Exhibit 10(z)(1)
REVOLVING/TERM LOAN CREDIT AGREEMENT
Dated as of July 6, 2004
among
▇▇▇▇▇▇▇▇, INC.,
as Borrower,
UNION BANK OF CALIFORNIA, N.A.,
as Administrative Agent
and
The Other Lenders Party Hereto
TABLE OF CONTENTS
Page
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ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS........................................................ 1
1.01 Defined Terms........................................................................... 1
1.02 Other Interpretive Provisions........................................................... 14
1.03 Accounting Terms........................................................................ 15
1.04 Rounding................................................................................ 15
1.05 References to Agreements and Laws....................................................... 15
1.06 Letter of Credit Amounts................................................................ 15
ARTICLE II. THE COMMITMENTS AND CREDIT EXTENSIONS................................................... 15
2.01 Committed Loans......................................................................... 15
2.02 Borrowings, Conversions and Continuations of Committed Loans............................ 16
2.03 Letters of Credit....................................................................... 17
2.04 Intentionally omitted................................................................... 22
2.05 Prepayments............................................................................. 22
2.06 Reduction or Termination of Commitments................................................. 22
2.07 Repayment of Loans...................................................................... 23
2.08 Interest................................................................................ 23
2.09 Fees.................................................................................... 23
2.10 Computation of Interest and Fees........................................................ 24
2.11 Evidence of Debt........................................................................ 24
2.12 Payments Generally...................................................................... 24
2.13 Sharing of Payments..................................................................... 25
ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY.................................................. 26
3.01 Taxes................................................................................... 26
3.02 Illegality.............................................................................. 27
3.03 Inability to Determine Rates............................................................ 27
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3.04 Increased Cost and Reduced Return; Capital Adequacy; Reserves on Eurodollar Rate
Committed Loans......................................................................... 28
3.05 Funding Losses.......................................................................... 28
3.06 Prepayment of Term Loan................................................................. 28
3.07 Matters Applicable to all Requests for Compensation..................................... 29
3.08 Survival................................................................................ 29
ARTICLE IV. CONDITIONS PRECEDENT TO CREDIT EXTENSIONS............................................... 29
4.01 Conditions of Initial Credit Extension.................................................. 29
4.02 Conditions to all Credit Extensions and Conversions and Continuations................... 30
ARTICLE V. REPRESENTATIONS AND WARRANTIES.......................................................... 31
5.01 Existence, Qualification and Power, Compliance with Laws................................ 31
5.02 Authorization; No Contravention......................................................... 31
5.03 Governmental Authorization.............................................................. 31
5.04 Binding Effect.......................................................................... 31
5.05 Financial Statements; No Material Adverse Effect........................................ 31
5.06 Litigation.............................................................................. 32
5.07 No Default.............................................................................. 32
5.08 Ownership of Property; Liens............................................................ 32
5.09 Environmental Compliance................................................................ 32
5.10 Insurance............................................................................... 32
5.11 Taxes................................................................................... 32
5.12 ERISA Compliance........................................................................ 32
5.13 Subsidiaries............................................................................ 33
5.14 Disclosure.............................................................................. 33
5.15 Compliance with Laws.................................................................... 33
5.16 Margin Regulations; Investment Company Act; Public Utility Holding Company Act.......... 33
5.17 Rights in Collateral; Priority of Liens................................................. 33
ARTICLE VI. AFFIRMATIVE COVENANTS................................................................... 34
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6.01 Financial Statements.................................................................... 34
6.02 Certificates; Other Information......................................................... 34
6.03 Notices. Promptly notify Agent and each Lender:......................................... 35
6.04 Payment of Obligations.................................................................. 35
6.05 Preservation of Existence, Etc. ........................................................ 35
6.06 Maintenance of Properties............................................................... 35
6.07 Maintenance of Insurance................................................................ 36
6.08 Compliance with Laws.................................................................... 36
6.09 Books and Records....................................................................... 36
6.10 Inspection Rights....................................................................... 36
6.11 Use of Proceeds......................................................................... 36
6.12 Financial Covenants..................................................................... 36
6.13 Additional Guarantors................................................................... 37
6.14 Collateral Records...................................................................... 37
6.15 Security Interests...................................................................... 38
ARTICLE VII. NEGATIVE COVENANTS...................................................................... 38
7.01 Liens................................................................................... 38
7.02 Investments............................................................................. 39
7.03 Indebtedness............................................................................ 39
7.04 Fundamental Changes..................................................................... 40
7.05 Dispositions............................................................................ 40
7.06 Restricted Payments..................................................................... 40
7.07 Change in Nature of Business............................................................ 41
7.08 Transactions with Affiliates............................................................ 41
7.09 Margin Regulations...................................................................... 41
7.10 Suspension of Business.................................................................. 41
ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES.......................................................... 41
8.01 Events of Default....................................................................... 41
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8.02 Remedies Upon Event of Default.......................................................... 43
8.03 Application of Funds.................................................................... 43
ARTICLE IX. AGENT................................................................................... 44
9.01 Appointment and Authorization of Agent.................................................. 44
9.02 Delegation of Duties.................................................................... 44
9.03 Liability of Agent...................................................................... 44
9.04 Reliance by Agent....................................................................... 44
9.05 Notice of Default....................................................................... 45
9.06 Credit Decision; Disclosure of Information by Agent..................................... 45
9.07 Indemnification of Agent................................................................ 45
9.08 Agent in its Individual Capacity........................................................ 46
9.09 Successor Agent......................................................................... 46
9.10 Agent May File Proofs of Claim.......................................................... 46
9.11 Guaranty Matters........................................................................ 47
9.12 Collateral Matters...................................................................... 47
9.13 Appointment of U.K. Security Trustee.................................................... 48
9.14 Agent as U.K. Security Trustee.......................................................... 48
9.15 Liens in Favor of U.K. Security Trustee................................................. 49
ARTICLE X. MISCELLANEOUS........................................................................... 49
10.01 Amendments, Etc. ....................................................................... 49
10.02 Notices and Other Communications; Facsimile Copies...................................... 50
10.03 No Waiver; Cumulative Remedies.......................................................... 50
10.04 Attorney Costs, Expenses and Taxes...................................................... 50
10.05 Indemnification by Borrower............................................................. 51
10.06 Payments Set Aside...................................................................... 51
10.07 Successors and Assigns.................................................................. 51
10.08 Confidentiality......................................................................... 53
10.09 Set-Off................................................................................. 54
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10.10 Interest Rate Limitation................................................................ 54
10.11 Counterparts............................................................................ 54
10.12 Integration............................................................................. 54
10.13 Survival of Representations and Warranties.............................................. 54
10.14 Severability............................................................................ 55
10.15 Governing Law; Submission to Jurisdiction............................................... 55
10.16 Waiver to Right to Trial by Jury........................................................ 55
10.17 Judgment Currency....................................................................... 55
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REVOLVING/TERM LOAN CREDIT AGREEMENT
This REVOLVING/TERM LOAN CREDIT AGREEMENT ("Agreement") is entered into as
of July 6, 2004, among ▇▇▇▇▇▇▇▇, Inc., a Delaware corporation ("Borrower"), each
lender from time to time party hereto (collectively, the "Lenders" and
individually, a "Lender"), and UNION BANK OF CALIFORNIA, N.A., as Agent and as
U.K. Security Trustee.
Borrower has requested that Lenders provide a revolving and term loan
credit facility, and Lenders are willing to do so on the terms and conditions
set forth herein.
In consideration of the mutual covenants and agreements herein contained,
the parties hereto covenant and agree as follows:
ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS
1.01 DEFINED TERMS. As used in this Agreement, the following terms shall
have the meanings set forth below:
"Acquisition Co." means ▇▇▇▇▇▇▇▇ Acquisition Corp., a Delaware corporation
and wholly owned Subsidiary of Borrower.
"Administrative Agent" or "Agent" means Union Bank in its capacity as (a)
Administrative Agent under any of the Loan Documents, and (b) issuer of Letters
of Credit hereunder, as the context requires, or any successor Agent.
"Affiliate" means, with respect to any Person, another Person that
directly or indirectly through one or more intermediaries, Controls, or is
Controlled by or is under common Control with, the Person specified. "Control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of a Person, whether through the
ability to exercise voting power, by contract or otherwise. Without limiting the
generality of the foregoing, a Person shall be deemed to be Controlled by
another Person if such other Person possesses, directly or indirectly, power to
vote 10% or more of the securities having ordinary voting power for the election
of directors, managing general partners or equivalent governing body of such
Person.
"Agent Fee Letter" has the meaning specified in Section 2.09 (b)
"Agent's Office" means Agent's address and, as appropriate, account as set
forth on Schedule 10.02, or such other address or account as Agent may from time
to time notify Borrower and Lenders.
"Agent-Related Persons" means Agent, together with its Affiliates, and the
officers, directors, employees, agents and attorneys-in-fact of such Persons and
Affiliates.
"Aggregate Commitments" means the Commitments of all Lenders.
"Agreement" means this Revolving/Term Loan Credit Agreement.
"Applicable-Rate" means, from time to time, the following percentages per
annum, based upon the ratio of average daily Funded Debt to EBITDA (the
"Financial Covenant") as set forth in the most recent Compliance Certificate
received by Agent pursuant to Section 6.02(b):
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APPLICABLE RATE
Eurodollar Rate
+
Pricing Funded Debt to -----------------
Level EBITDA Ratio Commitment Fee Letters of Credit Base Rate +
----- ------------ -------------- ----------------- -----------
1 Less than or equal to 0.175% 1.25% 0.00%
1.50:1.00
2 Less than or equal to 0.175% 1.50% 0.00%
2:00:1.00 but greater
than 1.50:1.00
3 Less than or equal to 0.25% 1.75% 0.00%
2.25:1.00 but greater
than 2.00:1.00
4 Greater than 2.25:1.00 0.375% 2.00% 0.25%
Any increase or decrease in the Applicable Rate resulting from a change in
the Financial Covenant shall become effective commencing on the 5th Business Day
immediately following the date a Compliance Certificate is delivered pursuant to
Section 6.02(b): provided, however, that if no Compliance Certificate is
delivered when due in accordance with such Section, then Pricing Level 4 shall
apply commencing on the 5th Business Day following the date such Compliance
Certificate was required to have been delivered until the 5th Business Day
immediately following the date a Compliance Certificate is delivered.
"▇▇▇▇▇▇▇▇ EDC" means ▇▇▇▇▇▇▇▇ EDC, LLC, a Delaware limited liability
company and wholly-owned Subsidiary of Borrower.
"Assignment and Assumption Agreement" means an Assignment and Assumption
Agreement substantially in the form of Exhibit D.
"Attorney Costs" means and includes all reasonable fees, expenses and
disbursements of any law firm or other external counsel and, without
duplication, the allocated cost of internal legal services and all expenses and
disbursements of internal counsel.
"Attributable Indebtedness" means, on any date, in respect of any capital
lease of any Person, the capitalized amount thereof that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP.
"Audited Financial Statements" means the audited consolidated balance
sheet of Borrower and its Subsidiaries for the fiscal year ended October 31,
2003, and the related consolidated statements of income or operations,
shareholders' equity and cash flows for such fiscal year of Borrower and its
Subsidiaries, including the notes thereto.
"Availability Period" means the period from and including the Closing Date
to the earliest of (a) the Maturity Date, (b) the date of termination of the
Aggregate Commitments pursuant to Section 2.06, and (c) the date of termination
of the commitment of each Lender to make Loans and of the obligation of Agent to
make L/C Credit Extensions pursuant to Section 8.02.
"Back-Up L/C" means the Letter of Credit issued hereunder for the benefit
of Bank of America, N.A., which Back-Up L/C shall (i) be in the initial face
(but declining) amount of, and (ii) only support drawings made under, the
Existing Letters of Credit.
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"Base Rate" means the rate of interest publicly announced from time to
time by the Administrative Agent in San Francisco, California (or other
headquarters city of the Administrative Agent), as its "reference rate." The
"reference rate" is one of several base rates used by the Administrative Agent
and serves as the basis upon which effective rates of interest are calculated
for loans and other credits making reference thereto. The "reference rate" is
not necessarily the lowest base interest rate used by the Administrative Agent.
The "reference rate" is evidenced by the recording thereof after its
announcement in such internal publication or publications as the Administrative
Agent may designate. Any change in the Base Rate announced by the Administrative
Agent shall take effect at the opening of business on the day specified in the
public announcement of such change.
"Base Rate Committed Loan" means a Committed Loan that is a Base Rate
Loan.
"Base Rate Loan" means a Loan that bears interest based on the Base Rate.
"BIA" means the Bankruptcy and Insolvency Act (Canada) as amended (or any
successor statute) and any rule or regulation thereunder.
"Borrower" has the meaning specified in the introductory paragraph hereto.
"Borrowing" means a Committed Borrowing.
"Business Day" means any day other than a Saturday, Sunday or other day on
which commercial banks are authorized to dose under the Laws of, or are in fact
dosed in, the state where Agent's Office is located and, if such day relates to
any Eurodollar Rate Committed Loan, means any such day on which dealings in
Dollar deposits are conducted by and between banks in the London interbank
eurodollar market.
"Capital Lease Obligations" means all monetary obligations of a Person
under any leasing or similar arrangement which, in accordance with GAAP, is
classified as a capital lease.
"Cash Collateralize" has the meaning specified in Section 2.03(g)
"Cash Income Taxes" means, with respect to any fiscal period, taxes on or
measured by the income of Borrower that are paid or currently payable in Cash by
Borrower during that fiscal period.
"CCAA" means the Companies' Creditors Arrangement Act, as amended (or any
successor statute) and any rule or regulation thereunder.
"Change of Control" means, with respect to any Person, an event or series
of events by which:
(a) any "person" or "group" (as such terms are used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit
plan of such person or its subsidiaries, and any person or entity acting in its
capacity as trustee, agent or other fiduciary or administrator of any such plan)
becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Securities Exchange Act of 1934, except that a person or group shall be deemed
to have "beneficial ownership" of all securities that such person or group has
the right to acquire (such right, an "option right"), whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of 35% or more of the equity securities of such Person entitled to
vote for members of the board of directors or equivalent governing body of such
Person on a fully diluted basis (and, taking into account all such securities
that such person or group has the right to acquire pursuant to any option
right); or
(b) during any period of 12 consecutive months, other than by reason of
removal and/or replacement of any member(s) upon death, retirement, or
disability, a majority of the members of the board of directors or other
equivalent governing body of such Person cease to be composed of individuals:
(i) who were members of that board or equivalent governing body on the first day
of such period, (ii) whose election or nomination to that board or equivalent
governing body was approved by individuals referred to in clause (i) above
constituting at the time of such election or nomination at least a majority of
that board or equivalent governing body or (iii) whose election or nomination to
that board or other equivalent governing body was approved by
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individuals referred to in clauses (i) and (ii) above constituting at the time
of such election or nomination at least a majority of that board or equivalent
governing body (excluding, in the case of both clause (ii) and clause (iii), any
individual whose initial nomination for, or assumption of office as, a member of
that board or equivalent governing body occurs as a result of an actual or
threatened solicitation of proxies or consents for the election or removal of
one or more directors by any person or group other than a solicitation for the
election of one or more directors by or on behalf of the board of directors).
"Closing Date" means the first date all the conditions precedent in
Section 4.01 are satisfied or waived in accordance with Section 10.01 (or, in
the case of Section 4.01(b), waived by the Person entitled to receive the
applicable payment).
"Control Agreement" means a deposit account control agreement, in form and
content reasonably acceptable to Agent.
"Controlled Accounts" means each deposit account of Borrower or any
Guarantor, other than accounts maintained with Union Bank, having a balance at
any time of Fifty Thousand Dollars ($50,000) or more, which accounts shall be
subject to Control Agreements.
"Civil Code" means the Civil Code of Quebec, as amended (or any successor
statute) and any rule or regulation thereunder.
"Code" means the Internal Revenue Code of 1986.
"Collateral" shall mean any and all assets and rights and interests in or
to property of Borrower and each of the other Loan Parties, whether real or
personal, movable or immovable, tangible or intangible, in which a Lien is
granted or purported to be granted pursuant to the Collateral Documents.
"Collateral Documents" means all agreements, instruments and documents now
or hereafter executed and delivered in connection with this Agreement pursuant
to which Liens are granted or purported to be granted to Agent in Collateral
securing all or part of the Obligations each in form and substance satisfactory
to Agent.
"Commitment" means, as to each Lender, its obligation to (a) make
Committed Loans to Borrower pursuant to Section 2.01, and (b) purchase
participations in L/C Obligations, in an aggregate principal amount at any one
time outstanding not to exceed the amount set forth opposite such Lender's name
on Schedule 2.01, or in the Assignment and Assumption Agreement pursuant to
which such Lender becomes a party hereto, as applicable, as such amount may be
adjusted from time to time in accordance with this Agreement.
"Committed Borrowing" means a borrowing consisting of simultaneous
Committed Loans of the same Type and, in the case of Eurodollar Rate Committed
Loans, having the same Interest Period made by each of Lenders pursuant to
Section 2.01.
"Committed Loan" means a Revolving Loan or the Term Loan, as applicable in
the context.
"Committed Loan Notice" means a notice of (a) a Committed Borrowing, (b) a
conversion of Committed Loans from one Type to the other (provided, that the
Term Loan may not be converted to another Type of Loan), or (c) a continuation
of Eurodollar Rate Committed Loans, pursuant to Section 2.02(a), which, if in
writing, shall be substantially in the form of Exhibit A.
"Compliance Certificate" means a certificate substantially in the form of
Exhibit C.
"Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Control" has the meaning specified in the definition of "Affiliate".
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"Credit Extension" means a Borrowing, or an L/C Credit Extension.
"Debtor Relief Laws" means the Bankruptcy Code of the United States, the
BIA, the CCAA, and all other liquidation, conservatorship, bankruptcy,
assignment for the benefit of creditors, moratorium, rearrangement,
receivership, insolvency, reorganization, or similar debtor relief Laws of the
United States or other applicable jurisdictions, foreign or otherwise, from time
to time in effect and affecting the rights of creditors generally.
"Default" means any event or condition that constitutes an Event of
Default or that, with the giving of any notice, the passage of time, or both,
would be an Event of Default.
"Default Rate" means an interest rate per annum which is 3.0% higher than
the rate of interest otherwise applicable under this Agreement, in each case to
the fullest extent permitted by applicable Laws.
"Defaulting Lender" means any Lender that (a) has failed to fund any
portion of the Committed Loans or participations in L/C Obligations required to
be funded by it hereunder within one Business Day of the date required to be
funded by it hereunder, (b) has otherwise failed to pay over to Agent or any
other Lender any other amount required to be paid by it hereunder within one
Business Day of the date when due, unless the subject of a good faith dispute,
or (c) has been deemed insolvent or become the subject of a bankruptcy or
insolvency proceeding.
"Disposition" or "Dispose" means the sale, transfer, license, lease or
other disposition (including any sale and leaseback transaction) of any property
by any Person, including any sale, assignment, transfer or other disposal, with
or without recourse, of any notes or accounts receivable or any rights and
claims associated therewith.
"Dollar" and "$" mean lawful money of the United States.
"EBITDA" means net income, less income or plus loss from discontinued
operations and extraordinary items, plus income taxes, plus interest expense,
plus depreciation, depletion, and amortization. EBITDA shall be calculated at
the end of each fiscal quarter, using the results of that quarter and each of
the three (3) immediately preceding quarters.
"Eligible Assignee" has the meaning specified in Section 10.07(h).
"Environmental Laws" means any and all Federal, state, provincial, local,
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including
those related to hazardous substances or wastes, air emissions and discharges to
waste or public systems.
"Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of Borrower, any other Loan Party or any of their
respective Subsidiaries directly or indirectly resulting from or based upon (a)
violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c)
exposure to any Hazardous Materials, (d) the release or threatened release of
any Hazardous Materials into the environment or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with Borrower within the meaning of Section
414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes
of provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a Pension Plan;
(b) a withdrawal by Borrower or any ERISA Affiliate from a Pension Plan subject
to Section 4063 of ERISA during a plan year in
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which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA)
or a cessation of operations that is treated as such a withdrawal under Section
4062(e) of ERISA; (c) a complete or partial withdrawal by Borrower or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is
in reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Sections 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (e) an event or condition which might reasonably be
expected to constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Pension Plan or
Multiemployer Plan; or (f) the imposition of any liability under Title IV of
ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon Borrower or any ERISA Affiliate.
"Eurodollar Base Rate" has the meaning set forth in the definition of
Eurodollar Rate.
"Eurodollar Rate" means for any Interest Period with respect to any
Eurodollar Rate Committed Loan, a rate per annum determined by Agent pursuant to
the following formula:
Eurodollar Base Rate
Eurodollar Rate = -----------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Base Rate" means, for such Interest Period:
(a) the rate per annum equal to the rate determined by Agent to be
the London interbank offered rate that appears on Page 3750 of the
Telerate screen (or any successor thereto) for deposits in Dollars (for
delivery on the first day of such Interest Period) with a term equivalent
to such Interest Period, determined as of approximately 11:00 a.m. (London
time) two Business Days prior to the first day of such Interest Period, or
(b) if the rate referenced in the preceding clause (a) does not
appear on such page or service or such page or service shall not be
available, the rate per annum equal to the rate determined by Agent to be
the offered rate on such other page or other service that displays an
average British Bankers Association Interest Settlement Rate for deposits
in Dollars (for delivery on the first day of such Interest Period) with a
term equivalent to such Interest Period, determined as of approximately
11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period, or
(c) if the rates referenced in the preceding clauses (a) and (b) are
not available, the rate per annum determined by Agent as the rate of
interest at which deposits in Dollars for delivery on the first day of
such Interest Period in same day funds in the approximate amount of the
Eurodollar Rate Committed Loan being made, continued or converted by Union
Bank and with a term equivalent to such Interest Period would be offered
by Union Bank's London Branch to major banks in the London interbank
eurodollar market at their request at approximately 4:00 p.m. (London
time) two Business Days prior to the first day of such Interest Period.
"Eurodollar Reserve Percentage" means, for any day during any Interest
Period, the reserve percentage (expressed as a decimal, carried out to five
decimal places) in effect on such day, whether or not applicable to any Lender,
under regulations issued from time to time by the Board of Governors of the
Federal Reserve System of the United States for determining the maximum reserve
requirement (including any emergency, supplemental or other marginal reserve
requirement) applicable to any member bank of the Federal Reserve System with
respect to Eurocurrency funding (currently referred to as "Eurocurrency
liabilities"). The Eurodollar Rate for each outstanding Eurodollar Rate Loan
shall be adjusted automatically as of the effective date of any change in the
Eurodollar Reserve Percentage.
"Eurodollar Rate Committed Loan" means a Committed Loan that bears
interest at a rate based on the Eurodollar Rate.
"Event of Default" has the meaning specified in Section 8.01.
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"Existing Letters of Credit" means the Letters of Credit specified in
Schedule 2.03 hereto.
"Federal Funds Rate" means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided that (a) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such transactions on
the next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate (rounded
upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Union Bank
on such day on such transactions as determined by Agent.
"Fixed Charge Coverage Ratio" means, as of the last day of any fiscal
quarter, the ratio of (a) EBITDA for the fiscal period consisting of the four
(4) fiscal quarters ended on that date minus Maintenance Capital Expenditures
made by Borrower and its Subsidiaries during such fiscal period and Cash Income
Taxes paid by Borrower and its Subsidiaries during such fiscal period, to (b)
the sum of, without duplication (i) Interest Expense of Borrower and its
Subsidiaries for such fiscal period plus (ii) the current portion of long-term
debt (including the Term Loan) of Borrower and its Subsidiaries on such date
plus (iii) the current portion of long-term lease obligations of Borrower and
its Subsidiaries on such date. For the purposes of this paragraph, the term
"Subsidiaries" shall exclude Gekko and the Gekko Subsidiaries until after the
third quarter of 2004.
"Fixed Rate" means, with respect to the Term Loan only, a fixed rate per
annum equal to the Treasuries Rate, determined as of the date immediately prior
to the date the Term Loan is made, plus 1.50%.
"Funded Debt" means all outstanding liabilities for borrowed money and
other interest-bearing liabilities, including current and long term liabilities
(including the outstanding Loans and L/C Obligations). Funded Debt shall be
measured as of the last day of each fiscal quarter, except that outstanding
Loans and L/C Obligations shall be calculated on the basis of the average daily
amount of Loans and L/C Obligations outstanding during each fiscal quarter.
"GAAP" means generally accepted accounting principles in the United States
set forth in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or such other
principles as may be approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of
the date of determination, consistently applied.
"Gekko" means GEKKO Brands, L.L.C., an Alabama limited liability company
and, concurrently with (or immediately following) the Closing Date, a
wholly-owned Subsidiary of Borrower.
"Gekko Acquisition" means the purchase by Acquisition Co. of all the
issued and outstanding membership interests in Gekko.
"Gekko Acquisition Documents" means the agreements, documents and
instruments pursuant to which the Gekko Acquisition is consummated.
"Gekko Subsidiaries" means The Game, LLC and Kudzu, L.L.C., each wholly
owned Subsidiaries of Gekko.
"Governmental Authority" means any nation or government, any state,
provincial, or other political subdivision thereof, any agency, authority,
instrumentality, regulatory body, court, administrative tribunal, central bank
or other entity exercising executive, legislative, judicial, taxing, regulatory
or administrative powers or functions of or pertaining to government.
"Guarantors" means, collectively, Acquisition Co., ▇▇▇▇▇▇▇▇ Store I, Inc.,
▇▇▇▇▇▇▇▇ Store II, Inc., Gekko and the Gekko Subsidiaries.
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"Guaranty" means the Guaranty made by the Guarantors in favor of Agent on
behalf of Lenders, in form and substance satisfactory to Agent.
"Guarantee" means, as to any Person, any (a) any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation payable or performable by
another Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect, (i)
to purchase or pay (or advance or supply funds for the purchase or payment of)
such Indebtedness or other obligation, (ii) to purchase or lease property,
securities or services for the purpose of assuring the obligee in respect of
such Indebtedness or other obligation of the payment or performance of such
Indebtedness or other obligation, (iii) to maintain working capital, equity
capital or any other financial statement condition or liquidity or level of
income or cash flow of the primary obligor so as to enable the primary obligor
to pay such Indebtedness or other obligation, or (iv) entered into for the
purpose of assuring in any other manner the obligee in respect of such
Indebtedness or other obligation of the payment or performance thereof or to
protect such obligee against loss in respect thereof (in whole or in part), or
(b) any Lien on any assets of such Person securing any Indebtedness or other
obligation of any other Person, whether or not such Indebtedness or other
obligation is assumed by such Person. The amount of any Guarantee shall be
deemed to be an amount equal to the stated or determinable amount of the related
primary obligation, or portion thereof, in respect of which such Guarantee is
made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof as determined by the guaranteeing Person in good
faith. The term "Guarantee" as a verb has a corresponding meaning.
"Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos-containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Indebtedness" means, as to any Person at a particular time, all of the
following, whether or not included as indebtedness or liabilities in accordance
with GAAP:
(a) all obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures, notes, loan
agreements or other similar instruments;
(b) all direct or contingent obligations of such Person arising
under letters of credit (including standby and commercial), bankers'
acceptances, bank guaranties, surety bonds and similar instruments;
(c) all obligations of such Person to pay the deferred purchase
price of property or services (other than trade accounts payable in the ordinary
course of business);
(d) indebtedness (excluding prepaid interest thereon) secured by a
Lien on property owned or being purchased by such Person (including indebtedness
arising under conditional sales or other title retention agreements), whether or
not such indebtedness shall have been assumed by such Person or is limited in
recourse;
(e) capital leases; and
(f) all Guarantees of such Person in respect of any of the
foregoing.
For all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, unless such Indebtedness is expressly
made non-recourse to such Person. The amount of any capital lease as of any date
shall be deemed to be the amount of Attributable Indebtedness in respect thereof
as of such date.
"Indemnified Liabilities" has the meaning specified in Section 10.05.
"Indemnitees" has the meaning specified in Section 10.05.
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"Information" has the meaning specified in Section 10.08.
"Interest Expense" means, with respect to any Person and as of the last
day of any fiscal period, the sum of (a) all interest, fees, charges and related
expenses (in each case as such expenses are calculated according to GAAP) paid
or payable (without duplication) for that fiscal period by that Person to a
lender in connection with borrowed money (excluding any obligations for fees,
charges and related expenses payable to the issuer of any letter of credit) or
the deferred purchase price of assets that are considered "interest expense"
under GAAP plus (b) the portion of rent paid or payable (without duplication)
for that fiscal period by that Person under Capital Lease Obligations that
should be treated as interest in accordance with Financial Accounting Standards
Board Statement No. 13
"Interest Payment Date" means, (a) as to any Eurodollar Rate Committed
Loan, the last day of each Interest Period applicable to such Loan and the
Maturity Date; provided, however, that if any Interest Period for a Eurodollar
Rate Committed Loan exceeds three months, the respective dates that fall every
three months after the beginning of such Interest Period shall also be Interest
Payment Dates; (b) as to any Base Rate Loan, the last Business Day of each
January, April, July and October and the Maturity Date; and (c) as to the Term
Loan, each Term Loan Amortization Date.
"Interest Period" means as to each Eurodollar Rate Committed Loan, the
period commencing on the date such Eurodollar Rate Committed Loan is disbursed
or converted to or continued as a Eurodollar Rate Committed Loan and ending on
the date one, two, three or six months thereafter, as selected by Borrower in
its Committed Loan Notice; provided that
(a) any Interest Period that would otherwise end on a day that is
not a Business Day shall be extended to the next succeeding Business Day unless,
such Business Day falls in another calendar month, in which case such Interest
Period shall end on the next preceding Business Day;
(b) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall end on the last
Business Day of the calendar month at the end of such Interest Period; and
(c) no Interest Period shall extend beyond the Maturity Date.
