Credit Agreement - Toy Biz Inc. and UBS AG
Execution Copy
$200,000,000
CREDIT AGREEMENT
dated as of
September 28, 1998
among
Toy Biz, Inc.
(to be renamed Marvel Enterprises, Inc.)
The Guarantors Party Hereto
The Lenders Party Hereto
and
UBS AG, Stamford Branch,
as Agent and Collateral Agent
------------------------------------
Warburg Dillon Read LLC,
as Arranger
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TABLE OF CONTENTS
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PAGE
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions.....................................................1
SECTION 1.02. Accounting Terms and Determinations............................20
ARTICLE 2
THE CREDITS
SECTION 2.01. Commitments to Lend............................................20
SECTION 2.02. Method of Borrowing............................................20
SECTION 2.03. Maturity of Loans, Mandatory Prepayments.......................21
SECTION 2.04. Interest Rates.................................................22
SECTION 2.05. Method of Electing Interest Rates..............................23
SECTION 2.06. [Intentionally omitted].......................................24
SECTION 2.07. Mandatory Termination of Commitments...........................24
SECTION 2.08. Optional Prepayments...........................................24
SECTION 2.09. General Provisions as to Payments..............................25
SECTION 2.10. Funding Losses.................................................25
SECTION 2.11. Computation of Interest and Fees...............................26
SECTION 2.12. Notes..........................................................26
ARTICLE 3
CONDITIONS
SECTION 3.01. Closing............................................ . .........27
SECTION 3.02. The Borrowings...................................... . ........31
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Corporate Existence and Power................................ 32
SECTION 4.02. Corporate and Governmental Authorization; No Contravention... 32
SECTION 4.03. Binding Effect; Liens........................................ 32
SECTION 4.04. Financial Information........................................ 33
SECTION 4.05. Litigation................................................... 34
SECTION 4.06. Compliance with ERISA........................................ 34
SECTION 4.07. Environmental Matters........................................ 34
SECTION 4.08. Taxes........................................................ 35
SECTION 4.09. Subsidiaries................................................ .36
SECTION 4.10. No Regulatory Restrictions on Borrowing.................... ..36
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PAGE
SECTION 4.11. Full Disclosure...............................................36
SECTION 4.12. Representations in Collateral Documents True and Correct......36
SECTION 4.13. Pro Forma and Projected Financial Information.................37
SECTION 4.14. Labor Matters.................................................38
SECTION 4.15. Intellectual Property.........................................38
SECTION 4.16. Solvency......................................................38
SECTION 4.17. Representations in Transaction Documents True and Correct.....38
SECTION 4.18. Ownership of Properties.......................................38
SECTION 4.19. No Burdensome Restrictions....................................39
SECTION 4.20. No Default....................................................39
SECTION 4.21. Compliance with Laws..........................................39
SECTION 4.22. Year 2000.....................................................39
SECTION 4.23. Limited Liability for Obligations of Panini Entities..........39
ARTICLE 5
COVENANTS
SECTION 5.01. Information...................................................40
SECTION 5.02. Payment of Obligations........................................42
SECTION 5.03. Maintenance of Property; Insurance............................43
SECTION 5.04. Conduct of Business and Maintenance of Existence..............44
SECTION 5.05. Compliance with Laws..........................................44
SECTION 5.06. Inspection of Property, Books and Records.....................44
SECTION 5.07. Mergers and Sales of Assets...................................44
SECTION 5.08. Use of Proceeds...............................................45
SECTION 5.09. Negative Pledge...............................................45
SECTION 5.10. Limitation on Debt............................................46
SECTION 5.11. Minimum EBITDA................................................47
SECTION 5.12. Leverage Ratio................................................47
SECTION 5.13. Interest Coverage Ratio.......................................47
SECTION 5.14. Minimum Current Ratio.........................................47
SECTION 5.15. Minimum Consolidated Net Worth................................47
SECTION 5.16. Limitations on Restricted Payments............................47
SECTION 5.17. Limitation on Capital Expenditures............................47
SECTION 5.18. Lease Payments................................................48
SECTION 5.19. Investments and Acquisitions..................................48
SECTION 5.20. Sale-Leaseback Transactions...................................48
SECTION 5.21. Transactions with Affiliates..................................49
SECTION 5.22. Constitutive Documents........................................49
SECTION 5.23. No Modification of Transaction Documents Without Consent......49
SECTION 5.24. Limitation on Restrictions Affecting Subsidiaries.............50
SECTION 5.25. Fiscal Year...................................................50
SECTION 5.26. Change in Business............................................50
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PAGE
SECTION 5.27. Further Assurances.............................................50
SECTION 5.28. No New Subsidiaries............................................52
SECTION 5.29. Year 2000......................................................53
SECTION 5.30. Permanent Financing............................................53
SECTION 5.31. Bank Accounts..................................................54
ARTICLE 6
DEFAULTS
SECTION 6.01. Events of Default..............................................55
SECTION 6.02. Notice of Default..............................................57
ARTICLE 7
THE AGENT
SECTION 7.01. Appointment and Authorization..................................57
SECTION 7.02. Agent and Affiliates...........................................57
SECTION 7.03. Action by Agent................................................58
SECTION 7.04. Appointment of Co-Agents.......................................58
SECTION 7.05. Consultation with Experts......................................58
SECTION 7.06. Liability of Agent.............................................58
SECTION 7.07. Indemnification................................................59
SECTION 7.08. Credit Decision................................................59
SECTION 7.09. Successor Agent................................................59
SECTION 7.10. Agent's Fee....................................................60
ARTICLE 8
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair.......60
SECTION 8.02. Illegality.....................................................60
SECTION 8.03. Increased Cost and Reduced Return..............................61
SECTION 8.04. Taxes..........................................................62
SECTION 8.05. Base Rate Loans Substituted for Affected Euro-Dollar Loans.....64
ARTICLE 9
GUARANTY
SECTION 9.01. The Guaranty...................................................64
SECTION 9.02. Guaranty Unconditional.........................................65
SECTION 9.03. Discharge Only upon Payment in Full; Reinstatement in Certain
Circumstances..................................................65
SECTION 9.04. Waiver by Each Guarantor.......................................66
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PAGE
SECTION 9.05. Subrogation and Contribution...................................66
SECTION 9.06. Stay of Acceleration...........................................66
SECTION 9.07. Limit of Liability.............................................66
SECTION 9.08. Release upon Sale..............................................66
ARTICLE 10
MISCELLANEOUS
SECTION 10.01. Notices.......................................................67
SECTION 10.02. No Waivers....................................................67
SECTION 10.03. Expenses; Indemnification.....................................67
SECTION 10.04. Set-offs......................................................68
SECTION 10.05. Amendments and Waivers Release of Collateral..................69
SECTION 10.06. Successors; Participations and Assignments....................69
SECTION 10.07. Designated Lenders............................................71
SECTION 10.08. No Reliance on Margin Stock...................................72
SECTION 10.09. Governing Law; Submission to Jurisdiction
....................................................................72
SECTION 10.10. Counterparts; Integration; Effectiveness......................72
SECTION 10.11. WAIVER OF JURY TRIAL..........................................72
COMMITMENT SCHEDULE
SCHEDULE 1.10 -- Existing Letters of Credit
SCHEDULE 4.09 -- Subsidiaries
SCHEDULE 5.10 -- Outstanding Debt
SCHEDULE 5.19(a) -- Investments
EXHIBIT A -- Note
EXHIBIT B -- Security Agreement
EXHIBIT C -- Opinion of Battle Fowler LLP, counsel for the Obligors
EXHIBIT D -- Opinion of William H. Hardie, III
EXHIBIT E -- Opinion of Davis Polk & Wardwell, special counsel for the Agent
EXHIBIT F -- Opinion of Wolf, Block, Schorr and Solis-Cohen, special
intellectual property counsel for the Obligors
EXHIBIT G -- Opinion of Gallagher & Kennedy, special Arizona counsel for
the Obligors
EXHIBIT H -- Opinion of Smith, Stratton, Wise, Heher & Brennan, special
New Jersey counsel for the Obligors
EXHIBIT I -- Opinion of Stoel Rives LLP, special Washington counsel for
the Obligors
EXHIBIT J -- Assignment and Assumption Agreement
EXHIBIT K -- Designation Agreement
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AGREEMENT dated as of September 28, 1998 among TOY BIZ, INC. (to be
renamed Marvel Enterprises, Inc.), the GUARANTORS party hereto, the LENDERS
party hereto and UBS AG, STAMFORD BRANCH, as Agent and Collateral Agent.
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 the Borrower.
"Adjusted London Interbank Offered Rate" has the meaning set forth in
Section 2.04(b).
"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 (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) which 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 securities of a Person or to direct
or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
"Agent" means UBS AG, Stamford Branch, in its capacity as agent for the
Lenders hereunder, and its successors in such capacity.
"Annualized" means (i) with respect to the Fiscal Quarter of the
Borrower ending December 31, 1998, the applicable amount for such Fiscal Quarter
multiplied by four, (ii) with respect to the Fiscal Quarter of the Borrower
ending March 31, 1999, the applicable amount for the period of two consecutive
Fiscal Quarters ending on such date multiplied by two and (iii) with respect to
the Fiscal Quarter of the Borrower ending June 30, 1999, the applicable amount
for the period of three consecutive Fiscal Quarters ending on such date
multiplied by 3/2.
"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 Euro-Dollar Loans, its
Euro-Dollar Lending Office.
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"Arranger" means Warburg Dillon Read LLC.
"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 the Borrower or a Subsidiary of the
Borrower.
"Assignee" has the meaning set forth in Section 10.06(c).
"Bank Facility" has the meaning set forth in Section 5.30.
"Base Rate" means, for any day, a rate per annum equal to the higher of
(i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the Federal
Funds Rate for such day.
"Base Rate Loan" means a Loan which 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 a rate per annum equal to 5.50%, provided that
such rate shall increase to 6.00% on April 30, 1999 and shall increase by 0.50%
on the last day of each three-month period thereafter.
"Borrower" means Toy Biz, Inc. (to be renamed 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 June 30, 1998, as filed with the SEC pursuant to
the Exchange Act.
"Borrowing" means a borrowing hereunder consisting of Loans made to the
Borrower 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 Euro-Dollar Borrowing if such Loans are Euro-Dollar Loans.
"Business Acquisition" means any acquisition, whether in a single
transaction or series of related transactions, by the Borrower or any one or
more Subsidiaries, or any
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combination thereof, of (i) all or a substantial part of the assets, or a going
concern business or division, 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 the occurrence of any of the following: (i)
any Person or group (as such terms are used for purposes of Sections 13(d) and
14(d) of the Exchange Act, whether or not applicable, except that for purposes
of this clause (i) such Person or group shall be deemed to have "beneficial
ownership" of all shares that such Person or group has the right to acquire,
whether such right is exercisable immediately or only after the passage of
time), other than an Excluded Person or Excluded Group, is or becomes the
"beneficial owner" (as such term is used in Rule 13d-3 promulgated pursuant to
the Exchange Act), directly or indirectly, of more than 25% of the aggregate
voting power of the Voting Stock of the Borrower or (ii) during any consecutive
two-year period, individuals who at the beginning of such period constituted the
Board of Directors of the Borrower (together with any new directors whose
election by such Board of Directors or whose nomination for election by the
stockholders of the Borrower was approved pursuant to the terms of the
Stockholders' Agreement or by a vote of a majority of the directors then still
in office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors of the Borrower then
in office.
"Closing Date" means the date on or after the Effective 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.
"Collateral Documents" means the Security Agreement, the Mortgages, if
any, any additional pledge agreements, security agreements or mortgages required
to be delivered pursuant to the Loan Documents and any instruments of
assignment, lockbox letters or other instruments or agreements executed pursuant
to the foregoing.
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"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 and (ii) with respect to any Assignee which 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 pursuant to Section 2.07 or increased or reduced by reason of an
assignment to or by such Lender pursuant to Section 10.06(c). At any time after
the Closing Date, the term "Commitment" shall refer to a Lender's Commitment
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 Current Assets" means at any date the consolidated
current assets of the Borrower and its Consolidated Subsidiaries (excluding the
Panini Entities) determined as of such date.
