EXHIBIT 15(A)
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LOAN AGREEMENT
Dated as of October 12, 2001
among
JAKKS PACIFIC, INC.
FLYING COLORS TOYS, INC.
ROAD CHAMPS, INC. and
PENTECH INTERNATIONAL INC.
as joint and several co-Borrowers
the Lenders and the Issuing Lenders
referred to herein
and
BANK OF AMERICA, N.A.
as Administrative Agent
for itself and for the other Lenders
BANC OF AMERICA SECURITIES LLC
Lead Arranger and Sole Book Manager
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TABLE OF CONTENTS
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ARTICLE 1
DEFINITIONS AND ACCOUNTING TERMS ................................. 1
1.1 Defined Terms .............................................. 1
1.2 Use of Defined Terms ....................................... 26
1.3 Accounting Terms ........................................... 26
1.4 Rounding ................................................... 26
1.5 Exhibits and Schedules ..................................... 27
1.6 Miscellaneous Terms ........................................ 27
ARTICLE 2
LOANS AND LETTERS OF CREDIT ...................................... 28
2.1 Loans-General .............................................. 28
2.2 Base Rate Loans ............................................ 29
2.3 Eurodollar Loans ........................................... 29
2.4 Redesignation of Loans ..................................... 29
2.5 Letters of Credit .......................................... 30
2.6 Voluntary Reduction of the Commitment ...................... 33
2.7 Rights to Assume Funds Available for Advances .............. 33
2.8 Collateral ................................................. 34
ARTICLE 3
PAYMENTS AND FEES ................................................ 35
3.1 Principal and Interest ..................................... 35
3.2 Commitment Fees ............................................ 36
3.3 Letter of Credit Fees ...................................... 36
3.4 Upfront Fees ............................................... 36
3.5 Capital Adequacy ........................................... 37
3.6 Eurodollar Fees and Costs .................................. 37
3.7 Post Default Interest and Late Payments .................... 39
3.8 Right to Assume Payments Will be Made by the Borrowers ..... 40
3.9 Computation of Interest and Fees ........................... 40
3.10 Non-Business Days .......................................... 40
3.11 Manner and Treatment of Payments ........................... 40
3.12 Funding Sources ............................................ 41
3.13 Failure to Charge Not Subsequent Waiver .................... 41
3.14 Authority to Charge Account ................................ 41
3.15 Survivability .............................................. 41
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES ................................... 42
4.1 Accounts Receivable and Inventory .......................... 42
4.2 Existence and Qualification; Power; Compliance With Laws ... 42
4.3 Authority; Compliance With Other Agreements and Instruments
and Government Regulations ................................. 42
4.4 No Governmental Approvals Required ......................... 43
4.5 Subsidiaries ............................................... 43
4.6 Financial Statements ....................................... 44
4.7 No Other Liabilities; No Material Adverse Effect ........... 44
4.8 Title to and Location of Property .......................... 44
4.9 Intangible Assets .......................................... 44
4.10 Governmental Regulation .................................... 45
4.11 Litigation ................................................. 45
4.12 Binding Obligations ........................................ 45
4.13 No Default ................................................. 45
4.14 ERISA ...................................................... 45
4.15 Regulations T, U and X ..................................... 46
4.16 Disclosure ................................................. 47
4.17 Tax Liability .............................................. 47
4.18 Projections ................................................ 47
4.19 Security Interests ......................................... 47
4.20 Hazardous Materials ........................................ 47
4.21 Material Contracts ......................................... 48
ARTICLE 5
AFFIRMATIVE COVENANTS (OTHER THAN INFORMATION
AND REPORTING REQUIREMENTS) ...................................... 49
5.1 Payment of Taxes and Other Potential Liens ................. 49
5.2 Preservation of Existence .................................. 49
5.3 Maintenance of Properties .................................. 49
5.4 Maintenance of Insurance ................................... 49
5.5 Compliance With Laws ....................................... 50
5.6 Inspection Rights .......................................... 50
5.7 Keeping of Records and Books of Account .................... 50
5.8 Compliance With Agreements ................................. 50
5.9 Use of Proceeds ............................................ 51
5.10 Hazardous Materials Laws ................................... 51
5.11 Acquisition Covenants ...................................... 51
5.12 Further Assurances ......................................... 52
5.13 Future Subsidiaries ........................................ 53
5.14 Deposit Accounts ........................................... 53
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ARTICLE 6
NEGATIVE COVENANTS ............................................... 54
6.1 Prepayment of Indebtedness ................................. 54
6.2 Disposition of Property .................................... 54
6.3 Mergers .................................................... 54
6.4 Acquisitions ............................................... 54
6.5 Distributions .............................................. 54
6.6 ERISA ...................................................... 55
6.7 Change in Name; Nature of Business ......................... 56
6.8 Indebtedness and Contingent Obligations .................... 56
6.9 Liens; Negative Pledges; Sales and Leasebacks .............. 56
6.10 Transactions with Affiliates ............................... 56
6.11 Investments ................................................ 57
6.12 Leverage Ratio ............................................. 57
6.13 Quick Ratio ................................................ 57
6.14 Fixed Charge Coverage Ratio ................................ 57
6.15 Net Worth .................................................. 58
6.16 Change of Location ......................................... 58
6.17 Use of Hazardous Materials ................................. 58
6.18 Clean Down ................................................. 58
6.19 The Lockbox Accounts ....................................... 58
ARTICLE 7
INFORMATION AND REPORTING REQUIREMENTS ........................... 59
7.1 Financial and Business Information ......................... 59
7.2 Compliance Certificates .................................... 61
ARTICLE 8
CONDITIONS ....................................................... 62
8.1 Conditions to the Initial Loans and Letters of Credit ...... 62
8.2 Any Increasing Loan ........................................ 64
ARTICLE 9
EVENTS OF DEFAULT AND REMEDIES ................................... 66
9.1 Events of Default .......................................... 66
9.2 Remedies Upon Event of Default ............................. 68
ARTICLE 10
THE ADMINISTRATIVE AGENT .......................................... 71
10.1 Appointment and Authorization .............................. 71
10.2 Delegation of Duties ....................................... 71
10.3 Liability of the Administrative Agent ...................... 71
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10.4 Reliance by Administrative Agent ........................... 72
10.5 Notice of Default .......................................... 72
10.6 Credit Decision ............................................ 73
10.7 Indemnification ............................................ 73
10.9 Successor Agents ........................................... 74
10.10 Action by the Administrative Agent; Collateral Matters ..... 75
10.11 Proportionate Interest of the Lenders in Collateral ........ 75
ARTICLE 11
MISCELLANEOUS ..................................................... 77
11.1 Cumulative Remedies; No Waiver ............................. 77
11.2 Amendments; Consents ....................................... 77
11.3 Costs, Expenses and Taxes .................................. 78
11.4 Nature of Lenders' Obligations ............................. 79
11.5 Survival of Representations and Warranties ................. 79
11.6 Notices .................................................... 79
11.7 Execution of Loan Documents ................................ 79
11.8 Binding Effect; Assignment ................................. 80
11.9 Foreign Lenders and Participants ........................... 81
11.10 Right of Setoff ............................................ 82
11.11 Sharing of Setoffs ......................................... 82
11.12 Indemnity by the Borrowers ................................. 83
11.13 Nonliability of the Creditor Parties ....................... 83
11.14 No Third Parties Benefited ................................. 84
11.15 Further Assurances ......................................... 84
11.16 Confidentiality ............................................ 84
11.17 Integration ................................................ 85
11.18 Severability of Provisions ................................. 85
11.19 Independent Covenants ...................................... 85
11.20 Headings ................................................... 85
11.21 Arbitration Reference ...................................... 85
11.22 Environmental Indemnity .................................... 86
11.23 Jurisdiction ............................................... 87
11.24 Joint Borrower Provisions .................................. 88
11.25 GOVERNING LAW .............................................. 88
11.26 PURPORTED ORAL AMENDMENTS .................................. 88
11.27 WAIVER OF JURY TRIAL ....................................... 89
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Exhibits
A - Assignment Agreement
B - Borrowing Base Certificate
C - Compliance Certificate
D - Request For Letter of Credit
E - Request For Loan
F - Request For Redesignation
G - Joint Borrower Provisions
Schedules
1.1 - Inventory Locations
4.2 - Options
4.5 - Subsidiaries
4.8 - Locations of Property
4.11 - Litigation
4.14 - Pension Plans
4.20 - Hazardous Materials
4.21 - Material Contracts
6.8 - Existing Indebtedness
6.9 - Existing Liens
6.10 - Affiliate Transactions
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LOAN AGREEMENT
Dated as of October 12, 2001
This LOAN AGREEMENT ("Agreement") is entered into by and among JAKKS
PACIFIC, INC., a Delaware corporation, FLYING COLORS TOYS, INC., a Michigan
corporation, ROAD CHAMPS, INC., a Delaware corporation, and PENTECH
INTERNATIONAL INC., a Delaware corporation (collectively, the "Borrowers"), the
lenders named on the signature pages hereof or which hereafter become parties
hereto in accordance with Section 11.8, hereof, as the Lenders, and BANK OF
AMERICA, N.A., as Administrative Agent for itself and for the other Lenders.
While not a party hereto, BANC OF AMERICA SECURITIES LLC has acted as Lead
Arranger and Sole Book Manager for the credit facilities described herein.
RECITALS
A. The Borrowers have requested the provision of certain credit
facilities pursuant to this Agreement.
B. The Borrowers are engaged in integrated operations that
require financing on a basis permitting the availability of credit from time to
time to each Borrower as required for the continued successful operation of each
of them separately and their integrated operations collectively. Each Borrower
expects to derive benefit, directly or indirectly, from such availability
because the successful operation of each Borrower is dependent on the continued
successful performance of the functions of the integrated group.
In consideration of the mutual covenants and agreements herein
contained, the parties hereto covenant and agree as follows:
ARTICLE 1
DEFINITIONS AND ACCOUNTING TERMS
1.1 Defined Terms. As used in this Agreement, the following terms
shall have the respective meanings set forth below:
"Acquisition" means any transaction, or any series of related
transactions, by which any Borrower and/or any Subsidiary of such Borrower
directly or indirectly (i) acquires any business or all or substantially
all of the assets of any firm, partnership, joint venture, corporation or
division thereof, whether through purchase of assets, merger or otherwise,
or (ii) acquires (in one transaction or as the most recent transaction in
a series of transactions) control of at least a majority in ordinary
voting power of the Securities of a
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corporation which have ordinary voting power for the election of
directors, or (iii) acquires control of a majority of the ownership
interest in any partnership or joint venture.
"Administrative Agent" means Bank of America, when acting in
its capacity as Administrative Agent under any of the Loan Documents, or
any successor Administrative Agent.
"Administrative Agent's Office" means the Administrative
Agent's address as set forth on the signature pages of this Agreement, or
such other address as the Administrative Agent hereafter may designate by
written notice to the Borrowers and the Lenders.
"Advance" means any advance made or to be made by any Lender
under its Pro Rata Share, and includes each Base Rate Advance and each
Eurodollar Rate Advance.
"Affiliate" means, as to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
controlled by, such Person. As used in this definition, "control" (and the
correlative terms, "controlled by" and "under common control with") shall
mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of
Securities or partnership or other ownership interests, by contract or
otherwise); provided that, in any event, any Person that owns, directly or
indirectly, 10% or more of the Securities having ordinary voting power for
the election of directors or other governing body of a corporation (other
than Securities having such power only by reason of the happening of a
contingency), or 10% or more of the partnership or other ownership
interests of any other Person (other than as a limited partner of such
other Person), will be deemed to control such corporation or other Person.
"Agent Related Persons" means Bank of America and any
successor Administrative Agent, together with their respective Affiliates,
and the officers, directors, employees, agents and attorneys-in-fact of
such Persons and Affiliates.
"Agreement" means this Loan Agreement, either as originally
executed or as it may from time to time be supplemented, modified,
amended, restated or extended.
"Approved Customers" means the following customers of the
Borrowers, each of whom shall, for the period in which their senior
unsecured debt securities are rated not lower than Ba1 by ▇▇▇▇▇'▇
Investors Service, Inc. and BB+ by Standard & Poors Rating Service (a
Division of McGraw, Hill, Inc.), have the following concentration limits
(as described in clause (k) of the definition of "Eligible Accounts"):
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Walmart 30%
▇▇▇▇▇▇ ▇▇▇▇▇▇ Corporation (Target) 30%
Kmart 20%
Toys-R-Us 20%
"Approved Swap Agreement" means each interest rate, currency
or other similar swap or hedging agreement between any one or more of the
Borrowers and any Lender, either as originally executed or as the same may
from time to time be supplemented, modified, amended, renewed, extended,
replaced or supplanted.
"Assignment Agreement" means an Assignment Agreement
substantially in the form of Exhibit A.
"Availability Reserves" means such reserves against borrowing
availability under the Commitment as the Administrative Agent or the
Requisite Lenders may establish from time to time in the exercise of their
reasonable credit judgment, including, without limitation, reserves for
rent at leased locations subject to statutory or contractual landlord's
liens, inventory shrinkage, dilution, custom charges, warehousemen's or
bailee's charges, and for the amount of estimated maximum exposure, as
determined by the Administrative Agent from time to time, under any
interest rate contracts which Borrower enters into with any Lender
(including interest rate swaps, caps, floors, options thereon,
combinations thereof, or similar contracts).
"Bank of America" means Bank of America, N.A., its successors
and assigns.
"Base Rate" means, as of any date of determination, the
greater of (a) the Prime Rate or (b) the Federal Funds Rate plus .50%.
"Base Rate Advance" means each Advance made by a Lender
designated as a Base Rate Advance in accordance with Article 2.
"Base Rate Loan" means a Loan made hereunder and designated as
a Base Rate Loan in accordance with Article 2.
"Base Rate Margin" means (a) for the initial Pricing Period,
0.25% per annum, and (b) for each subsequent Pricing Period, the interest
rate per annum set forth in the matrix below opposite the Leverage Ratio
in effect as of the last day of the Fiscal Quarter ending two months prior
to the first day of such Pricing Period:
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Leverage Ratio Base Rate Margin
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Less than or equal to 1.25:1.00 0.25%
Greater than 1.25:1.00 but less than
or equal to 1.50:1.00 0.50%
Greater than 1.50:1.00 0.75%
"Borrower Security Agreement" means a security agreement in
favor of the Administrative Agent for the benefit of the Lenders executed
by the Borrowers on the Closing Date, either as originally executed or as
the same may from time to time be supplemented, modified, amended,
renewed, extended or supplanted.
"Borrowers" means the persons listed as such in the preamble
to this Agreement, their successors and permitted assigns.
"Borrowers Quick Ratio" means, as of each date of
determination thereof, the ratio of (a) the sum of (i) the market value of
the Borrowers' combined Cash, Cash Equivalents and marketable Securities
on that date, plus (ii) the gross amount of the Borrowers' trade accounts
receivable on that date, to (b) the Borrowers' combined current
liabilities, determined in accordance with Generally Accepted Accounting
Principles, as of that date, plus the aggregate outstanding Obligations as
of that date.
"Borrowing Base" means, as of each date of determination, the
sum of:
(a) up to 70% times the balance due with respect to the Eligible
Accounts as of that date, provided that the Administrative Agent or the
Requisite Lenders may determine, in the exercise of their reasonable
credit judgment, to reduce the advance rate against Eligible Accounts
stated above from time to time in response to excess dilution of the
Eligible Accounts or other factors that could reasonably be expected to
impair collection of the full amount of the Eligible Accounts; and
(b) the Inventory Advance Rate times the value of Eligible
Inventory as of that date, provided that the amount resulting from this
clause (b) shall not be in excess of up to 20% of the aggregate Borrowing
Base.
"Borrowing Base Certificate" means each Borrowing Base
Certificate delivered by the Borrowers pursuant to Section 7.1(a), each of
which shall be substantially in the form of Exhibit B.
"Business Day" means any Monday, Tuesday, Wednesday, Thursday
or Friday, other than a day on which banks are authorized or required to
be closed in California.
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"Capital Expenditure" means any expenditure during any fiscal
period that is considered a capital expenditure under Generally Accepted
Accounting Principles, consistently applied, including any amount that is
required to be treated as an asset subject to a Capital Lease.
"Capital Lease" means, as to any Person, a lease of any
Property by that Person as lessee that is, or should be in accordance with
Financial Accounting Standards Board Statement No. 13, recorded as a
"capital lease" on the balance sheet of that Person prepared in accordance
with Generally Accepted Accounting Principles.
"Cash" means, when used in connection with any Person, all
monetary and non-monetary items owned by that Person that are treated as
cash in accordance with Generally Accepted Accounting Principles,
consistently applied.
"Cash Equivalents" means:
(a) direct obligations of the United States government;
(b) commercial paper that is rated P-1 or higher by ▇▇▇▇▇'▇
Investors Service, Inc. or A-1 or higher by Standard and Poor's
Corporation and that is issued by issuers whose long term unsecured debt
rating is A1/A+ or better and that have not been identified by either
rating agency as an issuer whose rating is likely to be downgraded;
(c) banker's acceptances and certificates of deposit of any
Lender or any United States bank whose total assets are at least
$10,000,000,000 and whose senior long term debt is rated A2/A or higher by
▇▇▇▇▇'▇ Investors Service, Inc. and Standard and Poor's Corporation; and
(d) repurchase obligations, Dollar investments in money
market funds, and tax exempt municipal notes, provided that the debt
ratings and/or standings of the issuers thereof are comparable in quality
to those set forth in clauses (b) and (c) above;
provided that such Cash Equivalents that are not money market funds must
have remaining maturities not in excess of 180 days, and such Cash
Equivalents that are money market funds must have average remaining
maturities not in excess of 180 days and be able to be withdrawn by the
Borrowers upon demand.
"Cash Proceeds" means (a) the gross cash payments (including
any cash received by way of deferred payment pursuant to a note receivable
or otherwise, but only as and when so received) received from any sale,
transfer, exchange or other disposition of assets and (b) the gross cash
consideration received from or upon the sale or other disposition of any
asset received, directly or indirectly, in exchange for the asset which is
the subject of that sale, transfer, exchange or disposition.
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"Certificate of a Responsible Official" means a certificate
signed by a Responsible Official of the Person providing the certificate.
"Change in Control" means (a) any transaction or series of
related transactions in which any Unrelated Person or two or more
Unrelated Persons acting in concert acquire beneficial ownership (within
the meaning of Rule 13d-3(a) under the Securities Exchange Act of 1934, as
amended), directly or indirectly, of 25% or more of the outstanding common
stock or any other class of stock of the Company having ordinary voting
power, (b) the Company consolidates with or merges into another Person or
conveys, transfers or leases its properties and assets substantially as an
entirety to any Person or any Person consolidates with or merges into the
Company pursuant to a transaction in which the outstanding common stock of
the Company is changed into or exchanged for cash, Securities or other
property, with the effect that any Unrelated Person becomes the beneficial
owner, directly or indirectly, of 25% or more of Common Stock or that the
Persons who were the holders of Common Stock immediately prior to the
transaction hold less than 66 2/3% of the common stock of the surviving
corporation after the transaction, (c) during any period of 24 consecutive
months, individuals who at the beginning of such period were directors of
the Company (together with any new or replacement directors whose election
by the board of directors, or whose nomination for election, was approved
by a vote of at least 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 reelection was previously so approved) cease for any reason
to constitute a majority of the directors then in office or (d) a "change
in control" as defined in any document governing Indebtedness of the
Company or any of its Subsidiaries in excess of $5,000,000 which gives the
holders of such Indebtedness the right to accelerate or otherwise require
payment of such Indebtedness prior to the maturity date thereof.
"Clean Down Period" means a period of 30 consecutive days,
beginning on or after January 1 and ending on or before March 31 in each
year, during which the aggregate principal amount of the outstanding
Obligations is to be reduced to an amount which is not greater than
$30,000,000 and maintained below $30,000,000 for the entirety of such
period.
"Closing Date" means the Business Day on which the
consummation of all of the transactions contemplated in Section 8.1
occurs.
"Code" means the Internal Revenue Code of 1986, as amended or
replaced and as in effect from time to time.
"Collateral" means, collectively, all of the collateral
subject to the Liens, or intended to be subject to the Liens, created by
the Collateral Documents.
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"Collateral Documents" means, collectively, the Borrower
Security Agreement, the Guarantor Security Agreement, the Pledge
Agreement, the Lockbox Account Agreement, and any other pledge agreement,
hypothecation agreement, security agreement, assignment, deed of trust,
mortgage or similar instrument executed by the Borrowers or any of their
Subsidiaries to secure the Obligations.
"Commission" means the Securities and Exchange Commission.
"Commitment" means the commitment by Lenders to make revolving
Loans to the Borrowers and to issue Letters of Credit in an aggregate
principal amount, subject to Section 2.6, not to exceed $50,000,000.
"Commitment Fee Rate" means (a) for the initial Pricing
Period, 0.375% per annum, and (b) for each subsequent Pricing Period, the
rate per annum set forth in the matrix below opposite the Leverage Ratio
in effect as of the last day of the Fiscal Quarter ending two months prior
to the first day of such Pricing Period:
Leverage Ratio Commitment Fee Rate
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Less than or equal to 1.50:1.00 0.375%
Greater than 1.50:1.00 0.50%.
"Company" means JAKKS Pacific, Inc.
"Compliance Certificate" means a certificate in the form of
Exhibit C, properly completed and signed by a Senior Officer of each of
the Borrowers and delivered to the Administrative Agent.
"Consolidated Quick Ratio" means, as of each date of
determination thereof, the ratio of (a) the sum of (i) the market value of
the Company's consolidated Cash, Cash Equivalent and marketable Securities
on that date, plus (ii) the gross amount of the Company's consolidated
trade accounts receivable on that date, to (b) the Company's consolidated
current liabilities, determined in accordance with Generally Accepted
Accounting Principles, as of that date, plus the aggregate outstanding
Obligations as of that date.
"Contingent Obligation" means, as to any Person, any (a)
direct or indirect guarantee of Indebtedness of, or other obligation
performable by, any other Person, including any endorsement (other than
for collection or deposit in the ordinary course of business), co-making
or sale with recourse of the obligations of any other Person,
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(b) contingent reimbursement obligations in respect of any letter of
credit, including a Letter of Credit, or (c) assurance given to an obligee
with respect to the performance of an obligation by, or the financial
condition of, any other Person, whether direct, indirect or contingent,
including any purchase or repurchase agreement covering such obligation or
any collateral security therefor, any agreement to provide funds (by means
of loans, capital contributions or otherwise) to such other Person, any
agreement to support the solvency or level of any balance sheet item of
such other Person, or any "keep-well", "take-or-pay", "through put" or
other arrangement of whatever nature having the effect of assuring or
holding harmless any obligee against loss with respect to any obligation
of such other Person. The amount of any Contingent Obligation shall be
deemed to be an amount equal to the stated or determinable amount of the
related primary obligation (unless the Contingent Obligation is limited by
its terms to a lesser amount, in which case to the extent of such amount)
or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof as determined in good faith by the Person so
obligated.
"Contractual Obligation" means, as to any Person, any
provision of any outstanding Securities issued by that Person or of any
material agreement, instrument or undertaking to which that Person is a
party or by which it or any of its Property is bound.
"Creditor Parties" means, collectively the Administrative
Agent, the Issuing Lenders, Bank of America, in its capacity as a party to
the Approved Swap Agreement, and the Lenders.
"Debtor Relief Laws" means the Bankruptcy Code of the United
States of America, as amended from time to time, and all other applicable
liquidation, conservatorship, bankruptcy, moratorium, rearrangement,
receivership, insolvency, reorganization, or similar debtor relief Laws
from time to time in effect affecting the rights of creditors generally.
"Default" means any event that, with the giving of any
applicable notice or passage of time set forth in Section 9.1, or both,
would be an Event of Default.
"Default Rate" means the rate of interest specified in Section
3.7.
"Designated Eurodollar Market" means, with respect to any
Eurodollar Loan, (a) the London Eurodollar Market, (b) if prime banks in
the London Eurodollar Market are at the relevant time not accepting
deposits of Dollars or if the Administrative Agent determines that the
London Eurodollar Market does not represent at the relevant time the
effective pricing to the Lenders for deposits of Dollars in the London
Eurodollar Market, the Cayman Islands Eurodollar Market or (c) such other
Eurodollar Market as may from time to time be selected by the
Administrative Agent with the approval of the Requisite Lenders, provided
that the Designated Eurodollar Market shall not be changed (i) without
notice to the Borrowers from the Administrative Agent or (ii) with respect
to any Eurodollar
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Loan requested by a Borrower, prior to the making of that Eurodollar Loan
unless consented to by that Borrower.
"Disposition" means the sale, transfer or other disposition in
any single transaction or series of related transactions (including by
means of a sale-leaseback transaction) of any asset, or group of related
assets, of any Borrower or of any Subsidiary of a Borrower (a) which asset
or assets constitute a line of business or substantially all the assets of
such Borrower or Subsidiary or (b) the aggregate amount of the Cash
Proceeds of such assets is more than $500,000, other than (i) inventory or
other assets sold or otherwise disposed of in the ordinary course of
business of such Borrower or Subsidiary, (ii) equipment sold or otherwise
disposed of where substantially similar equipment in replacement thereof
has theretofore been acquired, or within 90 days thereafter is acquired,
by such Borrower or Subsidiary and (iii) obsolete assets no longer useful
in the business of such Borrower or Subsidiary whose carrying value on the
books of such Borrower or Subsidiary is zero or de minimus.
"Distribution" means, (i) with respect to any shares of
capital stock or any warrant or right to acquire shares of capital stock
or any other equity Security issued by a Person (other than pursuant to
the terms of Indebtedness which is convertible into or exchangeable for
capital stock or any other equity Security), (a) the retirement,
redemption, purchase, or other acquisition for value by such Person of any
such Security, (b) the declaration or (without duplication) payment by
such Person of any dividend in cash or in Property (other than common
stock or any other equity Security of such Person) on or with respect to
any such Security, (c) any Investment by such Person in the holder of any
such Security, and (d) any other payment by such Person constituting a
distribution under applicable Laws with respect to such Security, and (ii)
any payment in respect of Indebtedness owed by any Borrower to any other
Borrower, Affiliate or shareholder thereof, or Person not dealing at arm's
length with any such Borrower, Affiliate or Person, which is not expressly
permitted by this Agreement.
"Dollars" or the symbol "$" means United States dollars.
"Domestic Subsidiary" means each Subsidiary of the Company
organized under the laws of the United States or any subdivision thereof.
"EBITDA" means, for any fiscal period, Net Income, plus to the
extent deducted in arriving at Net Income, (i) income tax expense, (ii)
gross interest expense, plus (iii) depreciation, plus (iv) amortization
(or minus non-cash gains or reserve reversals), minus (v) extraordinary
cash income/gains (except to the extent of any corresponding extraordinary
cash losses incurred during the same period), minus (vi) gains (or plus
losses) on sales of fixed assets.
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"Eligible Accounts" means, as of any date of determination and
as to each Borrower, the aggregate book value of the accounts receivable
of that Borrower as to which the Administrative Agent holds a first
priority perfected security interest, provided that such accounts
receivable:
(a) arose in the ordinary course of business of that Borrower;
(b) represent amounts owed for services rendered or goods
delivered;
(c) have been the subject of an invoice submitted to the relevant
account debtor within five days of the date of shipment of the
related goods or the rendering of the related services;
(d) are due and payable within 90 days of the issuance of the
invoice;
(e) are not more than 60 days past due (nor more than 90 days from
the issuance of the invoice);
(f) do not represent amounts owed to that Borrower for goods
shipped on a consignment or "▇▇▇▇ and hold" basis;
(g) do not have as the account debtor a Person that is the subject
of any pending proceeding under any Debtor Relief Law;
(h) do not have as the account debtor any Governmental Agency or
any Affiliate, officer or employee of the Borrowers or their
Subsidiaries;
(i) do not have as the account debtor a Person located outside the
United States and Canada, unless the payment of such accounts
receivable are secured by an acceptable letter of credit issued to
that Borrower by a bank reasonably acceptable to the Requisite
Lenders;
(j) do not include any account receivable due from an account
debtor or their Affiliates if 25% or more of the aggregate accounts
receivable due from that account debtor do not qualify as "Eligible
Accounts" hereunder;
(k) do not include any account receivable which, when added to all
other accounts receivable owing from the respective account debtor,
causes the total of all accounts receivable owing from that account
debtor to exceed 10% of all accounts receivable from all account
debtors, provided that as to the Approved Customers, the limit
expressed in this clause (k) shall be increased to the amounts set
forth in the definition thereof;
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(l) do not include any account receivable which is subject to any
known or asserted offset, counterclaim or defense, or with respect
to which the account debtor has disputed its liability;
(m) do not include the amount of any contra accounts with respect
to an account debtor as a result of amounts owing from the Borrowers
to such account debtor;
(n) do not include any account receivable which is unenforceable
unless a future condition is met, including any accounts receivable
arising out of cash-on-delivery sales, consignments or guaranteed
sales;
(o) do not include accounts receivable which are evidenced by any
promissory note or other instrument;
(p) have not been the subject of a "rebilling" or any other
re-invoicing of such account receivable submitted to the relevant
account debtor on a date which is more than 30 days following the
date upon which the initial invoice with respect to such account
receivable was submitted to that account debtor;
(q) have not otherwise been objected to by the Requisite Lenders
in the exercise of their reasonable discretion for a reason which is
not the express subject matter of any of clauses (a) through (p)
above.
"Eligible Assignee" means, as to each assignment by a Lender
under Section 11.8, (a) another Lender, (b) with respect to any Lender,
any Affiliate of that Lender, (c) any commercial bank having a combined
capital and surplus of $100,000,000 or more, (d) any (i) savings bank,
savings and loan association or similar financial institution or (ii)
insurance company engaged in the business of writing insurance which, in
either case (A) has a net worth of $200,000,000 or more, (B) is engaged in
the business of lending money and extending credit under credit facilities
substantially similar to those extended under this Agreement and (C) is
operationally and procedurally able to meet the obligations of a Lender
hereunder to the same degree as a commercial bank and (e) any other
financial institution (including a mutual fund or other fund) having total
assets of $250,000,000 or more which meets the requirements set forth in
subclauses (B) and (C) of clause (d) above; provided that each Eligible
Assignee must either (a) be organized under the Laws of the United States
of America, any State thereof or the District of Columbia or (b) be
organized under the Laws of the Cayman Islands or any country which is a
member of the Organization for Economic Cooperation and Development, or a
political subdivision of such a country, and (i) act hereunder through a
branch, agency or funding office located in the United States of America
and (ii) be exempt from withholding of tax on interest and deliver the
documents related thereto pursuant to Section 11.9.