"Investment" means, as to any Person, any direct or indirect acquisition
or investment by such Person, whether by means of (a) the purchase or other
acquisition of capital stock or other securities of another Person, (b) a loan,
advance or capital contribution to, Guarantee or assumption of debt of, or
purchase or other acquisition of any other debt or equity participation or
interest in, another Person, including any partnership or joint venture interest
in such other Person, or (c) the purchase or other acquisition (in one
transaction or a series of transactions) of assets of another Person that
constitute a business unit. For purposes of covenant compliance, the amount of
any Investment shall be the amount actually invested, without adjustment for
subsequent increases or decreases in the value of such Investment.
"IRS" means the United States Internal Revenue Service.
"Laws" means, collectively, all international, foreign, Federal, state,
provincial, and local statutes, treaties, rules, by-laws, guidelines,
regulations, ordinances, codes and administrative or judicial precedents or
authorities, including the interpretation or administration thereof by any
Governmental Authority charged with the enforcement, interpretation or
administration thereof, and all applicable administrative orders, directed
duties, requests, licenses, authorizations and permits of, and agreements with,
any Governmental Authority, in each case whether or not having the force of law.
"L/C Advance" means, with respect to each Lender, such Lenders funding of
its participation in any L/C Borrowing in accordance with its Pro Rata Share.
"L/C Borrowing" means an extension of credit resulting from a drawing
under any Letter of Credit which has not been reimbursed on the date when made
or refinanced as a Committed Borrowing.
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"L/C Credit Extension" means, with respect to any Letter of Credit, the
issuance thereof or extension of the expiry date thereof, or the renewal or
increase of the amount thereof.
"L/C Obligations" means, as at any date of determination, the aggregate
undrawn face amount of all outstanding Letters of Credit plus the aggregate of
all Unreimbursed Amounts, including all L/C Borrowings.
"Lender" has the meaning specified in the introductory paragraph hereto
and, as the context requires, includes Agent in its capacity as issuer of
Letters of Credit hereunder.
"Lending Office" means, as to any Lender, the office or offices of such
Lender described as such on Schedule 10.02, or such other office or offices as a
Lender may from time to time notify Borrower and Agent.
"Letter of Credit" means any letter of credit issued hereunder and shall
include the Back-Up L/C. A Letter of Credit may be a commercial letter of credit
or a standby letter of credit.
"Letter of Credit Application" means an application and agreement for the
issuance or amendment of a Letter of Credit in the form from time to time in use
by Agent.
"Letter of Credit Expiration Date" means, (a) with respect to a commercial
Letter of Credit, the date not greater than 180 days from issuance date, not to
extend more than 90 days beyond the Maturity Date; and (b) with respect to a
standby Letter of Credit, the date not greater than 365 days from the issuance
date, not to extend more than 365 days beyond the Maturity Date.
"Letter of Credit Sublimit" means an amount equal to $30,000,000 with
respect to commercial letters of credit, and $3,000,000 with respect to standby
letters of credit. The Letter of Credit Sublimit is part of, and not in addition
to, the Aggregate Commitments.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge, or preference,
priority or other security interest or preferential arrangement of any kind or
nature whatsoever, ▇▇▇▇▇▇ or inchoate (including any conditional sale or other
title retention agreement, and any financing lease having substantially the same
economic effect as any of the foregoing).
"Loan" means an extension of credit by a Lender to Borrower under Article
II in the form of a Committed Loan or the Term Loan, as applicable.
"Loan Documents" means this Agreement, each Note, the Agent Fee Letter,
the Real Estate Collateral Documents, each Collateral Document, the Guaranty,
and such other documents as may be required hereunder.
"Loan Parties" means, collectively, Borrower and each Person (other than
Agent, U.K. Security Trustee or any Lender) executing a Loan Document including,
without limitation, each Guarantor and each Person executing a Collateral
Document.
"Maintenance Capital Expenditures" means the amount of capital spending by
a Person, during a period of determination, necessary to sustain such Person's
current level of sales and earnings which, in accordance with GAAP, is
classified as maintenance capital expenditures, not to exceed $5,000,000 per
annum.
"Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties, liabilities
(actual and contingent), condition (financial or otherwise) or prospects of
Borrower or Borrower and its Subsidiaries taken as a whole; (b) a material
impairment of the ability of any Loan Party to perform its obligations under any
Loan Document to which it is a party; or (c) a material adverse effect upon the
legality, validity, binding effect or enforceability against any Loan Party of
any Loan Document to which it is a party.
"Maturity Date" means July 6, 2009.
"Monthly Payment Date" means the last Business Day of each calendar month
during the term hereof.
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"Multiemployer Plan" means any employee benefit plan of the type described
in Section 4001(a)(3) of ERISA, to which Borrower or any ERISA Affiliate makes
or is obligated to make contributions, or during the preceding five plan years,
has made or been obligated to make contributions.
"Note" means, means a promissory note made by Borrower in favor of a
Lender evidencing Loans made by such Lender, substantially in the form of
Exhibit B-1 or B-2, as applicable.
"Obligations" means all advances to, and debts, liabilities, obligations,
covenants and duties of, any Loan Party arising under any Loan Document or
otherwise with respect to any Loan or Letter of Credit between any Loan Party
and any Lender or any Affiliate of any Lender, whether direct or indirect
(including those acquired by assumption), absolute or contingent, due or to
become due, now existing or hereafter arising and including interest and fees
that accrue after the commencement by or against any Loan Party or any Affiliate
thereof of any proceeding under any Debtor Relief Laws naming such Person as the
debtor in such proceeding, regardless of whether such interest and fees are
allowed claims in such proceeding.
"Organization Documents" means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation and operating agreement; and (c) with respect to any partnership,
joint venture, trust or other form of business entity, the partnership, joint
venture or other applicable agreement of formation and any agreement,
instrument, filing or notice with respect thereto filed in connection with its
formation or organization with the applicable Governmental Authority in the
jurisdiction of its formation or organization and, if applicable, any
certificate or articles of formation or organization of such entity.
"Outstanding Amount" means (a) with respect to Committed Loans on any
date, the aggregate outstanding principal amount thereof after giving effect to
any borrowings and prepayments or repayments of Committed Loans occurring on
such date; and (b) with respect to any L/C Obligations on any date, the amount
of such L/C Obligations on such date after giving effect to any L/C Credit
Extension occurring on such date and any other changes in the aggregate amount
of the L/C Obligations as of such date, including as a result of any
reimbursements of outstanding unpaid drawings under any Letters of Credit or any
reductions in the maximum amount available for drawing under Letters of Credit
taking effect on such date.
"Participant" has the meaning specified in Section 10.07(d).
"PBA" means the Pensions Benefits Act of Ontario as amended (and any
successor statute) and any rule or regulation thereunder.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plan" means any "employee pension benefit plan" (as such term is
defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA or under the applicable laws of any other
jurisdiction, including the PBA, and is sponsored or maintained by Borrower or
any ERISA Affiliate or to which Borrower or any ERISA Affiliate contributes or
has an obligation to contribute, or in the case of a multiple employer or other
plan described in Section 4064(a) of ERISA, has made contributions at any time
during the immediately preceding five plan years.
"Person" means any individual, trustee, corporation, general partnership,
limited partnership, limited liability company, joint stock company, trust,
unincorporated organization, bank, business association, firm, joint venture or
Governmental Authority.
"Plan" means any "employee benefit plan" (as such term is defined in
Section 3(3) of ERISA) established by Borrower under the applicable laws of any
jurisdiction or, with respect to any such plan that is subject to Section 412 of
the Code or Title IV of ERISA, any ERISA Affiliate.
"PPSA" means the Personal Property Security Act of Ontario (or any
successor statute) or similar legislation (including, without limitation, the
Civil Code) of any other jurisdiction the laws of which are required by
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such legislation to be applied in connection with the issue, perfection,
enforcement, validity or effect of security interests.
"Prepayment Fee" has the meaning set forth in Section 3.06.
"Pro Rata Share" means, with respect to each Lender, at any time, a
fraction (expressed as a percentage), carried out to the ninth decimal place),
the numerator of which is the amount of the Commitment of such Lender at such
time and the denominator of which is the amount of the Aggregate Commitments at
such time; provided that if the commitment of each Lender to make Loans and the
obligation of Agent to make L/C Credit Extensions have been terminated pursuant
to Section 8.02, then the Pro Rata Share of each Lender shall be determined
based on the Pro Rata Share of such Lender immediately prior to such termination
and after giving effect to any subsequent assignments made pursuant to Section
10.07. The initial Pro Rata Share of each Lender is set forth opposite the name
of such Lender on Schedule 2.01 or in the Assignment and Assumption Agreement
pursuant to which such Lender becomes a party hereto, as applicable.
"Quick Assets" means cash, short-term cash investments, net trade
receivables and marketable securities not classified as long-term investments.
"Real Estate Collateral Documents" means those certain Consents to Removal
of Personal Property, Landlord Waivers, Bailment Agreements, and similar or
related documents for execution with respect to Borrower's leased real property
and/or warehoused (or similar) assets.
"Register" has the meaning set forth in Section 10.07(c).
"Reportable Event" means any of the events set forth in Section 4043(c) of
ERISA, other than events for which the 30 day notice period has been waived.
"Request for Credit Extension" means (a) with respect to a Borrowing,
conversion or continuation of Committed Loans, a Committed Loan Notice, and (b)
with respect to an L/C Credit Extension, a Letter of Credit Application.
"Required Lenders" means, as of any date of determination, Lenders having
more than 66 2/3% of the Aggregate Commitments or, if the commitment of each
Lender to make Loans and the obligation of Agent to make L/C Credit Extensions
have been terminated pursuant to Section 8.02, Lenders holding in the aggregate
more than 66 2/3% of the Total Outstandings (with the aggregate amount of each
Lender's risk participation and funded participation in L/C Obligations being
deemed "held" by such Lender for purposes of this definition); provided that the
Commitment of, and the portion of the Total Outstandings held or deemed held by,
any Defaulting Lender shall be excluded for purposes of making a determination
of Required Lenders; and provided, further, in the event two (2) or more Lenders
consolidate or merge in or with each other such that the merged, resulting
Lender's pro rata share is 66 2/3% or more of the Aggregate Commitment, or Total
Outstandings, as the case may be as set forth herein, then Required Lenders
shall mean two (2) or more Lenders holding in the aggregate more than 66 2/3% of
the Total Commitment.
"Responsible Officer" means the chief executive officer, president, chief
financial officer, treasurer or assistant treasurer of a Loan Party. Any
document delivered hereunder that is signed by a Responsible Officer of a Loan
Party shall be conclusively presumed to have been authorized by all necessary
corporate, partnership and/or other action on the part of such Loan Party and
such Responsible Officer shall be conclusively presumed to have acted on behalf
of such Loan Party.
"Restricted Payment" means any dividend or other distribution (whether in
cash, securities or other property) with respect to any capital stock or other
equity interest of Borrower or any Subsidiary, or any payment (whether in cash,
securities or other property), including any sinking fund or similar deposit on
account of the purchase, redemption, retirement, acquisition, cancellation or
termination of any such capital stock or other equity interest or of any option,
warrant or other right to acquire any such capital stock or other equity
interest, and excluding any distribution of stock options, or distribution of
shares of common stock upon the exercise of such stock options, to employees,
directors or consultants of Borrower or any of its Subsidiaries.
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"Revolving Loan" means a Loan made under the Revolving Loan Commitment,
and may be either Base Rate Committed Loans or Eurodollar Rate Committed Loans.
"Revolving Loan Advance" means an advance made under the Revolving Loan
Commitment.
"Revolving Loan Commitment" means $35,000,000. The respective Pro Rata
Shares of the Lenders with respect to the Revolving Loan Commitment are set
forth in Schedule 2.01.
"Revolving Loan Note" means any of the promissory notes made by Borrower
to a Lender evidencing Revolving Loan Advances under that Lender's Pro Rata
Share of the Revolving Loan Commitment, substantially in the form of Exhibit
B-1, either as originally executed or as the same may from time to time be
supplemented, modified, amended, restated, renewed, extended or supplanted.
"Store III" means ▇▇▇▇▇▇▇▇ Store III, Inc., a wholly owned Subsidiary of
Borrower.
"Subsidiary" of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity of which a majority of the
shares of securities or other interests having ordinary voting power for the
election of directors or other governing body (other than securities or
interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, or the management of which is otherwise
controlled, directly, or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise specified, all references herein to a
"Subsidiary" or to "Subsidiaries" shall refer to a Subsidiary or Subsidiaries of
Borrower, including but not limited to Gekko.
"Tangible Net Worth" means the value of total assets (including leaseholds
and leasehold improvements and reserves against assets but excluding goodwill,
patents, trademarks, trade names, organization expense, unamortized debt
discount and expense, capitalized or deferred research and development costs,
deferred marketing expenses, and other like intangibles, and monies due from
Affiliates, officers, directors, employees, shareholders, members or managers)
less Total Liabilities, including but not limited to accrued and deferred income
taxes.
"Taxes" has the meaning specified in Section 3.01(a).
"Term Loan" means the Loan made under the Term Loan Commitment, which
shall bear interest based upon the Fixed Rate.
"Term Loan Advance" means an advance made under the Term Loan Commitment.
"Term Loan Amortization Date" means the last Business Day of the first
full month after the Closing Date, each Monthly Payment Date thereafter
occurring prior to the Maturity Date, and the Maturity Date.
"Term Loan Commitment" means $20,000,000. The respective Pro Rata Shares
of the Lenders with respect to the Term Loan Commitment are set forth in
Schedule 2.01.
"Term Loan Note" means any of the promissory notes made by Borrower to a
Lender evidencing Term Loan Advances by that Lender, substantially in the form
of Exhibit B-2, either as originally executed or as the same may from time to
time be supplemented, modified, amended, restated, renewed, extended or
supplanted.
"Termination Event" means (a) the whole or partial withdrawal of any Loan
Party from a Plan during a plan year, or (b) the filing of a notice of interest
to terminate in whole or in part a Plan or the treatment of a Plan amendment as
a termination of partial termination; or (c) the institution of proceedings by
any Governmental Authority to terminate in whole or in part or have a trustee
appointed to administer a Plan; or (d) any other event or condition which might
constitute grounds for the termination of, winding up or partial termination of
winding up or the appointment of trustee to administer, any Plan.
"Threshold Amount" means $500,000.
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"Total Liabilities" means the sum of current liabilities plus long term
liabilities.
"Total Outstandings" means the aggregate Outstanding Amount of all Loans
and all L/C Obligations.
"Treasuries Rate" means a per annum rate of interest based on the
percentage yield on U.S. Treasury securities, plus a margin, set by Union Bank
in its discretion on the Closing Date, related to the general cost of corporate
borrowing for a term comparable to the term of the Term Loan, plus Lenders'
costs, including the cost, if any, of reserve requirements and FDIC assessments.
"Trust Property" means all or any of the assets, rights, powers,
authorities, and discretions at any time subject to or expressed to be subject
to the security from time to time constituted by or arising pursuant to the U.K.
Security Documents or rested in the U.K. Security Trustee or given under or
pursuant to the U.K. Security Documents including all income and other sums at
any time received or receivable by the U.K. Security Trustee in respect thereof.
"Type" means with respect to a Committed Loan, its character as a Base
Rate Committed Loan, a Eurodollar Rate Committed Loan, or the Term Loan.
"U.K. Security Documents" means the Collateral Documents governed by
English law in terms of which the U.K. Security Trustee holds the security
thereby created for the benefit of the Agent, Administrative Agent, Union Bank,
and the Lenders and any other document from time to time granted as security for
the Obligations in favor of the U.K. Security Trustee for the benefit of the
Agent, Administrative Agent, Union Bank and the Lenders.
"U.K. Security Trustee" means Union Bank in its capacity as security
trustee of the security created by the U.K. Security Documents.
"Unfunded Pension Liability" means the excess of a Pension Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Pension Plan's assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the applicable
plan year, and in the case of any Pension Plan or Plan regulated by the PBA or
the applicable laws of any jurisdiction, any unfunded or solvency deficiency as
determined under the PBA or other applicable law.
"Union Bank" means UNION BANK OF CALIFORNIA, N.A. and its successors.
"United States" and "U.S." mean the United States of America.
"Unreimbursed Amount" has the meaning set forth in Section 2.03(c)(i).
1.02 OTHER INTERPRETIVE PROVISIONS. With reference to this Agreement and
each other Loan Document, unless otherwise specified herein or in such other
Loan Document:
(a) The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.
(b) (i) The words "herein", "hereto", "hereof" and "hereunder" and
words of similar import when used in any Loan Document shall refer to such Loan
Document as a whole and not to any particular provision thereof; (ii) Article,
Section, Exhibit and Schedule references are to the Loan Document in which such
reference appears; (iii) the term "including" is by way of example and not
limitation; and (iv) the term "documents" includes any and all instruments,
documents, agreements, certificates, notices, reports, financial statements and
other writings, however evidenced, whether in physical or electronic form.
(c) In the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including;" the words "to"
and "until" each mean "to but excluding;" and the word "through" means "to and
including."
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(d) Section headings herein and in the other Loan Documents are
included for convenience of reference only and shall not affect the
interpretation of this Agreement or any other Loan Document.
1.03 ACCOUNTING TERMS.
(a) All accounting terms not specifically or completely defined
herein shall be construed in conformity with, and all financial data (including
financial ratios and other financial calculations) required to be submitted
pursuant to this Agreement shall be prepared in conformity with, GAAP applied on
a consistent basis, as in effect from time to time, applied in a manner
consistent with that used in preparing the Audited Financial Statements, except
as otherwise specifically prescribed herein.
(b) If at any time any change in GAAP would affect the computation
of any financial ratio or requirement set forth in any Loan Document, and either
Borrower or the Required Lenders shall so request, Agent, Lenders and Borrower
shall negotiate in good faith to amend such ratio or requirement to preserve the
original intent thereof in light of such change in GAAP (subject to the approval
of the Required Lenders); provided that, until so amended, (i) such ratio or
requirement shall continue to be computed in accordance with GAAP prior to such
change therein and (ii) Borrower shall provide to Agent and Lenders financial
statements and other documents required under this Agreement or as reasonably
requested hereunder setting forth a reconciliation between calculations of such
ratio or requirement made before and after giving effect to such change in GAAP.
1.04 ROUNDING. Any financial ratios required to be maintained by any Loan
Party pursuant to this Agreement shall be calculated by dividing the appropriate
component by the other component, carrying the result to one place more than the
number of places by which such ratio is expressed herein and rounding the result
up or down to the nearest number (with a rounding-up if there is no nearest
number).
1.05 REFERENCES TO AGREEMENTS AND LAWS. Unless otherwise expressly
provided herein, (a) references to Organization Documents, agreements (including
the Loan Documents) and other contractual instruments shall be deemed to include
all subsequent amendments, restatements, extensions, supplements and other
modifications thereto, but only to the extent that such amendments,
restatements, extensions, supplements and other modifications are not prohibited
by any Loan Document; and (b) references to any Law shall include all statutory
and regulatory provisions consolidating, amending, replacing, supplementing or
interpreting such Law.
1.06 LETTER OF CREDIT AMOUNTS. Unless otherwise specified, all references
herein to the amount of a Letter of Credit at any time shall be deemed to mean
the maximum face amount of such Letter of Credit after giving effect to all
increases thereof contemplated by such Letter of Credit or the Letter of Credit
Application therefor, whether or not such maximum face amount is in effect at
such time.
ARTICLE II. THE COMMITMENTS AND CREDIT EXTENSIONS.
2.01 LOANS.
(a) Revolving Loans. Subject to the terms and conditions set forth
herein, at any time and from time to time on any Business Day during the
Availability Period, each Lender shall, pro rata according to that Lender's Pro
Rata Share of the Revolving Commitment, make advances (each such advance, a
"Revolving Loan Advance") to Borrower under the Revolving Commitment in such
amounts as Borrower may request in an aggregate amount not to exceed at any time
outstanding the amount of such Lender's Commitment; provided, however, that
after giving effect to any Committed Borrowing, (i) the Total Outstandings shall
not exceed the Aggregate Commitments, and (ii) the aggregate Outstanding Amount
of the Committed Loans of any Lender, plus such Lender's Pro Rata Share of the
Outstanding Amount of all L/C Obligations, shall not exceed such Lender's
Commitment. Within the limits of each Lender's Commitment, and subject to the
other terms and conditions hereof, Borrower may borrow under this Section
2.01(a), prepay under Section 2.05, and reborrow under this Section 2.01(a).
(b) Term Loan. Subject to the terms and conditions set forth herein,
on the Closing Date, each Lender shall, pro rata according to that Lender's Pro
Rata Share of the Term Loan Commitment, make an advance (each such advance, a
"Term Loan Advance") to Borrower under the Term Loan Commitment such that
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the aggregate of all such Term Loan Advances equals the Term Loan Commitment.
Amounts repaid under the Term Loan Commitment may not be reborrowed.
2.02 BORROWINGS, CONVERSIONS AND CONTINUATIONS OF COMMITTED LOANS.
(a) Each Committed Borrowing, each conversion of Committed Loans
from one Type to the other, and each continuation of Eurodollar Rate Committed
Loans shall be made upon Borrowers irrevocable notice to Agent, which may be
given by telephone. Each such notice must be received by Agent not later than
11:00 a.m., Los Angeles time, (i) three Business Days prior to the requested
date of any Borrowing of, conversion to or continuation of Eurodollar Rate
Committed Loans or of any conversion of Eurodollar Rate Committed Loans to Base
Rate Committed Loans, or (ii) on the requested date of any Borrowing of Base
Rate Committed Loans. Each telephonic notice by Borrower pursuant to this
Section 2.02(a) must be confirmed promptly by delivery to Agent of a written
Committed Loan Notice, appropriately completed and signed by a Responsible
Officer of Borrower. Except as provided in Section 2.03(c), each Borrowing of,
conversion to or continuation of Eurodollar Rate Committed Loans shall be in a
principal amount of $500,000 or a whole multiple of $500,000 in excess thereof.
Each Borrowing of or conversion to Base Rate Committed Loans shall be in a
principal amount of $250,000 or a whole multiple of $250,000 in excess thereof.
Each Committed Loan Notice (whether telephonic or written) shall specify (i)
whether Borrower is requesting a Committed Borrowing, a conversion of Committed
Loans from one Type to the other (provided that the Term Loan may not be
converted to another Type of Loan), or a continuation of Eurodollar Rate
Committed Loans, (ii) the requested date of the Borrowing, conversion or
continuation, as the case may be (which shall be a Business Day), (iii) the
principal amount of Committed Loans to be borrowed, converted or continued, (iv)
the Type of Committed Loans to be borrowed or to which existing Committed Loans
are to be converted, and (v) if applicable, the duration of the Interest Period
with respect thereto. If Borrower fails to specify a Type of Committed Loan in a
Committed Loan Notice or if Borrower fails to give a timely notice requesting a
conversion or continuation, then the applicable Committed Loans shall be made,
or converted to, Base Rate Loans. Any such automatic conversion to Base Rate
Loans shall be effective as of the last day of the Interest Period then in
effect with respect to the applicable Eurodollar Rate Committed Loans. If
Borrower requests a Borrowing of, conversion to, or continuation of Eurodollar
Rate Committed Loans in any such Committed Loan Notice, but fails to specify an
Interest Period, it will be deemed to have specified an Interest Period of one
month.
(b) Following receipt of a Committed Loan Notice, Agent shall
promptly notify each Lender of the amount of its Pro Rata Share of the
applicable Committed Loans, and if no timely notice of a conversion or
continuation is provided by Borrower, Agent shall notify each Lender of the
details of any automatic conversion to Base Rate Loans described in the
preceding subsection. In the case of a Committed Borrowing, each Lender shall
make the amount of its Committed Loan available to Agent in immediately
available funds at Agent's Office not later than 1:00 p.m., Los Angeles time, on
the Business Day specified in the applicable Committed Loan Notice. Upon
satisfaction of the applicable conditions set forth in Section 4.02 (and, if
such Borrowing is the initial Credit Extension, Section 4.01), Agent shall make
all funds so received available to Borrower in like funds as received by Agent
either by (i) crediting the account of Borrower on the books of Union Bank with
the amount of such funds or (ii) wire transfer of such funds, in each case in
accordance with instructions provided to (and reasonably acceptable to) Agent by
Borrower; provided, however, that if, on the date of the Committed Loan Notice
with respect to such Borrowing is given by Borrower there are L/C Borrowings
outstanding, then the proceeds of such Borrowing shall be applied, first, to the
payment in full of any such L/C Borrowings, and second, to Borrower as provided
above.
(c) Except as otherwise provided herein, a Eurodollar Rate Committed
Loan may be continued or converted only on the last day of an Interest Period
for such Eurodollar Rate Committed Loan. During the existence of a Default, no
Loans may be requested as, converted to or continued as Eurodollar Rate
Committed Loans without the consent of the Required Lenders, and the Required
Lenders may demand that any or all of the then outstanding Eurodollar Rate
Committed Loans be converted immediately to Base Rate Committed Loans and
Borrower agrees to pay all amounts due under Section 3.05 in accordance with the
terms thereof due to any such conversion.
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(d) Agent shall promptly notify Borrower and Lenders of the interest
rate applicable to any Interest Period for Eurodollar Rate Committed Loans upon
determination of such interest rate. The determination of the Eurodollar Rate by
Agent shall be conclusive in the absence of manifest error.
(e) After giving effect to all Committed Borrowings, all conversions
of Committed Loans from one Type to the other, and all continuations of
Committed Loans as the same Type, there shall not be more than six Interest
Periods in effect with respect to Committed Loans.
2.03 LETTERS OF CREDIT.
(a) The Letter of Credit Commitment.
(i) Subject to the terms and conditions set forth herein, (A)
Agent agrees, in reliance upon the agreements of the other Lenders set
forth in this Section 2.03: (1) from time to time on any Business Day
during the period from the Closing Date until the Letter of Credit
Expiration Date, to issue Letters of Credit for the account of Borrower
[or certain Subsidiaries], and to amend [or renew] Letters of Credit
previously issued by it, in accordance with subsection (b) below, and (2)
to honor drafts under the Letters of Credit; and (B) Lenders severally
agree to participate in Letters of Credit issued for the account of
Borrower; provided that Agent shall not be obligated to make any L/C
Credit Extension with respect to any Letter of Credit, and no Lender shall
be obligated to participate in, any Letter of Credit if as of the date of
such L/C Credit Extension, (x) the Total Outstandings would exceed the
Aggregate Commitments, (y) the aggregate Outstanding Amount of the
Committed Loans of any Lender, plus such Lender's Pro Rata Share of the
Outstanding Amount of all L/C Obligations would exceed-such Lenders
Commitment, or (z) the Outstanding Amount of the L/C Obligations would
exceed the Letter of Credit Sublimit. Within the foregoing limits, and
subject to the terms and conditions hereof, (x) Borrower's ability
to-obtain-Letters-of Credit shall be fully revolving, and accordingly
Borrower may, during the foregoing period, obtain Letters of Credit to
replace Letters of Credit that have expired or that have been drawn upon
and reimbursed, and (y) on the Closing Date, Agent shall issue the Back-Up
L/C.
(ii) Agent shall be under no obligation to issue any Letter of
Credit if:
(A) any order, judgment or decree of any Governmental
Authority or arbitrator shall by its terms purport to enjoin or
restrain Agent from issuing such Letter of Credit, or any Law
applicable to Agent or any request or directive (whether or not
having the force of law) from any Governmental Authority with
jurisdiction over Agent shall prohibit, or request that Agent
refrain from, the issuance of letters of credit generally or such
Letter of Credit in particular or shall impose upon Agent with
respect to such Letter of Credit any restriction, reserve or capital
requirement (for which Agent is not otherwise compensated hereunder)
not in effect on the Closing Date, or shall impose upon Agent any
unreimbursed loss, cost or expense which was not applicable on the
Closing Date and which Agent in good ▇▇▇▇▇ ▇▇▇▇▇ material to it;
(B) subject to Section 2.03(b)(iv), the expiry date of
such requested Letter of Credit would occur more than twelve months
after the date of issuance or last renewal, unless the Required
Lenders have approved such expiry date;
(C) the expiry date of such requested standby Letter of
Credit would occur after the Maturity Date, unless Borrower shall,
on or before, the Maturity Date, Cash Collateralize (as defined in
Section 2.03(g) hereof), the Outstanding Amount of such Letter of
Credit;
(D) the issuance of such Letter of Credit would violate
one or more policies of Agent; or
(E) such Letter of Credit is in an initial amount less
than $10,000, in the case of a commercial Letter of Credit, or
$50,000, in the case of a standby Letter of Credit, or is to be
denominated in a currency other than Dollars.
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(iii) Agent shall be under no obligation to amend any Letter
of Credit if (A) Agent would have no obligation at such time to issue such
Letter of Credit in its amended form under the terms hereof, or (B) the
beneficiary of such Letter of Credit does not accept the proposed
amendment to such Letter of Credit.
(iv) Each commercial Letter of Credit will require drafts
payable at sight or up to 60 days after sight.
(b) Procedures for Issuance and Amendment of Letters of Credit:
Auto-Renewal Letters of Credit.
(i) Each Letter of Credit shall be issued or amended, as the
case may be, upon the request of Borrower delivered to Agent in the form
of a Letter of Credit Application, appropriately completed and signed by a
Responsible Officer of Borrower. Such Letter of Credit Application must be
received by Agent not later than 11:00 a.m., Los Angeles time, at least
two Business Days (or such later date and time as Agent may agree in a
particular instance in its sole discretion) prior to the proposed issuance
date or date of amendment, as the case may be.