"Consolidated Current Liabilities" means at any date (i) the
consolidated current liabilities of the Borrower and its Consolidated
Subsidiaries (excluding the Panini Entities) plus (ii) the current liabilities
of any Person (other than the Borrower or any of its Consolidated Subsidiaries
(excluding the Panini Entities)) which are Guaranteed by the Borrower or a
Consolidated Subsidiary (excluding the Panini Entities), all determined as of
such date, but in any event excluding Debt under this Agreement and under the
Revolving Credit Agreement.
"Consolidated Debt" means, at any date, Debt of the Borrower and its
Consolidated Subsidiaries (excluding the Panini Entities), determined on a
consolidated basis 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, (ii) income tax expense and (iii) depreciation, amortization and other
similar non-cash charges.
"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.
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"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 (and 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 which 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 with those of the Borrower in its consolidated
financial statements if such statements were prepared as of such date.
"Credit Exposure" means, as to any Lender, (i) at any time before the
making of the Loans hereunder, the amount of its Commitment at such time or (ii)
at any time after the making of the Loans hereunder, the aggregate outstanding
principal amount of its Loans.
"Current Ratio" means, at any date, the ratio of (i) Consolidated
Current Assets at such date to (ii) Consolidated Current Liabilities at such
date.
"Debt" of any Person means, at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (iv) all obligations of such Person as lessee which are capitalized in
accordance with GAAP, (v) all obligations (whether or not contingent) of such
Person to reimburse any bank or other Person in respect of amounts paid under a
letter of credit or similar instrument; provided that the term "Debt" shall not
include any such obligations under an Existing Letter of Credit to the extent
such Existing Letter of Credit has been backstopped by a Letter of Credit issued
by an Issuer under the Revolving Credit Agreement, (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 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).
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"Default" means any condition or event which constitutes an Event of
Default or which 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.
"Designated Lender" means, with respect to any Designating Lender, an
Eligible Designee designated by it pursuant to Section 10.07(a) as a Designated
Lender for purposes of this Agreement.
"Designating Lender" means, with respect to each Designated Lender, the
Lender that designated such Designated Lender pursuant to Section 10.07(a).
"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 thereto 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.
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City and Stamford, Connecticut,
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.
"Effective Date" means the date this Agreement becomes effective in
accordance with Section 10.10.
"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
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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.
"Entertainment" means Marvel Entertainment Group, Inc., a Delaware
corporation.
"Entertainment's Latest Form 10-Q" means Entertainment's quarterly
report on Form 10-Q for the quarter ended June 30, 1998, as filed with the SEC
pursuant to the Exchange Act.
"Entertainment's 1997 Form 10-K/A" means Entertainment's annual report
on Form 10-K/A for 1997, as filed with the SEC pursuant to the Exchange Act.
"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
the environment or the effect of the environment on human health 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 thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"ERISA Group" means the Borrower, any Subsidiary and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Borrower or any
Subsidiary, are treated as a single employer under Section 414 of the Internal
Revenue Code.
"Euro-Dollar Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
"Euro-Dollar 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
Euro-Dollar Lending Office) or such other office, branch or affiliate of such
Lender as it may hereafter designate as its Euro-Dollar Lending Office by notice
to the Borrower and the Agent.
"Euro-Dollar Loan" means a Loan which bears interest at a Euro-Dollar
Rate pursuant to the applicable Notice of Borrowing or Notice of Interest Rate
Election.
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"Euro-Dollar Margin" means a rate per annum equal to 6.50%, provided
that such rate shall increase to 7.00% on April 30, 1999 and shall increase by
0.50% on the last day of each three-month period thereafter.
"Euro-Dollar Rate" means a rate of interest determined pursuant to
Section 2.04(b) on the basis of a London Interbank Offered Rate.
"Euro-Dollar Reserve Percentage" means, for any day, that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of "Eurocurrency liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
Euro-Dollar Loans is determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of any Lender to
United States residents).
"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 incurred in connection
with the bankruptcy cases of Entertainment and its Subsidiaries exceeds
$35,000,000, (ii) the proceeds of such loan are used exclusively to pay such
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 repay such administration
expense claims and (iv) such loan shall bear interest at a rate equal to the
Base Rate applicable to the Base Rate Loans hereunder.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
"Excluded Group" means a "group" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) that (i) includes one or more Excluded
Persons; provided that the voting power of the Voting Stock of the Borrower
"beneficially owned" (as such term is used in Rule 13d-3 promulgated under the
Exchange Act) by such Excluded Persons (without attribution to such Excluded
Persons of the ownership by other members of the "group") represents a majority
of the voting power of the Voting Stock "beneficially owned" (as such term is
used in Rule 13d-3 promulgated under the Exchange Act) by such group or (ii)
exists solely by virtue of the fact that the members of such group are parties
to the Stockholders' Agreement.
"Excluded Person" means Mr. Isaac Perlmutter or Mr. Avi Arad or any
Person controlled by either or both of them.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Existing Letters of Credit" means the letters of credit issued before
the Closing Date pursuant to the Borrower's existing credit agreement and listed
on Schedule 1.01 hereof.
"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).
"Facility Request" has the meaning set forth in Section 5.30.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Domestic Business Day next
succeeding such day; provided that (i) if such day is not a Domestic Business
Day, the Federal Funds Rate for such day shall be such rate on such transactions
on the next preceding Domestic Business Day as so published on the next
succeeding Domestic Business Day and (ii) if no such rate is so published on
such next succeeding Domestic Business Day, the Federal Funds Rate for such day
shall be the average rate quoted to UBS AG, Stamford Branch, on such day on such
transactions, as determined by the Agent.
"Fee Letter" means the fee letter with respect to this Agreement dated
as of June 26, 1998 among the Borrower, the Agent and the Arranger.
"Fiscal Quarter" means a fiscal quarter of the Borrower.
"Fiscal Year" means a fiscal year of the Borrower.
"Follow-on Securities Notice" has the meaning specified in Section
5.30.
"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 as in effect on
the date hereof, applied on a basis consistent with the financial statements
referred to in Section 4.04(a).
"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.
765748.1 10/9/98 7:17p
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"Group of Loans" means, at any time, a group of Loans consisting of (i)
all Loans which are Base Rate Loans at such time or (ii) all Euro-Dollar 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 who 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 toxic, radioactive, caustic or
otherwise hazardous substance, including petroleum, its derivatives and
by-products and other hydrocarbons, or any substance having any constituent
elements displaying any of the foregoing characteristics.
"Indemnitee" has the meaning set forth in Section 10.03(b).
"Initial Securities Request" has the meaning set forth in Section 5.30.
"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 Euro-Dollar Loan, the
period commencing on the date of borrowing specified in the Notice of Borrowing
or on the date specified in an applicable Notice of Interest Rate Election and
ending one month thereafter, provided that:
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(a) any Interest Period which would otherwise end on
a day which is not a Euro-Dollar Business Day shall be
extended to the next succeeding Euro-Dollar Business Day
unless such Euro-Dollar Business Day falls in another calendar
month, in which case such Interest Period shall end on the
next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last
Euro-Dollar 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 Euro- Dollar
Business Day of a calendar month; and
(c) any Interest Period which 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.
"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).
"Lender" means (i) each Lender listed on the Commitment Schedule, (ii)
each Assignee which becomes a Lender pursuant to Section 10.06(c) and (iii)
their respective successors.
"Lender Parties" means the Lenders and the Agent.
"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, provided that if
the Fiscal Quarter most recently ended on or prior to such date ended on
December 31, 1998, March 31, 1999 or June 30, 1999, Consolidated EBITDA shall be
determined on an Annualized basis.
"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 which 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
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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.
"Lockbox Account" means a lockbox account that has been irrevocably
assigned to the Collateral Agent pursuant to a Lockbox Letter.
"Lockbox Letter" has the meaning set forth in the Security Agreement.
"London Interbank Offered Rate" has the meaning set forth in Section
2.04(b).
"Major Casualty Proceeds" means (i) the aggregate insurance proceeds
received in connection with one or more related events by the Borrower and its
Subsidiaries and/or the Collateral Agent under any insurance policy maintained
by the Borrower or any of its Subsidiaries or (ii) any award or other
compensation with respect to any condemnation of property (or any transfer or
disposition of property in lieu of condemnation) received by the Borrower and
its Subsidiaries, if the amount of such aggregate insurance proceeds or award or
other compensation exceeds $100,000.
"Material Adverse Effect" means (i) any material adverse effect upon
the condition (financial or otherwise), results of operations, properties,
assets, business or prospects 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 by this Agreement (including
the Permanent Financing); (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/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.
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"Merger Agreement" means the Agreement and Plan of Merger dated as of
August 12, 1998 among Entertainment, the Borrower and Acquisition Sub.
"Moody's" means Moody's Investors Service, Inc. and any successor
thereto.
"Mortgage" means each mortgage or deed of trust, in form and substance
reasonably satisfactory to the Agent, between any Obligor party thereto, as
mortgagor or trustor, and the Agent, as mortgagee or beneficiary, entered into
pursuant hereto, in each case as amended from time to time.
"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 which ceased to be a member of the ERISA Group during
such five year period.
"Net Cash Proceeds" means, with respect to any Reduction Event, an
amount (not less than zero) equal to the cash proceeds received by the Borrower
or any of its Subsidiaries from or in respect of such Reduction Event (including
any cash proceeds received as interest or similar income or other proceeds of
any noncash proceeds of any Asset Sale), less (a) any fees, costs and expenses
reasonably incurred by such Person in respect of such Reduction Event, (b) if
such Reduction Event is an Asset Sale, (i) the amount of any Debt secured by a
Lien on any asset disposed of in such Asset Sale and required to be, and
actually, discharged from the proceeds thereof and (ii) any taxes actually paid
or to be payable by such Person (as estimated by the senior financial or
accounting officer of the Borrower, giving effect to the overall tax position of
the Borrower) in respect of such Asset Sale and (c) if such Reduction Event is
the receipt of Major Casualty Proceeds and if the Borrower shall have notified
the Agent within 30 days after the receipt of such Major Casualty Proceeds of
its intent to use some or all of such Major Casualty Proceeds to repair or
replace the affected assets within 180 days after the receipt thereof, the
amount so specified by the Borrower; provided that the portion of the Net Cash
Proceeds not so used in such 180-day period shall be deemed to have been
received and shall be applied to prepayments required under Section 2.03(b) on
such 180th day; provided, further, that Major Casualty Proceeds in excess of
$1,000,000 shall be held and dispensed by the Agent in accordance with Section 5
of the Security Agreement.
"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).
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<PAGE>
"Obligor" means the Borrower and each Guarantor.
"Outstanding Amount" means, with respect to any Lender at any time, the
aggregate outstanding principal amount of its Loans 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 Entities" means Panini and its direct and indirect
Subsidiaries.
"Panini Guaranty" means the Guaranty Agreement dated as of the date
hereof 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 in full of the Restructured Panini
Indebtedness and are liable in respect of such Restructured Panini Indebtedness
in a maximum aggregate amount of $40,000,000 (before giving effect to the Panini
Guaranty Effective Date Payment).
"Panini Guaranty Effective Date Payment" means the $13,000,000 cash
payment by the Borrower to the holders of the Existing Panini Indebtedness on
the effective date of the Plan of Reorganization, which payment shall be made
pursuant to and in accordance with the Panini Guaranty and shall reduce the
obligations of the Panini Guarantors under the Panini Guaranty.
"Panini Guarantors" means the Borrower, Entertainment, Fleer Corp., The
Asher Candy Company, Frank H. Fleer Corp., Heroes World Distribution, Inc.,
Malibu Comics Entertainment, Inc., Marvel Characters, Inc., Marvel Direct
Marketing, Inc. and Skybox International, Inc.
"Panini Indemnification Agreement" means the Indemnification Agreement
dated as of the date hereof 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 the
date hereof 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.
"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.
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<PAGE>
"Permanent Financing" means (i) the Permitted Notes and/or (ii) the
Permitted Bank Facility.
"Permitted Bank Facility" means a loan facility the proceeds of which
are used exclusively to refinance (or together with an issuance of Permitted
Notes, to refinance) the Notes in their entirety and to pay fees and expenses
incurred in connection with such loan facility.
