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CONSOLIDATED, AMENDED, AND RESTATED
LOAN AND SECURITY AGREEMENT
by and between
MOUNTASIA ENTERTAINMENT INTERNATIONAL, INC.,
FORTY-FIVE OF ITS DIRECT AND INDIRECT
SUBSIDIARIES IDENTIFIED HEREIN,
and
FOOTHILL CAPITAL CORPORATION
Dated as of August 22, 1996
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TABLE OF CONTENTS
1. DEFINITIONS AND CONSTRUCTION........................................... 5
1.1 Definitions...................................................... 5
1.2 Accounting Terms................................................. 34
1.3 Code............................................................. 34
1.4 Construction..................................................... 34
1.5 Schedules and Exhibits........................................... 34
1.6 Restatement...................................................... 34
2. LOAN AND TERMS OF PAYMENT.............................................. 34
2.1 Revolving Advances............................................... 34
2.2 Term Loan A...................................................... 35
2.3 Term Loan B...................................................... 35
2.4 Overadvances..................................................... 36
2.5 Interest: Rates, Payments, and Calculations..................... 36
2.6 Collection of Accounts........................................... 37
2.7 Crediting Payments; Application of Collections................... 38
2.8 Borrower's Designated Account.................................... 38
2.9 Maintenance of Loan Account; Statements of Obligations........... 39
2.10 Fees............................................................. 40
2.11 Purchase of Loans of Existing Lender Not Deemed Repayment;
Assumption of Such Purchased Loans by Each Debtor; Allocation of
Obligations on Closing Date...................................... 40
2.12 Mandatory Prepayments............................................ 41
3. CONDITIONS; TERM OF AGREEMENT.......................................... 42
3.1 Conditions Precedent to the Initial Advance and Term Loan A...... 42
3.2 Conditions Precedent to Term Loan B.............................. 46
3.3 Conditions Precedent to all Advances and the Term Loans.......... 47
3.4 Conditions Subsequent............................................ 47
3.5 Term............................................................. 49
3.6 Effect of Termination............................................ 49
3.7 Early Termination by Borrower.................................... 49
3.8 Termination Upon Event of Default................................ 49
3.9 Conditions Precedent to Re-Advancing Term Loan A or any Portion
Thereof.......................................................... 49
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4. CREATION OF SECURITY INTEREST.......................................... 50
4.1 Grant of Security Interest....................................... 50
4.2 Negotiable Collateral............................................ 51
4.3 Collection of Accounts, General Intangibles, and Negotiable
Collateral....................................................... 51
4.4 Delivery of Additional Documentation Required.................... 51
4.5 Power of Attorney................................................ 52
4.6 Right to Inspect................................................. 52
4.7 Quitclaim........................................................ 53
5. REPRESENTATIONS AND WARRANTIES......................................... 53
5.1 No Encumbrances.................................................. 53
5.2 Equipment........................................................ 53
5.3 Location of Inventory and Equipment.............................. 53
5.4 Inventory Records................................................ 53
5.5 Location of Chief Executive Office; FEIN......................... 53
5.6 Due Organization and Qualification; Subsidiaries................. 53
5.7 Due Authorization; No Conflict................................... 54
5.8 Litigation....................................................... 55
5.9 No Material Adverse Change. ..................................... 55
5.10 Solvency......................................................... 56
5.11 Employee Benefits................................................ 56
5.12 Environmental Condition.......................................... 56
6. AFFIRMATIVE COVENANTS.................................................. 56
6.1 Accounting System................................................ 57
6.2 Collateral Reporting............................................. 57
6.3 Financial Statements, Reports, Certificates...................... 57
6.4 Tax Returns...................................................... 58
6.5 Intentionally Omitted............................................ 58
6.6 Intentionally Omitted............................................ 58
6.7 Title to Equipment............................................... 59
6.8 Maintenance of Equipment......................................... 59
6.9 Taxes............................................................ 59
6.10 Insurance........................................................ 59
6.11 No Setoffs or Counterclaims...................................... 61
6.12 Location of Inventory and Equipment.............................. 61
6.13 Compliance with Laws............................................. 61
6.14 Employee Benefits................................................ 62
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6.15 Leases........................................................... 62
7. NEGATIVE COVENANTS..................................................... 63
7.1 Indebtedness..................................................... 63
7.2 Liens............................................................ 64
7.3 Restrictions on Fundamental Changes.............................. 64
7.4 Disposal of Assets and Related Matters........................... 64
7.5 Change Name...................................................... 65
7.6 Guarantee........................................................ 65
7.7 Nature of Business............................................... 65
7.8 Prepayments and Amendments....................................... 65
7.9 Change of Control................................................ 65
7.10 Consignments..................................................... 65
7.11 Distributions.................................................... 65
7.12 Accounting Methods............................................... 66
7.13 Investments...................................................... 66
7.14 Transactions with Affiliates..................................... 66
7.15 Suspension....................................................... 66
7.16 Use of Proceeds.................................................. 66
7.17 Change in Location of Chief Executive Office; Inventory and
Equipment with Bailees........................................... 67
7.18 No Prohibited Transactions Under ERISA........................... 67
7.19 Financial Covenants.............................................. 68
8. EVENTS OF DEFAULT...................................................... 69
9. FOOTHILL'S RIGHTS AND REMEDIES......................................... 72
9.1 Rights and Remedies.............................................. 72
9.2 Remedies Cumulative.............................................. 74
10. TAXES AND EXPENSES..................................................... 74
11. WAIVERS; INDEMNIFICATION............................................... 75
11.1 Demand; Protest; etc............................................. 75
11.2 Foothill's Liability for Collateral.............................. 75
11.3 Indemnification.................................................. 75
11.4 Suretyship Waivers and Consents.................................. 76
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12. NOTICES................................................................ 79
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER............................. 80
14. DESTRUCTION OF BORROWER'S DOCUMENTS.................................... 81
15. GENERAL PROVISIONS..................................................... 81
15.1 Effectiveness.................................................... 81
15.2 Successors and Assigns........................................... 82
15.3 Section Headings................................................. 82
15.4 Interpretation................................................... 82
15.5 Severability of Provisions....................................... 82
15.6 Amendments in Writing............................................ 82
15.7 Counterparts; Telefacsimile Execution............................ 82
15.8 Revival and Reinstatement of Obligations......................... 83
15.9 Integration...................................................... 83
15.10 Covenant by Foothill Regarding Section 3.2(c).................... 83
SCHEDULES AND EXHIBITS
Schedule P-1 Permitted Liens
Schedule R-1 Real Property Collateral
Schedule 5.5 Debtor ▇▇▇▇▇
Schedule 5.6 Subsidiaries
Schedule 5.8 Litigation
Schedule 5.12 Environmental Reports
Schedule 6.12 Location of Inventory and Equipment
Schedule 7.1 Scheduled Indebtedness
Exhibit I Location of FunCenters
Exhibit C-1 Form of Compliance Certificate
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Exhibit I
Mountasia Entertainment International, Inc.
FunCenters
Location Fee Simple Lease
-------- ---------- -----
Mountasia FunCenters:
Mobile, AL X
Huntsville, AL X
Montgomery, AL X
Roswell, GA X
▇▇▇▇ ▇▇▇▇, ▇▇ ▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ X
Jacksonville, FL X
Pensacola, FL X
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ X
Henderson, NV (NEF Acquisition) X
Houston, TX X
Arlington, TX X
Plano, TX X
Kingwood, TX X
McAllen, TX (NEF Acquisition) X
Greenville, SC X
Spartanburg, SC X
----------- ------------ --------
Total Mountasia FunCenter 12 + 6 = 18
----------- ------------ --------
Malibu Grand Prix FunCenters:
Tempe, AZ
Tucson, AZ X
Fresno, CA X
N. Hollywood, CA X
▇▇▇▇▇▇ Hills, CA X
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ X
San Diego, CA X
Denver, CO X
Miami, FL (NEF Acquisition) X X
Orlando, FL X
Tampa, FL X X
Kennesaw, GA X
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Norcross, GA X
Lenexa, KS
Mount Laurel, NJ X
Cincinnati, OH X
Columbus, OH X
Portland, OR X
Austin, TX X
Dallas, TX X
Houston, TX X
San Antonio, TX X
----------- ------------ --------
Total Malibu Grand Prix 4 + 19 = 23
FunCenters
----------- ------------ --------
Total Combined Facilities 16 + 25 = 41
=========== ============ ========
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CONSOLIDATED, AMENDED, AND RESTATED
LOAN AND SECURITY AGREEMENT
THIS CONSOLIDATED, AMENDED, AND RESTATED LOAN AND SECURITY AGREEMENT (this
"Agreement"), is entered into as of August 22, 1996, between FOOTHILL CAPITAL
CORPORATION, a California corporation ("Foothill"), with a place of business
located at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇, MOUNTASIA ENTERTAINMENT INTERNATIONAL, INC., a Georgia corporation
("Mountasia"), with its chief executive office located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, MOUNTASIA MANAGEMENT COMPANY, a Georgia
corporation ("MMC"), with its chief executive office located at ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, MOUNTASIA PARTNERS I, INC., a
Georgia corporation ("MPI"), with its chief executive office located at ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, MALIBU GRAND PRIX
CORPORATION, a Delaware corporation ("MGPC"), with its chief executive office
located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, MIAMI
CASTLE MGPC, INC., a Florida corporation ("Miami"), with its chief executive
office located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
TEMPE MGPC, INC., an Arizona corporation ("Tempe"), with its chief executive
office located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
TUCSON MGPC, INC., an Arizona corporation ("Tucson"), with its chief executive
office located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
FRESNO MGPC, INC., a California corporation ("Fresno"), with its chief executive
office located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
NORTH HOLLYWOOD CASTLE MGPC, INC., a California corporation ("NHC"), with its
chief executive office located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ HILLS MGPC, INC., a California corporation ("PH"), with
its chief executive office located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ HILLS SHOWBOAT MGPC, INC., a California
corporation ("PHS"), with its chief executive office located at ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, REDONDO BEACH CASTLE MGPC, INC.,
a California corporation ("RBC"), with its chief executive office located at
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, REDWOOD CITY CASTLE
MGPC, INC., a California corporation ("RCC"), with its chief executive office
located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, REDWOOD
CITY MGPC, INC., a California corporation ("RC"), with its chief executive
office located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
SAN DIEGO MGPC, INC., a California corporation ("San Diego"), with its chief
executive office located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, DENVER MGPC, INC., a Colorado corporation ("Denver"), with its
chief executive office located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ MGPC, INC., a Florida corporation ("OC"), with
-1-
its chief executive office located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ORLANDO MGPC, INC., a Florida corporation
("Orlando"), with its chief executive office located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, TAMPA CASTLE MGPC, INC., a Florida
corporation ("TC"), with its chief executive office located at ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, TAMPA MGPC, INC., a Florida
corporation ("Tampa"), with its chief executive office located at ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, LENEXA MGPC, INC., a Kansas
corporation ("Lenexa"), with its chief executive office located at ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, MT. LAUREL MGPC, INC., a New
Jersey corporation ("Mt.Laurel"), with its chief executive office located at
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, COLUMBUS MGPC,
INC., an Ohio corporation ("Columbus"), with its chief executive office located
at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, CINCINNATI MGPC,
INC., an Ohio corporation ("Cincinnati"), with its chief executive office
located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, PORTLAND
MGPC, INC., an Oregon corporation ("Portland"), with its chief executive office
located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, AUSTIN
MGPC, INC., a Texas corporation ("Austin"), with its chief executive office
located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, DALLAS
CASTLE MGPC, INC., a Texas corporation ("DC"), with its chief executive office
located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, DALLAS
MGPC, INC., a Texas corporation ("Dallas"), with its chief executive office
located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, HOUSTON
CASTLE MGPC, INC., a Texas corporation ("HC"), with its chief executive office
located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, HOUSTON
II MGPC, INC., a Texas corporation ("Houston"), with its chief executive office
located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, SAN
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ MGPC, INC., a Texas corporation ("SAC"), with its chief executive
office located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
SAN ANTONIO MGPC, INC., a Texas corporation ("San Antonio"), with its chief
executive office located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, MOUNTASIA DEVELOPMENT COMPANY, a Georgia corporation ("MDC"),
with its chief executive office located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, MALIBU GRAND PRIX DESIGN & MANUFACTURING, INC., a
California corporation ("MGPDMI"), with its chief executive office located at
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, MALIBU GRAND PRIX
FINANCIAL SERVICES, INC., a California corporation ("MGPFSI"), with its chief
executive office located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, OFF TRACK MANAGEMENT, INC., a California corporation ("Off
Track"), with its chief executive office located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, MGP SPECIAL, INC., a California corporation
("Special"), with its chief executive office located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
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▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, AMUSEMENT MANAGEMENT FLORIDA, INC., a
Florida corporation ("Amusement"), with its chief executive office located at
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, MALIBU GRAND PRIX
CONSULTING, INC., a California corporation ("Consulting"), with its chief
executive office located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, MOUNTASIA - MEI INTERNATIONAL, INC., a Georgia corporation
("MMEII"), with its chief executive office located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, MOUNTASIA - MEI LIMITED COMPANY, INC., a
California corporation ("MMEILC"), with its chief executive office located at
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, MOUNTASIA - MEI
CALIFORNIA, INC., a California corporation ("MCNC"), with its chief executive
office located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
MOUNTASIA - MEI CALIFORNIA LIMITED PARTNERSHIP, a California limited partnership
("MMEICLP"), with its chief executive office located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, MOUNTASIA - MEI MANUFACTURING COMPANY,
INC., a Georgia corporation ("MMEIMCI"), with its chief executive office located
at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, AMUSEMENT CO.,
INC., a Delaware corporation ("ACI"), with its chief executive office located at
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, and AMUSEMENT CO.
PARTNERS, INC., a Delaware corporation ("ACPI"), with its chief executive office
located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇.
WHEREAS, Borrower develops, owns, and operates family-oriented
entertainment centers commonly called Mountasia Family FunCenters and Malibu
Grand Prix Centers (individually a "FunCenter" and collectively the
"FunCenters") either for its own account or on behalf of third parties,
including limited partnerships in which Borrower may be a partner;
WHEREAS, Borrower, on the Closing Date after giving effect to the
consummation of the NEF Acquisition, owns 41 FunCenters, including the 18
Mountasia FunCenters and 23 Malibu Grand Prix FunCenters identified on Exhibit I
of which 16 are located on land owned by Borrower, and of which 25 are located
on land leased by Borrower from a lessor that is other than a Debtor, and in
addition, Borrower operates the 4 FunCenters identified on page 18 of the Most
Recent 10-K as Santa Clarita, Columbus, North Richland Hills, and Willowbrook,
on behalf of limited partnerships that own the same.
WHEREAS, Borrower has certain term and revolving line of credit loans
outstanding ("Existing Loans") that are owed to MEI Financings, L.P., a Delaware
limited partnership ("MEIF"), that were acquired, in part, by assignment from
NationsBank, National Association (South), as successor to NationsBank of
Georgia, N.A. and as
-3-
successor by merger to Bank South, and that, in addition, include loans and
advances made by MEIF after receiving such assignment (MEIF, both in such
capacity as an assignee, and as a lender subsequent to such assignment, the
"Existing Lender") which are governed by and subject to certain loan agreements,
guaranties, and real and personal property collateral security documents more
particularly described in Schedule I of that certain Purchase and Sale
Agreement, of even date herewith, ("Loan Purchase Agreement") by and between
Existing Lender, as seller, and Foothill, as purchaser;
WHEREAS, one of the Existing Loans (the "NEF Loan") was an obligation of
NEF owed to Existing Lender which Mountasia agreed to purchase from Existing
Lender, and which NEF Loan has become a direct obligation of Mountasia by virtue
of Mountasia's assumption of such Existing Loan in connection with the NEF
Acquisition;
WHEREAS, upon the assumption of the NEF Loan by Mountasia, the conditional
obligations of Mountasia to Existing Lender with respect to the purchase of the
NEF Loan (as set forth in the "Note Purchase Agreement" referred to below in
these recitals) have become merged into the obligations of Mountasia with
respect to the NEF Loan as assumed by Mountasia and restated hereby, with the
collateral securing such conditional purchase obligation becoming collateral for
the assumed obligations of Mountasia with respect to the NEF Loan and for other
Obligations of Mountasia under the Loan Documents;
WHEREAS, the Loan Purchase Agreement provides that, among other things,
Foothill will acquire from Existing Lender the Existing Loans, and all
documents, agreements and instruments evidencing and securing the same,
including all collateral, security, interests and rights of Existing Lender
thereunder, and including all guaranties thereof by any Debtor, without any
offset, counterclaim, or defense of Borrower thereunder, and, immediately upon
the closing thereof, the Existing Loans will be consolidated into and restated
as the Term Loans and the right to receive Advances up to the Maximum Revolving
Amount in accordance with and subject to this Agreement and the other Loan
Documents referenced herein, with the Debtors other than Mountasia agreeing that
their obligations as guarantors of the Existing Loans shall be transformed into
primary obligations as co-borrowers hereunder, but preserving the continuity and
outstanding nature of such obligations, it being understood that no repayment of
the Existing Loans is being effected hereby, but merely an amendment and
restatement in accordance with the terms hereof;
WHEREAS, by executing and delivering this Agreement, the Debtors and each
of them hereby consent to the purchase by Foothill from Existing Lender of the
Existing Loans in accordance with the terms and provisions of the Purchase and
Sale Agreement and their amendment and restatement as herein provided; and
-4-
WHEREAS, in furtherance of the same and the intent of the Loan Purchase
Agreement, Borrower and Foothill desire to and do hereby amend, replace, and
restate in their entirety (a) that certain loan agreement and promissory note
dated as of March 25, 1994, between Mountasia and Existing Lender, as heretofore
amended, and as assigned to Foothill by Existing Lender, (b) that certain Credit
Agreement, dated as of November 14, 1994, between Mountasia and Existing Lender,
as heretofore amended, and as assigned to Foothill by Existing Lender, (c) that
certain Loan Agreement, dated as of August 1, 1994, between Mountasia and
Existing Lender, as heretofore amended, and as assigned to Foothill by Existing
Lender, (d) that certain Construction and Working Capital Loan Agreement dated
as of May 9, 1995, between Existing Lender and NEF, as assumed by Mountasia, as
heretofore amended, and as assigned to Foothill by Existing Lender, (e) that
certain Note Purchase Agreement dated as of May 9, 1995, between Existing Lender
and Mountasia (pertaining to the loan referenced in clause (d) above of this
paragraph), as heretofore amended, if at all, and as assigned to Foothill by
Existing Lender, and (f) all promissory notes, guaranties, or personal property
security agreements at any time heretofore executed and delivered by any Debtor
to Existing Lender with respect to any of the foregoing (but not including any
Real Property security documents, which are separately being assigned or amended
and which are not restated hereby), with the terms and provisions of this
Agreement (such amended and restated agreements, collectively, the "Existing
Loan Agreements").
NOW, the parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. As used in this Agreement, the following terms
shall have the following definitions:
"Account Debtor" means any Person who is or who may become obligated
under, with respect to, or on account of, an Account.
"Accounts" means all currently existing and hereafter arising
accounts, contract rights, and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods or the rendition of services by
Borrower, irrespective of whether earned by performance, and any and all credit
insurance, guaranties, or security therefor.
"ACI" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"ACPI" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
-5-
"Acquired Indebtedness" means Indebtedness of a Person existing at
the time such Person becomes an Unrestricted Subsidiary or is assumed in
connection with the acquisition of assets or properties from such Person, and
not incurred by such Person in connection with, or in anticipation of, such
Person becoming an Unrestricted Subsidiary or such acquisition.
"Acquisition" means any purchase or other acquisition by Mountasia
or one of its Subsidiaries of the Securities of a third Person or all or
substantially all of the assets or properties of a third Person, without regard
to how such purchase or other acquisition may be accomplished.
"Adjusted Net Worth" means, as of any date of determination, the sum
of (a) the difference of (i) Borrower's total stockholder's equity, minus (ii)
the sum of (w) all Intangible Assets of Borrower, (x) all of Borrower's prepaid
expenses, (y) all amounts due to Borrower from non-Borrower Affiliates,
calculated on a consolidated basis, and (z) all investments in partnerships or
joint ventures; provided that Adjusted Net Worth shall not be diminished or
reduced by reason of any non-cash investment asset writedowns by Borrower that
occur after June 30, 1996, plus (without duplication of any amount included in
clause (a)), (b) the aggregate issue price of outstanding preferred Securities
and the aggregate principal amount of Existing Subordinated Debt of Mountasia.
"Advances" has the meaning set forth in Section 2.1(a).
"Affiliate" means, as applied to any Person, any other Person who
directly or indirectly controls, is controlled by, is under common control with
or is a director or officer of such Person. For purposes of this definition,
"control" means the possession, directly or indirectly, of the power to vote 5%
or more of the securities having ordinary voting power for the election of
directors or the direct or indirect power to direct the management and policies
of a Person.
"Agreement" has the meaning set forth in the preamble hereto.
"Amusement" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"Amusement Lease Termination" means the termination, upon
consummation of the NEF Acquisition, of the lease affecting the Real Property on
which the Miami, Florida FunCenter is located.