(ii) Promptly after receipt of any Letter of Credit
Application by Agent at the address set forth in Schedule 10.02 for
receiving Letter of Credit Applications and related correspondence, if the
requested issuance or amendment is permitted in accordance with the terms
hereof, then, subject to the terms and conditions hereof, Agent shall, on
the requested date, issue a Letter of Credit for the account of Borrower
or applicable Subsidiary or enter into the applicable amendment, as the
case may be, in each case in accordance with Agent's usual and customary
business practices. Immediately upon the issuance of each Letter of
Credit, each Lender shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from Agent a risk participation in
such Letter of Credit in an amount equal to the product of such Lender's
Pro Rata Share times the amount of such Letter of Credit
(iii) Promptly after its delivery of any Letter of Credit or
any amendment to a Letter of Credit to an advising bank with respect
thereto or to the beneficiary thereof, Agent will also deliver to Borrower
a true and complete copy of such Letter of Credit or amendment.
(iv) If Borrower so requests in any applicable Letter of
Credit Application, Agent may, in it sole and absolute discretion, agree
to issue a Letter of Credit that has automatic renewal provisions (each,
an "Auto-Renewal Letter of Credit"); provided that any such Auto-Renewal
Letter of Credit must permit Agent to prevent any such renewal at least
once in each twelve-month period (commencing with the date of issuance of
such Letter of Credit) by giving prior notice to the beneficiary thereof
not later than a day (the "Nonrenewal Notice Date") in each such
twelve-month period to be agreed upon at the time such Letter of Credit is
issued. Unless otherwise directed by Agent, Borrower shall not be required
to make a specific request to Agent for any such renewal. Once an
Auto-Renewal Letter of Credit has been issued, Lenders shall be deemed to
have authorized (but may not require) Agent to permit the renewal of such
Letter of Credit at any time to an expiry date not later than the Letter
of Credit Expiration Date; provided, however, that Agent shall not permit
any such renewal if (A) Agent has determined that it would have no
obligation at such time to issue such Letter of Credit in its renewed form
under the terms hereof (by reason of Section 2.03a(ii) or otherwise), or
(B) it has received notice (which may be by telephone or in writing) at
least five (5) Business Days before the Nonrenewal Notice Date (1) from
the Required Lenders that they have elected not to permit such renewal or
(2) from any Lender or Borrower that one or more of the applicable
conditions specified in Section 4.02 is not then satisfied.
Notwithstanding anything to the contrary contained herein, (x) Agent shall
have no obligation to permit the renewal of any Auto Renewal Letter of
Credit at any time, and (y) the Back-Up L/C shall have an expiry date not
later than the last expiry date of any of the Existing Letters of Credit.
(c) Drawings and Reimbursements; Funding of Participations.
(i) Upon receipt from the beneficiary of any Letter of Credit
of any notice of drawing under such Letter of Credit, Agent shall notify
Borrower thereof. Not later than 10:00 a.m., Los Angeles
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time, on the date of any payment by Agent under a Letter of Credit (each
such date, an "Honor Date")(or the next succeeding Business Day if notice
of drawing was received by Borrower after 10:00 a.m., Los Angeles time, on
the Honor Date), Borrower shall reimburse Agent in an amount equal to the
amount of such drawing. If Borrower fails to so reimburse Agent by such
time, Agent shall promptly notify each Lender of the Honor Date, the
amount of the unreimbursed drawing (the "Unreimbursed Amount"), and the
amount of such Lender's Pro Rata Share thereof. In such event, Borrower
shall be deemed to have requested a Committed Borrowing of Base Rate Loans
to be disbursed on the Honor Date in an amount equal to the Unreimbursed
Amount, without regard to the minimum and multiples specified in Section
2.02 for the principal amount of Base Rate Loans, but subject to the
amount of the unutilized portion of the Aggregate Commitments and the
conditions set forth in Section 4.02 (other than the delivery of a
Committed Loan Notice). Any notice given by Agent pursuant to this Section
2.03(c)(i) may be given by telephone if immediately confirmed in writing;
provided that the lack of such an immediate confirmation shall not affect
the conclusiveness or binding effect of such notice.
(ii) Each Lender (including Agent in its capacity as a Lender)
shall upon any notice pursuant to Section 2.03(c)(i) make funds available
to Agent at Agent's Office in an amount equal to its Pro Rata Share of the
Unreimbursed Amount not later than 1:00 p.m., Los Angeles time, on the
Business Day specified in such notice by Agent, whereupon, subject to the
provisions of Section 2.03(c)(iii), each Lender that so makes funds
available shall be deemed to have made a Base Rate Committed Loan to
Borrower in such amount.
(iii) With respect to any Unreimbursed Amount that is not
fully refinanced by a Committed Borrowing of Base Rate Loans because the
conditions set forth in Section 4.02 cannot be satisfied or for any other
reason, Borrower shall be deemed to have incurred from Agent an L/C
Borrowing in the amount of the Unreimbursed Amount that is not so
refinanced, which L/C Borrowing shall be due and payable on demand
(together with interest) and shall bear interest at the Default Rate. In
such event, each Lenders payment to Agent pursuant to Section 2.03(c)(ii)
shall be deemed payment in respect of its participation in such L/C
Borrowing and shall constitute an L/C Advance from such Lender in
satisfaction of its participation obligation under this Section 2.03.
(iv) Until each Lender funds its Committed Loan or L/C Advance
pursuant to this Section 2.03(c) to reimburse Agent for any amount drawn
under any Letter of Credit, interest in respect of such Lender's Pro Rata
Share of such amount shall be solely for the account of Agent
(v) Each Lender's obligation to make Committed Loans or L/C
Advances to reimburse Agent for amounts drawn under Letters of Credit, as
contemplated by this Section 2.03(c), shall be absolute and unconditional
and shall not be affected by any circumstance, including (A) any set-off,
counterclaim, recoupment, defense or other right which such Lender may
have against Agent, Borrower or any other Person for any reason
whatsoever, (B) the occurrence or continuance of a Default; or (C) any
other occurrence, event or condition, whether or not similar to any of the
foregoing. No such making of an L/C Advance shall relieve or otherwise
impair the obligation of Borrower to reimburse Agent for the amount of any
payment made by Agent under any Letter of Credit, together with interest
as provided herein.
(vi) If any Lender fails to make available to Agent any amount
required to be paid by such Lender pursuant to the foregoing provisions of
this Section 2.03(c) by the time specified in Section 2.03(c)(ii), Agent
shall be entitled to recover from such Lender, on demand, such amount with
interest thereon for the period from the date such payment is required to
the date on which such payment is immediately available to Agent at a rate
per annum equal to the Federal Funds Rate from time to time in effect A
certificate of Agent submitted to any Lender with respect to any amounts
owing under this clause (vi) shall be conclusive absent manifest error.
(d) Repayment of Participations.
(i) At any time after Agent has made a payment under any
Letter of Credit and has received from any Lender such Lender's L/C
Advance in respect of such payment in accordance with
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Section 2.03(c), if Agent receives any payment in respect of the related
Unreimbursed Amount or interest thereon (whether directly from Borrower or
otherwise, including proceeds of Cash Collateral applied thereto by
Agent), Agent will distribute to such Lender its Pro Rata Share thereof
(appropriately adjusted, in the case of interest payments, to reflect the
period of time during which such Lender's L/C Advance was outstanding) in
the same funds as those received by Agent
(ii) If any payment received by Agent pursuant to Section
2.03(c)(i) is required to be returned under any of the circumstances
described in Section 10.06 (including pursuant to any settlement entered
into by Agent in its discretion, each Lender shall pay to Agent its Pro
Rata Share thereof on demand of Agent, plus interest thereon from the date
of such demand to the date such amount is returned by such Lender, at a
rate per annum equal to the Federal Funds Rate from time to time in
effect.
(e) Obligations Absolute. The obligation of Borrower to reimburse
Agent for each drawing under each Letter of Credit, and to repay each L/C
Borrowing, shall be absolute, unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement under all circumstances,
including the following:
(i) any lack of validity or enforceability of such Letter of
Credit, this Agreement, or any other agreement or instrument relating
thereto;
(ii) the existence of any claim, counterclaim, set-off,
defense or other right that Borrower may have at any time against any
beneficiary or any transferee of such Letter of Credit (or any Person for
whom any such beneficiary or any such transferee may be acting), Agent or
any other Person, whether in connection with this Agreement, the
transactions contemplated hereby or by such Letter of Credit or any
agreement or instrument relating thereto, or any unrelated transaction;
(iii) any draft, demand, certificate or other document
presented under such Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect; or any loss or delay in the
transmission or otherwise of any document required in order to make a
drawing under such Letter of Credit;
(iv) any payment by Agent under such Letter of Credit against
presentation of a draft or certificate that does not strictly comply with
the terms of such Letter of Credit in the absence of gross negligence or
willful misconduct by Agent; or any payment made by Agent under such
Letter of Credit to any Person purporting to be a trustee in bankruptcy,
debtor-in possession, assignee for the benefit of creditors, liquidator,
receiver or other representative of or successor to any beneficiary or any
transferee of such Letter of Credit, including any arising in connection
with any proceeding under any Debtor Relief Law; or
(v) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing, including any other circumstance that
might otherwise constitute a defense available to, or a discharge of,
Borrower.
Borrower shall promptly examine a copy of each Letter of
Credit and each amendment thereto that is delivered to it and, in the
event of any claim of noncompliance with Borrower's instructions or other
irregularity, Borrower will promptly notify Agent Borrower shall be
conclusively deemed to have waived any such claim against Agent and its
correspondents unless such notice is given as aforesaid.
(f) Role of Agent. Each Lender and Borrower agree that, in paying
any drawing under a Letter of Credit, Agent shall not have any responsibility to
obtain any document (other than any sight draft, certificates and documents
expressly required by the Letter of Credit) or to ascertain or inquire as to the
validity or accuracy of any such document or the authority of the Person
executing or delivering any such document None of Agent any Agent-Related Person
nor any of the respective correspondents, participants or assignees of Agent
shall be liable to any Lender for (i) any action taken or omitted in connection
herewith at the request or with the approval of Lenders or the Required Lenders,
as applicable; (ii) any action taken or omitted in the absence of gross
negligence or willful misconduct; or (iii) the due execution, effectiveness,
validity or enforceability of any
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document or instrument related to any Letter of Credit or Letter of Credit
Application. Borrower hereby assumes all risks of the acts or omissions of any
beneficiary or transferee with respect to its use of any Letter of Credit;
provided, however, that this assumption is not intended to, and shall not,
preclude Borrower's pursuing such rights and remedies as it may have against the
beneficiary or transferee at law or under any other agreement None of Agent any
Agent-Related Person, nor any of the respective correspondents, participants or
assignees of Agent shall be liable or responsible for any of the matters
described in clauses (i) through (v) of Section 2.03(e); provided, however, that
anything in such clauses to the contrary notwithstanding, Borrower may have a
claim against Agent and Agent may be liable to Borrower, to the extent, but only
to the extent, of any direct, as opposed to consequential or exemplary, damages
suffered by Borrower which Borrower proves were caused by Agents willful
misconduct or gross negligence or Agent's willful failure to pay under any
Letter of Credit after the presentation to it by the beneficiary of a sight
draft and certificate(s) strictly complying with the terms and conditions of
such Letter of Credit In furtherance and not in limitation of the foregoing,
Agent may accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary, and Agent shall not be responsible for the validity
or sufficiency of any instrument transferring or assigning or purporting to
transfer or assign a Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason.
(g) Cash Collateral. Upon the request of Agent, (i) if Agent has
honored any full or partial drawing request under any Letter of Credit and such
drawing has resulted in an L/C Borrowing, or (ii) if, as of the Letter of Credit
Expiration Date, any Letter of Credit may for any reason remain outstanding and
partially or wholly undrawn, Borrower shall immediately Cash Collateralize the
then Outstanding Amount of all L/C Obligations (in an amount equal to such
Outstanding Amount determined as of the date of such L/C Borrowing or the Letter
of Credit Expiration Date, as the case may be). For purposes hereof, "Cash
Collateralize" means to pledge and deposit with or deliver to Agent, for the
benefit of Agent, as issuer of Letters of Credit and Lenders, as collateral for
the L/C Obligations, cash or deposit account balances pursuant to documentation
in form and substance satisfactory to Agent (which documents are hereby
consented to by Lenders). Derivatives of such term have corresponding meanings.
Borrower hereby grants to Agent, for the benefit of Agent as issuer of Letters
of Credit and Lenders, a security interest in all such cash, deposit accounts
and all balances therein and all proceeds of the foregoing. Cash collateral
shall be maintained in blocked, non-interest bearing deposit accounts at Union
Bank.
(h) Applicability of ISP98 and UCP. Unless otherwise expressly
agreed by Agent and Borrower when a Letter of Credit is issued (including any
such agreement applicable to an Existing Letter of Credit), (i) the rules of the
"International Standby Practices 1998" published by the Institute of
International Banking Law & Practice (or such later version thereof as may be in
effect at the time of issuance) shall apply to each standby Letter of Credit,
and (ii) the rules of the Uniform Customs and Practice for Documentary Credits,
as most recently published by the International Chamber of Commerce (the "ICC")
at the time of issuance (including the ICC decision published by the Commission
on Banking Technique and Practice on April 6, 1998 regarding the European single
currency (euro)) shall apply to each commercial Letter of Credit.
(i) Letter of Credit Fees. Borrower shall pay to Agent for the
account of each Lender in accordance with its Pro Rata Share a letter of credit
fee for each standby Letter of Credit equal to the Applicable Rate times the
daily maximum amount available to be drawn under such Letter of Credit (whether
or not such maximum amount is then in effect under such Letter of Credit). Such
letter of credit fees shall be computed on a quarterly basis in arrears. Such
letter of credit fees shall be due and payable on the last Business Day of each
January, April, July and October, commencing with the first such date to occur
after the issuance of such Letter of Credit, on the Letter of Credit Expiration
Date and thereafter on demand. If there is any change in the Applicable Rate
during any quarter, the actual daily amount of each standby Letter of Credit
shall be computed and multiplied by the Applicable Rate separately for each
period during such quarter that such Applicable Rate was in effect
(j) Fronting Fee and Documentary and Processing Charges Payable to
Agent. Borrower shall pay directly to Agent for its own account a fronting fee
with respect to each standby Letter of Credit equal to 1/8 of 1% per annum of
the daily maximum amount available to be drawn thereunder (whether or not such
maximum amount is then in effect under such Letter of Credit), due and payable
quarterly in arrears on the last Business Day of each January, April, July and
October, commencing with the first such date to occur after the issuance of such
Letter of Credit, and on the Letter of Credit Expiration Date. In addition,
Borrower shall pay
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directly to Agent for its own account the customary issuance, presentation,
amendment and other processing fees, and other standard costs and charges, of
Agent relating to Letters of Credit as from time to time in effect, as disclosed
by the Agent in writing to the Borrower from time to time. Such customary fees
and standard costs and charges are due and payable on demand and are
nonrefundable. Borrower shall pay to the Agent, for the benefit of the Lenders,
on a pro rata basis, with respect to commercial Letters of Credit issued after
the date of this Agreement, quarterly in arrears, (x) .09% of the stated amount
of each newly issued commercial Letter of Credit (provided the issuance fee paid
by Borrower to the Agent exceeds $125); and (y) in the event that the stated
amount of any commercial Letter of Credit is subsequently increased by
amendment, .09% of the amount of such increase (provided that the amendment fee
paid by Borrower to Agent exceeds $100).
(k) Conflict with Letter of Credit Application. In the event of any
conflict between the terms hereof and the terms of any Letter of Credit
Application, the terms hereof shall control.
2.04 INTENTIONALLY OMITTED.
2.05 PREPAYMENTS.
(a) Upon notice to Agent, the Borrower may, at any time or from time
to time voluntarily prepay Committed Loans in whole or in part without premium
or penalty; provided that (i) such notice must be received by Agent not later
than 11:00 a.m., Los Angeles time, (A) three Business Days prior to any date of
prepayment of Eurodollar Rate Committed Loans, (B) on the date of prepayment of
Base Rate Committed Loans, and (C) five Business Days prior to any date of
prepayment of the Term Loan; (ii) any prepayment of Eurodollar Rate Committed
Loans shall be in a principal amount of $1,000,000 or a whole multiple of
$500,000 in excess thereof; and (iii) any prepayment of Base Rate Committed
Loans or the Term Loan shall be in a principal amount of $500,000 or a whole
multiple of $100,000 in excess thereof, or, in each case, if less, the entire
principal amount thereof then outstanding. Each such notice shall specify the
date and amount of such prepayment and the Type(s) of Committed Loans to be
prepaid. Agent will promptly notify each Lender of its receipt of each such
notice, and of the amount of such Lender's Pro Rata Share of such prepayment If
such notice is given by Borrower, Borrower shall make such prepayment and the
payment amount specified in such notice shall be due and payable on the date
specified therein. Any prepayment of a Eurodollar Rate Committed Loan shall be
accompanied by all accrued interest thereon, together with any additional
amounts required pursuant to Section 3.05. Any prepayment of the Term Loan shall
be accompanied by all accrued interest thereon, together with any additional
amounts required pursuant to Section 3.06. Each such prepayment shall be applied
to the Committed Loans of Lenders in accordance with their respective Pro Rata
Shares.
(b) If for any reason the Total Outstandings at any time exceed the
Aggregate Commitments then in effect, Borrower shall immediately prepay Loans
and/or Cash Collateralize the L/C Obligations in an aggregate amount equal to
such excess;
2.06 REDUCTION OR TERMINATION OF COMMITMENTS. Upon notice to Agent, the
Borrower may terminate the Aggregate Commitments, or from time to time
permanently reduce the Aggregate Commitments and the Borrower shall permanently
reduce the Aggregate Commitments in an amount equal to 100% of the net cash
proceeds from the issuance of equity by the Borrower or any of its Subsidiaries
(excluding proceeds from the exercise of stock options by employees, directors
and consultants of the Borrower or any Subsidiary); provided that (i) any such
notice shall be received by Agent not later than 11:00 a.m., five Business Days
prior to the date of termination or reduction, (ii) any such partial reduction
shall be in an aggregate amount of $5,000,000 or any whole multiple of
$1,000,000 in excess thereof, (iii) Borrower shall not terminate or reduce the
Aggregate Commitments if, after giving effect thereto and to any concurrent
prepayments hereunder, the Total Outstandings would exceed the Aggregate
Commitments and (iv) if, after giving effect to any reduction of the Aggregate
Commitments, the Letter of Credit Sublimit exceeds the amount of the Aggregate
Commitments, such Sublimit shall be automatically reduced by the amount of such
excess. Agent will promptly notify Lenders of any such notice of termination or
reduction of the Aggregate Commitments. Once reduced in accordance with this
Section, the Aggregate Commitments may not be increased. Any reduction of the
Aggregate Commitments shall be applied to the Commitment of each Lender
according to its Pro Rata Share. All commitment fees accrued until the effective
date of any termination of the Aggregate Commitments shall be paid on the
effective date of such termination.
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2.07 REPAYMENT OF LOANS.
(a) Revolving Loans. Borrower shall repay to Lenders on the Maturity
Date the aggregate principal amount of Revolving Loans outstanding on such date.
(b) Term Loan. Borrower shall repay to Lenders on each Term Loan
Amortization Date equal installments of principal in the amount of $333,333.33,
plus all accrued interest, on account of the Term Loan.
2.08 INTEREST.
(a) Subject to the provisions of subsection (b) below, (i) each
Eurodollar Rate Committed Loan shall bear interest on the outstanding principal
amount thereof for each Interest Period at a rate per annum equal to the
Eurodollar Rate for such Interest Period plus the Applicable Rate; (ii) each
Base Rate Committed Loan shall bear interest on the outstanding principal amount
thereof from the applicable borrowing date at a rate per annum equal to the Base
Rate plus the Applicable Rate; and (iii) the Term Loan shall bear interest on
the outstanding principal amount thereof from the date the Term Loan is made at
a rate per annum equal to the Fixed Rate.
(b) If any amount payable by Borrower under any Loan Document is not
paid when due (without regard to any applicable grace periods), whether at
stated maturity by acceleration or otherwise, such amount shall thereafter bear
interest at a fluctuating interest rate per annum at all times equal to the
Default Rate to the fullest extent permitted by applicable Laws. Furthermore,
while any Event of Default exists, Borrower shall pay interest on the principal
amount of all outstanding Obligations at a fluctuating interest rate per annum
at all times equal to the Default Rate to the fullest extent permitted by
applicable Laws. Accrued and unpaid interest on past due amounts (including
interest on past due interest) shall be due and payable upon demand. The Agent
shall notify the Borrower of the effective date of the Default Rate.
Interest on each Loan shall be due and payable in arrears on each Interest
Payment Date applicable thereto and at such other times as may be specified
herein. Interest hereunder shall be due and payable in accordance with the terms
hereof before and after judgment, and before and after the commencement of any
proceeding under any Debtor Relief Law.
2.09 FEES. In addition to certain fees described in subsections (i) and
(j) of Section 2.03
(a) Commitment Fee. Borrower shall pay to Agent for the account of
each Lender in accordance with its Pro Rata Share, a commitment fee equal to the
Applicable Rate times the actual daily amount by which the Aggregate Commitments
exceed the sum of (i) the Outstanding Amount of Committed Loans and (ii) the
Outstanding Amount of L/C Obligations. The commitment fee shall accrue at all
times during the Availability Period, including at any time during which one or
more conditions in Article IV is not met, and shall be due and payable quarterly
in arrears on the last Business Day of each January, April, July and October,
commencing with the first such date to occur after the Closing Date, and on the
Maturity Date. The commitment fee shall be calculated quarterly in arrears, and
if there is any change in the Applicable Rate during any quarter, the actual
daily amount shall be computed and multiplied by the Applicable Rate separately
for each period during such quarter that such Applicable Rate was in effect.
(b) Agency Fees. Borrower shall pay certain fees to Agent for
Agent's own account, in the amounts and at the times specified in the letter
agreement, dated June 30, 2004 (the "Agent Fee Letter"), between Borrower and
Agent. Such fees shall be fully earned when paid and shall be nonrefundable for
any reason whatsoever.
(c) Lenders' Upfront Fee. On the Closing Date, Borrower shall pay to
Agent, for the account of each Lender in accordance with their respective Pro
Rata Shares, an upfront fee in the amount specified in the Agent Fee Letter.
Such upfront fees are for the credit facilities committed by Lenders under this
Agreement and are fully earned on the date paid. The upfront fee paid to each
Lender is solely for its own account and is nonrefundable for any reason
whatsoever.
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(d) Administration Fee. On the Closing Date and each anniversary
thereafter, Borrower shall pay to Agent for Agent's own account, an
administration fee in the amount set forth in the Agent Fee Letter.
2.10 COMPUTATION OF INTEREST AND FEES. All computations of interest for
Base Rate Loans when the Base Rate is determined by Union Bank's prime rate
shall be made on the basis of a year of 365 or 366 days, as the case may be. All
other computations of interest and all fees shall be made on the basis of a year
of 360 days and the actual number of days elapsed, (which results in more fees
or interest, as applicable, being paid than if computed on the basis of a 365
day year). Interest shall accrue on each Loan for the day on which the Loan is
made, and shall not accrue on a Loan, or any portion thereof, for the day on
which the Loan or such portion is paid, provided that any Loan that is repaid on
the same day on which it is made shall, subject to Section 2.12(a), bear
interest for one day.
2.11 EVIDENCE OF DEBT. (a) The Credit Extensions made by each Lender shall
be evidenced by one or more accounts or records maintained by such Lender and by
Agent in the ordinary course of business. The accounts or records maintained by
Agent and each Lender shall be conclusive absent manifest error of the amount of
the Credit Extensions made by Lenders to Borrower and the interest and payments
thereon. Any failure to so record or any error in doing so shall not, however,
limit or otherwise affect the obligation of Borrower hereunder to pay any amount
owing with respect to the Obligations. In the event of any conflict between the
accounts and records maintained by any Lender and the accounts and records of
Agent in respect of such matters, the accounts and records of Agent shall
control in the absence of manifest error. Upon the request of any Lender made
through Agent, Borrower shall execute and deliver to such Lender (through Agent)
a Note, which shall evidence, such Lender's Loans, in addition to such accounts
or records. Each Lender may attach schedules to its Note and endorse thereon the
date, Type (if applicable), amount and maturity of the applicable Loans and
payments with respect thereto. (b) In addition to the accounts and records
referred to in subsection (a), each Lender and Agent shall maintain in
accordance with its usual practice accounts or records evidencing the purchases
and sales by such Lender of participations in Letters of Credit In the event of
any conflict between the accounts and records maintained by Agent and the
accounts and records of any Lender in respect of such matters, the accounts and
records of Agent shall control in the absence of manifest error.
2.12 PAYMENTS GENERALLY.
(a) (i) All payments to be made by Borrower shall be made without
condition or deduction for any counterclaim, defense, recoupment or setoff.
Except as otherwise expressly provided herein, all payments by Borrower
hereunder shall be made to Agent, for the account of the respective Lenders to
which such payment is owed, at Agent's Office in Dollars and in immediately
available funds not later than 12:00 noon, Los Angeles time, on the date
specified herein. Agent will promptly distribute to each Lender its Pro Rata
Share (or other applicable share as provided herein) of such payment in like
funds as received by wire transfer to such Lenders Lending Office. All payments
received by Agent after 12:00 noon, Los Angeles time, shall be deemed received
on the next succeeding Business Day and any applicable interest or fee shall
continue to accrue.
(i) On each date when the payment of any principal, interest
or fees are due hereunder or under any Note, Borrower agrees to maintain
on deposit in an ordinary checking account maintained by Borrower with
Agent (as such account shall be designated by Borrower in a written notice
to Agent from time to time, the "Borrower Account") an amount sufficient
to pay such principal, interest or fees in full on such date. Borrower
hereby authorizes Agent (A) to deduct automatically all principal,
interest or fees when due hereunder or under any Note from Borrower
Account, and (B) if and to the extent any payment of principal, interest
or fees under this Agreement or any Note is not made when due to deduct
any such amount from any or all of the accounts of Borrower maintained at
Agent. Agent agrees to provide written notice to Borrower of any automatic
deduction made pursuant to this Section 2.12(a)(ii) showing in reasonable
detail the amounts of such deduction. Lenders agree to reimburse Borrower
based on their Pro Rata Share for any amounts deducted from such accounts
in excess of amount due hereunder and under any other Loan Documents.
(b) If any payment to be made by Borrower shall come due on a day
other than a Business Day, payment shall be made on the next following Business
Day, and such extension of time shall be reflected in computing interest or
fees, as the case may be.
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(c) Unless Borrower or any Lender has notified Agent, prior to the
date any payment is required to be made by it to Agent hereunder, that Borrower
or such Lender, as the case may be, will not make such payment, Agent may assume
that Borrower or such Lender, as the case may be, has timely made such payment
and may (but shall not be so required to), in reliance thereon, make available a
corresponding amount to the Person entitled thereto. If and to the extent that
such payment was not in fact made to Agent in immediately available funds, then:
(i) if Borrower failed to make such payment, each Lender shall
forthwith on demand repay to Agent the portion of such assumed payment
that was made available to such Lender in immediately available funds,
together with interest thereon in respect of each day from and including
the date such amount was made available by Agent to such Lender to the
date such amount is repaid to Agent in immediately available funds, at the
Federal Funds Rate from time to time in effect; and
(ii) if any Lender failed to make such payment, such Lender
shall forthwith on demand pay to Agent the amount thereof in immediately
available funds, together with interest thereon for the period from the
date such amount was made available by Agent to Borrower to the date such
amount is recovered by Agent (the "Compensation Period") at a rate per
annum equal to the Federal Funds Rate from time to time in effect. If such
Lender pays such amount to Agent, then such amount shall constitute such
Lenders Committed Loan included in the applicable Borrowing. If such
Lender does not pay such amount forthwith upon Agent's demand therefor,
Agent may make a demand therefor upon Borrower, and Borrower shall pay
such amount to Agent, together with interest thereon for the Compensation
Period at a rate per annum equal to the rate of interest applicable to the
applicable Borrowing. Nothing herein shall be deemed to relieve any Lender
from its obligation to fulfill its Commitment or to prejudice any rights
which Agent or Borrower may have against any Lender as a result of any
default by such Lender hereunder.
A notice of Agent to any Lender or Borrower with respect to any amount
owing under this subsection (c) shall be conclusive, absent manifest error.
(d) If any Lender makes available to Agent funds for any Loan to be
made by such Lender as provided in the foregoing provisions of this Article II,
and such funds are not made available to Borrower by Agent because the
conditions to the applicable Credit Extension set forth in Article IV are not
satisfied or waived in accordance with the terms hereof, Agent shall return such
funds (in like funds as received from such Lender) to such Lender, without
interest.
(e) The obligations of Lenders hereunder to make Committed Loans and
to fund participations in Letters of Credit are several and not joint. The
failure of any Lender to make any Committed Loan or to fund any such
participation on any date required hereunder shall not relieve any other Lender
of its corresponding obligation to do so on such date, and no Lender shall be
responsible for the failure of any other Lender to so make its Committed Loan or
purchase its participation.
(f) Nothing herein shall be deemed to obligate any Lender to obtain
the funds for any Loan in any particular place or manner or to constitute a
representation by any Lender that it has obtained or will obtain the funds for
any Loan in any particular place or manner.