"Permitted Notes" means unsecured notes of the Borrower the proceeds of
which are used exclusively to refinance the Notes or any portion thereof and to
pay fees and expenses incurred in connection with the issuance of such notes.
"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.
"Pinnacle Acquisition" means the acquisition by the Borrower on or
prior to October 30, 1998 of all or substantially all of the assets of Pinnacle
Brands Inc. and its subsidiaries; provided that the aggregate consideration
therefor does not exceed $3,000,000.
"Plan" means, at any time, an employee pension benefit plan (other than
a Multiemployer Plan) which 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 which
was at such time a member of the ERISA Group for employees of any Person which
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. 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 the Toy Biz, Inc.
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.
"Prime Rate" means the rate of interest publicly announced by UBS AG,
Stamford Branch in Stamford, Connecticut from time to time as its Prime Rate.
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<PAGE>
"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 each March 31, June 30, September 30
and December 31.
"Reduction Event" means (i) any Asset Sale; (ii) receipt of Major
Casualty Proceeds; (iii) incurrence after the Closing Date of any Debt by the
Borrower or any of its Subsidiaries (including the Permanent Financing), other
than Debt referred to in clauses (i) through (iv), inclusive, and clause (vi) of
Section 5.10 or (iv) any Securities Issuance after the Closing Date.
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of the Closing Date among the Borrower and certain holders of its
capital stock.
"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 repayment or prepayment of the
principal of, or any purchase, redemption, retirement or acquisition of, all or
any portion of the Excess Administration Claims Loan.
"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.
"Reuters Screen LIBO Page" has the meaning set forth in Section
2.04(b).
"Revolving Credit Agreement" means the $50,000,000 Credit Agreement
dated as of the date hereof among the Borrower, the Guarantors, the lenders
party thereto, the issuers referred to therein and UBS AG, Stamford Branch, as
agent for such lenders, as amended from time to time.
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<PAGE>
"Revolving Documents" means the Revolving Credit Agreement, the
Revolving Notes and all other agreements and documents entered into by the
Borrower or any Subsidiary in connection therewith.
"Revolving Loans" means loans made to the Borrower under the Revolving
Credit Agreement.
"Revolving Notes" means notes issued by the Borrower under the
Revolving Credit Agreement.
"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.
"S&P" means Standard and Poor's Ratings Services, a division of The
McGraw Hill Companies or any successor thereto.
"SEC" means the Securities and Exchange Commission.
"Secured Parties" has the meaning set forth in the Security Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Issuance" means (i) any issuance and sale in a public or
private offering or in a private placement of (x) debt securities (whether
senior, senior subordinated, subordinated or otherwise), including the Permanent
Financing, or (y) equity securities, in each case by the Borrower or any of its
Subsidiaries and (ii) any exercise by any party of warrants to acquire any
securities of the Borrower or any of its Subsidiaries.
"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 B hereto, as amended from time to time.
"Stockholders' Agreement" means the agreement, dated as of the Closing
Date, among the Company, 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
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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.
"Take-Out Banks" means one or more banks, reasonably satisfactory to
the Lenders, engaged by the Borrower to place the Take-Out Securities, the
proceeds of which will be used to prepay in whole or in part the Loans pursuant
to Section 2.03.
"Take-Out Securities" has the meaning set forth in Section 5.30.
"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's Ratings Services 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 which 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 earlier of (i) September 27, 1999 or, if
such day is not a Euro-Dollar Business Day, the next preceding Euro-Dollar
Business Day or (ii) the closing date of the Permanent Financing.
"Transaction Documents" means the Merger Agreement, the Panini
Guarantee, the Panini Indemnification Agreement, the Stockholders' Agreement,
the Warrant Agreements, the Preferred Stock and all related or ancillary
documents, instruments or
agreements to be executed in connection therewith.
"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.
"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
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long as no senior class of stock or other relevant equity interest has voting
power by reason of any contingency) to vote in the election of members of the
board of directors of such Person.
"Warrant Agreements" means (i) the Warrant Agreement dated as of the
Closing Date relating to four-year warrants (referred to in the Plan of
Reorganization as "Plan Warrants") to purchase up to 1,750,000 shares of common
stock of the Borrower; (ii) the Warrant Agreement dated as the Closing Date
relating to three-year warrants (referred to in the Plan of Reorganization as
"Stockholder Series A Warrants") to purchase 4,000,000 shares of common stock of
the Borrower; (iii) the Warrant Agreement dated as of the Closing Date relating
to six-month warrants (referred to in the Plan of Reorganization as "Stockholder
Series B Warrants") to purchase 3,000,000 shares of Preferred Stock of the
Borrower; and (iv) the Warrant Agreement dated as of the Closing Date relating
to four-year warrants (referred to in the Plan of Reorganization as "Stockholder
Series C. Warrants") to purchase 7,000,000 shares of common stock of the
Borrower.
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. Subject to the terms and conditions
set forth in this Agreement, each Lender severally agrees to make Loans to the
Borrower pursuant to this Section on the Closing Date in an aggregate principal
amount not to exceed such Lender's Commitment. Each Borrowing hereunder shall be
in an aggregate amount of $25,000,000 or any larger multiple of $5,000,000 and
shall be made from the Lenders ratably in proportion to their respective
Commitments. The Loans are not revolving in nature and any Loans repaid or
prepaid may not be reborrowed.
SECTION 2.02. Method of Borrowing. (a) The Borrower shall give the
Agent notice (the "Notice of Borrowing") not later than 10:30 A.M. (Stamford,
Connecticut time) on (x) the Closing Date, if all Loans are to be made as Base
Rate Loans and (y) the third Euro-Dollar Business Day before the Closing Date,
if any Loans are to be made as Euro-Dollar Loans, specifying:
(i) the Closing Date, which shall be a Domestic Business
Day, if all Loans are to be made as Base Rate Loans, or a
Euro-Dollar Business Day, if any Loans are to be made as
Euro-Dollar Loans;
(ii) the aggregate amount of each Borrowing; and
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<PAGE>
(iii) whether the Loans comprising such Borrowing are to
bear interest initially at the Base Rate or the Euro-Dollar
Rate.
In no event shall the total number of Groups of Loans comprised of Euro-Dollar
Borrowings at any one time outstanding exceed three.
(b) Promptly after receiving the Notice of Borrowing, the Agent shall
notify each Lender of the contents thereof and of such Lender's ratable share of
each Borrowing and such Notice of Borrowing shall not thereafter be revocable by
the Borrower.
(c) Not later than 12:00 Noon (Stamford, Connecticut time) on the
Closing Date, each Lender shall make available its ratable share of each
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 3.01 or 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 the Borrowings that such Lender will not make available to the Agent
such Lender's share of the Borrowings, the Agent may assume that such Lender has
made such share available to the Agent on the date of the Borrowings in
accordance with Section 2.02(c) 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, Mandatory Prepayments. (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 the Borrower or any of its Subsidiaries receives any Net Cash
Proceeds in respect of any Reduction Event, the Borrower shall (i) immediately
upon receipt of Net Cash Proceeds of the Permanent Financing (or any portion
thereof) or any Securities Issuance or (ii) as soon as possible but, in any
event, within two days of the Borrower's receipt of Net Cash Proceeds from
sources other than those referred to in clause (i),
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prepay Loans in an amount equal to such Net Cash Proceeds; provided that such
Net Cash Proceeds shall be applied first, to the prepayment of Base Rate Loans
and second, to the prepayment of Euro-Dollar Loans and, provided further that if
any prepayment of Euro- Dollar Loans on account of any Asset Sale would
otherwise be required to be made under this subsection (b) on a day other than
the last day of the Interest Period then applicable to such Euro-Dollar Loans,
then the Borrower may pay the amount required to be paid in respect of such
Euro-Dollar Loans to the Agent, to be held in escrow by the Agent and invested
in Temporary Cash Investments as the Borrower may direct, until the last day of
such Interest Period, at which time such prepayment shall be made. The Borrower
shall give the Agent at least one Domestic Business Day's notice of each
prepayment of Base Rate Loans and at least three Euro-Dollar Business Day's
notice of each prepayment of Euro-Dollar Loans required to be made pursuant to
this subsection (b).
(c) Promptly after receiving a notice of prepayment pursuant to this
Section, 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.
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
(x) the Base Rate Margin for such day plus (y) the Base Rate for such day. Such
interest shall be payable quarterly in arrears on each Quarterly Payment Date.
Any overdue principal of or 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 Euro-Dollar 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 (x) the Euro-Dollar Margin for
such day plus (y) the Adjusted London Interbank Offered Rate applicable to such
Interest Period. Such interest shall be payable for each Interest Period on the
last day thereof.
The "Adjusted London Interbank Offered Rate" applicable to any Interest
Period means a rate per annum equal to the quotient obtained (rounded upward, if
necessary, to the next higher 1/100 of 1%) by dividing (i) the applicable London
Interbank Offered Rate by (ii) 1.00 minus the Euro-Dollar Reserve Percentage.
The "London Interbank Offered Rate" means, for any Interest Period, the
arithmetic mean (rounded upward, if necessary, to the nearest 1/100 of 1%) of
the offered rates for deposits in Dollars, for a period approximately equal to
such Interest Period (or Overdue Period) and in an amount approximately equal to
the average principal amount of the applicable Loans, quoted on the second
Euro-Dollar Business Day prior to the first day of such Interest Period (or
Overdue Period) as such rates appear on the display designated as page "LIBO" on
the Reuters Monitor Money Rates Service (or such other page as may replace the
"LIBO" page on that service for the purpose of displaying
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London interbank offered rates of major banks) ("Reuters Screen LIBO Page") as
of 11:00 A.M. (London time) on such date.
(c) Any overdue principal of or interest on any Euro-Dollar 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 Euro-Dollar Margin for such
day plus the Adjusted London Interbank Offered 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 shall
bear interest initially at the type of rate specified by the Borrower in the
Notice of Borrowing. Thereafter, the Borrower may from time to time elect to
change or continue the type of interest rate borne by a Group of Loans (subject
to subsection (d) and the provisions of Article 8), as follows:
(i) if such Loans are Base Rate Loans, the Borrower may
elect to convert them to Euro-Dollar Loans as of any
Euro-Dollar Business Day, and
(ii) if such Loans are Euro-Dollar 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
Euro-Dollar Loans for an additional Interest Period, subject
to Section 2.10 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 10:30 A.M. (Stamford, Connecticut
time) on the third Euro-Dollar 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 applies, and the remaining portion to which it does not
apply, are each at least $25,000,000 (unless such portion is comprised of Base
Rate Loans). If no such notice is timely received before the end of an Interest
Period for any Group of Euro-Dollar 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:
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(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 subsection (a) above;
(iii) if the Loans comprising such Group are to be
converted, the new type of Loans.
(c) Promptly after receiving a Notice of Interest Rate Election from
the Borrower pursuant to subsection (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, Euro-Dollar
Loans if (i) the aggregate principal amount of the Group of Euro-Dollar Loans
created or continued as a result of such election would be less than $25,000,000
or (ii) a Default shall have occurred and be continuing when the Borrower
delivers notice of such election to the Agent.
(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. [Intentionally omitted].
SECTION 2.07. Mandatory Termination of Commitments. The Commitments
shall terminate on the earlier of (i) the Closing Date, immediately after giving
effect to the making of the Loans to be made on the Closing Date and (ii) the
close of business (New York City Time) on October 4, 1998.
SECTION 2.08. Optional Prepayments. (a) Subject in the case of
Euro-Dollar Loans to Section 2.10, 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 Euro-Dollar Business Days' notice to the Agent,
prepay any Group of Euro-Dollar 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. Loans (or portions thereof) that are prepaid
may not be reborrowed.
(b) Promptly after receiving a notice of prepayment pursuant to this
Section, 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.