"Austin" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
-6-
"Authorized Officer" means those officers or employees of Borrower
identified from time to time by the chief executive officer or chief financial
officer of Mountasia in a writing delivered to Foothill.
"Availability" means the amount of money that Borrower is entitled
to borrow as Advances under Section 2.1, such amount being the difference
derived when (a) the sum of the principal amount of Advances then outstanding
(including any amounts that Foothill may have paid for the account of Borrower
pursuant to any of the Loan Documents and that have not been reimbursed by
Borrower) is subtracted from (b) the Maximum Revolving Amount.
"Average Unused Portion of the Maximum Revolving Amount" means, as
of any date of determination, (a) the Maximum Revolving Amount, less (b) the
average Daily Balance of Advances that were outstanding during the immediately
preceding month.
"Average Unused Portion of the Term Loan A Commitment" means, as of
any date of determination, (a) the Term Loan A Commitment, less (b) the average
Daily Balance of Term Loan A during the immediately preceding month.
"Bankruptcy Code" means the United States Bankruptcy Code (11 U.S.C.
ss. 101 et seq.), as amended, and any successor statute.
"Benefit Plan" means a "defined benefit plan" (as defined in Section
3(35) of ERISA) for which Borrower, any Subsidiary of Borrower, or any ERISA
Affiliate has been an "employer" (as defined in Section 3(5) of ERISA) within
the past six years.
"Blocked Account" shall mean a depositary account established
pursuant to a Blocked Account Agreement.
"Blocked Account Agreement" means any Blocked Account Agreement, in
form and substance satisfactory to Foothill, among Borrower, Foothill, and a
Blocked Account Bank.
"Blocked Account Bank" means such bank identified by Borrower in
writing to, and approved by, Foothill.
"Borrower" means Mountasia, MMC, MPI, MGPC, Miami, Tempe, Tucson,
Fresno, NHC, PH, PHS, RBC, RCC, RC, San Diego, Denver, OC, Orlando, TC, Tampa,
Lenexa, Mt.Laurel, Columbus, Cincinnati, Portland, Austin, DC, Dallas, HC,
Houston, SAC, San Antonio, MDC, MGPDMI, MGPFSI, Off Track, Special, Amusement,
Consulting, MMEII, MMEILC, MCNC, MMEICLP, MMEIMCI, ACI, and ACPI, and
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each of them, and any one or more of them, individually and collectively, and
jointly and severally.
"Borrower's Books" means all of Borrower's books and records
including: ledgers; records indicating, summarizing, or evidencing Borrower's
properties or assets (including the Collateral) or liabilities; all information
relating to Borrower's business operations or financial condition; and all
computer programs, disk or tape files, printouts, runs, or other computer
prepared information.
"Borrower's Designated Account" means account number 2320839090 of
Mountasia maintained with Borrower's Designated Account Bank, or such other
deposit account (located within the United States) of Borrower designated, in
writing and from time to time, by Mountasia to Foothill prior to the date of the
establishment of such other deposit account.
"Borrower's Designated Account Bank" means NationsBank, National
Association (South), whose office is located at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, and whose ABA number is ▇▇▇-▇▇▇-▇▇▇.
"Business Day" means any day that is not a Saturday, Sunday, or
other day on which national banks are authorized or required to close.
"Capital Expenditures" means expenditures made or liabilities
incurred by Borrower for the acquisition of any fixed assets or improvements,
replacements, substitutions, or additions thereto that have a useful life of
more than one year, including the total principal portion of Capitalized Lease
Obligations, determined on a consolidated basis and in accordance with GAAP.
"Capitalized Lease Obligation" means any Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.
"Change of Control" shall be deemed to have occurred at such time as
(a) a "person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934), other than Hampstead and other than
holders of the NEF Debentures (in connection with an exchange of such
debentures, up to, but not in excess of, 30% of the total voting power of all
classes of stock of Mountasia), becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly,
of more than 20% of the total voting power of all classes of stock then
outstanding of Mountasia entitled to vote in the election of directors, (b)
Mountasia shall fail to own and control, directly or indirectly, 100% of the
outstanding voting stock
-8-
(or other voting interests having ordinary voting power) of each of its
Restricted Subsidiaries, or (c) Mountasia shall fail to own and control,
directly or indirectly, at least 50.1% of the outstanding voting stock (or other
voting interests having ordinary voting power) of any of the Unrestricted
Subsidiaries.
"Cincinnati" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"Closing Date" means the date of the first to occur of the making of
the initial Advance or the funding of either of the Term Loans, including by
means of the closing under the Loan Purchase Agreement.
"Code" means the California Uniform Commercial Code.
"Collateral" means each of the following:
(a) the Accounts,
(b) Borrower's Books,
(c) the Equipment,
(d) the General Intangibles,
(e) the Inventory,
(f) the Negotiable Collateral,
(g) the Real Property Collateral,
(h) any money, or other assets of Borrower that now or hereafter
come into the possession, custody, or control of Foothill, and
(i) the proceeds and products, whether tangible or intangible, of
any of the foregoing, including proceeds of insurance covering
any or all of the Collateral, and any and all Accounts,
Borrower's Books, Equipment, General Intangibles, Inventory,
Negotiable Collateral, Real Property, money, deposit accounts,
or other tangible or intangible property resulting from the
sale, exchange, collection, or other disposition of any of the
foregoing, or any portion thereof or interest therein, and the
proceeds thereof;
provided that, to the extent that Borrower acquires or develops new
FunCenter-related assets in compliance with the provisions of this
Agreement utilizing secured Purchase Money Indebtedness permitted by
the provisions of this Agreement, the Collateral shall not include
such acquired or developed assets to the extent that the inclusion
of such assets would breach any requirement that the prior consent
be obtained of such secured third party purchase money financier, so
long as Borrower uses its reasonable best
-9-
efforts to obtain such consent as soon as practicable, and provided
that such assets immediately and automatically shall be included in
the Collateral if and when Borrower obtains such consent or if such
consent is no longer necessary, but Foothill's security interest in
such assets shall be junior in priority to the security interest of
such secured third party purchase money financier to the extent that
such secured purchase money financing was obtained in compliance
with the provisions of this Agreement and as provided in any
subordination agreement between Foothill and such financier.
"Collateral Access Agreement" means a landlord waiver, mortgagee
waiver, bailee letter, or acknowledgement agreement of any warehouseman,
processor, lessor, or other Person in possession of, having a Lien upon, or
having rights or interests in the Real Property Collateral, Equipment or
Inventory, in each case, in form and substance satisfactory to Foothill.
"Collections" means all cash, checks, notes, instruments, and other
items of payment (including, insurance proceeds, proceeds of cash sales, rental
proceeds, and tax refunds).
"Columbus" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"Compliance Certificate" means a certificate substantially in the
form attached hereto as Exhibit C-1 and delivered by the chief accounting
officer of Borrower to Foothill.
"consolidated" means the consolidation, in accordance with GAAP, of
the accounts or other items as to which such term applies; provided, however,
that, for purposes of this Agreement, including the financial covenants, (but
excluding provisions related to financial statements of Borrower, which
statements shall include Santa Clarita and shall not include the Unrestricted
Subsidiaries), such term shall not result in or give effect to the consolidation
with any other Person of the respective assets, liabilities income or losses of
Santa Clarita or the Unrestricted Subsidiaries.
"Consulting" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"Daily Balance" means the amount of an Obligation owed at the end of
a given day.
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"Dallas" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"DC" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"Debt Service" means, with respect to any fiscal period of a Person,
on a consolidated basis, (a) scheduled principal payments or the equivalent
coming due during such period with respect to Indebtedness of such Person owed
to (i) Foothill, or (ii) financiers of games, vehicles, equipment, fixtures,
buildings, improvements, or Real Property (not including, however, any unsecured
trade payables that were incurred in the ordinary course of Borrower's
business), which Indebtedness would be shown as a liability on a consolidated
balance sheet of such Person prepared in accordance with GAAP, plus (b) Interest
Expense of such Person during such period.
"Debt Service Ratio" means, with respect to any Person for any
Relevant Measuring Period, the ratio of (a) Operating Cash Flow, to (b) Debt
Service for such period, all as determined on a consolidated basis in accordance
with GAAP.
"Debtor" means each and any of the entities that Borrower comprises.
"deems itself insecure" means that the Person deems itself insecure
in accordance with the provisions of Section 1208 of the Code.
"Default" means an event, condition, or default that, with the
giving of notice, the passage of time, or both, would be an Event of Default.
"Denver" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"Designated Claims" means any claims of any nature of Borrower, for
itself or on behalf of its present or former shareholders, against
professionals, based on transactions, events, or occurrences that transpired
before the Closing Date in relation to the provision of professional services,
without regard to whether such claims are disputed or unliquidated as of the
Closing Date.
"Designated Event of Default" means any Event of Default (a) arising
under Section 8.1 hereof, or (b) based on the breach of any provision of Article
7.
-11-
"Designated Obligor" means a Person obligated with respect to a
Designated Claim, without regard to whether liability is disputed or
unliquidated, and without regard to whether a Suit has been commenced to enforce
or collect the Designated Claim.
"Disbursement Letter" means an instructional letter executed and
delivered by Borrower to Foothill regarding the extensions of credit to be made
on the Closing Date, the form and substance of which shall be satisfactory to
Foothill.
"Dollars or $" means United States dollars.
"Durham" means Durham Capital Corporation, a Delaware corporation.
"Early Termination Premium" has the meaning set forth in Section
3.7.
"EBITDA" means, with respect to any fiscal period of a Person, on a
consolidated basis, such Person's earnings, excluding extraordinary items
(determined in accordance with GAAP), plus (except to the extent attributable to
extraordinary items (determined in accordance with GAAP)) the amount of any
interest, taxes, depreciation, and amortization deducted in arriving at such
earnings.
"Eligible Transferee" means (a) a commercial bank organized under
the laws of the United States, or any state thereof, and having total assets in
excess of $50,000,000; (b) a commercial bank organized under the laws of any
other country which is a member of the Organization for Economic Cooperation and
Development or a political subdivision of any such country, and having total
assets in excess of $50,000,000; provided that such bank is acting through a
branch or agency located in the United States; (c) a finance company, insurance
company, or other financial institution or fund that is engaged in making,
purchasing, or investing in commercial loans in the ordinary course of its
business and having total available assets in excess of $50,000,000; (d) any
Affiliate (other than individuals) of Foothill; and (e) any other Person
approved by Foothill and Borrower, with such approval not to be unreasonably
withheld, conditioned, or delayed.
"Equipment" means all of Borrower's present and hereafter acquired
machinery, games, machine tools, motors, equipment, furniture, furnishings,
fixtures, vehicles (including go-karts, racing cars, motor vehicles, and
trailers), tools, parts, and goods (other than farm products or Inventory),
wherever located, including, (a) any interest of Borrower in any of the
foregoing, and (b) all attachments, accessories, accessions, replacements,
substitutions, additions, and improvements to any of the foregoing.
-12-
"ERISA" means the Employee Retirement Income Security Act of 1974,
29 U.S.C. ▇▇.▇▇. 1000 et seq., amendments thereto, successor statutes, and
regulations or guidance promulgated thereunder.
"ERISA Affiliate" means (a) any corporation subject to ERISA whose
employees are treated as employed by the same employer as the employees of
Borrower under IRC Section 414(b), (b) any trade or business subject to ERISA
whose employees are treated as employed by the same employer as the employees of
Borrower under IRC Section 414(c), (c) solely for purposes of Section 302 of
ERISA and Section 412 of the IRC, any organization subject to ERISA that is a
member of an affiliated service group of which Borrower is a member under IRC
Section 414(m), or (d) solely for purposes of Section 302 of ERISA and Section
412 of the IRC, any party subject to ERISA that is a party to an arrangement
with Borrower and whose employees are aggregated with the employees of Borrower
under IRC Section 414(o).
"ERISA Event" means (a) a Reportable Event with respect to any
Benefit Plan or Multiemployer Plan, (b) the withdrawal of Borrower, any of its
Subsidiaries or ERISA Affiliates from a Benefit Plan during a plan year in which
it was a "substantial employer" (as defined in Section 4001(a)(2) of ERISA), (c)
the providing of notice of intent to terminate a Benefit Plan in a distress
termination (as described in Section 4041(c) of ERISA), (d) the institution by
the PBGC of proceedings to terminate a Benefit Plan or Multiemployer Plan, (e)
any event or condition (i) that provides a basis under Section 4042(a)(1), (2),
or (3) of ERISA for the termination of, or the appointment of a trustee to
administer, any Benefit Plan or Multiemployer Plan, or (ii) that may result in
termination of a Multiemployer Plan pursuant to Section 4041A of ERISA, (f) the
partial or complete withdrawal within the meaning of Sections 4203 and 4205 of
ERISA, of Borrower, any of its Subsidiaries or ERISA Affiliates from a
Multiemployer Plan, or (g) providing any security to any Plan under Section
401(a)(29) of the IRC by Borrower or its Subsidiaries or any of their ERISA
Affiliates.
"Event of Default" has the meaning set forth in Section 8.
"Existing Lender" has the meaning set forth in the recitals to this
Agreement.
"Existing Loan Agreements" has the meaning set forth in the recitals
to this Agreement.
"Existing Loans" has the meaning set forth in the recitals to this
Agreement.
"Existing Subordinated Debt" means (a) the Ten Percent Debentures,
(b) the Nine Percent Debentures, and (c) the NEF Debentures.
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"Exit Fee" has the meaning ascribed to such term in Section 2.10(a).
"FEIN" means Federal Employer Identification Number.
"Foothill" has the meaning set forth in the preamble to this
Agreement.
"Foothill Account" has the meaning set forth in Section 2.6.
"Foothill Expenses" means all: costs or expenses (including taxes,
and insurance premiums) required to be paid by Borrower under any of the Loan
Documents that are paid or incurred by Foothill; fees or charges paid or
incurred by Foothill in connection with Foothill's transactions with Borrower,
including, fees or charges for photocopying, notarization, couriers and
messengers,telecommunication, public record searches (including tax lien,
litigation, and ucc searches and including searches with the patent and
trademark office, the copyright office, or the department of motor vehicles),
filing, recording, publication, appraisal (including periodic Personal Property
Collateral or Real Property Collateral appraisals), real estate surveys, real
estate title policies and endorsements, and environmental audits; costs and
expenses incurred by Foothill in the disbursement of funds to Borrower (by wire
transfer or otherwise); charges paid or incurred by Foothill resulting from the
dishonor of checks; costs and expenses paid or incurred by Foothill to correct
any default or enforce any provision of the Loan Documents, or in gaining
possession of, maintaining, handling, preserving, storing, shipping, selling,
preparing for sale, or advertising to sell the Personal Property Collateral or
the Real Property Collateral, or any portion thereof, irrespective of whether a
sale is consummated; costs and expenses paid or incurred by Foothill in
examining Borrower's Books; costs and expenses of third party claims or any
other suit paid or incurred by Foothill in enforcing or defending the Loan
Documents or in connection with the transactions contemplated by the Loan
Documents or Foothill's relationship with Borrower; and Foothill's reasonable
attorneys fees and expenses incurred in advising, structuring, drafting,
reviewing, administering, amending, terminating, enforcing (including attorneys
fees and expenses incurred in connection with a "workout," a "restructuring," or
an Insolvency Proceeding concerning Borrower or any guarantor of the
Obligations), defending, or concerning the Loan Documents, irrespective of
whether suit is brought.
"Fresno" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"FunCenter" shall have the meaning ascribed to such term in the
recitals to this Agreement.
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"Fundamental Change Transaction" shall have the meaning ascribed to
such term in Section 7.3.
"Future Subordinated Debt" means Indebtedness of Mountasia other
than the Existing Subordinated Debt (which such Indebtedness shall not be
co-made, endorsed, guarantied by, or otherwise be recourse to, any of
Mountasia's Subsidiaries) that is on terms and conditions, including repayment
terms and subordination provisions, acceptable to Foothill in its sole
discretion.
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States, consistently applied.
"General Intangibles" means all of Borrower's present and future
general intangibles and other personal property (including contract rights,
rights arising under common law, statutes, or regulations, choses or things in
action (including any claim in tort or contract against third Persons and any
settlement, judgment award, or proceeds thereof or therefrom), goodwill,
patents, trade names, trademarks, servicemarks, copyrights, blueprints,
drawings, purchase orders, customer lists, monies due or recoverable from
pension funds, route lists, rights to payment and other rights under any royalty
or licensing agreements, infringement claims, computer programs, information
contained on computer disks or tapes, literature, reports, catalogs, deposit
accounts, insurance premium rebates, tax refunds, and tax refund claims), other
than goods, Accounts, and Negotiable Collateral.
"Governing Documents" means the certificate or articles of
incorporation, by-laws, or other organizational or governing documents of any
Person.
"Hampstead" means The Hampstead Group, L.L.C., a Delaware limited
liability company, MEI Holdings, L.P., a Delaware limited partnership, or MEI
Financings, L.P., a Delaware limited partnership.
"Hazardous Materials" means (a) substances that are defined or
listed in, or otherwise classified pursuant to, any applicable laws or
regulations as "hazardous substances," "hazardous materials," "hazardous
wastes," "toxic substances," or any other formulation intended to define, list,
or classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
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"HC" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"Houston" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"Houston Note" means that certain senior secured seller carryback
promissory note with an outstanding balance of approximately $1,909,000 as of
the Closing Date, made by Mountasia in connection with Mountasia's acquisition
of the Houston, Texas FunCenter, in the form heretofore provided by Mountasia to
Foothill and certified to Foothill by an Authorized Officer of Mountasia as
being accurate and complete.
"Inactive Subsidiary" means any one or more of MGPFSI, Special,
Amusement, Consulting, MMEII, MMEILC, MCNC, MCIMCI, ACI, or ACPI.
"Indebtedness" means: (a) all obligations of Borrower for borrowed
money, (b) all obligations of Borrower evidenced by bonds, debentures, notes, or
other similar instruments and all reimbursement or other obligations of Borrower
in respect of letters of credit, bankers acceptances, interest rate swaps, or
other financial products, (c) all obligations of Borrower under capital leases,
(d) all obligations or liabilities of others secured by a Lien on any property
or asset of Borrower, irrespective of whether such obligation or liability is
assumed, (e) any obligation of Borrower guaranteeing or intended to guarantee
(whether guaranteed, endorsed, co-made, discounted, or sold with recourse to
Borrower) any indebtedness, lease, dividend, letter of credit, or other
obligation of any other Person, and (f) all accounts payable of Borrower with
respect to trade debt.
"Insolvency Proceeding" means any proceeding commenced by or against
any Person under any provision of the Bankruptcy Code or under any other
bankruptcy or insolvency law, assignments for the benefit of creditors, formal
or informal moratoria, compositions, extensions generally with creditors, or
proceedings seeking reorganization, arrangement, or other similar relief.
"Intangible Assets" means, with respect to any Person, that portion
of the book value of all of such Person's assets that would be treated as
intangibles under GAAP.
"Interest Coverage Ratio" means, with respect to any Person for any
Relevant Measuring Period, the ratio of (a) Operating Cash Flow, to (b) Interest
Expense for such period, all as determined on a consolidated basis in accordance
with GAAP.
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"Interest Expense" means, with respect to any fiscal period, the
cash interest expense incurred by a Person for such period as determined on a
consolidated basis in accordance with GAAP.
"Inventory" means all present and future inventory in which Borrower
has any interest, including goods held for sale or lease or to be furnished
under a contract of service and all of Borrower's present and future raw
materials, work in process, finished goods, and packing and shipping materials,
wherever located.
"Investment Agreement" means the Investment Agreement between
Hampstead and Mountasia, as heretofore amended, in the form heretofore provided
by Mountasia to Foothill and certified to Foothill by an Authorized Officer of
Mountasia as being accurate and complete.
"IRC" means the Internal Revenue Code of 1986, as amended, and the
regulations thereunder.
"Lenexa" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"Lien" means any interest in property securing an obligation owed
to, or a claim by, any Person other than the owner of the property, whether such
interest shall be based on the common law, statute, or contract, whether such
interest shall be recorded or perfected, and whether such interest shall be
contingent upon the occurrence of some future event or events or the existence
of some future circumstance or circumstances, including the lien or security
interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security agreement, adverse
claim or charge, conditional sale or trust receipt, or from a lease,
consignment, or bailment for security purposes and also including reservations,
exceptions, encroachments, easements, rights-of-way, covenants, conditions,
restrictions, leases (by third Persons), and other title exceptions and
encumbrances affecting Real Property.
"Loan Account" has the meaning set forth in Section 2.9.
"Loan Documents" means this Agreement, the Loan Purchase Agreement,
the Stock Pledge Agreements, the Disbursement Letter, the Mutual General
Release, the Blocked Account Agreement, the Mortgages, any note or notes
executed by Borrower and payable to Foothill, and any other agreement entered
into, now or in the future, in connection with this Agreement.
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"Loan Purchase Agreement" has the meaning set forth in the recitals
to this Agreement.
