1
EXHIBIT 10.1
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CREDIT, SECURITY, GUARANTY AND PLEDGE AGREEMENT
DATED AS OF AUGUST 31, 2001
AMONG
CROWN MEDIA HOLDINGS, INC.
AS BORROWER
AND
ITS SUBSIDIARIES NAMED HEREIN
AS GUARANTORS
AND
THE LENDERS NAMED HEREIN
AND
THE CHASE MANHATTAN BANK
AS ADMINISTRATIVE AGENT AND ISSUING BANK
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THE CHASE MANHATTAN BANK
AS ARRANGER AND SOLE BOOKRUNNER,
BANK OF AMERICA, N.A.
AS ARRANGER AND SYNDICATION AGENT,
CITICORP USA, INC.
AS CO-ARRANGER AND DOCUMENTATION AGENT,
CREDIT SUISSE FIRST BOSTON
AS CO-ARRANGER AND DOCUMENTATION AGENT,
AND
DEUTSCHE BANK AG NEW YORK BRANCH
AS CO-ARRANGER AND DOCUMENTATION AGENT
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2
TABLE OF CONTENTS
PAGE
PARTIES...........................................................................................................1
INTRODUCTORY STATEMENT............................................................................................1
1. DEFINITIONS..............................................................................................2
2. THE LOANS...............................................................................................21
SECTION 2.1. Revolving Credit Loans.......................................................21
SECTION 2.2. Term Loans...................................................................21
SECTION 2.3. Making of Loans..............................................................21
SECTION 2.4. Letters of Credit............................................................22
SECTION 2.5. Notes; Repayment.............................................................25
SECTION 2.6. Interest on Loans............................................................26
SECTION 2.7. Commitment Fees and Other Fees...............................................26
SECTION 2.8. Termination or Reduction of Revolving Credit Commitments.....................27
SECTION 2.9. Default Interest; Alternate Rate of Interest.................................27
SECTION 2.10. Continuation and Conversion of Loans.........................................28
SECTION 2.11. Prepayment of Loans; Reimbursement of Lenders................................29
SECTION 2.12. Change in Circumstances......................................................31
SECTION 2.13. Change in Legality...........................................................33
SECTION 2.14. Manner of Payments...........................................................33
▇▇▇▇▇▇▇ ▇.▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ Withholding....................................................34
SECTION 2.16. Interest Adjustments.........................................................36
3. REPRESENTATIONS AND WARRANTIES..........................................................................36
SECTION 3.1. Corporate Existence and Power................................................36
SECTION 3.2. Authority and No Violation...................................................37
SECTION 3.3. Governmental and Other Approvals.............................................37
SECTION 3.4. Financial Statements.........................................................38
SECTION 3.5. No Material Adverse Change...................................................38
SECTION 3.6. Ownership of Pledged Securities, Subsidiaries, etc...........................39
SECTION 3.7. Copyrights, Trademarks and Other Rights......................................39
SECTION 3.8. Fictitious Names.............................................................40
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TABLE OF CONTENTS
(continued)
PAGE
SECTION 3.9. Title to Properties..........................................................40
SECTION 3.10. UCC Filing Information.......................................................40
SECTION 3.11. Litigation...................................................................40
SECTION 3.12. Federal Reserve Regulations..................................................40
SECTION 3.13. Investment Company Act.......................................................41
SECTION 3.14. Binding Agreements...........................................................41
SECTION 3.15. Taxes........................................................................41
SECTION 3.16. Compliance with ERISA and Applicable Law.....................................41
SECTION 3.17. Agreements...................................................................42
SECTION 3.18. Indebtedness; Guaranties; Liens..............................................42
SECTION 3.19. Security Interest; Other Security............................................42
SECTION 3.20. Disclosure...................................................................42
SECTION 3.21. Licensed Rights..............................................................43
SECTION 3.22. Environmental Liabilities....................................................43
SECTION 3.23. Pledged Securities...........................................................44
SECTION 3.24. Compliance with Laws.........................................................44
SECTION 3.25. Bank Accounts................................................................44
4. CONDITIONS OF LENDING...................................................................................45
SECTION 4.1. Conditions Precedent to Initial Loan or Letter of Credit.....................45
SECTION 4.2. Conditions Precedent to Each Loan and Letter of Credit.......................49
5. AFFIRMATIVE COVENANTS...................................................................................49
SECTION 5.1. Financial Statements and Reports.............................................50
SECTION 5.2. Corporate Existence..........................................................52
SECTION 5.3. Maintenance of Properties....................................................52
SECTION 5.4. Notice of Material Events....................................................52
SECTION 5.5. Insurance....................................................................53
SECTION 5.6. Music........................................................................54
SECTION 5.7. Copyrights and Trademarks....................................................54
SECTION 5.8. Books and Records............................................................55
SECTION 5.9. Observance of Agreements.....................................................55
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TABLE OF CONTENTS
(continued)
PAGE
SECTION 5.10. Laboratories; No Removal.....................................................55
SECTION 5.11. Taxes and Charges; Indebtedness in Ordinary Course of Business...............56
SECTION 5.12. Liens........................................................................56
SECTION 5.13. Cash Receipts................................................................56
SECTION 5.14. ERISA Compliance and Reports.................................................56
SECTION 5.15. Subsidiaries.................................................................57
SECTION 5.16. Environmental Laws...........................................................57
SECTION 5.17. Use of Proceeds..............................................................58
SECTION 5.18. Further Assurances; Security Interests.......................................58
SECTION 5.19. Bank Accounts................................................................59
6. NEGATIVE COVENANTS......................................................................................59
SECTION 6.1. Limitations on Indebtedness..................................................59
SECTION 6.2. Limitations on Liens.........................................................60
SECTION 6.3. Guaranties...................................................................61
SECTION 6.4. Limitations on Investments...................................................61
SECTION 6.5. Restricted Payments..........................................................62
SECTION 6.6. Limitations on Sale of Assets................................................63
SECTION 6.7. Receivables..................................................................63
SECTION 6.8. Tax Shelters, Sale and Leaseback etc.........................................63
SECTION 6.9. Places of Business; Change of Name...........................................63
SECTION 6.10. Limitations on Capital Expenditures..........................................64
SECTION 6.11. Transactions with Affiliates.................................................64
SECTION 6.12. Prohibition of Amendments or Waivers.........................................64
SECTION 6.13. No Negative Pledge...........................................................64
SECTION 6.14. Acquisitions or Mergers, etc.................................................64
SECTION 6.15. Production...................................................................64
SECTION 6.16. Change in Business...........................................................64
SECTION 6.17. ERISA Compliance.............................................................65
SECTION 6.18. Interest Rate Protection Agreements, etc.....................................65
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TABLE OF CONTENTS
(continued)
PAGE
SECTION 6.19. Subsidiaries.................................................................65
SECTION 6.20. Hazardous Materials..........................................................65
SECTION 6.21. Program Acquisition Guarantees...............................................65
SECTION 6.22. Use of Proceeds of Loans and Requests for Letters of Credits.................65
SECTION 6.23. EBITDA.......................................................................66
SECTION 6.24. Platform Agreements..........................................................66
SECTION 6.25. Net Worth....................................................................67
SECTION 6.26. Corporate Structure..........................................................67
SECTION 6.27. Leverage Ratio...............................................................67
SECTION 6.28. Interest Coverage Ratio......................................................68
7. EVENTS OF DEFAULT.......................................................................................68
8. GRANT OF SECURITY INTEREST; REMEDIES....................................................................71
SECTION 8.1. Security Interests...........................................................71
SECTION 8.2. Use of Collateral............................................................71
SECTION 8.3. Collection Accounts..........................................................71
SECTION 8.4. Credit Parties to Hold in Trust..............................................72
SECTION 8.5. Collections, etc.............................................................72
SECTION 8.6. Possession, Sale of Collateral, etc..........................................72
SECTION 8.7. Application of Proceeds on Default...........................................73
SECTION 8.8. Power of Attorney............................................................74
SECTION 8.9. Financing Statements, Direct Payments, Confirmation of Receivables
and Audit Rights.............................................................74
SECTION 8.10. Further Assurances...........................................................75
SECTION 8.11. Termination and Release......................................................75
SECTION 8.12. Remedies Not Exclusive.......................................................75
SECTION 8.13. Continuation and Reinstatement...............................................75
9. CASH COLLATERAL.........................................................................................75
SECTION 9.1. Cash Collateral Account......................................................75
SECTION 9.2. Grant of Security Interest...................................................76
SECTION 9.3. Remedies.....................................................................76
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TABLE OF CONTENTS
(continued)
PAGE
10. GUARANTY................................................................................................76
SECTION 10.1. Guaranty.....................................................................76
SECTION 10.2. No Impairment of Guaranty, etc...............................................78
SECTION 10.3. Continuation and Reinstatement, etc..........................................78
SECTION 10.4. Limitation on Guaranteed Amount etc..........................................79
11. PLEDGE..................................................................................................79
SECTION 11.1. Pledge.......................................................................79
SECTION 11.2. Registration in Nominee Name; Denominations..................................79
SECTION 11.3. Covenant.....................................................................79
SECTION 11.4. Voting Rights; Dividends; etc................................................80
SECTION 11.5. Remedies Upon Default........................................................80
SECTION 11.6. Application of Proceeds of Sale and Cash.....................................81
SECTION 11.7. Securities Act, etc..........................................................82
SECTION 11.8. Continuation and Reinstatement...............................................82
SECTION 11.9. Termination..................................................................82
12. THE AGENT AND THE ISSUING BANK..........................................................................83
SECTION 12.1. Administration by Agent......................................................83
SECTION 12.2. Advances and Payments........................................................84
SECTION 12.3. Sharing of Setoffs, Cash Collateral and Sharing Events.......................85
SECTION 12.4. Notice to the Lenders........................................................85
SECTION 12.5. Liability of the Agent.......................................................86
SECTION 12.6. Reimbursement and Indemnification............................................86
SECTION 12.7. Rights of Agent and Issuing Bank.............................................87
SECTION 12.8. Independent Investigation by Lenders.........................................87
SECTION 12.9. Agreement of Required Lenders................................................87
SECTION 12.10. Notice of Transfer...........................................................87
SECTION 12.11. Successor Agent..............................................................88
SECTION 12.12. Successor Issuing Bank.......................................................88
13. MISCELLANEOUS...........................................................................................89
SECTION 13.1. Notices......................................................................89
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TABLE OF CONTENTS
(continued)
PAGE
SECTION 13.2. Survival of Agreement, Representations and Warranties, etc...................89
SECTION 13.3. Successors and Assigns; Syndications; Loan Sales; Participations.............90
SECTION 13.4. Expenses; Documentary Taxes..................................................93
SECTION 13.5. Indemnification of the Agent, the Issuing Bank and the Lenders...............94
SECTION 13.6. CHOICE OF LAW................................................................95
SECTION 13.7. WAIVER OF JURY TRIAL.........................................................95
SECTION 13.8. WAIVER WITH RESPECT TO DAMAGES...............................................95
SECTION 13.9. No Waiver....................................................................96
SECTION 13.10. Extension of Payment Date....................................................96
SECTION 13.11. Amendments, etc..............................................................96
SECTION 13.12. Severability.................................................................97
SECTION 13.13. SERVICE OF PROCESS...........................................................97
SECTION 13.14. Headings.....................................................................98
SECTION 13.15. Execution in Counterparts....................................................98
SECTION 13.16. Subordination of Intercompany Indebtedness, Receivables and Advances.........98
SECTION 13.17. Confidentiality..............................................................98
SECTION 13.18. Entire Agreement.............................................................99
SECTION 13.19. Right of Set-Off.............................................................99
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TABLE OF CONTENTS
Schedules PAGE
1 Schedule of Commitments
3.1 List of Jurisdictions Where Credit Parties and their Subsidiaries are
Qualified
3.6(a) Credit Parties/Pledged Securities
3.6(b) Beneficial Interest
3.7(a) Items of Product
3.7(b) Trademarks
3.8 Fictitious Names
3.10 Principal Executive Office/Location of Collateral
3.11 Litigation
3.17 Material Agreements
3.18(a) Existing Indebtedness
3.18(b) Existing Guaranties
3.18(c) Existing Liens
3.23 Pledged Securities
3.25 Bank Accounts
8.3 Collection Accounts
Exhibits
A-1 Form of Revolving Note
A-2 Form of Term Note
B-1 Form of Copyright Security Agreement
B-2 Form of Copyright Security Agreement Supplement
C Form of Laboratory Pledgeholder Agreement
D Form of Borrowing Certificate
E Form of Trademark Security Agreement
F Form of Laboratory Access Letter
G Opinion of Counsel to the Credit Parties
H Form of Assignment and Acceptance
I Form of Contribution Agreement
J Form of Instrument of Assumption and Joinder
K Form of Hallmark Cards Subordination and Support Agreement
L Form of Limited Guarantee
L-1 Form of Hallmark Cards Letter of Credit
M-1 Amended and Restated Program License Agreement (Crown Media
International)
M-2 Amended and Restated Program License Agreement (Crown Media United
States)
N HEDC Purchase Agreement
O Hallmark Inducement Agreement
P Form of Sale/Leaseback Power of Attorney
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CREDIT, SECURITY, GUARANTY AND PLEDGE
AGREEMENT, dated as of August 31, 2001 among
(i) CROWN MEDIA HOLDINGS, INC., a Delaware
corporation (the "Borrower"), (ii) the
GUARANTORS which are parties hereto from
time to time, (iii) the LENDERS which are
parties hereto from time to time and (iv)
THE CHASE MANHATTAN BANK, a
New York banking
corporation, as Agent for the Lenders and as
Issuing Bank.
INTRODUCTORY STATEMENT
All terms not otherwise defined above or in this Introductory
Statement are as defined in Article 1 hereof, or as defined elsewhere herein.
The Borrower has requested that the Lenders make available a
$300,000,000 five-year secured credit facility (of which only $285,000,000 has
been committed as of the date hereof) consisting of a term loan of $100,000,000
and a revolving credit facility of up to $200,000,000 (or such lesser amount as
is available based upon amounts actually committed) which will be used (i) to
pay HEDC for the acquisition of certain rights in the HEDC Library in an amount
not to exceed $120,000,000 (or such lesser amount as represents the cash portion
of the purchase price of the HEDC Library), (ii) to repay intercompany loans
from Hallmark or HCC (subject to the limitations set forth herein), (iii) to
fund the development, distribution, exploitation and acquisition of intellectual
properties including feature films, television and video product and/or rights
therein or thereto; (iv) for general working capital purposes, including
acquisitions and the operation of the Borrower and its Subsidiaries; and (v) to
fund the acquisition, distribution, marketing and other exploitation of
movies-of-the-week, mini-series, cable, pay cable, first-run syndication,
network and video programming.
To provide security for the repayment of the Loans and all
other Obligations of the Credit Parties hereunder, the Credit Parties will
provide the following to the Agent, for the benefit of itself, the Issuing Bank
and the Lenders: (i) a security interest from the Credit Parties in the
Collateral pursuant to Article 8 hereof which will include (x) the material
contracts of the Credit Parties, including but not limited to, Platform
Agreements, and (y) all of the Credit Parties' rights in copyrights, trademarks,
tradenames and service marks; (ii) a guaranty from the Guarantors pursuant to
Article 10 hereof; (iii) a pledge of the capital stock or other ownership
interest of the Guarantors, pursuant to Article 11 hereof and (iv) a security
interest from the Borrower in the Cash Collateral Account.
Subject to the terms and conditions set forth herein, the
Agent is willing to act as agent for the Lenders and each Lender is willing to
make Loans to the Borrower and to participate in Letters of Credit in amounts in
the aggregate at any one time outstanding not in excess of the Commitment of
that Lender hereunder.
Accordingly, the parties hereto hereby agree as follows:
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1. DEFINITIONS
For the purposes hereof unless the context otherwise requires,
the following terms shall have the meanings indicated, all accounting terms not
otherwise defined herein shall have the respective meanings accorded to them
under GAAP and all terms defined in the UCC and not otherwise defined herein
shall have the respective meanings accorded to them therein. Unless the content
otherwise requires, any of the following terms may be used in the singular or
the plural, depending on the reference:
"Affiliate" shall mean any Person which directly or indirectly
holds a controlling interest in, is controlled by, or is under common control
with, another Person. For purposes of this definition, a Person shall be deemed
to be "controlled by" another Person if such latter Person possesses, directly
or indirectly, the power to direct or cause the direction of the management and
policies of such controlled Person whether by contract or otherwise.
"Agent" and "Administrative Agent" shall mean The Chase
Manhattan Bank, in its capacity as agent for the Lenders hereunder, and any
successor agent appointed pursuant to Section 12.11 hereof.
"Agreement" and "Credit Agreement" shall mean this
Credit,
Security, Guaranty and Pledge Agreement, as it may be amended, supplemented or
otherwise modified from time to time.
"Alternate Base Rate" shall mean for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of
(a) the Prime Rate in effect on such day, (b) the Base CD Rate in effect on such
day plus 1% and (c) the Federal Funds Effective Rate in effect for such day plus
1/2 of 1%. For purposes hereof, "Prime Rate" shall mean the rate of interest per
annum publicly announced from time to time by The Chase Manhattan Bank as its
prime rate in effect at its principal office in
New York City. "Base CD Rate"
shall mean the sum of (a) the product of (i) the Three-Month Secondary CD Rate
and (ii) Statutory Reserves and (b) the Assessment Rate. "Three-Month Secondary
CD Rate" shall mean, for any day, the secondary market rate for three-month
certificates of deposit reported as being in effect on such day (or, if such day
is not a Business Day, the next preceding Business Day) by the Board through the
public information telephone line of the Federal Reserve Bank of
New York (which
rate will, under current practices of the Board, be published in Federal Reserve
Statistical Release H.15(519) during the week following such day), or, if such
rate shall not be so reported on such day or such next preceding Business Day,
the average of the secondary market quotations for three-month certificates of
deposit of major money center banks in
New York City received at approximately
10:00 a.m.,
New York City time, on such day (or, if such day shall not be a
Business Day, on the next preceding Business Day) by the Agent from three
New
York City negotiable certificate of deposit dealers of recognized standing
selected by it. "Statutory Reserves" shall mean a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of which
is the number one minus the aggregate of the maximum reserve percentages
(including any marginal, special, emergency or supplemental reserves) expressed
as a decimal established by the Board and any other banking authority to which
The Chase Manhattan Bank is subject for new negotiable nonpersonal time deposits
in Dollars of over US$100,000 with maturities approximately equal to three
months. Statutory
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Reserves shall be adjusted automatically on and as of the effective date of any
change in any reserve percentage. "Federal Funds Effective Rate" shall mean, for
any day, the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published on the next succeeding Business Day by the Federal
Reserve Bank of
New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for the day of such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it. If for any reason the Agent shall have
determined (which determination shall be conclusive absent manifest error) that
it is unable to ascertain the Base CD Rate or the Federal Funds Effective Rate
or both for any reason, including the inability or failure of the Agent to
obtain sufficient quotations in accordance with the terms hereof, the Alternate
Base Rate shall be determined without regard to clause (b) or (c), or both, of
the first sentence of this definition, as appropriate, until the circumstances
giving rise to such inability no longer exist. Any change in the Alternate Base
Rate due to a change in the Prime Rate, the Three-Month Secondary CD Rate or the
Federal Funds Effective Rate shall be effective on the effective date of such
change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds
Effective Rate, respectively.
"Alternate Base Rate Loan" shall mean a Loan bearing interest
based on the Alternate Base Rate in accordance with the provisions of Article 2
hereof.
"Applicable Law" shall mean all provisions of statutes, rules,
regulations and orders of governmental bodies or regulatory agencies applicable
to a Person, and all orders and decrees of all courts and arbitrators in
proceedings or actions in which the Person in question is a party.
"Applicable Margin" shall mean (i) in the case of Alternate
Base Rate Loans, 2% per annum and (ii) in the case of Eurodollar Loans, 3% per
annum.
"Assessment Rate" shall mean, for any date, the net annual
assessment rate (rounded upwards, if necessary, to the next higher 1/100 of 1%)
as most recently estimated by the Agent for determining the then current net
annual assessment rate that will be employed in determining amounts payable by
The Chase Manhattan Bank to the Federal Deposit Insurance Corporation (or any
successor) for insurance by such Corporation (or such successor) of time
deposits made in dollars at The Chase Manhattan Bank's domestic offices.
"Assignment and Acceptance" shall mean an agreement
substantially in the form of Exhibit H hereto, executed by the assignor,
assignee and other parties as contemplated thereby.
"Authorized Officer" shall mean, with respect to any Person,
its chief executive officer, chief operating officer or chief financial officer.
"Bankruptcy Code" shall mean the Bankruptcy Reform Act of
1978, as heretofore and hereafter amended, as codified at 11 U.S.C. 101 et seq.
"Board" shall mean the Board of Governors of the Federal
Reserve System of the United States of America.
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"Borrowing" shall mean a group of Loans of a single Interest
Rate Type and as to which a single Interest Period is in effect on any given
day.
"Borrowing Certificate" shall be as defined in Section 4.2(d).
"Business Day" shall mean any day other than a Saturday,
Sunday or other day on which banks in The City of
New York or the City of Los
Angeles are permitted to close; provided, however, that when used in connection
with a Eurodollar Loan, the term "Business Day" shall also exclude any day on
which banks are not open for dealings in Dollar deposits on the London interbank
market.
"Capital Expenditures" shall mean, with respect to any Person
for any period, the sum of (i) the aggregate of all expenditures (whether paid
in cash or accrued as a liability) by such Person during that period which, in
accordance with GAAP, are or should be included in "additions to property, plant
or equipment" or similar items included in cash flows (including Capital Leases)
and (ii) to the extent not covered by clause (i) hereof, the aggregate of all
expenditures properly capitalized in accordance with GAAP by such Person to
acquire, by purchase or otherwise, the business, property or fixed assets of, or
stock or other evidence of beneficial ownership of, any other Person (other than
the portion of such expenditures allocable in accordance with GAAP to net
current assets or which is allocable to the acquisition of items of Product).
"Capital Lease", as applied to any Person, shall mean any
lease of any property (whether real, personal or mixed) by that Person as lessee
which, in accordance with GAAP, is or should be accounted for as a capital lease
on the balance sheet of that Person.
"Cash Collateral Account" shall be as defined in Section 9.1
hereof.
"Cash Equivalents" shall mean (i) marketable securities issued
or directly and fully guaranteed or insured by the United States of America or
any agency or instrumentality thereof (provided that the full faith and credit
of the United States of America is pledged in support thereof) having maturities
of not more than twelve months from the date of acquisition, (ii) time deposits,
demand deposits, certificates of deposit, acceptances or prime commercial paper
or repurchase obligations for underlying securities of the types described in
clause (i) entered into with any Lender or any commercial bank organized under
the laws of the United States or a state thereof having a short-term deposit
rating at the time of acquisition of at least A-2 or the equivalent thereof by
Standard & Poor's Ratings Services or at least P-2 or the equivalent thereof by
▇▇▇▇▇'▇ Investors Service, Inc., (iii) commercial paper issued by a Lender or
the parent of a Lender with a rating at the time of acquisition of A-1 or A-2 or
the equivalent thereof by Standard & Poor's Ratings Services or P-1 or P-2 or
the equivalent thereof by ▇▇▇▇▇'▇ Investors Service, Inc. and in each case
maturing within twelve months after the date of acquisition, (iv) repurchase
agreements and reverse repurchase agreements with any Lender or any Affiliate of
any Lender relating to marketable direct obligations issued or unconditionally
backed by the full faith and credit of the United States, in each case maturing
within one year from the date thereof and (v) marketable direct obligations
issued by any state of the United States or any agency or instrumentality
thereof maturing within twelve months from the date of
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acquisition thereof and, at the time of acquisition, having one of the two
highest ratings generally obtainable from either Standard & Poor's Ratings
Services or ▇▇▇▇▇'▇ Investors Service, Inc.
"Change in Control" shall mean (a) Hallmark Cards shall cease
to own (directly or indirectly) at least 80% of the Equity Interests of Hallmark
or (b) Hallmark shall cease to have (i) sufficient voting power to elect a
majority of the Borrower's Board of Directors or (ii) beneficial ownership over
a majority of the issued and outstanding Equity Interests of the Borrower having
voting power.
"Change in Management" shall mean ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇. shall cease
for any reason, including, without limitation, termination of employment, death
or disability (the term "disability" as used herein meaning an inability
continuing for ninety (90) consecutive days to perform his executive functions),
to perform his functions and services as Chairman of the Borrower, and the
Borrower shall fail, for a period of 90 consecutive days following the earliest
date that he may be considered disabled or shall have otherwise ceased to
perform his executive functions with the Borrower to propose a replacement for
him acceptable to the Required Lenders in their sole discretion.
"Charge Over Shares" shall mean a charge over shares to be
delivered by the Borrower in favor of the Agent, in form and substance
satisfactory to the Agent.
"Clearing Account" shall mean the account of the Borrower
maintained at the office of the Agent at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇-▇▇▇▇, designated as the "Crown Media, Inc. - Clearing Account", Account
No. 323224679.
"Closing Date" shall mean the date on which the conditions
precedent set forth in Section 4.1 have been satisfied or waived.
"Code" shall mean the Internal Revenue Code of 1986 and the
rules and regulations issued thereunder, as heretofore and hereafter amended, as
codified at 26 U.S.C. et seq., or any successor provision thereto.
"Collateral" shall mean with respect to each Credit Party, all
of such Credit Party's right, title and interest in and to all personal
property, tangible and intangible, wherever located or situated and whether now
owned, presently existing or hereafter acquired or created, including, but not
limited to, all goods, accounts, instruments, intercompany obligations, contract
rights, partnership and joint venture interests, documents, chattel paper,
general intangibles, goodwill, equipment, machinery, inventory, investment
property, copyrights, trademarks (other than any rights which such Credit Party
may have in and to the "Hallmark" and "Odyssey" trademarks), trade names,
insurance proceeds, cash, deposit accounts and the Pledged Securities, and any
proceeds thereof, products thereof or income therefrom, further including, but
not limited to, all of such Credit Party's right, title and interest in and to
each and every item and type of Product, the scenario, screenplay or script upon
which an item of Product is based, all of the properties thereof, tangible and
intangible, and all domestic and foreign copyrights and all other rights therein
and thereto, of every kind and character, whether now in existence or hereafter
to be made or produced, and whether or not in possession of such Credit Party,
including with respect to each and every item of Product and without limiting
the foregoing
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language, each and all of the following particular rights and properties (to the
extent they are now owned or hereafter owned by such Credit Party):
(i) all scenarios, screenplays and/or scripts at
every stage thereof;
(ii) all common law and/or statutory copyright and
other rights in all literary and other properties (hereinafter called "said
literary properties") which form the basis of such item of Product and/or which
are or will be incorporated into such item of Product, all component parts of
such item of Product consisting of said literary properties, all motion picture
rights in and to the story, all treatments of said story and said literary
properties, together with all preliminary and final screenplays used and to be
used in connection with such item of Product, and all other literary material
upon which such item of Product is based or from which it is adapted;
(iii) all motion picture rights in and to all music
and musical compositions used and to be used in such item of Product, if any,
including, each without limitation, all rights to record, rerecord, produce,
reproduce or synchronize all of said music and musical compositions in and in
connection with motion pictures;
(iv) all tangible personal property relating to such
item of Product, including, without limitation, all exposed film, developed
film, positives, negatives, prints, positive prints, answer prints, special
effects, preparing materials (including interpositives, duplicate negatives,
internegatives, color reversals, intermediates, lavenders, fine grain master
prints and matrices, and all other forms of pre-print elements), sound tracks,
cutouts, trims and any and all other physical properties of every kind and
nature relating to such item of Product whether in completed form or in some
state of completion, and all masters, duplicates, drafts, versions, variations
and copies of each thereof, in all formats whether on film, videotape, disk or
other optical or electronic media or otherwise and all music sheets and
promotional materials relating to such item of Product (collectively, the
"Physical Materials");
(v) all collateral, allied, subsidiary and
merchandising rights appurtenant or related to such item of Product including,
without limitation, the following rights: all rights to produce remakes, sequels
or prequels to such item of Product, based upon such item of Product, said
literary properties or the theme of such item of Product and/or the text or any
part of said literary properties; all rights throughout the world to broadcast,
transmit and/or reproduce by means of television (including commercially
sponsored, sustaining and subscription or "pay" television) or by streaming
video or by other means over the internet or any other open or closed physical
or wireless network or by any process analogous to any of the foregoing, now
known or hereafter devised, such item of Product or any remake, sequel or
prequel to the item of Product; all rights to produce primarily for television
or similar use, a motion picture or series of motion pictures, by use of film or
any other recording device or medium now known or hereafter devised, based upon
such item of Product, said literary properties or any part thereof, including,
without limitation, based upon any script, scenario or the like used in such
item of Product; all merchandising rights including, without limitation, all
rights to use, exploit and license others to use and exploit any and all
commercial tie-ups of any kind arising out of or connected with said literary
properties, such item of Product, the title or titles of such item of Product,
the characters of such item of Product and/or said literary
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15
properties and/or the names or characteristics of said characters and including
further, without limitation, any and all commercial exploitation in connection
with or related to such item of Product, any remake, sequel or prequel thereof
and/or said literary properties;
(vi) all statutory copyrights, domestic and foreign,
obtained or to be obtained on such item of Product, together with any and all
copyrights obtained or to be obtained in connection with such item of Product or
any underlying or component elements of such item of Product, including, in each
case without limitation, all copyrights on the property described in
subparagraphs (i) through (v) inclusive, of this definition, together with the
right to copyright (and all rights to renew or extend such copyrights) and the
right to ▇▇▇ in the name of any of the Credit Parties for past, present and
future infringements of copyright;
(vii) all insurance policies and completion
guaranties connected with such item of Product and all proceeds which may be
derived therefrom;
(viii) all rights to distribute, sell, rent, license
the exhibition of and otherwise exploit and turn to account such item of
Product, the Physical Materials, the motion picture rights in and to the story
and/or other literary material upon which such item of Product is based or from
which it is adapted, and the music and musical compositions used or to be used
in such item of Product;
(ix) any and all sums, proceeds, money, products,
profits or increases, including money profits or increases (as those terms are
used in the UCC or otherwise) or other property obtained or to be obtained from
the distribution, exhibition, sale or other uses or dispositions of such item of
Product or any part of such item of Product, including, without limitation, all
sums, proceeds, profits, products and increases, whether in money or otherwise,
from the sale, rental or licensing of such item of Product and/or any of the
elements of such item of Product including, without limitation, from collateral,
allied, subsidiary and merchandising rights, and further including, without
limitation, all monies held in any Collection Account;
(x) the dramatic, nondramatic, stage, television,
radio and publishing rights, title and interest in and to such item of Product,
and the right to obtain copyrights and renewals of copyrights therein;
(xi) the name or title of such item of Product and
all rights of such Credit Party to the use thereof, including, without
limitation, rights protected pursuant to trademark, service ▇▇▇▇, unfair
competition and/or any other applicable statutes, common law, or other rule or
principle of law;
(xii) any and all contract rights and/or chattel
paper which may arise in connection with such item of Product;
(xiii) all accounts and/or other rights to payment
which such Credit Party presently owns or which may arise in favor of such
Credit Party in the future, including, without limitation, any refund or rebate
in connection with a completion guaranty or otherwise, all accounts and/or
rights to payment due from Persons in connection with the distribution of such
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item of Product, or from the exploitation of any and all of the collateral,
allied, subsidiary, merchandising and other rights in connection with such item
of Product;
(xiv) any and all "general intangibles" (as that term
is defined in the UCC) not elsewhere included in this definition, including,
without limitation, any and all general intangibles consisting of any right to
payment which may arise in connection with the distribution or exploitation of
any of the rights set out herein, and any and all general intangible rights in
favor of such Credit Party for services or other performances by any third
parties, including actors, writers, directors, individual producers and/or any
and all other performing or nonperforming artists in any way connected with such
item of Product, any and all general intangible rights in favor of such Credit
Party relating to licenses of sound or other equipment, or licenses for any
photograph or photographic or other processes, and any and all general
intangibles related to the distribution or exploitation of such item of Product
including general intangibles related to or which grow out of the exhibition of
such item of Product and the exploitation of any and all other rights in such
item of Product set out in this definition;
(xv) any and all goods including, without limitation,
inventory (as that term is defined in the UCC) which may arise in connection
with the creation, production or delivery of such item of Product and which
goods pursuant to any production or distribution agreement or otherwise are
owned by such Credit Party;
(xvi) all and each of the rights, regardless of
denomination, which arise in connection with the acquisition, creation,
production, completion of production, delivery, distribution, or other
exploitation of such item of Product, including, without limitation, any and all
rights in favor of such Credit Party, the ownership or control of which are or
may become necessary or desirable, in the opinion of the Administrative Agent,
in order to complete production of such item of Product in the event that the
Administrative Agent exercises any rights it may have to take over and complete
production of such item of Product;
(xvii) any and all documents issued by any
pledgeholder or bailee with respect to such item of Product or any Physical
Materials (whether or not in completed form) with respect thereto;
(xviii) any and all Collection Accounts or other bank
accounts established by such Credit Party with respect to such item of Product;
(xix) any and all rights of such Credit Party under
any License Agreements or Platform Agreements relating to such item of Product;
and
(xx) any and all rights of such Credit Party under
contracts relating to the production or acquisition of such item of Product,
including, but not limited to, all contracts which have been delivered to the
Agent pursuant to this Credit Agreement.
"Collection Account" shall have the meaning given such term in
Section 8.3 hereof.
"Commitment" shall mean, collectively, the Term Loan
Commitment and the Revolving Loan Commitment of each Lender.
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"Commitment Fees" shall have the meaning given such term in
Section 2.7 hereof.
"Commitment Termination Date" shall mean the earlier to occur
of: (i) August 30, 2006; and (ii) such earlier date on which the Total
Commitment shall terminate in accordance with Section 2.8(a) or Article 7
hereof.
"Consolidated Net Income" shall mean, for any period for which
such amount is being determined, the consolidated net income of such Person for
such period in accordance with GAAP.
"Consolidated Subsidiaries" shall mean, for any Person, all
subsidiaries of such Person which are required or permitted to be consolidated
with such Person for financial reporting purposes in accordance with GAAP.
"Contribution Agreement" shall mean the Contribution Agreement
substantially in the form of Exhibit I hereto to be entered into by the
Guarantors, as such Contribution Agreement may be amended, supplemented or
otherwise modified from time to time.
"Controlled Foreign Corporation" shall mean a Subsidiary of
the Borrower which is a "controlled foreign corporation" as defined in Section
957(a) of the Code or any successor provision thereto.
"Copyright Security Agreement" shall mean the Copyright
Security Agreement, substantially in the form of Exhibit B-1 hereto, as the same
may be amended or supplemented from time to time by delivery of a Copyright
Security Agreement Supplement or otherwise.
"Copyright Security Agreement Supplement" shall mean a
Supplement to the Copyright Security Agreement substantially in the form of
Exhibit B-2 hereto.
"Credit Exposure" shall mean, without duplication, with
respect to any Lender, the sum of such Lender's (i) aggregate outstanding Loans
hereunder and (ii) Pro Rata Share of the then current L/C Exposure.
"Credit Parties" shall mean the Borrower and the Guarantors.
"Crown Media" shall mean Crown Media International, Inc., a
Delaware corporation.
"Crown Media US" shall mean Crown Media United States, LLC, a
Delaware limited liability company.
"Currency Agreement" shall mean any foreign exchange contract,
currency swap agreement, futures contract, option contract, synthetic cap or
other similar agreement designed to protect the Borrower against fluctuations in
currency values.
"Debenture" shall mean a debenture to be delivered by any U.K.
Credit Party in favor of the Agent, in form and substance satisfactory to the
Agent.
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"Default" shall mean any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of Default.
"Dollars" and "$" shall mean lawful money of the United States
of America.
"EBITDA" shall mean, for any period, for the Borrower and its
Subsidiaries on a consolidated basis, the sum for such period of (i)
Consolidated Net Income, (ii) interest expenses deducted in computing
Consolidated Net Income, (iii) provision for income taxes during such period,
(iv) total depreciation expense and (v) total amortization expense (other than
costs associated with the HEDC Library and other similar costs which were not
added back into EBITDA in connection with the five-year business plan presented
to the Lenders prior to the date hereof), all as determined for such period in
conformity with GAAP excluding non-cash extraordinary, unusual or non-recurring
gains and losses (e.g., shutdown and consolidation expenses), recognizing that
for purposes of this definition write-downs and amortization of capitalized film
costs are not considered to be extraordinary, unusual or non-recurring.