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SECTION 2.09. General Provisions as to Payments. (a) The Borrower shall
make each payment of principal of, and interest on, the Loans not later than
12:00 Noon (Stamford, Connecticut time) on the date when due, in Federal or
other funds immediately available in Stamford, Connecticut, 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 any payment of fees shall be due on a day
which 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 Euro-Dollar Loans shall be due on a day which
is not a Euro-Dollar Business Day, the date for payment thereof shall be
extended to the next succeeding Euro-Dollar Business Day unless such Euro-Dollar
Business Day falls in another calendar month, in which case the date for payment
thereof shall be the next preceding Euro-Dollar 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 2.10. Funding Losses. If the Borrower makes any payment of
principal with respect to any Euro-Dollar Loan or any Euro-Dollar 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 the last day of an applicable period
fixed pursuant to Section 2.04(c), or if the Borrower fails to borrow, prepay,
convert or continue any Euro-Dollar 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 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 2.11. Computation of Interest and Fees. Interest based on the
Prime Rate hereunder shall be computed on the basis of a year of 365 days (or
366 days in a leap
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year) and paid for the actual number of days elapsed (including the first day
but excluding the last day). All other 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 2.12. 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.
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), it being understood that with respect to the
conditions set forth in clauses (b), (c), (g), (j), (k), (q) through (s) and (v)
through (x), each Lender shall be deemed to have determined that such conditions
have been satisfied unless the Agent shall have received notice from such Lender
prior to the Closing Date that such Lender does not consider such conditions to
have been satisfied (or, solely with respect to the conditions set forth in
clauses (b), (c), (g), (s), (v) and (x), the Lenders shall not have received any
documents referred to therein):
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<PAGE>
(a) the Agent shall have received a duly executed Note for the account
of each Lender dated on or before the Closing Date and complying with the
provisions of Section 2.12;
(b) the Agent shall have received (i) an opinion of Battle Fowler LLP,
counsel for the Obligors, substantially in the form of Exhibit C hereto and (ii)
an opinion of William H. Hardie, III, General Counsel of the Borrower,
substantially in the form of Exhibit D hereto, each dated the Closing Date and
covering such additional matters relating to the transactions contemplated
hereby as the Required Lenders may reasonably request;
(c) the Agent shall have received an opinion of Davis Polk & Wardwell,
special counsel for the Agent, substantially in the form of Exhibit E hereto,
dated the Closing Date and covering such additional matters relating to the
transactions contemplated hereby as the Required Lenders may reasonably request;
(d) the Agent shall have received duly executed counterparts of each of
the Collateral Documents, together with (i) evidence satisfactory to the Agent
of the effectiveness and perfection (to the extent required thereby) 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 and (ii)
opinions of Wolf, Block, Schorr and Solis-Cohen, special intellectual property
counsel for the Obligors; Gallagher & Kennedy, special Arizona counsel for the
Obligors; Smith, Stratton, Wise, Heher & Brennan, special New Jersey counsel for
the Obligors; and Stoel Rives LLP, special Washington counsel for the Obligors,
substantially in the forms of Exhibits F, G. H and I;
(e) the Agent shall have received a true, complete and correct copy of
each Transaction Document as in effect on the Closing Date, certified as such by
a senior officer of the Borrower;
(f) all conditions to the closing of the transactions contemplated by
the Transaction Documents and the Plan of Reorganization to be consummated on
the Closing Date as set forth in the Transaction Documents and the Plan of
Reorganization shall have been satisfied (without waiver, amendment or
modification, unless consented to by the Lenders), and all such transactions
(including, without limitation, the consummation of the Merger) shall have been,
or are being, consummated prior to or simultaneously with the Closing Date;
(g) the Agent shall have received each opinion, report and other
document required to be delivered by any Person pursuant to the Transaction
Documents on the Closing Date, with a letter from each Person delivering any
such opinion, report and other document authorizing reliance thereon by the
Agent and the Lenders, all in form and substance satisfactory to the Lenders;
765748.1 10/9/98 7:17p
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<PAGE>
(h) 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, (x) the Borrower shall have received cash proceeds of not less than
$90,000,000 from the issuance of the Preferred Stock, (y) the Revolving Credit
Agreement and the other Revolving Documents shall have been executed and
delivered by the parties thereto and shall be in full force and effect and all
conditions to the closing thereunder shall have been satisfied and (z) on the
Closing Date, after giving effect to the consummation of transactions
contemplated by the Transaction Documents and the Plan of Reorganization, to be
consummated on the Closing Date (1) no Default shall have occurred and be
continuing and (2) the representations and warranties of the Obligors contained
in the Loan Documents are true and correct on and as of the Closing Date;
(i) 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 June 30,
1998;
(j) the Agent shall have received evidence satisfactory to the Lenders
of the insurance coverage required by Section 5.03(b) and the Collateral
Documents;
(k) 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 Lenders, (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 June 26, 1998;
(l) (i) all outstanding Debt and other obligations owed by the Borrower
or any of its Subsidiaries contemplated by the Plan of Reorganization or the
Transaction Documents to be repaid on or prior to the Closing Date shall have
been repaid or arrangements satisfactory to the Agent for the repayment thereof
shall have been made, (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;
(m) the Lenders shall be reasonably satisfied in all respects (i) with
the terms and conditions of any Debt or other obligations owed by the Borrower
or any of its Subsidiaries to remain outstanding after the Closing Date and (ii)
that the Borrower and its Subsidiaries are not subject to contractual or other
restrictions that would be violated by the contemplated transactions, including
the granting of security interests and guarantees and payment of dividends by
Subsidiaries;
(n) (i) all anti-trust and other 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 Plan of Reorganization
and the related transactions contemplated hereby shall have been obtained and
all applicable waiting periods shall have
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<PAGE>
expired without any action to affect the Plan of Reorganization and (ii) the
confirmation order with respect to the Plan of Reorganization shall have been
duly entered, shall not have been modified except as disclosed in writing to the
Lenders prior to the date hereof and shall be in full force and effect;
(o) the fact that (i) there shall not be any disruption or change in
financial, banking or capital markets or in the regulatory environment after
September 15, 1998 that in the good faith judgment of the Agent or the Arranger
could adversely affect the syndication of the Commitments or the Loans and (ii)
the Borrower shall have cooperated with syndication efforts, including, without
limitation, by promptly providing the Agent, the Arranger, their respective
affiliates and the Lenders with all information reasonably deemed necessary to
complete successfully such syndication;
(p) receipt by the Agent and the Lenders of all reasonable costs, 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;
(q) there shall be no facts, events or circumstances which are
inconsistent with the written information provided to the Agent or the Arranger
prior to June 26, 1998 that come to the attention of the Lenders after such date
and which, in their good faith determination, materially adversely affect the
business, debt service capacity, tax position, or financial condition,
operations or prospects of the Borrower and its Subsidiaries, taken as a whole,
or the consummation of the transactions contemplated hereby;
(r) the Lenders shall be reasonably satisfied with the status of all
labor, tax, employee benefit and health and safety matters involving the
Borrower and its Subsidiaries;
(s) (i) the Lenders shall have received the most recently completed
audited consolidated and unaudited consolidating balance sheets of, and related
audited consolidated and unaudited consolidating statements of income,
stockholders' equity and cash flows for the Borrower and Entertainment, which
financial statements shall not be materially inconsistent with the forecasts for
such periods provided to the Agent prior to June 26, 1998;
(ii) the Lenders shall have received (x) a pro forma consolidated
balance sheet and the related pro forma consolidated statements of
income and cash flows of the Borrower and its Consolidated Subsidiaries
as of June 30, 1998 and for the six months then ended and (y) pro forma
consolidated statements of income and cash flows of the Borrower and
its Consolidated Subsidiaries for the Fiscal Year ended December 31,
1997, in each case giving effect to the consummation of the
transactions contemplated by the Plan of Reorganization and the
Transaction Documents to be consummated on or prior to the Closing Date
and all related
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transactions, which pro forma financial statements shall be reasonably
satisfactory to the Lenders;
(iii) the Lenders shall have received projected consolidated
balance sheets of the Borrower and its Subsidiaries as of December 31,
1998, December 31, 1999, December 31, 2000 and December 31, 2001 and
projected quarterly statements of income and cash flow for each of the
Fiscal Years then to be ended, 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 Lenders and
(C) demonstrate that the financial covenants set forth in Sections 5.11
through 5.15 shall be satisfied;
(iv) the Lenders shall have received a detailed financial model
for the Fiscal Years through 2001, which shall be in form and substance
satisfactory to the Lenders; and
(v) the Lenders shall be satisfied after the receipt of the
information provided pursuant to clauses (i), (ii) and (iii) above that
in their reasonable judgment the amount of committed and existing
financing available to the Borrower shall be sufficient to meet the
ongoing financing needs of the Borrower;
(t) there shall exist no event of default (or condition which would
constitute an event of default with the giving of notice or the passage of time
or both) under any capital stock, financing agreements, lease agreements or
other contracts which could reasonably be expected to have a Material Adverse
Effect;
(u) All material contracts of the Borrower and its Subsidiaries
(including, without limitation, material licensing contracts) and the treatment
thereof (including, without limitation, any rejection, assumption or
renegotiation thereof) in connection with the consummation of the Plan of
Reorganization shall be reasonably satisfactory to the Lenders;
(v) the Lenders shall have completed their due diligence inspection,
testing and review of the assets and liabilities of the Borrower and its
Subsidiaries and shall be reasonably satisfied with the results thereof in all
respects;
(w) the Borrower shall have engaged the Take-Out Banks and shall have
used its best efforts to prepare an offering memorandum relating to the issuance
and sale of the Take-Out Securities;
(x) all other documentation, including, without limitation, any
employment agreement, management compensation arrangement, insurance or other
financing arrangement of the Borrower and its Subsidiaries shall be reasonably
satisfactory in form and substance to the Lenders;
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(y) the Agent shall have received all documents 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. The Borrowings. The obligation of any Lender to make a
Loan on the Closing Date, is subject to the satisfaction of the following
conditions:
(a) the fact that the Closing Date shall have occurred on or before
October 4, 1998:
(b) receipt by the Agent of the Notice of Borrowing as required by
Section 2.02;
(c) the fact that, immediately before and after the Borrowings, no
Default shall have occurred and be continuing; and
(d) the fact that the representations and warranties of the Obligors
contained the Loan Documents shall be true on and as of the Closing Date.
The Borrowings hereunder shall be deemed to be a representation and warranty by
the Borrower and, with respect to itself only, each Guarantor on the Closing
Date as to the facts specified in the foregoing clauses 3.02(c) and 3.02(d).
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
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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.
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, and,
in the case of the Mortgages, if any, first mortgage Liens on, the Collateral
purported to be covered thereby, which security interests and mortgage Liens are
and will remain perfected security interests and mortgage Liens, prior to all
other Liens (other than Liens permitted hereunder that do not secure Debt which
ranks senior to such security interests and mortgage Liens arising by operation
of law).
SECTION 4.04. Financial Information. (a) The consolidated and
consolidating balance sheets of Entertainment and its Consolidated Subsidiaries
as of December 31, 1997 and the related consolidated and consolidating
statements of income, cash flows and changes in stockholders' equity for the
Fiscal Year then ended, which consolidated statements have been reported on by
Ernst & Young and set forth in Entertainment's 1997 Form 10-K/A, and which
consolidating statements have been delivered to the Lenders prior to the date
hereof, fairly present, in conformity with GAAP, the consolidated and
consolidating financial position of Entertainment and its Consolidated
Subsidiaries as of such date and their consolidated and consolidating results of
operations and cash flows for such Fiscal Year.
(b) The unaudited consolidated and consolidating balance sheets of
Entertainment and its Consolidated Subsidiaries as of June 30, 1998 and the
related unaudited consolidated and consolidating statements of income, cash
flows and changes in stockholders' equity for the six months then ended, which
consolidated statements have been set forth in Entertainment's Latest Form 10-Q,
and which consolidating statements have been delivered to the Lenders prior to
the date hereof, fairly present, on a basis consistent with the financial
statements referred to in Section 4.04(a), the consolidated and consolidating
financial position of Entertainment and its Consolidated Subsidiaries as of such
date and their consolidated and consolidating results of operations and cash
flows for such six month period (subject to normal year-end adjustments).
