Credit Agreement - Marvel Enterprises Inc. and Citibank NA
EXECUTION COPY
$60,000,000
CREDIT AGREEMENT
dated as of
April 1, 1999
among
Marvel Enterprises, Inc.
The Guarantors Party Hereto
The Lenders Party Hereto
and
Citibank, N.A.
as Agent, Collateral Agent and Issuer
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TABLE OF CONTENTS
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Page
ARTICLE 1
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Definitions.......................................................................1
Section 1.01. Definitions........................................................1
Section 1.02. Accounting Terms and Determinations...............................24
ARTICLE 2
The Credits......................................................................24
Section 2.01. Commitments to Lend................................................24
Section 2.02. Method of Borrowing...............................................24
Section 2.03. Maturity of Loans.................................................25
Section 2.04. Interest Rates. ..................................................25
Section 2.05. Method of Electing Interest Rates.................................26
Section 2.06. Fees..............................................................27
Section 2.07. Voluntary Termination or Reduction of Commitments.................28
Section 2.08. Mandatory Termination of Commitments..............................28
Section 2.09. Prepayments of Loans..............................................28
Section 2.10. General Provisions as to Payments.................................29
Section 2.11. Funding Losses....................................................29
Section 2.12. Computation of Interest and Fees..................................30
Section 2.13. Notes.............................................................30
Section 2.14. Letters of Credit.................................................30
ARTICLE 3
Conditions.......................................................................35
Section 3.01. Closing...........................................................35
Section 3.02. Borrowings and Issuances of Letters of Credit.....................37
ARTICLE 4
Representations and Warranties...................................................38
Section 4.01. Corporate Existence and Power.....................................38
Section 4.02. Corporate and Governmental Authorization; No Contravention........38
Section 4.03. Binding Effect,Liens..............................................38
Section 4.04. Financial Information.............................................39
Section 4.05. Litigation........................................................39
Section 4.06. Compliance with ERISA and Foreign Pension Laws....................39
Section 4.07. Environmental Matters.............................................40
Section 4.08. Taxes.............................................................42
Section 4.09. Subsidiaries......................................................42
Section 4.10. No Regulatory Restrictions on Borrowing...........................42
Section 4.11. Full Disclosure...................................................42
Section 4.12. Representations in Collateral Documents True and Correct..........42
Section 4.13. Pro Forma and Projected Financial Information.....................42
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Section 4.14. Labor Matters.....................................................43
Section 4.15. Intellectual Property.............................................43
Section 4.16. Solvency..........................................................43
Section 4.17. Ownership of Properties...........................................44
Section 4.18. No Burdensome Restrictions........................................44
Section 4.19. No Default........................................................44
Section 4.20. Compliance with Laws..............................................44
Section 4.21. Year 2000.........................................................44
Section 4.22. Limited Liability for Obligations of Panini Entities..............44
Section 4.23. Margin Regulations................................................45
Section 4.24. Deposit Accounts..................................................45
ARTICLE 5
Covenants........................................................................45
Section 5.01. Information.......................................................45
Section 5.02. Payment of Obligation.............................................48
Section 5.03. Maintenance of Property; Insurance................................48
Section 5.04. Conduct of Business and Maintenance of Existence..................49
Section 5.05. Compliance with Laws..............................................49
Section 5.06. Inspection of Property, Books and Records.........................49
Section 5.07. Mergers and Sales of Assets.......................................49
Section 5.08. Use of Proceeds...................................................50
Section 5.09. Negative Pledge...................................................50
Section 5.10. Limitation on Debt................................................50
Section 5.11. Minimum EBITDA....................................................51
Section 5.12. Minimum Consolidated Net Worth....................................51
Section 5.13. Leverage Ratio....................................................52
Section 5.14. Interest Coverage Ratio...........................................52
Section 5.15. Fixed Charge Coverage Ratio.......................................53
Section 5.16. Limitations on Restricted Payments................................53
Section 5.17. Limitation on Capital Expenditures................................54
Section 5.18. Investments and Acquisitions. ....................................54
Section 5.19. Sale-Leaseback Transactions.......................................57
Section 5.20. Transactions with Affiliates......................................57
Section 5.21. Constitutive Documents............................................58
Section 5.22. No Material Amendments............................................58
Section 5.23. Limitation on Restrictions Affecting Subsidiaries.................58
Section 5.24. Clean-Down Period.................................................58
Section 5.25. Fiscal Year.......................................................58
Section 5.26. Change in Business................................................59
Section 5.28. No New Subsidiaries...............................................60
Section 5.29. Year 2000.........................................................60
Section 5.30. Blocked Accounts..................................................60
ARTICLE 6
Defaults.........................................................................61
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Section 6.01. Events of Default.................................................61
Section 6.02. Notice of Default.................................................63
Section 6.03. Cash Collateral. .................................................63
ARTICLE 7
The Agent........................................................................63
Section 7.01. Appointment and Authorization. ...................................63
Section 7.02. Agent and Affiliates..............................................63
Section 7.03. Action by Agent...................................................64
Section 7.04. Appointment of Co-Agents..........................................64
Section 7.05. Consultation with Experts.........................................64
Section 7.06. Liability of Agent................................................64
Section 7.07. Indemnification...................................................65
Section 7.08. Credit Decision...................................................65
Section 7.09. Successor Agent...................................................65
Section 7.10. Agent's Fee.......................................................65
ARTICLE 8
Change in Circumstances..........................................................65
Section 8.01. Basis for Determining Interest Rate Inadequate or Unfair..........65
Section 8.02. Illegality........................................................66
Section 8.03. Increased Cost and Reduced Return.................................66
Section 8.04. Taxes.............................................................67
Section 8.05. Base Rate Loans Substituted for Affected Eurodollar Loans.........69
ARTICLE 9
Guaranty.........................................................................69
Section 9.01. The Guaranty......................................................69
Section 9.02. Guaranty Unconditional............................................70
Section 9.03. Discharge Only upon Payment in Full; Reinstatement in Certain
Circumstances.....................................................70
Section 9.04. Waiver by Each Guarantor..........................................71
Section 9.05. Subrogation and Contribution......................................71
Section 9.06. Stay of Acceleration..............................................71
Section 9.07. Limit of Liability................................................71
Section 9.08. Release upon Sale.................................................71
ARTICLE 10
MISCELLANEOUS....................................................................71
Section 10.01. Notices..........................................................71
Section 10.02. No Waivers.......................................................72
Section 10.03. Expenses; Indemnification........................................72
Section 10.04. Set-offs.........................................................72
Section 10.05. Amendments and Waivers; Release of Collateral....................73
Section 10.06. Successors; Participations and Assignments.......................74
Section 10.07. No Reliance on Margin Stock......................................75
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Section 10.08. Confidentiality..................................................75
Section 10.09. Governing Law; Submission to Jurisdiction........................75
Section 10.10. Counterparts; Integration; Effectiveness.........................75
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COMMITMENT SCHEDULE
PRICING SCHEDULE
SCHEDULE 1.01 -- Existing Letters of Credit
SCHEDULE 4.09 -- Subsidiaries
SCHEDULE 4.24 -- Deposit Accounts
SCHEDULE 5.09 -- Existing Liens
SCHEDULE 5.10 -- Outstanding Debt
SCHEDULE 5.18 -- Investments
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EXHIBIT A -- Form of Note
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EXHIBIT B -- Form of Borrowing Base Certificate
EXHIBIT C -- Form of Borrowing Base Management Report
EXHIBIT D -- Form of Security Agreement
EXHIBIT E -- Form of Opinion of Battle Fowler LLP, counsel for the Obligors
EXHIBIT F -- Form of Opinion of William H. Hardie, III
EXHIBIT G -- Opinion of Gallagher & Kennedy, special Arizona counsel for the
Obligors
EXHIBIT H -- Opinion of Stoel Rives LLP, special Washington counsel for the Obligors
EXHIBIT I -- Form of Opinion of Jones, Day, Reavis & Pogue, counsel for the Agent
EXHIBIT J -- Form of Assignment and Acceptance Agreement
EXHIBIT K -- Form of Landlord Waiver and Consent
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CREDIT AGREEMENT, dated as of April 1, 1999 (this "Agreement"), among
MARVEL ENTERPRISES, INC., the GUARANTORS party hereto, the LENDERS party hereto
and CITIBANK, N.A., as Agent, Collateral Agent and Issuer.
ARTICLE 1
Definitions
Section 1.01. Definitions. The following terms, as used herein, have
the following meanings:
"Acquisition Sub" means MEG Acquisition Corp., a Delaware corporation
and a wholly-owned subsidiary of Toy Biz, Inc.
"Administration Expense Claims" means administration expense claims
incurred in connection with the bankruptcy cases of Entertainment and its
Subsidiaries.
"Administrative Questionnaire" means, with respect to each Lender, an
administrative questionnaire in the form prepared by the Agent, completed by
such Lender and returned to the Agent (with a copy to the Borrower).
"Affiliate" means, as applied to any Person other than the Borrower,
any other Person directly or indirectly controlling, controlled by, or under
direct or indirect common control with, such Person. With respect to the
Borrower, "Affiliate" means (i) any Person that directly, or indirectly through
one or more intermediaries, controls the Borrower (a "Controlling Person") or
(ii) any Person (other than the Borrower or a Guarantor) that is controlled by
or is under common control with a Controlling Person. As used in this definition
only, the term "control" means possession, directly or indirectly, of the power
to vote 10% or more of any class of Voting Stock of a Person or to direct or
cause the direction of the management or policies of a Person, whether through
the ownership of Voting Stock, by contract or otherwise.
"Affiliate Agreements" has the meaning set forth in Section 5.20.
"Agent" means Citibank, N.A., in its capacity as agent for the Lenders
hereunder, and its successors in such capacity.
"Aggregate LC Exposure" means, at any time, the sum, without
duplication, of (i) the aggregate amount that is (or may thereafter become)
available for drawing under all Letters of Credit outstanding at such time and
(ii) the aggregate unpaid amount of all LC Reimbursement Obligations at such
time.
"Agreement" has the meaning set forth in the preamble hereto.
"Applicable Lending Office" means, with respect to any Lender, (i) in
the case of its Base Rate Loans and its participations in Letters of Credit, its
Domestic Lending Office and (ii) in the case of its Eurodollar Loans, its
Eurodollar Lending Office.
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"Applicable Leverage Ratio" means, in respect of any day, the Leverage
Ratio as at the last day of the most recent Fiscal Quarter in respect of which
the Borrower shall have delivered, on or prior to such day, a certificate
pursuant to Section 5.01(d); provided that if the Borrower shall fail to deliver
any such certificate on or prior to the day so required pursuant to Section
5.01(d), the "Applicable Leverage Ratio" shall be deemed to be greater than 3.0
to 1.0 from and including the day upon which such certificate was required to
have been delivered to, but excluding, the day upon which such certificate is
delivered.
"Asset Sale" means any sale, lease or other disposition (including any
such transaction effected by way of merger or consolidation) by the Borrower or
any of its Subsidiaries of any asset, including without limitation, any
sale-leaseback transaction, whether or not involving a capital lease, but
excluding (i) sales, leases or other dispositions of Inventory, cash, cash
equivalents and other cash management investments and obsolete, unused or
unnecessary equipment and undeveloped real estate, in each case in the ordinary
course of business and (ii) dispositions to a Guarantor.
"Assignee" has the meaning set forth in Section 10.06(c).
"Avoidance Litigation Trust" means the trust created under the
Avoidance Litigation Trust Agreement, dated as of October 1, 1998, by and among
Entertainment and certain affiliates, John J. Gibbons, as chapter 11 trustee,
the Borrower and the other parties thereto.
"Base Rate" means, for any period, a fluctuating interest rate per
annum as shall be in effect from time to time, which rate per annum shall at all
times be equal to the highest of:
(a) the rate of interest announced publicly by Citibank, N.A. in
New York, New York, from time to time, as Citibank, N.A.'s base rate;
(b) the sum (adjusted to the nearest 1/4 of one percent or, if
there is no nearest 1/4 of one percent, to the next higher 1/4 of one
percent) of (i) 1/2 of one percent per annum, plus (ii) the rate per
annum obtained by dividing (A) the latest three-week moving average of
secondary market morning offering rates in the United States for
three-month certificates of deposit of major United States money market
banks, such three-week moving average (adjusted to the basis of a year
of 360 days) being determined weekly on each Monday (or, if any such
date is not a Domestic Business Day, on the next succeeding Domestic
Business Day) for the three-week period ending on the previous Friday
by Citibank, N.A. on the basis of such rates reported by certificate of
deposit dealers to and published by the Federal Reserve Bank of New
York or, if such publication shall be suspended or terminated, on the
basis of quotations for such rates received by Citibank, N.A. from
three New York certificate of deposit dealers of recognized standing
selected by Citibank, N.A., by (B) a percentage equal to 100% minus the
average of the daily percentages specified during such three-week
period by the Federal Reserve Board (or any successor) for determining
the maximum reserve requirement (including, but not limited to, any
emergency, supplemental or other marginal reserve requirement) for
Citibank, N.A. in respect of liabilities consisting of or including
(among other liabilities)
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three-month Dollar nonpersonal time deposits in the United States, plus
(iii) the average during such three-week period of the annual
assessment rates estimated by Citibank, N.A. for determining the then
current annual assessment payable by Citibank, N.A. to the Federal
Deposit Insurance Corporation (or any successor) for insuring Dollar
deposits of Citibank, N.A. in the United States; and
(c) the sum (adjusted to the nearest 1/4 of one percent or, if
there is no nearest 1/4 of one percent, to the next higher 1/4 of one
percent) of (i) 1/2 of one percent per annum plus (ii) the Federal
Funds Rate.
"Base Rate Loan" means a Loan that bears interest at the Base Rate
pursuant to the applicable Notice of Borrowing or Notice of Interest Rate
Election or the provisions of Section 2.05(a) or Article 8.
"Base Rate Margin" means (i) until the first anniversary of the Closing
Date, a rate per annum equal to 1.25% and (ii) thereafter, a rate per annum
determined in accordance with the Pricing Schedule.
"Beneficially Owned Directly" means Beneficially Owned without taking
into account any agreement or other arrangement or understanding (including the
Stockholders' Agreement).
"Beneficial Owner" (including, with correlative meaning, "Beneficially
Owned") has the meaning set forth in Rule 13d-3 under the Exchange Act.
"Blocked Account" means a depository account of the Borrower or a
Subsidiary of the Borrower maintained with a Blocked Account Bank pursuant to a
Blocked Account Agreement.
"Blocked Account Agreement" means a Blocked Account Agreement between
the Collateral Agent and a Blocked Account Bank substantially in the form of
Exhibit B to the Security Agreement.
"Blocked Account Bank" means any bank or financial institution that
executes and delivers to the Collateral Agent a Blocked Account Agreement.
"Borrower" means Marvel Enterprises, Inc., a Delaware corporation, and
its successors.
"Borrower's 1997 Form 10-K" means the Borrower's annual report on Form
10-K for 1997, as filed with the SEC pursuant to the Exchange Act.
"Borrower's Latest Form 10-Q" means the Borrower's quarterly report on
Form 10-Q for the quarter ended September 30, 1998, as filed with the SEC
pursuant to the Exchange Act.
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"Borrowing" means a borrowing hereunder consisting of Loans made to the
Borrower on the same day pursuant to Article 2, all of which Loans are of the
same type (subject to Article 8) and, except in the case of Base Rate Loans,
have the same initial Interest Period. A Borrowing is a Base Rate Borrowing if
such Loans are Base Rate Loans or a Eurodollar Rate Borrowing if such Loans are
Eurodollar Loans.
"Borrowing Base" means, on any date, a dollar amount equal to the sum
of (i) up to 80% of Eligible Receivables, (ii) (x) from January 1 to April 29 in
each year, up to 45% of Eligible Inventory and (y) from April 30 to December 31
in each year, up to 55% of Eligible Inventory, and (iii) up to 30% of LC
Eligible Inventory, in each case determined as of such date; provided that any
Inventory consisting of LC Eligible Inventory shall not be counted as Eligible
Inventory for purposes of clause (ii) of this definition; and provided, further,
that there shall be deducted from the Borrowing Base such reserves as the Agent,
in its sole discretion, in good faith deems appropriate from time to time in
accordance with its customary practices, including without limitation, a reserve
in an amount equal to up to three months' rent payment obligations in respect of
any warehouse lease under which an Obligor is lessee or, with respect to the
Long Term Service and Rate Agreement dated November 2, 1998 between Regal West
Corporation ("Regal West") and the Borrower relating to the Borrower's warehouse
facility located in Fife, Washington, a reserve in an amount equal to Regal
West's senior lien on the Inventory located at such premises, as agreed from
time to time between Regal West and the Collateral Agent.
"Borrowing Base Certificate" means a certificate, duly executed by the
chief financial officer of the Borrower, appropriately completed and
substantially in the form of Exhibit B hereto.
"Borrowing Base Management Report" means a report prepared by the
Borrower, appropriately completed and substantially in the form of Exhibit C
hereto.
"Bridge Credit Agreement" means the $200,000,000 Credit Agreement dated
as of September 28, 1998 among Toy Biz, Inc., as borrower, the guarantors party
thereto, the lenders party thereto and UBS AG, Stamford Branch, as agent for
such lenders, as amended from time to time.
"Bridge Documents" means the Bridge Credit Agreement, the Bridge Notes
and all other agreements and documents entered into by Toy Biz Inc., as
borrower, or any Subsidiary in connection with the making of the Bridge Loan.
"Bridge Loan" means the loan made to Toy Biz, Inc., as borrower, under
the Bridge Credit Agreement.
"Bridge Notes" means notes issued by Toy Biz, Inc., as borrower, under
the Bridge Credit Agreement.
"Business Acquisition" means any acquisition, whether in a single
transaction or series of related transactions, by the Borrower or any one or
more of its Subsidiaries, or any combination thereof, of (i) all or a
substantial part of the assets, or a going concern business or
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division (including any library of characters), of any Person, whether through
purchase of assets or securities, by merger or otherwise, (ii) control of
securities of an existing corporation or other Person having ordinary voting
power (apart from rights accruing under special circumstances) to elect a
majority of the board of directors of such corporation or other Person or (iii)
control of a greater than 50% ownership interest in any existing partnership,
joint venture or other Person.
"Capital Stock" of any Person means (i) any and all shares or other
equity interests (including without limitation common stock, preferred stock and
partnership interests) in such Person and (ii) all rights to purchase, warrants
or options (whether or not currently exercisable), participations or other
equivalents of or interests in (however designated) such shares or other
interests in such Person.
"Change of Control" means such time as (i) a "person" or "group"
(within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act), other
than an Excluded Stockholder or Excluded Group, becomes the Beneficial Owner of
more than 35% of the total voting power of the Voting Stock of the Borrower on a
fully diluted basis and such ownership represents a greater percentage of the
total voting power of the Voting Stock of the Borrower, on a fully diluted
basis, than is held by the Excluded Stockholders on such date; provided that the
Persons party to the Stockholders' Agreement on the Closing Date and their
Affiliates shall not constitute a "group" for purposes of this clause (i) solely
as a result of being a party to the Stockholders' Agreement so long as no Person
party to the Stockholders' Agreement Beneficially Owns Directly a greater
percentage of the voting power of the Voting Stock of the Borrower than is
Beneficially Owned Directly by the Excluded Stockholders, (ii) an Excluded
Stockholder or Excluded Group becomes the beneficial owner of more than 50% of
the Voting Stock of the Borrower on a fully diluted basis and exercises the
power (whether through the ownership of Voting Stock, by contract or otherwise)
to nominate a majority of the Borrower's board of directors; or (iii)
individuals who on the Closing Date constitute the board of directors of the
Borrower (together with any new directors whose election to such board of
directors or whose nomination by such board of directors for election by the
Borrower's stockholders was approved (a) by a vote of at least a majority of the
members of such board of directors then in office who either were members of
such board of directors on the Closing Date or whose election or nomination for
election was previously so approved, (b) pursuant to the terms of the
Stockholders' Agreement so long as no Person party to the Stockholders'
Agreement Beneficially Owns Directly a greater percentage of the voting power of
the Voting Stock of the Borrower than is Beneficially Owned Directly by the
Excluded Stockholders, or (c) by an Excluded Stockholder) cease for any reason
to constitute a majority of the members of the board of directors of the
Borrower then in office.
"Clean-Down Period" has the meaning set forth in Section 5.24.
"Closing Date" means the date on which all of the conditions specified
in or pursuant to Section 3.01 shall have been satisfied.
"Collateral" means collateral subject to the Collateral Documents.
"Collateral Agent" has the meaning set forth in the Security Agreement.
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"Collateral Documents" means the Security Agreement, any additional
pledge agreements or security agreements required to be delivered pursuant to
the Loan Documents, each Blocked Account Agreement, and any instruments of
assignment or other instruments or agreements executed pursuant to the
foregoing; provided that for purposes of Section 3.01(c), the Collateral
Documents shall not include the Blocked Account Agreements required by Section
3.02(f).
"Commitment" means (i) with respect to each Lender listed on the
Commitment Schedule, the amount set forth opposite such Lender's name on the
Commitment Schedule, (ii) with respect to any Assignee that becomes a Lender
pursuant to Section 10.06(c), the amount of the transferor Lender's Commitment
assigned to it pursuant to Section 10.06(c), in each case as such amount may be
reduced from time to time pursuant to Section 2.07 or 2.08 or increased or
reduced by reason of an assignment to or by such Lender pursuant to Section
10.06(c); provided that, if the context so requires, the term "Commitment" means
the obligation of a Lender to extend credit up to such amount to the Borrower
hereunder.
"Commitment Percentage" means, with respect to any Lender at any time,
the percentage that the amount of its Commitment at such time represents of the
aggregate amount of all the Commitments at such time. At any time after the
Commitments shall have terminated, the term "Commitment Percentage" shall refer
to a Lender's Commitment Percentage immediately before such termination,
adjusted to reflect any subsequent assignments pursuant to Section 10.06(c).
"Commitment Schedule" means the Commitment Schedule attached hereto.
"Consolidated Capital Expenditures" means, for any period, the
additions to property, plant and equipment and other capital expenditures
(including capital expenditures in respect of product development and package
design) of the Borrower and its Consolidated Subsidiaries (excluding the Panini
Entities) for such period, as the same are or would be set forth in a
consolidated statement of cash flows of the Borrower and its Consolidated
Subsidiaries (excluding the Panini Entities) for such period.
"Consolidated Debt" means, at any date, Debt of the Borrower and its
Consolidated Subsidiaries (excluding the Panini Entities), determined on a
consolidated basis as of such date.
"Consolidated EBITDA" means, for any period, Consolidated Net Income
for such period plus, to the extent deducted in determining Consolidated Net
Income for such period, the aggregate amount of (i) Consolidated Interest
Expense (without giving effect to the second parenthetical exclusion in the
definition thereof), (ii) income tax expense and (iii) depreciation,
amortization and other similar non-cash charges.
"Consolidated Fixed Charges" means, for any period, the sum of (i)
Consolidated Interest Expense for such period, (ii) all principal amounts of
Debt having a scheduled due date during such period payable by the Borrower or
any of its Consolidated Subsidiaries, (iii) all cash dividends payable by the
Borrower on preferred stock in respect of
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such period other than to any of the Borrower's Consolidated Subsidiaries, and
(iv) the total income tax expense of the Borrower and its Consolidated
Subsidiaries in respect of such period.
"Consolidated Interest Expense" means, for any period, the interest
expense of the Borrower and its Consolidated Subsidiaries (excluding the Panini
Entities), determined on a consolidated basis for such period in accordance with
GAAP (excluding, however, interest expense with respect to the Bridge Loan and
the amortization of any deferred financing costs).
"Consolidated Net Income" means, for any period, the net income of the
Borrower and its Consolidated Subsidiaries (excluding the Panini Entities),
determined on a consolidated basis for such period, adjusted to exclude the
effect of (i) any extraordinary or other non-recurring gain (but not loss) and
(ii) in the case of the calculation of Consolidated EBITDA only, non-recurring
expenses (including related reserve accruals) and write-offs, in each case under
this clause (ii) related to the Merger and consummation of the Plan of
Reorganization.
"Consolidated Net Worth" means, at any date, the consolidated
stockholders' equity of the Borrower and its Consolidated Subsidiaries
(excluding the Panini Entities) determined as of such date (including the amount
attributable to the Preferred Stock but excluding any other amount attributable
to other stock that is required to be redeemed or is redeemable at the option of
the holder, if certain events or conditions occur or exist or otherwise).
"Consolidated Subsidiary" means, at any date, any Subsidiary or other
entity (including, without limitation, the Panini Entities) the accounts of
which would be consolidated in accordance with GAAP with those of the Borrower
in its consolidated financial statements if such statements were prepared as of
such date.
"Credit Exposure" means, with respect to any Lender at any time,
without duplication, the sum of (i) the aggregate amount of its Commitment
(whether used or unused) at such time plus (ii) its Outstanding Amount.