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"Eligible Inventory" means, as of any date of determination
and as to each Borrower, the value, as determined in accordance with
Generally Accepted Accounting Principles based on the lesser of cost or
market value, of the finished goods inventory of that Borrower, excluding:
(a) finished goods inventory that is subject to any Lien,
other than any Lien in favor of the Administrative Agent;
(b) finished goods inventory that is damaged, defective,
unsalable, slow-moving (being items that did not have any sales
activity during the last six months) or otherwise unfit for use;
(c) inventory consisting of work-in-process, packaging
materials, pallets, bags, boxes, capitalized depot freight and
handling costs or supplies, or discontinued inventory;
(d) inventory which is (i) located at locations other than
those described on Schedule 1.1 or such other locations of which the
Borrowers have advised the Administrative Agent in writing;
(e) inventory covered by a negotiable document of title which
has not been delivered to the Administrative Agent in pledge;
(f) inventory other than that which is held for sale or use in
the ordinary course of such Borrower's business and is of good and
merchantable quality;
(g) inventory which has been placed on consignment; and
(h) finished goods inventory that has otherwise been objected
to by the Requisite Lenders in the exercise of their reasonable
discretion for a reason which is not the express subject matter of
any of clauses (a) through (g) above.
"Enforcement or Remedial Action" shall mean any step taken by
any Person to enforce compliance with or to collect or impose penalties,
fines or other sanctions provided by any Environmental Law.
"Environmental Claims" means all claims, however asserted, by
any Governmental Agency or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or any Enforcement
or Remedial Action or for release or injury to the environment or threat
to public health, personal injury (including sickness, disease or death),
property damage, natural resources damage, or otherwise alleging liability
or responsibility for damages (punitive or otherwise), cleanup, removal,
remedial or response costs, restitution, civil or criminal penalties,
injunctive relief, or other type of relief, resulting
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from or based upon the presence, placement, discharge, emission or release
(including intentional and unintentional, negligent and non-negligent,
sudden or non-sudden, accidental or non-accidental, placement, spills,
leaks, discharges, emissions or releases) of any Hazardous Material at,
in, or from Property, whether or not owned by the Borrowers.
"Environmental Laws" means all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes
together with all administrative orders, directed duties, policies,
notices, decrees, requests, licenses, authorizations and permits of, and
agreements with, any Governmental Agencies, in each case relating to,
regulating or imposing liability or standards of conduct regarding
environmental, health, safety, project liability and land use matters
(including matters related to air and water quality, the handling,
transportation, storage, treatment, usage or disposal of Hazardous
Materials, air emissions, noise control, industrial hygiene, zoning, and
land-use permits) including the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), the Clean Air Act, the
Federal Water Pollution Control Act of 1972, the Solid Waste Disposal Act,
the Federal Resource Conservation and Recovery Act, the Toxic Substances
Control Act, the Emergency Planning and Community Right-to-Know Act, the
California Hazardous Waste Control Law, the California Solid Waste
Management, Resource, Recovery and Recycling Act, the California Water
Code and the California Health and Safety Code.
"ERISA" means the Employee Retirement Income Security Act of
1974, and any regulations issued pursuant thereto, as amended or replaced
and as in effect from time to time.
"ERISA Affiliate" means, with respect to any Person, any
Person (or any trade or business, whether or not incorporated) that is
under common control with that Person within the meaning of Section 414 of
the Code.
"Eurodollar Base Rate" means, with respect to any Eurodollar
Loan, the average per annum interest rate at which Dollar deposits would
be offered for the applicable interest period by major banks in the
Designated Eurodollar Market, as shown on the Telerate Page 3750 (or such
other page as may replace it) at approximately 11:00 a.m. London time two
Eurodollar Business Days before the commencement of the interest period.
If such rate does not appear on the Telerate Page 3750 (or such other page
that may replace it), the rate for that interest period will be determined
by such alternate method as reasonably selected by the Administrative
Agent. The Administrative Agent's determination of the Eurodollar Base
Rate shall be conclusive in the absence of manifest error.
"Eurodollar Business Day" means any Business Day on which
dealings in Dollar deposits are conducted by and among banks in the
Designated Eurodollar Market.
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"Eurodollar Lending Office" means, as to each Lender, its
office or branch so designated by written notice to the Borrowers and the
Administrative Agent as its Eurodollar Lending Office. If no Eurodollar
Lending Office is designated by a Lender, its Eurodollar Lending Office
shall be its office at its address for purposes of notices hereunder.
"Eurodollar Loan" means a Loan made hereunder and designated
as a Eurodollar Loan in accordance with Article 2.
"Eurodollar Market" means a regular, established market
located outside the United States of America by and among banks for the
solicitation, offer and acceptance of Dollar deposits in such banks.
"Eurodollar Period" means:
(a) as to each Eurodollar Loan, the period commencing on the
date specified by the Borrowers pursuant to Section 2.1(c) and ending one,
two, three or six months thereafter, as specified by the Borrowers in the
applicable Request for Loan; provided that:
(i) The first day of any Eurodollar Period shall be a
Eurodollar Business Day;
(ii) Any Eurodollar Period that would otherwise end on
a day that is not a Eurodollar Business Day shall be extended to the
next succeeding Eurodollar Business Day unless such Eurodollar
Business Day falls in another calendar month, in which case such
Eurodollar Period shall end on the next preceding Eurodollar
Business Day; and
(iii) No Eurodollar Period shall extend beyond the
Maturity Date.
"Eurodollar Rate" means, with respect to any Eurodollar Loan,
the interest rate (rounded upward to the next 1/16 of 1%) determined to be
equal to the Eurodollar Base Rate divided by the sum of 1 minus the
Eurodollar Reserve Percentage.
"Eurodollar Rate Advance" means each Advance made by a Lender
designated as a Eurodollar Rate Advance in accordance with Article 2.
"Eurodollar Rate Margin" means (a) for the initial Pricing
Period, 1.50% per annum, and (b) for each subsequent Pricing Period, the
interest rate per annum set forth in the matrix below opposite the
Leverage Ratio in effect as of the last day of the Fiscal Quarter ending
two months prior to the first day of such Pricing Period:
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Leverage Ratio Eurodollar Rate Margin
-------------- ----------------------
Less than or equal to 1.25:1.00 1.50%
Greater than 1.25:1.00 but less than
or equal to 1.50:1.00 1.75%
Greater than 1.50:1.00 2.00%.
"Eurodollar Reserve Percentage" means, with respect to any
Eurodollar Loan, as of the date of determination of the Eurodollar Base
Rate for that Eurodollar Loan, the total of the maximum reserve
percentages for determining the reserves to be maintained, if any, by
member banks of the Federal Reserve System for Eurocurrency Liabilities,
as defined in Regulation D, having a term equal (or as nearly as
practicable equal) to the Eurodollar Period of such Eurodollar Loan,
rounded upward to the nearest 1/100 of 1%. The percentage will be
expressed as a decimal, and will include, but not be limited to, marginal,
emergency, supplemental, special, and other reserve percentages. The
determination by the Administrative Agent of any applicable Eurodollar
Reserve Percentage shall be conclusive in the absence of manifest error.
"Event of Default" shall have the meaning provided in Section
9.1.
"Federal Funds Rate" means, as of any date of determination, a
fluctuating interest rate per annum equal to the federal funds effective
rate for the previous Business Day as quoted by the Federal Reserve Bank
of New York or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by the Administrative Agent.
"Fiscal Quarter" means the fiscal quarter of the Borrowers
ending on each March 31, June 30, September 30 and December 31.
"Fiscal Year" means the fiscal year of the Borrowers ending on
each December 31.
"Fixed Charge Coverage Ratio" means, as of each date of
determination, the ratio of (a) EBITDA for the twelve month period ending
on that date minus Capital Expenditures made in cash during the same
period (net of any portion thereof representing amounts expended using
funds received from insurance proceeds, trade-in allowances or the sale of
similar assets being replaced), and minus state and federal income taxes
paid in cash during that period, to (b) Interest Expense paid in cash
during that period, plus the amount of payments of principal scheduled to
be made by the Company and its Subsidiaries with
15-
respect to Indebtedness during the twelve month period following the date
of determination (other than any intercompany Indebtedness), plus an
amount equal to 20% of the average principal amount of the Commitment
during such period, plus any Distributions made by the Company during that
period.
"Foreign Subsidiary" means each Subsidiary of the Company
which is not organized under the laws of the United States or any
subdivision thereof.
"Funded Debt" means, for any fiscal period, the sum without
duplication of the Company's consolidated (i) liabilities for borrowed
money (excluding all Subordinated Obligations), (ii) interest bearing
obligations, (iii) obligations under Capital Leases, (iv) obligations to
reimburse the issuer of any letter of credit (including any Letter of
Credit issued by any Issuing Lender under this Agreement) for amounts
drawn or which may be drawn under such letters of credit, other than
Letters of Credit issued for the importation or purchase of goods, (v) any
obligation to the extent secured by a Lien on the assets of the Company or
any of its Subsidiaries, and (vi) all guaranties of financial obligations
issued by the Company or any of its Subsidiaries.
"Funding Account" means account no. 14590-08406 maintained by
the Borrowers with Bank of America, or any other account designated by the
Borrowers and reasonably acceptable to the Administrative Agent.
"Generally Accepted Accounting Principles" means, as of any
date of determination, accounting principles (a) set forth as generally
accepted in then currently effective Opinions of the Accounting Principles
Board of the American Institute of Certified Public Accountants, (b) set
forth as generally accepted in then currently effective Statements of the
Financial Accounting Standards Board or (c) that are then approved by such
other entity as may be approved by a significant segment of the accounting
profession in the United States of America. The term "consistently
applied," as used in connection therewith, means that the accounting
principles applied are consistent in all material respects to those
applied at prior dates or for prior periods.
"Government Securities" means readily marketable direct full
faith and credit obligations of the United States of America or
obligations unconditionally guaranteed by the full faith and credit of the
United States of America.
"Governmental Agency" means (a) any international, foreign,
federal, state, county or municipal government, or political subdivision
thereof, (b) any governmental or quasi-governmental agency, authority,
board, bureau, commission, department, instrumentality or public body, or
(c) any court, administrative tribunal or public utility.
"Guarantor" means, each now existing or hereafter acquired
Domestic Subsidiary of the Company which is not a Borrower.
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"Guarantor Security Agreement" means the security agreement to
be executed and delivered on the Closing Date by each of the Guarantors,
either as originally executed or as it may from time to time be
supplemented, modified, amended, extended or supplanted.
"Guaranty" means the continuing guaranty of the Obligations to
be executed and delivered pursuant to Article 8 by each of the Guarantors,
either as originally executed or as it may from time to time be
supplemented, modified, amended, extended or supplanted.
"Hazardous Materials" means all those substances which are
regulated by, or which may form the basis of liability under, any
Environmental Law, including all substances identified under any
Environmental Law as a pollutant, contaminant, hazardous waste, hazardous
constituent, special waste, hazardous substance, hazardous material, or
toxic substance, or petroleum or petroleum derived substance or waste.
"Indebtedness" means, as to any Person, without duplication,
(a) all indebtedness of such Person for borrowed money, (b) that portion
of the obligations of such Person under Capital Leases which is properly
recorded as a liability on a balance sheet of that Person prepared in
accordance with Generally Accepted Accounting Principles, (c) any
obligation of such Person that is evidenced by a promissory note or other
instrument representing an extension of credit to such Person, whether or
not for borrowed money, (d) any payment obligation of such Person for the
deferred purchase price of Property or services (other than trade or other
accounts payable in the ordinary course of business in accordance with
customary industry terms), (e) any payment obligation of such Person that
is secured by a Lien on assets of such Person, whether or not that Person
has assumed such obligation or whether or not such obligation is
non-recourse to the credit of such Person, but only to the extent of the
fair market value of the assets so subject to the Lien, (f) payment
obligations of such Person arising under acceptance facilities or under
facilities for the discount of accounts receivable of such Person, (g) any
direct or contingent obligations of such Person under letters of credit
issued for the account of such Person and (h) any obligations of such
Person under a Swap Agreement.
"Intangible Assets" means, as of any date of determination,
the intangible assets of the Borrowers and their Subsidiaries, including
goodwill, patents, trademarks, trade names, organization expense,
capitalized acquisition expenses, deferred research and development costs
and deferred marketing expense, deferred tax assets and money due from
Affiliates, officers, directors or shareholders of the Borrowers and their
Subsidiaries.
"Interest Expense" means, as of the last day of any fiscal
period, the sum of (a) all interest, fees, charges and related expenses
paid or payable (without duplication) for that fiscal period to a lender
in connection with borrowed money or the deferred purchase price of assets
that are considered "interest expense" under Generally Accepted Accounting
17-
Principles, plus (b) the portion of rent paid or payable (without
duplication) for that fiscal period under Capital Lease Obligations that
should be treated as interest in accordance with Financial Accounting
Standards Board Statement No. 13, in each case determined for the Company
and its Subsidiaries on a consolidated basis.
"Inventory Advance Rate" means 20% provided that (a) the
Inventory Advance Rate shall be 30% for the determinations of the
Borrowing Base made as of the last Business Days of April, May, September,
October and November in each year, and (b) the Administrative Agent or the
Requisite Lenders may determine, in the exercise of their reasonable
credit judgment based upon their review of any audit or appraisal of the
Inventory, to reduce the Inventory Advance Rate from time to time.
"Investment" means, when used in connection with any Person,
any investment by or of that Person, whether by means of purchase or other
acquisition of capital stock or other Securities of any other Person or by
means of loan, advance, capital contribution, guaranty or other debt or
equity participation or interest, or otherwise, in any other Person,
including any partnership and joint venture interests of such Person in
any other Person. The amount of any Investment shall be the amount
actually invested, without adjustment for increases or decreases in the
value of such Investment.
"Issuing Lenders" means Bank of America, BNP Paribas and any
other Lender which expressly agrees to perform all of the obligations
that, by the terms of this Agreement, are required to be performed by an
Issuing Lender hereunder, in each case when acting in its capacity as
issuer of any Letter of Credit.
"Laws" means, collectively, all international, foreign,
federal, state, and local statutes, treaties, rules, regulations,
ordinances, codes and administrative or judicial precedents.
"Lenders" means Bank of America, each of the banks, financial
institutions or institutional lenders listed on the signature pages hereto
and each other Lender which hereafter becomes a party hereto pursuant to
Section 11.8.
"Letter of Credit" means a commercial letter of credit or
standby letter of credit issued by an Issuing Lender for the account of a
Borrower in the ordinary course of its business.
"Letter of Credit Usage" means, at any date of determination,
the sum of (i) the maximum aggregate amount that is or at any time
thereafter may become available for drawing or payment under issued and
outstanding Letters of Credit issued pursuant to the Commitment, plus (ii)
the aggregate amount of all drawings honored or payments made by the
Issuing Lenders under such Letters of Credit and not reimbursed by the
Borrowers.
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"Leverage Ratio" means, as of each date of determination
thereof, the ratio of (a) Funded Debt as of that date, to (b) EBITDA for
the twelve month period ending on that date.
"Lien" means any mortgage, deed of trust, pledge,
hypothecation, assignment for security, security interest, encumbrance,
lien or charge of any kind, whether voluntarily incurred or arising by
operation of Law or otherwise, affecting any Property, including any
agreement to grant any of the foregoing, any conditional sale or other
title retention agreement, any lease in the nature of a security interest,
and/or the filing of or agreement to give any financing statement (other
than a precautionary financing statement with respect to a lease that is
not in the nature of a security interest) under the Uniform Commercial
Code or comparable Law of any jurisdiction with respect to any Property.
"Loan" means any group of Advances made at any one time under
the Commitment by the Lenders pursuant to Article 2.
"Loan Documents" means, collectively, this Agreement, the
Collateral Documents, the Guaranty, each Request for Loan, each Request
for Letter of Credit, each Request for Redesignation, each Letter of
Credit, the Subordination Agreements, each Compliance Certificate, each
Approved Swap Agreement, and any other certificates, documents or
agreements to, with or for the benefit of the Creditor Parties, of any
type or nature heretofore or hereafter executed and delivered by the
Borrowers or any of their Subsidiaries or Affiliates to the Creditor
Parties in any way relating to or in furtherance of this Agreement, in
each case either as originally executed or as the same may from time to
time be supplemented, modified, amended, restated, extended or supplanted.
"Lockbox Account" means, as to each Borrower, an account in
the name of the Administrative Agent at Bank of America, into which the
proceeds of all trade accounts receivable of that Borrower is to be
deposited in accordance with Section 6.20.
"Lockbox Account Agreement" means the Lockbox Account
Agreement executed by each of the Borrowers and the Guarantors on the
Closing Date to govern the Lockbox Account, either as originally executed
or as the same may from time to time be supplemented, modified, amended,
restated, extended or supplanted.
"Material Adverse Effect" means any set of circumstances or
events which (a) has or may reasonably be expected to have any material
adverse effect whatsoever upon the validity or enforceability of any Loan
Document, (b) has or may reasonably be expected to have a materially
adverse effect on the condition (financial or otherwise) or business
operations of the Borrowers and their Subsidiaries, taken as a whole, or
the prospects of the Borrowers and their Subsidiaries, taken as a whole,
(c) materially impairs or may reasonably be expected to materially impair
the ability of the Borrowers and their Subsidiaries, to perform their
Obligations or (d) materially impairs or may reasonably be expected to
19-
materially impair the ability of the Creditor Parties to enforce their
legal remedies pursuant to the Loan Documents.
"Material Contract" means each agreement specified on Schedule
4.21 and each other each other contract or agreement to which any Borrower
is a party, contemplating annual payments or receipts of monies, or the
exchange of Property having a value in excess of $500,000, other than
supply contracts for which the amount shall be $10,000,000.
"Maturity Date" means October 10, 2004.
"Multiemployer Plan" means any employee benefit plan of the
type described in Section 4001(a)(3) of ERISA.
"Negative Pledge" means any covenant binding on any Borrower
or any current or future guarantor of the Obligations that prohibits the
creation of Liens on any Property of any of the Borrowers or of any such
guarantor to the Creditor Parties or prohibiting the granting of any such
covenant to any of the Creditor Parties.
"Net Cash Proceeds" means, with respect to any sale, transfer
or other disposition of Property, the Cash Proceeds received by any of the
Borrowers or by any Subsidiary of any of the Borrowers upon such sale,
transfer or other disposition minus, (a) the actual expenses of such sale
paid or payable by any of the Borrowers or by any Subsidiary of any of the
Borrowers in connection with such sale, transfer or other disposition
(including any lease cancellation expenses, license termination fees,
penalties or other costs associated therewith), (b) any amount paid or
payable by the transferor to retire existing Liens on the Property sold,
and (c) an amount representing the taxes (other than income taxes)
reasonably estimated by the Borrowers to be payable by any of the
Borrowers or Subsidiary thereof with respect to such sale, transfer or
other disposition.
"Net Income" means, for any fiscal period, the consolidated
net income of the Company and its Subsidiaries (for clarity, exclusive of
the income of THQ and other joint venturers), determined in accordance
with Generally Accepted Accounting Principles, consistently applied.
"Net Worth" means, as of each date of determination, the
consolidated net worth of the Company as of that date, determined in
accordance with Generally Accepted Accounting Principles, consistently
applied.
"Obligations" means all present and future obligations of
every kind or nature of the Borrowers or any Party at any time and from
time to time owed to any of the Creditor Parties under any of the Loan
Documents, whether due or to become due, matured or unmatured, liquidated
or unliquidated, or contingent or noncontingent, including obligations
20-
of performance as well as obligations of payment, and including interest
that accrues after the commencement of any proceeding under any Debtor
Relief Law by or against any of the Borrowers or any Affiliate of any of
the Borrowers.
"Party" means each party to the Loan Documents other than the
Creditor Parties.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor thereof established under ERISA.
"Pension Plan" means any "employee pension benefit plan" that
is subject to Title IV of ERISA and which is maintained for employees (or
former employees) of any of the Borrowers or of any ERISA Affiliate of any
of the Borrowers, other than a Multiemployer Plan.
"Permitted Acquisition" means an Acquisition by the Company or
any of its Domestic Subsidiaries (as applicable, the "Acquiror") of
another Person which will be a Domestic Subsidiary engaged in the same or
a similar line of business as that of the Company and its Subsidiaries
(the "Target"), provided that: (i) such Acquisition shall have been
approved by the board of directors of the Target (i.e., such Acquisition
shall not be "hostile"); (ii) upon the closing of such Acquisition, the
Administrative Agent shall be granted a first-priority security interest
in all assets of the Target, subject only to Permitted Encumbrances; (iii)
the Administrative Agent shall have received and been satisfied with its
review of a completed Environmental Assessment and Questionnaire with
respect to the real property of the Target not later than ten Business
Days prior to the estimated date of the consummation of the Acquisition;
(iv) upon the completion of the Acquisition, the Company and its Domestic
Subsidiaries shall own not less than 80% of the voting stock of the Target
(with the remaining voting stock owned by management of the Target or the
former owners thereof), (v) not more than $5,000,000 in assets of all
Targets, in the aggregate, shall be located outside of the United States
of America, and (vi) no Default or Event of Default shall exist at the
time of such Acquisition or after giving effect thereto.
"Permitted Encumbrances" means:
(a) Inchoate Liens incident to construction or maintenance
of real property, or Liens incident to construction or maintenance of real
property, now or hereafter filed of record for which adequate reserves
have been set aside and which are being or will be, within 30 days,
contested in good faith by appropriate proceedings diligently pursued and
have not proceeded to judgment, provided that, by reason of nonpayment of
the obligations secured by such Liens, no such real property is subject to
a material risk of loss or forfeiture;
21-
(b) Liens for taxes and assessments on real property which
are not yet past due, or Liens for taxes and assessments on real property
for which adequate reserves have been set aside and are being contested in
good faith by appropriate proceedings diligently pursued and have not
proceeded to judgment, provided that, by reason of nonpayment of the
obligations secured by such Liens, no such real property is subject to a
material risk of loss or forfeiture;
(c) easements, exceptions, reservations, covenants,
conditions, restrictions, and assessment Liens arising thereunder,
operating agreements, or other agreements granted, reserved or entered
into before or after the date hereof for the purpose of ingress, egress,
parking, encroaching, pipelines, conduits, cables, wire communication
lines, power lines and substations, streets, trails, walkways, drainage,
irrigation, water and sewerage, dikes, canals, ditches, the removal of
oil, gas, coal or other minerals, use, operation, repair, maintenance and
reconstruction, and other like purposes affecting real property which in
the aggregate do not materially burden or impair the fair market value or
use of such real property for the purposes for which it is or may
reasonably be expected to be held;
(d) rights reserved to or vested in any Governmental Agency
by Law to control or regulate, or obligations or duties under Law to any
Governmental Agency with respect to, the use of any real property;
(e) statutory Liens, other than those described in clauses
(a) or (b) above, arising in the ordinary course of business with respect
to obligations which are not delinquent or are being contested in good
faith by appropriate proceedings diligently pursued, provided that, if
delinquent, adequate reserves have been set aside with respect thereto
and, by reason of nonpayment, no Property is subject to a material risk of
loss or forfeiture;
(f) Liens consisting of pledges or deposits to secure
obligations under workers' compensation laws or similar legislation, that
do not exceed $100,000 in the aggregate at any time outstanding, including
Liens of judgments thereunder which are not currently dischargeable;
(g) Liens consisting of deposits of Property to secure
statutory obligations of any of the Borrowers or of any Subsidiary of any
of the Borrowers in the ordinary course of its business;
(h) Liens created by or resulting from any litigation or
legal proceeding involving any of the Borrowers or any Subsidiary of any
of the Borrowers in the ordinary course of its business which are
currently being contested in good faith by appropriate proceedings
diligently pursued, provided that adequate reserves have been set aside,
and
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such Liens are discharged or stayed within 30 days of creation and no
Property is subject to a material risk of loss or forfeiture.
"Permitted Joint Ventures" means Investments by the Company or
any of its Domestic Subsidiaries in less than 67% of the voting stock of
another Person engaged in the same or a similar line of business as that
of the Company and its Subsidiaries.
"Person" means any entity, whether an individual, trustee,
corporation, general partnership, limited partnership, limited liability
company, joint stock company, trust, estate, unincorporated organization,
business association, firm, joint venture, Governmental Agency, or
otherwise.
"Pricing Period" means (a) the period beginning on the Closing
Date and ending on November 30, 2001, and (b) each of the succeeding three
month periods beginning on the first day of each June, September, December
and March.
"Prime Rate" means the rate of interest publicly announced
from time to time by Bank of America as its "Prime Rate." The Prime Rate
is set by Bank of America based on various factors, including Bank of
America's costs and desired returns, general economic conditions and other
factors, and is used as a reference point for pricing some loans. Bank of
America may price loans at, above or below its Prime Rate. Any change in
the Prime Rate shall take effect on the day specified in the public
announcement of such change.
"Pro Rata Share" means, with respect to each Lender, the
percentage of the Commitment held by that Lender from time to time. The
dollar amount of the Commitment which is equal to the Pro Rata Share of
each Lender as of the Closing Date is set forth on that Lender's signature
page to this Agreement.
"Projections" means the projected financial information
prepared by the Borrowers and included in the Confidential Offering
Memorandum dated April, 2001.
"Property" means any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"Regulations D, T, U and X" means Regulations D, T, U and X,
as at any time amended, of the Board of Governors of the Federal Reserve
System, or any other regulations in substance substituted therefor.
"Request for Letter of Credit" means a written request for a
Letter of Credit, substantially in the form of Exhibit D, together with
the standard form of application for letters of credit used by the
relevant Issuing Lender, signed by a Responsible Official of each Borrower
and properly completed to provide all information to be included therein.
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"Request for Loan" means a written request for a Loan,
substantially in the form of Exhibit E, signed by a Responsible Official
of each Borrower and properly completed to provide all information
required to be included therein.
"Request for Redesignation" means a written request to
continue or redesignate a Loan substantially in the form of Exhibit F,
signed by a Responsible Official of each Borrower and properly completed
to provide all information required to be included therein.
"Requirement of Law" means, as to any Person, the articles or
certificate of incorporation and by-laws or other organizational or
governing documents of such Person, and any Law, or judgment, award,
decree, writ or determination of a Governmental Agency, in each case
applicable to or binding upon such Person or any of its Property or to
which such Person or any of its Property is subject.
"Requisite Lenders" means as of any date of determination,
Lenders having in the aggregate 66-2/3% or more of the Commitment then in
effect or, following termination of the Commitment, owning or holding, in
the aggregate, 66-2/3% of the aggregate principal amount of the Loans and
the Letter of Credit Usage outstanding on such date, provided that when
there are fewer than three Lenders, "Requisite Lenders" shall mean all of
the Lenders.
"Responsible Official" means (a) when used with reference to a
Person other than an individual, any corporate officer of such Person,
general partner of such Person, corporate officer of a corporate general
partner of such Person, or corporate officer of a corporate general
partner of a partnership that is a general partner of such Person, or any
other responsible official thereof duly acting on behalf thereof, and (b)
when used with reference to a Person who is an individual, such Person.
Any document or certificate hereunder that is signed or executed by a
Responsible Official of a Person shall be conclusively presumed to have
been authorized by all necessary corporate, partnership and/or other
action on the part of that Person.
"Right of Others" means, as to any Property in which a Person
has an interest, (a) any legal or equitable right, title or other interest
(other than a Lien) held by any other Person in or with respect to that
Property, and (b) any option or right held by any other Person to acquire
any right, title or other interest in or with respect to that Property,
including any option or right to acquire a Lien.
"Securities" means any capital stock, share, voting trust
certificate, bonds, debentures, notes or other evidences of indebtedness
(other than commercial obligations incurred in the ordinary course of
business), limited partnership interests, limited liability company
membership interests, or any warrant, option or other right to purchase or
acquire any of the foregoing.
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"Senior Officer" means the (a) President, (b) Vice President,
(c) Chief Financial Officer, (d) Chief Executive Officer or (e) Treasurer
of a Person or the persons performing the equivalent functions.
"Special Eurodollar Circumstance" means the application or
adoption of any Law or interpretation, or any change therein or thereof,
or any change in the interpretation or administration thereof by any
Governmental Agency, central bank or comparable authority charged with the
interpretation or administration thereof, or compliance by any Lender or
its Eurodollar Lending Office with any request or directive (whether or
not having the force of Law) of any such Governmental Agency, central bank
or comparable authority, or the existence or occurrence of circumstances
affecting the Designated Eurodollar Market generally that are beyond the
reasonable control of that Lender.
"Standby Letter of Credit" means each Letter of Credit which
is issued hereunder for a purpose other than the support of the purchase
of goods by the Company and its Subsidiaries.
"Subordinated Obligations" means unsecured Indebtedness of the
Company that is subordinated to the Obligations (and to any other
Indebtedness which in form or substance refinances the Obligations), all
of the provisions of which (including amount, maturity, amortization,
interest rate, covenants, defaults, remedies and subordination), have been
approved in writing as to form and substance by the Administrative Agent
with the written consent of the Requisite Lenders, and in any event (and
without limitation on the foregoing) having the following attributes:
(a) such Indebtedness shall be the obligation solely of the
Company, and no Subsidiary shall have any direct or contingent
obligations with respect thereto;
(b) the subordination provisions of such Indebtedness shall
provide for a 180-day remedies standstill (which may be invoked by
the Administrative Agent not more frequently than once each year);
(c) the interest rate payable with respect to such
Indebtedness shall not exceed 12% per annum;
(d) no reductions to the principal balance thereof shall be
required prior to maturity, and the maturity thereof shall not be
earlier than six months following the Maturity Date; and
(e) none of the representations, warranties, covenants,
defaults or other provisions thereof shall be more onerous to the
Company and its Subsidiaries than those provided for herein.
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"Subsidiary" means, as of any date of determination and with
respect to any Person, any corporation, partnership or joint venture,
whether now existing or hereafter organized or acquired: (a) in the case
of a corporation, of which a majority of the Securities having ordinary
voting power for the election of directors or other governing body (other
than Securities having such power only by reason of the happening of a
contingency) are at the time beneficially owned by such Person and/or one
or more Subsidiaries of such Person, or (b) in the case of a partnership
or joint venture, of which such Person or a Subsidiary of such Person is a
general partner or joint venturer and of which a majority of the
partnership or other ownership interests are at the time beneficially
owned by such Person and/or one or more of their Subsidiaries.