765748.1 10/9/98 7:17p
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(c) The consolidated and consolidating balance sheets of the Borrower
and its consolidated Subsidiaries as of December 31, 1997 and the related
consolidated and consolidating statements of income, cash flows and changes in
stockholders' equity for the Fiscal Year then ended, which consolidated
statements have been reported on by Ernst & Young and set forth in the
Borrower's 1997 Form 10-K, and which consolidating statements have been
delivered to the Lenders prior to the date hereof, fairly present, in conformity
with GAAP, the consolidated and consolidating financial position of the Borrower
and its Consolidated Subsidiaries as of such date and their consolidated and
consolidating results of operations and cash flows for such Fiscal year.
(d) The unaudited consolidated and consolidating balance sheets of the
Borrower and its consolidated Subsidiaries as of June 30, 1998 and the related
unaudited consolidated and consolidating statements of income, cash flows and
changes in stockholders' equity for the six months then ended, which
consolidated statements have been set forth in the Borrower's Latest Form 10-Q,
and which consolidating statements have been delivered to the Lenders prior to
the date hereof, fairly present, on a basis consistent with the financial
statements referred to Section 4.04(c), the consolidated and consolidating
financial position of the Borrower and its Consolidated Subsidiaries as of such
date and their consolidated and consolidating results of operations and cash
flows for such six month period (subject to normal year-end adjustments).
(e) Since June 30, 1998 there has been no material adverse change in
the business, financial position, 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 which (i) could have a Material Adverse Effect or (ii) in
any manner draws into question the validity or enforceability of the Loan
Documents or the Transaction Documents.
SECTION 4.06. Compliance with ERISA. 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 and is in compliance in all
material respects with the presently applicable provisions 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
contribution or payment to any Plan or Multiemployer Plan, or made any amendment
to any Plan, which 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.
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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:
(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 which 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
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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,
which has not been delivered to the Lenders at least five days prior to the date
hereof.
(c) For purposes of this Section, the terms "Borrower" and "Subsidiary"
shall include any business or business entity (including a corporation) which
is, in whole or in part, a predecessor of the Borrower or any Subsidiary.
SECTION 4.08. Taxes. The Borrower and its Subsidiaries have filed all
United States Federal income tax returns and all other material tax returns
which 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, after giving effect to the
consummation of the transaction contemplated by the Plan of Reorganization and
the Transaction Documents to be consummated on or prior to 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) After giving effect to the consummation of the transactions
contemplated by the Plan of Reorganization and the Transaction Documents to be
consummated on or prior to the Closing Date, neither the Borrower nor any of its
Subsidiaries has or will have 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. No Obligor is
(i) an "investment company" within the meaning of the Investment Company Act of
1940, as amended, (ii) 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 (iii) otherwise subject to any regulatory scheme which
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 or any transaction contemplated hereby 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 which have materially and adversely
affected, or could reasonably be expected to materially and
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<PAGE>
adversely affect (to the extent the Borrower can now reasonably foresee), the
business, operations or financial condition of the Borrower and its Consolidated
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
pro forma consolidated balance sheet of the Borrower and its Subsidiaries as of
June 30, 1998 and the related pro forma consolidated statements of income and
cash flows for the six months then ended, in each case delivered to the Lenders
pursuant to Section 3.01(s)(ii) hereof, fairly present, in conformity with GAAP
applied on a basis consistent with the financial statements referred to in
Section 4.04(c), the pro forma consolidated financial position of the Borrower
and its Subsidiaries as of such date and their pro forma consolidated results of
operations and cash flows for the six months then ended (subject to normal
year-end adjustments), adjusted to give effect (as if such events had occurred
on such date, in the case of such balance sheet, or on the first day of such
period, in the case of such statements of income and cash flows) to (i) the
transactions contemplated by this Agreement, the Plan of Reorganization and the
Transaction Documents to occur on or prior to the Closing Date, (ii) the
application of the proceeds therefrom as contemplated by this Agreement, the
Plan of Reorganization and the Transaction Documents and (iii) the payment of
all legal, accounting and other fees related thereto.
(b) The pro forma consolidated statements of income and cash flows of
the Borrower and its Subsidiaries for the Fiscal Year ended December 31, 1997
delivered to the Lenders pursuant to Section 3.01(s)(ii) hereof fairly present,
in conformity with GAAP applied on a basis consistent with the financial
statements referred to in Section 4.04(c), the pro forma consolidated results of
operations and cash flows of the Borrower and its Subsidiaries for such Fiscal
Year, adjusted to give effect (as if such events had occurred at the beginning
of such Fiscal Year) to (i) the transactions contemplated by this Agreement, the
Plan of Reorganization and the Transaction Documents to occur on the Closing
Date, (ii) the application of the proceeds therefrom as contemplated by this
Agreement, the Plan of Reorganization and the Transaction Documents and (iii)
the payment of all legal, accounting and other fees related thereto.
(c) As of June 30, 1998 and the Closing Date, after giving effect to
(i) the transactions contemplated by this Agreement, the Plan of Reorganization
and the Transaction Documents to occur on the Closing Date, (ii) the application
of the proceeds therefrom as contemplated by this Agreement, the Plan of
Reorganization and the Transaction Documents and (iii) the payment of all legal,
accounting and other fees related thereto, the Borrower and its Subsidiaries had
and have no material liabilities, contingent or otherwise, including liabilities
for taxes, long-term leases or forward or long-term commitments, which are not
properly reflected on the balance sheet referred to in clause
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(a) above, as delivered to the Lenders pursuant to Section 3.01(s)(ii) hereof,
or described in Borrower's Latest 10-Q or Entertainment's Latest 10-Q.
(d) The projections delivered to the Lenders pursuant to Section
3.01(s)(iii) 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.
(e) Since June 30, 1998, no event has occurred and no condition has
come into existence which has had, or is reasonably likely to have, a Material
Adverse Effect.
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, by the Plan of Reorganization and by the
Transaction Documents to occur on the Closing Date, and at all times thereafter:
(i) the aggregate fair market value of the assets of each Obligor will exceed
its liabilities (including contingent, subordinated, unmatured and unliquidated
liabilities), (ii) each Obligor will have sufficient cash flow to enable it to
pay its debts as they mature and (iii) no Obligor will have unreasonably small
capital for the business in which it is engaged.
SECTION 4.17. Representations in Transaction Documents True and
Correct. As of the dates when made and as of the Closing Date, each
representation and warranty of any Obligor party thereto contained in any
Transaction Documents is true and correct. The Transaction Documents have not as
of the Closing Date been modified or amended in
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any respect and no provision or condition contained therein has been waived,
except with the express written consent of the Required Lenders.
SECTION 4.18. 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 4.19. 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 4.20. No Default. No Default has occurred and is continuing.
SECTION 4.21. 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 4.22. 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 October 1, 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 4.23. Limited Liability for Obligations of Panini Entities.
Except as expressly set forth in the Panini Guaranty and the Panini
Indemnification Agreement and
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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, none of the Borrower and its Subsidiaries has any liability in
respect of any debt instrument, contract, agreement or other obligation of any
of the Panini Entities.
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 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) simultaneously with the delivery of each set of financial
statements referred to in clauses 5.01(a) and 5.01(b) above, a
certificate of the Borrower's chief financial officer or chief
accounting officer (i) setting forth in reasonable detail (x) the
calculations required to establish whether the Borrower was in
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compliance with the requirements of Sections 5.09 to 5.18, inclusive,
on the date of such financial statements and (y) a calculation of the
Leverage Ratio as of 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 which the Borrower is taking or proposes to take with respect
thereto;
(d) 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 which reported on such statements (i)
stating whether anything has come to their attention to cause them to
believe that any Event of Default existed on the date of such
statements and (ii) confirming the calculations set forth in the
officer's certificate delivered simultaneously therewith pursuant to
clause 5.01(c) above;
(e) prior to the end of each Fiscal Year, copies of monthly
operating budgets for the next Fiscal Year and quarterly operating
budgets for all succeeding Fiscal Years through the Fiscal Year ending
December 31, 2001;
(f) [Intentionally Omitted].
(g) 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
which the Borrower is taking or proposes to take with respect thereto;
(h) as soon as reasonably practicable after any officer of the
Borrower obtains knowledge thereof, notice of any event or condition
which has had or threatens to have a Material Adverse Effect and the
nature of such Material Adverse Effect;
(i) 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 which could have a Material Adverse
Effect or which 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;
(j) promptly after the mailing thereof to the Borrower's
shareholders generally, copies of all financial statements, reports and
proxy statements so mailed;
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<PAGE>
(k) 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;
(l) 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 which 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 Multiemployer Plan or makes any amendment
to any Plan which has resulted or could reasonably be expected to
result in the imposition of a Lien 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, which the Borrower or applicable member of the
ERISA Group is required or proposes to take; and
(m) 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.
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 which 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.
765748.1 10/9/98 7:17p
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<PAGE>
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 and loss payee on each
insurance policy required to be maintained pursuant to this Section. 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 which 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 which 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 insurance and
adjustments with insurers, and to execute or endorse all documents, checks or
drafts in connection with payments under Property Insurance Policies.
765748.1 10/9/98 7:17p
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<PAGE>
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, videos, television
programming or other similar activities, except such activities as are in the
ordinary course of business and in accordance with the Borrower's and its
Subsidiaries' past practice) as now conducted by the Borrower and its
Subsidiaries, 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 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. (a) 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 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 the Borrower or 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, so
long as, 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 $100,000, (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) the consideration therefor consists solely of cash, (ii) after
giving effect thereto, the aggregate fair market value of the assets disposed of
in all Asset
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Sales effected after the Closing Date would not exceed $2,500,000 and (iii) the
Net Cash Proceeds of such Asset Sale shall be applied in accordance with Section
2.03(b) hereof.
SECTION 5.08. Use of Proceeds. The proceeds of the Loans will be used
by the Borrower to consummate the Merger and Plan of Reorganization. No proceeds
of the Loans 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 arising in the ordinary course of its business which (i)
do not secure Debt or Derivatives Obligations and (ii) do not secure
any single obligation (or class of obligations having a common cause)
in an amount exceeding $1,000,000;
(b) Liens created by (i) the Panini Guaranty and any debt
securities issued in satisfaction thereof and (ii) the Panini Pledge
Agreement;
(c) Liens created by the Collateral Documents;
(d) Liens existing on the Closing Date securing Debt outstanding
on the Closing Date and reflected in Schedule 5.10 hereto;
(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, 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.
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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:
(i) Debt under the Loan Documents and the Revolving Documents;
(ii) Debt outstanding on the Closing Date and identified on
Schedule 5.10 and refinancings thereof, provided that the principal
amount thereof is not increased;
(iii) the Excess Administration Claims Loan;
(iv) the Panini Guaranty and any debt securities issued in
satisfaction thereof;
(v) the Permitted Notes and Guarantees thereof by the Guarantors;
and
(vi) Debt of any Subsidiary of the Borrower to the Borrower or any
other Subsidiary of the Borrower.
(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 and the Revolving Documents and Guarantees
permitted under Sections 5.10(a)(iv) and 5.10(a)(v).
(c) The Borrower will not enter into any amendment or other
modification of the Revolving Documents without the prior written consent of the
Required Lenders if such amendment or other modification would (i) increase the
maximum principal amount of loans and letters of credit available thereunder to
an amount exceeding $50,000,000, (ii) increase the applicable interest rate
margins, (iii) shorten the maturity thereof or (iv) require any additional
consent by the lenders thereunder in order to consummate the Permanent
Financing.
SECTION 5.11. Minimum EBITDA. Consolidated EBITDA (i) for the period
from October 1, 1998 through December 31, 1998 shall not be less than
$17,500,000, (ii) for the period from October 1, 1998 through March 31, 1999
shall not be less than $25,000,000 and (iii) for the period from October 1, 1998
through June 30, 1999 shall not be less than $36,700,000.
SECTION 5.12. Leverage Ratio. The Leverage Ratio shall at no time on or
after March 31, 1999 exceed 4.00:1.00.
SECTION 5.13. Interest Coverage Ratio. The Interest Coverage Ratio
shall at no time on or after December 31, 1998 be less than 2.5:1.0.
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SECTION 5.14. Minimum Current Ratio. The Current Ratio shall at no time
on or after December 31, 1998 be less than 1.35:1.00.
