CREDIT AGREEMENT
among
XXXXXXX SPORTS INC.
as Borrower,
AND
THE SUBSIDIARIES OF XXXXXXX SPORTS INC.
as Guarantors,
AND
THE LENDERS IDENTIFIED HEREIN,
AND
NBD BANK,
as Administrative Agent
AND
NATIONSBANK, N.A.,
as Documentation Agent
DATED AS OF JUNE 19, 1997
TABLE OF CONTENTS
SECTION 1 DEFINITIONS AND ACCOUNTING TERMS...............................1
1.1 Definitions..................................................1
1.2 Computation of Time Periods and Other
Definitional Provisions...................................21
1.3 Accounting Terms............................................22
SECTION 2 CREDIT FACILITIES.............................................22
2.1 Revolving Loans.............................................22
2.2 Letter of Credit Subfacility................................24
SECTION 3 GENERAL PROVISIONS APPLICABLE TO LOANS
AND LETTERS OF CREDIT.........................................30
3.1 Interest. ................................................. 30
3.2 Place and Manner of Payments................................30
3.3 Prepayments.................................................31
3.4 Fees........................................................31
3.5 Payment in full at Maturity.................................32
3.6 Computations of Interest and Fees...........................32
3.7 Pro Rata Treatment..........................................33
3.8 Sharing of Payments.........................................34
3.9 Capital Adequacy............................................35
3.10 Inability To Determine Interest Rate.......................35
3.11 Illegality.................................................36
3.12 Requirements of Law........................................36
3.13 Taxes......................................................37
3.14 Compensation...............................................39
3.15 Substitution of Lender.....................................40
SECTION 4 GUARANTY......................................................40
4.1 Guaranty of Payment.........................................40
4.2 Obligations Unconditional...................................41
4.3 Modifications...............................................42
4.4 Waiver of Rights............................................42
4.5 Reinstatement...............................................42
4.6 Remedies. .................................................43
4.7 Limitation of Guaranty......................................43
4.8 Rights of Contribution......................................43
SECTION 5 CONDITIONS PRECEDENT..........................................43
5.1 Closing Conditions..........................................43
5.2 Conditions to All Extensions of Credit......................47
SECTION 6 REPRESENTATIONS AND WARRANTIES................................48
6.1 Financial Condition.........................................48
6.2 No Material Change..........................................48
6.3 Organization and Good Standing..............................48
6.4 Due Authorization...........................................49
6.5 No Conflicts................................................49
6.6 Consents. .................................................49
6.7 Enforceable Obligations.....................................49
6.8 No Default..................................................49
6.9 Ownership. .................................................50
6.10 Indebtedness...............................................50
6.11 Litigation.................................................50
6.12 Taxes. .................................................50
6.13 Compliance with Law........................................50
6.14 ERISA. ...................................................51
6.15 Subsidiaries...............................................52
6.16 Use of Proceeds; Margin Stock..............................52
6.17 Government Regulation......................................52
6.18 Environmental Matters......................................53
6.19 Intellectual Property......................................54
6.20 Solvency. .................................................54
6.21 Investments................................................55
6.22 Location of Collateral.....................................55
6.23 Disclosure.................................................55
6.24 Licenses, etc..............................................55
6.25 No Burdensome Restrictions.................................55
6.26 Collateral Documents.......................................55
SECTION 7 AFFIRMATIVE COVENANTS.........................................56
7.1 Information Covenants.......................................56
7.2 Financial Covenants.........................................59
7.3 Preservation of Existence and Franchises....................61
7.4 Books and Records...........................................61
7.5 Compliance with Law.........................................61
7.6 Payment of Taxes and Other Indebtedness.....................61
7.7 Insurance. .................................................61
7.8 Maintenance of Property.....................................62
7.9 Performance of Obligations..................................63
7.10 Collateral.................................................63
7.11 Use of Proceeds............................................63
7.12 Audits/Inspections.........................................63
7.13 Additional Credit Parties..................................64
7.14 Material License Agreements................................64
7.15 Merger. ..................................................64
7.16 Further Assurances Regarding Real Estate
Collateral...............................................65
SECTION 8 NEGATIVE COVENANTS............................................66
8.1 Indebtedness................................................66
8.2 Liens. ....................................................67
8.3 Nature of Business..........................................67
8.4 Consolidation and Merger....................................67
8.5 Sale or Lease of Assets.....................................68
8.6 Sale Leasebacks.............................................68
8.7 Advances, Investments and Loans.............................68
8.8 Restricted Payments.........................................69
8.9 Transactions with Affiliates................................69
8.10 Fiscal Year; Organizational Documents......................69
8.11 Senior Notes/Subordinated Debt.............................69
8.12 No Limitations.............................................69
8.13 No Other Negative Pledges..................................70
SECTION 9 EVENTS OF DEFAULT.............................................70
9.1 Events of Default...........................................70
9.2 Acceleration; Remedies......................................73
9.3 Allocation of Payments After Event of Default...............74
SECTION 10 AGENCY PROVISIONS............................................75
10.1 Appointment................................................75
10.2 Delegation of Duties.......................................76
10.3 Exculpatory Provisions.....................................76
10.4 Reliance on Communications.................................76
10.5 Notice of Default..........................................77
10.6 Non-Reliance on Agents and Other Lenders...................77
10.7 Indemnification............................................78
10.8 Agents in Their Individual Capacity........................78
10.9 Successor Agent............................................78
SECTION 11 MISCELLANEOUS................................................79
11.1 Notices. .................................................79
11.2 Right of Set-Off...........................................79
11.3 Benefit of Agreement.......................................79
11.4 No Waiver; Remedies Cumulative.............................82
11.5 Payment of Expenses; Indemnification.......................82
11.6 Amendments, Waivers and Consents...........................83
11.7 Counterparts...............................................84
11.8 Headings. .................................................84
11.9 Defaulting Lender..........................................84
11.10 Survival of Indemnification and Representations
and Warranties..........................................84
11.11 Governing Law; Jurisdiction...............................84
11.12 Waiver of Jury Trial......................................85
11.13 Time. ...................................................85
11.14 Severability..............................................85
11.15 Further Assurances........................................85
11.16 Confidentiality...........................................86
11.17 Entirety..................................................86
11.18 Binding Effect............................................86
11.19 Release of Collateral.....................................86
11.20 Consent to M.O.U..........................................87
SCHEDULES
Schedule 1.1(a) Commitment Percentages
Schedule 5.1(f) Mortgaged Properties
Schedule 6.10 Indebtedness
Schedule 6.15 Subsidiaries
Schedule 6.18 Environmental Matters
Schedule 6.19 Intellectual Property
Schedule 6.21 Investments
Schedule 6.22(a) Real Property Locations
Schedule 6.22(b) Personal Property Locations
Schedule 6.22(c) Chief Executive Offices
Schedule 6.24 Material License Agreements
Schedule 7.7 Insurance
Schedule 7.11 Use of Proceeds
Schedule 8.2 Liens
Schedule 11.1 Notices
Schedule 11.20 M.O.U.
EXHIBITS
Exhibit 2.1(b) Form of Notice of Borrowing
Exhibit 2.1(e) Form of Notice of Continuation/Conversion
Exhibit 2.1(g) Form of Revolving Note
Exhibit 7.1(c) Form of Borrowing Base Certificate
Exhibit 7.1(d) Form of Officer's Certificate
Exhibit 7.13 Form of Joinder Agreement
Exhibit 11.3 Form of Assignment Agreement
CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "Credit Agreement"), is entered into
as of June 19, 1997 among XXXXXXX SPORTS INC., a Delaware corporation
("Borrower"), each of Borrower's Material Subsidiaries (individually a
"Guarantor" and collectively the "Guarantors"), the Lenders (as defined
herein), NBD BANK, as Administrative Agent for the Lenders and
NATIONSBANK, N.A., as Documentation Agent for the Lenders.
RECITALS
WHEREAS, the Borrower and the Guarantors have requested the
Lenders to provide a senior secured revolving credit facility in an
amount up to $40 million; and
WHEREAS, the Lenders party hereto have agreed to make the
requested senior secured revolving credit facility available to the
Borrower on the terms and conditions hereinafter set forth.
NOW, THEREFORE, IN CONSIDERATION of the premises and other good
and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITIONS AND ACCOUNTING TERMS
1.1 Definitions.
As used herein, the following terms shall have the meanings
herein specified unless the context otherwise requires. Defined terms
herein shall include in the singular number the plural and in the plural
the singular:
"Additional Credit Party" means each Person that
becomes a Guarantor after the Closing Date, as provided in
Section 7.13.
"Adjusted Base Rate" means the Base Rate plus the
Applicable Percentage.
"Adjusted Eurodollar Rate" means the Eurodollar Rate
plus the Applicable Percentage.
"Administrative Agent" means NBD Bank (or any successor
thereto) or any successor administrative agent appointed
pursuant to Section 10.9.
"Agents" mean the Administrative Agent, the
Documentation Agent and the Collateral Agent and any successors
and assigns in such capacity.
"Affiliate" means, with respect to any Person, any
other Person directly or indirectly controlling (including but
not limited to all directors and officers of such Person),
controlled by or under direct or indirect common control with
such Person. A Person shall be deemed to control a corporation
if such Person possesses, directly or indirectly, the power (i)
to vote 10% or more of the securities having ordinary voting
power for the election of directors of such corporation or (ii)
to direct or cause direction of the management and policies of
such corporation, whether through the ownership of voting
securities, by contract or otherwise.
"Applicable Percentage" means the appropriate
applicable percentages corresponding to the Leverage Ratio in
effect as of the most recent Calculation Date as shown below:
============================================================================================================
Applicable
Applicable Applicable Percentage for Applicable
Pricing Percentage For Percentage For Letter of Credit Percentage For
Level Leverage Ratio Eurodollar Loans Base Rate Loans Fees Commitment Fees
------------------------------------------------------------------------------------------------------------
I 3.5 to 1.0 1.50 0% 1.50% .40%
------------------------------------------------------------------------------------------------------------
II 4.0 to 1.0 but 1.75% .25% 1.75% .50%
3.5 to 1.0
------------------------------------------------------------------------------------------------------------
III 4.5 to 1.0 but 2.00% .50% 2.00% .50%
4.0 to 1.0
------------------------------------------------------------------------------------------------------------
IV 5.0 to 1.0 but 2.25% .75% 2.25% .50%
4.5% to 1.0
------------------------------------------------------------------------------------------------------------
V 5.0 to 1.0 2.50% 1.00% 2.50% .50%
============================================================================================================
The Applicable Percentage for Revolving Loans, the
Letter of Credit Fees and the Commitment Fees shall, in each
case, be determined and adjusted quarterly on the date (each a
"Calculation Date") five Business Days after the date by which
the Borrower is required to provide the officer's certificate in
accordance with the provisions of Section 7.1(d); provided that
the initial Applicable Percentage for Revolving Loans, the
Letter of Credit Fees and the Commitment Fees shall be based on
Pricing Level IV (as shown above) and shall remain at Pricing
Level IV until June 30, 1998 and, thereafter, the Pricing Level
shall be determined by the then current Leverage Ratio; and
provided further that if the Borrower fails to provide the
officer's certificate required by Section 7.1(d) on or before
the most recent Calculation Date, the Applicable Percentage for
Revolving Loans, the Letter of Credit Fees and the Commitment
Fees from such Calculation Date shall be based on Pricing Level
V until such time that an appropriate officer's certificate is
provided whereupon the Pricing Level shall be determined by the
then current Leverage Ratio. Each Applicable Percentage shall be
effective from one Calculation Date until the next Calculation
Date. Any adjustment in the Applicable Percentage shall be
applicable to all existing Loans and Letters of Credit as well
as any new Loans made or Letters of Credit issued.
"Bankruptcy Code" means the Bankruptcy Code in Title 11
of the United States Code, as amended, modified, succeeded or
replaced from time to time.
"Base Rate" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest whole multiple of
1/100 of 1%) equal to the greater of (a) the Federal Funds Rate
in effect on such day plus 1/2 of 1% or (b) the Prime Rate in
effect on such day. If for any reason the Administrative Agent
shall have determined (which determination shall be conclusive
absent manifest error) that it is unable after due inquiry to
ascertain the Federal Funds Rate for any reason, including the
inability or failure of the Administrative Agent to obtain
sufficient quotations in accordance with the terms hereof, the
Base Rate shall be determined without regard to clause (a) of
the first sentence of this definition until the circumstances
giving rise to such inability no longer exist. Any change in the
Base Rate due to a change in the Prime Rate or the Federal Funds
Rate shall be effective on the effective date of such change in
the Prime Rate or the Federal Funds Rate, respectively.
"Base Rate Loan" means any Loan bearing interest at a
rate determined by reference to the Base Rate.
"Beginning Net Worth" means 80% of the Net Worth
determined as of September 30, 1997.
"Borrower" means Xxxxxxx Sports Inc., a Delaware
corporation, together with any successors and permitted assigns.
"Borrowing Base Assets" means, at any date of
determination, the sum of (a) 80% of Eligible Accounts
Receivable plus (b) 50% of Eligible Inventory plus (c) 35% of
Eligible Work in Process plus (d) at the request of the
Borrower, for any one period of 90 consecutive days ending prior
to December 31, 1998, $5,000,000 (the "Overadvance"); provided
that the Borrower must provide written notice to the Agents of
the commencement of such 90 day period (and forward to the
Agents the fee set forth in Section 3.4(d)), and the Borrower
may only choose one 90 day period for such Overadvance.
"Business Day" means any day other than a Saturday, a
Sunday, a legal holiday or a day on which banking institutions
are authorized or required by law or other governmental action
to close in Detroit, Michigan, Charlotte, North Carolina or New
York, New York; provided that in the case of Eurodollar Loans,
such day is also a day on which dealings between banks are
carried on in U.S. dollar deposits in the London interbank
market.
"Calculation Date" has the meaning set forth in the
definition of Applicable Percentage.
"Capital Expenditures" means all expenditures of the
Credit Parties and their Subsidiaries which, in accordance with
GAAP, would be classified as capital expenditures, including,
without limitation, Capital Leases.
"Capital Lease" means, as applied to any Person, any
lease of any property (whether real, personal or mixed) by that
Person as lessee which, in accordance with GAAP, is or should be
accounted for as a capital lease on the balance sheet of that
Person.
"Cash Equivalents" means (a) securities issued or
directly and fully guaranteed or insured by the United States of
America or any agency or instrumentality thereof (provided that
the full faith and credit of the United States of America is
pledged in support thereof) having maturities of not more than
twelve months from the date of acquisition, (b) U.S. dollar
denominated time and demand deposits and certificates of deposit
of (i) any Lender, (ii) any domestic commercial bank having
capital and surplus in excess of $500,000,000 or (iii) any bank
whose short-term commercial paper rating from S&P is at least
A-1 or the equivalent thereof or from Xxxxx'x is at least P-1 or
the equivalent thereof (any such bank being an "Approved Bank"),
in each case with maturities of not more than 270 days from the
date of acquisition, (c) commercial paper and variable or fixed
rate notes issued by any Approved Bank (or by the parent company
thereof) or any variable rate notes issued by, or guaranteed by,
any domestic corporation rated A-1 (or the equivalent thereof)
or better by S&P or P-1 (or the equivalent thereof) or better by
Moody's and maturing within six months of the date of
acquisition, (d) repurchase agreements with a bank or trust
company (including any of the Lenders) or recognized securities
dealer having capital and surplus in excess of $500,000,000 for
direct obligations issued by or fully guaranteed by the United
States of America in which the Borrower shall have a perfected
first priority security interest (subject to no other Liens) and
having, on the date of purchase thereof, a fair market value of
at least 100% of the amount of the repurchase obligations and
(e) Investments, classified in accordance with GAAP as current
assets, in money market investment programs registered under the
Investment Company Act of 1940, as amended, which are
administered by reputable financial institutions having capital
of at least $500,000,000 and the portfolios of which are limited
to Investments of the character described in the foregoing
subdivisions (a) through (d).
"Change of Control" means either of the following
events: (a) any "person" or "group" (within the meaning of
Section 13(d) or 14(d) of the Exchange Act), in each case, other
than the Principals and the Related Parties has become, directly
or indirectly, the "beneficial owner" (as defined in Rules 13d-3
and 13d-5 under the Exchange Act, except that a Person shall be
deemed to have "beneficial ownership" of all shares that any
such Person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), by
way of merger, consolidation or otherwise, of 35% or more of the
voting power of the Voting Stock of the Borrower on a
fully-diluted basis, after giving effect to the conversion and
exercise of all outstanding warrants, options and other
securities of the Borrower (whether or not such securities are
then currently convertible or exercisable) or (b) a change in
control (as defined in the documentation evidencing the Senior
Notes or the Subordinated Debt) occurs.
"Closing Date" means the date hereof.
"Code" means the Internal Revenue Code of 1986 and the
rules and regulations promulgated thereunder, as amended,
modified, succeeded or replaced from time to time.
"Collateral" means all collateral described in and
covered by the Collateral Documents.
"Collateral Agent" means NBD Bank (or any successor
thereto) or any successor collateral agent appointed pursuant to
Section 10.9.
"Collateral Assignments of License Agreements" means
any collateral assignment of a Material License Agreement
executed and delivered by a Credit Party in favor of the
Collateral Agent, for the benefit of the Lenders, to secure its
obligations under the Credit Documents, as such may be amended,
modified, extended, renewed, restated or replaced from time to
time.
"Collateral Documents" means the Security Agreements,
the Pledge Agreements, the Mortgage Documents, the Collateral
Assignments of License Agreements and such other documents
executed and delivered in connection with the attachment and
perfection of the Lenders' security interests in the assets of
the Credit Parties, including without limitation, the Mortgage
Policies, UCC financing statements and collateral assignments of
certain license agreements and intellectual property.
"Commitment Fees" means the fees payable to the Lenders
pursuant to Section 3.4(a).
"Commitments" means the commitment of each Lender with
respect to the Revolving Committed Amount.
"Coverage Ratio" means, for the applicable period, the
ratio of (a) EBITDA minus Capital Expenditures to (b) cash
Interest Expense.
"Credit Documents" means this Credit Agreement, the
Notes, any Joinder Agreement, the Collateral Documents, the LOC
Documents, and all other related agreements and documents issued
or delivered hereunder or thereunder or pursuant hereto or
thereto.
"Credit Parties" means the Borrower and the Guarantors
and "Credit Party" means any one of them.
"Credit Party Obligations" means, without duplication,
(a) all of the obligations of the Credit Parties to the Lenders
(including the Issuing Lender) and the Agents, whenever arising,
under this Credit Agreement, the Notes, the Collateral Documents
or any of the other Credit Documents to which the Borrower or
any other Credit Party is a party and (b) all liabilities and
obligations owing from such Credit Party to any Lender, or any
Affiliate of a Lender, arising under Hedging Agreements.
"Default" means any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of
Default.
"Defaulting Lender" means, at any time, any Lender
that, (a) has failed to make a Loan or purchase a Participation
Interest required pursuant to the terms of this Credit Agreement
(but only for so long as such Loan is not made or such
Participation Interest is not purchased), (b) has failed to pay
to the Agents or any Lender an amount owed by such Lender
pursuant to the terms of this Credit Agreement (but only for so
long as such amount has not been repaid) or (c) has been deemed
insolvent or has become subject to a bankruptcy or insolvency
proceeding or to a receiver, trustee or similar official.
"Documentation Agent" means NationsBank, N.A. (or any
successor thereto) or any successor documentation agent
appointed pursuant to Section 10.9.
"Dollars" and "$" means dollars in lawful currency of
the United States of America.
"EBITDA" means, for any period, with respect to the
Credit Parties and their Subsidiaries on a consolidated basis,
the sum of (a) Net Income for such period (excluding the effect
of any extraordinary or other non-recurring gains (including any
gain from the sale of property) or non-cash losses) plus (b) an
amount which, in the determination of Net Income for such period
has been deducted for (i) Interest Expense for such period, (ii)
total Federal, state, foreign or other income taxes for such
period, (iii) all depreciation and amortization for such period,
all as determined in accordance with GAAP, (iv) Transaction
Costs and any amounts paid in connection with or pursuant to the
M.O.U. or the transactions contemplated thereby, including,
without limitation, reasonable attorneys fees and disbursements
and (v) without duplication, any write down of intangible assets
not to exceed $5,000,000, in the aggregate.
"Effective Date" means the date on which the conditions
set forth in Section 5.1 shall have been fulfilled (or waived in
the sole discretion of the Lenders) and on which the initial
Loans shall have been made and/or the initial Letters of Credit
shall have been issued.
"Eligible Assignee" means (a) any Lender or Affiliate
or subsidiary of a Lender and (b) any other commercial bank,
financial institution, institutional lender or "accredited
investor" (as defined in Regulation D of the Securities and
Exchange Commission).
"Eligible Accounts Receivable" means, as of any date of
determination, and without duplication, the aggregate book value
of all accounts receivable, receivables, and obligations for
payment created or arising from the sale or shipment (if such
shipment is pursuant to a purchase order to Varsity Spirit
Corporation or All American Sports Corporation) of inventory or
the rendering of services in the ordinary course of business
(collectively, the "Receivables"), owned by or owing to the
Credit Parties and in which the Lenders have a first priority
perfected security interest, net of any service charges included
in such aggregate value and sales adjustments consistent with a
Credit Party's internal policies and in any event in accordance
with GAAP, but excluding in any event (i) Receivables subject to
any Lien, other than any Lien described in clauses (a) through
(d) of the definition of Permitted Liens, (ii) Receivables which
are (A) if owing to a Credit Party other than Varsity Spirit
Corporation, more than 90 days past due and (B) if owing to
Varsity Spirit Corporation, more than 120 days past due; it
being understood that, for purposes of this clause (ii), any
Receivables owing from schools which are stated to have a due
date between April 1 and October 1 of any year shall be deemed
to have a due date of October 1 of such year, and Receivables
supported by a valid, existing and enforceable irrevocable
letter of credit or performance bond acceptable to the Agents
shall not be deemed to have a due date, (iii) Receivables
evidenced by notes, chattel paper or other instruments, unless
such notes, chattel paper or instruments have been delivered to
and are in the possession of the Collateral Agent, (iv)
Receivables owing by an account debtor which is subject to any
bankruptcy or insolvency proceeding of any kind, (v) Receivables
owing by an account debtor located outside of the United States
or Canada (unless (A) payment for the goods shipped is secured
by an irrevocable letter of credit or (B) export insurance is
obtained, in each case in a form and from an institution
acceptable to the Agents), (vi) Receivables which are contingent
or subject to offset, deduction, counterclaim, dispute or other
defense to payment, in each case to the extent of such offset,
deduction, counterclaim, dispute or other defense, (vii)
Receivables for which any direct or indirect Subsidiary of the
Borrower or any Affiliate of the Borrower is the account debtor,
(viii) Receivables representing a sale to the government of the
United States of America or any subdivision thereof, but not
including any state, county or municipal government as long as
there are no restrictions as to the assignability or collection
as to such Receivables, (ix) Receivables owing from any National
Football League team subject to the Promotional Rights Agreement
dated June 1, 1990 between Xxxxxxx, Inc. and NFL Properties,
Inc. or any replacement or substitution agreement thereof or any
similar agreement entered into by the Borrower or any of its
Subsidiaries, (x) all Receivables from an account debtor who has
more than 50% of its Receivables owing to the Credit Parties
that are more than 90 days past due and (xi) Receivables which
fail to meet such other specifications and requirements as may
from time to time be established by the Agents in their
reasonable discretion.
"Eligible Inventory" means, as of any date of
determination and without duplication, the lower of the
aggregate book value (based on a FIFO or a moving average cost
valuation, consistently applied) or fair market value (provided
that the value of any inventory sold between Credit Parties
shall be calculated using the value of the inventory prior to
any such sale between Credit Parties) of all raw materials and
finished goods inventory owned by any Credit Party and in which
the Lenders have a first priority perfected security interest
less appropriate reserves determined in accordance with GAAP,
but excluding in any event (i) inventory subject to any Lien,
other than any Lien described in clauses (a) through (d) of the
definition of Permitted Liens, (ii) inventory which is not in
good condition or fails to meet standards for sale or use
imposed by governmental agencies, departments or divisions
having regulatory authority over such goods, (iii) inventory
which is discontinued or not useable or saleable at prices
approximating their cost in the ordinary course of the
applicable Credit Party's business (including without
duplication the amount of any reserves for obsolescence,
unsalability or decline in value), (iv) inventory located
outside of the United States or Canada, (v) subsequent to the
date 90 days after the Closing Date, inventory located at a
location not owned or leased by the applicable Credit Party
unless the Agents have received a waiver and estoppel agreement,
reasonably satisfactory to the Agents, from the owner/operator
of such location, and, if deemed appropriate by the Collateral
Agent, a UCC financing statement has been filed with respect to
such location, (vi) subsequent to the date 90 days after the
Closing Date, inventory located at a location leased by the
applicable Credit Party with respect to which the Collateral
Agent shall not have received a landlord's waiver and estoppel
agreement reasonably satisfactory to the Agents, (vii) inventory
which is subject to a Material License Agreement unless (A) the
Material License Agreement is in full force and effect and (B)
the Agents have received (x) a Collateral Assignment of License
Agreement for such Material License Agreement and (y) a consent
to such Collateral Assignment of License Agreement from all
other parties to such Material License Agreement, in a form
reasonably satisfactory to the Agents, (viii) inventory which is
leased or on consignment, (ix) inventory which constitutes
supplies and packaging, letter inventory, parade inventory or
screws or washers and (x) inventory which fails to meet such
other specifications and requirements as may from time to time
be established by the Agents in their reasonable discretion; it
being agreed that the value of Eligible Inventory shall not
include any capitalized procurement costs other than shipping
costs and customs duty and other landing costs for imported
goods.
"Eligible Work in Process" means the book value of all
work in process of Xxxxxxx, Inc. (and only Xxxxxxx, Inc.) in
which the Lenders have a first priority perfected security
interest, as such work in process relates to materials but
specifically excluding any labor or overhead attributed to such
work in process.
"Environmental Claim" means any investigation, written
notice, violation, written demand, written allegation, action,
suit, injunction, judgment, order, consent decree, penalty,
fine, lien, proceeding, or written claim whether administrative,
judicial, or private in nature arising (a) pursuant to, or in
connection with, an actual or alleged violation of, any
Environmental Law, (b) in connection with any Hazardous
Material, (c) from any assessment, abatement, removal, remedial,
corrective, or other response action in connection with an
Environmental Law or other order of a Governmental Authority or
(d) from any actual or alleged damage, injury, threat, or harm
to health, safety, natural resources, or the environment.
"Environmental Laws" means any current or future legal
requirement of any Governmental Authority pertaining to (a) the
protection of health, safety, and the indoor or outdoor
environment, (b) the conservation, management, or use of natural
resources and wildlife, (c) the protection or use of surface
water and groundwater or (d) the management, manufacture,
possession, presence, use, generation, transportation,
treatment, storage, disposal, release, threatened release,
abatement, removal, remediation or handling of, or exposure to,
any hazardous or toxic substance or material or (e) pollution
(including any release to land surface water and groundwater)
and includes, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980,
as amended by the Superfund Amendments and Reauthorization Act
of 1986, 42 USC 9601 et seq., Solid Waste Disposal Act, as
amended by the Resource Conservation and Recovery Act of 1976
and Hazardous and Solid Waste Amendment of 1984, 42 USC 6901 et
seq., Federal Water Pollution Control Act, as amended by the
Clean Water Act of 1977, 33 USC 1251 et seq., Clean Air Act of
1966, as amended, 42 USC 7401 et seq., Toxic Substances Control
Act of 1976, 15 USC 2601 et seq., Hazardous Materials
Transportation Act, 49 USC App. 1801 et seq., Occupational
Safety and Health Act of 1970, as amended, 29 USC 651 et seq.,
Oil Pollution Act of 1990, 33 USC 2701 et seq., Emergency
Planning and Community Right-to-Know Act of 1986, 42 USC 11001
et seq., National Environmental Policy Act of 1969, 42 USC 4321
et seq., Safe Drinking Water Act of 1974, as amended, 42 USC
300(f) et seq., any analogous implementing or successor law, and
any amendment, rule, regulation, order, or directive issued
thereunder.