"Swap Agreements" means one or more written agreements between
a Borrower and one or more financial institutions providing for "swap",
"cap", "collar" or other interest rate or currency risk protection with
respect to any Indebtedness.
"Target" means the Person which is the subject of any
Permitted Acquisition.
"Target Adjusted EBITDA" means, in respect of any Target, the
EBITDA of such Target (determined as if it were already a party hereto),
after making adjustments thereto to eliminate excess owner compensation
and other items permitted under Regulation S-X of the Commission.
"Termination Event" means (a) a "reportable event" as defined
in Section 4043 of ERISA (other than a "reportable event" that is not
subject to the provision for 30 day notice to the PBGC), (b) the
withdrawal of either of the Borrowers or any of their ERISA Affiliates
from a Pension Plan during any plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA, (c) the filing of a
notice of intent to terminate a Pension Plan or the treatment of an
amendment to a Pension Plan as a termination thereof pursuant to Section
4041 of ERISA, (d) the institution of proceedings to terminate a Pension
Plan by the PBGC or (e) any other event or condition which, in any such
case as aforesaid, might reasonably be expected to constitute grounds
under ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan.
"to the best knowledge of" means, when modifying a
representation, warranty or other statement of any Person, that the fact
or situation described therein is known by the Person (or, in the case of
a Person other than a natural Person, known by a Responsible Official of
that Person) making the representation, warranty or other statement, or
with the exercise of reasonable due diligence under the circumstances (in
accordance with the standard of what a reasonable Person in similar
circumstances would have done) should have been known by the Person (or,
in the case of a Person other than a natural Person, should have been
known by a Responsible Official of that Person).
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"Trademark Security Agreement" means the Trademark Security
Agreement executed by the Borrowers in favor of the Administrative Agent
for the benefit of the Lenders on the Closing Date, either as originally
executed or as the same may from time to time be supplemented, modified,
amended, renewed, extended or supplanted.
"Unrelated Person" means any Person other than (a) Persons
owning 10% or more of the common stock of the Company as of the Closing
Date, and (b) any employee stock ownership plan or other employee benefit
plan covering the employees of a member of the Company and its
Subsidiaries.
"Wholly-Owned Subsidiary" means a Subsidiary of a Borrower,
100% of the capital stock or other equity interest of which is owned,
directly or indirectly, by such Borrower, except for director's qualifying
shares required by applicable Laws.
1.2 Use of Defined Terms. Any defined term used in the plural
shall refer to all members of the relevant class, and any defined term used in
the singular shall refer to any one or more of the members of the relevant
class.
1.3 Accounting Terms. All accounting terms not specifically
defined in this Agreement shall be construed in conformity with, and all
financial data required to be submitted by this Agreement shall be prepared in
conformity with, Generally Accepted Accounting Principles applied on a
consistent basis, except as otherwise specifically prescribed herein. In the
event that Generally Accepted Accounting Principles change during the term of
this Agreement such that the financial covenants contained in Sections 6.10
through 6.15 would then be calculated in a different manner or with different
components, the Borrowers and the Lenders agree to amend this Agreement in such
respects as are necessary to conform those covenants as criteria for evaluating
the Borrowers' financial condition to substantially the same criteria as were
effective prior to such change in Generally Accepted Accounting Principles.
1.4 Rounding. Any financial ratios required to be maintained by
the Borrowers pursuant to this Agreement shall be calculated by dividing the
appropriate component by the other component, carrying the result to one place
more than the number of places by which such ratio is expressed in this
Agreement and rounding the result up or down to the nearest number (with a
round-up if there is no nearest number) to the number of places by which such
ratio is expressed in this Agreement.
1.5 Exhibits and Schedules. All Exhibits and Schedules to this
Agreement, either as originally existing or as the same may from time to time be
supplemented, modified, amended or supplanted are incorporated herein by this
reference.
1.6 Miscellaneous Terms. The term "or" is disjunctive; the term
"and" is conjunctive. The term "shall" is mandatory; the term "may" is
permissive. Masculine terms also
27-
apply to females; feminine terms also apply to males. The term "including" is by
way of example and not limitation.
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ARTICLE 2
LOANS AND LETTERS OF CREDIT
2.1 Loans-General.
(a) Subject to the terms and conditions set forth in this
Agreement, at any time and from time to time from the Closing Date through
the Maturity Date, each Lender shall, pro rata according to that Lender's
Pro Rata Share, make Advances to the Borrowers under the Commitment in
such amounts as the Borrowers may request; provided that:
(i) giving effect to the requested Loan, (A) the sum of the
aggregate outstanding principal balance of the Loans plus the Letter
of Credit Usage shall not exceed (B) the lesser of the Borrowing
Base, less any Availability Reserves, or the Commitment; and
(ii) no Loans may be requested which would result in the sum
of the aggregate outstanding principal balance of the Loans plus the
Letter of Credit Usage being in excess of $30,000,000 if the effect
thereof would be to eliminate the possibility that a Clean Down
Period would occur when required.
Subject to the limitations set forth herein (including, without
limitation, the requirements of Section 3.6(d)), the Borrowers may borrow,
repay and reborrow under the Commitment without premium or penalty.
(b) Each Loan shall be made pursuant to a written Request
for Loan which shall specify (i) the requested date of such Loan, (ii)
whether such Loan is to be a Base Rate Loan or a Eurodollar Loan, (iii)
the amount of such Loan, and (iv) the Eurodollar Period for such Loan if
such Loan is to be a Eurodollar Loan.
(c) Promptly following receipt of a Request for Loan, the
Administrative Agent shall notify each Lender thereof by telephone or
telecopier of the date and type of the Loan, the applicable Eurodollar
Period, and that Lender's Pro Rata Share of the Loan. Not later than 11:00
a.m., Los Angeles time, on the date specified for each Loan, each Lender
shall make its Pro Rata Share of that Loan available to the Administrative
Agent at the Administrative Agent's Office in immediately available funds.
Upon fulfilment of the applicable conditions set forth in Article 8, the
Loan shall be credited in immediately available funds to the Funding
Account.
(d) Unless the Requisite Lenders otherwise consent, (i) each
Base Rate Loan shall be in an integral multiple of $100,000 which is not
less than $500,000 and (ii) each Eurodollar Loan shall be in an integral
multiple of $100,000 which is not less than $1,000,000.
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(e) If no Request for Loan has been delivered within the
requisite notice periods set forth in Sections 2.2 or 2.3 in connection
with a Loan which, if made, would not increase the outstanding principal
amount of the Obligations and would not result in the sum of the
outstanding Loans plus the Letter of Credit Usage being in excess of the
Borrowing Base, then the Borrowers shall be deemed to have requested, as
of the date upon which the related then outstanding Loan is due pursuant
to Section 3.1(d)(i) and not paid, a Base Rate Loan in an amount equal to
the amount necessary to cause the outstanding principal amount of the
Obligations to remain the same and the Lenders shall make the Advances
necessary to make such Loan notwithstanding the Borrowers' failure to
deliver a Request for Loan or other notice required by Sections 2.1(c),
2.2 and 2.3.
(f) Unless the Administrative Agent otherwise consents, no
more than four Eurodollar Loans shall be outstanding at any one time.
(g) A Request for Loan shall be irrevocable upon the
Administrative Agent's first receipt thereof.
2.2 Base Rate Loans. Each request by the Borrowers for a Base Rate
Loan shall be made pursuant to a Request for Loan received by the Administrative
Agent, at the Administrative Agent's Office, not later than 9:00 a.m., Los
Angeles time, on the Business Day prior to the Business Day of the requested
Base Rate Loan. All Loans shall constitute Base Rate Loans unless properly
designated as Eurodollar Loans pursuant to Section 2.3.
2.3 Eurodollar Loans.
(a) Each request by the Borrowers for a Eurodollar Loan
shall be made pursuant to a Request for Loan received by the
Administrative Agent, at the Administrative Agent's Office, not later than
9:00 a.m., Los Angeles time, at least three Eurodollar Business Days
before the first day of the applicable Eurodollar Period.
(b) At or about 11:00 a.m., Los Angeles time, two Eurodollar
Business Days before the first day of the applicable Eurodollar Period,
the Administrative Agent shall determine the applicable Eurodollar Rate
(which determination shall be conclusive in the absence of manifest error)
and promptly shall give notice of the same to the Borrowers and the
Lenders by telephone, telecopier or telex.
(c) No Eurodollar Loan may be requested during the
continuance of a Default or Event of Default or which would necessarily
result in a failure of the Borrowers to comply with Section 6.18.
(d) Nothing contained herein shall require any Lender to
fund any Eurodollar Loan in the Designated Eurodollar Market.
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2.4 Redesignation of Loans. The Borrowers may redesignate a Base
Rate Loan, or any portion thereof subject to Section 2.1(c), as a Eurodollar
Loan by delivering a Request for Redesignation to the Administrative Agent
subject to the same time limitations and other conditions set forth in Sections
2.3 and 3.1(e)(iv) in the case of a Request for Loan. The Borrowers may
redesignate a Eurodollar Loan, or any portion thereof subject to Sections 2.1(c)
and 2.1(g), as a Base Rate Loan by delivering a Request for Redesignation to the
Administrative Agent subject to the same time limitations and other conditions
set forth in Sections 2.2 and 3.1(e)(iv); provided that such redesignation shall
not be effective prior to the end of the Eurodollar Period for that Eurodollar
Loan. If no timely Request for Redesignation is delivered to the Administrative
Agent prior to the end of the Eurodollar Period for any Eurodollar Loan, it
shall automatically be redesignated as a Base Rate Loan as of the end of such
Eurodollar Period.
2.5 Letters of Credit.
(a) Subject to the terms and conditions hereof, at any time
and from time to time from the Closing Date through the day prior to the
Maturity Date, the Issuing Lenders severally agree to issue such Letters
of Credit as the Borrowers may request by a Request for Letter of Credit;
provided that:
(i) giving effect to the issuance of such Letter of Credit
(A) the sum of the aggregate outstanding principal balance of the
Loans plus the Letter of Credit Usage shall not exceed (B) the
lesser of the Borrowing Base or the Commitment;
(ii) no Letters of Credit may be requested which would result
in the sum of the aggregate outstanding principal balance of the
Loans plus the Letter of Credit Usage being in excess of $30,000,000
if the effect thereof would be to eliminate the possibility that a
Clean Down Period would occur when required;
(iii) the aggregate undrawn effective face amount of all
Letters of Credit issued in support of the purchase of merchandise
by the Borrowers and their Subsidiaries plus the amount drawn with
respect thereto and not reimbursed as required herein shall not
exceed $15,000,000 at any time; and
(iv) the aggregate undrawn effective face amount of all
Standby Letters of Credit plus the amount drawn and not reimbursed
as required herein shall not exceed $2,000,000 at any time.
(b) Unless all the Lenders otherwise consent in a writing
delivered to the Administrative Agent, the term of a Letter of Credit
shall not exceed one year and shall not extend beyond the Maturity Date,
in the case of standby letters of credit, or the date which is 30 days
prior to the Maturity Date, in the case of commercial letters of credit.
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(c) Each Request for Letter of Credit shall be submitted to
the relevant Issuing Lender and the Administrative Agent at least five
Business Days prior to the date when the issuance of a Letter of Credit is
requested unless such Issuing Lender and the Administrative Agent
otherwise agree in their discretion. Upon issuance of a Letter of Credit,
the Issuing Lenders shall promptly notify the Administrative Agent.
(d) Upon the issuance of a Letter of Credit, each Lender
shall be deemed to have purchased a pro rata participation from the
relevant Issuing Lender, in an amount equal to that Lender's Pro Rata
Share of the Letter of Credit. Without limiting the scope and nature of
each such Lender's participation in any Letter of Credit, to the extent
that such Issuing Lender has not been reimbursed by the Borrowers for any
payment required to be made by such Issuing Lender under any Letter of
Credit, each such Lender shall reimburse the Administrative Agent for the
account of such Issuing Lender in the case of each Letter of Credit,
promptly upon demand for the amount of such payment in accordance with its
Pro Rata Share. The obligation of each such Lender so to reimburse such
Issuing Lender shall be absolute and unconditional and shall not be
affected by the occurrence of an Event of Default or any other occurrence
or event. Any such reimbursement shall not relieve or otherwise impair the
obligation of the Borrowers to reimburse such Issuing Lender for the
amount of any payment made by such Issuing Lender under any Letter of
Credit together with interest as hereinafter provided.
(e) After the making by an Issuing Lender of any payment
with respect to any Letter of Credit issued for the account of the
Borrowers, the Borrowers agree to pay to such Issuing Lender, within one
Business Day after demand therefor, an amount equal to such payment made
by such Issuing Lender under that Letter of Credit, together with interest
on such amount at the rate applicable to Base Rate Loans from the date of
such payment through the date which is one Business Day after demand and,
thereafter, at the Default Rate through the date of payment by the
Borrowers. The principal amount of any such payment made to such Issuing
Lender shall be used to reimburse such Issuing Lender for the payment made
by it under the Letter of Credit. Each Lender that has reimbursed an
Issuing Lender pursuant to Section 2.5(d) for its Pro Rata Share of any
payment made by such Issuing Lender under a Letter of Credit shall
thereupon acquire a participation, to the extent of such reimbursement, in
the claim of such Issuing Lender against the Borrowers under this Section
2.5(e).
(f) If the Borrowers fail to make the payment required by
Section 2.5(e), the Administrative Agent may but is not required to,
without notice to or the consent of the Borrowers, cause Advances (as Base
Rate Loans) to be made by the Lenders in accordance with their respective
Pro Rata Shares in an aggregate amount equal to the amount paid by the
relevant Issuing Lender on that Letter of Credit and, for this purpose,
the conditions precedent set forth in Article 8 shall not apply. The
proceeds of such Advances shall be paid to such Issuing Lender to
reimburse it for the payment made by it under the Letter of Credit.
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(g) The issuance of any supplement, modification, amendment,
renewal, or extension to or of any Letter of Credit shall be treated in
all respects the same as the issuance of a new Letter of Credit, and shall
require the submission of a new Request for Letter of Credit; provided
however that nothing contained in this clause (g) shall require the
payment of any additional issuance fees in respect thereof by any Borrower
other than with respect to any extension of the term thereof or renewal
thereof or any increase in the amount of such Letter of Credit.
(h) The obligation of the Borrowers to pay to an Issuing
Lender the amount of any payment made by such Issuing Lender under any
Letter of Credit issued for the account of that Borrower shall be
absolute, unconditional, and irrevocable, subject only to performance by
such Issuing Lender of its obligations to the Borrowers under California
Commercial Code Section 5109. Without limiting the foregoing, the
obligations of the Borrowers shall not be affected by any of the following
circumstances:
(i) any lack of validity or enforceability of the
Letter of Credit, this Agreement, or any other agreement or
instrument relating thereto;
(ii) any amendment or waiver of or any consent to
departure from the Letter of Credit, this Agreement, or any other
agreement or instrument relating thereto;
(iii) the existence of any claim, setoff, defense, or
other rights which the Borrowers may have at any time against any
Lender, any beneficiary of the Letter of Credit (or any persons or
entities for whom any such beneficiary may be acting) or any other
Person, whether in connection with the Letter of Credit, this
Agreement, or any other agreement or instrument relating thereto, or
any unrelated transactions;
(iv) any demand, statement, or any other document
presented under the Letter of Credit proving to be forged,
fraudulent, invalid, or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect whatsoever so long
as any such document appears to comply with the terms of the Letter
of Credit;
(v) the solvency or financial responsibility of any
party issuing any documents in connection with a Letter of Credit;
(vi) any failure or delay in notice of shipments or
arrival of any Property;
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(vii) any error in the transmission of any message
relating to a Letter of Credit not caused by such Issuing Lender, or
any delay or interruption in any such message;
(viii) any error, neglect or default of any
correspondent of such Issuing Lender in connection with a Letter of
Credit;
(ix) any consequence arising from acts of God, war,
insurrection, disturbances, labor disputes, emergency conditions or
other causes beyond the control of the Lenders;
(x) so long as such Issuing Lender in good faith
determines that the draft, contract or document appears to comply
with the terms of the Letter of Credit, the form, accuracy,
genuineness or legal effect of any contract or document referred to
in any document submitted to such Issuing Lender in connection with
a Letter of Credit; and
(xi) where such Issuing Lender has acted in good faith
and without gross negligence, any other circumstance whatsoever.
(i) The Issuing Lenders shall be entitled to the protection
accorded to the Administrative Agent pursuant to Article 10, mutatis
mutandis.
2.6 Voluntary Reduction of the Commitment. The Borrowers shall
have the right, at any time and from time to time, without penalty or charge,
upon at least five Business Days prior written notice to the Administrative
Agent, voluntarily to reduce, permanently and irrevocably, in aggregate
principal amounts in an integral multiple of $1,000,000, or to terminate, all or
a portion of the then undisbursed portion of the Commitment, provided that any
such reduction or termination shall be accompanied by payment of all accrued and
unpaid commitment fees with respect to the portion of the Commitment being
reduced or terminated.
2.7 Rights to Assume Funds Available for Advances. Provided
Administrative Agent has notified Lenders in accordance with Section 2.1(c),
unless the Administrative Agent shall have been notified by any Lender no later
than 10:00 a.m. (Los Angeles time) on the Business Day prior to the Business Day
proposed for the funding by the Administrative Agent of any Loan that such
Lender does not intend to make available to the Administrative Agent such
Lender's portion of the total amount of such Loan, the Administrative Agent may
assume that such Lender has made such amount available to the Administrative
Agent on the date of the Loan and may, in reliance upon such assumption, make
available to the Borrowers a corresponding amount. If the Administrative Agent
has made funds available to the Borrowers based on such an assumption and such
corresponding amount is not in fact made available to the Administrative Agent
by such Lender, the Administrative Agent shall be entitled to recover such
corresponding amount on demand from such Lender. If such Lender does not pay
such corresponding amount forthwith upon demand therefor,
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the Administrative Agent promptly shall notify the Borrowers and the Borrowers
shall pay such corresponding amount to the Administrative Agent. The
Administrative Agent also shall be entitled to recover from such Lender interest
on such corresponding amount in respect of each day from the date such
corresponding amount was made available by the Administrative Agent to the
Borrowers to the date such corresponding amount is recovered by the
Administrative Agent, at a rate per annum equal to the Federal Funds Rate.
Nothing herein shall be deemed to relieve any Lender from its obligation to
fulfill its Pro Rata Share or to prejudice any rights which the Administrative
Agent and each Borrower may have against any Lender as a result of any default
by such Lender hereunder.
2.8 Collateral. The Obligations shall be secured by a first
priority (subject to Liens permitted by Section 6.9) perfected Lien on the
Collateral pursuant to the Collateral Documents.
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ARTICLE 3
PAYMENTS AND FEES
3.1 Principal and Interest.
(a) Interest shall be payable on the outstanding daily
unpaid principal amount of each Loan from the date thereof until payment
in full is made and shall accrue and be payable at the rates set forth
herein before and after default, before and after maturity, before and
after judgment, and before and after the commencement of any proceeding
under any Debtor Relief Law, with interest on overdue interest to bear
interest at the Default Rate to the fullest extent permitted by applicable
Laws.
(b) Interest accrued on each Base Rate Loan shall be due and
payable on the last Business Day of each calendar month. Except as
otherwise provided in Section 3.7, the unpaid principal amount of each
Base Rate Loan shall bear interest at a fluctuating rate per annum equal
to the Base Rate plus the Base Rate Margin. Each change in the interest
rate for Base Rate Loans shall take effect simultaneously with the
corresponding changes in the Base Rate and the Base Rate Margin.
(c) Interest on each Eurodollar Loan which is for a term of
three months or less shall be due and payable on the last day of the
related Eurodollar Period. Interest accrued on each other Eurodollar Loan
shall be due and payable on the date which is three months after the date
such Eurodollar Loan was made, every three months thereafter and, in any
event, on the last day of the related Eurodollar Period. Except as
otherwise provided in Section 3.7, the unpaid principal amount of any
Eurodollar Loan shall bear interest at a rate per annum equal to the
Eurodollar Rate for that Eurodollar Loan plus the Eurodollar Margin.
(d) If not sooner paid, the principal Indebtedness under
this Agreement shall be payable as follows:
(i) The principal amount of each Eurodollar Loan shall
be immediately payable in cash on the last day of the related
Eurodollar Period.
(ii) The Loans shall be immediately payable in cash in
the amount by which the aggregate outstanding amount of the Loans
plus the Letter of Credit Usage at any time exceeds the lesser of
the Commitment or the Borrowing Base.
(iii) The Loans shall be immediately payable in cash in
the amount by which the aggregate outstanding amount of the Loans
plus the Letter of Credit Usage exceeds $30,000,000 on March 1 of
each year unless a Clean Down Period has previously been completed
in that year.
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(iv) The Loans shall be payable immediately in cash on
the Maturity Date.
(e) The Loans may, at any time and from time to time,
voluntarily be paid or prepaid in whole or in part without premium or
penalty and without prior notice, except that with respect to any
voluntary prepayment under this Section 3.1(e), (i) each prepayment shall
be in an integral multiple of $100,000, which is, in the case of any
prepayment of any Eurodollar Loan, not less than $500,000 or, if less, the
balance of the Loan, (ii) the Administrative Agent shall have received
written notice of any prepayment at least one Business Day, in the case of
a Base Rate Loan, or by 9:00 a.m. (California local time) three Business
Days, in the case of a Eurodollar Loan, before the date of prepayment,
which notice shall identify the date and amount of the prepayment and the
Loan(s) being prepaid, (iii) each prepayment of principal in respect of a
Eurodollar Loan shall be accompanied by payment of interest accrued
through the date of payment on the amount of principal paid and (iv) in
any event, any payment or prepayment of all or any part of any Eurodollar
Loan on a day other than the last day of the applicable Eurodollar Period
shall be subject to Section 3.6(d).
3.2 Commitment Fees. From and after the Closing Date, the
Borrowers shall pay commitment fees to the Administrative Agent for the ratable
account of the Lenders in amount equal to the Commitment Fee Rate times the
average daily amount by which the Commitment exceeds the sum of the principal
amount of the outstanding Loans and the Letter of Credit Usage. These commitment
fees shall be payable quarterly in arrears on the last Business Day of each
Fiscal Quarter, upon any termination or reduction of the Commitment, and on the
Maturity Date.
3.3 Letter of Credit Fees. With respect to each Letter of Credit
issued by an Issuing Lender, the Borrowers shall pay to such Issuing Lender the
following fees on a non-refundable basis prior to the issuance of such Letter of
Credit:
(i) prior to the issuance of any Letter of Credit, a
fronting fee in an amount set forth in a letter agreement with such
Issuing Lender, which fee shall be for the sole account of such
Issuing Lender, plus
(ii) for the ratable account of the Lenders, a letter
of credit fee equal to the then applicable Eurodollar Margin times
the maximum face amount of each Letter of Credit for the tenor of
the Letter of Credit, plus
(iii) for the sole account of such Issuing Lender, such
standard payment, negotiation, processing, amendment and other
similar charges as and when such Issuing Lender may from time to
time advise the Borrowers are applicable to Letters of Credit.
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3.4 Upfront Fees. On the Closing Date, the Borrowers shall pay to
the Administrative Agent for the account of the Lenders upfront fees in the
amounts set forth in a fee letter of even date herewith between the
Administrative Agent and the Company. The Administrative Agent has advised each
Lender of the rate at which such fees shall be paid upon its allocated Pro Rata
Share. The upfront fees are fully earned when due and are not refundable under
any circumstances.
3.5 Capital Adequacy. If any Lender determines that either (i) the
introduction of or any change in any law, order or regulation or in the
interpretation or administration of any law, order or regulation by any
Governmental Agency charged with the interpretation thereof or (ii) compliance
with any guideline or request issued or made from the date hereof from any such
Governmental Agency (whether or not having the force of law) has or would have
the effect of reducing the rate of return on the capital of that Lender or any
corporation controlling that Lender as a consequence of that Lender's Pro Rata
Share or the making or maintaining of Loans or Letters of Credit below the rate
at which that Lender or such other corporation could have achieved but for such
introduction, change or compliance (taking into account the policies of that
Lender or corporation with regard to capital), then the Borrowers shall from
time to time, upon demand by such Lender, pay to that Lender additional amounts
sufficient to compensate such Lender or other corporation for such reduction. A
certificate as to such amounts, submitted to the Borrowers by the relevant
Lender, shall be conclusive and binding for all purposes, absent manifest error.
3.6 Eurodollar Fees and Costs.
(a) If, after the date hereof, the existence or occurrence
of any Special Eurodollar Circumstance:
(1) shall subject any Lender or its Eurodollar Lending
Office to any tax, duty or other charge or cost with respect to any
Eurodollar Rate Advance, or its obligation to make Eurodollar Rate
Advances, or shall change the basis of taxation of payments to any
Lender of the principal of or interest on any Eurodollar Rate
Advance or any other amounts due under this Agreement in respect of
any Eurodollar Rate Advance or its obligation to make Eurodollar
Rate Advances (except for changes in any tax, duty or other charge
on the overall net income, gross income or gross receipts of such
Lender or its Eurodollar Lending Office);
(2) shall impose, modify or deem applicable any
reserve (including any reserve imposed by the Board of Governors of
the Federal Reserve System), special deposit or similar requirements
against assets of, deposits with or for the account of, or credit
extended by, any Lender or its Eurodollar Lending Office; or
(3) shall impose on any Lender or its Eurodollar
Lending Office or the Designated Eurodollar Market any other
condition affecting any Eurodollar
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Loan, its obligation to make Eurodollar Rate Advances or this
Agreement, or shall otherwise affect any of the same;
and the result of any of the foregoing, as reasonably determined by such
Lender, increases the cost to such Lender or its Eurodollar Lending Office
of making or maintaining any Eurodollar Rate Advance or in respect of any
Eurodollar Rate Advance, its obligation to make Eurodollar Rate Advances
or reduces the amount of any sum received or receivable by such Lender or
its Eurodollar Lending Office with respect to any Eurodollar Rate Advance
or its obligation to make Eurodollar Rate Advances (assuming the Lender's
Eurodollar Lending Office had funded 100% of its Eurodollar Rate Advance
in the Designated Eurodollar Market), then, upon demand by such Lender
(with a copy to the Administrative Agent), the relevant Borrower shall pay
to such Lender such additional amount or amounts as will compensate such
Lender for such increased cost or reduction (determined as though such
Lender's Eurodollar Lending Office had funded 100% of its Eurodollar Rate
Advance in the Designated Eurodollar Market). A statement 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. Each Lender agrees to endeavour promptly to
notify the relevant Borrower of any event of which it has actual knowledge
(and, in any event, within one year from the date on which it obtained
such knowledge), occurring after the Closing Date, which will entitle such
Lender to compensation pursuant to this Section, and agrees to designate a
different Eurodollar 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, otherwise be disadvantageous to such Lender.
(b) If, after the date hereof, the existence or occurrence
of any Special Eurodollar Circumstance shall, in the reasonable opinion of
any Lender, make it unlawful, impossible or impracticable for such Lender
or its Eurodollar Lending Office to make, maintain or fund any Eurodollar
Loan, or materially restrict the authority of such Lender to purchase or
sell, or to take deposits of, Dollars in the Designated Eurodollar Market,
or to determine or charge interest rates based upon the Eurodollar Rate,
and such Lender shall so notify the Administrative Agent and the
Borrowers, then such Lender's obligation to make Eurodollar Rate Advances
shall be suspended for the duration of such illegality, impossibility or
impracticability and the Administrative Agent forthwith shall give notice
thereof to the other Lenders and the Borrowers. Upon receipt of such
notice, the outstanding principal amount of such Lender's Eurodollar Rate
Advances, together with accrued interest thereon, automatically shall be
converted to Base Rate Advances with Eurodollar Periods corresponding to
the Eurodollar Loans of which such Eurodollar Rate Advances were a part on
either (1) the last day of the Eurodollar Period(s) applicable to such
Eurodollar Rate Advances if such Lender may lawfully continue to maintain
and fund such Eurodollar Rate Advances to such day(s) or (2) immediately
if such Lender may not lawfully continue to fund and maintain such
Eurodollar Rate Advances to such day(s), provided that in such event the
conversion shall not be subject to payment of a prepayment
39-
fee under Section 3.6(d). In the event that such Lender is unable, for the
reasons set forth above, to make, maintain or fund any Eurodollar Loan,
such Lender shall fund such amount as a Base Rate Advance for the same
period of time, and such amount shall be treated in all respects as a Base
Rate Advance.
(c) If, with respect to any proposed Eurodollar Loan:
(1) the Administrative Agent reasonably determines
that, by reason of circumstances affecting the Designated Eurodollar
Market generally that are beyond the reasonable control of the
Lenders, deposits in Dollars (in the applicable amounts) are not
being offered to the Lenders in the Designated Eurodollar Market for
the applicable Eurodollar Period; or
(2) the Requisite Lenders advise the Administrative
Agent that the Eurodollar Rate as determined by the Administrative
Agent (i) does not represent the effective pricing to such Lenders
for deposits in Dollars in the Designated Eurodollar Market in the
relevant amount for the applicable Eurodollar Period, or (ii) will
not adequately and fairly reflect the cost to such Lenders of making
the applicable Eurodollar Rate Advances;
then the Administrative Agent forthwith shall give notice thereof to the
Borrowers and the Lenders, whereupon until the Administrative Agent
notifies the Borrowers that the circumstances giving rise to such
suspension no longer exist, the obligation of the Lenders to make any
future Eurodollar Rate Advances shall be suspended. If at the time of such
notice there is then pending a Request for Loan that specifies a
Eurodollar Loan, such Request for Loan shall be deemed to specify a Base
Rate Loan.
(d) Upon payment or prepayment of any Eurodollar Loan (other
than as the result of a conversion required under Section 3.6(b)), on a
day other than the last day in the applicable Eurodollar Period (whether
voluntarily, involuntarily, by reason of acceleration, or otherwise), or
upon the failure of a Borrower to borrow on the date or in the amount
specified for a Eurodollar Loan in any Request for Loan, the relevant
Borrower shall indemnify the Lenders against and reimburse each Lender on
demand for all costs, expenses, penalties, losses, legal fees and damages
incurred or sustained, or that would be incurred or sustained, by the
Lenders, including loss of interest, as reasonably determined by the
Lenders, to the extent that the same are a direct result of such payment,
prepayment or failure to borrow. Each Lender's determination of the amount
payable under this Section 3.6(d) shall be conclusive in the absence of
manifest error. The Borrower shall also pay any customary administrative
fees charged by such Lender in connection with the foregoing. For purposes
of calculating amounts payable by Borrowers to the Lenders under this
Section 3.6, each Lender shall be deemed to have funded each Eurodollar
Loan made by it at the Eurodollar Rate for such Loan by a matching deposit
or other borrowing in the
40-
Designated Eurodollar Market for a comparable amount and for a comparable
period, whether or not such Eurodollar Rate Loan was in fact so funded.