SECTION 5.15. Minimum Consolidated Net Worth. Consolidated Net Worth
will not at any time be less than an amount equal to the sum of (i) $350,000,000
plus (ii) an amount equal to 50% of Consolidated Net Income for each Fiscal
Quarter ending after June 30, 1998 and on or prior to the date of determination,
in each case, for which Consolidated Net Income is positive (but with no
deduction on account of negative Consolidated Net Income for any Fiscal Quarter)
plus (iii) 100% of the aggregate net proceeds, including the fair market value
of property other than cash (as determined in good faith by the Board of
Directors of the Borrower), received by the Borrower from the issuance and sale
after the Closing Date of any capital stock of the Borrower (other than the
proceeds of any issuance and sale of any capital stock (x) to a Subsidiary of
the Borrower or (y) which is required to be redeemed, or is redeemable at the
option of the holder, at any time) or in connection with the conversion or
exchange of any Debt of the Borrower into capital stock of the Borrower after
the Closing Date.
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.
SECTION 5.17. Limitation on Capital Expenditures. Consolidated Capital
Expenditures for the period from the Closing Date through December 31, 1998 will
not exceed $10,000,000 and Consolidated Capital Expenditures for Fiscal Year
1999 shall not exceed $30,000,000; provided that if the aggregate amount of
Consolidated Capital Expenditures actually made in the period from the Closing
Date through December 31, 1998 shall be less than the limit with respect thereto
set forth above (before giving effect to any increase therein pursuant to this
proviso) (the "Base Amount"), then the amount of such shortfall may be added to
the amount of such Consolidated Capital Expenditures permitted for Fiscal Year
1999 (such shortfall amount in any Fiscal Year, the "Rollover Amount").
SECTION 5.18. Lease Payments. Neither the Borrower nor any Subsidiary
will incur or assume (whether pursuant to a Guarantee or otherwise) any
liability for rental payments under a real property lease with a lease term (as
defined in Financial Accounting Standards Board Statement No. 13, as in effect
on the date hereof) of one year or more if, immediately after giving effect
thereto, the aggregate amount of minimum lease payments for which the Borrower
and its Subsidiaries are liable will exceed $4,000,000 for any Fiscal Year under
all such leases (excluding capital leases).
SECTION 5.19. 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 5.19 hereto;
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(ii) Investments in the Borrower or any Guarantor;
(iii) Temporary Cash Investments;
(iv) the Merger;
(v) the Panini Guaranty;
(vi) Investments in any Subsidiary that was a Foreign Subsidiary
on the Closing Date if, immediately after such Investment is made or
acquired, the aggregate net book value of all Investments permitted by
this clause does not exceed $2,500,000;
(vii) Investments by Foreign Subsidiaries in Foreign Subsidiaries;
and
(viii) trade accounts receivable arising in the ordinary course of
business on customary terms.
(b) Neither the Borrower nor any Subsidiary will consummate any
Business Acquisition other than the Merger and the Pinnacle Acquisition.
SECTION 5.20. 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 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, "Value" means, with respect
to a Sale-Leaseback Transaction, at any time, the amount equal to the greater of
(i) the net proceeds of the sale or transfer of the property leased pursuant to
such Sale-Leaseback Transaction and (ii) 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 5.21. Transactions with Affiliates. The Borrower will not, and
will not permit any Subsidiary to, directly or indirectly, (i) pay any funds to
or for the account of any Affiliate, (ii) 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), (iii) lease, sell, transfer or otherwise
dispose of any assets, tangible or intangible, to any Affiliate, or (iv)
participate in, or effect, any transaction with any Affiliate, except in each
case on an arms-length basis on terms at least as favorable to the Borrower or
such Subsidiary as could
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have been obtained from a third party that was not an Affiliate; provided that
the foregoing provisions of this Section shall not prohibit (A) 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, after giving effect
thereto, no Default shall have occurred and be continuing, (B) 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, (C) reasonable director, officer,
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, (D) 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 and (6) the
Registration Rights Agreement and (E) any Restricted Payment permitted by
Section 5.16.
SECTION 5.22. 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 5.23. No Modification of Transaction Documents Without Consent.
The Borrower will not, and will not permit any of its Subsidiaries to, consent
to or solicit any amendment or supplement to, or any waiver or other
modification of, any material term of any Transaction Document or any of the
ancillary agreements referred to therein without the prior written consent of
the Required Lenders.
SECTION 5.24. 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, the
Revolving Documents and the documents governing the Permitted Notes, which
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 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) and, if such Debt is renewed,
extended or refinanced, restrictions in the agreements governing the renewed,
extended or refinancing Debt (and successive renewals, extensions and
refinancings thereof) if such restrictions are no more restrictive
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than those contained in the agreements governing the Debt being renewed,
extended or refinanced.
SECTION 5.25. Fiscal Year. The Borrower will not change its Fiscal Year
from a fiscal year ending December 31.
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.
SECTION 5.27. Further Assurances. (a) The Borrower will, and will cause
each of the other Obligors to, at the Borrower's sole cost and expense, do,
execute, acknowledge and deliver all such further acts, deeds, conveyances,
mortgages, 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 shall 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 which would materially impair
their ability to comply, or which is intended to prohibit them from complying in
any material respect, with the provisions of this Section.
(d) The Borrower will:
(i) cause each Person which (x) is an existing U.S. Subsidiary and
not a Guarantor on the Closing Date or (y) 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 assets
(including, without limitation, assets acquired by such Person after it
becomes a U.S. Subsidiary) and (II) all of the capital stock and equity
interests acquired by such
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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, (y) in the
case of any Foreign Subsidiary which becomes a Subsidiary of the
Borrower after the Closing Date, 65% of the voting stock or 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 and (z) in the case of the Borrower's
Mexican Subsidiary, 65% of the voting stock or other voting equity
interests of such Mexican Subsidiary;
(iii) take, and cause its Subsidiaries to take, such actions as
may be necessary or desirable to effect the foregoing within 30 days
(or in the case of clause (d)(ii)(z) above, 10 days) after (x) the
Closing Date in respect of existing U.S. Subsidiaries or the Borrower's
Mexican Subsidiary or (y) 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;
(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, (x) deliver, and cause each Subsidiary to deliver, to the Agent a
collateral assignment in favor of the Agent, in form and substance
satisfactory to the Agent, of each such lease and (y) use, and cause
each Subsidiary to use, its best efforts to obtain agreement by each
landlord party to any such lease that such landlord, in the event of
any breach thereunder, will provide prompt written notice to the Agent
of such breach and will grant the Agent a reasonable period during
which it may arrange to cure such breach prior to any termination of
such lease; and
(v) execute and deliver, and cause each U.S. Subsidiary to execute
and deliver a Mortgage and such other security documents as may be
necessary, or as the Agent may reasonably request, to subject either
(x) so long as the aggregate fair market value (including improvements
thereon) of all interests in real property owned by the Borrower and
its U.S. Subsidiaries for which Mortgages have not been executed and
delivered does not exceed $5,000,000, all fee, leaseholder or other
interests in real property with a fair market value (including
improvements
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thereon) in excess of $1,000,000 owned by the Borrower or a U.S.
Subsidiary or (y) on and after the date upon which the aggregate fair
market value (including improvements thereon) of all interests in real
property owned by the Borrower and its U.S. Subsidiaries for which
Mortgages have not been executed and delivered exceeds $5,000,000, all
fee, leasehold or other interests in real property, in each case to a
first priority Lien on such real property interests securing its
obligations under the Loan Documents and provide, with respect to each
parcel of real property subject to such a Mortgage, (A) policies of
title insurance, on forms issued by the American Land Title Association
and otherwise in form and substance reasonably satisfactory to the
Agent and issued by such title insurance company or companies as are
acceptable to the Agent, with all premiums, expenses and fees paid or
caused to be paid by the Borrower, insuring the Liens created under
such Mortgage, in such amounts as the Agent shall request, subject only
to Liens permitted under the Loan Documents, containing such
endorsements and affirmative assurances as are satisfactory to the
Agent, and reinsured in amounts and under reinsurance agreements in
form and substance satisfactory to the Agent, (B) current "as-built"
surveys that comply with the current Minimum Standard Detail
Requirements for ALTA/ACSM Land Title Surveys and that are otherwise in
form and substance satisfactory to the Agent, and (C) appraisals
complying with all applicable bank regulatory requirements.
SECTION 5.28. No New Subsidiaries. (a) The Borrower will not have any
Subsidiaries other than (i) Subsidiaries that are (x) in existence on the
Closing Date after giving effect to the consummation of the transactions
contemplated by the Plan of Reorganization and the Transaction Documents to be
consummated on or prior to the Closing Date and (y) Guarantors on the Closing
Date or Foreign Subsidiaries; (ii) U.S. Subsidiaries having assets with a fair
market value of less than $1,000, which, not later than the thirtieth day
following the Closing Date, subject to applicable requirements of law, are wound
up and dissolved pursuant to subsection (b) hereof or have become Guarantors and
are in compliance with Section 5.27(d) hereof and (iii) U.S. Subsidiaries which
become Guarantors and are in compliance with Section 5.27(d) hereof.
(b) Not more than 30 days after the Closing Date, the Borrower will (i)
take, and cause its Subsidiaries to take, such actions as may be necessary or
desirable to wind up and dissolve any U.S. Subsidiaries that are not Guarantors
on the Closing Date or have not become Guarantors in compliance with Section
5.27(d) hereof and (ii) deliver to the Agent a certificate of the chief
executive officer or chief financial officer of the Borrower certifying to, and
providing evidence satisfactory to the Agent of, the fact that the Borrower and
its Subsidiaries have complied in all respects with the requirements of this
Section 5.28.
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
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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 4.22.
SECTION 5.30. Permanent Financing. (a) Upon a request (an "Initial
Securities Request") made by the Take-Out Banks at any time after the Closing
Date, the Borrower shall take all reasonable actions necessary or desirable, to
the extent within its power, to (x) issue Permitted Notes for the purposes of
refinancing all (or a portion) of the Loans (the "Take-Out Securities") and (y)
enable the Take-Out Banks, as soon as practicable after such Initial Securities
Request to place such Take-Out Securities. Thereafter, at any time and from time
to time after the Initial Securities Request, upon notice by the Take- Out Banks
of their desire to place additional Take-Out Securities (a "Follow-on Securities
Notice"), the Borrower will issue and sell such additional Take-Out Securities
upon the terms and subject to the conditions specified in such Follow-on
Securities Notice. The Borrower will enter into such agreements as are customary
in connections with financings similar to the Take-Out Securities. The Borrower
agrees that the Take- Out Banks shall determine the interest rates for such
Take-Out Securities in light of then prevailing market conditions. The Borrower
shall provide the Take-Out Banks with audited, unaudited and pro forma financial
statements meeting the requirements of Regulation S-X under the Securities Act
for the periods required of a registrant on Form S-1 under the Securities Act
and shall make such filings and public disclosures as may be necessary to cause
such filings to become effective and to permit the Take-Out Securities to be
sold.
(b) (i) Upon a request (a "Facility Request") made by the Required
Lenders at any time after the Closing Date, the Borrower shall take all
reasonable actions necessary or desirable, to the extent within its power, to
arrange for a bank facility (the "Bank Facility"), the proceeds of which shall
be used to refinance, in whole, the Loans. The Borrower shall enter into such
agreements as are customary in connection with credit facilities similar to the
Bank Facility. The Borrower shall cooperate with the agent, arranger and lenders
in the syndication of the Bank Facility by taking actions including, without
limitation, promptly providing the agent, the arranger, their respective
affiliates and the lenders with all information reasonably deemed necessary to
complete successfully such syndication.
(ii) The Borrower agrees that (x) the Arranger shall have the
option, in its sole discretion, to act as exclusive arranger of the
Bank Facility and (y) the Agent shall have the option, in its sole
discretion, to act as exclusive administrative agent for the Bank
Facility.
(c) The Borrower hereby covenants and agrees that all proceeds from the
Permanent Financing will be applied to repay the Loans.
SECTION 5.31. Bank Accounts. (a) Not later than (i) the day that is 60
days after the Closing Date, in the case of Entertainment and the other U.S.