2.13 SHARING OF PAYMENTS. If, other than as expressly provided elsewhere
herein, any Lender shall obtain on account of Committed Loans made by it, or the
participations in L/C Obligations held by it, any payment (whether voluntary,
involuntary, through the exercise of any right of set-off, or otherwise) in
excess of its ratable share (or other share contemplated hereunder) thereof,
such Lender shall immediately (a) notify Agent of such fact, and (b) purchase
from the other Lenders such participations in the Committed Loans made by them
and/or such subparticipations in the participations in L/C Obligations held by
them, as the case may be, as shall be necessary to cause such purchasing Lender
to share the excess payment in respect of such Committed Loans or such
participations, as the case may be, pro rata with each of them; provided,
however, that if all or any portion of such excess payment is thereafter
recovered from the purchasing Lender under any of the circumstances described in
Section 10.06 (including pursuant to any settlement entered into by the
purchasing Lender in its discretion), such purchase shall to that extent be
rescinded and each other Lender shall repay to the purchasing
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Lender the purchase price paid therefor, together with an amount equal to such
paying Lender's ratable share (according to the proportion of (i) the amount of
such paying Lenders required repayment to (ii) the total amount so recovered
from the purchasing Lender) of any interest or other amount paid or payable by
the purchasing Lender in respect of the total amount so recovered, without
further interest thereon. Borrower agrees that any Lender so purchasing a
participation from another Lender may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off, but subject
to Section 10.09) with respect to such participation as fully as if such Lender
were the direct creditor of Borrower in the amount of such participation. Agent
will keep records (which shall be conclusive and binding in the absence of
manifest error) of participations purchased under this Section and will in each
case notify Lenders following any such purchases or repayments. Each Lender that
purchases a participation pursuant to this Section shall from and after such
purchase have the right to give all notices, requests, demands, directions and
other communications under this Agreement with respect to the portion of the
Obligations purchased to the same extent as though the purchasing Lender were
the original owner of the Obligations purchased.
ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 TAXES.
(a) Any and all payments by Borrower to or for the amount of Agent
or any Lender under any Loan Document shall be made free and clear of and
without deduction for any and all present or future taxes, duties, levies,
imposts, deductions, assessments, fees, withholdings or similar charges, and all
liabilities with respect thereto, excluding, in the case of Agent and each
Lender, taxes imposed on or measured by its overall net income, and franchise
taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any
political subdivision thereof) under the Laws of which Agent or such Lender, as
the case may be, is organized or maintains a lending office (all such
non-excluded taxes, duties, levies, imposts, deductions, assessments, fees,
withholdings or similar charges, and liabilities being hereinafter referred to
as "Taxes"). If Borrower shall be required by any Laws to deduct any Taxes, or
the Agent or any Lender shall be liable to remit any Taxes, in either case from
or in respect of any sum payable under any Loan Document to Agent or any Lender,
(i) the sum payable shall be increased as necessary so that after making all
required deductions or remittance (including deductions applicable to additional
sums payable under this Section), each of Agent and such Lender receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) Borrower shall make such deductions, (iii) Borrower shall pay to the extent
required of it the full amount deducted to the relevant taxation authority or
other authority in accordance with applicable Laws, and (iv) within 30 days
after the date of such payment, Borrower shall furnish to Agent (which shall
forward the same to such Lender) the original or a certified copy of a receipt
evidencing payment thereof.
(b) In addition, Borrower agrees to pay any and all present or
future stamp, court or documentary taxes and any other excise or property taxes
or charges or similar levies which arise from any payment made under any Loan
Document or from the execution, delivery, performance, enforcement or
registration of, or otherwise with respect to, any Loan Document (hereinafter
referred to as "Other Taxes").
(c) If Borrower shall be required to deduct or pay any Taxes or
Other Taxes, or the Agent or any Lender shall be liable to remit any Taxes, in
either case from or in respect of any sum payable under any Loan Document to
Agent or any Lender, Borrower shall also pay to Agent or to such Lender, at the
time interest is paid, such additional amount that Agent or such Lender
specifies is necessary to preserve the after-tax yield (after factoring in all
taxes, including taxes imposed on or measured by net income) that Agent or such
Lender would have received if such Taxes or Other Taxes had not been imposed.
(d) Borrower agrees to indemnify Agent and each Lender for (i) the
full amount of Taxes and Other Taxes (including any Taxes or Other Taxes imposed
or asserted by any jurisdiction on amounts payable under this Section) paid by
or assessable against Agent and/or such Lender (including any amounts required
to be remitted by it or them on account of withholding taxes), (ii) amounts
payable under Section 3.01(a) or Section 3.01(c) and (iii) any liability
(including additions to tax, penalties, interest and expenses, including from
any failure by Agent or any Lender to make any remittance provided such failure
was inadvertent) arising therefrom or with respect thereto, in each case whether
or not such Taxes or Other Taxes were correctly or
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legally imposed or asserted by the relevant Governmental Authority. Payment
under this subsection (d) shall be made within 30 days after the date Lender or
Agent makes a demand therefor.
(e) Each Lender that is not a United States person under Section
7701(a)(30) of the Code, on or prior to the date of its execution and delivery
of this Credit Agreement in the case of each Lender listed on the signature
pages hereof and on or prior to the date on which it becomes a Lender in the
case of each other Lender, and from time to time thereafter if requested in
writing by the Borrower or the Agent (but only so long as such Lender remains
lawfully able to do so), shall provide the Borrower and the Agent with (i)
Internal Revenue Service Form W-8 BEN or W-8 ECI, as appropriate, or any
successor form prescribed by the internal Revenue Service, certifying that such
Lender is entitled to benefits under an income tax treaty to which the United
States is a party which reduces to zero the rate of withholding tax on payments
of interest or certifying that the income receivable pursuant to this Credit
Agreement is effectively connected with the conduct of a trade or business in
the United States, (ii) Internal Revenue Service Form W-8 or W-9, as
appropriate, or any successor form prescribed by the Internal Revenue Service,
and/or (iii) any other form or certificate required by any taxing authority
(including any certificate required by Sections 871(h) and 881(c) of the
Internal Revenue Code), certifying that such Lender is entitled to an exemption
from tax on payments pursuant to this Credit Agreement or any of the other
Credit Documents.
(f) For any period with respect to which a Lender has failed to
provide the Borrower and the Agent with the appropriate form pursuant to Section
3.01 (e) (unless such failure is due to a change in treat, law, or regulation
occurring subsequent to the date on which a form originally was required to be
provided), such Lender shall not be entitled to indemnification under Section
3.01(a) or 3.01(b) with respect to Taxes imposed by the United States; provided,
however, that should a Lender, which is otherwise exempt from withholding tax,
become subject to Taxes because of its failure to deliver a form required
hereunder, the Borrower shall take such steps as such Lender shall reasonably
request to assist such Lender to recover such Taxes.
(g) If any Loan Party is required to pay additional amounts to or
for the account of any Lender pursuant to this Section 3.01, then such Lender
will agree to use reasonable efforts to change the jurisdiction of its
Applicable Lending Office so as to eliminate or reduce any such additional
payment which may thereafter accrue if such change, in the judgment of such
Lender, is not otherwise disadvantageous to such Lender.
3.02 ILLEGALITY. If any Lender reasonably determines that any Law has made
it unlawful, or that any Governmental Authority has asserted that it is
unlawful, for any Lender or its applicable Lending Office to make, maintain or
fund Eurodollar Rate Committed Loans, or to determine or charge interest rates
based upon the Eurodollar Rate, then, on notice thereof by such Lender to
Borrower through Agent, any obligation of such Lender to make or continue
Eurodollar Rate Committed Loans or to convert Base Rate Committed Loans to
Eurodollar Rate Committed Loans shall be suspended until such Lender notifies
Agent and Borrower that the circumstances giving rise to such determination no
longer exist. Upon receipt of such notice, Borrower shall, upon demand from such
Lender (with a copy to Agent), prepay or, if applicable, convert all Eurodollar
Rate Committed Loans of such Lender to Base Rate Loans, either on the last day
of the Interest Period therefor, if such Lender may lawfully continue to
maintain such Eurodollar Rate Committed Loans to such day, or immediately, if
such Lender may not lawfully continue to maintain such Eurodollar Rate Committed
Loans. Upon any such prepayment or conversion, Borrower shall also pay accrued
interest on the amount so prepaid or converted and all amounts due under Section
3.05 in accordance with the terms thereof due to such prepayment or conversion.
Each Lender agrees to designate a different Lending Office if such designation
will avoid the need for such notice and will not, in the good faith judgment of
such Lender, otherwise be materially disadvantageous to such Lender.
3.03 INABILITY TO DETERMINE RATES. If Agent determines in connection with
any request for a Eurodollar Rate Committed Loan or a conversion to or
continuation thereof for any reason that (a) Dollar deposits are not being
offered to banks in the London interbank eurodollar market for the applicable
amount and Interest Period of such Eurodollar Rate Committed Loan, (b) adequate
and reasonable means do not exist for determining the Eurodollar Rate for any
requested Interest Period with respect to a proposed Eurodollar Rate Committed
Loan, or (c) the Eurodollar Rate for any requested Interest Period with respect
to a proposed Eurodollar Rate Committed Loan does not adequately and fairly
reflect the cost to Lenders of funding such Eurodollar Rate Committed Loan,
Agent will promptly so notify Borrower and all Lenders. Thereafter, the
obligation of Lenders to
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make or maintain Eurodollar Rate Committed Loans shall be suspended until Agent
revokes such notice. Upon receipt of such notice, Borrower may revoke any
pending request for a Borrowing of, conversion to or continuation of Eurodollar
Rate Committed Loans or, failing that, will be deemed to have converted such
request into a request for a Committed Borrowing of Base Rate Loans in the
amount specified therein.
3.04 INCREASED COST AND REDUCED RETURN; CAPITAL ADEQUACY; RESERVES ON
EURODOLLAR RATE COMMITTED LOANS.
(a) If any Lender determines that as a result of the introduction of
or any change in or in the interpretation of any Law, or such Lenders compliance
therewith, there shall be any increase in the cost to such Lender of agreeing to
make or making, funding or maintaining Eurodollar Rate Committed Loans or (as
the case may be) issuing or participating in Letters of Credit, or a reduction
in the amount received or receivable by such Lender in connection with any of
the foregoing (excluding for purposes of this subsection (a) any such increased
costs or reduction in amount resulting from (i) Taxes or Other Taxes (as to
which Section 3.01 shall govern), (ii) changes in the basis of taxation of
overall net income or overall gross income by the United States or any foreign
jurisdiction or any political subdivision of either thereof under the Laws of
which such Lender is organized or has its Lending Office, and (iii) reserve
requirements utilized, as to Eurodollar Rate Committed Loans, in the
determination of the Eurodollar Rate), then from time to time upon demand of
such Lender (with a copy of such demand to Agent), Borrower shall pay to such
Lender such additional amounts as will compensate such Lender for such increased
cost or reduction. Each Lender agrees to designate a different Lending Office if
such designation will avoid the need for such notice and will not, in the good
faith judgment of such Lender, otherwise be materially disadvantageous to such
Lender.
(b) If any Lender determines that the introduction of any Law
regarding capital adequacy or any change therein or in the interpretation
thereof, or compliance by such Lender (or its Lending Office) therewith, has the
effect of reducing the rate of return on the capital of such Lender or any
corporation controlling such Lender as a consequence of such Lenders obligations
hereunder (taking into consideration its policies with respect to capital
adequacy and such Lender's desired return on capital), then from time to time
upon demand of such Lender (with a copy of such demand to Agent), Borrower shall
pay to such Lender such additional amounts as will compensate such Lender for
such reduction.
3.05 FUNDING LOSSES. Upon demand of any Lender (with a copy to Agent) from
time to time, Borrower shall promptly compensate such Lender for and hold such
Lender harmless from any loss, cost or expense incurred by it as a result of:
(a) any continuation, conversion, payment or prepayment of any Loan
other than a Base Rate Loan or the Term Loan on a day other than the last day of
the Interest Period for such Loan (whether voluntary, mandatory, automatic, by
reason of acceleration, or otherwise); or
(b) any failure by Borrower (for a reason other than the failure of
such Lender to make a Loan) to prepay, borrow, continue or convert any Loan
other than a Base Rate Loan or the Term Loan on the date or in the amount
notified by Borrower,
including any loss of anticipated profits and any loss or expense arising from
the liquidation or reemployment of funds obtained by it to maintain such Loan or
from fees payable to terminate the deposits from which such funds were obtained.
Borrower shall also pay any customary administrative fees charged by such Lender
in connection with the foregoing.
For purposes of calculating amounts payable by Borrower to Lenders under this
Section 3.05, each Lender shall be deemed to have funded each Eurodollar Rate
Committed Loan made by it at the Eurodollar Base Rate used in determining the
Eurodollar Rate for such Loan by a matching deposit or other borrowing in the
London interbank eurodollar market for a comparable amount and for a comparable
period, whether or not such Eurodollar Rate Committed Loan was in fact so
funded.
3.06 PREPAYMENT OF TERM LOAN. In the event Borrower prepays the Term Loan,
whether voluntarily, by acceleration or otherwise, in addition to all other
amounts due hereunder, Borrower shall promptly pay each
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Lender according to such Lender's Pro Rata Share of the Term Loan Commitment, a
prepayment fee (the "Prepayment Fee"). The Prepayment Fee shall be an amount
equal to the present value of the product of: (i) the difference (but not less
than zero) between (a) the Treasuries Rate applicable to the principal amount of
the Term Loan which is being prepaid, and (b) the return which Lenders could
obtain if they used the amount of such prepayment of principal to purchase at
bid price regularly quoted securities issued by the United States having a
maturity date most closely coinciding with the Maturity Date and such securities
were held by Lenders until the Maturity Date (the "Yield Rate"); (ii) a
fraction, the numerator of which is the number of days in the period between the
date of prepayment and the Maturity Date and the denominator of which is 360;
and (iii) the amount of the principal so prepaid (except in the event that
principal payments are required and have been made as scheduled under the terms
of the Term Loan, then an amount equal to the lesser of (A) the amount prepaid
or (B) 50% of the sum of (1) the amount prepaid and (2) the amount of principal
scheduled under the terms of the Term Loan at the Maturity Date). As used
herein, "present value" is determined by discounting the above product to
present value using the Yield Rate as the annual discount factor.
3.07 MATTERS APPLICABLE TO ALL REQUESTS FOR COMPENSATION. A certificate of
Agent or any Lender claiming compensation under this Article III and setting
forth the calculation of the additional amount or amounts to be paid to it
hereunder shall be delivered with any such claim and shall be conclusive in the
absence of manifest error. In determining such amount, Agent or such Lender may
use any reasonable averaging and attribution methods.
3.08 SURVIVAL. All of Borrowers obligations under this Article III shall
survive termination of the Aggregate Commitments and repayment of all other
Obligations hereunder.
ARTICLE IV. CONDITIONS PRECEDENT TO CREDIT EXTENSIONS
4.01 CONDITIONS OF INITIAL CREDIT EXTENSION. The obligation of each Lender
to make its initial Credit Extension hereunder is subject to satisfaction of the
following conditions precedent:
(a) Agent's receipt of the following, each of which shall be
originals or facsimiles (followed promptly by originals) unless otherwise
specified, each property executed by a Responsible Officer of the signing Loan
Party, each dated the Closing Date (or, in the case of certificates of
governmental officials, a recent date before the Closing Date) and each in form
and substance satisfactory to Agent and its legal counsel:
(i) executed counterparts of this Agreement, all Collateral
Documents and the Guaranty, sufficient in number for distribution to
Agent, each Lender and Borrower;
(ii) a Note executed by Borrower in favor of each Lender
requesting a Note;
(iii) fully executed copies of the Gekko Acquisition
Documents;
(iv) such certificates of resolutions or other action,
incumbency certificates and/or other certificates of Responsible Officers
of each Loan Party as Agent may require evidencing the identity, authority
and capacity of each Responsible Officer thereof authorized to act as a
Responsible Officer in connection with this Agreement and the other Loan
Documents to which such Loan Party is a party;
(v) such documents and certificates as Agent may reasonably
require to evidence that each Loan Party is duly organized or formed and
that Borrower and each Guarantor is, validly existing, in good standing
and qualified to engage in business in each jurisdiction (including the
provinces of Canada) where its ownership, lease or operation of properties
or the conduct of its business requires such qualification, except to the
extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect;
(vi) an opinion of counsel to the Loan Parties acceptable to
Agent, addressed to Agent and each Lender, as to such matters concerning
the Loan Parties and the Loan Documents in form and substance satisfactory
to Agent; provided, however, that no opinion of counsel shall be required
in
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respect of any documents that are governed by any law other than the
Federal laws of the United States of America, the laws of the State of
California and the laws of the United Kingdom.
(vii) a certificate signed by a Responsible Officer of
Borrower certifying (A) that the conditions specified in Sections 4.02(a)
and (b) have been satisfied, (B) that there has been no event or
circumstance since January 31, 2004 that has had or could reasonably be
expected to have a Material Adverse Effect, and (C) a calculation of the
financial covenants set forth in Section 6.12 as of the last day of the
fiscal quarter of Borrower most recently ended prior to the Closing Date;
(viii) evidence that all insurance required to be maintained
pursuant to the Loan Documents has been obtained and is in effect; and
(ix) such other assurances, certificates, documents, consents
evidence of perfection of all Liens securing the Obligations(in the
applicable province of Canada, under the PPSA or similar statute, in the
United Kingdom, and in each applicable state of the U. S.) and opinions as
the Agent or the Required Lenders reasonably may require.
(b) Any fees required to be paid on or before the Closing Date shall
have been paid.
(c) Unless waived by Agent, Borrower shall have paid all Attorney
Costs of Agent to the extent invoiced prior to or on the Closing Date, plus such
additional amounts of Attorney Costs as shall constitute its reasonable estimate
of Attorney Costs incurred or to be incurred by it through the dosing
proceedings (provided that such estimate shall not thereafter preclude a final
settling of accounts between Borrower and Agent).
(d) The Closing Date shall have occurred on or before July 6, 2004.
(e) Agent shall have received, in form and substance satisfactory to
it, such other assurances, certificates, documents or consents related to the
foregoing as Agent or the Required Lenders reasonably may require; provided,
however, that Agent shall have received, on or before forty-five (45) days from
the Closing Date, the fully executed (i) Real Estate Collateral Documents, and
(ii) Control Agreements with respect to the Controlled Accounts.
4.02 CONDITIONS TO ALL CREDIT EXTENSIONS AND CONVERSIONS AND
CONTINUATIONS. The obligation of each Lender to honor any Request for Credit
Extension is subject to the following conditions precedent:
(a) The representations and warranties of Borrower and each other
Loan Party contained in Article V or any other Loan Document, or which are
contained in any document furnished at any time under or in connection herewith,
shall be true and correct on and as of the date of such Credit Extension,
conversion or continuation, except to the extent that such representations and
warranties specifically refer to an earlier date, in which case they shall be
true and correct as of such earlier date, and except that for purposes of this
Section 4.02, the representations and warranties contained in subsections (a)
and (b) of Section 5.05 shall be deemed to refer to the most recent statements
furnished pursuant to clauses (a) and (b), respectively, of Section 6.01.
(b) No Default shall exist, or would result from such proposed
Credit Extension, conversion or continuation.
(c) Agent shall have received a Request for Credit Extension in
accordance with the requirements hereof.
(d) Agent shall have received, in form and substance satisfactory to
it, such other assurances, certificates, documents or consents related to the
foregoing as Agent or the Required Lenders reasonably may require.
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Each Request for Credit Extension submitted by Borrower shall be deemed to
be a representation and warranty that the conditions specified in Sections
4.02(a) and (b) have been satisfied on and as of the date of the applicable
Credit Extension.
ARTICLE V. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Agent, the U.K. Security Trustee and
Lenders that:
5.01 EXISTENCE, QUALIFICATION AND POWER, COMPLIANCE WITH LAWS. Each Loan
Party (a) is duly organized or formed, validly existing and in good standing
under the Laws of the jurisdiction of its incorporation or organization, (b) has
all requisite power and authority and all requisite governmental licenses,
authorizations, consents and approvals to (i) own its assets and carry on its
business and (ii) execute, deliver, and perform its obligations under the Loan
Documents to which it is a party, and (c) is duly qualified and is licensed and
in good standing under the Laws of each jurisdiction (including the provinces of
Canada) where its ownership, lease or operation of properties or the conduct of
its business requires such qualification or licenses, except in each case
referred to in clause (b)(i) or (c), to the extent that failure to do so could
not reasonably be expected to have a Material Adverse Effect.
5.02 AUTHORIZATION; NO CONTRAVENTION. The execution, delivery and
performance by each Loan Party of each Loan Document to which such Person is
party, have been duly authorized by all necessary corporate or other
organizational action, and do not and will not (a) contravene the terms of any
of such Person's Organization Documents; (b) conflict with or result in any
breach or contravention of, or the creation of any Lien under, (i) any material
Contractual Obligation to which such Person is a party or (ii) any order,
injunction, writ or decree of any Governmental Authority or any arbitral award
to which such Person or its property is subject; or (c) violate any Law.
5.03 GOVERNMENTAL AUTHORIZATION. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority or any other Person is necessary or required in
connection with the execution, delivery or performance by, or enforcement
against, any Loan Party of this Agreement or any other Loan Document except for
filings related to perfection of Liens.
5.04 BINDING EFFECT. This Agreement has been, and each other Loan
Document, when delivered hereunder, will have been, duly executed and delivered
by each Loan Party that is party thereto. This Agreement constitutes, and each
other Loan Document when so delivered will constitute, a legal, valid and
binding obligation of such Loan Party, enforceable against each Loan Party that
is party thereto in accordance with its terms.
5.05 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE EFFECT.
(a) The Audited Financial Statements (i) were prepared in accordance
with GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein; (ii) fairly present the financial condition
of Borrower and its Subsidiaries as of the date thereof and their results of
operations for the period covered thereby in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly
noted therein; and (iii) show all material indebtedness and other liabilities,
direct or contingent, of Borrower and its Subsidiaries as of the date thereof,
including liabilities for taxes, material commitments and Indebtedness.
(b) The unaudited consolidated financial statements of Borrower and
its Subsidiaries dated April 30, 2004, and the unaudited financial statements of
Gekko dated May 31, 2004, and the related consolidated statements of income or
operations, shareholders' equity and cash flows for the fiscal quarter ended on
that date (i) were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted
therein; and (ii) fairly present the financial condition of Borrower and its
Subsidiaries (and as such relate to Gekko, Gekko) as of the date thereof and
their results of operations for the period covered thereby, subject in the case
of clauses (i) and (ii), to the absence of footnotes and to normal year-end
audit adjustments.
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(c) Since January 31, 2004, there has been no event or circumstance,
either individually or in the aggregate, that has had or could reasonably be
expected to have a Material Adverse Effect.
5.06 LITIGATION. Except as specifically disclosed in Schedule 5.06 hereto,
there are no actions, suits, proceedings, claims or disputes pending or, to the
knowledge of Borrower, threatened or contemplated, at law, in equity, in
arbitration or before any Governmental Authority, by or against Borrower or any
of its Subsidiaries or against any of their properties or revenues that (a)
purport to affect or pertain to this Agreement or any other Loan Document, or
any of the transactions contemplated hereby, and, if arising after the Closing
Date, in which there is a reasonably possibility of an adverse result or (b)
either individually or in the aggregate, if determined adversely, could
reasonably be expected to have a Material Adverse Effect.
5.07 NO DEFAULT. Neither Borrower nor any Subsidiary is in default under
or with respect to any Contractual Obligation that could either individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect. No
Default has occurred and is continuing or would result from the consummation of
the transactions contemplated by this Agreement or any other Loan Document.
5.08 OWNERSHIP OF PROPERTY; LIENS. Each of Borrower and each Subsidiary
has good record and marketable title in fee simple to, or valid leasehold
interests in, all real property necessary in the ordinary conduct of its
business, except for such defects in title as could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect The property
of Borrower and its Subsidiaries is subject to no Liens, other than Liens
permitted by Section 7.01.
5.09 ENVIRONMENTAL COMPLIANCE. Borrower and its Subsidiaries conduct in
the ordinary course of business a review of the effect of existing Environmental
Laws and claims alleging potential liability or responsibility for violation of
any Environmental Law on their respective businesses, operations and properties,
and as a result thereof Borrower has reasonably concluded that, except as
specifically disclosed in Schedule 5.09 hereto, such Environmental Laws and
claims could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
5.10 INSURANCE. The properties of Borrower and its Subsidiaries are
insured with financially sound and reputable insurance companies not Affiliates
of Borrower, in such amounts, after giving effect to any self-insurance
compatible with the following standards, with such deductibles and covering such
risks as are customarily carried by companies engaged in similar businesses and
owning similar properties in localities where Borrower or the applicable
Subsidiary operates.
5.11 TAXES. Borrower and its Subsidiaries have filed all Federal, state,
provincial, municipal and other material tax returns and reports required to be
filed, and have paid all Federal, state, provincial, municipal and other
material taxes, assessments, fees and other governmental charges levied or
imposed upon them or their properties, income or assets otherwise due and
payable, except those which are being contested in good faith by appropriate
proceedings diligently conducted and for which adequate reserves have been
provided in accordance with GAAP. There is no proposed tax assessment against
Borrower or any Subsidiary that would, if made, have a Material Adverse Effect.
5.12 ERISA COMPLIANCE.
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code, the PBA and other Federal, state, or
provincial Laws, as applicable. Each Plan that is intended to qualify under
Section 401(a) of the Code has received a favorable determination letter from
the IRS or an application for such a letter is currently being processed by the
IRS with respect thereto and, to the best knowledge of Borrower, nothing has
occurred which would prevent, or cause the loss of, such qualification. Borrower
and each ERISA Affiliate have made all required contributions to each Plan when
due, and no application for a funding waiver or an extension of any amortization
period has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of Borrower,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan that could reasonably be expected
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to have a Material Adverse Effect There has been no prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan that
has resulted or could reasonably be expected to result in a Material Adverse
Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected to
occur, (ii) no Pension Plan has any material Unfunded Pension Liability; (iii)
neither Borrower nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability under Title IV of ERISA with respect to any Pension Plan
(other than premiums due and not delinquent under Section 4007 of ERISA and
liabilities immaterial in amount); (iv) neither Borrower nor any ERISA Affiliate
has incurred, or reasonably expects to incur, any material liability (and no
event has occurred which, with the giving of notice under Section 4219 of ERISA,
would result in such liability) under Sections 4201 or 4243 of ERISA with
respect to a Multiemployer Plan; (v) neither Borrower nor any ERISA Affiliate
has engaged in a transaction that could be subject to Sections 4069 or 4212(c)
of ERISA; and (vi) no Lien has arisen, ▇▇▇▇▇▇ or inchoate, in respect of the
Borrower or its property in connection with any Plan (save for contributions not
yet due).
5.13 SUBSIDIARIES. As of the Closing Date, Borrower has no Subsidiaries
other than those specifically disclosed in Part (a) of Schedule 5.13 and has no
equity investments in any other corporation or entity other than those
specifically disclosed in Part (b) of Schedule 5.13.
5.14 DISCLOSURE. Borrower has disclosed to Agent and Lenders all
agreements, instruments and corporate or other restrictions to which it or any
of its Subsidiaries is subject, and all other matters known to it, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. No report, financial statement, certificate or other
information furnished (whether in writing or orally) by or on behalf of any Loan
Party in connection with any Loan Document to Agent or any Lender in connection
with the transactions contemplated hereby and the negotiation of this Agreement
or delivered hereunder (as modified or supplemented by other information so
furnished) contains any material misstatement of fact or omits to state (when
included with all other information so furnished) any material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
5.15 COMPLIANCE WITH LAWS. Borrower, each Subsidiary and each other Loan
Party is in compliance in all material respects with the requirements of all
Laws and all orders, writs, injunctions and decrees applicable to it or to its
properties, except in such instances in which (a) such requirement of Law or
order, writ, injunction or decree is being contested in good faith by
appropriate proceedings diligently conducted or (b) the failure to comply
therewith, either individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
5.16 MARGIN REGULATIONS; INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING
COMPANY ACT.
(a) Borrower is not engaged and will not engage, principally or as
one of its important activities, in the business of purchasing or carrying
margin stock (within the meaning of Regulation U issued by the FRB), or
extending credit for the purpose of purchasing or carrying margin stock.
(b) None of Borrower, any Person Controlling Borrower, or any
Subsidiary (i) is a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a `holding company," within the meaning of the Public Utility Holding Company
Act of 1935, or (ii) is or is required to be registered as an "investment
company" under the Investment Company Act of 1940.
5.17 RIGHTS IN COLLATERAL; PRIORITY OF LIENS. Upon the proper filing of
UCC and PPSA financing statements or other equivalent registration forms, as the
case may be, and the taking of the other actions required by the Required
Lenders (including registration of the U.K. Security Documents at the U.K.
companies registry), the Liens granted pursuant to the Collateral Documents will
constitute valid and enforceable first, prior and perfected Liens on the
Collateral in favor of Agent, or in the case of the U.K. Security Documents, the
U.K. Security Trustee, in each case, for the ratable benefit of Agent and
Lenders subject only to Liens permitted under Section 7.01.