"Debt" of any Person means, at any date, without duplication, (i) all
obligations of such Person for borrowed money (including, without limitation,
obligations in respect of the deferred purchase price of property or services,
other than trade accounts payable arising in the ordinary course of business
that are not more than 60 days past due, and reimbursement and other obligations
with respect to surety bonds), (ii) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (iii) all obligations of
such Person created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (iv)
all obligations of such Person as lessee that are capitalized in accordance with
GAAP, (v) all obligations (whether or not contingent) of such Person in respect
of outstanding letters of credit, bankers acceptances or similar instruments;
(vi) all Debt secured by a Lien on any asset of such Person, whether or not such
Debt is otherwise an obligation of such Person, and (vii) all
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Guarantees by such Person of Debt of another Person (each such Guarantee to
constitute Debt in an amount equal to the amount of such other Person's Debt
Guaranteed thereby).
"Default" means any condition or event that constitutes an Event of
Default or that with the giving of notice or lapse of time or both would, unless
cured or waived, become an Event of Default.
"Derivatives Obligations" of any Person means all obligations of such
Person in respect of any rate swap transaction, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency option
or any other similar transaction (including any option with respect to any of
the foregoing transactions) or any combination of the foregoing transactions.
"Disqualified Capital Stock" means any Capital Stock of any Person or
any of its Subsidiaries that, by its terms, by the terms of any agreement
related to such Capital Stock or by the terms of any security into which it is
convertible, putable or exchangeable, is, or upon the happening of any event or
the passage of time would be, required to be redeemed or repurchased by such
Person or any of its Subsidiaries, whether or not at the option of the holder
thereof, or matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, in whole or in part, on or prior to the tenth
anniversary of the Closing Date.
"Dollar" and the sign "$" each mean the lawful currency of the United
States of America.
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City are authorized or required
by law to close.
"Domestic Lending Office" means, as to each Lender, its office located
at its address set forth in its Administrative Questionnaire (or identified in
its Administrative Questionnaire as its Domestic Lending Office) or such other
office as such Lender may hereafter designate as its Domestic Lending Office by
notice to the Borrower and the Agent.
"Earned Receivable" means, as at any date of determination thereof, the
unpaid portion of a Receivable, as stated in the respective invoice, of a
customer of the Borrower or any Guarantor in respect of Inventory sold, services
rendered or intellectual property licensed in the ordinary course of business,
which amount has been earned by performance under the terms of the related
contract and recognized as revenue on the books of the Borrower or such
Guarantor.
"Eligible Designee" means a special purpose corporation that (i) is
organized under the laws of the United States or any state thereof, (ii) is
engaged in making, purchasing or otherwise investing in commercial loans in the
ordinary course of its business and (iii) issues (or the parent of which issues)
commercial paper rated as least A-1 or the equivalent thereof by S&P or P-1 or
the equivalent thereof by Moody's.
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"Eligible Inventory" means, at any date of determination thereof, the
aggregate value (determined at the lower of cost or market on a basis consistent
with that used in the preparation of the financial statements referred to in
Section 4.04(a)) at such date of all Inventory owned by the Borrower or any
Guarantor (excluding, however, without duplication (i) any such Inventory that
has been shipped to a customer, even if on a consignment or "sale or return"
basis or is otherwise not in the possession of the Borrower or any Guarantor or
a warehouseman or bailee of the Borrower or any Guarantor; (ii) any Inventory
against which the Borrower or Guarantor has taken a reserve, to the extent of
such reserve; (iii) any Inventory that has been discontinued; (iv) any Inventory
not located in the United States or located in a jurisdiction as to which a
UCC-1 financing statement has not been filed or otherwise not subject to a valid
and perfected Lien under the Collateral Documents, subject to no prior or equal
Lien; (v) any supply, scrap or obsolete Inventory; (vi) any Inventory that is
damaged or not in good condition, is a sample used for marketing purposes or
does not meet all material standards imposed by any governmental authority
having regulatory authority over such Inventory; (vii) any Inventory that is
subject to any licensing, patent, royalty, trademark, trade name or copyright
agreement with any third party from whom the Borrower or any of its Subsidiaries
has received notice of a dispute in respect of such agreement to the extent that
such dispute could reasonably be expected to prevent the sale of such Inventory;
(viii) any Inventory which is subject to a negotiable document of title and such
document of title has not been delivered to the Collateral Agent; (ix) any
Inventory to the extent that such Inventory (A) is not comprised of readily
marketable materials of a type manufactured, consumed or held for resale by the
Borrower and the Guarantors in the ordinary course of business or (B) consists
of raw materials, component parts and/or work-in-progress; and (x) any Inventory
that the Agent has deemed is ineligible (as notified by the Agent to the
Borrower) in accordance with the Agent's customary criteria and in substantially
the same manner in which the Agent treats similarly situated borrowers).
"Eligible Receivables" means, at any date of determination thereof, the
aggregate amount of all Earned Receivables at such date due to the Borrower or
any Guarantor other than the following (determined without duplication):
(a) any Earned Receivable due from an account debtor that is not
both domiciled in the United States of America and organized under the
laws of the United States of America or any political subdivision
thereof;
(b) any Earned Receivable that does not comply with all applicable
legal requirements, including, without limitation, all laws, rules,
regulations and orders of any governmental or judicial authority;
(c) any Earned Receivable in respect of which there is any
unresolved dispute with the account debtor, but only to the extent of
such dispute;
(d) any Earned Receivable (other than an Earned Receivable from
Toys 'r Us that has November 10th dating or an Earned Receivable in
respect of the license of intellectual property) payable more than 90
days after the date of the issuance of the original invoice therefor;
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(e) 100% of the principal amount of any Earned Receivable (other
than an Earned Receivable from Toys 'r Us that has November 10th dating
or an Earned Receivable in respect of the license of intellectual
property) that is more than 60 days past due, notwithstanding any
offsetting trade payable against which such Earned Receivable may have
been netted on the books of the Borrower or any Guarantor, as the case
may be;
(f) 100% of the principal amount of any Earned Receivable from
Toys 'r Us that has November 10th dating and that is more than 30 days
past due, notwithstanding any offsetting trade payable against which
such Earned Receivable may have been netted on the books of the
Borrower or any Guarantor, as the case may be;
(g) any Earned Receivable in respect of the license of
intellectual property that is either (i) due more than one year after
the date of determination or (ii) 60 days or more past due;
(h) any unbilled Earned Receivable and any Earned Receivable in
respect of goods not yet shipped;
(i) any Earned Receivable arising outside the ordinary course of
business of the Borrower;
(j) any Earned Receivable in respect of which there has been
established a contra account, or of an account debtor to whom the
Borrower owes a trade payable, but only to the extent of such contra
account or trade payable;
(k) any Earned Receivable that fails to meet or violates in any
material respect any warranty, representation or covenant contained in
this Agreement or any other Loan Document;
(l) any Earned Receivable the sale for which was on a
bill-and-hold, guaranteed sale, sale-and-return, sale on approval,
consignment, or any other repurchase or return basis;
(m) any Earned Receivable that is not subject to a first priority
perfected Lien in favor of the Collateral Agent under the Collateral
Documents and any Earned Receivable evidenced by an instrument (as
defined in the Uniform Commercial Code) not in the possession of the
Agent;
(n) any Earned Receivable due from an account debtor (I) as to
which on such date 50% or more of the Earned Receivables of such
account debtor are more than 60 days past due (or (x) in the case of
Earned Receivables from Toys 'r Us that have November 10th dating, 30
days past due or (y) in the case of Earned Receivables in respect of
the license of intellectual property that is past due), (II) in respect
of which a credit loss has been recognized or reserved by the Borrower
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or any of its Subsidiaries, (III) whose senior unsecured debt is not
rated by any Rating Agency or, if rated by any Rating Agency, is rated
lower than BBB-, Baa3 or BBB- (or their equivalents) by S&P, Moody's or
Fitch, respectively, unless the Agent, on behalf of the Required
Lenders in their sole discretion, shall have notified the Borrower that
such account debtor is acceptable notwithstanding its failure to be
rated or, if rated, its failure to meet the criteria set forth in this
clause (III), (IV) in respect of which the Agent shall have notified
the Borrower that such account debtor does not have a satisfactory
credit standing as determined in good faith by the Required Lenders,
(V) that is a Subsidiary or an Affiliate of the Borrower, (VI) that is
a Government Obligor, or (VII) that is the subject of a bankruptcy,
insolvency, reorganization or similar case or proceeding;
(o) any Earned Receivable that would not be reported as payable
within one calendar year in conformity with GAAP; and
(p) any Earned Receivable that the Agent has deemed ineligible (as
notified by the Agent to the Borrower) in accordance with the Agent's
customary criteria and in substantially the same manner in which the
Agent treats similarly situated borrowers;
provided that (i) with respect to each of Toys 'r Us and Wal-Mart Stores, the
maximum amount of Earned Receivables that shall constitute Eligible Receivables
shall be $20,000,000 in each case and (ii) with respect to each of Target
Stores, Inc., Kay-Bee Toys and Kmart Corporation, the maximum amount of Earned
Receivables that shall constitute Eligible Receivables shall be $10,000,000 in
each case, provided, further, however, that the amount of Earned Receivables in
excess of the amounts specified in clauses (i) and (ii) above shall constitute
Eligible Receivables to the extent that such Earned Receivables are fully
insured under policies of credit insurance on terms reasonably satisfactory to
the Agent.
"Employee Plans" has the meaning set forth in Section 4.14(b).
"Entertainment" means Marvel Entertainment Group, Inc., a Delaware
corporation.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions, relating
to human health or the environment or to emissions, discharges or releases of
pollutants, contaminants, Hazardous Substances or wastes into the environment,
including (without limitation) ambient air, surface water, ground water or land,
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants, contaminants,
Hazardous Substances or wastes or the clean-up or other remediation of the
foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
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"ERISA Group" means the Borrower, any Subsidiary and all members of a
controlled group of corporations, all trades or businesses (whether or not
incorporated) under common control and all affiliated service group members
that, together with the Borrower or any Subsidiary, are treated as a single
employer under Section 414 of the Internal Revenue Code.
"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"Eurodollar Business Day" means any Domestic Business Day on which
dealings (including dealings in Dollar deposits) are carried on in the London
interbank market.
"Eurodollar Lending Office" means, as to each Lender, its office,
branch or affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its
Eurodollar Lending Office) or such other office, branch or affiliate of such
Lender as it may hereafter designate as its Eurodollar Lending Office by notice
to the Borrower and the Agent.
"Eurodollar Loan" means a Loan that bears interest at a Eurodollar Rate
pursuant to the applicable Notice of Borrowing or Notice of Interest Rate
Election.
"Eurodollar Rate" means, with respect to any Interest Period applicable
to a Borrowing of Eurodollar Loans denominated in Dollars, the interest rate per
annum obtained by dividing (i) an interest rate per annum determined by the
Agent to be the average (rounded upward to the nearest whole multiple of
one-sixteenth of one percent (0.0625%) per annum if such average is not such a
multiple) of the rates per annum at which deposits in Dollars are offered by the
principal office of Citibank, N.A. in London, England to major banks in the
London interbank market at approximately 11:00 a.m. (London time) on the
Eurodollar Rate Determination Date for such Interest Period for a period equal
to such Interest Period (or, in the case of a two week Interest Period, a period
equal to one month) and in an amount substantially equal to the amount of the
Eurodollar Loan to be made by Citibank, N.A. for such Interest Period, by (ii) a
percentage equal to 100% minus the Eurodollar Rate Reserve Percentage for such
period.
"Eurodollar Rate Determination Date " means, with respect to a
Borrowing of Eurodollar Loans, the second Eurodollar Business Day prior to the
first day of the Interest Period for such Borrowing.
"Eurodollar Rate Margin" means (i) until the first anniversary of the
Closing Date, a rate per annum equal to 2.75% and (ii) thereafter, a rate per
annum determined in accordance with the Pricing Schedule.
"Eurodollar Rate Reserve Percentage" for any Interest Period means the
reserve percentage applicable on the Eurodollar Determination Date under
regulations issued from time to time by the Board of Governors of the Federal
Reserve System for determining the maximum reserve requirement (including,
without limitation, any emergency, supplemental or other marginal reserve
requirement) for a member bank of the Federal Reserve System in New York
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City with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities (or with respect to any other category of liabilities
that includes deposits by reference to which the Eurodollar Rate is determined )
having a term equal to such Interest Period.
"Events of Default" has the meaning set forth in Section 6.01.
"Excess Administration Claims Loan" means a cash loan from an affiliate
of Mr. Isaac Perlmutter to the Borrower, in exchange for a five-year, unsecured
note of the Borrower; provided that (i) such loan shall be made only if the
aggregate amount of the Administration Expense Claims exceeds $35,000,000, (ii)
the proceeds of such loan are used exclusively to pay such excess Administration
Expense Claims, (iii) the principal amount of such loan shall be equal to the
amount of such excess, less the aggregate principal amount of Loans made
hereunder the proceeds of which are used to pay such Administration Expense
Claims, (iv) such loan shall bear interest at a rate not higher than 14% per
annum and (v) such loan shall not exceed $5,000,000.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
"Exchange Notes" has the meaning assigned to such term in the Senior
Note Indenture.
"Excluded Group" means a "group" (within the meaning of Section 13(d)
or 14(d)(2) of the Exchange Act) that includes one or more of the Excluded
Stockholders; provided that a majority of the voting power of the Voting Stock
of the Borrower Beneficially Owned by such group is Beneficially Owned Directly
by such Excluded Stockholder(s).
"Excluded Stockholder" means (i) Isaac Perlmutter or any of his
Affiliates and (ii) the spouse or any one or more lineal descendants of Isaac
Perlmutter and their spouses and any trust established solely for the benefit of
any one or more of such Persons and each of their respective Affiliates;
provided that each such Person included in this clause (ii) shall only be deemed
to be an Excluded Stockholder to the extent such Person's Capital Stock of the
Borrower was received directly or indirectly from Isaac Perlmutter.
"Existing Panini Indebtedness" means the indebtedness of Panini
outstanding on the date hereof pursuant to the Restructured Panini Loan
Documents (as defined in the Plan of Reorganization).
"Existing Registration Rights Agreements" means (i) the Registration
Rights Agreement, dated as of October 1, 1998, among the Borrower and certain
holders of its Capital Stock; (ii) the Registration Rights Agreement, dated as
of December 8, 1998, among the Borrower and certain holders of its Capital
Stock; and (iii) the registration rights provided for in Section 6.18 of the
Plan of Reorganization.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates on overnight
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federal funds transactions with members of the Federal Reserve System arranged
by federal funds brokers, as published for such day (or, if such day is not a
Domestic Business Day, for the next preceding Domestic Business Day) by the
Federal Reserve Bank of New York, or if such rate is not so published for any
day that is a Domestic Business Day, the average of the quotations for such day
on such transactions received by Citibank, N.A. from three federal funds brokers
of recognized standing selected by Citibank, N.A.
"Fiscal Quarter" means a fiscal quarter of the Borrower.
"Fiscal Year" means a fiscal year of the Borrower.
"Fixed Charge Coverage Ratio" means, at any date, the ratio of (i)
Consolidated EBITDA minus Consolidated Capital Expenditures for the four
consecutive Fiscal Quarters most recently ended on or prior to such date to (ii)
Consolidated Fixed Charges for such period.
"Fitch" means Fitch IBCA, Inc. and any successor thereto.
"Fleer Sale" means the sale by the Borrower on February 11, 1999 of
substantially all of the assets of Fleer Corp., Frank H. Fleer Corp. and Sky Box
International Inc., each a wholly owned Subsidiary of the Borrower.
"Foreign Employee Benefit Plan" means any employee benefit plan as
defined in Section 3(3) of ERISA that is maintained or contributed to for the
benefit of the employees of any member of the ERISA Group, but that is not (i)
covered by ERISA pursuant to ERISA Section 4(b)(4) or (ii) mandated by a foreign
governmental authority.
"Foreign Pension Plan" means any employee benefit plan as defined in
Section 3(3) of ERISA that (i) is maintained or contributed to for the benefit
of employees of any member of the ERISA Group, (ii) is not covered by ERISA
pursuant to Section 4(b)(4) of ERISA, and (iii) under applicable local law, is
required to be funded through a trust or other funding vehicle; provided,
however, that the term "Foreign Pension Plan" shall not include any such plan
that is mandated by a foreign governmental authority.
"Foreign Subsidiary" means any Subsidiary organized under the laws of a
jurisdiction, and conducting substantially all of its operations, outside of the
United States, other than any such Subsidiary that shall have elected to be
treated as a partnership or a branch of the Borrower or any U.S. Subsidiary for
United States income tax purposes.
"GAAP" means generally accepted accounting principles of the United
States of America as in effect on the date hereof, applied on a basis consistent
with the financial statements referred to in Section 4.04(a).
"General Collateral Account" has the meaning set forth in the Security
Agreement.
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"Government Obligor" means the United States federal government, any
state government, any local government or, in each case, any subdivision thereof
or any agency, department or instrumentality thereof.
"Group of Loans" means, at any time, a group of Loans consisting of (i)
all Loans that are Base Rate Loans at such time or (ii) all Eurodollar Loans
having the same Interest Period at such time; provided that, if a Loan of any
particular Lender is converted to or made as a Base Rate Loan pursuant to
Article 8, such Loan shall be included in the same Group or Groups of Loans from
time to time as it would have been in if it had not been so converted or made.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation (whether arising by virtue of
partnership arrangements, by virtue of an agreement to keep-well, to purchase
assets, goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise), (ii) to reimburse a bank for amounts drawn
under a letter of credit for the purpose of paying such Debt or other obligation
or (iii) entered into for the purpose of assuring in any other manner the holder
of such Debt or other obligation of the payment thereof or to protect such
holder against loss in respect thereof (in whole or in part); provided that the
term "Guarantee" shall not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Guarantor" means, subject to Section 9.08, each Person that has
executed this Agreement as a guarantor and each Person that shall have become a
Guarantor pursuant to Section 5.27(d).
"Hazardous Substances" means any hazardous substance as defined by 42
U.S.C. Section 9601, radioactive materials, petroleum, its derivatives and
by-products and other hydrocarbons.
"Indemnitee" has the meaning set forth in Section 10.03(b).
"Interest Coverage Ratio" means, at any date, the ratio of (i)
Consolidated EBITDA for the four consecutive Fiscal Quarters most recently ended
on or prior to such date to (ii) Consolidated Interest Expense for such period.
"Interest Period" means, with respect to each Eurodollar Loan, the
period commencing on the date of Borrowing specified in the applicable Notice of
Borrowing or on the date specified in an applicable Notice of Interest Rate
Election and (subject to the first proviso hereto) ending two weeks or one, two,
three or six months thereafter, as the Borrower may elect in such notice;
provided that, with respect to any Interest Period that commences during the
Primary Syndication Period and (subject to clauses (a), (b) and (c) below) ends
two, three or six months after the date of Borrowing thereof, the Borrower
agrees to prepay all outstanding Loans
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on the last day of the Primary Syndication Period, together with all amounts
payable under Section 2.11 in respect of such prepayment; and provided further
that:
(a) any Interest Period that would otherwise end on a day that is
not a Eurodollar Business Day shall be extended to the next succeeding
Eurodollar Business Day unless such Eurodollar Business Day falls in
another calendar month, in which case such Interest Period shall end on
the next preceding Eurodollar Business Day;
(b) any Interest Period that begins on the last Eurodollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on the last
Eurodollar Business Day of a calendar month; and
(c) any Interest Period that would otherwise end after the
Termination Date shall end on the Termination Date.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"Inventory" shall mean "inventory" (as defined in Article 9 of the New
York Uniform Commercial Code) of the Borrower and the Guarantors.
"Investment" means any investment in any Person, whether by means of
share purchase, capital contribution, loan, Guarantee, time deposit or otherwise
(but not including any demand deposit).
"Issuer" means Citibank, N.A. in its capacity as Issuer under the
letter of credit facility described in Section 2.14.
"Landlord Waiver and Consent" means a waiver and consent substantially
in the form of Exhibit K hereto.
"LC Eligible Inventory" means Eligible Inventory with respect to which
either (i) a Letter of Credit has been issued and in respect of which the Issuer
or its correspondent has received satisfactory negotiable documents of title or
(ii) satisfactory negotiable documents of title have been delivered to the
Collateral Agent.
"LC Exposure" means, with respect to any Lender at any time, an amount
equal to its Commitment Percentage of the Aggregate LC Exposure at such time.
"LC Fee Rate" means the Eurodollar Rate Margin.
"LC Indemnitees" has the meaning set forth in Section 2.14(k).
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<PAGE>
"LC Office" means, with respect to the Issuer, the office at which it
books any Letter of Credit issued by it.
"LC Payment Date" has the meaning set forth in Section 2.14(g).
"LC Reimbursement Due Date" has the meaning set forth in Section
2.14(h).
"LC Reimbursement Obligations" means, at any time, all obligations of
the Borrower to reimburse the Issuer for amounts paid by the Issuer in respect
of drawings under Letters of Credit, including any portion of any such
obligations to which a Lender has become subrogated pursuant to Section 2.14(i).
"Lender" means (i) each Lender listed on the Commitment Schedule, (ii)
each Assignee that becomes a Lender pursuant to Section 10.06(c) and (iii) their
respective successors.
"Lender Parties" means the Lenders, the Issuer, the Agent and the
Collateral Agent.
"Letter of Credit" means a letter of credit issued hereunder by the
Issuer.
"Leverage Ratio" means, at any date, the ratio of (i) Consolidated Debt
at such date to (ii) Consolidated EBITDA for the period of four consecutive
Fiscal Quarters most recently ended on or prior to such date.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind, or any other type of
preferential arrangement that has substantially the same practical effect as a
security interest, in respect of such asset. For purposes hereof, the Borrower
or any Subsidiary shall be deemed to own subject to a Lien any asset that it has
acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such asset.
"Loan" means a loan made by a Lender pursuant to Section 2.01; provided
that, if any such loan or loans (or portions thereof) are combined or subdivided
pursuant to a Notice of Interest Rate Election, the term "Loan" shall refer to
the combined principal amount resulting from such combination or to each of the
separate principal amounts resulting from such subdivision, as the case may be.
"Loan Documents" means this Agreement, the Notes and the Collateral
Documents.
"MAFCO Litigation Trust" means the trust created under the MAFCO
Litigation Trust Agreement, dated as of October 1, 1998 by and among
Entertainment and certain affiliates, John J. Gibbons, as chapter 11 trustee,
the Borrower and the other parties thereto.
"Material Adverse Effect" means (i) any material adverse effect upon
the condition (financial or otherwise), results of operations, properties,
assets, business or prospects
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of the Borrower and its Subsidiaries, taken as a whole; (ii) a material adverse
effect on the ability of any Obligor or any other Person to consummate the
transactions contemplated hereby to occur on the Closing Date; (iii) a material
adverse effect on the ability of any Obligor to perform under this Agreement and
the Notes and the other Loan Documents; or (iv) a material adverse effect on the
rights and remedies of the Agent and the Lenders under this Agreement and the
other Loan Documents.
"Material Debt" means Debt (except Debt outstanding hereunder) of the
Borrower and/or one or more of its Subsidiaries, arising in one or more related
or unrelated transactions, in an aggregate principal or face amount exceeding
$2,500,000.
"Material Financial Obligations" means a principal or face amount of
Debt (other than the Loans and LC Reimbursement Obligations) and/or payment or
collateralization obligations in respect of Derivatives Obligations of the
Borrower and/or one or more of its Subsidiaries, arising in one or more related
or unrelated transactions, exceeding in the aggregate $2,500,000.
"Material Plan" means, at any time, a Plan or Plans having aggregate
Unfunded Liabilities in excess of $1,000,000.
"Merger" means the merger of Acquisition Sub with and into
Entertainment, with Entertainment as the surviving corporation.
"Merger Agreement" means the Agreement and Plan of Merger dated as of
August 12, 1998 among Entertainment, Toy Biz, Inc. and Acquisition Sub.
"Moody's" means Moody's Investors Service, Inc. and any successor
thereto.
"Multiemployer Plan" means, at any time, an employee pension benefit
plan within the meaning of Section 4001(a)(3) of ERISA to which any member of
the ERISA Group is then making or accruing an obligation to make contributions
or has within the preceding five plan years made contributions, including for
these purposes any Person that ceased to be a member of the ERISA Group during
such five year period.
"Notes" means promissory notes of the Borrower, substantially in the
form of Exhibit A hereto, evidencing the Borrower's obligation to repay the
Loans, and "Note" means any one of such promissory notes issued hereunder.
"Notice of Borrowing" has the meaning set forth in Section 2.02(a).
"Notice of Interest Rate Election" has the meaning set forth in Section
2.05(a).
"Obligations" means the Loans, the Aggregate LC Exposure and all other
advances, debts, liabilities, obligations, covenants and duties owing by any
Obligor to the Lender Parties, any affiliate of any of them or any Indemnitee,
of every type and description, present or future, whether or not evidenced by
any note, guaranty or other instrument, arising under this
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Agreement or under any other Loan Document, whether or not for the payment of
money, whether arising by reason of extension of credit, opening or amendment of
a Letter of Credit or payment of any draft drawn thereunder, loan, guaranty,
indemnification, foreign exchange transaction or in any other manner, whether
direct or indirect (including, without limitation those acquired by assignment),
absolute or contingent, due or to become due, now existing or hereafter arising
and however acquired. The term "Obligations" includes, without limitation, all
interest, charges expenses, fees, attorneys' fees and disbursements and any
other sum chargeable to any Obligor under this Agreement or any other Loan
Document and all obligations of the Borrower to cash collateralize Letter of
Credit obligations.