3.7 Post Default Interest and Late Payments. So long as any Event
of Default has occurred and is continuing, the Loans shall thereafter bear
interest, and, in any event if any installment of principal or interest or any
fee or cost or other amount payable under any Loan Document to any Creditor
Party is not paid when due, the Obligations shall thereafter bear interest until
any overdue amount is paid in full or the Event of Default is cured or waived,
at a fluctuating interest rate per annum at all times equal to 2% per annum
above the rate of interest that would otherwise be applicable pursuant to this
Agreement (the "Default Rate"), to the fullest extent permitted by applicable
Laws. Accrued and unpaid interest on past due amounts (including interest on
past due interest) shall be compounded quarterly, on the last day of each
calendar quarter, to the fullest extent permitted by applicable Laws.
3.8 Right to Assume Payments Will be Made by the Borrowers. Unless
the Administrative Agent shall have been notified by the relevant Borrower prior
to the date on which any payment to be made by that Borrower hereunder is due
that such Borrower does not intend to remit such payment, the Administrative
Agent may, in its sole discretion, assume that such Borrower has remitted such
payment when so due and may, in its sole discretion and in reliance upon such
assumption, make available to each Lender on such payment date an amount equal
to such Lender's share of such assumed payment. If such Borrower has not in fact
remitted such payment to the Administrative Agent each Lender shall forthwith on
demand repay to the Administrative Agent the amount of such assumed payment made
available to such Lender, together with interest thereon in respect of each day
from and including the date such amount was made available by the Administrative
Agent to such Lender to the date such amount is repaid to the Administrative
Agent at the Federal Funds Rate.
3.9 Computation of Interest and Fees. Computation of Base Rate
interest hereunder shall be made on the basis of a year of 365 days (or 366 days
for leap years) and the actual number of days elapsed. Calculation of all other
interest or fees under this Agreement shall be calculated on the basis of a year
of 360 days and the actual number of days elapsed. The Borrowers acknowledge
that such calculation method will result in a higher yield to the Lenders than a
method based on a year of 365 or 366 days.
3.10 Non-Business Days. If any payment to be made by a Borrower or
any other Party under any Loan Document shall come due on a day other than a
Business Day, payment shall instead be considered due on the next succeeding
Business Day and the extension of time shall be reflected in computing interest.
3.11 Manner and Treatment of Payments.
(a) Each payment hereunder shall be made to the
Administrative Agent, at the Administrative Agent's Office, for the
account of the relevant Creditor Party in
41-
immediately available funds not later than 11:00 a.m., Los Angeles time,
on the day of payment (which must be a Business Day). All payments
received after these deadlines on any Business Day, shall be deemed
received on the next succeeding Business Day. The amount of all payments
received by the Administrative Agent for the account of any Lender shall
be promptly paid by the Administrative Agent to that Lender in immediately
available funds. All payments shall be made in Dollars.
(b) Each Lender shall use its best efforts to keep a record
of Advances made by it and payments received by it with respect to each of
the Loans and such record shall, as against each Borrower, be presumptive
evidence of the amounts owing. Notwithstanding the foregoing sentence, no
Lender shall be liable to any Party for any failure to keep such a record.
(c) Each payment of any amount payable by a Borrower or any
other Party under this Agreement or any other Loan Document shall be made
free and clear of, and without reduction by reason of, any taxes,
assessments or other charges imposed by any Governmental Agency, central
bank or comparable authority (other than taxes on overall net income,
gross income or gross receipts of a Lender or its Eurodollar Lending
Office). To the extent that a Borrower is obligated by applicable Laws to
make any deduction or withholding on account of taxes, assessments or
other charges imposed by any Governmental Agency from any amount payable
to any Lender under this Agreement, such Borrower shall (i) make such
deduction or withholding and pay the same to the relevant Governmental
Agency and (ii) pay such additional amount to that Lender as is necessary
to result in that Lender's receiving a net after-tax (or after-assessment
or after-charge) amount equal to the amount to which that Lender would
have been entitled under this Agreement absent such deduction or
withholding.
3.12 Funding Sources. Nothing in this Agreement shall be deemed to
obligate any Lender to obtain the funds for any Loan in any particular place or
manner or to constitute a representation by any Lender that it has obtained or
will obtain the funds for any Loan in any particular place or manner.
3.13 Failure to Charge Not Subsequent Waiver. Any decision by any
Creditor Party not to require payment of any interest (including interest
arising under Section 3.7), fee, cost or other amount payable under any Loan
Document, or to calculate any amount payable by a particular method, on any
occasion shall in no way limit or be deemed a waiver of that Creditor Party's
right to require full payment of any interest (including interest arising under
Section 3.7), fee, cost or other amount payable under any Loan Document, or to
calculate an amount payable by another method, on any other or subsequent
occasion.
42-
3.14 Authority to Charge Account. The Borrowers hereby authorize
Bank of America upon notice from the Administrative Agent to charge the Funding
Account and thereafter to remit to the Administrative Agent, in such amounts as
may from time to time be necessary to cause timely payment of principal,
interest, fees and other charges payable by the Borrowers under the Loan
Documents.
3.15 Survivability. All of the Borrowers' obligations under
Sections 3.5 and 3.6 shall survive the date on which all Loans hereunder are
fully paid.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants to the Creditor Parties as
follows:
4.1 Accounts Receivable and Inventory. Each account described on
any Borrowing Base Certificate delivered to the Administrative Agent as an
Eligible Account is fully earned and is the subject of an appropriate invoice to
the customer and otherwise fulfills the eligibility criteria set forth in the
definition of "Eligible Accounts." All inventory reported on any Borrowing Base
Certificate delivered to the Administrative Agent as Eligible Inventory is of
merchantable quality, is salable in the ordinary course of business of the
Borrower and its Subsidiaries and otherwise fulfills the eligibility criteria
set forth in the definition of "Eligible Inventory."
4.2 Existence and Qualification; Power; Compliance With Laws. Each
Borrower is a corporation duly formed, validly existing and in good standing
under the laws of the state of its incorporation, as described in the preamble
to this Agreement. Each of the Borrowers is duly qualified to transact business,
is in good standing in its jurisdiction of incorporation and each other
jurisdiction, in which the conduct of its business or the ownership or leasing
of its properties makes such qualification or registration necessary, except
where the failure so to qualify or register and to be in good standing would not
constitute a Material Adverse Effect. The chief executive offices and principal
place of business of each Borrower are located at the addresses for notices set
forth for that Borrower in the signature pages to this Agreement. Each of the
Borrowers has all requisite corporate power and authority to conduct its
business, to own and lease its properties and to execute and deliver each Loan
Document to which it is a party and to perform the Obligations. All outstanding
shares of capital stock of each Borrower are duly authorized, validly issued,
fully paid, non-assessable and issued in compliance with all applicable state
and federal securities and other Laws. Except as set forth on Schedule 4.2, no
Person holds any material option, warrant or other right to acquire any shares
of capital stock of any Borrower. Each Borrower is in compliance with all Laws
and other legal requirements applicable to its business, has obtained all
authorizations, consents, approvals, orders, licenses and permits from, and has
accomplished all filings, registrations and qualifications with, or obtained
exemptions from any of the foregoing from, any Governmental Agency that are
necessary for the transaction of its business, except where the failure so to
comply, file, register, qualify or obtain exemptions does not constitute a
Material Adverse Effect.
4.3 Authority; Compliance With Other Agreements and Instruments
and Government Regulations. The execution, delivery and performance by each
Borrower and the Guarantors of each Loan Document to which it is a Party have
been duly authorized by all necessary corporate action, and do not:
(a) Require any consent or approval of any partner,
director, stockholder, security holder or creditor of such Party, except
as heretofore obtained;
44-
(b) Violate or conflict with any provision of that such
Party's charter, articles or certificate of incorporation or bylaws, as
applicable;
(c) Result in or require the creation or imposition of any
Lien or right of others (other than pursuant to the Collateral Documents)
upon or with respect to any Property now owned or leased or hereafter
acquired by that Party;
(d) Violate any Requirement of Law applicable to such Party;
(e) Result in a breach of or constitute a default under, or
cause or permit the acceleration of any obligation owed under, any
indenture or loan or credit agreement or any other Contractual Obligation
to which such Party is a party or by which such Party or any of its
Property is bound;
and no Party is in violation of, or default under, any Requirement of Law or
Contractual Obligation, or any indenture, loan or credit agreement described in
Section 4.3(e), in any respect that constitutes a Material Adverse Effect.
4.4 No Governmental Approvals Required. No authorization, consent,
approval, order, license or permit from, or filing, registration or
qualification with, any Governmental Agency is required to authorize or permit
under applicable Laws the execution, delivery and performance by any Borrowers
or Guarantor of any of the Loan Documents to which it is a Party.
4.5 Subsidiaries.
(a) As of the Closing Date, Schedule 4.5 hereto correctly
sets forth the names, the form of legal entity, jurisdictions of
organization, chief executive offices and principal place of business of
all Subsidiaries of the Borrowers. Except as described in Schedule 4.5,
none of the Borrowers owns as of the Closing Date any capital stock or
equity interest in any Person. All of the outstanding shares of capital
stock, or all of the units of equity interest, as the case may be, of each
such Subsidiary which is wholly-owned by a Borrower are (and as to each
partially owned Subsidiary, to the best knowledge of the Borrowers, are)
owned of record and beneficially as indicated on Schedule 4.5, except as
set forth thereon, and all such shares or equity interests so owned are
duly authorized, validly issued, fully paid, nonassessable, and were
issued in compliance with all applicable state, federal and other Laws,
and are free and clear of all Liens.
(b) Each such Subsidiary is a legal entity of the form
described for that Subsidiary in Schedule 4.5, duly organized, validly
existing, and in good standing under the Laws of its jurisdiction of
organization, is duly qualified to do business as a foreign organization
and is in good standing as such, and has filed fictitious business name
statements, in each jurisdiction in which the conduct of its business or
the ownership or leasing of its properties makes such qualification
necessary (except where the failure to be
45-
so duly qualified and in good standing does not constitute a Material
Adverse Effect), and has all requisite power and authority to conduct its
business and to own and lease its properties.
(c) Each such Subsidiary is in compliance with all Laws and
other requirements applicable to its business and has obtained all
authorizations, consents, approvals, orders, licenses, and permits from,
and each such Subsidiary has accomplished all filings, registrations, and
qualifications with, or obtained exemptions from any of the foregoing
from, any Governmental Agency that are necessary for the transaction of
its business, except where the failure to be in such compliance, obtain
such authorizations, consents, approvals, orders, licenses, and permits,
accomplish such filings, registrations, and qualifications, or obtain such
exemptions, does not constitute a Material Adverse Effect.
4.6 Financial Statements. The Borrowers have furnished to the
Administrative Agent (a) the audited consolidated and unaudited consolidating
financial statements of the Company and its Subsidiaries for the Fiscal Year
ended December 31, 2000 and (b) the internally prepared consolidated and
consolidating financial statements of the Company and its Subsidiaries for the
three month fiscal period ended June 30, 2001. Such financial statements fairly
present in all material respects the financial condition, results of operations
and changes in financial position of the Company and its Subsidiaries as of such
dates and for such periods in conformity with Generally Accepted Accounting
Principles consistently applied, subject only to normal year-end accruals and
audit adjustments.
4.7 No Other Liabilities; No Material Adverse Effect. The
Borrowers and their Subsidiaries do not have any material liability or material
contingent liability required under Generally Accepted Accounting Principles to
be reflected or disclosed, and not reflected or disclosed, in the financial
statements described in Section 4.6, other than liabilities and contingent
liabilities arising in the ordinary course of business since the date of such
financial statements. As of the Closing Date, no circumstance or event has
occurred that constitutes a Material Adverse Effect since December 31, 2000.
4.8 Title to and Location of Property. The Borrowers and their
Subsidiaries have valid title to the Property (other than assets which are the
subject of a Capital Lease) reflected in the financial statements described in
Section 4.6, other than items of Property or exceptions to title which are in
each case immaterial and Property subsequently sold or disposed of in the
ordinary course of business. Such Property of the Borrowers and the Subsidiaries
is free and clear of all Liens and Rights of Others, other than those permitted
under Section 6.9. All Property of the Borrowers and their Subsidiaries is
located at one of the locations described in Schedule 4.8.
4.9 Intangible Assets. The Borrowers and their Subsidiaries own,
or possess the right to use to the extent necessary in their respective
businesses, all material trademarks, trade names, copyrights, patents, patent
rights, computer software, licenses and other intangible assets that are used in
the conduct of their businesses as now operated. None of the intangible assets
46-
described in the first sentence of this Section, to the best knowledge of each
Borrower, conflicts with the valid trademark, trade name, copyright, patent,
patent right or intangible asset of any other Person to the extent that such
conflict constitutes a Material Adverse Effect.
4.10 Governmental Regulation. Neither any of the Borrowers nor any
Subsidiary of any of the Borrowers is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, the Interstate
Commerce Act, the Investment Company Act of 1940 or to any other Law limiting or
regulating its ability to incur Indebtedness for money borrowed.
4.11 Litigation. Except for (a) any matter fully covered (subject
to applicable deductibles and retentions) by insurance for which the insurance
carrier has assumed full responsibility, (b) any matter, or series of related
matters, involving a claim against the Borrowers or any of their Subsidiaries of
less than $250,000, and (c) matters set forth in Schedule 4.11, as of the
Closing Date, there are no actions, suits, proceedings or investigations pending
as to which any of the Borrowers or any Subsidiary of any of the Borrowers has
been served or has received written notice or, to the best knowledge of the
Borrowers, threatened against or affecting any of the Borrowers, any Subsidiary
of any of the Borrowers or any Property of any of them before any Governmental
Agency. Except for matters set forth in Schedule 4.11, there is no reasonable
basis, to the best knowledge of the Borrowers, for any action, suit, proceeding
or investigation against or affecting any of the Borrowers, any Subsidiary of
any of the Borrowers or any Property of any of them before any Governmental
Agency which would constitute a Material Adverse Effect.
4.12 Binding Obligations. Each of the Loan Documents to which the
Borrowers and the Guarantors are a party will, when executed and delivered by
such Party, constitute the legal, valid and binding obligation of such Party,
enforceable against such Party in accordance with its terms, except as
enforcement may be limited by Debtor Relief Laws or equitable principles
relating to the granting of specific performance and other equitable remedies
and/or defenses as a matter of judicial discretion.
4.13 No Default. No event has occurred and is continuing that is a
Default or Event of Default.
4.14 ERISA.
(a) Except as disclosed in Schedule 4.14, as of the Closing
Date, neither any of the Borrowers nor any ERISA Affiliate of any of the
Borrowers maintains, contributes to or is required to contribute to any
"employee pension benefit plan" that is subject to Title IV of ERISA.
(b) With respect to each Pension Plan disclosed in Schedule
4.14:
(i) such Pension Plan complies in all material
respects with ERISA and any other applicable Laws;
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(ii) such Pension Plan has not incurred any material
"accumulated funding deficiency", as that term is defined in Section
302 of ERISA;
(iii) no "reportable event" (as defined in Section 4043
of ERISA) has occurred that would subject any of the Borrowers or
any Subsidiary of a Borrower to any liability with respect to such
Pension Plan that would constitute a Material Adverse Effect;
(iv) neither any of the Borrowers nor any Subsidiary of
a Borrower has engaged in any non-exempt "prohibited transaction"
(as defined in Section 4975 of the Code) that would subject any of
the Borrowers or any Subsidiary of a Borrower to any penalty that
would constitute a Material Adverse Effect;
(v) no Termination Event has occurred or may
reasonably be expected to occur; and
(vi) no material unfunded vested liabilities exist
under any Pension Plan and the present value of all benefit
liabilities under each Pension Plan and each Pension Plan of a
Subsidiary and of an ERISA Affiliate do not exceed by a material
amount the value of the assets of such Plan.
(c) As of the Closing Date, all contributions required to be
made by the Borrowers or any of their Subsidiaries to a Multiemployer Plan
described in Schedule 4.14 have been made except as may be described in
Schedule 4.14. None of the Borrowers, any Subsidiary of any of the
Borrowers, nor any ERISA Affiliate has incurred any withdrawal liability
under Section 4201 of ERISA that could have a Material Adverse Effect.
Neither any of the Borrowers nor any ERISA Affiliate of any of the
Borrowers has received any notification that any Multiemployer Plan is in
reorganization or has been terminated, within the meaning of Title IV of
ERISA, and no Multiemployer Plan is reasonably expected to be in
reorganization or to be terminated, where such reorganization has resulted
or can reasonably be expected to result in an increase in the
contributions required to be made to such plan that could have a Material
Adverse Effect.
(d) Each of the Borrowers, their Subsidiaries and their
ERISA Affiliates are in compliance with those provisions of ERISA which
are applicable to the Borrowers, their Subsidiaries and their ERISA
Affiliates, the non-compliance with which would have a Material Adverse
Effect.
4.15 Regulations T, U and X. No part of the proceeds of any Loan
hereunder will be used to purchase or carry, or to extend credit to others for
the purpose of purchasing or carrying, any "margin stock" (as such term is
defined in Regulation U) in violation of Regulations T,
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U or X. Neither any of the Borrowers nor any Subsidiary of a Borrower is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any such "margin stock."
4.16 Disclosure. No written statement made by a Responsible
Official of any Borrower or any Guarantor to any Creditor Party in connection
with this Agreement, or in connection with any Loan, contains any untrue
statement of a material fact or omits a material fact (which fact is known to
such Borrower or Guarantor, in the case of materials not furnished by such
Borrower or Guarantor) necessary to make the statement made not misleading in
light of all the circumstances existing at the date the statement was made.
There is no fact known to any Borrower or Guarantor (other than facts generally
applicable to businesses of the types engaged in by the Borrowers) which would
constitute a Material Adverse Effect that has not been disclosed in writing to
the Lenders.
4.17 Tax Liability. The Borrowers and their Subsidiaries have filed
all tax returns which are required to be filed, and have paid, withheld,
collected or remitted, all taxes, interest, penalties and installments of taxes
due and payable by them with respect to the periods, Property or transactions
covered by such returns, or pursuant to any assessment received by either any of
the Borrowers or any Subsidiary of a Borrower, except (a) taxes for which such
Borrower or Subsidiary has been fully indemnified and (b) such taxes, if any, as
are being contested in good faith by appropriate proceedings diligently pursued
and as to which adequate reserves have been established and maintained. To the
best knowledge of the Borrowers, there is no tax assessment contemplated or
proposed by any Governmental Agency against any Borrower or any Subsidiary of a
Borrower that would constitute a Material Adverse Effect.
4.18 Projections. To the best knowledge of each Borrower, the
assumptions set forth in the Projections are reasonable and consistent with each
other and with all facts known to the Borrowers. No material assumption is
omitted as a basis for the Projections and the Projections are reasonably based
on such assumptions. Nothing in this Section shall be construed as a
representation or covenant that the Projections in fact will be achieved.
4.19 Security Interests. The Collateral Documents create a valid
security interest in the Collateral described therein in favor of the
Administrative Agent securing the Obligations. Upon (a) the filing of UCC-1
financing statements delivered to the Administrative Agent pursuant to Section
8.1(a) with the appropriate Governmental Agencies, and (b) the filing of the
Trademark Security Agreement with the United States Patent and Trademark Office,
all action necessary to perfect the security interests so created by the
Collateral Documents described in this sentence, will have been taken and
completed (except for the requirement that continuation statements periodically
must be filed and/or recorded with respect to financing statements on file in
favor of the Administrative Agent). Such security interests are of first
priority except as otherwise permitted under this Agreement.
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4.20 Hazardous Materials.
(a) Except as specifically disclosed in Schedule 4.20, the
on-going operations of the Borrowers and their Subsidiaries, and to the
best of their knowledge the on-going operations of all current tenants,
subtenants or other occupants of all or any part of the real property
described on Schedule 4.8 (the "Real Property"), are conducted in
accordance with and comply in all respects with all Environmental Laws,
except such non-compliance which would not (if enforced in accordance with
applicable Law) result in liability in excess of $100,000 in the
aggregate.
(b) Except as specifically disclosed in Schedule 4.20, the
Borrowers and each of their Subsidiaries have obtained all licenses,
permits, authorizations and registrations required under any Environmental
Law ("Environmental Permits") and necessary for their respective ordinary
course operations, all such Environmental Permits are in good standing,
and the Borrowers and each of their Subsidiaries are in compliance with
all material terms and conditions of such Environmental Permits.
(c) Except as specifically disclosed in Schedule 4.20,
neither any of the Borrowers nor any Subsidiary of any of the Borrowers
(nor to the best of their knowledge no current tenants, or other occupants
of all or part of the Real Property) or any of their respective present
Property or operations, is subject to any existing, pending, threatened or
outstanding written order, suit, claim, proceeding, investigation, order,
comment, injunction, writ, award, action or proceeding from or agreement
with any Governmental Agency or third party, nor subject to any judicial
or docketed administrative proceeding, respecting any Environmental Law,
Environmental Claim or Hazardous Material.
(d) Except as specifically disclosed in Schedule 4.20, there
are no Hazardous Materials or other conditions or circumstances existing
with respect to any Property, or arising from operations prior to the
Closing Date, of the Borrowers or any of their Subsidiaries that could
reasonably be expected to give rise to Environmental Claims with a
potential liability of the Borrowers and their Subsidiaries in excess of
$100,000 in the aggregate for any such condition, circumstance or
Property. In addition, (i) neither any of the Borrowers nor any Subsidiary
of any of the Borrowers has any underground storage tanks (x) that are not
properly registered or permitted under applicable Environmental Laws, or
(y) that are leaking or disposing of Hazardous Materials off-site, and
(ii) the Borrowers and their Subsidiaries have notified all of their
employees of the existence, if any, of any health hazard arising from the
conditions of their employment and have met all notification requirements
under Title III of CERCLA and all other Environmental Laws.
4.21 Material Contracts. As of the Closing Date, except as
disclosed on Schedule 4.21, neither any of the Borrowers nor any Subsidiary of a
Borrower is a party to any Material Contract.
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ARTICLE 5
AFFIRMATIVE COVENANTS
(OTHER THAN INFORMATION AND
REPORTING REQUIREMENTS)
So long as any Loan remains unpaid, any Letter of Credit remains
outstanding, any other Obligation remains unpaid, or any portion of the
Commitment remains in force, the Borrowers shall, and shall cause each of their
respective Subsidiaries to, unless the Requisite Lenders otherwise consent in
writing:
5.1 Payment of Taxes and Other Potential Liens. Pay, collect,
withhold, remit and discharge promptly all taxes, assessments and governmental
charges or levies imposed upon any of them, upon their respective Property or
any part thereof, upon their respective income or profits or any part thereof or
upon any right or interest of the Creditor Parties under any Loan Document,
except that the Borrowers and their Subsidiaries shall not be required to pay or
cause to be paid (a) any income or gross receipts tax or any other tax on or
measured by income generally applicable to banks or their corporate parents or
(b) any tax, assessment, charge or levy that is not yet past due, or is being
contested in good faith by appropriate proceedings diligently pursued, so long
as the relevant entity has established and maintains adequate reserves for the
payment of the same and by reason of such nonpayment and contest there is no
material risk that any item or portion of Property of the Borrowers or their
Subsidiaries would be seized, levied upon or forfeited.
5.2 Preservation of Existence. Preserve and maintain, or cause to
be maintained and preserved, their respective existences in the jurisdictions of
their formation and all authorizations, rights, franchises, privileges,
consents, approvals, orders, licenses, permits, or registrations from any
Governmental Agency that are necessary for the transaction of their respective
businesses, and qualify and remain qualified to transact business in each
jurisdiction in which such qualification is necessary in view of their
respective businesses or the ownership or leasing of their respective
properties, except where the failure to do so would not result in a Material
Adverse Effect.
5.3 Maintenance of Properties. Maintain, preserve and protect, or
cause to be maintained, preserved and protected, all of their respective
depreciable properties in good order and condition, subject to wear and tear in
the ordinary course of business, or damage or destruction from casualties which
are fully covered by insurance (subject to customary deductibles and
retentions), and not permit any waste of their respective properties, except
that the failure to maintain, preserve and protect a particular item of
depreciable Property that is not of significant value, either intrinsically or
to the operations of the Borrowers and their Subsidiaries, taken as a whole,
shall not constitute a violation of this covenant.
5.4 Maintenance of Insurance. Maintain, or cause to be maintained,
liability, casualty and other insurance (subject to customary deductibles and
retentions) in such amounts and against such risks as are customary for
similarly situated businesses, including public liability insurance, business
interruption insurance and all-risk casualty insurance with respect to all of
the
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Borrowers' tangible personal property. Such insurance shall be maintained, in
amounts and with responsible insurance companies reasonably acceptable to the
Requisite Lenders. The Administrative Agent shall be named as additional insured
and loss payee as its interests may appear, with respect to casualty insurance
on all Collateral, and the Borrowers shall deliver to the Administrative Agent,
not less frequently than once in each calendar year, (a) an Accord Certificate
(or its equivalent) evidencing that insurance of the types required by this
Section and the Collateral Documents is in force and (b) a Lenders Loss Payable
Endorsement on Form 438-BFU (or its equivalent) evidencing that the
Administrative Agent is an additional insured and loss payee with respect to all
risk casualty insurance and other insurance requested by the Administrative
Agent.
5.5 Compliance With Laws. Comply with, or cause to be complied
with, all Requirements of Laws, noncompliance with which could constitute a
Material Adverse Effect.
5.6 Inspection Rights. Upon reasonable notice, at any time during
regular business hours and as often as requested (but not so as to materially
interfere with the business of the Borrowers or any of their Subsidiaries),
permit the Administrative Agent or any Lender, or any authorized employee, agent
or representative thereof, (a) to examine, audit and make copies and abstracts
from the records and books of account of, (b) to visit, and inspect the
Properties of, the Borrowers and their Subsidiaries, (c) to discuss the affairs,
finances and accounts of the Borrowers and their Subsidiaries with any of their
officers, key employees or accountants or with any relevant taxing authority,
and (d) in the case of the Administrative Agent, to discuss the accounts of the
Borrowers and their Subsidiaries with vendors upon the occurrence and during the
continuance of an Event of Default, and, upon request, furnish promptly to the
Administrative Agent true copies of all financial information made available to
the senior management of the Borrowers or any of their Subsidiaries. The
Administrative Agent may conduct audits of the Borrowers' books and records and
of the Collateral in its discretion at the sole expense of the Borrowers and,
while it is anticipated that these audits will be annual, the same may be
conducted more frequently if reasonably requested by the Administrative Agent or
the Requisite Lenders. The Administrative Agent may, at any time, either orally
or in writing, request confirmation from any account debtor, of the current
amount and status of the accounts receivable upon which such account debtor is
obligated to any of the Borrowers, provided that the Administrative Agent shall
use reasonable care to avoid undue interruption of the business of Borrowers and
their Subsidiaries.
5.7 Keeping of Records and Books of Account. Keep adequate records
and books of account reflecting all financial transactions in conformity with
Generally Accepted Accounting Principles, consistently applied, and in material
conformity with all applicable requirements of any Governmental Agency having
regulatory jurisdiction over the Borrowers or any of their Subsidiaries.
5.8 Compliance With Agreements. Promptly and fully comply with all
Contractual Obligations under all material agreements, indentures, leases and/or
instruments to which any one or more of them is a party, whether such material
agreements, indentures, leases or instruments are with a Creditor Party or
another Person, except that the Borrowers and their
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Subsidiaries need not comply with Contractual Obligations (other than the Loan
Documents) under any such agreements, indentures, leases or instruments then
being contested by any of them in good faith by appropriate proceedings
diligently pursued provided that the failure to comply does not constitute a
Material Adverse Effect.
5.9 Use of Proceeds. Use the proceeds of the Loans and the Letters
of Credit for Permitted Acquisitions, for working capital and general corporate
purposes of the Borrowers and their Subsidiaries and permitted Capital
Expenditures.
5.10 Hazardous Materials Laws.
(a) Conduct their operations and keep and maintain their
Property in compliance with all Environmental Laws.
(b) Notify the Administrative Agent in writing upon, but in
no event later than 10 days after, becoming aware of (i) any and all
enforcement, cleanup, removal or other governmental or regulatory actions
instituted, completed or threatened against any Borrower or any Subsidiary
of a Borrower or any of their respective Properties pursuant to any
applicable Environmental Laws, (ii) all other Environmental Claims, and
(iii) any environmental or similar condition on any real property
adjoining or in the vicinity of the Property of such Borrowers or
Subsidiary that could reasonably be anticipated to cause such Property or
any part thereof to be subject to any restrictions on the ownership,
occupancy, transferability or use of such Property under any Environmental
Laws.
(c) Upon the written request of the Administrative Agent or
the Requisite Lenders, submit to the Administrative Agent with sufficient
copies for each Lender, at the Borrowers' sole cost and expense, at
reasonable intervals, a report providing an update of the status of any
environmental, health or safety compliance, hazard or liability issue
identified in any notice or report required pursuant to Section 5.10(b),
that could, individually or in the aggregate, result in liability in
excess of $250,000.
5.11 Acquisition Covenants. Comply with each of the following
covenants in connection with the use of Loans for Permitted Acquisitions:
(a) Not permit the consideration paid by the Company and its
Subsidiaries in connection with Acquisitions and Investments made pursuant
to Section 6.11(g) completed during the term of this Agreement to exceed
(a) $50,000,000 in Cash and Property (other than capital stock of the
Company), and (b) $75,000,000 in Cash and all Property (including capital
stock of the Company);
(b) Not permit the consideration paid by the Company and its
Subsidiaries in connection with any single Acquisition completed during
the term of this Agreement to exceed (a) $20,000,000 in Cash and Property
other than common stock of
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the Company, and (b) $30,000,000 in Cash and all Property (including
common stock of the Company);
(c) Not permit the total Cash of the Company and its
Domestic Subsidiaries, plus the amount of available for Loans hereunder
(giving effect to any restrictions imposed thereon by the Borrowing Base),
to be less than $15,000,000 after giving effect to the Acquisition.
