Exhibit 10.1
================================================================================
CREDIT AGREEMENT
by and between
GLOBAL ENTERTAINMENT CORPORATION, a Nevada corporation
WESTERN PROFESSIONAL HOCKEY LEAGUE INC., a Texas corporation
INTERNATIONAL COLISEUMS COMPANY, INC., a Nevada corporation
GLOBAL ENTERTAINMENT MARKETING SYSTEMS, a Nevada corporation
CRAGAR INDUSTRIES, INC., a Delaware corporation
GLOBAL ENTERTAINMENT TICKETING, a Nevada corporation
and
COMERICA BANK, a Michigan corporation
Dated as of
November __, 2004
Table of Contents
Page
ARTICLE 1 DEFINITION OF TERMS ............................................... 1
1.1 Definitions ........................................................ 1
1.2 References ......................................................... 6
1.3 Accounting Terms ................................................... 6
ARTICLE 2 THE RLC ........................................................... 6
2.1 RLC Commitment ..................................................... 6
2.2 Revolving Line of Credit ........................................... 7
2.3 RLC Payments ....................................................... 7
2.4 Excess Balance Payment ............................................. 8
2.5 Conditions ......................................................... 8
2.6 Other RLC Advances by Lender ....................................... 8
2.7 Assignment ......................................................... 8
ARTICLE 3 PAYMENTS, FEES AND PREPAYMENTS PROVISIONS ......................... 8
3.1 Payments ........................................................... 8
3.2 Fees ............................................................... 9
3.3 Computations ....................................................... 9
3.4 Maintenance of Accounts ............................................ 9
3.5 Prepayments ........................................................ 9
ARTICLE 4 SECURITY .......................................................... 10
4.1 Security ........................................................... 10
4.2 Security Documents ................................................. 10
ARTICLE 5 CONDITIONS PRECEDENT .............................................. 10
5.1 Initial or Any Subsequent Advance .................................. 10
5.2 No Event of Default ................................................ 12
5.3 No Material Adverse Effect ......................................... 12
5.4 Representations and Warranties ..................................... 12
5.5 Opinion of Counsel ................................................. 12
ARTICLE 6 REPRESENTATIONS AND WARRANTIES .................................... 12
6.1 Recitals ........................................................... 12
6.2 Organization and Good Standing ..................................... 12
-i-
Table of Contents
(continued)
6.3 Authorization and Power ............................................ 13
6.4 Security Documents ................................................. 13
6.5 No Conflicts or Consents ........................................... 13
6.6 No Litigation ...................................................... 13
6.7 Financial Condition ................................................ 13
6.8 Taxes .............................................................. 13
6.9 No Stock Purchase .................................................. 14
6.10 Advances .......................................................... 14
6.11 Enforceable Obligations ........................................... 14
6.12 No Default ........................................................ 14
6.13 ERISA ............................................................. 14
6.14 Compliance with Law ............................................... 14
6.15 Solvent ........................................................... 14
6.16 Investment Company Act ............................................ 15
6.17 Title ............................................................. 15
6.18 Survival of Representations, Etc .................................. 15
6.19 Environmental Matters ............................................. 15
6.20 Licenses, Tradenames .............................................. 15
6.21 License Agreements ................................................ 15
6.22 Existing Indebtedness ............................................. 15
6.23 Accuracy of Information ........................................... 15
6.24 Lien Priority ..................................................... 15
ARTICLE 7 AFFIRMATIVE COVENANTS ............................................. 16
7.2 Maintenance of Existence and Rights; Conduct of Business;
Management ......................................................... 17
7.3 Operations and Properties .......................................... 17
7.4 Authorizations and Approvals ....................................... 17
7.5 Compliance with Law ................................................ 17
7.6 Payment of Taxes and Other Indebtedness ............................ 17
7.7 Compliance Other Agreements ........................................ 17
7.8 Compliance with Credit Documents ................................... 17
-ii-
Table of Contents
(continued)
7.9 Notice of Default .................................................. 17
7.10 Other Notices ..................................................... 18
7.11 Books and Records; Access; Audits ................................. 18
7.12 ERISA Compliance .................................................. 18
7.13 Further Assurances ................................................ 18
7.14 Insurance ......................................................... 18
7.15 Deposit Accounts .................................................. 19
7.16 RLC Clean-Up ...................................................... 19
ARTICLE 8 NEGATIVE COVENANTS ................................................ 19
8.1 Existence; Business; Management .................................... 19
8.2 Amendments to Organizational Documents ............................. 20
8.3 Sale of Assets ..................................................... 20
8.4 Transfer Collateral ................................................ 20
8.5 Distributions ...................................................... 20
8.6 No Indebtedness .................................................... 20
8.7 Guaranties ......................................................... 20
8.8 Change in Ownership Control ........................................ 20
8.9 Change or Suspension of Business ................................... 20
8.10 Employee Loans .................................................... 21
8.11 Loans; Equity Investments ......................................... 21
8.12 Liens ............................................................. 21
8.13 Margin Stock ...................................................... 21
8.14 Consolidated Financial Covenants .................................. 21
8.15 No Further Assignment ............................................. 21
ARTICLE 9 EVENTS OF DEFAULT ................................................. 21
9.1 Events of Default .................................................. 21
9.2 Remedies Upon Event of Default ..................................... 24
9.3 Performance by Lender .............................................. 25
ARTICLE 10 MISCELLANEOUS .................................................... 25
10.1 Global as Agent ................................................... 25
-iii-
Table of Contents
(continued)
10.2 Right of First Refusal ............................................ 25
10.3 Modification ...................................................... 26
10.4 Waiver ............................................................ 26
10.5 Payment of Expenses ............................................... 26
10.6 Notices ........................................................... 26
10.7 Governing Law; Jurisdiction, Venue; Waiver of Jury Trial .......... 27
10.8 Invalid Provisions ................................................ 27
10.9 Binding Effect .................................................... 27
10.10 Entirety ......................................................... 27
10.11 Headings ......................................................... 28
10.12 No Third Party Beneficiary ....................................... 28
10.13 Joint Liability .................................................. 28
10.14 Time ............................................................. 28
10.15 Schedules and Exhibits Incorporated .............................. 29
10.16 Counterparts ..................................................... 29
-iv-
EXHIBITS:
Exhibit A "RLC Advance Request"
Exhibit B "Compliance Certificate"
SCHEDULES:
Schedule 6.6 "Pending Litigation"
Schedule 6.20 "Trademarks and Tradenames"
Schedule 6.21 "License Agreements"
Schedule 6.22 "Existing Indebtedness"
-v-
CREDIT AGREEMENT
THIS CREDIT AGREEMENT (together with any amendments or modifications, the
"CREDIT AGREEMENT"), is entered into as of this ___ day of November, 2004 by and
between Global Entertainment Corporation, a Nevada corporation ("GLOBAL"),
Western Professional Hockey League Inc., a Texas corporation, International
Coliseums Company, Inc., a Nevada corporation, Global Entertainment Marketing
Systems, a Nevada corporation, Cragar Industries, Inc., a Delaware corporation
("CRAGAR") and Global Entertainment Ticketing, a Nevada corporation
(collectively, the "BORROWERS" and, each individually, a "BORROWER"), and
Comerica Bank, a Michigan corporation (the "LENDER").
The Borrowers have requested that Lender extend to Borrowers a revolving
line of credit facility (the "RLC") with an agreed upon credit limit of One
Million Dollars ($1,000,000.00) to provide working capital. Lender has agreed to
extend such financial accommodations subject to the terms and provisions of this
Agreement. Therefore, in consideration of the mutual covenants and conditions
hereof, the Borrowers and Lender hereto agree as follows:
ARTICLE 1
DEFINITION OF TERMS
1.1 DEFINITIONS. For the purposes of this Credit Agreement, unless the
context otherwise requires, the following terms shall have the respective
meanings assigned to them in this Article 1 or in the Section hereof referred to
below:
"ASSIGNMENT": See Section 4.1(b) hereof.
"AUTHORIZED OFFICER" means one or more officers of any Borrower duly
authorized (and so certified to Lender by an officer of any Borrower pursuant to
a certificate of authority and incumbency from time to time satisfactory to
Lender in the exercise of Lender's reasonable discretion), acting alone, to
request RLC Advances under the provisions of this Credit Agreement and execute
and deliver documents, instruments, agreements, reports, statements and
certificates in connection herewith.
"BANKING DAY" means a day of the year on which banks are not required
or authorized to close in Detroit, Michigan and/or Phoenix, Arizona.
"BASE RATE" means the rate per annum equal to the sum of the Prime Rate
plus one percent (1%).
"BORROWER(S)": See the Preamble hereto.
"CAPITAL EXPENDITURES" means for any specified period, the sum of all
expenditures capitalized for financial statement purposes in accordance with
GAAP (whether payable in cash or other property or accrued as a liability).
"CLOSING DATE" means the date of delivery of this Credit Agreement
fully executed by each Borrower and Lender.
1
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL" means all property subject to the Security Documents.
"COMPLIANCE CERTIFICATE": See Section 7.1(c) hereof.
"CONSOLIDATED EBITDA" means Consolidated Net Income (or Loss) of the
Consolidated Entities plus the sum of all interest expense, tax expense,
depreciation and amortization expense (as deducted in computing Consolidated Net
Income (or Loss)).
"CONSOLIDATED ENTITIES" means, with respect to financial computations,
those entities required to be consolidated in the financial statements of Global
prepared in accordance with GAAP.
"CONSOLIDATED NET INCOME (OR LOSS)" means, for any period, the
consolidated net income (or loss) of the Consolidated Entities.
"CONSOLIDATED TANGIBLE NET WORTH" means as of any applicable date of
determination, the excess of (i) the consolidated net book value of all assets
of the Consolidated Entities after all appropriate deductions (including,
without limitation, reserves for doubtful receivables, obsolescence,
depreciation and amortization), over (ii) the Consolidated Total Liabilities.
For purposes of calculating the Consolidated Tangible Net Worth, the
consolidated net book value of the Consolidated Entities shall not include
intangible assets, including without limitation goodwill and any amount due and
payable from any shareholder, officer, director, employee or affiliate of any
Borrower.
"CONSOLIDATED TOTAL CURRENT ASSETS" means, as of any date, the total
consolidated assets of the Consolidated Entities that would be shown as current
assets on the consolidated balance sheet of Global.
"CONSOLIDATED TOTAL CURRENT LIABILITIES" means, as of any date, the
total consolidated liabilities of the Consolidated Entities that would be shown
as current liabilities on the balance sheet of Global.
"CONSOLIDATED TOTAL LIABILITIES" means all of the direct and
non-contingent liabilities of the Consolidated Entities.
"CONTROL" when used with respect to any Person means the power,
directly or indirectly, to direct the management policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing. Provided, however, any distribution of shares or other equity in
Global by any existing shareholder(s) to its affiliates or equity holders shall
not be considered a Change in Control.
"CONTROLLED GROUP" means, severally and collectively, the members of
the group controlling, controlled by and/or in common control of Global, within
the meaning of Section 4001(b) of ERISA.