Subsidiaries, and (ii)
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January 31, 1999, in the case of the Borrower, the Borrower and each of its U.S.
Subsidiaries shall (x) execute and deliver each Lockbox Letter required by
Section 9(B) of the Security Agreement and (y) provide evidence satisfactory to
the Agent and the Collateral Agent of compliance with the other requirements of
such Section.
(b) Not later than (i) the day that is 60 days after the Closing Date,
in the case of Entertainment and the other U.S. Subsidiaries, and (ii) January
31, 1999, in the case of the Borrower, the Borrower and each of its U.S.
Subsidiaries shall cease to maintain any accounts (other than payroll accounts)
with any bank or other financial institution except the applicable Lockbox
Accounts, the applicable Insurance Account or another account with respect to
which any Obligor has entered into arrangements (including the execution of
agreements and the delivery of an opinion, in each case, in form and substance
reasonably satisfactory to the Agent) providing for a Lien in favor of the
Collateral Agent on substantially the same terms as those contained in the
applicable Lockbox Agreements.
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 when due any principal of any
Loan or shall fail to pay 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(g) 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 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 which results in the
acceleration of the maturity of any Material Debt or enables (or,
except in the case of the
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Revolving Loans, 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;
(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 which 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 which 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;
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(k) any Lien created by any of the Collateral Documents shall at
any time fail to constitute a valid and (to the extent required by the
Collateral Documents) 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; or
(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;
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; and
(ii) if requested by Lenders holding Notes evidencing 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.
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.
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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, a
Bank 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. UBS AG, Stamford Branch, 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 UBS AG, Stamford Branch, and its affiliates may accept
deposits from, lend money to and generally engage in any kind of 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 may be
specified in the instrument of appointment (which may, in the discretion of the
Agent or 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 (i) with the consent or at the request
of the Required Lenders (or such different number of Lenders (and Lenders under
the Revolving Documents, where applicable) as any provision hereof or of any
Loan Document expressly requires for such consent or request) or (ii) in
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the absence of its own gross negligence or willful misconduct. 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.
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.
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
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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.
ARTICLE 8
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair.
If on or before the first day of any Interest Period for any Euro-Dollar Loans:
(a) if fewer than two offered rates for deposits in Dollars are
available on the Reuters Screen LIBO Page as of 11:00 A.M. (London
time) on the second Euro-Dollar Business Day prior to the first day of
any Interest Period, or
(b) Lenders having at least 50% in aggregate amount of the
Commitments advise the Agent that the Adjusted London Interbank Offered
Rate as determined by the Agent will not adequately and fairly reflect
the cost to such Lenders of funding their Euro-Dollar Loans for such
Interest Period,
the Agent shall forthwith give notice thereof to the Borrower and the Lenders,
whereupon until the Agent notifies the Borrower that the circumstances giving
rise to such suspension no longer exist, (i) the obligations of the Lenders to
make Euro-Dollar Loans or to continue or convert outstanding Loans as or into
Euro-Dollar Loans shall be suspended and (ii) each outstanding Euro-Dollar Loan
shall be converted into a Base Rate Loan on the last day of the then current
Interest Period applicable thereto. Unless the Borrower notifies the Agent at
least two Domestic Business Days before the date of any affected Borrowing for
which a Notice of Borrowing has previously been given that it elects not to
borrow on such date, such Borrowing shall instead be made as a Base Rate
Borrowing.
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,
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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
Euro-Dollar 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 Euro-Dollar Lending
Office) to make, maintain or fund its Euro-Dollar 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 Euro-Dollar Loans, or to convert
outstanding Loans into Euro-Dollar Loans or continue outstanding Loans as
Euro-Dollar Loans, shall be suspended. Before giving any notice to the Agent
pursuant to this Section, such Lender shall designate a different Euro-Dollar
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 Euro-Dollar Loan of such Lender then
outstanding shall be converted to a Base Rate Loan either (a) on the last day of
the then current Interest Period applicable to such Euro-Dollar Loan if such
Lender may lawfully continue to maintain and fund such Loan as a Euro-Dollar
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 Euro-Dollar 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 Euro-Dollar 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 governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or its Applicable 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 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 Euro-Dollar 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 shall impose on any Lender (or its Applicable Lending Office) or the
London interbank market any other condition affecting its Euro-Dollar Loans, its
Notes or its obligation to make Euro-Dollar 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 to
reduce the amount of any sum received or receivable by such Lender (or its
Applicable Lending Office) under this Agreement or under its Note with respect
thereto, by an amount deemed by such Lender to be material, then, within 15 days
after demand by such Lender
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(with a copy to the Agent), the Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender 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 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 to compensation pursuant to this Section 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, be otherwise disadvantageous to it. A certificate of any Lender
claiming compensation under this Section 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 may use any reasonable
averaging and attribution methods.
SECTION 8.04. Taxes. (a) For the purposes of this Section, the
following terms have the following meanings:
"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 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 which 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, which
arise from any payment
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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) 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) 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 which 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 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
Section 8.04(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 Section 8.04(b) or 8.04(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
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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 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
which may thereafter accrue and (ii) is not otherwise disadvantageous to such
Lender.
SECTION 8.05. Base Rate Loans Substituted for Affected Euro-Dollar
Loans. If (i) the obligation of any Lender to make, or to continue or convert
outstanding Loans as or to, Euro-Dollar Loans has been suspended pursuant to
Section 8.02 or (ii) any Lender has demanded compensation under Section 8.03 or
8.04 with respect to its Euro-Dollar Loans , and in any such case the Borrower
shall, by at least five Euro-Dollar Business Days' prior notice to such Lender
through the Agent, have elected that the provisions of this Section 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 which would otherwise be made by such Lender as (or
continued as or converted to) Euro-Dollar Loans shall instead be Base Rate Loans
on which interest and principal shall be payable contemporaneously with the
related CD Loans or Euro-Dollar 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 Euro-Dollar Loan on the first day of the
next succeeding Interest Period applicable to the related Euro-Dollar 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.
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:
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(i) 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;
(ii) any modification or amendment of or supplement to the Loan
Documents;
(iii) 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;
(iv) 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;
(v) the existence of any claim, set-off or other rights which 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;
(vi) 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
(vii) 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 which might, but for the
provisions of this paragraph, 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
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respect to such payment shall be reinstated at such time as though such payment
had been due but not made at such time.
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 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 requisite proportion of the Lenders specified
in Article 6.01 of the 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 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
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communication shall be effective (i) if given by facsimile, when transmitted to
the facsimile number referred to in this Section 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; provided that notices to the Agent under Article 2 or Article 8 shall
not be effective until received.
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 and the Arranger, including
reasonable fees and disbursements of special counsel for the Agent and the
Arranger, 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 inside 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, which 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 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.
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 unpaid
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 is 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
to or for the
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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;
provided that any failure to give such notice shall not affect the validity of
such setoff and application. The rights of the Lenders under this subsection are
in addition to any other rights and remedies which the Lenders may have.
(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
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 held by such other Lender, the Lender receiving such
proportionately greater payment shall purchase such participations in the Loans
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 held by the Lenders shall be shared by the Lenders pro rata; provided that
nothing in this Section 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. Each Obligor agrees, to the fullest extent
it may effectively do so under applicable law, that any holder of a
participation in a Loan, 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 are affected
thereby, by the Agent); provided that no such amendment or waiver shall:
(i) unless signed by all the Lenders, (v) 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, (w) reduce the principal of or rate of interest on any Loan
or any interest thereon or any fees hereunder, (x) postpone the date
fixed for any payment of principal of or interest on any Loan or any
interest thereon or any fees hereunder or for the termination of any
Commitment, (y) release any Guarantor from its obligations hereunder or
(z) change the percentage of the Commitments or of the aggregate unpaid
principal amount of the Loans, or the number of Lenders, which shall be
required for the Lenders or any of them to take any action under this
Section or any other provision of this Agreement; or
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(ii) unless signed by a Designated Lender or its Designating
Lender, subject such Designated Lender to any additional obligation or
affect its rights hereunder (unless the rights of all the Lenders
hereunder are similarly affected).
(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 or pledge of assets permitted by the Loan Documents, and the Agent shall
execute and deliver all release documents reasonably requested to evidence such
release.
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 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 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(a)(b) without
the consent of the Participant. 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 which 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 subsection.
(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
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Assignment and Assumption 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 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 subsection,
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 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. Designated Lenders. (a) Subject to the provisions of
this Section, any Lender may from time to time elect to designate an Eligible
Designee to provide all or a portion of the Loans to be made by such Lender
pursuant to this Agreement; provided that such designation shall not be
effective unless the Borrower and the Agent consent thereto. When a Lender and
its Eligible Designee shall have signed an agreement substantially in the form
of Exhibit K hereto (a "Designation Agreement") and the Borrower and the Agent
shall have signed their respective consents thereto, such Eligible Designee
shall become a Designated Lender for purposes of this Agreement. The Designating
Lender shall thereafter have the right to permit such Designated Lender to
provide all or a portion of the Loans to be made by such Designating Lender
pursuant to Section 2.01 and the making of such Loans or portions thereof shall
satisfy the obligation of the Designating Lender to the same extent, and as if,
such Loans or portion thereof
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were made by the Designating Lender. As to any Loans or portion thereof made by
it, each Designated Lender shall have all the rights that a Lender making such
Loans or portion thereof would have had under the Loan Documents and otherwise;
provided that (x) its voting rights under this Agreement shall be exercised
solely by its Designating Lender and (y) its Designating Lender shall remain
solely responsible to the other parties hereto for the performance of its
obligations under this Agreement, including its obligations in respect of the
Loans or portion thereof made by it. No additional Note shall be required to
evidence Loans or portions thereof made by a Designated Lender; and the
Designating Lender shall be deemed to hold its Note as agent for its Designated
Lender to the extent of the Loans or portion thereof funded by such Designated
Lender. Each Designating Lender shall act as the agent for its Designated Lender
and give and receive notices and other communications on its behalf. Any
payments for the account of any Designated Lender shall be paid to its
Designating Lender as the agent for such Designated Lender and neither the
Borrower nor the Agent shall be responsible for any Designating Lender's
application of such payments. In addition, any Designated Lender may, with
notice to, but without the prior written consent of, the Borrower or the Agent,
assign all or portions of its interest in any Loans to its Designating Lender or
to any financial institutions consented to by the Borrower and the Agent
providing liquidity and/or credit facilities to or for the account of such
Designated Lender to support the funding of Loans or portions thereof made by
such Designated Lender and disclose on a confidential basis any non-public
information relating to its Loans or portions thereof to any rating agency,
commercial paper dealer or provider of any guarantee, surety, credit or
liquidity enhancement to such Designated Lender.
(b) Each party to this Agreement agrees that it will not institute
against, or join any other person in instituting against, any Designated Lender
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding or other proceeding under any federal or state bankruptcy or similar
law, for one year and a day after all outstanding senior indebtedness of such
Designated Lender is paid in full. The Designating Lender for each Designated
Lender agrees to indemnify, save, and hold harmless each other party hereto for
any loss, cost, damage and expense arising out of its inability to institute any
such proceeding against such Designated Lender. This Section shall survive the
termination of this Agreement.
SECTION 10.08. 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 10.09. 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
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irrevocably waives, to the fullest extent permitted by law, any objection which
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 upon the same
instrument. This Agreement, the Collateral Documents and the Fee Letter dated as
of June 26, 1998 among the Borrower, the Agent and the Arranger with respect to
this Agreement 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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<PAGE>
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.
TOY BIZ, INC.
(to be renamed Marvel Enterprises, Inc.)
