EXHIBIT 10.38
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REVOLVING CREDIT AND GUARANTY AGREEMENT
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AMONG
MARVEL ENTERTAINMENT GROUP, INC., A DEBTOR-IN-POSSESSION,
AS BORROWER
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THE SUBSIDIARIES OF THE BORROWER NAMED HEREIN,
AS GUARANTORS
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AND
THE BANKS PARTY HERETO,
AND
THE CHASE MANHATTAN BANK,
AS AGENT
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DATED AS OF DECEMBER 27, 1996
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REVOLVING CREDIT AND GUARANTY AGREEMENT
TABLE OF CONTENTS
Page No.
SECTION 1. DEFINITIONS...........................................3
SECTION 1.1. Defined Terms.........................................3
SECTION 1.2. Terms Generally......................................21
SECTION 2. AMOUNT AND TERMS OF CREDIT...........................21
SECTION 2.1. Commitment of the Banks..............................21
SECTION 2.2. Letters of Credit....................................22
SECTION 2.3. Issuance.............................................25
SECTION 2.4. Nature of Letter of Credit Obligations
Absolute.............................................25
SECTION 2.5. Making of Loans......................................25
SECTION 2.6 Notes; Repayment of Loans............................27
SECTION 2.7. Interest on Loans....................................27
SECTION 2.8. Default Interest.....................................28
SECTION 2.9. Optional Termination or Reduction of
Commitment...........................................28
SECTION 2.10 Alternate Rate of Interest...........................29
SECTION 2.11. Refinancing of Loans.................................29
SECTION 2.12. Commitment Termination; Cash
Collateral...........................................30
SECTION 2.13. Optional Prepayment of Loans;
Reimbursement of Banks...............................31
SECTION 2.14. Reserve Requirements; Change in
Circumstances........................................33
SECTION 2.15. Change in Legality...................................35
SECTION 2.16. Pro Rata Treatment, etc..............................36
SECTION 2.17. Taxes................................................36
SECTION 2.18. Certain Fees.........................................39
SECTION 2.19. Commitment Fee.......................................40
SECTION 2.20. Letter of Credit Fees................................40
SECTION 2.21. Nature of Fees.......................................40
SECTION 2.22. Priority and Liens...................................41
SECTION 2.23. Right of Set-Off.....................................42
SECTION 2.24. Security Interest in Letter of Credit
Account..............................................43
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SECTION 2.25. Payment of Obligations...............................43
SECTION 2.26. No Discharge; Survival of Claims.....................43
SECTION 2.27. Use of Cash Collateral...............................43
SECTION 3. REPRESENTATIONS AND WARRANTIES.......................44
SECTION 3.1. Organization and Authority...........................44
SECTION 3.2. Due Execution........................................44
SECTION 3.3. Statements Made......................................45
SECTION 3.4. Financial Statements.................................45
SECTION 3.5. Ownership............................................46
SECTION 3.6. Liens................................................46
SECTION 3.7. Compliance with Law..................................46
SECTION 3.8. Insurance............................................47
SECTION 3.9. The Orders...........................................47
SECTION 3.10. Use of Proceeds......................................48
SECTION 3.11. Litigation...........................................48
SECTION 4. CONDITIONS OF LENDING................................48
SECTION 4.1. Conditions Precedent to Initial Loans
and Initial
Letters of Credit. ..................................48
SECTION 4.2. Conditions Precedent to Each Loan
and Each Letter of Credit............................53
SECTION 5. AFFIRMATIVE COVENANTS................................55
SECTION 5.1. Financial Statements, Reports, etc...................55
SECTION 5.2. Corporate Existence..................................59
SECTION 5.3. Insurance............................................59
SECTION 5.4. Obligations and Taxes................................59
SECTION 5.5. Notice of Event of Default, etc......................59
SECTION 5.6. Access to Books and Records..........................60
SECTION 5.7. Business Plan........................................60
SECTION 5.8. Maintenance of Concentration Account.................60
SECTION 6. NEGATIVE COVENANTS...................................60
SECTION 6.1. Liens................................................61
SECTION 6.2. Merger, etc..........................................61
SECTION 6.3. Indebtedness.........................................61
SECTION 6.4. Capital Expenditures.................................61
SECTION 6.5. EBITDA...............................................62
SECTION 6.6. Guarantees and Other Liabilities.....................62
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SECTION 6.7. Chapter 11 Claims....................................63
SECTION 6.8. Dividends; Capital Stock.............................63
SECTION 6.9. Transactions with Affiliates.........................63
SECTION 6.10. Investments, Loans and Advances......................63
SECTION 6.11. Disposition of Assets................................64
SECTION 6.12. Nature of Business...................................64
SECTION 7. EVENTS OF DEFAULT....................................64
SECTION 7.1. Events of Default....................................64
SECTION 8. THE AGENT............................................69
SECTION 8.1. Administration by Agent..............................69
SECTION 8.2. Advances and Payments................................70
SECTION 8.3. Sharing of Setoffs...................................70
SECTION 8.4. Agreement of Required Banks..........................71
SECTION 8.5. Liability of Agent...................................71
SECTION 8.6. Reimbursement and Indemnification....................72
SECTION 8.7. Rights of Agent......................................73
SECTION 8.8. Independent Banks....................................73
SECTION 8.9. Notice of Transfer...................................73
SECTION 8.10. Successor Agent......................................74
SECTION 9. GUARANTY.............................................74
SECTION 9.1. Guaranty.............................................74
SECTION 9.2. No Impairment of Guaranty............................76
SECTION 9.3. Subrogation..........................................76
SECTION 10. MISCELLANEOUS........................................77
SECTION 10.1. Notices..............................................77
SECTION 10.2. Survival of Agreement, Representations
and Warranties, etc..................................77
SECTION 10.3. Successors and Assigns...............................78
SECTION 10.4. Confidentiality......................................81
SECTION 10.5. Expenses.............................................82
SECTION 10.6 Indemnity............................................82
SECTION 10.7. CHOICE OF LAW........................................83
SECTION 10.8. No Waiver............................................83
SECTION 10.9. Extension of Maturity................................83
SECTION 10.10 Amendments, etc......................................83
SECTION 10.11.Severability.........................................85
SECTION 10.12.Headings.............................................85
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SECTION 10.13.Execution in Counterparts............................85
SECTION 10.14.Prior Agreements.....................................86
SECTION 10.15.Further Assurances...................................86
SECTION 10.16.WAIVER OF JURY TRIAL.................................86
ANNEX A - Commitment Amounts
EXHIBIT A - Form of Note
EXHIBIT B-1 - Form of Interim Order
EXHIBIT B-2 - Form of Final Order
EXHIBIT C - Form of Security and Pledge
Agreement
EXHIBIT D - Form of Opinion of Counsel
EXHIBIT E - Form of Assignment and Acceptance
SCHEDULE 1.1 - Existing Agreements
SCHEDULE 3.5 - Subsidiaries
SCHEDULE 3.6 - Pre-Petition Liens
SCHEDULE 3.11 - Litigation
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REVOLVING CREDIT AND GUARANTY AGREEMENT
Dated as of December 27, 1996
REVOLVING CREDIT AND GUARANTY AGREEMENT, dated as of December 27, 1996
among MARVEL ENTERTAINMENT GROUP, INC., a Delaware corporation (the
"Borrower"), a debtor and debtor-in-possession in a case pending under Chapter
11 of the Bankruptcy Code, each of the direct or indirect Subsidiaries of the
Borrower signatory hereto (each a "Guarantor" and collectively, the
"Guarantors"), each of which Guarantors referred to in this paragraph is a
debtor and a debtor-in-possession in a case pending under Chapter 11 of the
Bankruptcy Code (the cases of the Borrower and the Guarantors, each a "Case"
and collectively, the "Cases"), THE CHASE MANHATTAN BANK, a New York banking
corporation ("Chase"), each of the other financial institutions from time to
time party hereto (together with Chase, the "Banks") and THE CHASE MANHATTAN
BANK, as agent (in such capacity, the "Agent") for the Banks.
INTRODUCTORY STATEMENT
On December 27, 1996, the Borrower and the Guarantors filed voluntary
petitions with the Bankruptcy Court initiating the Cases and have continued in
the possession of their assets and in the management of their businesses
pursuant to Sections 1107 and 1108 of the Bankruptcy Code.
The Borrower has applied to the Banks for a revolving credit and
letter of credit facility in an aggregate principal amount not to exceed
$100,000,000 (subject to mandatory and optional reductions in accordance with
Sections 2.9 and 2.12), all of the Borrower's obligations under which are to be
guaranteed by the Guarantors.
The proceeds of the Loans will be used to provide working capital for
the Borrower and the Guarantors, and for other general corporate purposes of
the Borrower and the Guarantors including for the making of permitted
intercompany loans and advances and for Capital Expenditures.
To provide guarantees and security for the repayment of the Loans, the
reimbursement of any draft drawn under a Letter of Credit and the payment of
the other obligations of the Borrower and the Guarantors hereunder and under
the other Loan Documents, the Borrower and the Guarantors will provide to the
Agent and the Banks the following (each as more fully described herein):
(a) a guaranty from each of the Guarantors of the due and
punctual payment and performance of the obligations of the Borrower
hereunder and under the Notes;
(b) with respect to the obligations of the Borrower and the
Guarantors hereunder, an allowed administrative expense claim in each
of the Cases pursuant to Section 364(c)(1) of the Bankruptcy Code
having priority over all administrative expenses of the kind specified
in Sections 503(b) and 507(b) of the Bankruptcy Code;
(c) with respect to the obligations of the Borrower and the
Guarantors hereunder, a perfected first priority Lien, pursuant to
Section 364(c)(2) of the Bankruptcy Code, upon all unencumbered
property of the Borrower and the Guarantors (including, but not
limited to, all of the capital stock of Toy Biz that is held,
beneficially or of record, by the Borrower or any of the Guarantors)
and all cash and cash equivalents in the Letter of Credit Account;
(d) with respect to the obligations of the Borrower and the
Guarantors hereunder, a perfected Lien, pursuant to Section 364(c)(3)
of the Bankruptcy Code, upon all property of the Borrower and the
Guarantors (other than the property referred to in paragraph (e) below
that is subject to the valid and perfected Liens that presently secure
the Borrower's and Guarantors' pre-petition Indebtedness under the
Existing Agreements) that is subject to valid and perfected Liens in
existence on the Filing Date, junior to such valid and perfected
Liens; and
(e) with respect to the obligations of the Borrower and the
Guarantors hereunder, a perfected first priority priming Lien,
pursuant to Section 364(d)(1) of the Bankruptcy Code, upon all
property of the Borrower and the Guarantors (including, without
limitation, accounts receivable, inventory, equipment, intellectual
property and the capital stock of certain
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direct or indirect Subsidiaries of the Borrower other than Toy Biz)
that is subject to the existing Liens that presently secure the Borrower's
and Guarantors' pre-petition Indebtedness under the Existing Agreements
and any Liens granted after the Filing Date to provide adequate
protection in respect of the Existing Agreements, which Lien in favor
of the Agent and the Banks shall be senior in all respects to all of
such existing Liens and to any Liens granted after the Filing Date to
provide adequate protection in respect thereof.
All of the claims and the Liens granted hereunder in the Cases to the
Agent and the Banks shall be subject to the Carve-Out to the extent provided in
Section 2.22.
Accordingly, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS.
SECTION 1.1 DEFINED TERMS.
As used in this Agreement, the following terms shall have the meanings
specified below:
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
"ABR Loan" shall mean any Loan bearing interest at a rate determined
by reference to the Alternate Base Rate in accordance with the provisions of
Section 2.
"Additional Credit" shall have the meaning given such term in Section
4.2(d) hereof.
"Adjusted LIBOR Rate" shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the quotient of (a) the LIBOR
Rate in effect for such Interest Period divided by (b) a percentage (expressed
as a decimal) equal to 100% minus Statutory Reserves. For purposes hereof, the
term "LIBOR Rate" shall mean the rate (rounded upwards, if necessary, to the
next 1/16 of 1%) at which dollar
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deposits approximately equal in principal amount to such Eurodollar Borrowing
and for a maturity comparable to such Interest Period are offered to the
principal London office of the Agent in immediately available funds in the
London interbank market at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period.
"Affiliate" shall mean, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with such Person. For purposes of this definition, a Person (a
"Controlled Person") shall be deemed to be "controlled by" another Person (a
"Controlling Person") if the Controlling Person possesses, directly or
indirectly, power to direct or cause the direction of the management and
policies of the Controlled Person whether by contract or otherwise.
"Agent" shall have the meaning set forth in the Introduction.
"Agreement" shall mean this Revolving Credit and Guaranty Agreement,
as the same may from time to time be further amended, modified or supplemented.
"Alternate Base Rate" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greatest
of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in effect on
such day plus 1% and (c) the Federal Funds Effective Rate in effect on such day
plus 1/2 of 1%. For purposes hereof, "Prime Rate" shall mean the rate of
interest per annum publicly announced from time to time by the Agent as its
prime rate in effect at its principal office in New York City; each change in
the Prime Rate shall be effective on the date such change is publicly
announced. "Base CD Rate" shall mean the sum of (a) the quotient of (i) the
Three-Month Secondary CD Rate divided by (ii) a percentage expressed as a
decimal equal to 100% minus Statutory Reserves and (b) the Assessment Rate.
"Three-Month Secondary CD Rate" shall mean, for any day, the secondary market
rate for three-month certificates of deposit reported as being in effect on
such day (or, if such day shall not be a Business Day, the next preceding
Business Day) by the Board through the public information telephone line of the
Federal Reserve Bank of New York (which rate will, under the current practices
of the Board, be published in Federal Reserve Statistical Release H.15(519)
during the week following such day), or, if
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such rate shall not be so reported on such day or such next preceding Business
Day, the average of the secondary market quotations for three-month certifi
▇▇▇▇▇ of deposit of major money center banks in New York City received at
approximately 10:00 a.m., New York City time, on such day (or, if such day
shall not be a Business Day, on the next preceding Business Day) by the Agent
from three New York City negotiable certificate of deposit dealers of
recognized standing selected by it. "Federal Funds Effective Rate" shall mean,
for any day, the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published on the next succeeding Business Day 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 the day of such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it. If for any reason the Agent shall have
determined (which determination shall be conclusive absent manifest error) that
it is unable to ascertain the Base CD Rate or the Federal Funds Effective Rate
or both for any reason, including the in ability or failure of the Agent to
obtain sufficient quotations in accordance with the terms hereof, the Alternate
Base Rate shall be determined without regard to clause (b) or (c), or both, of
the first sentence of this definition, as appropriate, until the circumstances
giving rise to such inability no longer exist. Any change in the Alternate Base
Rate due to a change in the Prime Rate, the Three-Month Secondary CD Rate or
the Federal Funds Effective Rate shall be effective on the effective date of
such change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal
Funds Effective Rate, respectively.
"Assessment Rate" shall mean for any date the annual rate (rounded
upwards, if necessary, to the next 1/100 of 1%) most recently estimated by the
Agent as the then current net annual assessment rate that will be employed in
determining amounts payable by the Agent to the Federal Deposit Insurance
Corporation (or any successor) for insurance by such Corporation (or any
successor) of time deposits made in dollars at the Agent's domestic offices.
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Bank and an Eligible Assignee, and accepted by the Agent,
substantially in the form of Exhibit E.
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"Bankruptcy Code" shall mean The Bankruptcy Reform Act of 1978, as
heretofore and hereafter amended, and codified as 11 U.S.C. Section 101 et seq.
"Bankruptcy Court" shall mean the United States Bankruptcy Court for
the District of Delaware or any other court having jurisdiction over the Cases
from time to time.
"Banks" shall have the meaning set forth in the Introduction.
"Board" shall mean the Board of Governors of the Federal Reserve
System of the United States.
"Borrower" shall have the meaning set forth in the Introduction.
"Borrowing" shall mean the incurrence of Loans of a single Type made
from all the Banks on a single date and having, in the case of Eurodollar
Loans, a single Interest Period (with any ABR Loan made pursuant to Section
2.15 being considered a part of the related Borrowing of Eurodollar Loans).
"Business Day" shall mean any day other than a Saturday, Sunday or
other day on which banks in the State of New York are required or permitted to
close (and, for a Letter of Credit, other than a day on which the Fronting Bank
issuing such Letter of Credit is closed); provided, however, that when used in
connection with a Eurodollar Loan, the term "Business Day" shall also exclude
any day on which banks are not open for dealings in dollar deposits on the
London interbank market.
"Capital Expenditures" shall mean, for any period, the aggregate of
all expenditures (whether paid in cash and not theretofore accrued subsequent
to the date of this Agreement or accrued as liabilities during such period and
including that portion of Capitalized Leases which is capitalized on the
consolidated balance sheet of the Borrower and the Guarantors) net of cash
amounts received by the Borrower and the Guarantors from other Persons during
such period in reimbursement of Capital Expenditures made by the Borrower and
the Guarantors, excluding interest capitalized during construction, by the
Borrower and the Guarantors during such period that, in conformity with GAAP,
are
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required to be included in or reflected by the property, plant, equipment or
intangibles or similar fixed asset accounts reflected in the consolidated
balance sheet of the Borrower and the Guarantors (including equipment which is
purchased simultaneously with the trade-in of existing equipment owned by the
Borrower or any of the Guarantors to the extent of the gross amount of such
purchase price less the book value of the equipment being traded in at such
time), but excluding expenditures made in connection with the replacement or
restoration of assets, to the extent reimbursed or financed from insurance
proceeds paid on account of the loss of or the damage to the assets being
replaced or restored, or from awards of compensation arising from the taking by
condemnation or eminent domain of such assets being replaced. For the purposes
of this Agreement, the term "Capital Expenditures" shall also include
Investments incurred or made by the Borrower in connection with (i) the
development of software products by the division of the Borrower known as
Marvel Interactive, (ii) the development of a number of restaurants by Marvel
Mania, a joint venture in which Marvel Restaurant Venture Corp. is a general
partner, (iii) certain projects of the business segment of the Borrower and the
Guarantors known as Marvel Studios (including a non-Guarantor Subsidiary to be
formed to carry on a portion of the activities of such business segment) and
(iv) the purchase by the Borrower and certain of the Guarantors of displays and
other related expenditures in connection with the expansion of mass market
distribution channels for the comic book, trading card and sticker businesses
of the Borrower and the Guarantors.
"Capitalized Lease" shall mean, as applied to any Person, any lease of
property by such Person as lessee which would be capitalized on a balance
sheet of such Person prepared in accordance with GAAP.
"Carve-Out" shall have the meaning set forth in Section 2.22.
"Cases" shall mean the Chapter 11 Cases of the Borrower and each of
the Debtor Guarantors pending in the Bankruptcy Court.
"Cash Collateral Order" shall have the meaning set forth in Section
4.1(d).
"Chase" shall have the meaning set forth in the Introduction.
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"Closing Date" shall mean the date on which this Agreement has been
executed and the conditions precedent to the making of the initial Loans set
forth in Section 4.1 have been satisfied or waived, which date shall occur
promptly, but no later than 10 days, after the entry of the Interim Order.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collateral" shall mean the Collateral under the Security and Pledge
Agreement.
"Commitment" shall mean, with respect to each Bank, the commitment of
each Bank hereunder in the amount set forth opposite its name on Annex A hereto
or as may subsequently be set forth in the Register from time to time, as the
same may be reduced from time to time pursuant to Sections 2.9 and 2.12.
"Commitment Fee" shall have the meaning set forth in Section 2.19.
"Commitment Letter" shall mean that certain Commitment Letter dated
December 23, 1996 among the Agent, Chase Securities Inc. and the Borrower.
"Commitment Percentage" shall mean at any time, with respect to each
Bank, the percentage obtained by dividing its Commitment at such time by the
Total Commitment at such time.
"Consummation Date" shall mean the date of the substantial
consummation (as defined in Section 1101 of the Bankruptcy Code and including
the effective date of a Reorganization Plan) of a Reorganization Plan of the
Borrower or any of the Guarantors which is confirmed pursuant to an order of
the Bankruptcy Court.
"Disclosure Statement" shall have the meaning given such term in
Section 3.4.
"Dollars" and "$" shall mean lawful money of the United States of
America.