2
"CREDIT AGREEMENT": See the Preamble hereto.
"CREDIT DOCUMENTS" means this Credit Agreement, the Note (including any
renewals, extensions and refundings thereof), the Security Documents and any
written agreements, certificates or documents (and with respect to this Credit
Agreement and such other written agreements and documents, any amendments or
supplements thereto or modifications thereof) executed or delivered pursuant to
the terms of this Credit Agreement.
"CURRENT RATIO" shall mean, as of each Quarterly End Date, the
numerical ratio of (a) the Consolidated Total Current Assets to (b) the
Consolidated Total Current Liabilities.
"DEFAULT RATE" means at any time five percentage points per annum over
the Base Rate.
"DOLLARS" and the sign "$" mean lawful currency of the United States of
America.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, together with all final and permanent regulations issued pursuant
thereto. References herein to sections and subsections of ERISA are deemed to
refer to any successor or substitute provisions therefor.
"EVENT OF DEFAULT": See SECTION 9.1 hereof.
"EXCHANGE ACT" means the Securities Exchange Act of 1934.
"FINANCIAL COVENANTS": See SECTION 8.14 hereof.
"GAAP" means those generally accepted accounting principles and
practices which are recognized as such by the American Institute of Certified
Public Accountants acting through its Accounting Principles Board or by the
Financial Accounting Standards Board or through other appropriate boards or
committees thereof and which are consistently applied for all periods after the
date hereof so as to properly reflect the financial condition, and the results
of operations and changes in the financial position, of any Borrower, except
that any accounting principle or practice required to be changed by the said
Accounting Principles Board or Financial Accounting Standards Board (or other
appropriate board or committee of the said Boards) in order to continue as a
generally accepted accounting principle or practice may be so changed.
"GOVERNMENTAL AUTHORITY" means any government (or any political
subdivision or jurisdiction thereof), court, bureau, agency or other
governmental authority having jurisdiction over any Borrower or any of its
business, operations or properties.
"INDEBTEDNESS" of a Person means each of the following (without
duplication): (a) obligations of that Person to any other Person for payment of
borrowed money, (b) capital lease obligations, (c) notes and drafts drawn or
accepted by that Person payable to any other Person, whether or not representing
obligations for borrowed money (but without duplication of indebtedness for
borrowed money), (d) any obligation for the purchase price of property the
payment of which is deferred for more than one year or evidenced by a note or
equivalent instrument, (e) guarantees of Indebtedness of third parties, and (f)
3
a recourse or nonrecourse payment obligation of any other Person that is secured
by a Lien on any property of the first Person, whether or not assumed by the
first Person, up to the fair market value (from time to time) of such property.
"INTEREST PAYMENT DATE" means the first day of each month, provided
that if any such day is not a Banking Day, then such Interest Payment Date shall
be the next succeeding Banking Day.
"LENDER": See the Preamble hereto.
"LETTER ASSIGNMENT": See Section 4.1(c) hereof.
"LIEN" means any lien, mortgage, security interest, tax lien, pledge,
encumbrance, conditional sale or title retention arrangement, or any other
interest in property designed to secure the repayment of Indebtedness whether
arising by agreement or under any statute or law, or otherwise.
"MATERIAL ADVERSE EFFECT" means any circumstance or event which (i) has
any material adverse effect upon the validity or enforceability of any Credit
Document, (ii) materially impairs the ability of Borrowers to fulfill their
obligations under the Credit Documents, or (iii) causes an Event of Default or
any event which, with notice or lapse of time or both, would reasonably be
expected to become an Event of Default.
"MAXIMUM RLC LOAN AMOUNT": See Section 2.1 hereof.
"MINIMUM 2005 NET WORTH": means $375,000 plus seventy-five percent
(75%) of the Consolidated Net Income on an annual basis, with no reductions for
losses.
"NOTE" means that certain Revolving Promissory Note of even date
herewith in the amount of the RLC, executed by Borrowers and delivered pursuant
to the terms of this Credit Agreement, together with any renewals, extensions,
modifications or replacements thereof.
"OBLIGATION" means all present and future indebtedness, obligations and
liabilities of each Borrower to Lender, and all renewals and extensions thereof,
or any part thereof, arising pursuant to this Credit Agreement or represented by
the Note, including without limitation the RLC and all interest accruing
thereon, and attorneys' fees incurred in the enforcement or collection thereof,
regardless of whether such indebtedness, obligations and liabilities are direct,
indirect, fixed, contingent, joint, several or joint and several; together with
all indebtedness, obligations and liabilities of each Borrower evidenced or
arising pursuant to any of the other Credit Documents, and all renewals and
extensions thereof, or part thereof.
"PBGC" means the Pension Benefit Guaranty Corporation, and any
successor to all or substantially all of the Pension Benefit Guaranty
Corporation's functions under ERISA.
"PERMITTED LIENS" means:
(a) Liens in Lender's favor.
4
(b) Liens for taxes and assessments not delinquent or which are
being contested in good faith by appropriate proceedings.
(c) Liens agreed to in writing by Lender prior to the Closing
Date.
(d) Liens related to leases of personal or real property made in
the ordinary course of business.
(e) Liens in respect of pledges or deposits under workers'
compensation or similar laws, carrier, warehouseman, contractor or
subcontractor, landlord, mechanics, laborer, materialman and similar
liens in the ordinary course of business if the obligations secured
thereby are not delinquent, and liens evidenced by UCC filings filed
by equipment lessors pursuant to bona fide equipment leases other than
in connection with lease transactions deemed to constitute financing
arrangements under applicable law.
"PERSON" includes an individual, a corporation, a joint venture, a
partnership, a trust, a limited liability company, an unincorporated
organization or a government or any agency or political subdivision thereof.
"PLAN" means an employee defined benefit plan or other plan maintained
by any Borrower for employees of any Borrower and covered by Title IV of ERISA,
or subject to the minimum funding standards under Section 412 of the Code.
"PRIME RATE" means the interest rate per annum publicly announced by
Lender, or its successors, as its "prime rate" as in effect from time to time.
Borrowers acknowledge that the Prime Rate is not necessarily the best or lowest
rate offered by Lender and Lender may lend to its customers at rates that are
at, above or below its Prime Rate.
"QUARTERLY END DATE" means each August 31, November 30, February 28 and
May 31.
"REGULATION U" means Regulation U promulgated by the Board of Governors
of the Federal Reserve System, 12 C.F.R. Part 221, or any other regulation
hereafter promulgated by said Board to replace the prior Regulation U and having
substantially the same function.
"REGULATORY CHANGE" means any change effective after the date of this
Credit Agreement in United States federal, state, or foreign law, regulations,
or rules or the adoption or making after such date of any interpretation,
directive, or request applying to a class of banks including Lender, of or under
any United States federal, state, or foreign law, regulation or rule (whether or
not having the force of law) by any court or governmental or monetary authority
charged with the interpretation or administration thereof.
"REPORTABLE EVENT" means any "reportable event" as described in Section
4043(b) of ERISA with respect to which the thirty (30) day notice requirement
has not been waived by the PBGC.
"RLC": See the Preamble hereto.
5
"RLC ADVANCE" means a disbursement of the proceeds of the RLC.
"RLC CLEAN-UP": See Section 7.16 hereof.
"RLC COMMITMENT" means One Million And No/100 Dollars ($1,000,000.00).
"RLC MATURITY DATE" means November __, 2005.
"RLC NON-USE FEE": See Section 3.2(a) hereof.
"SEC" means the Securities and Exchange Commission.
"SECURITY AGREEMENT": See SECTION 4.1(A) hereof.
"SECURITY DOCUMENTS": See SECTION 4.2 hereof.
1.2 REFERENCES. Capitalized terms shall be equally applicable to both the
singular and the plural forms of the terms therein defined. References to
"Credit Agreement," "this Agreement," "herein," "hereof," "hereunder," or other
like words mean this Credit Agreement as amended, supplemented, restated or
otherwise modified and in effect from time to time.
1.3 ACCOUNTING TERMS. Except as expressly provided to the contrary herein,
all accounting terms shall be interpreted and all accounting determinations
shall be made on a consolidated basis, if applicable, in accordance with GAAP.
To the extent any change in GAAP affects any computation or determination
required to be made pursuant to this Credit Agreement, such computation or
determination shall be made as if such change in GAAP had not occurred unless
the Borrowers and Lender agree in writing on an adjustment to such computation
or determination to account for such change in GAAP. Any report not prepared in
accordance with GAAP shall not satisfy Borrowers' obligation to provide such
report hereunder, unless the deviation from GAAP is occasioned by the absence of
agreement by Lender on any adjustment computations or determinations following a
change in GAAP applicable to Borrowers.
ARTICLE 2
THE RLC
2.1 RLC COMMITMENT. Subject to the conditions herein set forth, Lender
agrees to make the RLC available to or for the benefit of Borrowers, and
Borrowers may draw upon the RLC, in the manner and upon the terms and conditions
herein expressed, amounts that shall not exceed One Million and NO/100 Dollars
($1,000,000.00) (the "MAXIMUM RLC LOAN AMOUNT").
2.2 REVOLVING LINE OF CREDIT.
(a) Subject to the terms and conditions set forth in this Credit
Agreement, the RLC shall be a revolving line of credit, against which RLC
Advances may be made to Borrowers, repaid by Borrowers and new RLC Advances
made to Borrowers, as Borrowers may request, provided that (i) no RLC
Advance shall be made if an Event of Default shall be continuing, (ii) no
RLC Advance shall be made that would cause the outstanding principal
6
balance of the RLC to exceed the Maximum RLC Loan Amount, and (iii) no RLC
Advance shall be made on or after the RLC Maturity Date.
(b) The RLC shall be evidenced by the Note.
(c) RLC Advances may be made for the purpose of providing Borrowers
financing for working capital.
2.3 RLC PAYMENTS. The RLC shall bear interest and be payable to Lender upon
the following terms and conditions:
(a) Interest shall accrue on the unpaid principal of an RLC Advance at
the Base Rate.
(b) All accrued and unpaid interest shall be due and payable on each
Interest Payment Date.
(c) The entire unpaid principal balance, all accrued and unpaid
interest, and all other amounts payable under the Note shall be due and
payable in full on the RLC Maturity Date.
(d) Subject to all of the other terms and conditions hereof, RLC
Advances may be made (1) upon written request in accordance with the
procedures described below, or (2) automatically, in an amount sufficient
to cover all outstanding checks, drafts, and other debits to account
______________.
(e) Each request for an RLC Advance given pursuant to clause (1) of
Section 2.3(d) shall be substantially in the form attached hereto as
Exhibit "A" from an Authorized Officer and shall, in addition to complying
with the other requirements in this Agreement, specify the date and amount
of the requested RLC Advance.