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ARTICLE VI. AFFIRMATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, any Loan or
other Obligation shall remain unpaid or unsatisfied, or any Letter of Credit
shall remain outstanding, Borrower shall, and shall (except in the case of the
covenants set forth in Sections 6.01, 6.02, 6.03 and 6.11) cause each Subsidiary
to:
6.01 FINANCIAL STATEMENTS. Deliver to Agent a sufficient number of copies
for delivery by Agent to each Lender, of the following, in form and detail
satisfactory to Agent and the Required Lenders:
(a) as soon as available, but in any event within 90 days after the
end of each fiscal year of Borrower, a consolidated balance sheet of Borrower
and its Subsidiaries as at the end of such fiscal year, and the related
consolidated statements of income or operations, shareholders' equity and cash
flows for such fiscal year (including, without limitation, reports relating to
Callaway sales), setting forth in each case in comparative form the figures for
the previous fiscal year, all in reasonable detail and prepared in accordance
with GAAP, audited and accompanied by a report and opinion of an independent
certified public accountant of nationally recognized standing reasonably
acceptable to the Required Lenders, which report and opinion shall be prepared
in accordance with generally accepted auditing standards and shall not be
subject to any "going concern" or like qualification or exception or any
qualification or exception as to the scope of such audit;
(b) as soon as available, but in any event within 45 days after the
end of each of the first three fiscal quarters of each fiscal year of Borrower,
a consolidated balance sheet of Borrower and its Subsidiaries as at the end of
such fiscal quarter, and the related consolidated statements of income or
operations, and cash flows for such fiscal quarter and for the portion of
Borrowers fiscal year then ended (including, without limitation, reports
relating to ▇▇▇▇▇▇▇▇ sales) setting forth in each case in comparative form the
figures for the corresponding fiscal quarter of the previous fiscal year and the
corresponding portion of the previous fiscal year, all in reasonable detail and
certified by a Responsible Officer of Borrower as fairly presenting the
financial condition, results of operations, and cash flows of Borrower and its
Subsidiaries in accordance with GAAP, subject only to normal year-end audit
adjustments and the absence of footnotes.
6.02 CERTIFICATES; OTHER INFORMATION. Deliver to Agent a sufficient number
of copies for delivery to each Lender, of the following, in form and detail
satisfactory to Agent and the Required Lenders;
(a) concurrently with the delivery of the financial statements
referred to in Section 6.01(a), a certificate of its independent certified
public accountants stating that in making the examination necessary for its
certification of such financial statements no knowledge was obtained of any
Default arising under Section 6.12 or, if any such Default shall exist, stating
the nature and status of such event;
(b) concurrently with the delivery of the financial statements
referred to in Sections 6.01(a) and (b), a duly completed Compliance Certificate
signed by a Responsible Officer of Borrower;
(c) promptly after any request by Agent or any Lender, copies of any
audit reports, management letters or recommendations submitted to the board of
directors (or the audit committee of the board of directors) of Borrower by
independent accountants in connection with the accounts or books of Borrower or
any Subsidiary, or any audit of any of them;
(d) promptly after the same are available, and in any event within
15 days of filing; copies of each annual report, proxy or financial statement or
other report or communication sent to the stockholders of Borrower, and copies
of all annual, regular, periodic and special reports and registration statements
which Borrower may file or be required to file with the Securities and Exchange
Commission under Section 13 or 15(d) of the Securities Exchange Act of 1934, and
not otherwise required to be delivered to Agent pursuant hereto;
(e) within 30 days of the Borrowers fiscal year end, the Borrower's
financial projections or budget by quarter for the following fiscal year, and
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(f) promptly, such additional information regarding the business,
financial or corporate affairs of Borrower or any Subsidiary, or compliance with
the terms of the Loan Documents, as Agent or any Lender may from time to time
reasonably request.
6.03 NOTICES. PROMPTLY NOTIFY AGENT AND EACH LENDER:
(a) of the occurrence of any Default;
(b) any lawsuit in which there is a reasonable possibility of a
settlement or adverse result of greater than Five Hundred Thousand Dollars
($500,000) against the Borrower or any Subsidiary;
(c) any dispute, litigation, investigation, proceeding or suspension
between Borrower or any Subsidiary and any Governmental Authority;
(d) the commencement of, or any material development in, any
litigation or proceeding affecting Borrower or any Subsidiary, including
pursuant to any applicable Environmental Laws;
(e) the occurrence of any ERISA Event or Termination Event; and
(f) of any material change in accounting policies or financial
reporting practices by Borrower or any Subsidiary.
(g) any actual contingent liabilities of Borrower or any Subsidiary
and any such contingent liabilities which are reasonably foreseeable, where such
liabilities would not be included in the financial statements referenced in
Sections 6.01(a) and (b) and are in excess of One Million Dollars ($1,000,000)
in the aggregate.
Each notice pursuant to this Section shall be accompanied by a statement
of a Responsible Officer of Borrower setting forth details of the occurrence
referred to therein and stating what action Borrower has taken and proposes to
take with respect thereto. Each notice pursuant to Section 6.03(a) shall
describe with particularity any and all provisions of this Agreement and any
other Loan Document that have been breached.
6.04 PAYMENT OF OBLIGATIONS. Pay and discharge as the same shall become
due and payable, all its obligations and liabilities, including (a) all tax
liabilities, assessments and governmental charges or levies upon it or its
properties or assets, unless the same are being contested in good faith by
appropriate proceedings and adequate reserves in accordance with GAAP are being
maintained by Borrower or such Subsidiary; (b) all other lawful claims which, if
unpaid, would by law become a Lien upon its property that is not permitted under
Section 7.01; and (c) all Indebtedness, as and when due and payable, which, if
unpaid, would constitute an Event of Default under Section 8.01 (e) but subject
to any subordination provisions contained in any instrument or agreement
evidencing such Indebtedness.
6.05 PRESERVATION OF EXISTENCE, ETC. (a) Preserve, renew and maintain in
full force and effect its legal existence and good standing under the Laws of
the jurisdiction of its organization, except in a transaction permitted by
Section 7.04 or 7.05; (b) take all reasonable action to maintain all rights,
privileges, permits, licenses and franchises necessary or desirable in the
normal conduct of its business, except to the extent that failure to do so could
not reasonably be expected to have a Material Adverse Effect; and (c) preserve
or renew all of its registered patents, trademarks, trade names and service
marks, the non-preservation of which could reasonably be expected to have a
Material Adverse Effect.
6.06 MAINTENANCE OF PROPERTIES. (a) Maintain, preserve and protect all of
its material properties and equipment necessary in the operation of its business
in good working order and condition, ordinary wear and tear excepted; (b) make
all necessary repairs thereto and renewals and replacements thereof except where
the failure to do so could not reasonably be expected to have a Material Adverse
Effect; and (c) use the standard of care typical in the industry in the
operation and maintenance of its facilities.
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6.07 MAINTENANCE OF INSURANCE. Maintain with financially sound and
reputable insurance companies not Affiliates of Borrower, insurance with respect
to its properties and business against loss or damage of the kinds customarily
insured against by Persons engaged in the same or similar business, of such
types and in such amounts (after giving effect to any self-insurance compatible
with the following standards) as are customarily carried under similar
circumstances by such other Persons and providing for not less than 30 days'
prior notice to Agent of termination, lapse or cancellation of such insurance.
6.08 COMPLIANCE WITH LAWS. Comply in all material respects with the
requirements of all Laws, and all orders, writs, injunctions and decrees
applicable to it or to its business or property, except in such instances in
which (a) such requirement of Law or order, writ, injunction or decree is being
contested in good faith by appropriate proceedings diligently conducted; or (b)
the failure to comply therewith could not reasonably be expected to have a
Material Adverse Effect.
6.09 BOOKS AND RECORDS.
(a) Maintain proper books of record and account, in which full, true
and correct entries in conformity with GAAP consistently applied shall be made
of all financial transactions and matters involving the assets and business of
Borrower or such Subsidiary, as the case may be; and (b) maintain such books of
record and account in material conformity with all applicable requirements of
any Governmental Authority having regulatory jurisdiction over Borrower or such
Subsidiary, as the case may be. Borrower shall maintain at all times books and
records pertaining to the Collateral in such detail, form and scope as Agent or
any Lender shall reasonably require.
6.10 INSPECTION RIGHTS. Permit representatives and independent contractors
of Agent and each Lender to visit and inspect any of its properties, to examine
its corporate, financial and operating records, and make copies thereof or
abstracts therefrom, and to discuss on a confidential basis its affairs,
finances and accounts with its directors, officers, and independent public
accountants, all at the expense of Borrower and at such reasonable times during
normal business hours and as often as may be reasonably desired, upon seven days
advance written notice to Borrower, provided, however, that when a Default
exists Agent or any Lender (or any of their respective representatives or
independent contractors) may do any of the foregoing at the expense of Borrower
at any time during normal business hours and without advance notice.
6.11 USE OF PROCEEDS. Use the proceeds of the Credit Extensions to
refinance existing indebtedness to Bank of America, N.A., Union Bank and Bank of
the West, to consummate the Gekko Acquisition, to provide working capital, for
the issuance of Letters of Credit, for capital expenditures and for other
general corporate purposes not in contravention of any Law or of any Loan
Document.
6.12 FINANCIAL COVENANTS.
(a) Tangible Net Worth. Maintain on a consolidated basis Tangible
Net Worth equal to at least the sum of the following:
(i) Seventy Four Million Dollars ($74,000,000); plus
(ii) the sum of 90% of net income after income taxes (without
subtracting losses) earned in each quarterly accounting period commencing
after April 30, 2004; plus
(iii) the net proceeds from any equity securities issued after
the date of this Agreement.
(b) EBITDA. Maintain on a consolidated basis EBITDA (determined on a
rolling four quarter basis) equal to at least the amounts indicated for each
period specified below:
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Period Amounts
------ -------
From April 30, 2004
through October 30, 2004 $16,500,000
From October 31, 2004
through October 30, 2005 $19,000,000
From October 31, 2005
through October 30, 2006 $22,000,000
From October 31, 2006
through October 30, 2007 $23,000,000
From October 31, 2007
through October 30, 2008 $25,500,000
From October 31, 2008
and thereafter $27,000,000
(c) Quick Ratio. Maintain at all times on a consolidated basis a
ratio of Quick Assets to current liabilities (including the Outstanding Amount
of Loans and L/C Obligations) of at least 1.00:1.00, except for the fiscal
quarters ending January 31 and April 30, as to which the ratio of Quick Assets
to current liabilities (including the Outstanding Amount of Loans and L/C
Obligations) shall be at least 0.75:1.00.
(d) Lease and Rental Expense. Not to permit the aggregate payments
due in any fiscal year under all operating leases for personal property in
connection with the Borrower's new distribution center located in Oceanside,
California, to exceed One Million Nine Hundred Fifty Thousand Dollars
($1,950,000).
(e) Capital Expenditures. Not to spend or incur obligations
(including the total amount of any capital leases) to acquire fixed assets for
more than Five Million Dollars ($5,000,000) in any single fiscal year on a
consolidated basis; provided, an additional Twenty Million Dollars ($20,000,000)
may be incurred during Fiscal Year 2004 for the acquisition of real property and
equipment in connection with the Borrower's new distribution center located in
Oceanside, California.
(f) Clean Down Period. Reduce the amount of the Revolving Loan
outstanding under this Agreement to not more than Fifteen Million Dollars
($15,000,000) for a period of at least thirty (30) consecutive days during each
12-month fiscal year period, commencing with fiscal year 2004 and continuing
each fiscal year thereafter.
(g) Fixed Charge Coverage Ratio. Not to permit the Fixed Charge
Coverage Ratio as of the last day of any fiscal quarter to be less than (i) 1.10
to 1.00 for the quarter ending July 31, 2004, and (ii) 1.25 to 1.00 thereafter.
6.13 ADDITIONAL GUARANTORS. Notify Agent at the time that any Person
becomes a Subsidiary, and promptly thereafter (and in any event within 30 days),
cause such Person to (a) become a Guarantor by executing and delivering Agent a
counterpart of the Guaranty or such other document as Agent shall deem
appropriate for such purpose, and (b) deliver to Agent documents of the types
referred to in clauses (iii) and (iv) of Section 4.01(a) and favorable opinions
of counsel to such Person (which shall cover, among other things, the legality,
validity, binding effect and enforceability of the documentation referred to in
clause (a)), all in form, content and scope reasonably satisfactory to Agent.
Notwithstanding the foregoing, as of the Closing Date, ▇▇▇▇▇▇▇▇ EDC shall not be
a Guarantor; provided that Borrower shall use its best efforts to cause ▇▇▇▇▇▇▇▇
EDC to become a Guarantor hereunder within forty-five (45) days of the Closing
Date.
6.14 COLLATERAL RECORDS. Borrower agrees to execute and deliver promptly,
and to cause each other Loan Party to execute and deliver promptly, to Agent,
from time to time, solely for Agent's convenience in maintaining a record of the
Collateral, such written statements and schedules as Agent may reasonably
require designating, identifying or describing the Collateral. The failure by
Borrower or any other Loan Party, however, to
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promptly give Agent such statements or schedules shall not affect, diminish,
modify or otherwise limit the Liens on the Collateral granted pursuant to the
Collateral Documents.
6.15 SECURITY INTERESTS. Borrower shall, and shall cause each other Loan
Party to, defend the Collateral against all claims and demands of all Persons at
any time claiming the same or any interest therein. Borrower shall, and shall
cause each other Loan Party to, comply with the requirements of all state,
provincial and federal laws in order to grant to Agent or, as the case may be,
the U.K. Security Trustee and Lenders valid and perfected first priority
security interests in the Collateral, with perfection, in the case of any
investment property or deposit account, being effected by giving Agent or, as
the case may be, the U.K. Security Trustee control of such investment property
or deposit account, rather than by the filing of a UCC or PPSA financing
statement (or other equivalent registration form, as the case may be) with
respect to such investment property. Agent is hereby authorized by Borrower to
file any UCC or PPSA financing statements (or other equivalent registration
form, as the case may be) covering the Collateral whether or not Borrower's
signatures appear thereon. Borrower shall, and shall cause each other Loan
Party, to do whatever Agent or U.K. Security Trustee may reasonably request,
from time to time, to effect the purposes of this Agreement and the other Loan
Documents, including filing notices of liens, UCC or PPSA financing statements
(or other equivalent registration form, as the case may be), fixture filings and
amendments, renewals and continuations thereof; cooperating with Agent's,
representatives or U.S. Security Trustee's representatives; keeping stock
records; obtaining waivers from landlords and mortgagees and from warehousemen
and their landlords and mortgages; and, paying claims which might, if unpaid,
become a Lien on the Collateral not permitted under this Agreement.
6.16 DISSOLUTION OF ▇▇▇▇▇▇▇▇ STORE III, INC.. Borrower shall cause Store
III formally to be dissolved within ninety (90) days of the Closing Date. Prior
to the date of such dissolution, Store III shall neither hold nor receive any
assets, debt or equity, nor engage in any business other than winding up and
dissolving (and any activity directly related thereto). The certificate(s) for
the shares of stock of Store III shall be returned by Agent to Borrower upon
receipt by Agent of evidence satisfactory to Agent of the dissolution of Store
III.
ARTICLE VII. NEGATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, any Loan or
other Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of
Credit shall remain outstanding, Borrower shall not, nor shall it permit any
Subsidiary to, directly or indirectly:
7.01 LIENS. Create, incur, assume or suffer to exist, any Lien upon any of
its property, assets or revenues, whether now owned or hereafter acquired, other
than the following:
(a) Liens pursuant to any Loan Document;
(b) Liens existing on the date hereof and listed on Schedule 7.01
hereto and any renewals or extensions thereof, provided that the property
covered thereby is not increased and any renewal or extension of the obligations
secured or benefited thereby is permitted by Section 7.03(b):
(c) Liens for taxes not yet due or which are being contested in good
faith and by appropriate proceedings diligently conducted, if adequate reserves
with respect thereto are maintained on the books of the applicable Person in
accordance with GAAP;
(d) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business which
are not overdue for a period of more than 30 days or which are being contested
in good faith and by appropriate proceedings diligently conducted, if adequate
reserves with respect thereto are maintained on the books of the applicable
Person in accordance with GAAP;
(e) pledges or deposits in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other social
security legislation, other than any Lien imposed by ERISA;
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(f) deposits to secure the performance of bids, trade contracts and
leases (other than Indebtedness), statutory obligations, surety bonds (other
than bonds related to judgments or litigation), performance bonds and other
obligations of a like nature incurred in the ordinary course of business;
(g) easements, rights-of-way, restrictions and other similar
encumbrances affecting real property which, in the aggregate, are not
substantial in amount, and which do not in any case materially detract from the
value of the property subject thereto or materially interfere with the ordinary
conduct of the business of the applicable Person;
(h) Liens securing judgments for the payment of money not
constituting an Event of Default under Section 8.01 (h) or securing appeal or
other surety bonds relating to such judgments; and
(i) liens securing Indebtedness permitted under Section 7.03(d);
provided that (i) such Liens do not at any time encumber any property other than
the property financed by such Indebtedness and (ii) the Indebtedness secured
thereby does not exceed the cost or fair market value, whichever is lower, of
the property being acquired on the date of acquisition.
7.02 INVESTMENTS. Make any Investments, except:
(a) Investments held by Borrower or such Subsidiary in the form of
cash equivalents or short-term marketable debt securities;
(b) advances to officers, directors and employees of Borrower and
Subsidiaries in an aggregate amount not to exceed $850,000 at any time
outstanding, for travel, entertainment, relocation and analogous ordinary
business purposes;
(c) Investments of Borrower in any wholly-owned Subsidiary and
Investments of any wholly-owned Subsidiary in Borrower or in another
wholly-owned Subsidiary;
(d) Investments consisting of extensions of credit in the nature of
accounts receivable or notes receivable arising from the grant of trade credit
in the ordinary course of business, and Investments received in satisfaction or
partial satisfaction thereof from financially troubled account debtors to the
extent reasonably necessary in order to prevent or limit loss;
(e) Guarantees permitted by Section 7.03;
(f) Investments by Borrower (without duplication with any
Investments permitted hereunder) in connection with the acquisition of the
membership interests of Gekko, not to exceed $30,000,000; and
(g) Additional Investments which do not exceed $1,000,000 in the
aggregate at any time; provided that at the time of each Investment no Event of
Default exists or would exist after giving effect to such Investment.
7.03 INDEBTEDNESS. Create, incur, assume or suffer to exist any
Indebtedness, except:
(a) Indebtedness under the Loan Documents;
(b) Indebtedness outstanding on the date hereof and listed on
Schedule 7.03 hereto and any refinancings, refundings, renewals or extensions
thereof; provided that the amount of such Indebtedness is not increased at the
time of such refinancing, refunding, renewal or extension except by an amount
equal to a reasonable premium or other reasonable amount paid, and fees and
expenses reasonably incurred, in connection with such refinancing and by an
amount equal to any existing commitments unutilized thereunder;
(c) Guarantees of Borrower or any Subsidiary in respect of
Indebtedness otherwise permitted hereunder of Borrower or any Subsidiary;
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(d) Indebtedness in respect of capital leases and purchase money
obligations for fixed assets within the limitations set forth in Section
7.01(i); provided, however, that the aggregate amount of all such Indebtedness
outstanding (excluding those covered in Section 6.12(d) of this Agreement) shall
not exceed $3,000,000 in any fiscal year.
7.04 FUNDAMENTAL CHANGES. Merge, amalgamate, dissolve, liquidate,
consolidate with or into, another Person, or Dispose of (whether in one
transaction or in a series of transactions) all or substantially all of its
assets (whether now owned or hereafter acquired) to or in favor of any Person,
except that, so long as no Default exists or would result therefrom:
(a) any Subsidiary may merge or amalgamate with (i) Borrower,
provided that Borrower shall be the continuing or surviving Person, or (ii) any
one or more other Subsidiaries, provided that when any wholly-owned Subsidiary
is merging or amalgamating with another Subsidiary, the wholly-owned Subsidiary
shall be the continuing or surviving Person, and, provided further that if a
Guarantor is merging or amalgamating with another Subsidiary, the Guarantor
shall be the continuing or surviving Person; and
(b) any Subsidiary may dispose of all or substantially all of its
assets (upon voluntary liquidation or otherwise), to Borrower or to another
Subsidiary; provided that if the transferor in such a transaction is a
wholly-owned Subsidiary, then the transferee must also be a wholly-owned
Subsidiary, and provided further that if the transferor of such assets is a
Guarantor, the transferee thereof must either be Borrower or a Guarantor.
7.05 DISPOSITIONS. Make any Disposition or enter into any agreement to
make any Disposition, except:
(a) Dispositions of obsolete or worn out property, whether now owned
or hereafter acquired, in the ordinary course of business;
(b) Dispositions of inventory in the ordinary course of business;
(c) Dispositions of equipment or real property to the extent that
(i) such property is exchanged for credit against the purchase price of similar
replacement property, or (ii) the proceeds of such Disposition are reasonably
promptly applied to the purchase price of such replacement property;
(d) Dispositions of property by any Subsidiary to Borrower or to a
wholly-owned Subsidiary, provided that if the transferor of such property is a
Guarantor, the transferee thereof must either be Borrower or a Guarantor,
(e) Dispositions permitted by Section 7.04;
(f) Additional Dispositions in the ordinary course of business and
on ordinary and reasonable business terms, not to exceed $750,000 in any fiscal
year;
(g) Dispositions of the properties listed on Schedule 7.05; and
provided, however, that any Disposition pursuant to clauses (a) through (e)
shall be for fair market value, except for the transfer of inventory from the
Borrower to its retail stores within the United States.
7.06 RESTRICTED PAYMENTS. Declare or make, directly or indirectly, any
Restricted Payment, or incur any obligation (contingent or otherwise) to do so,
except that:
(a) each Subsidiary may make Restricted Payments to Borrower and to
wholly-owned Subsidiaries (and, in the case of a Restricted Payment by a
non-wholly-owned Subsidiary, to Borrower and any Subsidiary and to each other
owner of capital stock or other equity interests of such Subsidiary on a pro
rata basis based on their relative ownership interests);
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(b) Borrower and each Subsidiary may declare and make dividend
payments or other distributions payable solely in the common stock or other
common equity interests of such Person;
(c) Borrower and each Subsidiary may purchase, redeem or otherwise
acquire shares of its common stock or other common equity interests or warrants
or options to acquire any such shares with the proceeds received from the
substantially concurrent issue of new shares of its common stock or other common
equity interests; and
(d) Borrower may purchase, redeem or otherwise acquire shares of its
common stock in an aggregate amount not exceeding $1,000,000 per year, provided
that no Event of Default exists or would exist after giving effect thereto.
7.07 CHANGE IN NATURE OF BUSINESS. Engage in any material line of business
substantially different from those lines of business conducted by Borrower and
its Subsidiaries on the date hereof.
7.08 TRANSACTIONS WITH AFFILIATES. Enter into any transaction of any kind
with any Affiliate of Borrower, whether or not in the ordinary course of
business, other than on fair and reasonable terns substantially as favorable to
Borrower or such Subsidiary as would be obtainable by Borrower or such
Subsidiary at the time in a comparable arm's length transaction with a Person
other than an Affiliate, provided that, to the extent permitted under applicable
law, the foregoing restriction shall not apply to transactions between or among
Borrower and any of its wholly-owned Subsidiaries or between and among any
wholly-owned Subsidiaries, advances permitted under Section 7.02(b) and
reasonable and customary employee compensation and benefits, directors fees and
indemnification of directors, officers and employees.
7.09 MARGIN REGULATIONS. Use the proceeds of any Credit Extension, whether
directly or indirectly, and whether immediately, incidentally or ultimately, to
purchase or cant" margin stock (within the meaning of Regulation U of the Board
of Governors of the Federal Reserve System of the United States) or to extend
credit to others for the purpose of purchasing or carrying margin stock or to
refund indebtedness originally incurred for such purpose.
7.10 SUSPENSION OF BUSINESS. Voluntarily suspend its business for more
than seven (7) days in any 30-day period.
ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES
8.01 EVENTS OF DEFAULT. Any of the following shall constitute an Event of
Default:
(a) Non-Payment. Borrower or any other Loan Party fails to pay (i)
when and as required to be paid herein, any amount of principal of any Loan, or
any L/C Obligation, or (ii) within three days after the same becomes due, any
interest on any Loan or on any L/C Obligation, or any commitment or other fee
due hereunder, or (iii) within five days after the same becomes due, any other
amount payable hereunder or under any other Loan Document; or
(b) Specific Covenants. Borrower fails to perform or observe any
term, covenant or agreement contained in any of Section 6.01. 6.02, 6.03, 6.05
(as to existence of Borrower), 6.10, 6.12 or Article VII; or
(c) Other Defaults. Any Loan Party fails to perform or observe any
other covenant or agreement (not specified in subsection (a) or (b) above)
contained in any Loan Document on its part to be performed or observed and such
failure continues for 30 days or any default or event of default occurs under
any other Loan Document; or
(d) Representations and Warranties. Any representation, warranty,
certification or statement of fact made or deemed made by or on behalf of
Borrower or any other Loan Party herein, in any other Loan Document, or in any
document delivered in connection herewith or therewith shall be incorrect or
misleading in any material respect when made or deemed; or
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(e) Cross-Default. Borrower or any Subsidiary (A) fails to make any
payment when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee
(other than Indebtedness hereunder) having an aggregate principal amount
(including undrawn committed or available amounts and including amounts owing to
all creditors under any combined or syndicated credit arrangement) of more than
the Threshold Amount, or (B) fails to observe or perform any other agreement or
condition relating to any such Indebtedness or Guarantee or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event occurs, the effect of which default or other event is to cause, or to
permit the holder or holders of such Indebtedness or the beneficiary or
beneficiaries of such Guarantee (or a trustee or agent on behalf of such holder
or holders or beneficiary or beneficiaries) to cause, with the giving of notice
if required, such Indebtedness to be demanded or to become due or to be
repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an
offer to repurchase, prepay, defease or redeem such Indebtedness to be made
prior to its stated maturity, or such Guarantee to become payable or cash
collateral in respect thereof to be demanded; or
(f) Insolvency Proceedings, Etc. Any Loan Party or any of its
Subsidiaries institutes or consents to the institution of any proceeding (by
petition, proposal, or otherwise) under any Debtor Relief Law, or makes an
assignment for the benefit of creditors; or applies for or consents to the
appointment of any receiver, trustee, custodian, conservator, liquidator,
monitor, administrator, rehabilitator or similar officer for it or for all or
any material part of its property; or any receiver, trustee, custodian,
conservator, liquidator, monitor, administrator, rehabilitator or similar
officer is appointed without the application or consent of such Person and the
appointment continues undischarged or unstayed for 60 calendar days; or any
proceeding (by petition, proposal, or otherwise) under any Debtor Relief Law
relating to any such Person or to all or any material part of its property is
instituted without the consent of such Person and continues undismissed or
unstayed for 60 calendar days, or an order for relief is entered in any such
proceeding or a warrant of attachment, execution, writ of seizure or seizure and
sale or similar process shall be issued against any substantial portion of its
property; or
(g) Inability to Pay Debts: Attachment. (i) Borrower or any
Subsidiary becomes unable or admits in writing its inability or fails generally
to pay its debts as they become due, or (ii) any writ or warrant of attachment
or execution or similar process is issued or levied against all or any material
part of the property of any such Person and is not released, vacated or fully
bonded within 30 days after its issue or levy; or
(h) Judgments. There is entered against Borrower or any Subsidiary
(i) a final judgment or order for the payment of money in an aggregate amount
exceeding the Threshold Amount (to the extent not covered by independent
third-party insurance as to which the insurer does not dispute coverage), or
(ii) any one or more non-monetary final judgments that have, or could reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect
and, in either case, (A) enforcement proceedings are commenced by any creditor
upon such judgment or order, or (B) there is a period of 10 consecutive days
during which a stay of enforcement of such judgment, by reason of a pending
appeal or otherwise, is not in effect; or
(i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan
or Multiemployer Plan which has resulted or could reasonably be expected to
result in liability of Borrower under applicable law in an aggregate amount in
excess of the Threshold Amount, (ii) Borrower or any ERISA Affiliate fails to
pay when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under Section 4201
of ERISA under a Multiemployer Plan in an aggregate amount in excess of the
Threshold Amount, or (iii) any Lien arises (save for contribution amounts not
yet due) in connection with any Plan; or
(j) Invalidity of Loan Documents. Any Loan Document, at any time
after its execution and delivery and for any reason other than as expressly
permitted hereunder or satisfaction in full of all the Obligations, ceases to be
in full force and effect; or any Loan Party or any other Person contests in any
manner the validity or enforceability of any Loan Document; or any Loan Party
denies that it has any or further liability or obligation under any Loan
Document, or purports to revoke, terminate or rescind any Loan Document, or any
Lien with respect to any material portion of the Collateral intended to be
secured thereby ceases to be, or, subject to Section 7.01, is not, valid,
perfected and prior to all other Liens or is terminated, revoked or declared
void; or
(k) Change of Control. There occurs any Change of Control with
respect to Borrower, or
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(l) Material Adverse Effect. There occurs any event or circumstance
that has a Material Adverse Effect.
8.02 REMEDIES UPON EVENT OF DEFAULT. If any Event of Default occurs, Agent
shall, at the request of, or may, with the consent of, the Required Lenders,
take any or all of the following actions:
(a) declare the commitment of each Lender to make Loans and any
obligation of Agent to make L/C Credit Extensions to be terminated, whereupon
such commitments and obligation shall be terminated;
(b) declare the unpaid principal amount of all outstanding Loans,
all interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by Borrower,
(c) require that Borrower Cash Collateralize the L/C Obligations (in
an amount equal to the then Outstanding Amount thereof); and
(d) both in its capacity as Agent and U.K. Security Trustee,
exercise on behalf of itself and Lenders all rights and remedies available to it
and Lenders under the Loan Documents or applicable law;
(e) provided, however, that upon the occurrence of an actual or
deemed entry of an order for relief with respect to Borrower under the
Bankruptcy Code of the United States, the obligation of each Lender to make
Loans and any obligation of Agent to make L/C Credit Extensions shall
automatically terminate, the unpaid principal amount of all outstanding Loans
and all interest and other amounts as aforesaid shall automatically become due
and payable, and the obligation of Borrower to Cash Collateralize the L/C
Obligations as aforesaid shall automatically become effective, in each case
without further act of Agent or any Lender.