By: ____________________
Name:
Title:
Address:
Facsimile:
Web Site:
MARVEL ENTERTAINMENT GROUP, INC.,
as Guarantor
By: ____________________
Name:
Title:
Address:
Facsimile:
THE ASHER CANDY COMPANY, as Guarantor
By: ____________________
Name:
Title:
Address:
Facsimile:
FLEER CORP., as Guarantor
By: ____________________
Name:
Title:
Address:
Facsimile:
FRANK H. FLEER CORP., as Guarantor
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<PAGE>
By: ____________________
Name:
Title:
Address:
Facsimile:
HEROES WORLD DISTRIBUTION, INC.,
as Guarantor
By: ____________________
Name:
Title:
Address:
Facsimile:
MALIBU COMICS ENTERTAINMENT, INC.,
as Guarantor
By: ____________________
Name:
Title:
Address:
Facsimile:
MARVEL CHARACTERS, INC.,
as Guarantor
By: ____________________
Name:
Title:
Address:
Facsimile:
MARVEL DIRECT MARKETING, INC.,
as Guarantor
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<PAGE>
By: ____________________
Name:
Title:
Address:
Facsimile:
SKYBOX INTERNATIONAL, INC.,
as Guarantor
By: ____________________
Name:
Title:
Address:
Facsimile:
MARVEL RESTAURANT VENTURE CORP.,
as Guarantor
By:_____________________________
Name:
Title:
Address:
Facsimile:
MRV, INC., as Guarantor
By:_____________________________
Name:
Title:
Address:
Facsimile:
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<PAGE>
UBS AG, STAMFORD BRANCH, as Agent
and Collateral Agent
By: ___________________________
Name:
Title:
Address:
Facsimile:
By: ___________________________
Name:
Title:
Address:
Facsimile:
UBS AG, STAMFORD BRANCH, as Lender
By: ___________________________
Name:
Title:
Address:
Facsimile:
By: __________________________
Name:
Title:
Address:
Facsimile:
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<PAGE>
COMMITMENT SCHEDULE
Lender Commitment
UBS AG, Stamford Branch $ 200,000,000
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<PAGE>
EXHIBIT A- Note
Note
New York, New York
----------- --, -----
For value received, TOY BIZ, INC., a Delaware corporation (to be
renamed Marvel Enterprises, Inc.) (the "Borrower"), promises to pay to the order
of ______________________ (the "Lender"), for the account of its Applicable
Lending Office, the unpaid principal amount of the Loan made by the Lender to
the Borrower pursuant to the Credit Agreement referred to below on the maturity
date provided for in the Credit Agreement. The Borrower promises to pay interest
on the unpaid principal amount of such Loan on the dates and at the rate or
rates provided for in the Credit Agreement. All such payments of principal and
interest shall be made in lawful money of the United States in Federal or other
immediately available funds at the office of UBS AG, Stamford Branch, 677
Washington Boulevard, Stamford, Connecticut.
The Loans made by the Lender, the applicable interest rates thereon and
all repayments of the principal thereof shall be recorded by the Lender and, if
the Lender so elects in connection with any transfer or enforcement hereof,
appropriate notations to evidence the foregoing information with respect to such
Loan may be endorsed by the Lender on the schedule attached hereto, or on a
continuation of such schedule attached to and made a part hereof; provided that
the failure of the Lender to make (or any error in making) any such recordation
or endorsement shall not affect the Borrower's obligations hereunder or under
the Credit Agreement.
This note is one of the Notes referred to in the Credit Agreement dated
as of September 28, 1998 among the Borrower, the Guarantors and the Lenders
party thereto and UBS AG, Stamford Branch, as Agent and Collateral Agent (as the
same may be amended from time to time, the "Credit Agreement"). Terms defined in
the Credit Agreement are used herein with the same meanings. Reference is made
to the Credit Agreement for provisions for the prepayment hereof and the
acceleration of the maturity hereof.
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<PAGE>
The payment in full of the principal and interest on this note has,
pursuant to the provisions of the Credit Agreement, been unconditionally
guaranteed by certain Guarantors.
TOY BIZ, INC.
(to be renamed Marvel Enterprises, Inc.)
By: ____________________
Name:
Title:
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<PAGE>
Loans and Payments of Principal
Amount Type Amount of
of of Principal Notation
Date Loan Loan Repaid Made By
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<PAGE>
EXHIBIT J - Assignment and Assumption
Agreement
Assignment and Assumption Agreement
AGREEMENT dated as of _________, 19__ among <NAME OF ASSIGNOR> (the
"Assignor") and [NAME OF ASSIGNEE] (the "Assignee").
WHEREAS, this Assignment and Assumption Agreement (the "Agreement")
relates to the Credit Agreement dated as of September 28, 1998 among Toy Biz,
Inc., a Delaware corporation (to be renamed Marvel Enterprises, Inc.) (the
"Borrower"), the Guarantors party thereto, the Assignor and the other Lenders
party thereto and UBS AG, Stamford Branch, as Agent (the "Agent") (as amended
from time to time, the "Credit Agreement");
WHEREAS, as provided under the Credit Agreement, the Assignor has a
Commitment to make Loans to the Borrower in an aggregate principal amount at any
time outstanding not to exceed $____________;
WHEREAS, the Loans made to the Borrower by the Assignor under the
Credit Agreement in an aggregate principal amount of $__________ are outstanding
at the date hereof;
WHEREAS, the Assignor proposes to assign to the Assignee all of the
rights of the Assignor under the Credit Agreement in respect of a portion of its
Commitment thereunder in an amount equal to $_____________ (the "Assigned
Amount"), together with a corresponding portion of each of its outstanding
Loans, and the Assignee proposes to accept such assignment and assume the
corresponding obligations of the Assignor under the Credit Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
SECTION 1. Definitions. All capitalized terms not otherwise defined
herein have the respective meanings set forth in the Credit Agreement.
SECTION 2. Assignment. The Assignor hereby assigns and sells to the
Assignee all of the rights of the Assignor under the Credit Agreement to the
extent of the Assigned Amount, and the Assignee hereby accepts such assignment
from the Assignor and assumes all of the obligations of the Assignor under the
Credit Agreement to the extent of the Assigned Amount. Upon the execution and
delivery hereof by the Assignor and the
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Assignee and the execution of the consent attached hereto by [the Borrower and]1
the Agent and the payment of the amounts specified in Section 3 required to be
paid on the date hereof (i) the Assignee shall, as of the date hereof, succeed
to the rights and be obligated to perform the obligations of a Lender under the
Credit Agreement with a Commitment in an amount equal to the Assigned Amount and
acquire the rights of the Assignor with respect to a corresponding portion of
each of its outstanding Loans and (ii) the Commitment of the Assignor shall, as
of the date hereof, be reduced by the Assigned Amount, and the Assignor shall be
released from its obligations under the Credit Agreement to the extent such
obligations have been assumed by the Assignee. The assignment provided for
herein shall be without recourse to the Assignor.
SECTION 3. Payments. As consideration for the assignment and sale
contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on the
date hereof in Federal funds the amount heretofore agreed between them.2 Fees
accrued before the date hereof are for the account of the Assignor and such fees
accruing on and after the date hereof with respect to the Assigned Amount are
for the account of the Assignee. Each of the Assignor and the Assignee agrees
that if it receives any amount under the Credit Agreement which is for the
account of the other party hereto, it shall receive the same for the account of
such other party to the extent of such other party's interest therein and
promptly pay the same to such other party.
[SECTION 4. Consent of [the Borrower and] the Agent. This Agreement is
conditioned upon the consent of [the Borrower] and the Agent pursuant to Section
10.06(c) of the Credit Agreement.] 3
[SECTION 5. Note. Pursuant to Section 10.06(c) the Credit Agreement,
the Borrower has agreed to execute and deliver a Note payable to the order of
the Assignee to evidence the assignment and assumption provided for herein.] 4
SECTION 6. Non-Reliance on Assignor. The Assignor makes no
representation or warranty in connection with, and shall have no responsibility
with respect to, the solvency, financial condition or statements of any Obligor,
or the validity and enforceability of any Obligor's obligations under the Credit
Agreement or any other Loan Document. The Assignee acknowledges that it has,
independently and without reliance on the Assignor, and based on such documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and will continue to
----------------------------
1 Delete if consent is not required.
2 Amount should combine principal together with accrued interest and
breakage compensation, if any, to be paid by the Assignee, net of any portion of
any upfront fee to be paid by the Assignor to the Assignee. It may be preferable
in an appropriate case to specify these amounts generically or by formula rather
than as a fixed sum.
3 Delete if consent is not required.
4 Delete if the Assignee is already a Lender, since it already has a Note.
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<PAGE>
be responsible for making its own independent appraisal of the business,
affairs and financial condition of the Obligors.
SECTION 7. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 8. Counterparts. 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 upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
[NAME OF ASSIGNOR]
By: _________________________
Name:
Title:
[NAME OF ASSIGNEE]
By: __________________________
Name:
Title:
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<PAGE>
The undersigned consent to the foregoing assignment.
[TOY BIZ, INC.]/[MARVEL ENTERPRISES, INC.]
By: _________________________
Name:
Title:
UBS AG, STAMFORD BRANCH, as Agent
By: __________________________
Name:
Title:
By: __________________________
Name:
Title:
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<PAGE>
EXHIBIT K - Designation Agreement
DESIGNATION AGREEMENT
dated as of ________________, _____
Reference is made to the Credit Agreement dated as of September 28,
1998 (as amended from time to time, the "Credit Agreement") among Toy Biz, Inc.,
a Delaware corporation [to be renamed]/[predecessor of] Marvel Enterprises, Inc.
(the "Borrower"), the Guarantors party thereto, the lenders party thereto (the
"Lenders") and UBS AG, Stamford Branch, as Agent (the "Agent"). Terms defined in
the Credit Agreement are used herein with the same meaning.
_________________ (the "Designator") and ________________ (the
"Designee") agree as follows:
1. The Designator designates the Designee as its Designated Lender
under the Credit Agreement and the Designee accepts such designation.
2. The Designator makes no representations or warranties and assumes no
responsibility with respect to the financial condition of any Obligor or the
performance or observance by any Obligor of any of its obligations under the
Credit Agreement, any other Loan Document or any other instrument or document
furnished pursuant thereto.
3. The Designee confirms that it is an Eligible Designee; appoints and
authorizes the Designator as its agent and attorney-in-fact and grants the
Designator an irrevocable power of attorney to receive payments made for the
benefit of the Designee under the Credit Agreement and to deliver and receive
all communications and notices under the Credit Agreement, if any, that the
Designee is obligated to deliver or has the right to receive thereunder; and
acknowledges that the Designator retains the sole right and responsibility to
vote under the Credit Agreement, including, without limitation, the right to
approve any amendment or waiver of any provision of the Credit Agreement, and
agrees that the Designee shall be bound by all such votes, approvals, amendments
and waivers and all other agreements of the Designator pursuant to or in
connection with the Credit Agreement, all subject to Section 10.05(b) of the
Credit Agreement.
4. The Designee confirms that it has received a copy of the Credit
Agreement, together with copies of the most recent financial statements referred
to in Article 4 or delivered pursuant to Article 5 thereof and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Designation Agreement; agrees that it
will, independently and without reliance upon the Agent, the Designator 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 it may be permitted to take under the Credit Agreement.
The Designee acknowledges that it is subject to and bound by the confidentiality
provisions of the Credit Agreement (except as provided in Section 10.07(a)
thereof).
765748.1
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<PAGE>
5. Following the execution of this Designation Agreement by the
Designator and the Designee and the consent hereto by the Borrower, it will be
delivered to the Agent for its consent. This Designation Agreement shall become
effective when the Agent consents hereto or on any later date specified on the
signature page hereof.
6. Upon the effectiveness hereof, the Designee shall have the right to
make Loans or portions thereof as a Lender pursuant to Section 2.01 of the
Credit Agreement and the rights of a Lender related thereto and the making of
any such Loans or portions thereof by the Designee shall satisfy the obligations
of the Designator under the Credit Agreement to the same extent, and as if, such
Loans or portions thereof were made by the Designator.
7. This Designation Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties have caused this Designation Agreement
to be executed by their respective officers hereunto duly authorized, as of the
date first above written.
Effective Date:______, ____
[NAME OF DESIGNATOR]
By: _________________________
Name:
Title:
[NAME OF DESIGNEE]
By: _________________________
Name:
Title:
765748.1 10/9/98 7:17p
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<PAGE>
The undersigned consent to the foregoing designation.
[TOY BIZ, INC.]/[MARVEL ENTERPRISES, INC.]
By: __________________________
Name:
Title:
UBS AG, STAMFORD BRANCH, as Agent
By: __________________________
Name:
Title:
By: __________________________
Name:
Title:
765748.1
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