Exhibit 10.1
REVOLVING CREDIT AND SECURITY AGREEMENT
among
KOALA CORPORATION,
U.S. BANK NATIONAL ASSOCIATION, AS AGENT FOR THE LENDERS,
and
THE OTHER LENDERS PARTY HERETO
NOVEMBER 17, 2000
TABLE OF CONTENTS
Page No.
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1. DEFINITIONS.........................................................1
1.1 CERTAIN SPECIFIC TERMS.....................................1
1.2 SINGULARS AND PLURALS......................................8
1.3 U.C.C. DEFINITIONS.........................................8
2. AMOUNTS AND TERMS OF LOANS..........................................8
2.1 REVOLVING CREDIT...........................................8
2.2 REDUCTIONS................................................10
2.3 FUNDING LOSSES............................................10
3. LETTERS OF CREDIT..................................................11
3.1 AMOUNT....................................................11
3.2 COLLATERAL................................................11
4. INTEREST, FEES AND PAYMENT CONVENTIONS.............................11
4.1 PROMISE TO PAY INTEREST...................................11
4.2 PROMISE TO PAY FEES.......................................12
4.3 COMPUTATION OF INTEREST AND FEES..........................13
4.4 DEFICIENCY ADVANCES; FAILURE TO PURCHASE
PARTICIPATIONS............................................13
4.5 ACCOUNT STATED............................................13
5. COLLATERAL AND INDEBTEDNESS SECURED................................14
5.1 SECURITY INTEREST.........................................14
5.2 INDEBTEDNESS SECURED......................................14
6. REPRESENTATIONS AND WARRANTIES.....................................15
6.1 EXISTENCE.................................................15
6.2 CAPACITY..................................................15
6.3 INVENTORY.................................................15
6.4 TITLE TO COLLATERAL.......................................15
6.5 NOTES RECEIVABLE..........................................15
6.6 EQUIPMENT.................................................16
6.7 PLACE OF BUSINESS.........................................16
6.8 FINANCIAL CONDITION.......................................16
6.9 TAXES.....................................................16
6.10 LITIGATION................................................16
6.11 ERISA MATTERS.............................................16
6.12 ENVIRONMENTAL MATTERS.....................................16
6.13 VALIDITY OF TRANSACTION DOCUMENTS.........................17
6.14 NO CONSENT OR FILING......................................17
6.15 NO VIOLATIONS.............................................17
6.16 TRADEMARKS AND PATENTS....................................17
6.17 CONTINGENT................................................18
6.18 COMPLIANCE WITH LAWS......................................18
6.19 LICENSES, PERMITS, ETC....................................18
6.20 LABOR CONTRACTS...........................................18
6.21 CONSOLIDATED SUBSIDIARIES.................................18
6.22 CAPITALIZATION............................................18
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7. CERTAIN DOCUMENTS TO BE DELIVERED TO LENDERS.......................18
7.1 CLOSING DELIVERIES........................................18
7.2 ADDITIONAL DOCUMENTS......................................19
8. AFFIRMATIVE COVENANTS..............................................19
8.1 FINANCIAL INFORMATION.....................................19
8.2 INVENTORY IN POSSESSION OF THIRD PARTIES..................19
8.3 EXAMINATIONS..............................................19
8.4 VERIFICATION OF COLLATERAL................................20
8.5 TAXES.....................................................20
8.6 LITIGATION................................................20
8.7 INSURANCE.................................................20
8.8 GOOD STANDING; BUSINESS...................................20
8.9 PENSION REPORTS...........................................21
8.10 NOTICE OF ADVERSE EVENT OR NON-COMPLIANCE.................21
8.11 COMPLIANCE WITH ENVIRONMENTAL LAWS........................21
8.12 DEFEND COLLATERAL.........................................21
8.13 USE OF PROCEEDS...........................................21
8.14 COMPLIANCE WITH LAWS......................................21
8.15 MAINTENANCE OF PROPERTY...................................21
8.16 LICENSES, PERMITS, ETC....................................21
8.17 TRADEMARKS AND PATENTS....................................22
8.18 ERISA.....................................................22
8.19 MAINTENANCE OF OWNERSHIP..................................22
8.20 ACTIVITIES OF CONSOLIDATED SUBSIDIARIES...................22
9. NEGATIVE COVENANTS.................................................22
9.1 LOCATION OF INVENTORY, EQUIPMENT, AND BUSINESS RECORDS....22
9.2 BORROWED MONEY............................................22
9.3 SECURITY INTEREST AND OTHER ENCUMBRANCES..................22
9.4 STORING AND USE OF COLLATERAL.............................22
9.5 MERGERS, CONSOLIDATIONS, SALES............................22
9.6 CAPITAL CHANGES...........................................23
9.7 RESTRICTED PAYMENT........................................23
9.8 INVESTMENTS AND ADVANCES..................................23
9.9 GUARANTIES................................................23
9.10 NAME CHANGE...............................................23
9.11 DISPOSITION OF COLLATERAL.................................23
9.12 FINANCIAL COVENANTS.......................................23
9.13 AGREEMENTS WITH AFFILIATES................................23
9.14 OWNERSHIP AND MANAGEMENT..................................23
10. EVENTS OF DEFAULT..................................................23
10.1 EVENTS OF DEFAULT.........................................23
10.2 EFFECTS OF AN EVENT OF DEFAULT............................25
11. APPOINTMENT AND AUTHORIZATION OF AGENT.............................26
11.1 APPOINTMENT AND AUTHORIZATION.............................26
11.2 AGENT AND AFFILIATES......................................26
11.3 ACTION BY AGENT...........................................26
11.4 CONSULTATION WITH EXPERTS.................................26
11.5 LIABILITY OF AGENT........................................26
11.6 INDEMNIFICATION...........................................26
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11.7 CREDIT DECISION...........................................26
11.8 SUCCESSOR AGENT...........................................26
11.9 ASSIGNMENT BY LENDERS.....................................27
12. LENDERS' RIGHTS AND REMEDIES.......................................27
12.1 GENERALLY.................................................27
12.2 NOTIFICATION OF ACCOUNT DEBTORS...........................27
12.3 POSSESSION OF COLLATERAL..................................27
12.4 COLLECTION OF RECEIVABLES.................................27
12.5 ENDORSEMENT OF CHECKS; BORROWER'S MAIL....................27
12.6 LICENSE TO USE PATENTS, TRADEMARKS, AND TRADE NAMES.......27
13. MISCELLANEOUS......................................................28
13.1 EXPENSES..................................................28
13.2 LENDERS' CONSENTS, WAIVERS AND AMENDMENTS.................28
13.3 PERFECTING THE SECURITY INTEREST; PROTECTING
THE COLLATERAL......................................28
13.4 PERFORMANCE OF BORROWER'S DUTIES..........................28
13.5 NOTICE OF SALE............................................28
13.6 WAIVER BY LENDERS.........................................28
13.7 WAIVER BY BORROWER........................................28
13.8 SETOFF....................................................28
13.9 ASSIGNMENT................................................29
13.10 SUCCESSORS AND ASSIGNS....................................29
13.11 MODIFICATION..............................................29
13.12 COUNTERPARTS..............................................29
13.13 GENERALLY ACCEPTED ACCOUNTING PRINCIPLES..................29
13.14 INDEMNIFICATION...........................................29
13.15 TERMINATION...............................................30
13.16 FURTHER ASSURANCES........................................30
13.17 HEADINGS..................................................30
13.18 CUMULATIVE SECURITY INTEREST, ETC.........................30
13.19 LENDERS' DUTIES...........................................30
13.20 NOTICES GENERALLY.........................................30
13.21 SEVERABILITY..............................................31
13.22 INCONSISTENT PROVISIONS...................................31
13.23 ENTIRE AGREEMENT..........................................31
13.24 APPLICABLE LAW............................................31
13.25 CONSENT TO JURISDICTION...................................31
13.26 JURY TRIAL WAIVER.........................................31
13.27 NO ORAL AGREEMENTS........................................31
Schedules
5.1(d) - Trademarks, Patents, etc.
6.3 - Inventory and Equipment
6.4 - Existing Liens
6.7 - Location of Books and Records
6.9 - Unpaid Taxes
6.10 - Litigation
6.21 - Consolidated Subsidiaries
6.22 - Capitalization
8.7 - Insurance
iii
Exhibits
A List of Lenders
B Revolving Note
C Applicable Margin
D Financial Statements Certification
E Compliance Certificate
F Assignment and Acceptance Agreement
G Borrowing Notice
iv
REVOLVING CREDIT AND SECURITY AGREEMENT
This REVOLVING CREDIT AND SECURITY AGREEMENT (the "Agreement"), dated
as of November 17, 2000, is by and among KOALA CORPORATION, a Colorado
corporation, as borrower and debtor ("Borrower"), the LENDERS (as hereinafter
defined), and U.S. BANK NATIONAL ASSOCIATION, a national banking association, as
a Lender and in its capacity as agent acting in the manner described below
("U.S. Bank" or "Agent").
RECITALS
--------
A. Borrower and U.S. Bank are parties to that certain Revolving
Credit Agreement dated December 16, 1998, as amended on March 1, 2000 (the "
Existing Revolving Credit Agreement").
B. Borrower and the Lenders have agreed to enter into this Agreement to
replace the Existing Revolving Credit Agreement to establish a revolving credit
facility pursuant to which the Lenders will provide funding to Borrower in an
aggregate principal amount equal to the total of the Maximum Line (the
"Facility").
C. The Lenders are willing to make available the credit facilities
provided for herein based on the representations, warranties, covenants, terms
and conditions set forth herein.
AGREEMENT
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The parties agree as follows:
1. DEFINITIONS.
1.1 CERTAIN SPECIFIC TERMS. For purposes of this Agreement, the
following terms shall have the following meanings:
"ACCOUNT" means any account receivable, including any rights of payment
for goods sold or leased or for services rendered, which is not evidenced by an
instrument (as defined in the UCC) or chattel paper, whether or not it has been
earned by performance and in addition includes all property included in the
definition of "accounts" as used in the UCC together with any guaranties,
letters of credit and other security therefor.
"ACCOUNT DEBTOR" means a Person who is obligated under any Account,
general intangible, chattel paper or instrument.
"ADVANCE" means a loan made to Borrower by Lenders pursuant to this
Agreement.
"AFFILIATE" means (i) any officer, director, manager, or shareholder or
member of Borrower, (ii) any other person or entity that controls, is controlled
by or is under common control with Borrower, (iii) any person or entity that
directly or indirectly owns ten percent (10%) or more of any shareholder or
member of Borrower, and (iv) any person or entity ten percent (10%) or more of
the equity of which is owned by a shareholder or member of Borrower.
"APPLICABLE COMMITMENT PERCENTAGE" means, for each Lender at any time,
a fraction the numerator of which shall be such Lender's Revolving Credit
Commitment and the denominator of which shall be the Total Revolving Credit
Commitment, which Applicable Commitment Percentages for each Lender as of the
Closing Date are set forth in Exhibit A; provided that the Applicable Commitment
Percentages of each Lender shall be increased or decreased to reflect any
assignments to or by such Lender effected in accordance with this Agreement.
"APPLICABLE MARGIN" means the appropriate percentages set forth on
Exhibit C opposite certain Consolidated Leverage Ratios of Borrower.
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"ASSIGNMENT AND ACCEPTANCE" shall mean an Assignment and Acceptance in
the form of Exhibit F (with blanks appropriately filled in) delivered to the
Agent in connection with an assignment of a Lender's interest under this
Agreement pursuant to Section 2.1.
"AUTHORIZED REPRESENTATIVE" means any of the President, Chief Executive
Officer, Chief Operating Officer or any Vice President of the Borrower or, with
respect to financial matters, the Chief Financial Officer or Vice President of
Finance of the Borrower, or any other Person expressly designated by the Board
of Directors of the Borrower (or the appropriate committee thereof) as an
Authorized Representative of the Borrower.
"BASE RATE" means, for any day, the rate per annum equal to the sum of
(a) the higher of (i) the Federal Funds Rate for such date plus one-half of
one-percent (0.5%) and (ii) the Reference Rate for such date plus (b) the
Applicable Margin. Any change in the Base Rate due to a change in the Reference
Rate or the Federal Funds Rate shall be effective on the effective date of such
change in the Reference Rate or Federal Funds Rate.
"BASE RATE LOAN" means a Loan for which the rate of interest is
determined by reference to the Base Rate.
"BORROWER" has the meaning provided in the introductory paragraph of
this Agreement.
"BORROWING NOTICE" means a request for an Advance under the Revolving
Line of Credit and, if written, in the form attached as Exhibit G.
"BUSINESS DAY" means, (i) except as expressly provided in clause (ii),
any day which is not a Saturday, Sunday or a day on which banks in the State are
authorized or obligated by law, executive order or governmental decree to be
closed, and (ii) with respect to the selection, funding, interest rate, payment
and Interest Period of any Eurodollar Rate Loan, any day which is a business
day, as described above, and on which the relevant international financial
markets are open for the transaction of business contemplated by this Agreement
in London, England, and Denver, Colorado.
"CLOSING DATE" means the date on which all Transaction Documents have
been executed and delivered to and accepted by Lenders, all conditions precedent
to funding have been satisfied, including those set forth in Sections 6 and 7,
and the initial Advance(s) are made by Lenders.
"COLLATERAL" means collectively all of the property of Borrower subject
to the Security Interest and described in Sections 5.1 and 5.2.
"CONSOLIDATED EBITDA" means, with respect to the Borrower and its
Consolidated Subsidiaries for any four-quarter period (or other applicable
period, if appropriate) ending on the date of computation thereof, the sum of,
without duplication, (i) net income, (ii) Consolidated Interest Expense, (iii)
taxes on income, (iv) amortization, and (v) depreciation, all determined on a
consolidated basis in accordance with GAAP applied on a consistent basis.
"CONSOLIDATED INTEREST EXPENSE" means, with respect to any period of
computation thereof, the gross interest expense of the Borrower and its
Consolidated Subsidiaries, including without limitation (i) the current
amortized portion of the debt discounts to the extent included in gross interest
expenses, and (ii) the portion of any payments made in connection with capital
leases allocable to the interest expense, all determined on a consolidated basis
in accordance with GAAP applied on a consistent basis.
"CONSOLIDATED LEVERAGE RATIO" means, as of the date of computation
thereof, the ratio of (i) Debt determined as at such date to (ii) Consolidated
EBITDA for the four-quarter period ending on (or most recently ended prior to)
such date.
"CONSOLIDATED SUBSIDIARY" means any corporation, limited liability
company, partnership or other entity of which at least fifty percent (50%) of
the voting power is controlled by Borrower, directly or indirectly, through one
or more Consolidated Subsidiaries, whether existing on the date hereof or
acquired at any time
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hereafter. If Borrower has no Consolidated Subsidiaries, the provisions of this
Agreement relating to Consolidated Subsidiaries shall be inapplicable without
affecting the applicability of such provisions to Borrower alone.
"CONTINUE," "CONTINUATION," and "CONTINUED" shall refer to the
continuation pursuant to Section 4.1 hereof of a Eurodollar Rate Loan of one
type as a Eurodollar Rate Loan of the same type from one Interest Period to the
next Interest Period.
"CONVERT," "CONVERSION," and "CONVERTED" shall refer to a conversion
pursuant to Section 4.1 of one type of loan into another type of loan.
"DEBT" means with respect to the Borrower and its Consolidated
Subsidiaries (i) indebtedness for borrowed money or for the deferred purchase
price of property or services, (ii) obligations as lessee under leases which
shall have been or should be, in accordance with GAAP, recorded as capital
leases, (iii) obligations under direct or indirect guaranties in respect of, and
obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise assure a creditor against loss in respect of, indebtedness or
obligations of the kinds referred to in clause (i) or (ii) above, and (iv)
liabilities in respect of unfunded vested benefits under plans covered by Title
IV of ERISA.
"DEFAULT" means any event or condition which, with the giving or
receipt of notice or lapse of time or both, would constitute an Event of Default
hereunder.
"DEFAULT RATE" means (i) with respect to a Eurodollar Rate Loan, until
the end of the Interest Period applicable thereto, a rate of two percent (2%)
above the Eurodollar Rate applicable to such Loan, and thereafter at a rate of
interest per annum which shall be two percent (2%) above the Base Rate, and (ii)
with respect to Base Rate Loans, fees, and other amounts payable in respect to
the Indebtedness a rate of interest per annum which shall be two percent (2%)
above the Base Rate and (iii) in any case, the maximum rate permitted by
applicable law, if lower.
"DISPOSAL" means the intentional or unintentional abandonment,
discharge, deposit, injection, dumping, spilling, leaking, storing, burning,
thermal destruction, or placing of any Hazardous Substance so that it or any of
its constituents may enter the Environment.
"ELIGIBLE ASSIGNEE" means (i) a Lender, (ii) an affiliate of a Lender,
and (iii) any other Person approved by the Agent and, unless an Event of Default
has occurred and is continuing at the time any assignment is effected in
accordance with Section 11.9, the Borrower, such approval not to be unreasonably
withheld or delayed by the Borrower and such approval to be deemed given by the
Borrower in the absence of written notification of such disapproval within five
(5) Business Days of the Borrower being informed of such assignment.