"Equity Issuance" means any issuance by the Borrower to
any Person of (a) shares of its capital stock or other equity
interests, (b) any shares of its capital stock or other equity
interests pursuant to the exercise of options or warrants or (c)
any shares of its capital stock or other equity interests
pursuant to the conversion of any debt securities to equity.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended, and any successor statute thereto, as
interpreted by the rules and regulations thereunder, all as the
same may be in effect from time to time. References to sections
of ERISA shall be construed also to refer to any successor
sections.
"ERISA Affiliate" means an entity, whether or not
incorporated, which is under common control with any Credit
Party or any of its Subsidiaries within the meaning of Section
4001(a)(14) of ERISA, or is a member of a group which includes
any Credit Party or any of its Subsidiaries and which is treated
as a single employer under Sections 414(b), (c), (m), or (o) of
the Code.
"Eurodollar Loan" means a Loan bearing interest based
at a rate determined by reference to the Eurodollar Rate.
"Eurodollar Rate" means, for the Interest Period for
each Eurodollar Loan comprising part of the same borrowing
(including conversions, extensions and renewals), a per annum
interest rate determined pursuant to the following formula:
Eurodollar Rate = London Interbank Offered Rate
------------------------------
1 - Eurodollar Reserve Percentage
"Eurodollar Reserve Percentage" means for any day, that
percentage (expressed as a decimal) which is in effect from time
to time under Regulation D of the Board of Governors of the
Federal Reserve System (or any successor), as such regulation
may be amended from time to time or any successor regulation, as
the maximum reserve requirement (including, without limitation,
any basic, supplemental, emergency, special, or marginal
reserves) applicable with respect to Eurocurrency liabilities as
that term is defined in Regulation D (or against any other
category of liabilities that includes deposits by reference to
which the interest rate of Eurodollar Loans is determined),
whether or not Lender has any Eurocurrency liabilities subject
to such reserve requirement at that time. Eurodollar Loans shall
be deemed to constitute Eurocurrency liabilities and as such
shall be deemed subject to reserve requirements without benefits
of credits for proration, exceptions or offsets that may be
available from time to time to a Lender. The Eurodollar Rate
shall be adjusted automatically on and as of the effective date
of any change in the Eurodollar Reserve Percentage.
"Event of Default" means any of the events or
circumstances described in Section 9.1.
"Exchange Act" means the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated
thereunder, as amended, modified, succeeded or replaced from
time to time.
"Extension of Credit" means, as to any Lender, the
making of a Loan by such Lender (or a participation therein by a
Lender) or the issuance of, or participation in, a Letter of
Credit by such Lender.
"Federal Funds Rate" means for any day the rate per
annum (rounded upward, if necessary, to the nearest 1/100th of
1%) equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the
Business Day next succeeding such day; provided that (a) if such
day is not a Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding
Business Day and (b) if no such rate is so published on such
next preceding Business Day, the Federal Funds Rate for such day
shall be the average rate quoted to the Administrative Agent on
such day on such transactions as determined by the
Administrative Agent.
"Fee Letter" means that certain letter agreement
between the Borrower and the Agents dated as of the Closing
Date.
"Funded Debt" means, without duplication, the sum of
(a) all Indebtedness of the Credit Parties and their
Subsidiaries for borrowed money, (b) all purchase money
Indebtedness of the Credit Parties and their Subsidiaries, (c)
the principal portion of all obligations of the Borrower and its
Subsidiaries under Capital Leases, (d) all obligations,
contingent or otherwise, relative to the face amount of all
letters of credit (other than letters of credit supporting trade
payables in the ordinary course of business), whether or not
drawn, and banker's acceptances issued for the account of such
Person (it being understood that, to the extent an undrawn
letter of credit supports another obligation consisting of
Indebtedness, in calculating aggregated Indebtedness only such
other obligation shall be included), (e) all Guaranty
Obligations of the Credit Parties and their Subsidiaries with
respect to Funded Debt of another Person, (f) all Funded Debt of
another entity secured by a Lien on any property of the Credit
Parties and their Subsidiaries whether or not such Funded Debt
has been assumed by a Credit Party or any of its Subsidiaries,
(g) all Funded Debt of any partnership or unincorporated joint
venture to the extent a Credit Party or one of its Subsidiaries
is legally obligated or has a reasonable expectation of being
liable with respect thereto, net of any assets of such
partnership or joint venture and (h) the principal balance
outstanding under any synthetic lease, tax retention operating
lease, off-balance sheet loan or similar off-balance sheet
financing product where such transaction is considered borrowed
money indebtedness for tax purposes but is classified as an
operating lease in accordance with GAAP.
"GAAP" means generally accepted accounting principles
in the United States applied on a consistent basis and subject
to Section 1.3.
"Governmental Authority" means any Federal, state,
local, provincial or foreign court or governmental agency,
authority, instrumentality or regulatory body.
"Guarantor" means each of the Material Subsidiaries of
the Borrower and each Additional Credit Party which has executed
a Joinder Agreement, together with their successors and assigns.
"Guaranty Obligations" means, with respect to any
Person, without duplication, any obligations (other than
endorsements in the ordinary course of business of negotiable
instruments for deposit or collection) guaranteeing any
Indebtedness of any other Person in any manner, whether direct
or indirect, and including without limitation any obligation,
whether or not contingent, (a) to purchase any such Indebtedness
or other obligation or any property constituting security
therefor, (b) to advance or provide funds or other support for
the payment or purchase of such indebtedness or obligation or to
maintain working capital, solvency or other balance sheet
condition of such other Person (including, without limitation,
maintenance agreements, comfort letters, take or pay
arrangements, put agreements or similar agreements or
arrangements) for the benefit of the holder of Indebtedness of
such other Person, (c) to lease or purchase property, securities
or services primarily for the purpose of assuring the owner of
such Indebtedness or (d) to otherwise assure or hold harmless
the owner of such Indebtedness or obligation against loss in
respect thereof. The amount of any Guaranty Obligation hereunder
shall (subject to any limitations set forth therein) be deemed
to be an amount equal to the outstanding principal amount (or
maximum principal amount, if larger) of the Indebtedness in
respect of which such Guaranty Obligation is made.
"Hazardous Materials" means any substance, material or
waste defined or regulated in or under any Environmental Laws.
"Hedging Agreements" means, collectively, interest rate
protection agreements, foreign currency exchange agreements,
commodity purchase or option agreements or other interest or
exchange rate or commodity price hedging agreements, in each
case, entered into or purchased by a Credit Party.
"Indebtedness" of any Person means, without
duplication, (a) all obligations of such Person for borrowed
money, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, or upon which interest
payments are customarily made (c) all obligations of such Person
under conditional sale or other title retention agreements
relating to property purchased by such Person to the extent of
the value of such property (other than customary reservations or
retentions of title under agreements with suppliers entered into
in the ordinary course of business), (d) all obligations, other
than intercompany items, of such Person issued or assumed as the
deferred purchase price of property or services purchased by
such Person which would appear as liabilities on a balance sheet
of such Person, (e) all Indebtedness of others secured by (or
for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on, or
payable out of the proceeds of production from, property owned
or acquired by such Person, whether or not the obligations
secured thereby have been assumed, (f) all Guaranty Obligations
of such Person, (g) the principal portion of all obligations of
such Person under (i) Capital Leases and (ii) any synthetic
lease, tax retention operating lease, off-balance sheet loan or
similar off-balance sheet financing product of such Person where
such transaction is considered borrowed money indebtedness for
tax purposes but is classified as an operating lease in
accordance with GAAP, (h) all net obligations of such Person in
respect of Hedging Agreements, (i) the maximum amount of all
performance and standby letters of credit issued or bankers'
acceptances facilities created for the account of such Person
and, without duplication, all drafts drawn thereunder (to the
extent unreimbursed), (j) all preferred stock issued by such
Person and required by the terms thereof to be redeemed, or for
which mandatory sinking fund payments are due within one year of
the date of determination and (k) the aggregate amount of
uncollected accounts receivable of such Person subject at such
time to a sale of receivables (or similar transaction)
regardless of whether such transaction is effected without
recourse to such Person or in a manner that would not be
reflected on the balance sheet of such Person in accordance with
GAAP. The Indebtedness of any Person shall include the
Indebtedness of any partnership or unincorporated joint venture
in which such Person is legally obligated.
"Interest Expense" means, for any period, with respect
to the Credit Parties and their Subsidiaries on a consolidated
basis, all net interest expense, including the interest
component under Capital Leases, as determined in accordance with
GAAP.
"Interest Payment Date" means (a) as to Base Rate
Loans, the tenth day of each month and the Revolving Loan
Maturity Date and (b) as to Eurodollar Loans, the last day of
each applicable Interest Period and the Revolving Loan Maturity
Date and in addition where the applicable Interest Period for a
Eurodollar Loan is greater than three months, then also the date
three months from the beginning of the Interest Period and each
three months thereafter.
"Interest Period" means, as to Eurodollar Loans, a
period of one, two, three or six months' duration, as the
Borrower may elect, commencing, in each case, on the date of the
borrowing (including continuations and conversions thereof);
provided, however, (a) if any Interest Period would end on a day
which is not a Business Day, such Interest Period shall be
extended to the next succeeding Business Day (except that where
the next succeeding Business Day falls in the next succeeding
calendar month, then on the next preceding Business Day), (b) no
Interest Period shall extend beyond the Revolving Loan Maturity
Date and (c) where an Interest Period begins on a day for which
there is no numerically corresponding day in the calendar month
in which the Interest Period is to end, such Interest Period
shall end on the last Business Day of such calendar month.
"Investment" in any Person means (a) the acquisition
(whether for cash, property, services, assumption of
Indebtedness, securities or otherwise) of assets, shares of
capital stock, bonds, notes, debentures, partnership, joint
ventures or other ownership interests or other securities of
such other Person or (b) any deposit with, or advance, loan or
other extension of credit to, such Person (other than deposits
made in connection with the purchase of equipment or other
assets in the ordinary course of business) or (c) any other
capital contribution to or investment in such Person, including,
without limitation, any Guaranty Obligation (including any
support for a Letter of Credit issued on behalf of such Person)
incurred for the benefit of such Person.
"Issuing Lender" means NBD Bank or any successor
Administrative Agent.
"Issuing Lender Fees" has the meaning set forth in
Section 3.4(b).
"Joinder Agreement" means a Joinder Agreement
substantially in the form of Exhibit 7.13.
"Lender" means any of the Persons identified as a
"Lender" on the signature pages hereto, and any Person which may
become a Lender by way of assignment in accordance with the
terms hereof, together with their successors and permitted
assigns.
"Letter of Credit" means a Letter of Credit issued for
the account of a Credit Party by the Issuing Lender pursuant to
Section 2.2, as such Letter of Credit may be amended, modified,
extended, renewed or replaced.
"Letter of Credit Fees" has the meaning assigned to
such term in Section 3.4(b).
"Leverage Ratio" means, as of the end of each fiscal
quarter, the ratio of (a) total Funded Debt on such date to (b)
EBITDA for the twelve month period ending on such date.
"Lien" means any mortgage, pledge, hypothecation,
assignment, deposit arrangement, security interest, encumbrance,
lien (statutory or otherwise), preference, priority or charge of
any kind, including, without limitation, any agreement to give
any of the foregoing, any conditional sale or other title
retention agreement, and any lease in the nature thereof.
"Loan" or "Loans" means the Revolving Loans (or a
portion of any Revolving Loan), individually or collectively, as
appropriate.
"LOC Documents" means, with respect to any Letter of
Credit, such Letter of Credit, any amendments thereto, any
documents delivered in connection therewith, any application
therefor, and any agreements, instruments, guarantees or other
documents (whether general in application or applicable only to
such Letter of Credit) governing or providing for (a) the rights
and obligations of the parties concerned or at risk or (b) any
collateral security for such obligations.
"LOC Obligations" means, at any time, the sum of (a)
the maximum amount which is, or at any time thereafter may
become, available to be drawn under Letters of Credit then
outstanding, assuming compliance with all requirements for
drawings referred to in such Letters of Credit plus (b) the
aggregate amount of all drawings under Letters of Credit honored
by an Issuing Lender but not theretofore reimbursed.
"LOC Participants" means the Lenders.
"London Interbank Offered Rate" means, with respect to
any Eurodollar Loan for the Interest Period applicable thereto,
the rate of interest per annum (rounded upwards, if necessary,
to the nearest 1/100 of 1%) appearing on Telerate Page 3750 (or
any successor page) as the London interbank offered rate for
deposits in Dollars at approximately 11:00 A.M. (London time)
two Business Days prior to the first day of such Interest Period
for a term comparable to such Interest Period; provided,
however, if more than one rate is specified on Telerate Page
3750, the applicable rate shall be the arithmetic mean of all
such rates. If, for any reason, such rate is not available, the
term "London Interbank Offered Rate" shall mean, with respect to
any Eurodollar Loan for the Interest Period applicable thereto,
the rate of interest 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
Dollars at approximately 11:00 A.M. (London time) two Business
Days prior to the first day of such Interest Period for a term
comparable to 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.
"Mandatory Borrowing" has the meaning set forth in
Section 2.2(e).
"Material Adverse Effect" means a material adverse
effect on (a) the operations, financial condition, business or
prospects of the Credit Parties and their Subsidiaries taken as
a whole, (b) the ability of the Borrower or the Credit Parties,
taken as a whole, to perform its or their respective obligations
under this Credit Agreement or any of the other Credit
Documents, or (c) the validity or enforceability of this Credit
Agreement, any of the other Credit Documents, or the rights and
remedies of the Lenders hereunder or thereunder taken as a
whole.
"Material License Agreements" means (a) all License
Agreements set forth on Schedule 6.24 and (b) all other License
Agreements entered into by a Credit Party in which such Credit
Party either guaranties or actually pays royalties to the
licensor party to such License Agreement in an amount equal to
or greater than $100,000 per year.
"Material Subsidiary" means, as of any date of
determination, all Subsidiaries, direct or indirect, of the
Borrower that, together with its Subsidiaries on a consolidated
basis, owns assets equal to or greater than five percent (5%) of
the total assets of the Borrower and its Subsidiaries on a
consolidated basis; provided that at no time shall the then
Credit Parties, in the aggregate, own less than ninety percent
(90%) of the total assets of the Borrower and its Subsidiaries
on a consolidated basis. As of the Effective Date, the Material
Subsidiaries are Xxxxxxx, Inc., Equilink Licensing Corporation,
RHC Licensing Corporation, Ridmark Corporation, All American
Sports Corporation, Cheer Acquisition Corp., Varsity Spirit
Corporation, Varsity Spirit Fashions & Supplies, Inc.,
International Logos, Inc., Varsity/Intropa Tours, Inc., and
Varsity USA, Inc.
"M.O.U." means the Memorandum of Understanding entered
into as of the 3rd day of June, 1997, by and among Xxxxxxx
Sports Inc., RHC Licensing Corporation, Xxxxxxx, Inc., Equilink
Licensing Corporation, Ridmark Corporation, MacMark Corporation,
NBD Bank N.A., MLC Partners Limited Partnership, Xxxxxx
Xxxxxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxx XxXxxxxxxxx, Xx., Xxxxxxxx
X. Xxxxxx, Connecticut Economics Corporation, Xxxxxx Xxxxxxx,
Xxxxx X. Xxxxxx, as Bankruptcy Trustee of M Holdings
Corporation, Xxxx Xxxxxxx, as Bankruptcy Trustee of MGS
Acquisition, Inc., Official Unsecured Creditors Committee of
MacGregor Sporting Goods, Inc. and MacGregor Sports, Inc.,
Official Unsecured Creditors' Committee of MacGregor Sporting
Goods, Inc., M Holdings Corporation, f/k/a MacGregor Sporting
Goods, Inc., Innovative Promotions, Inc., Xxxxxx Xxxx, Xx.,
Xxxxx Xxxx, Pursuit Athletic Footwear, Inc., and Xxxxxxx
Athletic Footwear, Inc. in the form set forth on Schedule 11.20
and any non-material modifications or amendments thereto.
"Moody's" means Xxxxx'x Investors Service, Inc., or any
successor or assignee of the business of such company in the
business of rating securities.
"Mortgage Documents" means the Mortgages, the Mortgage
Policies and such other documents and agreements executed or
delivered in connection with the Real Properties.
"Mortgage Policies" has the meaning set forth in
Section 5.1(f).
"Mortgages" has the meaning set forth in Section
5.1(f).
"Mortgaged Properties" has the meaning set forth in
Section 5.1(f).
"Multiemployer Plan" means a Plan covered by Title IV
of ERISA which is a multiemployer plan as defined in Section
3(37) or 4001(a)(3) of ERISA.
"Multiple Employer Plan" means a Plan covered by Title
IV of ERISA, other than a Multiemployer Plan, which any Credit
Party or any of its Subsidiaries or any ERISA Affiliate and at
least one employer other than a Credit Party or any of its
Subsidiaries or any ERISA Affiliate are contributing sponsors.
"Net Cash Proceeds" means the gross cash proceeds
received from an Equity Issuance net of (a) transaction costs
payable to third parties and (b) a good faith estimate of the
taxes payable with respect to such proceeds.
"Net Income" means, for any period, the net income
after taxes for such period of the Credit Parties and their
Subsidiaries on a consolidated basis, as determined in
accordance with GAAP.
"Net Worth" means, as of any date, shareholders' equity
or net worth of the Credit Parties and their Subsidiaries on a
consolidated basis, as determined in accordance with GAAP plus,
without duplication, any reduction in Net Worth as a result of
(a) a write down in the value of intangibles not to exceed $5
million in the aggregate, (b) the sum of all amounts paid
pursuant to or in connection with the M.O.U. or the transactions
contemplated thereby and (c) Transaction Costs.
"Non-Excluded Taxes" has the meaning set forth in
Section 3.13.
"Non-Material Subsidiary" means, as of any date of
determination, all Subsidiaries of the Borrower, direct or
indirect, other than Material Subsidiaries.
"Note" or "Notes" means the Revolving Loan Notes,
individually or collectively, as appropriate.
"Notice of Borrowing" means a request by the Borrower
for a Revolving Loan, in the form of Exhibit 2.1(b).
"Notice of Continuation/Conversion" means a request by
the Borrower to continue an existing Eurodollar Loan to a new
Interest Period or to convert a Eurodollar Loan to a Base Rate
Loan or a Base Rate Loan to a Eurodollar Loan, in the form of
Exhibit 2.1(e).
"Overadvance" has the meaning set forth in the
definition of Borrowing Base Assets.
"Participation Interest" means the Extension of Credit
by a Lender by way of a purchase of a participation in Letters
of Credit or LOC Obligations as provided in Section 2.2 or in
any Loans as provided in Section 3.8.
"PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA and any
successor thereto.
"Permitted Investments" means Investments which are (a)
cash or Cash Equivalents, (b) accounts receivable created,
acquired or made in the ordinary course of business and payable
or dischargeable in accordance with customary trade terms, (c)
inventory, raw materials and general intangibles (to the extent
such general intangible is not a Capital Expenditure) acquired
in the ordinary course of business, (d) Investments by one
Credit Party in another Credit Party, (e) Investments by a
Credit Party in a Non-Material Subsidiary, not to exceed
$250,000, in the aggregate, at any one time, (f) loans to
directors, officers or employees in the ordinary course of
business for reasonable business expenses, not to exceed, in the
aggregate, $250,000 at any one time; (g) Investments in Capital
Expenditures and (g) other Investments not to exceed, in the
aggregate, $2,500,000 at any one time.
"Permitted Liens" means (a) Liens securing Credit Party
Obligations, (b) Liens for taxes not yet due or Liens for taxes
being contested in good faith by appropriate proceedings for
which adequate reserves determined in accordance with GAAP have
been established (and as to which the property subject to any
such Lien is not yet subject to foreclosure, sale, collection,
levy or loss on account thereof), (c) Liens in respect of
property imposed by law arising in the ordinary course of
business such as materialmen's, mechanics', warehousemen's,
carrier's, landlords' and other nonconsensual statutory Liens
which are not yet due and payable or which are being contested
in good faith by appropriate proceedings for which adequate
reserves determined in accordance with GAAP have been
established (and as to which the property subject to any such
Lien is not yet subject to foreclosure, sale or loss on account
thereof), (d) pledges or deposits made in the ordinary course of
business to secure payment of worker's compensation insurance,
unemployment insurance, pensions or social security programs,
(e) Liens arising from good faith deposits in connection with or
to secure performance of tenders, bids, leases, government
contracts, performance and return-of-money bonds and other
similar obligations incurred in the ordinary course of business
(other than obligations in respect of the payment of borrowed
money), (f) Liens arising from good faith deposits in connection
with or to secure performance of statutory obligations and
surety and appeal bonds, (g) easements, rights-of-way,
restrictions (including zoning restrictions), matters of plat,
minor defects or irregularities in title and other similar
charges or encumbrances not, in any material respect, impairing
the use of the encumbered property for its intended purposes,
(h) judgment Liens that would not constitute an Event of
Default, (i) Liens in connection with Indebtedness permitted by
Section 8.1(g), (j) Liens arising by virtue of any statutory or
common law provision relating to banker's liens, rights of
setoff or similar rights as to deposit accounts or other funds
maintained with a creditor depository institution, (k) Liens
existing on the date hereof and identified on Schedule 8.2;
provided that no such Lien shall extend to any property other
than the property subject thereto on the Closing Date (l)
Permitted Encumbrances (as defined in any Mortgage Document) and
(m) Liens on Unrestricted Margin Stock.
"Person" means any individual, partnership, joint
venture, firm, corporation, limited liability company,
association, trust or other enterprise (whether or not
incorporated), or any Governmental Authority.
"Plan" means any employee benefit plan (as defined in
Section 3(3) of ERISA) which is covered by ERISA and with
respect to which any Credit Party or any of its Subsidiaries or
any ERISA Affiliate is (or, if such plan were terminated at such
time, would under Section 4069 of ERISA be deemed to be) an
"employer" within the meaning of Section 3(5) of ERISA.
"Pledge Agreements" means any Pledge Agreement executed
and delivered by a Credit Party in favor of the Collateral
Agent, for the benefit of the Lenders, to secure its obligations
under the Credit Documents, as amended, modified, extended,
renewed or replaced from time to time.
"Prime Rate" means the per annum rate of interest
established from time to time by the Administrative Agent at its
principal office in Detroit, Michigan (or such other principal
office of the Administrative Agent as communicated in writing to
the Borrower and the Lenders) as its Prime Rate. Any change in
the interest rate resulting from a change in the Prime Rate
shall become effective as of 12:01 a.m. of the Business Day on
which each change in the Prime Rate is announced by the
Administrative Agent. The Prime Rate is a reference rate used by
the Administrative Agent in determining interest rates on
certain loans and is not intended to be the lowest rate of
interest charged on any extension of credit to any debtor.
"Principals" means Xxxxxx X. Xxxxxxxxxxx, Xxxxxxx
Xxxxxxxx, Xxxx XxXxxxxxxxx, Xx., Xxxxx Xxxxx, Xxx Xxxxxxx, Xxxxx
Xxxxxxxxxx or Xxxxxxx X. Xxxx.
"Real Properties" means the Mortgaged Properties and
such other real properties as the Credit Parties may lease from
third parties from time to time.
"Regulation D, G, U, or X" means Regulation D, G, U or
X, respectively, of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor
to all or a portion thereof.
"Related Party" with respect to any Principal means (a)
any spouse or former spouse or immediate family member of such
Principal, (b) the estate or any heir of such Principal, (c) any
Subsidiary of any of the Principals or any other Related Party
or (d) any trust, the beneficiaries of whom are Principals or
Related Parties.
"Reportable Event" means a "reportable event" as
defined in Section 4043 of ERISA with respect to which the
notice requirements to the PBGC have not been waived.
"Required Lenders" means Lenders whose aggregate Credit
Exposure (as hereinafter defined) constitutes at least 51% of
the Credit Exposure of all Lenders at such time; provided,
however, that if any Lender shall be a Defaulting Lender at such
time then there shall be excluded from the determination of
Required Lenders the aggregate principal amount of Credit
Exposure of such Lender at such time. For purposes of the
preceding sentence, the term "Credit Exposure" as applied to
each Lender shall mean (a) at any time prior to the termination
of the Commitments, the sum of the Revolving Commitment
Percentage of such Lender multiplied by the Revolving Committed
Amount and (b) at any time after the termination of the
Commitments, the sum of (i) the principal balance of the
outstanding Loans of such Lender plus (ii) such Lender's
Participation Interests in the face amount of the outstanding
Letters of Credit.
"Requirement of Law" means, as to any Person, the
articles or certificate of incorporation and by-laws or other
organizational or governing documents of such Person, and any
law, treaty, rule or regulation or final, non-appealable
determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such
Person or to which any of its material property is subject.
"Responsible Officer" means the Chief Executive
Officer, the Chief Financial Officer, the Treasurer, the Chief
Accounting Officer or the General Counsel of the Borrower and
such other officers of the Borrower who may be involved in
administrating and complying with the Credit Documents and
communicating with the Agents with respect thereto.
"Revolving Loan Commitment Percentage" means, for each
Lender, the percentage identified as its Revolving Commitment
Percentage on Schedule 1.1(a), as such percentage may be
modified in connection with any assignment made in accordance
with the provisions of Section 11.3.
"Revolving Committed Amount" means (a) from the Closing
Date to September 30, 1997, FORTY MILLION DOLLARS ($40,000,000)
and (b) from October 1, 1997 to the Revolving Loan Maturity
Date, THIRTY FIVE MILLION DOLLARS ($35,000,000) or such lesser
amount as the Revolving Committed Amount may be reduced pursuant
to Section 2.1(d).
"Revolving Loan Maturity Date" means June 30, 2002.
"Revolving Loans" means the Revolving Loans made to the
Borrower pursuant to Section 2.1.
"Revolving Note" or "Revolving Notes" means the
promissory notes of the Borrower in favor of each of the Lenders
evidencing the Revolving Loans provided pursuant to Section 2.1,
individually or collectively, as appropriate, as such promissory
notes may be amended, modified, supplemented, extended, renewed
or replaced from time to time and as evidenced in the form of
Exhibit 2.1(g).
"S&P" means Standard & Poor's Ratings Group, a division
of McGraw Hill, Inc., or any successor or assignee of the
business of such division in the business of rating securities.
"Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Security Agreements" means any security agreement
executed and delivered by a Credit Party in favor of the
Collateral Agent for the benefit of the Lenders to secure its
obligations under the Credit Documents, as such may be amended,
modified, extended, renewed, restated or replaced from time to
time.
"Senior Notes" means those certain notes issued by the
Borrower pursuant to that certain Indenture dated June 19, 1997,
in the amount of $115 million and maturing July 15, 2007, the
terms of which are acceptable to the Agents.
"Single Employer Plan" means any Plan which is covered
by Title IV of ERISA, but which is not a Multiemployer Plan.
"Solvent" means, with respect to any Person as of a
particular date, that on such date (a) such Person is able to
pay its debts and other liabilities, contingent obligations and
other commitments as they mature in the normal course of
business, (b) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature in
their ordinary course, (c) such Person is not engaged in a
business or a transaction, and is not about to engage in a
business or a transaction, for which such Person's assets would
constitute unreasonably small capital after giving due
consideration to the prevailing practice in the industry in
which such Person is engaged or is to engage, (d) the fair value
of the assets of such Person is greater than the total amount of
liabilities, including, without limitation, contingent
liabilities, of such Person and (e) the present fair saleable
value of the assets of such Person is not less than the amount
that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured. In
computing the amount of contingent liabilities at any time, it
is intended that such liabilities will be computed at the amount
which, in light of all the facts and circumstances existing at
such time, represents the amount that can reasonably be expected
to become an actual or matured liability.