(f) Each request for an RLC Advance shall be irrevocable and binding
upon Borrowers once the request is received by Lender. Borrowers shall
indemnify Lender against any cost, loss, or expense incurred by Lender as a
result of Borrowers' failure to fulfill, on or before the date specified in
an RLC Advance request, the conditions to such RLC Advance, including any
cost, loss, or expense incurred by reason of the liquidation of deposits or
other funds acquired by Lender to fund such RLC Advance.
(g) If any payment of interest and/or principal is not received by
Lender within fifteen (15) days after such payment is due, then in addition
to the remedies conferred upon Lender under the Credit Documents, a late
charge of five percent (5%) of the amount of the installment due and unpaid
will be added to the delinquent amount to compensate Lender for the expense
of handling the delinquency for any such payment, regardless of any notice
or cure period.
(h) Upon the occurrence of an Event of Default and at any time when
such Event of Default is continuing, the unpaid principal balance, all
accrued and unpaid interest and all other amounts payable hereunder shall
bear interest at the Default Rate.
7
2.4 EXCESS BALANCE PAYMENT. There shall be due and payable from Borrowers
to Lender, and Borrowers shall immediately repay to Lender any amount by which
the outstanding principal balance of the RLC exceeds the Maximum RLC Loan
Amount.
2.5 CONDITIONS. Lender shall have no obligation to make any RLC Advance
unless and until all of the conditions and requirements of this Credit Agreement
are fully satisfied. However, Lender in its sole and absolute discretion may
elect to make one or more RLC Advances prior to full satisfaction of one or more
such conditions and/or requirements. Notwithstanding that such an RLC Advance or
RLC Advances are made, such unsatisfied conditions and/or requirements shall not
be waived or released thereby. Borrowers shall be and continue to be obligated
to fully satisfy such conditions and requirements, and Lender, at any time, in
Lender's sole and absolute discretion, may stop making RLC Advances until all
conditions and requirements are fully satisfied.
2.6 OTHER RLC ADVANCES BY LENDER. Lender, after giving fifteen (15) days
prior written notice to Borrowers to allow for corrective action, from time to
time, may make RLC Advances in any amount in payment of accrued and unpaid (i)
interest accrued and payable upon the RLC, (ii) any charges and expenses that
are the obligation of Borrowers under this Credit Agreement or any Security
Document, and (iii) any charges or matters necessary to preserve the property
encumbered by the Security Documents or to cure any still existing Event of
Default.
2.7 ASSIGNMENT. Borrowers shall have no right to any RLC Advance other than
to have the same disbursed by Lender in accordance with the disbursement
provisions contained in this Credit Agreement. Any assignment or transfer,
voluntary or involuntary, of this Credit Agreement or any right hereunder shall
not be binding upon or in any way affect Lender without its written consent;
Lender may make RLC Advances under the disbursement provisions herein,
notwithstanding any such assignment or transfer.
ARTICLE 3
PAYMENTS, FEES AND PREPAYMENTS PROVISIONS
3.1 PAYMENTS.
(a) All payments and prepayments by Borrowers of principal of and
interest on the Note and all fees, expenses and any other Obligation
payable to Lender in connection with the RLC shall be nonrefundable and
made in Dollars or immediately available funds to Lender not later than
2:00 p.m., (Phoenix, Arizona local time) on the dates called for under this
Credit Agreement, at the office of Lender in Phoenix, Arizona. Funds
received after such hour shall be deemed to have been received by Lender on
the next Banking Day.
(b) Unless otherwise required by applicable law, payments will be
applied first to accrued, unpaid interest, then to principal, and any
remaining amount to any unpaid collection costs, late charges and other
charges; provided, however, upon an Event of Default and at any time in
which such Event of Default is continuing, Lender reserves the right to
8
apply payments among principal, interest, late charges, collection costs
and other charges at its discretion.
(c) Whenever any payment to be made hereunder shall be stated to be
due on a day which is not a Banking Day, such payment shall be made on the
next succeeding Banking Day, and such extension of time shall in such case
be included in the computation of interest, commission or fee, as the case
may be.
3.2 FEES.
(a) Borrowers agree to pay Lender a quarterly fee (the "RLC NON-USE
FEE") in an annualized amount equal to one-fourth percent (.25%) of the
average daily undrawn balance of the RLC Commitment during the prior
calendar quarterly period. The RLC Non-Use Fee shall initially accrue from
the Closing Date and shall be due and payable in arrears within ten (10)
Banking Days after written notice of such amount due by Lender to Borrower
and shall be non-refundable. Notwithstanding this Section 3.2(a), the RLC
Non-Use Fee shall not accrue during the period of time constituting the RLC
Clean-up as required under Section 7.16 hereof.
(b) Borrowers agree to pay Lender a commitment fee in the amount of
Five Thousand and NO/100 Dollars ($5,000.00) on or prior to the Closing
Date, which amount shall be non-refundable.
3.3 COMPUTATIONS. All fees and interest shall be computed on the basis of a
year of 360-days/year and accrue on a daily basis for the actual number of days
elapsed.
3.4 MAINTENANCE OF ACCOUNTS. Lender shall maintain, in accordance with its
usual practice, an account or accounts evidencing the indebtedness of Borrowers
and the amounts payable and paid from time to time hereunder. In any legal
action or proceeding in respect of this Credit Agreement, the entries made in
the ordinary course of business in such account or accounts shall be evidence
(but shall not be conclusive) of the existence and amounts of the obligations of
Borrowers therein recorded. The failure to record any such amount shall not,
however, limit or otherwise affect the obligations of Borrowers hereunder to
repay all amounts owed hereunder, together with all interest accrued thereon as
provided in the Note.
3.5 PREPAYMENTS. Borrowers may, on same day notice to Lender, prepay the
outstanding principal balance of the RLC in whole or in part at any time prior
to the RLC Maturity Date, without penalty, fee or other charge.
ARTICLE 4
SECURITY
4.1 SECURITY. So long as Lender has any commitment to make any RLC Advance
hereunder, Borrowers shall cause the RLC and Borrower's obligations under this
Credit Agreement to be secured at all times by:
9
(a) A valid and effective security agreement and assignment (the
"SECURITY AGREEMENT"), duly executed and delivered by or on behalf of the
Borrowers granting Lender a valid and enforceable security interest in all
of their personal property as described therein;
(b) A valid and effective assignment and pledge (the "ASSIGNMENT") of
all issued and outstanding shares of stock of Cragar, duly executed and
delivered by Global; and
(c) A letter agreement executed by the Borrowers in favor of Lender,
assigning all letters of credit now existing or hereafter issued for the
benefit of any Borrower (the "LETTER AGREEMENT").
4.2 SECURITY DOCUMENTS. All of the documents required by this Article 4
shall be in form satisfactory to Lender and Lender's counsel, and, together with
any financing statements for filing and/or recording and any other items
required by Lender to fully perfect and effectuate the liens and security
interests of Lender contemplated by the Security Agreement, the Assignment, the
Letter Agreement and this Credit Agreement, may heretofore or hereinafter be
referred to as the "SECURITY DOCUMENTS."
ARTICLE 5
CONDITIONS PRECEDENT
The obligation of Lender to make any RLC Advance is subject to the full
prior satisfaction on or prior to the Closing Date (or thereafter if specified
below) of each of the following conditions precedent:
5.1 INITIAL OR ANY SUBSEQUENT ADVANCE. Prior to its making the initial RLC
Advance or any subsequent RLC Advance, Lender shall have received on or prior to
the Closing Date (or thereafter if specified below) the following each in form
and substance reasonably satisfactory to Lender:
(a) PAYMENT OF FEES. Payment of all of Lender's fees incurred in
connection with the transaction contemplated hereby, including but not
limited to the Commitment Fee and attorneys' fees.
(b) THIS CREDIT AGREEMENT. This Credit Agreement, duly executed and
delivered to Lender by Borrowers.
(c) THE NOTE. The RLC Note, duly executed and delivered by Borrowers,
drawn to the order of Lender and otherwise as provided in Article 2 hereof.
(d) ORGANIZATIONAL DOCUMENTS. A copy of the current organizational
documents of each Borrower, including all amendments thereto, certified as
current and complete as of the Closing Date by such Borrower, together with
evidence as of the Closing Date (or thereafter if requested by Lender) of
said entity's good standing in its state of formation and every other state
in which such entity is operating.
10
(e) CERTIFICATE. A certificate of each Borrower, signed by a duly
appointed officer thereof and issued as of the Closing Date, certifying
that (i) attached thereto is a true and complete copy of the organizational
documents of said entity in effect on the date of passage of the
resolutions described immediately below and at all subsequent times to and
including the date of the certificate, (ii) attached thereto is a true and
complete copy of the resolutions duly adopted authorizing the RLC, the
execution, delivery, and performance of this Credit Agreement, the Note,
the Credit Documents, and all advances of credit hereunder, and that such
resolutions have not been modified, rescinded, or amended and are in full
force and effect, (iii) no change has been made to its organizational
documents other than as reflected in the copies, certified by Borrower,
submitted in connection with the delivery of this Credit Agreement or as
approved in writing by Lender, and (iv) set forth therein and appropriately
identified are the names, current official titles, and signatures of the
officers of said entity authorized to sign this Credit Agreement and other
documents to be delivered hereunder and/or to act as Authorized Officers
hereunder.
(f) SECURITY AGREEMENT. The Security Agreement, duly executed and
delivered to Lender by Borrowers.
(g) FINANCING STATEMENTS. Financing statements, duly delivered to
Lender by Borrower.
(h) COMPLIANCE CERTIFICATE. A Compliance Certificate, indicating that
Borrowers are in compliance with the Financial Covenants as of August 31,
2004.
(i) GLOBAL'S FINANCIAL STATEMENTS. Global's August 31, 2004
consolidated quarterly financial statement.
(j) AUDITED FINANCIAL STATEMENTS. Global's consolidated audited annual
financial statement including its balance sheet as of the close of May 31,
2004 and a statement of income and a statement of cash flows of each
Borrower for such fiscal year, together with a reconciliation of Global's
capital balance accounts as of the close of such fiscal period, in each
case (other than for the year ending May 31, 2004) setting forth in
comparative form the figures for the preceding fiscal year, all in
reasonable detail and accompanied by an unqualified opinion thereon of
independent public accountants selected by Global and reasonably acceptable
to Lender (with ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP being acceptable to Lender as of the
Closing Date), to the effect that such financial statements have been
prepared in accordance with GAAP, which shall be in form and substance
reasonably acceptable to Lender.
(k) ASSIGNMENT OF EQUITY INTERESTS. A valid and effective Assignment
of all issued and outstanding shares of stock of Cragar.
(l) ASSIGNMENT OF LETTERS OF CREDIT. A valid and effective assignment
of all Letters of Credit now existing or hereafter issued for the benefit
of any Borrower.
(m) COPIES OF STOCK CERTIFICATES EVIDENCING OWNERSHIP INTERESTS.
Delivery of all stock certificates evidencing an ownership interest in
Cragar.
11
(n) INSURANCE. Evidence satisfactory to Lender that the Borrowers are
in compliance with all insurance requirements contained in the Credit
Documents.