(d) Not permit the Leverage Ratio, determined as of the then
most recently ended Fiscal Quarter preceding the Acquisition, and after
giving pro forma effect to (i) the incurrence of Indebtedness in an amount
equal to the cash purchase price payable in connection with the
Acquisition, and (ii) the Target Adjusted EBITDA of the target, to exceed
a ratio which is equal to the Leverage Ratio required for the Fiscal
Quarter ending immediately following the date of the Acquisition minus
0.25:1.00.
(e) Not consummate any Acquisition for which the Target
Adjusted EBITDA for the most recently ended four fiscal quarters is a
negative amount or in which the aggregate consideration payable by the
Company and its Subsidiaries is in excess of six times the Target Adjusted
EBITDA, provided that Acquisitions for an aggregate consideration not in
excess of $5,000,000 in any Fiscal Year may be conducted notwithstanding
this clause (e); and
(f) In connection with each Acquisition in respect of which
the aggregate consideration is in excess of $7,500,000, the Company shall
deliver a certificate to the Administrative Agent, not later than ten
Business Days prior to the consummation of the proposed Acquisition, as to
the matters set forth in this Section, together with a copy of (i) the
purchase agreement and related documents for such Acquisition, (ii) the
most recent fiscal year-end financial statements and interim financial
statements for the Target, and (iii) a certificate from a Senior Officer
to the effect that no Default or Event of Default has occurred and remains
continuing.
5.12 Further Assurances. Promptly upon request by the
Administrative Agent or the Requisite Lenders, do, execute, acknowledge,
deliver, record, re-record, file, re-file, register and re-register, any and all
such further acts, deeds, conveyances, security agreements, mortgages,
assignments, estoppel certificates, financing statements and continuations
thereof, termination statements, notices of assignment, transfers, certificates,
assurances and other instruments the Administrative Agent or such Lenders, as
the case may be, may reasonably require from time to time in order (i) to carry
out more effectively the purposes of this Agreement or any other Loan Document,
(ii) to subject to the Liens created by any of the Collateral Documents any of
the Properties of the Borrowers and their respective Subsidiaries, rights or
interests covered by any of the Collateral Documents, (iii) to perfect and
maintain the validity, effectiveness and priority of any of the Collateral
Documents and the Liens intended to be created thereby, and (iv) to better
assure, convey, grant, assign, transfer, preserve, protect and confirm to the
Creditor Parties the rights
54-
granted or now or hereafter intended to be granted to the Lenders under any Loan
Document or under any other document executed in connection therewith.
5.13 Future Subsidiaries. Concurrently with the formation or
acquisition of each new Subsidiary of the Company:
(a) deliver to the Administrative Agent an incumbency certificate
for such Subsidiary, attaching its formation documents and a specimen
signature for each officer thereof who will execute Loan Documents;
(b) cause each Domestic Subsidiary to execute and deliver a
joinder to the Guaranty in the form attached thereto, a joinder to the
Guarantor Security Agreement in the form attached thereto, and any other
instruments, documents or agreements which the Administrative Agent may
require to ▇▇▇▇▇ ▇ ▇▇▇▇ on the Property of such Subsidiary;
(c) pledge or cause the pledge to the Administrative Agent of 65%
of the capital stock of each such Subsidiary which is a Foreign Subsidiary
and 100% of the capital stock of each such Subsidiary which is a Domestic
Subsidiary, in each case pursuant to the Pledge Agreement or such other
documents as the Administrative Agent may request.
If the Requisite Lenders so request, each Domestic Subsidiary hereafter formed
or acquired will also enter into a joinder hereto in form and substance
acceptable to the Administrative Agent and shall thereby become a party to this
Agreement and the other Loan Documents as an additional Borrower.
5.14 Deposit Accounts. Maintain, and cause each of its Domestic
Subsidiaries to maintain, its deposit accounts with the Administrative Agent or
one or more banks acceptable to the Administrative Agent that has entered into a
Deposit Account Control Agreement, in form and substance satisfactory to the
Administrative Agent, in favor of the Administrative Agent.
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ARTICLE 6
NEGATIVE COVENANTS
So long as any Loan remains unpaid, any Letter of Credit remains
outstanding, any other Obligation remains unpaid, or any portion of the
Commitment remains in force, the Borrowers shall not, and shall not permit any
of their Subsidiaries to, unless the Requisite Lenders otherwise consent in
writing:
6.1 Prepayment of Indebtedness. (a) Prepay or repay any principal
(including sinking fund payments) in respect of any Subordinated Obligations, or
(b) pay any principal, interest or other amounts in respect of any Subordinated
Obligations except in accordance with the definitive subordination agreement
between the Administrative Agent and the holder of such Subordinated
Obligations, or (c) prepay any principal (including sinking fund payments),
interest or other amounts on any other Indebtedness of the Borrowers or any of
their Subsidiaries prior to the date when due.
6.2 Disposition of Property. Make any Disposition of its Property,
whether now owned or hereafter acquired, except a Disposition by a Borrower to a
Wholly-Owned Subsidiary, or by a Subsidiary to a Borrower or a Wholly-Owned
Subsidiary.
6.3 Mergers. Merge or consolidate with or into any Person, except
(a) mergers and consolidations of two or more Borrowers into one another or of a
Subsidiary of a Borrower into a Borrower or a Wholly-Owned Subsidiary or of
Subsidiaries with each other and (b) a merger or consolidation of a Person into
a Borrower or with or into a Wholly-Owned Subsidiary of a Borrower in connection
with a Permitted Acquisition; provided that (i) a Borrower or a Wholly-Owned
Subsidiary is the surviving entity, (ii) no Change in Control results therefrom,
(iii) no Default or Event of Default then exists or would result therefrom and
(iv) the Borrowers and each of the Guarantors execute such amendments to the
Loan Documents as the Lender may reasonably determine are appropriate as a
result of such merger.
6.4 Acquisitions. Make any Acquisition other than a Permitted
Acquisition.
6.5 Distributions. Make any Distribution, whether from capital,
income or otherwise, and whether in cash or other Property, except:
(a) Distributions by any Subsidiary of a Borrower to such Borrower
or to any Wholly-Owned Subsidiary of such Borrower;
(b) Distributions consisting of the payment of management fees to
the Borrowers and their Domestic Subsidiaries by the foreign Affiliates of
the Borrowers;
(c) the repurchase of shares of the capital stock of the Company
from stockholders and immaterial fractional shares in connection with any
stock split, in each case for an aggregate consideration not to exceed
$10,000,000 in any period of twelve months,
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provided that no such repurchases may be made at any time when a Default
or Event of Default exists or would result therefrom after giving pro
forma effect to the making of the Distribution as of the last day of the
most recent Fiscal Quarter for which the Borrowers are required to have
delivered a Compliance Certificate; and
(d) Distributions consisting of the payment of dividends in cash
on shares of preferred stock of the Company issued after the Closing Date,
provided that (i) such Distributions shall not exceed a "coupon" rate on
such shares of 10% per annum (i.e., the aggregate amount of such
Distributions paid by the Company to the holders of such shares in any
period of twelve months shall not exceed 10% of the aggregate share
purchase consideration paid to the Company for such shares) and (ii) such
Distributions may not be paid at any time when a Default or Event of
Default exists or would result therefrom after giving pro forma effect to
the making of the Distribution as of the last day of the most recent
Fiscal Quarter for which the Borrowers are required to have delivered a
Compliance Certificate.
6.6 ERISA.
(a) At any time, maintain, or be or become obligated to
contribute on behalf of its employees to, any "employee pension benefit
plan" that is subject to Title IV of ERISA other than those Pension Plans
disclosed in Schedule 4.14, and Multiemployer Plans to which any of the
Borrowers or any Subsidiary of a Borrower becomes obligated to contribute
pursuant to the terms of a collective bargaining agreement.
(b) At any time, permit any Pension Plan, if to do so would
constitute a Material Adverse Effect, to:
(i) engage in any non-exempt "prohibited transaction",
as such term is defined in Section 4975 of the Code;
(ii) incur any material "accumulated funding
deficiency", as that term is defined in Section 302 of ERISA; or
(iii) suffer a Termination Event to occur which may
reasonably be expected to result in liability of a Borrower or any
ERISA Affiliate thereof to the Pension Plan or to the PBGC or the
imposition of a Lien on the Property of a Borrower or any ERISA
Affiliate thereof pursuant to Section 4068 of ERISA.
(c) Fail, upon a Responsible Official of any Borrower
becoming aware thereof, promptly to notify the Administrative Agent of the
occurrence of any "reportable event" (as defined in Section 4043 of ERISA)
or of any non-exempt "prohibited transaction" (as defined in Section 4975
of the Code) with respect to any Pension Plan described in Schedule 4.14
or any trust created thereunder.
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(d) At any time, permit any Pension Plan described in
Schedule 4.14 to fail to comply with ERISA or other applicable Laws in any
respect that could result in a significant liability to any Borrower or
any Subsidiary of a Borrower.
6.7 Change in Name; Nature of Business. Change the legal name of
any of the Borrowers or of any Subsidiary of a Borrower or make any material
change in the nature of the business of the Borrowers and their Subsidiaries,
taken as a whole, as at present conducted.
6.8 Indebtedness and Contingent Obligations. Create, incur, assume
or suffer to exist any Indebtedness or Contingent Obligation, except:
(a) Existing Indebtedness and Contingent Obligations
disclosed on Schedule 6.8;
(b) Indebtedness and Contingent Obligations in favor of the
Creditor Parties under the Loan Documents;
(c) Subordinated Obligations in an aggregate principal
amount not to exceed $10,000,000 issued to sellers in consideration of
Permitted Acquisitions;
(d) purchase money Indebtedness and obligations in
connection with Capital Leases provided that (i) the aggregate amount of
such Indebtedness incurred in any Fiscal Year does not exceed $4,000,000,
and (ii) not more than $2,000,000 of such Indebtedness in the aggregate
during the term of this Agreement may be incurred by Persons which are not
Borrowers; and
(e) Indebtedness amongst Borrowers and their respective
Subsidiaries incurred in the ordinary course of business.
6.9 Liens; Negative Pledges; Sales and Leasebacks. Create, incur,
assume or suffer to exist any Lien or Right of Others of any nature upon or with
respect to any of its Property, whether now owned or hereafter acquired; or
suffer to exist any Negative Pledge with respect to any of its Property; or
engage in any sale and leaseback transaction with respect to any of its
Property; except:
(a) Permitted Encumbrances;
(b) Liens and Negative Pledges in favor of the
Administrative Agent or the Lenders under the Loan Documents; and
(c) purchase money Liens securing Indebtedness permitted
under Section 6.8(d).
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6.10 Transactions with Affiliates. Except as disclosed on Schedule
6.10, enter into any transaction of any kind with any officer or Affiliate of a
Borrower, or any Person that owns or holds 5% or more of the outstanding common
stock of a Borrower, other than transactions on terms at least as favorable to
the Borrowers or their respective Subsidiaries as would be the case in an
arm's-length transaction between unrelated parties of equal bargaining power.
6.11 Investments. Make or suffer to exist any Investment, other
than:
(a) Investments consisting of Cash Equivalents;
(b) Investments in a Person that is the subject of a
Permitted Acquisition;
(c) Investments consisting of advances to officers,
directors and employees of the Borrowers and their Subsidiaries for
travel, entertainment, relocation, anticipated bonus and analogous
ordinary business purposes;
(d) Investments consisting of the extension of credit to
customers or suppliers of the Borrowers and their Subsidiaries in the
ordinary course of business and any Investments received in satisfaction
or partial satisfaction thereof;
(e) Investments in Borrowers or in Wholly-Owned
Subsidiaries;
(f) Investments following the Closing Date in Permitted
Joint Ventures (in addition to the Investments in Permitted Joint Ventures
allowed under subsection (g) below) in an aggregate amount not to exceed
either (i) $10,000,000 or (ii) the amount that would cause the combination
of Investments in (A) Permitted Joint Ventures made pursuant to this
subsection (f) and subsection (g) below, and (B) Permitted Acquisitions to
exceed either (1) $50,000,000 in Cash and Property (other than capital
stock of the Company) or (2) $75,000,000 in Cash and Property (including
capital stock of the Company); and
(g) other Investments following the Closing Date in an
aggregate amount not to exceed $5,000,000, provided that not more than
$1,000,000 in the aggregate of such other Investments shall be made for a
purpose other than a Permitted Joint Venture.
6.12 Leverage Ratio. Permit the Leverage Ratio to exceed 1.75:1.00
as of the last day of any Fiscal Quarter.
6.13 Quick Ratio. Permit the Consolidated Quick Ratio as of the
last day of any calendar month to be less than 1.25:1.00, or permit the
Borrowers Quick Ratio as of the last day of any calendar month to be less than
1.00:1.00.
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6.14 Fixed Charge Coverage Ratio. Permit the Fixed Charge Coverage
Ratio as of the last day of (a) any Fiscal Quarter ending on or before December
31, 2001, to be less than 1.30:1.00, and (b) any subsequent Fiscal Quarter, to
be less than 1.40:1.00.
6.15 Net Worth. Permit Net Worth, as of the last day of any Fiscal
Quarter, to be less than the sum of (a) $180,000,000 plus (b) 75% of the
cumulative Net Income for each Fiscal Quarter which has then ended following the
Closing Date (without reduction for any net loss experienced in any Fiscal
Quarter), plus (c) the Net Cash Proceeds of any sale by the Company or any of
its Subsidiaries of their respective equity Securities to any third party
following the Closing Date.
6.16 Change of Location. Change the place of their respective chief
executive offices or principal places of business unless the Administrative
Agent has been notified in writing at least 30 days prior to such change.
6.17 Use of Hazardous Materials. Except as specifically disclosed
in Schedule 4.20, use, generate, manufacture, treat, store, allow to remain or
dispose of on, under, or about their real property or transport to or from such
real property any Hazardous Materials without prior written consent from the
Administrative Agent.
6.18 Clean Down. Fail to cause a Clean Down Period to occur in each
Fiscal Year.
6.19 The Lockbox Accounts. Fail to direct each account debtor with
respect to trade accounts receivable of Borrowers and the Guarantors to remit
payments with respect thereto directly to the appropriate Lockbox Accounts, or
fail to remit immediately in kind to the Administrative Agent, and in the same
form as received (but with any endorsements required to transfer the same to the
Administrative Agent), each remittance with respect to trade accounts receivable
which is received by Borrowers or any of the Guarantors.
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ARTICLE 7
INFORMATION AND REPORTING REQUIREMENTS
7.1 Financial and Business Information. So long as any Loan
remains unpaid, any Letter of Credit remains outstanding, any other Obligation
remains unpaid, or any portion of the Commitment remain in force, the Borrowers
shall, unless the Requisite Lenders otherwise consent in writing, deliver to the
Administrative Agent, at their sole expense:
(a) Not later than the 20th day of each calendar month, a
completed Borrowing Base Certificate setting forth the Borrowing Base as
of the last Business Day of the immediately preceding calendar month,
together with an accounts receivable aging report and inventory listing in
form and substance acceptable to the Administrative Agent together with
any supporting materials requested by the Administrative Agent;
(b) As soon as practicable, and in any event within 20 days
after the end of each calendar month, (i) the consolidated and
consolidating balance sheet of the Company and its Subsidiaries at the end
of such calendar month, (ii) consolidated and consolidating statements of
income and statement of cash flows of the Company and its Subsidiaries for
that calendar month and for the portion of the Fiscal Year then ended,
(iii) a comparison of the income statements for such calendar month with
the applicable Projections, and with the corresponding financial
statements as of the end of the same fiscal period during the immediately
preceding Fiscal Year, all in reasonable detail. Such financial statements
shall be certified by a Senior Officer of the Company as fairly presenting
the financial condition, results of operations and changes in financial
position of the Company and its Subsidiaries, and shall be prepared and
presented in accordance with Generally Accepted Accounting Principles
(other than any requirement for footnote disclosures), consistently
applied, as at such date and for such periods, subject only to normal
year-end accruals and audit adjustments;
(c) As soon as practicable, and in any event within 120 days
after the end of each Fiscal Year, (i) the audited combined balance sheet
and statement of income and cash flows of the Company and its Subsidiaries
prepared and presented in accordance with Generally Accepted Accounting
Principles, consistently applied, and accompanied by (A) a report and
opinion of ▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇ or another firm of independent public
accountants of recognized national standing selected by the Borrowers and
reasonably satisfactory to the Requisite Lenders, which report and opinion
shall be prepared in accordance with generally accepted auditing standards
as at such date, and shall not be subject to any qualifications or
exceptions as to the scope of the audit nor to any other qualification or
exception which the Requisite Lenders determine is unacceptable and (B) a
management letter from Borrowers' auditors to the extent issued, and (ii)
the unaudited company-prepared consolidating/combining balance sheets and
statements of income and cash flows for the Company and its Subsidiaries;
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(d) As soon as practicable, and in any event no later than
30 days prior to the commencement of each Fiscal Year, a business plan and
projections by calendar month for that Fiscal Year and by Fiscal Year for
each of the following Fiscal Years through the Maturity Date, all in form
and detail reasonably satisfactory to the Administrative Agent;
(e) Promptly and in any event within five Business Days
following receipt thereof, copies of any detailed audit reports or
recommendations submitted to the Borrowers or their Subsidiaries by
independent accountants in connection with the accounts or books of the
Borrowers or any of their Subsidiaries, or any audit of any of them;
(f) Promptly after the same are available, copies of each
annual report, proxy or financial statement or other report or
communication sent to the shareholders of the Borrowers, and copies of all
annual, regular, periodic and special reports and registration statements
which the Borrowers may file or be required to file under Sections 13 or
15(d) of the Securities Exchange Act of 1934;
(g) Promptly after request by the Requisite Lenders
submitted through the Administrative Agent, copies of any other specific
report or other document that was filed by either any of the Borrowers or
any Subsidiary of a Borrower with any Governmental Agency;
(h) Promptly upon a Responsible Official of any of the
Borrowers becoming aware, and in any event within ten Business Days after
becoming aware, of the occurrence of any (i) "reportable event" (as such
term is defined in Section 4043 of ERISA) or (ii) "prohibited transaction"
(as such term is defined in Section 406 of ERISA or Section 4975 of the
Code) in connection with any Pension Plan or any trust created thereunder,
written notice specifying the nature thereof and specifying what action
the Borrowers or any of their Subsidiaries is taking or proposes to take
with respect thereto, and, when known, any action taken by the Internal
Revenue Service with respect thereto;
(i) As soon as practicable, and in any event within two
Business Days after a Responsible Official of any of the Borrowers becomes
aware of the existence of any condition or event which constitutes a
Default, written notice specifying the nature and period of existence
thereof and specifying what action Borrowers are taking or propose to take
with respect thereto;
(j) Promptly upon a Responsible Official of any of the
Borrowers becoming aware that (i) any Person commenced a legal proceeding
with respect to a claim against the Company or any of its Subsidiaries
that is stated to be $1,000,000 or more in excess of the amount thereof
that is believed by such Responsible Official to be fully covered by
insurance (subject to customary deductibles and retentions), (ii) any
creditor or lessor under a written credit agreement or material lease has
asserted a default thereunder
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on the part of the Company or any of its Subsidiaries, and, in the case of
a lease, such default has not been cured or rescinded within any
applicable cure period under the lease or applicable Laws, (iii) any
Person commenced a legal proceeding with respect to a claim against the
Company or any of its Subsidiaries under a contract that is not a credit
agreement or material lease stated to be in excess of $1,000,000, or (iv)
any other event or circumstance occurs or exists that would constitute a
Material Adverse Effect, in each case a written notice describing the
pertinent facts relating thereto and what action the Borrowers are taking
or propose to take with respect thereto;
(k) Promptly following the issuance thereof, provide notice
to the Administrative Agent of each new trademark issued to any Borrower
or any Subsidiary of a Borrower;
(l) Promptly following request by the Requisite Lenders
submitted through the Administrative Agent, accounts receivable agings and
inventory listings for the Company and each of its Subsidiaries; and
(m) Such other data and information as from time to time may
be reasonably requested by the Administrative Agent or any Lender.
7.2 Compliance Certificates. So long as any Loan remains unpaid,
any Letter of Credit remains outstanding, any other Obligation remains unpaid,
or any portion of the Commitment remains outstanding, the Borrowers shall,
unless the Requisite Lenders otherwise consent, deliver to the Administrative
Agent as soon as practicable and in any event within 30 days after the end of
each calendar month, a Compliance Certificate signed by a Senior Officer of each
of the Borrowers.
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ARTICLE 8
CONDITIONS
8.1 Conditions to the Initial Loans and Letters of Credit. The
obligation of each Lender to make the initial Advance to be made by it, and the
obligation of any Issuing Lender to issue the initial Letters of Credit, is
subject to the following conditions precedent, each of which shall be satisfied
prior to the making of the initial Advances (unless all of the Lenders, in their
sole and absolute discretion, shall agree otherwise):
(a) The Administrative Agent shall have received all
of the following, each of which shall be originals unless otherwise
specified or, where applicable, the context otherwise requires, each
properly executed by a Responsible Official of each party thereto, each
dated as of the Closing Date and each in form and substance reasonably
satisfactory to the Administrative Agent and its legal counsel (unless
otherwise specified or, in the case of the date of any of the
following, unless the Administrative Agent otherwise agrees or
directs):
(1) executed counterparts of this Agreement;
(2) the Borrower Security Agreement executed
by each of the Borrowers, together with sufficient copies of
financing statements and fixture financing statements on Form
UCC-1 for filing in every United States jurisdiction in which
the Borrowers own Property or in which a Borrower has been
organized;
(3) the Guarantor Security Agreement
executed by each of the Guarantors, together with sufficient
copies of financing statements and fixture financing
statements on Form UCC-1 for filing in every United States
jurisdiction in which the Guarantors own Property or in which
a Guarantor has been organized;
(4) the Trademark Security Agreement,
executed by all Parties thereto;
(5) the Pledge Agreement, together with the
certificates evidencing (a) 100% of the capital stock of each
Domestic Subsidiary and (b) 65% of the capital stock of each
Foreign Subsidiary;
(6) the Lockbox Account Agreement executed
by Borrowers and each Guarantor;
(7) with respect to the Borrowers, the
Guarantors and each of their respective Subsidiaries, such
documentation as the Administrative Agent may reasonably
require to establish the due organization, valid existence and
good standing of each of the Borrowers, the Guarantors, and
each such Subsidiary, its
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qualification to engage in business in each jurisdiction in
which it is engaged in business or required to be so
qualified, its authority to execute, deliver and perform any
Loan Documents to which it is a Party, and the identity,
authority and capacity of each Responsible Official thereof
authorized to act on its behalf, including, without
limitation, certified copies of articles of incorporation and
amendments thereto, bylaws and amendments thereto,
certificates of good standing and/or qualification to engage
in business, tax clearance certificates, certificates of
corporate resolutions, incumbency certificates, Certificates
of Responsible Officials, and the like;
(8) evidence satisfactory to the
Administrative Agent that the Liens and security interest of
the Administrative Agent in the Collateral have been perfected
and are of first priority and that there are no other Liens on
the Collateral except for Permitted Encumbrances and Liens
referred to on Schedule 6.9;
(9) evidence of the insurance policies
required by Section 5.4, together with such endorsements as
are necessary (Form BFU-438 or an equivalent acceptable to the
Administrative Agent) to show the Administrative Agent as loss
payee thereunder to the extent required by Section 5.4;
(10) a Certificate of a Responsible Official
signed by a Senior Officer of each of the Borrowers certifying
that the conditions specified in Sections 8.1(e) and 8.1(f),
have been satisfied;
(11) a completed Borrowing Base Certificate
setting forth the Borrowing Base as of the end of the month
most recently ending prior to the Closing Date;
(12) Request for Loan and, if applicable, a
Request for Letter of Credit; and
(13) such other assurances, certificates,
documents, consents or opinions, consistent with the
foregoing, as the Administrative Agent or any Lender
reasonably may require;
(b) Any amounts payable pursuant to clause (a) of
Section 11.3 shall be paid concurrently;
(c) The Lenders shall have reviewed and found
satisfactory each of the following:
(1) the Projections;
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(2) the terms and conditions of any Material
Contracts to which the Borrowers are parties;
(3) the audited consolidated and company
prepared consolidating financial statements of the Company and
its Subsidiaries for the Fiscal Year ended December 31, 2000,
together with any management letter from the Company's
auditors;
(4) the internally-prepared financial
statements of the Company and its Subsidiaries for the six
month fiscal period ended June 30, 2001;
(d) The Borrowers shall have completed an
Environmental Questionnaire and Disclosure Statement on the
Administrative Agent's prescribed form regarding all real property
owned or operated by the Borrowers or any of their Subsidiaries, and a
Phase I environmental site assessment with respect to such real
property, and the information set forth therein shall be satisfactory
to Bank of America which shall have reviewed and found satisfactory all
information concerning environmental matters on such properties as is
available from the United States Environmental Protection Agency and
similar Governmental Authorities and deemed appropriate for review by
the Administrative Agent; and the Administrative Agent shall have
approved the plan of remediation proposed by the Borrowers with respect
to any conditions on such real property disclosed by the Environmental
Questionnaire and Disclosure Statement or such Phase I environmental
site assessments;
(e) The representations and warranties of the
Borrowers contained in Article 4 shall be true and correct; and
(f) The Borrowers shall be in compliance with all the
terms and provisions of the Loan Documents, no Default or Event of
Default shall have occurred and be continuing, and no event shall have
occurred since December 31, 2000 which constitutes a Material Adverse
Effect.
In the event that the Lenders determine to waive compliance with any of the
conditions precedent set forth in this Section on the Closing Date, the
Borrowers agree to fulfill such conditions promptly, and, unless the Requisite
Lenders otherwise agree, not later than ten Business Days following the Closing
Date.
8.2 Any Increasing Loan. The obligation of each Lender to make
any Advance which would increase the outstanding principal amount of the Loans,
and the obligation of any Issuing Lender to issue any Letter of Credit, is
subject to the following conditions precedent, each of which shall be satisfied
prior to the making of such an Advance or the issuance of a Letter of Credit:
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(a) except as disclosed by the Borrowers and approved
in writing by the Requisite Lenders, the representations and warranties
contained in Article 4 (other than Sections 4.7 and 4.11) shall be true
and correct on and as of the date of the Loan or Letter of Credit as
though made on that date;
(b) other than matters described in Schedule 4.11, or
matters not required as of the Closing Date to be therein described, or
matters disclosed by the Borrowers and approved in writing by the
Requisite Lenders, there shall not be then pending or threatened in
writing any action, suit, proceeding or investigation against or
affecting the Borrowers or any of their Subsidiaries or any Property of
any of them before any Governmental Agency that constitutes a Material
Adverse Effect;
(c) the Administrative Agent shall have received a
timely Request for Loan in compliance with Article 2, or the relevant
Issuing Lender and the Administrative Agent shall have timely received
a Request for Letter of Credit in compliance with Article 2, as
applicable; and
(d) the Administrative Agent shall have received, in
form and substance reasonably satisfactory to the Administrative Agent,
such other assurances, certificates, documents or consents related to
and consistent with the foregoing as the Administrative Agent or the
Requisite Lenders reasonably may require.
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ARTICLE 9
EVENTS OF DEFAULT AND REMEDIES
9.1 Events of Default. The existence or occurrence of any one
or more of the following events shall constitute an Event of Default:
(a) The Borrowers fail to pay any principal or
interest in respect of the Loans or Letters of Credit hereunder when
due;
(b) The Borrowers fail to pay any commitment fee,
letter of credit fee, expenses or other amount in respect of the Loans
or Letters of Credit hereunder, or any portion thereof, within five
days of the date when due;
(c) Any failure to comply with any covenant in
Section 5.6, 5.11, Article 6 or Article 7 hereof when required;
(d) Any Borrower or any other Party fails to perform
or observe any other covenant or agreement set forth in the Loan
Documents on its part to be performed or observed and fails to cure
such Default within thirty days following the first occurrence thereof;
(e) Any Borrower or any other Party fails to perform
or observe any other covenant or agreement contained in any Loan
Document other than this Agreement, giving effect to any grace period
and/or notice requirements set forth therein;
(f) Any representation or warranty made in any Loan
Document proves to have been incorrect when made or reaffirmed;
(g) The Company or any of its Subsidiaries (i) fails
to pay the principal, or any principal installment, of any present or
future indebtedness for borrowed money or Capital Lease of $500,000 or
more in the aggregate, or any guaranty of present or future
Indebtedness for borrowed money or Capital Lease of $500,000 or more in
the aggregate, on its part to be paid, when due (or within any stated
grace period), whether at the stated maturity, upon acceleration, by
reason of required prepayment or otherwise or (ii) fails to perform or
observe any other term, covenant or agreement on its part to be
performed or observed, or suffers any event to occur, in connection
with any present or future indebtedness for borrowed money or Capital
Lease of $500,000 or more in the aggregate, or of any guaranty of
present or future indebtedness for borrowed money or Capital Lease of
$500,000 or more in the aggregate, if as a result of such failure or
sufferance any holder or holders thereof (or an agent or trustee on its
or their behalf) has the right to declare such Indebtedness due before
the date on which it otherwise would become due;
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(h) Any event occurs which gives the holder or
holders of any Subordinated Obligation (or an agent or trustee on its
or their behalf) the right to declare such Indebtedness due before the
date on which it otherwise would become due, or the right to require
the issuer thereof to redeem or purchase, or offer to redeem or
purchase, all or any portion of any Subordinated Obligation;
(i) This Agreement or any other Loan Document at any
time after its execution and delivery and for any reason, other than
the agreement of the Lenders or satisfaction in full of all the
Obligations, ceases to be in full force and effect or is declared by a
court of competent jurisdiction to be null and void, invalid or
unenforceable in any respect which, in any such event in the reasonable
opinion of the Requisite Lenders, is materially adverse to the
interests of the Lenders; or any Party thereto denies that it has any
or further liability or obligation under any Loan Document, or purports
to revoke, terminate or rescind same (other than in accordance with the
terms and conditions of the Loan Documents);
(j) Any judgments or arbitration awards are entered
against the Company or any of its Subsidiaries, or the Company or any
of its Subsidiaries enters into any settlement agreements with respect
to any litigation or arbitration, in an aggregate amount of $1,000,000
or more in excess of any insurance coverage;
(k) The Company or any of its Subsidiaries institutes
or consents to any proceeding under a Debtor Relief Law relating to it
or to all or any part of its Property, or is unable or admits in
writing its inability to pay its debts as they mature, or makes a
general assignment for the benefit of creditors; or applies for or
consents to the appointment of any receiver, trustee, custodian,
conservator, liquidator, rehabilitator or similar officer for it or for
all or any part of its Property; or any receiver, trustee, custodian,
conservator, liquidator, rehabilitator or similar officer is appointed
without the application or consent of that Person and the appointment
continues undischarged or unstayed for sixty calendar days; or any
proceeding under a Debtor Relief Law relating to any such Person or to
all or any part of its Property is instituted without the consent of
that Person and continues undismissed or unstayed for sixty calendar
days; or any judgment, writ, warrant of attachment or execution or
similar process is issued or levied against all or any material part of
the Property of any such Person and is not released, vacated or fully
bonded within sixty calendar days after its issue or levy;
(l) Any Lien on any Collateral created by any Loan
Document, at any time after the execution and delivery of that Loan
Document and for any reason, ceases to be perfected or of less than
first priority (subject to any Lien permitted by this Agreement);
(m) The occurrence of a Termination Event with
respect to any Pension Plan if the aggregate liability of the Borrowers
and their ERISA Affiliates under ERISA as a result thereof exceeds
$250,000; or the complete or partial withdrawal by the Borrowers or any
of their Subsidiaries or any of their ERISA Affiliates from any
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Multiemployer Plan if the aggregate liability of the Borrowers and
their ERISA Affiliates as a result thereof exceeds $250,000;
(n) The occurrence of an "event of default" (as such
term is or may hereafter be specifically defined in any other Loan
Document) under any other Loan Document;
(o) Any judgment, order or ruling, whether or not
final, is made by a court of competent jurisdiction that payment of
principal or interest or both shall be made to the holder of any
Subordinated Obligation which would not be permitted by Section 6.1 or
that any Subordinated Obligation is not subordinated in accordance with
its terms to the Obligations;
(p) The results of any audit of the Collateral by or
on behalf of the Administrative Agent or the Lenders shall bring into
question, in the opinion of the Requisite Lenders, (a) the reliability
of the accounting practices or financial information provided, employed
or generated by any Borrower in connection with the Collateral, or (b)
the value of the Collateral in any respect that is material,
individually or in the aggregate and, in either such case, the
Borrowers shall not have cured such Default to the reasonable
satisfaction of the Requisite Lenders within twenty days after notice
from the Administrative Agent;
(q) The Administrative Agent determines reasonably
and in good faith that a circumstance or event has occurred that
constitutes a Material Adverse Effect; or
(r) The occurrence of a Change in Control.