"EBITDA" shall mean, for any period, all as determined in accordance
with GAAP, the consolidated net income (or net loss) of
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the Borrower and the Guarantors for such period, plus (a) the sum of (i)
depreciation expense, (ii) amortization expense, (iii) other non-cash charges,
(iv) provision for LIFO adjustment for inventory valuation, (v) net total
Federal, state and local income tax expense, (vi) gross interest expense for
such period less gross interest income for such period, (vii) extraordinary
losses, (viii) any non-recurring charge or restructuring charge which in
accordance with GAAP is excluded from operating income, (ix) the cumulative
effect of any change in accounting principles and (x) "Chapter 11 expenses" (or
"administrative costs reflecting Chapter 11 expenses") as shown on the
Borrower's consolidated statement of income for such period less (b)
extraordinary gains plus or minus (c) the amount of cash received or expended
(excluding up to $1,500,000 expended in connection with the disposition or
closure of The ▇▇▇▇▇ ▇▇▇▇▇ Company and up to $1,500,000 expended in connection
with the disposition or closure of Heroes World Distribution, Inc.) in such
period in respect of any amount which, under clause (viii) above, was taken
into account in determining EBITDA for such or any prior period.
"Eligible Assignee" shall mean (i) a commercial bank having total
assets in excess of $1,000,000,000; (ii) a finance company, insurance company
or other financial institution or fund acceptable to the Agent which in the
ordinary course of business extends credit of the type evidenced by the Notes
and has total assets in excess of $200,000,000 and whose becoming an assignee
would not constitute a prohibited transaction under Section 4975 of ERISA; and
(iii) any other financial institution satisfactory to the Borrower and the
Agent.
"Environmental Lien" shall mean a Lien in favor of any Governmental
Authority for (i) any liability under federal or state environmental laws or
regulations, or (ii) damages arising from or costs incurred by such
Governmental Authority in response to a release or threatened release of a
hazardous or toxic waste, substance or constituent, or other substance into the
environment.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) which is a member of a group of which the
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Borrower is a member and which is under common control within the meaning of
Section 414(b) or (c) of the Code and the regulations promulgated and rulings
issued thereunder.
"Eurocurrency Liabilities" shall have the meaning assigned thereto in
Regulation D issued by the Board, as in effect from time to time.
"Eurodollar Borrowing" shall mean a Borrowing comprised of Eurodollar
Loans.
"Eurodollar Loan" shall mean any Loan bearing interest at a rate
determined by reference to the Adjusted LIBOR Rate in accordance with the
provisions of Section 2.
"Event of Default" shall have the meaning given such term in Section
7.
"Existing Agreements" shall mean the agreements listed on Schedule 1.1
hereto, the notes delivered pursuant thereto, and all of the agreements
granting security interests and liens in property and assets of the Borrower
and the Guarantors to the Existing Lenders, including without limitation, the
security agreements, mortgages and leasehold mortgages listed on Schedule 1.1
hereto, each of which documents was executed and delivered (to the extent party
thereto) by the Borrower and the Guarantors prior to the Filing Date, as each
may have been amended or modified from time to time.
"Existing Lenders" shall mean, collectively, those certain lenders to
the Borrower and the Guarantors (to the extent party thereto) under the
Existing Agreements, together with any successors or assigns thereof.
"Fees" shall collectively mean the Commitment Fees, Letter of Credit
Fees and other fees referred to in Section 2.18.
"Filing Date" shall mean December 27, 1996.
"Final Order" shall have the meaning given such term in Section
4.2(d).
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"Financial Officer" shall mean the Chief Financial Officer, Vice President
Finance or the Treasurer of the Borrower.
"Fronting Bank" shall mean Chase or such other Bank (which other Bank
shall be reasonably satisfactory to the Borrower) as may agree with Chase to
act in such capacity.
"GAAP" shall mean generally accepted accounting principles applied on
a basis consistent with those used in preparing the financial statements
referred to in Section 3.4.
"Governmental Authority" shall mean any Federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality or any court, in each case whether of the United States or
foreign.
"Guarantor" shall have the meaning set forth in the Introduction.
"Indebtedness" shall mean, at any time and with respect to any Person,
(i) all indebtedness of such Person for borrowed money, (ii) all indebtedness
of such Person for the deferred purchase price of property or services (other
than property, including inventory, and services purchased, and expense
accruals and deferred compensation items arising, in the ordinary course of
business), (iii) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments (other than performance, surety and
appeal bonds arising in the ordinary course of business), (iv) all indebtedness
of such Person created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (v)
all obligations of such Person under leases which have been or should be, in
accordance with GAAP, recorded as capital leases, to the extent required to be
so recorded, (vi) all reimbursement, payment or similar obligations of such
Person, contingent or otherwise, under acceptance, letter of credit or similar
facilities, (vii) all Indebtedness referred to in clauses (i) through (vi)
above guaranteed directly or indirectly by such Person, or in effect guaranteed
directly or indirectly by such Person through an agreement (A) to pay or
purchase such Indebted ness or to advance or supply funds for the
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payment or purchase of such Indebtedness, (B) to purchase, sell or lease (as
lessee or lessor) property, or to purchase or sell services, primarily for the
purpose of enabling the debtor to make payment of such In debtedness or to
assure the holder of such Indebtedness against loss in respect of such
Indebtedness, (C) to supply funds to or in any other manner invest in the
debtor (including any agreement to pay for property or services irrespective of
whether such property is received or such services are rendered) or (D)
otherwise to assure a creditor against loss in respect of such Indebtedness,
and (viii) all Indebtedness referred to in clauses (i) through (vii) above
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in property
(including, without limitation, accounts and contract rights) owned by such
Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness.
"Insufficiency" shall mean, with respect to any Plan, the amount, if
any, of its unfunded benefit liabilities within the meaning of Section
4001(a)(18) of ERISA.
"Interim Order" shall have the meaning given such term in Section
4.1(c).
"Interest Expense" shall mean interest expense as determined in
accordance with GAAP.
"Interest Payment Date" shall mean (i) as to any Eurodollar Loan, the
last day of such Interest Period, and (ii) as to all ABR Loans, the last
calendar day of each month and the date on which any ABR Loans are refinanced
with Eurodollar Loans pursuant to Section 2.11.
"Interest Period" shall mean, as to any Borrowing of Eurodollar
Loans, the period commencing on the date of such Borrowing (including as a
result of a refinancing of ABR Loans) or on the last day of the preceding
Interest Period applicable to such Borrowing and ending on the numerically
corresponding day (or if there is no corresponding day, the last day) in the
calendar month that is 1 month thereafter, as the Borrower may elect in the
related notice delivered pursuant to Sections 2.5(b) or 2.11; provided,
however, that (i) if any Interest Period would end on a day which shall not be
a Business Day, such Interest Period shall
12
be extended to the next succeeding Business Day unless such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day, and (ii) no Interest
Period shall end later than the Termination Date.
"Investments" shall have the meaning given such term in Section 6.10.
"Letter of Credit" shall mean any irrevocable letter of credit issued
pursuant to Section 2.2, which letter of credit shall be (i) a standby or
documentary letter of credit, (ii) issued for such purposes for which the
Borrower or any Guarantor has historically obtained letters of credit, or for
such other purposes as are reasonably acceptable to the Agent, (iii)
denominated in Dollars and (iv) otherwise in such form as may be reasonably
approved from time to time by the Agent and the applicable Fronting Bank.
"Letter of Credit Account" shall mean the account established by the
Borrower under the sole and exclusive control of the Agent maintained at the
office of the Agent at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ designated as
the "Marvel Entertainment Group, Inc. Letter of Credit Account" that shall be
used solely for the purposes set forth in Sections 2.2(b) and 2.12.
"Letter of Credit Fees" shall mean the fees payable in respect of
Letters of Credit pursuant to Section 2.20.
"Letter of Credit Outstandings" shall mean, at any time, the sum of
(i) the aggregate undrawn stated amount of all Letters of Credit then
outstanding plus (ii) all amounts theretofore drawn under Letters of Credit and
not then reimbursed.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind whatsoever (including any conditional
sale or other title retention agreement or any lease in the nature thereof).
"Loan" shall have the meaning given such term in Section 2.1.
"Loan Documents" shall mean this Agreement, the Notes, the Letters of
Credit, the Security and Pledge Agreement, and any
13
other instrument or agreement executed and delivered in connection herewith.
"Maturity Date" shall mean April 30, 1997 provided, that if on April
30, 1996 there shall not have occurred and be continuing an Event of Default or
an event which upon notice or lapse of time or both would constitute an Event
of Default, such Maturity Date may be extended, at the Borrower's sole option
by written notice to the Agent delivered no later than April 25, 1997, to June
30, 1997.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is
making or accruing an obligation to make contributions, or has within any of
the preceding five plan years made or accrued an obligation to make
contributions.
"Multiple Employer Plan" shall mean a Single Employer Plan, which (i)
is maintained for employees of the Borrower or an ERISA Affiliate and at least
one Person other than the Borrower and its ERISA Affiliates or (ii) was so
maintained and in respect of which the Borrower or an ERISA Affiliate could
have liability under Section 4064 or 4069 of ERISA in the event such Plan has
been or were to be terminated.
"Notes" shall mean the promissory notes of the Borrower, substantially
in the form of Exhibit A hereto, each payable to the order of a Bank,
evidencing Loans.
"Obligations" shall mean (a) the due and punctual payment of principal
of and interest on the Loans and the Notes and the reimbursement of all amounts
drawn under Letters of Credit, and (b) the due and punctual payment of the Fees
and all other present and future, fixed or contingent, monetary obligations of
the Borrower and the Guarantors to the Banks and the Agent under the Loan
Documents.
"Orders" shall mean the Interim Order and the Final Order of the
Bankruptcy Court referred to in Sections 4.1(c) and 4.2(d).
"Other Taxes" shall have the meaning given such term in Section 2.17.
14
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor agency or entity performing substantially the same functions.
"Pension Plan" shall mean a defined benefit pension or retirement plan
which meets and is subject to the requirements of Section 401(a) of the Code.
"Permitted Investments" shall mean:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed by
the full faith and credit of the United States of America), in each case
maturing within twelve months from the date of acquisition thereof;
(b) without limiting the provisions of paragraph (d) below,
investments in commercial paper maturing within six months from the date of
acquisition thereof and having, at such date of acquisition, a rating of at
least "A" or the equivalent thereof from Standard & Poor's Corporation or of at
least "A2" or the equivalent thereof from ▇▇▇▇▇'▇ Investors Service, Inc.;
(c) investments in certificates of deposit, banker's acceptances
and time deposits (including Eurodollar time deposits) maturing within six
months from the date of acquisition thereof issued or guaranteed by or placed
with (i) any domestic office of the Agent or the bank with whom the Borrower
and the Guarantors maintain their cash management system, provided, that if
such bank is not a Bank hereunder, such bank shall have entered into an
agreement with the Agent pursuant to which such bank shall have waived all
rights of setoff and confirmed that such bank does not have, nor shall it
claim, a security interest therein or (ii) any domestic office of any other
commercial bank of recognized standing organized under the laws of the United
States of America or any State thereof that has a combined capital and surplus
and undivided profits of not less than $250,000,000 and is the principal
banking Subsidiary of a bank holding company having a long-term unsecured debt
rating of at least "A" or the equivalent thereof from Standard & Poor's
Corporation or at least "A2" or the equivalent thereof from ▇▇▇▇▇'▇ Investors
Service, Inc.;
15
(d) investments in commercial paper maturing within six months
from the date of acquisition thereof and issued by (i) the holding company of
the Agent or (ii) the holding company of any other commercial bank of
recognized standing organized under the laws of the United States of America or
any State thereof that has (A) a combined capital and surplus in excess of
$250,000,000 and (B) commercial paper rated at least "A" or the equivalent
thereof from Standard & Poor's Corporation or of at least "A2" or the
equivalent thereof from ▇▇▇▇▇'▇ Investors Service, Inc.;
(e) investments in repurchase obligations with a term of not more
than seven days for underlying securities of the types described in clause (a)
above entered into with any office of a bank or trust company meeting the
qualifications specified in clause (c) above;
(f) investments in money market funds substantially all the
assets of which are comprised of securities of the types described in clauses
(a) through (e) above;
(g) to the extent owned on the Filing Date, investments in the
capital stock of any direct or indirect Subsidiary of the Borrower, investments
in the capital stock of Dr. Torrents, S.A., Fleer Limited and Fleer Espanol and
investments in the capital stock of Toy Biz; and
(h) an investment in the capital stock of the Subsidiary, if any,
to be formed after the Filing Date to carry on a portion of the activities of
the business segment of the Borrower and the Guarantors known as Marvel
Studios, which Subsidiary shall not be a Guarantor, provided that the amount of
such investment shall be limited to $1,000,000.
"Permitted Liens" shall mean (i) Liens imposed by law (other than
Environmental Liens and any Lien imposed under ERISA) for taxes, assessments or
charges of any Governmental Authority for claims not yet due or which are being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves or other appropriate provisions are being maintained in
accordance with GAAP; (ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens (other than Environmental
Liens and any Lien imposed under ERISA) imposed by law created in the ordinary
course of business for
16
amounts not yet due or which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves or other appropriate
provisions are being maintained in accordance with GAAP; (iii) Liens (other
than any Lien imposed under ERISA) incurred or deposits made in the ordinary
course of business (including, without limitation, surety bonds and appeal
bonds) in connection with workers' compensation, unemployment insurance and
other types of social security benefits or to secure the perfor ▇▇▇▇▇ of
tenders, bids, leases, contracts (other than for the repayment of
Indebtedness), statutory obligations and other similar obligations or arising
as a result of progress payments under government contracts; (iv) easements
(including, without limitation, reciprocal easement agreements and utility
agreements), rights-of-way, covenants, consents, reservations, encroachments,
variations and zoning and other restrictions, charges or encumbrances (whether
or not recorded), which do not interfere materially with the ordinary conduct
of the business of the Borrower or any Guarantor, as the case may be, and which
do not materially detract from the value of the property to which they attach
or materially impair the use thereof to the Borrower or any Guarantor, as the
case may be; (v) purchase money Liens upon or in any property acquired or held
in the ordinary course of business to secure the purchase price of such
property or to secure Indebted ness permitted by Section 6.3(iii) solely for
the purpose of financing the acquisition of such property and Capitalized
Leases permitted by Section 6.3(iv) and true leases on account of which
financing statements have been filed; and (vi) extensions, renewals or
replacements of any Lien referred to in paragraphs (i) through (v) above,
provided that the principal amount of the obligation secured thereby is not
increased and that any such extension, renewal or replacement is limited to the
property originally encumbered thereby.
"Person" shall mean any natural person, corporation, division of a
corporation, partnership, trust, joint venture, association, company, estate,
unincorporated organization or government or any agency or political
subdivision thereof.
"Plan" shall mean a Single Employer Plan or a Multiemployer Plan.
"Prepayment Date" shall mean thirty (30) days after the entry of the
Interim Order by the Bankruptcy Court if the Final Order
17
has not been entered by the Bankruptcy Court prior to the expiration of such
thirty (30) day period.
"Pre-Petition Payment" shall mean a payment (by way of adequate
protection or otherwise) of principal or interest or otherwise on account of
any pre-petition Indebtedness or payables, other than in respect of trade
payables arising prior to the Petition Date to the extent permitted by the
Bankruptcy Court.
"Proposed Plan" shall have the meaning set forth in Section 4.1(f).
"Register" shall have the meaning set forth in Section 10.3(d).
"Reorganization Plan" shall mean a plan of reorganization in any of
the Cases.
"Required Banks" shall mean, at any time, Banks holding Loans
representing in excess of 50% of the aggregate principal amount of such Loans
outstanding or, if no such Loans are outstanding, Banks having Commitments
representing in excess of 50% of the Total Commitment.
"Security and Pledge Agreement" shall have the meaning set forth in
Section 4.1(e).
"Single Employer Plan" shall mean a single employer plan, as defined
in Section 4001(a)(15) of ERISA, that (i) is maintained for employees of the
Borrower or an ERISA Affiliate or (ii) was so maintained and in respect of
which the Borrower could have liability under Section 4069 of ERISA in the
event such Plan has been or were to be terminated.
"Statutory Reserves" shall mean on any date the percentage (expressed
as a decimal) established by the Board and any other banking authority which is
(i) for purposes of the definition of Base CD Rate, the then stated maximum
rate of all reserves (including, but not limited to, any emergency,
supplemental or other marginal reserve requirement) for a member bank of the
Federal Reserve System in New York City, for new three month negotiable
nonpersonal time deposits in dollars of $100,000 or more or (ii) for purposes
of the definition of Adjusted LIBOR
18
Rate, the then stated maximum rate for all reserves (including but not limited
to any emergency, supplemental or other marginal reserve requirements)
applicable to any member bank of the Federal Reserve System in respect of
Eurocurrency Liabilities (or any successor category of liabilities under
Regulation D issued by the Board, as in effect from time to time). Such reserve
percentages shall include, without limitation, those imposed pursuant to said
Regu lation. The Statutory Reserves shall be adjusted automatically on and as
of the effective date of any change in such percentage.
"Subsidiary" shall mean, with respect to any Person (herein referred
to as the "parent"), any corporation, association or other business entity
(whether now existing or hereafter organized) of which at least a majority of
the securities or other ownership interests having ordinary voting power for
the election of directors is, at the time as of which any determination is
being made, owned or controlled by the parent or one or more subsidiaries of
the parent or by the parent and one or more subsidiaries of the parent.
"Super-majority Banks" shall have the meaning given such term in
Section 10.10(b).
"Superpriority Claim" shall mean a claim against the Borrower and any
Guarantor in any of the Cases which is an administrative expense claim having
priority over any or all administrative expenses of the kind specified in
Sections 503(b) or 507(b) of the Bankruptcy Code.
"Taxes" shall have the meaning given such term in Section 2.17.
"Termination Date" shall mean the earliest to occur of (i) the
Prepayment Date, (ii) the Maturity Date, (iii) the Consummation Date and (iv)
the acceleration of the Loans and the termination of the Total Commitment in
accordance with the terms hereof.
"Termination Event" shall mean (i) a "reportable event", as such term
is described in Section 4043 of ERISA and the regulations issued thereunder
(other than a "reportable event" not subject to the provision for 30-day notice
to the PBGC under
19
Section 4043 of ERISA or such regulations) or an event described in Section
4068 of ERISA excluding events described in Section 4043(c)(9) of ERISA or 29
CFR ss.ss.2615.21 or 2615.23 and excluding events which would not be reasonably
likely (as reasonably determined by the Agent) to have a material adverse
effect on the financial condition, operations, business, properties or assets
of the Borrower and the Guarantors taken as a whole, or (ii) the withdrawal of
the Borrower or any ERISA Affiliate from a Multiple Employer Plan during a plan
year in which it was a "substantial employer", as such term is defined in
Section 4001(c) of ERISA, or the incurrence of liability by the Borrower or any
ERISA Affiliate under Section 4064 of ERISA upon the termination of a Multiple
Employer Plan, or (iii) providing notice of intent to terminate a Plan pursuant
to Section 4041(c) of ERISA or the treatment of a Plan amendment as a
termination under Section 4041 of ERISA, or (iv) the institution of proceedings
to terminate a Plan by the PBGC under Section 4042 of ERISA, or (v) any other
event or condition (other than the commencement of the Cases and the failure to
have made any contribution accrued as of the Filing Date but not paid) which
would reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Plan, or the imposition of any liability under Title IV of ERISA (other than
for the payment of premiums to the PBGC).
"Total Commitment" shall mean, at any time, the sum of the Commitments
at such time.
"Toy Biz" shall mean Toy Biz, Inc., a Delaware corporation.
"Transferee" shall have the meaning given such term in Section 2.17.
"Type" when used in respect of any Loan or Borrowing shall refer to
the rate of interest by reference to which interest on such Loan or on the
Loans comprising such Borrowing is determined. For purposes hereof, "Rate"
shall mean the Adjusted LIBOR Rate and the Alternate Base Rate.
"Unused Total Commitment" shall mean, at any time, (i) the Total
Commitment less (ii) the sum of (x) the aggregate outstanding principal amount
of all Loans and (y) the aggregate Letter of Credit Outstandings.
20
"Withdrawal Liability" shall have the meaning given such term under
Part I of Subtitle E of Title IV of ERISA.
SECTION 1.2. TERMS GENERALLY. The definitions in Section 1.1 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. All references herein to Sections,
Exhibits and Schedules shall be deemed references to Sections of, and Exhibits
and Schedules to, this Agreement unless the context shall otherwise require.
Except as otherwise expressly provided herein, all terms of an accounting or
financial nature shall be construed in accordance with GAAP, as in effect from
time to time; provided, however, that for purposes of determining compliance
with any covenant set forth in Section 6, such terms shall be construed in
accordance with GAAP as in effect on the date of this Agreement applied on a
basis consistent with the application used in the Borrower's audited financial
statements referred to in Section 3.4.
SECTION 2. AMOUNT AND TERMS OF CREDIT.
SECTION 2.1. COMMITMENT OF THE BANKS.