"Obligor" means the Borrower and each Guarantor.
"Operating Accounts" has the meaning set forth in the Security
Agreement.
"Outstanding Amount" means, with respect to any Lender at any time, the
sum of (i) the aggregate outstanding principal amount of its Loans and (ii) its
LC Exposure, all determined at such time after giving effect to any prior
assignments by or to such Lender pursuant to Section 10.06(c).
"Panini" means Panini S.p.A., an Italian corporation and a wholly-owned
subsidiary of Entertainment.
"Panini Disposition" means the intended disposition by the Borrower of
its interests in the Panini Entities or the property and assets thereof.
"Panini Entities" means Panini and its direct and indirect
Subsidiaries.
"Panini Guarantors" means the Borrower, Entertainment, and certain
other Subsidiaries of the Borrower.
"Panini Guaranty" means the Guaranty Agreement dated as of September
28, 1998 by the Panini Guarantors in favor of The Chase Manhattan Bank, as agent
on behalf of the holders of the Restructured Panini Indebtedness, pursuant to
which the Panini Guarantors guarantee payment of the Restructured Panini
Indebtedness and are liable in respect of such Restructured Panini Indebtedness
in a maximum aggregate amount of $27,000,000.
"Panini Indemnification Agreement" means the Indemnification Agreement
dated as of September 28, 1998 by the Panini Guarantors in favor of the Panini
Entities and their respective successors and assigns.
"Panini Pledge Agreement" means the Pledge Agreement dated as of
September 28, 1998 between the Borrower and The Chase Manhattan Bank, as agent,
pursuant to which Entertainment has pledged 66% of the issued and outstanding
common stock of Panini held by it to secure the Restructured Panini
Indebtedness.
"Parent" means, with respect to any Lender, any Person controlling such
Lender.
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"Participant" has the meaning set forth in Section 10.06(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"Permitted Acquisition" means a Business Acquisition relating to a
business or businesses of the same general type as now conducted by the Borrower
and its Subsidiaries, or a business or businesses complementary, ancillary or
related to the businesses now conducted.
"Plan" means, at any time, an employee pension benefit plan (other than
a Multiemployer Plan) that is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person that
was at such time a member of the ERISA Group for employees of any Person that
was at such time a member of the ERISA Group.
"Plan of Reorganization" means the Fourth Amended Joint Plan of
Reorganization proposed by the secured lenders and Toy Biz, Inc. and approved by
the United States District Court for the District of Delaware on July 31, 1998,
as amended by the Order Approving Technical Amendments to the Fourth Amended
Joint Plan of Reorganization proposed by the secured lenders and Toy Biz, Inc.
and approved by the United States District Court for the District of Delaware on
September 17, 1998.
"Preferred Stock" means the Borrower's 8% Cumulative Convertible
Exchangeable Preferred Stock, par value $.01 per share.
"Pricing Schedule" means the Pricing Schedule attached hereto.
"Primary Syndication Period" means the period beginning on the date
hereof and ending on the earlier of (i) the date on which the Agent, in its
reasonable judgment, shall have determined that the primary syndication of the
Commitments and the Loans has been completed and (ii) the date that is 90 days
after the Closing Date.
"Property Insurance Policy" means any insurance policy maintained by
the Borrower or any of its Subsidiaries covering losses with respect to tangible
real or personal property or improvements or losses from business interruption.
"Quarterly Payment Dates" means the last Domestic Business Day of each
March, June, September and December.
"Rating Agency" means S&P, Moody's or Fitch.
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"Receivable" means, as at any date of determination thereof, (i) all
present and future "accounts" (as defined in Articles 9 of the UCC) of the
Borrower and the Guarantors in respect of goods sold or services rendered and
(ii) all non-contingent rights to receive payment in respect of the guaranteed
minimum amount payable under any license by the Borrower or any Guarantor of any
patent, trademark, trade name or copyright to a third party.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Required Lenders" means, at any time, Lenders having at least a
majority in aggregate amount of the Credit Exposures at such time.
"Restricted Payment" means (i) any dividend or other distribution on
any shares of the Borrower's Capital Stock (except dividends payable solely in
shares of its Capital Stock of the same class, and having the same terms, as the
Capital Stock on which such dividends are paid), (ii) any payment on account of
the purchase, redemption, retirement or acquisition of (a) any shares of the
Borrower's Capital Stock or (b) any option, warrant or other right to acquire
shares of the Borrower's Capital Stock (but not including payments of principal,
premium (if any) or interest made pursuant to the terms of convertible debt
securities prior to conversion) or (iii) any prepayment of the principal of, or
any purchase, redemption, retirement or acquisition of, all or any portion of
any Indebtedness, other than the Obligations.
"Restructured Panini Indebtedness" means the Existing Panini
Indebtedness, as such indebtedness is restructured in accordance with, and upon
the consummation of, the Plan of Reorganization.
"Revolving Credit Period" means the period from and including the
Closing Date to but not including the Termination Date.
"Savings Plan" means the Marvel Entertainment Group, Inc. Savings and
Investment Plan, as such plan may be amended from time to time.
"S&P" means Standard and Poor's Ratings Services, a division of The
McGraw Hill Companies, or any successor thereto.
"Sale-Leaseback Transaction" means any arrangement with any Person
providing for the leasing by the Borrower or any Subsidiary of any property
that, or of any property similar to and used for substantially the same purposes
as any other property that, has been or is to be sold, assigned, transferred or
otherwise disposed of by the Borrower or any of its Subsidiaries to such Person
with the intention of entering into such a lease.
"SEC" means the Securities and Exchange Commission.
"Secured Parties" has the meaning set forth in the Security Agreement.
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"Security Agreement" means the Security Agreement dated as of the
Closing Date among the Borrower, the Guarantors and the Agent, substantially in
the form of Exhibit D hereto, as amended from time to time.
"Senior Notes" means the $250,000,000 12% Senior Notes due 2009 issued
by the Borrower pursuant to the Senior Note Indenture.
"Senior Note Documents" means the Senior Note Indenture, the Senior
Notes, any Exchange Notes and the Senior Note Offering Memorandum.
"Senior Note Guarantees" means the unsecured guarantees of the
Borrower's obligations under the Senior Notes made by certain of the Borrower's
Subsidiaries.
"Senior Note Indenture" means the Indenture dated as of February 25,
1999 among the Borrower, the Subsidiaries that are guarantors thereunder and IBJ
Whitehall Bank & Trust Company, as trustee.
"Senior Note Offering Memorandum" means the final offering memorandum
dated February 17, 1999 relating to the offering by the Borrower of the Senior
Notes.
"Stockholders' Agreement" means the agreement, dated as of October 1,
1998 among the Borrower, the secured creditors of Entertainment party thereto,
Mr. Isaac Perlmutter and certain of his affiliates, Mr. Avi Arad and the
affiliates of Mr. Mark Dickstein party thereto.
"Subsidiary" means, as to any Person, any corporation or other entity
of which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by such Person. Unless
otherwise specified, "Subsidiary" means a Subsidiary of the Borrower; provided
that none of the Panini Entities shall be considered to be a Subsidiary of the
Borrower for any purpose hereunder.
"Temporary Cash Investment" means any Investment in (i) direct
obligations of the United States or any agency thereof or obligations guaranteed
by the United States or any agency thereof, (ii) commercial paper rated at least
A-1 by S&P and at least P-1 by Moody's, (iii) time deposits with, including
certificates of deposit issued by, any office located in the United States of
any bank or trust company that is organized or licensed under the laws of the
United States or any state thereof and has capital, surplus and undivided
profits aggregating at least $1,000,000,000 or (iv) repurchase agreements with
respect to securities described in clause (i) above entered into with an office
of a bank or trust company meeting the criteria specified in clause (iii) above;
provided in each case that such Investment matures within one year after it is
acquired by the Borrower or a Subsidiary.
"Termination Date" means the third anniversary of the Closing Date, or,
if such day is not a Eurodollar Business Day, the next succeeding Eurodollar
Business Day.
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"Total Outstanding Amount" means, at any time, the sum of (i) the
aggregate outstanding principal amount of the Loans and (ii) the Aggregate LC
Exposure.
"Toy Biz, Inc." means the Borrower (identified by its former name).
"UBS Loan Facilities" means the UBS Revolving Credit Loans and the
Bridge Loan.
"UBS Revolving Credit Agreement" means the $50,000,000 Credit Agreement
dated as of September 28, 1998 among Toy Biz, Inc., as borrower, the guarantors
party thereto, the lenders party thereto and UBS AG, Stamford Branch, as Agent
for such lenders, as amended from time to time.
"UBS Revolving Credit Documents" means the UBS Revolving Credit
Agreement, the UBS Revolving Credit Notes, the UBS Revolving Credit Letters of
Credit and all other agreements and documents entered into by Toy Biz, Inc., as
borrower, or any Subsidiary in connection with the making of the UBS Revolving
Credit Loans.
"UBS Revolving Credit Letters of Credit" means the letters of credit
issued for the account of the Borrower and listed on Schedule 1.01 hereof.
"UBS Revolving Credit Loans" means loans made to the Borrower under the
UBS Revolving Credit Agreement.
"UBS Revolving Credit Notes" means notes issued by Toy Biz, Inc. under
the UBS Revolving Credit Agreement.
"Unfunded Liabilities" means, with respect to any Plan at any time, the
amount (if any) by which (i) the value of all benefit liabilities under such
Plan, determined on a plan termination basis using the assumptions prescribed by
the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market
value of all Plan assets allocable to such liabilities under Title IV of ERISA
(excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the ERISA Group to the
PBGC or any other Person under Title IV of ERISA.
"Uniform Customs" means the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, as the same may be modified from time to time.
"United States" means the United States of America.
"U.S. Subsidiary" means a Subsidiary other than a Foreign Subsidiary.
"Voting Stock" means, with respect to any Person, securities of any
class of Capital Stock of such Person entitling the holders thereof (whether at
all times or only so long as
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no senior class of stock or other relevant equity interest has voting power by
reason of any contingency) to vote in the election of directors, managers or
other voting members of the governing body of such Person.
Section 1.02. Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with GAAP.
ARTICLE 2
The Credits
Section 2.01. Commitments to Lend. Each Lender severally agrees, on the
terms and conditions set forth in this Agreement, to make Loans to the Borrower
from time to time during the Revolving Credit Period; provided that, immediately
after each such Loan is made, (i) such Lender's Outstanding Amount shall not
exceed its Commitment and (ii) the sum of (x) the aggregate principal amount of
Loans outstanding plus (y) the Aggregate LC Exposure shall not exceed the
Borrowing Base. Each Borrowing under this Section 2.01 shall be in an aggregate
principal amount of $2,000,000 or any larger multiple of $1,000,000 (except that
any such Borrowing may be in the aggregate amount of the unused Commitments) and
shall be made from the several Lenders ratably in proportion to their respective
Commitments. Within the foregoing limits, the Borrower may borrow under this
Section 2.01, prepay Loans to the extent permitted by Section 2.09 and reborrow
at any time during the Revolving Credit Period under this Section 2.01.
Section 2.02. Method of Borrowing. (a) The Borrower shall give the
Agent notice (a "Notice of Borrowing") not later than 11:00 A.M. (New York, New
York time) on (x) the same day as each Base Rate Borrowing and (y) the third
Eurodollar Business Day before each Eurodollar Rate Borrowing, specifying:
(i) the date of such Borrowing, which shall be a Domestic Business
Day in the case of a Base Rate Borrowing or a Eurodollar Business Day
in the case of a Eurodollar Rate Borrowing;
(ii) the aggregate amount of such Borrowing;
(iii) whether the Loans comprising such Borrowing are to bear
interest initially at the Base Rate or the Eurodollar Rate; and
(iv) in the case of a Eurodollar Rate Borrowing, the duration of
the initial Interest Period applicable thereto, subject to the
provisions of the definition of Interest Period.
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Notwithstanding the foregoing, during the Primary Syndication Period,
all Borrowings shall be Base Rate Borrowings. In no event shall the total number
of Groups of Loans comprised of Eurodollar Rate Borrowings at any one time
outstanding exceed five.
(b) Promptly after receiving a Notice of Borrowing, the Agent shall
notify each Lender of the contents thereof and of such Lender's ratable share of
such Borrowing and such Notice of Borrowing shall not thereafter be revocable by
the Borrower.
(c) Not later than 12:00 Noon (New York, New York time) on the date of
each Borrowing, each Lender shall make available its ratable share of such
Borrowing, in federal or other funds immediately available in New York City, to
the Agent at its address specified in or pursuant to Section 10.01. Unless the
Agent determines that any applicable condition specified in Section 3.02 has not
been satisfied, the Agent will make the funds so received from the Lenders
available to the Borrower at the Agent's aforesaid address.
(d) Unless the Agent shall have received notice from a Lender before
the date of any Borrowing that such Lender will not make available to the Agent
such Lender's share of such Borrowing, the Agent may assume that such Lender has
made such share available to the Agent on the date of such Borrowing in
accordance with paragraph (c) above and the Agent may, in reliance upon such
assumption, make available to the Borrower on such date a corresponding amount.
If and to the extent that such Lender shall not have so made such share
available to the Agent, such Lender and the Borrower severally agree to repay to
the Agent forthwith on demand such corresponding amount together with interest
thereon, for each day from the date such amount is made available to the
Borrower until the date such amount is repaid to the Agent, at (i) if such
amount is repaid by the Borrower, a rate per annum equal to the higher of the
Federal Funds Rate and the interest rate applicable to such Borrowing pursuant
to Section 2.04 and (ii) if such amount is repaid by such Lender, the Federal
Funds Rate. If such Lender shall repay to the Agent such corresponding amount,
the Borrower shall not be required to repay such amount and the amount so repaid
by such Lender shall constitute such Lender's Loan included in such Borrowing
for purposes of this Agreement.
Section 2.03. Maturity of Loans. (a) Each Loan shall mature, and the
principal amount thereof shall be due and payable (together with interest
accrued thereon), on the Termination Date.
(b) If at any date the Total Outstanding Amount exceeds the Borrowing
Base as set forth in the Borrowing Base Certificate most recently delivered or
required to be delivered to the Lenders on or prior to such date, the Borrower
shall prepay on the next succeeding Domestic Business Day a principal amount of
Loans equal to such excess and, to the extent that the amount of such excess
exceeds the aggregate principal amount of all Loans then outstanding, cash
collateralize outstanding Letters of Credit in an amount equal to such excess.
Section 2.04. Interest Rates. (a) Each Base Rate Loan shall bear
interest on the outstanding principal amount thereof, for each day from the date
such Loan is made until it becomes due, at a rate per annum equal to the sum of
(i) the Base Rate Margin for such day plus (ii) the Base Rate for such day. Such
interest shall be payable quarterly in arrears on each
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Quarterly Payment Date. After the occurrence of any Event of Default, all
principal of and interest on any Base Rate Loan shall bear interest, payable on
demand, for each day until paid at a rate per annum equal to the sum of 2% plus
the rate otherwise applicable to such Base Rate Loan for such day.
(b) Each Eurodollar Loan shall bear interest on the outstanding
principal amount thereof, for each day during each Interest Period applicable
thereto, at a rate per annum equal to the sum of (i) the Eurodollar Rate Margin
for such day plus (ii) the Eurodollar Rate. Such interest shall be payable for
each Interest Period on the last day thereof.
(c) After the occurrence of any Event of Default, all principal of and
interest on any Eurodollar Loan shall bear interest, payable on demand, for each
day until paid at a rate per annum equal to the higher of (i) the sum of 2% plus
the Eurodollar Rate Margin for such day plus the Eurodollar Rate applicable to
such Loan on the day before such payment was due and (ii) the sum of 2% plus the
rate applicable to Base Rate Loans for such day (or, if the circumstances
described in clause 8.01(a) or (b) shall exist, at a rate per annum equal to the
sum of 2% plus the rate applicable to Base Rate Loans for such day).
(d) The Agent shall determine each interest rate applicable to the
Loans hereunder. The Agent shall promptly notify the Borrower and the
participating Lenders of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence of manifest error.
Section 2.05. Method of Electing Interest Rates. (a) The Loans included
in each Borrowing shall bear interest initially at the type of rate specified by
the Borrower in the applicable Notice of Borrowing. Thereafter, the Borrower may
from time to time elect to change or continue the type of interest rate borne by
each Group of Loans (subject to paragraph (d) below and the provisions of
Article 8), as follows:
(i) if such Loans are Base Rate Loans, the Borrower may elect to
convert such Loans to Eurodollar Loans as of any Eurodollar Business
Day, and
(ii) if such Loans are Eurodollar Loans, the Borrower may elect to
convert such Loans to Base Rate Loans as of any Domestic Business Day
or elect to continue such Loans as Eurodollar Loans for an additional
Interest Period, subject to Section 2.11 if any such conversion is
effective on any day other than the last day of an Interest Period
applicable to such Loans.
Each such election shall be made by delivering a notice (a "Notice of Interest
Rate Election") to the Agent not later than 11:00 A.M. (New York, New York time)
on the third Eurodollar Business Day before the conversion or continuation
selected in such notice is to be effective. A Notice of Interest Rate Election
may, if it so specifies, apply to only a portion of the aggregate principal
amount of the relevant Group of Loans; provided that (i) such portion is
allocated ratably among the Loans comprising such Group and (ii) the portion to
which such Notice of Interest Rate Election applies, and the remaining portion
to which it does not apply, are each at least $2,000,000 (unless such portion is
comprised of Base Rate Loans). If no such notice is
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timely received before the end of an Interest Period for any Group of Eurodollar
Loans, the Borrower shall be deemed to have elected that such Group of Loans be
converted to Base Rate Loans at the end of such Interest Period.
(b) Each Notice of Interest Rate Election shall specify:
(i) the Group of Loans (or portion thereof) to which such notice
applies;
(ii) the date on which the conversion or continuation selected in
such notice is to be effective, which shall comply with the applicable
clause of paragraph (a) above;
(iii) if the Loans comprising such Group are to be converted, the
new type of Loans and, if the Loans resulting from such conversion are
to be Eurodollar Loans, the duration of the next succeeding Interest
Period applicable thereto; and
(iv) if such Loans are to be continued as Eurodollar Loans for an
additional Interest Period, the duration of such additional Interest
Period.
Each Interest Period specified in a Notice of Interest Rate Election shall
comply with the provisions of the definition of Interest Period.
(c) Promptly after receiving a Notice of Interest Rate Election from
the Borrower pursuant to paragraph (a) above, the Agent shall notify each Lender
of the contents thereof and such notice shall not thereafter be revocable by the
Borrower.
(d) The Borrower shall not be entitled to elect to convert any Loans
to, or continue any Loans for an additional Interest Period as, Eurodollar Loans
if (i) the aggregate principal amount of any Group of Eurodollar Loans created
or continued as a result of such election would be less than $2,000,000 or (ii)
a Default shall have occurred and be continuing when the Borrower delivers
notice of such election to the Agent. During the Primary Syndication Period, the
Borrower may not elect to convert any Base Rate Loans to Eurodollar Loans.
(e) If any Loan is converted to a different type of Loan, the Borrower
shall pay, on the date of such conversion, the interest accrued to such date on
the principal amount being converted.
Section 2.06. Fees. (a) The Borrower shall pay to the Agent, for the
account of the Lenders ratably in proportion to their Commitments, a commitment
fee for each day at the rate of (i) 0.625% per annum, if the Total Outstanding
Amount on such day is less than $20,000,000, or (ii) 0.50% per annum, if the
Total Outstanding Amount on such day is greater than or equal to $20,000,000, in
the case of both (i) and (ii), calculated on the amount by which the aggregate
amount of the Commitments exceeds the Total Outstanding Amount on such day.
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Such commitment fee shall accrue from and including the Closing Date to but
excluding the date on which the Commitments terminate in their entirety.
(b) The Borrower shall pay to the Agent, for the account of the Lenders
ratably in proportion to their Commitment Percentages, a Letter of Credit fee
calculated for each day at the LC Fee Rate for such day on the aggregate amount
available for drawing (whether or not conditions for drawing have been
satisfied) under all Letters of Credit outstanding at the close of business on
such day. The Borrower shall pay to the Agent, for the account of the Issuer, a
Letter of Credit fronting fee accruing daily on the aggregate amount available
for drawing (whether or not conditions for drawing have been satisfied) under
all Letters of Credit issued by the Issuer at a rate per annum equal to .25%.
The Borrower shall also pay to the Issuer such other customary administrative,
issuance, amendment, payment and negotiation charges in the amounts and at the
times agreed between the Borrower and the Issuer.
(c) Fees accrued for the account of the Lenders, and fronting fees
accrued for the account of the Issuer, under this Section 2.06 shall be payable
quarterly in arrears on each Quarterly Payment Date and on the day on which the
Commitments terminate in their entirety.
Section 2.07. Voluntary Termination or Reduction of Commitments. The
Borrower may, upon at least three Domestic Business Days' notice to the Agent,
(a) terminate the Commitments at any time, if there are no Outstanding Amounts
at such time, or (b) ratably reduce from time to time by an aggregate amount of
$2,000,000 or a larger multiple of $1,000,000, the aggregate amount of the
Commitments in excess of the Total Outstanding Amount. Promptly after receiving
a notice pursuant to this Section 2.07, the Agent shall notify each Lender of
the contents thereof.
Section 2.08. Mandatory Termination of Commitments. The Commitments
shall terminate on the Termination Date and any Loans then outstanding (together
with accrued interest thereon) shall be due and payable on such date.
Section 2.09. Prepayments of Loans. (a) Optional Prepayments. Subject
in the case of Eurodollar Loans to Section 2.11, the Borrower may (i) upon at
least one Domestic Business Day's notice to the Agent, prepay any Group of Base
Rate Loans or (ii) upon at least three Eurodollar Business Days' notice to the
Agent, prepay any Group of Eurodollar Loans, in each case in whole at any time,
or from time to time in part in amounts aggregating $2,000,000 or any larger
multiple of $1,000,000, by paying the principal amount to be prepaid together
with interest accrued thereon to the date of prepayment. Each such optional
prepayment shall be applied to prepay ratably the Loans of the several Lenders
included in such Group of Loans. Promptly after receiving a notice of prepayment
pursuant to this Section 2.09(a), the Agent shall notify each Lender of the
contents thereof and of such Lender's ratable share of such prepayment, and such
notice shall not thereafter be revocable by the Borrower.
(b) Mandatory Prepayments. (i) Immediately, if the Total Outstanding
Amount exceeds the aggregate amount of the Commitments or the Borrowing Base,
the Borrower shall make a mandatory repayment of the Loans in an amount equal to
such excess; and (ii) prior to 1:00 p.m. on any Domestic Business Day on which
there are funds on deposit in
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the General Collateral Account (other than funds constituting cash collateral
for outstanding Letters of Credit), the Agent shall cause such funds to be
applied: first, to the accrued and unpaid interest on the Loans to the extent
then due and payable; second, to the amount of any LC Reimbursement Obligations
then outstanding; third, to the outstanding principal amount of the Loans
(provided that (x) any outstanding Base Rate Loans shall be repaid in full
before any amounts are applied to the repayment of outstanding Eurodollar Loans
and (y) amounts shall be applied to repay outstanding Eurodollar Loans in the
order of maturity thereof); and, fourth, to any other Obligations then due and
payable. After application as aforesaid, so long as no Default or Event of
Default has occurred and is continuing, the Agent shall transfer the balance of
such funds to an Operating Account in accordance with the Borrower's
instructions.
Section 2.10. General Provisions as to Payments. (a) The Borrower shall
make each payment of principal of, and interest on, the Loans and LC
Reimbursement Obligations and each payment of fees hereunder (other than fees
payable directly to the Issuer) not later than 12:00 Noon (New York, New York
time) on the date when due, in federal or other funds immediately available in
New York, New York, to the Agent at its address specified in or pursuant to
Section 10.01. The Agent will promptly distribute to each Lender its ratable
share of each such payment received by the Agent for the account of the Lenders.
Whenever any payment of principal of, or interest on, the Base Rate Loans or LC
Reimbursement Obligations or any payment of fees shall be due on a day that is
not a Domestic Business Day, the date for payment thereof shall be extended to
the next succeeding Domestic Business Day. Whenever any payment of principal of,
or interest on, the Eurodollar Loans shall be due on a day that is not a
Eurodollar Business Day, the date for payment thereof shall be extended to the
next succeeding Eurodollar Business Day unless such Eurodollar Business Day
falls in another calendar month, in which case the date for payment thereof
shall be the next preceding Eurodollar Business Day. If the date for any payment
of principal is extended by operation of law or otherwise, interest thereon
shall be payable for such extended time.