9.2 Remedies Upon Event of Default. Without limiting any
other rights or remedies of the Creditor Parties provided for elsewhere in this
Agreement or the Loan Documents, or by applicable Law, or in equity, or
otherwise:
(a) Upon the occurrence of any Event of Default other
than an Event of Default described in Section 9.1(k):
(1) the Commitment to make Advances and to
issue Letters of Credit and all other obligations of the
Creditor Parties and all rights of the Borrowers and any other
Parties under the Loan Documents shall terminate without
notice to or demand upon the Borrowers, which are expressly
waived by the Borrowers, except that the Requisite Lenders
(or, to the extent required by Section 11.2, all of the
Lenders) may waive the Event of Default or, without waiving,
determine, upon terms and conditions satisfactory to the
Requisite Lenders (or, to the extent required by Section 11.2,
all of the Lenders), to make further Advances, which waiver or
determination shall apply equally to, and shall be binding
upon, all the Lenders;
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(2) any Issuing Lender may, or following a
request from the Requisite Lenders (or, to the extent required
by Section 11.2, all of the Lenders) shall, demand immediate
payment by each Borrower of an amount equal to the aggregate
effective face amount of all outstanding Letters of Credit
issued to that Borrower as provided in Section 2.5 to be held
as cash collateral for the reimbursement obligations of that
Borrower under such Letter of Credit; and
(3) the Requisite Lenders (or, to the
extent required by Section 11.2, all of the Lenders) may
request the Administrative Agent to, and the Administrative
Agent thereupon shall, declare all or any part of the unpaid
principal of all Loans, all interest accrued and unpaid
thereon and all other amounts payable under the Loan Documents
to be forthwith due and payable, whereupon the same shall
become and be forthwith due and payable, without protest,
presentment, notice of dishonor, demand or further notice of
any kind, all of which are expressly waived by the Borrowers.
(b) Upon the occurrence of any Event of Default
described in Section 9.1(k):
(1) the Commitment to make Advances and to
issue Letters of Credit and all other obligations of Creditor
Parties and all rights of the Borrowers and any other Parties
under the Loan Documents shall terminate without notice to or
demand upon the Borrowers, which are expressly waived by the
Borrowers, except that all the Lenders may waive the Event of
Default or, without waiving, determine, upon terms and
conditions satisfactory to all the Lenders, to make further
Advances, which determination shall apply equally to, and
shall be binding upon, all the Lenders; and
(2) an amount equal to the aggregate
effective face amount of all outstanding Letters of Credit
issued to each Borrower shall be forthwith due and payable by
that Borrower to the relevant Issuing Lender to be held by
such Issuing Lender as cash collateral for the reimbursement
obligations of that Borrower to such Issuing Lender with
respect to Letters of Credit issued by such Issuing Lender,
without protest, presentment, notice of dishonor, demand or
further notice of any kind, all of which are waived by the
Borrowers; and
(3) the unpaid principal amount of all
Loans, all interest accrued and unpaid thereon and all other
amounts payable under the Loan Documents shall be forthwith
due and payable, without protest, presentment, notice of
dishonor, demand or further notice of any kind, all of which
are expressly waived by the Borrowers.
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(c) Upon the occurrence of any Event of Default, the
Lenders and the Administrative Agent, or any of them, without notice to
or demand upon the Borrowers, which are expressly waived by the
Borrowers, may proceed (but only with the consent of the Requisite
Lenders) to protect, exercise and enforce their rights and remedies
under the Loan Documents against the Borrowers and such other rights
and remedies as are provided by Law or equity.
(d) The order and manner in which the Lenders' rights
and remedies are to be exercised shall be determined by the Requisite
Lenders in their sole discretion, and all payments received by the
Creditor Parties, or any of them, shall be applied first to the costs
and expenses (including attorneys' fees and disbursements) of the
Administrative Agent, acting in such capacity, second, to the principal
amount of the Obligations and interest and credit fees thereon, and
thereafter paid pro rata to the Lenders in the same proportions that
the aggregate Obligations owed to each Lender under the Loan Documents
bear to the aggregate Obligations owed under the Loan Documents to all
the Lenders, without priority or preference among the Lenders for
application to Obligations. Regardless of how each Lender may treat
payments for the purpose of its own accounting, for the purpose of
computing the Borrowers' Obligations hereunder, payments shall be
applied first, to the costs and expenses of the Creditor Parties, as
set forth above, second, to the payment of accrued and unpaid interest
due under any Loan Documents to and including the date of such
application (ratably, and without duplication, according to the accrued
and unpaid interest due under each of the Loan Documents), and third,
to the payment of all other amounts (including principal and credit
fees) then owing to the Creditor Parties under the Loan Documents. No
such application of payments will cure any Event of Default, or prevent
acceleration, or continued acceleration, of amounts payable under the
Loan Documents, or prevent the exercise, or continued exercise, of
rights or remedies of the Lenders hereunder or thereunder or at law or
in equity.
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ARTICLE 10
THE ADMINISTRATIVE AGENT
10.1 Appointment and Authorization. Each Lender hereby
irrevocably appoints, designates and authorizes the Administrative Agent to take
such action on its behalf under the provisions of this Agreement and each other
Loan Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document, the Administrative Agent shall not have
any duties or responsibilities, except those expressly set forth herein, nor
shall the Administrative Agent have or be deemed to have any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Administrative Agent. Without limiting the generality of the foregoing sentence,
the use of the term "agent" herein and in the other Loan Documents with
reference to the Administrative 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.
The Issuing Bank shall act on behalf of the Lenders with respect to any
Letters of Credit issued by it and the documents associated therewith until such
time (and except for so long) as the Administrative Agent may agree at the
request of the Requisite Lenders to act for the Issuing Bank with respect
thereto: provided , however, the Issuing Bank shall have all of the benefits and
immunities (i) provided to the Administrative Agent in this Article 10 with
respect to any acts taken or omissions suffered by the Issuing Bank in
connection with Letters of Credit issued by it or proposed by it and the
application and agreements for letters of credit pertaining to the Letters of
Credit as fully as if the term "Administrative Agent" as used in this Article 10
included the Issuing Bank with respect to such acts or omissions, and (ii) as
additionally provided herein with respect to the Issuing Bank.
10.2 Delegation of Duties. The Administrative Agent may
execute any of its duties under this Agreement or any other Loan Document by or
through agents, employees or attorneys-in-fact and shall be entitled to advice
of counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that they select with reasonable care.
10.3 Liability of the Administrative Agent. None of the Agent
Related Persons shall (i) be liable for any action taken or omitted to be taken
by any of them under or in connection with this Agreement or any other Loan
Document (except for its own gross negligence or willful misconduct), or (ii) be
responsible in any manner to any of the Creditor Parties for any recital,
statement, representation or warranty made by the Borrowers or any Subsidiary or
Affiliate of the Borrowers, or any officer thereof, contained in this Agreement
or in any other Loan Document, or in
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any certificate, report, statement or other document referred to or
provided for in, or received by the Administrative Agent under or in
connection with, this Agreement or any other Loan Document, or for the
value of any Collateral or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of any Borrower or any other Party to any
Loan Document to perform its obligations hereunder or thereunder. No
Agent Related Person shall be under any obligation to the Creditor
Parties to ascertain or to inquire as to the observance or performance
of any of the agreements contained in, or conditions of, this Agreement
or any other Loan Document, or to inspect the Properties, books or
records of the Borrowers or any of the Borrowers' Subsidiaries or
Affiliates.
10.4 Reliance by Administrative Agent.
(a) The Administrative Agent shall be entitled to
rely, and shall be fully protected in relying, upon any writing,
resolution, notice, consent, certificate, affidavit, letter, telegram,
facsimile, telex or telephone message, statement or other document or
conversation believed by them to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons, and upon
advice and statements of legal counsel (including counsel to the
Borrowers), independent accountants and other experts selected by them.
The Administrative Agent shall be fully justified in failing or
refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of
the Requisite Lenders (and, in a case covered by Section 11.2, of all
the Lenders) as it deems appropriate and, if it so requests, it shall
first be indemnified to its satisfaction by the Lenders against any and
all liability and expense which may be incurred by it by reason of
taking or continuing to take any such action. The Administrative Agent
shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Loan Document in accordance
with a request or consent of the Requisite Lenders (or, in a case
covered by Section 11.2, of all the Lenders) and such request and any
action taken or failure to act pursuant thereto shall be binding upon
all of the Lenders. Where this Agreement expressly permits or prohibits
an action unless the Requisite Lenders otherwise determine, the
Administrative Agent shall, and in all other instances, the
Administrative Agent may, but shall not be required to, initiate any
solicitation for the consent or a vote of the Lenders.
(b) For purposes of determining compliance with the
conditions specified in Section 8.1, each Lender that has executed this
Agreement shall be deemed to have consented to, approved or accepted or
to be satisfied with each document or other matter either sent by the
Administrative Agent to such Lender for consent, approval, acceptance
or satisfaction, or required thereunder to be consented to or approved
by or acceptable or satisfactory to the Lender.
10.5 Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default, except with respect to defaults in the payment of principal, interest
and fees required to be paid to the Administrative Agent
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for the account of the Lenders, unless the Administrative Agent shall have
received written notice from a Lender or a Borrower referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
"notice of default." In the event that the Administrative Agent receives such a
notice, the Administrative Agent shall give notice thereof to the Lenders. The
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be requested by the Requisite Lenders in accordance
with Article 9; provided, however, that unless and until the Administrative
Agent shall have received any such request, the Administrative Agent may (but
shall not be obligated to) take such action, or refrain from taking such action,
with respect to such Default or Event of Default as it shall deem advisable or
in the best interest of the Lenders.
10.6 Credit Decision. Each other Creditor Party expressly
acknowledges that none of the Agent Related Persons has made any representation
or warranty to it and that no act by the Administrative Agent hereinafter taken,
including any review of the affairs of the Borrowers and their Subsidiaries
shall be deemed to constitute any representation or warranty by the
Administrative Agent to any other Creditor Party. Each other Creditor Party
represents to the Administrative Agent that it has, independently and without
reliance upon the Administrative Agent and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, Property, financial and
other condition and creditworthiness of the Borrowers and their Subsidiaries,
and all applicable bank regulatory Laws relating to the transactions
contemplated thereby, and made its own decision to enter into this Agreement and
extend credit to the Borrowers hereunder. Each other Creditor Party also
represents that it will, independently and without reliance upon the
Administrative Agent and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations, Property, financial
and other condition and creditworthiness of the Borrowers. Except for notices,
reports and other documents expressly herein required to be furnished to the
other Creditor Parties by the Administrative Agent, the Administrative Agent
shall not have any duty or responsibility to provide any Lender with any credit
or other information concerning the business, prospects, operations, Property,
financial and other condition or creditworthiness of the Borrowers or any of
their Subsidiaries which may come into the possession of any of the Agent
Related Persons.
10.7 Indemnification. Whether or not the transactions
contemplated hereby shall be consummated, the Lenders shall indemnify upon
demand the Agent Related Persons (to the extent not reimbursed by or on behalf
of the Borrowers and without limiting the obligation of the Borrowers to do so),
ratably from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses and disbursements of any
kind whatsoever which may at any time (including at any time following the
repayment of the Loans and the termination or resignation of the Administrative
Agent) be imposed on, incurred by or asserted against any such Person in any way
relating to or arising out of this Agreement or any document contemplated by or
referred to herein or therein or the transactions contemplated hereby or thereby
or any action taken or omitted by any such Person under or in connection with
any of the foregoing;
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provided, however, that no Lender shall be liable for the payment to the Agent
Related Persons of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from such Person's gross negligence or willful misconduct.
Without limitation of the foregoing, each Lender shall reimburse the
Administrative Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including attorneys fees and expenses and the allocated
fees and expenses of any internal counsel to the Administrative Agent) incurred
by the Administrative Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement, any other Loan
Document, or any document contemplated by or referred to herein to the extent
that the Administrative Agent is not reimbursed for such expenses by or on
behalf of the Borrowers. Without limiting the generality of the foregoing, if
the Internal Revenue Service or any other Governmental Agency asserts a claim
that the Administrative Agent did not properly withhold tax from amounts paid to
or for the account of any Lender (because the appropriate form was not
delivered, was not properly executed, or because such Lender failed to notify
the Administrative Agent of a change in circumstances which rendered the
exemption from, or reduction of, withholding tax ineffective, or for any other
reason) such Lender shall indemnify the Administrative Agent fully for all
amounts paid, directly or indirectly, by the Administrative Agent as tax or
otherwise, including penalties and interest, and including any taxes imposed by
any jurisdiction on the amounts payable to the Administrative Agent under this
Section, together with all costs and expenses (including attorneys fees and
expenses and the allocated fees and expenses of any internal counsel to the
Administrative Agent). The obligation of the Lenders in this Section shall
survive the payment of all Obligations hereunder.
10.8 Bank of America in its Individual Capacity. Bank of
America and its Affiliates may make loans to, issue letters of credit for the
account of, accept deposits from, acquire equity interests in and generally
engage in any kind of banking, trust, financial advisory or other business with
the Borrowers and their Subsidiaries and Affiliates as though Bank of America
were not the Administrative Agent hereunder and without notice to or consent of
the Lenders. With respect to its Advances and its risk participation in Letters
of Credit, Bank of America shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not
the Administrative Agent, and the terms "Lender" and "Lenders" shall include
Bank of America in its individual capacity.
10.9 Successor Agents. The Administrative Agent may, and at
the request of the Requisite Lenders shall, resign upon 30 days' notice to the
Lenders. If the Administrative Agent so resigns, the Requisite Lenders shall
appoint from among the Lenders a successor Administrative Agent for the Lenders.
If no successor is appointed prior to the effective date of the resignation, the
Administrative Agent may appoint, after consulting with the Lenders and the
Borrowers, a successor Administrative Agent from among the Lenders. Upon the
acceptance of its appointment as successor agent hereunder, such successor agent
shall succeed to all the rights, powers and duties of the retiring agent and the
term "Administrative Agent" shall mean such successor agent and the retiring
agent's appointment, powers and duties as Administrative Agent shall be
terminated. After
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any retiring agent's resignation under this Section, the provisions of this
Article 10 and Sections 11.3, 11.12 and 11.22 shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was Administrative Agent
under this Agreement. If no successor agent has accepted appointment as
Administrative Agent by the date which is 30 days following a retiring agent's
notice of resignation, the retiring agent's resignation shall nevertheless
thereupon become effective and the Lenders shall perform all of the duties of
the retiring agent hereunder until such time, if any, as the Requisite Lenders
appoint a successor agent as provided for above.
10.10 Action by the Administrative Agent; Collateral Matters
(a) The Administrative Agent is authorized on behalf
of all the Lenders, without the necessity of any notice to or further
consent from the Lenders, from time to time to take any action with
respect to any Collateral or the Collateral Documents which may be
necessary to perfect and maintain perfected the security interest in
and Liens upon the Collateral granted pursuant to the Collateral
Documents.
(b) The Lenders irrevocably authorize the
Administrative Agent, at its option and in its discretion, to release
any Lien granted to or held by the Administrative Agent upon any
Collateral (i) upon termination of the Commitment and payment in full
of all Loans and all other Obligations payable under this Agreement and
under any other Loan Document; (ii) constituting Property sold or to be
sold or disposed of as part of or in connection with any disposition
permitted hereunder; (iii) constituting Property in which the Borrowers
or any Subsidiary of the Borrowers owned no interest at the time the
Lien was granted or at any time thereafter; (iv) constituting Property
leased to the Borrowers or any Subsidiary of the Borrowers under a
lease which has expired or been terminated in a transaction permitted
under this Agreement or is about to expire and which has not been, and
is not intended by the Borrowers or such Subsidiary to be, renewed or
extended; (v) consisting of an instrument evidencing Indebtedness or
other debt instrument, if the Indebtedness evidenced thereby has been
paid in full; or (vi) if approved, authorized or ratified in writing by
the Requisite Lenders or all the Lenders, as the case may be, as
provided in Section 11.2. Upon request by the Administrative Agent at
any time, the Lenders will confirm in writing the Administrative
Agent's authority to release particular types or items of Collateral
pursuant to this Section 10.10(b).
(c) Each Lender agrees with and in favor of each
other (which agreement shall not be for the benefit of the Borrowers or
any of their Subsidiaries) that the Borrowers' obligations to such
Lender under this Agreement and the other Loan Documents is not and
shall not be secured by any real property collateral now or hereafter
acquired by such Lender unless all of the Lenders otherwise agree.
10.11 Proportionate Interest of the Lenders in Collateral. The
Administrative Agent, on behalf of all the Lenders, shall hold in accordance
with the Loan Documents all items of any collateral or interests therein
received or held by the Administrative Agent. Subject to the
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Administrative Agent's rights to reimbursement for its costs and expenses
hereunder (including attorneys' fees and disbursements and other professional
services and the allocated costs of attorneys employed by the Administrative
Agent) and subject to the application of payments in accordance with Section
9.2(d), each Lender shall have an interest in any collateral or interests
therein in the same proportions that the aggregate Obligations owed such Lender
under the Loan Documents (other than the Approved Swap Agreement) bear to the
aggregate Obligations owed under the Loan Documents to all the Lenders, without
priority or preference among the Lenders. Any obligation owed to a Lender under
the Approved Swap Agreement shall rank pari passu with the Obligations under the
Loan Documents.
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ARTICLE 11
MISCELLANEOUS
11.1 Cumulative Remedies; No Waiver. The rights, powers,
privileges and remedies of the Creditor Parties provided herein or in any Loan
Document are cumulative and not exclusive of any right, power, privilege or
remedy provided by Law or equity. No failure or delay on the part of the
Administrative Agent or any Lender in exercising any right, power, privilege or
remedy may be, or may be deemed to be, a waiver thereof; nor may any single or
partial exercise of any right, power, privilege or remedy preclude any other or
further exercise of the same or any other right, power, privilege or remedy. The
terms and conditions of Article 8 hereof are inserted for the sole benefit of
the Administrative Agent the Lenders; the same may be waived in whole or in
part, with or without terms or conditions, in respect of any Loan without
prejudicing the Administrative Agent's or any Lender's rights to assert them in
whole or in part in respect of any other Loan.
11.2 Amendments; Consents. No amendment, modification,
supplement, extension, termination or waiver of any provision of this Agreement
or any other Loan Document, no approval or consent hereunder or thereunder, and
no consent to any departure by any Party therefrom, may in any event be
effective unless in writing signed by the Requisite Lenders (and, in the case of
amendments, modifications, supplements, extensions or terminations of or to any
Loan Document to which the Borrowers are a Party, the approval in writing of the
Borrowers) and then only in the specific instance and for the specific purpose
given; and, without the approval in writing of all the Lenders, no amendment,
modification, supplement, termination, waiver or consent may be effective:
(i) To (A) decrease the principal of, or the
amount of principal, principal prepayments or the rate of
interest payable on, any Loan, or (B) increase the amount of
the Commitment attributable to any Lender, or (C) decrease the
rate of any commitment fee or any letter of credit fee payable
to any Lender, or any other fee or amount payable to any
Lender under the Loan Documents or (D) waive an Event of
Default consisting of the failure of the Borrowers to pay when
due principal, interest, any commitment fee or any letter of
credit fee;
(ii) To postpone any date fixed for any
payment of principal of, prepayment of principal of, or any
installment of interest on, any Loan or any installment of any
commitment fee or letter of credit fee, or to extend the term
of the Commitment, or to release the Liens created under any
Collateral Document, except to the extent expressly
contemplated thereby or to release any Guarantor except in
accordance with the terms of the Guaranty;
(iii) To amend the provisions of the
definition of "Requisite Lenders", Articles 8 or 9, or this
Section 11.2;
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(iv) To amend the Borrowing Base or any of
its components, including without limitation, the advance rate
percentages or the definitions of Eligible Accounts or
Eligible Inventory, in any manner (a) that would result in an
increase in the amount of the Borrowing Base, as calculated in
accordance with the definition thereof, or (b) which increases
the ability of the Borrowers to obtain Loans or Letters of
Credit hereunder; or
(v) To amend any provision of this Agreement
that expressly requires the consent or approval of all the
Lenders.
Any amendment, modification, supplement, termination, waiver or consent pursuant
to this Section 11.2 shall apply equally to, and shall be binding upon, all the
Lenders and the Administrative Agent. Without implying that the Lenders are
obligated to agree to any amendment, modification, supplement, extension,
termination or waiver requested by the Borrowers, the Lenders may impose such
additional conditions and such other fees and expenses (including pursuant to
Section 11.3) as the Lenders may deem appropriate in connection with the
Lenders' approval thereof.
11.3 Costs, Expenses and Taxes. The Borrowers shall pay the
reasonable costs and expenses (including any sales, use, value-added, goods,
services or other taxes) of (a) the Administrative Agent in connection with the
negotiation, preparation, execution and delivery of the Loan Documents
(including fees and out-of-pocket expenses of legal counsel to the
Administrative Agent and the allocated costs of internal counsel to the
Administrative Agent), (b) of each Creditor Party in connection with any
amendment, modification, supplement, extension or waiver of the Loan Documents
in connection with any refinancing, restructuring, reorganization (including a
bankruptcy reorganization) and enforcement or attempted enforcement of the Loan
Documents, and any matter related thereto, in each case including filing fees,
recording fees, title insurance fees, appraisal fees, search fees and other
out-of-pocket expenses and the reasonable fees (including any sales, use,
value-added, goods, services or other taxes) and out-of-pocket expenses of any
legal counsel (including the allocated cost of in-house counsel), independent
public accountants and other outside experts retained by the Administrative
Agent, and including any costs, expenses or fees incurred or suffered by each
Creditor Party in connection with or during the course of any bankruptcy or
insolvency proceedings of the Borrowers or any Subsidiary thereof, and (c)
out-of-pocket costs and expenses of the Administrative Agent incurred in
connection with not less than one audit of the Borrowers and their Subsidiaries
during each year and with the administration of the Loan Documents. The
Borrowers shall pay any and all documentary and other taxes (other than income
or gross receipts taxes generally applicable to banks) and all costs, expenses,
fees and charges payable or determined to be payable in connection with the
filing or recording of any Loan Document or any other instrument or writing to
be delivered hereunder or thereunder, or in connection with any transaction
pursuant hereto or thereto, and shall reimburse, hold harmless and indemnify
each Creditor Party from and against any and all loss, liability or legal or
other expense with respect to or resulting from any delay in paying or failure
to pay any such tax, cost, expense, fee or charge that the Creditor Parties may
suffer or incur by reason of the failure of any Party to perform any of its
Obligations. Any amount payable to the Creditor Parties under this Section shall
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bear interest from the second Business Day following the date of demand for
payment at the Default Rate.
11.4 Nature of Lenders' Obligations. The obligations of the
Lenders hereunder are several and not joint or joint and several. Nothing
contained in this Agreement or any other Loan Document and no action taken by
the Creditor Parties or any of them pursuant hereto or thereto may, or may be
deemed to, make the Creditor Parties a partnership, an association, a joint
venture or other entity, either among themselves or with the Borrowers or any
Affiliate of any of the Borrowers. Each Lender's obligation to make any Advance
pursuant hereto is several and not joint or joint and several, and, in the case
of the initial Advances hereunder, is conditioned upon the performance by all
other Lenders of their obligations to make Advances. A default by any Lender
will not increase the Pro Rata Share of any other Lender. Any Lender not in
default may, if it desires, assume in such proportion as the nondefaulting
Lenders agree the obligations of any Lender in default, but is not obligated to
do so.
11.5 Survival of Representations and Warranties. All
representations and warranties contained herein or in any other Loan Document,
or in any certificate or other writing delivered by or on behalf of any one or
more of the Parties to any Loan Document, will survive the making of the Loans
hereunder (except to the extent the same relate solely to a specified earlier
date), and have been or will be relied upon by the Administrative Agent and each
Lender, notwithstanding any investigation made by the Administrative Agent or by
any Lender or on their behalf.
11.6 Notices. Except as otherwise expressly provided in the
Loan Documents: (a) All notices, requests, demands, directions and other
communications provided for hereunder or under any other Loan Document must be
in writing and must be mailed, telecopied, delivered by recognized overnight
delivery service or hand delivered to the appropriate party at the address set
forth on the signature pages of this Agreement or other applicable Loan Document
or, as to any party to any Loan Document, at any other address as may be
designated by it in a written notice sent to all other parties to such Loan
Document in accordance with this Section; and (b) Any notice, request, demand,
direction or other communication given by telecopier must be confirmed within
two Business Days by letter mailed or delivered to the appropriate party at its
address. Except as otherwise expressly provided in any Loan Document, if any
notice, request, demand, direction or other communication required or permitted
by any Loan Document is given by mail it will be effective on the earlier of
receipt or the third Business Day after deposit in the United States mail with
first class or airmail postage prepaid; if given by telecopier, when sent; or if
given by recognized overnight delivery service or personal delivery, when
delivered.
11.7 Execution of Loan Documents. This Agreement and any other
Loan Document may be executed in any number of counterparts and any party hereto
or thereto may execute any counterpart, each of which when executed and
delivered will be deemed to be an original and all of which counterparts of this
Agreement or any other Loan Document, as the case may be, when taken together
will be deemed to be but one and the same instrument.
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11.8 Binding Effect; Assignment.
(a) This Agreement and the other Loan Documents to
which any Borrower is a Party will be binding upon and inure to the
benefit of the Borrowers, the Creditor Parties, and their respective
successors and assigns, except that the Borrowers may not assign their
rights hereunder or thereunder or any interest herein or therein
without the prior written consent of the Lenders. Each Lender
represents that it is not acquiring its interest in the Loans with a
view to the distribution thereof within the meaning of the Securities
Act of 1933, as amended (subject to any requirement that disposition of
such interest must be within the control of such Lender). Any Lender
may at any time pledge its interest in the Loans to a Federal Reserve
Bank, but no such pledge shall release that Lender from its obligations
hereunder or grant to such Federal Reserve Bank the rights of a Lender
hereunder absent foreclosure of such pledge.
(b) From time to time, each Lender may assign all or
any portion of its Pro Rata Share to any Eligible Assignee; provided
that (i) the assignee, if not then a Lender or an Affiliate of the
assigning Lender, shall be approved by the Borrowers (which approval
shall not be unreasonably withheld or delayed), (ii) such assignment
shall be evidenced by an Assignment Agreement, a copy of which shall be
furnished to the Administrative Agent as hereinbelow provided, (iii)
such assignment shall be of the same Pro Rata Share of each Commitment,
(iv) except in the case of an assignment to an Affiliate of the
assigning Lender, to another Lender or of the entire remaining Pro Rata
Share of the assigning Lender, the assignment shall not assign a Pro
Rata Share equivalent to less than $5,000,000 and (v) the effective
date of any such assignment shall be as specified in the Assignment
Agreement, but not earlier than the date which is five Business Days
after the date the Administrative Agent has received the Assignment
Agreement. Upon the effective date of such Assignment Agreement, the
assignee named therein shall be a Lender for all purposes of this
Agreement, with the Pro Rata Share therein set forth and, to the extent
of such Pro Rata Share, the assigning Lender shall be released from its
obligations under this Agreement.
(c) By executing and delivering an Assignment
Agreement, the assignee Lender thereunder acknowledges and agrees that:
(i) other than the representation and warranty that it is the legal and
beneficial owner of the Pro Rata Share being assigned thereby free and
clear of any adverse claim, the assigning Lender has made no
representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in
connection with this Agreement or the execution, legality, validity,
enforceability, genuineness or sufficiency of this Agreement or any
other Loan Document; (ii) the assigning Lender has made no
representation or warranty and assumes no responsibility with respect
to the financial condition of the Borrowers or the performance by the
Borrowers of the Obligations; (iii) it has received a copy of this
Agreement, together with copies of the most recent financial statements
delivered pursuant to Section 7.1 and such other documents and
information as it has deemed appropriate to
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make its own credit analysis and decision to enter into such Assignment
Agreement; (iv) it will, independently and without reliance upon the
Administrative Agent or any Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make
its own credit decisions in taking or not taking action under this
Agreement; (v) it appoints and authorizes the Administrative Agent to
take such action and to exercise such powers under this Agreement as
are delegated to the Administrative Agent by this Agreement; and (vi)
it will perform in accordance with their terms all of the obligations
which by the terms of this Agreement are required to be performed by it
as a Lender.