(a) Each Bank severally and not jointly with the other Banks agrees,
upon the terms and subject to the conditions herein set forth (including,
without limitation, the provisions of Section 2.27), to make revolving credit
loans (each a "Loan" and collectively, the "Loans") to the Borrower at any time
and from time to time during the period commencing on the date hereof and
ending on the Termination Date (or the earlier date of termination of the Total
Commitment) in an aggregate principal amount not to exceed, when added to such
Bank's Commitment Percentage of the then aggregate Letter of Credit
Outstandings (in excess of the amount of cash then held in the Letter of Credit
Account pursuant to Section 2.2(b)), the Commitment of such Bank, which Loans
may be repaid and reborrowed in accordance with the provisions of this
Agreement. At no time shall the sum of the then outstanding aggregate principal
amount of the Loans plus the then aggregate Letter of Credit Outstandings
exceed the Total Commitment of
21
$100,000,000, as the same may be reduced from time to time pursuant to
Sections 2.9 or 2.12, as the case may be.
(b) Each Borrowing shall be made by the Banks pro rata in
accordance with their respective Commitments; provided, however, that the
failure of any Bank to make any Loan shall not in itself relieve the other
Banks of their obligations to lend.
SECTION 2.2. LETTERS OF CREDIT
(a) Upon the terms and subject to the conditions herein set forth,
the Borrower may request a Fronting Bank, at any time and from time to time
after the date hereof and prior to the Termination Date, to issue, and subject
to the terms and conditions contained herein, such Fronting Bank shall issue,
for the account of the Borrower or a Guarantor one or more Letters of Credit,
provided that no Letter of Credit shall be issued if after giving effect to
such issuance (i) the aggregate Letter of Credit Outstandings shall exceed
$25,000,000 or (ii) the aggregate Letter of Credit Outstandings, when added to
the aggregate outstanding principal amount of the Loans, would exceed the Total
Commitment and, provided further that no Letter of Credit shall be issued if
the Fronting Bank shall have received notice from the Agent or the Required
Banks that the conditions to such issuance have not been met.
(b) No Letter of Credit shall expire later than 60 days after the
Maturity Date, provided that if any Letter of Credit shall be outstanding on
the Termination Date, the Borrower shall, at or prior to the Termination Date,
except as the Agent may otherwise agree in writing, (i) cause all Letters of
Credit which expire after the Termination Date to be returned to the Fronting
Bank undrawn and marked "cancelled" or (ii) if the Borrower is unable to do so
in whole or in part, either (x) provide a "back-to-back" letter of credit to
one or more Fronting Banks in a form satis factory to such Fronting Bank and
the Agent (in their sole discretion), issued by a bank satisfactory to such
Fronting Bank and the Agent (in their sole discretion), in an amount equal to
105% of the then undrawn stated amount of all outstanding Letters of Credit
issued by such Fronting Banks and/or (y) deposit cash in the Letter of Credit
Account in an amount equal to 105% of the then undrawn stated amount of all
outstanding Letters of Credit as
22
collateral security for the Borrower's reimbursement obligations in connection
therewith, such cash to be remitted to the Borrower upon the expiration,
cancellation or other termination or satisfaction of such reimbursement
obligations.
(c) The Borrower shall pay to each Fronting Bank, in addition to
such other fees and charges as are specifically provided for in Section 2.20
hereof, such fees and charges in connection with the issuance and processing of
the Letters of Credit issued by such Fronting Bank as are customarily imposed
by such Fronting Bank from time to time in connection with letter of credit
transactions.
(d) Drafts drawn under each Letter of Credit shall be reimbursed by
the Borrower in Dollars not later than the first Business Day following the
date of draw and shall bear interest from the date of draw until the first
Business Day following the date of draw at a rate per annum equal to the
Alternate Base Rate plus 1-1/2% and thereafter until reimbursed in full at a
rate per annum equal to the Alternate Base Rate plus 3-1/2% (computed on the
basis of the actual number of days elapsed over any year of 360 days). The
Borrower shall effect such reimbursement (x) if such draw occurs prior to the
Termination Date (or the earlier date of termination of the Total Commitment),
in cash or through a
Borrowing without the satisfaction of the conditions precedent set forth in
Section 4.2 or (y) if such draw occurs on or after the Termination Date (or the
earlier date of termination of the Total Commitment), in cash. Each Bank agrees
to make the Loans described in clause (x) of the preceding sentence
notwithstanding a failure to satisfy the applicable lending conditions thereto
or the provisions of Sections 2.1 or 2.27 or the occurrence of the Termination
Date.
(e) Immediately upon the issuance of any Letter of Credit by any
Fronting Bank, such Fronting Bank shall be deemed to have sold to each Bank
other than such Fronting Bank and each such other Bank shall be deemed
unconditionally and irrevocably to have purchased from such Fronting Bank,
without recourse or warranty, an undivided interest and participation, to the
extent of such Bank's Commitment Percentage, in such Letter of Credit, each
drawing thereunder and the obligations of the Borrower and the Guarantors under
this Agreement with respect thereto. Upon any change in the Commitments
pursuant to Section 10.3, it is hereby
23
agreed that with respect to all Letter of Credit Outstandings, there shall be
an automatic adjustment to the participations hereby created to reflect the new
Commitment Percentages of the assigning and assignee Banks. Any action taken
or omitted by a Fronting Bank under or in connection with a Letter of Credit,
if taken or omitted in the absence of gross negligence or willful misconduct,
shall not create for such Fronting Bank any resulting liability to any other
Bank.
(f) In the event that a Fronting Bank makes any payment under any
Letter of Credit and the Borrower shall not have reimbursed such amount in full
to such Fronting Bank pursuant to this Section, the Fronting Bank shall
promptly notify the Agent, which shall promptly notify each Bank of such
failure, and each Bank shall promptly and unconditionally pay to the Agent for
the account of the Fronting Bank the amount of such Bank's Commitment
Percentage of such unreimbursed payment in Dollars and in same day funds. If
the Fronting Bank so notifies the Agent, and the Agent so notifies the Banks
prior to 11:00 a.m. (New York City time) on any Business Day, such Banks shall
make available to the Fronting Bank such Bank's Commitment Percentage of the
amount of such payment on such Business Day in same day funds. If and to the
extent such Bank shall not have so made its Commitment Percentage of the amount
of such payment available to the Fronting Bank, such Bank agrees to pay to such
Fronting Bank, forthwith on demand such amount, together with interest thereon,
for each day from such date until the date such amount is paid to the Agent for
the account of such Fronting Bank at the Federal Funds Effective Rate. The
failure of any Bank to make available to the Fronting Bank its Commitment
Percentage of any payment under any Letter of Credit shall not relieve any
other Bank of its obligation hereunder to make available to the Fronting Bank
its Commitment Percentage of any payment under any Letter of Credit on the date
required, as specified above, but no Bank shall be responsible for the failure
of any other Bank to make available to such Fronting Bank such other Bank's
Commitment Percentage of any such payment. Whenever a Fronting Bank receives a
payment of a reimbursement obligation as to which it has received any payments
from the Banks pursuant to this paragraph, such Fronting Bank shall pay to each
Bank which has paid its Commitment Percentage thereof, in Dollars and in same
day funds, an amount equal to such Bank's Commitment Percentage thereof.
24
SECTION 2.3. ISSUANCE. Whenever the Borrower desires a Fronting
Bank to issue a Letter of Credit, it shall give to such Fronting Bank and the
Agent at least two Business Days' prior written (including telegraphic, telex,
facsimile or cable communication) notice (or such shorter period as may be
agreed upon by the Agent, the Borrower and the Fronting Bank) specifying the
date on which the proposed Letter of Credit is to be issued (which shall be
a Business Day), the stated amount of the Letter of Credit so requested, the
expiration date of such Letter of Credit and the name and address of the
beneficiary thereof.
SECTION 2.4. NATURE OF LETTER OF CREDIT OBLIGATIONS ABSOLUTE.
The obligations of the Borrower to reimburse the Banks for
drawings made under any Letter of Credit shall be unconditional and irrevocable
and shall be paid strictly in accordance with the terms of this Agreement under
all circumstances, including, without limitation (it being understood that any
such payment by the Borrower shall be without prejudice to, and shall not
constitute a waiver of, any rights the Borrower might have or might acquire as
a result of the payment by the Fronting Bank of any draft or the reimbursement
by the Borrower thereof): (i) any lack of validity or enforceability of any
Letter of Credit; (ii) the existence of any claim, setoff, defense or other
right which the Borrower or any Guarantor may have at any time against a
beneficiary of any Letter of Credit or against any of the Banks, whether in
connection with this Agreement, the transactions contemplated herein or any
unrelated transaction; (iii) any draft, demand, certificate or other document
presented under any 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; (iv) payment by a Fronting Bank of any Letter of
Credit against presentation of a demand, draft or certificate or other document
which does not comply with the terms of such Letter of Credit; (v) any other
circumstance or happening whatsoever, which is similar to any of the foregoing;
or (vi) the fact that any Event of Default shall have occurred and be
continuing.
SECTION 2.5. MAKING OF LOANS.
25
(a) Except as contemplated by Section 2.8, Loans shall
be either ABR Loans or Eurodollar Loans as the Borrower may request subject
to and in accordance with this Section, provided that all loans made pursuant
to the same Borrowing shall, unless otherwise specifically provided herein,
be Loans of the same Type. Each Bank may fulfill its Commitment with respect
to any Eurodollar Loan or ABR Loan by causing any lending office of such
Bank to make such Loan; provided that any such use of a lending office
shall not affect the obligation of the Borrower to repay such Loan in
accordance with the terms of the applicable Note. Each Bank shall,
subject to its overall policy considerations, use reasonable
efforts (but shall not be obligated) to select a lending office
which will not result in the payment of increased costs by the
Borrower pursuant to Section 2.14. Subject to the other provisions
of this Section and the provisions of Section 2.11, Borrowings of
Loans of more than one Type may be incurred at the same time,
provided that no more than five (5) Borrowings of Eurodollar Loans
may be outstanding at any time.
(b) The Borrower shall give the Agent prior notice of
each Borrowing hereunder of at least three Business Days for Eurodollar Loans
and one Business Day for ABR Loans; such notice shall be irrevocable and shall
specify the amount of the proposed Borrowing (which shall not be less than
$5,000,000 in the case of Eurodollar Loans and $1,000,000 in the case of ABR
Loans) and the date thereof (which shall be a Business Day) and shall contain
disbursement instructions. Such notice, to be effective, must be received by
the Agent not later than 12:00 noon, New York City time, on the third Business
Day in the case of Eurodollar Loans and the first Business Day in the case of
ABR Loans, preceding the date on which such Borrowing is to be made except as
provided in the last sentence of this Section 2.5(b). Such notice shall specify
whether the Borrowing then being requested is to be a Borrowing of ABR Loans or
Eurodollar Loans. If no election is made as to the Type of Loan, such notice
shall be deemed a request for Borrowing of ABR Loans. The Agent shall promptly
notify each Bank of its proportionate share of such Borrowing, the date of such
Borrowing, the Type of Borrowing or Loans being requested and the Interest
Period or Interest Periods applicable thereto, as appropriate. On the borrowing
date specified in such notice, each Bank shall make its share of the Borrowing
available at the office of the Agent at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, no later than 12:00 noon, New York City time, in immediately
26
available funds. Upon receipt of the funds made available by the Banks to
fund any borrowing hereunder, the Agent shall disburse such funds in the manner
specified in the notice of borrowing delivered by the Borrower and shall use
reasonable efforts to make the funds so received from the Banks available to
the Borrower no later than 2:00 p.m. New York City time (other than as provided
in the following sentence). With respect to ABR Loans of $10,000,000 or less,
the Banks shall make such Borrowings available to the Borrower by 4:00 p.m.,
New York City time, on the same Business Day that the Borrower gives notice to
the Agent of such Borrowing by 12:00 noon, New York City time.
SECTION 2.6. NOTES; REPAYMENT OF LOANS. The Loans made by each Bank
shall be evidenced by a Note, duly executed on behalf of the Borrower, dated
the Closing Date or the date of the effectiveness of the applicable Assignment
and Acceptance, as the case may be, in substantially the form attached hereto
as Exhibit A, payable to the order of such Bank in an aggregate principal
amount equal to such Bank's Commitment. The outstanding principal balance of
all of the Loans, as evidenced by such Notes, shall be payable on the
Termination Date. Each Note shall bear interest from the date thereof on the
outstanding principal balance thereof as set forth in Section 2.7. Each Bank
shall, and is hereby authorized by the Borrower to, endorse on the schedule
attached to each Note delivered to such Bank (or on a continuation of such
schedule attached to such Note and made a part thereof), or otherwise to record
in such Bank's internal records, an appropriate notation evidencing the date
and amount of each Loan from such Bank, each payment and prepayment of
principal of any such Loan, each payment of interest on any such Loan and the
other information provided for on such schedule; provided, however, that the
failure of any Bank to make such a notation or any error therein shall not
affect the obligation of the Borrower to repay the Loans made by such Bank in
accordance with the terms of this Agreement and the applicable Notes.
SECTION 2.7. INTEREST ON LOANS.
(a) Subject to the provisions of Section 2.8, each ABR
Loan shall bear interest (computed on the basis of the actual number of days
elapsed over a year of 360 days) at a rate per annum equal to the Alternate
Base Rate plus 1-1/2%.
27
(b) Subject to the provisions of Section 2.8, each
Eurodollar Loan shall bear interest (computed on the basis of the actual number
of days elapsed over a year of 360 days) at a rate per annum equal, during each
Interest Period applicable thereto, to the Adjusted LIBOR Rate for such
Interest Period in effect for such Borrowing plus 2-1/2%.
(c) Accrued interest on all Loans shall be payable in
arrears on each Interest Payment Date applicable thereto, at maturity (whether
by acceleration or otherwise), after such maturity on demand and (with respect
to Eurodollar Loans) upon any repayment or prepayment thereof (on the amount
prepaid).
SECTION 2.8. DEFAULT INTEREST. If the Borrower or any Guarantor, as
the case may be, shall default in the payment of the principal of or interest
on any Loan or in the payment of any other amount becoming due hereunder
(including, without limitation, the reimbursement pursuant to Section 2.2(d) of
any draft drawn under a Letter of Credit), whether at stated maturity, by
acceleration or otherwise, the Borrower or such Guarantor, as the case may be,
shall on demand from time to time pay interest, to the extent permitted by law,
on such defaulted amount up to (but not including) the date of actual payment
(after as well as before judgment) at a rate per annum (computed on the basis
of the actual number of days elapsed over a year of 360 days) equal to (x) in
the case of Borrowings consisting of Eurodollar Loans, the Adjusted LIBOR Rate
in effect for such Borrowing plus 4-1/2% and (y) in the case of all other
amounts, the Alternate Base Rate plus 3-1/2%.
SECTION 2.9. OPTIONAL TERMINATION OR REDUCTION OF COMMITMENT. Upon
at least two Business Days' prior written notice to the Agent, the Borrower may
at any time in whole permanently terminate, or from time to time in part
permanently reduce, the Unused Total Commitment. Each such reduction of the
Commitments shall be in the principal amount of $5,000,000 or any integral
multiple thereof. Simultaneously with each reduction or termination of the
Commitment, the Borrower shall pay to the Agent for the account of each Bank
the Commitment Fee accrued on the amount of the Commitment of such Bank so
terminated or reduced through the date thereof. Any reduction of the Total
Commitment pursuant
28
to this Section shall be applied pro rata to reduce the Commitment of each Bank.
SECTION 2.10. ALTERNATE RATE OF INTEREST. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Loan, the Agent shall have determined (which
determination shall be con clusive and binding upon the Borrower absent
manifest error) that reasonable means do not exist for ascertaining the
applicable Adjusted LIBOR Rate, the Agent shall, as soon as practicable
thereafter, give written or telegraphic notice of such determination to the
Borrower and the Banks, and any request by the Borrower for a Borrowing of
Eurodollar Loans (including pursuant to a refinancing with Eurodollar Loans)
pursuant to Section 2.5 or 2.11 shall be deemed a request for a Borrowing of
ABR Loans. After such notice shall have been given and until the circumstances
giving rise to such notice no longer exist, each request for a Borrowing of
Eurodollar Loans shall be deemed to be a request for a Borrowing of ABR Loans.
SECTION 2.11. REFINANCING OF LOANS. The Borrower shall have the
right, at any time, on three Business Days' prior irrevocable notice to the
Agent (which notice, to be effective, must be received by the Agent not later
than 12:00 noon, New York City time, on the third Business Day preceding the
date of any refinancing), (x) to refinance (without the satisfaction of the
conditions set forth in Section 4 as a condition to such refinancing) any
outstanding Borrowing or Borrowings of Loans of one Type (or a portion thereof)
with a Borrowing of Loans of the other Type or (y) to continue an outstanding
Borrowing of Eurodollar Loans for an additional Interest Period, subject to the
following:
(a) as a condition to the refinancing of ABR Loans with
Eurodollar Loans and to the continuation of Eurodollar Loans for an
additional Interest Period, no Event of Default shall have occurred
and be continuing at the time of such refinancing;
(b) if less than a full Borrowing of Loans shall be
refinanced, such refinancing shall be made pro rata among the Banks
in accordance with the respective principal amounts of
29
the Loans comprising such Borrowing held by the Banks
immediately prior to such refinancing;
(c) the aggregate principal amount of Loans being
refinanced shall be at least $1,000,000, provided that no partial
refinancing of a Borrowing of Eurodollar Loans shall result in the
Eurodollar Loans remaining outstanding pursuant to such Borrowing
being less than $5,000,000 in aggregate principal amount;
(d) each Bank shall effect each refinancing by applying
the proceeds of its new Eurodollar Loan or ABR Loan, as the case
may be, to its Loan being refinanced;
(e) the Interest Period with respect to a Borrowing of
Eurodollar Loans effected by a refinancing or in respect to the
Borrowing of Eurodollar Loans being continued as Eurodollar Loans
shall commence on the date of refinancing or the expiration of the
current Interest Period applicable to such continuing Borrowing, as
the case may be; and
(f) a Borrowing of Eurodollar Loans may be refinanced
only on the last day of an Interest Period applicable thereto.
In the event that the Borrower shall not give notice to refinance any Borrowing
of Eurodollar Loans, or to continue such Borrowing as Eurodollar Loans, or
shall not be entitled to refinance or continue such Borrowing as Eurodollar
Loans, in each case as provided above, such Borrowing shall automatically be
refinanced with a Borrowing of ABR Loans at the expiration of the then-current
Interest Period. The Agent shall, after it receives notice from the Borrower,
promptly give each Bank notice of any refinancing, in whole or part, of any
Loan made by such Bank.
SECTION 2.12. COMMITMENT TERMINATION; CASH COLLATERAL. Upon
the Termination Date, the Total Commitment shall be terminated in
full and the Borrower shall pay the Loans in full and, except as
the Agent may otherwise agree in writing, if any Letter of Credit
remains outstanding, deposit into the Letter of Credit Account an
amount equal to 105% of the amount by which the sum of the
aggregate Letter of Credit Outstandings exceeds the amount of cash
held in the Letter of Credit Account, such cash to be remitted to
30
the Borrower upon the expiration, cancellation, satisfaction or other
termination of such reimbursement obligations, or otherwise comply with Section
2.2(b).
SECTION 2.13. OPTIONAL PREPAYMENT OF LOANS; REIMBURSEMENT OF
BANKS.
(a) The Borrower shall have the right at any time and
from time to time to prepay any Loans, in whole or in part, (x) with respect to
Eurodollar Loans, upon at least three Business Days' prior written, telex or
facsimile notice to the Agent and (y) with respect to ABR Loans on the same
Business Day if written, telex or facsimile notice is received by the Agent
prior to 12:00 noon, New York City time, and thereafter upon at least one
Business Day's prior written, telex or facsimile notice to the Agent; provided,
however, that (i) with respect to Eurodollar Loans, each such partial
prepayment shall be in multiples of $1,000,000, (ii) with respect to ABR Loans,
each such partial prepayment shall be in integral multiples of $1,000,000,
(iii) no prepayment of Eurodollar Loans shall be permitted pursuant to this
Section 2.13(a) other than on the last day of an Interest Period applicable
thereto (and other than in connection with the syndication of the credit
facility evidenced by this Agreement), and (iv) no partial prepayment of a
Borrowing of Eurodollar Loans shall result in the aggregate principal amount of
the Eurodollar Loans remaining outstanding pursuant to such Borrowing being
less than $5,000,000. Each notice of prepayment shall specify the prepayment
date, the principal amount of the Loans to be prepaid and in the case of
Eurodollar Loans, the Borrowing or Borrowings pursuant to which made, shall be
irrevocable and shall commit the Borrower to prepay such Loan by the amount and
on the date stated therein. The Agent shall, promptly after receiving notice
from the Borrower hereunder, notify each Bank of the principal amount of the
Loans held by such Bank which are to be prepaid, the prepayment date and the
manner of application of the prepayment.