(o) ADDITIONAL INFORMATION. Such other information and documents as
may reasonably be required by Lender or Lender's counsel.
5.2 NO EVENT OF DEFAULT. No Event of Default known to any Borrower shall
have occurred and be continuing, or result from Lender's making of any RLC
Advance.
5.3 NO MATERIAL ADVERSE EFFECT. Since the date of the most recent financial
statements provided to Lender by Borrowers, no change shall have occurred in the
business or financial condition of any Borrower that has or could reasonably be
expected to have a Material Adverse Effect.
5.4 REPRESENTATIONS AND WARRANTIES. The representations and warranties
contained in Article 6 hereof shall be true and correct in all material
respects, with the same force and effect as though made on and as of the Closing
Date (other than those of such representations which by their express terms
speak to a date prior to that date, which representations shall, in all material
respects, be true and correct as of such respective date).
5.5 OPINION OF COUNSEL. Borrowers shall provide on or prior to the Closing
Date an opinion of counsel in form and substance reasonably acceptable to Lender
including, but not limited to, opinions regarding the existence and, if
applicable, good standing of each Borrower and the enforceability of each of the
Credit Documents.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
To induce Lender to execute this Credit Agreement, each Borrower represents
and warrants to Lender that:
6.1 RECITALS. The recitals and statements of intent appearing in this
Credit Agreement are true and correct.
6.2 ORGANIZATION AND GOOD STANDING. It is duly organized, validly existing
and in good standing in all states and/or countries in which the nature of its
business and property makes such qualifications necessary. It has the legal
power and authority to own its properties and assets and to transact the
business in which it is engaged and is or will be qualified in those states
and/or countries wherein the nature of its proposed business and property will
make such qualifications necessary in the future.
6.3 AUTHORIZATION AND POWER. It has the corporate power and authority to
execute, deliver and perform this Credit Agreement, the Note and the other
Credit Documents to be executed by it; it is duly authorized to, and has taken
all action, organizational or otherwise, necessary to authorize it to, execute,
deliver and perform this Credit Agreement, the Note and such other Credit
Documents and is and will continue to be duly authorized to perform this Credit
Agreement, the Note and such other Credit Documents.
12
6.4 SECURITY DOCUMENTS. The liens, security interests and assignments
created by the Security Documents will, when granted, be valid, effective and
enforceable liens, security interests and assignments.
6.5 NO CONFLICTS OR CONSENTS. Neither the execution and delivery of this
Credit Agreement, the Note or the other Credit Documents to which it is a party,
nor the consummation of any of the transactions herein or therein contemplated,
nor compliance with the terms and provisions hereof or with the terms and
provisions thereof, (a) will materially contravene or conflict with: (i) any
provision of law, statute or regulation to which it is subject, (ii) any
judgment, license, order or permit applicable to it, (iii) any indenture, credit
agreement, mortgage, deed of trust, or other agreement or instrument to which it
is a party or by which it may be bound, or to which it may be subject, if such
conflict has or could reasonably be expected to have a Material Adverse Effect
on the Borrower, or (b) will violate any provision of its organizational
documents. No consent, approval, authorization or order of any court or
Governmental Authority or other Person is required in connection with the
execution and delivery by it of the Credit Documents or to consummate the
transactions contemplated hereby or thereby, or if required, such consent,
approval, authorization or order shall have been obtained.
6.6 NO LITIGATION. Except for those matters that have been disclosed in
Schedule 6.6 attached hereto, there are no actions, suits or legal, equitable,
arbitration or administrative proceedings pending, or to its actual knowledge
overtly threatened, against Borrower that would, if adversely determined, have a
Material Adverse Effect.
6.7 FINANCIAL CONDITION. It has delivered to Lender copies of Global's most
recent consolidated financial statements. Such financial statement, in all
material respects, fairly and accurately present the financial position of the
Consolidated Entities as of such date, have been prepared in accordance with
GAAP (subject to Section 1.3) and neither contain any untrue statement of a
material fact nor fail to state a material fact required in order to make such
financial statement not misleading. Since the date thereof, Borrower has not
discovered any obligations, liabilities or indebtedness (including contingent
and indirect liabilities and obligations or unusual forward or long-term
commitments) which in the aggregate are material and adverse to the financial
position or business of the Consolidated Entities that should have been but were
not reflected in such financial statements. To the best of Borrower's knowledge,
no changes having a Material Adverse Effect have occurred in the financial
condition or business of Borrower since the date of such financial statement.
6.8 TAXES. It has filed, caused to be filed or obtained an extension for
filing all returns and reports which are required to be filed by any
jurisdiction, and has paid or made provision for the payment of all taxes,
assessments, fees or other governmental charges imposed upon its properties,
income or franchises, as to which the failure to file or pay would have a
Material Adverse Effect, except such assessments or taxes, if any, which are
being contested in good faith by appropriate proceedings.
6.9 NO STOCK PURCHASE. No part of any RLC Advance will be used to purchase
or carry "margin stock," as that term is defined in Regulation U, or to extend
credit to others for the purpose of purchasing or carrying such margin stock.
13
6.10 ADVANCES. Each request for an RLC Advance shall constitute an
affirmation that the representations and warranties contained herein are, true
and correct as of the time of such request, and shall survive as set forth in
Section 6.18.
6.11 ENFORCEABLE OBLIGATIONS. This Credit Agreement, the Note and the other
Credit Documents are the legal, valid and binding obligations of Borrower,
enforceable against Borrower in accordance with their respective terms, except
as limited by bankruptcy, insolvency or other laws or equitable principles of
general application relating to the enforcement of creditors' rights.
6.12 NO DEFAULT. No event or condition has occurred and is continuing that
constitutes an Event of Default.
6.13 ERISA. (a) No Reportable Event has occurred and is continuing with
respect to any Plan; (b) PBGC has not instituted proceedings to terminate any
Plan; (c) neither Borrower, any member of the Controlled Group, nor any
duly-appointed administrator of a Plan (i) has incurred any liability to PBGC
with respect to any Plan other than for premiums not yet due or payable or (ii)
has instituted or intends to institute proceedings to terminate any Plan under
Section 4041 or 404lA of ERISA; and (d) each Plan of Borrower has been
maintained and funded in all material respects in accordance with its terms and
in all material respects in accordance with all provisions of ERISA applicable
thereto. No Borrower participates in, or is required to make contributions to,
any Multi-employer Plan (as that term is defined in Section 3(37) of ERISA).
6.14 COMPLIANCE WITH LAW. It is in substantial compliance with all laws,
rules, regulations, orders, writs, injunctions and decrees that are applicable
to it, or its properties, including but not limited to all SEC requirements as
may be applicable, noncompliance with which would have a Material Adverse
Effect.
6.15 SOLVENT. It (both before and after giving effect to the RLC
contemplated hereby) is solvent, has assets having a fair value in excess of the
amount required to pay its probable liabilities on its existing debts as they
become absolute and matured, and has, and expects to have, access to adequate
capital for the presently anticipated conduct of its business and the ability to
pay its debts from time to time incurred in connection therewith as such debts
mature.
6.16 INVESTMENT COMPANY ACT. It is not, and is not directly or indirectly
controlled by, or acting on behalf of, any person which is, an "Investment
Company" within the meaning of the Investment Company Act of 1940, as amended.
6.17 TITLE. It has good and marketable title to the Collateral.
6.18 SURVIVAL OF REPRESENTATIONS, ETC. All representations and warranties
by Borrower herein shall survive execution of this Credit Agreement, all RLC
Advances and delivery of all other documents and instruments in connection with
the RLC and/or this Credit Agreement, so long as Lender has any commitment to
lend hereunder and until the RLC has been paid in full and all of Borrower's
obligations under this Credit Agreement, the Note, and all Security Documents
have been fully discharged. No investigation at any time made by or on behalf of
Lender shall diminish Lender's right to rely on the representations and
warranties herein.
14
6.19 ENVIRONMENTAL MATTERS. Except as previously disclosed to Lender in
writing, it, to the best of its knowledge after due investigation, is in
compliance in all material respects with all applicable environmental, health
and safety statutes and regulations and Borrower does not have any material
contingent liability in connection with any improper treatment, disposal or
release into the environment of any hazardous or toxic waste or substance.
6.20 LICENSES, TRADENAMES. It, as of the date hereof, possesses all
necessary trademarks, tradenames, copyrights, patents, patent rights, and
licenses to conduct its business as now operated, without any known conflict
with valid trademarks, tradenames, copyright patents and license rights of
others. SCHEDULE 6.20 is a true, correct and complete list of all trademarks,
tradenames and DBAs, that are either registered or for which registration has
been applied for, and all other trademarks, tradenames and DBAs, failure to hold
property rights in which would have a Material Adverse Effect.
6.21 LICENSE AGREEMENTS. SCHEDULE 6.21 hereto is a complete and accurate
list of all agreements to which each Borrower is a party that grant any Person,
other than a Borrower, a license to use any trademark, tradename or DBA of such
Borrower.
6.22 EXISTING INDEBTEDNESS. SCHEDULE 6.22 hereto is a complete and accurate
list of all existing Indebtedness of Borrower. Borrower has not received any
notice claiming any, or after reasonable investigation has any knowledge that it
is in, default under any material obligation for borrowed money, any material
purchase money obligation or any other material lease, commitment, contract,
instrument or obligation.
6.23 ACCURACY OF INFORMATION. All information, certificates and statements
given by Borrower in, or pursuant to, the Credit Documents were accurate, true
and complete in all material respects when given, continue to be accurate, true
and complete in all material respects as of the Closing Date, and do not contain
any untrue statement or omission of a fact necessary to make the statements
therein not misleading. There is no fact or circumstance known to Borrower which
adversely affects in any material respect, or which in the future may adversely
affect in any material respect, the business, property, operations or condition,
financial or otherwise, of Borrower which has not been set forth in the Credit
Documents.
6.24 LIEN PRIORITY. Borrower has not entered into any security agreement or
otherwise granted a Lien to, or permitted a Lien to be held by, any Person that
would be prior or in any way superior to the Liens in favor of Lender created by
the Credit Documents, other than the Permitted Liens.
ARTICLE 7
AFFIRMATIVE COVENANTS
Until payment in full of the RLC and the complete performance of the
Obligation and so long as Lender has any commitment to make any RLC Advance
hereunder, Borrowers agree that:
7.1 FINANCIAL STATEMENTS, REPORTS AND DOCUMENTS. Borrowers shall deliver,
or cause to be delivered, to Lender each of the following:
15
(a) ANNUAL CONSOLIDATED AND CONSOLIDATING STATEMENTS OF GLOBAL. As soon as
available and in any event within one hundred twenty (120) days after the close
of each fiscal year of Global, audited consolidated and consolidating financial
statements of Global, including its balance sheet as of the close of such fiscal
year and statement of income of Global for such fiscal year, together with a
reconciliation of Global's capital balance accounts as of the close of such
fiscal period, in each case setting forth in comparative form the figures for
the preceding fiscal year, accompanied by an unqualified opinion thereon of
independent public accountants selected by Global and reasonably acceptable to
Lender(with ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP being acceptable to Lender as of the Closing
Date), to the effect that such financial statements have been prepared in
accordance with GAAP.