"Material Adverse Change" means (a) a material and adverse change in
the business, assets, liabilities, or financial condition of Borrower (taken as
a whole), (b) the material impairment of Borrower's (taken as whole) ability to
perform its obligations under the Loan Documents to which it is a party or of
Foothill to enforce the Obligations or realize upon the Collateral, (c) a
material and adverse decline in the value of the Collateral or the amount that
Foothill would be likely to receive (after giving consideration to delays in
payment and costs of enforcement) in the liquidation of such Collateral, or (d)
a material impairment of the priority of Foothill's Liens with respect to the
Collateral. In each instance, any determination required to be made of
materiality, adversity, or impairment shall be an objective (and not a
subjective) determination. As used herein, an "objective determination" is the
determination that most likely would be made by an intelligent, reasonable, and
neutral third party apprised of all relevant facts and circumstances (other than
facts and circumstances that are not publicly disclosed and that have not been
disclosed by Borrower to Foothill). As used herein, "material," "adverse," and
"impairment" have the meanings commonly ascribed to such terms in ordinary
usage.
"Maturity Date" means August 21, 2001.
"Maximum Revolving Amount" means $7,500,000.
"MCNC" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"MDC" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"MEIF" shall have the meaning ascribed to such term in the recitals
to this Agreement.
"MGPC" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"MGPDMI" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"MGPFSI" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
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"Miami" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"MMC" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"MMEICLP" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"MMEII" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"MMEILC" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"MMEIMCI" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"Mortgages" means one or more mortgages, deeds of trust, or deeds to
secure debt, and amendments thereto, executed by Borrower in favor of Foothill
or the Existing Lender (including its predecessor in interest) and thereafter
assigned to Foothill, and amendments thereto, the form and substance of which
shall be satisfactory to Foothill, that encumber the Real Property Collateral
and the related improvements thereto.
"Most Recent 10-K" means the Securities and Exchange Commission Form
10-K/A of Mountasia for its fiscal year ended September 30, 1995.
"Mt.Laurel" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"Mountasia" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"MPI" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"Multiemployer Plan" means a "multiemployer plan" (as defined in
Section 4001(a)(3) of ERISA) to which Borrower, any of its Subsidiaries, or any
ERISA Affiliate has contributed, or was obligated to contribute, within the past
six years.
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"NEF" means National Entertainment Funding, L.P., a Delaware limited
partnership.
"NEF Acquisition" means (a) the acquisition by Mountasia of all
remaining limited and general partnership interests in NEF not previously owned
by it, in accordance with the terms and provisions of the NEF Acquisition
Documents, (b) the assumption by Mountasia of certain of the liabilities of NEF,
including the express assumption by Mountasia for the benefit of Foothill of the
NEF Loan, (c) the dissolution of NEF, (d) the transfer of all of NEF's former
assets to Mountasia, and (e) the Amusement Lease Termination; provided that each
transaction or transfer referred to in clauses (b) through (e) of this
definition shall be effected by written documentation in form and substance
reasonably satisfactory to Foothill, true and complete copies of which shall be
provided to Foothill on or before the Closing Date.
"NEF Acquisition Documents" means the two purchase and sale
agreements and related exhibits, schedules, and attachments, dated as of April
3, 1996, among Mountasia and various of the partners of NEF, as any thereof may
have been modified or amended in the form heretofore provided by Mountasia to
Foothill and certified to Foothill by an Authorized Officer of Mountasia as
being accurate and complete.
"NEF Debentures" means the approximately $11,500,000 of subordinated
9.1% debentures to be issued by Mountasia pursuant to the NEF Acquisition in
accordance with the terms and provisions of the NEF Acquisition Documents.
"NEF Debenture Conversion" means the conversion of all or part of
the NEF Debentures to common stock of Mountasia in accordance with the
conversion provisions of the NEF Debentures.
"Negotiable Collateral" means all of Borrower's present and future
letters of credit, notes, drafts, instruments, certificated securities
(including the shares of stock (or other interests) of Subsidiaries of
Borrower), documents, personal property leases (wherein Borrower is the lessor),
chattel paper, and Borrower's Books relating to any of the foregoing.
"Net Cash Proceeds" means, with respect to a Permitted Disposition,
(a) the gross cash payments received (including any cash payments received by
way of deferred payment of principal pursuant to, or in liquidation of, any note
or installment receivable or otherwise, but only as and when received, except
that, with respect to any cash equivalents received, Borrower shall be deemed to
have received on the date of receipt thereof a cash payment equal to the fair
value of such cash equivalents on such date) by Borrower from such Permitted
Disposition, in each case, minus (b) the sum of all legal,
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tax, and other reasonable fees (including investment banking and brokerage fees
and commissions) and expenses incurred by Borrower in connection with such
Permitted Disposition.
"Net Recoveries" means, as of any date of determination, aggregate
cash recoveries by Borrower on account of Designated Claims, net of any costs
payable in connection with obtaining such recoveries.
"NHC" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"Nine Percent Debenture Amendments" means the amendments to be
effected with respect to the Nine Percent Debentures pursuant to documents, or
term sheets with respect thereto, in the form heretofore provided by Mountasia
to Foothill and certified to Foothill by an Authorized Officer of Mountasia as
being accurate and complete.
"Nine Percent Debenture Conversion" means the conversion of all or
part of the Nine Percent Debentures to common stock of Mountasia in accordance
with the conversion provisions of the Nine Percent Debentures.
"Nine Percent Debentures" means the approximately $5,650,000
outstanding 9% Subordinated Convertible Debentures of Mountasia, as amended by
the Nine Percent Debenture Amendments.
"Obligations" means all loans, Advances, debts, principal, interest
(including any interest that, but for the provisions of the Bankruptcy Code,
would have accrued), premiums (including Early Termination Premiums),
liabilities (including all amounts charged to Borrower's Loan Account pursuant
hereto), obligations, fees, charges, costs, or Foothill Expenses (including any
fees or expenses that, but for the provisions of the Bankruptcy Code, would have
accrued), lease payments, guaranties, covenants, and duties owing by Borrower to
Foothill of any kind and description (whether pursuant to or evidenced by the
Loan Documents or pursuant to any other agreement between Foothill and Borrower,
and irrespective of whether for the payment of money), whether direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, and including any debt, liability, or obligation owing from
Borrower to others that Foothill may have obtained by assignment (including
pursuant to the Loan Purchase Agreement) or otherwise, and further including all
interest not paid when due and all Foothill Expenses that Borrower is required
to pay or reimburse by the Loan Documents, by law, or otherwise.
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"OC" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"Off Track" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"Operating Cash Flow" means, with respect to any Person for any
applicable fiscal period, (a) EBITDA, minus (b) Unfinanced Capital Expenditures,
in each case determined on a consolidated basis in accordance with GAAP.
"Operating Subsidiary" means any Subsidiary of Mountasia other than
MGPC, any Inactive Subsidiary, and any Unrestricted Subsidiary.
"Ordinary Course Dispositions" means (a) the sale of Inventory in
the ordinary course of Borrower's business, and (b) the sale, exchange, or other
disposition of Equipment that is substantially worn, damaged, or obsolete and
that is replaced with Equipment of like value.
"Orlando" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"Overadvance" has the meaning set forth in Section 2.4.
"Participant" means any Person to which Foothill has sold a
participation interest in its rights under the Loan Documents.
"PBGC" means the Pension Benefit Guaranty Corporation as defined in
Title IV of ERISA, or any successor thereto.
"Permitted Acquisition" means a Permitted Mountasia Acquisition or a
Permitted Unrestricted Subsidiary Acquisition, as the context may require.
"Permitted Disposition" means, subject to the prior or concurrent
satisfaction of the applicable Release Condition therefor, (a) Ordinary Course
Dispositions, and (b) the sale, exchange, or other disposition, free and clear
of Foothill's Lien or security interest (other than its Lien or security
interest in the proceeds of such sale, exchange, or other disposition), of
Equipment or Real Property (expressly excluding Accounts, General Intangibles,
Inventory, and Negotiable Collateral), so long as (i) at least 80% of the
consideration received in connection with such sale, exchange, or other
disposition is in the form of cash or cash equivalents, (ii) Borrower is
receiving fair value for the Equipment or Real Property that is the subject of
such sale, exchange, or other disposition, and (iii)
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the Net Cash Proceeds to be received by Borrower at the time of the consummation
of such sale, exchange, or other disposition is at least equal to the greater of
(y) an amount equal to 125% of the net book value (as of the most recently
completed fiscal quarter) of the Equipment or Real Property that is the subject
of such Permitted Disposition, and (z) if the Equipment or Real Property that is
the subject of the Permitted Disposition is a FunCenter or other operating unit
of Borrower, an amount equal to 3 times the Operating Cash Flow (prior to any
overhead allocation and for the 12 months ended as of Borrower's most recently
completed fiscal quarter) of such FunCenter or other operating unit.
"Permitted Hampstead Transactions" means the consummation of the
transactions contemplated by (a) the Investment Agreement, (b) the warrant for
shares of common stock issued pursuant to the terms of the Investment Agreement,
(c) the registration rights agreement entered into pursuant to the terms of the
Investment Agreement, and (d) the standstill agreement entered into pursuant to
the terms of the Investment Agreement.
"Permitted Investments" means (a) loans or advances to employees
made by Mountasia in the ordinary course of business in an aggregate principal
amount outstanding at any one time not to exceed $500,000, and (b) loans to
employees made by Mountasia in accordance with the terms and provisions of
Schedule 5.2(l) to the Investment Agreement.
"Permitted Liens" means (a) Liens held by Foothill, (b) Liens for
unpaid taxes that are not yet due and payable or that are being contested as
provided in Section 6.9, (c) Liens set forth on Schedule P-1 attached hereto,
(d) the interests of lessors arising after the Closing Date under operating
leases, (e) Liens securing Permitted Purchase Money Indebtedness so long as the
Lien only attaches to the asset or property developed, purchased, or acquired,
(f) Liens arising by operation of law in favor of warehouseman, landlords,
carriers, mechanics, materialmen, laborers, or suppliers, incurred in the
ordinary course of business of Borrower and not in connection with the borrowing
of money, for sums not yet delinquent or that are being contested in good faith
and by proper proceedings diligently pursued, provided that a reserve or other
appropriate provision, if any, required by GAAP shall have been made therefor on
the applicable financial statements of Borrower, (g) Liens arising from deposits
made in connection with obtaining worker's compensation or other unemployment
insurance, (h) Liens or deposits to secure performance of bids, tenders, or
leases (to the extent permitted under this Agreement), incurred in the ordinary
course of business of Borrower and not in connection with the borrowing of
money, (i) Liens arising by reason of security for surety or appeal bonds in the
ordinary course of business of Borrower, (j) Liens of or resulting from any
judgment or award that do not give rise to an Event of Default under Section
8.9, (k) Liens with respect to the Real Property Collateral that are exceptions
to the commitments for title
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insurance issued in connection with the Mortgages, as accepted by Foothill, (l)
with respect to any Real Property that is not part of the Real Property
Collateral, easements, rights of way, zoning and similar covenants and
restrictions, and similar encumbrances that customarily exist on properties of
Persons engaged in similar activities and similarly situated and that in any
event do not materially interfere with or impair the use or operation of the
Collateral by Borrower or the value of Foothill's Lien thereon or therein, or
materially interfere with the ordinary conduct of the business of Borrower, and
(m) Liens securing Permitted Unrestricted Subsidiary Indebtedness so long as the
Lien only attaches to the assets and properties of such Unrestricted Subsidiary.
"Permitted Mountasia Acquisition" means an Acquisition made by
Mountasia so long as (a) no Default or Event of Default shall have occurred and
be continuing or would result from the consummation of the proposed Acquisition,
(b) at least 10 days prior to the consummation of any proposed Permitted
Mountasia Acquisition, Mountasia shall have provided Foothill with a written
description, in reasonable detail, of the proposed Permitted Mountasia
Acquisition, (c) after giving effect to the proposed Acquisition, Borrower would
have Availability of not less than $4,000,000, (d) the assets or properties
being acquired, or the Person whose Securities are being acquired, are useful in
or engaged in, as applicable, the operation of one or more FunCenters, (e)
Mountasia has provided Foothill with confirmation, supported by detailed
calculations and approved in writing by Foothill (which approval shall not be
unreasonably withheld) that on a pro forma basis (adjusted to eliminate expense
items that would not have been incurred and include income items that would have
been recognized, in each case, if the combination had been accomplished at the
beginning of the period; such eliminations and inclusions to be mutually agreed
upon by Mountasia and Foothill) combining the historical consolidated financial
statements of Mountasia and its Subsidiaries with the historical consolidated
financial statements of the Person to be acquired (or the historical financial
statements related to the assets and properties to be acquired) pursuant to the
proposed Acquisition, Borrower would have been in compliance with the financial
covenants set forth in Section 7.19 hereof for the 12 months ending as of the
fiscal quarter ended immediately prior to the proposed date of consummation of
such proposed Acquisition (or, with respect to any proposed Acquisition to be
consummated prior to June 30, 1997, for the period from July 1, 1996 through the
date of the fiscal quarter ended immediately prior to the proposed date of
consummation of such proposed Acquisition), (f) in the case of the acquisition
of Securities of a Person, at or prior to the consummation of such Acquisition,
such Person is merged with and into Mountasia, with Mountasia being the
surviving entity in such merger; provided, however, that if Borrower can
demonstrate to Foothill that there are bona fide economic advantages to doing
so, such acquired Person may be merged with and into a Restricted Subsidiary,
with such Restricted Subsidiary being the surviving entity in such merger; (g)
in the case of the acquisition of assets or properties of a Person, at or prior
to the consummation of such Acquisition, Mountasia has provided Foothill with
UCC-
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1 financing statements, fixture filings, and Mortgages with respect to the
assets or properties being acquired in such Acquisition; provided, however, that
if Borrower can demonstrate to Foothill that there are bona fide economic
advantages to doing so, such acquired assets or properties may be acquired by a
Restricted Subsidiary, so long as such Restricted Subsidiary provides Foothill
with UCC-1 financing statements, fixture filings, and Mortgages with respect to
the assets or properties being acquired in such Acquisition; provided, however,
that if Mountasia (or the Restricted Subsidiary, as applicable) is incurring
Permitted Purchase Money Indebtedness in connection with the consummation of
such Acquisition and if Mountasia (or the Restricted Subsidiary, as applicable)
is unable, after using its reasonable best efforts, to obtain any necessary
consent from the holder of such Permitted Purchase Money Indebtedness to a
second priority security interest in favor of Foothill with respect to the
subject assets and properties, the requirement therefor shall be suspended
until, if ever, such consent is obtained or the related Permitted Purchase Money
Indebtedness is repaid, and (h) in connection with such proposed Acquisition,
Mountasia shall not use the proceeds of Advances or Term Loans (including
proceeds of Advances or Term Loans that are used, in one or a series of related
transactions) to consummate the proposed Acquisition unless, after giving effect
thereto, Borrower has Availability of $4,000,000, or more. For purposes of this
definition, "pro forma EBITDA" shall be calculated after giving effect on a pro
forma basis for the period of such calculation to any other Permitted Mountasia
Acquisition (including, without limitation, the EBITDA of the Person or assets
or property so acquired in such other Permitted Mountasia Acquisition and any
Permitted Purchase Money Indebtedness acquired or incurred in connection with
such other Permitted Mountasia Acquisition) occurring during the 12 month period
as if such other Permitted Mountasia Acquisition occurred on the first day of
the 12 month period.
"Permitted Protest" means the right of Borrower to protest any Lien,
tax, or rental payment, other than any such Lien that secures the Obligations,
provided that (a) a reserve with respect to such obligation is established on
the books of Borrower in an amount that is reasonably satisfactory to Foothill,
(b) any such protest is instituted and diligently prosecuted by Borrower in good
faith, and (c) Foothill is satisfied that, while any such protest is pending,
there will be no impairment of the enforceability, validity, or priority of any
of the Liens of Foothill in and to the Collateral.
"Permitted Purchase Money Indebtedness" means Purchase Money
Indebtedness of Borrower that was incurred after the Closing Date so long as (a)
no Default or Event of Default exists at the time of the incurrence thereof, or
would exist after giving effect thereto, and (b) the principal amount of all
such Purchase Money Indebtedness of Borrower outstanding at any one time, that
was incurred after the Closing Date, does not exceed $60,000,000.
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"Permitted Special Distribution" means any dividend or distribution
by Mountasia to some or all of its present or former shareholders that (a) is
not declared or paid at any time when an Event of Default has occurred and is
continuing, and (b) when aggregated with all other Permitted Special
Distributions declared and paid to present or former shareholders of Mountasia,
does not exceed in the aggregate the Special Distribution Limit.
"Permitted Subordinated Debt Payments" means regularly scheduled
payments of interest in cash or common stock of Mountasia (in each case, taking
full advantage of any ability of Mountasia to make such payment in common stock)
and regularly scheduled payments of principal (in each case, however, only to
the extent that such payments are made in common stock of Mountasia), but not
prepayments, with respect to Subordinated Debt, but excluding any payments that
are due following the occurrence and during the continuance of any Event of
Default, or the making of which would conflict with the subordination provisions
of the Subordinated Debt; provided that nothing herein prevents the Nine Percent
Debenture Conversion, the Ten Percent Debenture Conversion, or the NEF Debenture
Conversion.
"Permitted Transactions" means (a) the NEF Acquisition, (b) the
Willowbrook Acquisition, (c) the Nine Percent Debenture Amendments, (d) the Nine
Percent Debenture Conversion, (e) the NEF Debenture Conversion, (f) the Ten
Percent Debenture Conversion, (g) Permitted Subordinated Debt Payments, (h)
Permitted Special Distributions, (i) Permitted Unrestricted Subsidiary
Investments, (j) Permitted Unrestricted Subsidiary Transactions, and (k)
Permitted Hampstead Transactions.
"Permitted Unrestricted Subsidiary Acquisition" means an Acquisition
made by one of the Unrestricted Subsidiaries so long as (a) no Default or Event
of Default shall have occurred and be continuing or would result from the
consummation of the proposed Acquisition, (b) at least 10 days prior to the
consummation of any proposed Permitted Unrestricted Subsidiary Acquisition,
Mountasia shall have provided Foothill with a written description, in reasonable
detail, of the proposed Permitted Unrestricted Subsidiary Acquisition, (c) the
assets or properties being acquired, or the Person whose Securities are being
acquired, are useful in or engaged in, as applicable, the operation of one or
more FunCenters, (d) in the case of the acquisition of Securities of a Person,
at or prior to the consummation of such Acquisition, either (i) such Person is
merged with and into an existing Unrestricted Subsidiary, with such Unrestricted
Subsidiary being the surviving entity in such merger, or (ii) such Person is
designated as a Unrestricted Subsidiary in a writing sent to Foothill by
Mountasia and Mountasia executes and delivers an appropriate amendment to the
Stock Pledge Agreement in order to add the Securities of such newly acquired
Unrestricted Subsidiary to the collateral pledged thereunder, and, in either
such case, at or prior to the consummation of such Acquisition, the applicable
Unrestricted
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Subsidiary has executed and delivered a joinder to this Agreement and the other
Loan Documents and has provided Foothill with UCC-1 financing statements,
fixture filings, and Mortgages with respect to the assets or properties being
acquired in such Acquisition; provided, however, that if such Unrestricted
Subsidiary is incurring Permitted Purchase Money Indebtedness in connection with
the consummation of such Acquisition and if such Unrestricted Subsidiary is
unable, after using its reasonable best efforts, to obtain any necessary consent
from the holder of such Permitted Purchase Money Indebtedness to a second
priority security interest in favor of Foothill with respect to the subject
assets and properties, the requirement therefor shall be suspended until, if
ever, such consent is obtained or the related Permitted Purchase Money
Indebtedness is repaid, (e) in the case of the acquisition of assets or
properties of a Person, (i) such assets or properties are acquired by an
existing Unrestricted Subsidiary, or (ii) such assets or properties are acquired
by a newly formed Unrestricted Subsidiary identified in a writing sent to
Foothill by Mountasia and Mountasia executes and delivers an appropriate
amendment to the Stock Pledge Agreement in order to add the Securities of such
newly formed Unrestricted Subsidiary to collateral pledged thereunder, and, in
either such case, at or prior to the consummation of such Acquisition, the
applicable Unrestricted Subsidiary has executed and delivered a joinder to this
Agreement and the other Loan Documents and has provided Foothill with UCC-1
financing statements, fixture filings, and Mortgages with respect to the assets
or properties being acquired in such Acquisition; provided, however, that if
such Unrestricted Subsidiary is incurring Permitted Purchase Money Indebtedness
in connection with the consummation of such Acquisition and if such Unrestricted
Subsidiary is unable, after using its reasonable best efforts, to obtain any
necessary consent from the holder of such Permitted Purchase Money Indebtedness
to a second priority security interest in favor of Foothill with respect to the
subject assets and properties, the requirement therefor shall be suspended
until, if ever, such consent is obtained or the related Permitted Purchase Money
Indebtedness is repaid.