(b) The Borrower shall reimburse each Bank on demand
for any loss incurred or to be incurred by it in the reemployment of the funds
released (i) resulting from any prepayment (for any reason whatsoever,
including, without limitation, refinancing with ABR Loans) of any Eurodollar
Loan required or permitted under this Agreement, if such Loan is prepaid other
than on the last day of the Interest Period for such Loan (including, without
limitation,
31
any such prepayment in connection with the syndication of the credit facility
evidenced by this Agreement) or (ii) in the event that after the Borrower
delivers a notice of borrowing under Section 2.5 in respect of Eurodollar
Loans, such Loans are not made on the first day of the Interest Period
specified in such notice of borrowing for any reason other than a breach by
such Bank of its obligations hereunder. Such loss shall be the amount as
reasonably determined by such Bank as the excess, if any, of (A) the amount of
interest which would have accrued to such Bank on the amount so paid or not
borrowed at a rate of interest equal to the Adjusted LIBOR Rate for such Loan,
for the period from the date of such payment or failure to borrow to the last
day (x) in the case of a payment or refinancing with ABR Loans other than on
the last day of the Interest Period for such Loan, of the then current Interest
Period for such Loan, or (y) in the case of such failure to borrow, of the
Interest Period for such Loan which would have commenced on the date of such
failure to borrow, over (B) the amount of interest which would have accrued to
such Bank on such amount by placing such amount on deposit for a comparable
period with leading banks in the London interbank market. Each Bank shall
deliver to the Borrower from time to time one or more certificates setting
forth the amount of such loss as determined by such Bank.
(c) In the event the Borrower fails to prepay any Loan
on the date specified in any prepayment notice delivered pursuant to Section
2.13(a), the Borrower on demand by any Bank shall pay to the Agent for the
account of such Bank any amounts required to compensate such Bank for any loss
incurred by such Bank as a result of such failure to prepay, including, without
limitation, any loss, cost or expenses incurred by reason of the acquisition of
deposits or other funds by such Bank to fulfill deposit obligations incurred in
anticipation of such prepayment, but without duplication of any amounts paid
under Section 2.13(b). Each Bank shall deliver to the Borrower from time to
time one or more certificates setting forth the amount of such loss as
determined by such Bank.
(d) Any partial prepayment of the Loans by the Borrower
pursuant to Sections 2.12 or 2.13 shall be applied as specified by the Borrower
or, in the absence of such specification, as deter mined by the Agent, provided
that in each case no Eurodollar Loans shall be prepaid pursuant to Section 2.12
32
to the extent that such Loan has an Interest Period ending after the required
date of prepayment unless and until all outstanding ABR Loans and Euro dollar
Loans with Interest Periods ending on such date have been repaid in full.
SECTION 2.14. RESERVE REQUIREMENTS; CHANGE IN CIRCUMSTANCES.
(a) Notwithstanding any other provision herein, if
after the date of this Agreement any change in applicable law or regulation or
in the interpretation or administration thereof by any governmental authority
charged with the interpretation or administration thereof (whether or not
having the force of law) shall change the basis of taxation of payments to any
Bank of the principal of or interest on any Eurodollar Loan made by such Bank
or any fees or other amounts payable hereunder (other than changes in respect
of Taxes, Other Taxes and taxes imposed on, or measured by, the net income or
overall gross receipts or franchise taxes of such Bank by the jurisdiction in
which such Bank has its principal office or in which the applicable lending
office for such Eurodollar Loan is located or by any political subdivision or
taxing authority therein, or by any other jurisdiction or by any political
subdivision or taxing authority therein other than a jurisdiction in which such
Bank would not be subject to tax but for the execution and performance of this
Agreement), or shall impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of or credit extended by such Bank (except any such reserve requirement
which is reflected in the Adjusted LIBOR Rate) or shall impose on such Bank or
the London interbank market any other condition affecting this Agreement or the
Eurodollar Loans made by such Bank, and the result of any of the foregoing
shall be to increase the cost to such Bank of making or maintaining any
Eurodollar Loan or to reduce the amount of any sum received or receivable by
such Bank hereunder or under the Notes (whether of principal, interest or
otherwise) by an amount deemed by such Bank to be material, then the Borrower
will pay to such Bank in accordance with paragraph (c) below such additional
amount or amounts as will compensate such Bank for such additional costs
incurred or reduction suffered.
(b) If any Bank shall have determined that the
applicability of any change in any law, rule, regulation or
33
guideline adopted pursuant to or arising out of the July 1988 report of the
Basel Committee on Banking Regulations and Supervisory Practices entitled
"International Convergence of Capital Measurement and Capital Standards", or
the adoption or effectiveness after the date hereof of any law, rule,
regulation or guideline regarding capital adequacy, or any change in any of the
foregoing or in the interpretation or administration of any of the foregoing by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank (or any
Lending Office of such Bank) or any Bank's holding company with any request or
directive regarding capital adequacy (whether or not having the force of law)
of any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Bank's capital or on the capital
of such Bank's holding company, if any, as a consequence of this Agreement, the
Loans made by such Bank pursuant hereto, such Bank's Commitment hereunder or
the issuance of, or participation in, any Letter of Credit by such Bank to a
level below that which such Bank or such Bank's holding company could have
achieved but for such adoption, change or compliance (taking into account
Bank's policies and the policies of such Bank's holding company with respect to
capital adequacy) by an amount deemed by such Bank to be material, then from
time to time the Borrower shall pay to such Bank such additional amount or
amounts as will compensate such Bank or such Bank's holding company for any
such reduction suffered.
(c) A certificate of each Bank setting forth such amount
or amounts as shall be necessary to compensate such Bank or its holding company
as specified in paragraph (a) or (b) above, as the case may be, shall be
delivered to the Borrower and shall be conclusive absent manifest error. The
Borrower shall pay each Bank the amount shown as due on any such certificate
delivered to it within 10 days after its receipt of the same. Any Bank
receiving any such payment shall promptly make a refund thereof to the Borrower
if the law, regulation, guideline or change in circum stances giving rise to
such payment is subsequently deemed or held to be invalid or inapplicable.
(d) Failure on the part of any Bank to demand
compensation for any increased costs or reduction in amounts received or
receivable or reduction in return on capital with respect to any
34
period shall not constitute a waiver of such Bank's right to demand
compensation with respect to such period or any other period. The protection of
this Section shall be available to each Bank regard less of any possible
contention of the invalidity or inapplic ability of the law, rule, regulation,
guideline or other change or condition which shall have occurred or been
imposed.
SECTION 2.15. CHANGE IN LEGALITY.
(a) Notwithstanding anything to the contrary contained
elsewhere in this Agreement, if (x) any change in any law or regulation or in
the interpretation thereof by any governmental authority charged with the
administration thereof shall make it unlawful for a Bank to make or maintain a
Eurodollar Loan or to give effect to its obligations as contemplated hereby
with respect to a Eurodollar Loan or (y) at any time any Bank determines that
the making or continuance of any of its Eurodollar Loans has become
impracticable as a result of a contingency occurring after the date hereof
which adversely affects the London interbank market or the position of such
Bank in such market, then, by written notice to the Borrower, such Bank may (i)
declare that Eurodollar Loans will not thereafter be made by such Bank
hereunder, whereupon any request by the Borrower for a Eurodollar Borrowing
shall, as to such Bank only, be deemed a request for an ABR Loan unless such
declaration shall be subsequently withdrawn; and (ii) require that all
outstanding Eurodollar Loans made by it be converted to ABR Loans, in which
event all such Eurodollar Loans shall be automatically converted to ABR Loans
as of the effective date of such notice as provided in paragraph (b) below. In
the event any Bank shall exercise its rights under clause (i) or (ii) of this
paragraph (a), all payments and prepayments of principal which would otherwise
have been applied to repay the Eurodollar Loans that would have been made by
such Bank or the converted Eurodollar Loans of such Bank shall instead be
applied to repay the ABR Loans made by such Bank in lieu of, or resulting from
the conversion of, such Eurodollar Loans.
(b) For purposes of this Section 2.15, a notice to the
Borrower by any Bank pursuant to paragraph (a) above shall be effective, if
lawful, and if any Eurodollar Loans shall then be outstanding, on the last day
of the then-current Interest Period,
35
otherwise, such notice shall be effective on the date of receipt by
the Borrower.
SECTION 2.16. PRO RATA TREATMENT, ETC. All payments and repayments
of principal and interest in respect of the Loans (except as provided in
Sections 2.14 and 2.15) shall be made pro rata among the Banks in accordance
with the then outstanding principal amount of the Loans and/or participations
in Letter of Credit Outstandings and all outstanding undrawn Letters of Credit
(and the unreimbursed amount of drawn Letters of Credit) hereunder and all
payments of Commitment Fees and Letter of Credit Fees (other than those payable
to a Fronting Bank) shall be made pro rata among the Banks in accordance with
their Commitments. All payments by the Borrower hereunder and under the Notes
shall be (i) net of any tax applicable to the Borrower or Guarantor and (ii)
made in Dollars in immediately available funds at the office of the Agent by
12:00 noon, New York City time, on the date on which such payment shall be due.
Interest in respect of any Loan hereunder shall accrue from and including the
date of such Loan to but excluding the date on which such Loan is paid in full
or converted to a Loan of a different Type.
SECTION 2.17. TAXES.
(a) Any and all payments by the Borrower or any
Guarantor hereunder and under the Notes shall be made free and clear of and
without deduction for any and all current or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding (i) taxes imposed on or measured by the net income or overall gross
receipts of the Agent or any Bank (or any transferee or assignee thereof,
including a participation holder (any such entity being called a "Transferee"))
and franchise taxes imposed on the Agent or any Bank (or Transferee) by the
United States or any jurisdiction under the laws of which the Agent or any such
Bank (or Transferee) is organized or in which the applicable lending office of
any such Bank (or Transferee) is located or any political subdivision thereof
or by any other jurisdiction or by any political subdivision or taxing
authority therein other than a jurisdiction in which the Agent or such Bank
would not be subject to tax but for the execution and performance of this
Agreement and (ii) taxes, levies, imposts, deductions, charges or withholdings
36
("Amounts") with respect to payments hereunder or under the Notes to a Bank (or
Transferee) in accordance with laws in effect on the later of the date of this
Agreement and the date such Bank (or Transferee) becomes a Bank (or Transferee,
as the case may be), but not excluding, with respect to such Bank (or
Transferee), any increase in such Amounts solely as a result of any change in
such laws occurring after such later date or any Amounts that would not have
been imposed but for actions (other than actions contemplated by this Agreement
or the Notes) taken by the Borrower after such later date (all such nonexcluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If the Borrower or any Guarantor shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder to the Banks (or any Transferee) or the Agent, (i) the sum payable
shall be increased by the amount necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section) such Bank (or Transferee) or the Agent (as the case may be) shall
receive an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and (iii)
the Borrower shall pay the full amount deducted to the relevant taxing
authority or other Governmental Authority in accordance with applicable law.
(b) In addition, the Borrower agrees to pay any current
or future stamp or documentary taxes or any other excise or property taxes,
charges, assessments or similar levies that arise from any payment made
hereunder or from the execution, delivery or registration of, or otherwise with
respect to, this Agreement or any other Loan Document (hereinafter referred to
as "Other Taxes").
(c) The Borrower will indemnify each Bank (or
Transferee) and the Agent for the full amount of Taxes and Other Taxes paid by
such Bank (or Transferee) or the Agent, as the case may be, and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted by the relevant taxing authority or other Governmental Authority. Such
indemnification shall be made within 30 days after the date any Bank (or
Transferee) or the Agent, as the case may be, makes written demand therefor. If
a Bank (or Transferee) or the Agent shall become aware that it is entitled to
receive a refund in
37
respect of Taxes or Other Taxes as to which it has been indemnified by the
Borrower pursuant to this Section, it shall promptly notify the Borrower of the
availability of such refund and shall, within 30 days after receipt of a
request by the Borrower, apply for such refund at the Borrower's expense. If
any Bank (or Transferee) or the Agent receives a refund in respect of any Taxes
or Other Taxes as to which it has been indemnified by the Borrower pursuant to
this Section, it shall promptly notify the Borrower of such refund and shall,
within 30 days after receipt of a request by the Borrower (or promptly upon
receipt, if the Borrower has requested application for such refund pursuant
hereto), repay such refund to the Borrower (to the extent of amounts that have
been paid by the Borrower under this Section with respect to such refund plus
interest that is received by the Bank (or Transferee) or the Agent as part of
the refund), net of all out-of-pocket expenses of such Bank (or Transferee) or
the Agent and without additional interest thereon; provided that the Borrower,
upon the request of such Bank (or Transferee) or the Agent, agrees to return
such refund (plus penalties, interest or other charges) to such Bank (or
Transferee) or the Agent in the event such Bank (or Transferee) or the Agent is
required to repay such refund. Nothing contained in this subsection (c) shall
require any Bank (or Transferee) or the Agent to make available any of its tax
returns (or any other information relating to its taxes that it deems to be
confidential).
(d) Within 30 days after the date of any payment of
Taxes or Other Taxes withheld by the Borrower in respect of any payment to any
Bank (or Transferee) or the Agent, the Borrower will furnish to the Agent, at
its address referred to on the signature pages hereof, the original or a
certified copy of a receipt evidencing payment thereof.
(e) Without prejudice to the survival of any other
agreement contained herein, the agreements and obligations contained in this
Section shall survive the payment in full of the principal of and interest on
all Loans made hereunder.
(f) Each Bank (or Transferee) that is organized under
the laws of a jurisdiction outside the United States shall, if legally able to
do so, prior to the immediately following due date of any payment by the
Borrower hereunder, deliver to the Borrower such certificates, documents or
other evidence, as required by the
38
Code or Treasury Regulations issued pursuant thereto, including (A) Internal
Revenue Service Form W-8 or W-9 and (B) Internal Revenue Service Form 1001 or
Form 4224 and any other certificate or statement of exemption required by
Treasury Regulation Section 1.1441-1, 1.1441-4 or 1.1441-6(c) or any subsequent
version thereof or successors thereto, properly completed and duly executed by
such Bank (or Transferee) establishing that such payment is (i) not subject to
United States Federal withholding tax under the Code because such payment is
effectively connected with the conduct by such Bank (or Transferee) of a trade
or business in the United States or (ii) totally exempt from United States
Federal with holding tax or subject to a reduced rate of such tax under a
provision of an applicable tax treaty. Unless the Borrower and the Agent have
received forms or other documents satisfactory to them indicating that such
payments hereunder or under the Notes are not subject to United States Federal
withholding tax or are subject to such tax at a rate reduced by an applicable
tax treaty, the Borrower or the Agent shall withhold taxes from such payments
at the applicable statutory rate.
(g) The Borrower shall not be required to pay any
additional amounts to any Bank (or Transferee) in respect of United States
Federal withholding tax pursuant to subsection (a) above if the obligation to
pay such additional amounts would not have arisen but for a failure by such
Bank (or Transferee) to comply with the provisions of subsection (f) above.
(h) Any Bank (or Transferee) claiming any additional
amounts payable pursuant to this Section 2.17 shall use reasonable efforts
(consistent with legal and regulatory restrictions) to file any certificate
or document requested by the Borrower or to change the jurisdiction of
its applicable lending office if the making of such a filing or change would
avoid the need for or reduce the amount of any such additional amounts that
may thereafter accrue and would not, in the sole reasonable determination
of such Bank, be otherwise materially disadvantageous to such Bank (or
Transferee).
SECTION 2.18. CERTAIN FEES. The Borrower shall pay to the
Agent, for the respective accounts of the Agent and the Banks, the
fees set forth in that certain letter dated December 23, 1996 among
the Agent, Chase Securities Inc. and the Borrower.
39
SECTION 2.19. COMMITMENT FEE. The Borrower shall pay to the Banks a
commitment fee (the "Commitment Fee") for the period commencing on the date the
Commitment Letter is executed to the Termination Date or the earlier date of
termination of the Commitment, computed (on the basis of the actual number of
days elapsed over a year of 360 days) at the rate of one-half of one percent
(1/2%) per annum on the average daily Unused Total Commitment. Such Commitment
Fee, to the extent then accrued, shall be payable (x) monthly, in arrears, on
the last calendar day of each month, (y) on the Termination Date and (z) as
provided in Section 2.9 hereof, upon any reduction or termination in whole or
in part of the Total Commitment.
SECTION 2.20. LETTER OF CREDIT FEES. The Borrower shall pay with
respect to each Letter of Credit (i) to the Agent on behalf of the Banks a fee
calculated (on the basis of the actual number of days elapsed over a year of
360 days) at the rate of (x) two and one-half (2-1/2%) per annum on the daily
average Letter of Credit Outstandings and (ii) to the Fronting Bank such
Fronting Bank's customary fees for issuance, amendments and processing referred
to in Section 2.2. In addition, the Borrower agrees to pay each Fronting Bank
for its account a fronting fee in respect of each Letter of Credit issued by
such Fronting Bank, for the period from and including the date of issuance of
such Letter of Credit to and including the date of termination of such Letter
of Credit, com puted at a rate, and payable at times, to be determined by such
Fronting Bank, the Borrower and the Agent. Accrued fees described in clause (i)
of the first sentence of this paragraph in respect of each Letter of Credit
shall be due and payable monthly in arrears on the last calendar day of each
month and on the Termination Date, or such earlier date as the Total Commitment
is terminated. Accrued fees described in clause (ii) of the first sentence of
this paragraph in respect of each Letter of Credit shall be payable at times to
be determined by the Fronting Bank, the Borrower and the Agent.
SECTION 2.21. NATURE OF FEES. All Fees shall be paid on the
dates due, in immediately available funds, to the Agent for the
respective accounts of the Agent and the Banks, as provided herein
40
and in the letter described in Section 2.18. Once paid, none of
the Fees shall be refundable under any circumstances.
SECTION 2.22. PRIORITY AND LIENS. The Borrower and each of the
Guarantors hereby covenants, represents and warrants that, upon entry of the
Interim Order (i) pursuant to Section 364(c)(1) of the Bankruptcy Code, the
Obligations of the Borrower and the Guarantors hereunder and under the Loan
Documents shall at all times constitute allowed administrative expense claims
in the Cases having priority over all administrative expenses of the kind
specified in Sections 503(b) or 507(b) of the Bankruptcy Code, (ii) pursuant to
Section 364(c)(2) of the Bankruptcy Code, the Obligations of the Borrower and
the Guarantors hereunder and under the Loan Documents shall at all times be
secured by a perfected first priority Lien on all unencumbered property of the
Borrower and the Guarantors (including, but not limited to, all of the capital
stock of Toy Biz that is held beneficially or of record, by the Borrower or any
of the Guarantors but limited, in the case of Subsidiaries that are
incorporated in jurisdictions other than within the United States, to 65% of
the issued and outstanding capital stock thereof) and all cash maintained in
the Letter of Credit Account and any direct investments of the funds contained
therein, (iii) pursuant to Section 364(c)(3) of the Bankruptcy Code, the
Obligations of the Borrower and the Guarantors hereunder and under the Loan
Documents shall be secured by a perfected Lien upon all property of the
Borrower and the Guarantors (other than the property that is subject to
existing Liens that presently secure the obligations of the Borrower and the
Guarantors under the Existing Agreements, as to which the Lien in favor of the
Agent and the Banks will be as described in clause (iv) of this sentence) that
is subject to valid and perfected Liens in existence on the Filing Date and to
other Permitted Liens described in clause (v) of the definition of such term
herein (and extensions, renewals and replacements thereof described in clause
(vi) of such definition), junior to such valid and perfected Liens, and (iv)
pursuant to Section 364(d)(1) of the Bankruptcy Code, the Obligations of the
Borrower and the Guarantors hereunder and under the Loan Documents shall be
secured by a perfected first priority, senior priming Lien on all property of
the Borrower and the Guarantors (including without limitation, accounts
receivable, inventory, equipment, intellectual property and the capital stock
of certain direct or indirect Subsidiaries of the Borrower (other
41
than Toy Biz) and the proceeds thereof) that is subject to existing Liens
that presently secure the Borrower's and the Guarantors' pre-petition
Indebtedness under the Existing Agreements and any Liens granted after the
Filing Date to provide adequate protection in respect of the Existing
Agreements, subject in each case only to (x) in the event of the occurrence
and during the continuance of an Event of Default or an event that would
constitute an Event of Default with the giving of notice or lapse of time or
both, the payment of allowed and unpaid professional fees and disbursements
incurred by the Borrower, the Guarantors, and any statutory committees
appointed in the Cases in an aggregate amount not in excess of $2,500,000 and
(y) the payment of unpaid fees pursuant to 28 U.S.C. ss.1930 (collectively,
the "Carve-Out"), provided that following the Termination Date amounts in the
Letter of Credit Account shall not be subject to the Carve-Out. The Banks
agree that so long as no Event of Default or event which with the giving of
notice or lapse of time or both would constitute an Event of Default shall
have occurred, the Borrower and the Guarantors shall be permitted to pay
compensation and reimbursement of expenses allowed and payable under 11 U.S.C.
ss. 330 and 11 U.S.C. ss. 331, as the same may be due and payable, and the
same shall not reduce the Carve-Out.