"Environmental Laws" shall mean any and all federal, state,
local or municipal laws, rules, orders, regulations, statutes, ordinances,
codes, decrees or requirements of any Governmental Authority regulating,
relating to, or imposing liability or standards of conduct concerning, any
Hazardous Material or environmental protection or health and safety, as now or
at any time hereafter in effect, including without limitation, the Clean Water
Act also known as the Federal Water Pollution Control Act ("FWPCA"), 33 U.S.C.
Section 1251 et seq., the Clean Air Act ("CAA"), 42 U.S.C. Sections 7401 et
seq., the Federal Insecticide, Fungicide and Rodenticide Act ("FIFRA"), 7 U.S.C.
Sections 136 et seq., the Surface Mining Control and Reclamation Act ("SMCRA"),
30 U.S.C. Sections 1201 et seq., the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), 42 U.S.C. Section 9601 et seq., the
Superfund Amendments and Reauthorization Act of 1986 ("▇▇▇▇"), Public Law
99-499, 100 Stat. 1613, the Emergency Planning and Community Right to Know Act
("EPCRA"), 42 U.S.C. Section 11001 et seq., the Resource Conservation and
Recovery Act ("RCRA"), 42 U.S.C. Section 6901 et seq., the Occupational Safety
and Health Act as amended ("OSHA"), 29 U.S.C. Section 655 and Section 657, and
other such laws relating to the storage, transportation, treatment and disposal
of Hazardous Materials into the air, surface water, ground water, land surface,
subsurface strata or any building or structure and, together, in each case, with
any amendment thereto, and the regulations adopted pursuant thereto.
"Equity Interest" shall mean shares of the capital stock,
partnership interests, membership interest in a limited liability company,
beneficial interests in a trust or other equity interests in any Person or any
warrants, options or other rights to acquire such interests.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as heretofore and hereafter amended, as codified at 29 U.S.C. Section
1001 et seq., and the regulations promulgated thereunder.
"ERISA Affiliate" shall mean each Person (as defined in
Section 3(9) of ERISA) which is treated as a single employer with any Credit
Party under Section 414(b), (c), (m) or (o) of the Code.
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"Eurodollar Loan" shall mean a Loan bearing interest based on
the LIBO Rate in accordance with the provisions of Article 2 hereof.
"Events of Default" shall have the meaning given such term in
Article 7 hereof.
"Executive Officer" shall mean, with respect to any Person,
its chief executive officer, chief operating officer, chief financial officer or
executive or senior vice president.
"Existing Agreement" shall mean the Amended and Restated
Credit and Security Agreement dated as of August 31, 1995 as amended and
restated as of October 16, 1998 among Hallmark, certain of its Subsidiaries, the
lenders party thereto and the Agent.
"Fee Letter" shall mean the letter agreement dated June 27,
2001, between the Borrower and the Agent.
"Fundamental Documents" shall mean this Credit Agreement, the
Notes, the Contribution Agreement, the Pledgeholder Agreements, the Laboratory
Access Letters, the Copyright Security Agreement, the Copyright Security
Agreement Supplements, the Trademark Security Agreement, UCC Financing
Statements, the Charge Over Shares, the Debenture, the Hallmark Cards
Subordination and Support Agreement, the Hallmark Inducement Agreement, the
Limited Guarantee and any other ancillary agreement which is required to be or
otherwise executed by such Credit Party and delivered to the Agent in connection
with this Agreement and, in addition, with respect to the Borrower, the Notes.
"GAAP" shall mean generally accepted accounting principles in
the United States of America consistently applied as in effect on the date
hereof; provided, however, that if either the Required Lenders or the Borrower
proposes that GAAP be modified as a result of any changes allowed by or in
response to FASB releases or other authoritative pronouncements issued after the
date hereof, the Required Lenders or the Borrower (as applicable) agree not to
unreasonably withhold or delay their consent to any such proposal so long as
such proposed modification would not affect the calculation of any of the
financial covenants contained herein.
"Governmental Authority" shall mean any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, or any court, in each case whether of the United States or
foreign.
"Granting Lender" has the meaning specified in Section 13.3.
"Guarantors" shall mean all existing Subsidiaries of the
Borrower (other than H&H Programming Asia, LLC, ▇▇▇▇▇▇ (L) Ltd. and Odyssey
Productions, Ltd.), and any other Subsidiaries which hereafter are required to
become signatories to this Agreement pursuant to Section 5.15 hereof.
"Guaranty" shall mean, as to any Person, any direct or
indirect obligation of such Person guaranteeing or intended to guarantee any
Indebtedness, Capital Lease, dividend or other monetary obligation ("primary
obligation") of any other Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, any obligation of such
Person, whether or not contingent, (a) to purchase any such primary obligation
or any property
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constituting direct or indirect security therefor, (b) to advance or supply
funds (i) for the purchase or payment of any such primary obligation or (ii) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency of the primary obligor, or (c) to purchase
property, securities or services, in each case, primarily for the purpose of
assuring the owner of any such primary obligation. The amount of any Guaranty
shall be deemed to be an amount equal to (x) the stated or determinable amount
of the primary obligation in respect of which such Guaranty is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof (assuming such Person is required to perform thereunder) or (y) the
stated maximum liability under such Guaranty, whichever is less.
"Hallmark" shall mean Hallmark Entertainment, Inc., a Delaware
corporation.
"Hallmark Cards" shall mean Hallmark Cards, Incorporated, a
Missouri corporation.
"Hallmark Cards Letter of Credit" shall mean the Letter of
Credit issued by Credit Suisse First Boston or an Affiliate on behalf of HCC for
the benefit of the Borrower, and substantially in the form of Exhibit L-1
hereto.
"Hallmark Cards Subordination and Support Agreement" shall
mean the subordination and support agreement from Hallmark Cards substantially
in the form of Exhibit K hereto, as amended, supplemented or otherwise modified
from time to time in accordance with the terms thereof.
"Hallmark Inducement Agreement" shall mean the Hallmark
Inducement Agreement substantially in the form of Exhibit O hereto, as amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof.
"Hazardous Materials" shall mean any flammable materials,
explosives, radioactive materials, hazardous materials, hazardous wastes,
hazardous or toxic substances, or similar materials defined as such in any
Environmental Law.
"HCC" shall mean HC Crown Corp., a Delaware corporation.
"HCC Promissory Note" shall mean the promissory note dated as
of August 31, 2001 among the Borrower, as borrower, Crown Media International,
Inc. and Crown Media United States, LLC, as guarantors, and HCC, as lender.
"HEDC" shall mean Hallmark Entertainment Distribution, LLC, a
Delaware limited liability company.
"HEDC Library" shall mean the seven hundred two titles in
which the Borrower is to obtain certain rights pursuant to the HEDC Purchase
Agreement.
"HEDC License Agreements" shall mean (i) prior to the Closing
Date, the Program License Agreement dated as of July 1, 1999 between HEDC and
Crown Media and, subsequent to the Closing Date, the amended and restated
version thereof substantially in the form of Exhibit M-1 hereto and (ii) prior
to the Closing Date, the Program License Agreement
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dated as of November 13, 1998 between HEDC and Crown Media US and, subsequent to
the Closing Date, the amended and restated version thereof substantially in the
form of Exhibit M-2 hereto.
"HEDC Purchase Agreement" shall mean the Purchase and Sale
Agreement dated as of April 10, 2001 between HEDC and the Borrower pursuant to
which the Borrower is acquiring rights in the HEDC Library, a copy of which is
attached hereto as Exhibit N.
"Indebtedness" shall mean (without double counting), at any
time and with respect to any Person, (i) indebtedness of such Person for
borrowed money (whether by loan or the issuance and sale of debt securities) or
for the deferred purchase price of property or services purchased (other than
amounts constituting trade payables (payable within 90 days) arising in the
ordinary course of business); (ii) obligations of such Person in respect of
letters of credit, acceptance facilities, or drafts or similar instruments
issued or accepted by banks and other financial institutions for the account of
such Person; (iii) obligations of such Person under Capital Leases; (iv)
deferred payment obligations of such Person resulting from the adjudication or
settlement of any litigation; (v) obligations of such Person under synthetic
leases or financing leases (but not operating leases); and (vi) indebtedness of
others of the type described in clauses (i), (ii), (iii), (iv) and (v) hereof
which such Person has (a) directly or indirectly assumed or guaranteed in
connection with a Guaranty or (b) secured by a Lien on the assets of such
Person, whether or not such Person has assumed such indebtedness (provided, that
if such Person has not assumed such indebtedness of another Person then the
amount of indebtedness of such Person pursuant to this clause (vi) for purposes
of this Credit Agreement shall be equal to the lesser of the amount of the
indebtedness of the other Person and the fair market value of the assets of such
Person which secure such other indebtedness).
"Initial Date" shall mean (i) in the case of the Agent and the
Issuing Bank, the date hereof, (ii) in the case of each Lender which is an
original party to this Credit Agreement, the date hereof and (iii) in the case
of any other Lender, the effective date of the Assignment and Acceptance
pursuant to which it became a Lender.
"Instrument of Assumption and Joinder" shall mean an
Instrument of Assumption and Joinder substantially in the form of Exhibit J
hereto.
"Interest Coverage Ratio" shall mean, for any period, in
respect of the Borrower and its Subsidiaries on a consolidated basis, the ratio
of (a) EBITDA of such Persons for such period to (b) the Interest Expense of
such Persons with respect to the corresponding period.
"Interest Deficit" shall have the meaning given such term in
Section 2.16 hereof.
"Interest Expense" shall mean, for any period in respect of
the Borrower and its Subsidiaries, the sum of (a) the interest expense
(including the interest component in respect of Capital Lease obligations), plus
(b) all commitment fees, letter of credit fees, issuing bank fees, or similar
fees paid by such Persons during such period in respect of any Indebtedness,
plus (c) the net amounts paid by such Persons during such period in connection
with any Interest Rate Protection Agreement, Currency Agreement or other hedging
arrangement, plus (d) any
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22
dividends or similar amounts paid by such Persons during such period in respect
of any preferred stock.
"Interest Payment Date" shall mean (i) as to any Eurodollar
Loan having an Interest Period of one, two or three months, the last day of such
Interest Period, (ii) as to any Eurodollar Loan having an Interest Period of at
least six months, the last day of such Interest Period and, in addition, each
date during such Interest Period that is an integral multiple of three months
from the commencement of such Interest Period and (iii) with respect to
Alternate Base Rate Loans, the last Business Day of each March, June, September
and December (commencing the last Business Day of September 2001).
"Interest Period" shall mean as to any Eurodollar Loan, the
period commencing on the date of such Loan or the last day of the preceding
Interest Period and ending on the numerically corresponding day (or if there is
no corresponding day, the last day) in the calendar month that is one, two,
three, six or twelve months thereafter as the Borrower may elect; provided,
however, that (i) if any Interest Period would end on a day which shall not be a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day, unless such next succeeding Business Day would fall in the next
calendar month, in which case, such Interest Period shall end on the next
preceding Business Day, (ii) no Interest Period may be selected which would end
later than the Maturity Date, (iii) interest shall accrue from and including the
first day of such Interest Period to but excluding the last date of such
Interest Period and (iv) no Interest Period of six or twelve months may be
selected unless such Interest Period is available from all of the Lenders.
"Interest Rate Protection Agreement" shall mean any interest
rate swap agreement, interest rate cap agreement, synthetic cap, collar or floor
or other financial agreement or arrangement designed to protect a Credit Party
against fluctuations in interest rates.
"Interest Rate Type" shall have the meaning given such term in
Section 2.3 hereof.
"Investment" shall mean any stock, evidence of indebtedness or
other security of any Person, any loan, advance, contribution of capital,
extension of credit or commitment therefor (including, without limitation, the
Guaranty of loans made to others, but excluding current trade and customer
accounts receivable arising in the ordinary course of business and payable in
accordance with customary trading terms in the ordinary course of business), any
purchase of (i) any security of another Person or (ii) any business or
undertaking of any Person or any commitment to make any such purchase, or any
other investment.
"Issuing Bank" shall mean (i) The Chase Manhattan Bank, a
New
York banking corporation, in its capacity as such or (ii) such successor as may
be appointed pursuant to Section 12.12 hereof.
"Laboratory" shall mean any laboratory acceptable to the Agent
which is located in the United States and is a party to a Pledgeholder Agreement
or a Laboratory Access Letter.
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23
"Laboratory Access Letter" shall mean a letter agreement among
(i) a Laboratory holding any elements of any Product to which any Credit Party
has the right of access, (ii) such Credit Party and (iii) the Agent,
substantially in the form of Exhibit F hereto or a form otherwise acceptable to
the Agent.
"L/C Exposure" shall mean, at any time, the amount expressed
in Dollars of the aggregate face amount of all drafts which may then or
thereafter be presented by beneficiaries under all Letters of Credit then
outstanding, plus (without duplication) the face amount of all drafts which have
been presented or accepted under Letters of Credit but have not yet been paid or
have been paid but not reimbursed, whether directly or from the proceeds of a
Loan hereunder.
"Lender" and "Lenders" shall mean the financial institutions
whose names appear at the foot hereof and any assignee of a Lender pursuant to
Section 13.3(b).
"Lending Office" shall mean, with respect to any of the
Lenders, the branch or branches (or affiliate or affiliates) from which any such
Lender's Eurodollar Loans or Alternate Base Rate Loans, as the case may be, are
made or maintained and for the account of which all payments of principal of,
and interest on, such Lender's Eurodollar Loans or Alternate Base Rate Loans are
made, as notified to the Agent from time to time.
"Letter of Credit" shall mean a letter of credit issued
pursuant to Section 2.4.
"Leverage Ratio" shall mean, as at any date of determination,
in respect of the Borrower and its Subsidiaries on a consolidated basis, the
ratio of (a) the aggregate principal amount of Indebtedness of such Persons as
at such date of determination (excluding, for these purposes, (i) preferred
stock (no matter how classified under GAAP) and (ii) non-interest bearing
obligations of such Persons owing to Affiliates thereof) to (b) EBITDA of such
Persons for the 12-month period ending on such date of determination.
"LIBO Rate" shall mean, with respect to the Interest Period
for a Eurodollar Loan, an interest rate per annum equal to the quotient (rounded
upwards to the next 1/100 of 1%) of (A) the average of the rates at which Dollar
deposits approximately equal in principal amount to The Chase Manhattan Bank's
portion of such Eurodollar Loan and for a maturity equal to the applicable
Interest Period are offered to the Lending Office of The Chase Manhattan Bank in
immediately available funds in the London interbank market for eurodollars at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period divided by (B) one minus the applicable
statutory reserve requirements of The Chase Manhattan Bank, expressed as a
decimal (including without duplication or limitation, basic, supplemental,
marginal and emergency reserves), from time to time in effect under Regulation D
or similar regulations of the Board of Governors of the Federal Reserve System.
It is agreed that for purposes of this definition, Eurodollar Loans made
hereunder shall be deemed to constitute Eurocurrency Liabilities as defined in
Regulation D and to be subject to the reserve requirements of Regulation D.
"Library Credit" shall mean 50% of the most recent library
valuation delivered to the Agent by the Borrower pursuant to Section 4.1,
Section 5.1(h) or Section 5.1(i) (it being
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24
understood that such valuation will be determined based on the net present value
of all cash flows of the Borrower (with cash flows for sold rights to be
determined based on the net receivables relating thereto and the cash flows for
unsold rights to be based on an estimate of the anticipated net cash flows
relating thereto)), subject to the Agent's approval as set forth herein;
provided, however, that all rights under license agreements for which HEDC
retains rights and obligations pursuant to the HEDC Purchase Agreement shall not
be included in such valuation. The Library Credit will be adjusted immediately
upon receipt of the valuation contemplated by Section 5.1(h); provided, however,
that the Agent may object to the amount contained in such valuation and may then
determine the Library Credit to be a lesser amount provided that the Agent shall
have notified the Borrower in writing of such objection and the reasons
therefor. In the event the valuation is not received within 30 days after it is
due from the Borrower, the Agent may determine the Library Credit in its
discretion. The Library Credit will be reduced immediately upon receipt of any
valuation pursuant to Section 5.1(i) to the extent that such valuation indicates
that a decrease is to be made but shall be increased only to the extent that the
Agent shall have notified the Borrower in writing that the methodology used and
the end result is reasonably satisfactory to it.
"License Agreements" shall mean any and all agreements entered
into by any Credit Party pursuant to which such Credit Party acquires license
rights in any item of Product (including the HEDC License Agreements).
"Lien" shall mean any mortgage, pledge, security interest,
copyright mortgage, encumbrance, lien or charge of any kind whatsoever
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, and the filing of or agreement to give any financing
statement under the Uniform Commercial Code of any jurisdiction).
"Limited Guarantee" shall mean a Limited Guarantee Agreement
and Acknowledgment by Hallmark Cards in favor of the Agent substantially in the
form attached hereto as Exhibit L, as it may be amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof.
"Loans" shall mean the Revolving Credit Loans and/or the Term
Loans.
"Margin Stock" shall be as defined in Regulation U of the
Board.
"Material Adverse Effect" shall mean any change or effect that
(a) has a materially adverse effect on the business, assets, properties,
operations, condition (financial or otherwise) or prospects of the Borrower and
its Subsidiaries, taken as a whole, (b) materially impairs the ability of any
Credit Party to perform its respective obligations under the Fundamental
Documents to which it is a party, (c) materially impairs the validity or
enforceability of, or materially impairs the security interests, rights,
remedies or benefits available to the Agent or the Lenders under any of the
Fundamental Documents; (d) has a material adverse effect on the Collateral or
the Pledged Securities taken as a whole, or (e) results in a decrease in the
amount of the Library Credit to an amount less than the greater of (i) the
aggregate amount of the Commitments then in effect and (ii) the sum of
outstanding Loans plus the L/C Exposure.
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"Maturity Date" shall mean August 31, 2006.
"Multiemployer Plan" shall mean a plan that is a multiemployer
plan as defined in Section 4001(a)(3) of ERISA to which any Credit Party or
ERISA Affiliate is making or accruing an obligation to make contributions or has
within any of the five preceding plan years made or accrued an obligation to
make contributions.
"Net Cash Proceeds" shall mean cash payments received in
exchange for the issuance of any debt or equity security by any Credit Party net
of commissions and other reasonable fees and expenses incurred, any taxes
payable and reasonably estimated income taxes payable with respect to the fiscal
year during which such issuance occurs, as a consequence of any repatriation of
such cash payments.
"Net Worth" shall mean the amount of total stockholders'
equity (including capital stock and retained earnings and deficit) of the
Borrower and its Consolidated Subsidiaries.
"Note" or "Notes" shall mean the Term Note(s) and/or the
Revolving Credit Note(s).
"Obligations" shall mean the obligation of the Borrower to
make due and punctual payment of (i) principal of and interest on the Loans, the
Commitment Fees, any reimbursement obligations (current or contingent) in
respect of Letters of Credit, costs and attorneys' fees and all other monetary
obligations of the Borrower to the Agent, the Issuing Bank or any Lender under
this Agreement, the Notes, any other Fundamental Document or the Fee Letter,
(ii) all amounts payable by the Borrower to any Lender under any Currency
Agreement or Interest Rate Protection Agreement, provided that the
Administrative Agent shall have received written notice thereof within ten (10)
Business Days after execution of such Currency Agreement or Interest Rate
Protection Agreement and (iii) amounts payable to any Lender or any of its
Affiliates in connection with any bank account maintained by the Borrower or any
other Credit Party at any Lender or any such Affiliate or any other banking
services provided to the Borrower or any other Credit Party by any Lender or any
such Affiliate.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.
"Percentage" shall mean each Lender's percentage share of the
Total Commitment as set forth in the Schedule of Commitments opposite the name
of such Lender in the column captioned "Percentage" (as the same may be modified
pursuant to any Assignment and Acceptance to which such Lender is a party).
"Permitted Encumbrances" shall mean Liens permitted under
Section 6.2 hereof.
"Person" shall mean any natural person, corporation, division
of a corporation, partnership, trust, joint venture, association, company,
estate, unincorporated organization or government or any agency or political
subdivision thereof.
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"Physical Materials" shall have the meaning given to such term
in paragraph (iv) of the definition of "Collateral" herein.
"Plan" shall mean an employee benefit plan within the meaning
of Section 3(3) of ERISA (other than a Multiemployer Plan) which is maintained
or contributed to by any Credit Party or any ERISA Affiliates, or with respect
to which any Credit Party could otherwise have any liability.
"Platform Agreements" shall mean any and all agreements
entered into by a Credit Party with a television distributor pursuant to which
the television distributor agrees to deliver channels owned by a Credit Party to
subscribers in exchange for a fee.
"Pledged Collateral" shall mean the Pledged Securities and any
proceeds (as defined in Section 9-102(a)(64) of the UCC) of the Pledged
Securities.
"Pledged Securities" shall mean all of the issued and
outstanding capital stock or other equity interests of each of the Guarantors
directly or indirectly owned by the Borrower (other than any Controlled Foreign
Corporation which the Borrower has elected to pledge only 65% of the stock of
such Controlled Foreign Corporation) and all other equity securities or
interests now owned or hereafter acquired by any of the Credit Parties,
including without limitation the securities listed in Schedule 3.6(a) hereto.
"Pledgeholder Agreement" shall mean a Laboratory Pledgeholder
Agreement among a Credit Party, the Agent, and one or more Laboratories located
within the continental United States, substantially in the form of Exhibit C
hereto, or in such other form as shall be acceptable to the Agent.
"Pledgor" shall mean those Credit Parties that own any Pledged
Securities.
"Prepayment Date" shall have the meaning given to such term in
Section 2.11(h) hereof.
"Product" shall mean any movie-of-the-week, episode of a
television series, mini-series, motion picture, film, videotape or other program
produced for television release or for release in any other medium, shown on
network, free, cable, pay and/or other television medium (including without
limitation first run syndication) in each case whether recorded on film,
videotape, cassette, cartridge, disc or on or by any other means, method,
process or device whether now known or hereafter developed. The term "Product"
shall include, without limitation, the scenario, screenplay or script upon which
such item of Product is based, all of the properties thereof, tangible and
intangible, and whether now in existence or hereafter to be made or produced,
whether or not in possession of any of the Credit Parties, and all rights
therein and thereto, of every kind and character.
"Pro Rata Share" shall mean with respect to any Obligation or
other amount, each Lender's pro rata share of such Obligation or other amount
determined in accordance with each Lender's Percentage.
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"Regulation D", "Regulation T", "Regulation U" and "Regulation
X" shall mean such regulation of the Board.
"Reportable Event" shall mean any reportable event as
described in Section 4043(c) of ERISA, other than a reportable event as to which
provision for 30-day notice to the PBGC would be waived under applicable
regulations had the regulations in effect on the Closing Date been in effect on
the date of occurrence of such reportable event.
"Required Lenders" shall mean (i) the Lenders holding at least
51% of the outstanding Credit Exposure or (ii) if at the time there is zero
Credit Exposure, the Lenders holding at least 51% of the Total Commitment.
"Restricted Payment" shall mean (i) any distribution, dividend
or other direct or indirect payment on account of any Equity Interest in a
Credit Party or an Affiliate, in each case whether now or hereafter outstanding;
(ii) any redemption or other acquisition or re-acquisition by a Credit Party of
any Equity Interest in a Credit Party or an Affiliate, in each case whether now
or hereafter outstanding; (iii) any payment by a Credit Party of principal of,
premium or liquidated damages, if any, interest on, fees in relation to, or any
redemption, purchase, retirement, defeasance, sinking fund, or any other payment
with respect to, any Subordinated Debt, or any reduction of HCC's funding
commitment under the HCC Promissory Note; (iv) any payment in relation to the
Schedule 1.5 Obligations (whether to Hallmark, Hallmark Cards, any Affiliate
thereof or any third party unaffiliated therewith); and (v) any other payment
(whether in cash or in kind) to Hallmark, Hallmark Cards, or any Affiliate
thereof.
"Revolving Credit Commitment" shall mean the commitment of
each Lender to make Revolving Credit Loans to the Borrower and to participate in
Letters of Credit from the Initial Date applicable to such Lender through the
Commitment Termination Date up to an aggregate amount, at any one time, not in
excess of the amount set forth (i) opposite its name under the column entitled
"Revolving Credit Commitment" in the Schedule of Commitments appearing in
Schedule 1, or (ii) in any applicable Assignment and Acceptance(s) to which it
may be a party, as the case may be, as such amount may be reduced from time to
time in accordance with the terms of this Credit Agreement.
"Revolving Credit Loans" shall mean the loans made hereunder
in accordance with the provisions of Section 2.1(a) or 2.1(b), whether made as a
Eurodollar Loan or an Alternate Base Rate Loan, as permitted hereby.
"Revolving Credit Notes" shall have the meaning given such
term in Section 2.5(a) hereof.
"Schedule 1.5 Obligations" shall mean the obligations referred
to in Schedule 1.5 of the HEDC Purchase Agreement, as assumed by the Borrower
pursuant to the HEDC Purchase Agreement.
"S.E.C." shall mean the Securities and Exchange Commission or
any successor thereto.
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"Sale/Leaseback Powers of Attorney" shall mean powers of
attorney executed by HEDC appointing the Borrower as its attorney-in-fact in
connection with each sale/leaseback transaction to which HEDC or any of its
predecessors in interest is a party, each substantially in the form of Exhibit P
hereto.
"SPC" has the meaning specified in Section 13.3.
"Subordinated Debt" or "Subordinated Indebtedness" shall mean
all Indebtedness or other obligations of the Borrower subordinated to the
Obligations pursuant to written agreements, containing interest rates, payment
terms, maturities, amortization schedules, covenants, defaults, remedies,
subordination provisions and other material terms in form and substance
satisfactory to the Agent and the Required Lenders in their sole discretion. For
the avoidance of doubt, the terms "Subordinated Debt" and "Subordinated
Indebtedness" shall include, without limitation, the "Subordinated Obligations"
(as such term is defined in the Hallmark Cards Subordination and Support
Agreement).
"Subscriber" shall mean any Person or location that receives a
channel owned or operated by a Credit Party either directly from a pay
television distributor party to a Platform Agreement or from cable operators to
whom such pay television distributors sublicense the right to distribute such
channel.
"Subsidiary" shall mean with respect to any Person, any
corporation, association, joint venture, partnership, limited liability company
or other business entity (whether now existing or hereafter organized) of which
at least a majority of the voting stock or other ownership interests having
ordinary voting power for the election of directors (or the equivalent) is, at
the time as of which any determination is being made, owned or controlled by
such Person or one or more subsidiaries of such Person or by such Person and one
or more subsidiaries of such Person. For the avoidance of doubt, HM Holdings of
Delaware, LLC and Hallmark India Private Limited shall be considered
"Subsidiaries" for all purposes hereof.
"Term Loan Commitment" shall mean the commitment of each
Lender to make a Term Loan to the Borrower up to an aggregate amount not in
excess of the amount set forth (i) opposite its name under the column entitled
"Term Loan Commitment" in the Schedule of Commitments appearing in Schedule 1,
or (ii) in any applicable Assignment and Acceptance(s) to which it may be a
party, as the case may be, as such amount may be reduced from time to time in
accordance with the terms of this Credit Agreement.
"Term Loans" shall mean the loans made hereunder in accordance
with the provisions of Section 2.2(a).
"Term Notes" shall have the meaning given such term in Section
2.5(b) hereof.
"Total Commitment" shall mean the aggregate amount of the
Commitments.
"Trademark Security Agreement" shall mean the Trademark
Security Agreement substantially in the form of Exhibit E hereto, as the same
may be amended or supplemented from time to time in accordance with the terms
hereof.
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"UCC" shall mean the Uniform Commercial Code as in effect in
the State of New York on the date of execution of this Agreement.
2. THE LOANS
SECTION 2.1. Revolving Credit Loans. (a) Each Lender, severally and not
jointly, agrees, upon the terms and subject to the conditions hereof, to make
its Pro Rata Share of Revolving Credit Loans to the Borrower on any Business Day
and from time to time from the Closing Date and prior to the Commitment
Termination Date, each in an amount which when added to the aggregate principal
amount of all Revolving Credit Loans then outstanding to the Borrower from such
Lender and such Lender's Pro Rata Share of the then-current L/C Exposure does
not exceed such Lender's Revolving Credit Commitment. Furthermore, no Revolving
Credit Loan shall be made which would result in the sum of (x) the aggregate
principal amount of all outstanding Revolving Credit Loans and Term Loans and
(y) the then-current L/C Exposure exceeding the amount of the Library Credit
then in effect.
(b) Subject to the terms hereof, the Borrower may borrow,
repay and reborrow amounts constituting the Revolving Credit Commitments.
(c) Subject to Section 2.2 hereof, the Loans shall be made at
such times as the Borrower shall request, but the Lenders shall not be required
to make Loans hereunder more often than once each calendar week.
(d) Payments of the Revolving Credit Loans which are not made
as a result of an optional or mandatory termination or reduction of the
Revolving Credit Commitments shall not reduce the Revolving Credit Commitments.
SECTION 2.2. Term Loans. (a) Each Lender, severally and not jointly,
agrees, upon the terms and subject to the conditions hereof, to make its Pro
Rata Share of the Term Loans to the Borrower on the Closing Date in a principal
amount not exceeding the amount of such Lender's Term Loan Commitment.
(b) Once repaid, amounts constituting the Term Loan
Commitments may not be reborrowed.
SECTION 2.3. Making of Loans. (a) Each Loan shall be an Alternate Base
Rate Loan or a Eurodollar Loan (each such type of Loan, an "Interest Rate Type")
as the Borrower may request subject to and in accordance with this Section. The
Borrower shall give the Agent prior written, facsimile or telephonic (promptly
confirmed in writing) notice of (i) at least three Business Days for a Borrowing
which is to consist of Eurodollar Loans and (ii) at least one Business Day for a
Borrowing which is to consist of Alternate Base Rate Loans. Each such notice in
order to be effective must be received by the Agent not later than 1:00 p.m.,
New York City time, on the day required and shall specify the date (which shall
be a Business Day) on which such Borrowing is to be made and the aggregate
principal amount of the requested Borrowing. Each such notice shall be
irrevocable and shall specify whether the Borrowing then being requested is to
consist of Alternate Base Rate Loans or Eurodollar Loans, and in the case of
Eurodollar Loans, the Interest Period or Interest Periods with respect thereto.
If no election of
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an Interest Period is specified in such notice in the case of a Borrowing
consisting of Eurodollar Loans, such notice shall be deemed to be a request for
an Interest Period of one month. If no election is made as to the Interest Rate
Type of any Borrowing, such notice shall be deemed a request for a Borrowing
consisting of Alternate Base Rate Loans. No Borrowing shall consist of
Eurodollar Loans if after giving effect thereto an aggregate of more than ten
(10) separate Eurodollar Loans would be outstanding hereunder with respect to
each Lender (determined in accordance with Section 2.10(c) hereof).
(b) The Agent shall promptly notify each Lender of its
proportionate share of each Borrowing under this Section, the date of such
Borrowing, the Interest Rate Type of each Loan being requested and the Interest
Period or Interest Periods applicable thereto. On the borrowing date specified
in such notice, each Lender shall make its share of the Borrowing available at
the offices of The Chase Manhattan Bank, Loan and Agency Services Group, One
Chase ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, for credit to the Clearing Account no later than 1:00 p.m., New York
City time, in Federal or other immediately available funds. Upon receipt of any
funds to be made available by the Lenders to fund any Borrowing hereunder, the
Agent shall disburse such funds by depositing them into an account specified by
the Borrower.
(c) Each Lender may at its option fulfill its obligation to
make Eurodollar Loans by causing a foreign branch or affiliate to fund such
Eurodollar Loans, provided that any exercise of such option shall not affect the
obligation of the Borrower to repay the Loans in accordance with the terms
hereof and of the Notes. Subject to the other provisions of this Section, Loans
of more than one type may be outstanding at the same time.
(d) The amount of any Borrowing of new funds hereunder shall
be in an aggregate principal amount of $500,000 for Alternate Base Rate Loans
and $1,000,000 for Eurodollar Loans (or such lesser amount as shall equal the
available but unused portion of the Revolving Credit Commitments) or such
greater amount which is an integral multiple of $500,000.
SECTION 2.4. Letters of Credit. (a) Upon the terms and subject to the
conditions hereof, the Issuing Bank agrees, upon the request of the Borrower, to
issue Letters of Credit, payable in Dollars from time to time after the Closing
Date and prior to the 30th day prior to the Commitment Termination Date,
provided that (i) the Borrower shall not request, and the Issuing Bank shall not
issue, any Letter of Credit, if after giving effect thereto, (A) the sum of the
then-current L/C Exposure plus the aggregate amount of all outstanding Revolving
Credit Loans and Term Loans would exceed the amount of the Library Credit then
in effect, (B) the sum of the then-current L/C Exposure plus the aggregate
amount of all outstanding Revolving Credit Loans would exceed the Revolving
Credit Commitment then in effect, or (C) the sum of the then-current L/C
Exposure would exceed $20,000,000 and (ii) in no event shall the Issuing Bank be
required to issue any Letter of Credit having an expiration date (x) later than
the tenth Business Day prior to the Commitment Termination Date or (y) more than
one year after its date of issuance.
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(i) Immediately upon the issuance of each Letter of
Credit, each Lender shall be deemed to, and hereby agrees to, have irrevocably
purchased from the Issuing Bank a participation in such Letter of Credit in
accordance with such Lender's Percentage.
(ii) Each Letter of Credit may, at the option of the
Issuing Bank, provide that the Issuing Bank may (but shall not be required to)
pay all or any part of the maximum amount which may at any time be available for
drawing thereunder to the beneficiary thereof upon the occurrence or
continuation of an Event of Default and the acceleration of the maturity of the
Loans, provided that, if payment is not then due to the beneficiary, the Issuing
Bank shall deposit the funds in question in a segregated account with the
Issuing Bank to secure payment to the beneficiary and any funds so deposited
shall be paid to the beneficiary of the Letter of Credit if conditions to such
payment are satisfied or returned to the Issuing Bank for distribution to the
Lenders (or, if all Obligations shall have been paid in full in cash, to the
Borrower) if no payment to the beneficiary has been made and the final date
available for drawings under the Letter of Credit has passed. Each payment or
deposit of funds by the Issuing Bank as provided in this paragraph shall be
treated for all purposes of this Credit Agreement as a drawing duly honored by
such Issuing Bank under the related Letter of Credit.
(b) Whenever the Borrower desires the issuance of a Letter of
Credit, it shall deliver to the Agent and the Issuing Bank a written notice no
later than 1:00 p.m. (New York time) at least five Business Days prior to the
proposed date of issuance. That notice shall specify (i) the proposed date of
issuance (which shall be a Business Day), (ii) the face amount of the Letter of
Credit, (iii) the expiration date of the Letter of Credit and (iv) the name and
address of the beneficiary. Such notice shall be accompanied by a brief
description of the underlying transaction and upon reasonable request of the
Issuing Bank or the Agent, the Borrower shall provide additional details
regarding the underlying transaction. Concurrently with the giving of written
notice of a request for the issuance of a Letter of Credit, the Borrower shall
provide a precise description of the documents and the verbatim text of any
certificate to be presented by the beneficiary of such Letter of Credit which,
if presented by such beneficiary prior to the expiration date of the Letter of
Credit, would require the Issuing Bank to make payment under the Letter of
Credit; provided, however, that the Issuing Bank, in its reasonable discretion,
may require customary changes in any such documents and certificates to be
presented by the beneficiary. Upon issuance of each Letter of Credit, the
Issuing Bank shall notify the Agent of the issuance of such Letter of Credit.
Promptly after receipt of such notice, the Agent shall notify each Lender of the
issuance and the amount of such Lender's respective participation in the
applicable Letter of Credit.
(c) The acceptance and payment of drafts under any Letter of
Credit shall be made in accordance with the terms of such Letter of Credit and
the Uniform Customs and Practice for Documentary Credits, International Chamber
of Commerce Publication No. 500, as adopted or amended from time to time. The
Issuing Bank shall be entitled to honor any drafts and accept any documents
presented to it by the beneficiary of such Letter of Credit in accordance with
the terms of such Letter of Credit and believed by the Issuing Bank in good
faith to be genuine. Except as otherwise required by Applicable Law which cannot
be waived, the Issuing Bank shall not have any duty to inquire as to the
accuracy or authenticity of any draft or other drawing documents which may be
presented to it, but shall be responsible only to determine in accordance with
customary commercial practices that the documents which are
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required to be presented before payment or acceptance of a draft under any
Letter of Credit have been delivered and that they comply on their face with the
requirements of that Letter of Credit.