(d) The Administrative Agent shall maintain at the
Administrative Agent's Office a copy of each Assignment Agreement
delivered to it. After receipt of a completed Assignment Agreement
executed by any Lender and an assignee, and receipt of an assignment
fee of $3,500 from such assignee, Administrative Agent shall, promptly
following the effective date thereof notify Borrower and each Lender of
the identity of the new Lender.
(e) Each Lender may from time to time grant
participations to one or more banks or other financial institutions in
a portion of its Pro Rata Share; provided, however, that (i) such
Lender's obligations under this Agreement shall remain unchanged, (ii)
such Lender shall remain solely responsible to the other parties hereto
for the performance of such obligations, (iii) the participating banks
or other financial institutions shall not be a Lender hereunder for any
purpose except, if the participation agreement so provides, for the
purposes of Sections 3.5, 3.7, and 11.12 but only to the extent that
the cost of such benefits to the Borrowers does not exceed the cost
which the Borrowers would have incurred in respect of such Lender
absent the participation, (iv) the Borrowers, the Administrative Agent
and the other Lenders shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and obligations
under this Agreement, (v) the participation interest shall be expressed
as a percentage of the assigning Lender's Pro Rata Share and shall not
restrict an increase in the Commitment or in the assigning Lender's Pro
Rata Share, so long as the amount of the participation interest is not
affected thereby and (vii) the consent of the holder of such
participation interest shall not be required for amendments or waivers
of provisions of the Loan Documents other than those which (A) extend
the Maturity Date or any other date upon which any payment of money is
due to the Lenders or (B) reduce the rate of interest on the Loans, any
fee or any other monetary amount payable to the Lenders.
11.9 Foreign Lenders and Participants. Each Lender, and each
holder of a participation interest in the Loans that is incorporated under the
Laws of a jurisdiction other than the United States of America or any state
thereof shall deliver to the Borrowers (with a copy to the Administrative
Agent), within twenty days after accepting an assignment or receiving a
participation interest herein pursuant to Section 11.8, all appropriate United
States Internal Revenue Service forms as the Administrative Agent may require,
or such other evidence satisfactory to the Borrowers and the Administrative
Agent, to establish that no withholding under the federal income tax Laws is
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required with respect to such Person. Thereafter and from time to time, each
such Person shall (a) promptly submit to the Borrowers (with a copy to the
Administrative Agent), such additional duly completed and signed copies of one
of such forms (or such successor forms as shall be adopted from time to time by
the relevant United States taxing authorities) as may then be available under
then current United States Laws and regulations to avoid, or such evidence as is
satisfactory to the Borrowers and the Administrative Agent of any available
exemption from, United States withholding taxes in respect of all payments to be
made to such Person by the Borrowers pursuant to this Agreement and (b) take
such steps as shall not be disadvantageous to it, in the judgment of such
Lender, and as may be reasonably necessary (including the re-designation of its
Eurodollar Lending Office, if any) to avoid any requirement of applicable Laws
that the Borrowers make any deduction or withholding for taxes from amounts
payable to such Person.
11.10 Right of Setoff. If an Event of Default has occurred and
is continuing, the Administrative Agent or any Lender (but only with the consent
of the Requisite Lenders) may exercise its rights under Article 9 of the Uniform
Commercial Code and other applicable Laws and, to the extent permitted by
applicable Laws, apply any funds in any deposit account maintained with it by
any Borrower and/or any Property of that Borrower in its possession against the
Obligations.
11.11 Sharing of Setoffs. Each Lender severally agrees that if
it, through the exercise of any right of setoff, banker's lien or counterclaim
against the Borrowers, or otherwise, receives payment of the Obligations held by
it that is ratably more than any other Lender, through any means, receives in
payment of the Obligations held by that Lender, then, subject to applicable
Laws: (a) the Lender exercising the right of setoff, banker's lien or
counterclaim or otherwise receiving such payment shall purchase, and shall be
deemed to have simultaneously purchased, from the other Lender a participation
in the Obligations held by the other Lender and shall pay to the other Lender a
purchase price in an amount so that the share of the Obligations held by each
Lender after the exercise of the right of setoff, banker's lien or counterclaim
or receipt of payment shall be in the same proportion that existed prior to the
exercise of the right of setoff, banker's lien or counterclaim or receipt of
payment; and (b) such other adjustments and purchases of participations shall be
made from time to time as shall be equitable to ensure that all of the Lenders
share any payment obtained in respect of the Obligations ratably in accordance
with each Lender's share of the Obligations immediately prior to, and without
taking into account, the payment; provided that, if all or any portion of a
disproportionate payment obtained as a result of the exercise of the right of
setoff, banker's lien, counterclaim or otherwise is thereafter recovered from
the purchasing Lender by the Borrowers or any Person claiming through or
succeeding to the rights of any of the Borrowers, the purchase of a
participation shall be rescinded and the purchase price thereof shall be
restored to the extent of the recovery, but without interest. Each Lender that
purchases a participation in the Obligations pursuant to this Section shall from
and after the purchase have the right to give all notices, requests, demands,
directions and other communications under this Agreement with respect to the
portion of the Obligations purchased to the same extent as though the purchasing
Lender were the original owner of the Obligations purchased. Each Borrower
expressly consents to the foregoing arrangements and agrees that any Lender
holding a participation in an Obligation so purchased may exercise any and all
rights of setoff, banker's lien or counterclaim with
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respect to the participation as fully as if that Lender were the original owner
of the Obligation purchased.
11.12 Indemnity by the Borrowers. The Borrowers agree to
indemnify, save and hold harmless each Creditor Party and their respective
parent corporations, Subsidiaries, directors, officers, agents, attorneys and
employees (collectively the "Indemnitees") from and against: (a) Any and all
claims, demands, actions or causes of action that are asserted against any
Indemnitee by any Person (other than any Indemnitee or any Party) if the claim,
demand, action or cause of action directly or indirectly relates to a claim,
demand, action or cause of action that such Person asserts or may assert against
the Borrowers, any Affiliate of the Borrowers or any officer, director or
shareholder of the Borrowers in relation to the transactions described herein,
provided that the same relates to or arises from this Agreement, any other Loan
Document, or any transaction contemplated hereunder or thereunder; (b) Any and
all claims, demands, actions or causes of action that are asserted against any
Indemnitee by any Person (other than any Indemnitee or any Party) if the claim,
demand, action or cause of action arises out of or relates to the Commitment,
the use or contemplated use of proceeds of any Loan or Letter of Credit, or the
relationship of the Borrowers and the Creditor Parties under this Agreement; (c)
Any administrative or investigative proceeding by any Governmental Agency
arising out of or related to a claim, demand, action or cause of action
described in clauses (a) or (b) above; and (d) Any and all liabilities, losses,
costs or expenses (including reasonable attorneys' fees (including the allocated
cost of in-house counsel) and disbursements and other reasonable professional
services) that any Indemnitee suffers or incurs as a result of the assertion of
any foregoing claim, demand, action or cause of action; provided that no
Indemnitee shall be entitled to indemnification for any loss caused by its own
gross negligence or willful misconduct. If any such claim, demand, action or
cause of action is asserted against any Indemnitee, such Indemnitee shall
promptly notify the Borrowers in writing, but the failure promptly to so notify
the Borrowers shall not affect the Borrowers' obligations under this Section.
Any obligation or liability of the Borrowers to any Indemnitee under this
Section shall survive the expiration or termination of this Agreement and the
repayment of all Loans and the payment and performance of all other Obligations.
11.13 Nonliability of the Creditor Parties. The Borrowers
acknowledge and agree that:
(a) Any inspections or audits of any Property of the
Borrowers made by or through the Creditor Parties are for purposes of
administration of the Loan Documents only and the Borrowers are not
entitled to rely upon the same, nor is any Creditor Party obligated to
release to the Borrowers any information obtained as a result of such
inspection or audit;
(b) By accepting or approving anything required to be
observed, performed, fulfilled or given to any Creditor Party pursuant
to the Loan Documents, the Creditor Parties shall not be deemed to have
warranted or represented the sufficiency, legality, effectiveness or
legal effect of the same, or of any term, provision or condition
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thereof, and such acceptance or approval thereof shall not constitute a
warranty or representation to anyone with respect thereto by any
Creditor Party; and
(c) The relationship among the Borrowers and the
Creditor Parties is, and shall at all times remain, solely that of
borrowers, guarantors and lenders; no Creditor Party shall under any
circumstance be construed to be a partner or joint venturer of the
Borrowers or their Affiliates; no Creditor Party shall under any
circumstance be deemed to be in a relationship of confidence or trust
or a fiduciary relationship with the Borrowers or their Affiliates, or
to owe any fiduciary duty to the Borrowers or their respective
Affiliates under this Agreement; the Creditor Parties do not undertake
or assume any responsibility or duty to the Borrowers or their
respective Affiliates to select, review, inspect, supervise, pass
judgment upon or inform the Borrowers or their respective Affiliates of
any matter in connection with their Property or the operations of the
Borrowers or their respective Affiliates; the Borrowers and their
Affiliates shall rely entirely upon their own judgment with respect to
such matters; and any review, inspection, supervision, exercise of
judgment or supply of information undertaken or assumed by the Creditor
Parties in connection with such matters is solely for the protection of
the Creditor Parties and none of the Borrowers nor any other Person is
entitled to rely thereon.
11.14 No Third Parties Benefited. This Agreement is made for
the purpose of defining and setting forth certain obligations, rights and duties
of the Borrowers and the Creditor Parties in connection with the Loans and
Letters of Credit, and is made for the sole benefit of the Borrowers and the
Creditor Parties and the successors and assigns of the Creditor Parties. Except
as provided in Section 11.8, no other Person shall have any rights of any nature
hereunder or by reason hereof.
11.15 Further Assurances. The Borrowers shall, and shall cause
their Subsidiaries to, at their expense and without expense to the Creditor
Parties, do, execute and deliver such further acts and documents as the
Administrative Agent or the Requisite Lenders from time to time reasonably
require for the assuring and confirming unto the Creditor Parties of the rights
hereby created or intended now or hereafter so to be created, or for carrying
out the intention or facilitating the performance of the terms of any Loan
Document.
11.16 Confidentiality. Each Lender agrees to hold any
confidential information that it may receive from the Borrowers pursuant to this
Agreement in confidence, except for disclosure: (a) To other Lenders; (b) To
legal counsel and accountants for the Borrowers, the Administrative Agent or any
Lender; (c) To other professional advisors to the Borrowers, the Administrative
Agent or any Lender; (d) To regulatory officials having jurisdiction over that
Lender; (e) As required by Law or legal process or in connection with any legal
proceeding to which that Lender is a party; and (g) To another financial
institution in connection with a disposition or proposed disposition to that
financial institution of all or part of that Lender's interests hereunder or a
participation interest in its Loans, provided that the recipient has accepted
such information subject to a confidentiality agreement substantially similar to
this Section. For purposes of the foregoing, "confidential
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information" shall mean any information respecting the Borrowers or their
Subsidiaries reasonably considered by the Borrowers to be confidential, other
than (i) information previously filed with any Governmental Agency and available
to the public, (ii) information previously published in any public medium from a
source other than, directly or indirectly, that Lender, and (iii) information
previously disclosed by any Borrower to any Person not an Affiliate, agent or
employee of the Borrower without a confidentiality agreement substantially
similar to this Section. Nothing in this Section shall be construed to create or
give rise to any fiduciary duty on the part of the Administrative Agent or the
Lenders to any Borrower.
11.17 Integration. This Agreement, together with the other
Loan Documents, comprises the complete and integrated agreement of the parties
on the subject matter hereof and supersedes all prior agreements, written or
oral, on the subject matter hereof. In the event of any conflict between the
provisions of this Agreement and those of any other Loan Document, the
provisions of this Agreement shall control and govern; provided that the
inclusion of supplemental rights or remedies in favor of the Administrative
Agent or the Lenders in any other Loan Document shall not be deemed a conflict
with this Agreement. Each Loan Document was drafted with the joint participation
of the respective parties thereto and shall be construed neither against nor in
favor of any party, but rather in accordance with the fair meaning thereof.
11.18 Severability of Provisions. Any provision in any Loan
Document that is held to be inoperative, unenforceable or invalid as to any
party or in any jurisdiction shall, as to that party or jurisdiction, be
inoperative, unenforceable or invalid without affecting the remaining provisions
or the operation, enforceability or validity of that provision as to any other
party or in any other jurisdiction, and to this end the provisions of all Loan
Documents are declared to be severable.
11.19 Independent Covenants. Each covenant in Articles 5, 6
and 7 is independent of the other covenants in those Articles; the breach of any
such covenant shall not be excused by the fact that the circumstances underlying
such breach would be permitted by another such covenant.
11.20 Headings. Article and Section headings in this Agreement
and the other Loan Documents are included for convenience of reference only and
are not part of this Agreement or the other Loan Documents for any other
purpose.
11.21 Arbitration Reference.
(a) Mandatory Arbitration. Any controversy or claim
between or among the parties, including but not limited to those
arising out of or relating to this Agreement or any agreements or
instruments relating hereto or delivered in connection herewith and any
claim based on or arising from an alleged tort, shall at the request of
any party be determined by arbitration. The arbitration shall be
conducted in accordance with the United States Arbitration Act (Title
9, U.S. Code), notwithstanding any choice of law provision in this
Agreement, and under the Commercial Rules of the American Arbitration
Association
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("AAA"). The arbitrators shall give effect to statutes of limitation in
determining any claim. Any controversy concerning whether an issue is
arbitrable shall be determined by the arbitrators. Judgment upon the
arbitration award may be entered in any court having jurisdiction. The
institution and maintenance of an action for judicial relief or pursuit
of a provisional or ancillary remedy shall not constitute a waiver of
the right of any party, including the plaintiff, to submit the
controversy or claim to arbitration if any other party contests such
action for judicial relief.
(b) Real Property Collateral. Notwithstanding the
provisions of subparagraph (a), no controversy or claim shall be
submitted to arbitration without the consent of all parties if, at the
time of the proposed submission, such controversy or claim arises from
or relates to an obligation to any Creditor Party which is secured by
real property Collateral. If all parties do not consent to submission
of such a controversy or claim to arbitration, the controversy or claim
shall be determined as provided in subparagraph (c).
(c) Judicial Reference. A controversy or claim which
is not submitted to arbitration as provided and limited in
subparagraphs (a) and (b) shall, at the request of any party, be
determined by a reference in accordance with California Code of Civil
Procedure Sections 638 et seq. If such an election is made, the parties
shall designate to the court a referee or referees selected under the
auspices of the AAA in the same manner as arbitrators are selected in
AAA-sponsored proceedings. The presiding referee of the panel, or the
referee if there is a single referee, shall be an active attorney or
retired judge. Judgment upon the award rendered by such referee or
referees shall be entered in the court in which such proceeding was
commenced in accordance with California Code of Civil Procedure
Sections 644 and 645.
(d) Provisional Remedies, Self-Help and Foreclosure.
No provision of this section shall limit the right of any party to this
Agreement to exercise self-help remedies such as setoff, to foreclose
against or sell any real or personal property Collateral or security or
to obtain provisional or ancillary remedies from a court of competent
jurisdiction before, after, or during the pendency of any arbitration
or other proceeding. The exercise of a remedy does not waive the right
of any party to resort to arbitration or reference. At the Requisite
Lenders' option, foreclosure under a deed of trust or mortgage may be
accomplished either by exercise of power of sale under the deed of
trust or mortgage or by judicial foreclosure.
11.22 Environmental Indemnity.
(a) Each Borrower hereby agrees to indemnify, defend
and hold harmless each Creditor Party and each of their respective
officers, directors, employees, counsel, agents and attorneys-in-fact
(each, an "Indemnified Person"), from and against any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, charges, expenses or disbursements (including
fees and out-of-pocket expenses of legal
88-
counsel to the Administrative Agent and the allocated costs of internal
counsel to the Administrative Agent and the allocated cost of internal
environmental audit or review services), which may be incurred by or
asserted against such Indemnified Person in connection with or arising,
directly or indirectly out of any pending or threatened investigation,
litigation or proceeding, or any action taken by any Person, with
respect to any Environmental Claim arising out of or related to any
Property subject to a Lien in favor of the Administrative Agent or any
Lender. No action taken by legal counsel chosen by the Administrative
Agent or any Lender in defending against any such investigation,
litigation or proceeding or requested remedial, removal or response
action shall vitiate or any way impair the Borrowers' obligation and
duty hereunder to indemnify and hold harmless each Creditor Party.
(b) In no event shall any site visit, observation or
testing by the Administrative Agent or any Lender (or any contractee of
the Administrative Agent or any Lender) be deemed a representation or
warranty that Hazardous Materials are or are not present in, on, or
under, the site, or that there has been or shall be compliance with any
Environmental Law. None of the Borrowers nor any other Person is
entitled to rely on any site visit, observation or testing by the
Administrative Agent or any Lender. Neither the Administrative Agent
nor any Lender owes any duty of care to protect the Borrowers or any
other Person against, or to inform the Borrowers or any other party of,
any Hazardous Materials or any other adverse condition affecting any
site or Property. Neither the Administrative Agent nor any Lender shall
be obligated to disclose to the Borrowers or any other Person any
report or findings made as a result of, or in connection with, any site
visit, observation or testing by the Administrative Agent or any
Lender.
(c) The obligations in this Section shall survive
payment of all other Obligations. At the election of any Indemnified
Person, the Borrowers shall defend such Indemnified Person using legal
counsel reasonably satisfactory to the Borrowers and such Indemnified
Person, at the sole cost and expense of the Borrowers. All amounts
owing under this Section shall be paid within 30 days after demand.
(d) The Borrowers acknowledge that the Administrative
Agent's and Lenders' appraisal of the Real Property is such that
Administrative Agent and Lenders are not willing to accept the
consequences under any applicable anti-deficiency rules of inclusion
of the obligations under this Section among the obligations secured by
the Real Property, and that the Administrative Agent and the Lenders
would not enter into the Loan Agreement with the Borrowers but for the
personal liability undertaken by the Borrowers for such obligations.
11.23 Jurisdiction. Except as otherwise expressly provided in
any Loan Document, the parties hereto and thereto agree and intend that the
proper and exclusive forum for any litigation of any disputes or controversies
arising out of or related to the Loan Documents shall be the Superior Court of
the State of California for the County of Los Angeles. Notwithstanding the
89-
foregoing, the parties agree that, with respect to any Collateral given by any
Borrower or any Affiliate thereof to any of the Creditor Parties located in
states or jurisdictions other than California, or in counties of California
other than Los Angeles County, the Administrative Agent shall be entitled on
behalf of such Creditor Parties to commence actions in such states or
jurisdictions, or in such counties of California, against the Borrowers or any
Affiliate thereof or other Persons for the purpose of seeking provisional
remedies, including actions for claim and delivery of Property, or for
injunctive relief or appointment of a receiver, or actions to foreclose upon
Liens granted to the Creditor Parties. Each party to any Loan Document, to the
extent permitted by applicable Laws, hereby expressly waives any defence or
objection to jurisdiction or venue based on the doctrine of forum non
conveniens, and stipulates that the Superior Court of the State of California
for the County of Los Angeles shall have in personam jurisdiction and venue over
such party for the purpose of litigating any dispute or controversy arising out
of or related to the Loan Documents. In the event the Borrowers or any Affiliate
thereof should commence or maintain any action or proceeding arising out of or
related to the Loan Documents in a forum other than the Superior Court of the
State of California for the County of Los Angeles, the Creditor Parties shall be
entitled to request the dismissal or stay of such action or proceeding, and the
Borrowers and their Affiliates stipulate that such action or proceeding shall be
dismissed or stayed.
11.24 Joint Borrower Provisions. The Borrowers acknowledge
that the Loans and Letters of Credit are being extended to the Borrowers on a
joint and several basis at their request and as an accommodation to the
Borrowers (rather than in separate credit facilities made available to the
individual Borrowers) and, in furtherance thereof, hereby consent and agree to
the Joint Borrower provisions attached hereto as Exhibit G and incorporated
herein by this reference.
11.25 GOVERNING LAW. EXCEPT TO THE EXTENT OTHERWISE EXPRESSLY
PROVIDED THEREIN, EACH LOAN DOCUMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA (WITH OUT
REGARD TO THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION WHICH MAY BE
REQUIRED BY THE CHOICE OF LAW AND CONFLICT OF LAWS PROVISIONS THEREOF).
11.26 PURPORTED ORAL AMENDMENTS. THE PARTIES HERETO EXPRESSLY
ACKNOWLEDGE THAT THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY ONLY BE AMENDED
OR MODIFIED, OR THE PROVISIONS HEREOF OR THEREOF WAIVED OR SUPPLEMENTED, BY AN
INSTRUMENT IN WRITING THAT COMPLIES WITH SECTION 11.2. THE PARTIES HERETO AGREE
THAT THEY WILL NOT RELY ON ANY COURSE OF DEALING, COURSE OF PERFORMANCE, OR ORAL
OR WRITTEN STATEMENTS BY ANY REPRESENTATIVE OF THE ADMINISTRATIVE AGENT OR ANY
LENDER THAT DOES NOT COMPLY WITH SECTION 11.2 TO EFFECT AN AMENDMENT,
MODIFICATION, WAIVER OR SUPPLEMENT TO THE AGREEMENT OF THE OTHER LOAN DOCUMENTS.
[Remainder of this Page Intentionally Left Blank]
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11.27 WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT
HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTY HERETO OR ANY OF THEM WITH
RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR
TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR
A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
Borrowers:
JAKKS PACIFIC, INC.
FLYING COLORS TOYS, INC.
ROAD CHAMPS, INC. and
PENTECH INTERNATIONAL INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Exec. V.P./C.F.O. of each of the foregoing
Address for notices for each of the foregoing:
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, #▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
BANK OF AMERICA, N.A., as Administrative Agent
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President and Manager
Address:
Bank of America, N.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Mail Code: WA1-501-37-20
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
206/358-7578
206/358-0971 FAX
Attn.: ▇▇▇ ▇▇▇▇▇▇▇, Vice President
BANK OF AMERICA, N.A., as Issuing Lender and as
a Lender
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
Address:
Bank of America, N.A. #1459
Mail Code CA 9-156-MZ-07
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
213/345-6931
213/345-6982 FAX
▇▇▇▇▇.▇.▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
-----------------------------------------------
Commitment Amount $17,500,000
UNITED CALIFORNIA BANK, as a Lender
By: /s/ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
Title: Vice President
Address for Notices:
United California Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇, Vice President
Telephone: ▇▇▇ ▇▇▇ ▇▇▇▇
Telecopier: ▇▇▇ ▇▇▇ ▇▇▇▇
Commitment Amount: $15,000,000
BNP PARIBAS, as Issuing Lender and as a Lender
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
---------------------------------------
BNP Paribas
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Vice President
Telephone: ▇▇▇ ▇▇▇-▇▇▇▇
Telecopier: ▇▇▇ ▇▇▇-▇▇▇▇
Commitment Amount: $12,500,000
WASHINGTON MUTUAL BANK, d/b/a
WM BUSINESS BANK
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
Address for Notices:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
Telephone: ▇▇▇ ▇▇▇-▇▇▇▇
Telecopier: ▇▇▇ ▇▇▇-▇▇▇▇
Commitment Amount $5,000,000
EXHIBIT A
ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT ("Agreement") dated as of
__________, _____ is made with reference to that certain Loan Agreement dated as
of October 12, 2001 (as it may from time to time be amended, restated, extended,
renewed, modified or supplemented, the "Loan Agreement") by and among JAKKS
PACIFIC, INC., a Delaware corporation, FLYING COLORS TOYS, INC., a Michigan
corporation, ROAD CHAMPS, INC., a Delaware corporation, and PENTECH
INTERNATIONAL INC., a Delaware corporation (collectively, "Borrowers"), the
Lenders referred to therein and Bank of America, N.A., as Administrative Agent,
and is entered into between the "Assignor" described below, in its capacity as a
Lender under the Loan Agreement, and the "Assignee" described below.
Assignor and Assignee hereby represent, warrant and agree as
follows:
1. Definitions. Capitalized terms defined in the Loan
Agreement are used herein with the meanings set forth for such terms in the Loan
Agreement. As used in this Agreement, the following capitalized terms shall have
the meanings set forth below:
"Assignee" means ____________________________.
"Assigned Pro Rata Share" means _____% of the Commitment of the Lenders
under the Loan Agreement which equals $____________.
"Assignor" means _____________________________.
"Effective Date" means ______________, _____, the effective date of
this Agreement determined in accordance with Section 11.8 of the Loan Agreement.
2. Representations and Warranties of the Assignor. The
Assignor represents and warrants to the Assignee as follows:
a. As of the date hereof, the Pro Rata Share of the
Assignor is ____% of the Commitment (without giving effect to assignments
thereof which have not yet become effective). The Assignor is the legal and
beneficial owner of the Assigned Pro Rata Share and the Assigned Pro Rata Share
is free and clear of any adverse claim.
b. As of the date hereof, the outstanding principal
balance of Loans made by the Assignor under the Assignor's Pro Rata Share of the
Commitment is $_________, and Assignor's ratable participation in outstanding
Letters of Credit is $___________.
c. The Assignor has full power and authority, and has
taken all action necessary, to execute and deliver this Agreement and any and
all other documents required or
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permitted to be executed or delivered by it in connection with this Agreement
and to fulfill its obligations under, and to consummate the transactions
contemplated by, this Agreement, and no governmental authorizations or other
authorizations are required in connection therewith; and
d. This Agreement constitutes the legal, valid and
binding obligation of the Assignor.
The Assignor makes no representation or warranty and assumes no responsibility
with respect to the financial condition of Borrowers, or any of them, or the
performance by Borrowers, or any of them, of the Obligations, and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Loan Agreement or the execution, legality,
validity, enforceability, genuineness, or sufficiency of the Loan Agreement or
any other Loan Document other than as expressly set forth above.
3. Representations and Warranties of the Assignee. The
Assignee hereby represents and warrants to the Assignor as follows:
a. The Assignee has full power and authority, and has
taken all action necessary, to execute and deliver this Agreement, and any and
all other documents required or permitted to be executed or delivered by it in
connection with this Agreement and to fulfill its obligations under, and to
consummate the transactions contemplated by, this Agreement, and no governmental
authorizations or other authorizations are required in connection therewith;
b. This Agreement constitutes the legal, valid and
binding obligation of the Assignee;
c. The Assignee has independently and without
reliance upon the Administrative Agent or Assignor and based on such documents
and information as the Assignee has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. The Assignee will,
independently and without reliance upon the Administrative Agent or any Lender,
and based upon such documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking or not taking
action under the Loan Agreement;
d. The Assignee has received copies of such of the
Loan Documents delivered pursuant to Section 8.1 of the Loan Agreement as it has
requested, together with copies of the most recent financial statements
delivered pursuant to Section 7.1 of the Loan Agreement;
e. The Assignee will perform in accordance with their
respective terms all of the obligations which by the terms of the Loan Agreement
are required to be performed by it as a Lender; and
f. The Assignee is an Eligible Assignee.
4. Assignment. On the terms set forth herein, the Assignor, as
of the Effective Date, hereby irrevocably sells, assigns and transfers to the
Assignee all of the rights and obligations of
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the Assignor under the Loan Agreement, the other Loan Documents and the
Assignor's Pro Rata Share of the Commitment to the extent of the Assigned Pro
Rata Share, and the Assignee irrevocably accepts such assignment of rights and
assumes such obligations from the Assignor on such terms and effective as of the
Effective Date. As of the Effective Date, the Assignee shall have the rights and
obligations of a "Lender" under the Loan Documents, except to the extent of any
arrangements with respect to payments referred to in Section 5 hereof. Assignee
hereby appoints and authorizes the Administrative Agent to take such action and
to exercise such powers under the Loan Agreement as are delegated to the
Administrative Agent by the Loan Agreement.
5. Payment. On the Effective Date, the Assignee shall pay to
the Assignor, in immediately available funds, an amount equal to the purchase
price of the Assigned Pro Rata Share, as agreed between the Assignor and the
Assignee pursuant to a letter agreement of even date herewith. Such letter
agreement also sets forth the agreement between the Assignor and the Assignee
with respect to the amount of interest, fees, and other payments with respect to
the Assigned Pro Rata Share which are to be retained by the Assignor. Assignee
shall also pay to the Administrative Agent an assignment fee of $3,500, if
applicable, in accordance with Section 11.8 of the Loan Agreement.
The Assignor and the Assignee hereby agree that if either
receives any payment of interest, principal, fees or any other amount under the
Loan Agreement, their respective Pro Rata Shares of the Commitment or any other
Loan Documents which is for the account of the other, it shall hold the same in
trust for such party to the extent of such party's interest therein and shall
promptly pay the same to such party.
6. Principal, Interest, Fees, etc. Any principal that would be
payable and any interest, fees and other amounts that would accrue from and
after the Effective Date to or for the account of the Assignor pursuant to the
Loan Agreement and its Pro Rata Share of the Commitment shall be payable to or
for the account of the Assignor and the Assignee, in accordance with their
respective interests as adjusted pursuant to this Agreement.
7. Further Assurances. Concurrently with the execution of this
Agreement, the Assignor shall execute two counterpart original Requests for
Registration, in the form of Exhibit A to this Agreement, to be forwarded to the
Administrative Agent. The Assignor and the Assignee further agree to execute and
deliver such other instruments, and take such other action, as either party may
reasonably request in connection with the transactions contemplated by this
Agreement, and the Assignor specifically agrees to cause the delivery of (i) two
original counterparts of this Agreement and (ii) the Request for Registration,
to the Administrative Agent for the purpose of registration of the Assignee as a
"Lender" pursuant to Section 11.8 of the Loan Agreement.
8. Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE A
CONTRACTUAL OBLIGATION UNDER, AND SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LOCAL LAWS OF THE STATE OF CALIFORNIA. FOR
ANY DISPUTE ARISING IN CONNECTION WITH THIS AGREEMENT, THE ASSIGNEE HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF
CALIFORNIA.
-3-
9. Notices. All communications among the parties or notices in
connection herewith shall be in writing, hand delivered or sent by registered
airmail, postage prepaid, or by telex, telegram or cable, addressed to the
appropriate party at its address set forth on the signature pages hereof. All
such communications and notices shall be effective upon receipt.
10. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns;
provided, however, that the Assignee shall not assign its rights or obligations
under this Agreement without the prior written consent of the Assignor and any
purported assignment, absent such consent, shall be void. Nothing contained in
this Section shall restrict the assignment by Assignee of its rights under the
Loan Documents following the Effective Date.