"ENVIRONMENT" means any water including, but not limited to, surface
water and ground water or water vapor; any land including land surface or
subsurface; stream sediments; air; fish, wildlife, plants; and all other natural
resources or environmental media.
"ENVIRONMENTAL LAWS" means all federal, state, and local environmental,
land use, zoning, health, chemical use, safety and sanitation laws, statutes,
ordinances, regulations, codes, and rules relating to the protection of the
Environment and/or governing the use, storage, treatment, generation,
transportation, processing, handling, production, or disposal of Hazardous
Substances and the policies, guidelines, procedures, interpretations, decisions,
orders, and directives of federal, state, and local governmental agencies and
authorities with respect thereto.
"ENVIRONMENTAL PERMITS" means all licenses, permits, approvals,
authorizations, consents, or registrations required by any applicable
Environmental Laws and all applicable judicial and administrative orders in
connection with ownership, lease, purchase, transfer, closure, use, and/or
operation of any property owned, leased, or operated by Borrower or any
Consolidated Subsidiary and/or as may be required for the storage, treatment,
generation, transportation, processing, handling, production, or disposal of
Hazardous Substances.
"ENVIRONMENTAL QUESTIONNAIRE" means a questionnaire and all attachments
thereto concerning (i) activities and conditions affecting the Environment at
any property owned, leased or used by Borrower or any Consolidated Subsidiary,
or (ii) the enforcement or possible enforcement of any Environmental Law against
Borrower or any Consolidated Subsidiary.
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"ENVIRONMENTAL REPORT" means a written report prepared for Lenders by
an environmental consulting or environmental engineering firm.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"EURODOLLAR RATE" means the interest per annum calculated according to
the following formula:
Eurodollar = Interbank Offered Rate + Applicable
------------------------------
Rate 1 - Reserve Requirement Margin
"EURODOLLAR RATE LOAN" means an Advance for which the rate of interest
is determined by reference to the Eurodollar Rate.
"EVENT OF DEFAULT" means an Event of Default or Events of Default as
defined in Section 10.
"FACILITY" shall have the meaning set forth in the Recitals to this
Agreement.
"FEDERAL BANKRUPTCY CODE" means Title 11 of the United States Code,
entitled "Bankruptcy," as amended, or any successor federal bankruptcy law.
"FEDERAL FUNDS RATE" means, for any date, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such date, 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 transaction son 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 date shall be the average rate charged to the Agent (in its
individual capacity) on such day on such transactions as determined by the
Agent.
"FISCAL YEAR" means the twelve month fiscal period of the Borrower and
its Consolidated Subsidiaries commencing on January 1 of each calendar year and
ending on December 31 of each calendar year.
"GAAP" means generally accepted accounting principles, being those
principles of accounting set forth in pronouncements of the Financial Accounting
Standards Board, the American Institute of Certified Public Accountants, or
which have other substantial authoritative support and are applicable in the
circumstances as of the date of a report.
"HAZARDOUS SUBSTANCES" means, without limitation, any explosives,
radon, radioactive materials, asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls, petroleum and petroleum products, methane, hazardous
materials, hazardous wastes, hazardous or toxic substances, and any other
material defined as a hazardous substance in Section 101(14) of the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. Section 9601(14).
"INDEBTEDNESS" means the indebtedness evidenced by the Notes, secured
by the Security Interest described in Section 5, together with all other amounts
due, or which may become due, under the Transaction Documents.
"INDEMNIFIED LIABILITIES" has the meaning provided in Section 13.14(c)
of this Agreement.
"INTERBANK OFFERED RATE" means, with respect to any Eurodollar Rate
Loan for the Interest Period applicable thereto, the rate per annum (rounded
upwards, if necessary), to the nearest 1/100 of 1% appearing on Telerate Page
3750 (or any successor page) as the London interbank offered rate for deposits
in U.S. dollars at approximately 11:00 A.M. (London time) two Business Days
prior to the first day of such Interest Period for a term comparable to such
Interest Period. If for any reason such rate is not available, the term
"Interbank Offered Rate" for the Interest Period applicable thereto means the
rate per annum (rounded upwards, if necessary, to the nearest
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1/100 of 1%) appearing on Reuters Screen LIBO Page as the London interbank
offered rate for deposits in U.S. dollars at approximately 11:00 A.M.(London
time) two Business Days prior to the first day of such Interest Period for a
term comparable to such Interest Period, provided, however; if more than one
rate is specified on Reuters Screen LIBO Page, the applicable rate shall be the
arithmetic mean of all such rates (rounded upwards, if necessary, to the nearest
1/100 of 1%).
"INTEREST COVERAGE" means Consolidated EBITDA divided by the total
interest expense for Borrower
"INTEREST PERIOD" means for each Eurodollar Rate Loan, a period
commencing on the date such Eurodollar Rate Loan is made or Converted or
Continued and ending at the Borrower's option, on the date, one, two, three or
six months thereafter, as the Authorized Representative shall notify the Agent
by in accordance with the terms hereof; provided that,
(i) if any Interest Period would end on a day which
is not a Business Day, such Interest Period shall be extended to the
next Business Day (unless, in the case of a Eurodollar Rate Loan, such
extension would cause the applicable Interest Period to end in the
succeeding calendar month, in which case such Interest Period shall end
on the next preceding Business Day); and
(ii) any Interest Period for a Eurodollar Rate Loan
which 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 a calendar month; and
(iii) no Interest Period shall extend beyond the
Revolving Credit Maturity Date.
"INVENTORY" means inventory, as defined in the Uniform Commercial Code
as in effect in the State as of the date of this Agreement, and in any event
shall include returned or repossessed goods.
"ISSUING BANK" shall mean U.S. Bank.
"LENDERS" means U.S. Bank and the other persons or entities listed on
Exhibit A of this Agreement and any successors or assigns of each Lender.
"LETTER OF CREDIT" means a standby or commercial letter of credit
issued by the Issuing Bank pursuant to Article 3 hereof for the account of the
Borrower in favor of a Person advancing credit or securing an obligation on
behalf of the Borrower.
"LETTER OF CREDIT COMMITMENT" means, with respect to each Lender, the
obligation of such Lender to acquire Participations in respect of Letters of
Credit and Reimbursement Obligations up to an aggregate amount at any one time
outstanding equal to such Lender's Applicable Commitment Percentage of the Total
Letter of Credit Commitment as the same may be increased or decreased from time
to time pursuant to this Agreement.
"LETTER OF CREDIT OUTSTANDINGS" means, as of the date of determination,
the aggregate amount available to be drawn under all Letters of Credit plus
Reimbursement Obligations then outstanding.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the
business, properties, operations, prospects or condition, financial or
otherwise, of the Borrower and its Consolidated Subsidiaries, taken as a whole,
(ii) the ability of the Borrower and its Consolidated Subsidiaries taken as a
whole to pay or perform its respective obligations, liabilities and indebtedness
under the Transaction Documents as such payment or performance becomes due in
accordance with the terms thereof, or (iii) the rights, powers and remedies of
the Agent or any Lender under any Transaction Document or the validity, legality
or enforceability thereof.
"NET PROCEEDS" (a) from any public or private offering of any equity
security means cash proceeds received by the Borrower or any Consolidated
Subsidiary therefrom as and when received, net of all legal, accounting, banking
and underwriting fees and expenses, commissions, discounts and other issuance
expenses incurred in connection therewith and all taxes required to be paid or
accrued as a consequence of such issuance; and
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(b) from any asset disposition means cash payments received by the Borrower and
any Subsidiary therefrom (including any cash payments received pursuant to any
note or other debt security received in connection with any asset disposition )
as and when received, net of (i) all legal fees and expenses and other fees and
expenses paid to third parties and incurred in connection therewith, (ii) all
taxes required to be paid or accrued as a consequence of such disposition, (iii)
all amounts applied to repayment of Debt (other than the Indebtedness) secured
by a lien on the asset or property disposed and (iv) all amounts reinvested by
the Borrower and its Consolidated Subsidiaries substantially contemporaneously
with such disposition (or to be invested within 90 days pursuant to an
investment plan approved by the Agent) in replacement assets of substantially
equal or greater value and utility;
"NOTE" means any Revolving Note.
"OUTSTANDINGS" means, collectively, at any date, all Revolving Credit
Outstandings and Letter of Credit Outstandings on such date.
"PARTICIPATION" means with respect to any Lender (other than the
Issuing Bank) and a Letter of Credit, the extension of credit represented by the
participation of such Lender hereunder in the liability of the Issuing Bank in
respect of a Letter of Credit issued by the Issuing Bank in accordance with the
terms hereof.
"PENSION EVENT" means, with respect to any Pension Plan, the occurrence
of (i) any prohibited transaction described in Section 406 of ERISA or in
Section 4975 of the Internal Revenue Code; (ii) any Reportable Event; (iii) any
complete or partial withdrawal, or proposed complete or partial withdrawal, of
Borrower or any Consolidated Subsidiary from such Pension Plan; (iv) any
complete or partial termination, or proposed complete or partial termination, of
such Pension Plan; or (v) any accumulated funding deficiency (whether or not
waived), as defined in Section 302 of ERISA or in Section 412 of the Internal
Revenue Code.
"PENSION PLAN" means any pension plan, as defined in Section 3(2) of
ERISA, which is a multi-employer plan or a single employer plan, as defined in
Section 4001 of ERISA, and subject to Title IV of ERISA and which is (i) a plan
maintained by Borrower or any Consolidated Subsidiary for employees or former
employees of Borrower or of any Consolidated Subsidiary; (ii) a plan to which
Borrower or any Consolidated Subsidiary contributes or is required to
contribute; (iii) a plan to which Borrower or any Consolidated Subsidiary was
required to make contributions at any time during the five (5) calendar years
preceding the date of this Agreement; or (iv) any other plan with respect to
which Borrower or any Consolidated Subsidiary has incurred or may incur
liability, including, without limitation, contingent liability, under Title IV
of ERISA either to such plan or to the Pension Benefit Guaranty Corporation. For
purposes of this definition and the definition of Pension Event, Borrower shall
include any trade or business (whether or not incorporated) which, together with
Borrower or any Consolidated Subsidiary, is deemed to be a "single employer"
within the meaning of Section 4001(b)(1) of ERISA.
"REFERENCE RATE" means the rate of interest from time to time publicly
announced by the Agent as its "reference rate". The Agent may lend to its
customers at rates that are at, above or below the Reference Rate. For purposes
of determining any interest rate hereunder or under any other Transaction
Document which is based on the Reference Rate, such interest rate shall change
as and when the Reference Rate changes.
"REIMBURSEMENT OBLIGATION" shall mean at any time, the obligation of
the Borrower with respect to any Letter of Credit to reimburse the Issuing Bank
and the Lenders to the extent of their respective Participations (including by
the receipt by the Issuing Bank of proceeds of loans pursuant to Section 3) for
amounts theretofore paid by the Issuing Bank pursuant to a drawing under such
Letter of Credit.
"RELEASE" means "release," as defined in Section 101(22) of the
Comprehensive, Environmental Response, Compensation and Liability Act of 1980,
42 U.S.C. Section 9601(22), and the regulations promulgated thereunder.
"REPORTABLE EVENT" means any event described in Section 4043(b) of
ERISA or in regulations issued thereunder with regard to a Pension Plan.
"REQUIRED LENDERS" means, as of any date, Lenders on such date having
Credit Exposure aggregating more than 66 2/3% of all the Lenders' Credit
Exposure on such date (provided that until there are at least three
6
participating Lenders under this Agreement, Required Lenders shall mean Lenders
having a Credit Exposure aggregating 100% of all the Lenders' Credit Exposure).
For purposes of the preceding sentence, the amount of the "Credit Exposure" of
each Lender shall be equal at all times (a) other than following the occurrence
and during the continuance of an Event of Default, to the sum of its Revolving
Credit Commitment, and (b) following the occurrence and during the continuance
of an Event of Default, to the sum of (i) the aggregate principal amount of such
Lender's Applicable Commitment Percentage of Revolving Credit Outstandings plus
(iii) the amount of such Lender's Applicable Commitment Percentage of Letter of
Credit Outstandings; provided that, for the purpose of this definition only, (A)
if any Lender shall have failed to fund its Applicable Commitment Percentage of
any Advance, then the Revolving Credit Commitment of such Lender shall be deemed
reduced by the amount it so failed to fund for so long as such failure shall
continue and such Lender's Credit Exposure attributable to such failure shall be
deemed held by any Lender making more than its Applicable Commitment Percentage
of such Advance to the extent it covers such failure, (B) if any Lender shall
have failed to pay to the Issuing Bank upon demand its Applicable Commitment
Percentage of any drawing under any Letter of Credit resulting in an outstanding
Reimbursement Obligation (whether by funding its Participation therein or
otherwise), such Lender's Credit Exposure attributable to all letter of Credit
Outstandings shall be deemed to be held by the Issuing Bank until such Lender
shall pay such deficiency amount to the Issuing Bank together with interest
thereon.
"RESERVE REQUIREMENT" means, at any time, the maximum rate at which
reserves (including, without limitation, any marginal, special, supplemental, or
emergency reserves) are required to be maintained under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or any
successor) by member banks of the Federal Reserve System against "Eurocurrency
liabilities" (as such term is used in Regulation D). Without limiting the effect
of the foregoing, the Reserve Requirement shall reflect any other reserves
required to be maintained by such member banks with respect to (i) any category
of liabilities which includes deposits by reference to which the Eurodollar Rate
is to be determined, or (ii) any category of extensions of credit or other
assets which include Eurodollar Rate Loans. the Eurodollar Rate shall be
adjusted automatically on and as of the effective date of any change in the
Reserve Requirement.
"RESTRICTED PAYMENT" means (a) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock or securities
of Borrower or any securities of its Consolidated Subsidiaries (other than those
payable or distributable solely to the Borrower or a Consolidated Subsidiary of
the Borrower) now or hereafter outstanding, except a dividend payable solely in
shares of class of stock or securities to the holders of that class; (b) any
redemption, conversion, exchange, retirement or similar payment, purchase or
other acquisition for value, direct or indirect, of any shares of any class of
stock or securities of Borrower or of any of its Consolidated Subsidiaries
(other than those payable or distributable solely to the Borrower) now or
hereafter outstanding; (c) any payment made to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire
shares of any class of stock of Borrower or of its Consolidated Subsidiaries now
or hereafter outstanding; (d) any issuance and sale of securities of any
Consolidated Subsidiary of the Borrower (or any option, warrant or right to
acquire such stock) other than to the Borrower.
"REVOLVING CREDIT COMMITMENT" means, with respect to each Lender, the
obligations of such Lender to make Revolving Loans to the Borrower up to an
aggregate principal amount at any one time outstanding equal to such Lender's
Applicable Commitment Percentage of the Total Revolving Credit Commitment.
"REVOLVING CREDIT MATURITY DATE" means March 1, 2003.
"REVOLVING CREDIT OUTSTANDINGS" means, as of any date of determination,
the aggregate principal amount of all Revolving Loans then outstanding.
"REVOLVING LINE OF CREDIT" means the revolving line of credit described
in Section 2.1 hereof and all renewals, extensions, modifications, amendments,
restatements and substitutions thereof or therefor.
"REVOLVING LOANS" means any borrowing pursuant to an Advance under the
Revolving Line of Credit.
"REVOLVING NOTE" has the meaning provided in Section 2.1(a) of this
Agreement.
7
"SCHEDULE" means any schedule executed in connection with, and which is
a part of, this Agreement.
"SECURITY INTEREST" means the security interest granted to Lenders by
Borrower as described in Section 5.
"STATE" means the state of Colorado.
"THIRD PARTY" means any person or entity who has executed and
delivered, or who in the future may execute and deliver, to Lenders any
agreement, instrument, or document, pursuant to which such person or entity has
guaranteed to Lenders the payment of the Indebtedness or has granted Lenders a
security interest in or lien on some or all of such person's or entity's real or
personal property to secure the payment of the Indebtedness.
"TOTAL LETTER OF CREDIT COMMITMENT" means an amount not to exceed
$5,000,000.
"TOTAL REVOLVING CREDIT COMMITMENT" means a principal amount equal to
$45,000,000.
"TRANSACTION DOCUMENTS" means this Agreement, the Notes, the Pledge and
Security Agreement, the Third Party Security Agreements, the Assignment of
Security Interest in U.S. Trademarks and Patents and all other agreements and
documents, including, without limitation, collateral documents, letter of credit
agreements, notes, acceptance credit agreements, security agreements, pledges,
guaranties, mortgages, title insurance, assignments, and subordination
agreements now or hereafter required to be executed by Borrower or any Third
Party.
1.2 SINGULARS AND PLURALS. Unless the context otherwise requires,
words in the singular include the plural, and in the plural include the singular
1.3 U.C.C. DEFINITIONS. Unless otherwise defined in Section 1.1 or
elsewhere in this Agreement, capitalized words shall have the meanings set
forth in the Uniform Commercial Code as in effect in the State as of the date of
this Agreement.
2. AMOUNTS AND TERMS OF LOANS.
2.1 REVOLVING CREDIT.
----------------
(a) Amount. Subject to the other terms and conditions set
forth in this Agreement, the Lenders agree to make available to Borrower, during
the term of the Facility, Advances equal to the Total Revolving Credit
Commitment, which shall be evidenced by promissory notes in the form of Exhibit
B ("Revolving Note" or "Note").