(d) If the Issuing Bank shall make payment on any draft
presented under a Letter of Credit (regardless of whether a Default, Event of
Default or acceleration has occurred), the Issuing Bank shall give notice of
such payment to the Borrower, the Agent and the Lenders and each Lender hereby
authorizes and requests the Issuing Bank to advance for its account, pursuant to
the terms hereof, its share of such payment based upon its participation in such
Letter of Credit and agrees promptly to reimburse the Issuing Bank in
immediately available funds for the Dollar equivalent of the amount so advanced
on its behalf by the Issuing Bank. If any such reimbursement is not made by any
Lender in immediately available funds on the same day on which the Issuing Bank
shall have made payment on any such draft, such Lender shall pay interest
thereon to the Issuing Bank at a rate per annum equal to the Issuing Bank's cost
of obtaining overnight funds in the New York Federal Funds Market for the three
(3) Business Days following the time such Lender fails to make the reimbursement
and thereafter at a rate per annum equal to the Alternate Base Rate plus the
Applicable Margin.
(e) The Borrower is absolutely, unconditionally and
irrevocably obligated to reimburse all amounts drawn under each Letter of
Credit. If any draft is presented under a Letter of Credit, the payment of which
is required to be made at any time on or before the Commitment Termination Date,
then payment by the Issuing Bank of such draft shall constitute an Alternate
Base Rate Loan hereunder and interest shall accrue from the date the Issuing
Bank makes payment on such draft under such Letter of Credit. If any draft is
presented under a Letter of Credit, the payment of which is required to be made
after the Commitment Termination Date or at the time when an Event of Default or
Default shall have occurred and then be continuing, then the Borrower shall
immediately pay to the Issuing Bank, in immediately available funds, the full
amount of such draft together with interest thereon at a rate per annum of 2% in
excess of the rate then in effect for Alternate Base Rate Loans from the date on
which the Issuing Bank makes such payment of such draft until the date it
receives full reimbursement for such payment from the Borrower. The Borrower
further agrees that the Issuing Bank may reimburse itself for such drawing,
first, from amounts in the Clearing Account, second, from amounts in the
Collection Account, and third, from the balance in any other account of the
Borrower maintained with the Issuing Bank.
(f) The Borrower shall pay the following amounts to the
Issuing Bank for its own account with respect to Letters of Credit issued by it
hereunder:
(A) with respect to the issuance, amendment or transfer of
each Letter of Credit and each drawing made thereunder, documentary and
processing charges in accordance with the Issuing Bank's standard
schedule for such charges in effect at the time of such issuance,
amendment, transfer or drawing, as the case may be; and
(B) a fronting fee payable to the Issuing Bank equal to 1/4 of
1% of the face amount of any Letter of Credit issued hereunder payable
upon the issuance of such Letter of Credit.
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(g) The Borrower agrees to pay to the Agent for distribution
to each Lender in respect of its L/C Exposure, such Lender's Pro Rata Share of a
commission (calculated on the basis of a 360-day year) equal to 3% per annum of
the daily average L/C Exposure. Such commission shall be due and payable in
arrears on and through the last Business Day of each March, June, September and
December (commencing the last Business Day of September, 2001) prior to the
Commitment Termination Date or the expiration of the last outstanding Letter of
Credit (whichever is later) and on the later of the Commitment Termination Date
and the expiration of the last outstanding Letter of Credit.
(h) Promptly upon receipt by the Issuing Bank or the Agent of
any amount described in Section 2.4(g), or any amount described in Section
2.4(e) previously reimbursed to the Issuing Bank by the Lenders, the Issuing
Bank or the Agent (as applicable) shall distribute to each Lender its Pro Rata
Share of such amount.
(i) [INTENTIONALLY OMITTED.]
(j) If, at any time when an Event of Default shall have
occurred and be continuing, any Letters of Credit shall remain outstanding, then
the Issuing Bank may, and if directed by the Required Lenders shall, require the
Borrower to deliver to the Issuing Bank Cash Equivalents in an amount equal to
the full amount of the L/C Exposure or to furnish other security acceptable to
the Required Lenders. Any amounts so delivered pursuant to the preceding
sentence shall be applied to reimburse the Issuing Bank for the amount of any
drawings honored under Letters of Credit; provided, however, that if prior to
the Maturity Date, (i) no Default or Event of Default is then continuing, then
the Agent shall return all of such Cash Equivalents and collateral relating to
such deposit to the Borrower if requested by it or (ii) Letters of Credit shall
expire or be returned by the beneficiary so that the amount of the Cash
Equivalents delivered to the Agent hereunder shall exceed the then current L/C
Exposure, then such excess shall first be applied to pay any Obligations then
due under this Credit Agreement and the remainder shall be returned to the
Borrower.
(k) Notwithstanding the termination of the Commitments and the
payment of the Loans, the obligations of the Borrower under this Section 2.4
shall remain in full force and effect until the Agent, the Issuing Bank and the
Lenders shall have been irrevocably released from their obligations with regard
to any and all Letters of Credit.
SECTION 2.5. Notes; Repayment. (a) The Revolving Credit Loans made by
each Lender hereunder shall be evidenced by a Revolving Credit promissory note
substantially in the form of Exhibit A-1 hereto (each a "Revolving Credit Note"
and collectively the "Revolving Credit Notes") in the face amount of such
Lender's Revolving Credit Commitment, payable to the order of such Lender, duly
executed by the Borrower and dated the date hereof. The outstanding principal
balance of each Revolving Credit Loan as evidenced by a Revolving Credit Note
shall be payable in full on the Maturity Date, subject to acceleration as
provided in Article 7.
(b) The Term Loan made by each Lender hereunder shall be
evidenced by a promissory note substantially in the form of Exhibit A-2 (each a
"Term Note" and collectively the "Term Notes") in the face amount of such
Lender's Term Loan, payable to the order of such
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Lender, duly executed on behalf of the Borrower and dated the date hereof. The
principal amount of the Term Loans as evidenced by the Term Notes shall be
payable in full on the Maturity Date subject to acceleration as provided in
Article 7 hereof.
(c) Each of the Notes shall bear interest on the outstanding
principal balance thereof as set forth in Section 2.6 hereof. Each Lender and
the Agent on its behalf is hereby authorized by the Borrower, but not obligated,
to enter the amount of each Loan and the amount of each payment or prepayment of
principal or interest thereon in the appropriate spaces on the reverse of or on
an attachment to the Notes; provided, however, that the failure of any Lender or
the Agent to set forth such Loans, principal payments or other information shall
not in any manner affect the obligations of the Borrower to repay such Loans.
SECTION 2.6. Interest on Loans. (a) In the case of a Eurodollar Loan,
interest shall be payable at a rate per annum (computed on the basis of the
actual number of days elapsed over a year of 360 days) equal to the LIBO Rate
plus the Applicable Margin for Eurodollar Loans. Interest shall be payable on
each Eurodollar Loan on each applicable Interest Payment Date, on the Maturity
Date and on the date of a conversion of such Eurodollar Loan to an Alternate
Base Rate Loan. The Agent shall determine the applicable LIBO Rate for each
Interest Period as soon as practicable on the date when such determination is to
be made in respect of such Interest Period and shall notify the Borrower and the
Lenders of the applicable interest rate so determined. Such determination shall
be conclusive absent manifest error.
(b) In the case of an Alternate Base Rate Loan, interest shall
be payable at a rate per annum (computed on the basis of the actual number of
days elapsed over a year of 365/366 days, as the case may be, during such times
as the Alternate Base Rate is based upon the Prime Rate, and over a year of 360
days at all other times) equal to the Alternate Base Rate plus the Applicable
Margin for Alternate Base Rate Loans. Interest shall be payable on each
Alternate Base Rate Loan on each applicable Interest Payment Date and on the
Maturity Date.
(c) Anything in this Credit Agreement or the Notes to the
contrary notwithstanding, the interest rate on the Loans or with respect to any
drawing under a Letter of Credit shall in no event be in excess of the maximum
permitted by Applicable Law.
SECTION 2.7. Commitment Fees and Other Fees. (a) The Borrower agrees to
pay to the Agent (for the account of each Lender in accordance with its
Percentage) on the last Business Day of each March, June, September and December
in each year (commencing on the last Business Day of September 2001) prior to
the Commitment Termination Date and on the Commitment Termination Date, an
aggregate fee (the "Commitment Fees") of 0.5% per annum, computed on the basis
of the actual number of days elapsed over a year of 360 days, on the average
daily amount by which the aggregate amount of the Revolving Credit Commitments,
as they may be reduced in accordance with the provisions of this Agreement,
exceeds the sum of the principal balance of Revolving Credit Loans outstanding
plus the L/C Exposure during the preceding period or quarter. Such Commitment
Fees shall commence to accrue on the date on which this Agreement is fully
executed and shall cease to accrue on the Commitment Termination Date.
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(b) In addition, the Borrower agrees to pay to the Agent
and/or the Lenders, as the case may be (without duplication) the various fees
referred to in the Fee Letter.
SECTION 2.8. Termination or Reduction of Revolving Credit Commitments.
(a) Upon written, facsimile or telephonic (promptly confirmed in writing) notice
to the Agent, which notice must be received by the Agent not later than 1:00
p.m. New York City time on the same Business Day, the Borrower may at any time
permanently terminate the Revolving Credit Commitments in their entirety or from
time to time permanently reduce the Revolving Credit Commitments in part. Each
such reduction shall be in a minimum aggregate amount of $5,000,000 (or such
lesser amount as is the aggregate of the Revolving Credit Commitments) or such
greater amount which is an integral multiple of $1,000,000; provided, however,
that the Revolving Credit Commitments may not be reduced to an amount less than
the sum of the aggregate principal balance of the Revolving Credit Loans then
outstanding plus the L/C Exposure.
(b) Simultaneously with each such termination or reduction of
the Revolving Credit Commitments, the Borrower shall pay to the Agent for the
account of the Lenders all accrued and unpaid Commitment Fees on the amount of
the Revolving Credit Commitments so terminated or reduced through the date of
such termination or reduction.
(c) Any reduction of the Revolving Credit Commitments pursuant
to this Section shall be made among the Lenders ratably in accordance with their
respective Percentages.
SECTION 2.9. Default Interest; Alternate Rate of Interest. (a) So long
as an Event of Default shall have occurred and be continuing (after, as well as
before a judgment), the Borrower shall on demand from time to time pay interest,
to the extent permitted by Applicable Law, on any then unpaid amount of the
Obligations at a rate per annum (i) for the remainder of the then current
Interest Period for each Eurodollar Loan, equal to 2% in excess of the rate then
in effect for such Eurodollar Loan and (ii) for all periods subsequent to the
then current Interest Period for each Eurodollar Loan, for all Alternate Base
Rate Loans and for all other overdue amounts hereunder, equal to 2% in excess of
the rate then in effect for Alternate Base Rate Loans.
(b) In the event, and on each occasion, that on the day two
Business Days prior to the commencement of any Interest Period for a Eurodollar
Loan, (i) the Agent shall have received notice from any Lender of such Lender's
determination (which determination, absent manifest error, shall be conclusive)
that Dollar deposits in the amount of the principal amount of such Eurodollar
Loan are not generally available in the London interbank market or that the rate
at which such Dollar deposits are being offered will not adequately and fairly
reflect the cost to such Lender of making or maintaining the principal amount of
such Eurodollar Loan during such Interest Period or (ii) the Agent shall have
determined that reasonable means do not exist for ascertaining the applicable
LIBO Rate, the Agent shall, as soon as practicable thereafter, give written or
facsimile notice of such determination by such Lender or the Agent, as
applicable, to the Borrower and the Lenders, and any request by the Borrower for
a Borrowing of Eurodollar Loans (or conversion to or continuation as Eurodollar
Loans pursuant to Section 2.10), made after receipt of such notice and until the
circumstances giving rise to such notice no longer exist, shall be deemed a
request for Alternate Base Rate Loans; provided, however, that in the
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circumstances described in clause (i) above such deemed request shall only apply
to the affected Lender's Loan.
SECTION 2.10. Continuation and Conversion of Loans. The continuation or
conversion of any Loan pursuant to this Section 2.10 does not constitute a
repayment and a reborrowing hereunder and is not subject to the conditions set
forth in Section 4.2, and the designation of a Loan as an Alternate Base Rate
Loan or Eurodollar Loan, and the designation of applicable Interest Periods, is
merely a mechanism for determining the interest rate applicable to such Loan.
The Borrower shall have the right, at any time, (i) to convert any Eurodollar
Loan or portion thereof to an Alternate Base Rate Loan or to continue such
Eurodollar Loan for a successive Interest Period, or (ii) to convert any
Alternate Base Rate Loan to a Eurodollar Loan, subject to the following:
(a) the Borrower shall give the Agent prior written, facsimile
or telephonic (promptly confirmed in writing) notice of each continuation or
conversion hereunder of at least three (3) Business Days for each continuation
or conversion hereunder; such notice shall be irrevocable and to be effective
must be received by the Agent on the day required not later than 1:00 p.m., New
York City time;
(b) no Event of Default or Default shall have occurred and be
continuing at the time of any conversion to a Eurodollar Loan or continuation of
a Eurodollar Loan into a subsequent Interest Period;
(c) no Alternate Base Rate Loan may be converted to a
Eurodollar Loan and no Eurodollar Loan may be continued as a Eurodollar Loan if,
after such conversion and after giving effect to any concurrent prepayment of
Loans, an aggregate of more than ten (10) separate Eurodollar Loans would be
outstanding hereunder with respect to each Lender (for purposes of determining
the number of such Loans outstanding, Loans with different Interest Periods
shall be counted as different Loans even if made on the same date);
(d) if fewer than all Eurodollar Loans and Alternate Base Rate
Loans at the time outstanding shall be continued or converted, such continuation
or conversion shall be made pro rata among the Lenders in accordance with the
respective principal amounts of the Loans held by the Lenders immediately prior
to such continuation or conversion;
(e) the aggregate principal amount of Loans continued as or
converted to Eurodollar Loans as part of the same borrowing shall be $1,000,000
or such greater amount which is an integral multiple of $500,000;
(f) accrued interest on any Eurodollar Loan (or portion
thereof) being continued or converted shall be paid by the Borrower at the time
of continuation or conversion;
(g) the Interest Period with respect to a new Eurodollar Loan
effected by a continuation or conversion shall commence on the date of such
continuation or conversion;
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(h) if a Eurodollar Loan is converted to another type of Loan
other than on the last day of the Interest Period with respect thereto, the
amounts required by Section 2.11(b) shall be paid upon such conversion; and
(i) each request for a continuation as or conversion to a
Eurodollar Loan which fails to state an applicable Interest Period shall be
deemed to be a request for an Interest Period of one month.
In the event that the Borrower shall not give notice to continue or convert any
Eurodollar Loan as provided above, such Loan (unless repaid) shall automatically
be (i) continued as a Eurodollar Loan with an Interest Period of one month or
(ii) converted to an Alternate Base Rate Loan at the expiration of the then
current Interest Period at the Agent's discretion. The Agent shall, after it
receives notice from the Borrower, promptly give the Lenders notice of any
continuation or conversion.
SECTION 2.11. Prepayment of Loans; Reimbursement of Lenders. (a)
Subject to the terms of paragraph (b) of this Section 2.11, the Borrower shall
have the right at its option at any time and from time to time to prepay (i) the
Alternate Base Rate Loans, in whole or in part, upon at least one Business Day's
written, facsimile or telephonic (promptly confirmed in writing) notice, in the
principal amount of $500,000 or such greater amount which is an integral
multiple of $500,000 and (ii) any Borrowings of Eurodollar Loans, in whole or in
part, upon at least three Business Days' written, facsimile or telephonic
(promptly confirmed in writing) notice, in the principal amount of $1,000,000 or
such greater amount which is an integral multiple of $500,000. Each notice of
prepayment shall specify the prepayment date, the Loans to be prepaid and the
principal amount thereof, shall be irrevocable and shall commit the Borrower to
prepay such Loans in the amount and on the date stated therein. Such notice
shall also specify the expected principal amount of Loans to be outstanding
after giving effect to such prepayment.
(b) The Borrower shall reimburse each Lender on demand for any
loss incurred or to be incurred by it in the reemployment of the funds released
(i) by any prepayment (for any reason) of any Eurodollar Loan if such Loan is
repaid other than on the last day of the Interest Period for such Loan or (ii)
in the event that after the Borrower delivers a notice of borrowing under
Section 2.3(a) or continuation or conversion under Section 2.10(a) in respect of
Eurodollar Loans, such Loan is not made, continued or converted on the first day
of the Interest Period specified in such notice for any reason other than (I) a
suspension or limitation under Section 2.9(b) of the right of the Borrower to
select a Eurodollar Loan or (II) a breach by the Lenders of their obligation
hereunder. Such loss shall be the amount as reasonably determined by such Lender
as the excess, if any, of (A) the amount of interest which would have accrued to
such Lender on the amount so paid or not borrowed, continued or converted at a
rate of interest equal to the interest rate applicable to such Loan pursuant to
Section 2.6 hereof, for the period from the date of such payment or failure to
borrow, continue or convert to the last day (x) in the case of a payment other
than on the last day of the Interest Period for such Loan, of the then current
Interest Period for such Loan or (y) in the case of such failure to borrow,
continue or convert, of the Interest Period for such Loan which would have
commenced on the date of such failure to borrow, continue or convert, over (B)
the amount realized by such Lender in reemploying the funds not advanced or the
funds received in prepayment or realized from the Loan so continued or converted
during the period referred to above. Each Lender shall deliver to
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the Borrower from time to time one or more certificates setting forth the amount
of such loss (and in reasonable detail the manner of computation thereof) as
determined by such Lender, which certificates shall be conclusive absent
manifest error.
(c) In the event the Borrower fails to prepay any Loan on the
date specified in any prepayment notice delivered pursuant to Section 2.11(a),
the Borrower on demand by any Lender shall pay to the Agent for the account of
such Lender any amounts required to compensate such Lender for any loss incurred
by such Lender as a result of such failure to prepay, including, without
limitation, any loss, cost or expenses incurred by reason of the acquisition of
deposits or other funds by such Lender to fulfill deposit obligations incurred
in anticipation of such prepayment. Each Lender shall deliver to the Borrower
and the Agent from time to time one or more certificates setting forth the
amount of such loss (and in reasonable detail the manner of computation thereof)
as determined by such Lender, which certificates shall be conclusive absent
manifest error.
(d) Net Cash Proceeds not used to make Restricted Payments
permitted pursuant to Section 6.5(vii) shall, within ten days of receipt
thereof, be remitted to the Agent to be applied as a prepayment of the Revolving
Credit Loans for the pro rata account of each Lender.
(e) The outstanding principal amount of the Loans shall be
repaid immediately to the extent that the aggregate amount of the Loans plus the
L/C Exposure exceeds the Total Commitment then in effect.
(f) If at any time the sum of the aggregate principal amount
of all Loans outstanding plus the then current L/C Exposure exceeds the Library
Credit, the Borrower shall immediately prepay outstanding Loans or deposit Cash
Equivalents in the Cash Collateral Account to the extent necessary to eliminate
such excess.
(g) Simultaneously with each termination and/or reduction of
the Total Commitment pursuant to Section 2.8, the Borrower shall pay to the
Agent for the account of the Lenders the amount, if any, by which the sum of the
aggregate outstanding principal amount of the Loans and the L/C Exposure exceeds
the reduced Total Commitment, all accrued and unpaid interest thereon and the
Commitment Fees on the amount of the Total Commitment so terminated or reduced
through the date thereof.
(h) If on any day on which the Loans would otherwise be
required to be prepaid but for the operation of this Section 2.11(h) (each, a
"Prepayment Date"), the amount of such required prepayment exceeds the then
outstanding aggregate principal amount of the Loans which consist of Alternate
Base Rate Loans, and no Default or Event of Default is then continuing, then on
such Prepayment Date the Borrower may, at its option, deposit Dollars into the
Cash Collateral Account in an amount equal to such excess. If the Borrower makes
such deposit (i) only the outstanding Alternate Base Rate Loans that are also
Revolving Credit Loans shall be required to be prepaid on such Prepayment Date,
and (ii) on the last day of each Interest Period in effect after such Prepayment
Date the Agent is irrevocably authorized and directed to apply funds from the
Cash Collateral Account (and liquidate investments held in the Cash Collateral
Account as necessary) to prepay Eurodollar Loans that are also Revolving Credit
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Loans for which the Interest Period is then ending until the aggregate of such
prepayments equals the prepayment which would have been required on such
Prepayment Date but for the operation of this Section 2.11(h); provided,
however, that if there are no outstanding Revolving Credit Loans, or the amount
of outstanding Revolving Credit Loans is less than the required prepayment, then
the outstanding Term Loans that are also Alternate Base Rate Loans shall be
required to be prepaid on such Prepayment Date and on the last day of each
Interest Period the Agent may apply funds in the Cash Collateral Account to
prepay Eurodollar Loans that are also Term Loans as set forth in clause (ii)
herein.
(i) Unless otherwise designated in writing by the Borrower,
all prepayments shall be applied to the applicable principal payment set forth
in this Section 2.11, first to that amount of such applicable principal payment
then maintained as Alternate Base Rate Loans, and then to that amount of such
applicable principal payment maintained as Eurodollar Loans in order of the
scheduled expiry of Interest Periods with respect thereto.
(j) All prepayments (other than prepayments of Alternate Base
Rate Loans) shall be accompanied by accrued but unpaid interest on the principal
amount being prepaid to the date of prepayment.
SECTION 2.12. Change in Circumstances. (a) In the event that after the
Initial Date hereof any change in Applicable Law or in the interpretation or
administration thereof (including, without limitation, any request, guideline or
policy not having the force of law) by any Governmental Authority charged with
the administration or interpretation thereof or, with respect to clause (ii),
(iii) or (iv) below, any change in conditions shall occur which shall:
(i) subject any Lender to, or increase the net amount
of, any tax, levy, impost, duty, charge, fee, deduction or withholding with
respect to any Eurodollar Loan (other than withholding tax imposed by the United
States of America or any political subdivision or taxing authority thereof or
any other tax, levy, impost, duty, charge, fee, deduction or withholding (x)
that is measured with respect to the overall net income of such Lender or of a
Lending Office of such Lender, and that is imposed by the United States of
America, or by the jurisdiction in which such Lender or Lending Office is
incorporated, in which such Lending Office is located, managed or controlled or
in which such Lender has its principal office (or any political subdivision or
taxing authority thereof or therein), or (y) that is imposed solely by reason of
any Lender failing to make a declaration of, or otherwise to establish,
non-residence, or to make any other claim for exemption, or otherwise to comply
with any certification, identification, information, documentation or reporting
requirements prescribed under the laws of the relevant jurisdiction, in those
cases where a Lender may properly make such declaration or claim or so establish
non-residence or otherwise comply); or
(ii) change the basis of taxation of any payment to
any Lender of principal or any interest on any Eurodollar Loan or other fees and
amounts payable hereunder, or any combination of the foregoing other than
withholding tax imposed by the United States of America as applicable, or any
political subdivision or taxing authority thereof or therein or any other tax,
levy, impost, duty, charge, fee, deduction or withholding that is measured with
respect to the overall net income of such Lender or of a Lending Office of such
Lender, and that is imposed by the United States of America or by the
jurisdiction in which such Lender or Lending
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Office is incorporated or carries on business, in which such Lending Office is
located, managed or controlled or in which such Lender has its principal office
or a presence not otherwise connected with, or required by, this transaction (or
any political subdivision or taxing authority thereof or therein); or
(iii) impose, modify or deem applicable any reserve,
deposit or similar requirement against any assets held by, deposits with or for
the account of or loans or commitments by an office of such Lender; or
(iv) impose upon such Lender or the London interbank
market any other condition with respect to the Eurodollar Loans, any Letter of
Credit or this Agreement;
and the result of any of the foregoing shall be to increase the actual cost to
such Lender of making or maintaining any Eurodollar Loan hereunder or to reduce
the amount of any payment (whether of principal, interest or otherwise) received
or receivable by such Lender, or to require such Lender to make any payment in
connection with any Eurodollar Loan, in each case by or in an amount which such
Lender in its sole judgment shall deem material, then and in each case the
Borrower shall pay to the Agent for the account of such Lender, as provided in
paragraph (c) below, such amounts as shall be necessary to compensate such
Lender for such cost, reduction or payment.
(b) If at any time and from time to time after the Initial
Date any Lender shall have determined that the applicability of any law, rule,
regulation or guideline adopted after the Initial Date regarding capital
adequacy, or any change in any of the foregoing or in the interpretation or
administration of any of the foregoing by any Governmental Authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or any Lending Office of such Lender) or
any Lender's holding company with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of reducing the rate of
return on such Lender's capital or on the capital of such Lender's holding
company, if any, as a consequence of this Credit Agreement or the Loans made or
Letters of Credit issued or participated in by such Lender pursuant hereto to a
level below that which such Lender or such Lender's holding company could have
achieved but for such applicability, adoption, change or compliance (taking into
consideration such Lender's policies and the policies of such Lender's holding
company with respect to capital adequacy), then from time to time the Borrower
shall pay to such Lender such additional amount or amounts as will compensate
such Lender or such Lender's holding company for any such reduction suffered
with respect to Loans made or Letters of Credit issued or participated in by
such Lender hereunder.
(c) Each Lender shall deliver to the Borrower and the Agent
from time to time, one or more certificates setting forth the amounts due to
such Lender under paragraphs (a) and (b) above, the changes as a result of which
such amounts are due and the manner of computing such amounts. Each such
certificate shall be conclusive in the absence of manifest error. The Borrower
shall pay to the Agent for the account of each such Lender the amounts shown as
due on any such certificate within ten Business Days after its receipt of the
same. No failure on the part of any Lender to demand compensation under
paragraph (a) or (b) above on any one occasion shall constitute a waiver of its
rights to demand compensation on any other
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occasion. The protection of this Section shall be available to each Lender
regardless of any possible contention of the invalidity or inapplicability of
any law, regulation or other condition which shall give rise to any demand by
such Lender for compensation thereunder.
(d) Each Lender agrees that, as promptly as practicable after
it becomes aware of the occurrence of an event or the existence of a condition
that (i) would cause it to incur any increased cost under Section 2.9(b) or this
Section 2.12 or (ii) would require the Borrower to pay an increased amount under
Section 2.9(b) or this Section 2.12, it will use reasonable efforts to notify
the Borrower of such event or condition and, to the extent not inconsistent with
such Lender's internal policies, will use its reasonable efforts to make, fund
or maintain the affected Loans of such Lender, or, if applicable, to participate
in Letters of Credit as required by Section 2.4, through another Lending Office
of such Lender if as a result thereof the additional monies which would
otherwise be required to be paid or the reduction of amounts receivable by such
Lender thereunder in respect of such Loans or Letters of Credit would be
materially reduced, or such inability to perform would cease to exist, or the
increased costs which would otherwise be required to be paid in respect of such
Loans or Letters of Credit pursuant to Section 2.11(b) or this Section 2.12
would be materially reduced or the taxes or other amounts otherwise payable
under Section 2.9(b) or this Section 2.12 would be materially reduced, and if,
as determined by such Lender, in its sole discretion, the making, funding or
maintaining of such Loans or the participation in such Letters of Credit through
such other Lending Office would not otherwise materially adversely affect such
Loans, such Letters of Credit or such Lender.
SECTION 2.13. Change in Legality. (a) Notwithstanding anything to the
contrary contained elsewhere in this Agreement, if any change after the date
hereof in Applicable Law, guideline or order, or in the interpretation thereof
by any Governmental Authority charged with the administration thereof, shall
make it unlawful for any Lender to make or maintain any Eurodollar Loan or to
give effect to its obligations as contemplated hereby with respect to a
Eurodollar Loan, then, by written notice to the Borrower and the Agent, such
Lender may (i) declare that Eurodollar Loans will not thereafter be made by such
Lender hereunder and/or (ii) require that, subject to Section 2.11(b), all
outstanding Eurodollar Loans made by it be converted to Alternate Base Rate
Loans, whereupon all of such Eurodollar Loans shall automatically be converted
to Alternate Base Rate Loans as of the effective date of such notice as provided
in paragraph (b) below. Such Lender's Pro Rata Share of any subsequent Borrowing
of Eurodollar Loans shall, instead, be an Alternate Base Rate Loan unless such
declaration is subsequently withdrawn.
(b) A notice to the Borrower by any Lender pursuant to
paragraph (a) above shall be effective for purposes of clause (ii) thereof, if
lawful, on the last day of the current Interest Period for each outstanding
Eurodollar Loan and, in all other cases, on the date of receipt of such notice
by the Borrower.
SECTION 2.14. Manner of Payments. All payments of principal and
interest in respect of any Loans shall be pro rata among the Lenders in
accordance with their Percentages. All payments by the Borrower hereunder and
under the Notes shall be made without offset or counterclaim in Dollars in
Federal or other immediately available funds at the office of The Chase
Manhattan Bank, Loan and Agency Services Group, One Chase ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, for credit to the
Clearing
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Account no later than 1:00 p.m., New York City time, on the date on which such
payment shall be due. Any payment received at such office after such time shall
be deemed received on the following Business Day. Interest in respect of any
Loan hereunder shall accrue from and including the date of such Loan to but
excluding the date on which such Loan is paid or converted to a Loan of a
different type.
SECTION 2.15. United States Withholding. (a) Prior to the date of the
initial Loans hereunder and prior to the effective date set forth in the
Assignment and Acceptance with respect to any Lender becoming a Lender after the
date hereof, and from time to time thereafter if requested by the Borrower or
the Agent or required because, as a result of a change in law or a change in
circumstances or otherwise, a previously delivered form or statement becomes
incomplete or incorrect in any material respect, each Lender organized under the
laws of a jurisdiction outside the United States shall provide, if applicable,
the Agent and the Borrower with complete, accurate and duly executed forms or
other statements prescribed by the Internal Revenue Service of the United States
certifying such Lender's exemption from, or entitlement to a reduced rate of,
United States withholding taxes (including backup withholding taxes) with
respect to all payments to be made to such Lender hereunder and under any other
Fundamental Documents.
(b) The Borrower and the Agent shall be entitled to deduct and
withhold any and all present or future taxes or withholdings, and all
liabilities with respect thereto, from payments hereunder or under any other
Fundamental Documents, if and to the extent that the Borrower or the Agent in
good faith determines that such deduction or withholding is required by the law
of the United States, including, without limitation, any applicable treaty of
the United States. In the event the Borrower or the Agent shall so determine
that deduction or withholding of taxes is required, it shall advise the affected
Lender as to the basis of such determination prior to actually deducting and
withholding such taxes. In the event the Borrower or the Agent shall so deduct
or withhold taxes from amounts payable hereunder, it (i) shall pay to or deposit
with the appropriate taxing authority in a timely manner the full amount of
taxes it has deducted or withheld; (ii) shall provide evidence of payment of
such taxes to, or the deposit thereof with, the appropriate taxing authority and
a statement setting forth the amount of taxes deducted or withheld, the
applicable rate, and any other information or documentation reasonably requested
by the Lenders from whom the taxes were deducted or withheld; and (iii) shall
forward to such Lenders any receipt of the deducted or withheld taxes as may be
issued from time to time by the appropriate taxing authority. Unless the
Borrower and the Agent have received forms or other documents satisfactory to
them indicating that payments hereunder or under the Notes are not subject to
United States withholding tax or are subject to such tax at a rate reduced by an
applicable tax treaty, the Borrower or the Agent may withhold taxes from such
payments at the applicable statutory rate in the case of payments to or for any
Lender organized under the laws of a jurisdiction outside the United States.
(c) Each Lender agrees (i) that as between it and the Borrower
or the Agent, it shall be the Person to deduct and withhold taxes, and to the
extent required by law it shall deduct and withhold taxes, on amounts that such
Lender may remit to any other Person(s) by reason of any undisclosed transfer or
assignment of an interest in this Agreement to such other Person(s) pursuant to
paragraph (f) of Section 13.3 and (ii) to indemnify the Borrower and the Agent
and any officers, directors, agents, or employees of the Borrower or the Agent
against and to hold
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them harmless from any tax, interest, additions to tax, penalties, reasonable
counsel and accountants' fees, disbursements or payments arising from the
assertion by any appropriate taxing authority of any claim against them relating
to a failure to withhold taxes as required by law with respect to amounts
described in clause (i) of this paragraph (c) or arising from the reliance by
the Borrower or the Agent on any form or other document furnished by such Lender
and purporting to establish a basis for not withholding, or for withholding at a
reduced rate, taxes with respect to payments hereunder or under any other
Fundamental Document.
(d) Each assignee of a Lender's interest in this Credit
Agreement in conformity with Section 13.3 shall be bound by this Section 2.15,
so that such assignee will have all of the obligations and provide all of the
forms and statements and all indemnities, representations and warranties
required to be given under this Section 2.15.
(e) Notwithstanding the foregoing, in the event that any
withholding taxes or additional withholding taxes shall become payable solely as
a result of any change in any statute, treaty, ruling, determination or
regulation (or interpretation of any of the foregoing) occurring after the
Initial Date in respect of any sum payable hereunder or under any other
Fundamental Document to any Lender or the Agent (i) the sum payable by the
Borrower (or, if applicable, the relevant Credit Party) shall be increased as
may be necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.15) such
Lender or the Agent (as the case may be) receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the Borrower (or, if
applicable, the relevant Credit Party) shall make such deductions, (iii) the
Borrower (or, if applicable, the relevant Credit Party) shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with Applicable Law and (iv) the Borrower (or, if applicable, the
relevant Credit Party) shall forward to such Lender or the Agent (as the case
may be) the official tax receipts or other documentation pursuant to Section
2.15(b). In addition, the Borrower (and, if applicable, the relevant Credit
Party) shall indemnify each Lender and the Agent for any additional withholding
taxes paid by such Lender or the Agent, as the case may be, or any liability
(including penalties and interest) arising therefrom or with respect thereto,
whether or not such additional withholding taxes were correctly or legally
asserted.
(f) In the event that a Lender receives a refund of or credit
for taxes withheld or paid pursuant to clause (e) of this Section, which credit
or refund is identifiable by such Lender as being a result of taxes withheld or
paid in connection with sums payable hereunder or under any other Fundamental
Document, such Lender shall promptly notify the Agent and the Borrower and
shall, if no Event of Default has occurred and is continuing, remit to the
Borrower the amount of such refund or credit allocable to payments made
hereunder or under any other Fundamental Document.
(g) Each Lender agrees that after it becomes aware of the
occurrence of an event that would cause the Borrower or any other Credit Party
to pay any amount pursuant to Section 2.15(d), it will use reasonable efforts to
notify the Borrower of such event and, to the extent not inconsistent with such
Lender's internal policies, will use its reasonable efforts to make, fund or
maintain the affected Loans of such Lender, or, if applicable, to participate in
Letters of Credit through another Lending Office of such Lender if as a result
thereof the additional monies which would otherwise be required to be paid by
reason of Section 2.15(d) in
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respect of such Loans, Letters of Credit or participations therein would be
materially reduced, and if, as determined by such Lender, in its discretion, the
making, funding or maintaining of such Loans, Letters of Credit or
participations therein through such other Lending Office would not otherwise
materially adversely affect such Loans, Letters of Credit or participations
therein or such Lender.
SECTION 2.16. Interest Adjustments. If the provisions of this Credit
Agreement or any Note would at any time require payment by the Borrower to a
Lender of any amount of interest in excess of the maximum amount then permitted
by Applicable Law, the interest payments to that Lender shall be reduced to the
extent necessary so that such Lender shall not receive interest in excess of
such maximum amount. If, as a result of the foregoing, a Lender shall receive
interest payments hereunder or under a Note in an amount less than the amount
otherwise provided hereunder, such deficit (hereinafter called the "Interest
Deficit") will, to the fullest extent permitted by Applicable Law, cumulate and
will be carried forward (without interest) until the termination of this
Agreement. Interest otherwise payable to a Lender hereunder and under a Note for
any subsequent period shall be increased by the maximum amount of the Interest
Deficit that may be so added without causing such Lender to receive interest in
excess of the maximum amount then permitted by Applicable Law.