11. Interpretation. The headings of the various sections
hereof are for convenience of reference only and shall not affect the meaning or
construction of any provision hereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered by their respective officials, officers or agents
thereunto duly authorized as of the date first above written.
"Assignor"
_______________________________________
By:____________________________________
Its:_______________________________
Address: __________________________
__________________________
__________________________
Attention: __________________________
Telephone: __________________________
Telecopier: __________________________
"Assignee"
_______________________________________
By:____________________________________
Its:_______________________________
-4-
Address: __________________________
__________________________
__________________________
Attention: __________________________
Telephone: __________________________
Telecopier: __________________________
-5-
Exhibit A to Assignment Agreement
REQUEST FOR REGISTRATION
To: Bank of America, N.A., as Administrative Agent, and Borrowers (as
defined below)
THIS REQUEST FOR REGISTRATION is made as of the date of the
enclosed Assignment Agreement with reference to that certain Loan Agreement
dated as of October 12, 2001 by and among JAKKS PACIFIC, INC., a Delaware
corporation, FLYING COLORS TOYS, INC., a Michigan corporation, ROAD CHAMPS,
INC., a Delaware corporation, and PENTECH INTERNATIONAL INC., a Delaware
corporation (collectively, "Borrowers"), the Lenders therein named, and Bank of
America, N.A., Administrative Agent (as amended as of the date hereof, the "Loan
Agreement").
The Assignor and Assignee described below hereby request that
Administrative Agent register the Assignee as a Lender pursuant to Section 11.8
of the Loan Agreement effective as of the Effective Date described in the
Assignment Agreement. Enclosed with this Request are two counterpart originals
of the Assignment Agreement.
IN WITNESS WHEREOF, the Assignor and Assignee have executed
this Request for Registration by their duly authorized officers as of
________________.
"Assignor" "Assignee"
______________________________________ ______________________________________
By:___________________________________ By:___________________________________
Its:_____________________________ Its:_____________________________
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CONSENT OF ADMINISTRATIVE AGENT AND BORROWERS
TO: The Assignor and Assignee referred to in the above Request for
Registration
When countersigned by both Borrowers and Administrative Agent
below, this document shall certify that:
[ ] [CHECK HERE IF BORROWERS' SIGNATURE IS REQUIRED PURSUANT TO
SECTION 11.8(b)(i) OF THE LOAN AGREEMENT:]
1. Borrowers have consented, pursuant to the terms of the Loan
Documents, to the assignment by the Assignor to the Assignee of the Assigned Pro
Rata Share.
2. Administrative Agent has registered the Assignee as a
Lender under the Loan Agreement, effective as of the Effective Date described
above, with a Pro Rata Share of the Commitment corresponding to the Assigned Pro
Rata Share and has adjusted the registered Pro Rata Share of the Commitment of
the Assignor to reflect the assignment of the Assigned Pro Rata Share.
Approved:
JAKKS PACIFIC, INC. BANK OF AMERICA, N.A.,
FLYING COLORS TOYS, INC. as Administrative Agent
ROAD CHAMPS, INC. and
PENTECH INTERNATIONAL INC.
By:______________________________ By:______________________________
Title:____________________________ of Title:___________________________
each of the foregoing
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EXHIBIT B
BORROWING BASE CERTIFICATE
TO: BANK OF AMERICA, N.A., as Administrative Agent
This Borrowing Base Certificate ("Certificate") is delivered
pursuant to the Loan Agreement dated as of October 12, 2001 among JAKKS PACIFIC,
INC., a Delaware corporation, FLYING COLORS TOYS, INC., a Michigan corporation,
ROAD CHAMPS, INC., a Delaware corporation, and PENTECH INTERNATIONAL INC. a
Delaware corporation (collectively, "Borrowers"), the Lenders referred to
therein, and Bank of America, N.A., as Administrative Agent (as it may from time
to time be amended, restated, extended, renewed, modified or supplemented, the
"Loan Agreement"). Terms defined in the Loan Agreement and not otherwise defined
in this Certificate shall have the meanings defined for them in the Loan
Agreement. Section references herein relate to the Loan Agreement unless stated
otherwise. This Certificate covers the calendar month ending _______, _____ (the
"Test Date"), and is delivered to the Administrative Agent pursuant to Section
7.1(a) of the Loan Agreement.
The following calculations determine the Borrowing Base as of
the Test Date and current borrowing availability under the Loan Agreement and
the related Loan Documents. Such calculations are derived from the books and
records of Borrower in accordance with the relevant definitions of financial
terms set forth in Section 1.1 of the Loan Agreement:
A. BORROWING BASE
(1) Eligible Accounts Component (all accounts are calculated at
book value).
(a) Eligible Accounts Calculation.
(i) accounts receivable of the Borrowers as of the
Test Date as to which the Administrative Agent holds $
a first priority perfected security interest --------
less (ii) the following accounts receivable, to the
extent included in (i), (without duplication):
(A) accounts receivable of any Borrower that did not
arise in the ordinary course of business of that $
Borrower. --------
(B) accounts receivable of any Borrower which do not
represent amounts owed for services rendered or goods $
delivered. --------
-1-
(C) accounts receivable of any Borrower which were
not the subject of invoices sent to the relevant
account debtors within 5 days of shipment of the
related goods or the rendering of the related $
services. --------
(D) accounts receivable of any Borrower which are not
due and payable within 90 days of the issuance of the $
invoice. --------
(E) accounts receivable of any Borrower which are
more than 60 days past due (or more than 90 days from $
the issuance of the invoice). --------
(F) accounts receivable of any Borrower which
represent amounts owed to such Borrower for goods $
shipped on a consignment or "▇▇▇▇ and hold" basis. --------
(G) accounts receivable of any Borrower which have as
the account debtor a Person who is the subject of any $
pending proceeding under any Debtor Relief Law. --------
(H) accounts receivable of any Borrower which have as
the account debtor any Governmental Agency or any
Affiliate, officer or employee of any Borrower or its $
Subsidiaries. --------
(I) accounts receivable of any Borrower which have as
the account debtor a Person located outside the
United States and Canada, unless the payment of such
accounts receivable are secured by an acceptable
letter of credit issued to that Borrower by a Bank $
reasonably acceptable to the Requisite Lenders. --------
(J) accounts receivable of any Borrower due from an
account debtor or its Affiliates if 25% or more of
the aggregate accounts receivable due from that $
account debtor do not qualify as "Eligible Accounts". --------
(K) accounts receivable of any Borrower due from an
account debtor which, if added to all other accounts (K) shall be
receivable owing from such account debtor, causes the increased to
total of all accounts receivable owing from that the amounts
account debtor to exceed 10 percent (10%) of all set forth in
accounts receivable of all account debtors, provided the
that as to the Approved Customers, the limit definition
expressed in this clause thereof in
-2-
the Loan Agreement.
$
--------
(L) accounts receivable of any Borrower which are
subject to any known or asserted offset, counterclaim
or defense, or with respect to which the account $
debtor has disputed its liability. --------
(M) contra accounts of any Borrower with respect to
an account debtor as a result of amounts owing from $
the Borrowers to such account debtor. --------
(N) accounts receivable of any Borrower which are
unenforceable unless a future condition is met,
including any accounts receivable arising out of
cash-on-delivery sales, consignments or guaranteed $
sales. --------
(O) accounts receivable of any Borrower which are $
evidenced by a promissory note or other instrument. --------
(P) accounts receivable of any Borrower which have
been the subject of a "rebilling" or any other
re-invoicing of such account receivable submitted to
the relevant account debtor on a date which is more
than 30 days following the date upon which the
initial invoice with respect to such account $
receivable was submitted to that account debtor --------
(Q) accounts receivable of any Borrower which have
otherwise been objected to by the Requisite Lenders
in the exercise of their reasonable discretion for a
reason which is not the express subject matter of any $
of clauses (A) through (P) above. --------
equals (iii) Eligible Accounts [(i) - (ii)] $
--------
-3-
(b) Eligible Accounts Component.
(i) Eligible Accounts (from item 1(a)(iii) $
above) --------
times (ii) 70% x 0.70(1)
equals Eligible Accounts Component [(i) x (ii)] $
========
(2) Eligible Inventory Component (The "value" of Eligible
Inventory as used in this item 2 shall be determined in
accordance with GAAP based on the lower of cost or market
value on a "first-in, first-out" basis. For purposes of the
foregoing sentence, "cost" shall mean the Borrowers' direct
cost in acquiring such Eligible Inventory and shall not
include any allocation of the Borrowers' operating expenses or
overhead in determining such cost).
(a) Eligible Inventory Calculation.
(i) value of the finished goods inventory $
of the Borrower as of the Test Date. --------
less (ii) the value of the following inventory, to
the extent included in (i) (without duplication):
(A) finished goods inventory of any Borrower that is
subject to any Lien, other than any Lien in favor of $
the Administrative Agent. --------
(B) finished goods inventory of any Borrower that is
damaged, defective, unsalable, slow-moving or $
otherwise unfit for use. --------
(C) inventory of any Borrower consisting of work-in-
progress, packaging materials, pallets, bags, boxes,
capitalized depot freight and handling costs or $
supplies, or discontinued inventory. --------
(D) inventory of any Borrower which is located at
locations other than those described on Schedule 1.1
to the Loan Agreement or such other locations of
which the Borrowers have advised the Administrative $
Agent in writing. --------
--------
(1) or such lower advance rate as the Administrative Agent or the Requisite
Lenders shall have determined in accordance with the Loan Agreement.
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(E) inventory of any Borrower covered by a negotiable
document of title which has not been delivered to the $
Administrative Agent in pledge. --------
(F) inventory of any Borrower other than that which
is held for sale or use in the ordinary course of
such Borrower's business and is of good and $
merchantable quality. --------
(G) inventory of any Borrower which has been placed
on consignment.
(H) finished goods inventory of any Borrower that has
otherwise been objected to by the Requisite Lenders
in the exercise of their reasonable discretion for a
reason which is not the express subject matter of any $
of clauses (A) through (G) above. --------
equals (iii) the value of Eligible Inventory [(i) - $
(ii)] --------
(b) Eligible Inventory Component
(i) value of Eligible Inventory (from item 2(a)(iii)
above).
times (ii) the Inventory Advance Rate x
--------
equals Eligible Inventory Component [(i) x (ii)] $
========
(3) Borrowing Base.
$
(a) Eligible Accounts Component (item 1(b)) --------
plus (b) Eligible Inventory Component (item 2(b)) (provided
that the amount resulting from item 2(b) shall not be in $
excess of up --------
to 20% of the Borrowing Base)
equals Borrowing Base [(a) + (b)] $
========
B. NET BORROWING AVAILABILITY
Borrower's net borrowing availability as of the Test Date is
$___________, calculated as follows:
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(1) Lesser of:
(a) Borrowing Base (item A above) less any $
Availability Reserves --------
and
(b) the aggregate Commitment as of the $
Test Date --------
Less (2) the sum of (i) the aggregate outstanding principal balance of $
the --------
Loans and (ii) the Letter of Credit Usage, each as of the Test Date
equals (3) Borrower's net borrowing availability [(1) - (2)] $
========
C. This Borrowing Base Certificate is executed on ___________, _____, by the
Chief Financial Officer of Borrowers. The undersigned hereby further certifies
that each and every matter contained herein is derived from the books and
records of the Borrowers and is true and correct in all material respects.
-------------------------------------------
, Chief Financial Officer
------------------
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EXHIBIT C
COMPLIANCE CERTIFICATE
TO: BANK OF AMERICA, N.A., as Administrative Agent
This Compliance Certificate ("Certificate") is delivered pursuant to the
Loan Agreement dated as of October 12, 2001 among JAKKS PACIFIC, INC., a
Delaware corporation, FLYING COLORS TOYS, INC., a Michigan corporation, ROAD
CHAMPS, INC., a Delaware corporation, and PENTECH INTERNATIONAL INC., a Delaware
corporation (collectively, "Borrowers"), the Lenders referred to therein, and
Bank of America, N.A., as Administrative Agent (as it may from time to time be
amended, restated, extended, renewed, modified or supplemented, the "Loan
Agreement"). Terms defined in the Loan Agreement and not otherwise defined in
this Certificate shall have the meanings defined for them in the Loan Agreement.
Section references herein relate to the Loan Agreement unless stated otherwise.
This Certificate is delivered in accordance with Section 7.2 of the Loan
Agreement by a Senior Officer of Borrower. This Certificate is delivered as of
the last day of the [Fiscal Quarter] [Fiscal Year] ended _________________,
____, (the "Test Date"). Computations indicating compliance with respect to the
covenants contained in Sections 6.5(c), 6.8(c) and (d), 6.11(f) and (g), 6.12,
6.13, 6.14, 6.15, and 6.18 of the Loan Agreement are set forth below.
I. Section 6.5(c) - Distributions. During the twelve month period ending on the
Test Date, the aggregate consideration paid towards repurchase of shares of the
capital stock of the Company from public shareholders and immaterial fractional
shares in connection with any stock split, provided that no Default or Event of
Default exists or would have resulted from any such repurchase after giving pro
forma effect to the making of the Distribution as of the last day of the most
recent Fiscal Quarter for which the Borrowers are required to have delivered a
Compliance Certificate, was $______________.
Maximum Permitted: $10,000,000
II. Section 6.8(c) and (d) - Indebtedness and Contingent Obligations.
A. As of the Test Date, the aggregate principal amount of Subordinated
Obligations issued to sellers in connection with Permitted Acquisitions was
$_______________.
Maximum Permitted: $10,000,000
B. During the Fiscal Year, or portion thereof, ending on the Test Date,
the aggregate amount of purchase-money Indebtedness and obligations incurred in
connection with Capital Leases was $______________.
Maximum Permitted
in any Fiscal Year: $ 4,000,000
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C. The aggregate amount of purchase-money Indebtedness and obligations in
connection with Capital Leases incurred by Persons which are not Borrowers was $
______________.
Maximum Permitted: $ 2,000,000
III. Section 6.11(f) and (g) - Investments.
A. As of the Test Date, the aggregate amount of Investments made in
Permitted Joint Ventures, made under Section 6.11(f) or Section 6.11(g),
following the Closing Date was $______________.
Maximum Permitted: $ 10,000,000
B. As of the Test Date, the aggregate amount of (a) Investments made in
Permitted Joint Ventures, made under Section 6.11(f) or Section 6.11(g),
following the Closing Date and (b) all other Permitted Acquisitions which have
then been consummated, was $_______________.
Maximum Permitted: $50,000,000 in Cash and Property (other
than capital stock of the Company)
$75,000,000 in Cash and Property (including
capital stock of the Company)
C As of the Test Date, the aggregate amount of other Investments not
otherwise provided for in Section 6.11(a) - (f), was $_______________.
Maximum Permitted: $ 5,000,000
C As of the Test Date, the aggregate amount of Permitted Joint Ventures
not otherwise provided for in Section 6.11(a) - (f), was $_______________.
Maximum Permitted: $ 1,000,000
IV. Section 6.12 - Leverage Ratio. The Leverage Ratio, as of the Test Date,
was ____:1.00.
Maximum Permitted: 1.75:1.00
The Leverage Ratio is calculated as follows:
As of the Test Date:
(a) the sum of (without duplication):
(i) the Company's consolidated
-2-
liabilities for borrowed money
(excluding all Subordinated Obligations) $___________
plus (ii) the Company's consolidated
interest bearing obligations $___________
plus (iii) the Company's consolidated
obligations under Capital Leases $___________
plus (iv) the Company's consolidated
obligations to reimburse the issuer of
any letter of credit (including any
Letter of Credit issued by the Issuing
Lender under the Loan Agreement) for
amounts drawn or which may be drawn
under such letters of credit, other than
Letters of Credit issued for the importation
or purchase of goods $___________
plus (v) without duplication as to the
foregoing, any obligation to the extent
secured by a Lien on the assets of the
Company or any of its Subsidiaries $____________
plus (vi) all guaranties of financial
obligations issued by the Company or
any of its Subsidiaries $____________
equals [(i)+(ii)+(iii)+(iv)+(v)+(vi)] $____________
divided by
(b) EBITDA for the twelve month period ending
on the Test Date (the "Test Period")
(as calculated below) $____________
equals Leverage Ratio [(a)/(b)] ________:1.00
EBITDA is calculated as follows.
As determined in accordance with Generally Accepted Accounting Principles:
(a) EBITDA
-3-
(i) Net Income for the Test Period $___________
plus (ii) to the extent deducted in arriving
at Net Income, income tax expense $___________
plus (iii) to the extent deducted in arriving
at Net Income, gross interest expense $___________
plus (iv) to the extent deducted in arriving
at Net Income, depreciation $___________
plus (v) to the extent deducted in arriving
at Net Income, amortization (or minus
non-cash gains or reserve reversals) $___________
minus (vi) to the extent deducted in
arriving at Net Income, extraordinary
income/gains (except to the extent of any
corresponding extraordinary cash losses
incurred during the same period) $___________
minus (vii) gains (or plus losses) on sales
of fixed assets $___________
equals EBITDA
[(i)+(ii)+(iii)+(iv)+(v)-(vi)-(vii)] $___________
V. Section 6.13 - Quick Ratio.
A. The Consolidated Quick Ratio, as of the last day of the calendar month
ending on the Test Date, was ____:1.00.
Minimum Permitted: 1.25:1.00
The Consolidated Quick Ratio is calculated as follows.
As of the last day of the calendar month ending on the Test Date:
(a) the sum of:
(i) the market value of the Company's
consolidated Cash, Cash Equivalents
and marketable Securities $____________
plus (ii) the gross amount of the
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Company's consolidated trade
accounts receivable $____________
equals [(i)+(ii)] $____________
divided by (b) the sum of:
(i) the Company's consolidated
current liabilities, determined in
accordance with Generally Accepted
Accounting Principles $____________
plus (ii) the aggregate outstanding
Obligations $____________
equals [(i)+(ii)] $____________
equals [(a)/(b)] ______:1.00
B. The Borrowers Quick Ratio, as of the last day of the calendar month
ending on the Test Date, was _____:1.00.
Minimum Permitted: 1.00:1.00
The Borrower Quick Ratio is calculated as follows.
As of the last day of the calendar month ending on the Test Date:
(a) the sum of:
(i) the market value of the Borrowers'
combined Cash, Cash Equivalents
and marketable Securities $____________
plus (ii) the gross amount of the
Borrowers' consolidated trade accounts
receivable $____________
equals [(i)+(ii)] $____________
divided by (b) the sum of:
(i) the Borrowers' combined
current liabilities, determined in
accordance with Generally Accepted
Accounting Principles $____________
-5-
plus (ii) the aggregate outstanding
Obligations $____________
equals [(i)+(ii)] $____________
equals [(a)/(b)] ______:1.00
VI. Section 6.14 - Fixed Charge Coverage Ratio. The Fixed Charge Coverage Ratio,
as of the Test Date, was ____:1.00.
Minimum Permitted: 1.30:1.00 for any Fiscal Quarter ending on
or before December 31, 2001
1.40:1.00 for any Fiscal Quarter ending
thereafter
The Fixed Charge Coverage Ratio is calculated as follows:
As of the Test Date:
(a) the sum of:
(i) EBITDA for the Test Period
(as determined above) $___________
minus (ii) Capital Expenditures made in
cash during the Test Period (net of any
portion thereof representing amounts
expended using funds received from
insurance proceeds, trade-in allowances
or the sale of similar assets being
replaced) $____________
minus (iii) state and federal income taxes
paid in cash during the Test Period $____________
equals [(i)-(ii)-(iii)] $____________
divided by (b) the sum of:
(i) Interest Expense paid in cash during
the Test Period $____________
plus (ii) the amount of payments of principal
scheduled to be made by the Company
and its Subsidiaries with respect to
Indebtedness during the twelve month
-6-
period following the Test Date (other
that intercompany Indebtedness) $____________
plus (iii) 20% of the average principal amount
of the Commitment during the Test
Period $____________
plus (iv) any Distributions made by the
Company during the Test Period $____________
equals [(i)+(ii)+(iii)+(iv)] $____________
equals Fixed Charge Coverage Ratio [(a)/(b)] _______:1.00
VII. Section 6.15 - Net Worth. Net Worth, as of the Test Date, was
$_____________.
Minimum Permitted:
the sum of:
(a) $180,000,000 $180,000,000
plus (b) 75% of the cumulative Net Income
for each Fiscal Quarter which has ended
following the Closing Date (without reduction
for any net loss experienced in any Fiscal
Quarter) $___________
plus (c) the Net Cash Proceeds of any sale by
the Company or its Subsidiaries of their
respective equity Securities to any third party
following the Closing Date $___________
equals Minimum Net Worth [(a)+(b)+(c)] $___________
VIII. Section 6.18 - Clean Down. [compute only during the Clean Down Period] As
of the Test Date, the highest aggregate outstanding principal amount of the
Obligations during the Clean Down Period was $______________.
Maximum Permitted: $30,000,000 during the Clean Down Period
IX. A review of the activities of Borrowers and their Subsidiaries during the
fiscal period covered by this Certificate has been made under the supervision of
the undersigned with a view to determining whether during the fiscal period
ending on the Test Date Borrowers and their Subsidiaries performed and observed
all of their respective obligations under the Loan Documents. To the best
knowledge of
-7-
the undersigned, during the period ending on the Test Date, all covenants and
conditions have been so performed and observed and no Default or Event of
Default has occurred and is continuing, with the exceptions set forth below in
response to which Borrowers have taken or propose to take the following actions
(if none, so state).
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
X. The undersigned Senior Officer of Borrowers certifies that the calculations
made and the information contained herein are derived from the books and records
of Borrowers and that each and every matter contained herein correctly reflects
those books and records.
XI. To the best knowledge of the undersigned no event or circumstance has
occurred that constitutes a Material Adverse Effect since the date the most
recent Certificate was executed and delivered.
Dated: _______________
________________________________________
________________________________________
Printed Name and Title of Senior Officer
of JAKKS Pacific, Inc., Flying Colors Toys, Inc.,
Road Champs, Inc. and Pentech International
Inc.
-8-
EXHIBIT D
REQUEST FOR LETTER OF CREDIT
This REQUEST FOR LETTER OF CREDIT is executed and delivered by JAKKS
PACIFIC, INC., a Delaware corporation, FLYING COLORS TOYS, INC., a Michigan
corporation, ROAD CHAMPS, INC., a Delaware corporation, and PENTECH
INTERNATIONAL INC., a Delaware corporation (collectively, "Borrowers") with
reference to the Loan Agreement dated as October 12, 2001 among the Borrowers,
the Lenders therein named and Bank of America, N.A., as Administrative Agent (as
it may from time to time be amended, restated, extended, renewed, modified or
supplemented, the "Loan Agreement"). Any terms used herein and not defined
herein shall have the meanings set forth for such terms in the Loan Agreement.
Borrowers hereby jointly and severally request that the Issuing Lender
issue a Letter of Credit pursuant to the Loan Agreement as follows:
AMOUNT OF REQUESTED LETTER OF CREDIT: ______________
DATE OF REQUESTED ISSUANCE: _________________
BENEFICIARY: _________________________
Terms: Attached
Attached hereto is an application for letter of credit on Issuing
Lender's standard form. In connection with the requested Letter of Credit,
Borrowers hereby jointly and severally certify that
a. except as disclosed by Borrowers and approved in writing by the
Requisite Lenders, the representations and warranties contained in
Article 4 (other than Sections 4.7 and 4.11) are true and correct on
and as of the date hereof as though made on that date;
b. other than matters described in Schedule 4.11, or matters not
required as of the Closing Date to be therein described, or matters
disclosed by Borrowers and approved in writing by the Requisite
Lenders, there is not any pending or threatened in writing action,
suit, proceeding or investigation against or affecting Borrowers or
any of their Subsidiaries or any Property of any of them before any
Governmental Agency that constitutes a Material Adverse Effect;
c. giving effect to the requested Letter of Credit, (A) the sum of the
aggregate outstanding principal balance of the Loans plus the Letter
of Credit Usage does not exceed (B) the lesser of the Borrowing Base
or the Commitment or (C) $30,000,000 [applies only during the Clean
Down Period];
d. giving effect to the requested Letter of Credit, the aggregate
effective face amount of
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all Letters of Credit issued in support of the purchase of
merchandise by the Borrowers and their Subsidiaries does not exceed
$15,000,000;
e. giving effect to the requested Letter of Credit, the aggregate
undrawn effective amount of all Standby Letters of Credit does not
exceed $2,000,000; and
f. giving effect to the requested Letter of Credit, the aggregate
outstanding principal balance of the Loans is $______________ and
the Letter of Credit Usage is $______________.
This Request for Letter of Credit is executed on __________, _____, by a
Responsible Official of the Borrowers. The undersigned, in such capacity, hereby
certifies each and every matter contained herein to be true and correct.
JAKKS PACIFIC, INC.
FLYING COLORS TOYS, INC.
ROAD CHAMPS, INC.
PENTECH INTERNATIONAL INC.
By: _______________________________________
Title: ____________________________________
of each of the foregoing
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EXHIBIT E
REQUEST FOR LOAN
1. This REQUEST FOR LOAN is executed and delivered by JAKKS PACIFIC, INC.,
a Delaware corporation, FLYING COLORS TOYS, INC., a Michigan corporation, ROAD
CHAMPS, INC., a Delaware corporation, and PENTECH INTERNATIONAL INC., a Delaware
corporation (collectively, "Borrowers") with reference to the Loan Agreement
dated as October 12, 2001 among the Borrowers, the Lenders therein named and
Bank of America, N.A., as Administrative Agent (as it may from time to time be
amended, restated, extended, renewed, modified or supplemented, the "Loan
Agreement"). Any terms used herein and not defined herein shall have the
meanings set forth for such terms in the Loan Agreement.
2. Borrowers hereby jointly and severally request that the Lenders make a
Loan pursuant to the Loan Agreement as follows:
(a) Amount of Requested Loan: $_____________(1/)
(b) Date of Requested Loan: ________________
(c) Type of Requested Loan (check one box only)
/ / Base Rate
/ / Eurodollar Rate for a Eurodollar Period of ________ Months(2/)
(d) Giving effect to the requested Loan, the aggregate Loans
outstanding under the Commitment will be $__________________.
3. In connection with the request, Borrowers hereby jointly and severally
certify that:
(a) except as disclosed by Borrowers and approved in writing
by the Requisite Lenders, the representations and warranties contained in
Article 4 (other than Sections 4.7 and 4.11) are true and correct on and
as of the date hereof as though made on that date; and
(b) other than matters described in Schedule 4.11, or
matters not required as of the Closing Date to be therein described, or
matters disclosed by Borrowers and
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(1/) Unless the Lender otherwise consents, each Base Rate Loan shall not be
less than $500,000 and in an integral multiple of $100,000 and each
Eurodollar Rate Loan shall not be less than $1,000,000 and in an integral
multiple of $100,000.
(2/) Specify whether 1, 2, 3 or 6-month Eurodollar Period.
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approved in writing by the Requisite Lenders, there is not any pending or
threatened in writing action, suit, proceeding or investigation against or
affecting Borrowers or any of their Subsidiaries or any Property of any of
them before any Governmental Agency that constitutes a Material Adverse
Effect.
4. This Request for Loan is executed on ________________, by a Responsible
Official of the Borrowers. The undersigned, in such capacity, hereby certifies
each and every matter contained herein to be true and correct.
JAKKS PACIFIC, INC.
FLYING COLORS TOYS, INC.
ROAD CHAMPS, INC.
PENTECH INTERNATIONAL INC.
By: _______________________________________
Title: ____________________________________
of each of the foregoing
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EXHIBIT F
REQUEST FOR REDESIGNATION
1. This REQUEST FOR REDESIGNATION is executed and delivered by JAKKS
PACIFIC, INC., a Delaware corporation, FLYING COLORS TOYS, INC., a Michigan
corporation, ROAD CHAMPS, INC., a Delaware corporation, and PENTECH
INTERNATIONAL INC., a Delaware corporation (collectively, "Borrowers") with
reference to the Loan Agreement dated as of October 12, 2001 among the
Borrowers, the Lenders therein named and Bank of America, N.A., as
Administrative Agent (as it may from time to time be amended, restated,
extended, renewed, modified or supplemented, the "Loan Agreement"). Any terms
used herein and not defined herein shall have the meanings set forth for such
terms in the Loan Agreement.
2. Borrowers hereby jointly and severally request that the Administrative
Agent redesignate certain outstanding Loans heretofore made or redesignated for
the account of Borrowers pursuant to the Loan Agreement, as set forth below:
A. Type of Loan under which Redesignation is requested:
[ ] Base Rate Loan
[ ] Eurodollar Rate Loan
B. Redesignation:
(a) Base Rate Loans:
(i) Total Amount of Loans to be Redesignated: $______.
(ii) Date of Redesignation: ___________, _____.
(iii) Type of Loan as so redesignated (check one box
only):
[ ] Eurodollar Rate Loan with a _____-month
Interest Period.(1)
[ ] Base Rate Loan
(b) Eurodollar Rate Loans
(i) Total Amount of Loans to be Redesignated: $______.
(ii) Date of Redesignation: ___________, ____.
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(1) Specify whether 1, 2, 3 or 6-month Eurodollar Period.
(iii) Type of Loan as so redesignated (check one box
only):
[ ] Eurodollar Rate Loan with a _____-month
Interest Period.(2)
[ ] Base Rate Loan
3. In connection with the redesignation requested herein, Borrowers hereby
jointly and severally represent, warrant and certify that, as of the date of the
redesignation requested herein:
(a) except as disclosed by Borrowers and approved in writing
by the Requisite Lenders, the representations and warranties
contained in Article 4 (other than Sections 4.7 and 4.11) will be
true and correct, both immediately before and after giving effect to
the redesignation of the Loan, as though made on and as of that
date; and
(b) other than matters described in Schedule 4.11, or matters
not required as of the Closing Date to be therein described, or
matters disclosed by Borrowers and approved in writing by the
Requisite Lenders, there is not any pending or threatened in writing
action, suit, proceeding or investigation against or affecting
Borrowers or any of their Subsidiaries or any Property of any of
them before any Governmental Agency that constitutes a Material
Adverse Effect.
4. This Request for Redesignation is executed on _______________, _____ by
a Responsible Official of the Borrowers. The undersigned, in such capacity,
hereby certifies each and every matter contained herein to be true and correct.
JAKKS PACIFIC, INC.
FLYING COLORS TOYS, INC.
ROAD CHAMPS, INC.
PENTECH INTERNATIONAL INC.
By:___________________________________
Title:________________________________
of each of the foregoing
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(2) Specify whether 1, 2, 3 or 6-month Eurodollar Period.
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