"Permitted Unrestricted Subsidiary Indebtedness" means Indebtedness
incurred by an Unrestricted Subsidiary (including in respect of any line of
credit or other "program" financing and including Acquired Indebtedness) to
Persons other than a Debtor in connection with the consummation of a Permitted
Unrestricted Subsidiary Acquisition, so long as (a) no Default or Event of
Default exists at the time of the incurrence thereof, or would exist after
giving effect thereto, (b) such Indebtedness to be on terms and conditions
satisfactory to Foothill, in its reasonable discretion, and (c) such
Indebtedness is in an amount, with respect to each Permitted Unrestricted
Subsidiary Acquisition, not to exceed at any time 70% of the sum of (i) the
purchase price paid in connection with such Permitted Unrestricted Subsidiary
Acquisition, and (ii) the aggregate costs of any renovations made with respect
to the assets or properties acquired in such Permitted Unrestricted Subsidiary
Acquisition, provided, however, that (y) such Indebtedness shall be non-recourse
to any Debtor (other than for any customary carve-outs for environmental
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and "bad deed" indemnities), but may be recourse to the applicable Unrestricted
Subsidiary (which Unrestricted Subsidiary shall have no material Indebtedness,
assets, or properties, other than those acquired in connection with Permitted
Unrestricted Subsidiary Acquisitions), and (z) if required by the provider of
such Indebtedness, such Indebtedness may be secured by a first priority Lien
upon all material assets of such Unrestricted Subsidiary.
"Permitted Unrestricted Subsidiary Investments" means, so long as no
Default or Event of Default has occurred and is continuing, loans or capital
contributions by Mountasia in or to any of the Unrestricted Subsidiaries in an
amount not to exceed, in the aggregate, an amount equal to (a) the amount of
equity contributed, in cash (or by conversion of Indebtedness in accordance with
Section 3.1(x)), by Hampstead to Mountasia, minus (b) $40,000,000.
"Permitted Unrestricted Subsidiary Transactions " means any
Fundamental Change Transaction involving solely Unrestricted Subsidiaries.
"Permitted Uses" means the use of proceeds of Advances and the Term
Loans to (a) fund the acquisition of additional FunCenters so long as after
giving effect thereto Borrower has Availability of $4,000,000, or more, or (b)
other than as may be restricted by clause (a), fund Borrower's general corporate
purposes (including Capital Expenditures), consistent with the terms and
conditions hereof.
"Person" means and includes natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, limited
liability partnerships, joint ventures, trusts, land trusts, business trusts, or
other organizations, irrespective of whether they are legal entities, and
governments and agencies and political subdivisions thereof.
"Personal Property Collateral" means all Collateral other than the
Real Property Collateral.
"PH" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"PHS" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"Plan" means any employee benefit plan, program, or arrangement
maintained or contributed to by Borrower or with respect to which it may incur
liability.
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"Portland" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"Purchase Money Indebtedness" means any Indebtedness (other than the
Obligations) incurred at the time of or within 30 days prior to or after the
purchase or acquisition of any Equipment or Real Property solely for the purpose
of financing all or any part of the purchase price thereof and paying the
related acquisition or development costs, provided, however, that such
Indebtedness shall not exceed the fair market value of such fixed assets at the
time of their acquisition, plus sales and excise taxes, installation and
delivery charges, and other related expenses paid by or charged to Mountasia or
its Subsidiaries in connection with such acquisition, plus the costs and
expenses of development thereof.
"RBC" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"RC" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"RCC" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"Real Property" means any estates or interests in real property now
owned or hereafter acquired by any Debtor (including leasehold estates).
"Real Property Collateral" means the Real Property, including the
parcel or parcels of real property and the related improvements thereto
identified on Schedule R-1, and any Real Property hereafter acquired by
Borrower, including the Real Property proposed to be acquired by Borrower that
is located in ▇▇▇▇▇▇ Hills, California.
"Reference Rate" means the variable rate of interest, per annum,
most recently announced by Norwest Bank Minnesota, National Association, or any
successor thereto, as its "base rate," irrespective of whether such announced
rate is the best rate available from such financial institution.
"Release Condition" means with respect to any Permitted Disposition
(other than an Ordinary Course Disposition) that (a) no Default or Event of
Default has occurred and is continuing or would result therefrom, (b) Borrower
is receiving at least fair value for the subject Equipment or Real Property, (c)
Borrower is selling, exchanging, or disposing of the subject Equipment or Real
Property and, following such sale, exchange, or other disposition, the subject
Equipment or Real Property is not to be the subject of a
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lease by Mountasia or any of its Subsidiaries and (d) the subject Equipment or
Real Property is not being sold to, exchanged with, or disposed of to, any
Affiliate of Mountasia or Hampstead.
"Relevant Measuring Period" means, with respect to September 30,
1996, the three months then ended, with respect to December 31, 1996, the six
months then ended, with respect to March 31, 1997, the nine months then ended,
and, with respect to any date thereafter, the twelve months then ended.
"Reportable Event" means any of the events described in Section
4043(c) of ERISA or the regulations thereunder other than a Reportable Event as
to which the provision of 30 days notice to the PBGC is waived under applicable
regulations.
"Required Amount" means, in connection with a Permitted Disposition,
the greater of (a) an amount equal to 75% of the Net Cash Proceeds received by
Borrower in connection with such Permitted Disposition, (b) an amount equal to
125% of the net book value (as of the most recently completed fiscal quarter) of
the Equipment or Real Property that is the subject of such Permitted
Disposition, or (c) if the Equipment or Real Property that is the subject of the
Permitted Disposition is a FunCenter or other operating unit of Borrower, an
amount equal to 3 times the Operating Cash Flow (prior to any overhead
allocation and for the 12 months ended as of Borrower's most recently completed
fiscal quarter) of such FunCenter or other operating unit.
"Restricted Subsidiary" shall mean any Subsidiary of Mountasia that
is not an Unrestricted Subsidiary.
"Retiree Health Plan" means an "employee welfare benefit plan"
within the meaning of Section 3(1) of ERISA that provides benefits to
individuals after termination of their employment, other than as required by
Section 601 of ERISA.
"SAC" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"San Antonio" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"San Diego" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"Santa Clarita" means Mountasia of Santa Clarita, L.P., a California
limited partnership.
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"Security" shall have the meaning set forth in Section 2(1) of the
Securities Act of 1933, as amended.
"Solvent" means, with respect to any Person on a particular date,
that on such date (a) at fair valuations, all of the properties and assets of
such Person are greater than the sum of the debts, including contingent
liabilities, of such Person, (b) the present fair salable value of the
properties and assets of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its debts as they
become absolute and matured, (c) such Person is able to realize upon its
properties and assets and pay its debts and other liabilities, contingent
obligations and other commitments as they mature in the normal course of
business, (d) such Person does not intend to, and does not believe that it will,
incur debts beyond such Person's ability to pay as such debts mature, and (e)
such Person is not engaged in business or a transaction, and is not about to
engage in business or a transaction, for which such Person's properties and
assets would constitute unreasonably small capital after giving due
consideration to the prevailing practices in the industry in which such Person
is engaged. In computing the amount of contingent liabilities at any time, it is
intended that such liabilities will be computed at the amount that, in light of
all the facts and circumstances existing at such time, represents the amount
that reasonably can be expected to become an actual or matured liability.
"Special" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"Special Distribution Limit" means as of any date of determination
(a) if, as of such date, Net Recoveries are not more than $10,000,000, an amount
equal to 50% of Net Recoveries; and (b) if, as of such date, Net Recoveries are
more than $10,000,000, an amount equal to the sum of $5,000,000 plus 75% of such
excess.
"Stock Pledge Agreements" means the stock pledge agreements executed
and delivered by Mountasia and MGPC to Foothill with respect to the pledge of
the stock of their respective first-tier Subsidiaries, as required by Section
3.1.
"Subordinated Debt" means (a) the Existing Subordinated Debt, and
(b) the Future Subordinated Debt.
"Subsidiary" of a Person means a corporation, partnership, limited
liability company, or other entity in which that Person directly or indirectly
owns or controls the shares of stock or other ownership interests having
ordinary voting power to elect a majority of the board of directors or appoint
other managers of such corporation, partnership, limited liability company, or
other entity.
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"Suit" means a lawsuit pending in a court, a formal arbitration
proceeding pending before an arbitrator, or any other comparable formal
adversary proceeding, but does not include mediation or settlement discussions
not involving such a formal proceeding.
"Tampa" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"TC" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"Tempe" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"Temporary Account" means account number 2320839090 of Mountasia
maintained with NationsBank, National Association (South), whose office is
located at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇.
"Ten Percent Debenture Conversion" means the conversion of all or
part of the Ten Percent Debentures to common stock of Borrower in accordance
with the conversion rights of the Ten Percent Debentures.
"Ten Percent Debentures" means the approximately $6,961,882
outstanding 10% Convertible Subordinated Debentures due January 31, 1998 in the
form heretofore provided by Mountasia to Foothill and certified to Foothill by
an Authorized Officer of Mountasia as being accurate and complete.
"Term Loans" means, collectively, Term Loan A and Term Loan B.
"Term Loan A" has the meaning set forth in Section 2.2.
"Term Loan A Commitment" means $12,500,000, as such amount may be
adjusted from time to time in accordance with the provisions of Section 2.2(b).
"Term Loan A Repayment Date" means the first date, if any, on which
Borrower prepays the principal balance of Term Loan A to zero so long as such
date occurs within 34 days of the Closing Date.
"Term Loan B" has the meaning set forth in Section 2.3.
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"Term Loan B Commitment" means, from and after the satisfaction of
the conditions precedent contained in Sections 3.2 and 3.3 and prior to the
making of Term Loan B, $5,000,000. Prior to the satisfaction of such conditions
precedent, and after the making of Term Loan B, the Term Loan B Commitment shall
equal zero.
"Trademark Security Agreements" means Trademark Security Agreements
executed and delivered by Mountasia and MGPC to Foothill, in form and substance
satisfactory to Foothill.
"Tucson" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"Unfinanced Capital Expenditures" means Capital Expenditures of
Borrower other than those made directly (a) with the proceeds of Permitted
Purchase Money Indebtedness, (b) with the proceeds of insurance respecting
casualty losses to the extent applied to the repair or replacement of the
property affected by such casualty loss, (c) as part of a concurrent sale and
purchase of capital assets up to the amount of the net proceeds received from
the sale of the subject capital assets, (d) with proceeds of equity investments
made by Hampstead to the equity of Mountasia (which amounts are not used,
directly or indirectly, to make a Permitted Unrestricted Subsidiary Investments)
after the Closing Date, or (e) up to $30,000,000 in the aggregate.
"Unrestricted Subsidiary" means any Subsidiary of Mountasia that is
formed or acquired after the Closing Date in connection with the consummation of
a Permitted Acquisition and that (a) is designated as being an "Unrestricted
Subsidiary" in a writing delivered by Mountasia to Foothill at the time of such
formation or acquisition, (b) except as otherwise provided in the definition of
"Permitted Unrestricted Subsidiary Indebtedness," all of such Subsidiary's
liabilities are non-recourse to Mountasia or any Restricted Subsidiary, and (c)
no Affiliate of Mountasia (other than Hampstead) owns any capital stock (or
other interests) of such Subsidiary.
"Voidable Transfer" has the meaning set forth in Section 15.8.
"Willowbrook" means the FunCenter referred to as such on page 18 of
the Most Recent 10-K.
"Willowbrook Acquisition" means the proposed acquisition by
Mountasia of Willowbrook pursuant to the Willowbrook Acquisition Documents.
"Willowbrook Acquisition Documents" means (a) the Purchase and Sale
Agreement, between M.F.G. of Willowbrook, L.P., a Texas limited partnership
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("Willowbrook Partnership"), and Mountasia, dated as of January 1, 1996, and (b)
the Lease Agreement, between Willowbrook Partnership and Mountasia, dated as of
January 1, 1996, in the form heretofore provided by Mountasia to Foothill and
certified to Foothill by an appropriate officer of Mountasia as being accurate
and complete.
"Young World of Spartanburg Note" means that certain subordinated
promissory note with an outstanding balance of approximately $2,000,000 as of
the Closing Date, made by Mountasia in connection with Mountasia's acquisition
of the Spartanburg, South Carolina FunCenter, in the form heretofore provided by
Mountasia to Foothill and certified to Foothill by an appropriate officer of
Mountasia as being accurate and complete.
1.2 Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto. Whenever
the term "Borrower" is used in respect of a financial statement, financial
covenant, or a related definition, it shall be understood to mean Borrower on a
consolidated basis unless the context clearly requires otherwise;
1.3 Code. Any terms used in this Agreement that are defined in the
Code shall be construed and defined as set forth in the Code unless otherwise
defined herein.
1.4 Construction. Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular, references to
the singular include the plural, the term "including" is not limiting, and the
term "or" has, except where otherwise indicated, the inclusive meaning
represented by the phrase "and/or." The words "hereof," "herein," "hereby,"
"hereunder," and similar terms in this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement. An Event of Default
shall "continue" or be "continuing" until such Event of Default has been waived
in writing by Foothill. Section, subsection, clause, schedule, and exhibit
references are to this Agreement unless otherwise specified. Any reference in
this Agreement or in the Loan Documents to this Agreement or any of the Loan
Documents shall include all alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, and supplements, thereto
and thereof, as applicable.
1.5 Schedules and Exhibits. All of the schedules and exhibits
attached to this Agreement shall be deemed incorporated herein by reference.
1.6 Restatement. This Agreement restates and replaces in its
entirety the Existing Loan Agreements; in the event of any conflict or
inconsistency between this Agreement and the Existing Loan Agreements, this
Agreement shall control in any and all events.
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2. LOAN AND TERMS OF PAYMENT.
2.1 Revolving Advances.
(a) Subject to the terms and conditions of this Agreement,
Foothill agrees to make advances ("Advances") to Borrower in an amount at any
one time outstanding not to exceed the Maximum Revolving Amount. On the Closing
Date, a portion of the Existing Loans up to the Maximum Revolving Amount shall
be converted into Advances.
(b) Amounts borrowed pursuant to this Section 2.1 may be
repaid and, subject to the terms and conditions of this Agreement, reborrowed at
any time during the term of this Agreement.
(c) To the extent that any provision of the Loan Documents
expressly so provides, Foothill may from time to time create reasonable reserves
against Availability. Without limiting the generality of the foregoing, should
Borrower at any time be 30 days or more delinquent in the payment of Real
Property taxes or payroll taxes, Foothill may create and maintain reserves in
the estimated amounts of such delinquencies; provided, however, that Foothill
agrees to provide Borrower with 5 days prior notice before the imposition of any
such reserve and, during such 5 day period, Borrower shall not be able to
request Advances under Section 2.1 that would cause the amount of the
Availability less the proposed reserve to be less than $1.00.
2.2 Term Loan A. (a) On the Closing Date, a portion of the Existing
Loans shall be converted into a term loan (the "Term Loan A") in the original
principal amount of $12,500,000. The outstanding principal balance and all
accrued and unpaid interest under Term Loan A shall be due and payable upon the
earlier of (i) the Maturity Date, or (ii) the date of termination of this
Agreement, whether by its terms, by prepayment, by acceleration, or otherwise.
The unpaid principal balance of Term Loan A may be prepaid in whole or in part
without penalty or premium (except to the extent, if any, that the Exit Fee or
Early Termination Premium may be applicable) at any time during the term of this
Agreement upon 15 days (3 days in the case of the first such prepayment so long
as it occurs within 34 days of the Closing Date) prior written notice by
Borrower to Foothill; provided, however, that, subsequent to the Term Loan A
Repayment Date, any voluntary prepayment of Term Loan A shall be deemed to
constitute and shall result in a permanent termination of the remaining Term
Loan A Commitment. All amounts outstanding under Term Loan A shall constitute
Obligations. Any amount repaid with respect to Term Loan A may be reborrowed, in
one or more drawings, subject to the prior satisfaction of the conditions
contained in Sections 3.3 and 3.9.
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(b) Anything to the contrary in this Section 2.2 notwithstanding,
Borrower shall have the right, from time to time, but not more than 5 times
during the term of this Agreement, to reduce permanently the Term Loan A
Commitment. Borrower shall give Foothill not less than 15 days prior written
notice designating the date (which shall be a Business Day) of such reduction
and each such reduction shall be in an amount of not less than $50,000. Each
such reduction automatically shall be effective on the date specified in
Borrower's notice given in compliance hereunder.
2.3 Term Loan B. Subject to the prior satisfaction of the conditions
contained in Sections 3.2 and 3.3, Foothill has agreed to make a term loan (the
"Term Loan B") to Borrower in an original principal amount up to $5,000,000 on
or prior to December 31, 1996 (but not after) subject to the terms and
conditions set forth herein. The outstanding principal balance and all accrued
and unpaid interest under Term Loan B shall be due and payable upon the earlier
of (i) the Maturity Date, or (ii) the date of termination of this Agreement,
whether by its terms, by prepayment, by acceleration, or otherwise. The unpaid
principal balance of Term Loan B may be prepaid in whole or in part without
penalty or premium (except to the extent, if any, that the Exit Fee or Early
Termination Premium may be applicable) at any time during the term of this
Agreement upon 15 days prior written notice by Borrower to Foothill. All amounts
outstanding under Term Loan B shall constitute Obligations. Any amount repaid
with respect to Term Loan B may not be reborrowed.
2.4 Overadvances. If, at any time or for any reason, the amount of
Obligations owed by Borrower to Foothill pursuant to Section 2.1 is greater than
the Dollar limitations set forth in Section 2.1 (an "Overadvance"), Borrower
immediately shall pay to Foothill, in cash, the amount of such excess to be used
by Foothill to repay Advances outstanding under Section 2.1.
2.5 Interest: Rates, Payments, and Calculations.
(a) Interest Rate. Except as provided in clause (b) below, (i)
all Obligations shall bear interest at a per annum rate of 1.5 percentage points
above the Reference Rate.
(b) Default Rate. From and after and during the continuation
of an Event of Default, all Obligations shall bear interest at a per annum rate
equal to 4.5 percentage points above the Reference Rate.
(c) Minimum Interest. In no event shall the rate of interest
chargeable hereunder for any day be less than 7% per annum. To the extent that
interest accrued hereunder at the rate set forth herein would be less than the
foregoing minimum
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daily rate, the interest rate chargeable hereunder for such day automatically
shall be deemed increased to the minimum rate.
(d) Payments. Interest hereunder shall be due and payable, in
arrears, on the first day of each month during the term hereof. Borrower hereby
authorizes Foothill, at its option, without prior notice to Borrower, to charge
such interest, all Foothill Expenses (as and when incurred), the fees and
charges provided for in Section 2.10 (as and when accrued or incurred), and all
installments or other payments due under the Term Loans, or any Loan Document to
Borrower's Loan Account, which amounts thereafter shall accrue interest at the
rate then applicable to Advances hereunder. Any interest not paid when due shall
be compounded and shall thereafter accrue interest at the rate then applicable
to Advances hereunder.
(e) Computation. The Reference Rate as of the date of this
Agreement is 8.25% per annum. In the event the Reference Rate is changed from
time to time hereafter, the applicable rate of interest hereunder automatically
and immediately shall be increased or decreased by an amount equal to such
change in the Reference Rate. All interest and fees chargeable under the Loan
Documents shall be computed on the basis of a 360 day year for the actual number
of days elapsed.
(f) Intent to Limit Charges to Maximum Lawful Rate. In no
event shall the interest rate or rates payable under this Agreement, plus any
other amounts paid in connection herewith, exceed the highest rate permissible
under any law that a court of competent jurisdiction shall, in a final
determination, deem applicable. Borrower and Foothill, in executing and
delivering this Agreement, intend legally to agree upon the rate or rates of
interest and manner of payment stated within it; provided, however, that,
anything contained herein to the contrary notwithstanding, if said rate or rates
of interest or manner of payment exceeds the maximum allowable under applicable
law, then, ipso facto as of the date of this Agreement, Borrower is and shall be
liable only for the payment of such maximum as allowed by law, and payment
received from Borrower in excess of such legal maximum, whenever received, shall
be applied to reduce the principal balance of the Obligations to the extent of
such excess.
2.6 Collection of Accounts. Borrower shall, at all times after the
Closing Date, instruct all managers and other responsible personnel operating
each FunCenter to deposit all Collections in respect thereof at the close of
each day of business into deposit accounts maintained with depositary
institutions that have been notified of Foothill's security interest in such
deposit accounts. Borrower agrees that all Collections and other amounts
received by any Debtor from any source other than such Collections in respect of
the operation of FunCenters as soon as practicable upon receipt shall be
remitted (a) during the period from the Closing Date up to the date of the
satisfaction of the condition
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subsequent set forth in Section 3.4(g), to the Temporary Account, and (b) from
and after the date of the satisfaction of the condition subsequent set forth in
Section 3.4(g), to the Blocked Account. No Blocked Account Agreement or
arrangement contemplated thereby shall be modified by Borrower without the prior
written consent of Foothill. In accordance with Borrower's ordinary and
customary mode of business and prudent cash management practices, all
Collections deposited in any deposit account of any Debtor (other than the
Blocked Account) shall be transferred no less often than weekly into the
Temporary Account, or the Blocked Account, as applicable. Prior to the
occurrence of a Designated Event of Default, Borrower shall have unrestricted
access to the funds in such Temporary Account or Blocked Account, as applicable.
From and after the occurrence of a Designated Event of Default, all amounts
received in the Temporary Account or Blocked Account, as applicable,
automatically shall be wire transferred each Business Day into an account (the
"Foothill Account") maintained by Foothill at a depositary selected by Foothill.