SECTION 2.23. RIGHT OF SET-OFF. Subject to the provisions of
Section 7.1, upon the occurrence and during the continuance of any Event of
Default, the Agent and each Bank is hereby authorized at any time and from time
to time, to the fullest extent permitted by law and without further order of or
application to the Bankruptcy Court, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by the Agent and each such Bank to or for
the credit or the account of the Borrower or any Guarantor against any and all
of the obligations of such Borrower or Guarantor now or hereafter existing
under the Loan Documents, irrespective of whether or not such Bank shall have
made any demand under any Loan Document and although such obligations may be
unmatured. Each Bank and the Agent agrees promptly to notify the Borrower and
Guarantors after any such set-off and application made by such Bank or by the
Agent, as the case may be, provided that the failure to give such notice shall
not affect the validity of such set-off and application. The rights of each
Bank and the Agent under this Section are in addition to
42
other rights and remedies which such Bank and the Agent may have upon the
occurrence and during the continuance of any Event of Default.
SECTION 2.24. SECURITY INTEREST IN LETTER OF CREDIT ACCOUNT.
Pursuant to Section 364(c)(2) of the Bankruptcy Code, the Borrower and the
Guarantors hereby assign and pledge to the Agent, for its benefit and for the
ratable benefit of the Banks, and hereby grant to the Agent, for its benefit
and for the ratable benefit of the Banks, a first priority security interest,
senior to all other Liens, if any, in all of the Borrower's and the Guarantors'
right, title and interest in and to the Letter of Credit Account and any direct
investment of the funds contained therein.
SECTION 2.25. PAYMENT OF OBLIGATIONS. Upon the maturity (whether by
acceleration or otherwise) of any of the obligations under this Agreement or
any of the other Loan Documents of the Borrower and the Guarantors, the Banks
shall be entitled to immediate payment of such obligations without further
application to or order of the Bankruptcy Court.
SECTION 2.26. NO DISCHARGE; SURVIVAL OF CLAIMS. Each of the
Borrower and the Guarantors agrees that (i) its obligations hereunder shall not
be discharged by the entry of an order confirming a Plan of Reorganization
(and each of the Borrower and the Guarantors, pursuant to Section 1141(d)(4) of
the Bankruptcy Code, hereby waives any such discharge) and (ii) the
Superpriority Claim granted to the Agent and the Banks pursuant to the Order
and described in Section 2.22 and the Liens granted to the Agent pursuant to
the Order and described in Sections 2.22 and 2.24 shall not be affected in any
manner by the entry of an order confirming a Plan of Reorganization.
SECTION 2.27. USE OF CASH COLLATERAL. Notwithstanding anything to
the contrary contained herein, the Borrower shall not be permitted (i) to
request a Borrowing under Section 2.5 or request the issuance of a Letter of
Credit under Section 2.3 unless the Bankruptcy Court shall have entered the
Cash Collateral Order or (ii) to request a Borrowing under Section 2.5 unless
the Borrower and the Guarantors shall at that time have used all cash
43
collateral subject to the Cash Collateral Order for the purposes described in
Section 3.10.
SECTION 3. REPRESENTATIONS AND WARRANTIES
In order to induce the Banks to make Loans and issue and/or
participate in Letters of Credit hereunder, the Borrower and each of the
Guarantors jointly and severally represent and warrant as follows:
SECTION 3.1. ORGANIZATION AND AUTHORITY. Each of the Borrower and
the Guarantors (i) is a corporation duly organized and validly existing under
the laws of the State of its incorporation and is duly qualified as a foreign
corporation and is in good standing in each jurisdiction in which the failure
to so qualify would have a material adverse effect on the financial condition,
operations, business, properties or assets of the Borrower and the Guarantors
taken as a whole; (ii) has the requisite corporate power and authority to
effect the transactions contemplated hereby, and by the other Loan Documents to
which it is a party, and (iii) has all requisite corporate power and authority
and the legal right to own, pledge, mortgage and operate its properties, and to
conduct its business as now or currently proposed to be conducted.
SECTION 3.2. DUE EXECUTION. The execution, delivery and performance
by each of the Borrower and the Guarantors of each of the Loan Documents to
which it is a party (i) are within the respective corporate powers of each of
the Borrower and the Guarantors, have been duly authorized by all necessary
corporate action, including the consent of shareholders where required, and do
not (A) contravene the charter or by-laws of any of the Borrower or the
Guarantors, (B) violate any law (including, without limitation, the Securities
Exchange Act of 1934) or regulation (including, without limitation, Regulations
G, T, U or X of the Board of Governors of the Federal Reserve System), or any
order or decree of any court or governmental instrumentality, (C) conflict with
or result in a breach of, or constitute a default under, any material
indenture, mortgage or deed of trust entered into after the Filing Date or any
material lease, agreement or other instrument entered into after the Filing
Date binding on the Borrower or the Guarantors or any of their properties, or
(D)
44
result in or require the creation or imposition of any Lien upon any of the
property of any of the Borrower or the Guarantors other than the Liens granted
pursuant to this Agreement; and do not require the consent, authorization by or
approval of or notice to or filing or registration with any Governmental
Authority other than the entry of the Orders. This Agreement has been duly
executed and delivered by each of the Borrower and the Guarantors.
This Agreement is, and each of the other Loan Documents to which the Borrower
and each of the Guarantors is or will be a party, when delivered hereunder or
thereunder, will be, a legal, valid and binding obligation of the Borrower and
each Guarantor, as the case may be, enforceable against the Borrower and the
Guarantors, as the case may be, in accordance with its terms.
SECTION 3.3 STATEMENTS MADE. The information that has been
delivered in writing by the Borrower or any of the Guarantors to the Agent or
to the Bankruptcy Court in connection with any Loan Document, and any financial
statement delivered pursuant hereto or thereto (other than to the extent that
any such statements constitute projections), taken as a whole and in light of
the circumstances in which made, contains no untrue statement of a material
fact and does not omit to state a material fact necessary to make such
statements not misleading; and, to the extent that any such information
constitutes projections, such projections were prepared in good faith on the
basis of assumptions, methods, data, tests and information believed by the
Borrower or such Guarantor to be reasonable at the time such projections were
furnished.
SECTION 3.4. FINANCIAL STATEMENTS. The Borrower has furnished the
Banks with copies of (i) the audited consolidated financial statement and
schedules of the Borrower for the fiscal year ended December 31, 1995 and (ii)
the unaudited consolidated financial statement and schedules of the Borrower
for the fiscal quarter ended September 30, 1996. Such financial statements
present fairly the financial condition and results of operations of the
Borrower and the Guarantors on a consolidated basis as of such dates and for
such periods; such balance sheets and the notes thereto disclose all
liabilities, direct or contingent, of the Borrower and the Guarantors as of the
dates thereof required to be disclosed by GAAP and such financial statements
were prepared in a manner consistent with GAAP, subject (in the case of such
fiscal
45
quarter statement) to normal year end adjustments. No material adverse
change in the, operations, business, properties, assets, prospects or condition
(financial or otherwise) of the Borrower and the Guarantors, taken as a whole,
has occurred from that set forth in the Borrower's disclosure statement
prepared in connection with the Proposed Plan heretofore furnished to the Agent
(the "Disclosure Statement") other than (x) those which customarily occur and
as a result of events leading up to and following the commencement of a
proceeding under Chapter 11 of the Bankruptcy Code and (y) the commencement of
the Cases (it being understood that any non-cash restructuring and other
non-cash charges to be reflected on the Borrower's 1996 consolidated financial
statements will not in themselves be deemed to constitute such a material
adverse change).
SECTION 3.5. OWNERSHIP. Each of the Persons listed on Schedule 3.5
is a wholly-owned, direct or indirect Subsidiary of the Borrower, and the
Borrower owns no other Subsidiaries, whether directly or indirectly, other than
as set forth on Schedule 3.5 (other than a Subsidiary formed to carry on a
portion of the activities of the business segment of the Borrower and the
Guarantors known as Marvel Studios, which Subsidiary shall not be a Guarantor).
SECTION 3.6. LIENS. Except for Liens existing on the Filing Date as
reflected on Schedule 3.6, there are no Liens of any nature whatsoever on any
assets of the Borrower or any of the Guarantors other than: (i) Liens granted
pursuant to the Existing Agreements; (ii) Permitted Liens; (iii) Liens
permitted pursuant to Section 6.1(ii); and (iv) Liens in favor of the Agent and
the Banks. Neither the Borrower nor the Guarantors are parties to any contract,
agreement, lease or instrument the performance of which, either unconditionally
or upon the happening of an event, will result in or require the creation of a
Lien on any assets of the Borrower or any Guarantor or otherwise result in a
violation of this Agreement other than the Liens granted to the Agent and the
Banks as provided for in this Agreement.
SECTION 3.7. COMPLIANCE WITH LAW.
46
(a) (i) The operations of the Borrower and the Guarantors comply in all
material respects with all applicable environmental, health and safety statutes
and regulations, including, without limitation, regulations promulgated under
the Resource Conservation and Recovery Act (42 U.S.C. ss.ss.6901 et seq.); (ii)
to the Borrower's and each of the Guarantor's knowledge, none of the operations
of the Borrower or the Guarantors is the subject of any Federal or state
investigation evaluating whether any remedial action involving a material
expenditure by the Borrower or any Guarantor is needed to respond to a release
of any Hazardous Waste or Hazardous Substance (as such terms are defined in any
applicable state or Federal environmental law or regulations) into the
environment; and (iii) to the Borrower's and each of the Guarantor's knowledge,
the Borrower and the Guarantors do not have any material contingent liability
in connection with any release of any Hazardous Waste or Hazardous Substance
into the environment.
(b) Neither the Borrower nor any Guarantor is, to the
best of its knowledge, in violation of any law, rule or regulation,
or in default with respect to any judgment, writ, injunction or
decree of any Governmental Authority the violation of which, or a default with
respect to which, would have a material adverse effect on the financial
condition, operations, business, properties or assets of the Borrower and the
Guarantors taken as a whole.
SECTION 3.8. INSURANCE. All policies of insurance of any kind or
nature owned by or issued to the Borrower and the Guarantors, including,
without limitation, policies of life, fire, theft, product liability, public
liability, property damage, other casualty, employee fidelity, workers'
compensation, employee health and welfare, title, property and liability
insurance, are in full force and effect and are of a nature and provide such
coverage as is sufficient and as is customarily carried by companies of the
size and character of the Borrower and the Guarantors.
SECTION 3.9. THE ORDERS. On the date of the making of the initial
Loans or the issuance of the initial Letters of Credit hereunder, whichever
first occurs, the Interim Order will have been entered and will not have been
stayed, amended, vacated,
47
reversed or rescinded. On the date of the making of any Loan or the issu
ance of any Letter of Credit, the Interim Order or the Final Order, as the
case may be, shall have been entered and shall not have been amended, stayed,
vacated or rescinded. Upon the maturity (whether by the acceleration or
otherwise) of any of the obligations of the Borrower and the Guarantors
hereunder and under the other Loan Documents, the Banks shall, subject to the
provisions of Section 7.1, be entitled to immediate payment of such
obligations, and to enforce the remedies provided for hereunder, without
further appli cation to or order by the Bankruptcy Court.
SECTION 3.10. USE OF PROCEEDS. The proceeds of the Loans shall be
used (i) for general working capital of the Borrower and the Guarantors, and
(ii) for other general corporate purposes of the Borrower and the Guarantors
(including among such general corporate purposes, the making of Investments,
subject to the limitations provided for in Section 6.10, and the making of
Capital Expenditures, subject to the limitations provided for in Section 6.4).
SECTION 3.11. LITIGATION. Except as set forth on Schedule 3.11,
there are no unstayed actions, suits or proceedings pending or, to the
knowledge of the Borrower or the Guarantors, threatened against or affecting
the Borrower or the Guarantors or any of its properties, before any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, which is reasonably likely to be determined adversely to
the Borrower or the Guarantors and, if so determined adversely to the Borrower
or the Guarantors would have a material adverse effect on the financial
condition, business, properties, prospects, operations or assets of the
Borrower and the Guarantors, taken as a whole.
SECTION 4. CONDITIONS OF LENDING
SECTION 4.1. CONDITIONS PRECEDENT TO INITIAL LOANS AND INITIAL
LETTERS OF CREDIT. The obligation of the Banks to make the initial Loans or the
Fronting Bank to issue the initial Letter of Credit, whichever may occur first,
is subject to the following conditions precedent:
48
(a) Supporting Documents. The Agent shall have
received for each of the Borrower and the Guarantors:
(i) a copy of such entity's certificate of
incorporation, as amended, certified as of a recent date
by the Secretary of State of the state of its
incorporation;
(ii) a certificate of such Secretary of
State, dated as of a recent date, as to the good
standing of and payment of taxes by, that entity and as
to the charter documents on file in the office of such
Secretary of State; and
(iii) a certificate of the Secretary or an
Assistant Secretary of that entity dated the date of
the initial Loans or the initial Letter of Credit
hereunder, whichever first occurs, and certifying (A)
that attached thereto is a true and complete copy of
the by-laws of that entity as in effect on the date of
such certification, (B) that attached thereto is a true
and complete copy of resolutions adopted by the Board
of Directors of that entity authorizing the Borrowings
and Letter of Credit extensions hereunder, the
execution, delivery and performance in accordance with
their respective terms of this Agreement, the Notes to
be executed by it, the Loan Documents and any other
documents required or contemplated hereunder or
thereunder and the granting of the security interest in
the Letter of Credit Account contemplated hereby, (C)
that the certificate of incorporation of that entity
has not been amended since the date of the last
amendment thereto indicated on the certificate of the
Secretary of State furnished pursuant to clause (i)
above and (D) as to the incumbency and specimen
signature of each officer of that entity executing this
Agreement, the Notes to be executed by it and the Loan
Documents or any other document delivered by it in
connection herewith or therewith (such certificate to
contain a certification by another officer of that
entity as to the incumbency and signature of the
49
officer signing the certificate referred to in this
clause (iii)).
(b) Notes. On or before the date of the initial Loans
or the issuance of the initial Letter of Credit hereunder,
whichever first occurs, the Agent shall have received Notes
executed on behalf of the Borrower, dated the Closing Date, payable
to the order of each of the Banks, in an amount equal to such
Bank's Commitment.
(c) Interim Order. At the time of the making of the
initial Loans or at the time of the issuance of the initial Letter
of Credit, whichever first occurs, the Agent and the Banks shall
have received a certified copy of an order of the Bankruptcy Court
in substantially the form of Exhibit B-1 (the "Interim Order")
approving the Loan Documents and granting the Superpriority Claim
status and priming and other Liens described in Section 2.22 which
(i) shall have been entered upon an application or motion of the
Borrower reasonably satisfactory in form and substance to the
Agent, on such prior notice to such parties (including the Existing
Lenders) as may in each case be reasonably satisfactory to the
Agent, (ii) shall be in full force and effect, and (iii) shall not
have been stayed, reversed, modified or amended in any respect
without the prior written consent of the Agent and the Required
Banks and, if the Interim Order is the subject of a pending appeal
in any respect, neither the making of such Loans nor the issuance
of such Letter of Credit nor the performance by the Borrower or any
of the Guarantors of any of their respective obligations hereunder
or under the Loan Documents or under any other instrument or
agreement referred to herein shall be the subject of a presently
effective stay pending appeal.
(d) Cash Collateral Order. At the time of the making of
the initial Loans or at the time of the issuance of the initial
Letter of Credit, whichever first occurs, the Agent and the Banks
shall have received a certified copy of an order or orders of the
Bankruptcy Court in form and substance reasonably satisfactory to
the Agent (the "Cash Collateral Order") pursuant to Section
363(c)(2)(B) of the Bankruptcy Code (which Cash Collateral Order
may be embodied in the
50
Interim Order and the Final Order) authorizing the use by the
Borrower and the Guarantors of any cash collateral in which any
Existing Lender under any Existing Agreement may have an interest
and providing for (x) the making of current interest payments and
letter of credit fees at the applicable non-default rate or rates
provided for pursuant to the Existing Agreements, (y) a priority
claim as contemplated by Section 507(b) of the Bankruptcy Code, and
(z) a Lien on substantially all of the assets of the Borrower and
the Guarantors having a priority junior to the priming and other
Liens granted in favor of the Agent and the Banks hereunder and
under the other Loan Documents which Cash Collateral Order shall be
in full force and effect and shall not have been stayed, reversed,
modified or amended in any respect without the prior written
consent of the Agent and the Required Banks.
(e) Security and Pledge Agreement. The Borrower and
each of the Guarantors shall have duly executed and delivered to
the Agent a Security and Pledge Agreement in substantially the form
of Exhibit C (the "Security and Pledge Agreement").
(f) Plan of Reorganization. The Agent shall have
received evidence satisfactory to it that the Borrower has filed
with the Bankruptcy Court (i) a plan of reorganization for itself
and the Guarantors satisfactory in form and substance to the Agent
(the "Proposed Plan") providing for, among other things, (x) the
investment by ▇▇▇▇▇▇▇ Group Incorporated or an affiliate thereof
("▇▇▇▇▇▇▇ Group") in the Borrower of $365,000,000 in cash or, at
the option of ▇▇▇▇▇▇▇ Group, an equal value of the shares of class
A common stock of Toy Biz or a combination of the foregoing, (y)
the acquisition by the Borrower or one or more subsidiaries of the
Borrower of 100% of the outstanding capital stock of Toy Biz and
(z) only such impairment of the rights of and claims held by the
Existing Lenders as may be satisfactory to the Agent, and (ii) a
disclosure statement with respect to the Proposed Plan pursuant to
the provisions of the Bankruptcy Code satisfactory in form and
substance to the Agent and the Bankruptcy Court shall have
scheduled a hearing on the approval of such disclosure statement.
51
(g) Financing Commitment. The Agent shall have received
evidence satisfactory to it that certain financial institutions
have executed and delivered to the Borrower commitments to provide,
at the time of the consummation of the Proposed Plan and such
acquisition of the outstanding capital stock of Toy Biz, the
aggregate principal amount of no less than $160,000,000 as a credit
facility for Toy Biz, such commitments to reflect such terms and
conditions (and be only subject to such qualifications) as may be
satisfactory to the Agent.
(h) First Day Orders. All of the "first day orders"
entered by the Bankruptcy Court at the time of the
commencement of the Cases shall be reasonably satisfactory in
form and substance to the Agent.
(i) Opinion of Counsel to the Borrower. The Agent and
the Banks shall have received the favorable written opinion of
counsel to the Borrower and the Guarantors reasonably acceptable to
the Agent, dated the date of the initial Loans or the issuance of
the initial Letter of Credit, whichever first occurs, substantially
in the form of Exhibit D.
(j) Payment of Fees. The Borrower shall have paid to
the Agent the then unpaid balance of all accrued and unpaid Fees
owed under and pursuant to this Agreement and the letter referred
to in Section 2.18.
(k) Corporate and Judicial Proceedings. All corporate
and judicial proceedings and all instruments and agreements in
connection with the transactions among the Borrower, the Guarantors,
the Agent and the Banks contemplated by this Agreement shall be
reasonably satisfactory in form and substance to the Agent, and the
Agent shall have received all information and copies of all
documents and papers, including records of corporate and judicial
proceedings, which the Agent may have reasonably requested in
connection therewith, such documents and papers where appropriate
to be certified by proper corporate, governmental or judicial
authorities.
(l) Information. The Agent shall have received such
information (financial or otherwise) as may be reasonably
requested by the Agent.
52
(m) Compliance with Laws. The Borrower and the
Guarantors shall have granted the Agent access to and the right to
inspect all reports, audits and other internal information of the
Borrower and the Guarantors relating to environmental matters, and
any third party verification of certain matters relating to
compliance with environmental laws and regulations requested by the
Agent, and the Agent shall be reasonably satisfied that the
Borrower and the Guarantors are in compliance in all material
respects with all applicable environmental laws and regulations and
be satisfied with the costs of maintaining such compliance.
(n) Closing Documents. The Agent shall have received
all documents required by this Agreement reasonably
satisfactory in form and substance to the Agent.
SECTION 4.2. CONDITIONS PRECEDENT TO EACH LOAN AND EACH LETTER OF
CREDIT. The obligation of the Banks to make each Loan and of the Fronting Bank
to issue each Letter of Credit, including the initial Loan and the initial
Letter of Credit, is subject to the following conditions precedent:
(a) Notice. The Agent shall have received a notice with
respect to such borrowing or issuance, as the case may be, as
required by Section 2.