"Subordinated Debt" means those certain convertible
subordinated notes issued by the Borrower, in the aggregate
amount of $7.5 million, and maturing November 1, 2004.
"Subordinated Secured Note" means that certain
Subordinated Secured Note dated as of November 30, 1995 in the
original face amount of $2,950,000 executed by Xxxxxxx Sports
Inc. and Xxxxxxx, Inc. in favor of Xxxxx X. Xxxxxx, Xxxxx Xxxxxx
and Xxxxxx Xxxxxx.
"Subsidiary" means, as to any Person, (a) any
corporation more than 50% of whose stock of any class or classes
having by the terms thereof ordinary voting power to elect a
majority of the directors of such corporation (irrespective of
whether or not at the time, any class or classes of such
corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time owned by such
Person directly or indirectly through Subsidiaries, and (b) any
partnership, association, joint venture or other entity in which
such person directly or indirectly through Subsidiaries has more
than a 50% equity interest at any time.
"Termination Event" means (a) with respect to any
Single Employer Plan, the occurrence of a Reportable Event or
the substantial cessation of operations (within the meaning of
Section 4062(e) of ERISA); (b) the withdrawal of any Credit
Party or any of its Subsidiaries or any ERISA Affiliate from a
Multiple Employer Plan during a plan year in which it was a
substantial employer (as such term is defined in Section
4001(a)(2) of ERISA), or the termination of a Multiple Employer
Plan; (c) the distribution of a notice of intent to terminate or
the actual termination of a Plan pursuant to Section 4041(a)(2)
or 4041A of ERISA; (d) the institution of proceedings to
terminate or the actual termination of a Plan by the PBGC under
Section 4042 of ERISA; (e) any event or condition which might
reasonably constitute grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to
administer, any Plan; or (f) the complete or partial withdrawal
of any Credit Party or any of its Subsidiaries or any ERISA
Affiliate from a Multiemployer Plan.
"Transaction Costs" means all usual and necessary
legal, administrative and contractual obligations incurred by
the Borrower in connection with the consummation of (a) the
acquisition of Varsity Spirit Corporation, (b) the issuance of
the Senior Notes and (c) the Credit Documents.
"Unrestricted Margin Stock" means the capital stock of
Varsity Spirit Corporation that constitutes "margin stock" (as
defined in Regulation U of the Board of Governors of the Federal
Reserve System as from time to time in effect), if, and to the
extent that the value of such margin stock exceeds 25% of the
total assets of the Borrower and its Subsidiaries; provided that
it is understood that upon completion of the merger of Cheer
Acquisition Corp. into Varsity Spirit Corporation there shall be
no Unrestricted Margin Stock outstanding.
"Unused Commitment" means, for any period, the amount
by which (a) the then applicable aggregate Revolving Committed
Amount exceeds (b) the daily average sum for such period of the
outstanding aggregate principal amount of all Revolving Loans
plus the aggregate amount of LOC Obligations outstanding.
"Voting Stock" of a corporation means all classes of
the capital stock of such corporation then outstanding and
normally entitled to vote in the election of directors.
1.2 Computation of Time Periods and Other Definitional
Provisions.
For purposes of computation of periods of time hereunder, the
word "from" means "from and including" and the words "to" and "until"
each mean "to but excluding." References in this Agreement to "Articles",
"Sections", "Schedules" or "Exhibits" shall be to Articles, Sections,
Schedules or Exhibits of or to this Agreement unless otherwise
specifically provided.
1.3 Accounting Terms.
Except as otherwise expressly provided herein, all accounting
terms used herein shall be interpreted, and all financial statements and
certificates and reports as to financial matters required to be delivered
to the Lenders hereunder shall be prepared, in accordance with GAAP as of
the Closing Date.
SECTION 2
CREDIT FACILITIES
2.1 Revolving Loans.
(a) Revolving Loan Commitment. Subject to the terms and
conditions set forth herein, each Lender severally agrees to
make revolving loans (each a "Revolving Loan" and collectively
the "Revolving Loans") to the Borrower, in Dollars, at any time
and from time to time, during the period from and including the
Effective Date to but not including the Revolving Loan Maturity
Date (or such earlier date if the Revolving Committed Amount has
been terminated as provided herein); provided, however, that (i)
the sum of the aggregate amount of Revolving Loans outstanding
plus the aggregate amount of LOC Obligations outstanding shall
not exceed the Revolving Committed Amount and (ii) with respect
to each individual Lender, the Lender's pro rata share of
outstanding Revolving Loans plus such Lender's pro rata share of
outstanding LOC Obligations shall not exceed such Lender's
Revolving Loan Commitment Percentage of the Revolving Committed
Amount. Subject to the terms of this Credit Agreement (including
Section 3.3), the Borrower may borrow, repay and reborrow
Revolving Loans.
(b) Method of Borrowing for Revolving Loans. By no
later than 11:00 a.m. (i) on the date of the requested borrowing
of Revolving Loans that will be Base Rate Loans or (ii) three
Business Days prior to the date of the requested borrowing of
Revolving Loans that will be Eurodollar Loans, the Borrower
shall submit a written Notice of Borrowing in the form of
Exhibit 2.1(b) to the Administrative Agent setting forth (A) the
amount requested, (B) whether such Revolving Loans shall accrue
interest at the Adjusted Base Rate or the Adjusted Eurodollar
Rate, (C) with respect to Revolving Loans that will be
Eurodollar Loans, the Interest Period applicable thereto and (D)
certification that the Borrower has complied in all respects
with Section 5.2.
(c) Funding of Revolving Loans. Upon receipt of a
Notice of Borrowing, the Administrative Agent shall promptly
inform the Lenders as to the terms thereof. Each Lender shall
make its Revolving Loan Commitment Percentage of the requested
Revolving Loans available to the Administrative Agent by 1:00
p.m. on the date specified in the Notice of Borrowing by
deposit, in Dollars, of immediately available funds at the
offices of the Administrative Agent at its principal office in
Detroit, Michigan or at such other address as the Administrative
Agent may designate in writing. The amount of the requested
Revolving Loans will then be made available to the Borrower by
the Administrative Agent by crediting the account of the
Borrower on the books of such office of the Administrative
Agent, to the extent the amount of such Revolving Loans are made
available to the Administrative Agent.
No Lender shall be responsible for the failure or delay
by any other Lender in its obligation to make Revolving Loans
hereunder; provided, however, that the failure of any Lender to
fulfill its obligations hereunder shall not relieve any other
Lender of its obligations hereunder. Unless the Administrative
Agent shall have been notified by any Lender prior to the date
of any such Revolving Loan that such Lender does not intend to
make available to the Administrative Agent its portion of the
Revolving Loans to be made on such date, the Administrative
Agent may assume that such Lender has made such amount available
to the Administrative Agent on the date of such Revolving Loans,
and the Administrative Agent in reliance upon such assumption,
may (in its sole discretion but without any obligation to do so)
make available to the Borrower a corresponding amount. If such
corresponding amount is not in fact made available to the
Administrative Agent, the Administrative Agent shall be able to
recover such corresponding amount from such Lender. If such
Lender does not pay such corresponding amount forthwith upon the
Administrative Agent's demand therefor, the Administrative Agent
will promptly notify the Borrower, and the Borrower shall
immediately pay such corresponding amount to the Administrative
Agent. The Administrative Agent shall also be entitled to
recover from the Lender or the Borrower, as the case may be,
interest on such corresponding amount in respect of each day
from the date such corresponding amount was made available by
the Administrative Agent to the Borrower to the date such
corresponding amount is recovered by the Administrative Agent at
a per annum rate equal to (i) from the Borrower at the
applicable rate for such Revolving Loan pursuant to the Notice
of Borrowing and (ii) from a Lender at the Federal Funds Rate.
(d) Reductions of Revolving Committed Amount. Upon at
least three Business Days' notice, the Borrower shall have the
right to permanently reduce all or part of the aggregate unused
amount of the Revolving Committed Amount at any time or from
time to time; provided that (i) each partial reduction shall be
in an aggregate amount at least equal to $5,000,000 and in
integral multiples of $1,000,000 above such amount and (ii) no
reduction shall be made which would reduce the Revolving
Committed Amount to an amount less than the aggregate amount of
outstanding Revolving Loans plus the aggregate amount of
outstanding LOC Obligations. Any reduction in (or termination
of) the Revolving Committed Amount shall be permanent and may
not be reinstated. The Administrative Agent shall immediately
notify the Lenders of any reduction in the Revolving Committed
Amount.
(e) Continuations and Conversions. Subject to the terms
of Section 5.2, the Borrower shall have the option, on any
Business Day, to continue existing Eurodollar Loans for a
subsequent Interest Period, to convert Base Rate Loans into
Eurodollar Loans or to convert Eurodollar Loans into Base Rate
Loans; provided, however, that (i) each such continuation or
conversion must be requested by the Borrower pursuant to a
written Notice of Continuation/Conversion, in the form of
Exhibit 2.1(e), in compliance with the terms set forth below,
(ii) except as provided in Section 3.11, Eurodollar Loans may
only be continued or converted into Base Rate Loans on the last
day of the Interest Period applicable thereto, (iii) Eurodollar
Loans may not be continued nor may Base Rate Loans be converted
into Eurodollar Loans during the existence and continuation of
an Event of Default and (iv) any request to continue a
Eurodollar Loan that fails to comply with the terms hereof or
any failure to request a continuation of a Eurodollar Loan at
the end of an Interest Period shall constitute a conversion to a
Base Rate Loan on the last day of the applicable Interest
Period. Each continuation or conversion must be requested by the
Borrower no later than 11:00 a.m. (A) on the date for a
requested conversion of a Eurodollar Loan to a Base Rate Loan or
(B) three Business Days prior to the date for a requested
continuation of a Eurodollar Loan or conversion of a Base Rate
Loan to a Eurodollar Loan, in each case pursuant to a written
Notice of Continuation/Conversion submitted to the
Administrative Agent which shall set forth (x) whether the
Borrower wishes to continue or convert such Loans and (y) if the
request is to continue a Eurodollar Loan or convert a Base Rate
Loan to a Eurodollar Loan, the Interest Period applicable
thereto.
(f) Minimum Amounts. Each request for a borrowing,
conversion or continuation shall be subject to the requirements
that (i) each Eurodollar Loan shall be in a minimum amount of
$1,000,000 and in integral multiples of $100,000 in excess
thereof, (ii) each Base Rate Loan shall be in a minimum amount
of the lesser of $100,000 (and integral multiples of $50,000 in
excess thereof) or the remaining amount available under the
Revolving Committed Amount and (iii) no more than ten Eurodollar
Loans shall be outstanding hereunder at any one time. For the
purposes of this Section, all Eurodollar Loans with the same
Interest Periods that begin and end on the same date shall be
considered as one Eurodollar Loan, but Eurodollar Loans with
different Interest Periods, even if they begin on the same date,
shall be considered as separate Eurodollar Loans.
(g) Notes. The Revolving Loans made by each Lender
shall be evidenced by a duly executed promissory note of the
Borrower to each applicable Lender in the face amount of its
Revolving Loan Commitment Percentage of the Revolving Committed
Amount in substantially the form of Exhibit 2.1(g).
2.2 Letter of Credit Subfacility.
(a) Issuance. Subject to the terms and conditions
hereof and of the LOC Documents, if any, and any other terms and
conditions which the Issuing Lender may reasonably require (so
long as such terms and conditions do not impose any financial
obligation on or require any Lien (not otherwise contemplated by
this Agreement) to be given by any Credit Party or conflict with
any obligation of, or detract from any action which may be taken
by, any Credit Party or their Subsidiaries under this
Agreement), the Issuing Lender shall from time to time upon
request issue (from the Effective Date to the Revolving Loan
Maturity Date and in a form reasonably acceptable to the Issuing
Lender), in Dollars, and the LOC Participants shall participate
in, letters of credit (the "Letters of Credit") for the account
of the Borrower; provided, however, that (i) the aggregate
amount of LOC Obligations shall not at any time exceed FIVE
MILLION DOLLARS ($5,000,000), (ii) the sum of the aggregate
amount of LOC Obligations outstanding plus Revolving Loans
outstanding shall not exceed the Revolving Committed Amount and
(iii) with respect to each individual LOC Participant, the LOC
Participant's pro rata share of outstanding Revolving Loans plus
its pro rata share of outstanding LOC Obligations shall not
exceed such LOC Participant's Revolving Loan Commitment
Percentage of the Revolving Committed Amount. The issuance and
expiry date of each Letter of Credit shall be a Business Day.
Except as otherwise expressly agreed upon by all the LOC
Participants, no Letter of Credit shall have an original expiry
date more than one year from the date of issuance, or as
extended, shall have an expiry date extending beyond the
Revolving Loan Maturity Date. Each Letter of Credit shall be
either (x) a standby letter of credit issued to support the
obligations (including pension or insurance obligations),
contingent or otherwise, of the Borrower or any of its
Subsidiaries, or (y) a commercial letter of credit in respect of
the purchase of goods or services by the Borrower or any of its
Subsidiaries in the ordinary course of business. Each Letter of
Credit shall comply with the related LOC Documents.
(b) Notice and Reports. The request for the issuance of
a Letter of Credit shall be submitted to the Issuing Lender at
least three Business Days prior to the requested date of
issuance. The Issuing Lender will, at least quarterly and more
frequently upon request, provide to the Administrative Agent for
dissemination to the Lenders a detailed report specifying the
Letters of Credit which are then issued and outstanding and any
activity with respect thereto which may have occurred since the
date of the prior report, and including therein, among other
things, the account party, the beneficiary, the face amount, and
the expiry date as well as any payments or expirations which may
have occurred. The Issuing Lender will further provide to the
Administrative Agent, promptly upon request, copies of the
Letters of Credit and the other LOC Documents.
(c) Participations. Each LOC Participant, upon issuance
of a Letter of Credit, shall be deemed to have purchased without
recourse a risk participation from the Issuing Lender in such
Letter of Credit and each LOC Document related thereto and the
rights and obligations arising thereunder and any collateral
relating thereto, in each case in an amount equal to its
Revolving Loan Commitment Percentage of the obligations under
such Letter of Credit, and shall absolutely, unconditionally and
irrevocably assume, as primary obligor and not as surety, and be
obligated to pay to the Issuing Lender therefor and discharge
when due, its Revolving Loan Commitment Percentage of the
obligations arising under such Letter of Credit. Without
limiting the scope and nature of each LOC Participant's
participation in any Letter of Credit, to the extent that the
Issuing Lender has not been reimbursed as required hereunder or
under any such Letter of Credit, each such LOC Participant shall
pay to the Issuing Lender its Revolving Loan Commitment
Percentage of such unreimbursed drawing in same day funds on the
day of notification by the Issuing Lender of an unreimbursed
drawing pursuant to the provisions of subsection (d) hereof. The
obligation of each LOC Participant to so reimburse the Issuing
Lender shall be absolute and unconditional and shall not be
affected by the occurrence of a Default, an Event of Default or
any other occurrence or event. Any such reimbursement shall not
relieve or otherwise impair the obligation of the Borrower or
any other Credit Party to reimburse the Issuing Lender under any
Letter of Credit, together with interest as hereinafter
provided.
(d) Reimbursement. In the event of any drawing under
any Letter of Credit, the Issuing Lender will promptly notify
the Borrower. Unless the Borrower shall immediately notify the
Issuing Lender of its intent to otherwise reimburse the Issuing
Lender, the Borrower shall be deemed to have requested a
Revolving Loan at the Adjusted Base Rate in the amount of the
drawing as provided in subsection (e) hereof, the proceeds of
which will be used to satisfy the reimbursement obligations. The
Borrower shall reimburse the Issuing Lender on the day of
drawing under any Letter of Credit either with the proceeds of a
Revolving Loan obtained hereunder or otherwise in same day funds
as provided herein or in the LOC Documents. If the Borrower
shall fail to reimburse the Issuing Lender as provided
hereinabove, the unreimbursed amount of such drawing shall bear
interest at a per annum rate equal to the Base Rate plus the
Applicable Percentage for the Base Rate Loans that are Revolving
Loans plus two percent (2%). The Borrower's reimbursement
obligations hereunder shall be absolute and unconditional under
all circumstances irrespective of (but without waiver of) any
rights of set-off, counterclaim or defense to payment the
applicable account party or the Borrower may claim or have
against the Issuing Lender, the Agent, the Lenders, the
beneficiary of the Letter of Credit drawn upon or any other
Person, including without limitation, any defense based on any
failure of the applicable account party, the Borrower or any
other Credit Party to receive consideration or the legality,
validity, regularity or unenforceability of the Letter of
Credit. The Issuing Lender will promptly notify the LOC
Participants of the amount of any unreimbursed drawing and each
LOC Participant shall promptly pay to the Administrative Agent
for the account of the Issuing Lender, in Dollars and in
immediately available funds, the amount of such LOC
Participant's Revolving Loan Commitment Percentage of such
unreimbursed drawing. Such payment shall be made on the day such
notice is received by such Lender from the Issuing Lender if
such notice is received at or before 2:00 p.m., otherwise such
payment shall be made at or before 12:00 Noon on the Business
Day next succeeding the day such notice is received. If such LOC
Participant does not pay such amount to the Issuing Lender in
full upon such request, such LOC Participant shall, on demand,
pay to the Administrative Agent for the account of the Issuing
Lender interest on the unpaid amount during the period from the
date the LOC Participant received the notice regarding the
unreimbursed drawing until such LOC Participant pays such amount
to the Issuing Lender in full at a rate per annum equal to, if
paid within two Business Days of the date of drawing, the
Federal Funds Rate and thereafter at a rate equal to the Base
Rate. Each LOC Participant's obligation to make such payment to
the Issuing Lender, and the right of the Issuing Lender to
receive the same, shall be absolute and unconditional, shall not
be affected by any circumstance whatsoever and without regard to
the termination of this Credit Agreement or the Commitments
hereunder, the existence of a Default or Event of Default or the
acceleration of the obligations hereunder and shall be made
without any offset, abatement, withholding or reduction
whatsoever. Simultaneously with the making of each such payment
by a LOC Participant to the Issuing Lender, such LOC Participant
shall, automatically and without any further action on the part
of the Issuing Lender or such LOC Participant, acquire a
participation in an amount equal to such payment (excluding the
portion of such payment constituting interest owing to the
Issuing Lender) in the related unreimbursed drawing portion of
the LOC Obligation and in the interest thereon and in the
related LOC Documents, and shall have a claim against the
Borrower and the other Credit Parties with respect thereto.
(e) Repayment with Revolving Loans. On any day on which
the Borrower shall have requested, or been deemed to have
requested, a Revolving Loan borrowing to reimburse a drawing
under a Letter of Credit, the Administrative Agent shall give
notice to the applicable Lenders that a Revolving Loan has been
requested or deemed requested in connection with a drawing under
a Letter of Credit, in which case a Revolving Loan borrowing
comprised solely of Base Rate Loans (each such borrowing, a
"Mandatory Borrowing") shall be immediately made from all
applicable Lenders (without giving effect to any termination of
the Commitments pursuant to Section 9.2) pro rata based on each
Lender's respective Revolving Loan Commitment Percentage and the
proceeds thereof shall be paid directly to the Issuing Lender
for application to the respective LOC Obligations. Each such
Lender hereby irrevocably agrees to make such Revolving Loans
immediately upon any such request or deemed request on account
of each such Mandatory Borrowing in the amount and in the manner
specified in the preceding sentence and on the same such date
notwithstanding (i) the amount of Mandatory Borrowing may not
comply with the minimum amount for borrowings of Revolving Loans
otherwise required hereunder, (ii) whether any conditions
specified in Section 5 are then satisfied, (iii) whether a
Default or Event of Default then exists, (iv) failure of any
such request or deemed request for Revolving Loans to be made by
the time otherwise required hereunder, (v) the date of such
Mandatory Borrowing, or (vi) any reduction in the Revolving
Committed Amount or any termination of the Commitments. In the
event that any Mandatory Borrowing cannot for any reason be made
on the date otherwise required above (including, without
limitation, as a result of the commencement of a proceeding
under the Bankruptcy Code with respect to the Borrower or any
other Credit Party), then each such Lender hereby agrees that it
shall forthwith fund (as of the date the Mandatory Borrowing
would otherwise have occurred, but adjusted for any payments
received from the Borrower on or after such date and prior to
such purchase) its Participation Interest in the outstanding LOC
Obligations; provided, further, that in the event any Lender
shall fail to fund its Participation Interest on the day the
Mandatory Borrowing would otherwise have occurred, then the
amount of such Lender's unfunded Participation Interest therein
shall bear interest payable to the Issuing Lender upon demand,
at the rate equal to, if paid within two Business Days of such
date, the Federal Funds Rate, and thereafter at a rate equal to
the Base Rate.
(f) Modification and Extension. The issuance of any
supplement, modification, amendment, renewal, or extensions to
any Letter of Credit shall, for purposes hereof, be treated in
all respects the same as the issuance of a new Letter of Credit
hereunder.
(g) Uniform Customs and Practices. The Issuing Lender
may have the Letters of Credit be subject to The Uniform Customs
and Practice for Documentary Credits, as published as of the
date of issue by the International Chamber of Commerce
(Publication No. 500 or the most recent publication, the "UCP"),
in which case the UCP may be incorporated therein and deemed in
all respects to be a part thereof.
(h) Responsibility of Issuing Lender. It is expressly
understood and agreed as between the Lenders that the
obligations of the Issuing Lender hereunder to the LOC
Participants are only those expressly set forth in this Credit
Agreement and that the Issuing Lender shall be entitled to
assume that the conditions precedent set forth in Section 5 have
been satisfied unless it shall have acquired actual knowledge
that any such condition precedent has not been satisfied;
provided, however, that nothing set forth in this Section 2.2
shall be deemed to prejudice the right of any LOC Participant to
recover from the Issuing Lender any amounts made available by
such LOC Participant to the Issuing Lender pursuant to this
Section 2.2 in the event that it is determined by a court of
competent jurisdiction that the payment with respect to a Letter
of Credit constituted gross negligence or willful misconduct on
the part of the Issuing Lender.
(i) Conflict with LOC Documents. In the event of any
conflict between this Credit Agreement and any LOC Document,
this Credit Agreement shall govern.
(j) Indemnification of Issuing Lender.
(i) In addition to its other obligations under
this Credit Agreement, the Borrower hereby agrees to
protect, indemnify, pay and save the Issuing Lender
harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and
expenses (including reasonable attorneys' fees) that
the Issuing Lender may incur or be subject to as a
consequence, direct or indirect, of (A) the issuance of
any Letter of Credit or (B) the failure of the Issuing
Lender to honor a drawing under a Letter of Credit as a
result of any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto
government or governmental authority (all such acts or
omissions, herein called "Government Acts").
(ii) As between the Borrower and the Issuing
Lender, the Borrower shall assume all risks of the
acts, omissions or misuse of any Letter of Credit by
the beneficiary thereof. The Issuing Lender shall not
be responsible for (except in the case of (A), (B) and
(C) below if the Issuing Lender has actual knowledge to
the contrary): (A) the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document
submitted by any party in connection with the
application for and issuance of any Letter of Credit,
even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent
or forged; (B) the validity or sufficiency of any
instrument transferring or assigning or purporting to
transfer or assign any Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or
in part, that may prove to be invalid or ineffective
for any reason; (C) failure of the beneficiary of a
Letter of Credit to comply fully with conditions
required in order to draw upon a Letter of Credit; (D)
errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail,
cable, telegraph, telex or otherwise, whether or not
they be in cipher; (E) errors in interpretation of
technical terms; (F) any loss or delay in the
transmission or otherwise of any document required in
order to make a drawing under a Letter of Credit or of
the proceeds thereof; and (G) any consequences arising
from causes beyond the control of the Issuing Lender,
including, without limitation, any Government Acts.
None of the above shall affect, impair, or prevent the
vesting of the Issuing Lender's rights or powers
hereunder.
(iii) In furtherance and extension and not in
limitation of the specific provisions hereinabove set
forth, any action taken or omitted by the Issuing
Lender, under or in connection with any Letter of
Credit or the related certificates, if taken or omitted
in good faith, shall not put the Issuing Lender under
any resulting liability to the Borrower or any other
Credit Party. It is the intention of the parties that
this Credit Agreement shall be construed and applied to
protect and indemnify the Issuing Lender against any
and all risks involved in the issuance of the Letters
of Credit, all of which risks are hereby assumed by the
Borrower, including, without limitation, any and all
risks of the acts or omissions, whether rightful or
wrongful, of any present or future Government Acts. The
Issuing Lender shall not, in any way, be liable for any
failure by the Issuing Lender or anyone else to pay any
drawing under any Letter of Credit as a result of any
Government Acts or any other cause beyond the control
of the Issuing Lender.
(iv) Nothing in this subsection (j) is
intended to limit the reimbursement obligation of the
Borrower contained in this Section 2.2. The obligations
of the Borrower under this subsection (j) shall survive
the termination of this Credit Agreement. No act or
omission of any current or prior beneficiary of a
Letter of Credit shall in any way affect or impair the
rights of the Issuing Lender to enforce any right,
power or benefit under this Credit Agreement.
(v) Notwithstanding anything to the contrary
contained in this subsection (j), the Borrower shall
have no obligation to indemnify the Issuing Lender in
respect of any liability incurred by the Issuing Lender
arising solely out of the gross negligence or willful
misconduct of the Issuing Lender, as determined by a
court of competent jurisdiction. Nothing in this
Agreement shall relieve the Issuing Lender of any
liability to the Borrower in respect of any action
taken by the Issuing Lender which action constitutes
gross negligence or willful misconduct of the Issuing
Lender or a violation of the UCP or Uniform Commercial
Code (as applicable), as determined by a court of
competent jurisdiction.
SECTION 3
GENERAL PROVISIONS APPLICABLE TO LOANS AND LETTERS OF CREDIT
3.1 Interest.
(a) Interest Rate. All Base Rate Loans shall accrue
interest at the Adjusted Base Rate and all Eurodollar Loans
shall accrue interest at the Adjusted Eurodollar Rate.
(b) Default Rate of Interest. Upon the occurrence, and
during the continuance, of an Event of Default, the principal of
and, to the extent permitted by law, interest on the Loans and
any other amounts owing hereunder or under the other Credit
Documents (including without limitation fees and expenses) shall
bear interest, payable on demand, at a per annum rate equal to
2% plus the rate which would otherwise be applicable (or if no
rate is applicable, then the rate for Revolving Loans that are
Base Rate Loans plus two percent (2%) per annum).
(c) Interest Payments. Interest on Loans shall be due
and payable in arrears on each Interest Payment Date. If an
Interest Payment Date falls on a date which is not a Business
Day, such Interest Payment Date shall be deemed to be the next
succeeding Business Day, except that in the case of Eurodollar
Loans where the next succeeding Business Day falls in the next
succeeding calendar month, then on the next preceding day.