2.7 Crediting Payments; Application of Collections. The receipt of
any Collections by Foothill immediately shall be applied provisionally to reduce
the Obligations outstanding under Section 2.1, but shall not be considered a
payment on account unless such Collection item is a wire transfer of immediately
available federal funds and is made to the Foothill Account or unless and until
such Collection item is honored when presented for payment. If, after applying
Collections to Obligations then due, a credit remains, and if no Event of
Default has occurred and is continuing, Foothill shall transfer such credit to
Borrower's Designated Account. From and after the Closing Date, Foothill shall
be entitled to charge Borrower for 3 Business Days of `clearance' or `float' at
the rate set forth in Section 2.5(a) or Section 2.5(b), as applicable, on all
Collections that are received by Foothill, or, without duplication, all
Collections that are deposited in any Blocked Account, or, without duplication,
all Collections that are deposited in the Temporary Account. This
across-the-board 3 Business Day clearance or float charge on all Collections is
acknowledged by the parties to constitute an integral aspect of the pricing of
Foothill's financing of Borrower, and shall apply irrespective of the
characterization of whether receipts are owned by Borrower or Foothill, whether
they are remitted to the Foothill Account, and whether or not there are any
outstanding Advances, the effect of such clearance or float charge being the
equivalent of charging 3 Business Days of interest on such Collections. Should
any Collection item not be honored when presented for payment, then Borrower
shall be deemed not to have made such payment, and interest shall be
recalculated accordingly. Anything to the contrary contained herein
notwithstanding, any Collection item shall be deemed received by Foothill only
if it is received into the Foothill Account on a Business Day on or before 11:00
a.m. Los Angeles time. If any Collection item is received into the Foothill
Account on a non-Business Day or after 11:00 a.m. Los Angeles time on a Business
Day, it shall be deemed to have been received by Foothill as of the opening of
business on the immediately following Business Day.
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2.8 Borrower's Designated Account. Foothill is authorized to make
the Advances and the Term Loans under this Agreement based upon written
instructions sent in accordance with Section 12 from anyone purporting to be an
Authorized Officer of Borrower, or without instructions if pursuant to Section
2.5(d). Foothill shall incur no liability to Borrower in acting upon any such
written instructions that Foothill believes in good faith to have been given by
an Authorized Officer and in making any Advance or other loan in accordance with
this Agreement pursuant to any such written notice. Any such written
instructions shall be irrevocable and Borrower shall be bound to make a
borrowing in accordance therewith. Borrower agrees to establish and maintain
Borrower's Designated Account with Borrower's Designated Account Bank for the
purpose of receiving the proceeds of the Advances requested by Borrower and made
by Foothill hereunder. Unless otherwise agreed by Foothill and Borrower, any
Advance requested by Borrower and made by Foothill hereunder shall be made to
Borrower's Designated Account. Even though Borrower's Designated Account is in
the name of Mountasia and is managed by Mountasia, any Advances and Term Loans
shall be for the benefit and for the account of each and every Debtor, as
co-obligors, and each Debtor hereby appoints Mountasia as its agent, and
Mountasia hereby agrees to act as such, for purposes of dealing with the
proceeds of any Term Loans or Advances. Foothill shall have no responsibility
with respect to the allocation of the proceeds of either of the Term Loans or
Advances as among Debtors, and each Debtor acknowledges that it is obligated
with respect to all the Obligations without regard to which Debtor actually
receives or uses the proceeds of either of the Term Loans or Advances. The
Debtors are an integrated operation and each Debtor acknowledges that it will
receive direct and indirect benefits from the co-borrowing arrangement provided
for herein, which is being provided by Foothill at the request of each Debtor
and as an accommodation to all of the Debtors.
2.9 Maintenance of Loan Account; Statements of Obligations. Foothill
shall maintain an account on its books in the name of Borrower (the "Loan
Account") on which Borrower will be charged with all Advances and the Term Loans
made by Foothill to Borrower or for Borrower's account, including, accrued
interest, Foothill Expenses, and any other payment Obligations of Borrower. In
accordance with Section 2.7, the Loan Account will be credited with all payments
received by Foothill from Borrower or for Borrower's account, including all
amounts received in the Foothill Account from any Blocked Account Bank. Foothill
shall render statements regarding the Loan Account to Borrower, including
principal, interest, fees, and including an itemization of all charges and
expenses constituting Foothill Expenses owing, and such statements, absent
manifest error, shall be conclusively presumed to be correct and accurate and
constitute an account stated between Borrower and Foothill unless, within 60
days after receipt thereof by Borrower, Borrower shall deliver to Foothill by
registered or certified mail at its address specified in Section 12, written
objection thereto describing the error or errors contained in any such
statements.
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2.10 Fees. Borrower shall pay to Foothill the following fees:
(a) Exit Fee. On the earlier of the Maturity Date or the
effective date of termination of this Agreement under Section 3.7 or 3.8, an
exit fee of $475,000 ("Exit Fee"), which is fully earned and non-refundable from
and after the Closing Date, but shall not commence to bear interest until the
date that it first becomes payable.
(b) Term Loan B Fee. On the date, if such date occurs, that
Borrower receives written notice from Lender that the condition set forth in
Section 3.2(c) has been satisfied, or waived by Foothill in its sole discretion,
a fully earned and non-refundable fee of $50,000;
(c) Unused Commitment Fee. (i) On the first day of each month
during the term of this Agreement, an unused commitment fee in an amount equal
to 0.5% per annum times the Average Unused Portion of the Maximum Revolving
Amount, plus (ii) on the first day of each month during the term of this
Agreement occurring on and after the Term Loan A Repayment Date, an unused
commitment fee in an amount equal to 0.5% per annum times the Average Unused
Portion of the Term Loan A Commitment;
(d) Financial Examination, Documentation, and Appraisal Fees.
Foothill's customary fee of $650 per day per examiner, plus out-of-pocket
expenses for each financial analysis and examination (i.e., audits) of Borrower
performed by personnel employed by Foothill; Foothill's customary appraisal fee
of $1,500 per day per appraiser, plus out-of-pocket expenses for each appraisal
of the Collateral performed by personnel employed by Foothill; and, the actual
charges paid or incurred by Foothill if it elects to employ the services of one
or more third Persons to perform such financial analyses and examinations (i.e.,
audits) of Borrower or to appraise the Collateral; and, on each anniversary of
the Closing Date, a fee of $5,000 per year for legal loan documentation review;
and
(e) Servicing Fee. On the first day of each month during the
term of this Agreement, and thereafter so long as any Obligations are
outstanding, a servicing fee in an amount equal to $5,000.
2.11 Purchase of Loans of Existing Lender Not Deemed Repayment;
Assumption of Such Purchased Loans by Each Debtor; Allocation of Obligations on
Closing Date. To the extent that Foothill advances funds on the Closing Date to
the Existing Lender pursuant to the Loan Purchase Agreement in an amount equal
to the Assigned Amount (as defined in the Loan Purchase Agreement), such
advances shall constitute a purchase of the existing claims of the Existing
Lender by Foothill, as thereafter
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restated hereby, and shall not constitute a repayment of such claims. Upon being
purchased by Foothill from the Existing Lender on the Closing Date, such claims
in an amount equal to the Assigned Amount shall become an Obligation of the
Borrower hereunder, and each Debtor hereby expressly assumes and agrees to be
bound by such Obligations as a co-obligor (even if such Debtor previously was
liable as a guarantor or in some other capacity, or even not at all), such that
the liability of Borrower shall be as if Foothill made a loan to Borrower in the
Assigned Amount on the Closing Date. The intention of the parties is to preserve
the continuity of the original loans made by the Existing Lender, as acquired by
Foothill and restated hereby, and not to effect a repayment thereof. The parties
acknowledge that, on the Closing Date, in addition to acquiring claims in an
amount equal to the Assigned Amount, Foothill may make additional loans or
advances. The sum total of Obligations to Foothill incurred on the Closing Date
(whether with respect to purchased claims, or with respect to supplemental loans
or advances made by Foothill) shall be allocated, first, to Term Loan A until it
is fully disbursed and, thereafter, to Advances under Section 2.1.
2.12 Mandatory Prepayments. Immediately upon receipt by Borrower of
Net Cash Proceeds of any Permitted Disposition (other than an Ordinary Course
Disposition), Borrower shall (a) prepay Term Loan A in an amount equal to the
Required Amount applicable to such Permitted Disposition and the amount so
prepaid automatically shall reduce the Term Loan A Commitment, on a
dollar-for-dollar basis, (b) if Term Loan A has been repaid or prepaid in full,
prepay Term Loan B in an amount equal to the Required Amount applicable to such
Permitted Disposition (or the balance remaining after the prepayment of Term
Loan A pursuant to clause (a) above, as applicable), and the amount so prepaid
automatically shall reduce the Term Loan A Commitment, if any, on a
dollar-for-dollar basis and, thereafter, the Term Loan B Commitment, if any, on
a dollar-for-dollar basis, and (c) if Term Loan A and Term Loan B have been
repaid or prepaid in full, prepay the Advances made by Foothill to Borrower
under Section 2.1 in an amount equal to the Required Amount applicable to such
Permitted Disposition (or the balance remaining after the prepayment of Term
Loan A pursuant to clause (a) above or the prepayment of Term Loan B pursuant to
clause (b) above, as applicable), and the amount so prepaid automatically shall
reduce the Term Loan A Commitment, if any, on a dollar-for-dollar basis and,
thereafter, the Term Loan B Commitment, if any, on a dollar-for-dollar basis
and, thereafter the Maximum Revolving Amount, on a dollar-for-dollar basis.
3. CONDITIONS; TERM OF AGREEMENT.
3.1 Conditions Precedent to the Initial Advance and Term Loan A. The
obligation of Foothill to make the initial Advance and to make Term Loan A is
subject to the fulfillment, to the satisfaction of Foothill and its counsel, of
each of the following conditions on or before the Closing Date:
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(a) the Closing Date shall occur on or before August 23, 1996;
(b) Foothill shall have received searches reflecting the
filing of its financing statements and fixture filings;
(c) Foothill shall have received each of the following
documents, duly executed, and each such document shall be in full force and
effect:
i) the Disbursement Letter;
ii) the Loan Purchase Agreement, together with UCC
assignments, Real Property Collateral assignments and
other documentation evidencing, among other things, the
assignment to Foothill by Existing Lender of the
Existing Loans and all of its Liens in and to the
properties and assets of Borrower, and together with the
originals of all of the loan documents being assigned
thereby;
iii) the Mortgages; and
iv) the Trademark Security Agreements;
(d) Foothill shall have received a certificate from the
Secretary of Borrower attesting to the resolutions of Borrower's Board of
Directors authorizing its execution, delivery, and performance of this Agreement
and the other Loan Documents to which Borrower is a party and authorizing
specific officers of Borrower to execute the same;
(e) Foothill shall have received copies of Borrower's
Governing Documents, as amended, modified, or supplemented to the Closing Date,
certified by the Secretary of Borrower;
(f) Foothill shall have received a certificate of status with
respect to Borrower, dated within 10 days of the Closing Date, by the
appropriate officer of the jurisdiction of organization of Borrower, which
certificate shall indicate that Borrower is in good standing in such
jurisdiction;
(g) Foothill shall have received certificates of status with
respect to Borrower, each dated within 15 days of the Closing Date, such
certificates to be issued by the appropriate officer of the jurisdictions in
which its failure to be duly qualified or
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licensed would have a Material Adverse Change, which certificates shall indicate
that Borrower is in good standing in such jurisdictions;
(h) Foothill shall have received a certificate of insurance,
together with the endorsements thereto, as are required by Section 6.10, the
form and substance of which shall be satisfactory to Foothill and its counsel;
(i) [Intentionally omitted];
(j) The terms and conditions of the Nine Percent Debentures,
the Ten Percent Debentures, and the NEF Debentures, in each case as in effect on
the Closing Date and giving effect to any prior or concurrent amendments thereof
or exchanges thereof, shall be satisfactory to Foothill, and any and all
defaults under the Nine Percent Debentures shall have been cured or waived;
(k) Foothill shall have received opinions of Borrower's
counsel in form and substance satisfactory to Foothill in its sole discretion;
(l) Foothill shall have received (i) appraisals of the Real
Property Collateral and appraisals of the Equipment, in each case satisfactory
to Foothill, and (ii) mortgagee title insurance policies or assignments of the
insured's interest therein (or marked commitments to issue the same) for the
Real Property Collateral issued by a title insurance company satisfactory to
Foothill (each a "Mortgage Policy" and, collectively, the "Mortgage Policies")
in amounts satisfactory to Foothill assuring Foothill that the Mortgages on such
Mortgaged Properties are valid and enforceable first priority mortgage Liens on
such Mortgaged Properties free and clear of all defects and encumbrances except
Permitted Liens, and the Mortgage Policies shall otherwise be in form and
substance reasonably satisfactory to Foothill;
(m) Foothill shall have received a phase-I environmental
report (and tank testing report) and a real estate survey shall have been
completed with respect to the Real Property Collateral and copies thereof
delivered to Foothill; the environmental consultants and surveyors retained for
such reports or surveys, the scope of the reports or surveys, and the results
thereof shall be acceptable to Foothill in its sole discretion;
(n) Foothill shall have received satisfactory evidence that
all returns required to be filed by Borrower have been timely filed and all
taxes upon Borrower or its properties, assets, income, and franchises (including
Real Property taxes and payroll taxes) have been paid prior to delinquency,
except such taxes that are the subject of a Permitted Protest;
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(o) Foothill shall have received, reviewed and approved
financial projections for the Borrower for the calendar years of 1996 including
the detail relating to the projected performance of individual FunCenter
operations and budgeted performance of FunCenters open less than 12 months;
(p) Foothill shall have received satisfactory evidence that
Borrower has addressed all outstanding property tax defaults and issues,
together with the ability to report monthly the currency of the Real Property
and all employee payroll taxes, each to the reasonable satisfaction of Foothill;
(q) [Intentionally omitted];
(r) [Intentionally omitted];
(s) Foothill shall be satisfied that the NEF Acquisition shall
have been consummated prior to or upon the Closing Date, and shall have received
certified true and complete copies of all documents executed and delivered in
connection therewith;
(t) to the extent that any defined term herein requires that
Foothill have received copies of documents certified as being true and correct
prior to the Closing Date, Foothill shall have received such copies so certified
sufficiently in advance of the Closing Date as to have had a reasonable
opportunity to review same;
(u) Mountasia shall have pledged to Foothill, to secure its
Obligations, 100% of the issued and outstanding capital stock (or other
interests) of each of its first-tier Subsidiaries, pursuant to a pledge
agreement satisfactory to Foothill, and shall have delivered to Foothill the
original stock certificates evidencing same together with duly executed stock
powers with respect thereto in form satisfactory to Foothill;
(v) MGPC shall have pledged to Foothill, to secure its
Obligations, 100% of the issued and outstanding capital stock (or other
interests) of each of its first-tier Subsidiaries, pursuant to a pledge
agreement satisfactory to Foothill, and shall have delivered to Foothill the
original stock certificates evidencing same together with duly executed stock
powers with respect thereto in form satisfactory to Foothill;
(w) Hampstead, prior to the consummation of the purchase by
Foothill from Hampstead of Hampstead's claims against Borrower, shall have
converted all indebtedness owed to Hampstead by Borrower in excess of
$20,000,000 to common equity of Mountasia, and Foothill shall have received
satisfactory written evidence of such conversion;
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(x) Hampstead shall have contributed to the common equity of
Mountasia an amount, in cash, of not less than $40,000,000 less the amount of
Indebtedness converted to common equity as described in the immediately
preceding paragraph, and Foothill shall have received satisfactory written
evidence of such conversion;
(y) each of the Houston Note and the Young World of
Spartanburg Note shall have been fully repaid and discharged, any Liens securing
either of same shall have been released (or the holders thereof shall have
contractually obligated themselves to release such Liens), and Foothill shall
have received satisfactory written evidence of the foregoing;
(z) [Intentionally omitted];
(aa) Foothill shall have received a copy of the executed
letter of intent relative to Borrower's proposed purchase of the Real Property
on which Borrower operates its FunCenter located in ▇▇▇▇▇▇ Hills, California,
such agreement to be certified by an appropriate officer of Borrower as being
true and complete;
(ab) Foothill shall have received a copy of the executed
Service Agreement between Hampstead and Mountasia, such agreement to be in form
and substance satisfactory to Foothill and to be certified by an appropriate
officer of Borrower as being true and complete;
(ac) on the Closing Date, Foothill shall have received from
Borrower a pro forma consolidated opening balance sheet of Mountasia, giving
effect to all of the transactions enumerated in this Agreement that are to be
completed on or before the Closing Date and the making of the initial Advance
and Term Loan A, the form and substance of which shall be satisfactory to
Foothill; and
(ad) all other documents and legal matters in connection with
the transactions contemplated by this Agreement shall have been delivered or
executed or recorded and shall be in form and substance satisfactory to Foothill
and its counsel.
3.2 Conditions Precedent to Term Loan B. The obligation of Foothill
to make Term Loan B is subject to the fulfillment, to the satisfaction of
Foothill and its counsel, of each of the following conditions on or before
December 31, 1996:
(a) Borrower shall have provided Foothill with a written
request to fund Term Loan B;
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(b) [Intentionally omitted];
(c) Foothill shall have received either (i) the required
approval of Norwest Corporation to fund Term Loan B (it being understood by
Borrower that Foothill has not approached Norwest Corporation for such approval
and that there can be no assurance that Norwest Corporation will grant such
approval, although Foothill acknowledges its obligation to request such approval
in accordance with the provisions of Section 15.10 hereof), or (ii) binding
commitments in an aggregate amount of $5,000,000, or greater, from Participants,
each on terms and conditions acceptable to Foothill;
(d) Borrower previously or contemporaneously shall have
completed the Willowbrook Acquisition in accordance with the terms and
conditions of the Willowbrook Acquisition Documents;
(e) Foothill shall receive (i) subject to receiving, if
required, the consent of the existing secured lender respecting Willowbrook
(which consent Borrower shall use its reasonable best efforts to obtain), a
perfected second priority Lien on all assets associated with Willowbrook, real
and personal, pursuant to security documents satisfactory to Foothill, junior
only to a prior Lien in favor of the existing secured lender of approximately
$1,500,000 of aggregate principal amount, and (ii) mortgagee title insurance
policy (or a marked commitment to issue the same) for the Real Property
Collateral associated with Willowbrook issued by a title insurance company
satisfactory to Foothill in an amount satisfactory to Foothill assuring Foothill
that the Mortgage on such property creates a valid and enforceable first
priority mortgage Lien on such property free and clear of all defects and
encumbrances except Permitted Liens, and such mortgage policy or commitment
shall otherwise be in form and substance reasonably satisfactory to Foothill;
and
(f) any conditions subsequent provided for in Section 3.4 that
are due to have been satisfied shall have been satisfied as Foothill may
determine in its sole discretion.
3.3 Conditions Precedent to all Advances and the Term Loans. The
following shall be conditions precedent to all Advances and the making of each
of the Term Loans hereunder:
(a) the representations and warranties contained in this
Agreement and the other Loan Documents shall be true and correct in all respects
on and as of the date of such extension of credit, as though made on and as of
such date (except to the extent that such representations and warranties relate
solely to an earlier date);
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(b) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof; and
(c) no injunction, writ, restraining order, or other order of
any nature prohibiting, directly or indirectly, the extending of such credit
shall have been issued and remain in force by any governmental authority against
Borrower, Foothill, or any of their Affiliates.
3.4 Conditions Subsequent. As conditions subsequent to initial
closing hereunder, Borrower shall perform or cause to be performed the following
(the failure by Borrower to so perform or cause to be performed constituting an
Event of Default hereunder):
(a) within 30 days following the Closing Date, deliver to Foothill
the certified copies of the policies of insurance, together with the
endorsements thereto, as are required by Section 6.10, the form and substance of
which shall be satisfactory to Foothill and its counsel;
(b) to the extent that Foothill closes without satisfaction on or
before the Closing Date of any condition precedent pertaining to Real Property
(including assignments of leasehold estates), such condition precedent shall not
be waived and automatically shall become a condition subsequent that Borrower
shall use its reasonable best efforts to complete as soon as practicable
following the Closing Date;
(c) within 60 days following the Closing Date, deliver to Foothill
Collateral Access Agreements from the lessors with respect to Borrower's
headquarters location in Alpharetta, Georgia, and its Warner Center location in
Woodland Hills, California;
(d) within 60 days following the Closing Date, deliver to Foothill
evidence that Borrower has obtained business interruption insurance, the terms
and conditions of the insurance policy regarding such insurance to be
satisfactory to Foothill;
(e) within 60 days following the Closing Date, deliver to Foothill
evidence that Borrower has increased the amount of its combined single limit
bodily injury and property damage insurance to $20,000,000, the terms and
conditions of the insurance policy regarding such insurance to be satisfactory
to Foothill;
(f) within 60 days following the Closing Date, either (i) the
approximately $1,500,000 Indebtedness of Santa Clarita to Mountasia shall have
been restructured on
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terms and conditions satisfactory to Foothill, such restructured Indebtedness
shall have been evidenced by a negotiable promissory note made by Santa Clarita
to the order of Mountasia, and such promissory note shall have been endorsed and
negotiated by Mountasia to Foothill, as a holder in due course, in order to
secure the Obligations, (ii) the approximately $1,500,000 Indebtedness of Santa
Clarita to Mountasia shall have been exchanged by Mountasia for additional
partnership interests in Santa Clarita, which such additional partnership
interests shall have been hypothecated by Mountasia in favor of Foothill in
order to secure the Obligations, or (iii) Mountasia shall institute and
diligently prosecute proceedings designed to effect the collection of the
approximately $1,500,000 of Indebtedness of Santa Clarita to Mountasia; and
(g) within 45 days following the Closing Date, (i) enter into a
Blocked Account Agreement with a Blocked Account Bank, (ii) irrevocably instruct
the bank at which the Temporary Account is maintained to remit all Collections
received in such account directly to the Blocked Account, and (iii) irrevocably
instruct any depositary institution with which any deposit account of any Debtor
(other than the Blocked Account) is maintained to remit all Collections received
in such accounts to the Blocked Account. During the period from and after the
Closing Date up to the date on which the foregoing conditions are satisfied,
Borrower shall telecopy to Foothill an account activity statement with respect
to all Collections received in the Temporary Account as often as Collections are
received in the Temporary Account, but in any event no less frequently than once
per week.