The amount of any Interest Deficit relating to a particular Loan and Note shall
be treated as a prepayment penalty and paid in full at the time of any optional
prepayment by the Borrower to the Lenders of all the Loans at that time
outstanding pursuant to Section 2.11(a) hereof and a termination of the
Commitments under Section 2.8. The amount of any Interest Deficit relating to a
particular Loan and Note at the time of any complete payment of the Loans at
that time outstanding (other than an optional prepayment thereof pursuant to
Section 2.10(a) hereof) shall be cancelled and not paid.
3. REPRESENTATIONS AND WARRANTIES
In order to induce the Agent, Lenders and the Issuing Bank to
enter into this Credit Agreement and to make the Loans and issue or participate
in the Letters of Credit provided for herein, the Credit Parties, jointly and
severally, make the following representations and warranties to, and agreements
with, the Agent, the Lenders and the Issuing Bank, all of which shall survive
the execution and delivery of this Agreement, the issuance of the Notes and the
Letters of Credit and the making of the Loans:
SECTION 3.1. Corporate Existence and Power. (a) Each Credit Party is a
corporation, limited liability company or partnership, duly organized, validly
existing and in good standing under the laws of its jurisdiction of organization
and is in good standing or has applied for authority to operate as a foreign
entity in all jurisdictions where the nature of its properties or business so
requires it and where a failure to be in good standing as a foreign entity would
have a material adverse effect on the business, assets or condition, financial
or otherwise, of such Credit Party. As of the Closing Date, the Borrower is
engaged in a U.S. trade or business.
(b) Each Credit Party has the power and authority (i) to own
its respective properties and carry on its respective businesses as now being
conducted, (ii) to execute, deliver
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and perform its obligations (as applicable) under this Credit Agreement and the
other Fundamental Documents and any other documents contemplated hereby, (iii)
in the case of the Borrower, to borrow hereunder, (iv) to grant to the Agent,
for the benefit of itself, the Issuing Bank and the Lenders, a security interest
in the Collateral including the Pledged Securities, to the extent applicable, as
contemplated by this Credit Agreement and the other Fundamental Documents to
which it is or will be a party and (v) in the case of the Guarantors, to
guarantee the Obligations as contemplated by Article 10 hereof.
(c) A list of all of the Credit Parties setting forth their
jurisdictions of organization and the jurisdictions in which they are in good
standing as of the date hereof as provided in Section 3.1(a) hereof is attached
hereto as Schedule 3.1.
SECTION 3.2. Authority and No Violation. (a) The execution, delivery
and performance of this Credit Agreement and the other Fundamental Documents by
each Credit Party and the grant to the Agent for the benefit of itself, the
Issuing Bank and the Lenders of a security interest in the Collateral as
contemplated herein or in the other Fundamental Documents, and in the case of
the Borrower, the Borrowings hereunder and the execution, delivery and
performance of the Notes by the Borrower and, in the case of each Guarantor, the
guaranty of the Obligations as contemplated by Article 10 hereof, (a) have been
duly authorized by all necessary corporate or company (as applicable) action on
the part of each Credit Party, (b) will not violate any provision of any
Applicable Law, or any order of any court or other agency of the United States
or any State thereof, applicable to any Credit Party or any of its respective
properties or assets, (c) will not violate any provision of the Certificate of
Incorporation or By-Laws, limited liability company agreement or other
organizational document of any Credit Party, or any indenture, any agreement for
borrowed money, any bond, note or other similar instrument in any material
respect or any other material agreement to which any Credit Party is a party or
by which any Credit Party or any of its properties or assets are bound, (d) will
not be in conflict with, result in a breach of or constitute (with due notice or
lapse of time or both) a default under any such indenture, agreement, bond,
note, instrument or other material agreement and (e) will not result in the
creation or imposition of any Lien, charge or encumbrance of any nature
whatsoever upon any property or assets of any Credit Party other than pursuant
to this Agreement or any other Fundamental Document.
(b) There are no restrictions on the transfer of any Pledged
Securities other than as a result of the Credit Agreement or applicable
securities laws and the regulations promulgated thereunder or such as would not
prevent the Agent from exercising its remedies with respect to such Pledged
Securities in the case of an Event of Default.
SECTION 3.3. Governmental and Other Approvals. All authorizations,
approvals, registrations or filings with any Governmental Authority or public
regulatory body (other than UCC-1 Financing Statements, the Copyright Security
Agreement and the Trademark Security Agreement which will be delivered to the
Agent on or prior to the Closing Date), and such filings in the United Kingdom
as may be necessary or appropriate in connection with the Charge Over Shares and
the Debenture, in form suitable for recording or filing with the appropriate
filing office, required for the execution, delivery and performance by the
Credit Parties of this Credit Agreement and the other Fundamental Documents, and
the execution and delivery by the Borrower of the Notes, have been duly obtained
or made and are in full force and effect or have
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been duly applied for, and if any such further authorizations, approvals,
registrations or filings should hereafter become necessary, the Credit Parties
shall obtain or make all such authorizations, approvals, registrations or
filings.
SECTION 3.4. Financial Statements. Each of the audited financial
statements of the Borrower and its Consolidated Subsidiaries at December 31,
2000 and the unaudited consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries at June 30, 2001 together with the related statements
of operations and cash flow and the related notes and supplemental information
are complete and correct and have been prepared in accordance with GAAP in
effect as of such date consistently applied, except as otherwise indicated in
the notes to such financial statements and subject in the case of unaudited
statements to changes resulting from year-end audit adjustments. All of such
financial statements fairly present the financial condition or the results of
operations of the Borrower and its Consolidated Subsidiaries on a consolidated
basis at the dates and for the periods indicated and (in the case of the balance
sheets) reflect (including the notes thereto) all known liabilities and subject
in the case of unaudited statements to changes resulting from year-end audit
adjustments, contingent or otherwise, as of such dates required in accordance
with GAAP to be shown or reserved against, or disclosed in notes to financial
statements.
SECTION 3.5. No Material Adverse Change. (a) Since December 31, 2000
there has been no material adverse change in the business, assets, condition
(financial or otherwise), or results of operations of the Borrower and its
Subsidiaries, taken as a whole.
(b) No Credit Party has entered or is entering into the
arrangements contemplated hereby and by the other Fundamental Documents, or
intends to make any transfer or incur any obligations hereunder or thereunder,
with actual intent to hinder, delay or defraud either present or future
creditors. On and as of the Closing Date, on a pro forma basis after giving
effect to all Indebtedness (including the Loans) expected to be borrowed or
repaid on the Closing Date, (i) each Credit Party expects the cash available to
such Credit Party, after taking into account all other anticipated uses of the
cash of such Credit Party (including the payments on or in respect of debt
referred to in clause (iii) of this Section 3.5(b)), will be sufficient to
satisfy all final judgments for money damages which have been docketed against
such Credit Party or which may be rendered against such Credit Party in any
action in which such Credit Party is a defendant (taking into account the
reasonably anticipated maximum amount of any such judgment and the earliest time
at which such judgment might reasonably be anticipated to be entered); (ii) the
sum of the present fair saleable value of the combined assets of all of the
Credit Parties will exceed the probable liability of the Credit Parties on their
debts (including their Guaranties); (iii) no Credit Party will have incurred or
intends to, or believes that it will, incur debts beyond its ability to pay such
debts as such debts mature (taking into account the timing and amounts of cash
to be received by such Credit Party from any source and of amounts to be payable
on or in respect of debts of such Credit Party and the amounts referred to in
clause (i)); and (iv) each Credit Party believes it will have sufficient capital
with which to conduct its present and proposed business and the property of such
Credit Party does not constitute unreasonably small capital with which to
conduct its present or proposed business. For purposes of this paragraph (b),
"debt" means any liability or a claim, and "claim" means (y) right to payment
whether or not such right is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured, or
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(z) right to an equitable remedy for breach of performance if such breach gives
rise to a payment, whether or not such right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured.
SECTION 3.6. Ownership of Pledged Securities, Subsidiaries, etc. (a)
Annexed hereto as Schedule 3.6(a) is a correct and complete list as of the date
hereof, of each Credit Party showing, as to each, (i) its name, (ii) the type of
entity it is, (iii) the jurisdiction in which it was incorporated or otherwise
organized, (iv) in the case of each Credit Party which is a corporation, its
authorized capitalization, the number of shares of its capital stock outstanding
and other than as to the Borrower the ownership of its capital stock and (v) in
the case of each Credit Party which is a limited liability company, the
ownership of its membership interests.
(b) Except as noted on Schedule 3.6(b), as of the date hereof
no Credit Party holds any Equity Interest or other Investment, either directly
or indirectly, in any Person other than another Credit Party and no Credit Party
is a general or limited partner in any joint venture or partnership.
SECTION 3.7. Copyrights, Trademarks and Other Rights. (a) On the date
hereof on a pro forma basis after giving effect to the acquisition contemplated
by the HEDC Purchase Agreement, the items of Product listed on Schedule 3.7(a)
hereto comprise all of the Product in which any Credit Party has any right,
title or interest (either directly, through a joint venture or partnership or
otherwise). The existing U.S. copyright registration number (or if not yet
obtained, the registration status) for each of the items of Product acquired
pursuant to the HEDC Purchase Agreement are set forth on Schedule 3.7(a).
Schedule 3.7(a) also identifies the location of the Physical Materials related
to each item of Product owned by any Credit Party or to which any Credit Party
has rights of access. To the best of each Credit Party's knowledge, all items of
Product and all component parts thereof do not and will not violate or infringe
upon any copyright, right of privacy, trademark, patent, trade name, performing
right or any literary, dramatic, musical, artistic, personal, private, several,
care, contract, property or copyright right or any other right of any Person, in
any material respect or contain any libelous or slanderous material. There is no
claim, suit, action or proceeding pending or, to the best of each Credit Party's
knowledge, threatened against any Credit Party that involves a claim of
infringement of any copyright with respect to any item of Product listed on
Schedule 3.7(a), and no Credit Party has any knowledge of any existing
infringement by any other Person of any copyright held by any Credit Party with
respect to any item of Product listed on Schedule 3.7(a).
(b) Schedule 3.7(b) hereto (i) lists all the trademarks
registered by any Credit Party on the date hereof on a pro forma basis after
giving effect to the acquisition contemplated by the HEDC Purchase Agreement and
identifies the Credit Party in whose name each such trademark is registered and
(ii) specifies as to each, the jurisdictions in which such trademark has been
issued or registered (or, if applicable, in which an application for such
issuance or registration has been filed), including the respective registration
or application numbers and applicable dates of registration or application and
(iii) specifies as to each, as applicable, material licenses, sublicenses and
other material agreements as of the date hereof (other than any agreements which
relate to the exploitation of an item of Product), to which any Credit Party is
a party and pursuant to which any Person, other than a Credit Party, is
authorized to use such trademark. Each trademark set forth on Schedule 3.7(b)
will be included on Schedule A to the
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Trademark Security Agreement to be delivered to the Agent on or prior to the
Closing Date pursuant to Section 4.1(f) (other than those incorporating the
"Hallmark" name or "Odyssey" name or any variations thereof).
(c) All applications and registrations for all copyrights,
trademarks, service marks, trade names and service names in which any Credit
Party has any right, title or interest are valid and in full force and effect
and are not subject to the payment of any taxes or maintenance fees or the
taking of any other actions by the Credit Parties (other than standard renewals)
to maintain their validity or effectiveness.
SECTION 3.8. Fictitious Names. None of the Credit Parties has done
business, is doing business or intends to do business other than under its full
corporate or company name (as applicable), including, without limitation, under
any tradename or other doing business name other than as listed on Schedule 3.8.
SECTION 3.9. Title to Properties. The Credit Parties have good title to
each of the properties and assets reflected on the financial statements referred
to in Section 3.4 or delivered pursuant to Section 5.1(a) hereof and all such
properties and assets will be free and clear of Liens, except Permitted
Encumbrances.
SECTION 3.10. UCC Filing Information. The chief executive office of
each Credit Party is, on the date hereof, as set forth on Schedule 3.10 hereto,
the state of incorporation or formation of each Credit Party is listed on
Schedule 3.10 hereto and the place where each Credit Party keeps the records
concerning the Collateral on the date hereof or regularly keeps any goods
included in the Collateral on the date hereof are also listed on Schedule 3.10
hereto.
SECTION 3.11. Litigation. On a pro forma basis, after giving effect to
the acquisition contemplated by the HEDC Purchase Agreement, except as set forth
on Schedule 3.11, there are no actions, lawsuits or other proceedings pending
(including, but not limited to, matters relating to environmental liability),
or, to the knowledge of any Credit Party, threatened, against or affecting any
Credit Party or any of its respective properties, by or before any Governmental
Authority, arbitration panel, or arbitrator, which could reasonably be expected
to have a Material Adverse Effect on the financial condition or the business of
any Credit Party or which involve this Agreement or any of the transactions
contemplated hereby. No Credit Party is in default with respect to any order,
writ, injunction, decree, rule or regulation of any Governmental Authority,
which default would have a Material Adverse Effect.
SECTION 3.12. Federal Reserve Regulations. No Credit Party is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any Margin Stock. No part of
the proceeds of the Loans will be used, directly or indirectly, and whether
immediately, incidentally or ultimately to purchase or carry any Margin Stock,
to extend credit to others for the purpose of purchasing or carrying any Margin
Stock or for any other purpose violative of or inconsistent with any of the
provisions of any regulations of the Board of Governors of the Federal Reserve
System, including, without limitation, Regulations D, T, U and X.
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SECTION 3.13. Investment Company Act. No Credit Party will during the
term of this Agreement be, (x) an "investment company", within the meaning of
the Investment Company Act of 1940, as amended or (y) subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act or
any foreign, federal or local statute or regulation limiting its ability to
incur indebtedness for money borrowed as contemplated hereby or by any other
Fundamental Document.
SECTION 3.14. Binding Agreements. This Credit Agreement and the other
Fundamental Documents when executed will constitute, the legal, valid and
enforceable obligations of each Credit Party that is a party thereto enforceable
against such Credit Party in accordance with its respective terms, subject, as
to the enforcement of remedies, to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and to general principles of equity.
SECTION 3.15. Taxes. All federal, state and local tax returns which are
required to be filed by or on behalf of the Credit Parties have been filed, and
the Credit Parties have paid or caused to be paid all taxes payable by the
Credit Parties as shown on said returns or on any assessment received by them in
writing, to the extent that such taxes have become due, except as permitted by
Section 5.11 hereof. No Credit Party knows of any material additional
assessments or any basis therefore. The Credit Parties believe that the charges,
accruals and reserves on their books in respect of taxes or other governmental
charges are accurate in all material respects.
SECTION 3.16. Compliance with ERISA and Applicable Law. (a) Each Plan
has been maintained and operated in all material respects in accordance with all
applicable laws, including ERISA and the Code, and each Plan intended to qualify
under section 401(a) of the Code so qualifies. No Reportable Event has occurred
in the last five years as to any Plan. No Plan has any "accumulated funding
deficiency" as defined in section 302 of ERISA or Section 412 of the Code
(whether or not waived) and no application has been made to the Secretary of the
Treasury for a waiver or modification of the minimum funding standards
(including required installment payments) or an extension of any amortization
period under Section 412 of the Code with respect to a Plan. No material
liability has been, and no circumstances exist pursuant to which any material
liability could be, imposed upon any Credit Party or ERISA Affiliate (i) under
sections 4971 through 4980B of the Code, section 502(i) or 502(l) of ERISA, or
Title IV of ERISA with respect to any Plan or Multiemployer Plan or with respect
to any plan heretofore maintained by any Credit Party or ERISA Affiliate or any
entity that heretofore was an ERISA Affiliate or (ii) for the failure to fulfill
any obligation to contribute to any Multiemployer Plan. No material liability
has been, and no circumstances exist pursuant to which any material liability
could be, imposed upon any Credit Party with respect to any Plan that provides
post-retirement welfare coverage (other than as required pursuant to Section
4980B of the Code). Neither any Credit Party nor any ERISA Affiliate has
received any notification that any Multiemployer Plan is in reorganization or
has been terminated within the meaning of Title IV of ERISA, and no
Multiemployer Plan is reasonably expected to be in reorganization or to be
terminated.
(b) The execution, delivery and performance of the Fundamental
Documents and the consummation of the transactions contemplated hereby and
thereby will not involve any "prohibited transaction" within the meaning of
ERISA or the Code.
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SECTION 3.17. Agreements. (a) On a pro forma basis after giving effect
to the acquisition contemplated by the HEDC Purchase Agreement, no Credit Party
is in default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any agreement or instrument
(including any License Agreement or Platform Agreement) to which it is a party
which could reasonably be expected to have a Material Adverse Effect or result
in the loss of more than 5,000,000 Subscribers.
(b) Schedule 3.17 is a true and complete listing as of the
date hereof of (i) all credit agreements, indentures, and other agreements
related to any indebtedness for borrowed money of any Credit Party, other than
the Fundamental Documents and intercompany indebtedness among the Credit
Parties, (ii) all joint venture agreements to which any Credit Party is a party,
(iii) all material License Agreements and Platform Agreements, (iv) all
agreements or other arrangements pursuant to which a Credit Party has granted a
Lien to any Person other than Permitted Encumbrances and (v) all other
contractual arrangements entered into by a Credit Party or by which any Credit
Party is bound which arrangements are material to any Credit Party, including
but not limited to, Guaranties and employment agreements. The Credit Parties
have delivered or made available to the Agent a true and complete copy of each
agreement described on Schedule 3.17, including all exhibits and schedules. For
purposes of this Section 3.17, a Platform Agreement or other contract, agreement
or arrangement shall be deemed "material" if the Credit Parties reasonably
expect that any Credit Party would, pursuant to the terms thereof, (A) recognize
future revenues in excess of US$1,000,000 per annum or, (B) incur liabilities,
obligations or expenses in excess of US$1,000,000 per annum.
SECTION 3.18. Indebtedness; Guaranties; Liens. (a) Except for this
Agreement and as otherwise disclosed on Schedule 3.18(a), as of the Closing Date
no Credit Party has any outstanding Indebtedness except for intercompany
indebtedness among the Credit Parties.
(b) Except for this Agreement and as otherwise disclosed on
Schedule 3.18(b), as of the Closing Date no Credit Party is responsible for any
Indebtedness of any other Person.
(c) Except for (i) Liens arising under this Agreement, (ii)
Liens disclosed on Schedule 3.18(c) and (iii) Permitted Encumbrances, as of the
Closing Date no Credit Party has granted or is aware of the existence of any
Liens on any property of any Credit Party.
SECTION 3.19. Security Interest; Other Security. This Agreement and the
other Fundamental Documents, when executed and delivered and, to the extent
appropriate, filed in locations where required by law, in connection with the
execution and delivery hereof will create and grant to the Agent for the benefit
of itself, the Issuing Bank and the Lenders (upon the making of the first Loan
hereunder, the filing of the appropriate UCC-1 financing statements, the
Copyright Security Agreement with the United States Copyright Office, the
Trademark Security Agreement with the Patent and Trademark Office and delivery
of the Pledged Securities with appropriate stock powers to the Agent) a valid
and first priority perfected security interest in the Collateral located in the
United States subject only to Permitted Encumbrances.
SECTION 3.20. Disclosure. Neither this Credit Agreement nor any other
Fundamental Document nor any other agreement, document, certificate or statement
furnished to the Agent for
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the benefit of the Lenders by or on behalf of any Credit Party in connection
with the transactions contemplated hereby at the time it was furnished contained
any untrue statement of a material fact or omitted to state a material fact,
under the circumstances under which it was made, necessary in order to make the
statements contained herein or in any other Fundamental Document not misleading
in any material respect. At the date hereof, there is no fact relating to any
Credit Party known to any Credit Party which would have a Material Adverse
Effect or would reasonably be expected to have a Material Adverse Effect in the
future.
SECTION 3.21. Licensed Rights. The License Agreements grant to the
Credit Parties sufficient rights in and to the items of Product licensed
thereunder to enable the Credit Parties to perform their respective obligations
under the Platform Agreements, and no Credit Party is in breach of any of its
material obligations under such agreements, nor does any Credit Party have any
knowledge of any breach or anticipated breach by any other parties thereto which
could reasonably be expected to result in any material adverse change in the
business, properties, assets, operations or condition (financial or otherwise)
of any Credit Party.
SECTION 3.22. Environmental Liabilities. (a) No Credit Party has used,
stored, treated, transported, manufactured, refined, handled, produced or
disposed of any Hazardous Materials on, under, at, from or in any way affecting,
any properties or assets owned or leased by a Credit Party, in any manner which
at the time of the action in question violated in any material respect any
Environmental Law governing the use, storage, treatment, transportation,
manufacture, refinement, handling, production or disposal of Hazardous
Materials, and, to the best of each Credit Party's knowledge, no prior owner of
any such property or asset or any tenant, subtenant, prior tenant or prior
subtenant thereof has used Hazardous Materials on or affecting such property or
asset, or otherwise, in any manner which at the time of the action in question
violated in any material respect any Environmental Law governing the use,
storage, treatment, transportation, manufacture, refinement, handling,
production or disposal of Hazardous Materials.
(b) To the best of each Credit Party's knowledge, (i) no
Credit Party has any obligations or liabilities, known or unknown, matured or
not matured, absolute or contingent, assessed or unassessed, which could
reasonably be expected to have a Material Adverse Effect and (ii) no claims have
been made against any of the Credit Parties in the past five years and no
presently outstanding citations or notices have been issued against any of the
Credit Parties, which could reasonably be expected to have a Material Adverse
Effect which in either case have been or are imposed by reason of or based upon
any provision of any Environmental Law, including, without limitation, any such
obligations or liabilities relating to or arising out of or attributable, in
whole or in part, to the manufacture, processing, distribution, use, treatment,
storage, disposal, transportation or handling of any Hazardous Materials by any
Credit Party, or any of its employees, agents, representatives or predecessors
in interest in connection with or in any way arising from or relating to any of
the Credit Parties or any of their respective owned or leased properties, or
relating to or arising from or attributable, in whole or in part, to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transportation or handling of any such substance, by any other Person at or on
or under any of the real properties owned or used by any of the Credit Parties
or any other location where such could reasonably be expected to have a Material
Adverse Effect.
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SECTION 3.23. Pledged Securities. (a) Annexed hereto as Schedule 3.23
is a correct and complete list as of the date hereof, of all the Pledged
Securities hereunder showing, as to each, the entity whose stock or other Equity
Interests are being pledged, the Pledgor of such stock or other Equity
Interests, the stock certificate number (as applicable) and the number of shares
or amount of the capital stock or other Equity Interests being pledged
hereunder. Each Pledgor (i) is the legal and beneficial owner of, and has sole
right, title and interest to, the Pledged Securities owned by such Pledgor, free
and clear of all Liens, security interests or other encumbrances whatsoever,
except the security interests created by this Credit Agreement and the other
Fundamental Documents and (ii) has sole right and power to pledge, and grant the
security interest in, and Lien upon, such Pledged Securities pursuant to this
Credit Agreement and the other Fundamental Documents without the consent of any
Person or Governmental Authority whatsoever.
(b) All of the Pledged Securities are duly authorized, validly
issued, fully paid and non-assessable.
(c) Except for contractual restrictions disclosed on Schedule
3.23 and restrictions created herein or under applicable securities laws and the
regulations promulgated thereunder, there are no restrictions on the transfer of
any of the Pledged Securities.
(d) Except as set forth on Schedule 3.23, there are no
warrants, options, conversion or similar rights currently outstanding with
respect to, and no agreements to purchase or otherwise acquire, any shares of
the capital stock or other Equity Interests of any issuer of any of the Pledged
Securities; and there are no securities or obligations of any kind convertible
into any shares of the capital stock or other Equity Interests of any issuer of
any of the Pledged Securities.
(e) Article 11 of this Credit Agreement creates in favor of
the Agent (on behalf of the Agent, the Issuing Bank and the Lenders) a valid,
binding and enforceable security interest in, and Lien upon, all right, title
and interest of the Pledgors in the Pledged Securities and constitutes a fully
perfected first and prior security interest and Lien upon all right, title and
interest of the Pledgors in such Pledged Securities subject, as to the
enforcement of remedies, to applicable bankruptcy, insolvency, reorganization
and similar laws affecting creditors' rights generally and to general principles
of equity.
SECTION 3.24. Compliance with Laws. No Credit Party is in violation of
any Applicable Law except for such violations which in the aggregate would not
have a Material Adverse Effect. The Borrowings hereunder, the intended use of
the proceeds of the Loans as described in the preamble hereto and as
contemplated by Section 5.17 hereof and any other transactions contemplated
hereby will not violate any Applicable Law.
SECTION 3.25. Bank Accounts. The Credit Parties have no bank accounts
other than those listed on Schedule 3.25.
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4. CONDITIONS OF LENDING
SECTION 4.1. Conditions Precedent to Initial Loan or Letter of Credit.
The obligation of the Issuing Bank to issue the initial Letter of Credit, and of
each Lender to make its initial Loan hereunder and participate in the initial
Letter of Credit, is subject to the satisfaction in full of the following
conditions precedent:
(a) Corporate Documents. The Agent shall have received, with
copies for each of the Lenders:
(i) a copy of the articles, certificate of
incorporation or other organizational documents of each Credit Party, certified
as of a recent date by the Secretary of State of the jurisdiction of
incorporation or organization of such Credit Party;
(ii) a certificate of such Secretary of State, dated
as of a recent date, as to the good standing of and payment of taxes by each
Credit Party;
(iii) a certificate dated as of a recent date as to
the good standing of each Credit Party issued by the Secretary of State of each
jurisdiction in which such Credit Party is qualified as a foreign corporation or
limited liability company as listed in Schedule 3.1(a) hereto;
(iv) a certificate of the Secretary of each Credit
Party dated the Closing Date and certifying (A) that attached thereto is a true
and complete copy of the by-laws or limited liability company agreement, as the
case may be, of such party as in effect on the date of such certification, (B)
that attached thereto is a true and complete copy of resolutions adopted by the
Board of Directors or other governing body of such party authorizing the
execution, delivery and performance in accordance with their respective terms of
this Credit Agreement, the other Fundamental Documents and any other documents
required or contemplated hereunder or thereunder, the grant of the security
interests in the Collateral and the Pledged Securities and, in addition, as to
the Borrower, the borrowings hereunder and the Notes and that such resolutions
have not been amended, rescinded or supplemented and are currently in effect,
(C) that the certificate of incorporation or organization of such party has not
been amended since the date of the last amendment thereto indicated on the
certificate of the Secretary of State furnished pursuant to clause (i) above
except to the extent specified in such Secretary's certificate and (D) as to the
incumbency and specimen signature of each officer of such Credit Party executing
any Fundamental Document (such certificate to contain a certification by another
officer of such Credit Party as to the incumbency and signature of the officer
signing the certificate referred to in this clause (iv)); and
(v) such additional supporting documents as the Agent
or its counsel or any Lender may reasonably request.
(b) Credit Agreement; Notes. The Agent shall have received (i)
executed counterparts of this Credit Agreement, which, when taken together, bear
the signatures of the Agent, the Issuing Bank, all of the Credit Parties and all
of the Lenders and (ii) the Notes executed by the Borrower.
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(c) Opinions of Counsel. The Agent shall have received the
favorable written opinion, dated the Closing Date and addressed to the Agent and
the Lenders and satisfactory to ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel to the Agent,
of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, General Counsel of the Borrower, of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
General Counsel to Hallmark Cards, and of ▇▇▇▇▇▇▇ ▇▇▇▇▇, General Counsel of
Hallmark, which opinions shall be substantially in the forms attached hereto as
Exhibit G.
(d) No Material Adverse Change. No material adverse change
shall have occurred with respect to the business, operations, performance,
assets, properties, condition (financial or otherwise) or prospects of the
Credit Parties, taken as a whole, or Hallmark since December 31, 2000.
(e) Insurance. The Borrower shall have furnished the Agent
with (i) a summary of all existing insurance coverage, on a pro forma basis
after giving effect to the acquisition contemplated by the HEDC Purchase
Agreement, (ii) evidence acceptable to the Agent that the insurance policies
required by Section 5.5 have been obtained and are in full force and effect and
(iii) certificates of insurance with respect to all existing insurance coverage
which certificates shall name The Chase Manhattan Bank, as Agent, as the
certificate holder and shall evidence the Credit Parties' compliance with
Section 5.5(f) with respect to all insurance coverage existing as of the Closing
Date.
(f) Security and Other Documentation. On or prior to the
Closing Date, the Agent shall have received fully executed copies of (i) amended
Pledgeholder Agreements for each item of Product which the Borrower is acquiring
pursuant to the HEDC Purchase Agreement and Pledgeholder Agreements for any
additional items of Product for which any Credit Party has control over any
physical elements thereof as listed on Schedule 3.7(a) hereto; (ii) a Copyright
Security Agreement for each item of Product listed on Schedule 3.7(a) hereto in
which any Credit Party has a copyrightable interest executed by the appropriate
Credit Party; (iii) a Laboratory Access Letter addressed to each Laboratory
where any Credit Party has access rights to any physical elements of Product;
(iv) the Trademark Security Agreement; (v) the Pledged Securities, with undated
stock powers executed in blank; (vi) the appropriate UCC-1 financing statements
relating to the Collateral; (vii) the Charge Over Shares; and (viii) the
Debenture.
(g) Security Interests in Copyrights, Trademarks and other
Collateral. On or prior to the date of the first extension of credit hereunder,
the Agent shall have received evidence satisfactory to it that the Credit
Parties have sufficient right, title and interest in and to the Collateral which
they purport to own (including appropriate licenses under copyright), as set
forth in their financial statements and in the other documents presented to the
Lenders and have made (i) sufficient trademark filings under Applicable Law and
(ii) with respect to the items listed on Schedule 3.7(a), sufficient copyright
filings under Applicable Law, to enable them (x) to perform the Platform
Agreements and (y) to grant to the Agent for the benefit of itself, the Issuing
Bank and the Lenders the security interests contemplated by this Agreement, and
that all financing statements and/or copyright filings or trademark filings
under Applicable Law in the United States necessary to provide the Agent for the
benefit of itself, the Issuing Bank and the Lenders with a first perfected
security interest in the Collateral (except for Permitted Encumbrances) have
been filed.
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(h) Library. The Borrower shall have entered into the HEDC
Purchase Agreement and the acquisition contemplated thereunder shall have closed
concurrently with the drawdown of the initial Loan hereunder and the Agent shall
have received (i) copies of all of the closing documentation in connection
therewith including, but not limited to, the ▇▇▇▇ of Sale, the Assignment and
Assumption Agreements, the Service Agreement, the Guild Assumption Agreements
and the Copyright Assignment (as each such term is defined in the HEDC Purchase
Agreement) all of which shall be in form and substance reasonably acceptable to
the Agent and which shall evidence (inter alia) that the items of Product and
other assets which are the subject thereof have been transferred (or,
concurrently with the initial Loan hereunder, will be transferred) to Crown
Media Distribution LLC and (ii) a valuation of the HEDC Library prepared by
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney which contains a description of the methodology used to
prepare the valuation which is based on a methodology acceptable to the Agent,
and which indicates a valuation in excess of two (2) times the Commitments in
effect on the Closing Date (prior to giving effect to any advances or reductions
permitted hereunder) (it being understood that if such valuation provides for a
range of estimated values, rather than a sum certain, the Agent shall make its
determination on the basis of the lowest figure in the estimated range).
(i) Business Plan; Support Agreement. The Agent shall be
satisfied with the Borrower's business plan and shall have received (i) evidence
satisfactory to it that the Borrower has sufficient liquidity to fund such plan
and (ii) each of the Hallmark Cards Subordination and Support Agreement and the
Limited Guarantee duly executed by Hallmark Cards.
(j) HEDC License Agreements. The HEDC License Agreements shall
have been amended and restated substantially in the forms of Exhibits M-1 and
M-2 hereto.
(k) Due Diligence Investigation. The Agent shall have
completed a due diligence investigation of each of the Credit Parties including,
but not limited to, review of (i) the Platform Agreements and License Agreements
not previously reviewed and the results of such investigation shall have been
satisfactory to the Agent and (ii) such other agreements as requested by the
Agent.
(l) UCC Searches. The Agent shall have received UCC, copyright
office and other searches satisfactory to it indicating that no other filings,
encumbrances or transfers with regard to the Collateral are of record in any
jurisdiction in which it shall be necessary or desirable for the Agent to make a
UCC filing in order to provide the Agent (for the benefit of the Agent, the
Issuing Bank and the Lenders) with a perfected security interest in the
Collateral.
(m) ERISA. The Agent shall have received copies of all Plans
of the Credit Parties that are in existence on the Closing Date and descriptions
of those that are committed to on the Closing Date.
(n) Required Consents and Approvals. The Agent shall be
satisfied that all required consents and approvals have been obtained with
respect to the transactions contemplated hereby from all (i) Governmental
Authorities with jurisdiction over the business and activities of any Credit
Party, (ii) from any third parties whose consent is required in connection with
the HEDC Purchase Agreement and (iii) from any other Person whose consent
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or approval the Agent in its reasonable discretion deems necessary to the
transactions contemplated hereby.
(o) Federal Reserve Regulations. The Agent shall be satisfied
that the provisions of Regulations T, U and X of the Board will not be violated
by the transactions contemplated hereby.
(p) Compliance with Laws. The Agent shall be satisfied that
the transactions contemplated hereby will not violate any provision of
Applicable Law or any order of any court or other agency of the United States or
any state thereof applicable to any of the Credit Parties or any of their
respective properties or assets.
(q) Payment of Fees. All fees and expenses then due and
payable by the Borrower pursuant hereto or pursuant to the Fee Letter to the
Agent for its own account and for the account of the Lenders shall have been
paid.
(r) Fundamental Documents. This Agreement shall have been duly
executed (in sufficient original counterparts for delivery to each Lender and
the Borrower) and delivered by each of the Credit Parties, the Lenders, the
Issuing Bank and the Agent. In addition, all other Fundamental Documents shall
have been duly executed and delivered to the Agent by each of the Credit Parties
party thereto.
(s) Hallmark Inducement Agreement. The Hallmark Inducement
Agreement shall have been duly executed and delivered to the Agent by Hallmark.
(t) Sale/Leaseback Powers of Attorney. Sale/Leaseback Powers
of Attorney for each sale/leaseback transaction set forth on Schedule 1.41 to
the HEDC Purchase Agreement shall have been duly executed and delivered to the
Agent by HEDC.
(u) Existing Agreement. All outstanding obligations under the
Existing Agreement (other than those continuing obligations referred to in the
Modification Agreement dated the date hereof among The Chase Manhattan Bank,
Hallmark and Hallmark Cards) shall have been indefeasibly paid in full
concurrently with the drawdown of the initial Loan hereunder.
(v) HCC Promissory Note; Hallmark Cards Letter of Credit. The
Agent shall have received certified copies of the HCC Promissory Note and the
Hallmark Cards Letter of Credit.
(w) Appointment of Process Agent. The Agent shall have
received evidence satisfactory to it that each non-U.S. Credit Party shall have
appointed a process agent located in The City of New York.
(x) Other Documents. The Agent shall have received such other
documents as the Agent or any Lender may require.
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(y) Other Matters. All legal matters incident to this
Agreement and the transactions contemplated hereby shall be reasonably
satisfactory to ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel to the Agent.
SECTION 4.2. Conditions Precedent to Each Loan and Letter of Credit.
The obligation of the Lenders (including the Agent) to make each Loan (including
the initial Loan) and to participate in each Letter of Credit (including the
initial Letter of Credit) and of the Issuing Bank to issue each Letter of Credit
is subject to the following conditions precedent:
(a) Notice. The Agent shall have received a notice with
respect to such Borrowing or the Issuing Bank shall have received a notice with
respect to such Letter of Credit as required by Article 2 hereof.
(b) Representations and Warranties. The representations and
warranties set forth in Article 3 hereof and in the other Fundamental Documents
shall be true and correct in all material respects on and as of the date of each
Borrowing or issuance of a Letter of Credit hereunder (except to the extent that
such representations and warranties expressly relate to an earlier date, in
which case they shall be true and correct as of such earlier date, or changed
circumstances specifically contemplated by, and allowed pursuant to, this
Agreement) with the same effect as if made on and as of such date.
(c) No Event of Default. On the date of each Borrowing or
issuance of a Letter of Credit hereunder, the Credit Parties shall be in
material compliance with all of the terms and provisions set forth herein to be
observed or performed and no Event of Default or Default shall have occurred and
be continuing nor shall any such event occur by reason of the making of such
Loans or issuance of such Letter of Credit.