(b) Unless the Borrower notifies the Agent before the date on which any
payment is due to the Lenders hereunder that the Borrower will not make such
payment in full, the Agent may assume that the Borrower has made such payment in
full to the Agent on such date and the Agent may, in reliance on such
assumption, cause to be distributed to each Lender on such due date an amount
equal to the amount then due such Lender. If and to the extent that the Borrower
shall not have so made such payment, each Lender shall repay to the Agent
forthwith on demand such amount distributed to such Lender together with
interest thereon, for each day from the date such amount is distributed to such
Lender until the date such Lender repays such amount to the Agent, at the
Federal Funds Rate.
Section 2.11. Funding Losses. If the Borrower makes any payment of
principal with respect to any Eurodollar Loan or any Eurodollar Loan is
converted to a Base Rate Loan (whether such payment or conversion is pursuant to
Article 2, 6 or 8 or otherwise) on any day other than the last day of an
Interest Period applicable thereto, or if the Borrower fails to borrow, prepay,
convert or continue any Eurodollar Loan after notice has been given to any
Lender in accordance with Section 2.02(a) or 2.09, the Borrower shall reimburse
each Lender within 15 days after written demand for any resulting loss or
expense incurred by it (or by an existing or prospective Participant in the
related Loan), including (without limitation) any loss incurred in obtaining,
liquidating or employing deposits from third parties, but excluding loss of
margin for
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the period after such payment or conversion or failure to borrow, prepay,
convert or continue; provided that such Lender shall have delivered to the
Borrower a certificate setting forth in reasonable detail calculations of the
amount of such loss or expense, which certificate shall be conclusive in the
absence of manifest error.
Section 2.12. Computation of Interest and Fees. All interest and fees
shall be computed on the basis of a year of 360 days and paid for the actual
number of days elapsed (including the first day but excluding the last day).
Section 2.13. Notes. (a) The Borrower's obligation to repay the Loans
of each Lender shall be evidenced by a single Note payable to the order of such
Lender for the account of its Applicable Lending Office.
(b) Each Lender may, by notice to the Borrower and the Agent, request
that the Borrower's obligation to repay such Lender's Loans of a particular type
be evidenced by a separate Note. Each such Note shall be in substantially the
form of Exhibit A hereto with appropriate modifications to reflect the fact that
it relates solely to Loans of the relevant type. Each reference in this
Agreement to the "Note" of such Lender shall be deemed to refer to and include
any or all of such Notes, as the context may require.
(c) Promptly after it receives each Lender's Note pursuant to Section
3.01(a), the Agent shall forward such Note to such Lender. Each Lender shall
record the date, amount and type of each Loan made by it and the date and amount
of each payment of principal made by the Borrower with respect thereto, and may,
if such Lender so elects in connection with any transfer or enforcement of its
Note, endorse on the schedule forming a part thereof appropriate notations to
evidence the foregoing information with respect to each such Loan then
outstanding; provided that a Lender's failure to make (or any error in making)
any such recordation or endorsement shall not affect the Borrower's obligations
hereunder or under the Notes. Each Lender is hereby irrevocably authorized by
the Borrower so to endorse its Note and to attach to and make a part of its Note
a continuation of any such schedule as and when required.
Section 2.14. Letters of Credit. (a) Issuance. The Issuer agrees, on
the terms and conditions set forth in this Agreement, to issue Letters of Credit
hereunder at the request of the Borrower from time to time prior to the date
that is 30 days before the Termination Date; provided that, immediately after
each such Letter of Credit is issued and participations therein are sold to the
Lenders as provided in this paragraph (a):
(i) the Aggregate LC Exposure shall not exceed $10,000,000;
(ii) in the case of each Lender, its Outstanding Amount shall not
exceed its Commitment; and
(iii) the sum of (x) the aggregate principal amount of Loans
outstanding plus (y) the aggregate LC Exposure shall not exceed the
Borrowing Base.
Whenever the Issuer issues a Letter of Credit hereunder, the Issuer shall be
deemed, without further action by any party hereto, to have sold to each Lender,
and each Lender shall be deemed,
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without further action by any party hereto, to have purchased from the Issuer, a
participation (on the terms specified in this paragraph (a)) in such Letter of
Credit equal to such Lender's Commitment Percentage thereof.
(b) Notice of Proposed Issuance. With respect to each Letter of Credit,
the Borrower shall give the Issuer and the Agent at least five Domestic Business
Days' prior notice (i) specifying the date such Letter of Credit is to be issued
and (ii) describing the proposed terms of such Letter of Credit and the nature
of the transactions to be supported thereby. Promptly after it receives such
notice, the Agent shall notify each Lender of the contents thereof.
(c) Conditions to Issuance. The Issuer shall not issue any Letter of
Credit unless:
(i) such Letter of Credit shall be reasonably satisfactory in form
and substance to the Issuer,
(ii) the Borrower shall have executed and delivered such other
customary documentation relating to such Letter of Credit as the Issuer
shall have reasonably requested,
(iii) the Issuer shall have confirmed with the Agent on the date
of such issuance that the limitations specified in paragraph (a) above
will not be exceeded immediately after such Letter of Credit is issued,
and
(iv) the Issuer shall not have been notified in writing by the
Borrower or the Agent expressly to the effect that any condition
specified in clause 3.02(c), 3.02(d), 3,02(e), 3.02(f) or 3.02(g) is
not satisfied at the time such Letter of Credit is to be issued.
(d) Notice of Actual Issuance. Promptly after it issues any Letter of
Credit, the Issuer shall notify the Agent of the date, face amount, beneficiary
or beneficiaries and expiry date of such Letter of Credit. Promptly after it
receives such notice, the Agent shall notify each Lender of the contents thereof
and the amount of such Lender's participation in such Letter of Credit. Promptly
after it issues any Letter of Credit, the Issuer shall send a copy of such
Letter of Credit to the Agent.
(e) Expiry Dates. No Letter of Credit shall have an expiry date later
than the fifth Domestic Business Day before the Termination Date. Subject to the
preceding sentence, each Letter of Credit issued hereunder shall expire on or
before the first anniversary of the date of such issuance (or, in the case of
any Letter of Credit whose expiry date is extended hereunder, the date of such
extension); provided that, subject to paragraph (f) below, the expiry date of
any Letter of Credit may be extended from time to time at the Borrower's
request.
(f) Notice of Proposed Extensions of Expiry Dates. The Issuer shall
give the Agent at least three Domestic Business Days' notice before the Issuer
extends the expiry date of any Letter of Credit issued by it. Such notice shall
identify such Letter of Credit, the date on which it is to be extended and the
date to which it is to be extended. Promptly after it receives
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such notice, the Agent shall notify each Lender of the contents thereof. The
Issuer shall not extend the expiry date of any Letter of Credit if:
(i) such extension does not comply with paragraph (e) above, or
(ii) the Issuer shall have been notified by the Borrower or the
Agent expressly to the effect that any condition specified in clause
3.02(c), 3.02(d), 3.02(e), 3.02(f) or 3.02(g) is not satisfied at the
time of such proposed extension.
If any Letter of Credit is not extended after notice of a proposed extension
thereof has been given to the Lenders, the Issuer shall promptly notify the
Agent of such failure to extend. Promptly after it receives such notice, the
Agent shall notify each Lender thereof.
(g) Drawings. If the Issuer receives a demand for payment under any
Letter of Credit issued by it and determines in accordance with its standard
practices that such demand should be honored, the Issuer shall (i) promptly
notify the Borrower and the Agent as to the amount to be paid by the Issuer as a
result of such demand and the date of such payment (an "LC Payment Date") and
(ii) make such payment in accordance with the terms of such Letter of Credit.
(h) Reimbursement by the Borrower.
(i) If any amount is drawn under any Letter of Credit, the
Borrower irrevocably and unconditionally agrees to reimburse the Issuer
for such amount, together with any and all reasonable and customary
charges and expenses that the Issuer may pay or incur relative to such
drawing. Such reimbursement shall be due and payable on the relevant LC
Payment Date or the date on which the Issuer notifies the Borrower of
such drawing, whichever is later; provided that, if such notice is
given after 12:00 Noon (New York, New York time) on the later of such
dates, such reimbursement shall be due and payable on the next
following Domestic Business Day (the date on which it is due and
payable being an "LC Reimbursement Due Date").
(ii) In addition, the Borrower agrees to pay, on the applicable LC
Reimbursement Due Date, interest on each amount drawn under a Letter of
Credit, for each day from and including the date such amount is drawn
to but excluding such LC Reimbursement Due Date, at the rate applicable
to Base Rate Loans for such day. The Borrower also agrees to pay, on
demand, interest on any overdue amount (including any overdue interest)
payable under this paragraph (h), for each day from and including the
day such amount becomes due to but excluding the day such amount is
paid in full, at a rate per annum equal to the sum of 2% plus the rate
applicable to Base Rate Loans for such day.
(iii) Each payment by the Borrower pursuant to this paragraph (h)
shall be made to the Issuer in federal or other funds immediately
available to it at its address specified in or pursuant to Section
10.01.
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(i) Payments by Lenders.
(i) If the Borrower fails to pay any LC Reimbursement Obligation
in full when due, the Issuer may notify the Agent of the unreimbursed
amount and request that the Lenders reimburse the Issuer for their
respective Commitment Percentages thereof. Promptly after it receives
any such notice, the Agent shall notify each Lender of the unreimbursed
amount and such Lender's Commitment Percentage thereof. Upon receiving
such notice from the Agent, each Lender shall make available to the
Issuer, at its address specified in or pursuant to Section 10.01, an
amount equal to such Lender's Commitment Percentage of such
unreimbursed amount, in federal or other funds immediately available to
the Issuer, by 3:00 P.M. (New York, New York time) (A) on the day such
Lender receives such notice if it is received at or before 12:00 Noon
(New York, New York time) on such day or (B) on the next Domestic
Business Day if such notice is received after 12:00 Noon (New York, New
York time) on the date of receipt, in each case together with interest
on such amount for each day from and including the relevant LC Payment
Date to but excluding the day such payment is due from such Lender at
the Federal Funds Rate for such day. Upon payment in full thereof, such
Lender shall be subrogated to the rights of the Issuer against the
Borrower to the extent of such Lender's Commitment Percentage of the
related LC Reimbursement Obligation (including interest accrued
thereon).
(ii) If any Lender fails to pay when due any amount to be paid by
it pursuant to clause (i) of this paragraph (i), interest shall accrue
on such Lender's obligation to make such payment, for each day from and
including the date such payment became due to but excluding the date
such Lender makes such payment, at a rate per annum equal to (x) for
each day from the day such payment is due to the third succeeding
Domestic Business Day, inclusive, the Federal Funds Rate for such day
and (y) for each day thereafter the sum of 2% plus the rate applicable
to Base Rate Loans for such day.
(iii) If the Borrower shall reimburse the Issuer for any drawing
with respect to which any Lender shall have made funds available to the
Issuer in accordance with clause (i) of this paragraph (i), the Issuer
shall promptly upon receipt of such reimbursement distribute to such
Lender its Commitment Percentage thereof, including interest, to the
extent received by the Issuer.
(j) Exculpatory Provisions. The obligations of the Borrower and the
Lenders under this Section 2.14 shall be absolute and unconditional under any
and all circumstances and irrespective of any set-off, counterclaim or defense
to payment that the Borrower or any Lender may have or have had against the
Issuer, any Lender, any beneficiary of any Letter of Credit or any other Person.
The Borrower assumes all risks of the acts or omissions of any beneficiary of
any Letter of Credit with respect to the use of such Letter of Credit by such
beneficiary. None of the Issuer, the Lenders and their respective officers,
directors, employees and agents shall be responsible for, and the obligations of
each Lender to make payments to the Issuer and of the Borrower to reimburse the
Issuer for drawings pursuant to this Section 2.14 shall not be excused or
affected by, among other things, (i) the use that may be made of any Letter of
Credit or any
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acts or omissions of any beneficiary or transferee in connection therewith; (ii)
the validity, sufficiency or genuineness of documents presented under any Letter
of Credit or of any endorsements thereon, even if such documents should in fact
prove to be in any or all respects invalid, insufficient, fraudulent or forged;
(iii) payment by the Issuer against presentation of documents to it that do not
comply with the terms of the relevant Letter of Credit; or (iv) any dispute
between or among the Borrower, any beneficiary of any Letter of Credit or any
other Person or any claims or defenses whatsoever of the Borrower or any other
Person against any beneficiary of any Letter of Credit. The Issuer shall not be
liable for any error, omission, interruption or delay in transmission, dispatch
or delivery of any message or advice, however transmitted, in connection with
any Letter of Credit. Any action taken or omitted by the Issuer in connection
with any Letter of Credit and the related drafts and documents shall be binding
upon the Borrower and shall not place the Issuer or any Lender under any
liability to the Borrower. Notwithstanding the foregoing, the provisions of this
paragraph (j) shall not relieve the Issuer from responsibility for its own gross
negligence or willful misconduct.
(k) Indemnification by Borrower. The Borrower agrees to indemnify and
hold harmless each Lender, the Issuer and the Agent (collectively, the "LC
Indemnitees") from and against any and all claims and damages, losses,
liabilities, costs or expenses (including, without limitation, the reasonable
fees and disbursements of counsel) that such LC Indemnitee may reasonably incur
(or that may be claimed against such LC Indemnitee by any Person whatsoever) by
reason of or in connection with any execution and delivery or transfer of or
payment or failure to pay under any Letter of Credit or any actual or proposed
use of any Letter of Credit; provided that the Borrower shall not be required to
indemnify the Issuer for any such claims, damages, losses, liabilities, costs or
expenses to the extent, but only to the extent, caused by (i) its own willful
misconduct or gross negligence or (ii) its failure to pay under any Letter of
Credit issued by it after the presentation to it of a request strictly complying
with the terms and conditions of such Letter of Credit. Nothing in this
paragraph (k) is intended to limit the obligations of the Borrower under any
other provision of this Section 2.14.
(l) Indemnification by Lenders. The Lenders shall, ratably in
proportion to their Commitment Percentages, indemnify the Issuer (to the extent
not reimbursed by the Borrower) against any claims, damages, losses,
liabilities, reasonable costs and reasonable expenses (including, without
limitation, reasonable fees and disbursements of counsel) that any such
indemnitee may suffer or incur in connection with this Section 2.14 or any
action taken or omitted by such indemnitee under this Section 2.14; provided
that the Lenders shall not be required to indemnify the Issuer for any such
claims, damages, losses, liabilities, costs or expenses to the extent, but only
to the extent, caused by (i) its own gross negligence or willful misconduct,
(ii) its failure to pay under any Letter of Credit issued by it after the
presentation to it of a request strictly complying with the terms and conditions
of such Letter of Credit, (iii) its failure to comply with paragraph (e) above,
(iv) its liabilities under any Letter of Credit issued by it in contravention of
clause 2.14(c)(iii) (to the extent that the limitations referred to therein were
in fact exceeded) or clause 2.14(c)(iv) or (v) its liabilities under any Letter
of Credit extended (or allowed to be automatically extended) by it in
contravention of clause 2.14(f)(ii).
(m) Liability for Damages. Nothing in this Agreement shall preclude the
Borrower or any Lender from asserting against the Issuer any claim for damages
suffered by the Borrower or such Lender to the extent, but only to the extent,
caused by (i) the willful
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misconduct or gross negligence of the Issuer, but in no event shall the Issuer
be liable for punitive, exemplary or consequential damages or (ii) the Issuer's
failure to pay under any Letter of Credit issued by it after the presentation to
it of a request strictly complying with the terms and conditions thereof.
(n) Dual Capacities. In its capacity as a Lender, the Issuer shall have
the same rights and obligations under this Section 2.14 as any other Lender.
(o) Information to be Provided to Agent. The Issuer shall furnish to
the Agent upon request such information as the Agent shall reasonably request in
order to calculate (i) the Aggregate LC Exposure existing from time to time and
(ii) the amount of any fee payable for the account of the Lenders under Section
2.06.
(p) Uniform Customs. Each Letter of Credit shall be subject to the
Uniform Customs and, to the extent not inconsistent therewith, the laws of the
State of New York.
ARTICLE 3
Conditions
Section 3.01. Closing. The Closing Date shall occur on the first date
on which all the following conditions have been satisfied (or waived in
accordance with Section 10.05) to the satisfaction of the Agent:
(a) the Agent shall have received a duly executed copy of this
Agreement and a duly executed Note for the account of each Lender dated the
Closing Date and complying with the provisions of Section 2.13;
(b) the Agent shall have received (i) an opinion of Battle Fowler LLP,
counsel for the Obligors, substantially in the form of Exhibit E hereto, (ii) an
opinion of William H. Hardie, III, General Counsel of the Borrower,
substantially in the form of Exhibit F hereto, (iii) opinions of Gallagher &
Kennedy, special Arizona counsel for the Obligors, and Stoel Rives LLP, special
Washington counsel for the Obligors, substantially in the forms of Exhibits G
and H hereto and (iv) an opinion of Jones, Day, Reavis & Pogue, counsel for the
Agent, substantially in the form of Exhibit I hereto, each dated the Closing
Date;
(c) the Agent shall have received duly executed counterparts of each of
the Collateral Documents, together with evidence satisfactory to the Agent of
the effectiveness and perfection of the Liens contemplated thereby, including
the filing of UCC-1 's and the delivery of any promissory notes and stock
certificates comprising the Collateral;
(d) the Agent shall have received a duly executed Landlord Waiver and
Consent with respect to the Borrower's warehouse facility located in Fife,
Washington;
(e) the Agent shall have received a true, complete and correct copy of
each Senior Note Document as in effect on the Closing Date, certified as such by
a senior officer of the Borrower;
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(f) the fact that, and receipt by the Agent of a certificate of the
chief executive officer or chief financial officer of the Borrower to the effect
that, on the Closing Date, after giving effect to the consummation of
transactions contemplated by the Loan Documents to be consummated on the Closing
Date (i) no Default shall have occurred and be continuing and (ii) the
representations and warranties of the Obligors contained in the Loan Documents
are true and correct on and as of the Closing Date;
(g) there shall not have occurred a material adverse change in the
business, assets, liabilities, operations, condition (financial or otherwise) or
prospects of Borrower and its Subsidiaries, taken as a whole, since December 31,
1998;
(h) the Agent shall have received evidence satisfactory to it of the
insurance coverage required by Section 5.03(b) and the Collateral Documents;
(i) there shall be no litigation or administrative proceedings or other
legal or regulatory developments, actual or threatened in writing, that, in the
judgment of the Agent (i) could reasonably be expected to have a Material
Adverse Effect, or (ii) would be materially inconsistent with the assumptions
underlying the forecasts provided to the Agent prior to the date hereof;
(j) (i) all outstanding Debt and other obligations owed by the Borrower
or any of its Subsidiaries under the UBS Loan Facilities shall have been repaid,
(ii) all commitments in respect thereof shall have been terminated or
arrangements satisfactory to the Agent for the termination thereof shall have
been made and (iii) all Liens securing such obligations and all Guarantees
thereof shall have been released or arrangements satisfactory to the Agent for
such release shall have been made;
(k) all governmental, shareholder and third party consents and
approvals necessary or, to the extent requested by the Agent in writing,
reasonably desirable, in connection with the Loan Documents shall have been
obtained;
(l) receipt by the Agent and the Lenders of all reasonable costs
(including without limitation, the fees set forth in that separate fee letter
dated the date hereof between the Borrower and the Agent), fees, expenses and
other amounts (including, without limitation, reasonable legal fees and expenses
and other compensation) payable to any of the foregoing on or prior to the
Closing Date in connection with the Loan Documents;
(m) (i) the Agent shall have received projected consolidated balance
sheets of the Borrower and its Consolidated Subsidiaries as of December 31,
1999, December 31, 2000 and December 31, 2001, projected annual consolidated
statements of income and cash flow for the Borrower and its Consolidated
Subsidiaries for the Fiscal Years ended 2000 and 2001 and projected consolidated
statements of income and cash flow for the Borrower and its Consolidated
Subsidiaries for each month in Fiscal Year 1999, which projections shall (A) be
prepared by the Borrower in good faith on the basis of information and
assumptions that the Borrower believes to be reasonable as of the date of such
projections, (B) be reasonably satisfactory to the Agent and (C) demonstrate
that the financial covenants set forth in Sections 5.11 through 5.15 shall be
satisfied;
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(ii) the Agent shall have received a detailed financial model for
the Fiscal Years through 2001, which shall be in form and substance
satisfactory to the Agent; and
(iii) the Agent shall be satisfied in its reasonable judgment
after the receipt of the information provided pursuant to clauses (i)
and (ii) above that the amount of committed and existing financing
available to the Borrower shall be sufficient to meet the ongoing
financing needs of the Borrower;
(n) there shall exist no event of default (or condition that would
constitute an event of default with the giving of notice or the passage of time
or both) under any agreements relating to the Borrower's Capital Stock or under
any financing agreements, lease agreements or other contracts to which the
Borrower or any Subsidiary is a party or by which any of their respective
properties are bound or affected that could reasonably be expected to have a
Material Adverse Effect;
(o) the Agent shall have received all documents that the Agent may
reasonably request relating to the existence of the Obligors, the corporate
authority for and the validity of the Loan Documents, and any other matters
relevant hereto, all in form and substance satisfactory to the Agent.
Promptly upon the occurrence of the Closing Date, the Agent shall notify the
Borrower and the Lenders thereof, and such notice shall be conclusive and
binding on all parties hereto.
Section 3.02. Borrowings and Issuances of Letters of Credit. The
obligation of any Lender to make a Loan on the occasion of any Borrowing, and
the obligation of the Issuer to issue (or extend the expiry date of) any Letter
of Credit, is subject to the satisfaction of the following conditions:
(a) the fact that the Closing Date shall have occurred on or before
April 1, 1999;
(b) receipt by the Agent of a Notice of Borrowing as required by
Section 2.02, or receipt by the Issuer of a notice of proposed issuance or
extension as required by Section 2.14(b) or 2.14(f), as the case may be;
(c) in the case of any Borrowing during the Primary Syndication Period,
the fact that the Borrower shall have cooperated with syndication efforts,
including, without limitation, by promptly providing the Agent, its affiliates
and the Lenders with all information deemed necessary to complete successfully
such syndication;
(d) the fact that, immediately before and after such Borrowing or
issuance or extension of a Letter of Credit, no Default shall have occurred and
be continuing;
(e) the fact that the representations and warranties of the Obligors
contained in the Loan Documents shall be true on and as of the date of such
Borrowing or issuance or extension of a Letter of Credit;
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(f) receipt by the Agent of an executed Blocked Account Agreement from
each Blocked Account Bank, which Blocked Account Agreement shall be in form and
substance satisfactory to the Agent; provided, however, that until the earlier
of (i) the initial request by the Borrower for a Loan and (ii) the date
specified in Section 5.30(a), so long as any Letters of Credit outstanding or to
be issued are or will be fully secured by cash collateral on deposit in the
General Collateral Account, executed Blocked Account Agreements need not be
received by the Agent prior to the issuance or extension of a Letter of Credit.
(g) receipt by the Agent on or prior to the date most recently
occurring prior to such Borrowing or issuance or extension of a Letter of Credit
on which a Borrowing Base Certificate is required to be delivered pursuant to
Section 5.01(g)(i) or a Borrowing Base Management Report is required to be
delivered pursuant to Section 5.01(g)(ii) of (i) a Borrowing Base Certificate as
of the last day of the calendar month most recently ended prior to such date and
(ii) a Borrowing Base Management Report as of Wednesday of the calendar week
most recently ended prior to such date; provided, however, that so long as there
are no Loans outstanding and any Letters of Credit outstanding or to be issued
are or will be fully secured by cash collateral on deposit in the General
Collateral Account, the Borrower will not be obligated to deliver a Borrowing
Base Management Report prior to the issuance or extension of a Letter of Credit.
Each Borrowing and each issuance or extension of a Letter of Credit hereunder
shall be deemed to be a representation and warranty by the Borrower and, with
respect to itself only, each Guarantor on the date of such Borrowing or issuance
or extension of a Letter of Credit as to the facts specified in the foregoing
clauses 3.02(d) and 3.02(e).
ARTICLE 4
Representations and Warranties
The Borrower represents and warrants, and each Guarantor represents and
warrants, with respect to itself only, that:
Section 4.01. Corporate Existence and Power. The Borrower (i) is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation, (ii) has all corporate powers and
(iii) has all material governmental licenses, consents, authorizations and
approvals required to carry on its business as now conducted.
Section 4.02. Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by each Obligor of each
Loan Document to which it is a party are within such Obligor's corporate powers,
have been duly authorized by all necessary corporate action, require no action
by or in respect of, or filing with, any governmental body, agency or official
(other than as have been obtained) and do not contravene, or constitute a
default under, any material provision of applicable law or regulation or any
provision of such Obligor's certificate of incorporation or by-laws or of any
agreement, judgment, injunction, order, decree or other instrument binding upon
the Borrower or any Subsidiary or result in the creation or imposition of any
Lien on any asset of the Borrower or any Subsidiary.
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Section 4.03. Binding Effect, Liens. (a) (i) Each Loan Document (other
than the Notes) to which any Obligor is a party constitutes a valid and binding
agreement of such Obligor and (ii) each Note, when executed and delivered in
accordance with this Agreement, will constitute a valid and binding obligation
of the Borrower, in the case of both clause (i) and clause (ii) enforceable in
accordance with its terms subject to applicable bankruptcy, insolvency or
similar laws affecting creditors' rights generally and to equitable principles
of general applicability.