3.5 Term. This Agreement shall become effective upon the execution
and delivery hereof by Borrower and Foothill, without regard to whether Borrower
has satisfied or thereafter satisfies the conditions precedent to Foothill's
obligation to lend, and without regard to whether, when, or if the Closing Date
occurs, and shall continue in full force and effect for a term ending on the
Maturity Date. The foregoing notwithstanding, Foothill shall have the right to
terminate its obligations under this Agreement immediately and without notice
upon the occurrence and during the continuation of an Event of Default.
3.6 Effect of Termination. On the date of termination of this
Agreement, all Obligations immediately shall become due and payable without
notice or demand. No termination of this Agreement, however, shall relieve or
discharge Borrower of Borrower's duties, Obligations, or covenants hereunder,
and Foothill's continuing security interests in the Collateral shall remain in
effect until all Obligations have been fully and finally discharged and
Foothill's obligation to provide additional credit hereunder is terminated.
3.7 Early Termination by Borrower. Borrower has the option, at any
time upon 45 days prior written notice to Foothill, to terminate this Agreement
by paying
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to Foothill, in cash, the Obligations, in full, together with a premium (the
"Early Termination Premium") equal to $50,000 (which amount shall be in addition
to the Exit Fee that is then due and payable).
3.8 Termination Upon Event of Default. If Foothill terminates this
Agreement upon the occurrence of an Event of Default, in view of the
impracticability and extreme difficulty of ascertaining actual damages and by
mutual agreement of the parties as to a reasonable calculation of Foothill's
lost profits as a result thereof, Borrower shall pay to Foothill upon the
effective date of such termination, a premium in an amount equal to the Early
Termination Premium. The Early Termination Premium shall be presumed to be the
amount of damages sustained by Foothill as the result of the early termination
and Borrower agrees that it is reasonable under the circumstances currently
existing. The Early Termination Premium provided for in this Section 3.8 shall
be deemed included in the Obligations.
3.9 Conditions Precedent to Re-Advancing Term Loan A or any Portion
Thereof. The obligation of Foothill to readvance any portion of Term Loan A
shall be subject to the fulfillment, to the satisfaction of Foothill and its
counsel, of each of the following conditions:
(a) the aggregate amount of re-advances under Term Loan A
shall not exceed $12,500,000 (i.e., Term Loan A may only be re-borrowed once in
the aggregate), and the aggregate outstanding principal balance of Term Loan A
shall not at any time exceed the Term Loan A Commitment;
(b) each drawing with respect to re-advances under Term Loan A
shall be in a minimum amount of $50,000;
(c) Foothill shall have received from Borrower not less than 3
Business Days prior written notice of Borrower's request for such re-advance,
specifying the requested amount and date of such re-advance;
(d) Borrower shall have executed and delivered to Foothill any
Mortgage amendments deemed necessary by Foothill to clarify that each such
re-advance is secured by the Mortgages and to permit the obtaining of
appropriate title insurance endorsements;
(e) Foothill shall have obtained, at the expense of Borrower,
endorsements to its policies of title insurance with respect to the Mortgages
and the Real Property Collateral, "down-dating" such policies, and insuring the
continuing priority of
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Foothill's Lien under the Mortgages, as amended, to secure the Obligations
secured thereby including such re-advances, the form of such endorsements to be
acceptable to Foothill;
(f) any and all mortgage recording taxes, documentary stamp
taxes, intangibles taxes, and other tax obligations arising as a result of the
making of such re-advances, or the execution, delivery, or recordation of any
Mortgage amendments in connection therewith, shall have been paid by Borrower;
(g) the Term Loan A Prepayment Date shall have occurred;
(h) [Intentionally omitted]; and
(i) any conditions subsequent provided for in Section 3.4 that
are due to have been satisfied shall have been satisfied or waived by Foothill
in its sole discretion.
4. CREATION OF SECURITY INTEREST.
4.1 Grant of Security Interest. Borrower hereby grants to Foothill a
continuing security interest in all currently existing and hereafter acquired or
arising Personal Property Collateral in order to secure prompt repayment of any
and all Obligations and in order to secure prompt performance by Borrower of
each of its covenants and duties under the Loan Documents. Foothill's security
interests in the Personal Property Collateral shall attach to all Personal
Property Collateral without further act on the part of Foothill or Borrower.
Anything contained in this Agreement or any other Loan Document to the contrary
notwithstanding, except for Permitted Dispositions, Borrower has no authority,
express or implied, to dispose of any item or portion of the Personal Property
Collateral or the Real Property Collateral.
4.2 Negotiable Collateral. In the event that any Collateral,
including proceeds, is evidenced by or consists of Negotiable Collateral,
Borrower, immediately upon the request of Foothill, shall endorse and deliver
physical possession of such Negotiable Collateral to Foothill.
4.3 Collection of Accounts, General Intangibles, and Negotiable
Collateral. Except as otherwise set forth below, at any time, Foothill or
Foothill's designee may (a) notify customers or Account Debtors of Borrower that
the Accounts, General Intangibles, or Negotiable Collateral have been assigned
to Foothill or that Foothill has a security interest therein, and (b) collect
the Accounts, General Intangibles, and Negotiable Collateral directly and charge
the collection costs and expenses to the Loan Account. Borrower agrees that it
will hold in trust for Foothill, as Foothill's trustee, any
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Collections that it receives and immediately will deliver said Collections to
Foothill in their original form as received by Borrower. The foregoing
notwithstanding, unless an Event of Default has occurred and is continuing or
Suit has been commenced and is continuing with respect thereto, Foothill shall
not notify any Designated Obligor that any Designated Claim has been assigned to
Foothill, and, unless an Event of Default has occurred and is continuing,
Foothill shall not directly collect any Designated Claim from a Designated
Obligor.
4.4 Delivery of Additional Documentation Required. At any time upon
the request of Foothill, Borrower shall execute and deliver to Foothill all
financing statements, continuation financing statements, fixture filings,
security agreements, chattel mortgages, pledges, assignments, endorsements of
certificates of title, applications for title, affidavits, reports, notices,
schedules of accounts, letters of authority, and all other documents that
Foothill reasonably may request, in form satisfactory to Foothill, to perfect
and continue perfected Foothill's security interests in the Collateral, and in
order to fully consummate all of the transactions contemplated hereby and under
the other the Loan Documents. In addition, and without limiting the generality
of the foregoing, (a) Borrower acknowledges and agrees that, subject to the
provisos in the definitions of "Collateral," "Permitted Mountasia Acquisition,"
and "Permitted Unrestricted Subsidiary Acquisition," Foothill shall be entitled,
at Foothill's sole option, to have a Lien on all present or future, now owned or
hereafter acquired, Real Property of Borrower (including FunCenters acquired or
developed after the Closing Date), or any part thereof, even though Foothill may
not have obtained a Lien on some of the Real Property as of the Closing Date for
various reasons (including practical considerations), and Foothill's failure to
have obtained a Lien on any Real Property on the Closing Date shall not
constitute a waiver of its right to request and obtain such a Lien thereafter
(provided that such decision shall be at the sole option of Foothill), and, (b)
if at any time Foothill asks any Debtor to transfer any Real Property to any
other Debtor of which such transferor Debtor is a Subsidiary, such transferor
Debtor will do so if it may lawfully do so, will execute and deliver any
documents of transfer reasonably requested by Foothill, and will use its best
efforts to obtain any consents of third parties (such as lessors) that may be
necessary or advisable in connection therewith.
4.5 Power of Attorney. Borrower hereby irrevocably makes,
constitutes, and appoints Foothill (and any of Foothill's officers, employees,
or agents designated by Foothill) as Borrower's true and lawful attorney, with
power to (a) at any time that an Event of Default has occurred and is
continuing, if Borrower refuses to, or fails timely to execute and deliver any
of the documents described in Section 4.4, sign the name of Borrower on any of
the documents described in Section 4.4, (b) at any time that an Event of Default
has occurred and is continuing, sign Borrower's name on any invoice or ▇▇▇▇ of
lading relating to any Account, drafts against Account Debtors, schedules and
assignments
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of Accounts, verifications of Accounts, and notices to Account Debtors, (c) at
any time than an Event of Default has occurred and is continuing or Foothill
deems itself insecure, send requests for verification of Accounts, (d) endorse
Borrower's name on any Collection item that may come into Foothill's possession,
(e) at any time that an Event of Default has occurred and is continuing, notify
the post office authorities to change the address for delivery of Borrower's
mail to an address designated by Foothill, to receive and open all mail
addressed to Borrower, and to retain all mail relating to the Collateral and
forward all other mail to Borrower, (f) at any time that an Event of Default has
occurred and is continuing, make, settle, and adjust all claims under Borrower's
policies of insurance and make all determinations and decisions with respect to
such policies of insurance, and (g) at any time that an Event of Default has
occurred and is continuing, settle and adjust disputes and claims respecting the
Accounts directly with Account Debtors, for amounts and upon terms that Foothill
determines to be reasonable, and Foothill may cause to be executed and delivered
any documents and releases that Foothill determines to be necessary. The
appointment of Foothill as Borrower's attorney, and each and every one of
Foothill's rights and powers, being coupled with an interest, is irrevocable
until all of the Obligations have been fully and finally repaid and performed
and Foothill's obligation to extend credit hereunder is terminated.
4.6 Right to Inspect. Prior to the time that an Event of Default has
occurred and is continuing or Foothill deems itself insecure (in accordance with
Section 1208 of the Code), Foothill (through any of its officers, employees, or
agents) shall have the right, from time to time hereafter upon prior
notification to Borrower and during normal business hours, to inspect Borrower's
Books and to check, test, and appraise the Collateral in order to verify
Borrower's financial condition or the amount, quality, value, condition of, or
any other matter relating to, the Collateral. After the time that an Event of
Default has occurred and is continuing or Foothill deems itself insecure (in
accordance with Section 1208 of the Code), Foothill (through any of its
officers, employees, or agents) shall have the right, from time to time
hereafter during reasonable business hours, to inspect Borrower's Books and to
check, test, and appraise the Collateral in order to verify Borrower's financial
condition or the amount, quality, value, condition of, or any other matter
relating to, the Collateral.
4.7 Quitclaim. Each Inactive Subsidiary hereby transfers, assigns,
and quitclaims to Mountasia all of its right, title, and interest in and to any
personal property of any type or nature whatsoever, including all Personal
Property Collateral. This Section 4.7 is not applicable with respect to any Real
Property.
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5. REPRESENTATIONS AND WARRANTIES.
In order to induce Foothill to enter into this Agreement, Borrower
makes the following representations and warranties which shall be true, correct,
and complete in all respects as of the date hereof, and shall be true, correct,
and complete in all respects as of the Closing Date, and at and as of the date
of the making of each Advance and Term Loans made thereafter, as though made on
and as of the date of such Advance or Term Loans (except to the extent that such
representations and warranties relate solely to an earlier date) and such
representations and warranties shall survive the execution and delivery of this
Agreement:
5.1 No Encumbrances. Borrower has good and indefeasible title to the
Collateral, free and clear of Liens except for Permitted Liens.
5.2 Equipment. All of the Equipment is used or held for use in
Borrower's business and is fit for such purposes.
5.3 Location of Inventory and Equipment. The Inventory and Equipment
are not stored with a bailee, warehouseman, or similar party (without Foothill's
prior written consent) and are located only at the locations identified (on a
Debtor-by-Debtor basis) on Schedule 6.12 or otherwise permitted by Section 6.12.
5.4 Inventory Records. Borrower keeps correct and accurate records
with respect to its Inventory, to the extent that it has any Inventory.
5.5 Location of Chief Executive Office; FEIN. The chief executive
office of Borrower is located at the address indicated in the preamble to this
Agreement and each Debtor's FEIN is as indicated on Schedule 5.5.
5.6 Due Organization and Qualification; Subsidiaries.
(a) Each Debtor is duly incorporated and existing and in good
standing under the laws of the jurisdiction of its incorporation (or, in the
case of the one Subsidiary that is a limited partnership, formation and
organization) and qualified and licensed to do business in, and in good standing
in, any state where the failure to be so licensed or qualified reasonably could
be expected to have a Material Adverse Change.
(b) Set forth on Schedule 5.6 attached hereto is a complete
and accurate list of Mountasia's direct and indirect Subsidiaries, showing: (i)
the jurisdiction of their incorporation (or, in the case of the one Subsidiary
that is a limited partnership, formation and organization); (ii) the number of
shares of each class of common and
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preferred stock authorized for each of such Subsidiaries (or, in the case of the
one Subsidiary that is a limited partnership, the authorized partnership
interests that exist); and (iii) the number and the percentage of the
outstanding shares of each such class owned directly or indirectly by any Debtor
(specifying which Debtor or Debtors own same) (or, in the case of the one
Subsidiary that is a limited partnership, corresponding information as to which
Debtor or Debtors own which partnership interests therein). All of the
outstanding capital stock or partnership interests of each such Subsidiary have
been validly issued and are fully paid and non-assessable. Mountasia, directly
or indirectly, owns not less than 23.2% of the partnership interests in Santa
Clarita.
(c) Except as set forth on Schedule 5.6 attached hereto, no
capital stock or partnership interests (or any securities, instruments,
warrants, options, purchase rights, conversion or exchange rights, calls,
commitments or claims of any character convertible into or exercisable for
capital stock or partnership interests) of any Debtor is subject to the issuance
of any security, instrument, warrant, option, purchase right, conversion or
exchange right, call, commitment or claim of any right, title, or interest
therein or thereto.
(d) As to each Inactive Subsidiary: It does not own any
property or assets of any consequential value (after giving effect to any
transfers being made by it on the Closing Date), does not currently engage in
any business, and does not intend in the future to engage in any business.
5.7 Due Authorization; No Conflict.
(a) The execution, delivery, and performance by Borrower of
this Agreement and the Loan Documents to which it is a party have been duly
authorized by all necessary corporate action.
(b) The execution, delivery, and performance by Borrower of
this Agreement and the Loan Documents to which it is a party do not and will not
(i) violate any provision of federal, state, or local law or regulation
(including Regulations G, T, U, and X of the Federal Reserve Board) applicable
to Borrower, the Governing Documents of Borrower, or any order, judgment, or
decree of any court or other Governmental Authority binding on Borrower, (ii)
conflict with, result in a breach of, or constitute (with due notice or lapse of
time or both) a default under any material contractual obligation or material
lease of Borrower, (ii) result in or require the creation or imposition of any
Lien of any nature whatsoever upon any properties or assets of Borrower, other
than Permitted Liens, or (iv) require any approval of stockholders or any
approval or consent of any Person under any material contractual obligation of
Borrower.
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(c) Other than the filing of appropriate financing statements
(and assignments thereof), fixture filings (and assignments thereof), and
Mortgages (and assignments thereof), the execution, delivery, and performance by
Borrower of this Agreement and the Loan Documents to which Borrower is a party
do not and will not require any registration with, consent, or approval of, or
notice to, or other action with or by, any federal, state, foreign, or other
Governmental Authority or other Person.
(d) This Agreement and the Loan Documents to which Borrower is
a party, and all other documents contemplated hereby and thereby, when executed
and delivered by Borrower will be the legally valid and binding obligations of
such Debtor, enforceable against Borrower in accordance with their respective
terms, except as enforcement may be limited by equitable principles or by
bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to
or limiting creditors' rights generally.
(e) The Liens granted by Borrower to Foothill in and to its
properties and assets pursuant to this Agreement and the other Loan Documents
are validly created, perfected, and first priority Liens, subject only to
Permitted Liens.
5.8 Litigation. There are no actions or proceedings pending by or
against Borrower before any court or administrative agency and Borrower does not
have knowledge or belief of any pending, threatened, or imminent litigation,
governmental investigations, or claims, complaints, actions, or prosecutions
involving Borrower or any guarantor of the Obligations, except for: (a) ongoing
collection matters in which Borrower is the plaintiff; (b) matters disclosed on
Schedule 5.8; and (c) matters arising after the date hereof that, if decided
adversely to Borrower, would not have a Material Adverse Change.
5.9 No Material Adverse Change. All financial statements relating to
Borrower or any guarantor of the Obligations that have been delivered by
Borrower to Foothill have been prepared in accordance with GAAP (except, in the
case of unaudited financial statements, for the lack of footnotes and being
subject to year-end audit adjustments) and, except for potential restatements
relating to Columbus or Willowbrook not affecting Borrower's cash flow, and
except for any non-cash investment asset writedowns by Borrower that occur after
June 30, 1996 as a result of compliance with Financial Accounting Standard No.
121, fairly present Borrower's (or such guarantor's, as applicable) financial
condition as of the date thereof and Borrower's results of operations for the
period then ended. There has not been a Material Adverse Change with respect to
Borrower (or such guarantor, as applicable) since the date of the latest
financial statements submitted to Foothill on or before the Closing Date.
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5.10 Solvency. Borrower is Solvent. No transfer of property is being
made by Borrower and no obligation is being incurred by Borrower in connection
with the transactions contemplated by this Agreement or the other Loan Documents
with the intent to hinder, delay, or defraud either present or future creditors
of Borrower.
5.11 Employee Benefits. None of Borrower, any of its Subsidiaries,
or any of their ERISA Affiliates maintains or contributes to any Benefit Plan.
Borrower, each of its Subsidiaries and each ERISA Affiliate have satisfied the
minimum funding standards of ERISA and the IRC with respect to each Benefit Plan
to which it is obligated to contribute. No ERISA Event has occurred nor has any
other event occurred that may result in an ERISA Event that reasonably could be
expected to result in a Material Adverse Change. None of Borrower or its
Subsidiaries, any ERISA Affiliate, or any fiduciary of any Plan is subject to
any direct or indirect liability with respect to any Plan under any applicable
law, treaty, rule, regulation, or agreement. None of Borrower or its
Subsidiaries or any ERISA Affiliate is required to provide security to any Plan
under Section 401(a)(29) of the IRC.
5.12 Environmental Condition. Except as specifically disclosed on
Schedule 5.12, and other than in accordance with applicable laws or regulations,
none of Borrower's properties or assets has ever been used by Borrower or, to
the best of Borrower's knowledge, by previous owners or operators in the
disposal of, or to produce, store, handle, treat, release, or transport, any
Hazardous Materials that has had or reasonably could be expected to result in a
Material Adverse Change or a material impairment of the value of any item of
Real Property Collateral. Except as specifically disclosed on Schedule 5.12, and
other than in accordance with applicable laws or regulations, none of Borrower's
properties or assets has ever been designated or identified in any manner
pursuant to any environmental protection statute as a Hazardous Materials
disposal site, or a candidate for closure pursuant to any environmental
protection statute. No Lien arising under any environmental protection statute
has attached to any revenues or to any real or personal property owned or
operated by Borrower. Except as specifically disclosed on Schedule 5.12,
Borrower has not received a summons, citation, notice, or directive from, or
provided notification to, the Environmental Protection Agency or any other
federal or state governmental agency concerning any action or omission by
Borrower resulting in the releasing or disposing of Hazardous Materials into the
environment.
6. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until full and final payment of the Obligations, and
unless Foothill shall otherwise consent in writing, Borrower shall do all of the
following:
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6.1 Accounting System. Maintain a standard and modern system of
accounting that enables Borrower to produce financial statements in accordance
with GAAP and also maintains records pertaining to the Collateral that contain
information as from time to time may be requested by Foothill.
6.2 Collateral Reporting. Provide Foothill with the following
documents at the following times in form satisfactory to Foothill: (a) on a
monthly basis and, in any event, by no later than the last day of each month
during the term of this Agreement, a summary aging, by vendor, of Borrower's
accounts payable and any book overdraft, current within a week of the date of
delivery, (b) on a monthly basis and, in any event, by no later than the last
day of each month during the term of this Agreement, a report detailing any
delinquent Real Property or payroll taxes owed by any Debtor, specifying with
reasonable particularity and amounts details thereof, (c) on an annual basis,
tank test reports with respect to any underground storage tanks located on any
Real Property, and (d) such other reports as to the Collateral or the financial
condition of Borrower as Foothill may request from time to time.