3.2 Place and Manner of Payments.
All payments of principal, interest, fees, expenses and other
amounts to be made by a Credit Party under this Agreement shall be
received not later than 2:00 p.m. on the date when due, in Dollars and in
immediately available funds, by the Administrative Agent at its offices
in Detroit, Michigan. Payments received after such time shall be deemed
to have been received on the next Business Day. The Borrower shall, at
the time it makes any payment under this Agreement, specify to the
Administrative Agent, the Loans, Letters of Credit, fees or other amounts
payable by the Borrower hereunder to which such payment is to be applied
(and in the event that it fails to specify, or if such application would
be inconsistent with the terms hereof, the Administrative Agent shall,
subject to Section 3.7, distribute such payment to the Lenders in such
manner as the Administrative Agent may deem appropriate). The
Administrative Agent will distribute such payments to the applicable
Lenders if any such payment is received prior to 2:00 p.m.; otherwise the
Administrative Agent will distribute such payment to the applicable
Lenders on the next succeeding Business Day. Whenever any payment
hereunder shall be stated to be due on a day which is not a Business Day,
the due date thereof shall be extended to the next succeeding Business
Day (subject to accrual of interest and fees for the period of such
extension), except that in the case of Eurodollar Loans, if the extension
would cause the payment to be made in the next following calendar month,
then such payment shall instead be made on the next preceding Business
Day.
3.3 Prepayments.
(a) Voluntary Prepayments. The Borrower shall have the
right to prepay Loans in whole or in part from time to time
without premium or penalty; provided, however, that (i)
Eurodollar Loans may only be prepaid on three Business Days'
prior written notice to the Administrative Agent and any
prepayment of Eurodollar Loans will be subject to Section 3.14
and (ii) each such partial prepayment of Loans shall be in the
minimum principal amount of $1,000,000 and integral multiples of
$100,000 in excess thereof.
(b) Mandatory Prepayments.
(i) Revolving Committed Amount. If at any time
the sum of the aggregate amount of Revolving Loans
outstanding plus LOC Obligations outstanding exceeds
the Revolving Committed Amount, the Borrower shall
immediately make a principal payment to the
Administrative Agent in the manner and in an amount
necessary to be in compliance with Section 2.1.
(ii) Application of Prepayments. All amounts
required to be paid pursuant to Section 3.3(b)(i) shall
be applied first to Revolving Loans and second to a
cash collateral account in respect of LOC Obligations.
Within the parameters of the application set forth
above, prepayments shall be applied first to Base Rate
Loans and then to Eurodollar Loans in direct order of
Interest Period maturities. All prepayments hereunder
shall be subject to Section 3.14.
3.4 Fees.
(a) Commitment Fees. In consideration of the Revolving
Committed Amount being made available by the Lenders hereunder,
the Borrower agrees to pay to the Administrative Agent, for the
pro rata benefit of each applicable Lender (based on each
Lender's Revolving Loan Commitment Percentage of the Revolving
Committed Amount), a fee equal to the Applicable Percentage for
Commitment Fees multiplied by the Unused Commitment (the
"Commitment Fees"). The Commitment Fees accrued prior to the
Closing Date shall be paid on the Closing Date and future
Commitment Fees shall commence to accrue on the Effective Date
and shall be due and payable in arrears on the last day of each
fiscal quarter of the Borrower (as well as on the Revolving Loan
Maturity Date and on any date that the Revolving Committed
Amount is reduced) for the immediately preceding fiscal quarter
(or portion thereof), beginning with the first of such dates to
occur after the Closing Date.
(b) Letter of Credit Fees.
(i) Letter of Credit Fees. In consideration of
the issuance of Letters of Credit hereunder, the
Borrower agrees to pay to the Issuing Lender for the
pro rata benefit of the applicable Lenders (based on
each Lender's Revolving Loan Commitment Percentage of
the Revolving Committed Amount), a fee (the "Letter of
Credit Fees") equal to the Applicable Percentage for
the Letter of Credit Fees on the average daily maximum
amount available to be drawn under each such Letter of
Credit from the date of issuance to the date of
expiration. The Letter of Credit Fees will be payable
in arrears on the last day of each fiscal quarter of
the Borrower (as well as on the Revolving Loan Maturity
Date) for the immediately preceding fiscal quarter (or
portion thereof), beginning with the first of such
dates to occur after the Closing Date.
(ii) Issuing Lender Fees. In addition to the
Letter of Credit Fees payable pursuant to subsection
(i) above, the Borrower shall pay to the Issuing Lender
for its own account, without sharing by the other
Lenders, (A) a fee equal to one-fourth of one percent
(.25%) per annum on the total sum of all Letters of
Credit issued by the Issuing Lender, such fee to be
paid in arrears on the last day of each fiscal quarter
of the Borrower (as well as on the Revolving Loan
Maturity Date) and (B) the customary charges from time
to time to the Issuing Lender for its services in
connection with the issuance, amendment, payment,
transfer, administration, cancellation and conversion
of, and drawings under, such Letters of Credit
(collectively, the "Issuing Lender Fees").
(c) Administrative Fees. The Borrower agrees to pay to
the Administrative Agent, for its own account, an annual fee in
accordance with the terms of the Fee Letter.
(d) Overadvance Fee. If the Borrower provides to the
Agents written notice that it desires to commence the 90 day
period for the Overadvance (as set forth in the definition of
Borrowing Base Assets), the Borrower shall simultaneous with
such notice pay to the Lenders a nonrefundable fee of $12,500 to
be shared pro rata by the Lenders (based on each Lender's
Revolving Loan Commitment Percentage of the Revolving Committed
Amount).
3.5 Payment in full at Maturity.
On the Revolving Loan Maturity Date, the entire outstanding
principal balance of all Revolving Loans and all LOC Obligations,
together with accrued but unpaid interest and all other sums owing with
respect thereto, shall be due and payable in full, unless accelerated
sooner pursuant to Section 9.
3.6 Computations of Interest and Fees.
(a) All computations of interest and fees hereunder
shall be made on the basis of the actual number of days elapsed
over a year of 360 days. Interest shall accrue from and include
the date of borrowing (or continuation or conversion) but
exclude the date of payment.
(b) It is the intent of the Lenders and the Credit
Parties to conform to and contract in strict compliance with
applicable usury law from time to time in effect. All agreements
between the Lenders and the Borrower are hereby limited by the
provisions of this paragraph which shall override and control
all such agreements, whether now existing or hereafter arising
and whether written or oral. In no way, nor in any event or
contingency (including but not limited to prepayment or
acceleration of the maturity of any obligation), shall the
interest taken, reserved, contracted for, charged, or received
under this Credit Agreement, under the Notes or otherwise,
exceed the maximum nonusurious amount permissible under
applicable law. If, from any possible construction of any of the
Credit Documents or any other document, interest would otherwise
be payable in excess of the maximum nonusurious amount, any such
construction shall be subject to the provisions of this
paragraph and such documents shall be automatically reduced to
the maximum nonusurious amount permitted under applicable law,
without the necessity of execution of any amendment or new
document. If any Lender shall ever receive anything of value
which is characterized as interest on the Loans under applicable
law and which would, apart from this provision, be in excess of
the maximum lawful amount, an amount equal to the amount which
would have been excessive interest shall, without penalty, be
applied to the reduction of the principal amount owing on the
Loans and not to the payment of interest, or refunded to the
Borrower or the other payor thereof if and to the extent such
amount which would have been excessive exceeds such unpaid
principal amount of the Loans. The right to demand payment of
the Loans or any other indebtedness evidenced by any of the
Credit Documents does not include the right to accelerate the
payment of any interest which has not otherwise accrued on the
date of such demand, and the Lenders do not intend to charge or
receive any unearned interest in the event of such demand. All
interest paid or agreed to be paid to the Lenders with respect
to the Loans shall, to the extent permitted by applicable law,
be amortized, prorated, allocated, and spread throughout the
full stated term (including any renewal or extension) of the
Loans so that the amount of interest on account of such
indebtedness does not exceed the maximum nonusurious amount
permitted by applicable law.
3.7 Pro Rata Treatment.
Except to the extent otherwise provided herein:
(a) Loans. Each Revolving Loan borrowing (including,
without limitation, each Mandatory Borrowing), each payment or
prepayment of principal of any Loan, each payment of fees (other
than the Issuing Lender Fees retained by the Issuing Lender for
its own account and the Administrative Fees retained by the
Administrative Agent for its own account), each reduction of the
Revolving Committed Amount, and each conversion or continuation
of any Loan, shall (except as otherwise provided in Section
3.11) be allocated pro rata among the relevant Lenders in
accordance with the respective Revolving Loan Commitment
Percentages of such Lenders (or, if the Commitments of such
Lenders have expired or been terminated, in accordance with the
respective principal amounts of the outstanding Loans and
Participation Interests of such Lenders); provided that, if any
Lender shall have failed to pay its applicable pro rata share of
any Revolving Loan, then any amount to which such Lender would
otherwise be entitled pursuant to this subsection (a) shall
instead be payable to the Administrative Agent until the share
of such Loan not funded by such Lender has been repaid; provided
further, that in the event any amount paid to any Lender
pursuant to this subsection (a) is rescinded or must otherwise
be returned by the Administrative Agent, each Lender shall, upon
the request of the Administrative Agent, repay to the
Administrative Agent the amount so paid to such Lender, with
interest for the period commencing on the date such payment is
returned by the Administrative Agent until the date the
Administrative Agent receives such repayment at a rate per annum
equal to, during the period to but excluding the date two
Business Days after such request, the Federal Funds Rate, and
thereafter, the Base Rate plus two percent (2%) per annum; and
(b) Letters of Credit. Each payment of unreimbursed
drawings in respect of LOC Obligations shall be allocated to
each LOC Participant pro rata in accordance with its Revolving
Loan Commitment Percentage; provided that, if any LOC
Participant shall have failed to pay its applicable pro rata
share of any drawing under any Letter of Credit, then any amount
to which such LOC Participant would otherwise be entitled
pursuant to this subsection (b) shall instead be payable to the
Issuing Lender until the share of such unreimbursed drawing not
funded by such Lender has been repaid; provided further, that in
the event any amount paid to any LOC Participant pursuant to
this subsection (b) is rescinded or must otherwise be returned
by the Issuing Lender, each LOC Participant shall, upon the
request of the Issuing Lender, repay to the Administrative Agent
for the account of the Issuing Lender the amount so paid to such
LOC Participant, with interest for the period commencing on the
date such payment is returned by the Issuing Lender until the
date the Issuing Lender receives such repayment at a rate per
annum equal to, during the period to but excluding the date two
Business Days after such request, the Federal Funds Rate, and
thereafter, the Base Rate plus two percent (2%) per annum.
3.8 Sharing of Payments.
The Lenders agree among themselves that, except to the extent
otherwise provided herein, in the event that any Lender shall obtain
payment in respect of any Loan, unreimbursed drawing with respect to any
LOC Obligations or any other obligation owing to such Lender under this
Credit Agreement through the exercise of a right of setoff, banker's lien
or counterclaim, or pursuant to a secured claim under Section 506 of the
Bankruptcy Code or other security or interest arising from, or in lieu
of, such secured claim, received by such Lender under any applicable
bankruptcy, insolvency or other similar law or otherwise, or by any other
means, in excess of its pro rata share of such payment as provided for in
this Credit Agreement, such Lender shall promptly pay in cash or purchase
from the other Lenders a participation in such Loans, LOC Obligations,
and other obligations in such amounts, and make such other adjustments
from time to time, as shall be equitable to the end that all Lenders
share such payment in accordance with their respective ratable shares as
provided for in this Credit Agreement. The Lenders further agree among
themselves that if payment to a Lender obtained by such Lender through
the exercise of a right of setoff, banker's lien, counterclaim or other
event as aforesaid shall be rescinded or must otherwise be restored, each
Lender which shall have shared the benefit of such payment shall, by
payment in cash or a repurchase of a participation theretofore sold,
return its share of that benefit (together with its share of any accrued
interest payable with respect thereto) to each Lender whose payment shall
have been rescinded or otherwise restored. The Borrower agrees that any
Lender so purchasing such a participation may, to the fullest extent
permitted by law, exercise all rights of payment, including setoff,
banker's lien or counterclaim, with respect to such participation as
fully as if such Lender were a holder of such Loan, LOC Obligation or
other obligation in the amount of such participation. Except as otherwise
expressly provided in this Credit Agreement, if any Lender or an Agent
shall fail to remit to an Agent or any other Lender an amount payable by
such Lender or such Agent to such Agent or such other Lender pursuant to
this Credit Agreement on the date when such amount is due, such payments
shall be made together with interest thereon for each date from the date
such amount is due until the date such amount is paid to such Agent or
such other Lender at a rate per annum equal to the Federal Funds Rate. If
under any applicable bankruptcy, insolvency or other similar law, any
Lender receives a secured claim in lieu of a setoff to which this Section
3.8 applies, such Lender shall, to the extent practicable, exercise its
rights in respect of such secured claim in a manner consistent with the
rights of the Lenders under this Section 3.8 to share in the benefits of
any recovery on such secured claim.
3.9 Capital Adequacy.
If, after the date hereof, any Lender has determined that the
adoption or the becoming effective of, or any change in, or any change by
any Governmental Authority, central bank or comparable agency charged
with the interpretation or administration thereof in the interpretation
or administration of, any applicable law, rule or regulation regarding
capital adequacy, or compliance by such Lender, or its parent
corporation, with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of reducing the
rate of return on such Lender's (or parent corporation's) capital or
assets as a consequence of its commitments or obligations hereunder to a
level below that which such Lender, or its parent corporation, could have
achieved but for such adoption, effectiveness, change or compliance
(taking into consideration such Lender's (or parent corporation's)
policies with respect to capital adequacy), then, upon notice from such
Lender to the Borrower, the Borrower shall be obligated to pay to such
Lender such additional amount or amounts as will compensate such Lender
on an after-tax basis (after taking into account applicable deductions
and credits in respect of the amount indemnified) for such reduction.
Each determination by any such Lender of amounts owing under this Section
shall, absent manifest error, be conclusive and binding on the parties
hereto. This covenant shall survive the termination of this Credit
Agreement and the payment of the Loans and all other amounts payable
hereunder.
3.10 Inability To Determine Interest Rate.
If prior to the first day of any Interest Period, the
Administrative Agent shall have determined in good faith (which
determination shall be conclusive and binding upon the Borrower) that, by
reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for
such Interest Period, the Administrative Agent shall give telecopy or
telephonic notice thereof to the Borrower and the Lenders as soon as
practicable thereafter, and will also give prompt written notice to the
Borrower when such conditions no longer exist. If such notice is given
(a) any Eurodollar Loans requested to be made on the first day of such
Interest Period shall be made as Base Rate Loans, (b) any Loans that were
to have been converted on the first day of such Interest Period to or
continued as Eurodollar Loans shall be converted to or continued as Base
Rate Loans and (c) any outstanding Eurodollar Loans shall be converted,
on the first day of such Interest Period, to Base Rate Loans. Until such
notice has been withdrawn by the Agent, no further Eurodollar Loans shall
be made or continued as such, nor shall the Borrower have the right to
convert Base Rate Loans to Eurodollar Loans.
3.11 Illegality.
Notwithstanding any other provision herein, if the adoption of
or any change in any Requirement of Law or in the interpretation or
application thereof occurring after the Closing Date shall make it
unlawful for any Lender to make or maintain Eurodollar Loans as
contemplated by this Credit Agreement, (a) such Lender shall promptly
give written notice of such circumstances to the Borrower and the
Administrative Agent (which notice shall be withdrawn whenever such
circumstances no longer exist), (b) the commitment of such Lender
hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert a Base Rate Loan to Eurodollar Loans shall forthwith be canceled
and, until such time as it shall no longer be unlawful for such Lender to
make or maintain Eurodollar Loans, such Lender shall then have a
commitment only to make a Base Rate Loan when a Eurodollar Loan is
requested and (c) such Lender's Loans then outstanding as Eurodollar
Loans, if any, shall be converted automatically to Base Rate Loans on the
respective last days or the then current Interest Periods with respect to
such Loans or within such earlier period as required by law. If any such
conversion of a Eurodollar Loan occurs on a day which is not the last day
of the then current Interest Period with respect thereto, the Borrower
shall pay to such Lender such amounts, if any, as may be required
pursuant to Section 3.14.
3.12 Requirements of Law.
If the adoption of or any change in any Requirement of Law or in
the interpretation or application thereof applicable to any Lender, or
compliance by any Lender with any request or directive (whether or not
having the force of law) from any central bank or other Governmental
Authority, in each case made subsequent to the Closing Date (or, if
later, the date on which such Lender becomes a Lender):
(a) shall subject such Lender to any tax of any kind
whatsoever with respect to any Letter of Credit, any Eurodollar
Loans made by it or its obligation to make Eurodollar Loans, or
change the basis of taxation of payments to such Lender in
respect thereof (except for Non-Excluded Taxes covered by
Section 3.13 (including Non-Excluded Taxes imposed solely by
reason of any failure of such Lender to comply with its
obligations under Section 3.13(b)) and changes in taxes measured
by or imposed upon the overall net income, or franchise tax
(imposed in lieu of such net income tax), of such Lender or its
applicable lending office, branch, or any affiliate thereof);
(b) shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, deposits or other liabilities in or for
the account of, advances, loans or other extensions of credit
by, or any other acquisition of funds by, any office of such
Lender which is not otherwise included in the determination of
the Eurodollar Rate hereunder; or
(c) shall impose on such Lender any other condition
(excluding any tax of any kind whatsoever);
and the result of any of the foregoing is to increase the cost to such
Lender, by an amount which such Lender deems to be material, of making,
converting into, continuing or maintaining Eurodollar Loans or issuing or
participating in Letters of Credit or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, upon notice to the
Borrower from such Lender, through the Administrative Agent, in
accordance herewith, the Borrower shall be obligated to promptly pay such
Lender, upon its demand, any additional amounts necessary to compensate
such Lender on an after-tax basis (after taking into account applicable
deductions and credits in respect of the amount indemnified) for such
increased cost or reduced amount receivable, provided that, in any such
case, the Borrower may elect to convert the Eurodollar Loans made by such
Lender hereunder to Base Rate Loans by giving the Administrative Agent at
least one Business Day's notice of such election, in which case the
Borrower shall promptly pay to such Lender, upon demand, without
duplication, such amounts, if any, as may be required pursuant to Section
3.14. If any Lender becomes entitled to claim any additional amounts
pursuant to this Section 3.12, it shall provide prompt notice thereof to
the Borrower, through the Administrative Agent, certifying (x) that one
of the events described in this Section 3.12 has occurred and describing
in reasonable detail the nature of such event, (y) as to the increased
cost or reduced amount resulting from such event and (z) as to the
additional amount demanded by such Lender and a reasonably detailed
explanation of the calculation thereof. Such a certificate as to any
additional amounts payable pursuant to this Section 3.12 submitted by
such Lender, through the Administrative Agent, to the Borrower shall be
conclusive and binding on the parties hereto in the absence of manifest
error. This covenant shall survive the termination of this Credit
Agreement and the payment of the Loans and all other amounts payable
hereunder.
3.13 Taxes.
(a) Except as provided below in this Section 3.13, all
payments made by the Borrower under this Credit Agreement and
any Notes shall be made free and clear of, and without deduction
or withholding for or on account of, any present or future
income, stamp or other taxes, levies, imposts, duties, charges,
fees, deductions or withholdings, now or hereafter imposed,
levied, collected, withheld or assessed by any court, or
governmental body, agency or other official, excluding taxes
measured by or imposed upon the overall net income of any Lender
or its applicable lending office, or any branch or affiliate
thereof, and all franchise taxes, branch taxes, taxes on doing
business or taxes on the overall capital or net worth of any
Lender or its applicable lending office, or any branch or
affiliate thereof, in each case imposed in lieu of net income
taxes: (i) by the jurisdiction under the laws of which such
Lender, applicable lending office, branch or affiliate is
organized or is located, or in which its principal executive
office is located, or any nation within which such jurisdiction
is located or any political subdivision thereof; or (ii) by
reason of any connection between the jurisdiction imposing such
tax and such Lender, applicable lending office, branch or
affiliate other than a connection arising solely from such
Lender having executed, delivered or performed its obligations,
or received payment under or enforced, this Credit Agreement or
any Notes. If any such non-excluded taxes, levies, imposts,
duties, charges, fees, deductions or withholdings ("Non-Excluded
Taxes") are required to be withheld from any amounts payable to
an Agent or any Lender hereunder or under any Notes, (A) the
amounts so payable to an Agent or such Lender shall be increased
to the extent necessary to yield to an Agent or such Lender
(after payment of all Non-Excluded Taxes) interest or any such
other amounts payable hereunder at the rates or in the amounts
specified in this Credit Agreement and any Notes, provided,
however, that the Borrower shall be entitled to deduct and
withhold any Non-Excluded Taxes and shall not be required to
increase any such amounts payable to any Lender that is not
organized under the laws of the United States of America or a
state thereof if such Lender fails to comply with the
requirements of paragraph (b) of this Section 3.13 whenever any
Non-Excluded Taxes are payable by the Borrower, and (B) as
promptly as possible after requested the Borrower shall send to
such Agent for its own account or for the account of such
Lender, as the case may be, a certified copy of an original
official receipt received by the Borrower showing payment
thereof. If the Borrower fails to pay any Non-Excluded Taxes
when due to the appropriate taxing authority or fails to remit
to the Administrative Agent the required receipts or other
required documentary evidence, the Borrower shall indemnify the
Agents and any Lender for any incremental taxes, interest or
penalties that may become payable by an Agent or any Lender as a
result of any such failure. The agreements in this subsection
shall survive the termination of this Credit Agreement and the
payment of the Loans and all other amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws
of the United States of America or a state thereof shall:
(i) (A) on or before the date of any payment
by the Borrower under this Credit Agreement or Notes to
such Lender, deliver to the Borrower and the
Administrative Agent (x) two duly completed copies of
United States Internal Revenue Service Form 1001 or
4224, or successor applicable form, as the case may be,
certifying that it is entitled to receive payments
under this Credit Agreement and any Notes without
deduction or withholding of any United States federal
income taxes and (y) an Internal Revenue Service Form
W-8 or W-9, or successor applicable form, as the case
may be, certifying that it is entitled to an exemption
from United States backup withholding tax;
(B) deliver to the Borrower and the
Administrative Agent two further copies of any such
form or certification on or before the date that any
such form or certification expires or becomes obsolete
and after the occurrence of any event requiring a
change in the most recent form previously delivered by
it to the Borrower; and
(C) obtain such extensions of time for
filing and complete such forms or certifications as may
reasonably be requested by the Borrower or the
Administrative Agent; or
(ii) in the case of any such Lender that is
not a "bank" within the meaning of Section 881(c)(3)(A)
of the Internal Revenue Code, (A) represent to the
Borrower (for the benefit of the Borrower and the
Agents) that it is not a bank within the meaning of
Section 881(c)(3)(A) of the Internal Revenue Code, (B)
agree to furnish to the Borrower, on or before the date
of any payment by the Borrower, with a copy to the
Administrative Agent, two accurate and complete
original signed copies of Internal Revenue Service Form
W-8, or successor applicable form certifying to such
Lender's legal entitlement at the date of such
certificate to an exemption from U.S. withholding tax
under the provisions of Section 881(c) of the Internal
Revenue Code with respect to payments to be made under
this Credit Agreement and any Notes (and to deliver to
the Borrower and the Administrative Agent two further
copies of such form on or before the date it expires or
becomes obsolete and after the occurrence of any event
requiring a change in the most recently provided form
and, if necessary, obtain any extensions of time
reasonably requested by the Borrower or the
Administrative Agent for filing and completing such
forms), and (C) agree, to the extent legally entitled
to do so, upon reasonable request by the Borrower, to
provide to the Borrower (for the benefit of the
Borrower and the Agents) such other forms as may be
reasonably required in order to establish the legal
entitlement of such Lender to an exemption from
withholding with respect to payments under this Credit
Agreement and any Notes.
Notwithstanding the above, if any change in treaty, law or
regulation has occurred after the date such Person becomes a
Lender hereunder which renders all such forms inapplicable or
which would prevent such Lender from duly completing and
delivering any such form with respect to it and such Lender so
advises the Borrower and the Administrative Agent then such
Lender shall be exempt from such requirements. Each Person that
shall become a Lender or a participant of a Lender pursuant to
Section 11.3 shall, upon the effectiveness of the related
transfer, be required to provide all of the forms,
certifications and statements required pursuant to this
subsection (b); provided that in the case of a participant of a
Lender, the obligations of such participant of a Lender pursuant
to this subsection (b) shall be determined as if the participant
of a Lender were a Lender except that such participant of a
Lender shall furnish all such required forms, certifications and
statements to the Lender from which the related participation
shall have been purchased.
3.14 Compensation.
The Borrower promises to indemnify each Lender and to hold each
Lender harmless from any loss or expense which such Lender may sustain or
incur as a consequence of (a) default by the Borrower in making a
borrowing of, conversion into or continuation of Eurodollar Loans after
the Borrower has given a notice requesting the same in accordance with
the provisions of this Credit Agreement, (b) default by the Borrower in
making any prepayment of a Eurodollar Loan after the Borrower has given a
notice thereof in accordance with the provisions of this Credit Agreement
and (c) the making of a prepayment of Eurodollar Loans on a day which is
not the last day of an Interest Period with respect thereto. Such
indemnification may include an amount equal to (i) the amount of interest
which would have accrued on the amount so prepaid, or not so borrowed,
converted or continued, for the period from the date of such prepayment
or of such failure to borrow, convert or continue to the last day of the
applicable Interest Period (or, in the case of a failure to borrow,
convert or continue, the Interest Period that would have commenced on the
date of such failure) in each case at the applicable rate of interest for
such Eurodollar Loans provided for herein (excluding, however, the
Applicable Percentage included therein, if any) minus (ii) the amount of
interest (as reasonably determined by such Lender) which would have
accrued to such Lender on such amount by placing such amount on deposit
for a comparable period with leading banks in the interbank Eurodollar
market. The agreements in this Section shall survive the termination of
this Credit Agreement and the payment of the Loans and all other amounts
payable hereunder.
3.15 Substitution of Lender.
If (a) the obligation of any Lender to make Eurodollar Loans has
been suspended pursuant to Section 3.11 or (b) any Lender has demanded
compensation under Section 3.9, 3.11, 3.12, 3.13 or 3.14, the Borrower
shall have the right, with the assistance of the Administrative Agent, to
seek a mutually satisfactory substitute lender or lenders. Any
substitution under this Section 3.15 may be accomplished, at the
Borrower's option, either (i) by the replaced Lender assigning its rights
and obligations hereunder to a replacement lender or lenders pursuant to
Section 11.3(b) at a mutually agreeable price or (ii) by the Borrower
prepaying all outstanding Loans and LOC Obligations from the replaced
Lender and terminating such Lender's Commitment on a date specified in a
notice delivered to the Administrative Agent and the replaced Lender at
least three Business Days before the date so specified (and compensating
such Lender for any resulting funding losses as provided in Section 3.14)
and concurrently a replacement Lender or Lenders assuming a Commitment in
an amount equal to the Commitment being terminated and making Loans in
the same aggregate amount and having the same maturity date or dates,
respectively, as the Loans being prepaid, all pursuant to documents
reasonably satisfactory to the Administrative Agent (and in the case of
any document to be signed by the replaced Lender, reasonably satisfactory
to such Lender). No such substitution shall relieve the Borrower of its
obligations to compensate and/or indemnify the replaced Lender as
required by Section 3.9, 3.11, 3.12, 3.13 or 3.14 with respect to the
period before it is replaced and to pay all accrued interest, accrued
fees and other amounts owing to the replaced Lender hereunder.
SECTION 4
GUARANTY
4.1 Guaranty of Payment.
Subject to Section 4.7 below, each of the Guarantors hereby,
jointly and severally, unconditionally guarantees to each Lender, each
Affiliate of Lender that enters into a Hedging Agreement and the Agents
the prompt payment of the Credit Party Obligations in full when due
(whether at stated maturity, as a mandatory prepayment, by acceleration
or otherwise). The Guarantors additionally, jointly and severally,
unconditionally guarantee to each Lender, each Affiliate of a Lender that
enters into a Hedging Agreement and the Agents the timely performance of
all other obligations under the Credit Documents and such Hedging
Agreements. This Guaranty is a guaranty of payment and not of collection
and is a continuing guaranty and shall apply to all Credit Party
Obligations whenever arising.