(b) Commitment. Subject to the terms and conditions of this
Agreement, each Lender severally agrees to make Advances to the Borrower under
the Revolving Credit Commitment from time to time from the Closing Date until
the Revolving Credit Maturity Date on a pro rata basis as to the total borrowing
requested by the Borrower on any day determined by such Lender's Applicable
Commitment Percentage up to but not exceeding the Revolving Credit Commitment of
such Lender, provided, however, that the Lenders will not be required and shall
have no obligation to make any such Advance (i) so long as Default or an Event
of Default has occurred and is continuing or (ii) if the Agent has accelerated
the maturity of any of the Notes as a result of an Event of Default; provided,
further, however, that immediately after giving effect to each such Advance, the
amount of Revolving Credit Outstandings plus Letter of Credit Outstandings shall
not exceed the Total Revolving Credit Commitment.
(i) Additional Lenders. Additional Lenders may join
the Facility from time to time by executing and delivering an
appropriate Assignment and Acceptance to each of the Lenders and to
Borrower, provided that the amount of such Lender's Revolving Credit
Commitment shall not cause the total amount of the Facility to exceed
Forty-Five Million Dollars ($45,000,000).
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(ii) Expiration of Facility upon Revolving Credit
Maturity Date. The term of the Facility will expire and all principal
and interest amounts owed to Lenders under this Agreement shall be
immediately due and payable on the Revolving Credit Maturity Date.
(c) Advances.
--------
(i) Requests for Advances. Any request by an
Authorized Representative of the Borrower for an Advance hereunder
shall be in writing or by telephone and must be given on behalf of the
Borrower so as to be received by the Agent not later than 10:00 A.M.
(Denver time) two Business Days prior to the requested date of Advance
if the Advance (or any portion thereof) is requested as a Eurodollar
Rate Loan and not later than 1:00 P.M. (Denver time) on the requested
date of Advance if the Advance is requested as a Base Rate Loan. Each
request for an Advance hereunder shall be irrevocable and shall be
deemed a representation by the Borrower that on the requested date of
Advance and after giving effect to the requested Revolving Loans the
applicable conditions specified in Article 6 have been and will be
satisfied. Each request for an Advance hereunder shall specify (i) the
requested date of Advance, (ii) the aggregate amount of the Advance to
be made on such date which shall be in the minimum amounts set forth in
2.1(d), (iii) whether the Advances are to be funded as Eurodollar Rate
Loans or Base Rate Loans (and, if such Advance is to be made with more
than one applicable interest rate choice, specifying the amounts to
which each interest rate choice is applicable) and (iv) in the case of
Eurodollar Rate Advances, the duration of the initial Interest Period
applicable thereto. The Agent may rely on any telephone request for
Revolving Loans hereunder which it believes in good faith to be
genuine; and the Borrower hereby waives the right to dispute the
Agent's record of the terms of such telephone request. The Agent shall
promptly notify each other Lender of the receipt of such request, the
matters specified therein, and of such Lender's ratable share of the
requested Advance.
(ii) Funding from Lenders. On the date of the
requested Advance, each Lender shall provide its share of the requested
Advance to the Agent in immediately available funds not later than 2:30
P.M. Denver time. Unless the Agent determines that any applicable
condition specified in Article 6 has not been satisfied, the Agent will
make available to the Borrower at the Agent's principal office in
Denver, Colorado in immediately available funds not later than 3:00
P.M. (Denver time) on the requested date of Advance the amount of the
requested Advance. If the Agent has made an Advance to the Borrower on
behalf of a Lender but has not received the amount of such Advance from
such Lender by the time herein required, such Lender shall pay interest
to the Agent on the amount so advanced at the overnight Federal Funds
Rate from the date of such Advance to the date funds are received by
the Agent from such Lender, such interest to be payable with such
remittance from such Lender of the principal amount of such Advance
(provided, however, that the Agent shall not make any Advance on behalf
of a Lender if the Agent has received prior notice from such Bank that
it will not make such Revolving Loan). If the Agent does not receive
payment from such Lender by the next Business Day after the date of any
Advance, the Agent shall be entitled to recover such Advance, with
interest thereon at the rate (or rates) then applicable to the Advance,
on demand, from the Borrower, without prejudice to the Agent's and the
Borrower's rights against such Lender. If such Lender pays the Agent
the amount herein required with interest at the overnight Federal Funds
Rate before the Agent has recovered from the Borrower, such Lender
shall be entitled to the interest payable by the Borrower with respect
to the Advance in question accruing from the date the Agent made such
Advance Agent shall be entitled to honor any request for an Advance
that it reasonably believes to be genuine, whether or not the person
making the request is named as an authorized person in any corporate
resolution or instruction furnished to Agent by Borrower.
(iii) Frequency and Amount of Borrowings. Borrower
may seek a disbursement under the Facility at any time and from time to
time; provided, however, that any request for an Advance (i) as a
Eurodollar Rate Loan must be in the minimum principal amount of
$500,000 and in multiples of $100,000 above the minimum principal
amount and (ii) as a Base Rate Loan must be in the minimum principal
amount of $100,000 and in multiples of $10,000 above the minimum
principal amount. In addition, the aggregate outstanding balance under
the Facility shall be limited as follows:
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Time Period Aggregate Outstanding Balance
Prior to Agent's receipt of 12/31/2000 No greater than 4.0 times Consolidated EBITDA
financial statements
Upon Agent's receipt of 12/31/2000 financial No greater than 3.5 times Consolidated EBITDA
statements through receipt of 12/31/2001
financial statements
After Agent's receipt of 12/31/2001 financial No greater than 3.0 times Consolidated EBITDA
statements
For purposes of this calculation, Consolidated EBITDA shall be calculated at the
end of each fiscal quarter on a rolling previous four quarter basis and all
financial statements shall be those required to be delivered to Lenders under
Section 8.1.
(d) Interest Rate. As part of its notice for an Advance,
Borrower must select an Interest Period of one, two, three or six months.
Borrower may also select a daily rate option, which shall be based upon the Base
Rate.
(e) Repayment. Borrower promises to pay to Lenders the
outstanding principal of Advances under the Revolving Line of Credit in full
upon the earlier to occur of (a) termination of this Agreement, (b) acceleration
of the time for payment of the Indebtedness pursuant to this Agreement or (c) on
the Revolving Credit Maturity Date. Subject to the provisions of this Agreement,
any amounts borrowed under the Revolving Credit Commitment may be voluntarily
prepaid in the minimum amounts of (x) in the case of a Eurodollar Rate Loan,
$500,000 or such greater amount that is an integral multiple of $100,000 or (y)
in the case of a Base Rate Loan, $100,000 or such greater amount that is an
integral of $10,000, and any amounts so prepaid may be reborrowed, up to the
amount available under Section 2.1(a) above at the time of such Borrowing, until
the Business Day next preceding the Revolving Credit Maturity Date. Borrower
shall notify Lender by 1:00 p.m. on any Business Day of any prepayment of a Base
Rate Loan. Except as otherwise agreed to in writing by the Lenders, Borrower
shall also be required to use all Net Proceeds to repay the then-current
Outstandings up to the total amount of such Net Proceeds. Any prepayment of any
kind shall also be subject to any fees required under Section 4.3. During the
term of the Facility, Borrower shall pay to Agent such amounts as are necessary
so that the sum of the outstanding principal balance of the Revolving Credit
Outstandings and the Letter of Credit Outstandings in the aggregate at any time
does not exceed the Total Revolving Credit Commitment (including the limitations
in Section 2.1 (d)) at such time. Borrower shall pay such amounts within two (2)
Business Days after the earlier of demand by Agent and the date Borrower learns
of any such excess in the aggregate amount of the Revolving Credit Outstandings
and the Letter of Credit Outstandings over the Total Revolving Credit
Commitment.
2.2 REDUCTIONS. The Borrower shall, by notice from an Authorized
Representative, have the right from time to time but not more frequently than
once each calendar month, upon not less than three (3) Business Days' written
notice to the Agent, effective upon receipt, to reduce the Total Revolving
Credit Commitment. The Agent shall give each Lender, within one (1) Business Day
of receipt of such notice, telefacsimile notice, or telephonic notice (confirmed
in writing), of such reduction. Each such reduction shall be in the aggregate
amount of $1,000,000 or such greater amount which is in an integral multiple of
$250,000 or the entire remaining Total Revolving Credit Commitment, and shall
permanently reduce the Total Revolving Credit Commitment. Each reduction of the
Total Revolving Credit Commitment shall be accompanied by payment to the extent
that the principal amount of Revolving Credit Outstandings plus Letter of Credit
Outstandings exceeds the Total Revolving Credit Commitment.
2.3 FUNDING LOSSES. The Borrower shall compensate each Lender, upon its
written request, for all losses, expenses and liabilities (including any
interest paid by such Lender to lenders of funds borrowed by it to make or carry
Eurodollar Rate Loans to the extent not recovered by such Lender in connection
with the re-employment of such funds and including loss of anticipated profits)
which such Lender may sustain: (i) if for any reason, other than a default by
such Lender, a funding of a Eurodollar Rate Loan does not occur on the date
10
specified therefor in the Borrower's request or notice as to such Advance of the
maturity under Section 2.1, or (ii) if, for whatever reason (including, but not
limited to, acceleration of Advances following an Event of Default), any
repayment of a Eurodollar Rate Loan, or a conversion pursuant to Section 4.1,
occurs on any day other than the last day of the Interest Period applicable
thereto. A Lender's request for compensation shall set forth the basis for the
amount requested and shall be final, conclusive and binding, absent error.
3. LETTERS OF CREDIT.
3.1 AMOUNT. In connection with Facility, Borrower may, subject to the
terms and conditions of this Agreement, request Letters of Credit to be issued
in an amount not to exceed the Total Letter of Credit Commitment and in the
event and to the extent the Issuing Bank issues a Letter of Credit on behalf of
Borrower, the Total Revolving Credit Commitment shall be considered utilized by
the amount of such Letter of Credit. Amounts drawn under any Letter of Credit
and honored by the Issuing Bank but not immediately reimbursed by Borrower shall
become an Advance hereunder in such amount, at such time and subject to the
terms of this Agreement, whether or not any Event of Default has occurred. All
Letters of Credit issued under this Agreement shall reduce the amount available
under the Total Revolving Credit Commitment. At no time shall the aggregate
amount of Letter of Credit Outstandings exceed the Total Letter of Credit
Commitment; provided, however, that upon expiration or termination of any Letter
of Credit, the Issuing Bank may determine to issue, or cause to be issued,
additional Letters of Credit provided that, in connection with any such
additional Letter of Credit, the Total Letter of Credit Commitment shall not be
exceeded and the other terms and conditions set forth herein have been
satisfied. The Issuing Bank shall not be obligated to issue Letters of Credit
that would cause all outstanding Letters of Credit to exceed the Total Letter of
Credit Commitment. The Issuing Bank shall not be obligated to issue Letters of
Credit with an expiration date that extends beyond one year of the date of
issuance.
3.2 COLLATERAL. Borrower hereby expressly agrees that Borrower's
obligations relating to any Letter of Credit are secured by the Collateral.
4. INTEREST, FEES AND PAYMENT CONVENTIONS.
4.1 PROMISE TO PAY INTEREST.
-----------------------
(a) Interest Rate Options. Eurodollar Rate Loans and Base Rate
Loans may be outstanding at the same time and, so long as no Default or Event of
Default shall have occurred and be continuing, the Borrower shall have the
option to elect the type of loan and the duration of the initial and any
subsequent Interest Periods and to Convert Eurodollar Rate Loans and Base Rate
Loans in accordance with this Agreement; provided, however, (a) there shall not
be outstanding at any one time Eurodollar Rate Loans having more than six (6)
different Interest Periods, (b) each Eurodollar Rate Loan (including each
Conversion into and each Continuation as a Eurodollar Rate Loan) shall be in an
amount of $500,000 or, if greater than $500,000, an integral multiple of
$100,000, (c) no Eurodollar Rate Loan shall have an Interest Period that extends
beyond the Revolving Credit Maturity Date. If the Agent does not receive a
Borrowing Notice or an interest rate selection notice giving notice of election
of the duration of an Interest Period or of Conversion of any Base Rate Loan to
or Continuation of a Eurodollar Rate Loan as a Eurodollar Rate Loan by the time
prescribed by Section 4.1(b) the Borrower shall be deemed to have elected to
obtain or Convert such Eurodollar Rate Loan to (or Continue such Base Rate Loan
as) a Base Rate Loan until the Borrower notifies the Agent. The Borrower shall
not be entitled to request or elect to Continue any Eurodollar Rate Loan as a
Eurodollar Rate Loan, or Convert any Base Rate Loan into a Eurodollar Rate Loan,
if a Default or Event of Default shall have occurred and be continuing.
(b) Conversions and Elections of Subsequent Interest
Periods. Subject to the limitations set forth in the definition of "Interest
Period" and in this Section 4.1, the Borrower may:
(i) upon delivery of telephonic notice to the Agent
(which shall be irrevocable) on or before 10:00 A.M. Denver time on any
Business Day, Convert any Eurodollar Rate Loan to a Base Rate Loan on
the last day of the Interest Period for such Eurodollar Rate Loan; and
11
(ii) provided that no Default or Event of Default
shall have occurred and be continuing, upon delivery of telephonic
notice to the Agent (which shall be irrevocable) on or before 10:00
A.M. Denver time two (2) Business Days prior to the date of such
Conversion or Continuation:
(A) elect a subsequent Interest Period for
any Eurodollar Rate Loan to begin on the last day of the then
current Interest Period for such Eurodollar Rate Loan; or
(B) Convert any Base Rate Loan to a
Eurodollar Rate Loan on any Business Day.
Each such notice shall be effective upon receipt by the Agent, shall specify the
amount of the Eurodollar Rate Loan affected and, if a Continuation as or
Conversion into a Eurodollar Rate Loan, the Interest Period to be used in the
computation of interest. The Authorized Representative shall provide the Agent
written confirmation of each such telephonic notice in the form of Borrowing
Notice or interest rate selection notice (as applicable) with appropriate
insertions but failure to provide such confirmation shall not affect the
validity of such telephonic notice. Notice of receipt of such Borrowing Notice
or interest rate selection notice, as the case may be, shall be provided by the
Agent to each Lender by telefacsimile transmission with reasonable promptness,
but (provided the Agent shall have received such notice by 10:00 A.M. Denver
time) not later than 3:00 P.M. on the same day as the Agent's receipt of such
notice. All such Continuations or Conversions of Loans shall be effected pro
rata based on the Applicable Commitment Percentages of the Lenders.
(c) Interest. Borrower agrees to pay interest on the Revolving
Credit Outstandings and the Letter of Credit Outstandings from time to time as
provided herein. Interest will accrue on the daily outstanding balance of each
Advance at a fluctuating rate per annum equal to the Eurodollar Rate plus the
Applicable Margin as set forth on Exhibit C for Eurodollar Rate Loans and at a
fluctuating rate per annum equal to the Base Rate plus the Applicable Margin as
set forth in Exhibit C for Base Rate Loans. The Applicable Margin shall `be
determined quarterly based upon the Borrower's Consolidated Leverage Ratio, and
will be adjusted, as necessary, within five (5) business days of the receipt of
the financial statements required to be provided to Lenders pursuant to this
Agreement.
(d) Interest Payments. Interest accrued on Eurodollar Rate
Loans shall be payable by Borrower in arrears on the last Business Day of the
Interest Period selected by the Borrower pursuant to 2.1(f); provided, however,
that in no event shall interest payments be made less than quarterly. In the
case of any Base Rate Loan, interest shall be due and payable monthly in arrears
on the first Business Day of the month.
(e) Default Interest. Notwithstanding the rates of interest
specified in Sections 4.1(a) and 4.1(b) and the payment dates specified in
herein, effective immediately upon the occurrence and during the continuance of
any Event of Default, the principal balance of all outstanding Revolving Loans
and, to the extent permitted by applicable law, any interest payments on such
Revolving Loans shall bear interest payable upon demand at the Default Rate. In
addition, all other amounts due Agent or the Lenders (whether directly or for
reimbursement) under this Agreement or any of the other Transaction Documents,
if not paid when due or, in the event no time period is expressed, if not paid
within five (5) days after written notice from Agent that the same has become
due, shall thereafter bear interest at the Default Rate. Finally, any amount due
on the Revolving Credit Maturity Date which is not then paid shall also bear
interest thereafter at the Default Rate.
4.2 PROMISE TO PAY FEES.
-------------------
(a) Commitment Fee. For the period beginning on the Closing
Date and ending on the Revolving Credit Maturity Date, the Borrower agrees to
pay to the Agent, for the pro rata benefit of the Lenders, based on their
Applicable Commitment Percentages, a commitment fee in the amount of 1/4 of 1%
(0.25%) per annum on the daily unused portion of the Revolving Line of Credit.
Usage on the Revolving Line of Credit will equal the sum of Revolving Credit
Outstandings and Letter of Credit Outstandings. Such fees shall be due and
payable quarterly in arrears on the last day of each March, June, September and
December, commencing December 31, 2000.