8.03 APPLICATION OF FUNDS. After the exercise of remedies provided for in
Section 8.02 (or after the Loans have automatically become immediately due and
payable and the L/C Obligations have automatically been required to be Cash
Collateralized as set forth in the proviso to Section 8.02), any amounts
received on account of the Obligations shall be applied by Agent in the
following order:
First, to payment of that portion of the Obligations constituting
fees, indemnities, expenses and other amounts (including Attorney Costs
and amounts payable under Article III) payable to Agent in its capacity as
such;
Second, to payment of that portion of the Obligations constituting
fees, indemnities and other amounts (other than principal and interest)
payable to Lenders (including Attorney Costs and amounts payable under
Article III), ratably among them in proportion to the amounts described in
this clause Second payable to them;
Third, to payment of that portion of the Obligations constituting
accrued and unpaid interest on the Loans and L/C Borrowings, ratably among
Lenders in proportion to the respective amounts described in this clause
Third payable to them;
Fourth, to payment of that portion of the Obligations constituting
unpaid principal of the Loans and L/C Borrowings, ratably among Lenders in
proportion to the respective amounts described in this clause Fourth held
by them;
Fifth, to Agent, to Cash Collateralize that portion of L/C
Obligations comprised of the aggregate undrawn amount of Letters of
Credit; and
Last, the balance, if any, after all of the Obligations have been paid in
full, to Borrower or as otherwise required by Law.
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Subject to Section 2.03(c), amounts used to Cash Collateralize the aggregate
undrawn amount of Letters of Credit pursuant to clause Fifth above shall be
applied to satisfy drawings under such Letters of Credit as they occur. If any
amount remains on deposit as Cash Collateral after all Letters of Credit have
either been fully drawn or expired, such remaining amount shall be applied to
the other Obligations, if any, in the order set forth above.
ARTICLE IX. AGENT
9.01 APPOINTMENT AND AUTHORIZATION OF AGENT. Each Lender hereby
irrevocably appoints, designates and authorizes Agent to take such action on its
behalf under the provisions of this Agreement and each other Loan Document and
to exercise such powers and perform such duties as are expressly delegated to it
by the terms of this Agreement or any other Loan Document, together with such
powers as are reasonably incidental thereto. Notwithstanding any provision to
the contrary contained elsewhere herein or in any other Loan Document, Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall Agent have or be deemed to have any fiduciary relationship
with any Lender or participant, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against Agent Without
limiting the generality of the foregoing sentence, the use of the term "agent"
herein and in the other Loan Documents with reference to Agent is not intended
to connote any fiduciary or other implied (or express) obligations arising under
agency doctrine of any applicable Law. Instead, such term is used merely as a
matter of market custom, and is intended to create or reflect only an
administrative relationship between independent contracting parties. All
benefits and immunities provided to Agent in this Article IX shall apply to
Agent as issuer of Letters of Credit with respect to any acts taken or omissions
suffered by Agent in connection with Letters of Credit issued by it or proposed
to be issued by it and the applications and agreements for letters of credit
pertaining to such Letters of Credit, and as additionally provided herein with
respect to Agent as issuer of letters of Credit.
9.02 DELEGATION OF DUTIES. Agent may execute any of its duties under this
Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel and other
consultants or experts concerning all matters pertaining to such duties. Agent
shall not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects in the absence of gross negligence or willful
misconduct
9.03 LIABILITY OF AGENT. No Agent-Related Person shall (a) be liable for
any action taken or omitted to be taken by any of them under or in connection
with this Agreement or any other Loan Document or the transactions contemplated
hereby (except for its own gross negligence or willful misconduct in connection
with its duties expressly set forth herein), or (b) be responsible in any manner
to any Lender or Participant for any recital, statement, representation or
warranty made by any Loan Party or any officer thereof, contained herein or in
any other Loan Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by Agent under or in
connection with, this Agreement or any other Loan Document, or the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document, or for any failure of any Loan Party or any other party
to any Loan Document to perform its obligations hereunder or thereunder. No
Agent-Related Person shall be under any obligation to any Lender or Participant
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of any Loan Party or
any Affiliate thereof.
9.04 RELIANCE BY AGENT. (a) Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, communication, signature,
resolution, representation, notice, consent, certificate, affidavit, letter,
telegram, facsimile, telex or telephone message, electronic mail message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to any Loan
Party), independent accountants and other experts selected by Agent. Agent shall
be fully justified in failing or refusing to take any action under any Loan
Document unless it shall first receive such advice or concurrence of the
Required Lenders as it deems appropriate and, if it so requests, it shall first
be indemnified to its satisfaction by all Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. Agent shall in all cases be fully protected in acting, or
in refraining from acting, under this Agreement or any other Loan Document in
accordance with a request or consent of the Required Lenders (or such greater
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number of Lenders as may be expressly required by any instance), and such
request and any action taken or failure to act pursuant thereto shall be binding
upon all Lenders.
(b) For purposes of determining compliance with the conditions specified
in Section 4.01, each Lender that has signed this Agreement shall be deemed to
have consented to, approved or accepted or to be satisfied with, each document
or other matter required thereunder to be consented to or approved by or
acceptable or satisfactory to a Lender unless Agent shall have received notice
from such Lender prior to the proposed Closing Date specifying its objection
thereto.
9.05 NOTICE OF DEFAULT. Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default, except with respect to defaults in the
payment of principal, interest and fees required to be paid to Agent for the
account of Lenders, unless Agent shall have received written notice from a
Lender or Borrower referring to this Agreement, describing such Default and
stating that such notice is a "notice of default." Agent will notify Lenders of
its receipt of any such notice. Agent shall take such action with respect to
such Default as may be directed by the Required Lenders in accordance with
Article VIII; provided, however, that unless and until Agent has received any
such direction, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default as it shall deem
advisable or in the best interest of Lenders.
9.06 CREDIT DECISION; DISCLOSURE OF INFORMATION BY AGENT. Each Lender
acknowledges that no Agent-Related Person has made any representation or
warranty to it, and that no act by Agent hereafter taken, including any consent
to and acceptance of any assignment or review of the affairs of any Loan Party
or any Affiliate thereof, shall be deemed to constitute any representation or
warranty by any Agent-Related Person to any Lender as to any matter, including
whether Agent-Related Persons have disclosed material information in their
possession. Each Lender represents to Agent that it has, independently and
without reliance upon any Agent-Related Person and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of the Loan Parties and their respective
Subsidiaries, and all applicable bank or other regulatory Laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to Borrower and the other Loan Parties hereunder.
Each Lender also represents that it will, independently and without reliance
upon any Agent-Related Person and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations, property, financial
and other condition and creditworthiness of Borrower and the other Loan Parties.
Except for notices, reports and other documents expressly required to be
furnished to Lenders by Agent herein, Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of any of the Loan Parties or any of their
respective Affiliates which may come into the possession of any Agent-Related
Person.
9.07 INDEMNIFICATION OF AGENT. Whether or not the transactions
contemplated hereby are consummated, Lenders shall indemnify upon demand each
Agent-Related Person (to the extent not reimbursed by or on behalf of any Loan
Party and without limiting the obligation of any Loan Party to do so), pro rata,
and hold harmless each Agent-Related Person from and against any and all
Indemnified Liabilities incurred by it; provided, however, that no Lender shall
be liable for the payment to any Agent-Related Person of any portion of such
Indemnified Liabilities to the extent determined in a final, nonappealable
judgment by a court of competent jurisdiction to have been caused primarily by
such Agent-Related Person's own gross negligence or willful misconduct; it being
agreed by all Lenders that no action taken in accordance with the directions of
the Required Lenders shall be deemed to constitute gross negligence or willful
misconduct for purposes of this Section. Without limitation of the foregoing,
each Lender shall reimburse Agent upon demand for its ratable share of any costs
or out-of-pocket expenses (including Attorney Costs and costs and expenses in
connection with the use of IntraLinks, Inc. or other similar information
transmission systems in connection with this Agreement) incurred by Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that Agent is not
reimbursed for such expenses by or on behalf of Borrower. The undertaking in
this Section shall survive termination of the Aggregate Commitments, the payment
of all other
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Obligations and the resignation of Agent.
9.08 AGENT IN ITS INDIVIDUAL CAPACITY. Union Bank and its Affiliates may
make loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with each of the Loan Parties
and their respective Affiliates as though Union Bank were not Agent hereunder
and without notice to or consent of Lenders. Lenders acknowledge that, pursuant
to such activities, Union Bank or its Affiliates may receive information
regarding any Loan Party or its Affiliates (including information that may be
subject to confidentiality obligations in favor of such Loan Party or such
Affiliate) and acknowledge that Agent shall be under no obligation to provide
such information to them. With respect to its Loans, Union Bank shall have the
same rights and powers under this Agreement as any other Lender and may exercise
such rights and powers as though it were not Agent, and the terms "Lender" and
"Lenders" include Union Bank in its individual capacity.
9.09 SUCCESSOR AGENT. Agent may resign as Agent upon 30 days' written
notice to Lenders and Borrower; provided that any such resignation by Union Bank
shall also constitute its resignation as Agent in its capacity of issuer of
Letters of Credit If Agent resigns under this Agreement, the Required Lenders
shall appoint from among Lenders a successor Agent for Lenders, which successor
Agent shall be consented to by Borrower at all times other than during the
existence of a Default (which consent of Borrower shall not be unreasonably
withheld or delayed). If no successor Agent is appointed prior to the effective
date of the resignation of Agent, Agent may appoint, after consulting with
Lenders and Borrower, a successor Agent from among Lenders. Upon the acceptance
of its appointment as successor Agent hereunder, the Person acting as such
successor Agent shall succeed to all the rights, powers and duties of the
retiring Agent (including those in its capacity as issuer of Letters of Credit)
and the term "Agent" shall mean such successor Agent in all such capacities and
the retiring Agent's appointment, powers and duties as Agent shall be
terminated, without any other or further act or deed on the part of such
retiring Agent or any other Lender, other than the obligation of the successor
Agent to issue letters of credit in substitution for the Letters of Credit, if
any, outstanding at the time of such succession or to make other arrangements
satisfactory to the retiring Agent to effectively assume the obligations of the
retiring Agent with respect to such Letters of Credit After any retiring Agent's
resignation hereunder as Agent, the provisions of this Article IX and Sections
10.04 and 10.05 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under this Agreement If no successor Agent has
accepted appointment as Agent by the date which is 30 days following a retiring
Agent's notice of resignation, the retiring Agent's resignation shall
nevertheless thereupon become effective and Lenders shall perform all of the
duties of Agent hereunder until such time, if any, as the Required Lenders
appoint a successor agent as provided for above.
9.10 AGENT MAY FILE PROOFS OF CLAIM. In case of the pendency of any
receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement,
adjustment, composition or other judicial proceeding relative to any Loan Party,
Agent (irrespective of whether the principal of any Loan or L/C Obligation shall
then be due and payable as herein expressed or by declaration or otherwise and
irrespective of whether Agent shall have made any demand on Borrower) shall be
entitled and empowered, by intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of the principal
and interest owing and unpaid in respect of the Loans, L/C Obligations and all
other Obligations that are owing and unpaid and to file such other documents as
may be necessary or advisable in order to have the claims of Lenders and Agent
(including any claim for the reasonable compensation, expenses, disbursements
and advances of Lenders and Agent and their respective agents and counsel and
all other amounts due Lenders and Agent under Sections 2.03(1) and (j), 2.09 and
10.4) allowed in such judicial proceeding; and
(b) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator
or other similar official in any such judicial proceeding is hereby authorized
by each Lender to make such payments to Agent and, in the event that
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Agent shall consent to the making of such payments directly to Lenders, to pay
to Agent any amount due for the reasonable compensation, expenses, disbursements
and advances of Agent and its agents and counsel, and any other amounts due
Agent under Sections 2.09 and 10.04.
Nothing contained herein shall be deemed to authorize Agent to authorize
or consent to or accept or adopt on behalf of any Lender any plan of
reorganization, arrangement, adjustment or composition affecting the Obligations
or the rights of any Lender or to authorize Agent to vote in respect of the
claim of any Lender in any such proceeding.
9.11 GUARANTY MATTERS. Each Lender hereby irrevocably authorizes Agent, at
its option and in its discretion, to release any Guarantor from its obligations
under the Guaranty if such Person ceases to be a Subsidiary as a result of a
transaction permitted hereunder. Upon request by Agent at any time, each Lender
will confirm in writing Agents authority to release any Guarantor from its
obligations under the Guaranty pursuant to this Section 9.11.
9.12 COLLATERAL MATTERS(a) Each Lender hereby irrevocably authorizes and
directs Agent to enter into the Collateral Documents for the benefit of such
Lender. Each Lender hereby agrees, and each holder of any Note by the acceptance
thereof will be deemed to agree, that, except as otherwise set forth in Section
10.01, any action taken by the Required Lenders, in accordance with the
provisions of this Agreement or the Collateral Documents, and the exercise by
the Required Lenders of the powers set forth herein or therein, together with
such other powers as are reasonably incidental thereto, shall be authorized and
binding upon all of Lenders. Agent is hereby authorized on behalf of all of
Lenders, without the necessity of any notice to or further consent from any
Lender from time to time prior to, an Event of Default, to take any action with
respect to any Collateral or Collateral Documents which may be necessary to
perfect and maintain perfected the Liens upon the Collateral granted pursuant to
the Collateral Documents.
Without limiting the generality of this paragraph, for the purposes
of creating a solidarite active in accordance with Article 1541 of the Civil
Code of Quebec, between each Lender, taken individually, on the one hand, and
the Agent, on the other hand, each Loan party, each such Lender and the Agent
acknowledge and agree that such Lender and the Agent are hereby conferred the
legal status of solidary creditors of each Loan Party in respect of all
Obligations, present and future, owed by each Loan Party to each such Lender and
the Agent (collectively, the "Solidary Claim"). Each Loan Party which is not a
signatory of this Agreement but is or may become a signatory to any other Loan
Documents shall be deemed to have accepted the provisions contained in this
paragraph by its execution of such other Loan Documents. Accordingly, but
subject (for the avoidance of doubt) to Article 1542 of the Civil Code of
Quebec, the Loan Parties are irrevocably bound towards the Agent and each Lender
in respect of the entire Solidary Claim of the Agent and each Lender. As a
result of the foregoing, the parties hereto acknowledge that the Agent and each
Lender shall at all times have a valid and effective right of action for the
entire Solidary Claim of the Agent and such Lender and the right to give full
acquittance for it. Accordingly, without limiting the generality of the
foregoing, the Agent, as solidary creditor with each Lender, shall at all times
have a valid and effective right of action in respect of all Obligations,
present and future, owed by each Loan Party to the Agent and Lenders or any of
them and the right to give a full acquittance for same. The parties further
agree and acknowledge that the Liens created by the Collateral Documents on the
Collateral shall be granted to the Agent, for its own benefit and for the
benefit of Lenders.
(b) Each Lender hereby irrevocably authorizes Agent, at its option
and in its discretion,
(i) to release any Lien on any property granted to or held by
Agent under any Loan Document (A) upon termination of the Aggregate
Commitments and payment in full of all Obligations (other than contingent
indemnification obligations) and the expiration or termination of all
Letters of Credit, (B) that is sold or to be sold as part of or in
connection with any sale permitted hereunder or under any other Loan
Document, or (C) subject to Section 10.01, if approved, authorized or
ratified in writing by the Required Lenders; and
(ii) to subordinate any Lien on any property granted to or
held by Agent under any Loan Document to the holder of any Lien on such
property that is permitted by this Agreement or any other Loan Document.
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Upon request by Agent at any time, each Lender will confirm in writing
Agents authority to release or subordinate its interest in particular types or
items of Collateral pursuant to this Section 9.12.
(c) Subject to (b) above, Agent shall (and is hereby irrevocably
authorized by each Lender, to) execute such documents as may be necessary to
evidence the release or subordination of the Liens granted to Agent for the
benefit of Agent and Lenders herein or pursuant hereto upon the applicable
Collateral; provided that (i) Agent shall not be required to execute any such
document on terms which, in Agents opinion, would expose Agent to or create any
liability or entail any consequence other than the release or subordination of
such Liens without recourse or warranty and (ii) such release or subordination
shall not in any manner discharge, affect or impair the Obligations or any Liens
upon (or obligations of Borrower or any other Loan Party in respect of) all
interests retained by Borrower or any other Loan Party, including the proceeds
of the sale, all of which shall continue to constitute part of the Collateral.
In the event of any sale or transfer of Collateral, or any foreclosure with
respect to any of the Collateral, Agent shall be authorized to deduct all
expenses reasonably incurred by Agent from the proceeds of any such sale,
transfer or foreclosure.
(d) Agent or, as the case may be, U.K. Security Trustee, shall have
no obligation whatsoever to any Lender or any other Person to assure that the
Collateral exists or is owned by Borrower or any other Loan Party or is cared
for, protected or insured or that the Liens granted to Agent or, as the case may
be, U.K. Security Trustee, herein or in any of the Collateral Documents or
pursuant hereto or thereto have been properly or sufficiently or lawfully
created, perfected, protected or enforced or are entitled to any particular
priority, or to exercise or to continue exercising at all or in any manner or
under any duty of care, disclosure or fidelity any of the rights, authorities
and powers granted or available to Agent or, as the case may be, U.K. Security
Trustee, in this Section 9.12 or in any of the Collateral Documents, it being
understood and agreed that in respect of the Collateral, or any act, omission or
event related thereto, Agent or U.K. Security Trustee may act in any manner it
may deem appropriate, in its sole discretion, given Agent's and U.K. Security
Trustee's own interest in the Collateral as one of Lenders and that Agent or
U.K. Security Trustee shall have no duty or liability whatsoever to Lenders.
(e) Each Lender hereby appoints each other Lender as agent for the
purpose of perfecting Lenders' security interest in assets which, in accordance
with Article 9 of the UCC or PPSA can be perfected only by possession. Should
any Lender (other than Agent) obtain possession of any such Collateral, such
Lender shall notify Agent thereof, and, promptly upon Agent's request therefor
shall deliver such Collateral to Agent or in accordance with Agent's
instructions.
9.13 APPOINTMENT OF U.K. SECURITY TRUSTEE. Each Lender and the Agent
hereby appoint the U.K. Security Trustee to act as its trustee under and in
relation to the U.K. Security Documents to which the U.K. Security Trustee is a
party pursuant to this Agreement and to hold the Trust Property as trustee for
the Agent and the Lenders on trust and in accordance with the other terms
contained in the U.K. Security Documents to which the U.K. Security Trustee is a
party and the Agent and each Lender hereby irrevocably authorize the U.K.
Security Trustee to exercise such rights, remedies, powers and discretions as
are specifically delegated to the U.K. Security Trustee by the terms of the U.K.
Security Documents to which the U.K. Security Trustee is party together with all
such rights, remedies, powers and discretions as are reasonably incidental
thereto.
9.14 AGENT AS U.K. SECURITY TRUSTEE. In this Agreement, any rights
exercisable by, any documents to be delivered to, or any other indemnities or
obligations in favor of the Agent shall be, as the case may be, exercisable by,
delivered to, or be indemnities or other obligations in favor of the Agent in
its capacity as U.K. Security Trustee to the extent that the right, document,
indemnity or other obligation relates to the U.K. Security Documents or the
security thereby created. Any obligations of the Agent in this Agreement shall
be obligations of the Agent in its capacity as U.K. Security Trustee to the
extent that the obligations relate to the U.K. Security Documents or the
security thereby created. Additionally, in its capacity as U.K. Security
Trustee, the Agent shall have (i) all the rights, powers, and benefits in favor
of the Agent contained in the provisions of this Article 9; (ii) all the rights
and powers of an absolute owner of the security constituted by the U.K. Security
Documents, and (iii) all the rights and powers granted to it and be subject to
all the obligations and duties owed by it under the U.K. Security Documents. The
Lenders agree that at any time that the U.K. Security Trustee shall be a Person
other than the Agent, such other Person shall have all the rights, benefits and
powers granted to the Agent in its capacity as U.K Security Trustee in this
Agreement
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9.15 LIENS IN FAVOR OF U.K. SECURITY TRUSTEE. Any reference in this
Agreement to Liens stated to be in favor of the Agent shall be construed so as
to include a reference to Liens granted in favor of the U.K. Security Trustee.
ARTICLE X. MISCELLANEOUS
10.01 AMENDMENTS, ETC. No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent to any departure by
Borrower or any other Loan Party therefrom, shall be effective unless in writing
signed by the Required Lenders and Borrower or the applicable Loan Party, as the
case may, be, and acknowledged by Agent, and each such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given; provided, however, that no such amendment, waiver or consent shall:
(a) waive any condition set forth in Section 4.01 (a) without the
written consent of each Lender, provided, however, in the sole discretion of
Agent, only a waiver by Agent shall be required with respect to immaterial
matters or items specified in Section 4.01(a) (iii) or (iv) with respect to
which Borrower has given assurances satisfactory to Agent that such items shall
be delivered promptly following the Closing Date;
(b) extend or increase the Commitment of any Lender (or reinstate
any Commitment terminated pursuant to Section 8.02) without the written consent
of such Lender,
(c) postpone any date fixed by this Agreement or any other Loan
Document for any payment (excluding mandatory prepayments) of principal,
interest, fees or other amounts due to Lenders (or any of them) hereunder or
under any other Loan Document without the written consent of each Lender
directly affected thereby;
(d) reduce the principal of, or the rate of interest specified
herein on, any Loan or L/C Borrowing, or (subject to clause (ii) of the second
proviso to this Section 10.01) any fees or other amounts payable hereunder or
under any other Loan Document without the written consent of each Lender
directly affected thereby; provided, however, that only the consent of the
Required Lenders shall be necessary (i) to amend the definition of "Default
Rate" or to waive any obligation of Borrower to pay interest at the Default Rate
or (ii) to amend any financial covenant hereunder (or any defined term used
therein) even if the effect of such amendment would be to reduce the rate of
interest on any Loan or L/C Borrowing or to reduce any fee payable hereunder;
(e) change Section 2.13 or Section 8.03 in a manner that would alter
the pro rata sharing of payments required thereby without the written consent of
each Lender; or
(f) change any provision of this Section or the definition of
"Required Lenders" or any other provision hereof specifying the number or
percentage of Lenders required to amend, waive or otherwise modify any rights
hereunder or make any determination or grant any consent hereunder, without the
written consent of each Lender, or
(g) release any Guarantor from the Guaranty or release the Liens on
all or substantially all of the Collateral except in accordance with the terms
of any Loan Document without the written consent of each Lender.
and, provided further, that (i) no amendment, waiver or consent shall,
unless in writing and signed by Agent in addition to Lenders required above,
affect the rights or duties of Agent under this Agreement or any other Loan
Document, (A) as Administrative Agent, or (B) as Letter of Credit issuer or
under any Letter of Credit Application relating to any Letter of Credit issued
or to be issued by it (including, without limitation, any reduction in any fee,
charge, expense, cost or other amount payable to Agent for its own account under
this Agreement in any such capacity); and (ii) the Agent Fee Letter may be
amended, or rights or privileges thereunder waived, in a writing executed only
by the respective panties thereto. Notwithstanding anything to the contrary
herein, no Defaulting Lender shall have any right to approve or disapprove any
amendment, waiver or consent hereunder,
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except that the Commitment of such Lender may not be increased or extended
without the consent of such Lender.
10.02 NOTICES AND OTHER COMMUNICATIONS; FACSIMILE COPIES.
(a) General. Unless otherwise expressly provided herein, all notices
and other communications provided for hereunder shall be in writing (including
by facsimile transmission). All such written notices shall be mailed, faxed or
delivered, to the applicable address, facsimile number or (subject to subsection
(c) below) electronic mail address, and all notices and other communications
expressly permitted hereunder to be given by telephone shall be made to the
applicable telephone number, specified for such Person on Schedule 10.02 or to
such other address, facsimile number, electronic mail address or telephone
number as shall be designated by such party in a notice to the other parties.
All such notices and other communications shall be deemed to be given or made
upon the earlier to occur of (i) actual receipt by the relevant party hereto and
(ii) (A) if delivered by hand or by courier, upon delivery; (B) if delivered by
mail, four Business Days after deposit in the mails, postage prepaid; provided,
however, that notices of Default, if delivered by mail, shall be effective four
Business Days after deposit in the mails, certified or registered postage
prepaid; (C) if delivered by facsimile, when sent and the sender has received
electronic confirmation of error free receipt; and (D) if delivered by
electronic mail (which form of delivery is subject to the provisions of
subsection (c) below), when delivered; provided, however, that notices and other
communications to Agent pursuant to Article II shall not be effective until
actually received by Agent. In no event shall a voicemail message be effective
as a notice, communication or confirmation hereunder.
(b) Effectiveness of Facsimile Documents and Signatures. Loan
Documents may be transmitted and/or signed by facsimile. The effectiveness of
any such documents and signatures shall, subject to applicable Law, have the
same force and effect as manually-signed originals and shall be binding on all
Loan Parties, Agent, U.K. Security Trustee and Lenders. Agent may also require
that any such documents and signatures be confirmed by a manually-signed
original thereof; provided, however. that the failure to request or deliver the
same shall not limit the effectiveness of any facsimile document or signature.
(c) Limited Use of Electronic Mail. Electronic mail and internet and
intranet websites may be used only to distribute routine communications, such as
financial statements, and to distribute Loan Documents for execution by the
parties thereto, and may not be used for any other purpose.
(d) Reliance by Agent. U.K. Security Trustee and Lenders. Agent,
U.K. Security Trustee and Lenders shall be entitled to rely and act upon any
notices (including telephonic Committed Loan Notices) purportedly given by or on
behalf of Borrower even if (i) such notices were not made in a manner specified
herein, were incomplete or were not preceded or followed by any other form of
notice specified herein, or (ii) the terms thereof, as understood by the
recipient, varied from any confirmation thereof. Borrower shall indemnify each
Agent-Related Person, U.K. Security Trustee and each Lender from all losses,
costs, expenses and liabilities resulting from the reliance by such Person on
each notice purportedly given by or on behalf of Borrower. All telephonic
notices to and other communications with Agent may be recorded by Agent, and
each of the parties hereto hereby consents to such recording.
10.03 NO WAIVER; CUMULATIVE REMEDIES. No failure by any Lender or Agent to
exercise, and no delay by any such Person in exercising, any right, remedy,
power or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and privileges
herein provided are cumulative and not exclusive of any rights, remedies, powers
and privileges provided by law.
10.04 ATTORNEY COSTS, EXPENSES AND TAXES. Borrower agrees (a) to pay or
reimburse Agent for all reasonable costs and expenses incurred in connection
with the development, preparation, negotiation and execution of this Agreement
and the other Loan Documents and any amendment, waiver, consent or other
modification of the provisions hereof and thereof (whether or not the
transactions contemplated hereby or thereby are consummated), and the
consummation and administration of the transactions contemplated hereby and
thereby, including all reasonable Attorney Costs and costs and expenses in
connection with the use of IntraLinks,
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Inc. or other similar information transmission systems in connection with this
Agreement, and (b) to pay or reimburse Agent and each Lender for all costs and
expenses incurred in connection with the enforcement, attempted enforcement, or
preservation of any rights or remedies under this Agreement or the other Loan
Documents (including all such costs and expenses incurred during any "workout"
or restructuring in respect of the Obligations and during any legal proceeding,
including any proceeding under any Debtor Relief Law), including all Attorney
Costs. The fore going costs and expenses shall include all search, filing,
recording, title insurance and appraisal charges and fees and taxes related
thereto, and other out-of-pocket expenses incurred by Agent and the cost of
independent public accountants and other outside experts retained by Agent or
any Lender. The agreements in this Section shall survive the termination of the
Aggregate Commitments and repayment of all other Obligations. Promptly upon
Borrower's request, Agent shall provide to Borrower such documentation as is
customary in support of such costs and expenses.
10.05 INDEMNIFICATION BY BORROWER. Whether or not the transactions
contemplated hereby are consummated, Borrower shall indemnify and hold harmless
each Agent-Related Person, each Lender and their respective Affiliates,
directors, officers, employees, counsel, agents and attorneys-in-fact
(collectively the "Indemnitees") from and against any and all liabilities,
obligations, losses, damages, penalties, claims, demands, actions, judgments,
suits, costs, expenses and disbursements (including Attorney Costs) of any kind
or nature whatsoever which may at any time be imposed on, incurred by or
asserted against any such Indemnitee in any way relating to or arising out of or
in connection with (a) the execution, delivery, enforcement, performance or
administration of any Loan Document or any other agreement, letter or instrument
delivered in connection with the transactions contemplated thereby or the
consummation of the transactions contemplated thereby, (b) any Commitment, Loan
or Letter of Credit or the use or proposed use of the proceeds therefrom
(including any refusal by Agent to honor a demand for payment under a Letter of
Credit if the documents presented in connection with such demand do not strictly
comply with the terms of such Letter of Credit), (c) any actual or alleged
presence or release of Hazardous Materials on or from any property currently or
formerly owned or operated by Borrower, any Subsidiary or any other Loan Party,
or any Environmental Liability related in any way to Borrower, any Subsidiary or
any other Loan Party, or (d) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory (including any investigation of, preparation
for, or defense of any pending or threatened claim, investigation, litigation or
proceeding) and regardless of whether Indemnitee is a party thereto (all the
foregoing, collectively, the "Indemnified Liabilities"); provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
liabilities, obligations, losses, damages, penalties, claims, demand, actions,
judgments, suits, costs, expenses or disbursements are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from
the gross negligence or willful misconduct of such Indemnitee. No Indemnitee
shall be liable for any damages arising from the use by others of any
information or other materials obtained through IntraLinks or other similar
information transmission systems in connection with this Agreement, nor shall
any Indemnitee have any liability for any indirect or consequential damages
relating to this Agreement or any other Loan Document or arising out of its
activities in connection herewith or therewith (whether before or after the
Closing Date). The agreements in this Section shall survive the resignation of
Agent, the replacement of any Lender, the termination of the Aggregate
Commitments and the repayment, satisfaction or discharge of all the other
Obligations. All amounts due under this Section 10.05 shall be payable within
ten Business Days after demand therefor.