4.2 Obligations Unconditional.
The obligations of the Guarantors hereunder are absolute and
unconditional, irrespective of the value, genuineness, validity,
regularity or enforceability of any of the Credit Documents or the
Hedging Agreements, or any other agreement or instrument referred to
therein, to the fullest extent permitted by applicable law, irrespective
of any other circumstance whatsoever which might otherwise constitute a
legal or equitable discharge or defense of a surety or guarantor. Each
Guarantor agrees that this Guaranty may be enforced by the Lenders
without the necessity at any time of resorting to or exhausting any other
security or collateral and without the necessity at any time of having
recourse to the Notes or any other of the Credit Documents or any
collateral, if any, hereafter securing the Credit Party Obligations or
otherwise and each Guarantor hereby waives the right to require the
Lenders to proceed against the Borrower or any other Person (including a
co-guarantor) or to require the Lenders to pursue any other remedy or
enforce any other right. Each Guarantor further agrees that it shall have
no right of subrogation, indemnity, reimbursement or contribution against
the Borrower or any other Guarantor of the Credit Party Obligations for
amounts paid under this Guaranty until such time as the Lenders (and any
Affiliates of Lenders entering into Hedging Agreements) have been paid in
full, all Commitments under the Credit Agreement have been terminated and
no Person or Governmental Authority shall have any right to request any
return or reimbursement of funds from the Lenders in connection with
monies received under the Credit Documents. Each Guarantor further agrees
that nothing contained herein shall prevent the Lenders from suing on the
Notes or any of the other Credit Documents or any of the Hedging
Agreements or foreclosing its security interest in or Lien on any
collateral, if any, securing the Credit Party Obligations or from
exercising any other rights available to it under this Credit Agreement,
the Notes, any other of the Credit Documents, or any other instrument of
security, if any, and the exercise of any of the aforesaid rights and the
completion of any foreclosure proceedings shall not constitute a
discharge of any of any Guarantor's obligations hereunder; it being the
purpose and intent of each Guarantor that its obligations hereunder shall
be absolute, independent and unconditional under any and all
circumstances. Neither any Guarantor's obligations under this Guaranty
nor any remedy for the enforcement thereof shall be impaired, modified,
changed or released in any manner whatsoever by an impairment,
modification, change, release or limitation of the liability of the
Borrower or by reason of the bankruptcy or insolvency of the Borrower.
Each Guarantor waives any and all notice of the creation, renewal,
extension or accrual of any of the Credit Party Obligations and notice of
or proof of reliance of by any Agent or any Lender upon this Guarantee or
acceptance of this Guarantee. The Credit Party Obligations, and any of
them, shall conclusively be deemed to have been created, contracted or
incurred, or renewed, extended, amended or waived, in reliance upon this
Guarantee. All dealings between the Borrower and any of the Guarantors,
on the one hand, and the Agents and the Lenders, on the other hand,
likewise shall be conclusively presumed to have been had or consummated
in reliance upon this Guarantee.
4.3 Modifications.
Each Guarantor agrees that (a) all or any part of the security
now or hereafter held for the Credit Party Obligations, if any, may be
exchanged, compromised or surrendered from time to time; (b) the Lenders
shall not have any obligation to protect, perfect, secure or insure any
such security interests, liens or encumbrances now or hereafter held, if
any, for the Credit Party Obligations or the properties subject thereto;
(c) the time or place of payment of the Credit Party Obligations may be
changed or extended, in whole or in part, to a time certain or otherwise,
and may be renewed or accelerated, in whole or in part; (d) the Borrower
and any other party liable for payment under the Credit Documents may be
granted indulgences generally; (e) any of the provisions of the Notes or
any of the other Credit Documents may be modified, amended or waived; (f)
any party (including any co-guarantor) liable for the payment thereof may
be granted indulgences or be released; and (g) any deposit balance for
the credit of the Borrower or any other party liable for the payment of
the Credit Party Obligations or liable upon any security therefor may be
released, in whole or in part, at, before or after the stated, extended
or accelerated maturity of the Credit Party Obligations, all without
notice to or further assent by such Guarantor, which shall remain bound
thereon, notwithstanding any such exchange, compromise, surrender,
extension, renewal, acceleration, modification, indulgence or release.
4.4 Waiver of Rights.
Each Guarantor expressly waives to the fullest extent permitted
by applicable law: (a) notice of acceptance of this Guaranty by the
Lenders and of all extensions of credit to the Borrower by the Lenders;
(b) presentment and demand for payment or performance of any of the
Credit Party Obligations; (c) protest and notice of dishonor or of
default (except as specifically required in the Credit Agreement) with
respect to the Credit Party Obligations or with respect to any security
therefor; (d) notice of the Lenders obtaining, amending, substituting
for, releasing, waiving or modifying any security interest, lien or
encumbrance, if any, hereafter securing the Credit Party Obligations, or
the Lenders' subordinating, compromising, discharging or releasing such
security interests, liens or encumbrances, if any; (e) all other notices
to which such Guarantor might otherwise be entitled; and (f) demand for
payment under this Guaranty.
4.5 Reinstatement.
The obligations of the Guarantors under this Section 4 shall be
automatically reinstated if and to the extent that for any reason any
payment by or on behalf of any Person in respect of the Credit Party
Obligations is rescinded or must be otherwise restored by any holder of
any of the Credit Party Obligations, whether as a result of any
proceedings in bankruptcy or reorganization or otherwise, and each
Guarantor agrees that it will indemnify the Agents and each Lender on
demand for all reasonable costs and expenses (including, without
limitation, reasonable fees of counsel) incurred by an Agent or such
Lender in connection with such rescission or restoration, including any
such costs and expenses incurred in defending against any claim alleging
that such payment constituted a preference, fraudulent transfer or
similar payment under any bankruptcy, insolvency or similar law.
4.6 Remedies.
The Guarantors agree that, as between the Guarantors, on the one
hand, and the Agents and the Lenders, on the other hand, the Credit Party
Obligations may be declared to be forthwith due and payable as provided
in Section 9 (and shall be deemed to have become automatically due and
payable in the circumstances provided in Section 9) notwithstanding any
stay, injunction or other prohibition preventing such declaration (or
preventing such Credit Party Obligations from becoming automatically due
and payable) as against any other Person and that, in the event of such
declaration (or such Credit Party Obligations being deemed to have become
automatically due and payable), such Credit Party Obligations (whether or
not due and payable by any other Person) shall forthwith become due and
payable by the Guarantors. The Guarantors acknowledge and agree that
their obligations hereunder are secured in accordance with the terms of
the Security Agreements and the other Collateral Documents and that the
Lenders may exercise their remedies thereunder in accordance with the
terms thereof.
4.7 Limitation of Guaranty.
Notwithstanding any provision to the contrary contained herein
or in any of the other Credit Documents, to the extent the obligations of
any Guarantor shall be adjudicated to be invalid or unenforceable for any
reason (including, without limitation, because of any applicable state or
federal law relating to fraudulent conveyances or transfers) then the
obligations of such Guarantor hereunder shall be limited to the maximum
amount that is permissible under applicable law (whether federal or state
and including, without limitation, the Bankruptcy Code).
4.8 Rights of Contribution.
The Credit Parties agree among themselves that, in connection
with payments made hereunder, each Credit Party shall have contribution
rights against the other Credit Parties as permitted under applicable
law. Such contribution rights shall be subordinate and subject in right
of payment to the obligations of the Credit Parties under the Credit
Documents and no Credit Party shall exercise such rights of contribution
until all Credit Party Obligations have been paid in full and the
Commitments terminated.
SECTION 5
CONDITIONS PRECEDENT
5.1 Closing Conditions.
The obligation of the Lenders to enter into this Credit
Agreement and make the initial Extension of Credit is subject to
satisfaction of the following conditions:
(a) Executed Credit Documents. Receipt by the Agents of
duly executed copies of: (i) this Credit Agreement; (ii) the
Notes; (iii) the Collateral Documents; and (iv) all other Credit
Documents, each in form and substance reasonably acceptable to
the Agents in their sole discretion.
(b) Corporate Documents. Receipt by the Agents of the
following:
(i) Charter Documents. Copies of the articles
or certificates of incorporation or other charter
documents of each Credit Party certified to be true and
complete as of a recent date by the appropriate
Governmental Authority of the state or other
jurisdiction of its incorporation and certified by a
secretary or assistant secretary of such Credit Party
to be true and correct as of the Effective Date.
(ii) Bylaws. A copy of the bylaws of each
Credit Party certified by a secretary or assistant
secretary of such Credit Party to be true and correct
as of the Effective Date.
(iii) Resolutions. Copies of resolutions of
the Board of Directors of each Credit Party approving
and adopting the Credit Documents to which it is a
party, the transactions contemplated therein and
authorizing execution and delivery thereof, certified
by a secretary or assistant secretary of such Credit
Party to be true and correct and in force and effect as
of the Effective Date.
(iv) Good Standing. Copies of (A) certificates
of good standing, existence or its equivalent with
respect to each Credit Party certified as of a recent
date by the appropriate Governmental Authorities of the
state or other jurisdiction of incorporation and each
other jurisdiction in which the failure to so qualify
and be in good standing would have a Material Adverse
Effect on the business or operations of a Credit Party
in such jurisdiction and (B) to the extent available, a
certificate indicating payment of all corporate
franchise taxes certified as of a recent date by the
appropriate governmental taxing authorities.
(v) Incumbency. An incumbency certificate of
each Credit Party certified by a secretary or assistant
secretary to be true and correct as of the Effective
Date.
(c) Opinion of Counsel. Receipt by the Agents of an
opinion, or opinions (which shall cover, among other things,
authority, legality, validity, binding effect, enforceability
and attachment and perfection of liens), reasonably satisfactory
to the Agents, addressed to the Agents on behalf of the Lenders
and dated as of the Effective Date, from legal counsel to the
Credit Parties.
(d) Acquisition. Receipt by the Agents of evidence that
the Borrower, through a wholly owned Subsidiary, has acquired,
on terms acceptable to the Agents, at least 51% of the shares of
Varsity Spirit Corporation for a price not to exceed $18.90 per
share.
(e) Personal Property Collateral. The Collateral Agent
shall have received, in form and substance reasonably
satisfactory to the Collateral Agent:
(i) searches of Uniform Commercial Code
("UCC") filings in the jurisdiction of the chief
executive office of each Credit Party and each
jurisdiction where any Collateral is located or where a
filing would need to be made in order to perfect the
Lenders' security interest in the Collateral, copies of
the financing statements on file in such jurisdictions
and evidence that no Liens exist other than Permitted
Liens;
(ii) duly executed UCC financing statements
for each appropriate jurisdiction as is necessary, in
the Collateral Agent's sole discretion, to perfect the
Lenders' security interest in the Collateral;
(iii) searches of ownership of intellectual
property in the appropriate governmental offices as
requested by the Collateral Agent; and
(iv) all stock certificates evidencing the
stock pledged to the Collateral Agent pursuant to the
Pledge Agreements, together with duly executed in blank
undated stock powers attached thereto.
(f) Real Property Collateral. The Collateral Agent
shall have received, in form and substance reasonably
satisfactory to the Collateral Agent:
(i) fully executed and notarized mortgages,
deeds of trust or deeds to secure debt (each a
"Mortgage" and collectively the "Mortgages")
encumbering the fee interest of the Credit Parties in
each real property asset owned by a Credit Party set
forth on Schedule 5.1(f) (each a "Mortgaged Property"
and collectively the "Mortgaged Properties"), together
with such UCC-1 financing statements as the Collateral
Agent shall deem appropriate with respect to each such
Mortgaged Property; and
(ii) an opinion of counsel in the state in
which each Mortgaged Property is located with respect
to the enforceability of the form of Mortgage, standard
remedies with respect thereto and sufficiency of the
form of UCC-1 financing statements to be recorded or
filed in such state and such other matters as the
Collateral Agent may request, in form and substance
reasonably satisfactory to the Collateral Agent.
(g) Evidence of Insurance. Receipt by the Agents of
copies of insurance policies or certificates of insurance of the
Credit Parties evidencing liability and casualty insurance
meeting the requirements set forth in the Credit Documents,
including, but not limited to, naming the Collateral Agent as
additional insured on behalf of the Lenders.
(h) Senior Notes. Receipt by the Agents of evidence
that the Senior Notes have been issued, on terms acceptable to
the Agents, and that the Borrower shall have received at least
$115 million less Transactions Costs incurred in connection
therewith.
(i) Government Consent. Receipt by the Agents of
evidence that all governmental, shareholder and third party
consents and approvals necessary or desireable in connection
with the acquisition of Varsity Spirit Corporation and the
related financings and other transactions contemplated hereby
have been received and no condition or Requirement of Law exists
which could reasonably be likely to restrain, prevent or impose
any material adverse conditions on the acquisition or ownership
of Varsity Spirit Corporation or the financings or other
transactions contemplated hereby.
(j) Litigation. There shall not exist any pending or
threatened action, suit, investigation or proceeding against a
Credit Party or any of their Subsidiaries that would have or
would reasonably be expected to have a Material Adverse Effect.
(k) Officer's Certificates. The Agents shall have
received a certificate or certificates executed by the chief
financial officer of the Borrower on behalf of the Borrower as
of the Effective Date stating that (i) the Borrower and each of
the Borrower's Subsidiaries are in compliance with all existing
material financial obligations, (ii) no action, suit,
investigation or proceeding is pending or threatened in any
court or before any arbitrator or governmental instrumentality
that purports to effect the Borrower, any of the Borrower's
Subsidiaries or any transaction contemplated by the Credit
Documents, if such action, suit, investigation or proceeding
could have or could be reasonably expected to have a Material
Adverse Effect, (iii) the financial statements and information
delivered to the Agents on or before the Effective Date were
prepared in good faith and using reasonable assumptions and (iv)
immediately after giving effect to this Credit Agreement, the
other Credit Documents and all the transactions contemplated
therein to occur on such date, (A) the Borrower and each of the
Borrower's Subsidiaries is Solvent, (B) no Default or Event of
Default exists, (C) all representations and warranties contained
herein and in the other Credit Documents are true and correct in
all material respects, and (D) the Credit Parties are in
compliance with each of the financial covenants set forth in
Section 7.2.
(l) Fees and Expenses. Payment by the Credit Parties of
(i) an upfront fee in accordance with the terms of the Fee
Letter and (ii) all other fees and expenses owed by them to the
Lenders and the Agents, including, without limitation, any
accrued Commitment Fees.
(m) Borrowing Base Report. A Borrowing Base Report, in
the form of Exhibit 7.1(c), dated as of May 31, 1997.
(n) Other. Receipt by the Lenders of such other
documents, instruments, agreements or information as reasonably
and timely requested by any Lender, including, but not limited
to, information regarding litigation, tax, accounting, labor,
insurance, pension liabilities (actual or contingent), real
estate leases, material contracts, debt agreements, property
ownership and contingent liabilities of the Borrower and its
Subsidiaries.
5.2 Conditions to All Extensions of Credit.
In addition to the conditions precedent stated elsewhere herein,
the Lenders shall not be obligated to make Loans nor shall an Issuing
Lender be required to issue or extend a Letter of Credit unless:
(a) Notice. The Borrower shall have delivered (i) in
the case of any new Revolving Loan, a Notice of Borrowing, duly
executed and completed, by the time specified in Section 2.1 and
(ii) in the case of any Letter of Credit, the Issuing Lender
shall have received an appropriate request for issuance in
accordance with the provisions of Section 2.2;
(b) Representations and Warranties. The representations
and warranties made by the Credit Parties in any Credit Document
are true and correct in all material respects at and as if made
as of such date except to the extent they expressly relate to an
earlier date;
(c) No Default. No Default or Event of Default shall
exist or be continuing either prior to or after giving effect
thereto;
(d) No Material Adverse Effect. Since the Effective
Date, there shall not have occurred any Material Adverse Effect;
and
(e) Availability. Immediately after giving effect to
the making of a Revolving Loan (and the application of the
proceeds thereof) or to the issuance of a Letter of Credit, as
the case may be, the sum of the Revolving Loans outstanding plus
LOC Obligations outstanding shall not exceed the Revolving
Commitment Amount.
The delivery of each Notice of Borrowing and each request for a Letter of
Credit shall constitute a representation and warranty by the Borrower of
the correctness of the matters specified in subsections (b), (c), (d) and
(e) above.
SECTION 6
REPRESENTATIONS AND WARRANTIES
The Credit Parties hereby represent to the Agents and each
Lender that:
6.1 Financial Condition.
(a) The financial statements delivered to the Lenders
prior to the Effective Date and pursuant to Section 7.1(a) and
(b): (i) have been prepared in accordance with GAAP and (ii)
present fairly the consolidated and consolidating (as
applicable) financial condition, results of operations and cash
flows of the Credit Parties and their Subsidiaries as of such
date and for such periods.
(b) The financial statements delivered to the Lenders
prior to the Effective Date with respect to Varsity Spirit
Corporation (i) have been prepared in accordance with GAAP and
(ii) present fairly the financial condition, results of
operations and cash flows of Varsity Spirit Corporation as of
such dates and for such periods.
(c) Since December 31, 1996, there has been no sale,
transfer or other disposition by any Credit Party or any of
their Subsidiaries of any material part of the business or
property of the Credit Parties, taken as a whole, and no
purchase or other acquisition by any of them of any business or
property (including any capital stock of any other Person)
material in relation to the consolidated financial condition of
the Credit Parties, taken as a whole, in each case, which, is
not (i) reflected in the most recent financial statements
delivered to the Lenders pursuant to Section 7.1 or in the notes
thereto or (ii) otherwise permitted by the terms of this Credit
Agreement and communicated to the Administrative Agent.
6.2 No Material Change.
Since the Effective Date, there has been no development or event
relating to or affecting a Credit Party or any of their Subsidiaries
which has had or would be reasonably expected to have a Material Adverse
Effect.
6.3 Organization and Good Standing.
Each Credit Party (a) is a corporation duly incorporated,
validly existing and in good standing under the laws of the State (or
other jurisdiction) of its incorporation, (b) is duly qualified and in
good standing as a foreign corporation and authorized to do business in
every jurisdiction unless the failure to be so qualified, in good
standing or authorized would have a Material Adverse Effect and (c) has
the requisite corporate power and authority to own its properties and to
carry on its business as now conducted and as proposed to be conducted.
6.4 Due Authorization.
Each Credit Party (a) has the requisite corporate power and
authority to execute, deliver and perform this Credit Agreement and the
other Credit Documents to which it is a party and to incur the
obligations herein and therein provided for and (b) is duly authorized
to, and has been authorized by all necessary corporate action, to
execute, deliver and perform this Credit Agreement and the other Credit
Documents to which it is a party.
6.5 No Conflicts.
Neither the execution and delivery of the Credit Documents, nor
the consummation of the transactions contemplated therein, nor
performance of and compliance with the terms and provisions thereof by
such Credit Party will (a) violate or conflict with any provision of its
articles or certificate of incorporation or bylaws, (b) violate,
contravene or materially conflict with any Requirement of Law or any
other law, regulation (including, without limitation, Regulation U or
Regulation X), order, writ, judgment, injunction, decree or permit
applicable to it, (c) violate, contravene or conflict with contractual
provisions of, or cause an event of default under, any indenture, loan
agreement, mortgage, deed of trust, contract or other agreement or
instrument to which it is a party or by which it may be bound, the
violation of which could have or might be reasonably expected to have a
Material Adverse Effect, or (d) result in or require the creation of any
Lien (other than those contemplated in or created in connection with the
Credit Documents) upon or with respect to its properties.
6.6 Consents.
Except for consents, approvals and authorizations which have
been obtained, no consent, approval, authorization or order of, or
filing, registration or qualification with, any court or Governmental
Authority or third party in respect of any Credit Party is required in
connection with the execution, delivery or performance of this Credit
Agreement or any of the other Credit Documents by such Credit Party.
6.7 Enforceable Obligations.
This Credit Agreement and the other Credit Documents have been
duly executed and delivered and constitute legal, valid and binding
obligations of each Credit Party enforceable against such Credit Party in
accordance with their respective terms, except as may be limited by
bankruptcy or insolvency laws or similar laws affecting creditors' rights
generally or by general equitable principles.
6.8 No Default.
No Credit Party, nor any of their Subsidiaries, is in default in
any respect under any contract, lease, loan agreement, indenture,
mortgage, security agreement or other agreement or obligation to which it
is a party or by which any of its properties is bound which default would
have or would be reasonably expected to have a Material Adverse Effect.
No Default or Event of Default has occurred or exists except as
previously disclosed in writing to the Lenders.
6.9 Ownership.
Each Credit Party, and each of its Subsidiaries, is the owner
of, and has good and marketable title to, all of its respective assets
and none of such assets is subject to any Lien other than Permitted
Liens.
6.10 Indebtedness.
The Credit Parties and their Subsidiaries have no Indebtedness
except (a) as disclosed in the financial statements referenced in Section
6.1, (b) as set forth on Schedule 6.10 and (c) as otherwise permitted by
this Credit Agreement. There are no mandatory principal payments due with
respect to the Senior Notes or the Subordinated Debt prior to the
Revolving Loan Maturity Date.
6.11 Litigation.
Except for any litigation outstanding as set forth in the
M.O.U., there are no actions, suits or legal, equitable, arbitration or
administrative proceedings, pending or, to the knowledge of any Credit
Party, threatened against, the Borrower or any of its Subsidiaries which
could have or might be reasonably expected to have a Material Adverse
Effect; provided that the Credit Parties do not, as of the Closing Date,
believe that the litigation set forth in the M.O.U. would have or be
reasonably expected to have a Material Adverse Effect.
6.12 Taxes.
Each Credit Party, and each of its Subsidiaries, has filed, or
caused to be filed, all material tax returns (federal, state, local and
foreign) required to be filed and paid (a) all material amounts of taxes
shown thereon to be due (including interest and penalties) and (b) all
material other taxes, fees, assessments and other governmental charges
(including mortgage recording taxes, documentary stamp taxes and
intangibles taxes) owing by it, except for such taxes (i) which are not
yet delinquent or (ii) that are being contested in good faith and by
proper proceedings, and against which adequate reserves are being
maintained in accordance with GAAP. No Credit Party is aware of any
material proposed tax assessments against it.
6.13 Compliance with Law.
Each Credit Party, and each of its Subsidiaries, is in
compliance with all Requirements of Law and all other laws, rules,
regulations, orders and decrees (including without limitation
Environmental Laws) applicable to it, or to its properties, unless such
failure to comply would not have or would not be reasonably expected to
have a Material Adverse Effect. No Requirement of Law would be reasonably
expected to cause a Material Adverse Effect.
6.14 ERISA.
Except as would not result or be reasonably expected to result
in a Material Adverse Effect:
(a) During the five-year period prior to the date on
which this representation is made or deemed made: (i) no
Termination Event has occurred, and, to the best knowledge of
the Credit Parties, no event or condition has occurred or exists
as a result of which any Termination Event could reasonably be
expected to occur, with respect to any Plan; (ii) no
"accumulated funding deficiency," as such term is defined in
Section 302 of ERISA and Section 412 of the Code, whether or not
waived, has occurred with respect to any Plan; (iii) each Plan
has been maintained, operated, and funded in compliance with its
own terms and in material compliance with the provisions of
ERISA, the Code, and any other applicable federal or state laws;
and (iv) no lien in favor or the PBGC or a Plan has arisen or is
reasonably likely to arise on account of any Plan.
(b) The actuarial present value of all "benefit
liabilities" under each Single Employer Plan (determined within
the meaning of Section 401(a)(2) of the Code, utilizing the
actuarial assumptions used to fund such Plans), whether or not
vested, did not, as of the last annual valuation date prior to
the date on which this representation is made or deemed made,
exceed the current value of the assets of such Plan allocable to
such accrued liabilities.
(c) Neither the Borrower, nor any of its Subsidiaries
nor any ERISA Affiliate has incurred, or, to the best knowledge
of the Credit Parties, are reasonably expected to incur, any
withdrawal liability under ERISA to any Multiemployer Plan or
Multiple Employer Plan. Neither the Borrower, any of its
Subsidiaries nor any ERISA Affiliate has received any
notification that any Multiemployer Plan is in reorganization
(within the meaning of Section 4241 of ERISA), is insolvent
(within the meaning of Section 4245 of ERISA), or has been
terminated (within the meaning of Title IV of ERISA), and no
Multiemployer Plan is, to the best knowledge of the Credit
Parties, reasonably expected to be in reorganization, insolvent,
or terminated.
(d) No prohibited transaction (within the meaning of
Section 406 of ERISA or Section 4975 of the Code) or breach of
fiduciary responsibility has occurred with respect to a Plan
which has subjected or is reasonably likely to subject the
Borrower or any of its Subsidiaries or any ERISA Affiliate to
any liability under Sections 406, 409, 502(i), or 502(l) of
ERISA or Section 4975 of the Code, or under any agreement or
other instrument pursuant to which the Borrower or any of its
Subsidiaries or any ERISA Affiliate has agreed or is required to
indemnify any person against any such liability.
(e) The present value (determined using actuarial and
other assumptions which are reasonable with respect to the
benefits provided and the employees participating) of the
liability of the Borrower and its Subsidiaries and each ERISA
Affiliate for post-retirement welfare benefits to be provided to
their current and former employees under Plans which are welfare
benefit plans (as defined in Section 3(1) of ERISA), net of all
assets under all such Plans allocable to such benefits, are
reflected on the Financial Statements in accordance with FASB
106.
(f) Each Plan which is a welfare plan (as defined in
Section 3(1) of ERISA) to which Sections 601-609 of ERISA and
Section 4980B of the Code apply has been administered in
compliance in all material respects with such sections.
6.15 Subsidiaries.
Set forth on Schedule 6.15 is a complete and accurate list of
all Subsidiaries of each Credit Party. Information on Schedule 6.15
includes jurisdiction of incorporation, the number of shares of each
class of capital stock or other equity interests outstanding, the number
and percentage of outstanding shares of each class owned (directly or
indirectly) by such Credit Party; and the number and effect, if
exercised, of all outstanding options, warrants, rights of conversion or
purchase and all other similar rights with respect thereto. The
outstanding capital stock and other equity interests of all such
Subsidiaries is validly issued, fully paid and non-assessable and is
owned by each such Credit Party, directly or indirectly, free and clear
of all Liens (other than those arising under or contemplated in
connection with the Credit Documents). Other than as set forth in
Schedule 6.15, neither any Credit Party nor any Subsidiary thereof has
outstanding any securities convertible into or exchangeable for its
capital stock nor does any such Person have outstanding any rights to
subscribe for or to purchase or any options for the purchase of, or any
agreements providing for the issuance (contingent or otherwise) of, or
any calls, commitments or claims of any character relating to its capital
stock. Schedule 6.15 may be updated from time to time by the Borrower by
giving written notice thereof to the Administrative Agent.
6.16 Use of Proceeds; Margin Stock.
The proceeds of the Loans hereunder will be used solely for the
purposes specified in Section 7.11. None of the proceeds of the Loans
will be used for the purpose of purchasing or carrying any "margin stock"
as defined in Regulation U, Regulation X or Regulation G, or for the
purpose of reducing or retiring any Indebtedness which was originally
incurred to purchase or carry "margin stock" or any "margin security" or
for any other purpose which might constitute this transaction a "purpose
credit" within the meaning of Regulation U, Regulation X, Regulation G or
Regulation T. None of the Credit Parties owns any "margin stock".