(b) The Collateral Documents create valid security interests in the
Collateral purported to be covered thereby, which security interests are and
will remain perfected security interests, prior to all other Liens (other than
Liens permitted hereunder that do not secure Debt and that rank senior to such
security interests by operation of law).
Section 4.04. Financial Information. (a) The consolidated and
consolidating balance sheets of the Borrower and its Consolidated Subsidiaries
as of December 31, 1997 and December 31, 1998 and the related consolidated and
consolidating statements of income, cash flows and changes in stockholders'
equity for the Fiscal Years then ended, which consolidated statements have been
reported on by Ernst & Young LLP and, with respect to the Fiscal Year 1997
statements, set forth in the Borrower's Form 10-K for 1997 and, with respect to
the Fiscal Year 1998 statements, set forth in the Borrower's Form 8-K filed with
the SEC on March 10, 1999, fairly present, in conformity with GAAP, the
consolidated and consolidating financial position of the Borrower and its
Consolidated Subsidiaries as of such dates and their consolidated and
consolidating results of operations and cash flows for such Fiscal Years.
(b) Since December 31, 1998 there has been no material adverse change
in the business, condition (financial or otherwise), results of operations or
prospects of the Borrower and its Consolidated Subsidiaries, considered as a
whole.
Section 4.05. Litigation. There is no action, suit or proceeding
pending against, or to the Borrower's knowledge, threatened against or
affecting, the Borrower or any Subsidiary before any court or arbitrator or any
governmental body, agency or official in which there is a reasonable possibility
of an adverse decision that (a) could have a Material Adverse Effect or (b) in
any manner draws into question the validity or enforceability of the Loan
Documents.
Section 4.06. Compliance with ERISA and Foreign Pension Laws. (a) The
Savings Plan and each Plan that is intended to be qualified under Section 401(a)
of the Internal Revenue Code as currently in effect has been determined by the
Internal Revenue Service to be so qualified, and each trust related to any such
Plan and the Savings Plan has been determined to be exempt from federal income
tax under Section 501(a) of the Internal Revenue Code as currently in effect.
Each member of the ERISA Group is in compliance in all material respects with
the presently applicable provisions of ERISA and the Internal Revenue Code with
respect to each Plan and the Savings Plan.
(b) Each member of the ERISA Group has fulfilled its obligations under
the minimum funding standards of ERISA and the Internal Revenue Code with
respect to each Plan. No member of the ERISA Group has (i) sought a waiver of
the minimum funding standard under Section 412 of the Internal Revenue Code in
respect of any Plan, (ii) failed to make any required
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contribution or payment to any Plan, the Savings Plan or Multiemployer Plan, or
made any amendment to any Plan, that has resulted or could reasonably be
expected to result in the imposition of a Lien or the posting of a bond or other
security under ERISA or the Internal Revenue Code or (iii) incurred liabilities
in an aggregate amount in excess of $1,000,000 under Title IV of ERISA other
than a liability to the PBGC for premiums under Section 4007 of ERISA. Other
than the Fleer/Skybox International Retirement Plan, there is no other Plan that
if terminated would result in liabilities in excess of $1,000,000 under Title IV
of ERISA.
(c) No member of the ERISA Group maintains or contributes to any
employee welfare benefit plan within the meaning of Section 3(1) of ERISA that
provides medical benefits to employees after termination of employment, other
than as required by Section 601 of ERISA, where the unfunded accumulated
post-retirement benefit obligation as of the end of the last Fiscal Year that
occurred prior to the Closing Date exceeded $1,000,000.
(d) No member of the ERISA Group nor any fiduciary of any Plan or the
Savings Plan (i) has engaged in a nonexempt prohibited transaction described in
Sections 406 of ERISA or 4975 of the Internal Revenue Code that could give rise
to a material liability or (ii) has taken or failed to take any action that
would cause the Borrower to have to notify the Lender pursuant to Section
5.01(m) below.
(e) No member of the ERISA Group has incurred any material liability to
or on account of any Plan or the Savings Plan pursuant to Sections 4063, 4064,
4069, 4204 or 4212(c) of ERISA, and no such member expects to incur any such
material liability under the foregoing sections with respect to any Plan or the
Savings Plan.
(f) Each Foreign Employee Benefit Plan is in compliance in all material
respects with all laws, regulations and rules applicable thereto and the
respective requirements of the governing documents for such Plan. The aggregate
of the liabilities to provide all of the accrued benefits under any Foreign
Pension Plan does not exceed the current fair market value of the assets held in
the trust or other funding vehicle for such Plan by more than $1,000,000. There
are no actions, suits or claims (other than routine claims for benefits) pending
or, to their respective knowledge, threatened against any member of the ERISA
Group with respect to any Foreign Employee Benefit Plan.
(g) To the best of their respective knowledge, no member of the ERISA
Group is non-compliant with respect to COBRA, HIPAA and Medicare secondary where
the liability with respect to such non-compliance would exceed $1,000,000.
(h) There are no material unfunded liabilities related to an
individual's termination of employment by a member of the ERISA Group other than
those disclosed in the Senior Note Offering Memorandum and the financial
statements included therein.
Section 4.07. Environmental Matters. (a) Except to the extent that the
liabilities of the Borrower and its Subsidiaries, taken as a whole, relating to
or resulting from the matters referred to in clauses (i) through (vi) below,
inclusive, would not reasonably be expected to exceed $250,000 for any one
occurrence or $1,000,000 in the aggregate:
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(i) no notice, notification, demand, request for information,
citation, summons, complaint or order has been issued, no complaint has
been filed, no penalty has been assessed and no investigation or review
is pending, or to the Borrower's knowledge, threatened by any
governmental or other entity, relating to the Borrower or any
Subsidiary and relating to or arising out of any Environmental Law;
(ii) there are no liabilities of the Borrower or any Subsidiary of
any kind whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise, arising under or relating to any
Environmental Law, and there are no facts, conditions, situations or
set of circumstances that could reasonably be expected to result in or
be the basis for any such liability;
(iii) no polychlorinated biphenyls, radioactive material, lead,
lead paint, asbestos-containing material, incinerator, sump, surface
impoundment, lagoon, landfill, septic, wastewater treatment or other
disposal system or underground storage tank (active or inactive) is or
has been present at any property now or previously owned, operated or
leased by the Borrower or any Subsidiary;
(iv) no Hazardous Substance has been discharged, disposed of,
dumped, injected, pumped, deposited, spilled, leaked, emitted or
released at, on or under any property now or previously owned, operated
or leased by the Borrower or any Subsidiary;
(v) no property now or previously owned, leased or operated by the
Borrower or any Subsidiary nor any property to which the Borrower or
any Subsidiary has, directly or indirectly, transported or arranged for
the transportation of any Hazardous Substances, is listed or, to the
Borrower's knowledge, proposed for listing, on the National Priorities
List promulgated pursuant to CERCLA, on CERCLIS (as defined in CERCLA)
or on any similar federal, state or foreign list of sites requiring
investigation or clean-up; and
(vi) the Borrower and its Subsidiaries are in compliance with all
Environmental Laws and have obtained and are in compliance with all
permits, licenses, authorizations, certificates and approvals of
governmental authorities relating to or required by Environmental Laws
and necessary or proper for the business of the Borrower or any
Subsidiary as currently conducted.
(b) There has been no environmental investigation, study, audit, test,
review or other analysis conducted of which the Borrower has knowledge in
relation to the current or prior business of the Borrower or any Subsidiary or
any property or facility now or previously owned, leased or operated by the
Borrower or any Subsidiary that has not been delivered to the Lenders at least
five days prior to the date hereof.
(c) For purposes of this Section 4.07, the terms "Borrower" and
"Subsidiary" shall include any business or business entity (including a
corporation) that is, in whole or in part, a predecessor of the Borrower or any
Subsidiary.
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Section 4.08. Taxes. The Borrower and its Subsidiaries have filed all
United States federal income tax returns and all other material tax returns that
are required to be filed (other than any returns for which an unexpired
extension has been granted) by them and have paid all taxes due pursuant to such
returns (or extensions) or pursuant to any assessment received by the Borrower
or any Subsidiary, except to the extent that any such assessment is being
contested in good faith by appropriate proceedings. The charges, accruals and
reserves on the books of the Borrower and its Subsidiaries in respect of taxes
or other governmental charges are, in the Borrower's opinion, adequate.
Section 4.09. Subsidiaries. (a) Schedule 4.09 sets forth a list of all
the Subsidiaries of the Borrower on the Closing Date. Each of the Borrower's
corporate Subsidiaries is a corporation duly incorporated, validly existing and
in good standing under the laws of its jurisdiction of incorporation, has all
corporate powers and has all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted.
(b) Neither the Borrower nor any of its Subsidiaries has any U.S.
Subsidiaries with assets having a fair market value of $1,000 or more that are
not Guarantors.
Section 4.10. No Regulatory Restrictions on Borrowing. Neither the
Borrower nor any Subsidiary is (a) an "investment company" within the meaning of
the Investment Company Act of 1940, as amended, (b) a "holding company" or a
"subsidiary company" of a holding company within the meaning of the Public
Utility Holding Company Act of 1935, as amended, or (c) otherwise subject to any
regulatory scheme that restricts its ability to incur debt.
Section 4.11. Full Disclosure. All information heretofore furnished by
any Obligor to the Agent or any Lender for purposes of or in connection with
this Agreement, any other Loan Document or any transaction contemplated hereby
or thereby is, and all such information hereafter furnished by any Obligor to
the Agent or any Lender will be, true and accurate in all material respects on
the date as of which such information is stated or certified. The Borrower has
disclosed or made available to the Lenders in writing any and all facts that
have materially and adversely affected, or could reasonably be expected to
materially and adversely affect (to the extent the Borrower can now reasonably
foresee), the business, operations or financial condition of the Borrower and
its Subsidiaries, taken as a whole, or the Obligors' ability to perform their
Obligations under the Loan Documents.
Section 4.12. Representations in Collateral Documents True and Correct.
Each of the representations and warranties of any Obligor contained in any
Collateral Document is true and correct.
Section 4.13. Pro Forma and Projected Financial Information. (a) The
unaudited pro forma consolidated balance sheet of the Borrower and its
Subsidiaries as of December 31, 1998 and the related unaudited pro forma
consolidated statement of operations for the Fiscal Year then ended, in each
case contained in the Senior Note Offering Memorandum, fairly present, in
conformity with GAAP applied on a basis consistent with the financial statements
referred to in Section 4.04(a), the pro forma consolidated financial position of
the Borrower and its Consolidated Subsidiaries as of such date and their pro
forma consolidated results of operations for the Fiscal Year then ended (subject
to normal year-end adjustments),
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adjusted to give effect to (i) the issuance and sale of the Senior Notes and the
repayment of all Debt under the UBS Loan Facilities, (ii) the Fleer Sale and
(iii) the Panini Disposition, as if (x) each of such transactions (as well as
the other transactions relating to the Plan of Reorganization) had occurred on
January 1, 1998 for purposes of such statement of operations or (y) each of such
transactions had occurred on December 31, 1998 for purposes of such balance
sheet.
(b) As of December 31, 1998 and the Closing Date, after giving effect
to (i) this issuance of the Senior Notes and the transactions contemplated by
this Agreement to occur on the Closing Date, (ii) the application of the
proceeds from the issuance of the Senior Notes to repay all Debt under the UBS
Loan Facilities and (iii) the payment of all legal, accounting and other fees
related to the foregoing, the Borrower and its Subsidiaries had and will have no
material liabilities, contingent or otherwise, including liabilities for taxes,
long-term leases or forward or long-term commitments, that are not properly
reflected on the pro forma balance sheet referred to in paragraph (a) above.
(c) The projections delivered to the Lenders pursuant to Section
3.01(m)(i) hereof (the "Projections") were based on assumptions believed by the
Borrower in good faith to be reasonable when made and as of their date
represented the Borrower's good faith estimate of future performance of the
Borrower and its Subsidiaries.
Section 4.14. Labor Matters. There are no strikes or other labor
disputes pending, or to the best knowledge of the Borrower threatened, against
the Borrower or any of its Subsidiaries. Hours worked and payments made to the
employees of the Borrower and its Subsidiaries have not been in material
violation of the Fair Labor Standards Act or any other applicable law dealing
with such matters. All payments due from the Borrower or any of its
Subsidiaries, or for which any claim may be made against any of them, on account
of wages and employee health and welfare insurance and other benefits have been
paid or accrued as a liability on their books.
Section 4.15. Intellectual Property. The Borrower and each of its
Subsidiaries owns or possesses or holds under valid licenses all patents,
trademarks, service marks, trade names, copyrights, licenses and other
intellectual property rights that are necessary for the operation of their
respective properties and businesses, and neither the Borrower nor any of its
Subsidiaries is in material violation of any material provision thereof. The
Borrower and its Subsidiaries conduct their business without material
infringement or claim of material infringement of any material license, patent,
trademark, trade name, service mark, copyright, trade secret or any other
intellectual property right of others and there is no material infringement or
claim of material infringement by others of any material license, patent,
trademark, trade name, service mark, copyright, trade secret or other
intellectual property right of the Borrower and its Subsidiaries.
Section 4.16. Solvency. As of the Closing Date after giving effect to
the transactions contemplated hereby to occur on or prior to the Closing Date
and at all times thereafter: (a) the aggregate fair market value of the assets
of each Obligor will exceed its liabilities (including contingent, subordinated,
unmatured and unliquidated liabilities), (b) each Obligor will have sufficient
cash flow to enable it to pay its debts as they mature and (c) no Obligor will
have unreasonably small capital for the business in which it is engaged.
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Section 4.17. Ownership of Properties. On and as of the Closing Date,
the Borrower and its Subsidiaries are the lawful owners of, have good and
marketable title to and are in lawful possession of, or have valid leasehold
interests in, or, to the extent such properties constitute intellectual
property, have the rights therein described in Section 4.15 hereof, in all
properties and other assets (real or personal, tangible, intangible or mixed)
purported to be owned or leased (as the case may be) by them on the pro forma
balance sheet referred to in Section 4.13(a). None of the properties and assets
of the Borrower and its Subsidiaries is subject to any Lien (other than the
Liens created under the Collateral Documents and other Liens permitted under
Section 5.09).
Section 4.18. No Burdensome Restrictions. No contract, lease, agreement
or other instrument to which the Borrower or any of its Subsidiaries is a party
or by which any of their property is bound or affected, no charge, corporate
restriction, judgment, decree or order and no provision of applicable law or
governmental regulation could reasonably be expected to have Material Adverse
Effect.
Section 4.19. No Default. No Default has occurred and is continuing.
Section 4.20. Compliance with Laws. The Borrower and its Subsidiaries
are in compliance, in all material respects, with all applicable laws,
ordinances, rules, regulations and requirements of governmental authorities
(including, without limitation, Environmental Laws and ERISA and the rules and
regulations thereunder), except where the necessity of compliance therewith is
being contested in good faith by appropriate proceedings.
Section 4.21. Year 2000. Any reprogramming required to permit the
proper functioning, in and following the year 2000, of the computer systems of
the Borrower and its Subsidiaries and material equipment containing embedded
microchips (including systems and material equipment supplied by others) and the
testing of all such systems and equipment, as so reprogrammed, will be completed
by December 31, 1999. The cost to the Borrower and its Subsidiaries of such
reprogramming and testing and of the reasonably foreseeable consequences of the
year 2000 to the Borrower and its Subsidiaries (including, without limitation,
reprogramming errors and the failure of others' systems or equipment) will not
result in a Default or a Material Adverse Effect. Except for such of the
reprogramming referred to in the preceding sentence as may be necessary, the
computer and management information systems of the Borrower and its Subsidiaries
are and, with ordinary course upgrading and maintenance, will continue for the
term of this Agreement, to be sufficient to permit the Borrower and its
Subsidiaries to conduct their businesses without Material Adverse Effect.
Section 4.22. Limited Liability for Obligations of Panini Entities.
Except as expressly set forth in the Panini Guaranty and the Panini
Indemnification Agreement and except for transactions in the ordinary course of
business after the Closing Date on an arms-length basis on terms as favorable to
the Borrower or its Subsidiary as terms that could have been obtained from a
third party who was not an Affiliate of the Borrower, neither the Borrower nor
any Subsidiary has any liability in respect of any debt instrument, contract,
agreement or other obligation of any of the Panini Entities.
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Section 4.23. Margin Regulations. The Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation U issued by the Board of Governors of
the Federal Reserve System), and no proceeds of any Borrowing will be used to
purchase or carry any margin stock or to extend credit to others for the purpose
of purchasing or carrying any margin stock in contravention of Regulation T, U
or X of the Board of Governors of the Federal Reserve System.
Section 4.24. Deposit Accounts. Schedule 4.24 sets forth a list of all
deposit accounts maintained by the Borrower or any of its Subsidiaries at any
bank on the Closing Date.
ARTICLE 5
Covenants
The Borrower agrees that, so long as any Lender has any Credit Exposure
hereunder or any interest or fees accrued hereunder remain unpaid:
Section 5.01. Information. The Borrower will deliver to each of the
Lenders:
(a) as soon as available and in any event within 90 days after the end
of each Fiscal Year (or if such 90th day is not a Domestic Business Day, the
next succeeding Domestic Business Day), consolidated and consolidating balance
sheets of the Borrower and its Consolidated Subsidiaries as of the end of such
Fiscal Year and the related consolidated and consolidating statements of income,
cash flows and changes in stockholders' equity for such Fiscal Year, setting
forth in each case in comparative form the figures for the previous Fiscal Year,
such consolidated financial statements to be reported on in a manner acceptable
to the SEC by Ernst & Young LLP or other independent public accountants of
nationally recognized standing, and such consolidating financial statements to
be certified as to fairness of presentation and consistency with GAAP by the
Borrower's chief financial officer or chief accounting officer;
(b) as soon as available and in any event within 45 days after the end
of each of the first three Fiscal Quarters of each Fiscal Year (or if such 45th
day is not a Domestic Business Day, the next succeeding Domestic Business Day),
consolidated and consolidating balance sheets of the Borrower and its
Consolidated Subsidiaries as of the end of such Fiscal Quarter, the related
consolidated and consolidating statements of income for such Fiscal Quarter and
the related consolidated and consolidating statements of income, cash flows and
changes in stockholders' equity for the portion of the Fiscal Year ended at the
end of such Fiscal Quarter, setting forth in the case of each such statement of
income, cash flows and changes in stockholders' equity in comparative form the
figures for the corresponding period in the previous Fiscal Year, all certified
(subject to normal year-end adjustments) as to fairness of presentation and
consistency with GAAP by the Borrower's chief financial officer or chief
accounting officer;
(c) as soon as available and in any event within 30 days after the end
of each January, February, April, May, July, August, October and November of
each Fiscal Year (or if such 30th day is not a Domestic Business Day, the next
succeeding Domestic Business Day), consolidated and consolidating balance sheets
of the Borrower and its Consolidated Subsidiaries
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as of the end of such month, the related consolidated and consolidating
statements of income for such month and the related consolidated and
consolidating statements of income, cash flows and changes in stockholders'
equity for the portion of the Fiscal Year ended at the end of such month,
setting forth in the case of each such statement of income, cash flows and
changes in stockholders' equity in comparative form the figures for the
corresponding period in the previous Fiscal Year, all certified as to fairness
of presentation and consistency with GAAP (subject to normal year-end
adjustments and the absence of footnotes) by the Borrower's chief financial
officer or chief accounting officer;
(d) simultaneously with the delivery of each set of financial
statements referred to in paragraphs (a) and (b) above, a certificate of the
Borrower's chief financial officer or chief accounting officer (i) setting forth
in reasonable detail the calculations required to establish whether the Borrower
was in compliance with the requirements of Sections 5.09 to 5.19, inclusive, and
5.24 on the date of such financial statements and (ii) stating whether any
Default exists on the date of such certificate and, if any Default then exists,
setting forth the details thereof and the action that the Borrower is taking or
proposes to take with respect thereto;
(e) simultaneously with the delivery of each set of financial
statements referred to in clause 5.01(a) above, a statement of the firm of
independent public accountants that reported on such statements (i) stating
whether anything has come to such firm's attention to cause it to believe that
any Event of Default existed on the date of such statements and (ii) containing
the calculations set forth in the officer's certificate delivered simultaneously
with such financial statements pursuant to paragraph (d) above;
(f) prior to the end of each Fiscal Year, copies of monthly operating
budgets for the next Fiscal Year and annual operating budgets for all succeeding
Fiscal Years through the Fiscal Year ending December 31, 2002;
(g) (i) on or prior to the twentieth (20th) day of each calendar month
(or, if such twentieth (20th) day is not a Domestic Business Day, the next
succeeding Domestic Business Day), a Borrowing Base Certificate setting forth a
calculation of the Borrowing Base as of the last day of the immediately
preceding calendar month, together with supporting information consistent with
the Borrower's past practice, and (ii) on or prior to Wednesday of each calendar
week (or if such Wednesday is not a Domestic Business Day, the next succeeding
Domestic Business Day), a Borrowing Base Management Report setting forth a
calculation of the Borrowing Base as of Wednesday of the immediately preceding
calendar week, provided that, in the case of this clause (ii), so long as there
are no Loans outstanding and any Letters of Credit outstanding or to be issued
are or will be fully secured by cash collateral on deposit in the General
Collateral Account, the Borrower will not be obligated to deliver a Borrowing
Base Management Report;
(h) within five days after any officer of the Borrower obtains
knowledge of any Default, if such Default is then continuing, a certificate of
the Borrower's chief financial officer or chief accounting officer setting forth
the details thereof and the action that the Borrower is taking or proposes to
take with respect thereto;
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(i) as soon as reasonably practicable after any officer of the Borrower
obtains knowledge thereof, notice of any event or condition that has had or
threatens to have a Material Adverse Effect and the nature of such Material
Adverse Effect;
(j) as soon as reasonably practicable after any officer of the Borrower
obtains knowledge of the commencement of, or of a threat of the commencement of,
an action, suit or proceeding against the Borrower or any of its Subsidiaries
before any court or arbitrator or any governmental body, agency or official in
which there is a reasonable likelihood of an adverse decision that could have a
Material Adverse Effect or that questions the validity of the Loan Documents, a
certificate of a senior financial officer of the Borrower setting forth the
nature of such pending or threatened action, suit or proceeding and such
additional information with respect thereto as may be reasonably requested by
any Lender;
(k) promptly after the mailing thereof to the Borrower's shareholders
generally, copies of all financial statements, reports and proxy statements so
mailed;
(l) promptly after the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements on
Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or their
equivalents) filed by the Borrower with the SEC;
(m) promptly after any member of the ERISA Group (i) gives or is
required to give notice to the PBGC of any "reportable event" (as defined in
Section 4043 of ERISA) with respect to any Plan that could reasonably be
expected to constitute grounds for a termination of such Plan under Title IV of
ERISA, or knows that the plan administrator of any Plan has given or is required
to give notice of any such reportable event, a copy of the notice of such
reportable event given or required to be given to the PBGC; (ii) receives notice
of complete or partial withdrawal liability under Title IV of ERISA or notice
that any Multiemployer Plan is in reorganization, is insolvent or has been
terminated, a copy of such notice; (iii) receives notice from the PBGC under
Title IV of ERISA of an intent to terminate, impose liability (other than for
premiums under Section 4007 of ERISA) in respect of, or appoint a trustee to
administer any Plan a copy of such notice; (iv) applies for a waiver of the
minimum funding standard under Section 412 of the Internal Revenue Code, a copy
of such application; (v) gives notice of intent to terminate any Plan under
Section 4041(c) of ERISA, a copy of such notice and other information filed with
the PBGC; (vi) gives notice of withdrawal from any Plan pursuant to Section 4063
of ERISA, a copy of such notice; or (vii) fails to make any payment or
contribution to any Plan or a Multiemployer Plan or makes any amendment to any
Plan that has resulted or could reasonably be expected to result in the
imposition of a Lien under Section 401(a)(29) of the Internal Revenue Code or
the posting of a bond or other security, a certificate of the Borrower's chief
financial officer or chief accounting officer setting forth details as to such
occurrence and the action, if any, that the Borrower or applicable member of the
ERISA Group is required or proposes to take; and
(n) from time to time such additional information regarding the
financial position or business of the Borrower and its Subsidiaries or any
Guarantor as the Agent, at the request of any Lender, may reasonably request.
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Section 5.02. Payment of Obligations. The Borrower will pay and
discharge, and will cause each Subsidiary to pay and discharge, at or before
maturity, all their respective material obligations and liabilities (including,
without limitation, tax liabilities and claims of materialmen, warehousemen and
the like that if unpaid might by law give rise to a Lien), except where the same
are contested in good faith by appropriate proceedings, and will maintain, and
will cause each Subsidiary to maintain, in accordance with GAAP, appropriate
reserves for the accrual thereof.
Section 5.03. Maintenance of Property; Insurance. (a) The Borrower will
keep, and will cause each Subsidiary to keep, all property useful and necessary
in its business in good working order and condition, ordinary wear and tear
excepted.