10.06 PAYMENTS SET ASIDE. To the extent that any payment by or on behalf
of Borrower is made to Agent or any Lender, or Agent or any Lender exercises its
right of set-off, and such payment or the proceeds of such set-off or any part
thereof is subsequently invalidated, declared to be fraudulent or preferential,
set aside or required (including pursuant to any settlement entered into by
Agent or such Lender in its discretion) to be repaid to a trustee, receiver or
any other party, in connection with any proceeding under any Debtor Relief Law
or otherwise, then (a) to the extent of such recovery, the obligation or part
thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such set-off had
not occurred, and (b) each Lender severally agrees to pay to Agent upon demand
its applicable share of any amount so recovered from or repaid by Agent, plus
interest thereon from the date of such demand to the date such payment is made
at a rate per annum equal to the Federal Funds Rate from time to time in effect.
10.07 SUCCESSORS AND ASSIGNS.
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(a) The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that Borrower may not assign or otherwise transfer any
of its rights or obligations hereunder without the prior written consent of each
Lender and no Lender" may assign or otherwise transfer any of its rights or
obligations hereunder except (i) to an Eligible Assignee in accordance with the
provisions of subsection (b) of this Section, (ii) by way of participation in
accordance with the provisions of subsection (d) of this Section, or (iii) by
way of pledge or assignment of a security interest subject to the restrictions
of subsection (f) of this Section (and any other attempted assignment or
transfer by any party hereto shall be null and void). Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby
and, to the extent expressly contemplated hereby, the Indemnitees) any legal or
equitable right, remedy or claim under or by reason of this Agreement.
(b) So long as no Event of Default has occurred and is continuing,
with prior written consent of the Borrower (which shall not be unreasonably
withheld or delayed), any Lender may assign to one or more Eligible Assignees
all or a portion of its rights and obligations under this Agreement (including
all or a portion of its Commitment and the Loans (including for purposes of this
subsection (b), and participations in L/C Obligations) at the time owing to it);
provided that (i) except in the case of an assignment of the entire remaining
amount of the assigning Lender's Commitment and the Loans at the time owing to
it or in the case of an assignment to a Lender or an Affiliate of a Lender, the
aggregate amount of the Commitment (which for this purpose includes Loans
outstanding thereunder) subject to each such assignment, determined as of the
date the Assignment and Assumption Agreement with respect to such assignment is
delivered to Agent, shall not be less than $5,000,000 unless each of Agent and,
so long as no Event of Default has occurred and is continuing, Borrower
otherwise consents (each such consent not to be unreasonably withheld or
delayed); (ii) each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lenders rights and obligations under
this Agreement with respect to the Loans or the Commitment assigned, (iii) any
assignment of a Commitment must be approved by Agent, unless the Person that is
the proposed assignee is itself a Lender (whether or not the proposed assignee
would otherwise qualify as an Eligible Assignee), and (iv) the parties to each
assignment shall execute and deliver to Agent an Assignment and Assumption
Agreement, together with a processing and recordation fee of $3,500. Subject to
acceptance and recording thereof by Agent pursuant to subsection (c) of this
Section, from and after the effective date specified in each Assignment and
Assumption Agreement, the Eligible Assignee thereunder shall be a party hereto
and, to the extent of the interest assigned by such Assignment and Assumption
Agreement, have the rights and obligations of a Lender under this Agreement, and
the assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Assumption Agreement, be released from its obligations under
this Agreement (and, in the case of an Assignment and Assumption Agreement
covering all of the assigning Lenders rights and obligations under this
Agreement, such Lender shall cease to be a party hereto but shall continue to be
entitled to the benefits of Sections 3.01, 3.04, 3.05, 10.04 and 10.05 with
respect to facts and circumstances occurring prior to the date of such
assignment). Upon request, Borrower (at its expense) shall execute and deliver a
Note to the assignee Lender. Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this subsection shall
be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with subsection (d)
of this Section.
(c) Agent, acting solely for this purpose as an agent of Borrower,
shall maintain at Agent's Office a copy of each Assignment and Assumption
Agreement delivered to it and a register for the recordation of the names and
addresses of Lenders, and the Commitments of, and principal amount of the Loans
and L/C Obligations owing to, each Lender pursuant to the terms hereof from time
to time (the "Register"). The entries in the Register shall be conclusive, and
Borrower, Agent and Lenders may treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a Lender hereunder for all purposes of
this Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by Borrower and any Lender, at any reasonable time and
from time to time upon reasonable prior notice.
(d) Any Lender may, without the consent of, or notice to, Borrower
or Agent, sell participations to any Person (other than a natural person or
Borrower or any of Borrower's Affiliates or Subsidiaries (each a "Participant")
in all or a portion of such Lenders rights and/or obligations under this
Agreement (including all or a portion of its Commitment and/or the Loans
(including such Lender's participations in L/C Obligations) owing to it);
provided that (i) such Lenders obligations under this Agreement shall remain
-52-
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (iii) Borrower, Agent and the
other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lenders rights and obligations under this Agreement Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision
of this Agreement; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, waiver or other modification described in the first provision to
Section 10.01 that directly affects such Participant Subject to subsection (e)
of this Section, Borrower agrees that each Participant shall be entitled to the
benefits of Sections 3.01, 3.04 and 3.05 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to subsection (b) of
this Section. To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 10.09 as though it were a Lender, provided
such Participant agrees to be subject to Section 2.13 as though it were a
Lender.
(e) A Participant shall not be entitled to receive any greater
payment under Section 3.01 or 3.04 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with Borrowers
prior written consent.
(f) Any Lender may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement (including under its
Note, if any) to secure obligations of such Lender, including any pledge or
assignment to secure obligations to a Federal Reserve Bank; provided that no
such pledge or assignment shall release a Lender from any of its obligations
hereunder or substitute any such pledgee or assignee for such Lender as a party
hereto.
(g) As used herein, "Eligible Assignee" means (a) a Lender; (b) an
Affiliate of a Lender, and (c) any other Person (other than a natural Person)
approved by (i) Agent and (ii) unless an Event of Default has occurred and is
continuing, Borrower (such approval referred to in (i) and (ii) not to be
unreasonably withheld or delayed) ); provided that notwithstanding the
foregoing, "Eligible Assignee" shall not include Borrower or any of Borrower's
Affiliates or Subsidiaries.
(h) Notwithstanding anything to the contrary contained herein, if at
any time Union Bank assigns all of its Commitment and Loans pursuant to
subsection (b) above, Union Bank may, upon 30 days' notice to Borrower and
Lenders, resign in its capacity as issuer of Letters of Credit hereunder (the
"L/C Issuer"). In the event of any such resignation as L/C Issuer Borrower shall
be entitled to appoint from among Lenders a successor L/C Issuer hereunder;
provided, however, that no failure by Borrower to appoint any such successor
shall affect the resignation of Union Bank as L/C Issuer. If Union Bank resigns
as L/C Issuer, it shall retain all the rights and obligations of Agent as the
L/C Issuer hereunder with respect to all Letters of Credit outstanding as of the
effective date of its resignation as L/C Issuer and all L/C Obligations with
respect thereto (including the right to require Lenders to make Base Rate
Committed Loans or fund risk participations in Unreimbursed Amounts pursuant to
Section 2.03(c)). Borrower, Lenders and Union Bank agree that they shall amend
this Agreement as necessary to reflect that Union Bank remains Agent for
purposes of administering this Agreement, but has resigned in its capacity as
L/C Issuer and another Lender(s) shall provides such service, including the
obligation of the successor to Union Bank as L/C Issuer to issue letters of
credit in substitution for the Letters of Credit, if any, outstanding at the
time of such succession or to make other arrangements satisfactory to Union Bank
to effectively assume the obligations of Union Bank with respect to such Letters
of Credit.
10.08 CONFIDENTIALITY. Each of Agent and Lenders agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its and its Affiliates' directors, officers, employees
and agents, including accountants, legal counsel and other advisors (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential); (b) to the extent requested by any regulatory
authority; (c) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process; (d) to any other party to this Agreement;
(e) in connection with the exercise of any remedies hereunder or any other Loan
Document or any suit, action or proceeding relating to this Agreement or any
other Loan Document or the enforcement of rights hereunder or under any other
Loan Document; (f) subject to an agreement containing provisions substantially
the same as those of this Section, to (i) any Eligible Assignee of or
Participant in, or any prospective Eligible Assignee of or Participant in, any
of its rights or obligations under this Agreement or (ii) any
-53-
direct or indirect contractual counterparty or prospective counterparty (or such
contractual counterparty's or prospective counterparty's professional advisor)
to any credit derivative transaction relating to obligations of a Loan Party;
(g) with the consent of Borrower, (h) to the extent such Information (i) becomes
publicly available other than as a result of a breach of this Section or (ii)
becomes available to Agent or any Lender on a nonconfidential basis from a
source other than Borrower; or (i) to the National Association of Insurance
Commissioners or any other similar organization. In addition, Agent and Lenders
may disclose the existence of this Agreement and information about this
Agreement to market data collectors, similar service providers to the lending
industry, and service providers to Agent and Lenders in connection with the
administration and management of this Agreement, the other Loan Documents, the
Commitments, and the Credit Extensions. For the purposes of this Section,
"Information" means all information received from any Loan Party relating to any
Loan Party or its business, other than any such information that is available to
Agent or any Lender on a nonconfidential basis prior to disclosure by any Loan
Party. Any Person required to maintain the confidentiality of Information as
provided in this Section shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such Information as such Person would accord to
its own confidential information.
10.09 SET-OFF. In addition to any rights and remedies of Lenders provided
by law, upon the occurrence and during the continuance of any Event of Default,
each Lender is authorized at any time and from time to time, without prior
notice to Borrower or any other Loan Party, any such notice being waived by
Borrower (on its own behalf and on behalf of each Loan Party) to the fullest
extent permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held by, and other
indebtedness at any time owing by, such Lender to or for the credit or the
account of the respective Loan Parties against any and all Obligations owing to
such Lender hereunder or under any other Loan Document, now or hereafter
existing, irrespective of whether or not Agent or such Lender shall have made
demand under this Agreement or any other Loan Document and although such
Obligations may be contingent or unmatured or denominated in a currency
different from that of the applicable deposit or Indebtedness. Each Lender
agrees promptly to notify Borrower and Agent after any such set-off and
application made by such Lender; provided, however, that the failure to give
such notice shall not affect the validity of such set-off and application.
10.10 INTEREST RATE LIMITATION. Notwithstanding anything to the contrary
contained in any Loan Document, the interest paid or agreed to be paid under the
Loan Documents shall not exceed the maximum rate of non-usurious interest
permitted by applicable Law (the "Maximum Rate"). If Agent or any Lender shall
receive interest in an amount that exceeds the Maximum Rate, the excess interest
shall be applied to the principal of the Loans or, if it exceeds such unpaid
principal, refunded to Borrower. In determining whether the interest contracted
for, charged, or received by Agent or a Lender exceeds the Maximum Rate, such
Person may, to the extent permitted by applicable Law, (a) characterize any
payment that is not principal as an expense, fee, or premium rather than
interest, (b) exclude voluntary prepayments and the effects thereof, and (c)
amortize, prorate, allocate, and spread in equal or unequal parts the total
amount of interest throughout the contemplated term of the Obligations
hereunder.
10.11 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.12 INTEGRATION. This Agreement, together with the other Loan Documents,
comprises the complete and integrated agreement of the parties on the subject
matter hereof and thereof and supersedes all prior agreements, written or oral,
on such subject matter. In the event of any conflict between the provisions of
this Agreement and those of any other Loan Document, the provisions of this
Agreement shall control; provided that the inclusion of supplemental rights or
remedies in favor of Agent or Lenders or U.K. Security Trustee in any other Loan
Document shall not be deemed a conflict with this Agreement Each Loan Document
was drafted with the joint participation of the respective parties thereto and
shall be construed neither against nor in favor of any party, but rather in
accordance with the fair meaning thereof.
10.13 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made hereunder and in any other Loan Document or other document
delivered pursuant hereto or thereto or in connection herewith or therewith
shall survive the execution and delivery hereof and thereof. Such
representations and warranties have been or will be relied upon by Agent and
U.K. Security Trustee and each
-54-
Lender, regardless of any investigation made by Agent or U.K. Security Trustee
or any Lender or on their behalf and notwithstanding that Agent or U.K Security
Trustee or any Lender may have had notice or knowledge of any Default at the
time of any Credit Extension, and shall continue in full force and effect as
long as any Loan or any other Obligation hereunder shall remain unpaid or
unsatisfied or any Letter of Credit shall remain outstanding.
10.14 SEVERABILITY. If any provision of this Agreement or the other Loan
Documents is held to be illegal, invalid or unenforceable, (a) the legality,
validity and enforceability of the remaining provisions of this Agreement and
the other Loan Documents shall not be affected or impaired thereby and (b) the
parties shall endeavor in good faith negotiations to replace the illegal,
invalid or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
10.15 GOVERNING LAW; SUBMISSION TO JURISDICTION. (a) THIS AGREEMENT SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CALIFORNIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN
SUCH STATE; PROVIDED THAT AGENT AND EACH LENDER SHALL RETAIN ALL RIGHTS ARISING
UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA
SITTING IN LOS ANGELES COUNTY OR OF THE UNITED STATES FOR THE CENTRAL DISTRICT
OF SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, BORROWER, AGENT
AND EACH LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NONEXCLUSIVE JURISDICTION OF THOSE COURTS. BORROWER, AGENT AND EACH LENDER
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT
OF ANY LOAN DOCUMENT OR OTHER DOCUMENT RELATED THERETO. BORROWER, AGENT AND EACH
LENDER WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH
MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE.
10.16 WAIVER TO RIGHT TO TRIAL BY JURY. EACH PARTY TO THIS AGREEMENT
HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM
WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH
CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT
OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR
A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
10.17 JUDGMENT CURRENCY. If for the purpose of obtaining judgment in any
court it is necessary to convert an amount due hereunder in the currency in
which it is due (the "Original Currency") into another currency (the "Second
Currency"), the rate of exchange applied shall be that at which, in accordance
with normal banking procedures, the Lender(s) could purchase in the California
foreign exchange market, the Original Currency with the Second Currency on the
date two (2) Business Days preceding that on which judgment is given. Each Loan
Party agrees that its obligation in respect of any Original Currency due from it
hereunder shall, notwithstanding any judgment or payment in such other currency,
be discharged only to the extent that, on the Business Day following the date
the Lender(s) receives payment of any sum so adjudged to be due hereunder in the
Second Currency, the Lender(s) may, in accordance with normal banking
procedures, purchase, in the California foreign exchange market, the Original
Currency with the amount of the Second Currency so paid; and if the amount of
the Original Currency so purchased or could have been so purchased is less than
the amount originally due in the Original Currency, each Loan Party agrees as a
separate obligation and notwithstanding any such payment or
-55-
judgment to indemnify the Lender(s) against such loss. The term "rate of
exchange" in this Section 10.17 means the spot rate at which the Lender, in
accordance with normal practices, is able on the relevant date to purchase the
Original Currency with the Second Currency, and includes any premium and costs
of exchange payable in connection with such purchase.
[Remainder of page intentionally left blank]
-56-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
▇▇▇▇▇▇▇▇, INC.
________________________________________
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Its Executive Vice President, Chief
Operating Officer, Chief Financial Officer,
Chief Accounting Officer and Treasurer
UNION BANK OF CALIFORNIA, N.A., as Agent
By: ___________________________________________
Name: ___________________________________
Title: __________________________________
UNION BANK OF CALIFORNIA, N.A., as U.K. Security
Trustee
By: ___________________________________________
Name: ___________________________________
Title:___________________________________
UNION BANK OF CALIFORNIA, N.A., as a Lender
By:____________________________________________
Name:____________________________________
Title:___________________________________
[SIGNATURE PAGE TO REVOLVING/TERM LOAN CREDIT AGREEMENT]
[SIGNATURES CONTINUED NEXT PAGE]
BANK OF THE WEST
By: ___________________________________________
Name: ___________________________________
Title: __________________________________
COLUMBUS BANK AND TRUST
By: ___________________________________________
Name: ___________________________________
Title: __________________________________
[SIGNATURE PAGE TO REVOLVING/TERM LOAN CREDIT AGREEMENT]
SCHEDULE 2.01
COMMITMENTS
AND PRO RATA SHARES
LENDER COMMITMENT PRO RATA SHARE
------ ---------- --------------
Union Bank of California $30,000,000.00 54.545454546%
Bank of the West 12,500,000.00 22.727272727%
Columbus Bank and Trust 12,500,000.00 22.727272727%
-------------- -------------
Total $55,000,000.00 100.000000000%
-------------- -------------
Schedule 2.03
EXISTING LETTERS OF CREDIT
(AND BANKER'S ACCEPTANCES)
Type Number Amount
---- ------ ------
DLC 1120578 $ 82,312.94
DBA 10808200 47,541.00
DLC 1120585 68,480.86
DLC 1120591 22,544.60
DBA 10808418 11,907.18
DLC 1120597 113,956.87
DBA 10808035 55,264.15
DBA 10808324 183,018.80
DBA 10808668 189,985.95
DLC 1120601 30,060.21
DLC 1120604 240,367.57
DBA 10808005 25,771.44
DBA 10808247 71,509.25
DBA 10808541 42,370.00
DLC 1120609 37,507.40
DBA 10808954 18,541.60
DBA 10808074 36,800.00
DLC 1120612 62,522.10
DLC 1120613 381,639.76
DBA 10808242 90,733.76
DBA 10808739 29,282.40
DLC 1120614 54,296.00
DBA 10809095 20,296.00
DLC 1120615 1,449.50
DLC 1120616 897.00
DBA 10808666 25,500.00
DLC 1120617 35,148.75
DLC 1120618 30,187.50
DLC 1120619 68,486.40
DBA 10808874 38,800.80
DBA 10809008 91,587.84
DLC 1120620 2,647.95
DBA 10808921 45,757.05
DLC 1120621 21,771.75
DLC 1120622 52,416.00
-------------
Subtotal: $2,331,360.38
Plus reserve: $ 233,136.03
=============
TOTAL: $2,564,496.41
SCHEDULE 5.06
LITIGATION
On January 22, 1999, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇ LLP filed a class
action in the United States District Court for the Southern District of
California ("U.S. District Court") on behalf of purchasers of the Company's
common stock during the period between September 4, 1997 and July 15, 1998. The
action was subsequently consolidated with two similar suits and plaintiffs filed
their Amended and Consolidated Complaint on December 17, 1999. Upon the
Company's motion, the U.S. District Court dismissed the Complaint with leave to
amend on July 18, 2000. On September 18, 2000, plaintiffs served their Second
Consolidated Amended Complaint ("Second Amended Complaint"). On November 6,
2000, the Company filed its motion to dismiss the Second Amended Complaint,
which the U.S. District Court granted, in part, and denied, in part. The
remaining portions of the Second Amended Complaint allege that, among other
things, during the class period and in violation of the Securities Exchange Act
of 1934, the Company's financial statements, as reported, did not conform to
generally accepted accounting principles with respect to revenues and inventory
levels. It further alleges that certain Company executives made false or
misleading statements or omissions concerning product demand and that two former
executives engaged in ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇. The plaintiffs seek unspecified damages.
As discussed with the Lenders prior to the Closing Date, the parties voluntarily
suspended discovery activity while they seek to work out a settlement. The
Company has not to date booked any provision for settlement charges.
The Company is party to other claims and litigation proceedings arising in the
normal course of business. Although the legal responsibility and financial
impact with respect to such other claims and litigation cannot currently be
ascertained, the Company does not believe that these other matters will result
in payment by the Company of monetary damages, net of any applicable insurance
proceeds, that, in the aggregate, would be material in relation to the
consolidated financial position or results of operations of the Company.
SCHEDULE 5.09
ENVIRONMENTAL MATTERS
▇▇▇▇▇▇▇▇, Inc.
None.
GEKKO Brands, L.L.C.
GEKKO Brands, L.L.C. uses approximately 40 gallons of Acetone in the Company's
facilities annually. No reportable spill of Acetone has occurred. GEKKO Brands,
L.L.C. has no air permits for the use of Acetone.
SCHEDULE 5.13
SUBSIDIARIES
AND OTHER EQUITY INVESTMENTS
Part (a). Subsidiaries
Name of subsidiary State or other jurisdiction of incorporation
------------------ --------------------------------------------
▇▇▇▇▇▇▇▇ Store I, Inc. Delaware
▇▇▇▇▇▇▇▇ Store II, Inc. Delaware
▇▇▇▇▇▇▇▇ EDC, LLC Delaware
▇▇▇▇▇▇▇▇ U.K., Ltd. England
▇▇▇▇▇▇▇▇ Acquisition Corp. Delaware
GEKKO Brands, L.L.C. Alabama
Kudzu, L.L.C. Alabama
The Game, LLC Alabama
Part (b) Other Equity Investments
The Game, LLC owns 4,500 shares of Osprey Events, Inc.
SCHEDULE 7.01
EXISTING LIENS
1. CAPITAL LEASE - CISCO EQUIPMENT AND SERVICES
Lien holder: SBC Capital Services File No. 0117660263
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Final payment due: May 2006
2. CAPITAL LEASE - AS400 SYSTEM UPGRADE
Lien holder: IBM Credit Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Final payment due: January 2005
3. MORTGAGE - ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ - DISTRIBUTION FACILITY
Lien holder: Bank of America, N.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Final payment due: May 1, 2014
4. OPERATING LEASE - EQUIPMENT LEASED IN CONNECTION WITH CERTAIN MASTER
AGREEMENT/LEASE NO. 325020 CAIRC3200 MSK05421
Lien holder: IOS Capital File No. 33082008
5. NOTE PAYABLE - CHEVROLET C3500 CREW CAB TRUCK (KUDZU, LLC)
Lien holder: GMAC Financial Services
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇
Final payment due: June 26, 2007
6. OPERATING LEASE - NISSAN FORKLIFT MODEL RCOSN SN 4079550 (KUDZU, LLC)
Lien holder: Associates Leasing, Inc. File No. 2000-28903
7. OPERATING LEASE - TAJIMA EMBROIDERY MACHINES (KUDZU, LLC)
Lien holder: ▇▇▇▇▇▇ International Corp File No. 2000-38231
8. OPERATING LEASE - 3 TAJIMA EMBROIDERY MACHINES (KUDZU, LLC AND THE GAME,
LLC)
Lien holder: ▇▇▇▇▇▇ International Corp File No. ▇▇-▇▇▇▇▇▇▇
9. OPERATING LEASE - 3 TAJIMA EMBROIDERY MACHINES (KUDZU, LLC AND THE GAME,
LLC)
Lien holder: ▇▇▇▇▇▇ International Corp File No. ▇▇-▇▇▇▇▇▇▇
10. OPERATING LEASE - ALL EQUIPMENT NOW AND HEREAFTER LEASED FROM LESSOR
(KUDZU, LLC)
Lien holder: Citicorp Vendor Finance File No. 2001-09087
THE FOLLOWING LIENS RELATING TO THE UNDERLYING LINES OF CREDIT HAVE BEEN PAID IN
FULL AND/OR NO OUTSTANDING OBLIGATIONS RELATED THERETO REMAIN. ▇▇▇▇▇▇▇▇ HAS
DEMANDED THAT THE RELATED LIENS AND RELATED FINANCING STATEMENTS BE TERMINATED.
11. CAPITAL LEASE - KEYMATIC RACK AND RAIL SYSTEM
Lien holder: New England Capital Corp File No. 92225933
12. CAPITAL LEASE - VOLT TRAPEZE UNITS
Lien holder: New England Capital Corp File No. 93005094
13. EQUIPMENT FINANCING AGREEMENT - COMPUTER HARDWARE AND SOFTWARE,
MACHINERY AND OFFICE EQUIPMENT
Lien holder: Banc One Leasing File No.0013460375
THE FOLLOWING LIENS RELATE TO THE UNDERLYING LINES OF CREDIT AND ARE TO BE
RELEASED AT CLOSING.
14. LINE OF CREDIT LOAN - ALL EQUIPMENT (GEKKO BRANDS, LLC)
Lien holder: Columbus Bank and Trust File No. 2000-38635
15. LINE OF CREDIT LOAN - ALL EQUIPMENT (THE GAME, LLC)
Lien holder: Columbus Bank and Trust File No. 2000-38636
16. LINE OF CREDIT LOAN - ALL EQUIPMENT (KUDZU, LLC)
Lien holder: Columbus Bank and Trust File No. 2000-38637
17. LINE OF CREDIT LOAN - INVENTORY AND ALL ACCOUNTS (KUDZU, LLC)
Lien holder: Columbus Bank and Trust File No. 2000-38638
18. LINE OF CREDIT LOAN - INVENTORY AND ALL ACCOUNTS (THE GAME, LLC)
Lien holder: Columbus Bank and Trust File No. 2000-38639
19. LINE OF CREDIT LOAN - INVENTORY AND ALL ACCOUNTS (GEKKO BRANDS, LLC)
Lien holder: Columbus Bank and Trust File No. 2000-38640
20. LINE OF CREDIT LOAN - ALL DEBTOR'S RIGHT, TITLE AND INTEREST IN THE
GAME, LLC (GEKKO BRANDS, LLC)
Lien holder: ▇.▇. ▇▇▇▇▇▇▇ Co. File No. 2001-08302
21. LINE OF CREDIT LOAN - ALL DEBTOR'S RIGHT, TITLE AND INTEREST IN THE
GAME, LLC (GEKKO BRANDS, LLC)
Lien holder: ▇.▇. ▇▇▇▇▇▇▇ Co. File No. 10601000386
22. LINE OF CREDIT LOAN - TRADENAMES, TRADEMARKS, SERVICEMARKS, LOGOS AND
GOODWILL RELATED TO LAND, EQUIPMENT AND PROCEEDS (KUDZU, LLC)
Lien holder: SunTrust Bank. File No. 126330
23. LINE OF CREDIT LOAN - INTANGIBLES COLLATERAL SUCH AS, COPYRIGHTS, TRADE
NAMES, TRADEMARKS, SERVICE MARKS, ETC. (KUDZU, LLC)
Lien holder: SunTrust Bank, Atlanta. File No. 53-98-1042
SCHEDULE 7.03
EXISTING INDEBTEDNESS
▇▇▇▇▇▇▇▇, Inc.
1. CAPITAL LEASE - CISCO EQUIPMENT AND SERVICES
Balance Due as of 6/30/04: $70,264.64
Monthly Payment (including interest): $ 3,313.60
2. CAPITAL LEASE - AS400 SYSTEM UPGRADE
Balance Due as of 6/30/04: $88,679.31
Monthly Payment (including interest): $11,905.00
3. ▇▇▇▇▇▇▇▇, INC. GUARANTY OF PAYMENTS UNDER THE AMENDED AND RESTATED
LEASE AGREEMENT DATED JULY 6, 2004 WITH 16 ▇▇▇▇▇▇▇, LLC.
Annual rent Approximately $ 400,000
4. ▇▇▇▇▇▇▇▇, INC. GUARANTY OF ▇▇▇▇▇▇▇▇ ACQUISITION CORP. PROMISSORY NOTE
IN FAVOR OF ▇. ▇. ▇▇▇▇▇▇▇
Note amount $1,000,000.00
▇▇▇▇▇▇▇▇ EDC, LLC
5. MORTGAGE ON THE REAL ESTATE PROPERTY AT ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Balance Due as of 6/30/04: $11,637,320
Monthly Payment (including interest): $ 62,539.72
▇▇▇▇▇▇▇▇ Acquisition Corp. (GEKKO Brands, L.L.C., Kudzu, L.L.C. and The Game,
LLC)
6. NOTE PAYABLE ON A 2002 CHEVROLET C3500 CREW CAB TRUCK
Balance due as of 6/30/04: $16,195.54
Monthly Payment (including interest): $ 470.90
7. KUDZU, L.L.C. GUARANTY - MAXIMUM EXPOSURE NOT TO EXCEED $100,000
Guaranty is with respect to indebtedness of Osprey Events, Inc. (Kudzu
owns 4,500 shares of the stock of Osprey.)
8. ▇▇▇▇▇▇▇▇ ACQUISITION CORP. PROMISSORY NOTE IN FAVOR OF ▇. ▇. ▇▇▇▇▇▇▇
(THIS NOTE IS GUARANTEED BY ▇▇▇▇▇▇▇▇, INC., AS IDENTIFIED IN NUMBER 4
ABOVE)
Note amount: $1,000,000.00
SCHEDULE 7.05
DISPOSITIONS
None.
SECTION 10.02
ADDRESSES FOR NOTICES
▇▇▇▇▇▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
Telephone: ▇▇▇.▇▇▇.▇▇▇▇
Facsimile: 760.476.8438
Electronic Mail: ▇▇▇▇▇▇▇.▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
UNION BANK OF CALIFORNIA
ADMINISTRATIVE AGENTS OFFICE
Notices (other than Requests for Extensions of Credit):
UNION BANK OF CALIFORNIA, N.A.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Mail Code: ▇-▇▇▇-▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Electronic Mail: ▇▇▇▇.▇▇▇▇▇@▇▇▇▇.▇▇▇
Requests for Extensions of Credit:
UNION BANK OF CALIFORNIA, N.A.
▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Mail Code: S420
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇, VP
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Electronic Mail: ▇▇▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇.▇▇▇
Payments:
UNION BANK OF CALIFORNIA
Monterey Park, California
ABA No. ▇▇▇-▇▇▇-▇▇▇
Account No.: 77070-196431
Account Name: Commercial Loan Operations
Reference: ▇▇▇▇▇▇▇▇, Inc.