(b) MONTHLY FINANCIAL STATEMENTS OF GLOBAL. As soon as available, and in
any event within thirty (30) days after the end of each month and within sixty
(60) days of each year then ended, copies of internally prepared consolidated
and consolidating financial statements of Global.
(c) COMPLIANCE CERTIFICATE OF GLOBAL. Within sixty (60) days after the end
of each fiscal quarter of Global and ninety (90) days after the close of each
fiscal year of Global, a certificate signed by the chief financial officer of
Global, substantially in the form of EXHIBIT "B" attached hereto (the
"COMPLIANCE CERTIFICATE") (i) certifying that after a review of the activities
of Borrowers during such period, Borrowers have observed, performed and
fulfilled each and every obligation and covenant contained herein and no Event
of Default exists under any of the same or, if any Event of Default shall have
occurred, specifying the nature and status thereof, (ii) stating that all
consolidated financial statements of Global delivered to Lender during the
respective period pursuant to Sections 7.1(a) and 7.1(b) hereof, to his/her
knowledge, fairly present in all material respect the consolidated financial
position of Global and the results of its operations as of and for the periods
covered thereby.
(d) OTHER REPORTS. No later than July 1 of each fiscal year, financial
projections for each Borrower for the upcoming four quarter period, subject to
customary confidentiality agreements by Lender in order to comply with
applicable federal and state securities laws.
(e) NOTICES AND FILINGS. Promptly provide Lender with a copy of any notices
or filings made by Global with, or received by Global from, any Government
Authority, including without limitation Global's annual 10-K and quarterly 10-Q
reports filed with the SEC. Notwithstanding this SECTION 7.1(E), however,
Borrower shall be under no duty to provide Lender with reports filed under
Section 16 of the Exchange Act unless the same shall be expressly requested by
Lender.
(f) OTHER INFORMATION. As soon as is practicable, such other information
concerning the business, properties or financial condition of the Borrowers as
Lender shall reasonably request, including but not limited to, all licensing
agreements, trademarks and royalty agreements promptly after they are executed.
16
7.2 MAINTENANCE OF EXISTENCE AND RIGHTS; CONDUCT OF BUSINESS; MANAGEMENT.
Each Borrower will preserve and maintain its existence and all of its rights,
privileges, licenses, permits, franchises and other rights necessary or
desirable in the normal conduct of its business, conduct its business in an
orderly and efficient manner consistent with good business practices and
maintain professional management of its business.
7.3 OPERATIONS AND PROPERTIES. Each Borrower will keep in good working
order and condition, ordinary wear and tear excepted, all of its assets and
properties which are necessary to the conduct of its business.
7.4 AUTHORIZATIONS AND APPROVALS. Each Borrower will maintain or cause to
be maintained, at no expense to Lender, all such governmental licenses,
authorizations, consents, permits and approvals as may be required to enable it
to comply with its obligations hereunder and under the other Credit Documents
and to operate its businesses substantially as presently or hereafter duly
conducted.
7.5 COMPLIANCE WITH LAW. Each Borrower will comply with all applicable
laws, rules, regulations, and all final, nonappealable orders of any
Governmental Authority applicable to it or any of its property, business
operations or transactions, including without limitation, any environmental laws
applicable to it, a breach of which could result in a Material Adverse Effect.
7.6 PAYMENT OF TAXES AND OTHER INDEBTEDNESS. Each Borrower will pay and
discharge (i) all income taxes and payroll taxes, (ii) all taxes, assessments,
fees and other governmental charges imposed upon it or upon its income or
profits, or upon any property belonging to it, before delinquent, which become
due and payable, (iii) all lawful claims (including claims for labor, materials
and supplies), which, if unpaid, might become a Lien upon any of its property,
and (iv) all of its Indebtedness as it becomes due and payable, except as
prohibited hereunder, in each case if the failure to do so could result in a
Material Adverse Effect; provided, however, that it shall not be required to pay
any such tax, assessment, charge, levy, claims or Indebtedness if and so long as
the amount, applicability or validity thereof shall currently be contested in
good faith by appropriate actions and appropriate accruals and reserves therefor
have been established in accordance with GAAP.
7.7 COMPLIANCE OTHER AGREEMENTS. Each Borrower will comply in all material
respects with all other agreements and contracts to which it is a party, a
breach of which could result in a Material Adverse Effect.
7.8 COMPLIANCE WITH CREDIT DOCUMENTS. Each Borrower will comply with any
and all covenants and provisions of this Credit Agreement, the Note and all
other Credit Documents.
7.9 NOTICE OF DEFAULT. Each Borrower will furnish to Lender immediately
upon becoming aware of the existence of any event or condition that constitutes
an Event of Default, a written notice specifying the nature and period of
existence thereof and the action which it is taking or proposes to take with
respect thereto.
7.10 OTHER NOTICES. Each Borrower will promptly notify Lender of (a) any
Material Adverse Effect, (b) any claim in excess of $50,000.00 not covered by
insurance against Borrower or any Borrower's properties, and (c) the
commencement of, and any material determination in, any litigation with any
17
third party or any proceeding before any Governmental Authority affecting it,
except litigation or proceedings which, if adversely determined, would not have
a Material Adverse Effect.
7.11 BOOKS AND RECORDS; ACCESS; AUDITS. Upon three (3) Banking Day notice
from Lender, each Borrower will give any authorized representative of Lender
access during normal business hours to, and permit such representative to
examine, copy or make excerpts from, any and all books, records and documents in
its possession of and relating to the RLC, and to inspect any of its properties,
provided that, during an Event of Default, Lender may take such actions without
notice to the Borrowers.
7.12 ERISA COMPLIANCE. With respect to its Plans, each Borrower shall (a)
at all times comply with the minimum funding standards set forth in Section 302
of ERISA and Section 412 of the Code or shall have duly obtained a formal waiver
of such compliance from the proper authority; (b) at Lender's request, within
thirty (30) days after the filing thereof, furnish to Lender copies of each
annual report/return (Form 5500 Series), as well as all schedules and
attachments required to be filed with the Department of Labor and/or the
Internal Revenue Service pursuant to ERISA, in connection with each of its Plans
for each year of the plan; (c) notify Lender within a reasonable time of any
fact, including, but not limited to, any Reportable Event arising in connection
with any of its Plans, which constitutes grounds for termination thereof by the
PBGC or for the appointment by the appropriate United States District Court of a
trustee to administer such Plan, together with a statement, if requested by
Lender, as to the reason therefor and the action, if any, proposed to be taken
with respect thereto; and (d) furnish to Lender within a reasonable time, upon
Lender's request, such additional information concerning any of its Plans as may
be reasonably requested.
7.13 FURTHER ASSURANCES. Each Borrower will make, execute or endorse, and
acknowledge and deliver or file or cause the same to be done, all such notices,
certifications and additional agreements, undertakings or other assurances, and
take any and all such other action, as Lender may, from time to time, deem
reasonably deem necessary or proper to fully evidence the RLC subject to the
terms and conditions of this Credit Agreement.
7.14 INSURANCE. Each Borrower shall maintain in full force and effect at
all times all insurance coverages required under the terms of this Credit
Agreement and/or the Security Documents to which it is a party. In addition, it
shall maintain in full force and effect at all times:
(a) Policies of all risk coverage insurance covering all tangible
personal property in which Lender has been granted or obtained a security
interest to secure the Obligation, in coverage amounts not less than, from
time to time, the fair market value thereof.
(b) Policies of insurance evidencing general liability including
property damage coverages, in amounts not less than $1,000,000.00 (combined
single limit for bodily injury and property damage), and an umbrella excess
liability coverage in an amount not less than $5,000,000.00 shall be in
effect with respect to Borrower.
18
(c) Policies of workers' compensation insurance in amounts and with
coverages as legally required.
Without limitation of the foregoing, it shall at all times maintain insurance
coverages in scope and amount not less than, and not less extensive than, the
scope and amount of insurance coverages customary in the trades or businesses in
which it is from time to time engaged. All of the aforesaid insurance coverages
shall be issued by insurers reasonably acceptable to Lender.
Copies of all policies of insurance evidencing such coverages in effect
from time to time and showing Lender as an additional insured and loss payee
shall be delivered to Lender on or before the Closing Date and upon reasonable
notice upon issuance of new policies thereafter. From time to time, promptly
upon Lender's request, it shall provide evidence satisfactory to Lender (i) that
required coverage in required amounts is in effect, and (ii) that Lender is
shown as an additional insured and loss payee with respect to all such
coverages, as Lender's interest may appear, by standard (non-attribution) loss
payable endorsement, additional insured endorsement, insurer's certificate or
other means acceptable to Lender in its reasonable discretion. At Lender's
option, it shall deliver to Lender certified copies of all such policies of
insurance in effect from time to time, to be retained by Lender so long as
Lender shall have any commitment to lend hereunder and/or any portion of the
Obligation shall be outstanding or unsatisfied. All such insurance policies
shall provide for at least thirty (30) days prior written notice of the
cancellation or modification thereof to Lender.
7.15 DEPOSIT ACCOUNTS. Global shall maintain (i) its principal depository
accounts with Lender, and (ii) its principal banking relationship with Lender.
7.16 RLC CLEAN-UP. The outstanding balance of the RLC shall, at any time
prior to the RLC Maturity Date, remain at Zero Dollars ($0) for a period of at
least thirty (30) consecutive days.
ARTICLE 8
NEGATIVE COVENANTS
Until payment in full of the RLC and the performance of the Obligation and
so long as Lender has any commitment to make any RLC Advance hereunder, no
Borrower shall, directly or indirectly, without receiving the prior express
written consent of Lender, which consent shall not be unreasonably withheld:
8.1 EXISTENCE; BUSINESS; MANAGEMENT. Dissolve or liquidate, or merge or
consolidate with or into any other entity, or make any substantial change in the
character of its business. No Borrower shall change its name or permit any
transfer of ownership resulting in a change in the Control, or turn over the
management or operation of its property, assets or business to any other Person.
8.2 AMENDMENTS TO ORGANIZATIONAL DOCUMENTS. Amend its organizational
documents if the result thereof could result in the occurrence directly or
indirectly of a Material Adverse Effect.
19
8.3 SALE OF ASSETS. (i) Sell, lease, transfer or dispose of substantially
all of its assets or business, (ii) permit any transfer of the power to Control
any borrower, or (iii) except as may occur as a result of stock sales, permit
any transfer of the ownership of any Borrower.
8.4 TRANSFER COLLATERAL. Assign, transfer or convey any of its right, title
and interest in the Collateral, other than sales of inventory and the entering
into licensing or similar arrangements with respect to its intellectual property
or similar brand rights, all done in the ordinary course of business.
8.5 DISTRIBUTIONS. Declare or pay any dividends or make any distribution of
any kind that would cause any Borrower to violate the Financial Covenants or to
fail to make any payment that is due and payable hereunder.