6.3 Financial Statements, Reports, Certificates. Deliver to
Foothill: (a) as soon as available, but in any event within 30 days after the
end of each month during each of Borrower's fiscal years, Borrower-prepared
unaudited and unconsolidated balance sheets for Mountasia and MGPC,
FunCenter-by-FunCenter income statements and operating reports for each
FunCenter, and a consolidated income statement and operating report for all
FunCenters taken as a whole; and (b) as soon as available, but in any event
within 90 days after the end of each of Borrower's fiscal years, consolidated
financial statements of Borrower for each such fiscal year, audited by
independent certified public accountants reasonably acceptable to Foothill and
certified, without any qualifications, by such accountants to have been prepared
in accordance with GAAP, together with a certificate of such accountants
addressed to Foothill stating that, in the course of their engagement, such
accountants did not acquire actual knowledge of the existence of any Event of
Default. Such audited financial statements shall include a balance sheet, profit
and loss statement, and statement of cash flow and, if prepared, such
accountants' letter to management.
Together with the above, Borrower also shall deliver to Foothill
Borrower's Form 10-Q Quarterly Reports, Form 10-K Annual Reports, and Form 8-K
Current Reports, and any other filings made by Borrower with the Securities and
Exchange Commission, if any, as soon as the same are filed, or any other
information that is provided by Borrower to its shareholders, and any other
report reasonably requested by Foothill relating to the financial condition of
Borrower.
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Each month, together with the financial statements provided pursuant
to Section 6.3(a), Borrower shall deliver to Foothill a certificate signed by
its chief financial officer to the effect that: (i) all financial statements
delivered or caused to be delivered to Foothill hereunder have been prepared in
accordance with GAAP (except, in the case of unaudited financial statements, for
the lack of footnotes and being subject to year-end audit adjustments) and
fairly present the financial condition of Borrower, (ii) the representations and
warranties of Borrower contained in this Agreement and the other Loan Documents
are true and correct in all material respects on and as of the date of such
certificate, as though made on and as of such date (except to the extent that
such representations and warranties relate solely to an earlier date), (iii) for
each month that also is the date on which a financial covenant in Section 7.19
is to be tested, a Compliance Certificate demonstrating in reasonable detail
compliance at the end of such period with the applicable financial covenants
contained in Section 7.19, and (iv) on the date of delivery of such certificate
to Foothill there does not exist any condition or event that constitutes a
Default or Event of Default (or, in the case of clauses (i), (ii), or (iii), to
the extent of any non-compliance, describing such non-compliance as to which he
or she may have knowledge and what action Borrower has taken, is taking, or
proposes to take with respect thereto).
Borrower shall have issued written instructions to its independent
certified public accountants authorizing them to communicate with Foothill and
to release to Foothill whatever financial information concerning Borrower that
Foothill reasonably may request. Borrower hereby irrevocably authorizes and
directs all auditors, accountants, or other third parties (other than lawyers)
to deliver to Foothill, at Borrower's expense, copies of Borrower's financial
statements, papers related thereto, and other accounting records of any nature
in their possession, and to disclose to Foothill any information they may have
regarding Borrower's business affairs and financial conditions. The foregoing
notwithstanding, Foothill shall not actually independently communicate with
Borrower's auditors, accountants, or other third parties for the foregoing
purposes without the consent of Borrower unless (a) Foothill first shall have
made a reasonable attempt to obtain the requested information through Borrower
and not have obtained a reasonably acceptable response from Borrower within
fifteen days of Foothill's request, and (b) 1 Business Day prior, Foothill shall
have notified Borrower that it intends to communicate directly with Borrower's
independent public accountants.
6.4 Tax Returns. Deliver to Foothill copies of each of Borrower's
future federal income tax returns, and any amendments thereto, within 30 days of
the filing thereof with the Internal Revenue Service.
6.5 Intentionally Omitted.
6.6 Intentionally Omitted.
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6.7 Title to Equipment. Upon Foothill's request, Borrower
immediately shall deliver to Foothill, properly endorsed, any and all evidences
of ownership of, certificates of title, or applications for title to any items
of Equipment.
6.8 Maintenance of Equipment. Maintain the Equipment in good
operating condition and repair (ordinary wear and tear excepted), and make all
necessary replacements thereto so that the value and operating efficiency
thereof shall at all times be maintained and preserved. Other than those items
of Equipment that constitute fixtures on the Closing Date, Borrower shall not
permit any item of Equipment to become a fixture to real estate or an accession
to other property, and such Equipment shall at all times remain personal
property.
6.9 Taxes. All assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against Borrower
or any of its property shall be paid in full, before delinquency or before the
expiration of any extension period, except to the extent that the validity of
such assessment or tax (other than payroll taxes or taxes that are the subject
of a United States federal tax lien) shall be the subject of a Permitted
Protest. Borrower shall make due and timely payment or deposit of all such
federal, state, and local taxes, assessments, or contributions required of it by
law, and will execute and deliver to Foothill, on demand, appropriate
certificates attesting to the payment thereof or deposit with respect thereto.
Borrower will make timely payment or deposit of all tax payments and withholding
taxes required of it by applicable laws, including those laws concerning
F.I.C.A., F.U.T.A., state disability, and local, state, and federal income
taxes, and will, upon request, furnish Foothill with proof satisfactory to
Foothill indicating that Borrower has made such payments or deposits.
6.10 Insurance.
(a) At its expense, keep the Personal Property Collateral
insured against loss or damage by fire, theft, explosion, sprinklers, and all
other hazards and risks, and in such amounts, as are ordinarily insured against
by other owners in similar businesses. Borrower also shall maintain business
interruption (commencing no later than 60 days from the Closing Date), public
liability, product liability, and property damage insurance relating to
Borrower's ownership and use of the Personal Property Collateral, as well as
insurance against larceny, embezzlement, and criminal misappropriation.
(b) At its expense, obtain and maintain (i) insurance of the
type necessary to insure the Improvements and Chattels (as such terms are
defined in the Mortgages), for the full replacement cost thereof, against any
loss by fire, lightning, windstorm, hail, explosion, aircraft, smoke damage,
vehicle damage, earthquakes, elevator collision, and other risks from time to
time included under "extended coverage" policies,
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in such amounts as Foothill may require, but in any event in amounts sufficient
to prevent Borrower from becoming a co-insurer under such policies, (ii)
combined single limit bodily injury and property damages insurance against any
loss, liability, or damages on, about, or relating to each parcel of Real
Property Collateral, in an amount of not less than $20,000,000 ($10,000,000
being acceptable prior to the date that is 60 days after the Closing Date); and
(iii) insurance for such other risks as Foothill reasonably may require.
Replacement costs, at Foothill's option, may be redetermined by an insurance
appraiser, satisfactory to Foothill, not more frequently than once every 12
months at Borrower's cost.
(c) All such policies of insurance shall be in such form, with
such companies, and in such amounts as may be reasonably satisfactory to
Foothill. As of the Closing Date, except as identified by Foothill or its
counsel to Mountasia, Borrower shall be deemed in compliance with subsections
(a) and (b) of this section and with the immediately preceding sentence of this
subsection (c), provided that this sentence shall not excuse Borrower from
complying with this section after the Closing Date with respect to events that
occur after the Closing Date that constitute changes in circumstances from those
that existed on the Closing Date and that are relevant to this section (such as,
without limitation, acquisition or development of additional FunCenters
requiring insurance coverage, the necessity of paying premiums to maintain
coverage, or changes with respect to the issuers of policies of insurance). All
insurance required herein shall be written by companies which are authorized to
do insurance business in the State of California. All such insurance shall, with
respect to hazard insurance and such other insurance as Foothill shall specify,
contain a California Form 438BFU (NS) mortgagee endorsement, or an equivalent
endorsement satisfactory to Foothill, showing Foothill as sole loss payee
thereof (as its interests may appear), and shall contain a waiver of warranties.
Every policy of insurance referred to in this Section 6.10 shall contain an
agreement by the insurer that it will not cancel such policy except after 30
days prior written notice to Foothill and that any loss payable thereunder shall
be payable notwithstanding any act or negligence of Borrower or Foothill which
might, absent such agreement, result in a forfeiture of all or a part of such
insurance payment and notwithstanding (i) occupancy or use of the Real Property
Collateral for purposes more hazardous than permitted by the terms of such
policy, (ii) any foreclosure or other action or proceeding taken by Foothill
pursuant to the Mortgages upon the happening of an Event of Default, or (iii)
any change in title or ownership of the Real Property Collateral. Borrower shall
deliver to Foothill certified copies of such policies of insurance and evidence
of the payment of all premiums therefor.
(d) Original policies or certificates thereof satisfactory to
Foothill evidencing such insurance shall be delivered to Foothill at least 30
days prior to the expiration of the existing or preceding policies. Borrower
shall give Foothill prompt notice of any loss covered by such insurance and
Foothill shall have the right to adjust any loss. Foothill shall have the
exclusive right to adjust all losses payable under any such insurance
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policies without any liability to Borrower whatsoever in respect of such
adjustments. Any monies received as payment for any loss under any insurance
policy including the insurance policies mentioned above, shall be paid over to
Foothill to be applied at the option of Foothill either to the prepayment of the
Obligations without premium, in such order or manner as Foothill may elect, or
shall be disbursed to Borrower under staged payment terms satisfactory to
Foothill for application to the cost of repairs, replacements, or restorations.
All repairs, replacements, or restorations shall be effected with reasonable
promptness and shall be of a value at least equal to the value of the items or
property destroyed prior to such damage or destruction. Upon the occurrence of
an Event of Default, Foothill shall have the right to apply all prepaid premiums
to the payment of the Obligations in such order or form as Foothill shall
determine.
(f) Borrower shall not take out separate insurance concurrent in
form or contributing in the event of loss with that required to be maintained
under this Section 6.10, unless Foothill is included thereon as named insured
with the loss payable to Foothill under a standard California 438BFU (NS)
Mortgagee endorsement, or its local equivalent. Borrower immediately shall
notify Foothill whenever such separate insurance is taken out, specifying the
insurer thereunder and full particulars as to the policies evidencing the same,
and originals of such policies immediately shall be provided to Foothill.
6.11 No Setoffs or Counterclaims. All payments hereunder and under
the other Loan Documents made by or on behalf of Borrower shall be made without
setoff or counterclaim and free and clear of, and without deduction or
withholding for or on account of, any federal, state, or local taxes.
6.12 Location of Inventory and Equipment. Keep the Inventory and
Equipment only at the locations identified on Schedule 6.12 (which schedule
shall identify permitted locations on a Debtor-by-Debtor basis); provided,
however, that Borrower may amend Schedule 6.12 so long as such amendment occurs
by written notice to Foothill not less than 30 days prior to the date on which
the Inventory or Equipment is moved to such new location, so long as such new
location is within the continental United States, and so long as, at the time of
such written notification, Borrower provides any financing statements or fixture
filings necessary to perfect and continue perfected Foothill's security
interests in such assets and also provides to Foothill a Collateral Access
Agreement.
6.13 Compliance with Laws. Comply with the requirements of all
applicable laws, rules, regulations, and orders of any governmental authority,
including the Fair Labor Standards Act and the Americans With Disabilities Act,
other than laws, rules, regulations, and orders the non-compliance with which,
individually or in the aggregate, would not have and could not reasonably be
expected to result in a Material Adverse Change.
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6.14 Employee Benefits.
(a) Promptly, and in any event within 10 Business Days after
Borrower or any of its Subsidiaries knows or has reason to know that an ERISA
Event has occurred that reasonably could be expected to result in a Material
Adverse Change, a written statement of the chief financial officer of Borrower
describing such ERISA Event and any action that is being taking with respect
thereto by Borrower, any such Subsidiary or ERISA Affiliate, and any action
taken or threatened by the IRS, Department of Labor, or PBGC. Borrower or such
Subsidiary, as applicable, shall be deemed to know all facts known by the
administrator of any Benefit Plan of which it is the plan sponsor, (ii)
promptly, and in any event within 3 Business Days after the filing thereof with
the IRS, a copy of each funding waiver request filed with respect to any Benefit
Plan and all communications received by Borrower, any of its Subsidiaries or, to
the knowledge of Borrower, any ERISA Affiliate with respect to such request, and
(iii) promptly, and in any event within 3 Business Days after receipt by
Borrower, any of its Subsidiaries or, to the knowledge of Borrower, any ERISA
Affiliate, of the PBGC's intention to terminate a Benefit Plan or to have a
trustee appointed to administer a Benefit Plan, copies of each such notice.
(b) Borrower will cause to be delivered to Foothill, upon Foothill's
request, each of the following: (i) a copy of each Plan (or, where any such plan
is not in writing, complete description thereof) (and if applicable, related
trust agreements or other funding instruments) and all amendments thereto, all
written interpretations thereof and written descriptions thereof that have been
distributed to employees or former employees of Borrower or its Subsidiaries;
(ii) the most recent determination letter issued by the IRS with respect to each
Benefit Plan; (iii) for the three most recent plan years, annual reports on Form
5500 Series required to be filed with any governmental agency for each Benefit
Plan; (iv) all actuarial reports prepared for the last three plan years for each
Benefit Plan; (v) a listing of all Multiemployer Plans, with the aggregate
amount of the most recent annual contributions required to be made by Borrower
or any ERISA Affiliate to each such plan and copies of the collective bargaining
agreements requiring such contributions; (vi) any information that has been
provided to Borrower or any ERISA Affiliate regarding withdrawal liability under
any Multiemployer Plan; and (vii) the aggregate amount of the most recent annual
payments made to former employees of Borrower or its Subsidiaries under any
Retiree Health Plan.
6.15 Leases. Pay when due all rents and other amounts payable under
any leases to which Borrower is a party or by which Borrower's properties and
assets are bound, unless such payments are the subject of a Permitted Protest.
To the extent that Borrower fails timely to make payment of such rents and other
amounts payable when due under its leases, Foothill shall be entitled, in its
discretion, to reserve an amount equal to such unpaid amounts against
Availability.
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7. NEGATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until full and final payment of the Obligations, Borrower
will not do any of the following, and will not suffer or permit any of its
Subsidiaries to do any of the following, without Foothill's prior written
consent:
7.1 Indebtedness. Except with respect to any Permitted Transaction,
create, incur, assume, permit, guarantee, or otherwise become or remain,
directly or indirectly, liable with respect to any Indebtedness, except:
(a) Indebtedness evidenced by this Agreement;
(b) Indebtedness specifically set forth in Schedule 7.1;
(c) Permitted Purchase Money Indebtedness;
(d) Subordinated Debt;
(e) Permitted Unrestricted Subsidiary Indebtedness;
(f) refinancings, renewals, or extensions of Indebtedness
permitted under clauses (b), (c), (d), and (e) of this Section 7.1 (and
continuance or renewal of any Permitted Liens associated therewith) so long as:
(i) the terms and conditions of such refinancings, renewals, or extensions do
not materially impair the prospects of repayment of the Obligations by Borrower,
(ii) the net cash proceeds of such refinancings, renewals, or extensions do not
result in an increase in the aggregate principal amount of the Indebtedness so
refinanced, renewed, or extended, (iii) such refinancings, renewals, refundings,
or extensions do not result in a shortening of the average weighted maturity of
the Indebtedness so refinanced, renewed, or extended, and (iv) to the extent
that Indebtedness that is refinanced was Subordinated Debt, then the terms and
conditions of the refinancing Indebtedness (including payment terms and
subordination provisions) must be at least as favorable to Foothill as those
applicable to the refinanced Indebtedness; and
(g) accounts payable to trade creditors, in each case incurred
and repaid in the ordinary course of business, unless the same are being
actively contested in good faith and by appropriate and lawful proceedings and
Borrower shall have set aside such reserves, if any, with respect thereto as are
required by GAAP and deemed adequate by Borrower and its independent
accountants; provided that in each instance such accounts payable shall be
incurred and repaid by Mountasia or MGPC, and not by any other Debtor,
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except only to the extent that both (i) such account payable is for an
immaterial amount, and (ii) it was not practicable to incur same in the name of
Mountasia or MGPC.
Anything contained in this Section 7.1 to the contrary notwithstanding, in no
event shall Mountasia or any of the Restricted Subsidiaries co-make, endorse,
guaranty, or otherwise become liable or have any recourse with respect to any
Indebtedness or other liabilities (including Permitted Unrestricted Subsidiary
Indebtedness) of any of the Unrestricted Subsidiaries.
7.2 Liens. Create, incur, assume, or permit to exist, directly or
indirectly, any Lien on or with respect to any of its property or assets, of any
kind, whether now owned or hereafter acquired, or any income or profits
therefrom, except for Permitted Liens (including Liens that are replacements of
Permitted Liens to the extent that the original Indebtedness is refinanced under
Section 7.1(f) and so long as the replacement Liens only encumber those assets
or property that secured the original Indebtedness).
7.3 Restrictions on Fundamental Changes. Except for any Permitted
Transaction, or Permitted Acquisition, or except as expressly permitted by
Section 7.4, enter into any acquisition (excluding Capital Expenditures that do
not constitute Acquisitions), merger, consolidation, reorganization, or
recapitalization, or reclassify its capital stock, or liquidate, wind up, or
dissolve itself (or suffer any liquidation or dissolution), or convey, sell,
assign, lease, transfer, or otherwise dispose of, in one transaction or a series
of transactions, all or any substantial part of its property or assets
(collectively, a "Fundamental Change Transaction"). Without limiting the
generality of the foregoing (a) no Operating Subsidiary shall engage in any
Fundamental Change Transaction with any other Debtor without the prior written
consent of Foothill, (b) no Inactive Subsidiary shall acquire any property or
asset or engage in business, and (c) no Unrestricted Subsidiary shall engage in
any Fundamental Change Transaction with any Restricted Subsidiary or MGPC or
Special.
7.4 Disposal of Assets and Related Matters. Except for Permitted
Dispositions, sell, lease, assign, transfer, or otherwise dispose of any of any
Debtor's properties or assets; provided, however, that any Operating Subsidiary
may transfer Personal Property Collateral to any Debtor of which it is a
Subsidiary (but not to any other Debtor). Without limiting the generality of the
foregoing, (a) no Operating Subsidiary shall engage in any transaction
restricted by this Section with any other Debtor without the prior written
consent of Foothill, (b) no Operating Subsidiary shall transfer any Real
Property to any Person (including any other Debtor) without the prior written
consent of Foothill, (c) no Operating Subsidiary shall agree to any restriction
that would limit its right to transfer Personal Property Collateral to, or make
dividends or distributions to, any Debtor of which it is a Subsidiary, and (d)
no Operating Subsidiary shall acquire any property or
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asset after the Closing Date in its own name if it is practicable instead for
Mountasia or MGPC to acquire such asset.
7.5 Change Name. Change any Debtor's name, FEIN, corporate structure
(within the meaning of Section 9402(7) of the Code), or identity, or add any new
fictitious name.
7.6 Guarantee. Except for guarantees existing on the Closing Date
and described on Schedule 7.1, guarantee or otherwise become in any way liable
with respect to the obligations of any third Person except by endorsement of
instruments or items of payment for deposit to the account of Borrower or which
are transmitted or turned over to Foothill.
7.7 Nature of Business. Make any change in the principal nature of
Borrower's business.
7.8 Prepayments and Amendments. Except for the Permitted
Transactions, and except in connection with a refinancing permitted by Section
7.1(f), prepay, redeem, retire, defease, purchase, or otherwise acquire any
Indebtedness owing to any third Person, other than the Obligations in accordance
with this Agreement, and (b) directly or indirectly, amend, modify, alter,
increase, or change any of the terms or conditions of any agreement, instrument,
document, indenture, or other writing evidencing or concerning Indebtedness
permitted under Sections 7.1(b), (c), (d), or (e). Without limiting the
generality of the foregoing, at no time shall Borrower make any (y) payment with
respect to any Subordinated Debt if the making of same would conflict with the
subordination provisions thereof, or (z) cash payment of principal with respect
to the NEF Debentures.
7.9 Change of Control. Cause, permit, or suffer, directly or
indirectly, any Change of Control.
7.10 Consignments. Consign any Inventory or sell any Inventory on
▇▇▇▇ and hold, sale or return, sale on approval, or other conditional terms of
sale.
7.11 Distributions. Except for Permitted Special Distributions, in
each case occurring at a time when no Event of Default has occurred and is
continuing, make any distribution or declare or pay any dividends (in cash or
other property, other than capital stock) on, or purchase, acquire, redeem, or
retire any of Borrower's capital stock, of any class, whether now or hereafter
outstanding (including any payment to a present or former shareholder with
respect to or in settlement of any claim or alleged claim arising out of or
relating to such shareholder's ownership of capital stock of Borrower, or
Borrower's duties or actions with respect thereto, or any asserted right of
rescission);
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provided that a Operating Subsidiary may make cash distributions, or
distributions of Personal Property Collateral, to a Debtor of which it is a
Subsidiary, and shall not agree to any restriction on its ability to make same.
7.12 Accounting Methods. Modify or change its method of accounting
or enter into, modify, or terminate any agreement currently existing, or at any
time hereafter entered into with any third party accounting firm or service
bureau for the preparation or storage of Borrower's accounting records without
said accounting firm or service bureau agreeing to provide Foothill information
regarding the Collateral or Borrower's financial condition. Borrower waives the
right to assert a confidential relationship, if any, it may have with any
accounting firm or service bureau in connection with any information requested
by Foothill pursuant to or in accordance with this Agreement, and agrees that,
in accordance with Section 6.3, Foothill may contact directly any such
accounting firm or service bureau in order to obtain such information.