(b) Representations and Warranties. All representations
and warranties contained in this Agreement and the other Loan
Documents or otherwise made in writing in connection herewith or
therewith shall be true and correct in all material respects on and
as of the date of each Borrowing or the issuance of each Letter of
Credit hereunder with the same effect as if made on and as of such
date except to the extent such representations and warranties
expressly relate to an earlier date.
(c) No Default. On the date of each Borrowing hereunder
or the issuance of each Letter of Credit, the Borrower and
Guarantors shall be in compliance with all of the terms and
provisions set forth herein to be observed or performed and no
Event of Default or event which upon notice
53
or lapse of time or both would constitute an Event of Default
shall have occurred and be continuing.
(d) Orders. The Interim Order shall be in full force
and effect and shall not have been stayed, reversed, modified or
amended in any respect without the prior written consent of the
Agent and the Required Banks, provided, that at the time of the
making of any Loan or the issuance of any Letter of Credit the
aggregate amount of either of which, when added to the sum of the
principal amount of all Loans then outstanding and the Letter of
Credit Outstandings, would exceed the amount thereof which was
authorized by the Bankruptcy Court in the Interim Order
(collectively, the "Additional Credit"), the Agent and each of the
Banks shall have received a certified copy of an order of the
Bankruptcy Court in substantially the form of Exhibit B-2 (the
"Final Order"), which, in any event, shall have been entered by the
Bankruptcy Court no later than 30 days after the entry of the
Interim Order, and at the time of the extension of any Additional
Credit the Final Order shall be in full force and effect, and shall
not have been stayed, reversed, modified or amended in any respect
without the prior written consent of the Agent and the Required
Banks; and if either the Interim Order or the Final Order is the
subject of a pending appeal in any respect, neither the making of
the Loans nor the issuance of any Letter of Credit nor the
performance by the Borrower or any Guarantor of any of their
respective obligations under any of the Loan Documents shall be the
subject of a presently effective stay pending appeal.
(e) Cash Collateral Order. The Cash Collateral Order
shall be in full force and effect and shall not have been stayed,
reversed, modified or amended in any respect without the prior
written consent of the Agent and the Required Banks.
(f) Payment of Fees. The Borrower shall have paid to
the Agent the then unpaid balance of all accrued and unpaid Fees
then payable under and pursuant to this Agreement and the letter
referred to in Section 2.18.
The request by the Borrower for, and the acceptance by the Borrower of, each
extension of credit hereunder shall be deemed to
54
be a representation and warranty by the Borrower that the conditions
specified in this Section have been satisfied or waived at that time.
SECTION 5. AFFIRMATIVE COVENANTS
From the date hereof and for so long as any Commitment shall be in
effect or any Letter of Credit shall remain outstanding (in a face amount in
excess of the amount of cash then held in the Letter of Credit Account, or the
face amount of back-to-back letters of credit delivered, in each case pursuant
to Section 2.2(b)), or any amount shall remain outstanding under any Note or
unpaid under this Agreement, the Borrower and each of the Guarantors agree
that, unless the Required Banks shall otherwise consent in writing, it will:
SECTION 5.1. FINANCIAL STATEMENTS, REPORTS, ETC. In the case
of the Borrower and the Guarantors, deliver to the Agent and each
of the Banks:
(a) within 90 days after the end of each fiscal year,
the Borrower's consolidated and consolidating balance sheet and
related statement of income and cash flows, showing the financial
condition of the Borrower and the Guarantors on a consolidated and
consolidating basis as of the close of such fiscal year and the
results of their respective operations during such year, the
consolidated statement of the Borrower to be audited for the
Borrower and its consolidated Subsidiaries by independent public
accountants of recognized national standing acceptable to the
Required Banks and accompanied by an opinion of such accountants
(which shall not be qualified in any material respect other than
with respect to the Cases), and the consolidating statement to be
subjected to the auditing procedures applied to such audit of the
consolidated statement, and to be certified by a Financial Officer
of the Borrower to the effect that such consolidated financial
statements fairly present the financial condition and results of
operations of the Borrower and the Guarantors on a consolidated
basis in accordance with GAAP consistently applied;
55
(b) within 45 days after the end of each of the first
three fiscal quarters and within 90 days after the end of the fourth
fiscal quarter of each fiscal year, the Borrower's consolidated and
consolidating balance sheets and related statements of income and
cash flows, showing the financial condition of the Borrower and the
Guarantors on a consolidated and consolidating basis as of the
close of such fiscal quarter and the results of their operations
during such fiscal quarter and the then elapsed portion of the
fiscal year, each certified by a Financial Officer as fairly
presenting the financial condition and results of operations of the
Borrower and the Guarantors on a consolidated and consolidating
basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments;
(c) concurrently with any delivery of financial
statements under (a) or (b) above, (i) a certificate of a Financial
Officer, certifying such statements (A) certifying that no Event of
Default or event which upon notice or lapse of time or both would
constitute an Event of Default has occurred, or, if such an Event
of Default or event has occurred, specifying the nature and extent
thereof and any corrective action taken or proposed to be taken
with respect thereto and (B) setting forth computations in
reasonable detail satisfactory to the Agent demonstrating
compliance with the provisions of Sections 6.4, 6.5 and 6.10 and
(ii) a certificate (which certificate may be limited to accounting
matters and disclaim responsibility for legal interpretations) of
such accountants accompanying the audited consolidated financial
statements delivered under (a) above certifying that, in the course
of the regular audit of the business of the Borrower and its
consolidated Subsidiaries, such accountants have obtained no
knowledge that an Event of Default has occurred and is continuing,
or if, in the opinion of such accountants, an Event of Default has
occurred and is continuing, specifying the nature thereof and all
relevant facts with respect thereto;
(d) within thirty days of the end of each fiscal month
(commencing with the fiscal month ending on or about December 31,
1996), the unaudited monthly cash flow reports of the Borrower and
the Guarantors on a consolidated basis and as of the close of such
fiscal month and the results of their
56
operations during such fiscal period and the then elapsed portion
of the fiscal year, all certified by a Financial Officer as fairly
presenting the results of operations of the Borrower and the
Guarantors on a consolidated basis, subject to normal year-end
audit adjustments;
(e) as soon as possible, and in any event within 45
days of the Closing Date, a pro forma statement of the Borrower's
and Guarantors' financial condition as of the Filing Date in detail
reasonably satisfactory to the Agent;
(f) promptly after the same become publicly available,
copies of all periodic and other reports, proxy statements and
other materials filed by it with the Securities and Exchange
Commission, or any governmental authority succeeding to any of or
all the functions of said commission, or with any national
securities exchange, as the case may be;
(g) as soon as available and in any event (A) within 30
days after the Borrower or any of its ERISA Affiliates knows or has
reason to know that any Termination Event described in clause (i)
of the definition of Termination Event with respect to any Single
Employer Plan of the Borrower or such ERISA Affiliate has occurred
and (B) within 10 days after the Borrower or any of its ERISA
Affiliates knows or has reason to know that any other Termination
Event with respect to any such Plan has occurred, a statement of a
Financial Officer of the Borrower describing such Termination Event
and the action, if any, which the Borrower or such ERISA Affiliate
proposes to take with respect thereto;
(h) promptly and in any event within 10 days after
receipt thereof by the Borrower or any of its ERISA Affiliates from
the PBGC copies of each notice received by the Borrower or any such
ERISA Affiliate of the PBGC's intention to terminate any Single
Employer Plan of the Borrower or such ERISA Affiliate or to have a
trustee appointed to administer any such Plan;
(i) promptly and in any event within 30 days after the
filing thereof with the Internal Revenue Service, copies of each
Schedule B (Actuarial Information) to the annual report
57
(Form 5500 Series) with respect to each Single Employer Plan of the
Borrower or any of its ERISA Affiliates;
(j) within 10 days after notice is given or required to
be given to the PBGC under Section 302(f)(4)(A) of ERISA of the
failure of the Borrower or any of its ERISA Affiliates to make
timely payments to a Plan, a copy of any such notice filed and a
statement of a Financial Officer of the Borrower setting forth (A)
sufficient information necessary to determine the amount of the
lien under Section 302(f)(3), (B) the reason for the failure to
make the required payments and (C) the action, if any, which the
Borrower or any of its ERISA Affiliates proposed to take with
respect thereto;
(k) promptly and in any event within 10 days after
receipt thereof by the Borrower or any ERISA Affiliate from a
Multiemployer Plan sponsor, a copy of each notice received by the
Borrower or any ERISA Affiliate concerning (A) the imposition of
Withdrawal Liability by a Multiemployer Plan, (B) the determination
that a Multiemployer Plan is, or is expected to be, in
reorganization within the meaning of Title IV of ERISA, (C) the
termination of a Multiemployer Plan within the meaning of Title IV
of ERISA, or (D) the amount of liability incurred, or which may be
incurred, by the Borrower or any ERISA Affiliate in connection with
any event described in clause (A), (B) or (C) above;
(l) promptly, from time to time, such other information
regarding the operations, business affairs and financial condition
of the Borrower or any Guarantor, or compliance with the terms of
any material loan or financing agreements as the Agent or any Bank
may reasonably request; and
(m) furnish to the Agent and its counsel promptly after
the same is available, copies of all pleadings, motions,
applications, judicial information, financial information and other
documents filed by or on behalf of the Borrower or any of the
Guarantors with the Bankruptcy Court in the Cases, or distributed
by or on behalf of the Borrower or any of the Guarantors to any
official committee appointed in the Cases.
58
SECTION 5.2. CORPORATE EXISTENCE. Do or cause to be done and cause
each of the Guarantors to do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its corporate existence,
material rights, licenses, permits and franchises and comply in all material
respects with all laws and regulations applicable to it.
SECTION 5.3. INSURANCE. (a) Keep its insurable properties insured
at all times, against such risks, including fire and other risks insured
against by extended coverage, as is customary with companies of the same or
similar size in the same or similar businesses; and maintain in full force and
effect public liability insurance against claims for personal injury or death
or property damage occurring upon, in, about or in connection with the use of
any properties owned, occupied or controlled by the Borrower or any Guarantor,
as the case may be, in such amounts and with such deductibles as are customary
with companies of the same or similar size in the same or similar businesses
and in the same geographic area; and (b) maintain such other insurance or self
insurance as may be required by law.
SECTION 5.4. OBLIGATIONS AND TAXES. With respect to the Borrower
and each Guarantor, pay all its material obligations arising after the Filing
Date promptly and in accordance with their terms and pay and discharge promptly
all material taxes, assess ments and governmental charges or levies imposed
upon it or upon its income or profits or in respect of its property arising
after the Filing Date, before the same shall become in default, as well as all
material lawful claims for labor, materials and supplies or otherwise arising
after the Filing Date which, if unpaid, might become a Lien or charge upon such
properties or any part thereof; provided, however, that the Borrower and each
Guarantor shall not be required to pay and discharge or to cause to be paid and
discharged any such tax, assessment, charge, levy or claim so long as the
validity or amount thereof shall be contested in good faith by appropriate
proceedings (if the Borrower and the Guarantors shall have set aside on their
books adequate reserves therefor).
SECTION 5.5. NOTICE OF EVENT OF DEFAULT, ETC. Promptly give
to the Agent notice in writing of any Event of Default or the
59
occurrence of any event or circumstance which with the passage of time or
giving of notice or both would constitute an Event of Default.
SECTION 5.6. ACCESS TO BOOKS AND RECORDS. Maintain or cause to be
maintained at all times true and complete books and records of the financial
operations of the Borrower and the Guarantors; and provide the Agent and its
representatives access to all such books and records during regular business
hours, in order that the Agent may examine and make abstracts from such books,
accounts, records and other papers for the purpose of verifying the accuracy of
the various reports delivered by the Borrower or the Guarantors to the Agent or
the Banks pursuant to this Agreement or for otherwise ascertaining compliance
with this Agreement; and at any reasonable time and from time to time during
regular business hours, upon reasonable notice, permit the Agent and any agents
or repre sentatives (including, without limitation, appraisers) thereof to
visit the properties of the Borrower and the Guarantors and to conduct
examinations of and to monitor the Collateral held by the Agent.
SECTION 5.7. BUSINESS PLAN. As soon as practicable, furnish to the
Agent all material modifications to the Borrower's business plan heretofore
furnished to the Agent, and make its senior officers available to discuss the
same with the Agent upon the Agent's reasonable request.
SECTION 5.8. MAINTENANCE OF CONCENTRATION ACCOUNT. The Borrower and
the Guarantors shall continue to maintain with the Agent the account or
accounts currently used by the Borrower and the Guarantors as their principal
concentration and disbursement account for day-to-day operations conducted by
the Borrower and the Guarantors.
SECTION 6. NEGATIVE COVENANTS
From the date hereof and for so long as any Commitment shall be in
effect or any Letter of Credit shall remain outstanding (in a face amount in
excess of the amount of cash then held in the Letter of Credit Account, or the
face amount of back-to-back letters of credit delivered, in each case pursuant
to Section
60
2.2(b)) or any amount shall remain outstanding under any Note or unpaid under
this Agreement, unless the Required Banks shall otherwise consent in writing,
the Borrower and each of the Guarantors will not (and will not, subject to the
last paragraph of this Section 6, apply to the Bankruptcy Court for authority
to):
SECTION 6.1. LIENS. Incur, create, assume or suffer to exist any
Lien on any asset of the Borrower or the Guarantors, now owned or hereafter
acquired by the Borrower or any of such Guarantors, other than (i) Liens which
were existing on the Filing Date as reflected on Schedule 3.6 hereto and Liens
granted pursuant to the Existing Agreements; (ii) Liens in favor of the
Existing Lenders as adequate protection granted pursuant to the Orders or the
Cash Collateral Order, which Liens are junior to the Liens contemplated hereby
in favor of the Agent and the Banks, provided that the Interim Order and the
Final Order provide that the holder of such junior Liens shall not be permitted
to take any action to foreclose with respect to, or otherwise realize upon,
such junior Liens so long as any amounts shall remain outstanding hereunder or
under the Notes or any Commitment shall be in effect; (iii) Permitted Liens;
and (iv) Liens in favor of the Agent and the Banks.
SECTION 6.2. MERGER, ETC. Consolidate or merge with or into
another Person.
SECTION 6.3. INDEBTEDNESS. Contract, create, incur, assume or
suffer to exist any Indebtedness, except for (i) Indebtedness under this
Agreement, (ii) Indebtedness incurred prior to the Filing Date (including
existing Capitalized Leases), (iii) Indebtedness incurred subsequent to the
Filing Date secured by purchase money Liens (exclusive of Capitalized Leases)
in an aggregate amount not to exceed $5,000,000, (iv) Capitalized Leases to the
extent permitted by Section 6.4 and (v) Indebtedness arising from Investments
among the Borrower and the Guarantors that are permitted hereunder.
SECTION 6.4. CAPITAL EXPENDITURES. Make Capital Expenditures (x)
for purposes other than for restaurant development by Marvel Mania, a joint
venture in which Marvel
61
Restaurant Venture Corp. is a general partner, in an aggregate amount in
excess (when added to loans or investments for such purposes permitted by
Section 6.10(iv)) of (i) $8,135,000 during the quarter ending on March 31,
1997 or (ii) $13,279,000 on a cumulative basis during the two quarters ending
June 30, 1997 or (y) for purposes that are in connection with such restaurant
development, in an aggregate amount in excess (when added to loans or
investments for such purpose permitted by Section 6.10(iv)) of (i) $4,765,000
during the quarter ending on March 31, 1997 or (ii) $8,721,000 on a cumulative
basis during the two quarters ending June 30, 1997, provided that if the
Borrower shall have formed a Subsidiary to carry on a portion of the
activities of the Marvel Studios business segment (which Subsidiary shall not
be a Guarantor), not more than $1,000,000 of the amount provided for in clause
(x) above may be expended for such Subsidiary.
SECTION 6.5. EBITDA. Permit cumulative EBITDA for each period
beginning on February 1, 1997 and ending on the dates listed below
to be less than the amount specified opposite such period:
Period Ending EBITDA
------------- ------
February 28, 1997 ($ 8,500,000)
March 31, 1997 ($12,000,000)
April 30, 1997 ($15,500,000)
May 31, 1997 ($19,000,000)
SECTION 6.6. GUARANTEES AND OTHER LIABILITIES. Purchase or
repurchase (or agree, contingently or otherwise, so to do) the Indebtedness of,
or assume, guarantee (directly or indirectly or by an instrument having the
effect of assuring another's payment or performance of any obligation or
capability of so doing, or otherwise), endorse or otherwise become liable,
directly or indirectly, in connection with the obligations, stock or dividends
of any Person, except (i) for any guaranty of Indebtedness or other obligations
of any Borrower or Guarantor if the guarantor could have incurred such
Indebtedness or obligations under this Agreement, (ii) by endorsement of
negotiable instruments for deposit or collection in the ordinary course of
business, (iii) guarantees by the Borrower of leases of restaurant premises
entered into by Marvel Mania in an aggregate amount not in excess of $5,000,000
and (iv) as otherwise permitted under this Agreement.
62
SECTION 6.7. CHAPTER 11 CLAIMS. Incur, create, assume, suffer to
exist or permit any other Super-Priority Claim which is pari passu with or
senior to the claims of the Agent and the Banks against the Borrower and the
Guarantors hereunder, except for the Carve-Out.
SECTION 6.8. DIVIDENDS; CAPITAL STOCK. Declare or pay, directly or
indirectly, any dividends or make any other distribution or payment, whether
in cash, property, securities or a combination thereof, with respect to
(whether by reduction of capital or otherwise) any shares of capital stock (or
any options, warrants, rights or other equity securities or agreements relating
to any capital stock), or set apart any sum for the aforesaid purposes,
provided that any Guarantor may pay dividends to the Borrower or to any other
Guarantor.
SECTION 6.9. TRANSACTIONS WITH AFFILIATES. Sell or transfer any
property or assets to, or otherwise engage in any other transactions with, any
of its Affiliates (other than the Borrower and the Guarantors), other than in
the ordinary course of business at prices and on terms and conditions not less
favorable to the Borrower or such Guarantor than could be obtained on an arm's-
length basis from unrelated third parties or except as disclosed in the
Disclosure Statement.
SECTION 6.10. INVESTMENTS, LOANS AND ADVANCES. Purchase, hold or
acquire any capital stock, evidences of indebtedness or other securities of,
make or permit to exist any loans or advances to, or make or permit to exist
any investment in, any other Person (all of the foregoing, "Investments"),
except for (i) ownership by the Borrower or the Guarantors of the capital stock
of each of the Subsidiaries listed on Schedule 3.5, (ii) Permitted Investments,
(iii) advances and loans among the Borrower and the Guarantors in the ordinary
course, (iv) Investments by the Borrower or any Guarantor for the purposes
described in the last sentence of the definition of the term "Capital
Expenditures" in an aggregate amount not to exceed, when added to amounts
expended for such purposes as permitted therein, the maximum amounts permitted
pursuant to Section 6.4 and (v) loans to Panini S.p.A. in an
63
aggregate amount not to exceed U.S. $10,000,000 at any one time
outstanding.
SECTION 6.11. DISPOSITION OF ASSETS. Sell or otherwise dispose of
any assets (including, without limitation, the capital stock of any Subsidiary)
except for (i) sales of inventory, fixtures and equipment in the ordinary
course of business, (ii) sales or other dispositions of assets having a fair
market value not exceeding $7,500,000 in the aggregate and (iii) sales or other
dispositions of assets among the Borrower and the Guarantors.
SECTION 6.12. NATURE OF BUSINESS. Modify or alter in any material
manner the nature and type of its business as conducted at or prior to the
Filing Date or the manner in which such business is conducted (except as
required by the Bankruptcy Code). Notwithstanding anything to the contrary
contained in this Section 6, the Borrower and the Guarantors may apply to the
Bankruptcy Court for authority to enter into transactions in connection with
the consummation of the Proposed Plan described in Section 4.1(f) and, upon
entry of an order authorizing such transactions, execute and deliver agreements
evidencing (or other instruments in connection with) such transactions,
provided that such transactions are not consummated prior to the Consummation
Date.