8.6 NO INDEBTEDNESS. Become or remain obligated either directly or as a
guarantor or surety for any Indebtedness for itself except:
(a) Indebtedness to Lender;
(b) Existing Indebtedness as shown on the Borrowers' financial
statements, dated May 31, 2004; and
(c) Debt incurred in the ordinary course of the Borrowers' business,
so long as such debt does not remain outstanding for a period longer than
ninety (90) days.
8.7 GUARANTIES. Without Lender's prior written consent, which consent may
be withheld in Lender's sole and absolute discretion, incur any obligation as
surety or guarantor.
8.8 CHANGE IN OWNERSHIP CONTROL. Issue any additional securities not
outstanding on the Closing Date or enter into, or permit any transaction,
including any redemption or classification of stock or any other reorganization
of any Borrower if such transaction would result in a change of Control of such
Borrower.
8.9 CHANGE OR SUSPENSION OF BUSINESS. Materially change the nature of the
business conducted by any Borrower, or voluntarily suspend the business of any
Borrower, for more than five (5) consecutive Business Days in any fiscal year,
unless a longer suspension is reasonable as the result of any fire, flood, or
other act of God, act of public enemy, riot, insurrection or governmental
regulation, a labor disruption or a shortage of, or disruption of transportation
for, materials, supplies or labor.
8.10 EMPLOYEE LOANS. Extend any loans or advances to employees of Borrowers
in excess of $25,000.00 in the aggregate. Notwithstanding anything to the
contrary contained herein, all reimbursable expenses and commission paid in the
ordinary course of business and consistent with past practices of Borrowers
shall not constitute employee loans
8.11 LOANS; EQUITY INVESTMENTS. Make any equity investments, loans, or
advances to any Person other than as permitted under SECTION 8.10 above.
20
8.12 LIENS. On and after the date hereof, create, issue, assume or suffer
to exist Liens upon the property, now owned or hereafter acquired, of any
Borrower, except Permitted Liens.
8.13 MARGIN STOCK. Use any proceeds of the RLC, or any proceeds of any
other or future financial accommodation from Lender for the purpose, whether
immediate, incidental or ultimate, of purchasing or carrying any "margin stock"
as that term is defined in Regulation U or to reduce or retire any indebtedness
undertaken for such purposes within the meaning of said Regulation U, and will
not use such proceeds in a manner that would involve Borrower in a violation of
Regulation U or of any other Regulation of the Board of Governors of the Federal
Reserve System, nor use such proceeds for any purpose not permitted by Section 7
of the Exchange Act, or any of the rules or regulations respecting the
extensions of credit promulgated thereunder.
8.14 Consolidated Financial Covenants. Permit:
(a) The Current Ratio to be less than 1.05 to 1.00 as of any Quarterly
End Date.
(b) The Consolidated Tangible Net Worth to be less than the following
as of the date indicated:
As of May 31, 2004 $375,000
As of May 31, 2005 Minimum 2005 Net Worth
(c) The ratio of Consolidated Total Liabilities to Consolidated EBITDA
at the end of any Quarterly End Date to be more than 3.00 to 1.0 for the
reporting periods ending August 31, 2004, November 30, 2004, and February
28, 2005, in each case for the preceding four quarters, or to be more than
2.5 to 1.0 at any Quarterly End Date thereafter.
8.15 NO FURTHER ASSIGNMENT. Make any assignment or pledge other than to
Lender of any ownership interest in any Borrower.
ARTICLE 9
EVENTS OF DEFAULT
9.1 EVENTS OF DEFAULT. An "Event of Default" shall exist if any one or more
of the following events (herein collectively called "EVENTS OF DEFAULT") shall
occur and be continuing:
(a) Borrowers shall fail to pay any principal of, or interest on, the
Note when the same shall become due or payable and such failure continues
for fifteen (15) days after notice thereof to Borrower.
(b) Any failure or neglect to perform or observe any of the covenants,
conditions, provisions or agreements of Borrowers contained herein, or in
any of the other Credit Documents (other than a failure or neglect
described in one or more of the other provisions of this Section 9.1) and
such failure or neglect either cannot be remedied or, if it can be
21
remedied, it continues unremedied for a period of fifteen (15) Banking Days
after written notice thereof to Borrowers, provided that if such neglect or
failure can be remedied, but cannot reasonably be remedied within fifteen
(15) Banking Days and Borrower (i) commences remedial action within fifteen
(15) Banking Days after written notice thereof to Borrowers, (ii)
diligently pursues remedial action, and (iii) remedies the failure or
neglect within sixty (60) days, such failure or neglect shall not result in
an Event of Default.
(c) Any warranty, representation or statement contained in this Credit
Agreement or any of the other Credit Documents, or which is contained in
any certificate or statement furnished or made to Lender pursuant hereto or
in connection herewith or with the RLC, shall be or shall prove to have
been false in any material respect when made or furnished.
(d) The occurrence of any "event of default" or "default" by Borrowers
after the giving of any applicable notice or the expiration of any
applicable grace period under any Credit Document, or any agreement, now or
hereafter existing, to which Lender or an Affiliate of Lender, and
Borrowers are a party.
(e) Any Borrower shall (i) fail to pay any of its Indebtedness (other
than the Note), or (ii) fail to perform or observe any term, covenant, or
condition on its part to be performed or observed under any agreement or
instrument relating to such Indebtedness, within any applicable grace
period when required to be performed or observed, if the effect of such
failure to perform or observe is to accelerate the maturity of such
Indebtedness, or any such Indebtedness shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled
prepayment), prior to the stated maturity thereof, unless any such defaults
are being contested in good faith by Borrowers through appropriate
proceeding and adequate reserves have been established to pay such
indebtedness.
(f) Any one or more of the Credit Documents shall have been determined
to be invalid or unenforceable against any Borrower executing the same in
accordance with the respective terms thereof, or shall in any way be
terminated or become or be declared ineffective or inoperative, so as to
deny Lender the substantial benefits contemplated by such Credit Document
or Credit Documents.
(g) Any Borrower shall (i) apply for or consent to the appointment of
a receiver, trustee, custodian, intervenor or liquidator of itself or of
all or a substantial part of its assets, (ii) file a voluntary petition in
bankruptcy or admit in writing that it is unable to pay its debts as they
become due, (iii) make a general assignment for the benefit of creditors,
(iv) file a petition or answer seeking reorganization or an arrangement
with creditors or to take advantage of any bankruptcy or insolvency laws,
(v) file an answer admitting the material allegations of, or consent to, or
default in answering, a petition filed against it in any bankruptcy,
reorganization or insolvency proceeding, or (vi) take corporate action for
the purpose of effecting any of the foregoing
22
(h) An involuntary petition or complaint shall be filed against any
Borrower, seeking bankruptcy or reorganization of any Borrower, or the
appointment of a receiver, custodian, trustee, intervenor or liquidator of
any Borrower, or all or substantially all of its assets, and such petition
or complaint shall not have been dismissed within ninety (90) days of the
filing thereof; or an order, order for relief, judgment or decree shall be
entered by any court of competent jurisdiction or other competent authority
approving a petition or complaint seeking reorganization of any Borrower,
appointing a receiver, custodian, trustee, intervenor or liquidator of any
Borrower, or all or substantially all of its assets, and such order,
judgment or decree shall continue unstayed and in effect for a period of
ninety (90) days.
(i) Any final judgment(s) (excluding those the enforcement of which is
suspended pending appeal) for the payment of money in excess of the sum of
$50,000 in the aggregate (other than any judgment covered by insurance
where coverage has been acknowledged by the insurer) shall be rendered
against any Borrower, and such judgment or judgments shall not be
satisfied, settled, bonded or discharged at least ten (10) days prior to
the date on which any of its assets could be lawfully sold to satisfy such
judgment.
(j) Either (i) proceedings shall have been instituted to terminate, or
a notice of termination shall have been filed with respect to, any Plans
(other than a Multi-Employer Pension Plan as that term is defined in
Section 4001(a)(3) of ERISA) by any Borrower, any member of the Controlled
Group, PBGC or any representative of any thereof, or any such Plan shall be
terminated, in each case under Section 4041 or 4042 of ERISA, and such
termination shall give rise to a liability of any Borrower or the
Controlled Group to the PBGC or the Plan under ERISA having an effect in
excess of $50,000 or (ii) a Reportable Event, the occurrence of which would
cause the imposition of a lien in excess of $50,000 under Section 4062 of
ERISA, shall have occurred with respect to any Plan (other than a
Multi-Employer Pension Plan as that term is defined in Section 400 l(a)(3)
of ERISA) and be continuing for a period of sixty (60) days.
(k) Any of the following events shall occur with respect to any
Multi-Employer Pension Plan (as that term is defined in Section 4001(a)(3)
of ERISA) to which any Borrower contributes or contributed on behalf of its
employees and Lender determines in good faith that the aggregate liability
likely to be incurred by any Borrower, as a result of any of the events
specified in Subsections (i), (ii) and (iii) below, will have an effect in
excess of $100,000; (i) any Borrower incurs a withdrawal liability under
Section 4201 of ERISA; (ii) any such plan is "in reorganization" as that
term is defined in Section 4241 of ERISA; or (iii) any such Plan is
terminated under Section 4041A of ERISA.
(l) The occurrence of a majority change in the ownership structure or
control of any Borrower without the written consent of Lender, which will
not be unreasonably withheld.
23
(m) The dissolution, liquidation, sale, transfer, lease or other
disposal of all or substantially all of the assets or business of any
Borrower without the written consent of Lender, which shall not be
unreasonably withheld.
(n) Any failure to observe any of the Financial Covenants.
(o) A material modification of the organizational documents of any
Borrower without the written consent of Lender (which consent shall not be
unreasonably withheld.
(p) The occurrence of any material adverse change in the business
operations, assets or financial condition of any Borrower that Lender in
its reasonable discretion deems material, or if Lender in good faith shall
believe that the prospect of payment or performance of the RLC is impaired.
9.2 REMEDIES UPON EVENT OF DEFAULT. If an Event of Default shall have
occurred and be continuing, then Lender may, at its sole option, exercise any
one or more of the following rights and remedies, and any other remedies
provided in any of the Credit Documents, as Lender in its sole discretion may
deem necessary or appropriate, all of which remedies shall be deemed cumulative,
and not alternative:
(i) Cease making RLC Advances to or for the benefit of Borrower,
(ii) Declare the principal of, and all interest then accrued on, the
Note and any other liabilities hereunder to be forthwith due and payable,
whereupon the same shall become immediately due and payable without
presentment, demand, protest, notice of default, notice of acceleration or
of intention to accelerate or other notice of any kind all of which
Borrowers hereby expressly waive, anything contained herein or in the Note
to the contrary notwithstanding,
(iii) Reduce any claim to judgment,
(iv) Without notice of default or demand, pursue and enforce any of
Lender' rights and remedies under the Credit Documents, or otherwise
provided under or pursuant to any applicable law or agreement; provided,
however, that if any Event of Default specified in Sections 9.1(g) and
9.1(h) shall occur, the principal of, and all interest on, the Note and
other liabilities hereunder shall thereupon become due and payable
concurrently therewith, without any further action by Lender and without
presentment, demand, protest, notice of default, notice of acceleration or
of intention to accelerate or other notice of any kind, all of which
Borrowers hereby expressly waive,
(v) Require, if it has not already done so, that no dividends or
distributions related to Cragar be paid, or, if paid, that they be paid
directly to Lender in accordance with Section 8.5, and/or
(vi) Exercise its rights under the Security Documents.