(d) Borrowing Certificate. On the date of each Borrowing
hereunder, the Agent shall have received a borrowing certificate, substantially
in the form of Exhibit D hereto (the "Borrowing Certificate"), executed by an
Authorized Officer of the Borrower, dated the date of such Borrowing, containing
a certification by the chief financial officer of the Borrower, that (i) no
Event of Default or Default has occurred or is continuing and (ii) no Event of
Default or Default will occur if the Lenders should make the Loans requested.
(e) Additional Documents. The Lenders shall have received from
the Borrower on the date of such Borrowing or issuance of a Letter of Credit
such documents and information as they may reasonably request relating to the
satisfaction of the conditions in this Section 4.2.
Each Borrowing or request for issuance of a Letter of Credit shall be deemed to
be a representation and warranty by the Borrower on the date of such Borrowing
or issuance as to the matters specified in paragraphs (b) and (c) of this
Section.
5. AFFIRMATIVE COVENANTS
From the date hereof and for as long as the Commitments shall
be in effect, any amount shall remain outstanding under the Notes, any Letter of
Credit shall remain unpaid or
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unsatisfied, or any other Obligations remain unpaid or unsatisfied, each Credit
Party agrees that, unless the Required Lenders shall otherwise consent in
writing, each of them will:
SECTION 5.1. Financial Statements and Reports. Furnish or cause to be
furnished to the Agent:
(a) Within 90 days after the end of each fiscal year
(commencing with fiscal year 2001), (i) the audited consolidated balance sheet
of the Borrower and its Consolidated Subsidiaries, as at the end of, and the
related statements of operations, shareholders' equity and cash flow for, such
year, and the corresponding figures as at the end of, and for, the preceding
fiscal year, accompanied, in each case, by an opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP or
such other independent public accountants of recognized standing as shall be
retained by the Borrower and satisfactory to the Agent, which report and opinion
shall be prepared in accordance with generally accepted auditing standards
relating to reporting and which report and opinion shall contain no material
exceptions or qualifications except for qualifications relating to accounting
changes (with which such independent public accountants concur) in response to
FASB releases or other authoritative pronouncements, (ii) a management
discussion and analysis of such financial statements and (iii) a financial
business plan of the Borrower showing sources and uses of funds for the ensuing
five-year period, calculated on a monthly basis for the ensuing 12-month period
and quarterly thereafter (including statements of cash flows and profit and
loss, and a balance sheet as at the end of such periods);
(b) Within 45 days after the end of each of the first three
fiscal quarters of each of its fiscal years, the unaudited consolidated balance
sheet of the Borrower and its Consolidated Subsidiaries, as at the end of, and
the related unaudited statements of operations, shareholders' equity and cash
flow for, such quarter, and the corresponding figures as at the end of, and for,
the corresponding period in the preceding fiscal year, in each case together
with a management discussion and analysis of such financial statements and a
certificate signed by an Authorized Officer of the Borrower on behalf of the
Borrower to the effect that such financial statements, while not examined by
independent public accountants, reflect, in the opinion of the Borrower all
adjustments necessary to present fairly the financial position of the Borrower
and its Consolidated Subsidiaries, as at the end of the fiscal quarter and the
results of its operations for the quarter then ended in conformity with GAAP;
(c) Simultaneously with the delivery of the statements
referred to in paragraphs (a) and (b) of this Section 5.1, a certificate of an
Authorized Officer of the Borrower, in form and substance satisfactory to the
Agent (i) stating that in the course of the performance of his duties, he would
normally have knowledge of any condition or event which would constitute an
Event of Default or Default and stating whether or not he has knowledge of any
such condition or event and, if so, specifying each such condition or event of
which he has knowledge and the nature thereof (ii) demonstrating in detail
satisfactory to the Agent compliance with the provisions of Sections 6.10, 6.15,
6.21, 6.23, 6.24, 6.25, 6.27 and 6.28 hereof; and (iii) certifying that all
filings required under Section 5.8 hereof have been made and listing each such
filing that has been made since the date of the last certificate delivered in
accordance with this Section 5.1(c);
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(d) Promptly upon their becoming available, copies of (i) all
management projections presented to any Credit Party's Board of Directors in
connection with any action by such Board of Directors, (ii) all audits, studies
or evaluations prepared by independent public accountants for or submitted to
any Credit Party and (iii) copies of all reports submitted by independent public
accountants to the Borrower in connection with each annual, interim or special
audit or review of the financial statements of the Borrower, including, without
limitation, the comment letter submitted by such accountants to management in
connection with their annual audit;
(e) Promptly upon their becoming available, copies of (i) all
registration statements, proxy statements, and all reports which any Credit
Party shall file with any securities exchange or with the S.E.C. and (ii) all
reports, financial statements, press releases and other information which any
Credit Party shall release, send or make available to its stockholders;
(f) Notice of (i) any action taken by the Board of Directors
or governing body of any Credit Party in connection with the issuance of any
additional equity securities and (ii) the date on which such Credit Party will
receive the Net Cash Proceeds from the issuance of such additional equity
securities;
(g) Provide the Agent with copies of all Platform Agreements
providing for (x) greater than 5,000,000 Subscribers or (y) payment of greater
than $1,000,000 in any one year;
(h) Deliver to the Agent no later than the date the annual
financial statements are delivered (or, if earlier, the date on which such
annual financial statements are required by paragraph (a) above to be
delivered), an updated library valuation prepared by an independent third party
reasonably acceptable to the Agent, in substantially the same form and using the
same methodology as was used in preparing the initial library valuation
delivered to the Agent pursuant to Section 4.1(h) hereof or using such other
form and methodology as is otherwise acceptable to the Agent in its sole
discretion;
(i) Deliver to the Agent together with each set of quarterly
financial statements required by paragraph (b) above, an updated library
valuation prepared by the Company in substantially the same form and using the
same methodology as was used in preparing the initial library valuation
delivered to the Agent pursuant to Section 4.1(h) hereof or using such other
form and methodology as is otherwise acceptable to the Agent in its sole
discretion and which has been reduced (i) to the extent that any rights have
been sold for an amount less than the amount attributed to such rights in the
valuation, by an amount equal to such difference and (ii) by an amount equal to
any cash received for rights previously sold, with a certificate of an
Authorized Officer of the Borrower setting forth any deviations from such
methodology and showing a reconciliation or providing a satisfactory explanation
for such deviations;
(j) Upon request of the Agent, provide the Agent with copies
of any and all material License Agreements; and
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(k) From time to time such additional information regarding
the financial condition, business or business prospects of the Credit Parties,
the amount of film inventory in which any of the Credit Parties has rights on an
individual or market basis or otherwise regarding the Collateral, as any Lender
may reasonably request.
SECTION 5.2. Corporate Existence. Do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its corporate
existence (provided, that any Credit Party may merge into or consolidate with
another Credit Party, provided further that the Borrower, if it is a party
thereto, is the surviving entity), and material rights, licenses, permits and
franchises, and comply in all material respects with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, any
Governmental Authority.
SECTION 5.3. Maintenance of Properties. Keep its tangible properties
which are material to its business in good repair, working order and condition
subject to ordinary wear and tear and, from time to time (i) make all necessary
and proper repairs, renewals, replacements, additions and improvements thereto
and (ii) comply at all times with the provisions of all material leases and
other material agreements to which it is a party so as to prevent any loss or
forfeiture thereof or thereunder unless compliance therewith is being currently
contested in good faith by appropriate proceedings and appropriate reserves have
been established in accordance with GAAP.
SECTION 5.4. Notice of Material Events. (a) Promptly upon any Executive
Officer of a Credit Party obtaining knowledge of (i) any Default or Event of
Default, or becoming aware that the Agent, the Issuing Bank or any Lender has
given notice or taken any other action with respect to a claimed Event of
Default, (ii) any material adverse change in the condition or operations of any
Credit Party, financial or otherwise, (iii) any action or event which could
reasonably be expected to materially and adversely affect the performance of the
Credit Parties' obligations under this Credit Agreement or any other Fundamental
Document, the repayment of the Notes, or the security interests granted to the
Agent for the benefit of itself, the Issuing Bank and the Lenders under this
Credit Agreement or any other Fundamental Document, (iv) any other event which
could reasonably be expected to result in a Material Adverse Effect or would
otherwise cause the loss of greater than 5,000,000 Subscribers, (v) the opening
of any office of a Credit Party or the change of the executive office,
jurisdiction or form of organization, or the principal place of business of any
Credit Party or of the location of any Credit Party's books and records, (vi)
any change in the name of any Credit Party, (vii) any other event which could
reasonably be expected to materially and adversely impact upon the amount of
collectability of any material accounts receivable of the Credit Parties or
materially decrease the value of the Collateral or the Pledged Securities,
(viii) any proposed material amendment to any material agreements that are part
of the Collateral, or (ix) any Person giving any notice to any Credit Party or
taking any other action with respect to a claimed default or event or condition
of the type referred to in paragraph (e) of Article 7, such Credit Party shall
promptly give written notice thereof to the Agent specifying the nature and
period of existence of any such condition or event, or specifying the notice
given or action taken and the nature of such claimed Event of Default or
condition and what action such Credit Party has taken, is taking and proposes to
take with respect thereto.
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(b) Promptly upon any Executive Officer of a Credit Party
obtaining knowledge of (i) the institution of, or threat of, any action, suit,
proceeding, investigation or arbitration by any Governmental Authority or other
Person against or affecting any Credit Party or any of its assets, or (ii) any
material development in any such action, suit, proceeding, investigation or
arbitration (whether or not previously disclosed to the Lenders), which, in the
case of (i) or (ii) might, if adversely determined, reasonably be expected to
have a Material Adverse Effect or would otherwise cause the loss of greater than
5,000,000 Subscribers, such Credit Party shall promptly give notice thereof to
the Agent and provide such other information as may be available to it (without
waiver of any applicable evidentiary privilege) to enable the Lenders to
evaluate such matters; and, in addition to the requirements set forth in clauses
(i) and (ii) of this subsection (b), such Credit Party upon request shall
promptly give notice of the status of any action, suit, proceeding,
investigation or arbitration covered by a report delivered to the Lenders
pursuant to clause (i) and (ii) above to the Lenders and provide such other
information as may be reasonably available to it to enable the Lenders to
evaluate such matters.
SECTION 5.5. Insurance. (a) Keep its assets which are of an insurable
character insured (to the extent and for the time periods consistent with normal
industry practices) by financially sound and reputable insurers against loss or
damage by fire, explosion, theft or other hazards which are included under
extended coverage in amounts not less than the insurable value of the property
insured or such lesser amounts, and with such self-insured retention or
deductible levels, as are consistent with customary industry practices.
(b) Maintain with financially sound and reputable insurers,
insurance against other hazards and risks and liability to Persons and property
to the extent and in the manner customary for companies in similar businesses.
(c) Maintain, or cause to be maintained, in effect during the
period from the date of acquisition of each item of Product acquired by any
Credit Party until such time as the Agent shall have been provided with
satisfactory evidence of the existence of one negative or master tape in one
location and in another location, an interpositive or internegative or duplicate
master tape of the final version of the completed Product, insurance on the
negatives and sound tracks of such item of Product in an amount not less than
the cost of re-shooting the principal photography of the item of Product and
otherwise recreating such item of Product.
(d) Maintain, or cause to be maintained, distributor's "Errors
and Omissions" insurance to the extent and in amounts consistent with or greater
than customary industry standards.
(e) Maintain, or cause to be maintained, broadcaster's "Errors
and Omissions" insurance to the extent and in amounts consistent with or greater
than customary industry standards.
(f) Cause all such above-described insurance (excluding
worker's compensation insurance) to (1) provide for the benefit of the Lenders
that 30 days' prior written notice of suspension, cancellation, termination,
reduction, non-renewal or lapse or material change of coverage shall be given to
the Agent; (2) name the Agent for the benefit of the Lenders as a loss payee
(except for "Errors and Omissions" insurance and other third party liability
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insurance), provided, however, that so long as an Event of Default has occurred
and is continuing, property insurance proceeds may be used to repair damage in
respect of which such proceeds were received or so long as no Default or Event
of Default has occurred and is then continuing, to reimburse a Credit Party for
its own funds expended to repair the applicable damage; and (3) to the extent
that neither the Agent nor the Lenders shall be liable for premiums or calls,
name the Agent for the benefit of the Lenders as an additional insured
including, without limitation, under any "Errors and Omissions" insurance and
other third party liability insurance but only from claims arising from the acts
or omissions of any Credit Party or its employees, representatives or
contractors.
(g) Upon the request of the Agent, the Borrower will render to
the Agent a statement in such detail as the Agent may request as to all such
insurance coverage.
SECTION 5.6. Music. When an item of Product produced by a Credit Party
has been scored, if requested by the Agent, promptly deliver to the Agent (a)
written evidence of the music synchronization rights obtained from the composer
or the licensor of the music and (b) copies of all music cue sheets with respect
to such item of Product.
SECTION 5.7. Copyrights and Trademarks. (a) As soon as practicable
(but, in the case of an item of Product, in no event later than 60 days after
the initial release or broadcast of such item of Product and in the case of a
screenplay, in no event later than 5 days prior to payment by any Credit Party
for any portion of the cost of the item of Product to be based on such
screenplay), to the extent any Credit Party is or becomes the copyright
proprietor thereof or otherwise acquires a copyrightable interest (other than
with respect to rights in items of Product that are acquired pursuant to (x) any
License Agreement under which the aggregate amount required to be paid in
respect of such License Agreement is less than $250,000, (y) any License
Agreement with a term of less than three (3) months or (z) License Agreements
under which the aggregate amounts previously paid to acquire such rights which
are allocable to unexpired license periods are less than $10,000,000 (it being
understood that amounts paid under a License Agreement shall be allocated on a
straight line basis over the relevant license term of such License Agreement),
in which instance the applicable Credit Party shall use prudent business
judgment as to whether or not to register such rights), the applicable Credit
Party shall take any and all actions necessary to register the copyright for
such item of Product or screenplay, in the name of such Credit Party (subject to
a Lien in favor of the Agent for the benefit of itself, the Issuing Bank and the
Lenders pursuant to the Copyright Security Agreement) in conformity with the
laws of the United States and such other jurisdictions as the Agent may
reasonably specify, and immediately deliver to the Agent: (x) written evidence
of the registration of any and all such copyrights for inclusion in the
Collateral under this Credit Agreement and (y) a Copyright Security Agreement
Supplement relating to such item, executed by all of the Credit Parties.
(b) As soon as any Credit Party acquires any trademark (other
than any rights which any Credit Party may have in and to the "Hallmark" and
"Odyssey" trademarks), service ▇▇▇▇, trade name or service name, the applicable
Credit Party shall take any and all actions necessary to register such
trademark, service ▇▇▇▇, trade name or service name, in the name of such Credit
Party (subject to a Lien in favor of the Agent for the benefit of itself, the
Issuing Bank and the Lenders pursuant to the Trademark Security Agreement) in
conformity with the laws of the United States and such other jurisdictions as
the Agent may reasonably specify, and
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immediately deliver to the Agent: (x) written evidence of the registration of
any and all such trademarks, service marks, trade names or service names for
inclusion in the Collateral under this Credit Agreement and (y) a Trademark
Security Agreement relating to such trademark, service ▇▇▇▇, trade name or
service name, executed by all of the Credit Parties.
(c) Obtain instruments of transfer or other documents
evidencing the interest of any Credit Party with respect to the copyright
relating to items of Product in which such Credit Party is not entitled to be
the initial copyright proprietor and any trademark, service ▇▇▇▇, trade name or
service name which such Credit Party acquires, and promptly record such
instruments of transfer on the United States Copyright Register or the United
States Trademark Register and such other jurisdictions as the Agent may specify.
SECTION 5.8. Books and Records. Maintain or cause to be maintained at
all times true and complete books and records of its financial operations and
provide the Agent and its representatives (and each Lender and its
representatives during the continuance of an Event of Default) access to such
books and records and to any of its properties or assets upon reasonable notice
and during regular business hours in order that the Agent (or such Lender) may
make such audits and examinations and make abstracts from such books, accounts,
records and other papers pertaining to the Collateral (including, but not
limited to, all on and off balance sheet receivables) and may discuss the
affairs, finances and accounts with, and be advised as to the same by the Credit
Parties' officers and independent accountants, all as the Agent (or such Lender)
may deem appropriate for the purpose of verifying the various reports delivered
by any Credit Party to the Agent and/or the Lenders pursuant to this Credit
Agreement or for otherwise ascertaining compliance with this Credit Agreement or
any Fundamental Document.
SECTION 5.9. Observance of Agreements. Duly observe and perform in all
material respects all the terms and conditions of all material agreements with
respect to the distribution and/or exploitation of items of Product and
diligently protect and enforce the rights of the Credit Party under all such
agreements in a manner consistent with prudent business judgment and subject to
the terms and conditions of such agreements.
SECTION 5.10. Laboratories; No Removal. (a) To the extent any Credit
Party has control over or rights to receive any of the Physical Materials
relating to any item of Product, deliver or cause to be delivered to a
Laboratory or Laboratories all negative and preprint material, master tapes and
all sound track materials with respect to each such item of Product and deliver
to the Agent a fully executed Pledgeholder Agreement with respect to such
materials. To the extent that any Credit Party has only rights of access to
preprint material or master tapes and has not created duplicate materials
sufficient to exploit its rights and has not stored such duplicate materials at
a Laboratory that has delivered a Pledgeholder Agreement to the Agent, then the
Credit Parties will deliver to the Agent a fully executed Laboratory Access
Letter covering such materials. Prior to requesting any Laboratory to deliver
such negative or other preprint or sound track material or master tapes to
another Laboratory, any such Credit Party shall provide the Agent with a
Pledgeholder Agreement or Laboratory Access Letter, as appropriate, executed by
such other Laboratory and all other parties to such Pledgeholder Agreement
(including the Agent). Without the consent of the Agent, no Credit Party shall
deliver or remove or cause the delivery or removal of the original negative and
film or sound materials or master tapes with respect to any item of Product
owned by such Credit Party or in
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which such Credit Party has an interest (i) to a location outside the United
States or (ii) to any state or jurisdiction where UCC-1 financing statements
have not been filed against such Credit Party.
(b) With respect to items of Product acquired after the
Closing Date, on at least a quarterly basis, deliver to the Agent and the
Laboratories which are signatories to Pledgeholder Agreements a revised schedule
of Product on deposit with such Laboratories.
SECTION 5.11. Taxes and Charges; Indebtedness in Ordinary Course of
Business. Duly pay and discharge, or cause to be paid and discharged, before the
same shall become in arrears, all taxes, assessments, levies and other
governmental charges, imposed upon any Credit Party or its properties, sales and
activities, or any part thereof, or upon the income or profits therefrom, as
well as all claims for labor, materials, or supplies which if unpaid could
reasonably be expected to become by law a Lien upon any property of a Credit
Party; provided, however, that any such tax, assessment, charge, levy or claim
need not be paid if the validity or amount thereof shall currently be contested
in good faith by appropriate proceedings and if the Borrower shall have set
aside on its books reserves (the presentation of which is segregated to the
extent required by GAAP) adequate with respect thereto if reserves shall be
deemed necessary; and provided, further, that such Credit Party will pay all
such taxes, assessments, levies or other governmental charges forthwith upon the
commencement of proceedings to foreclose any Lien which may have attached as
security therefor. The Credit Parties will pay when due, or in conformance with
customary trade terms all other obligations incident to their respective
operations.
SECTION 5.12. Liens. Defend the Collateral (including, without
limitation, the Pledged Securities) to the extent commercially reasonable
against any and all Liens howsoever arising, other than Permitted Encumbrances
and in any event defend against any attempted foreclosure.
SECTION 5.13. Cash Receipts. In the event any Credit Party receives (i)
payment from any obligor, which payment should have been remitted to the Agent
or (ii) the proceeds of any sale of Product, whether in the form of cash or
otherwise, such Credit Party shall immediately remit such payment or proceeds to
the Agent for deposit to the Collection Account.
SECTION 5.14. ERISA Compliance and Reports. Furnish to the
Administrative Agent (i) as soon as possible, and in any event within thirty
(30) days after any Executive Officer of a Credit Party has knowledge that (A)
any Reportable Event with respect to any Plan has occurred, a statement of an
Executive Officer of the Credit Party, setting forth on behalf of such Credit
Party details as to such Reportable Event and the action which it proposes to
take with respect thereto, together with a copy of the notice, if any, required
to be filed of such Reportable Event given to the PBGC or (B) an accumulated
funding deficiency has been incurred or an application has been made to the
Secretary of the Treasury for a waiver or modification of the minimum funding
standard or an extension of any amortization period under Section 412 of the
Code with respect to a Plan; that a Plan or Multiemployer Plan has been or is
proposed to be terminated, reorganized, partitioned or declared insolvent under
Title IV of ERISA, proceedings have been instituted to terminate a Plan if such
Plan is subject to Title IV of ERISA, a proceeding has been instituted pursuant
to Section 515 of ERISA to collect a delinquent contribution to a Multiemployer
Plan, or any such Credit Party or ERISA Affiliate will incur any liability
(including any contingent or secondary liability) to or on account of the
termination of or
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withdrawal from a Plan subject to Title IV of ERISA or Multiemployer Plan under
Sections 4062, 4063, 4201 or 4204 of ERISA, a statement of an Executive Officer
of the Credit Party, setting forth details as to such event and the action the
applicable Credit Party proposes to take with respect thereto, (ii) promptly
upon reasonable request of the Agent, copies of each annual and other report
with respect to each Plan and (iii) promptly after receipt thereof, a copy of
any notice any Credit Party or ERISA Affiliate may receive from the PBGC
relating to the PBGC's intention to terminate any Plan subject to Title IV of
ERISA or to appoint a trustee to administer any Plan subject to Title IV of
ERISA.
SECTION 5.15. Subsidiaries. Immediately (i) cause each entity which
hereafter becomes a Subsidiary, to become a Guarantor, to be jointly and
severally liable for the Obligations and to become a party to the other
Fundamental Documents, as appropriate, with the same obligations and
responsibilities under this Agreement and the other Fundamental Documents as if
it had originally executed this Agreement and the other Fundamental Documents,
by delivering to the Agent an Instrument of Assumption and Joinder duly executed
by such Subsidiary and (ii) deliver to the Agent certificates evidencing all of
the stock or other ownership interest of the Subsidiary referred to in the
preceding clause (i) (which stock has been pledged to the Agent pursuant to
Article 11 hereof) together with undated stock powers executed in blank for such
certificates (or such other documents necessary to replace a member of a
Subsidiary that is a limited liability company) and organizational documents to
the extent set forth in Section 4.1 hereof, and written opinions of counsel in
form and substance satisfactory to the Agent; provided, however, that with
respect to any Subsidiary which is a Controlled Foreign Corporation, the
Borrower may elect to pledge either 100% or only 65% of the stock of such
Controlled Foreign Corporation.
SECTION 5.16. Environmental Laws. (a) Promptly notify the Agent upon
any Executive Officer becoming aware of any violation or potential violation or
non-compliance with, or liability or potential liability under any Environmental
Laws which, when taken together with all other pending violations could
reasonably be expected to have a Material Adverse Effect, and promptly furnish
to the Agent all notices of any nature which any Credit Party or any Subsidiary
may receive from any Governmental Authority or other Person with respect to any
violation, or potential violation or non-compliance with, or liability or
potential liability under any Environmental Laws which, in any case or when
taken together with all such other notices, could reasonably be expected to have
a Material Adverse Effect.
(b) Comply in all material respects with and use reasonable
efforts to ensure compliance in all material respects by all tenants and
subtenants with all Environmental Laws, and obtain and comply in all material
respects with and maintain and use best efforts to ensure that all tenants and
subtenants obtain and comply in all material respects with and maintain any and
all licenses, approvals, registrations or permits required by Environmental
Laws.
(c) Conduct and complete all investigations, studies, sampling
and testing, and all remedial, removal and other actions required under all
Environmental Laws and promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities. Any order or directive
whose lawfulness is being contested in good faith by appropriate proceedings
shall be considered a lawful order or directive when such proceedings, including
any judicial review of such proceedings, have been finally concluded by the
issuance
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of a final non-appealable order; provided, however, that the appropriate Credit
Party shall have set aside on its books reserves (the presentation of which is
segregated to the extent required by GAAP) adequate with respect thereto if
reserves shall be deemed necessary.
(d) Defend, indemnify and hold harmless the Agent, the Issuing
Bank and the Lenders, and their respective employees, agents, officers and
directors, from and against any claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature, known or
unknown, contingent or otherwise, arising out of, or in any way related to the
violation of or non-compliance by any Credit Party with any Environmental Laws,
or any orders, requirements or demands of Governmental Authorities related
thereto, including, without limitation, reasonable external attorney and
consultant fees, investigation and laboratory fees, court costs and litigation
expenses, but excluding therefrom all claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses arising out of or
resulting from (i) the gross negligence or willful acts or willful misconduct of
any indemnified party or (ii) any acts or omissions of any indemnified party
occurring after any indemnified party is in possession of, or controls the
operation of, any property or asset.
SECTION 5.17. Use of Proceeds. Use the proceeds of the Loans (i) for
the acquisition of certain rights in the HEDC Library, in an amount not to
exceed $120,000,000 (or such lesser amount as represents the cash portion of the
purchase price of the HEDC Library), (ii) to repay intercompany loans from
Hallmark or HCC (not including programming fees due and payable pursuant to
program license agreements) in an amount not to exceed $83,000,000 in the
aggregate plus interest accrued thereon; (iii) to fund the development,
distribution, exploitation and acquisition of intellectual properties including
feature films, television and video product and/or rights therein or thereto;
(iv) for general working capital purposes, including acquisitions of cable
channels and the operation of the Credit Parties; and (v) to fund the
acquisition, distribution, marketing and other exploitation of
movies-of-the-week, mini-series, cable, pay cable, first-run syndication,
network and video programming.
SECTION 5.18. Further Assurances; Security Interests. (a) Upon the
request of the Agent, duly execute and deliver, or cause to be duly executed and
delivered, at the cost and expense of the Borrower, such further instruments as
may be necessary or proper, in the reasonable judgment of the Agent, to provide
the Agent (for the benefit of itself, the Issuing Bank and the Lenders) a
perfected Lien in the Collateral and to carry out the provisions and purposes of
this Agreement and the other Fundamental Documents.
(b) Upon the request of the Agent, promptly perform or cause
to be performed any and all acts and execute or cause to be executed any and all
documents (including, without limitation, the execution, amendment or
supplementation of any financing statement and continuation statement or other
statement) for filing under the provisions of the UCC and the rules and
regulations thereunder, or any other statute, rule or regulation of any
applicable foreign, federal, state or local jurisdiction, which are necessary or
advisable, from time to time, in order to grant and maintain in favor of the
Agent for the ratable benefit of itself, the Issuing Bank and the Lenders as
beneficiaries thereof the security interest in the Collateral contemplated
hereunder and under the other Fundamental Documents, subject (other than in
connection with the Pledged Securities) only to Permitted Encumbrances.
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(c) Promptly undertake to deliver or cause to be delivered to
the Lenders from time to time such other documentation, consents, authorizations
and approvals in form and substance satisfactory to the Agent, as the Agent
shall deem reasonably necessary or advisable to perfect or maintain the Liens of
the Agent for the benefit of itself, the Issuing Bank and the Lenders.
(d) In furtherance (and not in limitation) of the foregoing,
the Credit Parties shall, as soon as practicable, take any and all such actions
as may be reasonably necessary or appropriate (or as may be reasonably requested
by the Agent) to clarify the chain of title for any items of Product in the HEDC
Library so as to ensure that the Credit Parties may realize the economic value
therein which is intended to be conveyed pursuant to the HEDC Purchase
Agreement, including (without limitation) by duly recording in the United States
Copyright Office, in the name of Crown Media Distribution, LLC (or such other
Credit Party as may be reasonably acceptable to the Agent), ownership of rights
in and to each of the items of Product included in the HEDC Library (to the
extent not so recorded as at the Closing Date), and (upon request by the Agent)
to deliver to the Agent copies of any and all documents pertaining to the chain
of title for the items of Product included in the HEDC Library and all such
recordations.
SECTION 5.19. Bank Accounts. Provide the Agent with 10 Business Days'
prior written notice before opening any bank account other than (a) those listed
on Schedule 3.23 and (b) the account at the office of the Agent as contemplated
by Section 8.3 hereof.
6. NEGATIVE COVENANTS
From the date hereof and for so long as the Commitments shall
be in effect, any amount shall remain outstanding under the Notes, any Letter of
Credit shall remain unpaid or unsatisfied, or any other Obligations remain
unpaid or unsatisfied, each Credit Party agrees that unless the Required Lenders
shall otherwise consent in writing, it will not, directly or indirectly, and
will not allow any Subsidiary, directly or indirectly, to:
SECTION 6.1. Limitations on Indebtedness. Incur, create, assume or
suffer to exist any Indebtedness other than:
(i) the Indebtedness represented by the Notes and the
other Obligations;
(ii) Indebtedness in respect of secured purchase
money financings, including Capital Leases to the extent permitted under Section
6.10 hereof, not to exceed $30,000,000 at any time outstanding;
(iii) ordinary trade payables which are not yet due
and payable and are not the result of a transaction which is essentially the
borrowing of money;
(iv) Indebtedness by any Credit Party to any other
Credit Party to the extent not otherwise prohibited by this Section 6.1;
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(v) existing Indebtedness listed on Schedule 3.18(a)
hereto but no increases thereof;
(vi) Indebtedness to HCC which (x) is evidenced by
the HCC Promissory Note or (y) is otherwise the subject of the Hallmark Cards
Subordination and Support Agreement and is on terms and conditions acceptable to
the Required Lenders;
(vii) Indebtedness to Hallmark Cards, Hallmark or
HEDC resulting from the assumption of the Schedule 1.5 Obligations;
(viii) convertible unsecured subordinated notes in an
amount and on terms acceptable to the Required Lenders in their sole discretion;
and
(ix) preferred stock (to the extent classified as
Indebtedness under GAAP).
SECTION 6.2. Limitations on Liens. Incur, create, assume or suffer to
exist any Lien on any of the Collateral, whether now owned or hereafter
acquired, except:
(i) with regard to items of Product that are part of
the HEDC Library, pre-existing Liens in favor of the Screen Actors Guild and the
Directors Guild of America, all of which have been disclosed on Schedule
3.18(c);
(ii) with regard to all items of Product, Liens
pursuant to written security agreements (in form and substance acceptable to the
Agent) in favor of guilds as required pursuant to terms of collective bargaining
agreements, which Liens are (A) subordinated or junior to the claims of the
Lenders hereunder pursuant to documentation that is satisfactory in form and
substance to the Agent or (B) on terms otherwise acceptable to the Agent;
(iii) deposits under workers' compensation,
unemployment insurance and Social Security laws or to secure statutory
obligations or surety or appeal bonds or performance or other similar bonds in
the ordinary course of business (other than completion bonds);
(iv) Liens for taxes, assessments or other
governmental charges or levies due and payable, the validity or amount of which
is currently being contested in good faith by appropriate proceedings pursuant
to the terms of Section 5.11 hereof;
(v) Liens customarily granted or incurred in the
ordinary course of business to secure payment for services rendered by
laboratories and production houses and suppliers of materials and equipment;
(vi) mechanic's liens and Liens in connection with
secured purchase money financings to the extent permitted in Section 6.1(ii)
hereof;
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(vii) possessory Liens other than on Product or
physical properties of Product (other than of laboratories and production
houses) which (a) occur in the ordinary course of business, (b) secure normal
trade debt which is not yet due and payable, (c) do not secure Indebtedness for
borrowed money and (d) do not defer payment terms beyond 180 days;
(viii) Liens arising out of attachments, judgments or
awards as to which an appeal or other appropriate proceedings for contest or
review are promptly commenced (and as to which foreclosure and other enforcement
proceedings (a) shall not have been commenced (unless fully bonded or otherwise
effectively stayed) or (b) in any event shall be promptly fully bonded or
otherwise effectively stayed);
(ix) Liens arising from zoning restrictions or
easements;
(x) the Liens of the Agent under this Agreement, the
other Fundamental Documents and other documents contemplated hereby; and
(xi) existing Liens listed on Schedule 3.18(c)
hereto; provided, however, that, without the consent of the Required Lenders,
any Indebtedness secured by any such Lien may not be increased, extended or
renewed and such Lien may not extend to any other property of the Credit Party.
SECTION 6.3. Guaranties. Incur, create, assume or suffer to exist any
Guaranty, either directly or indirectly, or otherwise in any way become
responsible for any Indebtedness (including working capital maintenance,
pay-or-play contracts or other similar obligations) of any other Person,
contingently or otherwise, except (i) for the endorsement of negotiable
instruments by a Credit Party in the ordinary course of business, (ii) for
Guaranties which would constitute investments in items of Product not otherwise
prohibited hereunder, (iii) for existing Guaranties listed on Schedule 3.18(b)
hereto and (iv) as permitted in Section 6.1 hereof.
SECTION 6.4. Limitations on Investments. Make any Investment (including
any loans to any shareholder or other Affiliate of the Borrower) except:
(i) purchases of Cash Equivalents;
(ii) loans to officers and travel advances in the
ordinary course of business to employees and/or officers; provided, however,
that the aggregate amount of such loans and/or advances may not exceed
$2,000,000 at any time;
(iii) Investments in wholly-owned Subsidiaries, HM
Holdings of Delaware, LLC and Hallmark India Private Limited; provided, however,
that the total amount of Investments made in any of H&H Programming Asia, LLC,
▇▇▇▇▇▇ (L) Ltd. and Odyssey Productions, Ltd. after the date hereof shall not
exceed $50,000 in the aggregate (or its equivalent);
(iv) additional Investments not in excess of
$5,000,000 in the aggregate in entities which are not wholly-owned Subsidiaries;
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(v) with the prior written consent of the Required
Lenders, investments representing ownership interests (whether in cash or
otherwise) for acquisition purposes; and
(vi) intercompany advances from the Borrower or any
Guarantor to a Guarantor.
SECTION 6.5. Restricted Payments. Pay or declare or enter into any
agreement to pay or otherwise become obligated to make any Restricted Payments
other than:
(i) stock dividends paid solely in shares of stock of
the Borrower or another Guarantor which stock is not subject to any mandatory
redemption or redemption at the option of the holder;
(ii) payments by a Credit Party to another Credit
Party;
(iii) payments to HEDC pursuant to the HEDC License
Agreements;
(iv) payments to Hallmark, Hallmark Cards or an
Affiliate pursuant to the terms of one or more service agreement(s); provided
that such service agreement(s) shall be in form and substance acceptable to the
Agent and provided further that such payments shall not exceed $5,000,000 for
fiscal year 2001, $7,000,000 for fiscal year 2002, $9,000,000 for fiscal year
2003, $10,000,000 for fiscal year 2004 or $11,000,000 for fiscal year 2005; and
(v) issuance of common stock for or upon conversion
of preferred stock or debt of the Borrower;
(vi) payments of dividends or other amounts on
preferred stock the issuance and terms of which have been approved by the
Required Lenders;
(vii) so long as no Default or Event of Default has
occurred and is continuing (and, in the case of clause (z) below, provided that
the Required Lenders shall have consented thereto), Net Cash Proceeds realized
since the date hereof may be used (x) to repay HCC for amounts outstanding under
the HCC Promissory Note (together with accrued interest thereon) or to reduce
HCC's funding commitment under the HCC Promissory Note (in which latter case,
such Net Cash Proceeds will be used by the applicable Credit Party to fund its
general working capital requirements (or for any other purpose permitted by the
Fundamental Documents)), (y) once HCC's funding commitment under the HCC
Promissory Note shall have terminated and all outstanding loans thereunder shall
have been repaid, to repay HCC or Hallmark Cards for other intercompany
Indebtedness in an aggregate principal amount not to exceed $30,000,000, or (z)
thereafter, to reimburse Hallmark or Hallmark Cards for any payments previously
made by such Person(s) in relation to the underlying obligations to third
parties giving rise to the Schedule 1.5 Obligations; provided, however, that the
Lenders acknowledge that it is the Borrower's intention to request, after such
time as it has realized at least $180,000,000 in Net Cash Proceeds, that the
Required Lenders permit it to use additional Net Cash Proceeds to repay other
intercompany Indebtedness (it being understood that the Required Lenders may
elect whether or not to consent to such request in their sole discretion); and
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(viii) on the Closing Date, the Borrower may use
proceeds of the initial Loans hereunder to repay intercompany loans from
Hallmark or HCC in an aggregate principal amount not to exceed $83,000,000 plus
interest accrued thereon.