6.17 Government Regulation.
No Credit Party, nor any of its Subsidiaries, is subject to
regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, the Investment Company Act of 1940 or the Interstate
Commerce Act, each as amended. In addition, no Credit Party is an
"investment company" registered or required to be registered under the
Investment Company Act of 1940, as amended, or controlled by such a
company, or a "holding company," or a "Subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "Subsidiary"
or a "holding company," within the meaning of the Public Utility Holding
Company Act of 1935, as amended. No director, executive officer or
principal shareholder of the Borrower or any of its Subsidiaries is a
director, executive officer or principal shareholder of any Lender. For
the purposes hereof the terms "director", "executive officer" and
"principal shareholder" (when used with reference to any Lender) have the
respective meanings assigned thereto in Regulation O issued by the Board
of Governors of the Federal Reserve System.
6.18 Environmental Matters.
(a) Except as set forth on Schedule 6.18:
(i) Each of the Real Properties and all
operations at the Real Properties are in compliance
with all applicable Environmental Laws, and there is no
violation of any Environmental Law with respect to the
Real Properties or the businesses operated by the
Borrower or any of their Subsidiaries (the
"Businesses"), and there are no conditions relating to
the Businesses or Real Properties that would be
reasonably expected to give rise to liability under any
applicable Environmental Laws.
(ii) No Credit Party has received any written
notice of, or inquiry from any Governmental Authority
regarding, any violation, alleged violation,
non-compliance, liability or potential liability
regarding Hazardous Materials or compliance with
Environmental Laws with regard to any of the Real
Properties or the Businesses, nor does the Borrower or
any of its Subsidiaries have knowledge or reason to
believe that any such notice is being threatened.
(iii) Hazardous Materials have not been
transported or disposed of from the Real Properties, or
generated, treated, stored or disposed of at, on or
under any of the Real Properties or any other location,
in each case by, or on behalf or with the permission
of, the Borrower or any of its Subsidiaries in a manner
that would reasonably be expected to give rise to a
Material Adverse Effect.
(iv) No judicial proceeding or governmental or
administrative action is pending or, to the knowledge
of the Borrower or any of its Subsidiaries, threatened,
under any Environmental Law to which the Borrower or
any of its Subsidiaries is or will be named as a party,
nor are there any consent decrees or other decrees,
consent orders, administrative orders or other orders,
or other administrative or judicial requirements
outstanding under any Environmental Law with respect to
the Borrower or any of its Subsidiaries, the Real
Properties or the Businesses, in any amount reportable
under the federal Comprehensive Environmental Response,
Compensation and Liability Act or any analogous state
law, except releases in compliance with any
Environmental Laws.
(v) There has been no release or threat of
release of Hazardous Materials at or from the Real
Properties, or arising from or related to the
operations (including, without limitation, disposal) of
the Borrower or any of its Subsidiaries in connection
with the Real Properties or otherwise in connection
with the Businesses.
(vi) None of the Real Properties contains, or
has previously contained, any Hazardous Materials at,
on or under the Real Properties in amounts or
concentrations that, if released, constitute or
constituted a violation of, or could give rise to
liability under, Environmental Laws and could
reasonably be expected to have a Material Adverse
Effect.
(vii) No Credit Party, nor any of its
Subsidiaries, has assumed any liability of any Person
(other than another Credit Party, or one of its
Subsidiaries) under any Environmental Law.
(b) The Borrower has adopted procedures that are
designed to (i) ensure that each Credit Party, any of its
operations and each of the properties owned or leased by each
Credit Party remains in compliance with applicable Environmental
Laws and (ii) minimize any liabilities or potential liabilities
that each Credit Party, any of its operations and each of the
properties owned or leased by each Credit Party may have under
applicable Environmental Laws.
6.19 Intellectual Property.
Each Credit Party owns, or has the legal right to use, all
patents, trademarks, tradenames, copyrights, technology, know-how and
processes (the "Intellectual Property") necessary for each of them to
conduct its business as currently conducted except for those the failure
to own or have such legal right to use would not have or be reasonably
expected to have a Material Adverse Effect. Set forth on Schedule 6.19 is
a list of all Intellectual Property owned by each Credit Party or that
any Credit Party has the right to use. Except as provided on Schedule
6.19, no claim has been asserted and is pending by any Person challenging
or questioning the use of any such Intellectual Property or the validity
or effectiveness of any such Intellectual Property, nor does any Credit
Party know of any such claim, and to the Credit Parties' knowledge the
use of such Intellectual Property by the Borrower or any of their
Subsidiaries does not infringe on the rights of any Person, except for
such claims and infringements that in the aggregate, would not have or be
reasonably expected to have a Material Adverse Effect. Schedule 6.19 may
be updated from time to time by the Borrower by giving written notice
thereof to the Administrative Agent.
6.20 Solvency.
Each Credit Party is and, after consummation of the transactions
contemplated by this Credit Agreement, will be Solvent.
6.21 Investments.
All Investments of each Credit Party and its Subsidiaries are
(a) as set forth on Schedule 6.21, (b) Permitted Investments or (c)
otherwise permitted by the terms of this Credit Agreement.
6.22 Location of Collateral.
Set forth on Schedule 6.22(a) is a list of all Mortgaged
Properties with street address, county and state where located. Set forth
on Schedule 6.22(b) is a list of all locations where any personal
property of a Credit Party is located, including county and state where
located. Set forth on Schedule 6.22(c) is the chief executive office and
principal place of business of each Credit Party. Schedule 6.22(a),
6.22(b) and 6.22(c) may be updated from time to time by the Borrower by
giving written notice thereof to the Administrative Agent.
6.23 Disclosure.
Neither this Agreement nor any financial statements delivered to
the Lenders nor any other document, certificate or statement furnished to
the Lenders by or on behalf of any Credit Party in connection with the
transactions contemplated hereby contains any untrue statement of a
material fact or omits to state a material fact necessary in order to
make the statements contained therein or herein, taken as a whole, not
misleading.
6.24 Licenses, etc.
The Credit Parties have obtained and hold in full force and
effect, all franchises, licenses, permits, certificates, authorizations,
qualifications, accreditations, easements, rights of way and other
rights, consents and approvals which are necessary for the operation of
their respective businesses as presently conducted, except where the
failure to obtain same would not have a Material Adverse Effect. Set
forth on Schedule 6.24 is a list of all Material License Agreements to
which a Credit Party is a party, as such schedule may be updated from
time to time by the Borrower giving written notice thereof to the
Administrative Agent.
6.25 No Burdensome Restrictions.
No Credit Party, nor any of their Subsidiaries, is a party to
any agreement or instrument or subject to any other obligation or any
charter or corporate restriction or any provision of any applicable law,
rule or regulation which, individually or in the aggregate, would have or
be reasonably expected to have a Material Adverse Effect.
6.26 Collateral Documents.
The Collateral Documents create valid security interests in, and
Liens on, the Collateral purported to be covered thereby, which security
interests and Liens are and will remain perfected security interests and
Liens, prior to all other Liens other than Permitted Liens. Each of the
representations and warranties made by the Borrower and its Subsidiaries
in the Collateral Documents is true and correct in all material respects.
SECTION 7
AFFIRMATIVE COVENANTS
Each Credit Party hereby covenants and agrees that so long as
this Credit Agreement is in effect and until the Loans and LOC
Obligations, together with interest and fees and other obligations
hereunder, have been paid in full and the Commitments and Letters of
Credit hereunder shall have terminated:
7.1 Information Covenants.
The Borrower will furnish, or cause to be furnished, to the
Administrative Agent and each of the Lenders:
(a) Annual Financial Statements. As soon as available,
and in any event within 120 days after the close of each fiscal
year of the Borrower, a consolidated and consolidating balance
sheet and income statement of the Borrower and its Subsidiaries,
as of the end of such fiscal year, together with related
consolidated and consolidating statements of operations and
consolidated statements of retained earnings and of cash flows
for such fiscal year, setting forth in comparative form
consolidated and consolidating figures for the preceding fiscal
year, all such consolidated financial information described
above to be in reasonable form and detail and audited by
independent certified public accountants of recognized national
standing reasonably acceptable to the Agents and whose opinion
shall be to the effect that such financial statements have been
prepared in accordance with GAAP (except for changes with which
such accountants concur) and shall not be limited as to the
scope of the audit or qualified in any manner.
(b) Quarterly Financial Statements. As soon as
available, and in any event within 60 days after the close of
each of the first three fiscal quarter of the Borrower, (i) a
consolidated and consolidating balance sheet and income
statement of the Borrower and its Subsidiaries, as of the end of
such fiscal quarter, together with related consolidated and
consolidating statements of operations and consolidated
statements of retained earnings and of cash flows for such
fiscal quarter in each case setting forth in comparative form
consolidated and consolidating figures for (A) the corresponding
period of the preceding fiscal year and (B) management's
proposed budget for such period, all such financial information
described above to be in reasonable form and detail and
reasonably acceptable to the Agent, and accompanied by a
certificate of the chief financial officer or the chief
accounting officer of the Borrower to the effect that such
quarterly financial statements fairly present in all material
respects the financial condition of the Borrower and its
Subsidiaries and have been prepared in accordance with GAAP,
subject to changes resulting from audit and normal year-end
audit adjustments and (ii) a management discussion and analysis
of operating results for such fiscal quarter.
(c) Borrowing Base Report. (i) on the 15th day of each
month, a Borrowing Base Report, as of the end of the immediately
preceding month and (ii) on the last day of each month a
Borrowing Base Report, as of the 15th day of such month with
respect to Eligible Receivables and as of the end of the
immediately preceding month with respect to Eligible Inventory
and Eligible Work in Process, in each case in substantially in
the form of Exhibit 7.1(c) and certified by the chief financial
officer of the Borrower to be true and correct as of the date
thereof. Notwithstanding the above, the Borrowing Base Report
delivered on June 30, 1997 shall reflect Eligible Receivables as
of June 19, 1997.
(d) Officer's Certificate. At the time of delivery of
the financial statements provided for in Sections 7.1(a) and
7.1(b) above, a certificate of the chief financial officer of
the Borrower substantially in the form of Exhibit 7.1(d), (i)
demonstrating compliance with the financial covenants contained
in Section 7.2 by calculation thereof as of the end of each such
fiscal period, (ii) demonstrating compliance with any other
terms of the Credit Agreement as requested by the Agents and
(iii) stating that no Default or Event of Default exists, or if
any Default or Event of Default does exist, specifying the
nature and extent thereof and what action the Borrower proposes
to take with respect thereto.
(e) Annual Business Plan and Budgets. Within 90 days
after the end of each fiscal year of the Borrower, an annual
business plan and budget of the Borrower and its Subsidiaries on
a consolidated basis containing, among other things, pro forma
financial projections for the next fiscal year.
(f) Accountant's Certificate. Within the period for
delivery of the annual financial statements provided in Section
7.1(a), a certificate of the accountants conducting the annual
audit stating that they have reviewed this Credit Agreement and
stating further whether, in the course of their audit, they have
(based on the financial statements prepared in accordance with
then existing GAAP) become aware of any Default or Event of
Default and, if any such Default or Event of Default exists,
specifying the nature and extent thereof.
(g) Auditor's Reports. Promptly upon receipt thereof, a
copy of any "management letter" submitted by independent
accountants to the Borrower or any of its Subsidiaries in
connection with any annual, interim or special audit of the
books of the Borrower or any of its Subsidiaries.
(h) Reports. Promptly upon transmission or receipt
thereof, (a) copies of any filings and registrations with, and
reports to or from, the Securities and Exchange Commission, or
any successor agency, and copies of all financial statements,
proxy statements, notices and reports as the Borrower or any of
its Subsidiaries shall send to its shareholders generally or to
a holder of the Subordinated Debt in its capacity as such a
holder and (b) upon the written request of an Agent, all reports
and written information to and from the United States
Environmental Protection Agency, or any state or local agency
responsible for environmental matters, the United States
Occupational Health and Safety Administration, or any state or
local agency responsible for health and safety matters, or any
successor agencies or authorities concerning environmental,
health or safety matters.
(i) Notices. Upon a Responsible Officer obtaining
knowledge thereof, the Borrower will give written notice to the
Administrative Agent immediately of (a) the occurrence of an
event or condition consisting of a Default or Event of Default,
specifying the nature and existence thereof and what action the
Borrower proposes to take with respect thereto, and (b) the
occurrence of any of the following with respect to the Borrower
or any of its Subsidiaries (i) the pendency or commencement of
any litigation, arbitral or governmental proceeding against the
Borrower or any of its Subsidiaries which if adversely
determined would have or would be reasonably expected to have a
Material Adverse Effect, or (ii) the institution of any
proceedings against the Borrower or any of its Subsidiaries with
respect to, or the receipt of notice by such Person of potential
liability or responsibility for violation, or alleged violation
of any federal, state or local law, rule or regulation,
including but not limited to, Environmental Laws, the violation
of which would have or would be reasonably expected to have a
Material Adverse Effect.
(j) ERISA. Upon any of the Credit Parties or any ERISA
Affiliate obtaining knowledge thereof, Borrower will give
written notice to the Administrative Agent and each of the
Lenders promptly (and in any event within five Business Days)
of: (i) any event or condition, including, but not limited to,
any Reportable Event, that constitutes, or might reasonably lead
to, a Termination Event; (ii) with respect to any Multiemployer
Plan, the receipt of notice as prescribed in ERISA or otherwise
of any withdrawal liability assessed against the Borrowers or
any of their ERISA Affiliates, or of a determination that any
Multiemployer Plan is in reorganization or insolvent (both
within the meaning of Title IV of ERISA); (iii) the failure to
make full payment on or before the due date (including
extensions) thereof of all amounts which the Borrower or any of
its Subsidiaries or ERISA Affiliates is required to contribute
to each Plan pursuant to its terms and as required to meet the
minimum funding standard set forth in ERISA and the Code with
respect thereto; or (iv) any change in the funding status of any
Plan that could have a Material Adverse Effect; together, with a
description of any such event or condition or a copy of any such
notice and a statement by the principal financial officer of the
Borrower briefly setting forth the details regarding such event,
condition, or notice, and the action, if any, which has been or
is being taken or is proposed to be taken by the Credit Parties
with respect thereto. Promptly upon request, the Borrower shall
furnish the Administrative Agent and each of the Lenders with
such additional information concerning any Plan as may be
reasonably requested, including, but not limited to, copies of
each annual report/return (Form 5500 series), as well as all
schedules and attachments thereto required to be filed with the
Department of Labor and/or the Internal Revenue Service pursuant
to ERISA and the Code, respectively, for each "plan year"
(within the meaning of Section 3(39) of ERISA).
(k) Environmental.
(i) Subsequent to a notice from any
Governmental Authority that would reasonably cause
concern or during the existence of an Event of Default,
and upon the written request of an Agent, the Borrower
will furnish or cause to be furnished to the
Administrative Agent, at the Borrower's expense, a
report of an environmental assessment of reasonable
scope, form and depth, including, where appropriate,
invasive soil or groundwater sampling, by a consultant
reasonably acceptable to the Agents as to the nature
and extent of the presence of any Hazardous Materials
on any property owned, leased or operated by a Credit
Party and as to the compliance by the Credit Parties
with Environmental Laws. If the Borrower fails to
deliver such an environmental report within
seventy-five (75) days after receipt of such written
request then the Agents may arrange for same, and the
Borrower hereby grants to the Agents and their
representatives access to the Real Properties and a
license of a scope reasonably necessary to undertake
such an assessment (including, where appropriate,
invasive soil or groundwater sampling). The reasonable
cost of any assessment arranged for by the Agents
pursuant to this provision will be payable by the
Borrower on demand and added to the obligations secured
by the Collateral Documents.
(ii) Each Credit Party will conduct and
complete all investigations, studies, sampling, and
testing and all remedial, removal, and other actions
necessary to address all Hazardous Materials on, from,
or affecting any real property owned or leased by a
Credit Party to the extent necessary to be in
compliance with all Environmental Laws and all other
applicable federal, state, and local laws, regulations,
rules and policies and with the orders and directives
of all Governmental Authorities exercising jurisdiction
over such real property to the extent any failure would
have or be reasonably expected to have a Material
Adverse Effect.
(l) Other Information. With reasonable promptness upon
any such request, such other information regarding the business,
properties or financial condition of the Credit Parties and
their Subsidiaries as an Agent may reasonably request.
7.2 Financial Covenants.
(a) Leverage Ratio. The Leverage Ratio shall be less
than or equal to the ratios set forth below for the last day of
each fiscal quarter within the period set forth below:
(i) From the Effective Date to June 30, 1997,
8.0 to 1.0;
(ii) From July 1, 1997 to September 30, 1997,
7.40 to 1.0;
(iii) From October 1, 1997 to June 30, 1998,
6.50 to 1.0;
(iv) From July 1, 1998 to September 30, 1999,
5.50 to 1.0;
(v) From October 1, 1999 to September 30,
2000, 4.50 to 1.0;
(vi) From October 1, 2000 to September 30,
2001, 3.50 to 1.0; and
(vii) From October 1, 2001 thereafter, 3.0 to
1.0.
(b) Coverage Ratio. The Coverage Ratio, for the twelve
month period ending on such date, shall be greater than or equal
to the ratios set forth below for the last day of each fiscal
quarter within the period set forth below:
(i) From the Effective Date to September 30,
1998, 1.25 to 1.0;
(ii) From October 1, 1998 to September 30,
1999, 1.50 to 1.0;
(iii) From October 1, 1999 to September 30,
2000, 2.0 to 1.0; and
(iv) From October 1, 2000 thereafter, 2.5 to
1.0.
(c) Net Worth. For the dates set forth below, Net Worth
shall be greater than or equal to the sum of (i) 75% of the Net
Cash Proceeds from each Equity Issuance subsequent to the
Effective Date plus (ii) the amount set forth below:
Date Amount
December 31, 1997 Beginning Net Worth
March 31, 1998 Beginning Net Worth minus $4 million
June 30, 1998 Beginning Net Worth minus $1 million
September 30, 1998 Beginning Net Worth plus $5 million
December 31, 1998 Beginning Net Worth plus $1 million
March 31, 1999 Beginning Net Worth minus $2 million
June 30, 1999 Beginning Net Worth plus $1 million
September 30, 1999 Beginning Net Worth plus $7.5 million
December 31, 1999 Beginning Net Worth plus $4.5 million
March 31, 2000 Beginning Net Worth plus $1.5 million
June 30, 2000 Beginning Net Worth plus $4.5 million
September 30, 2000 Beginning Net Worth plus $10.5 million
December 31, 2000 Beginning Net Worth plus $7.5 million
March 31, 2001 Beginning Net Worth plus $4.5 million
June 30, 2001 Beginning Net Worth plus $8 million
September 30, 2001 Beginning Net Worth plus $14 million
December 31, 2001 Beginning Net Worth plus $11 million
March 31, 2002 Beginning Net Worth plus $8 million
June 30, 2002 Beginning Net Worth plus $12 million
(d) Net Income. For the fiscal quarters ending June 30,
1997 and September 30, 1997, the sum of Net Income plus (i) any
amounts deducted in determining Net Income representing any
amounts paid pursuant to or in connection with the M.O.U. or the
transactions contemplated thereby and (ii) Transaction Costs
shall be greater than zero.
7.3 Preservation of Existence and Franchises.
Each of the Credit Parties will do all things necessary to
preserve and keep in full force and effect its existence, rights,
franchises and authority except as permitted by Section 8.4.
7.4 Books and Records.
Each of the Credit Parties will keep complete and accurate books
and records of its transactions in accordance with good accounting
practices on the basis of GAAP (including the establishment and
maintenance of appropriate reserves).
7.5 Compliance with Law.
Each of the Credit Parties will comply with all material laws,
rules, regulations and orders, and all applicable material restrictions
imposed by all Governmental Authorities, applicable to it and its
property (including, without limitation, Environmental Laws).
7.6 Payment of Taxes and Other Indebtedness.
Each of the Credit Parties will pay, settle or discharge (a) all
taxes, assessments and governmental charges or levies imposed upon it, or
upon its income or profits, or upon any of its properties, before they
shall become delinquent, (b) all lawful claims (including claims for
labor, materials and supplies) which, if unpaid, might give rise to a
Lien upon any of its properties, and (c) all of its other Indebtedness as
it shall become due, including, without limitation, the Subordinated
Secured Note; provided, however, that a Credit Party shall not be
required to pay any such tax, assessment, charge, levy, claim or
Indebtedness which is being contested in good faith by appropriate
proceedings and as to which adequate reserves therefor have been
established in accordance with GAAP, unless the failure to make any such
payment (i) would give rise to an immediate right to foreclose or collect
on a Lien securing such amounts or (ii) would have a Material Adverse
Effect.
7.7 Insurance.
Each of the Credit Parties will at all times maintain in full
force and effect insurance (including worker's compensation insurance,
liability insurance, casualty insurance and business interruption
insurance) in such amounts, covering such risks and liabilities and with
such deductibles or self-insurance retentions as are in accordance with
normal industry practice. All policies shall have the Collateral Agent,
on behalf of the Lenders, as an additional insured.
In the event there occurs any material loss, damage to or destruction of
the Collateral of any Credit Party or any part thereof, such Credit Party
shall promptly give written notice thereof to the Administrative Agent
generally describing the nature and extent of such damage or destruction.
Subsequent to any loss, damage to or destruction of the Collateral of any
Credit Party or any part thereof, such Credit Party, whether or not the
insurance proceeds, if any, received on account of such damage or
destruction shall be sufficient for that purpose, at such Credit Party's
cost and expense, will promptly repair or replace the Collateral of such
Credit Party so lost, damaged or destroyed; provided, however, that such
Credit Party need not repair or replace the Collateral of such Credit
Party so lost, damaged or destroyed to the extent the failure to make
such repair or replacement (a) is desirable to the proper conduct of the
business of such Credit Party in the ordinary course and otherwise is in
the best interest of such Credit Party and (b) would not materially
impair the rights and benefits of the Agents or the Lenders under this
Credit Agreement or any other Credit Document. In the event a Credit
Party shall receive any insurance proceeds, as a result of any loss,
damage or destruction of Collateral, in a net amount in excess of
$1,000,000, such Credit Party will immediately pay over such proceeds to
the Administrative Agent as cash collateral for the Credit Party
Obligations. The Administrative Agent agrees to release such insurance
proceeds to such Credit Party for replacement or restoration of the
portion of the Collateral of such Credit Party lost, damaged or destroyed
if (A) within 15 days from the date the Administrative Agent receives
such insurance proceeds, the Administrative Agent has received written
application for such release from such Credit Party together with
evidence reasonably satisfactory to it that the Collateral lost, damaged
or destroyed has been or will be replaced or restored to its condition
(or by Collateral having a value at least equal to the condition of the
asset subject to the loss, damage or destruction) immediately prior to
the loss, destruction or other event giving rise to the payment of such
insurance proceeds and (B) on the date of such release no Default or
Event of Default exists. If the conditions in the preceding sentence are
not met, the Administrative Agent may or, upon the request of the
Required Lenders, shall at any time after the first Business Day
subsequent to the date 30 days after it received such insurance proceeds,
apply such insurance proceeds as a mandatory prepayment of the Credit
Party Obligations for application in accordance with the terms of Section
3.3(b)(ii). All insurance proceeds shall be subject to the security
interest of the Lenders under the Collateral Documents.
The present insurance coverage of the Borrower and its Subsidiaries is
outlined as to carrier, policy number, expiration date, type and amount
on Schedule 7.7, as Schedule 7.7 may be amended from time to time by
written notice to the Administrative Agent.
7.8 Maintenance of Property.
Each of the Credit Parties will maintain and preserve its
properties and equipment in good repair, working order and condition,
normal wear and tear excepted, and will make, or cause to be made, in
such properties and equipment from time to time all repairs, renewals,
replacements, extensions, additions, betterments and improvements thereto
as may be needed or proper, to the extent and in the manner customary for
companies in similar businesses.
7.9 Performance of Obligations.
Each of the Credit Parties will perform in all material respects
all of its obligations under the terms of all material agreements,
indentures, mortgages, security agreements or other debt instruments to
which it is a party or by which it is bound.
7.10 Collateral.
If, subsequent to the Closing Date, a Credit Party shall (a)
acquire any real property or (b) acquire any intellectual property or any
securities or other personal property required to be delivered to the
Collateral Agent as Collateral hereunder or under any of the Collateral
Documents, or (c) enter into any Material License Agreement, the Borrower
shall immediately notify the Collateral Agent of same. Each Credit Party
shall take such action (including, but not limited to, the actions set
forth in Sections 5.1(e) and (f)), as requested by the Collateral Agent
and at its own expense, to ensure that (i) the Lenders have a perfected
Lien in all owned real property (unless the Borrower has exercised its
rights pursuant to Section 11.19) and such personal property of the
Credit Parties as set forth in the Security Agreements (whether now owned
or hereafter acquired), subject only to Permitted Liens and (ii) the
Lenders have collateral assignments of all Material License Agreements
and the right to use all intellectual property of the Credit Parties as
set forth in the Security Agreements. Each Credit Party shall adhere to
the covenants regarding the location of personal property as set forth in
the Security Agreements.
7.11 Use of Proceeds.
The Credit Parties will use the proceeds of the Loans solely (a)
to refinance or repay existing Indebtedness owing from the Credit Parties
to NBD Bank, NationsBank, N.A. and the other creditors set forth on
Schedule 7.11 (together with the amounts owed to each), (b) to assist in
financing the acquisition of Varsity Spirit Corporation (to the extent
the proceeds of the Senior Notes are insufficient with respect thereto),
(c) to pay related fees and expenses in connection with the foregoing,
(d) to provide working capital, (e) to make Capital Expenditures
permitted under this Credit Agreement and (f) for general corporate
purposes. The Credit Parties will use the Letters of Credit solely for
the purposes set forth in Section 2.2(a).
7.12 Audits/Inspections.
Upon reasonable notice and during normal business hours, each
Credit Party will permit representatives appointed by an Agent,
including, without limitation, independent accountants, agents, attorneys
and appraisers to visit and inspect such Credit Party's property,
including its books and records, its accounts receivable and inventory,
its facilities and its other business assets, and to make photocopies or
photographs thereof and to write down and record any information such
representative obtains and shall permit an Agent or its representatives
to investigate and verify the accuracy of information provided to the
Lenders, including, without limitation, the performance of collateral
valuation reviews from time to time to assess the composition of the
Borrowing Base Assets, and to discuss all such matters with the officers,
employees and representatives of the Credit Parties. The Borrower agrees
that the Collateral Agent may conduct such collateral reviews, at the
Borrower's expense, as it reasonably deems appropriate; provided that
absent an Event of Default such reviews shall not occur more frequently
than twice a year.
7.13 Additional Credit Parties.
At the time any Person becomes a Material Subsidiary of a Credit
Party, the Borrower shall so notify the Administrative Agent and promptly
thereafter (but in any event within 30 days after the date thereof) shall
cause such Person to execute a Joinder Agreement in substantially the
same form as Exhibit 7.13, (b) cause all of the capital stock of such
Person to be delivered to the Collateral Agent (together with undated
stock powers signed in blank) and pledged to the Collateral Agent
pursuant to an appropriate pledge agreement in substantially the form of
the Pledge Agreements and otherwise in a form reasonably acceptable to
the Collateral Agent, (c) pledge such of its assets to the Lenders
pursuant to a security agreement in substantially the form of the
Security Agreements and otherwise in a form reasonably acceptable to the
Collateral Agent, and collaterally assign any Material License Agreements
to which it is a party, (d) if such Person has any Subsidiaries, (i)
deliver all of the capital stock of such Subsidiaries (together with
undated stock powers signed in blank) to the Collateral Agent and (ii)
execute a pledge agreement in substantially the form of the Pledge
Agreements and otherwise in a form reasonably acceptable to the
Collateral Agent, (e) if such Person owns any real property, execute any
and all necessary mortgages, deeds of trust, deeds to secure debt or
other appropriate real estate collateral documentation in a form
substantially similar to the Mortgages, with appropriate covenants as
necessary unless the Borrower has previously exercised its rights
pursuant to Section 11.19 and (f) deliver such other documentation as the
Collateral Agent may reasonably request in connection with the foregoing,
including, without limitation, appropriate UCC-1 financing statements,
real estate title insurance policies, environmental reports, certified
resolutions and other organizational and authorizing documents of such
Person and favorable opinions of counsel to such Person (which shall
cover, among other things, the legality, validity, binding effect and
enforceability of the documentation referred to above), all in form,
content and scope reasonably satisfactory to the Agents.