24
Upon the occurrence and during the continuance of any Event of Default,
Lender is hereby authorized at any time and from time to time, with five (5)
Banking Days written notice to Borrowers, to setoff and apply any and all
monies, securities or other property of any Borrower or any proceeds therefrom,
now or hereafter held or received by or in transit to Lender or its agents, from
or for the account of Borrower, whether for safe keeping, custody, pledge,
transmission, collection or otherwise, and also upon any and all deposits
(general or special) and credits of any Borrower, and any and all claims of any
Borrower against Lender at any time existing. Lender agrees promptly to notify
any Borrower prior to and after any such setoff and application, provided that
the failure to give such notice shall not affect the validity of such setoff and
application. The rights of Lender under this Section 9.2 are in addition to
other rights and remedies (including, without limitation, other rights of
setoff) which Lender may have.
9.3 PERFORMANCE BY LENDER. Should any Borrower fail to perform any material
covenant, duty or agreement with respect to the payment of taxes, obtaining
licenses or permits, or any other requirement contained herein or in any of the
Credit Documents within the period provided herein, if any, for correction of
such failure, Lender may, with five (5) Banking Days prior written notice, at
its option, perform or attempt to perform such covenant, duty or agreement on
behalf of Borrowers. In such event, Borrowers shall, at the request of Lender,
promptly pay any amount expended by Lender in such performance or attempted
performance to Lender at the location or depository designated by Lender in
Detroit, Michigan together with interest thereon at the Default Rate, from the
date of such expenditure until paid. Notwithstanding the foregoing, it is
expressly understood that Lender does not assume any liability or responsibility
for the performance of any duties of Borrowers hereunder or under any of the
Credit Documents or other control over the management and affairs of Borrowers.
ARTICLE 10
MISCELLANEOUS
10.1 GLOBAL AS AGENT. Each Borrower hereunder appoints Global as its agent
for all purposes hereunder. Lender shall be entitled to rely upon all acts or
directions given by Global as the acts or direction of each and every Borrower.
The giving of notice to Global shall constitute the giving of notice to each and
every Borrower.
10.2 RIGHT OF FIRST REFUSAL. In the event any Borrower shall desire to
enter into an agreement with another entity for the processing of credit card
transactions (the "PROPOSED AGREEMENT"), such Borrower shall provide Lender
written notice of such intent, which notice shall set forth the terms of the
Proposed Agreement. Upon receipt of the notice, Lender shall have fifteen (15)
days to notify the Borrower of its election to enter into a credit card
processing agreement with Borrower, on substantially the same terms and
conditions as the Proposed Agreement. In the event (i) Lender shall elect not to
enter into such agreement with the Borrower, or (ii) Lender shall fail to notify
Borrower within fifteen (15) business days, Borrower may enter into the Proposed
Agreement. Notwithstanding the terms of this SECTION 10.2, if the terms of the
Proposed Agreement shall materially change after notice to Lender, Buyer shall
re-submit the Proposed Agreement pursuant to the terms set forth above.
25
10.3 MODIFICATION. All modifications, consents, amendments or waivers of
any provision of any Credit Document, or consent to any departure by any
Borrower therefrom, shall be effective only if the same shall be in writing and
accepted by Lender.
10.4 WAIVER. No failure to exercise, and no delay in exercising, on the
part of Lender, any right hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise thereof preclude any other further exercise
thereof or the exercise of any other right. The rights of Lender hereunder and
under the Credit Documents shall be in addition to all other rights provided by
law. No modification or waiver of any provision of this Credit Agreement, the
Note or any Credit Documents, nor consent to departure therefrom, shall be
effective unless in writing and no such consent or waiver shall extend beyond
the particular case and purpose involved. No notice or demand given in any case
shall constitute a waiver of the right to take other action in the same, similar
or other instances without such notice or demand.
10.5 PAYMENT OF EXPENSES. Borrowers shall pay all costs and expenses of
Lender (including, without limitation, UCC searches, filing fees, the attorneys'
fees of Lender's legal counsel) incurred by Lender in connection with the
documentation of the RLC, and the preservation and enforcement of Lender's
rights under this Credit Agreement, the Note, and/or the other Credit Documents
(including, without limitation, reasonable attorneys' fees and costs). In
addition, Borrowers shall pay all costs and expenses of Lender in connection
with the negotiation, preparation, execution and delivery of any and all
amendments, modifications and supplements of or to this Credit Agreement, the
Note or any other Credit Document.
10.6 NOTICES. Except for telephonic notices permitted herein, any notices
or other communications required or permitted to be given by this Credit
Agreement or any other documents and instruments referred to herein must be (i)
given in writing and personally delivered or mailed by prepaid certified or
registered mail or sent by overnight delivery service, or (ii) made by facsimile
delivered or transmitted, to the party to whom such notice or communication is
directed, to the address of such party as follows:
Borrowers: Global Entertainment Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: J. ▇▇▇▇▇ ▇▇▇▇▇▇▇, CFO
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Lender: Comerica Bank
▇▇▇▇▇▇ Dodge Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Any notice to be personally delivered may be delivered to the principal offices
(determined as of the date of such delivery) of the party to whom such notice is
directed. Any such notice or other communication shall be deemed to have been
26
given (whether actually received or not) on the day it is personally delivered
as aforesaid; or, if mailed, on the third day after it is mailed as aforesaid;
or, if transmitted by facsimile, on the day that such notice is transmitted as
aforesaid. If transmitted by facsimile, such transmission shall be followed by
first class United States Postal Service delivery of same. Any party may change
its address for purposes of this Credit Agreement by giving notice of such
change to the other parties pursuant to this Section 10.5.
10.7 GOVERNING LAW; JURISDICTION, VENUE; WAIVER OF JURY TRIAL. The Credit
Documents shall be governed by and construed in accordance with the substantive
laws (other than conflict laws) of the State of Arizona, except to the extent
Lender has greater rights or remedies under Federal law, whether as a national
bank or otherwise, in which case such choice of Arizona law shall not be deemed
to deprive Lender of any such rights and remedies as may be available under
Federal law. Each party consents to the personal jurisdiction and venue of the
state courts located in Maricopa County, State of Arizona in connection with any
controversy related to this Credit Agreement, waives any argument that venue in
any such forum is not convenient and agrees that any litigation initiated by any
of them in connection with this Credit Agreement shall be venued in the Superior
Court of Maricopa County, Arizona. The parties waive any right to trial by jury
in any action or proceeding based on or pertaining to this Credit Agreement or
any of the Credit Documents.
10.8 INVALID PROVISIONS. If any provision of any Credit Document is held to
be illegal, invalid or unenforceable under present or future laws during the
term of this Credit Agreement, such provision shall be fully severable; such
Credit Document shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part of such Credit Document; and
the remaining provisions of such Credit Document shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance from such Credit Document. Furthermore, in lieu of
each such illegal, invalid or unenforceable provision there shall be added as
part of such Credit Document a provision mutually agreeable to Borrowers and
Lender as similar in terms to such illegal, invalid or unenforceable provision
as may be possible and be legal, valid and enforceable.
10.9 BINDING EFFECT. The Credit Documents shall be binding upon and inure
to the benefit of Borrowers and Lender and their respective successors, assigns
and legal representatives; provided, however, that no Borrower may, without the
prior written consent of Lender, assign any rights, powers, duties or
obligations thereunder.
10.10 ENTIRETY. The Credit Documents embody the entire agreement between
the parties and supersede all prior agreements and understandings, if any,
relating to the subject matter hereof and thereof.
10.11 HEADINGS. Section headings are for convenience of reference only and
shall in no way affect the interpretation of this Credit Agreement.
10.12 NO THIRD PARTY BENEFICIARY. The parties do not intend the benefits of
this Credit Agreement to inure to any third party, nor shall this Credit
Agreement be construed to make or render Lender liable to any materialman,
supplier, contractor, subcontractor, purchaser or lessee of any property owned
by any Borrower, or for debts or claims accruing to any such persons against
27
Borrower. Notwithstanding anything contained herein or in the Note, or in any
other Credit Document, or any conduct or course of conduct by any or all of the
parties hereto, before or after signing this Credit Agreement or any of the
other Credit Documents, neither this Credit Agreement nor any other Credit
Document shall be construed as creating any right, claim or cause of action
against Lender, or any of its officers, directors, agents or employees, in favor
of any materialman, supplier, contractor, subcontractor, purchaser or lessee of
any property owned by Borrower, nor to any other person or entity other than
Borrower.
10.13 JOINT LIABILITY.
(a) Borrowers each: (a) agree that the liability hereunder of all
parties hereto is joint and several; and (b) consents that Lender may
extend the time of payment or otherwise modify the terms of payment of any
part or the whole of the debt evidenced hereby, at the request of any other
person liable hereon, and such consent shall not alter nor diminish the
liability of any person hereon.
(b) Borrowers each waive and agree not to assert: (i) any right to
require Lender to proceed against the obligations, to proceed against or
exhaust any security for the obligations, to pursue any other remedy
available to Lender, or to pursue any remedy in any particular order or
manner; (ii) the benefit of any statute of limitations affecting its
liability hereunder or the enforcement hereof, (iii) the benefits of any
legal or equitable doctrine or principle of marshalling; (iv) notice of the
existence, creation or incurring of new or additional indebtedness of any
Borrower to Lender; (v) the benefits of any statutory provision limiting
the liability of a surety; (vi) any defense arising by reason of any
disability or other defense of any Borrower or by reason of the cessation
from any cause whatsoever (other than payment in full) of the liability of
any Borrower for payment of any other party hereto; and (vii) the benefits
of any statutory provision limiting the right of Lender to recover a
deficiency judgment, or to otherwise proceed against any person or entity
obligated for payment of the obligations, after any foreclosure or
trustee's sale of any security for the obligations. Until payment in full
of the obligations and Lender has no obligation to make any further
advances of the proceeds hereof, no party shall have any right of
subrogation and each hereby waives any right to enforce any remedy which
Lender now has, or may hereafter have, against any Borrower or any other
party, and waives any benefit of, and any right to participate in, any
security now or hereafter held by Lender.
10.14 TIME. Time is of the essence hereof.
10.15 SCHEDULES AND EXHIBITS INCORPORATED. All schedules and exhibits
attached hereto, if any, are hereby incorporated into this Credit Agreement by
each reference thereto as if fully set forth at each such reference.