SECTION 6.6. Limitations on Sale of Assets. Sell, lease, license,
transfer or otherwise dispose of:
(i) items of Product other than in the ordinary
course of business, provided that the Credit Parties shall not be entitled to
sell, transfer or alienate their entire right, title or interest in and to items
of Product with an aggregate value in excess of $4,000,000; and
(ii) any of the channels owned or operated by a
Credit Party (or any Subsidiary thereof), whether directly (e.g., by way of an
outright sale or other disposition of the Credit Party's rights as owner or
operator) or indirectly (e.g., by selling, assigning or otherwise transferring
the Credit Party's rights in any Platform Agreement), provided that a Credit
Party shall at all times be entitled to dispose of some or all of its rights as
owner or operator of a channel in a territory to the extent such disposition is
required (x) by Applicable Law in the territory in which the channel is
available or (y) in order to comply with local practices and/or customs in the
relevant territory relating to the ownership or operation of channels by
non-residents; and
(iii) any other property of the Credit Parties, other
than dispositions made in the ordinary course of business involving property
with an aggregate fair market value at the time of disposition of less than
$100,000.
The limitation contained in clause (ii) of the preceding sentence shall not
limit the rights of the Credit Parties to shut down existing operations they
believe to be no longer financially beneficial or to acquire the ownership of,
or rights to operate, channels in new territories, or to expand existing
channels into new territories, through joint ventures or such other arrangements
as may be otherwise permitted by the terms of this Agreement, provided that any
disposition of such rights and interests (once so acquired) may only be made in
compliance with the terms of clause (ii) of the preceding sentence.
SECTION 6.7. Receivables. Sell, discount or otherwise dispose of notes,
accounts receivable or other obligations owing to a Credit Party except for the
purpose of collection in the ordinary course of business.
SECTION 6.8. Tax Shelters, Sale and Leaseback etc. Enter into any
arrangement with any Person or Persons other than a Credit Party, whereby in
contemporaneous transactions a Credit Party sells essentially all of its right,
title and interest in an item of Product or upon which an item of Product is
based and acquires or licenses the right to distribute or exploit such item of
Product in media and markets accounting for substantially all the value of such
item of Product; except on terms customary in the entertainment industry and
subject to the Agent's approval.
SECTION 6.9. Places of Business; Change of Name. Change the location of
its chief executive office or principal place of business or any of the offices
where it keeps its books and records with respect to the Collateral or change
its name or the jurisdiction or form of its
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organization without (i) giving the Agent 30 days prior written notice of such
change and (ii) filing any additional Uniform Commercial Code financing
statements, and such other documents requested by the Agent or which are
otherwise necessary or desirable, to continue the first perfected security
interest of the Agent for the benefit of itself, the Issuing Bank and the
Lenders in the Collateral.
SECTION 6.10. Limitations on Capital Expenditures. Make or incur any
obligation to make Capital Expenditures in excess of $25,000,000 for fiscal year
2001 (provided, however, that at least $13,000,000 of such Capital Expenditures
is used in connection with a Capital Lease of a transponder on a satellite),
$11,000,000 for fiscal year 2002, $12,000,000 for fiscal year 2003 and
$13,000,000 for each of fiscal years 2004, 2005 and 2006.
SECTION 6.11. Transactions with Affiliates. Effect any transaction with
an Affiliate on a basis less favorable to a Credit Party than would have been
the case if such transaction had been effected at arms-length with a Person
other than an Affiliate.
SECTION 6.12. Prohibition of Amendments or Waivers. Amend, alter,
modify, or waive, or consent to any amendment, alteration, modification or
waiver of (x) any provision of the HCC Promissory Note or the Hallmark Cards
Letter of Credit, or any of the provisions of the Service Agreement delivered to
the Agent pursuant to Section 4.1(h) which relate to the obligations of Hallmark
(or its affiliates) to pay its share of residuals, or (y) any other material
agreement to which any Credit Party is a party or the terms thereof in any
manner which would change, alter or waive any material term thereof and which
might (i) materially and adversely affect the collectability of accounts
receivable, (ii) materially and adversely affect the financial condition of the
Credit Party on a consolidated basis, (iii) materially and adversely affect the
rights of the Agent, the Issuing Bank or the Lenders under this Agreement, the
other Fundamental Documents and any other agreements contemplated hereby or (iv)
materially decrease the value of the Collateral.
SECTION 6.13. No Negative Pledge. Enter into any agreement after the
date hereof (other than Fundamental Documents) which prohibits the creation or
assumption of any Lien upon the properties or assets of any Credit Party,
whether now owned or hereafter acquired or requiring an obligation to be secured
if some other obligation is secured.
SECTION 6.14. Acquisitions or Mergers, etc. Merge into or consolidate
with a Person or acquire substantially all the assets of another Person other
than acquisitions of cable channels provided that such acquisitions shall not be
for cash consideration and provided further, that after giving effect to any
such transaction there would not exist any Default or Event of Default hereunder
and a Credit Party shall be the surviving entity. In addition, any Guarantor may
merge with any other Guarantor or with the Borrower.
SECTION 6.15. Production. Engage in the production of any item of
Product.
SECTION 6.16. Change in Business. Engage in any business activity other
than (i) activities incident and related to the acquisition, distribution and
licensing of Product; (ii) the operation of television channels; or (iii) the
development and operation of the interactive television business.
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SECTION 6.17. ERISA Compliance. Engage in a "prohibited transaction",
as defined in Section 406 of ERISA or Section 4975 of the Code, with respect to
any Plan or Multiemployer Plan or knowingly consent to any other "party in
interest" or any "disqualified person", as such terms are defined in Section
3(14) or ERISA and Section 4975(e)(2) of the Code, respectively, engaging in any
"prohibited transaction", with respect to any Plan or Multiemployer Plan; or
permit any Plan to incur any "accumulated funding deficiency", as defined in
Section 302 of ERISA or Section 412 of the Code, unless such incurrence shall
have been waived in advance by the Internal Revenue Service; or terminate any
Plan subject to Title IV of ERISA in a manner which could result in the
imposition of a Lien on any property of any Credit Party pursuant to Section
4068 of ERISA; or breach or knowingly permit any employee or officer or any
trustee or administrator of any Plan to breach any fiduciary responsibility
imposed under Title I of ERISA with respect to any Plan; engage in any
transaction which would result in the incurrence of a liability under Section
4069 of ERISA; or fail to make contributions to a Plan or Multiemployer Plan
which could result in the imposition of a Lien on any property of any Credit
Party pursuant to Section 302(f) of ERISA or Section 412(n) of the Code, if the
occurrence of any of the foregoing events (alone or in the aggregate) could
result in a liability which has a Material Adverse Effect.
SECTION 6.18. Interest Rate Protection Agreements, etc. Enter into any
Interest Rate Protection Agreement or Currency Agreement for other than bona
fide hedging purposes.
SECTION 6.19. Subsidiaries. Acquire or create any new direct or
indirect Subsidiary; provided, however, that a Credit Party may organize
additional Subsidiaries if each such Subsidiary executes an Instrument of
Assumption and Joinder in the form attached hereto as Exhibit J whereby such
Subsidiary becomes a Credit Party hereunder and the certificates representing
100% of the shares of capital stock or other Equity Interests, of such
Subsidiary held by such Credit Party become part of the Pledged Securities
hereunder and are delivered to the Agent together with stock powers for each
such certificate or such other documents that are necessary providing for the
transfer of a membership interest of a Subsidiary that is an LLC.
SECTION 6.20. Hazardous Materials. Cause or permit any of its
properties or assets to be used to generate, manufacture, refine, transport,
treat, store, handle, dispose, transfer, produce or process Hazardous Materials,
except in compliance in all material respects with all applicable Environmental
Laws, nor release, discharge, dispose of or permit or suffer any release or
disposal as a result of any intentional act or omission on its part of Hazardous
Materials onto any such property or asset in material violation of any
Environmental Law.
SECTION 6.21. Program Acquisition Guarantees. Incur cash program
acquisition guaranties (including in relation to the HEDC License Agreements and
the Borrower's existing license agreement with The ▇▇▇ ▇▇▇▇▇▇ Company) in excess
of $180,000,000 for fiscal year 2002, $140,000,000 for fiscal year 2003,
$150,000,000 for fiscal year 2004 and $140,000,000 for fiscal year 2005.
SECTION 6.22. Use of Proceeds of Loans and Requests for Letters of
Credits. Use the proceeds of the Loans or request any Letter of Credit for any
purpose other than as set forth in Section 5.17 hereof.
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SECTION 6.23. EBITDA. Permit EBITDA (i) for the preceding quarter to be
less than the amounts set forth below measured at the end of each fiscal quarter
through December 31, 2003 or (ii) for the preceding 12-month period to be less
than the amount set forth below measured at the end of each fiscal year starting
with 2004:
FISCAL QUARTER/YEAR ENDING AMOUNT
-------------------------- ------
September 30, 2001 $ (86,000,000)
December 31, 2001 $ (56,000,000)
March 31, 2002 $ (42,000,000)
June 30, 2002 $ (43,000,000)
September 30, 2002 $ (43,000,000)
December 31, 2002 $ (38,000,000)
March 31, 2003 $ (13,000,000)
June 30, 2003 $ (13,000,000)
September 30, 2003 $ (13,000,000)
December 31, 2003 $ (16,000,000)
December 31, 2004 $ 66,000,000
December 31, 2005 $ 129,000,000
December 31, 2006 $ 142,000,000
SECTION 6.24. Platform Agreements. Permit (i) the aggregate amount of
all cash payments to pay television distributors for Subscribers pursuant to the
Platform Agreements to be greater than $32,000,000 for fiscal year 2001,
$36,000,000 for fiscal year 2002, $8,000,000 for fiscal year 2003, $8,000,000
for fiscal year 2004, $9,000,000 for fiscal year 2005 and $10,000,000 for fiscal
year 2006, (ii) allow the aggregate number of paid Subscribers to be less than
54,000,000 for fiscal year 2001, 71,000,000 for fiscal year 2002, 101,000,000
for fiscal year 2003, 116,000,000 for fiscal year 2004, 128,000,000 for fiscal
year 2005 and 140,000,000 for fiscal year 2006 and (iii) allow annual aggregate
Subscriber revenue of Credit Parties under the Platform Agreements to be less
than (u) for fiscal year 2001, $16,000,000 for the third quarter and $18,000,000
for the fourth quarter, (v) for fiscal year 2002, $20,000,000 for the first
quarter, $22,000,000 for each of the second and third quarters and $24,000,000
for the fourth quarter, (w) for fiscal year 2003, $29,000,000 for the first
quarter, $31,000,000 for each of the second and
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third quarters and $35,000,000 for the fourth quarter, (x) $167,000,000 for
fiscal year 2004, (y) $196,000,000 for fiscal year 2005 and (z) $216,000,000 for
fiscal year 2006.
SECTION 6.25. Net Worth. Permit Net Worth to be less than the sum of
(x) the base amount for each fiscal quarter set forth in the table below, plus
(y) the sum of the Consolidated Net Income of the Borrower with respect to each
fiscal year (subsequent to the Closing Date) during which the Borrower achieves
positive Consolidated Net Income, plus (z) 50% of net equity invested in the
Borrower after the Closing Date.
FISCAL QUARTER ENDING BASE AMOUNT
--------------------- -----------
September 30, 2001 $646,000,000
December 31, 2001 $592,000,000
March 31, 2002 $546,000,000
June 30, 2002 $500,000,000
September 30, 2002 $449,000,000
December 31, 2002 $415,000,000
March 31, 2003 $384,000,000
June 30, 2003 $356,000,000
September 30, 2003 $320,000,000
December 31, 2003 $312,000,000
Thereafter $312,000,000
SECTION 6.26. Corporate Structure. Create any first tier Subsidiary
other than Crown Media or have any asset relating to the channels at a corporate
level above Crown Media.
SECTION 6.27. Leverage Ratio. Permit the Leverage Ratio to be in excess
of the figures indicated below at any time during the 3-month period ending on
any of the dates indicated below:
Date Maximum Leverage Ratio
---- ----------------------
December 31, 2004 5.00:1.00
March 31, 2005 5.00:1.00
June 30, 2005 5.00:1.00
September 30, 2005 5.00:1.00
December 31, 2005 3.50:1.00
March 31, 2006 3.50:1.00
June 30, 2006 3.50:1.00
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SECTION 6.28. Interest Coverage Ratio. Permit the Interest Coverage
Ratio to be less than the figures indicated below at any time during the
12-month period ending on any of the dates indicated below:
12-Month Period Ending Minimum Interest Coverage Ratio
---------------------- -------------------------------
December 31, 2004 2.25:1.00
March 31, 2005 2.25:1.00
June 30, 2005 2.25:1.00
September 30, 2005 2.25:1.00
December 31, 2005 3.00:1.00
March 31, 2006 3.00:1.00
June 30, 2006 3.00:1.00
7. EVENTS OF DEFAULT
In the case of the happening and during the continuance of any
of the following events (herein called "Events of Default"):
(a) any representation or warranty made by any Credit Party in
this Credit Agreement or in any other Fundamental Document or any statement or
representation made by any Credit Party in any report, financial statements,
certificate or other document furnished by or on behalf of any Credit Parties to
the Agent or any Lender pursuant to this Credit Agreement or any other
Fundamental Document, shall prove to have been false or misleading in any
material respect when made or delivered;
(b) default shall be made in the payment of any principal of
or interest on the Loans or Letter of Credit reimbursement obligations or of any
fees or other amounts payable by the Borrower hereunder, when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or by acceleration thereof or otherwise, and, in the case
of payments of interest, such default shall continue unremedied for five (5)
days after receipt by the Borrower of an invoice therefor;
(c) default shall be made by any Credit Party in the due
observance or performance of any covenant, condition or agreement contained in
Section 5.1(h), Section 5.4 or Article 6 (other than Sections 6.3, 6.7, 6.8,
6.11, 6.15, 6.17, and 6.18) of this Agreement;
(d) default shall be made by any Credit Party in the due
observance or performance of any other covenant, condition or agreement to be
observed or performed pursuant to the terms of this Agreement, or any other
Fundamental Document and such default shall continue unremedied for fifteen (15)
consecutive days after any Credit Party obtains knowledge or receives written
notice from the Agent or any Lender thereof;
(e) default shall be made with respect to any Indebtedness of
any Credit Party in excess of $1,000,000 when due or the performance of any
other obligation incurred in connection with any such Indebtedness, if the
effect of such default is to accelerate the maturity
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of such Indebtedness or to permit the holder thereof to cause such Indebtedness
to become due prior to its stated maturity and such default shall not be
remedied, cured, waived or consented to within the period of grace with respect
thereto;
(f) any Credit Party, Hallmark Cards or Hallmark shall
generally not pay its debts as they become due or shall admit in writing its
inability to pay its debts, or shall make a general assignment for the benefit
of creditors; or any such Person shall commence any case, proceeding or other
action seeking to have an order for relief entered on its behalf or to
adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, liquidation, dissolution or composition of it or its debts under any
law relating to bankruptcy, insolvency, reorganization or relief of such Person
or seeking appointment of a receiver, trustee, custodian or other similar
official for it or for all or any substantial part of its property or shall file
an answer or other pleading in any such case, proceeding or other action
admitting the material allegations of any petition, complaint or similar
pleading filed against it or consenting to the relief sought therein; or any
such Person shall take any action to authorize any of the foregoing;
(g) any involuntary case, proceeding or other action against
any Credit Party, Hallmark Cards or Hallmark shall be commenced seeking to have
an order for relief entered against it or to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, liquidation,
dissolution or composition of it or its debts under any law relating to
bankruptcy, insolvency, reorganization or relief of such Person, or seeking
appointment of a receiver, trustee, custodian or other similar official for it
or for all or any substantial part of its property, and such case, proceeding or
other action (i) results in the entry of any order for relief against it or (ii)
shall remain undismissed for a period of thirty (30) days;
(h) final judgment(s) for the payment of money in excess of
$100,000 shall be rendered in the aggregate against any Credit Party which
within thirty (30) days from the entry of such judgment shall not have been
discharged or stayed pending appeal or which shall not have been discharged
within thirty (30) days from the entry of a final order of affirmance on appeal;
(i) this Credit Agreement, the Copyright Security Agreement,
any Copyright Security Agreement Supplement, or any Trademark Security
Agreement, the Charge Over Shares or the Debenture (each, a "Security Document")
shall, for any reason, not be or shall cease to be in full force and effect or
shall be declared null and void or any of the Security Documents shall not give
or shall cease to give the Agent the Liens, rights, powers and privileges
purported to be created thereby in favor of the Agent for the benefit of the
Agent, the Issuing Bank and the Lenders, superior to and prior to the rights of
all third Persons and subject to no other Liens (other than Permitted
Encumbrances), or the validity or enforceability of the Liens granted, to be
granted, or purported to be granted, by any of the Security Documents shall be
contested by any Credit Party or any of their respective Affiliates;
(j) failure to deliver a valuation for the HEDC Library to the
Agent within 10 Business Days of the date such library valuation was due
pursuant to Section 5.1(i) hereof, provided, however, that any failure to
deliver a valuation of the HEDC Library shall not give rise to an Event of
Default under this clause (j) in the event there is no outstanding Credit
Exposure;
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(k) a Change in Control shall occur;
(l) a Change in Management shall occur;
(m) (i) any Credit Party or ERISA Affiliate shall fail to make
any contributions required to be made to a Plan subject to Title IV of ERISA or
Multiemployer Plan, (ii) any accumulated funding deficiency (within the meaning
of Section 4971 of the Code) shall exist with respect to any Plan (whether or
not waived) or an application shall have been made to the Secretary of the
Treasury for a waiver or modification of the minimum funding standards
(including any required installment payments) or an extension of any
amortization period under Section 412 of the Code with respect to a Plan, (iii)
any Credit Party or ERISA Affiliate shall have been notified by the sponsor of a
Multiemployer Plan that it has incurred withdrawal liability to such
Multiemployer Plan, or that a Multiemployer Plan is in reorganization or is
being terminated, (iv) a Reportable Event with respect to a Plan shall have
occurred, (v) any Credit Party or ERISA Affiliate shall withdraw from a Plan
during a plan year in which it was a substantial employer (within the meaning of
section 4001(a)(2) or 4062(e) of ERISA), (vi) a U.S. Plan subject to Title IV of
ERISA shall be terminated, or notice of intent to terminate a Plan under section
4041(c) of ERISA shall be filed, (vii) proceedings to terminate, a Plan subject
to Title IV of ERISA shall be instituted by the PBGC or a trustee shall be
appointed with respect to any such Plan, (viii) any other event or condition
which could constitute grounds under section 4042(a) of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan subject
to Title IV of ERISA shall occur, or (ix) a Lien pursuant to section 412 of the
Code or section 302 of ERISA shall be imposed as to any Credit Party or ERISA
Affiliate;
(n) any of Hallmark Cards, Hallmark or HEDC shall have
breached or disaffirmed any Fundamental Document (or, in the case of HEDC, any
HEDC License Agreement) to which it is a party or its obligations thereunder
shall cease to be in full force and effect or shall be void or voidable or any
such Person shall contest the enforceability of any provision thereof;
(o) failure of the transfer to the Borrower of the HEDC
Library as contemplated by the HEDC Purchase Agreement; or
(p) a termination by Hallmark Cards or by any of its
affiliates of (or any notice by any such Person that it intends to terminate)
the right of the Borrower or any of its Subsidiaries to use the "Hallmark" name
or the "Crown" name in their respective television services or on or with
respect to any channels owned or operated by the Borrower or any of its
Subsidiaries.
then, in every such event and at any time thereafter during the continuance of
such event, the Agent may, or if directed by the Required Lenders shall, take
any or all of the following actions, at the same or different times: (x)
terminate forthwith the Commitments, (y) declare the principal of and the
interest on the Loans and the Notes and all other amounts payable hereunder or
thereunder to be forthwith due and payable, whereupon the same shall become and
be forthwith due and payable, without presentment, demand, protest, or other
notice of any kind, all of which are hereby expressly waived, anything in this
Agreement or in the Notes to the contrary notwithstanding and/or (z) require the
Borrower to deliver to the Agent from time to time Cash
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Equivalents in an amount equal to the full amount of the L/C Exposure or to
furnish other security therefor acceptable to the Required Lenders. If an Event
of Default specified in paragraphs (f) or (g) above shall have occurred, the
Commitments shall automatically terminate and the Notes and all other amounts
payable hereunder and thereunder shall automatically become due and payable,
without presentment, demand, protest, or other notice of any kind, all of which
are hereby expressly waived, anything in this Credit Agreement or the Notes to
the contrary notwithstanding. Such remedies shall be in addition to any other
remedy available to the Agent, the Lenders or the Issuing Bank pursuant to
Applicable Law or otherwise.
8. GRANT OF SECURITY INTEREST; REMEDIES
SECTION 8.1. Security Interests. The Borrower, as security for the due
and punctual payment of the Obligations (including interest accruing on and
after the filing of any petition in bankruptcy or of reorganization of the
Borrower whether or not post filing interest is allowed in such proceeding) and
each of the Guarantors, as security for its obligations under Article 10 hereof,
hereby mortgages, pledges, assigns, transfers, sets over, conveys and delivers
to the Agent (for the benefit of the Agent, the Issuing Bank and the Lenders)
and grants to the Agent (for the benefit of the Agent, the Issuing Bank and the
Lenders) a security interest in the Collateral.
SECTION 8.2. Use of Collateral. So long as no Event of Default shall
have occurred and be continuing, and subject to the various provisions of this
Credit Agreement and the other Fundamental Documents, a Credit Party may use the
Collateral in any lawful manner except as otherwise provided hereunder.
SECTION 8.3. Collection Accounts. (a) The Credit Parties will maintain
or establish collection bank accounts (each, a "Collection Account") and will
direct, by a notice of assignment and irrevocable instructions in form
acceptable to the Agent, all Persons who become licensees, buyers or account
debtors under receivables with respect to any item of Product included in the
Collateral to make payments under or in connection with the license agreements,
sales agreements or receivables directly to a Collection Account. Upon agreement
between the Agent and the Borrower, a Collection Account may also serve as the
Cash Collateral Account, provided that such Collection Account is in the name of
the Agent (for the benefit of itself, the Issuing Bank and the Lenders) and is
under the sole dominion and control of the Agent. So long as no Event of Default
is continuing the Borrower shall have full and unfettered access to the
Collection Accounts. A list of all Collection Accounts of the Borrower existing
on the date hereof is attached as Schedule 8.3.
(b) The Credit Parties will execute such documentation as may
be reasonably required by the Agent in order to effectuate the provisions of
this Section 8.3.
(c) In the event a Credit Party receives payment from any
Person, which payment should have been remitted directly to a Collection
Account, such Credit Party shall promptly remit such payment or proceeds to a
Collection Account to be applied in accordance with the terms of this Credit
Agreement.
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(d) All such Collection Accounts shall be maintained with the
Agent or with such other financial institutions as may be approved by the Agent
(subject to their willingness to execute appropriate documentation as required
by this Section 8.3), subject to the right of the Agent to at any time withdraw
such approval and transfer any such Collection Account(s) to the Agent or
another approved financial institution acceptable to the Borrower.
SECTION 8.4. Credit Parties to Hold in Trust. Upon the occurrence and
during the continuance of an Event of Default, each Credit Party will, upon
receipt by it of any revenue, income, profits or other sums in which a security
interest is granted by this Article 8, payable pursuant to any agreement or
otherwise, or of any check, draft, note, trade acceptance or other instrument
evidencing an obligation to pay any such sum, hold the sum in trust for the
Agent (for the benefit of the Agent, the Issuing Bank and the Lenders),
segregate such sum from its own assets and forthwith, without any notice or
demand whatsoever (all notices, demands, or other actions on the part of the
Agent, the Issuing Bank or the Lenders being expressly waived), endorse,
transfer and deliver any such sums or instruments or both to the Agent to be
applied to the repayment of the Obligations in accordance with the provisions of
Section 8.7 hereof.
SECTION 8.5. Collections, etc. Upon the occurrence and during the
continuance of an Event of Default, the Agent may, in its sole discretion, in
its name or in the name of any Credit Party or otherwise, demand, ▇▇▇ for,
collect or receive any money or property at any time payable or receivable on
account of or in exchange for, or make any compromise or settlement deemed
desirable with respect to, any of the Collateral, but shall be under no
obligation so to do, or the Agent may extend the time of payment, arrange for
payment in installments, or otherwise modify the terms of, or release, any of
the Collateral, without thereby incurring responsibility to, or discharging or
otherwise affecting any liability of, the Credit Parties. The Agent will not be
required to take any steps to preserve any rights against prior parties to the
Collateral. If the Credit Parties fail to make any payment or take any action
required hereunder, the Agent may make such payments and take all such actions
as the Agent reasonably deems necessary to protect the Agent's (for the benefit
of itself, the Issuing Bank and the Lenders) security interests in the
Collateral and/or the value thereof, and the Agent is hereby authorized (without
limiting the general nature of the authority herein above conferred) to pay,
purchase, contest or compromise any Liens that in the judgment of the Agent
appear to be equal to, prior to or superior to the security interests of the
Agent in the Collateral and any Liens not expressly permitted by this Credit
Agreement.
SECTION 8.6. Possession, Sale of Collateral, etc. Upon the occurrence
and during the continuance of an Event of Default, the Agent may enter upon the
premises of any Credit Party or wherever the Collateral may be, and take
possession of the Collateral, and may demand and receive such possession from
any Person who has possession thereof, and the Agent may take such measures as
it may deem necessary or proper for the care or protection thereof, including
the right to remove all or any portion of the Collateral, and with or without
taking such possession may sell or cause to be sold, whenever the Agent shall
decide, in one or more sales or parcels, at such prices as the Agent may deem
best, and for cash or on credit or for future delivery, without assumption of
any credit risk, all or any portion of the Collateral, at any broker's board or
at public or private sale, without demand of performance or notice of intention
to sell or of time or place of sale (except 7 days' written notice to the
Borrower of the time and place of any such public sale or sales and such other
notices as may be required by Applicable
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Law and cannot be waived), and any Person may be the purchaser of all or any
portion of the Collateral so sold and thereafter hold the same absolutely, free
(to the fullest extent permitted by Applicable Law) from any claim or right of
whatever kind, including any equity of redemption, of any Credit Party, any such
demand, notice, claim, right or equity being hereby expressly waived and
released. At any sale or sales made pursuant to this Article 8, the Agent may
bid for or purchase, free (to the fullest extent permitted by Applicable Law)
from any claim or right of whatever kind, including any equity of redemption, of
any Credit Party, any such demand, notice, claim, right or equity being hereby
expressly waived and released, any part of or all of the Collateral offered for
sale, and may make any payment on account thereof by using any claim for moneys
then due and payable to the Agent, the Issuing Bank and the Lenders by any
Credit Party hereunder as a credit against the purchase price. The Agent shall
in any such sale make no representations or warranties with respect to the
Collateral or any part thereof, and the Agent shall not be chargeable with any
of the obligations or liabilities of any Credit Party. Each Credit Party hereby
agrees (i) that it will indemnify and hold the Agent, the Issuing Bank and the
Lenders harmless from and against any and all claims with respect to the
Collateral asserted before the taking of actual possession or control of the
relevant Collateral by the Agent pursuant to this Article 8, or arising out of
any act of, or omission to act on the part of, any party other than the Agent
prior to such taking of actual possession or control by the Agent, or arising
out of any act on the part of any Credit Party, or its agents before or after
the commencement of such actual possession or control by the Agent; and (ii)
none of the Agent, the Lenders or the Issuing Bank shall have any liability or
obligation to any Credit Party arising out of any such claim except for acts by
the Agent, the Lenders or the Issuing Bank of willful misconduct or gross
negligence or acts not taken in good faith. Subject only to the lawful rights of
third parties, any laboratory which has possession of any of the Collateral is
hereby constituted and appointed by each Credit Party as pledgeholder for the
Agent and, upon the occurrence and during the continuance of an Event of
Default, each such pledgeholder is hereby authorized to sell all or any portion
of the Collateral upon the order and direction of the Agent, and each Credit
Party hereby waives any and all claims, for damages or otherwise, for any action
taken by such pledgeholder in accordance with the terms of the UCC not otherwise
waived hereunder. In any action hereunder, the Agent shall be entitled to the
appointment of a receiver, without notice, to take possession of all or any
portion of the Collateral and to exercise such powers as the court shall confer
upon the receiver. Notwithstanding the foregoing, upon the occurrence and during
the continuance of an Event of Default, the Agent shall be entitled to apply,
without prior notice to any Credit Party, any cash or cash items constituting
Collateral in the possession of the Agent to payment of the Obligations.
SECTION 8.7. Application of Proceeds on Default. Upon the occurrence
and during the continuance of an Event of Default, the balances in the Clearing
Account, the Collection Account(s), the Cash Collateral Account(s) or in any
account of the Credit Party with a Lender, all other income earned on the
Collateral, and all proceeds from any sale of the Collateral pursuant hereto
shall be applied first toward payment of the reasonable out-of-pocket costs and
expenses paid or incurred by the Agent in enforcing this Credit Agreement, in
realizing on or protecting any Collateral and in enforcing or collecting any
Obligations or any Guaranty thereof, including, without limitation, court costs
and the reasonable attorney's fees and expenses incurred by the Agent, then to
satisfy or provide cash Collateral for all Obligations relating to the Letters
of Credit, and then to the payment in full of the Obligations in accordance with
Section
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12.2(b) hereof. Any amounts remaining after such payment in full shall be
remitted to the appropriate Credit Party or as a court of competent jurisdiction
may otherwise direct.
SECTION 8.8. Power of Attorney. Upon the occurrence and during the
continuance of an Event of Default which is not waived in writing by the
Required Lenders (a) each of the Credit Parties does hereby irrevocably make,
constitute and appoint the Agent or any of its officers or designees its true
and lawful attorney-in-fact with full power in the name of the Agent or such
other Person to receive, open and dispose of all mail addressed to any Credit
Party, and to endorse any notes, checks, drafts, money orders or other evidences
of payment relating to the Collateral that may come into the possession of the
Agent, with full power and right to cause the mail of such Persons to be
transferred to the Agent's own offices or otherwise, and to do any and all other
acts necessary or proper to carry out the intent of this Agreement and the grant
of the security interests hereunder and under the other Fundamental Documents,
and each of the Credit Parties hereby ratifies and confirms all that the Agent
or its substitutes shall properly do by virtue hereof; (b) each of the Credit
Parties does hereby further irrevocably make, constitute and appoint the Agent
or any of its officers or designees its true and lawful attorney-in-fact in the
name of the Agent or any Credit Party (i) to enforce all of such Credit Party's
rights under and pursuant to all agreements with respect to the Collateral, all
for the sole benefit of the Agent, for the benefit of itself, the Issuing Bank
and the Lenders, and to enter into such other agreements as may be necessary or
appropriate in the judgment of the Agent to complete the distribution or
exploitation of any item of Product which is included in the Collateral, (ii) to
enter into and perform such agreements as may be necessary in order to carry out
the terms, covenants and conditions of the Fundamental Documents that are
required to be observed or performed by such Credit Party, (iii) to execute such
other and further mortgages, pledges and assignments of the Collateral, and
related instruments or agreements, as the Agent may reasonably require for the
purpose of perfecting, protecting, maintaining or enforcing the security
interests granted to the Agent, for the benefit of itself, the Issuing Bank and
the Lenders, hereunder and under the other Fundamental Documents, and (iv) to do
any and all other things necessary or proper to carry out the intention of this
Agreement and the grant of the security interests hereunder. In the event the
Agent exercises the power of attorney granted herein, the Agent shall use
reasonable efforts to provide subsequent written notice promptly to the Borrower
in accordance with Section 13.1. Each of the Credit Parties hereby ratifies and
confirms in advance all that the Agent as such attorney-in-fact or its
substitutes shall properly do by virtue of this power of attorney.
SECTION 8.9. Financing Statements, Direct Payments, Confirmation of
Receivables and Audit Rights. Each Credit Party hereby authorizes the Agent to
file Uniform Commercial Code financing statements (covering all of the property
of such Credit Party) and any amendments thereto or continuations thereof, any
Copyright Security Agreement, any Copyright Security Agreement Supplement and
any Trademark Agreement Supplement and any other appropriate security documents
or instruments and to give any notices necessary or desirable to perfect the
Lien of the Agent (for the benefit of itself, the Issuing Bank and the Lenders)
on the Collateral, in all cases without the signatures of the relevant Credit
Party or to execute such items as attorney-in-fact for the Credit Party. Each
Credit Party further authorizes the Agent (i) upon the occurrence and during the
continuance of an Event of Default, to notify any account debtor that all sums
payable to such Credit Party relating to the Collateral shall be paid directly
to the Agent; (ii) to confirm directly with account debtors the amounts payable
by them to such Credit Party with regard to the Collateral and the terms of all
accounts receivable; and (iii) to participate with
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such Credit Party in the audits of its account debtors or to request that such
Credit Party's auditors confirm with account debtors the amounts and terms of
all accounts receivable. The Agent hereby agrees to provide the Borrower with
copies of any notification or written requests sent by the Agent to such account
debtors at the same time as the mailing of such documents.
SECTION 8.10. Further Assurances. Upon the request of the Agent, each
Credit Party hereby agrees to duly and promptly execute and deliver, or cause to
be duly executed and delivered, at the cost and expense of the Credit Party,
such further instruments as may be necessary or proper, in the judgment of the
Agent, to carry out the provisions and purposes of this Article 8, and to do all
things necessary, in the judgment of the Agent, to perfect and preserve the
Liens of the Agent for the benefit of itself, the Issuing Bank and the Lenders
hereunder and under the other Fundamental Documents in the Collateral or any
portion thereof.
SECTION 8.11. Termination and Release. The security interests granted
under this Article shall terminate when all the Obligations have been
indefeasibly fully paid and performed and the Commitments shall have terminated
and all Letters of Credit shall have expired or been terminated or cancelled.
Upon request by the Borrower (and at the sole expense of the Borrower) after
such termination, the Agent will take all reasonable action and do all things
reasonably necessary, including executing Uniform Commercial Code terminations,
Pledgeholder Agreement terminations, termination letters to account debtors and
copyright reassignments, to release the security interest granted to it
hereunder.
SECTION 8.12. Remedies Not Exclusive. The remedies conferred upon or
reserved to the Agent in this Article 8 are intended to be in addition to, and
not in limitation of, any other remedy or remedies available to the Agent.
Without limiting the generality of the foregoing, the Agent and the Lenders
shall have all rights and remedies of a secured creditor under Article 9 of the
UCC and under any other Applicable Law.
SECTION 8.13. Continuation and Reinstatement. Each Credit Party further
agrees that the security interest granted hereunder shall continue to be
effective or be reinstated, as the case may be, if at any time payment or any
part thereof of any Obligation is rescinded or must otherwise be restored by the
Agent, the Issuing Bank or the Lenders upon the bankruptcy or reorganization of
any Credit Party or otherwise.
9. CASH COLLATERAL
SECTION 9.1. Cash Collateral Account. (a) On or prior to the Closing
Date, there shall be established with the Agent a collateral account in the name
of the Agent (the "Cash Collateral Account"), into which the Borrower shall from
time to time deposit Dollars pursuant to the express provisions of this
Agreement requiring or permitting such deposit. Except to the extent otherwise
provided in this Section 9.1, the Cash Collateral Account shall be under the
sole dominion and control of the Agent.
(b) The Agent is hereby authorized and directed to invest and
reinvest the funds from time to time deposited in the Cash Collateral Account so
long as no Event of Default has occurred and is continuing on the instructions
of the Borrower (provided that such notice
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may be given verbally to be confirmed promptly in writing) or, if the Borrower
shall fail to give such instruction upon delivery of any such funds, in the sole
discretion of the Agent, provided that in no event may the Borrower give
instructions to the Agent to, or may the Agent in its discretion, invest or
reinvest funds in the Cash Collateral Account in other than Cash Equivalents
described in clause (i) of the definition of Cash Equivalents or described in
clauses (ii) and (iii) of the definition of Cash Equivalents to the extent
issued by The Chase Manhattan Bank.