SECTION 7. EVENTS OF DEFAULT
SECTION 7.1. EVENTS OF DEFAULT. In the case of the happening
of any of the following events and the continuance thereof beyond
the applicable period of grace if any (each, an "Event of
Default"):
(a) any material representation or warranty made by the
Borrower or any Guarantor in this Agreement or in any Loan Document or in
connection with this Agreement or with the execution and delivery of the Notes
or the credit extensions hereunder or any material statement or representation
made in any report, financial statement, certificate or other document
furnished by the Borrower or any Guarantors to the Banks under or in connection
with this Agreement, shall prove to have been false or misleading in any
material respect when made or delivered; or
64
(b) default shall be made in the payment of any (i)
Fees or interest on the Loans when due, and such default shall continue
unremedied for more than two (2) Business Days or (ii) principal of the
Loans or other amounts payable by the Borrower hereunder (including, without
limitation, reimbursement obligations or cash collateralization in respect of
Letters of Credit), when and as the same shall become due and payable, whether
at the due date thereof (including the Prepayment Date) or at a date fixed
for prepayment thereof or by acceleration thereof or otherwise; or
(c) default shall be made by the Borrower or any
Guarantor in the due observance or performance of any covenant,
condition or agreement contained in Section 6 hereof; or
(d) default shall be made by the Borrower or any
Guarantor in the due observance or performance of any other covenant, condition
or agreement to be observed or performed pursuant to the terms of this
Agreement or any of the other Loan Documents and such default shall continue
unremedied for more than ten (10) days; or
(e) any of the Cases shall be dismissed or converted to
a case under Chapter 7 of the Bankruptcy Code; a trustee under Chapter 7 or
Chapter 11 of the Bankruptcy Code shall be appointed in any of the Cases and
the order appointing such trustee shall not be reversed or vacated within 30
days after the entry thereof; or an application shall be filed by the Borrower
or any Guarantor for the approval of any other Super-Priority Claim (other than
the Carve-Out) in the Cases which is pari passu with or senior to the claims of
the Agent and the Banks against the Borrower or any Guarantor hereunder, or
there shall arise or be granted any such pari passu or senior Super-Priority
Claim; or
(f) the Bankruptcy Court shall enter an order or orders
granting relief from the automatic stay applicable under Section 362 of the
Bankruptcy Code to the holder or holders of any security
interest to permit foreclosure (or the granting of a deed in lieu of
foreclosure or the like) on any assets of the Borrower or any of the Guarantors
which have a value in excess of $500,000 in the aggregate; or
65
(g) the Borrower or any of the Guarantors shall file
a motion or application with the Bankruptcy Court seeking to reject, pursuant
to Section 365 of the Bankruptcy Code, the exclusive license for the use of
Marvel characters heretofore granted to Toy Biz;
(h) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ or, in the event of his
incompetence or death, his estate, heirs, executor, administrator, committee or
other personal representative and his (or any of their) Affiliates shall cease
to own, directly or indirectly, or shall no longer have the power to vote,
directly or indirectly, at least 51% of the outstanding voting stock of the
Borrower; or
(i) the Borrower or any of the Guarantors shall file a
motion or application with the Bankruptcy Court seeking to reject, pursuant to
Section 365 of the Bankruptcy Code, the exclusive license for the use of Marvel
characters heretofore granted to Toy Biz; or
(j) any material provision of any Loan Document shall,
for any reason, cease to be valid and binding on the Borrower or
any of the Guarantors, or the Borrower or any of the Guarantors
shall so assert in any pleading filed in any court; or
(k) an order of the Bankruptcy Court shall be entered
in any of the Cases of the Borrower or any of the Guarantors appointing an
examiner with enlarged powers relating to the operation of the business (powers
beyond those set forth in Section 1106(a)(3) and (4) of the Bankruptcy Code)
under Section 1106(b) of the Bankruptcy Code and such order shall not be
reversed or vacated within 30 days after the entry thereof; or
(l) an order of the Bankruptcy Court shall be entered
(i) reversing, amending, supplementing, staying for a period in excess of 10
days, vacating or otherwise modifying either of the Orders (without the prior
written consent of the Agent and the Required Banks) or (ii) terminating the
use of cash collateral by the Borrower or the Guarantors pursuant to the Cash
Collateral Order; or
(m) any judgment or order as to a post-petition
liability or debt for the payment of money in excess of $1,000,000
66
shall be rendered against the Borrower or any of the Guarantors and
the enforcement thereof shall not have been stayed; or
(n) any non-monetary judgment or order with respect to
a post-petition event shall be rendered against the Borrower or any of the
Guarantors which does or would reasonably be expected to (i) cause a material
adverse change in the financial condition, business, prospects, operations or
assets of the Borrower and the Guarantors taken as a whole on a consolidated
basis, (ii) have a material adverse effect on the ability of the Borrower or
any of the Guarantors to perform their respective obligations under any Loan
Document, or (iii) have a material adverse effect on the rights and remedies of
the Agent or any Bank under any Loan Document, and there shall be any period of
10 consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect; or
(o) the Borrower or the Guarantors shall make any Pre-
Petition Payments other than as permitted under the Orders or the Cash
Collateral Order and other than in respect of pre-petition trade payables to
the extent permitted by the Bankruptcy Court; or
(p) any Termination Event described in clauses (iii) or
(iv) of the definition of such term shall have occurred and shall continue
unremedied for more than 10 days and the sum (determined as of the date of
occurrence of such Termination Event) of the Insufficiency of the Plan in
respect of which such Termination Event shall have occurred and be continuing
and the Insufficiency of any and all other Plans with respect to which such a
Termination Event (described in such clauses (iii) or (iv)) shall have occurred
and then exist is equal to or greater than $5,000,000; or
(q) (i) the Borrower or any ERISA Affiliate thereof
shall have been notified by the sponsor of a Multiemployer Plan that it has
incurred Withdrawal Liability to such Multiemployer Plan, (ii) the Borrower or
such ERISA Affiliate does not have reasonable grounds to contest such
Withdrawal Liability and is not in fact contesting such Withdrawal Liability in
a timely and appropriate manner, and (iii) the amount of such Withdrawal
Liability specified in such notice, when aggregated with all other amounts
required to be paid to Multiemployer Plans in connection
67
with Withdrawal Liabilities (determined as of the date of such notification),
exceeds $5,000,000 allocable to post-petition obligations or requires payments
exceeding $500,000 per annum in excess of the annual payments made with respect
to such MultiEmployer Plans by the Borrower or such ERISA Affiliate for the
plan year immediately preceding the plan year in which such notification is
received; or
(r) the Borrower or any ERISA Affiliate thereof shall
have been notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or is being terminated, within the
meaning of Title IV of ERISA, if as a result of such reorganization or
termination the aggregate annual contributions of the Borrower and its ERISA
Affiliates to all Multiemployer Plans that are then in reorganization or being
terminated have been or will be increased over the amounts contributed to such
Multiemployer Plans for the plan years that include the date hereof by an
amount exceeding $5,000,000; or
(s) the Borrower or any ERISA Affiliate shall have
committed a failure described in Section 302(f)(1) of ERISA (other than the
failure to make any contribution accrued and unpaid as of the Filing Date) and
the amount determined under Section 302(f)(3) of ERISA is equal to or greater
than $5,000,000; or
(t) it shall be determined (whether by the Bankruptcy
Court or by any other judicial or administrative forum) that the Borrower or
any Guarantor is liable for the payment of claims arising out of any failure to
comply (or to have complied) with applicable environmental laws or regulations
the payment of which will have a material adverse effect on the financial
condition, business, properties, operations or assets of the Borrower or the
Guarantors, taken as a whole;
then, and in every such event and at any time thereafter during the continuance
of such event, and without further order of or application to the Bankruptcy
Court, the Agent may, and at the request of the Required Banks, shall, by
notice to the Borrower (with a copy to counsel for the Official Creditors'
Committee appointed in the Cases and to the United States Trustee for the
District of Delaware), take one or more of the following actions, at the same
or different times (provided, that with respect to clause (iv) below and the
enforcement of Liens or other remedies
68
with respect to the Collateral under clause (v) below, the Agent shall provide
the Borrower (with a copy to counsel for the Official Creditors' Committee
appointed in the Cases and to the United States Trustee for the District of
Delaware) with five (5) Business Days' written notice prior to taking the
action contemplated thereby and provided, further, that upon receipt of notice
referred to in the immediately preceding clause with respect to the accounts
referred to in clause (iv) below, the Borrower may continue to make ordinary
course disbursements from such accounts (other than the Letter of Credit
Account) but may not withdraw or disburse any other amounts from such
accounts): (i) terminate forthwith the Total Commitment; (ii) declare the Loans
then outstanding to be forthwith due and payable, whereupon the principal of
the Loans together with accrued interest thereon and any unpaid accrued Fees
and all other liabilities of the Borrower accrued hereunder and under any other
Loan Document, shall become forthwith due and payable, without presentment,
demand, protest or any other notice of any kind, all of which are hereby
expressly waived by the Borrower and the Guarantors, anything contained herein
or in any other Loan Document to the contrary notwithstanding; (iii) require
the Borrower and the Guarantors upon demand to forthwith deposit in the Letter
of Credit Account cash in an amount equal to the sum of 105% of the then
outstanding Letters of Credit and to the extent the Borrower and the Guarantors
shall fail to furnish such funds as demanded by the Agent, the Agent shall be
authorized to debit the accounts of the Borrower and the Guarantors maintained
with the Agent in such amount; (iv) set-off amounts in the Letter of Credit
Account or any other accounts maintained with the Agent and apply such amounts
to the obligations of the Borrower and the Guarantors hereunder and in the
other Loan Documents; and (v) exercise any and all remedies under the Loan
Documents and under applicable law available to the Agent and the Banks.
SECTION 8. THE AGENT
SECTION 8.1. ADMINISTRATION BY AGENT. The general administration of
the Loan Documents shall be by the Agent. Each Bank hereby irrevocably
authorizes the Agent, at its discretion, to take or refrain from taking such
actions as agent on its behalf and to exercise or refrain from exercising such
powers under the Loan Documents and the Notes as are delegated by the terms
hereof
69
or thereof, as appropriate, together with all powers reasonably incidental
thereto (including the release of Collateral in connection with any
transaction that is expressly permitted by the Loan Documents). The Agent
shall have no duties or responsibilities except as set forth in this
Agreement and the remaining Loan Documents.
SECTION 8.2. ADVANCES AND PAYMENTS
(a) On the date of each Loan, the Agent shall be
authorized (but not obligated) to advance, for the account of each of the
Banks, the amount of the Loan to be made by it in accordance with its
Commitment hereunder. Should the Agent do so, each of the Banks agrees
forthwith to reimburse the Agent in immediately available funds for the amount
so advanced on its behalf by the Agent, together with interest at the Federal
Funds Effective Rate if not so reimbursed on the date due from and including
such date but not including the date of reimbursement.
(b) Any amounts received by the Agent in connection
with this Agreement or the Notes (other than amounts to which the Agent is
entitled pursuant to Sections 2.18, 8.6, 10.5 and 10.6), the application of
which is not otherwise provided for in this Agreement shall be applied, first,
in accordance with each Bank's Commitment Percentage to pay accrued but unpaid
Commitment Fees or Letter of Credit Fees, and second, in accordance with each
Bank's Commitment Percentage to pay accrued but unpaid interest and the
principal balance outstanding on each Note and all unreimbursed Letter of
Credit drawings. All amounts to be paid to a Bank by the Agent shall be
credited to that Bank, after collection by the Agent, in immediately available
funds either by wire transfer or deposit in that Bank's correspondent account
with the Agent, as such Bank and the Agent shall from time to time agree.
SECTION 8.3. SHARING OF SETOFFS. Each Bank agrees that if it shall,
through the exercise of a right of banker's lien, setoff or counterclaim
against the Borrower, including, but not limited to, a secured claim under
Section 506 of the Bankruptcy Code or other security or interest arising from,
or in lieu of, such secured claim and received by such Bank under any
applicable bankruptcy, insolvency or other similar law, or otherwise, obtain
payment in respect of its Loans as a result of which the unpaid
70
portion of its Loans is proportionately less than the unpaid portion of
the Loans of any other Bank (a) it shall promptly purchase at par (and shall
be deemed to have thereupon purchased) from such other Bank a participation in
the Loans of such other Bank, so that the aggregate unpaid principal amount of
each Bank's Loans and its participation in Loans of the other Banks shall be
in the same proportion to the aggregate unpaid principal amount of all Loans
then outstanding as the principal amount of its Loans prior to the obtaining
of such payment was to the principal amount of all Loans outstanding prior to
the obtaining of such payment and (b) such other adjustments shall be made
from time to time as shall be equitable to ensure that the Banks share such
payment pro-rata, provided that if any such non-pro-rata payment is thereafter
recovered or otherwise set aside such purchase of participations shall be
rescinded (without interest). The Borrower expressly consents to the foregoing
arrangements and agrees that any Bank holding (or deemed to be holding) a
participation in a Loan may exercise any and all rights of banker's lien,
setoff (in each case, subject to the same notice requirements as pertain to
clause (iv) of the remedial provisions of Section 7.1) or counterclaim with
respect to any and all moneys owing by the Borrower to such Bank as fully as
if such Bank held a Note and was the original obligee thereon, in the amount
of such participation.
SECTION 8.4. AGREEMENT OF REQUIRED BANKS. Upon any occasion
requiring or permitting an approval, consent, waiver, election or other action
on the part of the Required Banks, action shall be taken by the Agent for and
on behalf or for the benefit of all Banks upon the direction of the Required
Banks, and any such action shall be binding on all Banks. No amendment,
modification, consent, or waiver shall be effective except in accordance with
the provisions of Section 10.10.
SECTION 8.5. LIABILITY OF AGENT.
(a) The Agent when acting on behalf of the Banks, may
execute any of its respective duties under this Agreement by or through any of
its respective officers, agents, and employees, and neither the Agent nor its
directors, officers, agents, employees or Affiliates shall be liable to the
Banks or any of them for any action taken or omitted to be taken in good faith,
or be respon-
71
sible to the Banks or to any of them for the consequences of any oversight or
error of judgment, or for any loss, unless the same shall happen through its
gross negligence or willful misconduct. The Agent and its respective directors,
officers, agents, employees and Affiliates shall in no event be liable to the
Banks or to any of them for any action taken or omitted to be taken by them
pursuant to instructions received by them from the Required Banks or in
reliance upon the advice of counsel selected by it. Without limiting the
foregoing, neither the Agent, nor any of its respective directors, officers,
employees, agents or Affiliates shall be responsible to any Bank for the due
execution, validity, genuineness, effectiveness, sufficiency, or enforceability
of, or for any statement, warranty, or representation in, this Agreement, any
Loan Document or any related agreement, document or order, or shall be required
to ascertain or to make any inquiry concerning the performance or observance by
the Borrower of any of the terms, conditions, covenants, or agreements of this
Agreement or any of the Loan Documents.
(b) Neither the Agent nor any of its respective
directors, officers, employees, agents or Affiliates shall have any
responsibility to the Borrower or the Guarantors on account of the failure or
delay in performance or breach by any Bank or by the Borrower or the Guarantors
of any of their respective obligations under this Agreement or the Notes or any
of the Loan Documents or in connection herewith or therewith.
(c) The Agent, in its capacity as Agent hereunder,
shall be entitled to rely on any communication, instrument, or document
reasonably believed by such person to be genuine or correct and to have been
signed or sent by a person or persons believed by such person to be the proper
person or persons, and such person shall be entitled to rely on advice of legal
counsel, independent public accountants, and other professional advisers and
experts selected by such person.
SECTION 8.6. REIMBURSEMENT AND INDEMNIFICATION. Each Bank agrees
(i) to reimburse (x) the Agent for such Bank's Commitment Percentage of any
expenses and fees incurred for the benefit of the Banks under this Agreement,
the Notes and any of the Loan Docu ments, including, without limitation,
counsel fees and compensation of agents and employees paid for services
rendered on behalf of the Banks, and any other expense incurred in connection
72
with the operations or enforcement thereof not reimbursed by the Borrower or
the Guarantors and (y) the Agent for such Bank's Commitment Percentage of any
expenses of the Agent incurred for the benefit of the Banks that the Borrower
has agreed to reimburse pursuant to Section 10.5 and has failed to so reimburse
and (ii) to indemnify and hold harmless the Agent and any of its directors,
officers, employees, agents or Affiliates, on demand, in the amount of its
proportionate share, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses, or
disbursements of any kind or nature whatsoever which may be imposed on,
incurred by, or asserted against it or any of them in any way relating to or
arising out of this Agreement, the Notes or any of the Loan Documents or any
action taken or omitted by it or any of them under this Agreement, the Notes or
any of the Loan Documents to the extent not reimbursed by the Borrower or the
Guarantors (except such as shall result from their respective gross negligence
or willful misconduct).
SECTION 8.7. RIGHTS OF AGENT. It is understood and agreed that
Chase shall have the same rights and powers hereunder (including the right to
give such instructions) as the other Banks and may exercise such rights and
powers, as well as its rights and powers under other agreements and instruments
to which it is or may be party, and engage in other transactions with the
Borrower or any Guarantor, as though it were not the Agent of the Banks under
this Agreement.
SECTION 8.8. INDEPENDENT BANKS. Each Bank acknowledges that it has
decided to enter into this Agreement and to make the Loans hereunder based on
its own analysis of the transactions contemplated hereby and of the
creditworthiness of the Borrower and the Guarantors and agrees that the Agent
shall bear no responsibility therefor.
SECTION 8.9. NOTICE OF TRANSFER. The Agent may deem and treat a
Bank party to this Agreement as the owner of such Bank's portion of the Loans
for all purposes, unless and until a written notice of the assignment or
transfer thereof executed by such Bank shall have been received by the Agent.
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SECTION 8.10. SUCCESSOR AGENT. The Agent may resign at any time by giving
written notice thereof to the Banks and the Borrower. Upon any such
resignation, the Required Banks shall have the right to appoint a successor
Agent, which shall be reasonably satisfactory to the Borrower. If no successor
Agent shall have been so appointed by the Required Banks and shall have
accepted such appointment, within 30 days after the retiring Agent's giving of
notice of resignation, the retiring Agent may, on behalf of the Banks, appoint
a successor Agent, which shall be a commercial bank organized under the laws
of the United States of America or of any State thereof and having a combined
capital and surplus of a least $100,000,000, which shall be reasonably
satisfactory to the Borrower. Upon the acceptance of any appointment as Agent
here under by a successor Agent, such successor Agent shall thereupon succeed
to and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Section 8 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement.
SECTION 9. GUARANTY
SECTION 9.1. GUARANTY
(a) Each of the Guarantors unconditionally and
irrevocably guarantees the due and punctual payment and performance by the
Borrower of the Obligations. Each of the Guarantors further agrees that the
Obligations may be extended or renewed, in whole or in part, without notice to
or further assent from it, and it will remain bound upon this guaranty
notwithstanding any extension or renewal of any of the Obligations. The
Obligations of the Guarantors shall be joint and several.
(b) Each of the Guarantors waives presentation to,
demand for payment from and protest to the Borrower or any other Guarantor, and
also waives notice of protest for nonpayment. The Obligations of the Guarantors
hereunder shall not be affected by (i) the failure of the Agent or a Bank to
assert any claim or demand or to enforce any right or remedy against the
Borrower or
74
any other Guarantor under the provisions of this Agreement or any other Loan
Document or otherwise; (ii) any extension or renewal of any provision hereof or
thereof; (iii) any rescission, waiver, compromise, acceleration, amendment or
modification of any of the terms or provisions of any of the Loan Documents;
(iv) the release, exchange, waiver or foreclosure of any security held by the
Agent for the Obligations or any of them; (v) the failure of the Agent or a
Bank to exercise any right or remedy against any other Guarantor; or (vi) the
release or substitution of any Guarantor or any other Guarantor.
(c) Each of the Guarantors further agrees that this
guaranty constitutes a guaranty of performance and of payment when due and not
just of collection, and waives any right to require that any resort be had by
the Agent or a Bank to any security held for payment of the Obligations or to
any balance of any deposit, account or credit on the books of the Agent or a
Bank in favor of the Borrower or any other Guarantor, or to any other Person.
(d) Each of the Guarantors hereby waives any defense
that it might have based on a failure to remain informed of the financial
condition of the Borrower and of any other Guarantor and any circumstances
affecting the ability of the Borrower to perform under this Agreement.
(e) Each Guarantor's guaranty shall not be affected by
the genuineness, validity, regularity or enforceability of the Obligations, the
Notes or any other instrument evidencing any Obli gations, or by the existence,
validity, enforceability, perfection, or extent of any collateral therefor or
by any other circumstance relating to the Obligations which might otherwise
constitute a defense to this Guaranty. Neither of the Agent, nor any of the
Banks makes any representation or warranty in respect to any such circumstances
or shall have any duty or responsibility whatsoever to any Guarantor in respect
of the management and maintenance of the Obligations.
(f) Subject to the provisions of Section 7.1, upon the
Obligations becoming due and payable (by acceleration or otherwise), the Banks
shall be entitled to immediate payment of such Obligations by the Guarantors
upon written demand by the Agent, without further application to or order of
the Bankruptcy Court.