10.16 COUNTERPARTS. This Credit Agreement may be executed in multiple
counterparts, each of which, when so executed, shall be deemed an original but
all such counterparts shall constitute but one and the same agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
28
IN WITNESS WHEREOF, the undersigned have executed this Credit Agreement as
of the day and year first above written.
BORROWERS
GLOBAL ENTERTAINMENT CORPORATION, a
Nevada corporation
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
WESTERN PROFESSIONAL HOCKEY LEAGUE
INC., a Texas corporation
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
INTERNATIONAL COLISEUMS COMPANY,
INC., a Nevada corporation
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
GLOBAL ENTERTAINMENT MARKETING
SYSTEMS, a Nevada corporation
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
29
CRAGAR INDUSTRIES, INC., a Delaware
corporation
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
GLOBAL ENTERTAINMENT TICKETING, a
Nevada corporation
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
30
LENDER
COMERICA BANK
By:
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------
Title: Assistant Vice President
-----------------------------
31
EXHIBIT A
"RLC ADVANCE REQUEST"
FORM OF ADVANCE NOTICE REQUEST
Comerica Bank
▇▇▇▇▇▇ Dodge Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Date:_______________
Time:_______________
Dear Ladies and Gentlemen:
The undersigned refers to the Credit Agreement dated as of November 19,
2004 (as it may hereafter be amended, modified, extended or restated from time
to time, the "Credit Agreement"), between the undersigned (and certain of its
affiliates) and Comerica Bank, a Michigan banking corporation. Capitalized terms
used herein and not otherwise defined herein shall have the meanings assigned to
such terms in the Credit Agreement.
The undersigned hereby gives notice that it requests an RLC Advance
pursuant to the Credit Agreement and sets forth below the terms of such
requested Advance:
A. Date of Advance: ______________________________
B. Principal Amount of Advance: ______________________________
Sincerely,
_____________________ a _______________
corporation, on behalf of all Borrowers
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
1
EXHIBIT B
"COMPLIANCE CERTIFICATE"
COMPLIANCE CERTIFICATE
FOR PERIOD ENDING
----------------------
("REPORTING PERIOD")
Comerica Bank
▇▇▇▇▇▇ Dodge Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Date: (1)
---------------
Dear Ladies and Gentlemen:
This Compliance Certificate refers to the Credit Agreement dated as of
November 19, 2004 (as it may hereafter be amended, modified, extended or
restated from time to time, the "Credit Agreement"), between Global
Entertainment Corporation, a Nevada corporation and its affiliates signatories
thereto (collectively, the "Borrower"), and Comerica Bank. Capitalized terms
used and not otherwise defined herein shall have the meanings assigned to such
terms in the Credit Agreement.
Pursuant to Section 7.1 of the Credit Agreement, the undersigned, hereby
certifies that:
1. To the best of the undersigned's knowledge, after a review of the
activities of Borrower during the Reporting Period, Borrower has observed,
performed and fulfilled each and every obligation and covenant contained in the
Credit Agreement and no "Event of Default" thereunder exists [OR IF SO,
SPECIFYING THE NATURE AND EXTENT THEREOF AND ANY CORRECTIVE ACTIONS TAKEN OR TO
BE TAKEN].
2. All financial statements of Borrower delivered to Lender during the
Reporting Period, to the undersigned's knowledge, fairly present in all material
respect the financial position of the Borrower and the results of its operations
at the dates and for the periods indicated and have been prepared in accordance
with GAAP.
----------
1. To be submitted within 60 days after the end of each fiscal quarter and
within 90 days of each fiscal year.
1
3. As of the last day of the Reporting Period, the computations below were
true and correct:
Section 8.14 CONSOLIDATED FINANCIAL COVENANTS :
(A) CURRENT RATIO (TESTED AT EACH QUARTERLY END DATE)
Numerator: Consolidated Total Current Assets A$______________
Denominator: Consolidated Total Current Liabilities B$______________
A divided by B equals A/B____________x
Minimum 1.05 to 1.0
(B) CONSOLIDATED TANGIBLE NET WORTH
(TESTED AT EACH FISCAL YEAR END DATE)
Net book value of all assets A$______________
Less intangible assets, including without
limitation goodwill and and any amount due
and payable from any shareholder, officer,
director, employee or affiliate of any
Borrower B$______________
Book value of tangible assets A-B$_________= C
Consolidated Total Indebtedness D$______________
C minus D equals Consolidated Tangible Net Worth C-D$____________
Minimum Prior
to 5/31/05 $375,000
Minimum 5/31/05
and thereafter Minimum 2005 Net Worth
(C) LEVERAGE RATIO (TESTED QUARTERLY AT EACH QUARTERLY END
DATE FOR PRIOR 4 FISCAL QUARTERS)
Numerator: Consolidated Total Liabilities A$______________
Denominator: Consolidated Net Income $_______________
plus interest expense $_______________
plus tax expense $_______________
plus depreciation $_______________
plus amortization $_______________
equals Consolidated EBITDA B$______________
2
A divided by B equals A/B____________x
Minimum 3.00 to 1.0 (Quarterly End
Dates on or before 2/28/05)
2.5 to 1.0 (Quarterly End
Dates thereafter)
GLOBAL ENTERTAINMENT CORPORATION, a
Nevada corporation
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
3
SCHEDULE 6.6
"PENDING LITIGATION"
None.
1
SCHEDULE 6.20
"TRADEMARKS AND TRADENAMES"
REGISTRATION NO. ▇▇▇▇ COUNTRY
---------------- ---- -------
819,800 Cragar United States
964,061 Super Trick United States
1,010,106 S/S Cragar & Design United States
1,022,020 TruSpoke United States
1,031,812 S/S United States
1,326,815 Street Pro United States
1,446,281 Starwire United States
1,478,604 Cragar America's Choice United States
1,526,744 ProTrac United States
1,914,785 Street Pro United States
A233,367 Cragar Australia
354,546 Cragar Mexico
1,870,609 Cragar Japan
161,878 Cragar Canada
A299,886 Cragar Australia
297,263 Cragar Taiwan
295,028 Cragar Taiwan
297,264 Taiwan
532,903 Cragar European Community
Trademarks
841,546 Keystone United States
1,116,356 K Keystone (Stylized) United States
1,127,479 Klassic United States
2,727,565 Global Entertainment & Design United States
2,359,614 We Play Hockey Loud United States
2,296,121 Proud to be Loud United States
2,230,308 Grades for Blades United States
1
"TRADEMARKS AND TRADENAMES"
(Continued)
PENDING APPLICATIONS
PENDING APPLICATION ▇▇▇▇ COUNTRY
------------------- ---- -------
76/533,605 Cragar G/T United States
76/111,032 Global Entertainment & Design United States
STATE REGISTRATION
STATE REGISTRATION ▇▇▇▇ COUNTRY
------------------ ---- -------
70,444 S/S United States
2
SCHEDULE 6.21
"LICENSE AGREEMENTS"
CRAGAR LICENSEES
STEEL & COMPOSITE WHEELS
Carlisle Tire & Wheel
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Agreement Date: October 15, 1999
Between Cragar Industries and Carlisle Tire & Wheel Co., Delaware Corporation
ALUMINUM WHEELS
The Wheel Group
▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇.
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Agreement Date: October 1, 2003
Between Cragar Industries and CIA Wheel Group, California Corporation
RACE WHEELS
Weld Racing
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Agreement Date: September 30, 1999
Between Cragar Industries and Weld Racing Inc, Missouri Corporation
CAR CARE
Quattro Brands
▇▇▇▇ ▇. ▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Agreement Date: May 1, 2003
Between Cragar Industries and Quattro Brands LLC, Minnesota LLC
COLLECTABLES
Playing Mantis
▇▇▇▇ ▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Agreement Date: September 1, 2001
Between Cragar Industries and Playing Mantis, Inc., Indiana Corporation
1
COLLECTABLES
RC2
▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Agreement Date: September 1, 2001
Between Cragar Industries and Racing Champions Ertl, Inc., Illinois Corporation
COLLECTABLES
GMP
▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Agreement Date: September 1, 2002
Between Cragar Industries and Georgia Marketing and Promotions, Inc.,
Georgia Corporation
COLLECTABLES
JAKKS Pacific
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Agreement Date: June 8, 2004
Between Cragar Industries and JAKKS Pacific, Inc, Delaware Corporation
MERCHANDISE
Summit Marketing
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Agreement Date: June 18, 2004
Between Cragar Industries and SMG-II LLC, Missouri LLC
WESTERN PROFESSIONAL HOCKEY LEAGUE LICENSEES
AMARILLO GORILLAS
Agreement date: May 6, 2002
Between: Western Professional Hockey League, Inc. & Hockey Sports of Amarillo,
Texas LLC
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
AUSTIN ICE BATS
Agreement date: July 2, 2003
Between: Western Professional Hockey League, Inc. & Capital Hockey Ventures,
Ltd.
Texas
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
2
BOSSIER-SHREVEPORT MUDBUGS
Agreement date: September 30, 2002
Between: Western Professional Hockey League, Inc. & Hardwater, Texas LLC.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
COLORADO EAGLES
Agreement date: November 7, 2001
Between: Western Professional Hockey League, Inc. & Larimer County Sports,
Colorado LLC.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇. ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
CORPUS ▇▇▇▇▇▇▇ ▇▇▇▇
Agreement date: December 10, 2002
Between: Western Professional Hockey League, Inc. & WD Sports, Texas, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇. ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
FORT WORTH BRAHMAS
Agreement date: July 1, 1998
Between: Western Professional Hockey League, Inc. & Texas Brahmas, Texas LP.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
LAREDO BUCKS
Agreement date: June 1, 2001
Between: Western Professional Hockey League, Inc. & Arena Ventures, Texas LLC.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
LUBBOCK COTTON KINGS
Agreement date: November 30, 1998
Between: Western Professional Hockey League, Inc. & South Plains Professional
Hockey Club, Ltd., Texas
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
NEW MEXICO SCORPIONS
Agreement date: May 1, 2001
Between: Western Professional Hockey League, Inc. & WD Sports New Mexico, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇. ▇-▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
3
ODESSA JACKALOPES
Agreement date: November 25, 1996
Between: Western Professional Hockey League, Inc. & Odessa Sports, Inc. Texas
▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
RIO GRANDE VALLEY KILLER BEES
Agreement date: September 19, 2002
Between: Western Professional Hockey League, Inc. & Rio Grande Valley
Professional Hockey Club, Ltd. Texas
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SAN ▇▇▇▇▇▇ SAINTS
Agreement date: August 9, 2002
Between: Western Professional Hockey League, Inc. & Concho Valley Pro Hockey,
Texas LLC.
▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇.
▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
4
SCHEDULE 6.22
"EXISTING INDEBTEDNESS"
▇▇▇▇▇▇ Capital Corporation
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Note for $200,000.00
Agreement date: March 19, 2004
Remaining balance: $133,333.36
▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Original Balance: $160,751.06
Installment acceptance date: April 24, 2004
Remaining balance: $139,746.98
1