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(b) Letter of Credit Fees. The Borrower shall pay to the
Agent, for the pro rata benefit of the Lenders based on their Applicable
Commitment Percentages, a fee equal to the then Applicable Margin on Eurodollar
Rate Loans on the aggregate amount of Letter of Credit Outstandings. Such fee
shall be due and payable quarterly in arrears on the last day of each March,
June, September and December, the first such payment to be made on the first
such date occurring after the date of the issuance of a Letter of Credit.
(c) Letter of Credit Fronting and Administrative Fees.
Borrower agrees to pay Agent a fronting fee equal to 1/8 of 1% (0.125%) per
annum of the face amount of each Letter of Credit requested by Borrower, if any.
Such fee shall be due and payable quarterly in arrears on the last day of each
March, June, September and December, commencing December 31, 2000. Borrower also
agrees to pay all present and future expenses, charges, costs and fees of any
Letter of Credit application, including, without limitation, all attorneys' fees
and expenses of the Issuing Lender or other Lender.
(d) Agent Fees. Borrower agrees to pay to the Agent, for
the Agent's individual account, an annual Agent's fee, such fee to be payable
in such amounts and at such dates as agreed to by the Borrower and Agent in
writing.
(e) Payment of Fees. The fees described in this Section 4.2
represent compensation for services rendered and to be rendered separate and
apart from the lending of money or the provision of credit and do not constitute
compensation for the use, detention or forbearance of money. The obligation of
Borrower to pay the fees described herein shall be in addition to, and not in
lieu of, the obligation of Borrower to pay interest, other fees and expenses
otherwise described in this Agreement. All fees shall be payable when due in
Colorado in immediately available funds and shall be non-refundable when paid.
If Borrower fails to make, when due, any payment of fees or expenses specified
or referred to in this Agreement due to Agent or the Lenders, including, without
limitation, those referred to in this Section or elsewhere in this Agreement or
in any separate fee agreement between Borrower and Agent or any other Lender
relating to this Agreement, the amount due shall bear interest until paid at
Default Rate (but not to exceed the maximum rate permitted by applicable law).
Furthermore, such amount shall constitute part of the Facility, secured by all
of the Collateral.
4.3 COMPUTATION OF INTEREST AND FEES. Interest and fees shall be
computed on the basis of the actual number of days elapsed in the period during
which interest or fees accrue and a year of three hundred sixty (360) days;
provided however, that Base Rate Loans shall be computed based upon a three
hundred sixty-five (365) or three hundred sixty-six (366) day year, as
appropriate. Notwithstanding any of the terms and conditions contained in this
Section, interest in respect of the Revolving Credit Outstandings and Letter of
Credit Outstandings shall not exceed the maximum rate permitted by applicable
law.
4.4 DEFICIENCY ADVANCES; FAILURE TO PURCHASE PARTICIPATIONS. No Lender
shall be responsible for any default of any other Lender in respect to such
other Lender's obligation to make any Advance hereunder or to fund its purchase
of any Participation hereunder nor shall the Revolving Credit Commitment or
Letter of Credit Commitment of any Lender hereunder be increased as a result of
such default of any other Lender. Without limiting the generality of the
foregoing, in the event any Lender shall fail to advance funds to the Borrower
as herein provided, the Agent may in its discretion, but shall not be obligated
to, advance under the applicable Note in its favor as a Lender all or any
portion of such amount or amounts (each, a "deficiency advance") and shall
thereafter be entitled to payments of principal of and interest on such
deficiency advance in the same manner and at the same interest rate or rates to
which such other Lender would have been entitled had it made such Advance under
its Note; provided that, (i) such defaulting Lender shall not be entitled to
receive payments of principal, interest or fees with respect to such deficiency
advance until such deficiency advance (together with interest thereon as
provided in clause (ii)) shall be paid by such Lender and (ii) upon payment to
the Agent from such other Lender of the entire outstanding amount of each such
deficiency advance, together with accrued and unpaid interest thereon, from the
most recent date or dates interest was paid to the Agent by a Borrower on each
Loan comprising the deficiency advance at the Federal Funds Rate, then such
payment shall be credited against the applicable Note of the Agent in full
payment of such deficiency advance and such Borrower shall be deemed to have
borrowed the amount of such deficiency advance from such other Lender as of the
most recent date or dates, as the case may be, upon which any payments of
interest were made by such Borrower thereon. In the event any Lender shall fail
to fund its purchase of a Participation after notice from the Issuing Bank such
Lender shall pay to the Issuing Bank such
13
amount on demand, together with interest at the Federal Funds Rate on the amount
so due from the date of such notice to the date such purchase price is received
by the Issuing Bank.
4.5 ACCOUNT STATED. Borrower agrees that each monthly or other
statement of account mailed or delivered by Agent to Borrower pertaining to the
outstanding balance of Advances under the Revolving Line of Credit, the amount
of interest due thereon, fees, and costs and expenses shall be final,
conclusive, and binding on Borrower and shall constitute an "account stated"
with respect to the matters contained therein unless, within thirty (30)
calendar days after such statement is mailed or, if not mailed, delivered to
Borrower, Borrower shall deliver to Agent written notice of any objections which
it may have as to such statement of account, and in such event, only the items
to which objection is expressly made in such notice shall be considered to be
disputed by Borrower.
5. COLLATERAL AND INDEBTEDNESS SECURED.
5.1 SECURITY INTEREST. Borrower hereby grants to Lenders a
security interest in, and a lien on, the following property of Borrower
wherever located and whether now owned or hereafter acquired:
(a) All Accounts, Inventory, general intangibles, chattel
paper, documents, and instruments, whether or not specifically assigned to
Lenders, including, without limitation, all Accounts, and all equipment (whether
or not affixed to realty), automotive equipment, motor vehicles and fixtures.
(b) All guaranties, collateral, liens on, or security
interests in, real or personal property, leases, letters of credit, and other
rights, agreements, and property securing or relating to payment of Accounts.
(c) All rights to receive the surplus funds, if any, which are
payable to Borrower following the termination of any Pension Plan and the
satisfaction of all liabilities or participants and beneficiaries under such
Pension Plan in accordance with applicable law.
(d) All trademarks, trademark rights, patents, patent rights,
licenses, permits, trade names, trade name rights, and approvals, including,
without limitation, those listed on Schedule 5.1(d) attached hereto, together
with all income, royalties, damages and payments now and hereafter due and
payable thereunder and with respect thereto.
(e) All sale, service, performance and equipment lease
contracts, agreements and grants (whether written or oral), and any other
contract (whether written or oral) between Borrower and Third Parties.
(f) The entire goodwill and all product lines of Borrower's
business and other general intangibles, including, without limitation, know-how,
trade secrets, customer lists, proprietary information, inventions, methods,
procedures and formulae in connection with the use of and symbolized by the
trademarks of Borrower.
(g) All books, records, ledger cards, data processing records,
computer software, and other property at any time evidencing or relating to
Collateral.
(h) All monies, securities, (including a pledge of all stock
owned in any Affiliate including the Consolidated Subsidiaries and other
property now or hereafter held, or received by, or in transit to, Lenders from
or for Borrower, and all of Borrower's investment property and financial assets
(as each is defined in the Uniform Commercial Code)), deposit accounts, credits,
and balances with Lenders existing at any time.
(i) All parts, accessories, attachments, special tools,
additions, replacements, substitutions, and accessions to or for all of the
foregoing.
(j) Any and all other real and personal property of
Borrower.
(k) All proceeds and products of all of the foregoing in any
form, including, without limitation, amounts payable under any policies of
insurance insuring the foregoing against loss or damage, and all increases and
profits received from all of the foregoing.
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5.2 INDEBTEDNESS SECURED. The Security Interest secures payment of any
and all Indebtedness, and the performance of all obligations and agreements, of
Borrower to Lenders, whether now existing or hereafter incurred or arising, of
every kind and character, primary or secondary, direct or indirect, absolute or
contingent, sole, joint or several, and whether such indebtedness is from time
to time reduced and thereafter increased, or entirely extinguished and
thereafter reincurred, including, without limitation: (a) all Advances under the
Revolving Line of Credit, the Revolving Note, and any Letters of Credit; (b) all
interest which accrues on any such indebtedness, until payment of such
indebtedness in full, including, without limitation, all interest provided for
under this Agreement or any other Transaction Documents; (c) all other monies
payable by Borrower, and all obligations and agreements of Borrower to Lenders,
pursuant to the Transaction Documents; (d) all debts owed, or to be owed, by
Borrower to others which Lenders have obtained, or may obtain, by assignment or
otherwise, including, without limitation, debts acquired by Lenders from its
affiliates that arise either (i) from negative balances which may exist from
time to time in any operating, deposit or other account maintained with such
affiliate of Lenders, or (ii) under any credit card line of credit established
by such affiliate of Lenders for Borrower; (e) all monies payable by any Third
Party, and all obligations and agreements of any Third Party to Lenders,
pursuant to any of the Transaction Documents; and (f) all monies due, and to
become due, in any way under the Transaction Documents.
6. REPRESENTATIONS AND WARRANTIES. To induce Lenders to enter into this
Agreement, and make Advances to Borrower from time to time as herein provided,
Borrower represents and warrants and, so long as any Indebtedness remains unpaid
or this Agreement remains in effect, shall be deemed continuously to represent
and warrant as follows:
6.1 EXISTENCE. Borrower and each Consolidated Subsidiary is duly
organized and existing and in good standing under the laws of the jurisdiction
of its incorporation or formation and is duly licensed or qualified to do
business and in good standing in every state in which the nature of its business
or ownership of its property requires such licensing or qualification.
6.2 CAPACITY. The execution, delivery, and performance of the
Transaction Documents to which Borrower is a party are within Borrower's
corporate or other organizational powers, have been duly authorized by all
necessary and appropriate corporate or other organizational action, and are not
in contravention of any law or the terms of Borrower's articles of
incorporation, bylaws or other organizational documents or any amendment
thereto, or of any indenture, agreement, undertaking, or other document to which
Borrower is a party or by which Borrower or any of Borrower's property is bound
or affected.
6.3 INVENTORY. (a) All representations made by Borrower to Lenders, and
all documents and schedules given by Borrower to Lenders, relating to the
description, quantity, quality, condition, and valuation of the Inventory are
true and correct in all material respects; (b) Borrower has not received any
Inventory on consignment or approval unless Borrower (i) has delivered written
notice to Lenders describing any Inventory which Borrower has received on
consignment or approval, (ii) has marked such Inventory on consignment or
approval or has segregated it from all other Inventory, and (iii) has
appropriately marked its records to reflect the existence of such Inventory on
consignment or approval; (c) Inventory is located only at the address or
addresses of Borrower set forth on the signature pages to this Agreement, the
locations specified in Schedule 6.3 attached hereto, or such other place or
places as may be approved by Lenders in writing; (d) all Inventory is insured as
required by Section 8.7 pursuant to policies in full compliance with the
requirements of such Section; and (e) to Borrower's knowledge, all Inventory has
been produced by Borrower in accordance with the Federal Fair Labor Standards
Act of 1938, as amended, and all rules, regulations, and orders promulgated
thereunder.
6.4 TITLE TO COLLATERAL. (a) Borrower is as of the date hereof, and, as
to Collateral acquired by it from time to time after the date hereof, will be
the sole direct and beneficial owner of the Collateral free of all security
interests, liens, and other encumbrances except the Security Interest and except
as described in Schedule 6.4 attached hereto; (b) Borrower has the unconditional
authority to grant the Security Interest to Lenders; and (c) assuming that all
necessary Uniform Commercial Code filings have been made and, if applicable,
assuming compliance with the Federal Assignment of Claims Act of 1940, as
amended, Lenders have an enforceable first lien and perfected first priority
security interest on all Collateral, superior and prior to the rights of all
other persons or entities therein, other than those security interests, liens,
or encumbrances described in Schedule 6.4.
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6.5 NOTES RECEIVABLE. No receivable is an instrument, document, or
chattel paper or is evidenced by any note, draft, trade acceptance, or other
instrument for the payment of money, except such instrument, document, chattel
paper, note, draft, trade acceptance, or other instrument as has been endorsed
and delivered by Borrower to Lenders and has not been presented for payment and
returned uncollected for any reason.
6.6 EQUIPMENT. All of Borrower's equipment is located, and equipment
which is a fixture is affixed to real property, only at (a) the address of
Borrower set forth on the signature pages to this Agreement; (b) the locations
specified in Schedule 6.3; or (c) such other place or places as approved by
Lenders in writing. The real property at which such equipment is located is
owned or leased pursuant to valid leasehold interests by Borrower or by the
person or persons named in Schedule 6.3 and is encumbered only by the mortgage
or mortgages listed in Schedule 6.3.
6.7 PLACE OF BUSINESS. (a) Unless otherwise disclosed to Lenders in
Schedule 6.3, Borrower is engaged in business operations which are in whole, or
in part, carried on at the address specified on the signature pages to this
Agreement and at no other address or addresses; (b) if Borrower has more than
one place of business, its chief executive office is at the address specified as
such on the signature pages to this Agreement; and (c) Borrower's records
concerning the Collateral are kept at the address or addresses specified on the
signature pages to this Agreement or in Schedule 6.7 attached hereto.
6.8 FINANCIAL CONDITION. Borrower has furnished to Lenders Borrower's
most current financial statements, which statements fairly represent the
financial condition and results of the operations of Borrower and the
Consolidated Subsidiaries as of the dates, and for the period referred to, and
have been prepared in accordance with GAAP consistently applied during each
interval involved and from interval to interval. Since the date of such
financial statements, there have not been any materially adverse changes in the
financial condition reflected in such financial statements, except as disclosed
in writing by Borrower to Lenders.
6.9 TAXES. Except as set forth in Schedule 6.9 attached hereto: (a) all
federal and other tax returns required to be filed by Borrower and each
Consolidated Subsidiary have been filed, and all taxes required by such returns
to be paid have been paid when due; and (b) neither Borrower nor any
Consolidated Subsidiary has received any notice from the Internal Revenue
Service or any other taxing authority proposing additional taxes.
6.10 LITIGATION. Except as disclosed in Schedule 6.10 attached hereto,
there are no actions, suits, proceedings, or investigations pending or, to the
knowledge of Borrower, threatened against Borrower or any Consolidated
Subsidiary or any basis therefor which, if adversely determined, would, in any
case or in the aggregate, materially adversely affect the property, assets,
financial condition, or business of Borrower taken as a whole or any
Consolidated Subsidiary or materially impair the right or ability of Borrower or
any Consolidated Subsidiary to carry on its operations substantially as
conducted on the date of this Agreement.
6.11 ERISA MATTERS. (a) No Pension Plan has been terminated, or
partially terminated, or is insolvent, or in reorganization, nor have any
proceedings been instituted to terminate or reorganize any Pension Plan; (b)
neither Borrower nor any Consolidated Subsidiary has withdrawn from any Pension
Plan in a complete or partial withdrawal, nor has a condition occurred which, if
continued, would result in a complete or partial withdrawal; (c) neither
Borrower nor any Consolidated Subsidiary has incurred any withdrawal liability,
including, without limitation, contingent withdrawal liability, to any Pension
Plan, pursuant to Title IV of ERISA; (d) neither Borrower nor any Consolidated
Subsidiary has incurred any liability to the Pension Benefit Guaranty
Corporation other than for required insurance premiums which have been paid when
due; (e) no Reportable Event has occurred; (f) no Pension Plan or other
"employee pension benefit plan," as defined in Section 3(2) of ERISA, to which
Borrower or any Consolidated Subsidiary is a party has an "accumulated funding
deficiency" (whether or not waived), as defined in Section 302 of ERISA or in
Section 412 of the Internal Revenue Code; (g) the present value of all benefits
vested under any Pension Plan does not exceed the value of the assets of such
Pension Plan allocable to such vested benefits; (h) each Pension Plan and each
other "employee benefit plan," as defined in Section 3(3) of ERISA, to which
Borrower or any Consolidated Subsidiary is a party is in substantial compliance
with ERISA, and no such plan or any administrator, trustee, or fiduciary thereof
has engaged in a prohibited transaction described in Section 406 of ERISA or in
Section 4975 of the Internal Revenue Code; (i) each Pension Plan and each other
"employee benefit plan," as defined in Section 3(2) of ERISA, to which Borrower
or any Consolidated Subsidiary is
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a party has received a favorable determination by the Internal Revenue Service
with respect to qualification under Section 401(a)of the Internal Revenue Code;
and (j) neither Borrower nor any Consolidated Subsidiary has incurred any
liability to a trustee established pursuant to Section 4042(b) or (c) of ERISA.
6.12 ENVIRONMENTAL MATTERS.
(a) Any Environmental Questionnaire previously provided to
Lenders was and is accurate and complete and does not omit any material fact the
omission of which would make the information contained therein materially
misleading.
(b) Except for two underground storage tanks that are not
currently in use on the property leased by SCS Interactive, Inc., a Consolidated
Subsidiary of Borrower, no above ground or underground storage tanks containing
Hazardous Substances are, or have been, located on any property owned, leased,
or operated by Borrower or any Consolidated Subsidiary.
(c) No property owned, leased, or operated by Borrower or any
Consolidated Subsidiary is, or has been, used for the Disposal of any Hazardous
Substance or for the treatment, storage, or Disposal of Hazardous Substances.