(b) The Borrower will, and will cause each Subsidiary to, maintain
(either in the Borrower's name or in such Subsidiary's own name) with
financially sound and responsible insurance companies, insurance on all their
respective real and personal property, including without limitation Inventory
and equipment, in at least such amounts, with no greater risk retention and
against at least such risks as are usually maintained, retained or insured
against in the same general area by companies of established repute engaged in
the same or a similar business. The Borrower will furnish to the Lenders, upon
request from the Agent, information presented in reasonable detail as to the
insurance so carried.
(c) On or prior to the Closing Date, the Borrower shall cause the
Collateral Agent to be named as an additional insured or loss payee, as
appropriate, on each insurance policy required to be maintained pursuant to this
Section 5.03. The Borrower will deliver to the Lenders (i) on the Closing Date,
a certificate from the Borrower's insurance broker dated such date showing the
amount of coverage as of such date, and certifying that, in the opinion of such
broker, such policies will include effective waivers (whether under the terms of
any such policy or otherwise) by the insurer of all claims for insurance
premiums against all loss payees and additional insureds, and that if all or any
part of such policy is canceled, terminated or expires, the insurer will
forthwith give notice thereof to each additional insured and loss payee and that
no cancellation, reduction in amount or material change in coverage thereof
shall be effective until at least 30 days after notice is sent to each
additional insured and loss payee, (ii) upon the request of any Lender through
the Agent from time to time, full information as to the insurance carried, (iii)
within five days of receipt of notice from any insurer, a copy of any notice of
cancellation, nonrenewal or material change in coverage from that existing on
the date of this Agreement and (iv) forthwith, notice of any cancellation or
nonrenewal of coverage by the Borrower.
(d) Any proceeds in excess of $1,000,000 from any Property Insurance
Policy that are payable to the insured in respect of any claim, or any
condemnation award or other compensation in respect of a condemnation (or any
transfer or disposition of property in lieu of condemnation) for which the
Borrower or any of its Subsidiaries receives a condemnation award or other
compensation in excess of $1,000,000, shall be paid to the Agent to be held,
applied or released for application in accordance with Section 5 of the Security
Agreement and each Property Insurance Policy shall provide that all insurance
proceeds in excess of $1,000,000 per claim that are payable to the insured shall
be adjusted with and payable to the Agent. The Borrower hereby appoints the
Agent as its attorney-in-fact to make proof of loss, claim for
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insurance and adjustments with insurers, and to execute or endorse all
documents, checks or drafts in connection with payments under Property Insurance
Policies.
Section 5.04. Conduct of Business and Maintenance of Existence. The
Borrower and its Subsidiaries will continue to engage in business of the same
general type (excluding the production of motion pictures), as now conducted by
the Borrower and its Subsidiaries, or business complementary, ancillary or
reasonably related to such business, and will preserve, renew and keep in full
force and effect their respective corporate existences and their respective
rights, privileges and franchises necessary or desirable in the normal conduct
of business; provided that nothing in this Section 5.04 shall prohibit (i) any
merger or consolidation expressly permitted by Section 5.07 or (ii) the
termination of the corporate existence of a Subsidiary if the Borrower in good
faith determines that such termination is in the best interest of the Borrower
and is not materially disadvantageous to the Lenders.
Section 5.05. Compliance with Laws. The Borrower will comply, and will
cause each Subsidiary to comply, in all material respects with all applicable
laws, ordinances, rules, regulations and requirements of governmental
authorities (including, without limitation, Environmental Laws and ERISA and the
rules and regulations thereunder), except where the necessity of compliance
therewith is contested in good faith by appropriate proceedings.
Section 5.06. Inspection of Property, Books and Records. The Borrower
will keep, and will cause each Subsidiary to keep, proper books of record and
account in which full and correct entries shall be made of all dealings and
transactions in relation to its business and activities; and will permit, and
will cause each Subsidiary to permit, representatives of any Lender at such
Lender's expense to visit and inspect any of their respective properties, to
examine and make abstracts from any of their respective books and records and to
discuss their respective affairs, finances and accounts with their respective
officers, employees and independent public accountants, all at such reasonable
times and as often as may reasonably be requested.
Section 5.07. Mergers and Sales of Assets. The Borrower will not, and
will not permit any Subsidiary to, consolidate or merge with or into any other
Person, provided that nothing in this Section 5.07 shall prohibit (i) the
Borrower from merging with any Subsidiary if the Borrower is the entity
surviving such merger, (ii) any Subsidiary from merging with any Guarantor if
the corporation surviving the merger is a Guarantor or (iii) any Subsidiary that
is not a Guarantor from merging with any Subsidiary that is not a Guarantor if
the entity surviving such merger is a wholly-owned Subsidiary; provided, in each
case, immediately after giving effect to such merger, no Event of Default shall
have occurred and be continuing. The Borrower will not, and will not permit any
of its Subsidiaries to, make any Asset Sale unless (i) with respect to any Asset
Sale the consideration for which exceeds $250,000, (x) the consideration
therefor is not less than the fair market value of the related asset (as
determined in good faith by the chief financial officer of the Borrower) and (y)
not less than 75% of the consideration therefor consists of cash and (ii) after
giving effect thereto, the aggregate fair market value of the assets disposed of
in all Asset Sales effected after the Closing Date would not exceed $10,000,000;
provided that (i) the conditions specified in clauses (i) and (ii) above will
not apply to any Asset Sale involving the sale of any Panini Entity or the
assets thereof and (ii) the condition specified in clause (ii) above will not
apply to the sale by the Borrower or any Subsidiary of accounts receivable in
the
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ordinary course of business in an amount not to exceed $2,000,000 in the
aggregate for the Borrower and its Subsidiaries in any Fiscal Year.
Section 5.08. Use of Proceeds. The proceeds of the Loans will be used
by the Borrower for working capital and general corporate purposes. The Letters
of Credit will be used by the Borrower for general corporate purposes. Neither
any proceeds of the Loans nor any Letter of Credit will be used, directly or
indirectly, for the purpose, whether immediate, incidental or ultimate, of
buying or carrying any "margin stock" within the meaning of Regulation U.
Section 5.09. Negative Pledge. Neither the Borrower nor any Subsidiary
will create, assume or suffer to exist any Lien on any asset now owned or
hereafter acquired by it, except:
(a) Liens created by the Panini Pledge Agreement;
(b) Liens arising by operation of law in favor of materialmen,
mechanics, warehousemen, carriers, lessors or other similar Persons incurred by
the Borrower or any of its Subsidiaries in the ordinary course of business that
secure obligations to such Persons; provided, however, that (i) (A) neither the
Borrower nor any Subsidiary is in default with respect to such payment
obligations to such Person or (B) the Borrower or a Subsidiary is in good faith
and by appropriate proceedings diligently contesting such obligation and
adequate provision is made for the payment thereof and (ii) all such Liens in
the aggregate will not have a Material Adverse Effect.
(c) Liens created by the Collateral Documents;
(d) Liens existing on the Closing Date and listed on Schedule 5.09;
(e) any Lien arising out of the refinancing, extension, renewal or
refunding of any Debt secured by any Lien permitted by any of the foregoing
clauses of this Section 5.09, provided that such Debt is not increased and is
not secured by any additional assets;
(f) any Lien granted by any Subsidiary of the Borrower in favor of the
Borrower or in favor of another Subsidiary, except any Lien granted by a
Guarantor to a Subsidiary that is not a Guarantor;
(g) Liens to secure the performance of statutory obligations, surety or
appeal bonds, performance bonds or other obligations of a like nature incurred
in the ordinary course of business; and
(h) Liens for taxes, assessments or governmental charges or claims that
are not yet delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently concluded, provided that adequate
reserves with respect thereto are maintained on the books of the Borrower or its
Subsidiaries, as the case may be.
Section 5.10. Limitation on Debt. (a) The Borrower will not, and will
not permit any of its Subsidiaries to, incur or at any time be liable with
respect to any Debt except:
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(i) Debt under the Loan Documents;
(ii) the Senior Notes and any Exchange Notes issued in exchange
therefor, provided that the aggregate principal amount of the Senior
Notes and Exchange Notes shall not exceed $250,000,000;
(iii) Debt outstanding on the Closing Date and identified on
Schedule 5.10 and refinancings thereof, provided that the principal
amount thereof is not increased;
(iv) the Excess Administration Claims Loan, provided that the
principal amount thereof shall not exceed $5,000,000;
(v) the Panini Guaranty and any debt securities issued in
satisfaction thereof;
(vi) Debt of any Subsidiary of the Borrower to the Borrower or any
other Subsidiary of the Borrower, except any Debt of a Subsidiary that
is not a Guarantor to the Borrower or a Guarantor, other than as
permitted by Section 5.18(a)(ix); and
(vii) unsecured Debt of the Borrower and its Subsidiaries not
otherwise permitted by this Section 5.10 in an aggregate principal
amount at any time outstanding not to exceed $10,000,000.
(b) The Borrower will not, and will not permit any of its Subsidiaries
to, incur or at any time be liable with respect to any Guarantee other than
Guarantees under the Loan Documents, the Senior Note Guarantees and the Panini
Guaranty.
Section 5.11. Minimum EBITDA. Consolidated EBITDA (a) for the period
from January 1, 1999 through June 30, 1999 shall not be less than $20,000,000,
(b) for the period from January 1, 1999 through September 30, 1999 shall not be
less than $27,500,000, and (c) for the period from January 1, 1999 through
December 31, 1999 shall not be less than $35,000,000.
Section 5.12. Minimum Consolidated Net Worth. Consolidated Net Worth
will not at any time prior to January 1, 2000 be less than $300,000,000.
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Section 5.13. Leverage Ratio. The Leverage Ratio will not, at any date
set forth below, exceed the ratio set forth below opposite such date:
Date Ratio
------ -------
December 31, 1999 7.00:1.00
March 31, 2000 7.00:1.00
June 30, 2000 6.50:1.00
September 30, 2000 6.00:1.00
December 31, 2000 5.00:1.00
March 31, 2001 5.00:1.00
June 30, 2001 5.00:1.00
September 30, 2001 5.00:1.00
December 31, 2001 5.00:1.00
March 31, 2002 4.50:1.00
Section 5.14. Interest Coverage Ratio. The Interest Coverage Ratio will
not, at any date set forth below, be less than the ratio set forth below
opposite such date:
Date Ratio
------- -------
December 31, 1999 1.40:1.00
March 31, 2000 1.50:1.00
June 30, 2000 1.50:1.00
September 30, 2000 1.50:1.00
December 31, 2000 1.50:1.00
March 31, 2001 1.50:1.00
June 30, 2001 1.75:1.00
September 30, 2001 2.00:1.00
December 31, 2001 2.00:1.00
March 31, 2002 2.00:1.00
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Section 5.15. Fixed Charge Coverage Ratio. The Fixed Charge Coverage
Ratio will not, at any date set forth below, be less than the ratio set forth
opposite such date:
Date Ratio
------ -------
December 31, 1999 0.50:1.00
March 31, 2000 0.50:1.00
June 30, 2000 0.50:1.00
September 30, 2000 0.75:1.00
December 31, 2000 1.00:1.00
March 31, 2001 1.10:1.00
June 30, 2001 1.10:1.00
September 30, 2001 1.10:1.00
December 31, 2001 1.30:1.00
March 31, 2002 1.30:1.00
Section 5.16. Limitations on Restricted Payments. The Borrower will
not, and will not permit any of its Subsidiaries to, directly or indirectly,
make any Restricted Payment, (except as permitted below), unless at the time of
such Restricted Payment:
(a) no Default shall have occurred and be continuing or shall occur as
a consequence thereof;
(b) there shall be not more than $20,000,000 in aggregate principal
amount of Loans outstanding on any date during the period of 90 consecutive
calendar days after the date such Restricted Payment is made;
(c) the amount of such Restricted Payment, when added to the aggregate
amount of all other Restricted Payments made after the Closing Date and all
Investments made pursuant to Section 5.18(a)(xii), does not exceed the sum of
(i) 50% of the Borrower's Consolidated Net Income (taken as one accounting
period) from the beginning of the first Fiscal Quarter commencing after the
Closing Date to the end of the Borrower's most recently ended Fiscal Quarter for
which financial statements are available at the time of such Restricted Payment
(or, if such aggregate Consolidated Net Income shall be a deficit, minus 100% of
such aggregate deficit) plus (ii) the net cash proceeds from the issuance and
sale (other than to a Subsidiary of the Borrower or a Panini Entity) on or after
the Closing Date of the Borrower's Capital Stock that is not Disqualified
Capital Stock, plus (iii) the cash proceeds received after the Closing Date from
the exercise of warrants to purchase the Borrower's Capital Stock which were
outstanding on the Closing Date.
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The foregoing provisions will not prohibit (1) the payment by the
Borrower or any Subsidiary of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would have
complied with the provisions of this Section 5.16; (2) the redemption,
repurchase, retirement or other acquisition of any Capital Stock of the Borrower
in exchange for, or out of the proceeds of, the substantially concurrent sale of
other Capital Stock of the Borrower (other than any Disqualified Capital Stock);
(3) the purchase, redemption, acquisition, cancellation or other retirement for
value of shares of Capital Stock of the Borrower held by officers, directors or
employees or former officers, directors or employees (or their transferees,
estates or beneficiaries under their estates), upon death, disability,
retirement, severance or termination of employment or service or pursuant to any
agreement under which such shares of Capital Stock or related rights were
issued; provided that the aggregate cash consideration paid for such purchase,
redemption, acquisition, cancellation or other retirement of such shares of
Capital Stock after the Closing Date does not exceed an aggregate amount of (x)
$1,000,000 in any calendar year (with unused amounts in any calendar year being
carried over to succeeding calendar years) or (y) $2,500,000 in the aggregate
after the Closing Date; or (4) the payment of cash in lieu of the issuance of
fractional shares upon (x) the conversion or exchange of any preferred stock of
the Borrower which was outstanding on the Closing Date or issued in payment of
dividends on any such preferred stock, (y) the payment of dividends payable in
shares of the Borrower's Capital Stock or (z) the exercise of any option,
warrant or other right to acquire the Borrower's Capital Stock; provided that
the aggregate amount of cash paid in lieu of the issuance of fractional shares
pursuant to clauses (x), (y) and (z) above shall not exceed $2,000,000.
Each Restricted Payment permitted pursuant to the preceding paragraph
(other than the Restricted Payments referred to in clauses (2) and (4) thereof)
shall be included once in calculating whether the conditions of clause (iii) of
the second preceding paragraph have been met with respect to any subsequent
Restricted Payments. If an issuance of Capital Stock of the borrower is applied
to make a Restricted Payment pursuant to clause (2) above, then, in calculating
whether the conditions of clause (c) of the second preceding paragraph have been
met with respect to any subsequent Restricted Payments, the proceeds of such
issuance shall be included under such clause (c) only to the extent such
proceeds are not applied as so described in this sentence. For purposes of
determining compliance with this Section 5.16, in the event that a transaction
meets the criteria of more than one of the types of Restricted Payments
described in the clauses of the immediately preceding paragraph or any clause of
the definition of "Restricted Payment," the Borrower, in its sole discretion,
shall classify such transaction and only be required to include the amount and
type of such transaction in one of such clauses.
Section 5.17. Limitation on Capital Expenditures. Consolidated Capital
Expenditures shall not exceed $40,000,000 for each Fiscal Year from 1999 to
2002.
Section 5.18. Investments and Acquisitions. (a) Neither the Borrower
nor any Subsidiary will hold, make or acquire any Investment in any Person other
than:
(i) Investments existing on the Closing Date and set forth on
Schedule 5.18 hereto;
(ii) Investments in the Borrower or any Guarantor;
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(iii) Temporary Cash Investments;
(iv) the Panini Guaranty;
(v) Investments in any Person if, immediately after such
Investment is made or acquired, the aggregate amount of Investments
made pursuant to this clause (v) does not exceed $5,000,000 plus the
net reduction of Investments made pursuant to this clause (v) resulting
from distributions on or repayments of such Investments or from the net
cash proceeds from the sale or other disposition of any such Investment
(except in each case to the extent of any gain on such sale or other
disposition that would be included in the calculation of Consolidated
Net Income for purposes of clause (xii) below); provided that the net
reduction in any Investment shall not exceed the amount of such
Investment;
(vi) Investments by Foreign Subsidiaries in Foreign Subsidiaries
(other than any Panini Entity);
(vii) trade accounts receivable arising in the ordinary course of
business on customary terms;
(viii) Investments in any Person received in return for the
licensing or sublicensing of use of any intellectual property to such
Person by the Borrower or a Subsidiary in the ordinary course of
business on customary terms; provided that any such Investment in an
Affiliate must be made on an arm's-length basis on terms at least as
favorable to the Borrower or such Subsidiary as could have been
obtained from a third party that was not an Affiliate;
(ix) short-term loans or advances to Foreign Subsidiaries in the
ordinary course of business on customary terms to pay invoices from
suppliers in an aggregate amount not to exceed $5,000,000 outstanding
at any time;
(x) revolving credit advances by the Borrower to (x) the Avoidance
Litigation Trust in an aggregate principal amount not to exceed
$1,100,000 outstanding at any time and (y) the MAFCO Litigation Trust
in an aggregate principal amount not to exceed $1,000,000 outstanding
at any time;
(xi) Investments consisting of Business Acquisitions permitted
under paragraph (b) below; and
(xii) other Investments in an aggregate amount which, when added
to the aggregate amount of all Restricted Payments made after the
Closing Date pursuant to Section 5.16(c), does not exceed the sum of
(i) 50% of the Borrower's Consolidated Net Income (taken as one
accounting period) from the beginning of the first Fiscal Quarter
commencing after the Closing Date to the end of the Borrower's most
recently ended Fiscal Quarter for which financial statements are
available at the time of such Restricted Payment (or, if such aggregate
Consolidated Net Income shall be a deficit, minus 100% of such
aggregate deficit)
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plus (ii) the net cash proceeds from the issuance and sale (other than
to a Subsidiary of the Borrower or a Panini Entity) on or after the
Closing Date of the Borrower's Capital Stock that is not Disqualified
Capital Stock, plus (iii) the cash proceeds received after the Closing
Date from the exercise of warrants to purchase the Borrower's Capital
Stock which were outstanding on the Closing Date.
(b) Neither the Borrower nor any Subsidiary will consummate any
Business Acquisition unless such Business Acquisition constitutes a Permitted
Acquisition and the following conditions are satisfied:
(i) the aggregate amount of consideration (including, without
limitation, the principal amount of any Debt incurred or assumed and
the fair market value of any non-cash consideration) paid or delivered
in connection with all Permitted Acquisitions does not exceed
$20,000,000;
(ii) no Default exists on the date of any such Permitted
Acquisition either before giving effect thereto (including, without
limitation, after giving pro forma effect to the consummation thereof
and the incurrence of any Debt in connection therewith as if such
consummation and incurrence had occurred on the first day of the period
of four Fiscal Quarters of the Borrower ending on or most recently
prior to the date of such consummation and incurrence);
(iii) the terms of any Debt (including, without limitation, any
Liens securing the same) assumed by the Borrower or any Subsidiary in
connection with any such Permitted Acquisition shall be permitted under
the terms of this Agreement and the other Loan Documents;
(iv) such Business Acquisition shall not have been preceded by an
unsolicited tender offer for the Capital Stock of the acquiree by the
Borrower or any of its Subsidiaries;
(v) the chief financial officer of the Borrower shall deliver to
the Lenders no later than three Domestic Business Days prior to the
consummation of any such Permitted Acquisition a certificate as to the
satisfaction of the conditions set forth in the preceding clauses (i),
(ii) and (iii), setting forth in reasonable detail the calculations
forming the basis of such certification and stating the aggregate
amount of consideration (including without limitation, the principal
amount of Debt incurred or assumed by the Borrower and its Subsidiaries
in connection therewith and the fair market value of any non-cash
consideration) paid or delivered in connection therewith; and
(vi) if such Permitted Acquisition includes the acquisition of
real property (whether in fee or by ground lease), the Borrower shall,
if requested by the Required Lenders, obtain such environmental audits
as may be requested by the Required Lenders and the results thereof
shall be satisfactory in the reasonable determination of the Required
Lenders.
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Section 5.19. Sale-Leaseback Transactions. Neither the Borrower nor any
of its Subsidiaries will engage in any Sale-Leaseback Transaction unless the
Borrower or such Subsidiary would be entitled, pursuant to the other provisions
of this Article 5, to incur Debt with a principal amount equal to or exceeding
the Value of such Sale-Leaseback Transaction secured by a Lien on the property
to be leased (after giving similar effect to all other Sale-Leaseback
Transactions in effect at such time). For purposes of this Section 5.19, "Value"
means, with respect to a Sale-Leaseback Transaction, at any time, the amount
equal to the greater of (a) the net proceeds of the sale or transfer of the
property leased pursuant to such Sale-Leaseback Transaction and (b) the fair
value in the opinion of the board of directors of the Borrower of such property
at the time of entering into such Sale-Leaseback Transaction, in either case
divided first by the number of full years of the term of the lease and then
multiplied by the number of full years of such term remaining at the time of
determination, without regard to any renewal or extension options contained in
the lease.
Section 5.20. Transactions with Affiliates. The Borrower will not, and
will not permit any Subsidiary to, directly or indirectly, (a) pay any funds to
or for the account of any Affiliate, (b) make any Investment in any Affiliate
(whether by acquisition of stock or indebtedness, by loan, advance, transfer of
property, guarantee or other agreement to pay, purchase or service, directly or
indirectly, any Debt, or otherwise), (c) lease, sell, transfer or otherwise
dispose of any assets, tangible or intangible, to any Affiliate, or (d)
participate in, or effect, any transaction with any Affiliate, except in each
case on an arm's-length basis on terms at least as favorable to the Borrower or
such Subsidiary as could have been obtained from a third party that was not an
Affiliate; provided that the foregoing provisions of this Section 5.20 shall not
prohibit (i) any such Person from declaring or paying any lawful dividend or
other payment ratably in respect of all its Capital Stock of the relevant class
so long as such dividend is permitted to be paid under Section 5.16 and, after
giving effect thereto, no Default shall have occurred and be continuing, (ii)
transactions between the Borrower or any of its Subsidiaries and any qualified
employee stock ownership plan established for the benefit of the Borrower's
employees, or the establishment or maintenance of any such plan, (iii)
reasonable director, officer and employee compensation and other benefits, and
indemnification arrangements entered into by the Borrower or any of its
Subsidiaries in the ordinary course of business and consistent with the past
practices of the Borrower and its Subsidiaries, (iv) transactions pursuant to
and in accordance with (1) the agreement dated as of January 1, 1998 between the
Borrower and Tangible Media, Inc., (2) the Employment Agreement, dated as of
September 30, 1998, between the Borrower and Avi Arad, (3) the Master License
Agreement, dated April 30, 1993, as amended through the date hereof, between the
Borrower and Avi Arad & Associates, (4) the Cost Sharing Agreement dated as of
January 1, 1998, between the Borrower and Tangible Media, Inc., (5) the
Stockholders' Agreement, (6) the Existing Registration Rights Agreements, (7)
the Panini Indemnity and (8) the Excess Administration Claims Loan (all of the
transactions described in (1) through (8) above, the "Affiliate Agreements"),
(v) any issuance or sale of shares of Capital Stock (other than Disqualified
Stock) of the Borrower or options, warrants or other rights to acquire such
shares of Capital Stock, (vi) the payment of fees for financial, advisory,
consulting or investment banking services (including, without limitation, the
payment of any underwriting discounts or commissions or placement agency fees in
connection with the issuance and sale of securities) that are determined to be
advisable or appropriate by a vote of the disinterested members of the
Borrower's board of directors; provided that if the aggregate amount of such
fees, discounts or commissions payable in connection with any single transaction
or series of related
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transactions would reasonably be likely to exceed $5,000,000, the Borrower shall
solicit bids for such services from at least two non-Affiliates prior to
engaging an Affiliate to perform such services, and (vii) any Restricted Payment
permitted by Section 5.16.
Section 5.21. Constitutive Documents. The Borrower will not, and will
not permit any Subsidiary to, amend any material provision of its charter or
by-laws or other constitutive documents without the prior written consent of the
Required Lenders.
Section 5.22. No Material Amendments. The Borrower will not, and will
not permit any of its Subsidiaries to, consent to or solicit any consent to any
amendment or supplement to, or any waiver or other modification of, any material
term of any of the Senior Note Documents, the Panini Guaranty, the Panini Pledge
Agreement or any Affiliate Agreement (except for any amendment, supplement or
modification to an Affiliate Agreement which is made on an arm's-length basis on
terms at least as favorable to the Borrower or such Subsidiary as could have
been obtained from a third party that was not an Affiliate) or any of the
ancillary agreements referred to in the foregoing without the prior written
consent of the Required Lenders.
Section 5.23. Limitation on Restrictions Affecting Subsidiaries.