(c) Any net income or gain on the investment of funds from
time to time held in the Cash Collateral Account shall be promptly reinvested by
the Agent as a part of the Cash Collateral Account, and any net loss on any such
investment shall be charged against the Cash Collateral Account.
(d) Neither the Agent nor the Lenders shall be a trustee for
the Borrower, or shall have any obligations or responsibilities, or shall be
liable for anything done or not done, in connection with the Cash Collateral
Account, except as expressly provided herein and except that the Agent shall
have the obligations of a secured party under the UCC. The Agent and the Lenders
shall not have any obligation or responsibilities and shall not be liable in any
way for any investment decision made pursuant to this Section 9.1 or for any
decrease in the value of the investments held in the Cash Collateral Account.
SECTION 9.2. Grant of Security Interest. For value received and to
induce the Lenders to make Loans from time to time to the Borrower and to
acquire participations in Letters of Credit from time to time as provided for in
this Credit Agreement, as security for the payment of all of the Obligations,
(including interest accruing on and after the filing of any petition in
bankruptcy or of reorganization of the Borrower whether or not post-filing
interest is allowed in such proceeding), the Borrower hereby assigns to the
Agent (for the benefit of itself, the Issuing Bank and the Lenders), and grants
to the Agent (for the benefit of itself, the Issuing Bank and the Lenders), a
first and prior Lien upon, all the Borrower's rights in and to the Cash
Collateral Account, all cash, documents, instruments and securities from time to
time held therein, and all rights pertaining to investments of funds in the Cash
Collateral Account and all products and proceeds of any of the foregoing. All
cash, documents, instruments and securities from time to time on deposit in the
Cash Collateral Account, and all rights pertaining to investments of funds in
the Cash Collateral Account, shall immediately and without any need for any
further action on the part of any of the Credit Parties, any Lender or the
Agent, become subject to the Lien set forth in this Section 9.2, be deemed
Collateral for all purposes hereof and be subject to the provisions of this
Agreement.
SECTION 9.3. Remedies. At any time during the continuation of an Event
of Default, the Agent may sell any documents, instruments and securities held in
the Cash Collateral Account and may immediately apply the proceeds thereof and
any other cash held in the Cash Collateral Account in accordance with Section
8.7.
10. GUARANTY
SECTION 10.1. Guaranty. (a) Each of the Guarantors, jointly and
severally, unconditionally and irrevocably guarantees to the Agent, the Issuing
Bank and the Lenders the
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due and punctual payment and performance of the Obligations (including interest
accruing on and after the filing of any petition in bankruptcy or of
reorganization of the obligor whether or not post filing interest is allowed in
such proceeding). Each of the Guarantors further agrees that the Obligations may
be increased, extended or renewed, in whole or in part, without notice or
further assent from it (except as may be otherwise required herein), and it will
remain bound under this Article 10 notwithstanding any extension or renewal of
any Obligation.
(b) Each Guarantor waives presentation to, demand for payment
from and protest to, as the case may be, any Credit Party or any other guarantor
of any of the Obligations, and also waives notice of protest for nonpayment,
notice of acceleration and notice of intent to accelerate. The obligations of
each Guarantor hereunder shall not be affected by (i) the failure of the Agent,
the Issuing Bank or the Lenders to assert any claim or demand or to enforce any
right or remedy against the Borrower or any Guarantor or any other guarantor
under the provisions of this Credit Agreement or any other agreement or
otherwise; (ii) any extension or renewal of any provision hereof or thereof;
(iii) the failure of the Agent, the Issuing Bank or the Lenders to obtain the
consent of such Guarantor with respect to any rescission, waiver, compromise,
acceleration, amendment or modification of any of the terms or provisions of
this Credit Agreement, the Notes or any other agreement; (iv) the release,
exchange, waiver or foreclosure of any security held by the Agent for the
Obligations or any of them; (v) the failure of the Agent, the Issuing Bank or
the Lenders to exercise any right or remedy against any other Guarantor or any
other guarantor of the Obligations; (vi) any bankruptcy, reorganization,
liquidation, dissolution or receivership proceeding or case by or against the
Borrower or other Credit Party, any change in the corporate existence,
structure, ownership or control of any such Guarantor or any other Credit Party
(including any of the foregoing arising from any merger, consolidation,
amalgamation, reorganization or similar transaction); or (vii) the release or
substitution of any Guarantor or any other guarantor of the Obligations.
(c) Each Guarantor further agrees that this Article 10 is a
continuing guaranty, shall secure the Obligations and any ultimate balance
thereof, notwithstanding that the Borrower or others may from time to time
satisfy the Obligations in whole or in part and thereafter incur further
Obligations, and constitutes a guaranty of performance and of payment when due
and not just of collection, and waives any right to require that any resort be
had by the Agent, the Issuing Bank or any Lender to any security held for
payment of the Obligations or to any balance of any deposit, account or credit
on the books of the Agent, the Issuing Bank or any Lender in favor of the
Borrower or any Guarantor or to any other Person.
(d) Each Guarantor hereby expressly assumes all
responsibilities to remain informed of the financial condition of the Borrower,
the Guarantors and any other guarantors of the Obligations and any circumstances
affecting the Collateral or the Pledged Securities or the ability of the
Borrower to perform under this Credit Agreement.
(e) Each Guarantor's obligations under the Article 10 shall
not be affected by the genuineness, validity, regularity or enforceability of
the Obligations, the Notes or any other instrument evidencing any Obligations,
or by the existence, validity, enforceability, perfection, or extent of any
collateral therefor or by any other circumstance relating to the Obligations
which might otherwise constitute a defense to this Article 10. The Agent, the
Issuing Bank and the Lenders make no representation or warranty with respect to
any such circumstances and have no
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duty or responsibility whatsoever to any Guarantor in respect to the management
and maintenance of the Obligations or any collateral security for the
Obligations.
SECTION 10.2. No Impairment of Guaranty, etc. The obligations of each
Guarantor under this Article 10 shall not be subject to any reduction,
limitation, impairment or termination for any reason (except payment and
performance in full of the Obligations), including, without limitation, any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to any defense or set-off, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality or unenforceability of the
Obligations or otherwise. Without limiting the generality of the foregoing, the
obligations of each Guarantor under this Article 10 shall not be discharged or
impaired or otherwise affected by the failure of the Agent, the Issuing Bank or
any Lender to assert any claim or demand or to enforce any remedy under this
Credit Agreement or any other agreement, by any waiver or modification of any
provision hereof or thereof, by any default, failure or delay, willful or
otherwise, in the performance of the Obligations, or by any other act or thing
or omission or delay to do any other act or thing which may or might in any
manner or to any extent vary the risk of such Guarantor or would otherwise
operate as a discharge of such Guarantor as a matter of law, unless and until
the Obligations are paid in full, the Commitments have terminated and each
outstanding Letter of Credit has expired or otherwise been terminated.
SECTION 10.3. Continuation and Reinstatement, etc. Each Guarantor
further agrees that its guaranty under this Article 10 shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any Obligation is rescinded or must otherwise be restored by
the Agent, the Issuing Bank or the Lenders upon the bankruptcy or reorganization
of the Borrower or a Guarantor, or otherwise. In furtherance of the provisions
of this Article 10, and not in limitation of any other right which the Agent,
the Issuing Bank or the Lenders may have at law or in equity against the
Borrower, a Guarantor or any other Person by virtue hereof, upon failure of the
Borrower to pay any Obligation when and as the same shall become due, whether at
maturity, by acceleration, after notice or otherwise, each Guarantor hereby
promises to and will, upon receipt of written demand by the Agent on behalf of
itself, the Issuing Bank and/or the Lenders, forthwith pay or cause to be paid
to the Agent for the benefit of itself, the Issuing Bank and/or the Lenders (as
applicable) in cash an amount equal to the unpaid amount of all the Obligations
with interest thereon at a rate of interest equal to the rate specified in
Section 2.9(a) hereof, and thereupon the Agent shall assign such Obligation,
together with all security interests, if any, then held by the Agent in respect
of such Obligation, to the Guarantors making such payment; such assignment to be
subordinate and junior to the rights of the Agent on behalf of itself, the
Issuing Bank and the Lenders with regard to amounts payable by the Borrower in
connection with the remaining unpaid Obligations and to be pro tanto to the
extent to which the Obligation in question was discharged by the Guarantor or
Guarantors making such payments.
(a) All rights of a Guarantor against the Borrower, arising as
a result of the payment by such Guarantor of any sums to the Agent for the
benefit of the Agent, the Issuing Bank and/or the Lenders or directly to the
Issuing Bank or the Lenders hereunder by way of right of subrogation or
otherwise, shall in all respects be subordinated and junior in right of payment
to, and shall not be exercised by such Guarantor until and unless, the prior
final and indefeasible payment in full of all the Obligations. If any amount
shall be paid to such Guarantor for the
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account of the Borrower, such amount shall be held in trust for the benefit of
the Agent segregated from such Guarantor's own assets and shall forthwith be
paid to the Agent on behalf of itself, the Issuing Bank and/or the Lenders to be
credited and applied to the Obligations, whether matured or unmatured.
SECTION 10.4. Limitation on Guaranteed Amount etc. (a) Notwithstanding
any other provision of this Article 10, the amount guaranteed by each Guarantor
under this Article 10 shall be limited to the extent, if any, required so that
its obligations under this Article 10 shall not be subject to avoidance under
Section 548 of the Bankruptcy Code or to being set aside or annulled under any
Applicable Law relating to fraud on creditors. In determining the limitations,
if any, on the amount of any Guarantor's obligations under this Article 10
pursuant to the preceding sentence, it is the intention of the parties hereto
that any rights of subrogation or contribution which such Guarantor may have
under this Article 10, any other agreement or Applicable Law shall be taken into
account.
11. PLEDGE
SECTION 11.1. Pledge. Each Pledgor, as security for the due and
punctual payment of the Obligations (including interest accruing on and after
the filing of any petition in bankruptcy or of reorganization of the Borrower
whether or not post filing interest is allowed in such proceeding) in the case
of the Borrower and as security for its obligations under Article 10 hereof in
the case of a Pledgor which is a Guarantor, hereby pledges, hypothecates,
assigns, transfers, sets over and delivers unto the Agent for the benefit of
itself, the Issuing Bank and the Lenders, a security interest in all Pledged
Collateral now owned or hereafter acquired by it. On the Closing Date, the
Pledgors shall deliver to the Agent the definitive instruments (if any)
representing all Pledged Securities, accompanied by undated stock powers, duly
endorsed or executed in blank by the appropriate Pledgor, and such other
instruments or documents as the Agent or its counsel shall reasonably request.
SECTION 11.2. Registration in Nominee Name; Denominations. The Agent
shall have the right (in its sole and absolute discretion) to hold the
certificates representing any Pledged Securities (a) in its own name (on behalf
of the Agent, the Issuing Bank and the Lenders) or in the name of its nominee or
(b) in the name of the appropriate Pledgor, endorsed or assigned in blank or in
favor of the Agent. Upon the occurrence and continuance of an Event of Default,
the Agent shall have the right to exchange the certificates representing any of
the Pledged Securities for certificates of smaller or larger denominations for
any purpose consistent with this Credit Agreement.
SECTION 11.3. Covenant. Each Pledgor covenants that as a stockholder of
each of its respective Subsidiaries it will not take any action to allow any
additional shares of common stock, preferred stock or other equity securities of
any of its respective Subsidiaries or any securities convertible or exchangeable
into common or preferred stock of such Subsidiaries to be issued, or grant any
options or warrants, unless such securities are pledged to the Agent (for the
benefit of itself, the Issuing Bank and the Lenders) as security for the
Obligations and such Pledgor's obligations (if any) under Article 10 hereof.
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SECTION 11.4. Voting Rights; Dividends; etc. (a) The appropriate
Pledgor shall be entitled to exercise any and all voting and/or consensual
rights and powers accruing to an owner of the Pledged Securities being pledged
by it hereunder or any part thereof for any purpose not inconsistent with the
terms hereof, at all times, except as expressly provided in paragraph (c) below.
(b) All dividends or distributions of any kind whatsoever
(other than cash dividends or distributions paid while no Event of Default is
continuing) received by a Pledgor, whether resulting from a subdivision,
combination, or reclassification of the outstanding capital stock of the issuer
or received in exchange for Pledged Securities or any part thereof or as a
result of any merger, consolidation, acquisition, or other exchange of assets to
which the issuer may be a party, or otherwise, shall be and become part of the
Pledged Securities pledged hereunder and shall immediately be delivered to the
Agent to be held subject to the terms hereof. All dividends and distributions
which are received contrary to the provisions of this subsection (b) shall be
received in trust for the benefit of the Agent, the Issuing Bank and the
Lenders, segregated from such Pledgor's own assets, and shall be delivered to
the Agent.
(c) Upon the occurrence and during the continuance of an Event
of Default and notice from the Agent of the transfer of such rights to the
Agent, all rights of a Pledgor (i) to exercise the voting and/or consensual
rights and powers which it is entitled to exercise pursuant to this Section and
(ii) to receive and retain cash dividends and distributions shall cease, and all
such rights shall thereupon become vested in the Agent, which shall have the
sole and exclusive right and authority to exercise such voting and/or consensual
rights and receive such cash dividends and distributions until such time as all
Events of Default have been cured.
SECTION 11.5. Remedies Upon Default. If an Event of Default shall have
occurred and be continuing, the Agent, on behalf of itself, the Issuing Bank and
the Lenders, may sell the Pledged Securities, or any part thereof, at public or
private sale or at any broker's board or on any securities exchange, for cash,
upon credit or for future delivery as the Agent shall deem appropriate subject
to the terms hereof or as otherwise provided in the UCC. The Agent shall be
authorized at any such sale (if it deems it advisable to do so) to restrict to
the full extent permitted by Applicable Law the prospective bidders or
purchasers to Persons who will represent and agree that they are purchasing the
Pledged Securities for their own account for investment and not with a view to
the distribution or sale thereof, and upon consummation of any such sale, the
Agent shall have the right to assign, transfer, and deliver to the purchaser or
purchasers thereof the Pledged Securities so sold. Each such purchaser at any
such sale shall hold the property sold absolutely, free from any claim or right
on the part of any Pledgor. The Agent shall give the Pledgors ten (10) days'
written notice of any such public or private sale, or sale at any broker's board
or on any such securities exchange, or of any other disposition of the Pledged
Securities. Such notice, in the case of public sale, shall state the time and
place for such sale and, in the case of sale at a broker's board or on a
securities exchange, shall state the board or exchange at which such sale is to
be made and the day on which the Pledged Securities, or portion thereof, will
first be offered for sale at such board or exchange. Any such public sale shall
be held at such time or times within ordinary business hours and at such place
or places as the Agent may fix and shall state in the notice of such sale. At
any such sale, the Pledged Securities, or portion thereof, to be sold may be
sold in one lot as an entirety or in separate parcels, as the Agent may (in its
sole and absolute discretion) determine. The Agent shall not be
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obligated to make any sale of the Pledged Securities if it shall determine not
to do so, regardless of the fact that notice of sale of the Pledged Securities
may have been given. The Agent may, without notice or publication, adjourn any
public or private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for sale, and such sale may, without
further notice, be made at the time and place to which the same was so
adjourned. In case the sale of all or any part of the Pledged Securities is made
on credit or for future delivery, the Pledged Securities so sold shall be
retained by the Agent until the sale price is paid by the purchaser or
purchasers thereof, but the Agent shall not incur any liability in case any such
purchaser or purchasers shall fail to take up and pay for the Pledged Securities
so sold and, in case of any such failure, such Pledged Securities may be sold
again upon like notice. At any sale or sales made pursuant to this Section 11.5,
the Agent (on behalf of itself, the Issuing Bank and/or the Lenders) may bid for
or purchase, free from any claim or right of whatever kind, including any equity
of redemption, of the Pledgors, any such demand, notice, claim, right or equity
being hereby expressly waived and released, any or all of the Pledged Securities
offered for sale, and may make any payment on the account thereof by using any
claim for moneys then due and payable to the Agent, the Issuing Bank (to the
extent it consents) or any consenting Lender by any Credit Party as a credit
against the purchase price; and the Agent, upon compliance with the terms of
sale, may hold, retain and dispose of the Pledged Securities without further
accountability therefor to any Pledgor or any third party (other than the
Issuing Bank and/or the Lenders). The Agent shall in any such sale make no
representations or warranties with respect to the Pledged Securities or any part
thereof and shall not be chargeable with any of the obligations or liabilities
of the Pledgors with respect thereto. Each Pledgor hereby agrees that (i) it
will indemnify and hold the Agent, the Issuing Bank and the Lenders harmless
from and against any and all claims with respect to the Pledged Securities
asserted before the taking of actual possession or control of the Pledged
Securities by the Agent pursuant to this Credit Agreement, or arising out of any
act of, or omission to act on the part of, any Person prior to such taking of
actual possession or control by the Agent (whether asserted before or after such
taking of possession or control), or arising out of any act on the part of any
Pledgor, its agents or Affiliates before or after the commencement of such
actual possession or control by the Agent and (ii) the Agent, the Issuing Bank
and the Lenders shall have no liability or obligation arising out of any such
claim. As an alternative to exercising the power of sale herein conferred upon
it, the Agent may proceed by a suit or suits at law or in equity to foreclose
upon the Collateral and Pledged Securities under this Credit Agreement and to
sell the Pledged Securities, or any portion thereof, pursuant to a judgment or
decree of a court or courts having competent jurisdiction.
SECTION 11.6. Application of Proceeds of Sale and Cash. The proceeds of
sale of the Pledged Securities sold pursuant to Section 11.5 hereof shall be
applied by the Agent on behalf of itself, the Issuing Bank and the Lenders as
follows:
(i) to the payment of all reasonable out-of-pocket
costs and expenses paid or incurred by the Agent in connection with such sale,
including, but not limited to, all court costs and the reasonable fees and
expenses of counsel for the Agent in connection therewith, and the payment of
all reasonable out-of-pocket costs and expenses paid or incurred by the Agent in
enforcing this Credit Agreement, in realizing or protecting any Collateral and
in enforcing or collecting any Obligations or any Guaranty thereof, including,
without limitation, court costs and the reasonable attorney's fees and expenses
incurred by the Agent in connection therewith;
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(ii) to satisfy or provide cash collateral for all
Obligations relating to the Letters of Credit; and
(iii) to the indefeasible payment in full of the
Obligations in accordance with Section 12.2(b) hereof.
Any amounts remaining after such indefeasible payment in full shall be remitted
to the appropriate Pledgor, or as a court of competent jurisdiction may
otherwise direct.
SECTION 11.7. Securities Act, etc. In view of the position of each
Pledgor in relation to the Pledged Securities pledged by it, or because of other
present or future circumstances, a question may arise under the Securities Act
of 1933, as amended, as now or hereafter in effect, or any similar statute
hereafter enacted analogous in purpose or effect (such Act and any such similar
statute as from time to time in effect being hereinafter called the "Federal
Securities Laws"), with respect to any disposition of the Pledged Securities
permitted hereunder. Each Pledgor understands that compliance with the Federal
Securities Laws may very strictly limit the course of conduct of the Agent if
the Agent were to attempt to dispose of all or any part of the Pledged
Securities, and may also limit the extent to which or the manner in which any
subsequent transferee of any Pledged Securities may dispose of the same.
Similarly, there may be other legal restrictions or limitations affecting the
Agent in any attempt to dispose of all or any part of the Pledged Securities
under applicable Blue Sky or other state securities laws, or similar laws
analogous in purpose or effect. Under Applicable Law, in the absence of an
agreement to the contrary, the Agent may perhaps be held to have certain general
duties and obligations to a Pledgor to make some effort towards obtaining a fair
price even though the Obligations may be discharged or reduced by the proceeds
of a sale at a lesser price. Each Pledgor waives to the fullest extent permitted
by Applicable Law any such general duty or obligation to it, and the Pledgors
and/or the Credit Parties will not attempt to hold the Agent responsible for
selling all or any part of the Pledged Securities at an inadequate price, even
if the Agent shall accept the first offer received or shall not approach more
than one possible purchaser. Without limiting the generality of the foregoing,
the provisions of this Section 11.7 would apply if, for example, the Agent were
to place all or any part of the Pledged Securities for private placement by an
investment banking firm, or if such investment banking firm purchased all or any
part of the Pledged Securities for its own account, or if the Agent placed all
or any part of the Pledged Securities privately with a purchaser or purchasers.
SECTION 11.8. Continuation and Reinstatement. Each Pledgor further
agrees that its pledge hereunder shall continue to be effective or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any Obligation is rescinded or must otherwise be restored by the Agent, the
Issuing Bank or the Lenders upon the bankruptcy or reorganization of any Pledgor
or otherwise.
SECTION 11.9. Termination. The pledge referenced herein shall terminate
when all Obligations shall have been indefeasibly fully paid and performed and
the Commitments shall have terminated, and all Letters of Credit shall have
expired or been terminated or canceled, at which time the Agent shall assign and
deliver to the appropriate Pledgor, or to such Person or Persons as such Pledgor
shall designate, against receipt, such of the Pledged Securities (if any) as
shall not have been sold or otherwise applied by the Agent pursuant to the terms
hereof and shall
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still be held by it hereunder, together with appropriate instruments of
reassignment and release. Any such reassignment shall be free and clear of all
Liens, arising by, under or through the Agent but shall otherwise be without
recourse upon or warranty by the Agent and at the expense of the Pledgors.
12. THE AGENT AND THE ISSUING BANK
SECTION 12.1. Administration by Agent. (a) The general administration
of the Fundamental Documents and any other documents contemplated by this
Agreement shall be by the Agent or its designees. Each of the Lenders hereby
irrevocably authorizes the Agent, at its discretion, to take or refrain from
taking such actions as agent on its behalf and to exercise or refrain from
exercising such powers under the Fundamental Documents, the Notes and any other
documents contemplated by this Credit Agreement as are delegated by the terms
hereof or thereof, as appropriate, together with all powers reasonably
incidental thereto. The Agent shall have no duties or responsibilities except as
set forth in the Fundamental Documents.
(b) The Lenders hereby authorize the Agent (in its sole
discretion):
(i) in connection with the sale or other disposition
of any asset included in the Collateral or the capital stock of any Guarantor,
in accordance with the terms of this Agreement, to release a Lien granted to it
(for the benefit of itself, the Issuing Bank and the Lenders) on such asset or
capital stock and/or release such Guarantor from its obligations hereunder;
(ii) to determine that the cost to a Credit Party is
disproportionate to the benefit to be realized by the Lenders by perfecting a
Lien in a given asset or group of assets included in the Collateral (other than
any item included in the Library Credit) and that such Credit Party should not
be required to perfect such Lien in favor of the Agent (for the benefit itself,
the Issuing Bank and of the Lenders);
(iii) to appoint subagents or Lenders to be the
holder(s) of record of a Lien to be granted to the Agent (for the benefit of
itself, the Issuing Bank and the Lenders) or to hold on behalf of the Agent such
collateral or instruments relating thereto;
(iv) to grant a right of quiet enjoyment to licensees
of Product other than pursuant to Platform Agreements and to confirm such grant
in writing;
(v) to enter into intercreditor and/or subordination
agreements on terms acceptable to the Agent with (A) the unions and/or the
guilds with respect to the security interests in favor of such unions and/or
guilds required pursuant to the terms of any collective bargaining agreement or
(B) any licensee or licensor having any rights to any item of Product or (C)
Persons providing any services in connection with any item of Product;
(vi) to enter into and perform its obligations under
the other Fundamental Documents;
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(vii) to accept commitments from one or more Persons
for the remaining $15,000,000 of the facility not committed to as of the date
hereof by (A) obtaining an executed counterpart of this Agreement from each such
Person, (B) amending Schedule 1 hereto to add each such Person's name, Term Loan
Commitment and Revolving Credit Commitment and circulating the amended Schedule
1 to the Lenders and the Borrower and (C) recording in the Register the name and
address of each such Person, its Term Loan Commitment and Revolving Loan
Commitment, and the principal amount of the Loans owing to it, whereupon (x) the
Borrower shall execute and deliver to the Agent (i) a Term Note in the amount of
such Person's Term Loan Commitment and (ii) a Revolving Credit Note in the
amount of such Person's Revolving Credit Commitment and (y) each such Person
shall be a party hereto, have the rights and obligations of a Lender hereunder
and under the other Fundamental Documents and shall be bound by the provisions
hereof and thereof;
(viii) upon the acceptance of additional commitments
pursuant to Section 12.1(b)(vii), to allocate equitably among the Lenders, the
Term Loans and the Revolving Credit Loans so as to achieve pro rata status; and
(ix) to execute and deliver reduction certificates
from time to time under the Hallmark Cards Letter of Credit in connection with
(and in the amount of) (x) any reduction in the commitments under the Hallmark
Subordination and Support Agreement permitted pursuant to Section 6.5 hereof or
(y) advances made under the Hallmark Subordination and Support Agreement (other
than with the proceeds of drawings made under the Hallmark Cards Letter of
Credit).
SECTION 12.2. Advances and Payments. (a) On the date of each Loan, (x)
the Agent shall be authorized (but not obligated) to advance, for the account of
each of the Lenders, the amount of the Loan to be made by it in accordance with
its Percentage hereunder. Each of the Lenders hereby authorizes and requests the
Agent to advance for its account, pursuant to the terms hereof, the amount of
the Loan to be made by it, and each of the Lenders agrees forthwith to reimburse
the Agent, in immediately available funds for the amount so advanced on its
behalf by the Agent. If any such reimbursement is not made in immediately
available funds on the same day on which the Agent shall have made any such
amount available on behalf of any Lender, such Lender shall pay interest to the
Agent, at a rate per annum equal to the Agent's cost of obtaining overnight
funds in the New York Federal Funds Market for the first three days following
the time when the Lender fails to make the required reimbursement, and
thereafter at a rate per annum equal to the Alternate Base Rate plus the
Applicable Margin for Alternate Base Rate Loans plus the default rate applicable
to Alternate Base Rate Loans as set forth in Section 2.9 hereof. If and to the
extent that any such reimbursement shall not have been made to the Agent, the
Borrower agrees to repay to the Agent forthwith on demand a corresponding amount
with interest thereon for each day from the date such amount is made available
to the Borrower until the date such amount is repaid to the Agent, in the case
of an Alternate Base Rate Loan, at the Alternate Base Rate plus the Applicable
Margin for Alternate Base Rate Loans plus the default rate applicable to
Alternate Base Rate Loans as set forth in Section 2.9 hereof and in the case of
a Eurodollar Loan, at the LIBO Rate plus the Applicable Margin for Eurodollar
Loans plus the default rate applicable to Eurodollar Loans as set forth in
Section 2.9 hereof.
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(b) As between the Agent and the Lenders, any amounts received
by the Agent in connection with the Fundamental Documents, the application of
which is not otherwise provided for, shall be applied, first, to pay the accrued
but unpaid Commitment Fees in accordance with each Lender's Percentage, second,
to pay accrued but unpaid interest on the Loans in accordance with the amount of
outstanding Loans owed to each Lender, third, to pay the principal balance
outstanding on the Loans (with amounts payable on the principal balance
outstanding on the Loans in accordance with the amount of outstanding Loans owed
to each Lender), and amounts then due in respect of unreimbursed draws under the
Letter of Credit, fourth, to pay amounts outstanding under Currency Agreements
and Interest Rate Protection Agreements, and fifth, to pay any other amounts
then due under this Credit Agreement. All amounts to be paid to any Lender by
the Agent shall be credited to that Lender, after collection by the Agent, in
immediately available funds either by wire transfer or deposit in such Lender's
correspondent account with the Agent or as such Lender and the Agent shall from
time to time agree.
SECTION 12.3. Sharing of Setoffs, Cash Collateral and Sharing Events.
Each of the Lenders agrees that if it shall, through the exercise of a right of
banker's lien, setoff or counterclaim against any Credit Party (including, but
not limited to, a secured claim under Section 506 of Title 11 of the United
States Code or other security or interest arising from, or in lieu of, such
secured claim and received by such Lender under any applicable bankruptcy,
insolvency or other similar law) or otherwise, obtain payment in respect of its
Obligations as a result of which the unpaid portion of its Obligations is
proportionately less than the unpaid portion of Obligations of any of the other
Lenders (a) it shall promptly purchase at par (and shall be deemed to have
thereupon purchased) from such other Lenders a participation in the Obligations
of such other Lenders, so that the aggregate unpaid principal amount of each of
the Lender's Obligations and its participation in Obligations of the other
Lenders shall be in the same proportion to the aggregate unpaid amount of all
remaining Obligations as the amount of its Obligations prior to the obtaining of
such payment was to the amount of all Obligations prior to the obtaining of such
payment and (b) such other adjustments shall be made from time to time as shall
be equitable to ensure that the Lenders share such payment pro rata. If all or
any portion of such excess payment is thereafter recovered from the Lender which
originally received such excess payment, such purchase (or portion thereof)
shall be canceled and the purchase price restored to the extent of such
recovery. Each Credit Party expressly consents to the foregoing arrangements and
agrees that any Lender or Lenders (and any Person holding (or deemed to be
holding) a participation in) a Loan, Note, or Letter of Credit may exercise any
and all rights of banker's lien, setoff or counterclaim with respect to any and
all moneys owing by such Credit Party to such Person(s) as fully as if such
Person(s) held a Note and was the original obligee thereon or was the issuer of
the Letter of Credit in the amount of such participation.
SECTION 12.4. Notice to the Lenders. Upon receipt by the Agent or the
Issuing Bank from any of the Credit Parties of any communication calling for an
action on the part of the Lenders, or upon notice to the Agent of any Event of
Default, the Agent or the Issuing Bank will in turn immediately inform the other
Lenders in writing (which shall include facsimile communications) of the nature
of such communication or of the Event of Default, as the case may be.
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SECTION 12.5. Liability of the Agent. (a) The Agent or the Issuing
Bank, when acting on behalf of the Lenders, may execute any of its duties under
this Credit Agreement or the other Fundamental Documents by or through its
officers, agents, or employees and neither the Agent, the Issuing Bank nor their
respective officers, agents or employees shall be liable to the Lenders or any
of them for any action taken or omitted to be taken in good faith, nor be
responsible to the Lenders or to any of them for the consequences of any
oversight or error of judgment, or for any loss, unless the same shall happen
through its gross negligence or willful misconduct. The Agent, the Issuing Bank
and their respective directors, officers, agents, and employees shall in no
event be liable to the Lenders or to any of them for any action taken or omitted
to be taken by it pursuant to instructions received by it from the Required
Lenders (or such other number of Lenders as is expressly required by any
Fundamental Document) or in reliance upon the advice of counsel selected by it
with reasonable care. Without limiting the foregoing, neither the Agent, the
Issuing Bank, nor any of their respective directors, officers, employees, or
agents shall be responsible to any of the Lenders for the due execution,
validity, genuineness, effectiveness, sufficiency, or enforceability of, or for
any statement, warranty, or representation in, or for the perfection of any
security interest contemplated by, this Credit Agreement, any other Fundamental
Document or any related agreement, document or order, or for freedom of any of
the Collateral or any of the Pledged Securities from prior Liens or security
interests, or shall be required to ascertain or to make any inquiry concerning
the performance or observance by the Borrower or any other Credit Party of any
of the terms, conditions, covenants, or agreements of this Credit Agreement, any
other Fundamental Document, or any related agreement or document.
(b) None of the Agent (as agent for the Lenders), the Issuing
Bank or any of their respective directors, officers, employees, or agents shall
have any responsibility to the Borrower or any other Credit Party on account of
the failure or delay in performance or breach by any of the Lenders of any of
such Lender's obligations under this Credit Agreement, the other Fundamental
Documents or any related agreement or document or in connection herewith or
therewith. No Lender nor any of its directors, officers, employees or agents
shall have any responsibility to the Borrower or any other Credit Party on
account of the failure or delay in performance or breach by any other Lender of
such other Lender's obligations under this Credit Agreement, the other
Fundamental Documents or any related agreement or document or in connection
herewith or therewith.
(c) The Agent as agent for the Lenders hereunder and the
Issuing Bank in such capacity, shall be entitled to rely on any communication,
instrument, or document believed by it to be genuine or correct and to have been
signed or sent by a Person or Persons believed by it to be the proper Person or
Persons, and it shall be entitled to rely on advice of legal counsel,
independent public accountants, and other professional advisers and experts
selected by it.
SECTION 12.6. Reimbursement and Indemnification. Each of the Lenders
agrees (i) to reimburse the Agent for such Lender's Pro Rata Share of any
expenses and fees incurred for the benefit of the Lenders under the Fundamental
Documents, including, without limitation, counsel fees and compensation of
agents and employees paid for services rendered on behalf of the Lenders, and
any other expense incurred in connection with the operations or enforcement
thereof not reimbursed by or on behalf of the Borrower, (ii) to indemnify and
hold harmless the Agent and any of its directors, officers, employees, or
agents, on demand, in accordance with such Lender's Pro Rata Share, from and
against any and all liabilities, obligations, losses,
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damages, penalties, actions, judgments, suits, costs, expenses, or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by, or
asserted against, it or any of them in any way relating to or arising out of the
Fundamental Documents or any related agreement or document, or any action taken
or omitted by it or any of them under the Fundamental Documents or any related
agreement or document, to the extent not reimbursed by or on behalf of the
Borrower or any other Credit Party (except such as shall result from its or
their gross negligence or willful misconduct), and (iii) to indemnify and hold
harmless the Issuing Bank and any of its directors, officers, employees, or
agents, on demand, in the amount of its Pro Rata Share, from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by, or asserted against it or any of them in any way
relating to or arising out of the issuance of any Letters of Credit or the
failure to issue Letters of Credit if such failure or issuance was at the
direction of the Required Lenders (except as shall result from the gross
negligence or willful misconduct of the Person to be reimbursed, indemnified or
held harmless, as applicable). To the extent indemnification payments made by
the Lenders pursuant to this Section 12.6 are subsequently recovered by the
Agent from a Credit Party, the Agent will promptly refund such previously paid
indemnity payments to the Lenders.
SECTION 12.7. Rights of Agent and Issuing Bank. It is understood and
agreed that each of the Agent and the Issuing Bank shall have the same duties,
rights and powers as a Lender hereunder (including the right to give such
instructions) as any of the other Lenders and may exercise such rights and
powers, as well as its rights and powers under other agreements and instruments
to which it is or may be party, and engage in other transactions with any Credit
Party or Affiliate thereof, as though it were not the Agent of the Lenders under
this Credit Agreement and the other Fundamental Documents or the Issuing Bank.
SECTION 12.8. Independent Investigation by Lenders. Each of the Lenders
acknowledges that it has decided to enter into this Credit Agreement and the
other Fundamental Documents and to make the Loans and participate in the Letters
of Credit hereunder based on its own analysis of the transactions contemplated
hereby and of the creditworthiness of the Credit Parties and agrees that neither
the Agent nor the Issuing Bank shall bear any responsibility therefor.
SECTION 12.9. Agreement of Required Lenders. Upon any occasion
requiring or permitting an approval, consent, waiver, election or other action
on the part of the Required Lenders, action shall be taken by the Agent for and
on behalf of, or for the benefit of, all Lenders upon the direction of the
Required Lenders and any such action shall be binding on all Lenders. No
amendment, modification, consent or waiver shall be effective except in
accordance with the provisions of Section 13.11 hereof.
SECTION 12.10. Notice of Transfer. The Agent and the Issuing Bank may
deem and treat any Lender which is a party to this Credit Agreement as the owner
of such Lender's respective portions of the Loans and participations in Letters
of Credit for all purposes, unless and until a written notice of the assignment
or transfer thereof executed by any such Lender shall have been received by the
Agent and become effective in accordance with Section 13.3 hereof.
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SECTION 12.11. Successor Agent. The Agent may resign at any time by
giving written notice thereof to the Lenders and the Borrower, but such
resignation shall not become effective until acceptance by a successor agent of
its appointment pursuant hereto. Upon any such resignation, the retiring Agent
shall promptly appoint a successor agent from among the Lenders which successor
shall be experienced and sophisticated in entertainment industry lending,
provided that such replacement is reasonably acceptable (as evidenced in
writing) to the Required Lenders and the Borrower; provided, however, that such
approval by the Borrower shall not be required at any time when a Default or
Event of Default is continuing. If no successor agent shall have been so
appointed by the retiring Agent and shall have accepted such appointment, within
30 days after the retiring agent's giving of notice of resignation, the Borrower
may appoint a successor agent (which successor may be replaced by the Required
Lenders; provided that such successor is experienced and sophisticated in
entertainment industry lending or media lending and reasonably acceptable to the
Borrower), which shall be either a Lender or a commercial bank organized,
licensed, carrying on business under the laws of the United States of America or
of any State thereof and shall have a combined capital and surplus of at least
US$500,000,000 and shall be experienced and sophisticated in entertainment
industry lending. Upon the acceptance of any appointment as Agent hereunder by a
successor agent, such successor agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations under
this Credit Agreement, the other Fundamental Documents and any other credit
documentation. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Article 12 and Article 13 shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was Agent under this
Credit Agreement.