(d) Except for certain water contamination previously
disclosed to Agent on property leased by PS Florida, Inc., a Consolidated
Subsidiary of Borrower, and which was not Released by PS Florida, Inc., no
Release of a Hazardous Substance has occurred, or is threatened on, at, from, or
near any property owned, leased, or operated by Borrower or any Consolidated
Subsidiary.
(e) Neither Borrower nor any Consolidated Subsidiary is
subject to any existing, pending, or threatened suit, claim, notice of
violation, or request for information under any Environmental Law nor has
Borrower or any Consolidated Subsidiary provided any notice or information under
any Environmental Law.
(f) Borrower and each Consolidated Subsidiary are in
compliance with, and have obtained all Environmental Permits required by, all
Environmental Laws.
6.13 VALIDITY OF TRANSACTION DOCUMENTS. The Transaction Documents
constitute the legal, valid, and binding obligations of Borrower and each
Consolidated Subsidiary and any Third Parties thereto, enforceable in accordance
with their respective terms, except as enforceability may be limited by
applicable bankruptcy and insolvency laws, laws affecting creditors, rights
generally or general principles of equity.
6.14 NO CONSENT OR FILING. No consent, license, approval, or
authorization of, or registration, declaration, or filing with, any court,
governmental body or authority, or other person or entity is required in
connection with the valid execution, delivery, or performance of the Transaction
Documents or for the conduct of Borrower's business as now conducted, other than
filings and recordings to perfect security interests in or liens on the
Collateral in connection with the Transaction Documents.
6.15 NO VIOLATIONS. Neither Borrower nor any Consolidated Subsidiary is
in violation of any term of its organizational documents or of any mortgage,
borrowing agreement, or other instrument or agreement pertaining to indebtedness
for borrowed money. Neither Borrower nor any Consolidated Subsidiary is in
violation of any term of any other indenture, instrument, or agreement to which
it is a party or by which it or its property may be bound, resulting, or which
might reasonably be expected to result, in a material and adverse effect upon
its business or assets. Neither Borrower nor any Consolidated Subsidiary is in
violation of any order, writ, judgment, injunction, or decree of any court of
competent jurisdiction or of any statute, rule, or regulation of any
governmental authority. The execution and delivery of the Transaction Documents
and the performance of all of the same is, and will be, in compliance with the
foregoing and will not result in any violation thereof, or result in the
creation of any mortgage, lien, security interest, charge, or encumbrance upon,
any properties or assets of Borrower or any Consolidated Subsidiary except in
favor of Lenders. To Borrower's knowledge, there exists no fact or circumstance
(whether or not disclosed in the Transaction Documents) which materially
adversely affects, or could reasonably be expected to materially adversely
affect, the condition, business, or operations of Borrower or any Consolidated
Subsidiary.
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6.16 TRADEMARKS AND PATENTS. Schedule 5.1(d) lists all trademarks,
trademark rights, patents, patent rights, trade names, trade name rights and
copyrights that are required for Borrower and each Consolidated Subsidiary to
conduct its business as now conducted without conflict with the rights or
claimed rights of others. Borrower has the right to use all such intellectual
property pursuant to valid trademarks, patents, licenses, sub-licenses or other
agreement. Other than items in the ordinary course of business relating to
interference, infringement or misappropriation of its intellectual property that
would not have a material adverse effect on Borrower or its Consolidated
Subsidiaries, (i) Borrower has not received any written claim, demand or notice
alleging any of its any interference, infringement or misappropriation of its
intellectual property with any third party's intellectual property rights and
(ii) to the knowledge of Borrower and its Consolidated Subsidiaries, no third
party has interfered with, infringed upon or misappropriated any intellectual
property rights of Borrower. Borrower hereby grants to Agent an absolute power
of attorney to sign, upon the occurrence and during the continuance of an Event
of Default, any document which may be required by the United States Patent and
Trademark Office in order to effect an absolute assignment of all right, title
and interest in each trademark, patent and copyright, and to record the same.
6.17 CONTINGENT. There are no suretyship agreements, guaranties, or
other contingent liabilities of Borrower or any Consolidated Subsidiary which
are not disclosed by the financial statements described in Section 6.8.
6.18 COMPLIANCE WITH LAWS. Borrower and each Consolidated Subsidiary is
in compliance with all applicable laws, rules, regulations, and other legal
requirements with respect to its business and the use, maintenance, and
operation of the real and personal property owned or leased by it in the conduct
of its business, except where the failure to comply would not, individually or
in the aggregate, have a material adverse effect on the financial condition,
business or operations of Borrower or such Consolidated Subsidiary.
6.19 LICENSES, PERMITS, ETC. Each franchise, grant, approval,
authorization, license, permit, easement, consent, certificate, and order of and
registration, declaration, and filing with, any court, governmental body or
authority, or other person or entity required for or in connection with the
conduct of Borrower's and each Consolidated Subsidiary's business as now
conducted is in full force and effect.
6.20 LABOR CONTRACTS. Except for its Canadian employees employed by
Delta Play Company and represented by International Wood and Allied Worker of
Canada, neither Borrower nor any Consolidated Subsidiary is a party to any
collective bargaining agreement or to any existing or threatened labor dispute
or controversies. The collective bargaining agreement with its Canadian
employees was effective February 1999 for a two-year term and comes up for
renewal in February 2001.
6.21 CONSOLIDATED SUBSIDIARIES. Borrower has no Consolidated
Subsidiaries other than those listed in Schedule 6.21 attached hereto, and
the percentage ownership of Borrower in each such Consolidated Subsidiary is
specified in such Schedule 6.21.
6.22 CAPITALIZATION. Borrower's equity interests, and the
capitalization of any Consolidated Subsidiary, are set forth in Schedule 6.22
attached hereto. All of such equity interests have been validly issued in full
compliance with all applicable federal and state laws, and are fully paid and
non-assessable. No other equity interests of the Borrower or any Consolidated
Subsidiary of any class or type are authorized or outstanding.
7. CERTAIN DOCUMENTS TO BE DELIVERED TO LENDERS.
7.1 CLOSING DELIVERIES. As a condition to entering into this Agreement
and the other Transaction Documents and making any Advance under the Revolving
Line of Credit, Borrower shall deliver, or cause to be delivered, to Lenders on
the Closing Date the following items:
(a) Promissory Note;
(b) Pledge and Security Agreement;
(c) Assignment of Security Interests in United States Trademarks and Patents;
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(d) Third Party Pledge and Security Agreement for Delta Play (US), Inc.;
(e) Third Party Security Agreements for each Consolidated Subsidiary;
(f) Secretary's Certificate; and
(g) UCC-1's on the Collateral.
7.2 ADDITIONAL DOCUMENTS. Borrower shall deliver to Lenders, at such
times as Lenders may reasonably request, any other documents and information
reasonably requested by Lenders, all in form, content and detail reasonably
satisfactory to Lenders.
8. AFFIRMATIVE COVENANTS. So long as any part of the Indebtedness
remains unpaid, or this Agreement remains in effect, Borrower shall comply with
the covenants contained elsewhere in this Agreement, and with the covenants
listed below:
8.1 FINANCIAL INFORMATION. Borrower shall furnish to Lenders:
(a) As soon as available and in any event within ninety (90)
days after the end of each Fiscal Year, audited consolidated and consolidating
financial statements of Borrower as of the end of such year, fairly presenting
Borrower's financial position, which statements shall consist of a balance sheet
and related statements of income, retained earnings, and cash flow covering the
period of Borrower's immediately preceding Fiscal Year, and which shall be
prepared by independent certified public accountants satisfactory to Lenders,
together with copies of any management letters provided by said accountants to
Borrower in connection with performing such audit. In addition, as soon as
available and in any event within ninety (90) days after the end of each Fiscal
Year, a compliance certificate executed by the president or chief financial
officer of Borrower or other financial officer satisfactory to Lenders in the
form of Exhibit E attached hereto and made a part hereof.
(b) As soon as available and in any event within forty-five
(45) days after the end of each fiscal quarter, consolidated and consolidating
financial statements of Borrower as of the end of such quarter, fairly
presenting Borrower's financial position, which statements shall consist of a
balance sheet and related statements of income and cash flow covering the period
from the end of the immediately preceding Fiscal Year to the end of such
quarter, all in such detail as Lenders may request and signed and certified to
be correct by the president or chief financial officer of Borrower or other
financial officer satisfactory to Lenders in the form of Exhibit D attached
hereto and made a part hereof. In addition, as soon as available and in any
event within forty-five (45) days after the end of each fiscal quarter (other
than the final quarter of Borrower's Fiscal Year), a compliance certificate
executed by the president or chief financial officer of Borrower or other
financial officer satisfactory to Lenders in the form of Exhibit E attached
hereto and made a part hereof.
(c) Prior to the close of each Fiscal Year of Borrower, a
consolidated plan/budget for each quarter of the succeeding Fiscal Year prepared
in accordance with Borrower's normal accounting procedures (and which represent
management's reasonable estimate of Borrower's projected performance during such
periods) applied on a consistent basis, including, without limitation, (i)
forecasted consolidated balance sheets, consolidated statements of operations,
and cash flows of Borrower on a consolidated basis for such periods, (ii) the
amount of forecasted capital expenditures for such periods, (iii) forecasted
compliance with the financial covenants listed in Section 9.12 and (iv)
appropriate discussion of the principal assumptions on which such budget/plan is
based.
(d) To the extent Borrower prepares or is required to prepare
such items, promptly after their preparation, copies of any and all proxy
statements, financial statements, and reports which Borrower sends to its
shareholders, and copies of any and all periodic and special reports and
registration statements which Borrower files with the Securities and Exchange
Commission.
(e) Such additional information as Lenders may from time to
time reasonably request regarding the financial and business affairs of Borrower
or any Consolidated Subsidiary.
8.2 INVENTORY IN POSSESSION OF THIRD PARTIES. If any Inventory remains
in the hands or control of any of Borrower's agents, finishers, contractors, or
processors, or any other third party, Borrower, shall notify such party of
Lenders' Security Interest in the Inventory and shall instruct such party to
hold such Inventory for the account of Lenders and subject to the instructions
of Lenders.
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8.3 EXAMINATIONS. Borrower shall at all reasonable times and from time
to time permit Lenders or its agents to inspect the Collateral and to examine
and make extracts from, or copies of, any of Borrower's books, ledgers, reports,
correspondence, and other records.
8.4 VERIFICATION OF COLLATERAL. Lenders shall have the right to verify
all or any Collateral in any manner and through any medium Lenders may consider
appropriate and Borrower agrees to furnish all assistance and information and
perform any acts which Lenders may require in connection therewith.
8.5 TAXES. Borrower shall promptly pay and discharge all of its taxes,
assessments, and other governmental charges prior to the date on which penalties
are attached thereto, establish adequate reserves for the payment of such taxes,
assessments, and other governmental charges, make all required withholding and
other tax deposits, and, upon request, provide Lenders with receipts or other
proof that such taxes, assessments, and other governmental charges have been
paid in a timely fashion; provided, however, that nothing contained herein shall
require the payment of any tax, assessment, or other governmental charge so long
as its validity is being contested in good faith, and by appropriate proceedings
diligently conducted, and adequate reserves for the payment thereof have been
established.
8.6 LITIGATION.
(a) Borrower shall promptly notify Lenders in writing of any
litigation, proceeding, or counterclaim against, or of any investigation of,
Borrower or any Consolidated Subsidiary if: (i) the outcome of such litigation,
proceeding, counterclaim, or investigation may materially and adversely affect
the finances or operations of Borrower or any Consolidated Subsidiary or title
to, or the value of, any Collateral; or (ii) such litigation, proceeding,
counterclaim, or investigation questions the validity of any Transaction
Document or any action taken, or to be taken, pursuant to any Transaction
Document.
(b) Borrower shall furnish to Lenders such information
regarding any such litigation, proceeding, counterclaim, or investigation as
Lenders shall request.
8.7 INSURANCE.
(a) Borrower shall at all times carry and maintain in full
force and effect the insurance policies set forth on Schedule 8.7 attached
hereto, and such other insurance as Lenders may from time to time reasonably
require, in coverage, form, and amount, and issued by insurers, satisfactory to
Borrower and Lenders, including, without limitation: workers compensation or
similar insurance; public liability insurance; business interruption insurance;
and insurance against such other risks as are usually insured against by
business entities of established positive reputation engaged in the same or
similar businesses as Borrower and similarly situated.
(b) Borrower shall deliver to Lenders certificates of
insurance or the policies of insurance required by Lenders, with appropriate
endorsements designating Lenders as an additional insured, mortgagee and lender
loss payee as requested by Lenders. Each certificate and policy of insurance
shall provide that if such policy is cancelled for any reason whatsoever, if any
substantial change is made in the coverage which affects Lenders, or if such
policy is allowed to lapse for nonpayment of premium, such cancellation, change,
or lapse shall not be effective as to Lenders until thirty (30) days after
receipt by Lenders of written notice thereof from the insurer issuing such
policy.
(c) Borrower hereby appoints Agent as its attorney-in-fact,
with full authority in the place and stead of Borrower and in the name of
Borrower, Agent, or otherwise, from time to time in Agent's discretion, to take
any actions and to execute any instruments which Agent may deem necessary or
desirable to obtain, adjust, make claims under, and otherwise deal with
insurance required pursuant hereto and to receive, endorse, and collect any
drafts or other instruments delivered in connection therewith; provided,
however, that Agent agrees that it will not take any action pursuant to this
power of attorney unless Borrower fails to take any action requested by Agent
promptly upon receipt by Borrower of such request.
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8.8 GOOD STANDING; BUSINESS.
(a) Borrower shall take all necessary steps to preserve its
existence and its right to conduct business in all states in which the nature of
its business or ownership of its property requires such qualification.
(b) Borrower shall engage in business only in principally the
same industry such business is conducted by it on the date of this Agreement.
8.9 PENSION REPORTS. Upon the occurrence of any Pension Event, Borrower
shall furnish to Lenders, as soon as possible and, in any event, within thirty
(30) days after Borrower knows, or has reason to know, of such occurrence, the
statement of the president or chief financial officer of Borrower setting forth
the details of such Pension Event and the action which Borrower proposes to take
with respect thereto.
8.10 NOTICE OF ADVERSE EVENT OR NON-COMPLIANCE. Borrower shall notify
Lenders in writing (a) of any failure by Borrower or any Third Party to comply
with any provision of any Transaction Document immediately upon learning of such
non-compliance, (b) if any representation or warranty contained in any
Transaction Document is no longer true and (c) of any event or occurrence which
has or could reasonably be expected to have a material adverse effect on
Borrower, Borrower's business or Borrower's ability to comply with any provision
of any Transaction Document.
8.11 COMPLIANCE WITH ENVIRONMENTAL LAWS.
(a) Borrower shall comply with all Environmental Laws.
(b) Borrower shall not suffer, cause, or permit the Disposal
of Hazardous Substances at any property owned, leased, or operated by it or any
Consolidated Subsidiary.
(c) Borrower shall promptly notify Lenders in the event of the
Disposal of any Hazardous Substance at any property owned, leased, or operated
by Borrower or any Consolidated Subsidiary, or in the event of any Release, or
threatened Release, of a Hazardous Substance, from any such property.
(d) Borrower shall, at Lenders' request, provide, at
Borrower's expense, updated Environmental Questionnaires and/or Environmental
Reports concerning any property owned, leased, or operated by Borrower or any
Consolidated Subsidiary.
(e) Borrower shall deliver promptly to Lenders: (i) copies of
any documents received from the United States Environmental Protection Agency or
any state, county, or municipal environmental or health agency concerning
Borrower's or any Consolidated Subsidiary's operations; and (ii) copies of any
documents submitted by Borrower or any Consolidated Subsidiary to the United
States Environmental Protection Agency or any state, county, or municipal
environmental or health agency concerning its operations.
8.12 DEFEND COLLATERAL. Borrower shall defend the Collateral against
the claims and demands of all other parties (other than Lenders), including,
without limitation, defenses, setoffs, and counterclaims asserted by any Account
Debtor against Borrower or Lenders.
8.13 USE OF PROCEEDS. Borrower shall use the proceeds of Advances under
the Revolving Line of Credit and any Letters of Credit solely for Borrower's
working capital, acquisitions and for such other legal and proper corporate
purposes as are consistent with all applicable laws, Borrower's organizational
documents, resolutions of Borrower's board of directors and/or shareholders, and
the terms of this Agreement.
8.14 COMPLIANCE WITH LAWS. Borrower shall comply with all applicable
laws, rules, regulations, and other legal requirements with respect to its
business and the use, maintenance, and operation of the real and personal
property owned or leased by it in the conduct of its business.
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8.15 MAINTENANCE OF PROPERTY. Borrower shall maintain its property,
including, without limitation, the Collateral, in good condition and repair and
shall prevent the Collateral, or any part thereof, from being or becoming an
accession to other goods not constituting Collateral.
8.16 LICENSES, PERMITS, ETC. Borrower shall maintain all of its
franchises, grants, authorizations, licenses, permits, easements, consents,
certificates, and orders, if any, in full force and effect until their
respective expiration dates.