Address for Receiving Letter of Credit Applications and related correspondence
Standby Letters of Credit:
UNION BANK OF CALIFORNIA, N.A.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Mail Code: ▇▇▇-▇▇▇
▇▇▇▇▇▇▇▇▇: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Electronic Mail: ▇▇▇▇▇▇.▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇
Commercial Letters of Credit
UNION BANK OF CALIFORNIA, N.A.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Mail Code: V01-517
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇ de Dios
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Electronic Mail: ▇▇▇▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇
Other Notices as a Lender.
UNION BANK OF CALIFORNIA, N.A.
San Diego Commercial Banking S-420
▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Vice President
Telephone: ▇▇▇.▇▇▇.▇▇▇▇
Facsimile: ▇▇▇.▇▇▇.▇▇▇▇
Electronic Mail: ▇▇▇▇▇.▇▇▇▇@▇▇▇▇.▇▇▇
BANK OF THE WEST
Notices for Subsequent Borrowings, Payments, Rollovers, Letters of Credit.
Bank of the West
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇
Telephone: ▇▇▇.▇▇▇.▇▇▇▇
Facsimile: 323.727.3099
Electronic Mail: ▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
Payments
Bank of the West
ABA#: ▇▇▇▇▇▇▇▇▇
Account Name: Commercial Loan Servicing
Account Number: 239855-332
Attn: Agented Credit Unit
Ref: ▇▇▇▇▇▇▇▇, Inc.
Other Notices:
Bank of the West
Agency Services Center
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇, VP/Manager
Telephone: ▇▇▇.▇▇▇.▇▇▇▇
Facsimile: 213.972.0618
Electronic Mail: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
Bank of the West
San Diego Corporate Banking
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇
Telephone: ▇▇▇.▇▇▇.▇▇▇▇
Facsimile: 619.595.1918
Electronic Mail: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
COLUMBUS BANK AND TRUST
Notices for Subsequent Borrowings, Paydowns, Rollovers Letters of Credit
COLUMBUS BANK AND TRUST
Corporate Banking
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Electronic Mail: ▇▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
PAYMENTS
COLUMBUS BANK AND TRUST
ABA No.: ▇▇▇▇▇▇▇▇▇
Account No.: ▇▇▇▇▇▇▇ 8888
Account Name: Loan Control
Reference: ▇▇▇▇▇▇▇▇, Inc.
EXHIBIT A
FORM OF COMMITTED LOAN NOTICE
Date: ___________, _____
To: UNION BANK OF CALIFORNIA, N.A., as Agent
Ladies and Gentlemen:
Reference is made to that certain Revolving/Term Loan Credit Agreement,
dated as of July 6, 2004 (as amended, restated, extended, supplemented or
otherwise modified in writing from time to time, the "Credit Agreement;" the
terms defined therein being used herein as therein defined), among ▇▇▇▇▇▇▇▇,
Inc. ( "Borrower"), Lenders from time to time party thereto, and UNION BANK OF
CALIFORNIA, N.A., as Agent.
The undersigned hereby requests (select one):
[ ] A Borrowing of Committed Loans [ ] A conversion or continuation of
Committed Loans
1. On _____________________________ (a Business Day).
2. In the amount of $___________________.
3. Comprised of_______________________________________.
[Type of Committed Loan requested]
4. For Eurodollar Rate Committed Loans: with an Interest Period of
___ months.
The Committed Borrowing requested herein complies with the proviso to the
first sentence of Section 2.01 of the Credit Agreement.
Borrower acknowledges that the Term Loan may not be converted to another
Type of Loan.
▇▇▇▇▇▇▇▇, INC.
By:__________________________________________
Name:________________________________________
Title:_______________________________________
A-1
Form of Revolving Loan Note
EXHIBIT B-1
FORM OF REVOLVING NOTE
$____________________________ ____________________
FOR VALUE RECEIVED, the undersigned ("Borrower"), hereby promises to pay
to the order of ____________________________ or registered assigns ("Lender"),
in accordance with the provisions of the Agreement (as hereinafter defined) the
principal amount of each Loan from time to time made by Lender to Borrower under
that certain Revolving/Term Loan Credit Agreement, dated as of July 6, 2004 (as
amended, restated, extended, supplemented or otherwise modified in writing from
time to time, the "Agreement;" the terms defined therein being used herein as
therein defined), among Borrower, Lenders from time to time party thereto, and
UNION BANK OF CALIFORNIA, N.A., as Agent.
Borrower promises to pay interest on the unpaid principal amount of each
Revolving Loan from the date of such Revolving Loan until such principal amount
is paid in full, at such interest rates and at such times as provided in the
Agreement. All payments of principal and interest shall be made to Agent for the
account of Lender in Dollars in immediately available funds at Agent's Office.
If any amount is not paid in full when due hereunder, such unpaid amount shall
bear interest, to be paid upon demand, from the due date thereof until the date
of actual payment (and before as well as after judgment) computed at the per
annum rate set forth in the Agreement.
This Note is one of the Notes referred to in the Agreement, is entitled to
the benefits thereof and may be prepaid in whole or in part subject to the terms
and conditions provided therein. This Note is also entitled to the benefits of
the Guaranty and is secured by the Collateral. Upon the occurrence and
continuation of one or more of the Events of Default specified in the Agreement,
all amounts then remaining unpaid on this Note shall become, or may be declared
to be, immediately due and payable all as provided in the Agreement. Loans made
by Lender shall be evidenced by one or more loan accounts or records maintained
by Lender in the ordinary course of business. Lender may also attach schedules
to this Note and endorse thereon the date, amount and maturity of its Loans and
payments with respect thereto.
Borrower, for itself, its successors and assigns, hereby waives diligence,
presentment, protest and demand and notice of protest, demand, dishonor and
non-payment of this Note.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF CALIFORNIA.
▇▇▇▇▇▇▇▇, INC.
By:___________________________
Name:_________________________
Title:________________________
B-1-1
Form of Revolving Loan Note
LOANS AND PAYMENTS WITH RESPECT THERETO
AMOUNT OF OUTSTANDING
PRINCIPAL OR PRINCIPAL
TYPE OF LOAN AMOUNT OF LOAN END OF INTEREST INTEREST PAID BALANCE THIS NOTATION
DATE MADE MADE PERIOD THIS DATE DATE MADE BY
-------------------------------------------------------------------------------------------------------------------------------
______________ ___________________ ________________ _________________ _______________ _________________ _________________
______________ ___________________ ________________ _________________ _______________ _________________ _________________
______________ ___________________ ________________ _________________ _______________ _________________ _________________
______________ ___________________ ________________ _________________ _______________ _________________ _________________
______________ ___________________ ________________ _________________ _______________ _________________ _________________
______________ ___________________ ________________ _________________ _______________ _________________ _________________
______________ ___________________ ________________ _________________ _______________ _________________ _________________
______________ ___________________ ________________ _________________ _______________ _________________ _________________
______________ ___________________ ________________ _________________ _______________ _________________ _________________
______________ ___________________ ________________ _________________ _______________ _________________ _________________
______________ ___________________ ________________ _________________ _______________ _________________ _________________
______________ ___________________ ________________ _________________ _______________ _________________ _________________
______________ ___________________ ________________ _________________ _______________ _________________ _________________
______________ ___________________ ________________ _________________ _______________ _________________ _________________
______________ ___________________ ________________ _________________ _______________ _________________ _________________
______________ ___________________ ________________ _________________ _______________ _________________ _________________
______________ ___________________ ________________ _________________ _______________ _________________ _________________
______________ ___________________ ________________ _________________ _______________ _________________ _________________
______________ ___________________ ________________ _________________ _______________ _________________ _________________
______________ ___________________ ________________ _________________ _______________ _________________
______________ ___________________ ________________ _________________ _______________ _________________
B-1-2
Form of Revolving Loan Note
EXHIBIT B-2
FORM OF TERM NOTE
$______________________ __________________
FOR VALUE RECEIVED, the undersigned ("Borrower"), hereby promises to pay
to the order of ____________________________ or registered assigns ("Lender"),
in accordance with the provisions of the Agreement (as hereinafter defined) the
principal amount of each Loan from time to time made by Lender to Borrower under
that certain Revolving/Term Loan Credit Agreement, dated as of July 6, 2004 (as
amended, restated, extended, supplemented or otherwise modified in writing from
time to time, the "Agreement;" the terms defined therein being used herein as
therein defined), among Borrower, Lenders from time to time party thereto, and
UNION BANK OF CALIFORNIA, N.A., as Agent.
Borrower promises to pay interest on the unpaid principal amount of each
Term Loan from the date of such Term Loan until such principal amount is paid in
full, at such interest rates and at such times as provided in the Agreement. All
payments of principal and interest shall be made to Agent for the account of
Lender in Dollars in immediately available funds at Agent's Office. If any
amount is not paid in full when due hereunder, such unpaid amount shall bear
interest, to be paid upon demand, from the due date thereof until the date of
actual payment (and before as well as after judgment) computed at the per annum
rate set forth in the Agreement.
This Note is one of the Notes referred to in the Agreement, is entitled to
the benefits thereof and may be prepaid in whole or in part subject to the terms
and conditions provided therein. This Note is also entitled to the benefits of
the Guaranty and is secured by the Collateral. Upon the occurrence and
continuation of one or more of the Events of Default specified in the Agreement,
all amounts then remaining unpaid on this Note shall become, or may be declared
to be, immediately due and payable all as provided in the Agreement. Loans made
by Lender shall be evidenced by one or more loan accounts or records maintained
by Lender in the ordinary course of business. Lender may also attach schedules
to this Note and endorse thereon the date, amount and maturity of its Loans and
payments with respect thereto.
Borrower, for itself, its successors and assigns, hereby waives diligence,
presentment, protest and demand and notice of protest, demand, dishonor and
non-payment of this Note.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF CALIFORNIA.
▇▇▇▇▇▇▇▇, INC.
By:_______________________________
Name:_____________________________
Title:____________________________
B-2-1
Form of Term Loan Note
LOANS AND PAYMENTS WITH RESPECT THERETO
AMOUNT OF OUTSTANDING
PRINCIPAL OR PRINCIPAL
TYPE OF LOAN AMOUNT OF LOAN END OF INTEREST INTEREST PAID BALANCE THIS NOTATION
DATE MADE MADE PERIOD THIS DATE DATE MADE BY
-------------------------------------------------------------------------------------------------------------------------------
______________ ___________________ ________________ _________________ _______________ _________________ _________________
______________ ___________________ ________________ _________________ _______________ _________________ _________________
______________ ___________________ ________________ _________________ _______________ _________________ _________________
______________ ___________________ ________________ _________________ _______________ _________________ _________________
______________ ___________________ ________________ _________________ _______________ _________________ _________________
______________ ___________________ ________________ _________________ _______________ _________________ _________________
______________ ___________________ ________________ _________________ _______________ _________________ _________________
______________ ___________________ ________________ _________________ _______________ _________________ _________________
______________ ___________________ ________________ _________________ _______________ _________________ _________________
______________ ___________________ ________________ _________________ _______________ _________________ _________________
______________ ___________________ ________________ _________________ _______________ _________________ _________________
______________ ___________________ ________________ _________________ _______________ _________________ _________________
______________ ___________________ ________________ _________________ _______________ _________________ _________________
______________ ___________________ ________________ _________________ _______________ _________________ _________________
______________ ___________________ ________________ _________________ _______________ _________________ _________________
______________ ___________________ ________________ _________________ _______________ _________________ _________________
______________ ___________________ ________________ _________________ _______________ _________________ _________________
______________ ___________________ ________________ _________________ _______________ _________________ _________________
______________ ___________________ ________________ _________________ _______________ _________________ _________________
______________ ___________________ ________________ _________________ _______________ _________________
______________ ___________________ ________________ _________________ _______________ _________________
B-2-2
Form of Term Loan Note
EXHIBIT C
FORM OF COMPLIANCE CERTIFICATE
Financial Statement Date:________________,
To: UNION BANK OF CALIFORNIA, N.A., as Agent
Ladies and Gentlemen:
Reference is made to that certain Revolving/Term Loan Credit Agreement,
dated as of July 6, 2004 (as amended, restated, extended, supplemented or
otherwise modified in writing from time to time, the "Agreement;" the terms
defined therein being used herein as therein defined), among ▇▇▇▇▇▇▇▇, Inc. (
"Borrower"), Lenders from time to time party thereto, and UNION BANK OF
CALIFORNIA, N.A., as Agent.
The undersigned Responsible Officer, solely in such capacity, hereby
certifies as of the date hereof that he/she is the __________ __________________
____________ of Borrower, and that, as such, he/she is
authorized to execute and deliver this Certificate to Agent on behalf of
Borrower, and that:
[Use following for fiscal YEAR-END financial statements]
1. Attached hereto as Schedule 1 are the year-end audited financial
statements required by Section 6.01 (a) of the Agreement for the fiscal year of
Borrower ended as of the above date, together with the report and opinion of an
independent certified public accountant required by such section.
[Use following for fiscal QUARTER-END financial statements]
1. Attached hereto as Schedule 1 are the unaudited financial statements
required by Section 6.01(b) of the Agreement for the fiscal quarter of Borrower
ended as of the above date. Such financial statements fairly present the
financial condition, results of operations and cash flows of Borrower and its
Subsidiaries in accordance with GAAP as at such date and for such period,
subject only to normal year-end audit adjustments and the absence of footnotes.
2. The undersigned has reviewed and is familiar with the terms of the
Agreement and has made, or has caused to be made under his/her supervision, a
detailed review of the transactions and condition (financial or otherwise) of
Borrower during the accounting period covered by the attached financial
statements.
3. A review of the activities of Borrower during such fiscal period has
been made under the supervision of the undersigned with a view to determining
whether during such fiscal period Borrower performed and observed all its
Obligations under the Loan Documents, and
(SELECT ONE:]
[TO THE BEST KNOWLEDGE OF THE UNDERSIGNED DURING SUCH FISCAL PERIOD,
BORROWER PERFORMED AND OBSERVED EACH COVENANT AND CONDITION OF THE LOAN
DOCUMENTS APPLICABLE TO IT.]
--OR--
[THE FOLLOWING COVENANTS OR CONDITIONS HAVE NOT BEEN PERFORMED OR OBSERVED
AND THE FOLLOWING IS A LIST OF EACH SUCH DEFAULT OR EVENT OF DEFAULT AND ITS
NATURE AND STATUS:]
4. THE REPRESENTATIONS AND WARRANTIES OF THE BORROWER CONTAINED IN ARTICLE
V OF THE AGREEMENT, OR WHICH ARE CONTAINED IN ANY DOCUMENT FURNISHED AT ANY TIME
UNDER OR IN CONNECTION WITH THE LOAN DOCUMENTS, ARE TRUE AND CORRECT ON AND AS
OF THE DATE HEREOF, EXCEPT TO THE EXTENT THAT SUCH REPRESENTATIONS AND
WARRANTIES SPECIFICALLY REFER TO AN EARLIER DATE, IN WHICH CASE THEY ARE TRUE
AND CORRECT
C-1
Form of Compliance Certificate
AS OF SUCH EARLIER DATE, AND EXCEPT THAT FOR PURPOSES OF THIS COMPLIANCE
CERTIFICATE, THE REPRESENTATIONS AND WARRANTIES CONTAINED IN SUBSECTIONS (a) AND
(b) OF SECTION 5.05 OF THE AGREEMENT SHALL BE DEEMED TO REFER TO THE MOST RECENT
STATEMENTS FURNISHED PURSUANT TO CLAUSES (a) AND (b), RESPECTIVELY, OF SECTION
6.01 OF THE AGREEMENT, INCLUDING THE STATEMENTS IN CONNECTION WITH WHICH THIS
COMPLIANCE CERTIFICATE IS DELIVERED.
5. The financial covenant analyses and information set forth on Schedule 2
attached hereto are true and accurate on and as of the date of this Certificate.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
__________________,_______________.
▇▇▇▇▇▇▇▇, INC.
By:____________________________
Name:__________________________
Title:_________________________
C - 2
Form of Compliance Certificate
For the Quarter/Year ended ___________________("Statement Date")
SCHEDULE 2
to the Compliance Certificate
I. SECTION 6.12(a) -TANGIBLE NET WORTH.
A. Tangible Net Worth at Statement Date:
1. Total Assets: $__________________
2. Total Liabilities: $__________________
3. Total Net Intangibles: $__________________
4. Tangible Net Worth (Line I.A.1 less Line I.A.2 less $__________________
line 1.A.3):
B. 1. $74,000,000, plus $__________________
2. the sum of 90% of net income after income taxes (without $__________________
subtracting losses) earned in each quarterly accounting
period commencing after April 30, 2004, plus
3. the net proceeds from any equity securities issued $__________________
after the date of the Agreement, plus
4. Minimum Required Tangible Net Worth (I.B.1 plus I.B.2 $__________________
plus I.B.3)
C. Excess (deficient) for covenant compliance (Line I.A.4 less I.B.4): $__________________
II. SECTION 6.12(b) - EBITDA.
A. net Income $__________________
B. less income or plus loss from discontinued operations and $__________________
extraordinary items, plus
C. income taxes, plus $__________________
D. interest expense, plus $__________________
E. depreciation, depletion and amortization $__________________
F. total EBITDA (Line II A + B + C + D + E) $__________________
G. EBITDA for the second most recent quarter $__________________
H. EBITDA for the third most recent quarter $__________________
I. EBITDA for the fourth most recent quarter $__________________
C-3
Form of Compliance Certificate
J. Total EBITDA for last four quarters (sum of II.F+G+H+I) $__________________
Minimum required EBITDA: $16,500,000 from 4/30/04 through 10/30/04
$19,000,000 from 10/31/04 to 10/30/05
$22,000,000 from 10/31/05 through 10/30/06
$23,000,000 from 10/31/06 through 10/30/07
$25,500,000 from 10/31/07 through 10/30/08
$27,000,000 from 10/31/08 and thereafter
III. SECTION 6.12(c) - QUICK RATIO.
A. Quick Assets $__________________
1. cash, plus $__________________
2. short-term cash investments, plus $__________________
3. net trade receivables, plus $__________________
4. marketable securities not classified as long-term $__________________
investment
5. Total Quick Assets $__________________
B. Current Liabilities $__________________
C. Outstanding Amount of L/C Obligations $__________________
D. Outstanding Amount of Loans (revolving line of credit) $__________________
E. Ratio (Line III.A.5 / sum of Line III.B + C + D): ____________ to 1.0
Minimum Required: 0.75:1.0 for fiscal quarters ending January
31 and April 30
1.00:1.00 otherwise
IV. APPLICABLE RATE - FUNDED DEBT TO EBITDA RATIO.
A.1 Funded Debt (quarterly)
a. Average daily outstandings under Notes to Lenders $__________________
b. Average daily of all L/C Obligations $__________________
c. all outstanding liabilities for borrowed money plus other $__________________
interest-bearing liabilities, including current and long-term
liabilities (i.e., capitalized leases and real estate debt)
2. Total Funded Debt (Lines IV.A.1 a + b + c) $__________________
C-4
Form of Compliance Certificate
B. EBITDA from Line 11J. above $__________________
C. Ratio (Line IV.A.2 / Line IV.B.): ____________ to 1.0
APPLICABLE RATE
Eurodollar Rate
+
Pricing Funded Debt to -----------
Level EBITDA Ratio Commitment Fee Letters of Credit Base Rate +
----- ------------ -------------- ----------------- -----------
1 Less than or equal 0.175% 1.25% 0.00%
to 1.50:1.00
2 Less than or equal 0.175% 1.50% 0.00%
to 2.00:1.00 but
greater than
1.50:1.00
3 Less than or equal 0.25% 1.75% 0.00%
to 2.25:1:00 but
greater than
2.00:1.00
4 Greater than 0.375% 2.00% 0.25%
2.25:1.00
Any increase or decrease in the Applicable Rate resulting from a change in
the Financial Covenant shall become effective commencing on the 5th Business Day
immediately following the date a Compliance Certificate is delivered pursuant to
Section 6.02(b); provided, however, that if no Compliance Certificate is
delivered when due in accordance with such Section, then Pricing Level 4 shall
apply commencing on the 5th Business Day following the date such Compliance
Certificate was required to have been delivered until the 5th Business Day
following the date a Compliance Certificate is delivered.
V. SECTION 6.12(d) - LEASE AND RENTAL EXPENSE.
A aggregate payments due under operating[and capital leases] $__________________
(including leases for real or personal property in connection
with the Oceanside Distribution Center) for fiscal year ending
B. Maximum permitted lease and rental expenses for fiscal year $__________________
C. Excess (deficient) for covenant compliance (Line $__________________
VI.A - VI.B):
VI. SECTION 6.12(e) -- CAPITAL EXPENDITURES.
A. Obligations incurred (including capital leases) for fixed assets $__________________
during fiscal year to date
B. Maximum permitted capital expenditures ($5,000,000 in any single $__________________
year, plus $20,000,000 in 2004 for the Oceanside distribution
center)
C-5
Form of Compliance Certificate
C. Excess (deficient) for covenant compliance (Line VI.A - VI.B): $__________________
VII. SECTION 6.12(f) - CLEAN DOWN DEBT.
A. Reduce debt to $15,000,000 or less for at least 30 consecutive $__________________
days each year
B. Dates reduced to $15,000,000 or less __________ to _________
VIII. SECTION 6.12(g) - FIXED CHARGE COVERAGE RATIO
A. EBITDA (enter EBITDA from Line II.J, above) $__________________
B. Maintenance Capital Expenditures $__________________
C. Cash Income Taxes $__________________
D. Interest Expense $__________________
E. Current Portion of Long Term Debt $__________________
F. Ratio (sum of Line VIII.A - B - C / sum of Line VIII.D + E) ______:1.00
Minimum Required: 1.10:1.00 (for the fiscal quarter ended 7/31/04)
1.25:1.00 (thereafter)
IX. SECTION 7.02(f) - ADDITIONAL INVESTMENTS
A. As of the date hereof amount of additional Investments $__________________
$_____________
B. Maximum permitted at any time $1,000,000
C. $30,000,000 for Gekko Acquisition (in addition to Line IX.B)
X. SECTION 7.06(d) - STOCK REPURCHASES
A. As of the date hereof, amount of stock repurchases in current $___________________
fiscal year
B. Maximum permitted in any fiscal year $1,000,000
XI. SECTION 7.03(e) - ADDITIONAL CAPITALIZED LEASE AND PURCHASE MONEY
OBLIGATIONS
A. As of the date hereof, amount of capitalized lease and $__________________
purchase money obligations
B. Maximum permitted in any fiscal year $3,000,000 $__________________
plus $20,000,000 for the Oceanside distribution center.
C-6
Form of Compliance Certificate
EXHIBIT D
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement (this "Assignment") is dated as
of the Effective Date set forth below and is entered into by and between [INSERT
NAME OF ASSIGNOR] (the "Assignor") and [INSERT NAME OF ASSIGNEE] (the
"Assignee"). Capitalized terms used but not defined herein shall have the
meanings given to them in the Revolving/Term Loan Credit Agreement identified
below (the "Credit Agreement"), receipt of a copy of which is hereby
acknowledged by the Assignee. The Standard Terms and Conditions set forth in
Annex 1 attached hereto are hereby agreed to and incorporated herein by
reference and made a part of this Assignment as if set forth herein in full.
For an agreed consideration, the Assignor hereby irrevocably sells and
assigns to the Assignee, and the Assignee hereby irrevocably purchases and
assumes from the Assignor, subject to and in accordance with the Standard Terms
and Conditions and the Credit Agreement, as of the Effective Date inserted by
Agent as contemplated below, (i) all of the Assignor's rights and obligations as
a Lender under the Credit Agreement and any other documents or instruments
delivered pursuant thereto to the extent related to the amount and percentage
interest identified below of all of such outstanding rights and obligations of
the Assignor under the respective facilities identified below (including, to the
extent included in any such facilities, Letters of Credit) included in such
facilities and, (ii) to the extent permitted to be assigned under applicable
law, all claims, including, without limitation, suits, causes of action and any
other right of the Assignor (in its capacity as a Lender) against any Person,
whether known or unknown, arising under or in connection with the Credit
Agreement, any other documents or instruments delivered pursuant thereto or the
loan transactions governed thereby or in any way based on or related to any of
the foregoing, including, but not limited to, contract claims, tort claims,
malpractice claims, statutory claims and all other claims at law or in equity
related to the rights and obligations sold and assigned pursuant to clause (i)
above (the rights and obligations sold and assigned pursuant to clauses (i) and
(ii) above being referred to herein collectively as, (the "Assigned Interest").
Such sale and assignment is without recourse to the Assignor and, except as
expressly provided in this Assignment, without representation or warranty by the
Assignor.
1. Assignor: ___________________________
2. Assignee: ___________________________ [and is an Affiliate of Assignor]
3. Borrower(s): ___________________________
4. Agent: Union Bank of California, N. A., as Agent under the
Credit Agreement
5. Revolving/Term Loan Credit Agreement: The Credit Agreement,
dated as of July 6, 2004, among ▇▇▇▇▇▇▇▇, Inc., Lenders
parties thereto, and Agent
6. Assigned Interest:
Aggregate
Amount of Amount of Percentage
Commitment/Loans Commitment/Loans Assigned of
Facility Assigned for all Lenders Assigned Commitment/Loans
----------------- --------------- -------- ----------------
_______________ $______________ $______________ ______________%
_______________ $______________ $______________ ______________%
_______________ $______________ $______________ ______________%
Effective Date: __________________, 20__
D-1
Form of Assignment and
Assumption Agreement
The terms set forth in this Assignment are hereby agreed to:
ASSIGNOR
[NAME OF ASSIGNOR]
By: _________________________
Title:
ASSIGNEE
[NAME OF ASSIGNEE]
By: _________________________
Title:
CONSENTED TO AND Accepted:
UNION BANK OF CALIFORNIA, N.A., as Agent
By: ________________________
Title:__________________
[CONSENTED TO:]
[NAME OF BORROWER(s)]
By: ________________________
Title:___________________
D-2
Form of Assignment and
Assumption Agreement
ANNEX 1 TO ASSIGNMENT AND ASSUMPTION AGREEMENT
STANDARD TERMS AND CONDITIONS FOR ASSIGNMENT
AND ASSUMPTION AGREEMENT
1. Representations and Warranties.
1.1. Assignor. The Assignor (a) represents and warrants that (i) it
is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned
Interest is free and dear of any lien, encumbrance or other adverse claim and
(iii) it has full power and authority, and has taken all action necessary, to
execute and deliver this Assignment and to consummate the transactions
contemplated hereby; and (b) assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with the
Credit Agreement or any other Loan Document, (ii) the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Loan
Documents , or any collateral thereunder, (iii) the financial condition of
Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in
respect of any Loan Document or (iv) the performance or observance by Borrower,
any of its Subsidiaries or Affiliates or any other Person of any of their
respective obligations under any Loan Document.
1.2. Assignee. The Assignee (a) represents and warrants that (i) it
has full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and to consummate the transactions contemplated hereby
and to become a Lender under the Credit Agreement, (ii) it meets all
requirements of an Eligible Assignee. under the Credit Agreement, (iii) from and
after the Effective Date, it shall be bound by the provisions of the Credit
Agreement as a lender thereunder and, to the extent of the Assigned Interest,
shall have the obligations of a Lender thereunder, and (iv) it has received a
copy of the Credit Agreement, together with copies of the most recent financial
statements delivered pursuant to Section 6.01 thereof, as applicable, and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment and to purchase the
Assigned Interest on the basis of which it has made such analysis and decision
independently and without reliance on Agent or any other Lender, and (b) agrees
that (i) it will, independently and without reliance on Agent, the Assignor or
any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Loan Documents, and (ii) it will perform in
accordance with their terms all of the obligations which by the terms of the
Loan Documents are required to be performed by it as a Lender.
1.3 Assignee's Address for Notices, etc. Attached hereto as Schedule
1 is all contact information, address, account and other administrative
information relating to the Assignee.
2. Payments. From and after the Effective Date, Agent shall make all
payments in respect of the Assigned Interest (including payments of principal,
interest, fees and other amounts) to the Assignee whether such amounts have
accrued prior to or on or after the Effective Date. The Assignor and the
Assignee shall make all appropriate adjustments in payments by Agent for periods
prior to the Effective Date or with respect to the making of this assignment
directly between themselves.
3. General Provisions. This Assignment shall be binding upon, and inure to
the benefit of, the parties hereto and their respective successors and assigns.
This Assignment may be executed in any number of counterparts, which together
shall constitute one instrument. Delivery of an executed counterpart of a
signature page of this Assignment by telecopy shall be effective as delivery of
a manually executed counterpart of this Assignment. This Assignment shall be
governed by, and construed in accordance with, the laws of the State of
California.
4. Agent. [The Assignee hereby appoints and authorizes the Assignor to
take such legal action as agent on its behalf and to exercise such powers under
the Credit Agreement as are delegated to the Agent by the Lenders pursuant to
the terms of the Credit Agreement.] [Insert bracketed text only if Assignor is
Agent.] Without limiting the generality of the foregoing, the parties
acknowledge and agree that the Assignee and the Agent are solidary creditors of
each of the Loan Parties in respect of all Obligations owed by each of the Loan
Parties, as the case may be, to each of them, as contemplated in Section 9.12(a)
of the Credit Agreement and in accordance with Article 1541 of the Civil Code of
Quebec. The Assignee shall assume no duties or obligations held by the Assignor
in its capacity as Agent under the Credit Agreement.
D-3
Form of Assignment and
Assumption Agreement
SCHEDULE 1 TO ASSIGNMENT AND ASSUMPTION AGREEMENT
ADMINISTRATIVE DETAILS
(ASSIGNEE TO LIST NAMES OF CREDIT CONTACTS, ADDRESSES, PHONE AND FACSIMILE
NUMBERS, ELECTRONIC MAIL ADDRESSES AND ACCOUNT AND PAYMENT INFORMATION)
D-4
Form of Assignment and
Assumption Agreement