SECTION 12.12. Successor Issuing Bank. The Issuing Bank may resign at
any time by giving prior written notice thereof to the Lenders and the Borrower,
but such resignation shall not become effective until acceptance by a successor
Issuing Bank of its appointment pursuant hereto. Upon any such resignation, the
retiring Issuing Bank shall promptly appoint a successor Issuing Bank from among
the Lenders, provided that such replacement is reasonably acceptable (as
evidenced in writing) to the Required Lenders and the Borrower and has a credit
rating at least as high as that of the Issuing Bank; provided, however, that
such approval by the Borrower shall not be required at any time when a Default
or Event of Default is continuing. If no successor Issuing Bank shall have been
so appointed by the retiring Issuing Bank and shall have accepted such
appointment, within 30 days after the retiring Issuing Bank's giving of notice
of resignation, the Borrower may appoint a successor Issuing Bank (which
successor may be replaced by the Required Lenders; provided that such successor
is reasonably acceptable to the Borrower), which shall be either a Lender or a
commercial bank organized, licensed, carrying on business under the laws of the
United States of America or of any State thereof and shall have a combined
capital and surplus of at least US$500,000,000. Upon the acceptance of any
appointment as Issuing Bank hereunder by a successor Issuing Bank, such
successor Issuing Bank shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Issuing Bank, and the
retiring Issuing Bank shall be discharged from its duties and obligations under
this Credit Agreement, the other Fundamental Documents and any other credit
documentation, except with respect to Letters of Credit which are outstanding at
the time of the resignation unless the successor Issuing Bank replaces the
retiring Issuing Bank as the issuing bank on such Letters of Credit. The
Borrower and each Lender hereby agree that
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each will use its commercially reasonable efforts to replace any such
outstanding Letters of Credit issued by the retiring Issuing Bank. After any
retiring Issuing Bank's resignation hereunder as Issuing Bank, the provisions of
this Article 12 and Article 13 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Issuing Bank under this Credit
Agreement.
13. MISCELLANEOUS
SECTION 13.1. Notices. Notices and other communications provided for
herein shall be in writing and shall be delivered or mailed (or in the case of
telegraphic communication, if by telegram, delivered to the telegraph company
and, if by telex, graphic scanning or other telegraphic or facsimile
communications equipment of the sending party hereto, delivered by such
equipment) addressed, if to the Agent, the Issuing Bank or The Chase Manhattan
Bank, to ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ Avenue of the ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Senior Vice President,
facsimile no.: (▇▇▇) ▇▇▇-▇▇▇▇, with a copy to ▇.▇. ▇▇▇▇▇▇ Securities, ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn: ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇, facsimile no.: (▇▇▇) ▇▇▇-▇▇▇▇, or if to any Credit Party, to it at
Crown Media Holdings, 6430 S. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn.: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq., facsimile no.: (▇▇▇) ▇▇▇-▇▇▇▇,
with a courtesy copy to Hallmark Cards Incorporated, 2501 ▇▇▇▇▇, P.O. 419580,
Mail Drop #339, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇, facsimile no.:
(▇▇▇) ▇▇▇-▇▇▇▇, or if to a Lender, to it at its address set forth on the
signature page, or such other address as such party may from time to time
designate by giving written notice to the other parties hereunder. Any failure
of the Agent, the Issuing Bank or a Lender giving notice pursuant to this
Section 13.1, to provide a courtesy copy to a party as provided herein, shall
not affect the validity of such notice. All notices and other communications
given to any party hereto in accordance with the provisions of this Agreement
shall be deemed to have been given on the fifth Business Day after the date when
sent by registered or certified mail, postage prepaid, return receipt requested,
if by mail, or when delivered to the telegraph company, charges prepaid, if by
telegram, or when receipt is acknowledged, if by any telegraphic or facsimile
communications equipment of the sender, in each case addressed to such party as
provided in this Section 13.1 or in accordance with the latest unrevoked written
direction from such party.
SECTION 13.2. Survival of Agreement, Representations and Warranties,
etc. All warranties, representations and covenants made by any of the Credit
Parties herein or in any other Fundamental Document or in any certificate or
other instrument delivered in connection with this Credit Agreement or any other
Fundamental Document shall be considered to have been relied upon by the Agent,
the Issuing Bank and the Lenders except for any terminations, amendments,
modifications or waivers thereof in accordance with the terms hereof, and shall
survive the making of the Loans and the issuance of the Letters of Credit herein
contemplated and the issuance and delivery to the Agent of the Notes regardless
of any investigation made by the Agent, the Issuing Bank or the Lenders or on
their behalf and shall continue in full force and effect so long as any
Obligation is outstanding and unpaid and so long as any Letter of Credit remains
outstanding and the Commitments have not been terminated. All statements in any
such certificate or other instrument shall constitute representations and
warranties by the Credit Party hereunder.
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SECTION 13.3. Successors and Assigns; Syndications; Loan Sales;
Participations. (a) Whenever in this Credit Agreement any of the parties hereto
is referred to, such reference shall be deemed to include the successors and
assigns of such party (provided, however, that no Credit Party may assign its
rights or obligations hereunder without the prior written consent of the Agent,
the Issuing Bank and all the Lenders), and all covenants, promises and
agreements by or on behalf of any Credit Party which are contained in this
Agreement shall inure to the benefit of the successors and assigns of the
Administrative Agent, the Issuing Bank and the Lenders.
(b) Each of the Lenders may (but only with the prior written
consent of the Agent and the Issuing Bank, which consent shall not be
unreasonably withheld or delayed) assign all or a portion of its interests,
rights and obligations under this Credit Agreement (including, without
limitation, all or a portion of its Commitment and the same portion of all Loans
at the time owing to it and the Notes held by it and its obligations and rights
with regard to Letters of Credit); provided, however, that (i) each assignment
shall be of a constant, and not a varying, percentage of the assigning Lender's
interests, rights and obligations under this Credit Agreement, (ii) each
assignment shall be in a minimum Commitment amount (or, at any time after the
Commitment Termination Date, minimum Loan amount) of at least $5,000,000 (except
that any assignment of the entire remaining portion of a Lender's Commitment or
Loan amount shall not be subject to this limitation), (iii) the parties to each
such assignment shall execute and deliver to the Agent, for its acceptance and
recording in the Register (as defined below), an Assignment and Acceptance,
together with the assigning Lender's original Note and a processing and
recordation fee of US$3,500 to be paid to the Administrative Agent by the
assigning Lender or the assignee. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each Assignment and
Acceptance, which effective date shall not (unless otherwise agreed to by the
Agent) be earlier than five Business Days after the date of acceptance and
recording by the Agent, (x) the assignee thereunder shall be a party hereto and,
to the extent provided in such Assignment and Acceptance, have the rights and
obligations of a Lender hereunder and under the other Fundamental Documents and
shall be bound by the provisions hereof and (y) the assigning Lender thereunder
shall, to the extent provided in such Assignment and Acceptance, relinquish its
rights and be released from its obligations under this Credit Agreement except
that, notwithstanding such assignment, any rights and remedies available to the
Borrower for any breaches by such assigning Lender of its obligations hereunder
while a Lender shall be preserved after such assignment and such Lender shall
not be relieved of any liability to the Borrower due to any such breach. In the
case of an Assignment and Acceptance covering all or the remaining portion of
the assigning Lender's rights and obligations under this Credit Agreement, such
assigning Lender shall cease to be a party hereto.
(c) Each Lender may at any time make an assignment of its
interests, rights and obligations under this Credit Agreement, without the
consent of the Agent or the Issuing Bank, to (i) any Affiliate of such Lender or
(ii) any other Lender hereunder; provided that after giving effect to such
assignment, the assignee's Percentage shall not exceed 20% of the aggregate
amount of all Commitments then outstanding hereunder. Any such assignment to any
Affiliate of the assigning Lender or any other Lender hereunder shall not be
subject to the requirements of Section 13.3(b) that (x) that the amount of the
Commitment (or Loans if applicable) of the assigning Lender subject to each
assignment be in a minimum principal amount of $5,000,000 and (y) the payment of
a processing and recordation fee and any such
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assignment to any Affiliate of the assigning Lender shall not release the
assigning Lender of its remaining obligations hereunder, if any.
(d) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than the
representation and warranty that it is the legal and beneficial owner of the
interest being assigned thereby and that such interest is free and clear of any
adverse claim, the assigning Lender makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Credit Agreement or any other
Fundamental Document or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Fundamental Documents or any other
instrument or document furnished pursuant hereto or thereto; (ii) such assignor
Lender makes no representation or warranty and assumes no responsibility with
respect to the financial condition of any of the Credit Parties or the
performance or observance by any of the Credit Parties of any of their
obligations under the Fundamental Documents or any other instrument or document
furnished pursuant thereto; (iii) such assignee confirms that it has received a
copy of this Credit Agreement, together with copies of the most recent financial
statements delivered pursuant to Sections 5.1(a) and 5.1(b) (or if none of such
financial statements shall have then been delivered, then copies of the
financial statements referred to in Section 3.4 hereof) and such other documents
and information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee agrees
that it will, independently and without reliance upon the assigning Lender, the
Agent, the Issuing Bank 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 this Credit Agreement or
any other Fundamental Document; (v) such assignee appoints and authorizes the
Agent, and the Issuing Bank to take such action as the agent on its behalf and
to exercise such powers under this Credit Agreement as are delegated to the
Agent or the Issuing Bank by the terms hereof, together with such powers as are
reasonably incidental thereto; and (vi) such assignee agrees that it will be
bound by the provisions of this Credit Agreement and will perform in accordance
with their terms all of the obligations which by the terms of this Credit
Agreement are required to be performed by it as a Lender.
(e) The Agent shall maintain at its address at which notices
are to be given to it pursuant to Section 13.1 a copy of each Assignment and
Acceptance and a register for the recordation of the names and addresses of the
Lenders and the Commitments of, and principal amount of the Loans owing to, each
Lender from time to time (the "Register"). The entries in the Register shall be
conclusive, in the absence of manifest error, and the Credit Parties, the Agent,
the Issuing Bank and the Lenders may treat each Person whose name is recorded in
the Register as a Lender hereunder for all purposes of the Fundamental
Documents. The Register shall be available for inspection by any Credit Party or
any Lender at any reasonable time and from time to time upon reasonable prior
notice.
(f) Subject to the foregoing, upon its receipt of an
Assignment and Acceptance executed by an assigning Lender and an assignee
together with the assigning Lender's original Notes and the processing and
recordation fee, the Agent shall, if such Assignment and Acceptance has been
completed and is substantially in the form of Exhibit H
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hereto, (i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register and (iii) give prompt written notice thereof
to the Borrower. Within five (5) Business Days after receipt of the notice, the
Borrower, at its own expense, shall execute and deliver to the Agent, in
exchange for each surrendered Note, a new Note to the order of such assignee in
an amount equal to the Revolving Credit Commitment and/or Term Loan, as the case
may be, assumed by it pursuant to such Assignment and Acceptance and if the
assigning Lender has retained a Revolving Credit Commitment and/or Term Loan
hereunder, new Notes to the order of the assigning Lender in an amount equal to
the Revolving Credit Commitment or Term Loan, as the case may be, retained by it
hereunder. Such new Notes shall be in an aggregate principal amount equal to the
aggregate principal amount of the surrendered Note and shall otherwise be in
substantially the form of Exhibit A-1 or Exhibit A-2, as applicable. In addition
the Credit Parties will promptly, at their own expense, execute such amendments
to the Fundamental Documents to which each is a party and such additional
documents, and take such other actions as the Agent or the assignee Lender may
reasonably request in order to give such assignee Lender the full benefit of the
Liens contemplated by the Fundamental Documents.
(g) Each of the Lenders may, without the consent of any of the
Credit Parties, the Issuing Bank or the Agent or the other Lenders, sell
participations to one or more banks or other entities in all or a portion of its
rights and obligations under this Credit Agreement (including, without
limitation, all or a portion of its Commitment and the Loans owing to it and the
Note or Notes held by it and its participation in Letters of Credit); provided,
however, that (i) any such Lender's obligations under this Credit Agreement
shall remain unchanged, (ii) such participant shall not be granted any voting
rights or any right to control the vote of such Lender under this Credit
Agreement, except with respect to proposed changes to interest rates, amount of
Commitments, final maturity of any Loan, releases of all or substantially all
the Collateral and fees (as applicable to such participant), (iii) any such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iv) the participating banks or other entities
shall be entitled to the cost protection provisions contained in Sections 2.11,
2.12, 2.13 and 12.3 hereof but a participant shall not be entitled to receive
pursuant to such provisions an amount larger than its share of the amount to
which the Lender granting such participation would have been entitled to receive
and (v) the Credit Parties, the Agent, the Issuing Bank and the other Lenders
shall continue to deal solely and directly with such Lender in connection with
such Lender's and its participants' rights and obligations under this Credit
Agreement.
(h) A Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
13.3, disclose to the assignee or participant or proposed assignee or
participant, any information relating to any of the Credit Parties furnished to
the Agent or such Lender by or on behalf of the Borrower; provided that prior to
any such disclosure, each such assignee or participant or proposed assignee or
participant shall agree, by executing a confidentiality letter, substantially in
the form of the confidentiality letter executed by the Lenders in connection
with information received by the Lenders relating to this transaction, to
preserve the confidentiality of any confidential information relating to any of
the Credit Parties received from such Lender.
(i) Any assignment pursuant to paragraph (b) or (c) of this
Section 13.3 shall constitute an amendment of the Schedule of Commitments as of
the effective date of such assignment.
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(j) The Credit Parties consent that any Lender may at any time
and from time to time pledge or otherwise grant a security interest in any Loan
or in any Note evidencing the Loans (or any part thereof) to any Federal Reserve
Bank.
(k) Notwithstanding anything to the contrary contained herein,
any Lender (a "Granting Lender") may grant to a special purpose funding vehicle
(an "SPC") identified as such in writing from time to time by the Granting
Lender to the Agent and the Borrower, the option to provide to the Borrower all
or any part of any Loan that such Granting Lender would otherwise be obligated
to make to the Borrower pursuant to this Agreement; provided that (i) nothing
herein shall constitute a commitment by any SPC to make any Loan and (ii) if an
SPC elects not to exercise such option or otherwise fails to provide all or any
part of a Loan, the Granting Lender shall be obligated to make such Loan
pursuant to the terms hereof. The making of a Loan by an SPC hereunder shall
utilize the relevant portion of the Commitment of the Granting Lender to the
same extent, and as if, such Loan were made by such Granting Lender. Each party
hereto hereby agrees that no SPC shall be liable for any indemnity or similar
obligation under the Fundamental Documents (all liability for which shall remain
with the Granting Lender). In addition, notwithstanding anything to the contrary
contained in this Section 13.3(k), any SPC may (i) with notice to, but without
prior written consent of, the Borrower and the Agent and without paying any
processing fee therefor, assign all or a portion of its interests in any Loans
to the Granting Lender or to any financial institutions (consented to by the
Agent) providing liquidity and/or credit support to or for the account of such
SPC to support the funding or maintenance of Loans and (ii) disclose on a
confidential basis any non-public information relating to its Loans to any
rating agency, commercial paper dealer or provider of any surety, guarantee or
credit or liquidity enhancement to such SPC. This Section 13.3(k) may not be
amended without the prior written consent of each Granting Lender, all or any of
whose Loans are being funded by an SPC at the time of such amendment. For the
avoidance of doubt, the Granting Lender shall for all purposes (including,
without limitation, the approval of any amendment or waiver of any provision of
any of the Fundamental Documents) continue to be the Lender of record hereunder.
SECTION 13.4. Expenses; Documentary Taxes. Whether or not the
transactions hereby contemplated shall be consummated, the Borrower agrees to
pay (a) all reasonable out-of-pocket expenses incurred by the Agent or ▇.▇.
▇▇▇▇▇▇ Securities Inc. in connection with, or growing out of, the performance of
due diligence, the syndication of the credit facility contemplated hereby, the
negotiation, preparation, execution, delivery, waiver or modification and
administration of this Credit Agreement and any other documentation contemplated
hereby, the making of the Loans and the issuance of the Letters of Credit, the
Collateral, the Pledged Securities or any Fundamental Document, including, but
not limited to, the reasonable out-of-pocket costs and internally allocated
charges of audit or field examinations of the Agent in connection with the
administration of this Credit Agreement, the verification of financial data and
the transactions contemplated hereby, and the reasonable fees and disbursements
of ▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP, counsel for the Agent and the Issuing Bank, and
any other counsel that the Agent or the Issuing Bank shall retain, and (b) all
reasonable out-of-pocket expenses incurred by the Agent, the Issuing Bank or the
Lenders in the enforcement or protection of the rights and remedies of the
Agent, the Issuing Bank or the Lenders in connection with this Credit Agreement,
the other Fundamental Documents, the Letters of Credit or the Notes, or as a
result of any transaction, action or non-action arising from any of the
foregoing, including, but not limited to, the
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reasonable fees and disbursements of any counsel for the Agent, the Issuing Bank
or the Lenders. Such payments shall be made on the date this Credit Agreement is
executed by the Borrower and thereafter on demand. The Borrower agrees that it
shall indemnify the Agent, the Issuing Bank and the Lenders from and hold them
harmless against any documentary taxes, assessments or charges made by any
Governmental Authority by reason of the execution and delivery of this Credit
Agreement or the Notes or the other Fundamental Documents or the issuance of the
Letters of Credit. The obligations of the Borrower under this Section shall
survive the termination of this Credit Agreement, the payment of the Loans and
the expiration of all Letters of Credit.
SECTION 13.5. Indemnification of the Agent, the Issuing Bank and the
Lenders. The Borrower agrees (a) to indemnify and hold harmless the Agent, the
Issuing Bank and the Lenders and their respective directors, officers,
employees, trustees, agents and affiliates (each, an "Indemnified Party") (to
the full extent permitted by Applicable Law) from and against any and all
claims, demands, losses, judgments and liabilities (including liabilities for
penalties) of whatsoever nature, and (b) to pay to the Indemnified Parties an
amount equal to the amount of all costs and expenses, including reasonable legal
fees and disbursements, and with regard to both (a) and (b) growing out of or
resulting from any litigation, investigation or other proceedings relating to
the Collateral, this Credit Agreement, the other Fundamental Documents and the
Letters of Credit, the making of the Loans, any attempt to audit, inspect,
protect or sell the Collateral, or the administration and enforcement or
exercise of any right or remedy granted to the Agent, the Issuing Bank or
Lenders hereunder or thereunder but excluding therefrom all claims, demands,
losses, judgments, liabilities, costs and expenses arising out of or resulting
from (i) in the case of any Indemnified Party, the gross negligence or willful
misconduct of such Indemnified Party and (ii) claims asserted or litigation
commenced against such Indemnified Party by a Credit Party in which the Credit
Party is the prevailing party. The foregoing indemnity agreement includes any
reasonable costs incurred by any Indemnified Party in connection with any action
or proceeding which may be instituted in respect of the foregoing by any
Indemnified Party, or by any other Person either against any Indemnified Party
or in connection with which any officer, director, agent or employee of any
Indemnified Party is called as a witness or deponent, including, but not limited
to, the reasonable fees and disbursements of ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP,
counsel to the Agent and the Issuing Bank, and any out-of-pocket costs incurred
by any Indemnified Party in appearing as a witness or in otherwise complying
with legal process served upon them. Except as otherwise required by Applicable
Law which may not be waived, the Agent, the Issuing Bank and the Lenders shall
not be liable to any Credit Party for any matter or thing in connection with
this Credit Agreement other than their express obligations hereunder, including
obligations to make Loans and account for moneys actually received by them in
accordance with the terms hereof.
Whenever the provisions of this Credit Agreement or any other
Fundamental Document provide that, if any Credit Party shall fail to do any act
or thing which it has covenanted to do hereunder, the Agent may (but shall not
be obligated to) do the same or cause it to be done or remedy any such breach
and if the Agent does the same or causes it to be done, there shall be added to
the Obligations hereunder the cost or expense incurred by the Agent in so doing,
and any and all amounts expended by the Agent in taking any such action shall be
repayable to it upon its demand therefor and shall for advances made by the
Agent, bear interest
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at 2% in excess of the sum of the Alternate Base Rate plus the Applicable
Margin, from time to time in effect from the date advanced to the date of
repayment.
All indemnities contained in this Section 13.5 shall survive
the expiration or earlier termination of this Credit Agreement and shall inure
to the benefit of any Person who was a Lender notwithstanding such Person's
assignment of all its Loans and Commitments as to any actions taken or omitted
to be taken by it while it was a Lender.
SECTION 13.6. CHOICE OF LAW. THIS CREDIT AGREEMENT AND THE NOTES SHALL
IN ALL RESPECTS BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF
THE STATE OF NEW YORK WHICH ARE APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED
WHOLLY WITHIN SUCH STATE AND, IN THE CASE OF PROVISIONS RELATING TO INTEREST
RATES, ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA. EACH LETTER OF CREDIT
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE LAWS OR RULES DESIGNATED IN SUCH LETTER OF CREDIT OR IF NO SUCH LAWS OR
RULES ARE DESIGNATED, THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS,
INTERNATIONAL CHAMBER OF COMMERCE PUBLICATION NO. 500 AS ADOPTED OR AMENDED FROM
TIME TO TIME (THE "UNIFORM CUSTOMS") AND, AS TO MATTERS NOT GOVERNED BY THE
UNIFORM CUSTOMS, THE LAWS OF THE STATE OF NEW YORK.
SECTION 13.7. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY
APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH CREDIT PARTY HEREBY WAIVES, AND
COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR
OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE,
CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS
CREDIT AGREEMENT, THE SUBJECT MATTER HEREOF, ANY OTHER FUNDAMENTAL DOCUMENT OR
THE SUBJECT MATTER THEREOF, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING AND WHETHER IN CONTRACT OR TORT OR OTHERWISE. EACH PARTY HERETO
ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY THE OTHER PARTIES HERETO THAT THE
PROVISIONS OF THIS SECTION CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH SUCH
OTHER PARTIES HAVE RELIED, ARE RELYING AND WILL RELY IN ENTERING INTO THIS
CREDIT AGREEMENT AND ANY OTHER FUNDAMENTAL DOCUMENT. ANY PARTY MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 13.7 WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF ANY OTHER PARTY TO THE WAIVER OF ITS RIGHTS TO TRIAL
BY JURY.
SECTION 13.8. WAIVER WITH RESPECT TO DAMAGES. EACH CREDIT PARTY
ACKNOWLEDGES THAT NEITHER THE AGENT, THE ISSUING BANK NOR ANY LENDER HAS ANY
FIDUCIARY RELATIONSHIP WITH, OR FIDUCIARY DUTY TO, ANY CREDIT PARTY ARISING OUT
OF OR IN CONNECTION WITH THIS CREDIT AGREEMENT OR ANY OTHER FUNDAMENTAL DOCUMENT
AND THE RELATIONSHIP BETWEEN THE AGENT, THE ISSUING BANK AND THE LENDERS,
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ON THE ONE HAND, AND THE CREDIT PARTIES, ON THE OTHER HAND, IN CONNECTION
HEREWITH AND THEREWITH IS SOLELY THAT OF DEBTOR AND CREDITOR. TO THE EXTENT
PERMITTED BY APPLICABLE LAW, NO CREDIT PARTY SHALL ASSERT, AND EACH CREDIT PARTY
HEREBY WAIVES, ANY CLAIMS AGAINST THE AGENT, THE ISSUING BANK, AND THE LENDERS,
ON ANY THEORY OF LIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE
DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL DAMAGES) ARISING OUT OF, IN CONNECTION
WITH, OR AS A RESULT OF, THIS CREDIT AGREEMENT, ANY OTHER FUNDAMENTAL DOCUMENT,
ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR THEREBY, OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
SECTION 13.9. No Waiver. No failure on the part of the Agent, or any
Lender or the Issuing Bank to exercise, and no delay in exercising, any right,
power or remedy hereunder, under the Notes or any other Fundamental Document or
with regard to any Letter of Credit shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right, power or remedy preclude any
other or further exercise thereof or the exercise of any other right, power or
remedy. All remedies hereunder are cumulative and are not exclusive of any other
remedies provided by law.
SECTION 13.10. Extension of Payment Date. Except as otherwise
specifically provided in Article 2 hereof, should any payment or prepayment of
principal of or interest on the Notes or any other amount due hereunder, become
due and payable on a day other than a Business Day, the due date of such payment
or prepayment shall be extended to the next succeeding Business Day and, in the
case of a payment or prepayment of principal, interest shall be payable thereon
at the rate herein specified during such extension.
SECTION 13.11. Amendments, etc. No modification, amendment or waiver of
any provision of this Credit Agreement or any other Fundamental Document, and no
consent to any departure by the Borrower or any other Credit Party herefrom or
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Required Lenders and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given;
provided, however, that no such modification, waiver, consent or amendment
shall, without the written consent of (a) each affected Lender, (i) change any
Commitment of such Lender, (ii) reduce the interest payable on such Lender's
Loans, (iii) alter the principal amount of such Lender's Loans or any
reimbursement obligation in respect of Letters of Credit; (iv) reduce the rate
at which the Commitment Fees are payable to such Lender or (v) reduce the fees
payable to such Lender with respect to Letters of Credit issued hereunder as set
forth in Section 2.4(f) and (g) and (b) all Lenders, (i) amend or modify any
provision of this Credit Agreement, which expressly provides for the unanimous
consent or approval of the Lenders, (ii) release a substantial portion of the
Collateral or any of the Pledged Securities (except as contemplated herein),
(iii) extend the Maturity Date or (iv) amend the definition of "Required
Lenders," (v) materially amend the definition of "Collateral" (and defined terms
used in the definition of Collateral), (vi) amend or modify this Section 13.11
or (vii) change the advance rate of the Library Credit. No such amendment or
modification may adversely affect the rights and obligations of the Agent
hereunder without its prior written consent or the rights and obligations of the
Issuing Bank without its prior written consent. No notice to or demand on the
Borrower
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shall entitle the Borrower to any other or further notice or demand in the same,
similar or other circumstances. Each holder of a Note shall be bound by any
amendment, modification, waiver or consent authorized as provided herein,
whether or not such Note shall have been marked to indicate such amendment,
modification, waiver or consent and any consent by any holder of a Note shall
bind any Person subsequently acquiring such Note, whether or not such Note is so
marked.
SECTION 13.12. Severability. Any provision of this Credit Agreement or
of the Notes which is invalid, illegal or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such invalidity,
illegality or unenforceability without invalidating the remaining provisions
hereof or thereof, and any such invalidity, illegality or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
SECTION 13.13. SERVICE OF PROCESS. EACH CREDIT PARTY PARTY HERETO (EACH
A "SUBMITTING PARTY") HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE
STATE COURTS OF THE STATE OF NEW YORK IN NEW YORK COUNTY AND TO THE JURISDICTION
OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR
THE PURPOSES OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF OR BASED
UPON THIS CREDIT AGREEMENT (INCLUDING, BUT NOT LIMITED TO, THE LETTERS OF
CREDIT), THE SUBJECT MATTER HEREOF, ANY OTHER FUNDAMENTAL DOCUMENT AND THE
SUBJECT MATTER THEREOF. EACH SUBMITTING PARTY TO THE EXTENT PERMITTED BY
APPLICABLE LAW (A) HEREBY WAIVES, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS
A DEFENSE, OR OTHERWISE, IN ANY SUCH SUIT, ACTION OR OTHER PROCEEDING BROUGHT IN
THE ABOVE-NAMED COURTS ANY CLAIM THAT IT IS NOT SUBJECT PERSONALLY TO THE
JURISDICTION OF SUCH COURTS, THAT ITS PROPERTY IS EXEMPT OR IMMUNE FROM
ATTACHMENT OR EXECUTION, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN
INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER
OR THAT THIS CREDIT AGREEMENT, THE SUBJECT MATTER HEREOF, THE OTHER FUNDAMENTAL
DOCUMENT OR THE SUBJECT MATTER THEREOF (AS APPLICABLE) MAY NOT BE ENFORCED IN OR
BY SUCH COURT, (B) HEREBY WAIVES THE RIGHT TO REMOVE ANY SUCH ACTION, SUIT OR
PROCEEDING INSTITUTED BY THE AGENT, THE ISSUING BANK OR A LENDER IN STATE COURT
TO FEDERAL COURT, OR TO REMAND AN ACTION INSTITUTED IN FEDERAL COURT TO STATE
COURT AND (C) HEREBY WAIVES THE RIGHT TO ASSERT IN ANY SUCH ACTION, SUIT OR
PROCEEDING ANY OFFSETS OR COUNTERCLAIMS EXCEPT COUNTERCLAIMS THAT ARE COMPULSORY
OR OTHERWISE ARISE FROM THE SAME SUBJECT MATTER. EACH SUBMITTING PARTY HEREBY
CONSENTS TO SERVICE OF PROCESS BY MAIL AT THE ADDRESS TO WHICH NOTICES ARE TO BE
GIVEN TO IT PURSUANT TO SECTION 13.1 HEREOF. EACH SUBMITTING PARTY AGREES THAT
ITS SUBMISSION TO JURISDICTION AND CONSENT TO SERVICE OF PROCESS BY MAIL IS MADE
FOR THE EXPRESS BENEFIT OF EACH OF THE OTHER PARTIES HERETO. FINAL JUDGMENT
AGAINST ANY SUBMITTING
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PARTY IN ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE CONCLUSIVE, AND MAY BE
ENFORCED IN ANY OTHER JURISDICTION (X) BY SUIT, ACTION OR PROCEEDING ON THE
JUDGMENT, A CERTIFIED OR TRUE COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE
FACT AND OF THE AMOUNT OF INDEBTEDNESS OR LIABILITY OF THE SUBMITTING PARTY
THEREIN DESCRIBED, OR (Y) IN ANY OTHER MANNER PROVIDED BY OR PURSUANT TO THE
LAWS OF SUCH OTHER JURISDICTION, PROVIDED, HOWEVER, THAT THE AGENT, THE ISSUING
BANK OR A LENDER MAY AT ITS OPTION BRING SUIT, OR INSTITUTE OTHER JUDICIAL
PROCEEDINGS, AGAINST A SUBMITTING PARTY OR ANY OF ITS ASSETS IN ANY ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ OR OF ANY COUNTRY OR PLACE WHERE THE
SUBMITTING PARTY OR SUCH ASSETS MAY BE FOUND.
SECTION 13.14. Headings. Section headings used herein and the Table of
Contents are for convenience only and are not to affect the construction of or
be taken into consideration in interpreting this Credit Agreement.
SECTION 13.15. Execution in Counterparts. This Credit Agreement may be
executed in any number of counterparts, each of which shall constitute an
original, but all of which taken together shall constitute one and the same
instrument.
SECTION 13.16. Subordination of Intercompany Indebtedness, Receivables
and Advances. (a) Each Credit Party hereby agrees that any intercompany
Indebtedness or other intercompany receivables or intercompany advances of any
other Credit Party, directly or indirectly in favor of such Credit Party of
whatever nature at any time outstanding shall be completely subordinate in right
of payment to the prior payment in full of the Obligations, and that no payment
on any such Indebtedness, receivable or advance shall be made (i) except that
intercompany receivables and intercompany advances permitted pursuant to the
terms hereof may be repaid and intercompany Indebtedness permitted pursuant to
the terms hereof may be repaid, in each case so long as no Default or Event of
Default shall have occurred and be continuing and (ii) except as specifically
consented to by all the Lenders in writing, until the prior payment in full of
all the Obligations, expiration or other termination of all outstanding Letters
of Credit and termination of the Commitments.
(b) In the event that any payment on any such Indebtedness
shall be received by any Credit Party other than as permitted by Section
13.16(a) before payment in full of all Obligations, expiration or other
termination of all outstanding Letters of Credit and termination of the
Commitments, such Credit Party shall receive such payments and hold the same in
trust for the Agent segregate the same from its own assets and immediately pay
over to the Agent for itself, the Issuing Bank and the Lenders all such sums to
the extent necessary so that the Agent, the Issuing Bank and the Lenders shall
have been paid all Obligations owed or which may become owing.
SECTION 13.17. Confidentiality. Each of the Lenders, the Agent and the
Issuing Bank hereby agrees that it will use its best efforts to treat any
information obtained from the Credit Parties and their Affiliates in connection
with this Credit Agreement as confidential, except that each of the Lenders, the
Agent and the Issuing Bank shall be permitted to disclose information
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(i) to their Affiliates and to their (and their Affiliates') respective
officers, directors, trustees, employees, agents, auditors, attorneys and
representatives (who will be informed of the confidential nature of the
material); (ii) to prospective assignees in accordance with Section 13.3(h)
hereof, (iii) to the extent required by Applicable Law or by any subpoena or
similar legal process; (iv) to the extent requested by any bank or other
regulatory authority; (v) to the extent such information (A) becomes publicly
available other than as a result of a breach of this provision or any
confidentiality letter executed by any prospective assignee addressed to the
Borrower, its representatives or agents, (B) becomes available to any of the
Lenders, the Agent or the Issuing Bank on a nonconfidential basis from a source
other than the Credit Parties or any of their respective Affiliates which source
is not known to such Lender, the Agent or the Issuing Bank to be prohibited from
transmitting the information by a contractual, legal or fiduciary obligation or
(C) was available to any of the Lenders, the Agent or the Issuing Bank on a
nonconfidential basis prior to its disclosure to any of the Lenders, the Agent
or the Issuing Bank by any Credit Party or any of their respective Affiliates;
(vi) to the extent any Credit Party, prior to such disclosure, shall have
consented to such disclosure in writing; or (vii) in connection with the
enforcement by any Lender, the Agent or the Issuing Bank of its rights under or
in respect of this Credit Agreement.
SECTION 13.18. Entire Agreement. This Credit Agreement (including the
Exhibits and Schedules hereto) and the other Fundamental Documents represent the
entire agreement of the parties with regard to the subject matter hereof and the
terms of any letters and other documentation entered into between any of the
parties hereto (other than the Fee Letter) prior to the execution of this Credit
Agreement which relate to Loans to be made or the Letters of Credit to be issued
hereunder shall be replaced by the terms of this Credit Agreement.
SECTION 13.19. Right of Set-Off. Upon the occurrence and during the
continuance of any Event of Default, each of the Agent and the Lenders is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law and without order of or application to any court, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by such Person to or for
the credit or the account of any Credit Party against any and all of the
Obligations, irrespective of whether or not such Person shall have made any
demand under any Fundamental Document and although the Obligations may not have
been accelerated. The rights of each Lender and the Agent under this Section are
in addition to other rights and remedies which such Lender and the Agent may
have upon the occurrence and during the continuance of any Event of Default.
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IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be duly executed as of the day and the year first written.
BORROWER:
CROWN MEDIA HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President and Chief
Financial Officer
GUARANTORS:
CROWN MEDIA INTERNATIONAL, INC.
CROWN MEDIA INTERNATIONAL (SINGAPORE) INC.
CROWN ENTERTAINMENT LIMITED
CROWN MEDIA DISTRIBUTION, LLC
CROWN MEDIA INTERNATIONAL (HK)
LIMITED
HEN LLC
HEN (L) LTD.
HM HOLDINGS OF DELAWARE LLC
CROWN MEDIA UNITED STATES LLC
HM INTERMEDIARY LLC
CITI TEEVEE LLC
DOONE CITY PICTURES LLC
HALLMARK INDIA PRIVATE LIMITED
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Authorized Signatory
LENDERS:
THE CHASE MANHATTAN BANK,
individually and as Issuing Bank and Agent
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
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▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇. A.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Director
CREDIT SUISSE FIRST BOSTON
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Assistant Vice President
CITICORP USA, INC.
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Director
DEUTSCHE BANK AG NEW YORK BRANCH
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Director
ROYAL BANK OF CANADA
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Manager
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ABN AMRO
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
BANK ONE, N.A. (Main Office Chicago)
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
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