8.17 TRADEMARKS AND PATENTS. Borrower shall maintain all of its
trademarks, trademark rights, patents, patent rights, licenses, permits, trade
names, trade name rights, licenses and approvals, including, without limitation,
those described in Schedule 5.1(d), if any, in full force and effect until their
respective expiration dates. Within thirty (30) days of the issuance of any new
trademarks to Borrower or the acquisition or issuance or any patent or copyright
or the filing of any application for a trademark, patent or copyright, Borrower
shall deliver copies of all documentation relating to such acquisition or
issuance.
8.18 ERISA. Borrower shall comply with the provisions of ERISA
and the Internal Revenue Code with respect to each Pension Plan.
8.19 MAINTENANCE OF OWNERSHIP. Borrower shall at all times maintain
ownership of the percentages of equity ownership of each Consolidated Subsidiary
set forth in Schedule 6.21 and notify Lenders in writing prior to the
incorporation, formation, acquisition or organization of any new Consolidated
Subsidiary.
8.20 ACTIVITIES OF CONSOLIDATED SUBSIDIARIES. Unless the provisions of
this Section 8.20 are expressly waived by Lenders in writing, Borrower shall
cause each Consolidated Subsidiary to comply with Articles 8 and 9 hereof, as
applicable, and to enter into Third Party Security Agreements and any other
documentation necessary to evidence its obligations to Lenders, including the
obligation to grant a security interest in all of its property to Lenders to
secure the Revolving Loans.
9. NEGATIVE COVENANTS. So long as any part of the Indebtedness remains unpaid or
this Agreement remains in effect, Borrower, without the prior written consent of
Lenders, shall not:
9.1 LOCATION OF INVENTORY, EQUIPMENT, AND BUSINESS RECORDS. Except for
property taken to trade shows or other business events in the ordinary course of
business and which is returned thereafter, move the Inventory, Equipment, or the
records concerning the Collateral from the location where they are kept as
specified in Schedules 6.3 and 6.7 and the signature pages hereto.
9.2 BORROWED MONEY. Create, incur, assume, or suffer to exist any
liability for borrowed money, except (i) for customary trade payables entered
into in the ordinary course of Borrower's business, (ii) for any Debt in an
amount less than $500,000; provided that operating leases shall not be included
in as Debt as long as such leases are entered into in the ordinary course of
Borrower's business, or (iii) for amounts owed to Lenders.
9.3 SECURITY INTEREST AND OTHER ENCUMBRANCES. Create, incur, assume, or
suffer to exist any mortgage, security, interest, lien, or other encumbrance
upon any of its properties or assets, whether now owned or hereafter acquired,
except (a) mortgages, security interests, liens, and encumbrances in favor of
Lenders, (b) those liens set forth on Schedule 6.4, (c) for customary trade
payables entered into in the ordinary course of Borrower's business, (d)
purchase money obligations in an amount not to exceed $300,000, provided that
such lien encumbers only the asset so purchased and (e) any leases entered into
pursuant to Section 9.2.
9.4 STORING AND USE OF COLLATERAL. Place the Collateral in any
warehouse which may issue a negotiable document with respect thereto or use the
Collateral in violation of any provision of the Transaction Documents, of any
applicable statute, regulation, or ordinance, or of any policy insuring the
Collateral.
9.5 MERGERS, CONSOLIDATIONS, SALES. OR ACQUISITIONS. (a) Merge
or consolidate with or into any corporation or other entity; (b) enter into any
joint venture or partnership with any person, firm, or corporation; (c) convey,
lease, or sell all or any material portion of its property or assets or business
to any other person, firm, or corporation except for the sale of Inventory in
the ordinary course of its business and in accordance
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with the terms of this Agreement; (d) convey, lease, or sell any of its assets
to any person, firm, or corporation for less than the fair market value thereof;
or (e) consummate any purchases or other acquisitions of the capital stock or
equity interests in, or all or any material portion of the property or assets or
business of any other person, firm, or corporation with aggregate purchase
prices in excess of $1,000,000 in any Fiscal Year.
9.6 CAPITAL CHANGES. Purchase or retire any of its equity
interests, or otherwise change the capital structure of Borrower or change
the relative rights, preferences, or limitations relating to any of its equity
interests.
9.7 RESTRICTED PAYMENT. Make any Restricted Payment.
9.8 INVESTMENTS AND ADVANCES. Except as set forth in Section 9.5(e),
make any investment in, or advances to, any other person, firm, or corporation,
except (a) advance payments or deposits against purchases made in the ordinary
course of Borrower's regular business; (b) direct obligations of the United
States of America; (c) money market mutual funds that invest in direct
obligations of the United States of America; (d) certificates of deposit with
any United States bank; or (e) any existing investments in, or existing advances
to, the Consolidated Subsidiaries.
9.9 GUARANTIES. Become a guarantor, a surety, or otherwise liable for
the debts or other obligations of any other person, firm, or corporation,
whether by guaranty or suretyship agreement, agreement to purchase indebtedness,
agreement for furnishing funds through the purchase of goods, supplies, or
services (or by way of stock purchase, capital contribution, advance, or loan)
for the purpose of paying or discharging indebtedness, or otherwise, except as
an endorser of instruments for the payment of money deposited to its bank
account for collection in the ordinary course of business.
9.10 NAME CHANGE. Change its name without giving at least thirty (30)
days, prior written notice of its proposed new name to Lenders, together with
delivery to Lenders of UCC-1 Financing Statements reflecting Borrower's new
name, all in form and substance satisfactory to Lenders.
9.11 DISPOSITION OF COLLATERAL. Sell, assign, or otherwise transfer,
dispose of, or encumber the Collateral or any interest therein, or grant a
security interest therein, or license thereof, except to Lenders and except for
the sale or lease of Inventory in the ordinary course of business of Borrower
and in accordance with the terms of this Agreement.
9.12 FINANCIAL COVENANTS. Fail to comply with the following
financial covenants (these covenants will be tested quarterly):
(a) Maximum Consolidated Leverage Ratio. The Consolidated
Leverage Ratio shall not exceed the following:
Period Consolidated Leverage Ratio
Quarter ending 9/30/2000 4.00 : 1
12/31/2000 through 9/30/2001 3.50 : 1
12/31/2001 and thereafter 3.00 : 1
(b) Minimum Interest Coverage. Borrower's Interest Coverage
shall at no time be less than 3.00 : 1.
9.13 AGREEMENTS WITH AFFILIATES. Enter into any agreement or
transaction with any Affiliate except: (i) agreements or transactions in the
ordinary course of business which contain terms that are fair and reasonable to
both parties; or (ii) agreements or transactions that have the prior written
consent of Lenders.
9.14 OWNERSHIP AND MANAGEMENT. Permit the sale, assignment or
other transfer of any direct or indirect controlling interest in Borrower.
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10. EVENTS OF DEFAULT.
10.1 EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute an event of default (individually, an Event
of Default and, collectively, Events of Default):
(a) Nonpayment. Nonpayment when due of any principal, or
nonpayment within three (3) calendar days after the due date, of any interest,
premium, fee, cost, or expense due under this Agreement or the other Transaction
Documents.
(b) Affirmative Covenants. Default in the observance
of any of the covenants or agreements of Borrower contained in Article 8.
(c) Negative Covenants. Default in the observance of
any of the covenants or agreements of Borrower contained in Article 9.
(d) Other Covenants. Default in the observance of any of the
covenants or agreements of Borrower contained in the Transaction Documents,
other than in Article 8, Article 9 or payment obligations, or in any other
agreement with Lenders which is not remedied by the earlier of ten (10) days
after (i) notice thereof by Lenders to Borrower, or (ii) the date Borrower was
required to give notice to Lenders under this Agreement.
(e) Cessation of Business or Voluntary Insolvency Proceedings.
The (i) cessation of operations of Borrower's business as conducted on the date
of this Agreement; (ii) filing by Borrower of a petition or request for
liquidation, reorganization, arrangement, adjudication as a bankrupt, relief as
a debtor, or other relief under the bankruptcy, insolvency, or similar laws of
the United States of America or any state or territory thereof or any foreign
jurisdiction now or hereafter in effect; (iii) making by Borrower of a general
assignment for the benefit of creditors; (iv) consent by the Borrower to the
appointment of a receiver or trustee, including, without limitation, a
"custodian," as defined in the Federal Bankruptcy Code, for Borrower or any of
Borrower's assets; (v) making of any, or sending of any, notice of any intended
bulk sale by Borrower; or (vi) execution by Borrower of a consent to any other
type of insolvency proceeding (under the Federal Bankruptcy Code or otherwise)
or any formal or informal proceeding for the dissolution or liquidation of, or
settlement of claims against, or winding up of affairs of, Borrower.
(f) Involuntary Insolvency Proceedings. (i) The appointment of
a receiver, trustee, custodian, or officer performing similar functions,
including, without limitation, a "custodian," as defined in the Federal
Bankruptcy Code, for Borrower or any of Borrower's assets; or the filing against
Borrower of a request or petition for liquidation, reorganization, arrangement,
adjudication as a bankrupt, or other relief under the bankruptcy, insolvency, or
similar laws of the United States of America, any state or territory thereof, or
any foreign jurisdiction now or hereafter in effect; or of any other type of
insolvency proceeding (under the Federal Bankruptcy Code or otherwise) or any
formal or informal proceeding for the dissolution or liquidation of, settlement
of claims against, or winding up of affairs of Borrower shall be instituted
against Borrower; and (ii) such appointment shall not be vacated, or such
petition or proceeding shall not be dismissed, within ninety (90) days after
such appointment, filing, or institution.
(g) Other Indebtedness and Agreements. Failure by Borrower to
pay, when due (or, if permitted by the terms of any applicable documentation,
within any applicable grace period) any indebtedness owing by Borrower to
Lenders or any other person or entity (other than the Indebtedness incurred
pursuant to this Agreement, and including, without limitation, indebtedness
evidencing a deferred purchase price) whether such indebtedness shall become due
by scheduled maturity, by required prepayment, by acceleration, by demand, or
otherwise, or failure by the Borrower to perform any term, covenant, or
agreement on its part to be performed under any agreement or instrument (other
than a Transaction Document) evidencing or securing or relating to any
indebtedness owing by Borrower when required to be performed if the effect of
such failure is to permit the holder to accelerate the maturity of such
indebtedness; provided that it shall not be a default under this Agreement if
Borrower has not paid any amount due to anyone other than Lenders which it is
currently contesting in good faith and for which adequate reserves have been set
aside in the event such contest is unsuccessful.
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(h) Judgments. Any judgment or judgments against Borrower in
an amount in excess of $500,000 (other than any judgment for which Borrower is
fully insured) shall remain unpaid, unstayed on appeal, undischarged, unbonded,
or undismissed for a period of thirty (30) days.
(i) Pension Default. Any Reportable Event which Lenders shall
determine in good faith constitutes grounds for the termination of any Pension
Plan by the Pension Benefit Guaranty Corporation, or for the appointment by an
appropriate United States district court of a trustee to administer any Pension
Plan, shall occur and shall continue thirty (30) days after written notice
thereof to Borrower by Lenders; or the Pension Benefit Guaranty Corporation
shall institute proceedings to terminate any Pension Plan or to appoint a
trustee to administer any Pension Plan; or a trustee shall be appointed by an
appropriate United States district court to administer any Pension Plan; or any
Pension Plan shall be terminated; or Borrower or any Consolidated Subsidiary
shall withdraw from a Pension Plan in a complete withdrawal or a partial
withdrawal; or there shall arise vested unfunded liabilities under any Pension
Plan that, in the good faith opinion of Lenders, have or will or might have a
material adverse effect on the finances or operations of Borrower; or Borrower
or any Consolidated Subsidiary shall fail to pay to any Pension Plan any
contribution which it is obligated to pay under the terms of such plan or any
agreement or which is required to meet statutory minimum funding standards.
(j) Collateral; Impairment. There shall occur with respect to
the Collateral any (i) fraud, (ii) misappropriation, conversion or diversion
other than nonrecurring misappropriations, conversions or diversions by
non-management level employees of Borrower of Collateral having a value of less
than $10,000.00; (iii) levy, seizure, or attachment; or (iv) material loss,
theft, or damage not covered by insurance.
(k) Third Party Default. There shall occur with respect to any
Third Party, including, without limitation, any Consolidated Subsidiary (i) any
event described in Section 10.1(e), 10.1(f), 10.1(g), or 10.1(h); (ii) any
pension default event such as described in Section 10.1(i) with respect to any
pension plan maintained by such Third Party; (iii) any failure by Third Party to
perform in accordance with the terms of any agreement between such Third Party
and Lenders; or (iv) any material adverse change to the financial condition of
any Third Party.
(l) Representations. Any certificate, statement,
representation, warranty, or financial statement furnished by, or on behalf of,
Borrower or any Third Party, pursuant to, or in connection with, this Agreement
(including, without limitation, representations and warranties contained herein)
or as an inducement to Lenders to enter into this Agreement or any other lending
agreement with Borrower shall prove to have been false in any material respect
at the time as of which the facts therein set forth were certified or to have
omitted any substantial contingent or unliquidated liability or claim against
Borrower or any such Third Party, or if on the date of the execution of this
Agreement there shall have been any materially adverse change in any of the
facts disclosed by any such statement or certificate which shall not have been
disclosed in writing to Lenders at, or prior to, the time of such execution.
(m) Challenge to Validity. Borrower or any Third Party
commences any action or proceeding to contest the validity or enforceability of
any Transaction Document or any lien or security interest granted or obligations
evidenced by any Transaction Document.
(n) Death or Incapacity; Termination. Any Third Party dies or
becomes incapacitated, or terminates or attempts to terminate, in accordance
with its terms or otherwise, any guaranty or other Transaction Document executed
by such Third Party.
(o) Change of Ownership. If all, or a controlling interest of,
the equity interests of Borrower or the Consolidated Subsidiaries shall be sold,
assigned, or otherwise transferred or if a security interest or other
encumbrance shall be granted or otherwise acquired therein or with respect
thereto except as provided herein and pursuant to the Pledge and Security
Agreement entered into by Borrower in favor of Lenders in connection with this
Agreement.
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10.2 EFFECTS OF AN EVENT OF DEFAULT.
(a) Upon the happening of one or more Events of Default
(except an Event of Default under either Section 10.1(e) or 10.1(f)), Lenders
may declare any obligations it may have hereunder to be cancelled, and the
principal of the Indebtedness then outstanding to be immediately due and
payable, together with all interest thereon and costs and expenses accruing
under the Transaction Documents. Upon such declaration, any obligations Lenders
may have hereunder shall be immediately cancelled, and the Indebtedness then
outstanding shall become immediately due and payable without presentation,
demand, or further notice of any kind to Borrower.
(b) Upon the happening of one or more Events of Default under
Section 10.1(e) or 10.1(f), Lenders' obligations hereunder shall be cancelled
immediately, automatically, and without notice, and the Indebtedness then
outstanding shall become immediately due and payable without presentation,
demand, or notice of any kind to the Borrower.
11. APPOINTMENT AND AUTHORIZATION OF AGENT.
11.1 APPOINTMENT AND AUTHORIZATION. Each Lender irrevocably appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement and the other Transaction Documents as
are delegated to the Agent by the terms hereof or thereof, together with all
such powers as are reasonably incidental thereto. Each Lender hereby agrees to
the provisions of each of the Transaction Documents and agrees to be bound
thereby and authorize the Agent to enter into or accept each of the foregoing on
its behalf.
11.2 AGENT AND AFFILIATES. U.S. Bank shall have the same rights
and powers under this Agreement as any other Lender and may exercise or refrain
from exercising the same as though it were not the Agent, and U.S. Bank and its
affiliates may accept deposits from, lend money to, and generally engage in any
kind of business with the Borrower, or any of its Affiliates as if it were not
the Agent hereunder.
11.3 ACTION BY AGENT. The obligations of the Agent hereunder are only
those expressly set forth herein. Without limiting the generality of the
foregoing, the Agent shall not be required to take any action with respect to
any Event of Default, except as expressly provided in this Agreement.
11.4 CONSULTATION WITH EXPERTS. The Agent may consult with legal
counsel, independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken by it in good
faith in accordance with the advice of such counsel, accountants or experts.
11.5 LIABILITY OF AGENT. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable for any action taken or not taken
by it in connection with any of the Transaction Documents (i) with the consent
or at the request of the Required Lenders or (ii) in the absence of its own
gross negligence or willful misconduct. Neither the Agent nor any of its
directors, officers, agents or employees shall be responsible for or have any
duty to ascertain, inquire into or verify (i) any statement, warranty or
representation made in connection with this Agreement or any borrowing
hereunder; (ii) the performance or observance of any of the covenants or
agreements of the Borrower; (iii) the satisfaction of any condition specified
herein, except receipt of items required to be delivered to the Agent; or (iv)
the validity, effectiveness or genuineness of any of the Transaction Documents
or any other instrument or writing furnished in connection herewith. The Agent
shall not incur any liability by acting in reliance upon any notice, consent,
certificate, statement, or other writing (which may be a bank wire, telex or
similar writing) believed by it to be genuine or to be signed by the proper
party or parties.
11.6 INDEMNIFICATION. Each Lender shall, ratably in accordance with its
Revolving Credit Commitment, indemnify the Agent (to the extent not reimbursed
by the Borrower) against any reasonable cost or expense (including counsel fees
and disbursements), or any claim, demand, action, loss or liability (except such
as result from the Agent's gross negligence or willful misconduct) that the
Agent may suffer or incur in connection with any of the Transaction Documents or
any action taken or omitted by the Agent thereunder.