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SECTION 9.2. NO IMPAIRMENT OF GUARANTY. The obligations of the
Guarantors hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason, including, without limitation, any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to any defense or set-off, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality or unenforceability of the
Obligations. Without limiting the generality of the foregoing, the obligations
of the Guarantors hereunder shall not be discharged or impaired or otherwise
affected by the failure of the Agent or a Bank to assert any claim or demand or
to enforce any remedy under this Agreement or any other agreement, by any
waiver or modification of any provision thereof, by any default, failure or
delay, willful or otherwise, in the performance of the Obligations, or by any
other act or thing or omission or delay to do any other act or thing which may
or might in any manner or to any extent vary the risk of the Guarantors or
would otherwise operate as a discharge of the Guarantors as a matter of law,
unless and until the Obligations are paid in full.
SECTION 9.3. SUBROGATION. Upon payment by any Guarantor of any sums
to the Agent or a Bank hereunder, all rights of such Guarantor against the
Borrower arising as a result thereof by way of right of subrogation or
otherwise, shall in all respects be subordinate and junior in right of payment
to the prior final and indefeasible payment in full of all the Obligations. If
any amount shall be paid to such Guarantor for the account of the Borrower,
such amount shall be held in trust for the benefit of the Agent and the Banks
and shall forthwith be paid to the Agent and the Banks to be credited and
applied to the Obligations, whether matured or unmatured.
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SECTION 10. MISCELLANEOUS
SECTION 10.1. NOTICES. Notices and other communications provided
for herein shall be in writing (including telegraphic, telex, facsimile or
cable communication) and shall be mailed, telegraphed, telexed, transmitted,
cabled or delivered to the Borrower or any Guarantor at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Chief Financial Officer and to a Bank or
the Agent to it at its address set forth on the signature pages of this
Agreement, or such other address as such party may from time to time designate
by giving written notice to the other parties hereunder. All notices and other
communications given to any party hereto in accordance with the provisions of
this Agreement shall be deemed to have been given on the fifth Business Day
after the date when sent by registered or certified mail, postage prepaid,
return receipt requested, if by mail; or when delivered to the telegraph
company, charges prepaid, if by telegram; or when receipt is acknowledged, if
by any telegraphic communications or facsimile equipment of the sender; in each
case addressed to such party as provided in this Section 10.1 or in accordance
with the latest unrevoked written direction from such party; provided, however,
that in the case of notices to the Agent notices pursuant to the preceding
sentence and pursuant to Section 2 shall be effective only when received by the
Agent.
SECTION 10.2. SURVIVAL OF AGREEMENT, REPRESENTATIONS AND
WARRANTIES, ETC. All warranties, representations and covenants made by the
Borrower or any Guarantor herein or in any certificate or other instrument
delivered by it or on its behalf in connection with this Agreement shall be
considered to have been relied upon by the Banks and shall survive the making
of the Loans herein contemplated and the issuance and delivery to the Banks of
the Notes regardless of any investigation made by any Bank or on its behalf and
shall continue in full force and effect so long as any amount due or to become
due hereunder is outstanding and unpaid and so long as the Commitments have not
been terminated. All statements in any such certificate or other instrument
shall constitute representations and warranties by the Borrower and the
Guarantors hereunder with respect to the Borrower.
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SECTION 10.3. SUCCESSORS AND ASSIGNS.
(a) This Agreement shall be binding upon and inure to
the benefit of the Borrower, the Agent and the Banks and their respective
successors and assigns. Neither the Borrower nor any of the Guarantors may
assign or transfer any of their rights or obligations hereunder without the
prior written consent of all of the Banks. Each Bank may sell participations to
any Person in all or part of any Loan, or all or part of its Note or
Commitment, in which event, without limiting the foregoing, the provisions of
Section 2.14 shall inure to the benefit of each purchaser of a participation
(provided that such participant shall look solely to the seller of such
participation for such benefits and the Borrower's and the Guarantors'
liability, if any, under Sections 2.14 and 2.17 shall not be increased as a
result of the sale of any such participation) and the PRO RATA treatment of
payments, as described in Section 2.16, shall be determined as if such Bank had
not sold such participation. In the event any Bank shall sell any
participation, such Bank shall retain the sole right and responsibility to
enforce the obligations of the Borrower and each of the Guarantors relating to
the Loans, including, without limitation, the right to approve any amendment,
modification or waiver of any provision of this Agreement (provided that such
Bank may grant its participant the right to consent to such Bank's execution of
amendments, modifications or waivers which (i) reduce any Fees payable
hereunder to the Banks, (ii) reduce the amount of any scheduled principal
payment on any Loan or reduce the principal amount of any Loan or the rate of
interest payable hereunder or (iii) extend the maturity of the Borrower's
obligations hereunder). The sale of any such participation shall not alter the
rights and obligations of the Bank selling such participation hereunder with
respect to the Borrower.
(b) Each Bank may assign to one or more Banks or
Eligible Assignees all or a portion of its interests, rights and obligations
under this Agreement (including, without limitation, all or a portion of its
Commitment and the same portion of the related Loans at the time owing to it
and the related Note held by it), PROVIDED, HOWEVER, that (i) other than in the
case of an assignment to a Person at least 50% owned by the assignor Bank, or
by a common parent of both, or to another Bank, the Agent and the Fronting Bank
must give their respective prior written consent, which consent will not be
unreasonably withheld, (ii) the
78
aggregate amount of the Commitment and/or Loans of the assigning Bank
subject to each such assignment (determined as of the date the Assignment and
Acceptance with respect to such assignment is delivered to the Agent) shall,
unless otherwise agreed to in writing by the Borrower and the Agent, in no
event be less than $5,000,000 (or $1,000,000 in the case of an assignment
between Banks) and (iii) the parties to each such assignment shall execute and
deliver to the Agent, for its acceptance and recording in the Register (as
defined below), an Assignment and Acceptance with blanks appropriately
completed, together with any Note subject to such assignment and a processing
and recordation fee of $3,000 (for which the Borrower shall have no
liability). Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in each Assignment and Acceptance, which
effective date shall be within ten Business Days after the execution thereof
(unless otherwise agreed to in writing by the Agent), (A) the assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Bank hereunder
and (B) the Bank thereunder shall, to the extent provided in such Assignment
and Acceptance, be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance covering all or the remaining portion
of an assigning Bank's rights and obligations under this Agreement, such Bank
shall cease to be a party hereto).
(c) By executing and delivering an Assignment and
Acceptance, the Bank assignor thereunder and the assignee thereunder confirm to
and agree with each other and the other parties hereto as follows: (i) other
than the representation and warranty that it is the legal and beneficial owner
of the interest being assigned thereby free and clear of any adverse claim,
such Bank assignor makes 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 any of the other Loan Documents
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of this Agreement or any of the other Loan Documents; (ii) such Bank
assignor makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Borrower or any Guarantor or the
performance or observance by the Borrower or any Guarantor of any of its
obligations under this Agreement or any of the other Loan Documents or any
other
79
instrument or document furnished pursuant hereto; (iii) such assignee
confirms that it has received a copy of this Agreement and the other Loan
Documents, together with copies of the financial statements referred to in
Section 3.4 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance upon the Agent, such Bank assignor or any other Bank 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) such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
as are delegated to the Agent by the terms thereto, together with such powers
as are reasonably incidental hereof; and (vi) such assignee agrees that it will
perform in accordance with their terms all obligations that by the terms of
this Agreement are required to be performed by it as a Bank.
(d) The Agent shall maintain at its office a copy of
each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Banks and the Commitments of, and
principal amount of the Loans owing to, each Bank from time to time (the
"Register"). The entries in the Register shall be conclusive, in the absence of
manifest error, and the Borrower, the Guarantors, the Agent and the Banks shall
treat each Person the name of which is recorded in the Register as a Bank
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by the Borrower or any Bank at any reasonable time and from time
to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance
executed by an assigning Bank and the assignee thereunder together with any
Note subject to such assignment and the fee payable in respect thereto, the
Agent shall, if such Assignment and Acceptance has been completed with blanks
appropriately filled, (i) accept such Assignment and Acceptance, (ii) record
the information contained therein in the Register and (iii) give prompt written
notice thereof to the Borrower (together with a copy thereof). Within five
Business Days after receipt of notice, the Borrower, at its own expense, shall
execute and deliver to the Agent in exchange for the surrendered Note a new
Note to the order
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of such assignee in an amount equal to the Commitment and/or Loans
assumed by it pursuant to such Assignment and Acceptance and, if the assigning
Bank has retained Commitments and/or Loans hereunder, a new Note to the order
of the assigning Bank in an amount equal to the Commitment and/or Loans
retained by it hereunder. Such new Notes shall be in an aggregate principal
amount equal to the aggregate principal amount of such surrendered Note, shall
be dated the effective date of such Assignment and Acceptance and shall
otherwise be in substantially the form of the surrendered Note. Thereafter,
such surrendered Note shall be marked canceled and returned to the Borrower.
(f) Any Bank may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
10.3, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrower or any of the Guarantors
furnished to such Bank by or on behalf of the Borrower or any of the
Guarantors; provided that prior to any such disclosure, each such assignee or
participant or proposed assignee or participant shall agree in writing to be
bound by the provisions of Section 10.4.
(g) The Borrower hereby agrees, to the extent set forth
in the Commitment Letter, to actively assist and cooperate with the Agent in
the Agent's efforts to sell participations herein (as described in Section
10.3(a)) and assign to one or more Banks or Eligible Assignees a portion of its
interests, rights and obligations under this Agreement (as set forth in Section
10.3(b)).
SECTION 10.4. CONFIDENTIALITY. Each Bank agrees to keep any
information delivered or made available by the Borrower or any of the
Guarantors to it confidential from anyone other than persons employed or
retained by such Bank who are or are expected to become engaged in evaluating,
approving, structuring or administering the Loans; PROVIDED that nothing herein
shall prevent any Bank from disclosing such information (i) to any other Bank,
(ii) to any other person if reasonably incidental to the administration of the
Loans, (iii) upon the order of any court or administrative agency, (iv) upon
the request or demand of any regulatory agency or authority, (v) which has been
publicly disclosed other than as a result of a disclosure by the Agent or any
Bank which is not permitted by this Agreement, (vi) in
81
connection with any litigation to which the Agent, any Bank, or their
respective Affiliates may be a party to the extent reasonably required, (vii)
to the extent reasonably required in connection with the exercise of any
remedy hereunder, (viii) to such Bank's legal counsel and independent
auditors, and (ix) to any actual or proposed participant or assignee of all or
part of its rights hereunder subject to the proviso in Section 10.3(f).
SECTION 10.5. EXPENSES. Whether or not the transactions hereby
contemplated shall be consummated, the Borrower and the Guarantors agree to
pay all reasonable out-of-pocket expenses incurred by the Agent (including but
not limited to the reasonable fees and disbursements of ▇▇▇▇▇▇, ▇▇▇▇▇ &
▇▇▇▇▇▇▇ LLP, special counsel for the Agent, any other counsel that the Agent
shall retain and any internal or third-party consultants and auditors advising
the Agent and Chase Securities Inc.) in connection with the preparation,
execution, delivery and administration of this Agreement, the Notes and the
other Loan Documents, the making of the Loans and the issuance of the Letters
of Credit, the syndication of the transactions contemplated hereby, the
reasonable and customary costs, fees and expenses of the Agent in connection
with its monthly and other periodic field audits, monitoring of assets and
publicity expenses, and, following the occurrence of an Event of Default, all
reasonable out-of-pocket expenses incurred by the Banks and the Agent in the
enforcement or protection of the rights of any one or more of the Banks or the
Agent in connection with this Agreement, the Notes or the other Loan
Documents, including but not limited to the reasonable fees and disbursements
of any counsel for the Banks or the Agent. Such payments shall be made on the
date of the Interim Order and thereafter on demand upon delivery of a
statement setting forth such costs and expenses. Whether or not the
transactions hereby contemplated shall be consummated, the Borrower and the
Guarantors agree to reimburse the Agent and Chase Securities Inc. for the
expenses set forth in the Commitment Letter and the reimbursement provisions
thereof are hereby incorporated herein by reference. The obligations of the
Borrower and the Guarantors under this Section shall survive the termination
of this Agreement and/or the payment of the Loans.
SECTION 10.6. INDEMNITY. The Borrower and each of the
Guarantors agree to indemnify and hold harmless the Agent, Chase
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Securities Inc. and the Banks and their directors, officers, employees, agents
and Affiliates (each an "Indemnified Party") from and against any and all
expenses, losses, claims, damages and liabilities incurred by such Indemnified
Party arising out of claims made by any Person in any way relating to the
transactions contemplated hereby, but excluding therefrom all expenses, losses,
claims, damages, and liabilities arising out of or resulting from the gross
negligence or willful misconduct of such Indemnified Party.
SECTION 10.7. CHOICE OF LAW. THIS AGREEMENT, THE NOTES AND
THE OTHER LOAN DOCUMENTS SHALL IN ALL RESPECTS BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN SUCH
STATE.
SECTION 10.8. NO WAIVER. No failure on the part of the Agent or any
of the Banks to exercise, and no delay in exercising, any right, power or
remedy hereunder or under the Notes or any of the other Loan Documents shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by law.
SECTION 10.9. EXTENSION OF MATURITY. Should any payment of
principal of or interest on the Notes or any other amount due hereunder become
due and payable on a day other than a Business Day, the maturity thereof shall
be extended to the next succeeding Business Day and, in the case of principal,
interest shall be payable thereon at the rate herein specified during such
extension.
SECTION 10.10. AMENDMENTS, ETC.
(a) No modification, amendment or waiver of any
provision of this Agreement, the Notes or the Security and Pledge Agreement,
and no consent to any departure by the Borrower or any Guarantor therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Required Banks, and
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then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given; provided, however, that no such
modification or amendment shall without the written consent of the Bank
affected thereby (x) increase the Commitment of a Bank (it being understood
that a waiver of an Event of Default shall not constitute an increase in the
Commitment of a Bank), or (y) reduce the principal amount of any Loan or the
rate of interest payable thereon, or extend any date for the payment of
interest hereunder or reduce any Fees payable hereunder or extend the final
maturity of the Borrower's obligations hereunder; and, provided, further, that
no such modification or amendment shall without the written consent of (A) all
of the Banks (i) amend or modify any provision of this Agreement which
provides for the unanimous consent or approval of the Banks, (ii) amend this
Section 10.10 or the definition of Required Banks or (iii) amend or modify the
Super-Priority Claim status of the Banks contemplated by Section 2.22 or (B)
Banks holding Loans representing at least 85% of the aggregate principal
amount of the Loans outstanding, or if no Loans are outstanding, Banks having
Commitments representing at least 85% of the Total Commitment, release all or
any substantial portion of the Liens granted to the Agent hereunder, under the
Orders or under any other Loan Document, or release any Guarantor. No such
amendment or modification may adversely affect the rights and obligations of
the Agent or any Fronting Bank hereunder without its prior written consent. No
notice to or demand on the Borrower or any Guarantor shall entitle the
Borrower or any Guarantor to any other or further notice or demand in the
same, similar or other circumstances. Each holder of a Note shall be bound by
any amendment, modification, waiver or consent authorized as provided herein,
whether or not a Note shall have been marked to indicate such amendment,
modification, waiver or consent and any consent by a Bank, or any holder of a
Note, shall bind any Person subsequently acquiring a Note, whether or not a
Note is so marked. No amendment to this Agreement shall be effective against
the Borrower or any Guarantor unless signed by the Borrower or such Guarantor,
as the case may be.
(b) Notwithstanding anything to the contrary contained
in Section 10.10(a), in the event that the Borrower requests that this
Agreement be modified or amended in a manner which would require the unanimous
consent of all of the Banks (or the consent described in clause (B) of the
first sentence of Section 10.10(a))
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and such modification or amendment is agreed to by the Supermajority Banks (as
hereinafter defined), then with the consent of the Borrower and the
Super-majority Banks, the Borrower and the Super-majority Banks shall be
permitted to amend the Agreement without the consent of the Bank or Banks which
did not agree to the modification or amendment requested by the Borrower (such
Bank or Banks, collectively the "Minority Banks") to provide for (w) the
termination of the Commitment of each of the Minority Banks, (x) the addition
to this Agreement of one or more other financial institutions (each of which
shall be an Eligible Assignee), or an increase in the Commitment of one or more
of the Super-majority Banks, so that the Total Commitment after giving effect
to such amendment shall be in the same amount as the Total Commitment
immediately before giving effect to such amendment, (y) if any Loans are
outstanding at the time of such amendment, the making of such additional Loans
by such new financial institutions or Super-majority Bank or Banks, as the
case may be, as may be necessary to repay in full the outstanding Loans of the
Minority Banks immediately before giving effect to such amendment and (z) such
other modifications to this Agreement as may be appropriate. As used herein,
the term "Super-majority Banks" shall mean, at any time, Banks, including
Chase, holding Loans representing at least 66-2/3% of the aggregate principal
amount of the Loans outstanding, or if no Loans are outstanding, Banks having
Commitments representing at least 66-2/3% of the Total Commitment.
SECTION 10.11. SEVERABILITY. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
SECTION 10.12. HEADINGS. Section headings used herein are
for convenience only and are not to affect the construction of or
be taken into consideration in interpreting this Agreement.
SECTION 10.13. EXECUTION IN COUNTERPARTS. This Agreement may
be executed in any number of counterparts, each of which shall
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constitute an original, but all of which taken together shall
constitute one and the same instrument.
SECTION 10.14. PRIOR AGREEMENTS. This Agreement represents the
entire agreement of the parties with regard to the subject matter hereof and
the terms of any letters and other documentation entered into between the
Borrower or a Guarantor and any Bank or the Agent prior to the execution of
this Agreement which relate to Loans to be made hereunder shall be replaced by
the terms of this Agreement (except as otherwise expressly provided herein with
respect to the Commitment Letter and the Fee Letter, including without
limitation the Borrower's agreement to actively assist the Agent in the
syndication of the transactions contemplated hereby referred to in Section
10.3(g) and including also the provisions of Section 2.21).
SECTION 10.15. FURTHER ASSURANCES. Whenever and so often as
reasonably requested by the Agent, the Borrower and the Guarantors will
promptly execute and deliver or cause to be executed and delivered all such
other and further instruments, documents or assurances, and promptly do or
cause to be done all such other and further things as may be necessary and
reasonably required in order to further and more fully vest in the Agent all
rights, interests, powers, benefits, privileges and advantages conferred or
intended to be conferred by this Agreement and the other Loan Documents.
SECTION 10.16. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE
GUARANTORS, THE AGENT AND EACH BANK HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the day and the year first written.
MARVEL ENTERTAINMENT GROUP, INC.
By:/s/ ▇▇▇▇▇▇ ▇▇▇▇
--------------------------------
Title: Vice President and Secretary
GUARANTORS:
THE ▇▇▇▇▇ ▇▇▇▇▇ COMPANY
By:/s/ ▇▇▇▇▇▇ ▇▇▇▇
--------------------------------
Title: Vice President and Secretary
FLEER CORP.
By:/s/ ▇▇▇▇▇▇ ▇▇▇▇
--------------------------------
Title: Vice President and Secretary
▇▇▇▇▇ ▇. ▇▇▇▇▇ CORP.
By:/s/ ▇▇▇▇▇▇ ▇▇▇▇
--------------------------------
Title: Vice President and Secretary
HEROES WORLD DISTRIBUTION, INC.
By:/s/ ▇▇▇▇▇▇ ▇▇▇▇
--------------------------------
Title: Vice President and Secretary
MALIBU COMICS ENTERTAINMENT, INC.
87
By:/s/ ▇▇▇▇▇▇ ▇▇▇▇
--------------------------------
Title: Vice President and Secretary
MARVEL CHARACTERS, INC.
By:/s/ ▇▇▇▇▇▇ ▇▇▇▇
--------------------------------
Title: Vice President and Secretary
MARVEL DIRECT MARKETING INC.
By:/s/ ▇▇▇▇▇▇ ▇▇▇▇
--------------------------------
Title: Vice President and Secretary
SKYBOX INTERNATIONAL INC.
By:/s/ ▇▇▇▇▇▇ ▇▇▇▇
--------------------------------
Title: Vice President and Secretary
THE CHASE MANHATTAN BANK,
INDIVIDUALLY AND AS AGENT
By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Title: Vice President
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
88
ANNEX A TO
REVOLVING CREDIT AND
GUARANTY AGREEMENT
ANNEX A
TO
REVOLVING CREDIT AND GUARANTY AGREEMENT
DATED AS OF DECEMBER 27, 1996
-----------------------------
Commitment Commitment
Bank Amount Percentage
---- -------------- ------------
The Chase Manhattan Bank $100,000,000 100.00%
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