7.14 Material License Agreements.
The Credit Parties will notify the Agents promptly regarding (a)
failure to comply with the terms of any Material License Agreement, (b)
failure to keep each Material License Agreement in full force and effect
and (c) any modification or amendment to any Material License Agreement
other than royalty rate increases or minimum guaranteed amounts
thereunder.
7.15 Merger.
As soon as practicable after the Closing Date, cause the merger
of Cheer Acquisition Corp. with and into Varsity Spirit Corporation, and
deliver to the Agents such evidence of same as the Agents may reasonably
request, including, without limitation, a legal opinion from counsel to
the Credit Parties.
7.16 Further Assurances Regarding Real Estate Collateral.
As soon as possible after the Effective Date but in any event no
later than July 31, 1997, the Credit Parties shall provide, or cause to
be delivered, to the Collateral Agent:
(a) ALTA or other appropriate form mortgagee title
insurance policies (the "Mortgage Policies") issued by a title
insurer reasonably satisfactory to the Collateral Agent (the
"Title Insurance Company"), in an amount reasonably satisfactory
to the Collateral Agent with respect to each Mortgaged Property,
assuring the Collateral Agent that the applicable Mortgages
create valid and enforceable mortgage liens on the respective
Mortgaged Properties, free and clear of all defects and
encumbrances except Permitted Liens which Mortgage Policies
shall be in form and substance reasonably satisfactory to the
Collateral Agent and containing such endorsements as shall be
reasonably satisfactory to the Collateral Agent and for any
other matters that the Collateral Agent may request, and
providing affirmative insurance and such reinsurance as the
Collateral Agent may request, all of the foregoing in form and
substance reasonably satisfactory to the Agents;
(b) Surveys. Maps or plats of an as-built survey of the
sites of the Mortgaged Properties certified to the Collateral
Agent and the Title Insurance Company in a manner reasonably
satisfactory to them, dated a date satisfactory to the
Collateral Agent and the Title Insurance Company by an
independent professional licensed land surveyor reasonably
satisfactory to the Collateral Agent and the Title Insurance
Company, which maps or plats and the surveys on which they are
based shall be sufficient to delete any standard printed survey
exception contained in the applicable title policy and be made
in accordance with the Minimum Standard Detail Requirements for
Land Title Surveys jointly established and adopted by the
American Land Title Association and the American Congress on
Surveying and Mapping in 1992, and, without limiting the
generality of the foregoing, there shall be surveyed and shown
on such maps, plats or surveys the following: (A) the locations
on such sites of all the buildings, structures and other
improvements and the established building setback lines; (B) the
lines of streets abutting the sites and width thereof; (C) all
access and other easements appurtenant to the sites necessary to
use the sites; (D) all roadways, paths, driveways, easements,
encroachments and overhanging projections and similar
encumbrances affecting the site, whether recorded, apparent from
a physical inspection of the sites or otherwise known to the
surveyor; (E) any encroachments on any adjoining property by the
building structures and improvements on the sites; and (F) if
the site is described as being on a filed map, a legend relating
the survey to said map;
(c) Flood Certificates. Certification from a registered
engineer or land surveyor or other evidence reasonably
acceptable to the Collateral Agent that none of the improvements
on the Mortgaged Properties are located within any area
designated by the Director of the Federal Emergency Management
Agency as a "special flood hazard" area or if any improvements
on the Mortgaged Properties are located within a "special flood
hazard" area, evidence of a flood insurance policy from a
company and in an amount reasonably satisfactory to the
Collateral Agent for the applicable portion of the premises,
naming the Collateral Agent, for the benefit of the Lenders, as
mortgagee; and
(d) Environmental Reports. If requested by the Agents,
environmental assessment reports and related documents with
respect to all Mortgaged Properties.
SECTION 8
NEGATIVE COVENANTS
Each Credit Party hereby covenants and agrees that so long as
this Credit Agreement is in effect and until the Loans and LOC
Obligations, together with interest, fees and other obligations
hereunder, have been paid in full and the Commitments and Letters of
Credit hereunder shall have terminated:
8.1 Indebtedness.
No Credit Party will, nor will it permit any of its Subsidiaries
to, contract, create, incur, assume or permit to exist any Indebtedness,
except:
(a) Indebtedness arising under this Credit Agreement
and the other Credit Documents;
(b) the Senior Notes;
(c) the Subordinated Debt;
(d) Indebtedness existing as of the Closing Date (other
than the Senior Notes or the Subordinated Debt) as referenced in
Section 6.10 (and renewals, refinancings, replacements or
extensions thereof on terms and conditions no more favorable, in
the aggregate, to such Person than such existing Indebtedness
and in a principal amount not in excess of that outstanding as
of the date of such renewal, refinancing, replacement or
extension);
(e) Indebtedness in respect of current accounts payable
and accrued expenses incurred in the ordinary course of business
and to the extent not current, accounts payable and accrued
expenses that are subject to bona fide dispute;
(f) Indebtedness owing by one Credit Party to another
Credit Party or from a Non-Material Subsidiary to a Credit
Party;
(g) purchase money Indebtedness (including Capital
Leases) incurred by the Borrower or any of its Subsidiaries to
finance the purchase of fixed assets (including equipment);
provided that (i) the total of all such Indebtedness for all
such Persons taken together shall not exceed an aggregate
principal amount of $2,000,000 at any one time outstanding
(including any such Indebtedness referred to in subsection (c)
above); (ii) such Indebtedness when incurred shall not exceed
the purchase price of the asset(s) financed; and (iii) no such
Indebtedness shall be refinanced for a principal amount in
excess of the principal balance outstanding thereon at the time
of such refinancing;
(h) Indebtedness arising from Hedging Agreements
entered into in the ordinary course and not for speculative
purposes;
(i) Indebtedness incurred in connection with the
settlement of product liability litigation not to exceed $3
million, in the aggregate;
(j) from the Closing Date to September 30, 1999, other
unsecured Indebtedness not to exceed $2,000,000 at any one time;
and
(k) from October 1, 1999 and thereafter, other
unsecured Indebtedness if the incurrence of such Indebtedness
would not cause a violation of Section 7.2(a).
8.2 Liens.
No Credit Party will, nor will it permit its Subsidiaries to
contract, create, incur, assume or permit to exist any Lien with respect
to any of its property or assets of any kind (whether real or personal,
tangible or intangible), whether now owned or after acquired, except for
Permitted Liens.
8.3 Nature of Business.
No Credit Party will, nor will it permit its Subsidiaries to,
alter the character of its business from (a) the lines of businesses that
any Credit Party or one of its Subsidiaries was engaged in on the date
hereof, (b) the businesses engaged in by an acquired businesses; provided
that a substantial portion of their business at the time of acquisition
was related or ancillary to a Credit Party or one of its Subsidiaries
then existing lines of businesses, (c) reasonable extensions of the
businesses referred to in clause (a) and (b) above, including, without
limitation, new products and services to its markets or new distribution
channels, (d) any other lines of business or activities that are related
or ancillary to the businesses referred to in clauses (a) - (c) above,
and (e) other unrelated lines of business; provided that the Credit
Parties and their Subsidiaries may not engage in lines of business
unrelated to those engaged in on the Closing Date (including, without
limitation, the opening of retail locations by a Credit Party that does
not currently operate retail locations) that, in the aggregate, exceed
any of the following (i) 20% of total assets of the Credit Parties and
their Subsidiaries, (ii) 15% of total revenues of the Credit Parties and
their Subsidiaries or (iii) 25% total Net Income of the Credit Parties
and their Subsidiaries.
8.4 Consolidation and Merger.
No Credit Party will enter into any transaction of merger or
consolidation or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution); provided that notwithstanding the foregoing
provisions of this Section 8.4, any Credit Party may be merged or
consolidated with or into the Borrower or any other Credit Party if (a)
such transaction is between the Borrower and another Credit Party, the
Borrower is the continuing or surviving corporation; (b) the
Administrative Agent is given prior written notice of such action, and
the Credit Parties execute and deliver such documents, instruments and
certificates as the Collateral Agent may request in order to maintain the
perfection and priority of the Liens on the assets of the Credit Parties;
and (c) after giving effect thereto no Default or Event of Default
exists.
8.5 Sale or Lease of Assets.
No Credit Party will, nor will it permit its Subsidiaries to,
convey, sell, lease, transfer or otherwise dispose of, in one transaction
or a series of transactions, all or any part of its business or assets
whether now owned or hereafter acquired, including, without limitation,
inventory, receivables, equipment, real property interests (whether owned
or leasehold), and securities, other than (a) any inventory sold or
otherwise disposed of in the ordinary course of business; (b) the sale,
lease, transfer or other disposal by a Credit Party (other than the
Borrower) of any or all of its assets to the Borrower or to another
Credit Party; (c) obsolete, slow-moving, idle or worn-out assets no
longer used or useful in its business; (d) the transfer of assets which
constitute a Permitted Investment; (e) the issuance of capital stock by
the Borrower; (f) sales of Unrestricted Margin Stock for fair market
value in cash (provided that notwithstanding Section 8.7, the proceeds of
such sales may only be invested in cash and Cash Equivalents) and (g)
other sales of assets not to exceed $1,000,000, in the aggregate, during
the term of this Agreement.
Upon a sale of assets permitted by this Section 8.5(c) or (g),
the Collateral Agent shall promptly deliver to the Borrower, upon the
Borrower's request and at the Borrower's expense, such documentation as
is reasonably necessary to evidence the release of the Lenders' security
interest in such assets, including, without limitation, amendments or
terminations of UCC financing statements.
8.6 Sale Leasebacks.
No Credit Party will, nor will it permit its Subsidiaries to,
directly or indirectly become or remain liable as lessee or as guarantor
or other surety with respect to any lease of any property (whether real
or personal or mixed), whether now owned or hereafter acquired, (a) which
such Credit Party has sold or transferred or is to sell or transfer to
any other Person other than a Credit Party or (b) which such Credit Party
intends to use for substantially the same purpose as any other property
which has been sold or is to be sold or transferred by such Credit Party
to any Person in connection with such lease.
8.7 Advances, Investments and Loans.
No Credit Party will, nor will it permit its Subsidiaries to,
make any Investments except for Permitted Investments.
8.8 Restricted Payments.
No Credit Party will, nor will it permit its Subsidiaries to,
directly or indirectly, (a) declare or pay any dividends or make any
other distribution upon any shares of its capital stock of any class or
(b) purchase, redeem or otherwise acquire or retire or make any
provisions for redemption, acquisition or retirement of any shares of its
capital stock of any class or any warrants or options to purchase any
such shares; provided that (i) any Subsidiary of the Borrower may pay
dividends to its parent and (ii) as long as no Event of Default exists or
is caused as a result thereof, the Borrower may make purchases of (A) its
capital stock from former or departing employees and (B) its warrants
from NBD Bank and M.L.C. Partners Limited Partnership.
8.9 Transactions with Affiliates.
Other than (a) transactions between Credit Parties or (b)
non-material transactions between Credit Parties and their Subsidiaries
otherwise permitted by 8.7, no Credit Party will, nor will it permit its
Subsidiaries to, enter into any transaction or series of transactions,
whether or not in the ordinary course of business, with any officer,
director, shareholder, Subsidiary or Affiliate other than on terms and
conditions substantially as favorable as would be obtainable in a
comparable arm's-length transaction with a Person other than an officer,
director, shareholder, Subsidiary or Affiliate.
8.10 Fiscal Year; Organizational Documents.
No Credit Party will, nor will it permit its Subsidiaries to,
(a) change its fiscal year or (b) in any manner that would reasonably be
likely to adversely affect the rights of the Lenders, change its articles
or certificate of incorporation or its bylaws.
8.11 Senior Notes/Subordinated Debt.
No Credit Party will, nor will it permit its Subsidiaries to,
(a) make or offer to make any voluntary or optional principal payments
with respect to the Senior Notes or Subordinated Debt, (b) redeem or
offer to redeem any of the Senior Notes or Subordinated Debt, or (c)
deposit any funds intended to discharge or defease any or all of the
Senior Notes or Subordinated Debt. Neither the terms of the Senior Notes
nor the Subordinated Debt shall be amended or modified in any manner
without the prior written consent of the Required Lenders.
8.12 No Limitations.
No Credit Party will, nor will it permit its Subsidiaries to,
directly or indirectly, create or otherwise cause, incur, assume, suffer
or permit to exist or become effective any consensual encumbrance or
restriction of any kind on the ability of any such Person to (a) pay
dividends or make any other distribution on any of such Person's capital
stock, (b) pay any Indebtedness owed to the Borrower or any other Credit
Party, (c) make loans or advances to any other Credit Party or (d)
transfer any of its property to any other Credit Party, except for
encumbrances or restrictions existing under or by reason of (i) customary
non-assignment or net worth provisions in any lease governing a leasehold
interest, (ii) any agreement or other instrument of a Person existing at
the time it becomes a Subsidiary of the Borrower; provided that such
encumbrance or restriction is not applicable to any other Person, or any
property of any other Person, other than such Person becoming a
Subsidiary of the Borrower and was not entered into in contemplation of
such Person becoming a Subsidiary of the Borrower, and (iii) this Credit
Agreement and the other Credit Documents.
8.13 No Other Negative Pledges.
No Credit Party will, nor will it permit its Subsidiaries to,
enter into, assume or become subject to any agreement prohibiting or
otherwise restricting the creation or assumption of any Lien upon its
properties or assets, whether now owned or hereafter acquired, or
requiring the grant of any security for such obligation if security is
given for some other obligation.
SECTION 9
EVENTS OF DEFAULT
9.1 Events of Default.
An Event of Default shall exist upon the occurrence of any of
the following specified events (each an "Event of Default"):
(a) Payment. Any Credit Party shall default in the
payment (i) when due of any principal of any of the Loans or any
reimbursement obligation arising from drawings under Letters of
Credit or (ii) within three Business Days of when due of any
interest on the Loans or any fees or other amounts owing
hereunder, under any of the other Credit Documents or in
connection herewith.
(b) Representations. Any representation, warranty or
statement made or deemed to be made by any Credit Party herein,
in any of the other Credit Documents, or in any statement or
certificate delivered or required to be delivered pursuant
hereto or thereto shall prove untrue in any material respect on
the date as of which it was made or deemed to have been made.
(c) Covenants. Any Credit Party shall:
(i) default in the due performance or
observance of any term, covenant or agreement contained
in Sections 7.2, 7.11, 7.12, or 8.1 through 8.13
inclusive; or
(ii) default in the due performance or
observance by it of any term, covenant or agreement
contained in Sections 7.1 (other than Section 7.1(c))
and such default shall continue unremedied for a period
of ten days after notice thereof is given by an Agent;
or
(iii) default in the due performance or
observance by it of any term, covenant or agreement
contained in Section 7.1(c) and such default shall
continue unremedied for a period of two Business Days
after notice thereof is given by an Agent; or
(iv) default in the due performance or
observance by it of any term, covenant or agreement
(other than those referred to in subsections (a), (b)
or (c)(i), (ii) or (iii) of this Section 9.1) contained
in this Credit Agreement and such default shall
continue unremedied for a period of at least 30 days
after the earlier of a Responsible Officer becoming
aware of such default or notice thereof given by an
Agent.
(d) Other Credit Documents. (i) Any Credit Party shall
default in the due performance or observance of any term,
covenant or agreement in any of the other Credit Documents and
such default shall continue unremedied for a period of at least
30 days after the earlier of a Responsible Officer becoming
aware of such default or notice thereof given by the Agent, or
(ii) any Credit Document shall fail to be in full force and
effect or any Credit Party shall so assert or any Credit
Document shall fail to give the Agents and/or the Lenders the
security interests, liens, rights, powers and privileges
purported to be created thereby.
(e) Guaranties. The guaranty given by the Credit
Parties hereunder or by any Additional Credit Party hereafter or
any provision thereof shall cease to be in full force and
effect, or any guarantor thereunder or any Person acting by or
on behalf of such guarantor shall deny or disaffirm such
Guarantor's obligations under such guaranty.
(f) Bankruptcy, etc. The occurrence of any of the
following with respect to the Borrower or any of its
Subsidiaries (i) a court or governmental agency having
jurisdiction in the premises shall enter a decree or order for
relief in respect of the Borrower or any of its Subsidiaries in
an involuntary case under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect, or appoint a
receiver, liquidator, assignee, custodian, trustee, sequestrator
or similar official of the Borrower or any of its Subsidiaries
or for any substantial part of its property or ordering the
winding up or liquidation of its affairs; or (ii) an involuntary
case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect is commenced against the
Borrower or any of its Subsidiaries and such petition remains
unstayed and in effect for a period of 60 consecutive days; or
(iii) the Borrower or any of its Subsidiaries shall commence a
voluntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or consent to the
entry of an order for relief in an involuntary case under any
such law, or consent to the appointment or taking possession by
a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of such Person or any
substantial part of its property or make any general assignment
for the benefit of creditors; or (iv) the Borrower or any of its
Subsidiaries shall admit in writing its inability to pay its
debts generally as they become due or any action shall be taken
by such Person in furtherance of any of the aforesaid purposes.
(g) Defaults under Other Agreements. With respect to
any Indebtedness (other than Indebtedness outstanding under this
Credit Agreement) of the Borrower or any of its Subsidiaries in
an aggregate principal amount in excess of $2,000,000,
including, without limitation, the Senior Notes or the
Subordinated Debt (i) a Credit Party shall (A) default in any
payment (beyond the applicable grace period with respect
thereto, if any) with respect to any such Indebtedness, or (B)
default (after giving effect to any applicable grace period) in
the observance or performance relating to such Indebtedness or
contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event or condition shall occur or
condition exist, the effect of which default or other event or
condition is to cause, or permit, the holder or holders of such
Indebtedness (or trustee or agent on behalf of such holders) to
cause (determined without regard to whether any notice or lapse
of time is required) any such Indebtedness to become due prior
to its stated maturity; or (ii) any such Indebtedness shall be
declared due and payable, or required to be prepaid other than
by a regularly scheduled required prepayment prior to the stated
maturity thereof; or (iii) any such Indebtedness shall mature
and remain unpaid.
(h) Judgments. One or more judgments, orders, or
decrees shall be entered against any one or more of the Credit
Parties and its Subsidiaries involving a liability of $1,000,000
or more, in the aggregate, (to the extent not paid or covered by
insurance provided by a carrier who has acknowledged coverage)
and such judgments, orders or decrees (i) are the subject of any
enforcement proceeding commenced by any creditor or (ii) shall
continue unsatisfied, undischarged and unstayed for a period
ending on the first to occur of (A) the last day on which such
judgment, order or decree becomes final and unappealable or (B)
60 days.
(i) ERISA. The occurrence of any of the following
events or conditions: (A) any "accumulated funding deficiency,"
as such term is defined in Section 302 of ERISA and Section 412
of the Code, whether or not waived, shall exist with respect to
any Plan, or any lien shall arise on the assets of the Borrower
or any of its Subsidiaries or any ERISA Affiliate in favor of
the PBGC or a Plan; (B) a Termination Event shall occur with
respect to a Single Employer Plan, which is, in the reasonable
opinion of the Administrative Agent, likely to result in the
termination of such Plan for purposes of Title IV of ERISA; (C)
a Termination Event shall occur with respect to a Multiemployer
Plan or Multiple Employer Plan, which is, in the reasonable
opinion of the Administrative Agent, likely to result in (i) the
termination of such Plan for purposes of Title IV of ERISA, or
(ii) the Borrower or any of its Subsidiaries or any ERISA
Affiliate incurring any liability in connection with a
withdrawal from, reorganization of (within the meaning of
Section 4241 of ERISA), or insolvency (within the meaning of
Section 4245 of ERISA) of such Plan; or (D) any prohibited
transaction (within the meaning of Section 406 of ERISA or
Section 4975 of the Code) or breach of fiduciary responsibility
shall occur which may subject the Borrower or any of its
Subsidiaries or any ERISA Affiliate to any liability under
Sections 406, 409, 502(i), or 502(l) of ERISA or Section 4975 of
the Code, or under any agreement or other instrument pursuant to
which the Borrower or any of its Subsidiaries or any ERISA
Affiliate has agreed or is required to indemnify any person
against any such liability.
(j) Ownership. There shall occur a Change of Control.
(k) Subordinated Debt. (i) Any Governmental Authority
with applicable jurisdiction determines that the Lenders are not
holders of Senior Indebtedness (as defined in the documentation
evidencing the Subordinated Debt) or Senior Debt (as defined in
the Subordinated Secured Note) or (ii) the subordination
provisions creating the Subordinated Debt or the Subordinated
Secured Note shall, in whole or in part, terminate, cease to be
effective or cease to be legally valid, binding and enforceable
as to any holder of the Subordinated Debt or the Subordinated
Secured Note.
(l) Borrowing Base Assets. The sum of the amount of
Revolving Loans outstanding plus LOC Obligations outstanding, as
of the date of the Borrowing Base Report, shall exceed the
Borrowing Base Assets, as determined on two consecutive
Borrowing Base Reports delivered by the Borrower.
9.2 Acceleration; Remedies.
Upon the occurrence of an Event of Default, and at any time
thereafter unless and until such Event of Default has been waived in
writing by the Required Lenders (or the Lenders as may be required
hereunder), the Administrative Agent shall, (x) upon the request and
direction of the Required Lenders or (y) on the day after an Event of
Default has occurred and been continuing for 90 days, unless otherwise
consented to by all Lenders, by written notice to the Borrower, take the
following actions without prejudice to the rights of the Agents or any
Lender to enforce its claims against the Credit Parties, except as
otherwise specifically provided for herein:
(a) Termination of Commitments. Declare the Commitments
terminated whereupon the Commitments shall be immediately
terminated.
(b) Acceleration of Loans. Declare the unpaid principal
of and any accrued interest in respect of all Loans, any
reimbursement obligations arising from drawings under Letters of
Credit and any and all other indebtedness or obligations of any
and every kind owing by a Credit Party to any of the Lenders
hereunder to be due whereupon the same shall be immediately due
and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Credit
Parties.
(c) Cash Collateral. Direct the Borrower to pay (and
the Borrower agrees that upon receipt of such notice, or upon
the occurrence of an Event of Default under Section 9.1(f), they
will immediately pay) to the Administrative Agent additional
cash, to be held by the Administrative Agent, for the benefit of
the Lenders, in a cash collateral account as additional security
for the LOC Obligations in respect of subsequent drawings under
all then outstanding Letters of Credit in an amount equal to the
maximum aggregate amount which may be drawn under all Letters of
Credits then outstanding.
(d) Enforcement of Rights. Enforce any and all rights
and interests created and existing under the Credit Documents,
including, without limitation, all rights and remedies existing
under the Collateral Documents, all rights and remedies against
a Guarantor and all rights of set-off.
Notwithstanding the foregoing, if an Event of Default specified in
Section 9.1(f) shall occur, then the Commitments shall automatically
terminate and all Loans, all reimbursement obligations under Letters of
Credit, all accrued interest in respect thereof, all accrued and unpaid
fees and other indebtedness or obligations owing to the Lenders hereunder
shall immediately become due and payable without the giving of any notice
or other action by the Agents or the Lenders, which notice or other
action is expressly waived by the Credit Parties.
Notwithstanding the fact that enforcement powers reside primarily with
the Administrative Agent, each Lender has, to the extent permitted by
law, a separate right of payment and shall be considered a separate
"creditor" holding a separate "claim" within the meaning of Section
101(5) of the Bankruptcy Code or any other insolvency statute.
9.3 Allocation of Payments After Event of Default.
Notwithstanding any other provisions of this Credit Agreement,
after the occurrence and during the continuance of an Event of Default,
all amounts collected or received by an Agent or any Lender on account of
amounts outstanding under any of the Credit Documents or in respect of
the Collateral shall be paid over or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket
costs and expenses (including without limitation reasonable
attorneys' fees) of the Agents in connection with enforcing the
rights of the Lenders under the Credit Documents and any
protective advances made by the Agents with respect to the
Collateral under or pursuant to the terms of the Collateral
Documents;
SECOND, to payment of any fees owed to an Agent or a
Issuing Lender;
THIRD, to the payment of all reasonable out-of-pocket
costs and expenses, (including, without limitation, reasonable
attorneys' fees) of each of the Lenders in connection with
enforcing its rights under the Credit Documents;
FOURTH, to the payment of all accrued fees and interest
payable to the Lenders hereunder;
FIFTH, to the payment of the outstanding principal
amount of the Loans and unreimbursed drawings under Letters of
Credit, to the payment or cash collateralization of the
outstanding LOC Obligations, pro rata as set forth below;
SIXTH, to any principal amounts outstanding under
Hedging Agreements, pro rata, as set forth below;
SEVENTH, to all other obligations which shall have
become due and payable under the Credit Documents and not repaid
pursuant to clauses "FIRST" through "SIXTH" above; and
EIGHTH, to the payment of the surplus, if any, to
whoever may be lawfully entitled to receive such surplus.
In carrying out the foregoing, (a) amounts received shall be applied in
the numerical order provided until exhausted prior to application to the
next succeeding category; (b) each of the Lenders shall receive an amount
equal to its pro rata share (based on the proportion that the then
outstanding Loans, LOC Obligations and obligations under Hedging
Agreements held by such Lender bears to the aggregate then outstanding
Loans, LOC Obligations and obligations under Hedging Agreements) of
amounts available to be applied pursuant to clauses "THIRD", "FOURTH,"
"FIFTH," "SIXTH" and "SEVENTH" above; and (c) to the extent that any
amounts available for distribution pursuant to clause "FIFTH" above are
attributable to the issued but undrawn amount of outstanding Letters of
Credit, such amounts shall be held by the Collateral Agent in a cash
collateral account and applied (x) first, to reimburse the Issuing Lender
from time to time for any drawings under such Letters of Credit and (y)
then, following the expiration of all Letters of Credit, to all other
obligations of the types described in clauses "FIFTH," "SIXTH" and
"SEVENTH" above in the manner provided in this Section 9.3.
SECTION 10
AGENCY PROVISIONS
10.1 Appointment.
Each Lender hereby designates and appoints NBD Bank as
Administrative Agent and Collateral Agent and NationsBank, N.A. as
Documentation Agent of such Lender to act as specified herein and the
other Credit Documents, and each such Lender hereby authorizes the
Agents, as the agents for such Lender, to take such action on its behalf
under the provisions of this Credit Agreement and the other Credit
Documents and to exercise such powers and perform such duties as are
expressly delegated by the terms hereof and of the other Credit
Documents, together with such other powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary elsewhere herein
and in the other Credit Documents, the Agents shall not have any duties
or responsibilities, except those expressly set forth herein and therein,
or any fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be
read into this Credit Agreement or any of the other Credit Documents, or
shall otherwise exist against the Agents. The provisions of this Section
are solely for the benefit of the Agents and the Lenders and none of the
Credit Parties shall have any rights as a third party beneficiary of the
provisions hereof. In performing its functions and duties under this
Credit Agreement and the other Credit Documents, each Agent shall act
solely as an agent of the Lenders and does not assume and shall not be
deemed to have assumed any obligation or relationship of agency or trust
with or for any Credit Party.