11.7 CREDIT DECISION. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender, and based
on such documents and information as it has deemed appropriate,
26
made its own credit analysis and decision to enter into this Agreement. Each
Lender also acknowledges that it will, independently and without reliance upon
the Agent or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking any action under any of the Transaction Documents.
11.8 SUCCESSOR AGENT. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrower. Upon any such
resignation, the Required Lenders shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed by the Required
Lenders, and shall have accepted such appointment, within thirty (30) days after
the retiring Agent give notice of resignation, then the retiring Agent may, on
behalf of the Lenders, appoint a successor Agent, which shall be a commercial
bank organized or licensed under the laws of the United States of America or of
any State thereof and having a combined capital and surplus of at least
$50,000,000. Upon the acceptance of its appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder and under
the other Transaction Documents. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Article shall inure to its benefit as
to any actions taken or omitted to be taken by it while it was Agent.
11.9 ASSIGNMENT BY LENDERS. The Lenders may make assignments of their
Revolving Credit Commitment to any Eligible Assignee, provided that such
assignments are in a minimum amount of $5,000,000. The Lenders will also be
permitted to sell participation rights with voting rights limited to those
matters requiring unanimous approval by the Lenders to any Eligible Assignee. If
any Lender makes an assignment as set forth in this Section, upon such
assignment an assignment fee equal to $3,500 shall be payable to the Agent by
the assigning Lender.
12. LENDERS' RIGHTS AND REMEDIES.
12.1 GENERALLY. Lenders' rights and remedies with respect to the
Collateral, in addition to those rights granted herein and in any other
agreement between Borrower and Lenders now or hereafter in effect, shall be
those of a secured party under the Uniform Commercial Code as in effect in the
State and under any other applicable law.
12.2 NOTIFICATION OF ACCOUNT DEBTORS. Upon the occurrence of an Event
of Default or an event which with notice or lapse of time, or both, would
constitute an Event of Default, Lenders may, at any time and from time to time,
notify any or all Account Debtors of the Security Interest and may direct such
Account Debtors to make all payments on receivables directly to Lenders.
12.3 POSSESSION OF COLLATERAL. Whenever Lenders may take possession of
the Collateral pursuant to Section 12.1, Lenders may take possession of the
Collateral on Borrower's premises or may remove the Collateral, or any part
thereof, to such other places as the Lenders may, in its sole discretion,
determine. If requested by Lenders, Borrower shall assemble the Collateral and
deliver it to Lenders at such place as may be designated by Lenders.
12.4 COLLECTION OF RECEIVABLES. Upon the occurrence of an Event of
Default or an event which with notice or lapse of time, or both, would
constitute an Event of Default, Lenders may demand, collect, and ▇▇▇ for all
monies and proceeds due, or to become due, on the receivables (in either
Borrower's or Lenders' name at the latter's option) with the right to enforce,
compromise, settle, or discharge any or all receivables. If Lenders takes any
action contemplated by this Section with respect to any receivable, Borrower
shall not exercise any right that Borrower would otherwise have had to take such
action with respect to such receivable.
12.5 ENDORSEMENT OF CHECKS; BORROWER'S MAIL. Borrower hereby
irrevocably appoints Lenders as Borrower's agent with full power, in the same
manner, to the same extent, and with the same effect as if Borrower were to do
the same: upon the occurrence of an Event of Default, or an event which with
notice or lapse of time, or both, would constitute an Event of Default, to
endorse Borrower's name on any instruments or documents pertaining to any
Collateral, to receive and collect all mail addressed to Borrower, to direct the
place of delivery of such mail to any location designated by Lenders, to open
such mail, to remove all contents therefrom, and to retain all contents thereof
constituting or relating to the Collateral. This agency is unconditional and
shall not terminate
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until all of the Indebtedness is paid in full and this Agreement has been
terminated. Lenders agrees to give Borrower notice in the event it exercises
this agency, except with respect to the endorsement of Borrower's name on any
instruments or documents pertaining to any Collateral.
12.6 LICENSE TO USE PATENTS, TRADEMARKS, AND TRADE NAMES. Borrower
grants to Lenders a royalty-free license to use any, and all patents,
trademarks, and trade names now or hereafter owned by or licensed to Borrower,
including, without limitation, the items set forth on Schedule 5.1(d), for the
purposes of manufacturing and disposing of Inventory after the occurrence of an
Event of Default. All Inventory shall at least meet quality standards maintained
by Borrower prior to such Event of Default.
13. MISCELLANEOUS.
13.1 EXPENSES. The Borrower agrees to pay on demand all costs and
expenses of the Agent in connection with the preparation, execution, delivery,
administration, modification, and amendment of this Agreement, the other
Transaction Documents, and the other documents to be delivered hereunder,
including, without limitation, the reasonable fees and expenses of counsel for
the Agent (including the cost of internal counsel) with respect thereto and with
respect to advising the Agent as to its rights and responsibilities under the
Transaction Documents. The Borrower further agrees to pay on demand all costs
and expenses of the Agent and the other Lenders, if any (including, without
limitation, reasonable attorneys' fees and expenses and the cost of internal
counsel), in connection with the enforcement (whether through negotiations,
legal proceedings, or otherwise) of the Transaction Documents and the other
documents to be delivered hereunder.
13.2 LENDERS' CONSENTS, WAIVERS AND AMENDMENTS. The Required Lenders
shall have the authority to grant any consents or waivers or approve any
amendments to the Transaction Documents; provided, however, that unanimous
approval of the Lenders shall be required for (i) increases in the aggregate
Revolving Credit Commitment, (ii) reductions of principal, interest or fees
payable, (iii) extensions of scheduled maturities or times for payments, (iv)
the release of any Collateral, and (v) any amendment to required voting
percentages.
13.3 PERFECTING THE SECURITY INTEREST; PROTECTING THE COLLATERAL.
Borrower hereby authorizes Lenders to file such financing statements relating to
the Collateral without Borrower's signature thereon as Lenders may deem
appropriate, and appoints Lenders as Borrower's attorney-in-fact (without
requiring Lenders) to execute any such financing statement or statements in
Borrower's name and to perform all other acts which Lenders deems appropriate to
perfect and continue the Security Interest and to protect, preserve, and realize
upon the Collateral.
13.4 PERFORMANCE OF BORROWER'S DUTIES. Upon Borrower's failure to
perform any of its duties under the Transaction Documents, including, without
limitation, the duty to obtain insurance as specified in Section 8.7, Lenders
may, but shall not be obligated to, perform any or all such duties.
13.5 NOTICE OF SALE. Without in any way requiring notice to be given in
the following manner, Borrower agrees that any notice by Lenders of sale,
disposition, or other intended action hereunder, or in connection herewith,
whether required by the Uniform Commercial Code as in effect in the State or
otherwise, shall constitute reasonable notice to Borrower if such notice is
mailed by regular or certified mail, postage prepaid, at least ten (10) calendar
days prior to such action, to Borrower's address or addresses specified above or
to any other address which Borrower has specified in writing to Lenders as the
address to which notices hereunder shall be given to Borrower.
13.6 WAIVER BY LENDERS. No course of dealing between Borrower and
Lenders and no delay or omission by Lenders in exercising any right or remedy
under the Transaction Documents or with respect to any Indebtedness shall
operate as a waiver thereof or of any other right or remedy, and no single or
partial exercise thereof shall preclude any other or further exercise thereof or
the exercise of any other right or remedy. All rights and remedies of Lenders
are cumulative.
13.7 WAIVER BY BORROWER. Lenders shall have no obligation to take, and
Borrower shall have the sole responsibility for taking, any and all steps to
preserve rights against any and all Account Debtors and against any and all
prior parties to any note, chattel paper, draft, trade acceptance, or other
instrument for the payment of money covered by the Security Interest whether or
not in Lenders' possession. Lenders shall not be
28
responsible to Borrower for loss or damage resulting from Lenders' failure to
enforce any receivables or to collect any moneys due, or to become due,
thereunder or other proceeds constituting Collateral hereunder. Borrower waives
protest of any note, check, draft, trade acceptance, or other instrument for the
payment of money constituting Collateral at any time held by Lenders on which
Borrower is in any way liable and waives notice of any other action taken by
Lenders, including, without limitation, notice of Lenders' intention to
accelerate the Indebtedness or any part thereof.
13.8 SETOFF. Without limiting any other right of Lenders, whenever
Lenders has the right to declare any Indebtedness to be immediately due and
payable (whether or not it has so declared), Lenders, at its sole election, may
setoff against the Indebtedness any and all monies then or thereafter owed to
Borrower by Lenders in any capacity, whether or not the Indebtedness or the
obligation to pay such monies owed by Lenders is then due, and Lenders shall be
deemed to have exercised such right of setoff immediately at the time of such
election even though any charge therefor is made or entered on Lenders' records
subsequent thereto.
13.9 ASSIGNMENT. The rights and benefits of Lenders hereunder shall, if
Lenders so agree, inure to any party acquiring any interest in the Indebtedness
or any part thereof, provided such assignee agrees in writing to be bound by the
terms hereof.
13.10 SUCCESSORS AND ASSIGNS. Lenders and Borrower, as used herein,
shall include the successors or assigns of those parties, except that Borrower
shall not have the right to assign its rights hereunder or any interest herein.
13.11 MODIFICATION. No modification, rescission, waiver, release, or
amendment of any provision of this Agreement shall be made, except by a written
agreement signed by Borrower and the Required Lenders.
13.12 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and by Lenders and Borrower on separate counterparts, each of
which, when so executed and delivered, shall be an original, but all of which
shall together constitute one and the same Agreement.
13.13 GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. Any financial
calculation to be made, all financial statements and other financial information
to be provided, and all books and records to be kept in connection with the
provisions of this Agreement, shall be in accordance with GAAP; provided,
however, that in the event changes in GAAP shall be mandated by the Financial
Accounting Standards Board or any similar accounting body of comparable
standing, or should be recommended by Borrower's certified public accountants,
to the extent such changes would affect any financial calculations to be made in
connection herewith, such changes shall be implemented in making such
calculations only from and after such date as Borrower and Lenders shall have
amended this Agreement to the extent necessary to reflect such changes in the
financial and other covenants to which such calculations relate.
13.14 INDEMNIFICATION.
(a) If after receipt of any payment of all, or any part of,
the Indebtedness, Lenders are, for any reason, compelled to surrender such
payment to any person or entity because such payment is determined to be void or
voidable as a preference, an impermissible setoff, or a diversion of trust
funds, or for any other reason, the Transaction Documents shall continue in full
force and Borrower shall be liable, and shall indemnify and hold Lenders
harmless for, the amount of such payment surrendered. The provisions of this
Section shall be and remain effective notwithstanding any contrary action which
may have been taken by Lenders in reliance upon such payment, and any such
contrary action so taken shall be without prejudice to Lenders' rights under the
Transaction Documents and shall be deemed to have been conditioned upon such
payment having become final and irrevocable. The provisions of this Section
13.14(a) shall survive the termination of this Agreement and the Transaction
Documents.
(b) Borrower agrees to indemnify, defend, and hold harmless
Lenders from and against, any and all liabilities, claims, damages, penalties,
expenditures, losses, or charges, including, but not limited to, all costs of
investigation, monitoring, legal representations, remedial response, removal,
restoration, or permit acquisition, which may now, or in the future, be
undertaken, suffered, paid, awarded, assessed, or otherwise incurred by Lenders
29
or any other person or entity as a result of the presence of, Release of, or
threatened Release of Hazardous Substances on, in, under, or near the property
owned, leased, or operated by Borrower or any Consolidated Subsidiary. The
liability of Borrower under the covenants of this Section 13.13(b) is not
limited by any exculpatory provisions in this Agreement or any other documents
securing the Indebtedness and shall survive repayment of the Indebtedness or any
transfer or termination of this Agreement regardless of the means of such
transfer or termination. Borrower agrees that Lenders shall not be liable in any
way for the completeness or accuracy of any Environmental Report or the
information contained therein. Borrower further agrees that Lenders has no duty
to warn Borrower or any other person or entity about any actual or potential
environmental contamination or other problem that may have become apparent, or
will become apparent, to Lenders. The provisions of this Section 13.14(b) shall
survive repayment of the Indebtedness.
(c) Borrower agrees to pay, indemnify, and hold Lenders
harmless from and against, any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses, or disbursements
of any kind or nature whatsoever (including, without limitation, counsel and
special counsel fees and disbursements in connection with any litigation,
investigation, hearing, or other proceeding) with respect, or in any way
related, to the existence, execution, delivery, enforcement, performance, and
administration of this Agreement and any other Transaction Document (all of the
foregoing, collectively, the "Indemnified Liabilities"). The provisions of this
Section 13.14(c) shall survive repayment of the Indebtedness.
13.15 TERMINATION. This Agreement is, and is intended to be, a
continuing Agreement and shall remain in full force and effect until the full
and final payment of all of the Indebtedness; provided, however, that Borrower,
subject to the provisions of Section 13.14(b), may terminate this Agreement at
any time by giving Lenders at least ninety (90) days prior notice of termination
in writing whereupon all outstanding Indebtedness shall be due and payable in
full without presentation, demand, or further notice of any kind, whether or not
all or any part of such Indebtedness is otherwise due and payable pursuant to
the agreement or instrument evidencing same. Lenders may terminate this
Agreement immediately and without notice upon the occurrence of an Event of
Default. Notwithstanding the foregoing or anything in this Agreement or
elsewhere to the contrary, the Security Interest, Lenders' rights and remedies
under the Transaction Documents and Borrower's obligations and liabilities under
the Transaction Documents, shall survive any termination of this Agreement and
shall remain in full force and effect until all of the Indebtedness outstanding,
or contracted or committed for (whether or not outstanding), before the receipt
of such notice by Lenders, and any extensions or renewals thereof (whether made
before or after receipt of such notice), together with interest accruing thereon
after such notice, shall be finally and irrevocably paid in full. No Collateral
shall be released or financing statement terminated until: (i) such final and
irrevocable payment in full of the Indebtedness as described in the preceding
sentence; and (ii) Borrower and Lenders execute a mutual general release,
subject to Section 13.14 of this Agreement, in form and substance satisfactory
to the Lenders and Borrower and their counsel. Thereafter, Lenders shall (at
Borrower's expense) release or terminate all security interests, liens and
encumbrances held by Lenders on the Collateral.
13.16 FURTHER ASSURANCES. From time to time, Borrower shall take such
action and execute and deliver to Lenders such additional documents,
instruments, certificates, and agreements as Lenders may reasonably request to
effectuate the purposes of the Transaction Documents.
13.17 HEADINGS. Article and Section headings used in this Agreement are
for convenience only and shall not affect the construction of this Agreement.
13.18 CUMULATIVE SECURITY INTEREST, ETC. The execution and delivery of
this Agreement shall in no manner impair or affect any other security (by
endorsement or otherwise) for payment or performance of the Indebtedness, and no
security taken hereafter as security for payment or performance of the
Indebtedness shall impair in any manner or affect this Agreement, or the
Security Interest granted hereby, all such present and future additional
security to be considered as cumulative security.
13.19 LENDERS' DUTIES. Without limiting any other provision of this
Agreement: (a) the powers conferred on Lenders hereunder are solely to protect
its interests and shall not impose any duty to exercise any such powers; and (b)
except as may be required by applicable law, Lenders shall not have any duty as
to any Collateral or as to the taking of any necessary steps to preserve rights
against any parties or any other rights pertaining to any Collateral.
30
13.20 NOTICES GENERALLY. All notices and other communications
hereunder, unless otherwise expressly provided, shall be in writing and made by
telecopy, overnight air courier, or certified or registered mail, return receipt
requested, and shall be deemed to be received by the party to whom sent one
Business Day after sending, if sent by telecopy or overnight air courier; and
three Business Days after mailing, if sent by certified or registered mail. All
such notices and other communications to a party hereto shall be addressed to
such party at the address set forth on the signature pages hereof or to such
other address as such party may designate for itself in a notice to the other
party given in accordance with this Section 13.20.
13.21 SEVERABILITY. The provisions of this Agreement are independent
of, and separable from, each other, and no such provision shall be affected or
rendered invalid or unenforceable by virtue of the fact that for any reason any
other such provision may be invalid or unenforceable in whole or in part. If any
provision of this Agreement is prohibited or unenforceable in any jurisdiction,
such provision shall be ineffective in such jurisdiction only to the extent of
such prohibition or unenforceability, and such prohibition or unenforceability
shall not invalidate the balance of such provision to the extent it is not
prohibited or unenforceable nor render prohibited or unenforceable such
provision in any other jurisdiction.
13.22 INCONSISTENT PROVISIONS. The terms of this Agreement and the
other Transaction Documents shall be cumulative except to the extent that they
are specifically inconsistent with each other, in which case the terms of this
Agreement shall prevail.
13.23 ENTIRE AGREEMENT. This Agreement, the Exhibits and Schedules
attached hereto and incorporated herein by this reference, and the other
Transaction Documents constitute the entire agreement and understanding between
the parties hereto with respect to the transactions contemplated hereby and
supersede all prior negotiations, understandings, and agreements between such
parties with respect to such transactions, including, without limitation, those
expressed in any commitment letter delivered by Lenders to Borrower.