Neither the Borrower nor any of its Subsidiaries will enter into, or suffer to
exist, any agreement with any Person, other than the Loan Documents and the
Senior Note Documents, that prohibits or limits the ability of any Subsidiary to
(a) pay dividends or make other distributions or pay any Debt owed to the
Borrower or any Subsidiary, (b) make loans or advances to the Borrower or any
Subsidiary, (c) transfer any of its properties or assets to the Borrower or any
Subsidiary or (d) create, incur, assume or suffer to exist any Lien upon any of
its property, assets or revenues, whether now owned or hereafter acquired (other
than with respect to assets subject to consensual Liens permitted under Section
5.09 ); provided that the foregoing shall not apply to (i) restrictions in
effect on the date of this Agreement contained in agreements governing Debt
outstanding on the date of this Agreement that is permitted under Section
5.10(a), (ii) restrictions contained in agreements governing Debt of
Subsidiaries of the Borrower existing at the time that such Subsidiaries become
Subsidiaries of the Borrower pursuant to a Business Acquisition permitted
pursuant to Section 5.18(b) which Debt was not incurred in contemplation of such
Business Acquisition and is permitted to be incurred under Section 5.10, and
(iii) in any such case, if such Debt is renewed, extended or refinanced,
restrictions in the agreements governing the renewed, extended or refinanced
Debt (and successive renewals, extensions and refinancings thereof) if such
restrictions are no more restrictive than those contained in the agreements
governing the Debt being renewed, extended or refinanced.
Section 5.24. Clean-Down Period. The Borrower shall from time to time
repay or prepay Loans in such amounts as shall be necessary so that there shall
be no more than $20,000,000 in aggregate principal amount of Loans outstanding
for a period (the "Clean-Down Period") of at least 45 consecutive calendar days
during the period from January 1 through April 30 of each Fiscal Year.
Section 5.25. Fiscal Year. The Borrower will not change its Fiscal Year
from a fiscal year ending December 31.
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Section 5.26. Change in Business. The Borrower will not, and will not
permit any of its Subsidiaries to, engage in any material line of business
substantially different from those lines of business carried on by the Borrower
and its Subsidiaries as a whole on the Closing Date or businesses complementary,
ancillary or reasonably related to such businesses.
Section 5.27. Further Assurances. (a) The Borrower will, and will cause
each Guarantor to, at the Borrower's sole cost and expense, do, execute,
acknowledge and deliver all such further acts, deeds, conveyances, assignments,
notices of assignment and transfers as the Agent shall from time to time
request, which may be necessary in the reasonable judgment of the Agent from
time to time to assure, perfect, convey, assign and transfer to the Agent the
property and rights conveyed or assigned pursuant to the Collateral Documents,
or which may facilitate the performance of the terms of the Collateral
Documents, or the filing, registering or recording of the Collateral Documents.
(b) All costs and expenses in connection with the grant of any security
interests under the Collateral Documents, including without limitation,
reasonable legal fees and other reasonable costs and expenses in connection with
the granting, perfecting and maintenance of any security interests under the
Collateral Documents or the preparation, execution, delivery, recordation or
filing of documents and any other acts as the Agent may reasonably request in
connection with the grant of such security interests shall be paid by the
Borrower promptly upon demand.
(c) The Borrower will not, and will not permit any of its Subsidiaries
to, enter into or become subject to any agreement that would materially impair
their ability to comply, or that is intended to prohibit them from complying in
any material respect, with the provisions of this Section 5.27.
(d) The Borrower will:
(i) cause each Person that becomes a U.S. Subsidiary after the
Closing Date to (A) become a party to this Agreement as a Guarantor by
executing a supplement hereto in form and substance satisfactory to the
Agent and (B) enter into the Security Agreement and any other
agreements, each in form and substance satisfactory to the Agent, as
may be necessary or desirable in order to grant perfected, first
priority security interests upon (I) all of its Collateral and proceeds
thereof (including, without limitation, all of such property acquired
by such Person after it becomes a U.S. Subsidiary) and (II) all of the
Capital Stock and equity interests acquired by such Person after it
becomes a U.S. Subsidiary), to secure its Obligations under the Loan
Documents, provided that not more than 65% of the Voting Stock of any
Foreign Subsidiary will be required to be so pledged;
(ii) pledge, or cause to be pledged, pursuant to the Security
Agreement, (x) in the case of any Subsidiary described in clause (i)
above, all of the Capital Stock or other equity interests of such
Subsidiary owned directly or indirectly by the Borrower and (y) in the
case of any Foreign Subsidiary that becomes a Subsidiary of the
Borrower after the Closing Date, 65% of the Voting Stock or
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other voting equity interests of such Foreign Subsidiary, and 100% of
any other Capital Stock or other equity interest, owned directly or
indirectly by the Borrower;
(iii) take, and cause its Subsidiaries to take, such actions as
may be necessary or desirable to effect the foregoing within 30 days
after such Subsidiary is acquired or becomes a U.S. Subsidiary,
including without limitation (A) executing and delivering, or causing
such Subsidiary to execute and deliver, to the Agent such number of
copies as the Agent may specify of such supplements, Security Agreement
and other documents creating security interests and (B) delivering, or
causing Subsidiaries to deliver, such certificates, evidences of
corporate action, legal opinions or other documents as the Agent may
reasonably request, all in form and substance satisfactory to the
Agent, relating to the satisfaction of the Borrower's obligations under
this Section 5.27; and
(iv) for each lease to which the Borrower or any of its
Subsidiaries becomes a party after the Closing Date and for each
existing lease that is amended, renewed or extended after the Closing
Date, deliver, and cause each Subsidiary to deliver, to the Agent a
Landlord Waiver and Consent in favor of the Agent with respect to each
such lease.
Section 5.28. No New Subsidiaries. The Borrower will not have any
Subsidiaries other than (a) Subsidiaries that are (i) in existence on the
Closing Date and (ii) Guarantors on the Closing Date or Foreign Subsidiaries;
and (b) U.S. Subsidiaries that become Guarantors and are in compliance with
Section 5.27(d) hereof.
Section 5.29. Year 2000. The Borrower shall take all actions necessary
to ensure that its and its Subsidiaries' computers and computer-based systems
are able to operate and effectively process data, including without limitation
dates, on and after January 1, 2000. The Borrower shall promptly provide to the
Agent such information as the Agent may reasonably request from time to time in
order to verify the Borrower's and its Subsidiaries' compliance with this
Section 5.29 as well as the accuracy of the representation in Section 4.21.
Section 5.30. Blocked Accounts. (a) The Borrower shall cause each
Blocked Account Bank to execute and deliver to the Collateral Agent a Blocked
Account Agreement, in form and substance satisfactory to the Collateral Agent,
on or prior to the date that is 90 days after the Closing Date.
(b) From and after the earlier of (i) the date of the initial request
by the Borrower for a Loan and (ii) any date on which there is any Letter of
Credit outstanding that is not fully secured by cash collateral on deposit in
the General Collateral Account, the Borrower shall (x) cause all collections of
Receivables and all proceeds of Collateral received directly or indirectly by
the Borrower or any Subsidiary of the Borrower or in the possession of the
Borrower or any such Subsidiary to be held in trust for the Collateral Agent for
the benefit of the Lenders and, promptly upon receipt thereof, to be deposited
into a Blocked Account and (y) not permit any account debtor to make payment of
any Receivables by wire or other transfer to any bank account other than a
Blocked Account. The Borrower agrees that the Collateral Agent
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alone shall have power of withdrawal from each Blocked Account and acknowledges
that the Borrower shall not have any right, title or interest in the Blocked
Accounts or the amounts at any time appearing to the credit of the Blocked
Accounts.
ARTICLE 6
Defaults
Section 6.01. Events of Default. If one or more of the following events
("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay (i) any principal of any Loan or any
LC Reimbursement Obligation when due or (ii) any interest, fee or other amount
payable by it hereunder or under any other Loan Document within four days of the
date when due;
(b) the Borrower shall fail to observe or perform any covenant
contained in Section 5.01(h) or Sections 5.07 through 5.31, inclusive;
(c) any Obligor shall fail to observe or perform any covenant or
agreement (other than those covered by clause 6.01(a) or 6.01(b) above)
contained in the Loan Documents for 15 days after the Borrower becomes aware of
such failure or the Agent gives notice thereof to the Borrower at the request of
any Lender;
(d) any representation, warranty, certification or statement made by
any Obligor in any Loan Document or in any certificate, financial statement or
other document delivered pursuant to any Loan Document shall prove to have been
incorrect in any material respect when made (or deemed made);
(e) the Borrower or any Subsidiary shall fail to make one or more
payments in respect of Material Financial Obligations when due or within any
applicable grace period (provided that any such Event of Default shall cease to
be continuing upon the waiver or extension of such payment);
(f) any event or condition shall occur that results in the acceleration
of the maturity of any Material Debt or enables (or, with the giving of notice
or lapse of time or both, would enable) the holder of such Debt or any Person
acting on such holder's behalf to accelerate the maturity thereof;
(g) the Borrower or any Subsidiary shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other similar
law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as they
become due, or shall take any corporate action to authorize any of the
foregoing;
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(h) an involuntary case or other proceeding shall be commenced against
the Borrower or any Subsidiary seeking liquidation, reorganization or other
relief with respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of 90 days; or an order for
relief shall be entered against the Borrower or any Subsidiary under the federal
bankruptcy laws as now or hereafter in effect;
(i) any member of the ERISA Group shall fail to pay when due an amount
or amounts aggregating in excess of $1,000,000 that it shall have become liable
to pay under Title IV of ERISA; or notice of intent to terminate a Material Plan
shall be filed under Title IV of ERISA by any member of the ERISA Group, any
plan administrator or any combination of the foregoing; or the PBGC shall
institute proceedings under Title IV of ERISA to terminate, to impose liability
(other than for premiums under Section 4007 of ERISA) in respect of, or to cause
a trustee to be appointed to administer, any Material Plan; or a condition shall
exist by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any Material Plan must be terminated; or there shall occur a
complete or partial withdrawal from, or a default, within the meaning of Section
4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans that could
be reasonably likely to cause one or more members of the ERISA Group to incur a
current payment obligation in excess of $1,000,000;
(j) judgments or orders for the payment of money exceeding $2,500,000
in aggregate amount shall be rendered against the Borrower or any Subsidiary and
such judgments or orders shall continue unsatisfied and unstayed for a period of
20 days;
(k) any Lien created by any of the Collateral Documents shall at any
time fail to constitute a valid and perfected Lien on all of the Collateral
purported to be subject thereto, securing the Obligations purported to be
secured thereby, with the priority required by the Loan Documents, or any
Obligor shall so assert in writing;
(l) a Change of Control shall occur;
(m) any Guarantee by any Guarantor hereunder shall cease for any reason
(other than the merger out of existence of such Guarantor pursuant to a
transaction permitted hereunder) to be in full force and effect, or any Obligor
shall so assert in writing; or
(n) after the Closing Date, the Borrower shall become obligated to pay
Administrative Expense Claims in an aggregate amount in excess of $25,000,000;
then, and in every such event, the Agent shall:
(i) if requested by Lenders having more than 50% in aggregate amount of
the Commitments, by notice to the Borrower terminate the Commitments and they
shall thereupon terminate;
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(ii) if requested by Lenders having more than 50% of the Aggregate LC
Exposure, by notice to the Issuer instruct the Issuer not to extend the expiry
date of any outstanding Letter of Credit; and
(iii) if requested by Lenders holding more than 50% in aggregate
outstanding principal amount of the Loans, by notice to the Borrower declare the
Loans (together with accrued interest thereon) to be, and the Loans (together
with accrued interest thereon) shall thereupon become, immediately due and
payable without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Borrower;
provided that, if any Event of Default specified in clause 6.01(g) or 6.01(h)
occurs with respect to the Borrower, then without any notice to the Borrower or
any other act by the Agent or the Lenders, the Commitments shall thereupon
terminate and the Loans (together with accrued interest thereon) shall become
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Borrower, and the Issuer
shall not extend the expiry date of any outstanding Letter of Credit.
Section 6.02. Notice of Default. The Agent shall give notice to the
Borrower under Section 6.01(c) promptly upon being requested to do so by any
Lender and shall thereupon notify all the Lenders thereof.
Section 6.03. Cash Collateral. If an Event of Default shall have
occurred and be continuing and Lenders having more than 50% of the Aggregate LC
Exposure instruct the Agent to request cash collateral pursuant to this Section
6.03, the Borrower will, promptly after it receives such request from the Agent,
pay to the Agent an amount in immediately available funds equal to 105% of the
then aggregate amount available for subsequent drawings under all outstanding
Letters of Credit, to be held by the Agent, under arrangements satisfactory to
it, to secure the payment of all LC Reimbursement Obligations arising from
subsequent drawings under such Letters of Credit; provided that, if any Event of
Default specified in clause 6.01(g) or 6.01(h) occurs with respect to the
Borrower, the Borrower shall pay such amount to the Agent forthwith without any
notice or demand or any other act by the Agent or the Lenders.
ARTICLE 7
The Agent
Section 7.01. Appointment and Authorization. Each Lender irrevocably
appoints and authorizes the Agent to enter into and act as its agent in
connection with the Loan Documents (whether therein referred to as the Agent,
the Collateral Agent or otherwise) and to take such action as agent on its
behalf and to' exercise such powers under the Loan Documents as are delegated to
the Agent by the terms hereof or thereof, together with all such powers as are
reasonably incidental thereto.
Section 7.02. Agent and Affiliates. Citibank, N.A. shall have the same
rights and powers under the Loan Documents as any other Lender and may exercise
or refrain from exercising the same as though it were not the Agent or the
Collateral Agent and Citibank, N.A. and its affiliates may accept deposits from,
lend money to and generally engage in any kind of
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business with the Borrower or any Subsidiary or Affiliate of the Borrower as if
it were not the Agent or the Collateral Agent.
Section 7.03. Action by Agent. The obligations of the Agent hereunder
and of the Collateral Agent under the Collateral Documents are only those
expressly set forth herein and therein respectively. Without limiting the
generality of the foregoing, the Agent shall not be required to take any action
with respect to any Default, except as expressly provided in Article 6.
Section 7.04. Appointment of Co-Agents. At any time or times, in order
to comply with any legal requirement in any jurisdiction, the Agent or
Collateral Agent may appoint another bank or trust company or one or more other
persons, either to act as co-agent or co-agents, jointly with the Agent or
Collateral Agent, as the case may be, or to act as separate agent or agents on
behalf of the Lenders or the Secured Parties with such power and authority as
may be necessary for the effectual operation of the provisions hereof and as may
be specified in the instrument of appointment (which may, in the discretion of
the Agent or as the Collateral Agent, as the case may be, include provisions for
the protection of such co-agent or separate agent similar to the provisions of
this Article 7).
Section 7.05. Consultation with Experts. The Agent or the Collateral
Agent may consult with legal counsel (who may be counsel for any Obligor),
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken by it in good faith in
accordance with the advice of such counsel, accountants or experts.
Section 7.06. Liability of Agent. None of the Agent, the Collateral
Agent, their respective affiliates and their and their affiliates' respective
directors, officers, agents and employees shall be liable for any action taken
or not taken by it in connection herewith (a) with the consent or at the request
of the Required Lenders (or such different number of Lenders as any provision
hereof or of any Loan Document expressly requires for such consent or request)
or (b) in the absence of its own gross negligence or willful misconduct but in
no event shall the Agent, the Collateral Agent or their respective affiliates
and their and their affiliates' respective directors, officers, agents and
employees be liable for punitive, exemplary or consequential damages. None of
the Agent, the Collateral Agent, their respective affiliates and their and their
affiliates' directors, officers, agents and employees shall be responsible for
or have any duty to ascertain, inquire into or verify (w) any statement,
warranty or representation made in connection with the Loan Documents or any
borrowing hereunder; (x) the performance or observance of any of the covenants
or agreements of any Obligor; (y) the satisfaction of any condition specified in
Article 3, except receipt of items required to be delivered to the Agent or the
Collateral Agent; or (z) the validity, effectiveness or genuineness of the Loan
Documents or any other instrument or writing furnished in connection herewith.
Neither the Agent nor the Collateral Agent shall incur any liability by acting
in reliance upon any notice, consent, certificate, statement or other writing
(which may be a bank wire, telex, facsimile or similar writing) believed by it
to be genuine or to be signed by the proper party or parties. Without limiting
the generality of the foregoing, the use of the term "agent" in this Agreement
or any other Loan Document with reference to the Agent or the Collateral Agent
is not intended to connote any fiduciary or other implied (or express)
obligations arising under agency doctrine of any applicable law. Instead, such
term is used merely as a matter of market custom and is intended to create or
reflect only an administrative relationship between independent contracting
parties.
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Section 7.07. Indemnification. The Lenders shall, ratably in proportion
to their Credit Exposures (in the case of the Agent) or their Secured
Obligations (as defined in the Security Agreement) (in the case of the
Collateral Agent), indemnify the Agent and the Collateral Agent, their
respective affiliates and their and their affiliates' respective directors,
officers, agents and employees (to the extent not reimbursed by the Borrower)
against any cost, expense (including counsel fees and disbursements), claim,
demand, action, loss or liability (except such as result from such indemnitees'
gross negligence or willful misconduct) that such indemnitees may suffer or
incur in connection with the Loan Documents or any action taken or omitted by
such indemnitees thereunder but in no event shall the Lenders be liable for
punitive, exemplary or consequential damages.
Section 7.08. Credit Decision. Each Lender acknowledges that it has,
independently and without reliance on the Agent, the Collateral Agent or any
other Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance on the Agent, the Collateral Agent 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 any action
under the Loan Documents.
Section 7.09. Successor Agent. The Agent or the Collateral Agent may
resign at any time by giving notice thereof to the Lenders and the Borrower.
Upon any such resignation, the Required Lenders shall have the right to appoint
a successor Agent or Collateral Agent, subject to, so long as no Event of
Default has occurred and is continuing, the consent of the Borrower (such
consent not to be unreasonably withheld or delayed). If no successor Agent or
Collateral Agent shall have been so appointed by the Required Lenders, and shall
have accepted such appointment, within 30 days after the retiring Agent or
Collateral Agent gives notice of resignation, then the retiring Agent or
Collateral Agent may, on behalf of the Lenders, appoint a successor Agent or
Collateral Agent, which shall be a commercial bank organized or licensed under
the laws of the United States or of any State thereof and having a combined
capital and surplus of at least $100,000,000. Upon the acceptance of its
appointment as Agent or Collateral Agent hereunder by a successor Agent or
Collateral Agent, such successor Agent or Collateral Agent shall thereupon
succeed to and become vested with all the rights and duties of the retiring
Agent, and the retiring Agent or Collateral Agent shall be discharged from its
duties and obligations hereunder. After any retiring Agent or Collateral Agent
resigns as Agent or Collateral Agent hereunder, the provisions of this Article
shall inure to its benefit as to actions taken or omitted to be taken by it
while it was Agent or Collateral Agent.
Section 7.10. Agent's Fee. The Borrower shall pay to the Agent for its
own account fees in the amounts and at the times previously agreed upon by the
Borrower and the Agent in the fee letter between the Borrower and the Agent
dated the date hereof.
ARTICLE 8
Change in Circumstances
Section 8.01. Basis for Determining Interest Rate Inadequate or Unfair.
In the event that at least one (1) Domestic Business Day before the Eurodollar
Determination Date:
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(a) the Agent determines that adequate and fair means do not exist for
ascertaining the Eurodollar Rate;
(b) the Required Lenders advise the Agent that Dollar deposits in the
principal amounts of the Eurodollar Loans comprising such Borrowing are not
generally available in the London interbank market for a period equal to such
Interest Period; or
(c) the Required Lenders advise the Agent that the Eurodollar Rate, as
determined by the Agent, after taking into account the adjustments for reserves
and increased costs, will not adequately and fairly reflect the cost to such
Lenders of funding their Eurodollar Loans;
then the Agent shall forthwith give notice thereof to the Borrower, whereupon
(until the Agent notifies the Borrower that the circumstances giving rise to
such suspension no longer exist) the right of the Borrower to elect to have
Loans bear interest based upon the Eurodollar Rate shall be suspended and each
outstanding Eurodollar Loan shall be converted into a Base Rate Loan on the last
day of the then current Interest Period therefor, and any Notice of Borrowing
for which Loans have not then been made shall be deemed to be a request for Base
Rate Loans, notwithstanding any prior election by the Borrower to the contrary.
Section 8.02. Illegality. If, on or after the date hereof, the adoption
of any applicable law, rule or regulation, or any change in any applicable law,
rule or regulation, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Lender
(or its Eurodollar Lending Office) with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency, shall make it unlawful or impossible for any Lender (or its Eurodollar
Lending Office) to make, maintain or fund its Eurodollar Loans and such Lender
shall so notify the Agent, the Agent shall forthwith give notice thereof to the
other Lenders and the Borrower, whereupon until such Lender notifies the
Borrower and the Agent that the circumstances giving rise to such suspension no
longer exist, the obligation of such Lender to make Eurodollar Loans, or to
convert outstanding Loans into Eurodollar Loans or continue outstanding Loans as
Eurodollar Loans, shall be suspended. Before giving any notice to the Agent
pursuant to this Section 8.02, such Lender shall designate a different
Eurodollar Lending Office if such designation will avoid the need for giving
such notice and will not, in the judgment of such Lender, be otherwise
disadvantageous to such Lender. If such notice is given, each Eurodollar Loan of
such Lender then outstanding shall be convened to a Base Rate Loan either (a) on
the last day of the then current Interest Period applicable to such Eurodollar
Loan if such Lender may lawfully continue to maintain and fund such Loan as a
Eurodollar Loan to such day or (b) immediately if such Lender shall determine
that it may not lawfully continue to maintain and fund such Loan as a Eurodollar
Loan to such day. Interest and principal on any such Base Rate Loan shall be
payable on the same dates as, and on a pro rata basis with, the interest and
principal payable on the related Eurodollar Loans of the other Lenders.
Section 8.03. Increased Cost and Reduced Return. (a) If on or after the
date hereof, the adoption of any applicable law, rule or regulation, or any
change in any applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any
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governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or its
Applicable Lending Office) or the Issuer with any request or directive (whether
or not having the force of law) of any such authority, central bank or
comparable agency, shall impose, modify or deem applicable any reserve
(including, without limitation, any such requirement imposed by the Board Of
Governors of the Federal Reserve System, but excluding any such requirement
included in an applicable Eurodollar Rate Reserve Percentage), special deposit,
insurance assessment or similar requirement against assets of, deposits with or
for the account of, or credit (including letters of credit and participations
therein) extended by, any Lender (or its Applicable Lending Office) or the
Issuer or shall impose on any Lender (or its Applicable Lending Office) or the
Issuer or the London interbank market any other condition affecting its
Eurodollar Loans, its Notes or its obligation to make Eurodollar Loans or its
obligations hereunder in respect of Letters of Credit and the result of any of
the foregoing is to increase the cost to such Lender (or its Applicable Lending
Office) or the Issuer of making or maintaining any Eurodollar Loan or issuing or
participating in any Letter of Credit, or to reduce the amount of any sum
received or receivable by such Lender (or its Applicable Lending Office) or the
Issuer under this Agreement or under its Note with respect thereto, by an amount
deemed by such Lender or the Issuer to be material, then, within 15 days after
demand by such Lender (with a copy to the Agent), the Borrower shall pay to such
Lender or the Issuer such additional amount or amounts as will compensate such
Lender or the Issuer for such increased cost or reduction.
(b) If any Lender shall have determined that, after the date hereof,
the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change in any such law, rule or regulation, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or 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 capital of such Lender (or its Parent) as a consequence of such Lender's
obligations hereunder to a level below that which such Lender (or its Parent)
could have achieved but for such adoption, change, request or directive (taking
into consideration its policies with respect to capital adequacy) by an amount
deemed by such Lender to be material, then from time to time, within 15 days
after demand by such Lender (with a copy to the Agent), the Borrower shall pay
to such Lender such additional amount or amounts as will compensate such Lender
(or its Parent) for such reduction.
(c) Each Lender and the Issuer will promptly notify the Borrower and
the Agent of any event of which it has knowledge, occurring after the date
hereof, which will entitle such Lender or the Issuer to compensation pursuant to
this Section 8.03 and will designate a different Applicable Lending Office if
such designation will avoid the need for, or reduce the amount of, such
compensation and will not, in the judgment of such Lender or the Issuer, be
otherwise disadvantageous to it. A certificate of any Lender or the Issuer
claiming compensation under this Section 8.03 and setting forth the additional
amount or amounts to be paid to it hereunder shall be conclusive in the absence
of manifest error. In determining such amount, such Lender or the Issuer may use
any reasonable averaging and attribution methods.
Section 8.04. Taxes. (a) For the purposes of this Section 8.04, the
following terms have the following meanings:
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"Taxes" means any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings with respect to any payment by the
Borrower or any Guarantor, as the case may be, pursuant to this Agreement or
under any Note, and all liabilities with respect thereto, excluding (i) in the
case of each Lender Party, taxes imposed on its net income, and franchise or
similar taxes imposed on it, by a jurisdiction under the laws of which it is
organized or in which its principal executive office is located or in which its
Applicable Lending Office or LC Office is located and (ii) in the case of each
Lender, any United States withholding tax imposed on such payment, but not
excluding any portion of such tax that exceeds the United States withholding tax
that would have been imposed on such a payment to such Lender under the laws and
treaties in effect when such Lender first becomes a party to this Agreement.