10.2 Delegation of Duties.
An Agent may execute any of its duties hereunder or under the
other Credit Documents by or through agents or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining
to such duties. An Agent shall not be responsible for the negligence or
misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
10.3 Exculpatory Provisions.
Neither the Agents nor any of their officers, directors,
employees, agents, attorneys-in-fact or affiliates shall be liable for
any action lawfully taken or omitted to be taken by it or such Person
under or in connection herewith or in connection with any of the other
Credit Documents (except for its or such Person's own gross negligence or
willful misconduct) or responsible in any manner to any of the Lenders
for any recitals, statements, representations or warranties made by any
of the Credit Parties contained herein or in any of the other Credit
Documents or in any certificate, report, document, financial statement or
other written or oral statement referred to or provided for in, or
received by an Agent under or in connection herewith or in connection
with the other Credit Documents, or enforceability or sufficiency
therefor of any of the other Credit Documents, or for any failure of the
Borrower to perform its obligations hereunder or thereunder. The Agents
shall not be responsible to any Lender for the effectiveness,
genuineness, validity, enforceability, collectibility or sufficiency of
this Credit Agreement, or any of the other Credit Documents or for any
representations, warranties, recitals or statements made herein or
therein or made by the Borrower or any Credit Party in any written or
oral statement or in any financial or other statements, instruments,
reports, certificates or any other documents in connection herewith or
therewith furnished or made by an Agent to the Lenders or by or on behalf
of the Credit Parties to the Agents or any Lender or be required to
ascertain or inquire as to the performance or observance of any of the
terms, conditions, provisions, covenants or agreements contained herein
or therein or as to the use of the proceeds of the Loans or the use of
the Letters of Credit or of the existence or possible existence of any
Default or Event of Default or to inspect the properties, books or
records of the Credit Parties. The Agents are not trustees for the
Lenders and owe no fiduciary duty to the Lenders.
10.4 Reliance on Communications.
The Agents shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy,
telex or teletype message, statement, order or other document or
conversation believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to
any of the Credit Parties, independent accountants and other experts
selected by the Agents with reasonable care). The Agents may deem and
treat the Lenders as the owner of its interests hereunder for all
purposes unless a written notice of assignment, negotiation or transfer
thereof shall have been filed with the Administrative Agent in accordance
with Section 11.3(b). The Agents shall be fully justified in failing or
refusing to take any action under this Credit Agreement or under any of
the other Credit Documents unless it shall first receive such advice or
concurrence of the Required Lenders as it deems appropriate or it shall
first be indemnified to its satisfaction by the Lenders against any and
all liability and expense which may be incurred by it by reason of taking
or continuing to take any such action. The Agents shall in all cases be
fully protected in acting, or in refraining from acting, hereunder or
under any of the other Credit Documents in accordance with a request of
the Required Lenders (or to the extent specifically provided in Section
11.6, all the Lenders) and such request and any action taken or failure
to act pursuant thereto shall be binding upon all the Lenders (including
their successors and assigns).
10.5 Notice of Default.
An Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default hereunder unless such Agent
has received notice from a Lender or a Credit Party referring to the
Credit Document, describing such Default or Event of Default and stating
that such notice is a "notice of default." In the event that the
Administrative Agent receives such a notice, the Administrative Agent
shall give prompt notice thereof to the Lenders. The Administrative Agent
shall take such action with respect to such Default or Event of Default
as shall be reasonably directed by the Required Lenders.
10.6 Non-Reliance on Agents and Other Lenders.
Each Lender expressly acknowledges that neither the Agents nor
any of their officers, directors, employees, agents, attorneys-in-fact or
affiliates has made any representations or warranties to it and that no
act by the Agents or any affiliate thereof hereinafter taken, including
any review of the affairs of any Credit Party, shall be deemed to
constitute any representation or warranty by the Agents to any Lender.
Each Lender represents to the Agents that it has, independently and
without reliance upon the Agents or any other Lender, and based on such
documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, assets, operations,
property, financial and other conditions, prospects and creditworthiness
of the Credit Parties and made its own decision to make its Loans
hereunder and enter into this Credit Agreement. Each Lender also
represents that it will, independently and without reliance upon the
Agents or any other Lender, and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
analysis, appraisals and decisions in taking or not taking action under
this Credit Agreement, and to make such investigation as it deems
necessary to inform itself as to the business, assets, operations,
property, financial and other conditions, prospects and creditworthiness
of the Credit Parties. Except for notices, reports and other documents
expressly required to be furnished to the Lenders by the Administrative
Agent hereunder, the Agents shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the
business, operations, assets, property, financial or other conditions,
prospects or creditworthiness of the Credit Parties which may come into
the possession of the Agents or any of their officers, directors,
employees, agents, attorneys-in-fact or affiliates.
10.7 Indemnification.
The Lenders agree to indemnify each Agent in its capacity as
such (to the extent not reimbursed by the Borrower and without limiting
the obligation of the Borrower to do so), ratably according to their
respective Commitments (or if the Commitments have expired or been
terminated, in accordance with the respective principal amounts of
outstanding Loans and Participation Interest of the Lenders), from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever which may at any time (including without limitation at any
time following payment in full of the Credit Party Obligations) be
imposed on, incurred by or asserted against an Agent in its capacity as
such in any way relating to or arising out of this Credit Agreement or
the other Credit Documents or any documents contemplated by or referred
to herein or therein or the transactions contemplated hereby or thereby
or any action taken or omitted by an Agent under or in connection with
any of the foregoing; provided that no Lender shall be liable for the
payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the gross negligence or willful misconduct of an Agent. If
any indemnity furnished to an Agent for any purpose shall, in the opinion
of such Agent, be insufficient or become impaired, such Agent may call
for additional indemnity and cease, or not commence, to do the acts
indemnified against until such additional indemnity is furnished. The
agreements in this Section shall survive the payment of the Credit Party
Obligations and all other amounts payable hereunder and under the other
Credit Documents.
10.8 Agents in Their Individual Capacity.
Each Agent and its affiliates may make loans to, accept deposits
from and generally engage in any kind of business with the Borrower or
any other Credit Party as though such Agent were not an Agent hereunder.
With respect to the Loans made and Letters of Credit issued and all
obligations owing to it, an Agent shall have the same rights and powers
under this Credit Agreement as any Lender and may exercise the same as
though they were not an Agent, and the terms "Lender" and "Lenders" shall
include each Agent in its individual capacity.
10.9 Successor Agent.
Any Agent may, at any time, resign upon 20 days written notice
to the Lenders. Upon any such resignation, the Required Lenders shall
have the right to appoint a successor Agent. If no successor Agent shall
have been so appointed by the Required Lenders, and shall have accepted
such appointment, within 45 days after the notice of resignation, then
the retiring Agent shall select a successor Agent provided such successor
is a Lender hereunder or a commercial bank organized under the laws of
the United States of America or of any State thereof and has a combined
capital and surplus of at least $400,000,000. Upon the acceptance of any
appointment as an Agent hereunder by a successor, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall
be discharged from its duties and obligations as an Agent, as
appropriate, under this Credit Agreement and the other Credit Documents
and the provisions of this Section 10.9 shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was an Agent
under this Credit Agreement.
SECTION 11
MISCELLANEOUS
11.1 Notices.
Except as otherwise expressly provided herein, all notices and
other communications shall have been duly given and shall be effective
(a) when delivered, (b) when transmitted via telecopy (or other facsimile
device) to the number set out below, (c) the Business Day following the
day on which the same has been delivered prepaid to a reputable national
overnight air courier service, or (d) the third Business Day following
the day on which the same is sent by certified or registered mail,
postage prepaid, in each case to the respective parties at the address or
telecopy numbers set forth on Schedule 11.1, or at such other address as
such party may specify by written notice to the other parties hereto.
11.2 Right of Set-Off.
In addition to any rights now or hereafter granted under
applicable law or otherwise, and not by way of limitation of any such
rights, upon the occurrence of an Event of Default and the commencement
of remedies described in Section 9.2, each Lender is authorized at any
time and from time to time, without presentment, demand, protest or other
notice of any kind (all of which rights being hereby expressly waived),
to set-off and to appropriate and apply any and all deposits (general or
special) and any other indebtedness at any time held or owing by such
Lender (including, without limitation, branches, agencies or Affiliates
of such Lender wherever located) to or for the credit or the account of
any Credit Party against obligations and liabilities of such Credit Party
to the Lenders hereunder, under the Notes, the other Credit Documents or
otherwise, irrespective of whether the Administrative Agent or the
Lenders shall have made any demand hereunder and although such
obligations, liabilities or claims, or any of them, may be contingent or
unmatured, and any such set-off shall be deemed to have been made
immediately upon the occurrence of an Event of Default even though such
charge is made or entered on the books of such Lender subsequent thereto.
The Credit Parties hereby agree that any Person purchasing a
participation in the Loans and Commitments hereunder pursuant to Section
11.3(c) or 3.8 may exercise all rights of set-off with respect to its
participation interest as fully as if such Person were a Lender
hereunder.
11.3 Benefit of Agreement.
(a) Generally. This Credit Agreement shall be binding
upon and inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto;
provided that none of the Credit Parties may assign and transfer
any of its interests (except as permitted by Section 8.4 or 8.5)
without the prior written consent of the Lenders; and provided
further that the rights of each Lender to transfer, assign or
grant participations in its rights and/or obligations hereunder
shall be limited as set forth below in subsections (b) and (c)
of this Section 11.3. Notwithstanding the above (including
anything set forth in subsections (b) and (c) of this Section
11.3), nothing herein shall restrict, prevent or prohibit any
Lender from (A) pledging its Loans hereunder to a Federal
Reserve Bank in support of borrowings made by such Lender from
such Federal Reserve Bank, or (B) granting assignments or
participations in such Lender's Loans and/or Commitments
hereunder to its parent company and/or to any Affiliate of such
Lender or to any existing Lender or Affiliate thereof.
(b) Assignments. Each Lender may, with the prior
written consent of the Borrower and the Agents (provided that no
consent of the Borrower shall be required during the existence
and continuation of an Event of Default), which consent shall
not be unreasonably withheld or delayed, assign all or a portion
of its rights and obligations hereunder pursuant to an
assignment agreement substantially in the form of Exhibit 11.3
to one or more Eligible Assignees; provided that (i) any such
assignment shall be in a minimum aggregate amount of $5,000,000
of the Commitments and in integral multiples of $1,000,000 above
such amount (or the remaining amount of Commitments held by such
Lender), (ii) each such assignment shall be of a constant, not
varying, percentage of all of the assigning Lender's rights and
obligations under the Commitment being assigned and (iii) an
Agent may not, in the aggregate, (unless there exists an Event
of Default) assign more than 50% of its original Commitment as
of the Closing Date. Any assignment hereunder shall be effective
upon satisfaction of the conditions set forth above and delivery
to the Administrative Agent of a duly executed assignment
agreement together with a transfer fee of $3,500 payable to the
Administrative Agent for its own account. Upon the effectiveness
of any such assignment, the assignee shall become a "Lender" for
all purposes of this Credit Agreement and the other Credit
Documents and, to the extent of such assignment, the assigning
Lender shall be relieved of its obligations hereunder to the
extent of the Loans and Commitment components being assigned.
Along such lines the Borrower agrees that upon notice of any
such assignment and surrender of the appropriate Note or Notes,
it will promptly provide to the assigning Lender and to the
assignee separate promissory notes in the amount of their
respective interests substantially in the form of the original
Note or Notes (but with notation thereon that it is given in
substitution for and replacement of the original Note or Notes
or any replacement notes thereof).
By executing and delivering an assignment agreement in
accordance with this Section 11.3(b), the assigning Lender
thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties
hereto as follows: (i) such assigning Lender warrants that it is
the legal and beneficial owner of the interest being assigned
thereby free and clear of any adverse claim and the assignee
warrants that it is an Eligible Assignee; (ii) except as set
forth in clause (i) above, such assigning Lender makes no
representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in
or in connection with this Credit Agreement, any of the other
Credit Documents or any other instrument or document furnished
pursuant hereto or thereto, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of
this Credit Agreement, any of the other Credit Documents or any
other instrument or document furnished pursuant hereto or
thereto or the financial condition of any Credit Party or the
performance or observance by any Credit Party of any of its
obligations under this Credit Agreement, any of the other Credit
Documents or any other instrument or document furnished pursuant
hereto or thereto; (iii) such assignee represents and warrants
that it is legally authorized to enter into such assignment
agreement; (iv) such assignee confirms that it has received a
copy of this Credit Agreement, the other Credit Documents and
such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to
enter into such assignment agreement; (v) such assignee will
independently and without reliance upon the Agents, such
assigning Lender or any other Lender, and based on such
documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not
taking action under this Credit Agreement and the other Credit
Documents; (vi) such assignee appoints and authorizes the Agents
to take such action on its behalf and to exercise such powers
under this Credit Agreement or any other Credit Document as are
delegated to the Agents by the terms hereof or thereof, together
with such powers as are reasonably incidental thereto; and (vii)
such assignee agrees that it will perform in accordance with
their terms all the obligations which by the terms of this
Credit Agreement and the other Credit Documents are required to
be performed by it as a Lender.
(c) Participations. Each Lender may sell, transfer,
grant or assign participations in all or any part of such
Lender's interests and obligations hereunder; provided that (i)
such selling Lender shall remain a "Lender" for all purposes
under this Credit Agreement (such selling Lender's obligations
under the Credit Documents remaining unchanged) and the
participant shall not constitute a Lender hereunder, (ii) no
such participant shall have, or be granted, rights to approve
any amendment or waiver relating to this Credit Agreement or the
other Credit Documents except to the extent any such amendment
or waiver would (A) reduce the principal of or rate of interest
on or fees in respect of any Loans in which the participant is
participating or increase any Commitments with respect thereto,
(B) postpone the date fixed for any payment of principal
(including the extension of the final maturity of any Loan or
the date of any mandatory prepayment), interest or fees in which
the participant is participating, or (C) release all or
substantially all of the collateral or guaranties (except as
expressly provided in the Credit Documents) supporting any of
the Loans or Commitments in which the participant is
participating, (iii) sub-participations by the participant
(except to an Affiliate, parent company or Affiliate of a parent
company of the participant) shall be prohibited and (iv) any
such participations shall be in a minimum aggregate amount of
$5,000,000 of the Commitments and in integral multiples of
$1,000,000 in excess thereof. In the case of any such
participation, the participant shall not have any rights under
this Credit Agreement or the other Credit Documents (the
participant's rights against the selling Lender in respect of
such participation to be those set forth in the participation
agreement with such Lender creating such participation) and all
amounts payable by the Borrower hereunder shall be determined as
if such Lender had not sold such participation; provided,
however, that such participant shall be entitled to receive
additional amounts under Sections 3.9, 3.12, 3.13 and 3.14 to
the same extent that the Lender from which such participant
acquired its participation would be entitled to the benefit of
such cost protection provisions.
11.4 No Waiver; Remedies Cumulative.
No failure or delay on the part of an Agent or any Lender in
exercising any right, power or privilege hereunder or under any other
Credit Document and no course of dealing between the Borrower or any
Credit Party and the Agents or any Lender shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or under any other Credit Document preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege hereunder or thereunder. The rights and remedies provided
herein are cumulative and not exclusive of any rights or remedies which
the Agents or any Lender would otherwise have. No notice to or demand on
any Credit Party in any case shall entitle any Credit Party to any other
or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Agents or the Lenders to any
other or further action in any circumstances without notice or demand.
11.5 Payment of Expenses; Indemnification.
The Credit Parties agree to: (a) pay all reasonable
out-of-pocket costs and expenses of (i) the Documentation Agent in
connection with (A) the negotiation, preparation, execution and delivery
and administration of this Credit Agreement and the other Credit
Documents and the documents and instruments referred to therein
(including, without limitation, the reasonable fees and expenses of Xxxxx
& Xxx Xxxxx, special counsel to the Documentation Agent and the fees and
expenses of counsel for the Documentation Agent in connection with
collateral issues), and (B) any amendment, waiver or consent relating
hereto and thereto including, but not limited to, any such amendments,
waivers or consents resulting from or related to any work-out,
renegotiation or restructure relating to the performance by the Credit
Parties under this Credit Agreement and (ii) the Agents and the Lenders
in connection with (A) enforcement of the Credit Documents and the
documents and instruments referred to therein, including, without
limitation, in connection with any such enforcement, the reasonable fees
and disbursements of counsel for the Agents and each of the Lenders, and
(B) any bankruptcy or insolvency proceeding of a Credit Party of any of
its Subsidiaries and (b) indemnify each Agent, and each Lender, its
officers, directors, employees, representatives and agents from and hold
each of them harmless against any and all losses, liabilities, claims,
damages or expenses incurred by any of them as a result of, or arising
out of, or in any way related to, or by reason of, any investigation,
litigation or other proceeding (whether or not any Agent, or Lender is a
party thereto) related to (i) the entering into and/or performance of any
Credit Document or the use of proceeds of any Loans (including other
extensions of credit) hereunder or the consummation of any other
transactions contemplated in any Credit Document, including, without
limitation, the reasonable fees and disbursements of counsel incurred in
connection with any such investigation, litigation or other proceeding
(but excluding any such losses, liabilities, claims, damages or expenses
to the extent incurred by reason of gross negligence or willful
misconduct on the part of the Person to be indemnified), (ii) any
Environmental Claim and (iii) any claims for Non-Excluded Taxes.
11.6 Amendments, Waivers and Consents.
Neither this Credit Agreement nor any other Credit Document nor
any of the terms hereof or thereof may be amended, changed, waived,
discharged or terminated unless such amendment, change, waiver, discharge
or termination is in writing and signed by the Required Lenders and the
then Credit Parties; provided that no such amendment, change, waiver,
discharge or termination shall without the consent of each Lender:
(a) extend the Revolving Loan Maturity Date or postpone
or extend the time for any payment or prepayment of principal;
(b) reduce the rate or extend the time of payment of
interest (other than as a result of waiving the applicability of
any post-default increase in interest rates) thereon or fees
hereunder;
(c) reduce or waive the principal amount of any Loan;
(d) increase or extend the Commitment of a Lender or
the total Commitments over the amount thereof in effect (it
being understood and agreed that a waiver of any Default or
Event of Default or a waiver of any mandatory reduction in the
Commitments shall not constitute a change in the terms of any
Commitment of any Lender);
(e) release all or substantially all of the Collateral
securing the Credit Party Obligations hereunder (provided that
the Collateral Agent may, without consent from any other Lender,
release any Collateral that is sold or transferred by a Credit
Party in conformance with Section 8.5);
(f) release the Borrower from its obligations or
release all or substantially all of the other Credit Parties
from their respective obligations under the Credit Documents;
(g) amend, modify or waive any provision of this
Section or Section 3.4(a), 3.4(b)(i), 3.7, 3.8, 3.9, 3.10, 3.11,
3.12, 3.13, 3.14, 9.1(a), 9.1(l), 11.2, 11.3 or 11.5;
(h) reduce any percentage specified in, or otherwise
modify, the definition of Required Lenders; or
(i) consent to the assignment or transfer by the
Borrower of any of its rights and obligations under (or in
respect of) the Credit Documents.
Notwithstanding the fact that the consent of all the Lenders is required
in certain circumstances as set forth above, (x) each Lender is entitled
to vote as such Lender sees fit on any reorganization plan that affects
the Loans or the Letters of Credit, and each Lender acknowledges that the
provisions of Section 1126(c) of the Bankruptcy Code supersedes the
unanimous consent provisions set forth herein and (y) the Required
Lenders may consent to allow a Credit Party to use cash collateral in the
context of a bankruptcy or insolvency proceeding.
11.7 Counterparts.
This Credit Agreement may be executed in any number of
counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument.
It shall not be necessary in making proof of this Credit Agreement to
produce or account for more than one such counterpart. Delivery of
executed counterparts by telecopy shall be as effective as an original
and shall constitute a representation that an original will be delivered.
11.8 Headings.
The headings of the sections and subsections hereof are provided
for convenience only and shall not in any way affect the meaning or
construction of any provision of this Credit Agreement.
11.9 Defaulting Lender.
Each Lender understands and agrees that if such Lender is a
Defaulting Lender then notwithstanding the provisions of Section 11.6 it
shall not be entitled to vote on any matter requiring the consent of the
Required Lenders or to object to any matter requiring the consent of all
the Lenders; provided, however, that all other benefits and obligations
under the Credit Documents shall apply to such Defaulting Lender.
11.10 Survival of Indemnification and Representations and
Warranties.
All indemnities set forth herein and all representations and
warranties made herein shall survive the execution and delivery of this
Credit Agreement, the making of the Loans, the issuance of the Letters of
Credit and the repayment of the Loans, LOC Obligations and other
obligations and the termination of the Commitments hereunder.
11.11 Governing Law; Jurisdiction.
(a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND
THEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Any legal
action or proceeding with respect to this Agreement or any other
Credit Document may be brought in the courts of the State of
Michigan or of the United States for the Eastern District of
Michigan, and, by execution and delivery of this Credit
Agreement, each Credit Party hereby irrevocably accepts for
itself and in respect of its property, generally and
unconditionally, the jurisdiction of such courts. Each Credit
Party further irrevocably consents to the service of process out
of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to it at the address for
notices pursuant to Section 11.1, such service to become
effective 15 days after such mailing. Nothing herein shall
affect the right of a Lender to serve process in any other
manner permitted by law or to commence legal proceedings or to
otherwise proceed against a Credit Party in any other
jurisdiction. Each Credit Party agrees that a final judgment in
any action or proceeding shall be conclusive and may be enforced
in other jurisdictions by suit on the judgment or in any other
manner provided by law; provided that nothing in this Section
11.11(a) is intended to impair a Credit Party's right under
applicable law to appeal or seek a stay of any judgment.
(b) Each Credit Party hereby irrevocably waives any
objection which it may now or hereafter have to the laying of
venue of any of the aforesaid actions or proceedings arising out
of or in connection with this Agreement or any other Credit
Document brought in the courts referred to in subsection (a)
hereof and hereby further irrevocably waives and agrees not to
plead or claim in any such court that any such action or
proceeding brought in any such court has been brought in an
inconvenient forum.
11.12 Waiver of Jury Trial.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS CREDIT AGREEMENT, ANY OF THE OTHER
CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY.
11.13 Time.
All references to time herein shall be references to Eastern
Standard Time or Eastern Daylight time, as the case may be, unless
specified otherwise.
11.14 Severability.
If any provision of any of the Credit Documents is determined to
be illegal, invalid or unenforceable, such provision shall be fully
severable and the remaining provisions shall remain in full force and
effect and shall be construed without giving effect to the illegal,
invalid or unenforceable provisions.
11.15 Further Assurances.
The Credit Parties agree, upon the request of the Agents, to
promptly take such actions, as reasonably requested, as is necessary to
carry out the intent of this Credit Agreement and the other Credit
Documents, including, but not limited to, such actions as are necessary
to ensure that the Lenders have a perfected security interest in the
Collateral subject to no Liens other than Permitted Liens.
11.16 Confidentiality.
Each Lender agrees that it will use its reasonable best efforts
to keep confidential and to cause any representative designated under
Section 7.12 to keep confidential any non-public information from time to
time supplied to it under any Credit Document; provided, however, that
nothing herein shall prevent the disclosure of any such information to
(a) the extent a Lender in good faith believes such disclosure is
required by Requirement of Law, (b) counsel for a Lender or to its
accountants, (c) bank examiners or auditors or comparable Persons, (d)
any affiliate of a Lender, (e) any other Lender, or any assignee,
transferee or participant, or any potential assignee, transferee or
participant, of all or any portion of any Lender's rights under this
Agreement who is notified of the confidential nature of the information
or (f) any other Person in connection with any litigation to which any
one or more of the Lenders is a party; and provided further that no
Lender shall have any obligation under this Section 11.16 to the extent
any such information becomes available on a non-confidential basis from a
source other than a Credit Party or that any information becomes publicly
available other than by a breach of this Section 11.16.
11.17 Entirety.
This Credit Agreement together with the other Credit Documents
represent the entire agreement of the parties hereto and thereto, and
supersede all prior agreements and understandings, oral or written, if
any, including any commitment letters or correspondence relating to the
Credit Documents or the transactions contemplated herein and therein.
11.18 Binding Effect.
This Credit Agreement shall become effective at such time when
all of the conditions set forth in Section 5.1 have been satisfied or
waived by the Lenders and it shall have been executed by the Borrower,
the Guarantors and the Agents, and the Agents shall have received copies
hereof (telefaxed or otherwise) which, when taken together, bear the
signatures of each Lender, and thereafter this Credit Agreement shall be
binding upon and inure to the benefit of the Borrower, the Guarantors,
the Agents and each Lender and their respective successors and assigns.
11.19 Release of Collateral.
Subsequent to the date that the Overadvance is no longer
available (whether as a result of the Overadvance being requested and the
90 day period thereafter having occurred or the time period available to
use the Overadvance has expired), the Lenders agree, upon the request and
at the expense of the Borrower, and so long as (a) the sum of the
aggregate amount of Revolving Loans outstanding plus LOC Obligations
outstanding exceeds the Borrowing Base Assets and (b) no Default or Event
of Default exists and is continuing, to take such action as is necessary
to release any real property Collateral or Collateral consisting of
equipment. The Lenders hereby authorize the Collateral Agent to execute
and deliver such documentation or to take such other action as is
necessary to give effect to this Section 11.19.
11.20 Consent to M.O.U.
Notwithstanding anything to the contrary contained in this
Agreement, each of the Credit Parties may execute, deliver, and perform
its obligations under the M.O.U. including, without limitation, the
execution, delivery, and performance of the definitive documents
contemplated thereby; provided that such definitive documents will be
submitted to each Lender prior to the execution of any such document (or,
if such prior submission is not practicable, contemporaneously with the
execution of such document) for confirmation by such Lender that such
definitive document conforms with the M.O.U., such confirmation not to be
unreasonably withheld.
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Each of the parties hereto has caused a counterpart of this
Credit Agreement to be duly executed and delivered as of the date first
above written.
BORROWER:
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XXXXXXX SPORTS INC.,
a Delaware corporation
By:_____________________________________
Name:___________________________________
Title:__________________________________
GUARANTORS:
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XXXXXXX, INC.,
a Illinois corporation
By:_____________________________________
Name:___________________________________
Title:__________________________________
EQUILINK LICENSING CORPORATION,
a Delaware corporation
By:_____________________________________
Name:___________________________________
Title:__________________________________
RHC LICENSING CORPORATION,
a Delaware corporation
By:_____________________________________
Name:___________________________________
Title:__________________________________
RIDMARK CORPORATION,
a Delaware corporation
By:_____________________________________
Name:___________________________________
Title:__________________________________
ALL AMERICAN SPORTS CORPORATION,
a Delaware corporation
By:_____________________________________
Name:___________________________________
Title:__________________________________
VARSITY SPIRIT CORPORATION,
a Tennessee corporation
By:_____________________________________
Name:___________________________________
Title:__________________________________
CHEER ACQUISITION CORP.
a Tennessee corporation
By:_____________________________________
Name:___________________________________
Title:__________________________________
VARSITY SPIRIT FASHIONS & SUPPLIES, INC.
a Minnesota corporation
By:_____________________________________
Name:___________________________________
Title:__________________________________
INTERNATIONAL LOGOS, INC.
a Tennessee corporation
By:_____________________________________
Name:___________________________________
Title:__________________________________
VARSITY/INTROPA TOURS, INC.
a Tennessee corporation
By:_____________________________________
Name:___________________________________
Title:__________________________________
VARSITY USA, INC.
a Tennessee corporation
By:_____________________________________
Name:___________________________________
Title:__________________________________
LENDERS:
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NBD BANK
individually in its capacity as a Lender
and in its capacity as Administrative
Agent and Collateral Agent
By:_____________________________________
Name:___________________________________
Title:__________________________________
NATIONSBANK, N.A.,
individually in its capacity as a Lender
and in its capacity as Documentation
Agent
By:_____________________________________
Name:___________________________________
Title:__________________________________