13.24 APPLICABLE LAW. This Agreement, and the transactions evidenced
hereby, shall be governed by, and construed under, the internal laws of the
State of Colorado, without regard to principles of conflicts of law, as the same
may from time to time be in effect, including, without limitation, the Uniform
Commercial Code as in effect in the state.
13.25 CONSENT TO JURISDICTION. Borrower and Lenders agree that any
action or proceeding to enforce, or arising out of, the Transaction Documents
may be commenced in any state or federal court of competent jurisdiction in the
State of Colorado, and Borrower and Lenders waive personal service of process
and agree that a summons and complaint commencing an action or proceeding in any
such court shall be properly served and shall confer personal jurisdiction if
served by registered or certified mail to Borrower or Lenders, as appropriate,
or as otherwise provided by the laws of the State or the United States.
13.26 JURY TRIAL WAIVER. Borrower and Lenders hereby knowingly,
voluntarily, and intentionally waive any right to trial by jury borrower or
lenders may have in any action or proceeding, in law or in equity, in connection
with the Transaction Documents or the transactions related thereto. Borrower
represents and warrants that no representative or agent of Lenders has
represented, expressly or otherwise, that Lenders will not, in the event of
litigation, seek to enforce this right to jury trial waiver. Borrower
acknowledges that Lenders have been induced to enter into this Agreement by,
among other things, the provisions of this Section 13.26.
13.27 NO ORAL AGREEMENTS. Oral agreements or commitments to loan money,
extend credit or to forbear from enforcing repayment of a debt, including
promises to extend or renew such debt, are not enforceable. To protect you
(Borrower) and us (Lenders) from misunderstanding or disappointment, any
agreements we reach covering such matters are contained in the transaction
documents, which are the complete and exclusive statement of the agreement
between us, except as we may later agree in writing to modify it.
* * * * * * * * * *
31
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
BORROWER:
KOALA CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President Finance and Administration
Address:
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇, President and CEO
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
LENDERS:
U.S. BANK NATIONAL ASSOCIATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
Address:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇, Vice President
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
KEYBANK NATIONAL ASSOCIATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
Address:
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
32
EXHIBIT A
LIST OF LENDERS
APPLICABLE
LENDER COMMITMENT PERCENTAGES
------ ----------------------
U.S. BANK NATIONAL ASSOCIATION 66.666666667
KEYBANK NATIONAL ASSOCIATION 33.333333333
A-1
EXHIBIT B
PROMISSORY NOTE
(Revolving Credit)
$____________ ___________, 2000
Denver, Colorado
FOR VALUE RECEIVED, the undersigned, KOALA CORPORATION, a Colorado
corporation (hereinafter referred to as the "Borrower"), promises to pay to the
order of ________________________ (herein, together with its successors and
assigns who become holders of this Note, called the "Lender") at
_________________________, or at such other place as may be designated in
writing by Lender from time to time, the principal sum of _________________
DOLLARS ($_______________), or such lesser amount which shall from time to time
be owing hereunder on account of Advances made by Lender to or for the benefit
or account of Borrower in accordance with the terms of the Revolving Credit and
Security Agreement dated as of the date hereof between Borrower and Lenders (as
amended from time to time, the "Revolving Credit Agreement"), together with
interest on the unpaid principal balances outstanding at the rate specified in
the Revolving Credit Agreement. Principal and interest due under this Note shall
be payable at the time or times provided in the Revolving Credit Agreement.
In no contingency or event whatsoever, whether by reason of advancement
of the proceeds hereof or otherwise, shall the amount paid or agreed to be paid
by Borrower to Lender for the use, forbearance or detention of money advanced
hereunder exceed the highest lawful rate permissible under any law which a court
of competent jurisdiction may deem applicable hereto.
If any Event of Default shall have occurred and be continuing, Borrower
promises to pay the Default Rate, on the outstanding unpaid principal and
interest balance hereof at the times and in the amount and manner provided for
more particularly in the Revolving Credit Agreement. Interest on the amount of
interest so unpaid shall be compounded monthly until paid in full. Principal,
interest, fees, charges, expenses and other costs owing hereunder are payable in
lawful money of the United States of America such that Lender has received
immediately available funds for the credit of Borrower on the date that such
payment or payments is or are due.
This Note is secured by the Collateral listed in the Revolving Credit
Agreement and other security instruments described in the Revolving Credit
Agreement. The cancellation or surrender of this Note, upon payment or
otherwise, shall not affect any right Lender has to retain the Collateral or any
other collateral for any other Indebtedness of Borrower to Lender.
Upon the occurrence of any of the following events:
1. Failure to pay when due any principal or interest on
this Note or any costs, fees, reimbursable expenses or other amounts payable by
Borrower under the Revolving Credit Agreement or under any of the other
Transaction Documents; or
2. The occurrence of any other Event of Default under the
Revolving Credit Agreement, or under any of the other Transaction Documents,
which is not cured within any applicable cure period contained in the Revolving
Credit Agreement;
then Lender may, at Lender's option: (i) have all principal, interest, fees,
charges, expenses and other costs outstanding or owing hereunder bear interest
at the Default Rate for so long as said Event of Default shall continue; and
(ii) declare all sums outstanding or owing hereunder, including principal,
interests fees, charges, expenses and other costs to be immediately due and
payable without presentment, demand or notice of any kind, all of which are
hereby expressly waived by Borrower; provided, however, that the principal,
interest, fees, expenses, charges and other costs owing on this Note shall be
and become automatically due and payable if the Revolving Credit Agreement, or
any of the other Transaction Documents, provide for the automatic acceleration
of the payment of the principal, interest, fees, charges, expenses and other
costs owing on this Note upon the occurrence of an Event of Default.
B-1
Borrower may prepay this Note, in whole or in part, at any time;
provided, however, that any prepayment will be subject to the terms of Article 2
of the Revolving Credit Agreement.
No waiver of any breach, Event of Default, default or failure of
condition under the terms of this Note, the Revolving Credit Agreement, or the
other Transaction Documents shall be implied from any failure of Lender to take,
or any delay by Lender in taking, action with respect to any such breach of or
Event of Default, default or failure of condition or from any previous waiver of
any similar or unrelated breach of or Event of Default, default or failure of
condition. A waiver of any term of this Note, the Revolving Credit Agreement or
the other Transaction Documents must be made in writing and shall be limited to
the express written terms of such waiver.
All obligations of Borrower and all rights, powers and remedies of
Lender expressed herein shall be in addition to and not in limitation of those
provided by law or in any written agreement or instrument (other than this Note)
relating to any of the Indebtedness of Borrower to Lender or the security
therefor.
Borrower waives presentment; demand; notice of dishonor; notice of
protest and nonpayment; notice of default interest and late charges; notice of
intent to accelerate; notice of acceleration; and diligence in taking any action
to collect any sums owing under this Note or in proceeding against any of the
rights and interests in and to properties securing payment of this Note.
Time is of the essence with respect to every provision hereof.
This Note is issued pursuant to the Revolving Credit Agreement and is
subject to the terms and conditions specified therein. Capitalized terms not
otherwise defined in this Note shall have the meanings assigned to them under
the Revolving Credit Agreement.
This Note shall be construed and enforced in accordance with the laws
of the State of Colorado, without regard to principles of conflicts of law,
except to the extent that Federal laws preempt the laws of the State of
Colorado.
IN WITNESS WHEREOF, the undersigned has executed this instrument as of
the date first above written.
KOALA CORPORATION
By:
---------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
B-2
EXHIBIT C
APPLICABLE MARGINS
The Applicable Margins for the Revolving Line of Credit will be based on the
Borrower's Consolidated Leverage Ratio (as determined quarterly) as follows (the
Applicable Margin for Eurodollar Rate Loans shall also be the Applicable Margins
for Letters of Credit):
Consolidated Leverage Ratio
--------------------------- Applicable Margins Applicable Margins
For Eurodollar Rate Loans For Base Rate Loans
------------------------- -------------------
Less than 1.00 : 1 2.15% 0.00%
Less than 2.50 : 1 and greater than
or equal than 1.00 : 1 2.35% 0.00%
Less than 3.25 : 1 and greater than
or equal to 2.50 : 1 2.60% 0.00%
Greater than or equal to 3.25 : 1 2.85% 0.00%
C-1
EXHIBIT D
FINANCIAL STATEMENTS CERTIFICATION
The undersigned, the ______________________________ of KOALA
CORPORATION (the "Borrower"), hereby certifies to U.S. BANK NATIONAL ASSOCIATION
that attached hereto is a true, correct and complete copy of Borrower's
financial statements as of the month ending ___________, 200_, which financial
statements fairly present Borrower's financial position and consist of a balance
sheet and related statements of income and cash flow covering the period from
the end of the immediately preceding fiscal year to the end of such month.
KOALA CORPORATION
By:
-------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
Date:
----------------------------------------
D-1
EXHIBIT E
COMPLIANCE CERTIFICATE
KOALA CORPORATION (the "Borrower") hereby certifies to U.S. BANK
NATIONAL ASSOCIATION and the other lenders named therein (the "Lenders")
pursuant to the Revolving Credit Agreement between Borrower and Lenders dated
_________, 2000, as amended from time to time (the "Revolving Credit
Agreement"), that:
A. General.
1. Capitalized terms not defined herein shall have the
meanings set forth in the Revolving Credit Agreement.
2. Borrower has complied with all the covenants and with all
material terms and conditions to be performed or observed by it contained in the
Revolving Credit Agreement and the Transaction Documents to which Borrower is a
party.
3. Neither on the date hereof nor, if applicable, after giving
effect to any Advance made under the Revolving Line of Credit on the date
hereof, does there exist an Event of Default or an event which with notice or
lapse of time, or both, would constitute an Event of Default.
4. The representations and warranties contained in the
Revolving Credit Agreement, in any Transaction Document to which Borrower is a
party and in any certificate, document or financial or other statement furnished
at any time thereunder are true, correct and complete in all material respects
with the same effect as though such representations and warranties had been made
on the date hereof, except to the extent that any such representation and
warranty relates solely to an earlier date (in which case, such representation
and warranty shall be true, correct and complete on and as of such earlier
date).
B. Financial Covenants.
1. As of ___________, 200__ or for such period as may be
designated below, the computations, ratios and calculations as set forth below
in accordance with Section 9.12 of the Revolving Credit Agreement, are true and
correct:
a. Consolidated Leverage Ratio.
(i) Debt = $
--------------
(ii) EBITDA for the preceding 12-month period = $
-------------
(iii) (i) divided by (ii) = :1
-------
b. Interest Expense Coverage Ratio.
(i) EBITDA for the preceding 12-month period = $
--------------
(ii) Actual interest expense for the
preceding 12-month period = $
-------------
(iii) (i) divided by (ii) = :1
-------
E-1
IN WITNESS WHEREOF, the undersigned, a duly authorized officer of
Borrower, has executed and delivered this Compliance Certificate in the name of
and on behalf of Borrower on ____________, ____.
KOALA CORPORATION
By:
----------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
E-2
EXHIBIT F
ASSIGNMENT AND ACCEPTANCE AGREEMENT
Reference is made to that certain Revolving and Security Agreement
dated as of ___________, 2000 (as extended, renewed, amended or restated from
time to time, the "Credit Agreement") among Koala Corporation (collectively,
"Koala"), the several financial institutions from time to time parties to the
Credit Agreement (the "Lenders") and U.S. Bank National Association, as agent
for the Banks (in such capacity, the "Agent"). Unless otherwise defined herein,
capitalized terms used herein have the respective meanings assigned to them in
the Credit Agreement.
The Assignor named on Schedule I (the "Assignor") and the Assignee
named on Schedule I (the "Assignee") agree as follows:
The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably purchases
and assumes from the Assignor without recourse to the Assignor, as of the
Effective Date (as defined below), the pro rata share specified in Schedule I
(the "Assigned interest") in the rights and obligations under the Credit
Agreement.
The Assignor (a) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or any other instrument or
document furnished pursuant thereto or with respect to the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or any other instrument or document furnished pursuant thereto, other
than that the Assignor has not created any adverse claim upon the assigned
interest and that such assigned interest is free and clear of any such adverse
claim; and (b) makes no representation or warranty and assumes no responsibility
with respect to the financial condition of Koala or any of its Subsidiaries or
the performance or observance by Koala of any of its obligations under the
Credit Agreement or any other instrument or document furnished pursuant thereto.
The Assignee (a) represents and warrants that it is legally authorized
to enter into this Assignment and Acceptance; (b) confirms that it has received
a copy of the Credit Agreement, together with copies of the most recent
financial statements referred to in the Section 8.1 of the Credit Agreement 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 Acceptance;
(c) agrees that it will, independently and without reliance upon the Assignor,
the Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement or any other instrument
or document furnished pursuant hereto or thereto; (d) appoints and authorizes
the Agent to take such action as agent on its behalf and to exercise such owners
and discretion under the Credit Agreement and any other instrument or document
furnished pursuant hereto or thereto as are delegated to the Agent by the terms
thereof, together with such powers as are incidental thereto; and (e) agrees
that it will be bound by the provisions of the Credit Agreement and will perform
in accordance with its terms all the obligations which by the terms of the
Credit Agreement are required to be performed by it as a Lender.
The effective date of this Assignment and Acceptance shall be as
specified on Schedule I (the "Effective Date"). Following the execution of this
Assignment and Acceptance, by Assignor and Assignee, it will be delivered to the
Agent and Koala for acceptance by them to the extent required by the Credit
Agreement, effective as of the Effective Date (which shall not, unless otherwise
agreed to by the Agent, be earlier than five Business Days after the execution
hereof).
Upon such acceptance and recording, from and after the Effective Date,
the Agent shall make all payments in respect of the assigned interest (including
payments of principal, interest, fees and other amounts) to the Assignee. The
Assignor and the Assignee shall make all appropriate adjustments in payments by
the Agent for periods prior to the Effective Date or with respect to the making
of this assignment directly between themselves.
F-1
From and after the Effective Date, (a) the Assignee shall be a party to
the Credit Agreement and, to the extent provided in this Assignment and
Acceptance, have the rights and obligations of a Lender thereunder and shall be
bound by the provisions thereof and (b) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement (other than any such
rights which expressly survive the termination thereof).
This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of Colorado.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed as of the date first above written by their respective
duly authorized officers on Schedule I hereto.
[The remainder of this page intentionally left blank.]
F-2
SCHEDULE I
Name of Assignor:
-------------------------------------
Name of Assignee:
-------------------------------------
Effective Date of Assignment:
-------------------------------------
Commitment and Pro Rata Share Assigned:
-------------------------------------
The terms set forth above and in the Assignment and Acceptance to which this
Schedule I is attached are hereby agreed to:
As Assignor
By:
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Its:
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As Assignee
By:
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Its:
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F-3
ASSIGNMENT ACKNOWLEDGED AND
CONSENTED TO:
▇.▇.▇▇▇▇ NATIONAL ASSOCIATION,
as Agent
By:
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Its:
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To the extent required by the Credit Agreement:
KOALA CORPORATION
By:
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Its:
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F-4
EXHIBIT G
Form of Borrowing Notice
To: U.S. Bank National Association, as Agent
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Agency Services MPFP0612
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Reference is hereby made to the Revolving Credit and Security Agreement
dated as of __________, 2000 (the "Agreement") among Koala Corporation, a
Colorado corporation (the "Borrower"), the Lenders (as defined in the
Agreement), and U.S. Bank National Association, as agent for the Lenders
("Agent"). Capitalized terms used but not defined herein shall have the
respective meanings therefor set forth in the Agreement.
The Borrower through its Authorized Representative hereby gives notice
to the Agent that Advances of the type and amount set forth below be made on the
date indicated:
Type of Loan Interest Period(1) Aggregate Amount(2) Date of Loan(3)
------------ ---------------- ------------------ ---------------
Base Rate Loan
----------------- ------------------ ----------------
Eurodollar Rate Loan
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(1) For any Eurodollar Rate Loan, one, two, three or six months.
(2) Eurodollar Loan: Must be $500,000 or if greater, an integral multiple
of $100,000. Base Rate Loan: Must be $100,000 or if greater, an
integral multiple of $10,000.
(3) At least two (2) Business Days later if a Eurodollar Rate Loan.
The Borrower hereby requests that the proceeds of Advances described
in this Borrowing Notice be made available to the Borrower as follows: [insert
transmittal instructions]
The undersigned hereby certifies that:
1. No Default or Event of Default exists either now or after giving
effect to the borrowing described herein; and
2. All the representations and warranties set forth in Article 6 of the
Agreement and in the Transaction Documents (other than those expressly stated to
refer to a particular date) are true and correct as of the date hereof except
that the reference to the financial statements in Section 6.8 of the Agreement
shall be deemed (solely for the purpose of the representation and warranty
contained in such Section 6.8 but not for the purpose of any cross reference to
such Section 6.8 or to the financial statements described therein contained in
any other provision of Article 6) to refer to those financial statements most
recently delivered to you pursuant to Section 8.1 of the Agreement.
F-5
(3) All conditions contained in the Agreement to the making of any
Advance requested hereby have been met or satisfied in full.
KOALA CORPORATION
By:
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Authorized Representative
Date:
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F-6