"Other Taxes" means any present or future stamp or documentary taxes
and any other excise or property taxes, or similar charges or levies, that arise
from any payment made pursuant to this Agreement or under any Note or from the
execution, delivery, registration or enforcement of, or otherwise with respect
to, any Loan Document.
(b) All payments by the Borrower or any Guarantor to or for the account
of any Lender Party hereunder or under any Note shall be made without deduction
for any Taxes or Other Taxes; provided that, if the Borrower or any Guarantor
shall be required by law to deduct any Taxes or Other Taxes from any such
payment, (i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 8.04) such Lender Party receives an amount equal
to the sum it would have received had no such deductions been made, (ii) the
Borrower or any Guarantor, as the case may be, shall make such deductions, (iii)
the Borrower or such Guarantor, as the case may be, shall pay the full amount
deducted to the relevant taxation authority or other authority in accordance
with applicable law and (iv) the Borrower shall promptly furnish to the Agent,
at its address specified in or pursuant to Section 10.01, the original or a
certified copy of a receipt evidencing payment thereof.
(c) The Borrower agrees to indemnify each Lender Party for the full
amount of Taxes and Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed or asserted (whether or not correctly) by any jurisdiction
on amounts payable under this Section 8.04) paid by such Lender Party and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto. This indemnification shall be paid within 15 days after such
Lender Party makes demand therefor.
(d) Each Lender Party organized under the laws of a jurisdiction
outside the United States, before it signs and delivers this Agreement in the
case of each Lender Party listed on the signature pages hereof and before it
becomes a Lender Party in the case of each other Lender Party, and from time to
time thereafter if requested in writing by the Borrower (but only so long as
such Lender Party remains lawfully able to do so), shall provide each of the
Borrower and the Agent with Internal Revenue Service Form 1001 or 4224, as
appropriate, or any successor form prescribed by the Internal Revenue Service,
certifying that such Lender Party is entitled to benefits under an income tax
treaty to which the United States is a party that exempts such Lender Party from
United States withholding tax or reduces the rate of withholding tax on payments
of interest for the account of such Lender Party or certifying that the income
receivable
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by it pursuant to this Agreement is effectively connected with the conduct of a
trade or business in the United States.
(e) For any period with respect to which a Lender Party has failed to
provide the Borrower or the Agent with the appropriate form referred to in
paragraph (d) (unless such failure is due to a change in treaty, law or
regulation occurring after the date on which such form originally was required
to be provided), such Lender Party shall not be entitled to indemnification
under paragraph (b) or (c) with respect to Taxes imposed by the United States;
provided that if a Lender Party that is otherwise exempt from or subject to a
reduced rate of withholding tax becomes subject to Taxes because of its failure
to deliver a form required hereunder, the Borrower shall take such steps as such
Lender Party shall reasonably request to assist such Lender Party to recover
such Taxes.
(f) If the Borrower or any Guarantor is required to pay additional
amounts to or for the account of any Lender pursuant to this Section 8.04 as a
result of a change in law or treaty occurring after such Lender first became a
party to this Agreement, then such Lender will, at the Borrower's request,
change the jurisdiction of its Applicable Lending Office if, in the judgment of
such Lender, such change (i) will eliminate or reduce any such additional
payment that may thereafter accrue and (ii) is not otherwise disadvantageous to
such Lender.
Section 8.05. Base Rate Loans Substituted for Affected Eurodollar
Loans. If (a) the obligation of any Lender to make, or to continue or convert
outstanding Loans as or to, Eurodollar Loans has been suspended pursuant to
Section 8.02 or (b) any Lender has demanded compensation under Section 8.03 or
8.04 with respect to its Eurodollar Loans, and in any such case the Borrower
shall, by at least five Eurodollar Business Days' prior notice to such Lender
through the Agent, have elected that the provisions of this Section 8.05 shall
apply to such Lender, then, unless and until such Lender notifies the Borrower
that the circumstances giving rise to such suspension or demand for compensation
no longer exist, all Loans that would otherwise be made by such Lender as (or
continued as or convened to) Eurodollar Loans shall instead be Base Rate Loans
on which interest and principal shall be payable contemporaneously with the
related Eurodollar Loans of the other Lenders. If such Lender notifies the
Borrower that the circumstances giving rise to such suspension or demand for
compensation no longer exist, the principal amount of each such Base Rate Loan
shall be converted into a Eurodollar Loan on the first day of the next
succeeding Interest Period applicable to the related Eurodollar Loans of the
other Lenders.
ARTICLE 9
Guaranty
Section 9.01. The Guaranty. Each Guarantor hereby jointly and severally
unconditionally guarantees the full and punctual payment (whether at stated
maturity, upon acceleration or otherwise) of the principal of and interest on
each Note issued by the Borrower pursuant to this Agreement, and the full and
punctual payment of all other amounts payable by the Borrower or any other
Guarantor under the Loan Documents. Upon failure by the Borrower or any other
Guarantor to pay punctually any such amount, each Guarantor shall forthwith on
demand pay the amount not so paid at the place and in the manner specified in
this Agreement or the other Loan Documents.
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Section 9.02. Guaranty Unconditional. The Obligations of each Guarantor
hereunder shall be joint and several, unconditional and absolute and, without
limiting the generality of the foregoing, shall not be released, discharged or
otherwise affected by:
(a) any extension, renewal, settlement, compromise, waiver or release
in respect of any Obligation of the Borrower or any other Guarantor under the
Loan Documents, by operation of law or otherwise;
(b) any modification or amendment of or supplement to the Loan
Documents;
(c) any release, impairment, non-perfection or invalidity of any direct
or indirect security for any Obligation of the Borrower or any other Guarantor
under the Loan Documents;
(d) any change in the corporate existence, structure or ownership of
the Borrower or any other Guarantor, or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting the Borrower, any other
Guarantor or their respective assets or any resulting release or discharge of
any Obligation of the Borrower or any other Guarantor contained in the Loan
Documents;
(e) the existence of any claim, set-off or other rights that the
Guarantor may have at any time against the Borrower, any other Guarantor, the
Agent, any Lender or any other Person, whether in connection herewith or any
unrelated transactions, provided that nothing herein shall prevent the assertion
of any such claim by separate suit or compulsory counterclaim;
(f) any invalidity or unenforceability relating to or against the
Borrower or any other Guarantor for any reason of the Loan Documents, or any
provision of applicable law or regulation purporting to prohibit the payment by
the Borrower or any other Guarantor of the principal of or interest on any Note
or any other amount payable by the Borrower or any other Guarantor under the
Loan Documents; or
(g) any other act or omission to act or delay of any kind by the
Borrower, any other Guarantor, the Agent, any Lender or any other Person or any
other circumstance whatsoever that might, but for the provisions of this
paragraph (g), constitute a legal or equitable discharge of the Guarantor's
Obligations hereunder.
Section 9.03. Discharge Only upon Payment in Full; Reinstatement in
Certain Circumstances. Each Guarantor's Obligations hereunder shall remain in
full force and effect until the Commitments shall have terminated and the
principal of and interest on the Notes and all other amounts payable by the
Obligors under the Loan Documents shall have been paid in full. If at any time
any payment of the principal of or interest on any Note or any other amount
payable by the Obligors under the Loan Documents is rescinded or must be
otherwise restored or returned upon the insolvency, bankruptcy or reorganization
of any Obligor or otherwise, each Guarantor's Obligations hereunder with respect
to such payment shall be reinstated at such time as though such payment had been
due but not made at such time.
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Section 9.04. Waiver by Each Guarantor. Each Guarantor irrevocably
waives acceptance hereof, presentment, demand, protest and any notice not
provided for herein, as well as any requirement that at any time any action be
taken by any Person against the Borrower or any other Guarantor or any other
Person.
Section 9.05. Subrogation and Contribution. Upon making any payment
with respect to the Borrower hereunder, a Guarantor shall be subrogated to the
rights of the payee against the Borrower with respect to such payment; provided
that such Guarantor shall not enforce any payment by way of subrogation, or in
the nature of contribution, until all amounts of principal of and interest on
the Loans, all LC Reimbursement Obligations and all other amounts payable by the
Obligors hereunder and under the other Loan Documents have been paid in full.
Section 9.06. Stay of Acceleration. If acceleration of the time for
payment of any amount payable by any Obligor under the Loan Documents is stayed
upon insolvency, bankruptcy or reorganization of the Borrower, all such amounts
otherwise subject to acceleration under the terms of this Agreement shall
nonetheless be payable by each Guarantor hereunder forthwith on demand by the
Agent made at the request of the Required proportion of the Lenders specified in
Section 6.01 of this Agreement.
Section 9.07. Limit of Liability. The Obligations of each Guarantor
hereunder shall be limited to an aggregate amount equal to the largest amount
that would not render its Obligations hereunder subject to avoidance under
Section 548 of the United States Bankruptcy Code or any comparable provisions of
any applicable state law.
Section 9.08. Release upon Sale. Upon any sale by the Borrower of a
Subsidiary permitted by this Agreement, such Subsidiary shall automatically and
without further action by any Lender or the Agent be released from its
Obligations, if any, as a Guarantor hereunder.
ARTICLE 10
MISCELLANEOUS
Section 10.01. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including bank wire, telex,
facsimile or similar writing) and shall be given to such party: (a) in the case
of the Borrower, the Issuer listed on the signature pages hereof or the Agent,
at its address or facsimile number set forth on the signature pages hereof, (b)
in the case of any Guarantor, in care of the Borrower, (c) in the case of any
Lender, at its address or facsimile number set forth in its Administrative
Questionnaire or (d) in the case of any party, at such other address or
facsimile number as such party may hereafter specify for the purpose by notice
to the Agent and the Borrower. Each such notice, request or other communication
shall be effective (i) if given by facsimile, when transmitted to the facsimile
number referred to in this Section 10.01 and confirmation of receipt is
received; (ii) if given by mail, 72 hours after such communication is deposited
in the mails with first class postage prepaid, addressed as aforesaid or (iii)
if given by any other means, when delivered at the address referred to in this
Section 10.01; provided that notices to the Agent or the Issuer under Article 2
or Article 8 shall not be effective until received.
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Section 10.02. No Waivers. No failure or delay by any Lender Party in
exercising any right, power or privilege hereunder or under any Note shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by law.
Section 10.03. Expenses; Indemnification. (a) The Borrower shall pay
(i) all out-of-pocket expenses of the Agent, including reasonable fees and
disbursements of special counsel for the Agent, in connection with the
preparation and administration of the Loan Documents, any waiver or consent
thereunder or any amendment thereof or any Default or alleged Default thereunder
and (ii) if an Event of Default occurs, all out-of-pocket expenses incurred by
each Lender Party, including (without duplication) the fees and disbursements of
outside counsel and the allocated cost of in-house counsel, in connection with
such Event of Default and collection, bankruptcy, insolvency and other
enforcement proceedings resulting therefrom.
(b) The Borrower agrees to indemnify each Lender Party, their
respective affiliates and the respective directors, officers, agents and
employees of the foregoing (each an "Indemnitee") and hold each Indemnitee
harmless from and against any and all liabilities, losses, damages, costs and
expenses of any kind, including, without limitation, the reasonable fees and
disbursements of counsel, that may be incurred by such Indemnitee in connection
with any investigative, administrative or judicial proceeding (whether or not
such Indemnitee shall be designated a party thereto) brought or threatened
relating to or arising out of the Loan Documents or any actual or proposed use
of any Letter of Credit or any proceeds of Loans hereunder; provided that no
Indemnitee shall have the right to be indemnified hereunder for such
Indemnitee's own gross negligence or willful misconduct as determined by a court
of competent jurisdiction, but in no event shall an Indemnitee be liable for
punitive, exemplary or consequential damages.
Section 10.04. Set-offs. (a) If (i) an Event of Default has occurred
and is continuing and (ii) Lenders holding more than 50% in aggregate
outstanding principal amount of the Loans have requested the Agent to declare
the Loans to be immediately due and payable pursuant to Section 6.01, or the
Loans have become immediately due and payable without notice as provided in
Section 6.01, then each Lender and its affiliates are hereby authorized by the
Borrower at any time and from time to time, to the extent permitted by
applicable law, without notice to the Borrower (any such notice being expressly
waived by the Borrower), to set off and apply all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by such Lender or its affiliates to or for the account of the
Borrower against any Obligations of the Borrower to such Lender now or hereafter
existing under this Agreement, regardless of whether any such deposit or other
Obligation is then due and payable or is in the same currency or is booked or
otherwise payable at the same office as the Obligation against which it is set
off and regardless of whether such Lender shall have made any demand for payment
under this Agreement. Each Lender agrees promptly to notify the Borrower after
any such set-off and application made by such Lender or its affiliates; provided
that any failure to give such notice shall not affect the validity of such
set-off and application. The rights of the Lenders and their respective
affiliates under this Section 10.04 are in addition to any other rights and
remedies that the Lenders and their respective affiliates may have.
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(b) Each Lender agrees that if it shall, by exercising any right of
set-off or counterclaim or otherwise, receive payment of a proportion of the
aggregate amount of principal and interest then due with respect to the Loans
and participations in LC Reimbursement Obligations held by it which is greater
than the proportion received by any other Lender in respect of the aggregate
amount of principal and interest then due with respect to the Loans and
participations in LC Reimbursement Obligations held by such other Lender, the
Lender receiving such proportionately greater payment shall purchase such
participations in the Loans and participations in LC Reimbursement Obligations
held by the other Lenders, and such other adjustments shall be made, as may be
required so that all such payments of principal and interest with respect to the
Loans and participations in LC Reimbursement Obligations held by the Lenders
shall be shared by the Lenders pro rata; provided that nothing in this Section
10.04 shall impair the right of any Lender to exercise any right of set-off or
counterclaim it may have and to apply the amount subject to such exercise to the
payment of indebtedness of any Obligor other than its indebtedness in respect of
the Loans and LC Reimbursement Obligations. Each Obligor agrees, to the fullest
extent it may effectively do so under applicable law, that any holder of a
participation in a Loan or LC Reimbursement Obligation, whether or not acquired
pursuant to the foregoing arrangements, may exercise rights of set-off or
counterclaim and other rights with respect to such participation as fully as if
such holder of a participation were a direct creditor of such Obligor in the
amount of such participation.
Section 10.05. Amendments and Waivers; Release of Collateral. (a) Any
provision of this Agreement or the Notes may be amended or waived if, but only
if, such amendment or waiver is in writing and is signed by the Borrower and the
Required Lenders (and, if the rights or duties of the Agent or the Issuer are
affected thereby, by the Agent or the Issuer, as the case may be); provided that
no such amendment or waiver shall, unless signed by all the Lenders, (i)
increase or decrease the Commitment of any Lender (except for a ratable decrease
in the Commitments of all the Lenders) or subject any Lender to any additional
obligation, (ii) reduce the principal of or rate of interest on any Loan or the
amount of any LC Reimbursement Obligation or any interest thereon or any fees
hereunder, (iii) postpone the date fixed for any payment of principal of or
interest on any Loan or of any LC Reimbursement Obligation or any interest
thereon or any fees hereunder or for the termination of any Commitment or
(except as expressly provided in Section 2.14(f) extend the expiry date of any
Letter of Credit, (iv) release any Guarantor from its Obligations hereunder or
(v) change the percentage of the Commitments or of the Aggregate LC Exposure or
of the aggregate unpaid principal amount of the Loans, or the number of Lenders,
that shall be required for the Lenders or any of them to take any action under
this Section 10.05 or any other provision of this Agreement; or
(b) Any provision of the Collateral Documents may be amended or waived
if, but only if, such amendment or waiver is in writing and is signed by the
relevant Obligor and the Agent with the consent of the Required Lenders;
provided that no such amendment or waiver shall, unless signed by all the
Lenders, effect or permit a release of all or substantially all of the
Collateral. Notwithstanding the foregoing, Collateral shall be released from the
Lien of the Collateral Documents from time to time as necessary to effect any
sale of assets permitted by the Loan Documents, and the Agent shall execute and
deliver all release documents reasonably requested to evidence such release.
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Section 10.06. Successors; Participations and Assignments. (a) The
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto, the Collateral Agent and their respective successors and
assigns, except that the Borrower may not assign or otherwise transfer any of
its rights under this Agreement without the prior written consent of all the
Lender Parties.
(b) Any Lender may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in its Commitment or
any or all of its Loans and participations in Letters of Credit. If a Lender
grants any such participating interest to a Participant, whether or not upon
notice to the Borrower and the Agent, such Lender shall remain responsible for
the performance of its obligations hereunder, and the Borrower, the Issuer and
the Agent shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement. Any
agreement pursuant to which any Lender may grant such a participating interest
shall provide that such Lender shall retain the sole right and responsibility to
enforce the obligations of the Borrower and the Issuer hereunder including,
without limitation, the right to approve any amendment, modification or waiver
of any provision of this Agreement; provided that such participation agreement
may provide that such Lender will not agree to any modification, amendment or
waiver of this Agreement or any Collateral Document described in clause (v), (w)
or (x) of Section 10.05(a)(i) or the proviso in the first sentence of Section
10.05(b) without the consent of the Participant party thereto. The Borrower
agrees that each Participant shall, to the extent provided in its participation
agreement, be entitled to the benefits of Article 8 with respect to its
participating interest. An assignment or other transfer that is not permitted by
Section 10.06(c) or 10.06(d) below shall be given effect for purposes of this
Agreement only to the extent of a participating interest granted in accordance
with this Section 10.06(b).
(c) Any Lender may at any time assign to one or more banks or other
institutions (each an "Assignee") all, or a proportionate part (equivalent to an
initial Commitment of not less than $5,000,000) of all, of its rights and
obligations under this Agreement and its Note, and such Assignee shall assume
such rights and obligations, pursuant to an Assignment and Acceptance Agreement
substantially in the form of Exhibit J hereto signed by such Assignee and such
transferor Lender, with (and subject to) the written consent of the Agent, the
Issuer and (so long as no Event of Default shall have occurred and be
continuing) the Borrower (which consent shall not, in any such case, be
unreasonably withheld or delayed); provided that if an Assignee is an affiliate
of such transferor Lender or was a Lender immediately before such assignment, no
such consent shall be required. When such instrument has been signed and
delivered by the parties thereto and such Assignee has paid to such transferor
Lender the purchase price agreed between them, such Assignee shall be a Lender
party to this Agreement and shall have all the rights and obligations of a
Lender with a Commitment as set forth in such instrument of assumption, and the
transferor Lender shall be released from its obligations hereunder to a
corresponding extent, and no further consent or action by any party shall be
required. Upon the consummation of any assignment pursuant to this Section
10.06(c) the transferor Lender, the Agent and the Borrower shall make
appropriate arrangements so that, if required, a new Note is issued to the
Assignee. In connection with any such assignment, the transferor Lender shall
pay to the Agent an administrative fee for processing such assignment in the
amount of $3,500. If the Assignee is not incorporated under the laws of the
United States or
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a State thereof, it shall deliver to the Borrower and the Agent certification as
to exemption from deduction or withholding of United States federal income taxes
in accordance with Section 8.04.
(d) Any Lender may at any time assign all or any portion of its rights
under this Agreement and its Note to a Federal Reserve Bank. No such assignment
shall release the transferor Lender from its obligations hereunder.
(e) No Assignee, Participant or other transferee of any Lender's rights
shall be entitled to receive any greater payment under Section 8.03 or 8.04 than
such Lender would have been entitled to receive with respect to the rights
transferred, unless such transfer is made with the Borrower's prior written
consent or by reason of the provisions of Section 8.02, 8.03 or 8.04 requiring
such Lender to designate a different Applicable Lending Office under certain
circumstances or at a time when the circumstances giving rise to such greater
payment did not exist.
Section 10.07. No Reliance on Margin Stock. Each of the Lenders
represents to the Agent and each of the other Lenders that it in good faith is
not relying upon any "margin stock" (as defined in Regulation U) as collateral
in the extension or maintenance of the credit provided for in this Agreement.
Section 10.08. Confidentiality. Each Lender Party agrees to keep
information obtained by it pursuant hereto and the other Loan Documents
confidential in accordance with such Lender Party's customary practices and
agrees that it will only use such information in connection with the
transactions contemplated by this Agreement and not disclose any of such
information other than (i) to such Lender Party's affiliates, employees,
representatives and agents who are or are expected to be involved in the
evaluation of such information in connection with the transactions contemplated
by this Agreement and who are advised of the confidential nature of such
information, (ii) to the extent such information presently is or hereafter
becomes available to such Lender Party on a non-confidential basis from a source
other than an Obligor, (iii) to the extent disclosure is required by law,
regulation or judicial order or requested or required by any regulator having
jurisdiction over such Lender Party, its affiliates or auditors, or (iv) to
assignees or participants or potential assignees or participants who agree to be
bound by the provisions of this sentence.
Section 10.09. Governing Law; Submission to Jurisdiction. This
Agreement and each Note shall be governed by and construed in accordance with
the laws of the State of New York. Each Obligor hereby submits to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York State court sitting in New York City
for purposes of all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby. Each Obligor irrevocably
waives, to the fullest extent permitted by law, any objection that it may now or
hereafter have to the laying of the venue of any such proceeding brought in such
a court and any claim that any such proceeding brought in such a court has been
brought in an inconvenient forum.
Section 10.10. Counterparts; Integration; Effectiveness. This Agreement
may be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were on the same
instrument. This Agreement and the
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Collateral Documents constitute the entire agreement and understanding among the
parties hereto and supersede any and all prior agreements and understandings,
oral or written, relating to the subject matter hereof and thereof. This
Agreement shall become effective when the Agent has received, from each of the
parties listed on the signature pages hereof, a counterpart hereof signed by
such party or facsimile or other written confirmation satisfactory to the Agent
confirming that such party has signed a counterpart hereof.
Section 10.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
MARVEL ENTERPRISES, INC.,
as Borrower
By: /s/
------------------------------------------------
Name: William H. Hardie, III
Title: Executive Vice President, Business Affairs
Address: 685 Third Avenue, New York, NY 10017
Facsimile: 212-682-5272
MARVEL ENTERTAINMENT GROUP, INC.,
as Guarantor
By: /s/
------------------------------------------------
Name: William H. Hardie, III
Title: Vice President
Address: 387 Park Avenue South, NY, NY 10016
Facsimile: 212-682-5272
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MEI HOLDING COMPANY S CORP.,
as Guarantor
By: /s/
------------------------------------------------
Name: William H. Hardie, III
Title: Vice President
Address: 387 Park Avenue South, NY, NY 10016
Facsimile: 212-682-5272
MEI HOLDING COMPANY F CORP.,
as Guarantor
By: /s/
------------------------------------------------
Name: William H. Hardie, III
Title: Vice President
Address: 387 Park Avenue South, NY, NY 10016
Facsimile: 212-682-5272
MARVEL CHARACTERS, INC.,
as Guarantor
By: /s/
------------------------------------------------
Name: William H. Hardie, III
Title: Vice President
Address: 10880 Wilshire Blvd., Ste 1400,
Los Angeles, CA 90024
Facsimile: 212-682-5272
MARVEL RESTAURANT VENTURE CORP.,
as Guarantor
By: /s/
------------------------------------------------
Name: William H. Hardie, III
Title: President
Address: 387 Park Avenue South, NY, NY 10016
Facsimile: 212-682-5272
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MRV, INC., as Guarantor
By: /s/
------------------------------------------------
Name: William H. Hardie, III
Title: Vice President
Address: 387 Park Avenue South, NY, NY 10016
Facsimile: 212-682-5272
CITIBANK, N.A., as Agent and Collateral Agent
By: /s/
------------------------------------------------
Name: Claudia Slacik
Title: Vice President
Address: 399 Park Avenue, 6th Floor, NY, NY 10043
Facsimile: (212) 793-1290
CITIBANK, N.A., as Issuer
By: /s/
------------------------------------------------
Name: Claudia Slacik
Title: Vice President
Address: 399 Park Avenue, 6th Floor, NY, NY 10043
Facsimile: (212) 793-1290
CITIBANK, N.A., as Lender
By: /s/
------------------------------------------------
Name: Claudia Slacik
Title: Vice President
Address: 399 Park Avenue, 6th Floor, NY, NY 10043
Facsimile: (212) 793-1290
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COMMITMENT SCHEDULE
Lender Commitment
-------------- -----------
CITIBANK, N.A. $60,000,000
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PRICING SCHEDULE
For any day from and after the first anniversary of the Closing Date,
the "Eurodollar Rate Margin" and "Base Rate Margin" are the respective
percentages set forth below in the applicable row under the column corresponding
to the Status that exists on such day:
Status Level I Level II Level III
Eurodollar Rate 2.25% 2.50% 2.75%
Margin
Base Rate Margin 0.75% 1.00% 1.25%
===================== =========== =========== =========
For purposes of this Schedule, the following terms have the following
meanings:
"Level I Status" exists at any day if the Applicable Leverage Ratio in
respect of such day is less than 2.0 to 1.0.
"Level II Status" exists at any day if (i) the Applicable Leverage
Ratio in respect of such day is less than 3.0 to 1.0 and (ii) Level I Status
does not exist.
"Level III Status" exists at any date if, at such date, no other Status
exists.
"Status" refers to the determination which of Level I Status, Level II
Status or Level I11 Status exists at any day.
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