7.13 Investments. Except for any Permitted Transactions, Permitted
Unrestricted Subsidiary Investments, Permitted Investments, and Permitted
Acquisitions, directly or indirectly make, acquire, or incur any liabilities
(including contingent obligations) for or in connection with (a) the acquisition
of the securities (whether debt or equity) of, or other interests in, a Person,
(b) loans, advances, capital contributions, or transfers of property to a
Person, or (c) the acquisition of all or substantially all of the properties or
assets of a Person. Nothing herein shall preclude Mountasia or MGPC from
incurring or paying in the ordinary course of business trade payables on account
of or relating to the operation of their Subsidiaries, provided that no Debtor
shall make contributions of cash or assets to the capital of other Debtors
(other than contributions by a Debtor to another Debtor of which it is a
Subsidiary) without the prior written consent of Foothill.
7.14 Transactions with Affiliates. Except for any Permitted
Transactions or Permitted Uses, directly or indirectly enter into or permit to
exist any material transaction with any Affiliate of Borrower except for
transactions that are in the ordinary course of Borrower's business, upon fair
and reasonable terms, that are fully disclosed to Foothill, and that are no less
favorable to Borrower than would be obtained in an arm's length transaction with
a non-Affiliate.
7.15 Suspension. Suspend or go out of a substantial portion of its
business.
7.16 Use of Proceeds. Use the proceeds of the Advances and the Term
Loans made hereunder for any purpose other than (i) on the Closing Date, (y) to
fund the purchase by Foothill of the Existing Loans pursuant to the Loan
Purchase Agreement, including the outstanding principal, accrued interest, and
accrued fees and expenses owing to Existing
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Lender, and (z) to pay transactional costs and expenses incurred in connection
with this Agreement, and (ii) thereafter, solely for the Permitted Uses;
provided,
(a) In no event may any Advance or proceeds of either of the
Term Loans be used for a Permitted Transaction unless immediately thereafter
there exists not less than $3,000,000 of Availability; and
(b) In no event may any Advance or the proceeds of either of
the Term Loans be used to acquire any FunCenter unless immediately thereafter
there exists not less than $4,000,000 of Availability.
7.17 Change in Location of Chief Executive Office; Inventory and
Equipment with Bailees. Relocate its chief executive office to a new location
without providing 30 days prior written notification thereof to Foothill and so
long as, at the time of such written notification, Borrower provides any
financing statements or fixture filings necessary to perfect and continue
perfected Foothill's security interests and also provides to Foothill a
Collateral Access Agreement with respect to such new location. The Inventory and
Equipment shall not at any time now or hereafter be stored with a bailee,
warehouseman, or similar party without Foothill's prior written consent.
7.18 No Prohibited Transactions Under ERISA. Directly or indirectly:
(a) Engage, or permit any Subsidiary of Borrower to engage, in any
prohibited transaction which is reasonably likely to result in a civil penalty
or excise tax described in Sections 406 of ERISA or 4975 of the IRC for which a
statutory or class exemption is not available or a private exemption has not
been previously obtained from the Department of Labor;
(b) permit to exist with respect to any Benefit Plan any accumulated
funding deficiency (as defined in Sections 302 of ERISA and 412 of the IRC),
whether or not waived;
(c) fail, or permit any Subsidiary of Borrower to fail, to pay
timely required contributions or annual installments due with respect to any
waived funding deficiency to any Benefit Plan;
(d) terminate, or permit any Subsidiary of Borrower to terminate,
any Benefit Plan where such event would result in any liability of Borrower, any
of its Subsidiaries or any ERISA Affiliate under Title IV of ERISA;
(e) fail, or permit any Subsidiary of Borrower to fail, to make any
required contribution or payment to any Multiemployer Plan;
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(f) fail, or permit any Subsidiary of Borrower to fail, to pay any
required installment or any other payment required under Section 412 of the IRC
on or before the due date for such installment or other payment;
(g) amend, or permit any Subsidiary of Borrower to amend, a Plan
resulting in an increase in current liability for the plan year such that either
of Borrower, any Subsidiary of Borrower or any ERISA Affiliate is required to
provide security to such Plan under Section 401(a)(29) of the IRC; or
(h) withdraw, or permit any Subsidiary of Borrower to withdraw, from
any Multiemployer Plan where such withdrawal is reasonably likely to result in
any liability of any such entity under Title IV of ERISA;
which, individually or in the aggregate, results in or reasonably would be
expected to result in a claim against or liability of Borrower, any of its
Subsidiaries or any ERISA Affiliate in excess of one dollar ($1).
7.19 Financial Covenants. Fail to maintain:
(a) Debt Service Ratio. A Debt Service Ratio for the Relevant
Measuring Period of not less than the relevant amount set forth in the following
table, measured on a fiscal quarter-end basis:
================================================================================
Period Ending Minimum Ratio
--------------------------------------------------------------------------------
9/30/96 0.5 : 1.0
--------------------------------------------------------------------------------
12/31/96 0.5 : 1.0
--------------------------------------------------------------------------------
3/31/97 0.5 : 1.0
--------------------------------------------------------------------------------
6/30/97 1.0 : 1.0
--------------------------------------------------------------------------------
9/30/97 1.25 : 1.0
--------------------------------------------------------------------------------
12/31/97 1.5 : 1.0
--------------------------------------------------------------------------------
3/31/98 and thereafter 1.5 : 1.0
================================================================================
(b) Total Liabilities to Adjusted Net Worth Ratio. A ratio of
Borrower's total liabilities (exclusive of Existing Subordinated Debt) divided
by Adjusted Net Worth of 1.0:1.0, or less, measured on a fiscal quarter-end
basis;
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(c) Adjusted Net Worth. Adjusted Net Worth of at least
$75,000,000, measured on a fiscal quarter-end basis; and
(d) Interest Coverage Ratio. An Interest Coverage Ratio for
the Relevant Measuring Period most recently ended of not less than the relevant
amount set forth in the following table, measured on a fiscal quarter-end basis
commencing September 30, 1996:
================================================================================
Period Ending Minimum Ratio
--------------------------------------------------------------------------------
9/30/96 0.75 : 1.00
--------------------------------------------------------------------------------
12/31/96 0.75 : 1.00
--------------------------------------------------------------------------------
3/31/97 0.75 : 1.00
--------------------------------------------------------------------------------
6/30/97 1.5 : 1.00
--------------------------------------------------------------------------------
9/30/97 2.25 : 1.00
--------------------------------------------------------------------------------
12/31/97 3.0 : 1.00
--------------------------------------------------------------------------------
3/31/98 and thereafter 3.0 : 1.00
================================================================================
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event of
default (each, an "Event of Default") under this Agreement:
8.1 If Borrower fails to pay when due and payable or when declared
due and payable, any portion of the Obligations (whether of principal, interest
(including any interest which, but for the provisions of the Bankruptcy Code,
would have accrued on such amounts), fees and charges due Foothill,
reimbursement of Foothill Expenses, or other amounts constituting Obligations);
provided, however, that in the case of Overadvances that are caused by the
charging of interest, fees, or Foothill Expenses to Borrower's Loan Account
hereunder, such event shall not constitute an Event of Default if, within 3 days
of the creation of any such Overadvance, Borrower eliminates such Overadvance;
8.2 (a) If any Debtor fails to perform, keep, or observe, in any
material respect, any term, provision, condition, covenant, or agreement
contained in Sections 6.2 (Collateral Reporting) of this Agreement and such
failure continues for a period of 5 days from
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the date of such failure, (b) If any Debtor fails to perform, keep, or observe,
in any material respect, any term, provision, condition, covenant, or agreement
contained in Sections 6.3 (Financial Statements), 6.4 (Tax Returns), 6.7 (Title
to Equipment), 6.12 (Location of Inventory and Equipment), 6.13 (Compliance with
Laws), or 6.15 (Leases) of this Agreement and such failure continues for a
period of 10 days from the date of such failure, (c) If any Debtor fails to
perform, keep, or observe, in any material respect, any term, provision,
condition, covenant, or agreement contained in Section 6.8 (Maintenance of
Equipment) of this Agreement and such failure continues for a period of 15 days
from the date Foothill sends such Debtor written notice of such failure, (d) If
any Debtor fails to perform, keep, or observe, in any material respect, any
other term, provision, condition, covenant, or agreement contained in this
Agreement, in any of the Loan Documents, or in any other present or future
agreement between any Debtor and Foothill (other than any such term, provision,
condition, covenant, or agreement that is the subject of another provision of
this Section 8);
8.3 If there is a Material Adverse Change;
8.4 If any material portion of Borrower's properties or assets is
attached, seized, subjected to a writ or distress warrant, or is levied upon, or
comes into the possession of any third Person and the same is not discharged or
bonded against within 30 days of the date of the attachment of such Lien;
provided, however, that during such period, upon 3 days prior written notice to
Borrower, Foothill shall have the right to create a reserve against Availability
in an amount sufficient to discharge such writ, warrant, or other process, and
any interest and penalties payable in connection therewith;
8.5 If an Insolvency Proceeding is commenced by Borrower;
8.6 If an Insolvency Proceeding is commenced against Borrower and
any of the following events occur: (a) Borrower consents to the institution of
the Insolvency Proceeding against it; (b) the petition commencing the Insolvency
Proceeding is not timely controverted; (c) the petition commencing the
Insolvency Proceeding is not dismissed within 45 calendar days of the date of
the filing thereof; provided, however, that, during the pendency of such period,
Foothill shall be relieved of its obligation to extend credit hereunder; (d) an
interim trustee is appointed to take possession of all or a substantial portion
of the properties or assets of, or to operate all or any substantial portion of
the business of, Borrower; or (e) an order for relief shall have been issued or
entered therein;
8.7 If Borrower is enjoined, restrained, or in any way prevented by
court order from continuing to conduct all or any material part of its business
affairs and the injunction, restraining order, or other order is not dissolved
or otherwise dismissed within 3 days of the date on which it first arises;
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8.8 (a) If a notice of Lien, levy, or assessment is filed of record
with respect to any of Borrower's properties or assets by the United States
Government, or any department, agency, or instrumentality thereof, or if any
taxes or debts owing at any time hereafter thereto becomes a Lien, whether
▇▇▇▇▇▇ or otherwise, upon any of Borrower's properties or assets and the same is
not paid on the payment date thereof, or (b) if a notice of Lien, levy, or
assessment is filed of record with respect to any of Borrower's properties or
assets by any state, county, municipal, or local governmental entity, or any
department, agency, or instrumentality thereof, or if any taxes or debts owing
at any time hereafter to any one or more of such entities becomes a Lien,
whether ▇▇▇▇▇▇ or otherwise, upon any of Borrower's properties or assets and the
same is not paid on the payment date thereof, unless the aggregate amount of
such taxes is less than $100,000 and, if and to the extent such tax liens would
have priority over the security interest of Foothill, Foothill has been
instructed within 5 days of the filing or attachment of same to reserve the
amount thereof entitled to such priority (together with interest and penalties
projected to be incurred with respect thereto) from Availability;
8.9 If a judgment or other claim (other than a claim covered by
Section 8.8) becomes a Lien upon any material portion of Borrower's properties
or assets and the same is not discharged or bonded against within 30 days of the
date of the attachment of such Lien; provided, however, that during such period,
upon 3 days prior written notice to Borrower, Foothill shall have the right to
create a reserve against Availability in an amount sufficient to discharge such
Lien and any interest and penalties payable in connection therewith;
8.10 If there is a default in any agreement to which Borrower is a
party with one or more third Persons, which such agreement involves an
obligation of Borrower of $100,000, or more, and such default (a) occurs at the
final maturity of the obligations thereunder, or (b) results in a right by such
third Person(s), irrespective of whether exercised, to accelerate the maturity
of Borrower's obligations thereunder;
8.11 If Borrower makes any payment on account of Indebtedness that
has been contractually subordinated in right of payment to the payment of the
Obligations, except to the extent such payment is permitted by the terms of the
subordination provisions applicable to such Indebtedness; or
8.12 If any material misstatement or misrepresentation exists now or
hereafter in any warranty, representation, statement, or report made to Foothill
by Borrower or any officer, employee, agent, or director of Borrower, or if any
such warranty or representation is withdrawn.
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9. FOOTHILL'S RIGHTS AND REMEDIES.
9.1 Rights and Remedies. Upon the occurrence, and during the
continuation, of an Event of Default Foothill may, at its election, without
notice of its election and without demand, do any one or more of the following,
all of which are authorized by Borrower:
(a) Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, immediately due and
payable;
(b) Cease advancing money or extending credit to or for the
benefit of Borrower under this Agreement, under any of the Loan Documents, or
under any other agreement between Borrower and Foothill;
(c) Terminate this Agreement and any of the other Loan
Documents as to any future liability or obligation of Foothill, but without
affecting Foothill's rights and security interests in the Personal Property
Collateral or the Real Property Collateral and without affecting the
Obligations;
(d) Settle or adjust disputes and claims directly with Account
Debtors for amounts and upon terms which Foothill considers advisable, and in
such cases, Foothill will credit Borrower's Loan Account with only the net
amounts received by Foothill in payment of such disputed Accounts after
deducting all Foothill Expenses incurred or expended in connection therewith.
Foothill agrees promptly to notify Borrower of its exercise of its rights under
this clause and to report to Borrower the results of any such adjustments;
provided, however, that Foothill shall incur no liability whatsoever for any
good faith failure to so notify or report to Borrower;
(e) Cause Borrower to hold all returned Inventory in trust for
Foothill, segregate all returned Inventory from all other property of Borrower
or in Borrower's possession and conspicuously label said returned Inventory as
the property of Foothill;
(f) Without notice to or demand upon Borrower or any
guarantor, make such payments and do such acts as Foothill considers necessary
or reasonable to protect its security interests in the Collateral. Borrower
agrees to assemble the Personal Property Collateral if Foothill so requires, and
to make the Personal Property Collateral available to Foothill as Foothill may
designate. Borrower authorizes Foothill to enter the premises where the Personal
Property Collateral is located, to take and maintain possession of the Personal
Property Collateral, or any part of it, and to pay, purchase, contest, or
compromise any encumbrance, charge, or Lien that in Foothill's determination
appears to conflict with its security interests and to pay all expenses incurred
in connection therewith. With respect to any of Borrower's owned or leased
premises, Borrower hereby grants Foothill a license to enter
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into possession of such premises and to occupy the same, without charge, for up
to 120 days in order to exercise any of Foothill's rights or remedies provided
herein, at law, in equity, or otherwise;
(g) Without notice to Borrower (such notice being expressly
waived), and without constituting a retention of any collateral in satisfaction
of an obligation (within the meaning of Section 9505 of the Code), set off and
apply to the Obligations in any order elected by Foothill any and all (i)
balances and deposits of Borrower held by Foothill (including any amounts
received in any Blocked Account), or (ii) indebtedness at any time owing to or
for the credit or the account of Borrower held by Foothill;
(h) Hold, as cash collateral, any and all balances and
deposits of Borrower held by Foothill, and any amounts received in any Blocked
Account, to secure the full and final repayment of all of the Obligations;
(i) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell (in the manner provided for
herein) the Personal Property Collateral. Foothill is hereby granted a license
or other right to use, without charge, Borrower's labels, patents, copyrights,
rights of use of any name, trade secrets, trade names, trademarks, service
marks, and advertising matter, or any property of a similar nature, as it
pertains to the Personal Property Collateral, in completing production of,
advertising for sale, and selling any Personal Property Collateral and
Borrower's rights under all licenses and all franchise agreements shall inure to
Foothill's benefit for such purposes;
(j) Sell the Personal Property Collateral at either a public
or private sale, or both, by way of one or more contracts or transactions, for
cash or on terms, in such manner and at such places (including Borrower's
premises) as Foothill determines is commercially reasonable. It is not necessary
that the Personal Property Collateral be present at any such sale;
(k) Foothill shall give notice of the disposition of the
Personal Property Collateral as follows:
(1) Foothill shall give Borrower and each holder of a
security interest in the Personal Property Collateral who has filed with
Foothill a written request for notice, a notice in writing of the time and place
of public sale, or, if the sale is a private sale or some other disposition
other than a public sale is to be made of the Personal Property Collateral, then
the time on or after which the private sale or other disposition is to be made;
(2) The notice shall be personally delivered or mailed,
postage prepaid, to Borrower as provided in Section 12, at least 5 days before
the date fixed for the
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sale, or at least 5 days before the date on or after which the private sale or
other disposition is to be made; no notice needs to be given prior to the
disposition of any portion of the Personal Property Collateral that is
perishable or threatens to decline speedily in value or that is of a type
customarily sold on a recognized market. Notice to Persons other than Borrower
claiming an interest in the Personal Property Collateral shall be sent to such
addresses as they have furnished to Foothill;
(3) If the sale is to be a public sale, Foothill also
shall give notice of the time and place by publishing a notice one time at least
5 days before the date of the sale in a newspaper of general circulation in the
county in which the sale is to be held;
(l) Foothill may credit bid and purchase at any public sale;
and
(m) Any deficiency that exists after disposition of the
Personal Property Collateral as provided above will be paid immediately by
Borrower. Any excess will be returned, without interest and subject to the
rights of third Persons, by Foothill to Borrower.
9.2 Remedies Cumulative. Foothill's rights and remedies under this
Agreement, the Loan Documents, and all other agreements shall be cumulative.
Foothill shall have all other rights and remedies not inconsistent herewith as
provided under the Code, by law, or in equity. No exercise by Foothill of one
right or remedy shall be deemed an election, and no waiver by Foothill of any
Event of Default shall be deemed a continuing waiver. No delay by Foothill shall
constitute a waiver, election, or acquiescence by it.
10. TAXES AND EXPENSES.
If Borrower fails to pay any monies (whether taxes, assessments, insurance
premiums, or, in the case of leased properties or assets, rents or other amounts
payable under such leases) due to third Persons, or fails to make any deposits
or furnish any required proof of payment or deposit, all as required under the
terms of this Agreement, then, to the extent that Foothill determines that such
failure by Borrower could result in a Material Adverse Change, in its discretion
and without prior notice to Borrower, Foothill may do any or all of the
following: (a) make payment of the same or any part thereof; (b) set up such
reserves in Borrower's Loan Account as Foothill deems necessary to protect
Foothill from the exposure created by such failure; or (c) obtain and maintain
insurance policies of the type described in Section 6.10, and take any action
with respect to such policies as Foothill deems prudent. Any such amounts paid
by Foothill shall constitute Foothill Expenses. Any such payments made by
Foothill shall not constitute an agreement by Foothill to make similar payments
in the future or a waiver by Foothill of any Event of Default under this
Agreement. Foothill need not inquire as to, or contest the validity of, any such
expense, tax, or Lien and the receipt of the usual official notice for the
payment thereof shall be conclusive evidence that the same was validly due and
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owing. Foothill agrees promptly to notify Borrower of its exercise of its rights
under this Section 10 and to report to Borrower the amount so paid or reserved;
provided, however, that Foothill shall incur no liability whatsoever for any
good faith failure to so notify or report to Borrower;
11. WAIVERS; INDEMNIFICATION.
11.1 Demand; Protest; etc. Borrower waives demand, protest, notice
of protest, notice of default or dishonor, notice of payment and nonpayment,
notice of any default, nonpayment at maturity, release, compromise, settlement,
extension, or renewal of accounts, documents, instruments, chattel paper, and
guarantees at any time held by Foothill on which Borrower may in any way be
liable.
11.2 Foothill's Liability for Collateral. So long as Foothill
complies with its obligations, if any, under Section 9207 of the Code, Foothill
shall not in any way or manner be liable or responsible for: (a) the safekeeping
of the Collateral; (b) any loss or damage thereto occurring or arising in any
manner or fashion from any cause; (c) any diminution in the value thereof; or
(d) any act or default of any carrier, warehouseman, bailee, forwarding agency,
or other Person. All risk of loss, damage, or destruction of the Collateral
shall be borne by Borrower.
11.3 Indemnification. Borrower shall pay, indemnify, defend, and
hold Foothill, each Participant, and each of their respective officers,
directors, employees, counsel, agents, and attorneys-in-fact (each, an
"Indemnified Person") harmless (to the fullest extent permitted by law) from and
against any and all claims, demands, suits, actions, investigations,
proceedings, and damages, and all reasonable attorneys fees and disbursements
and other costs and expenses actually incurred in connection therewith (as and
when they are incurred and irrespective of whether suit is brought), at any time
asserted against, imposed upon, or incurred by any of them in connection with or
as a result of or related to the execution, delivery, enforcement, performance,
and administration of this Agreement and any other Loan Documents or the
transactions contemplated herein, and with respect to any investigation,
litigation, or proceeding related to this Agreement, any other Loan Document, or
the use of the proceeds of the credit provided hereunder (irrespective of
whether any Indemnified Person is a party thereto), or any act, omission, event
or circumstance in any manner related thereto (all the foregoing, collectively,
the "Indemnified Liabilities"). Borrower shall have no obligation to any
Indemnified Person under this Section 11.3 with respect to any Indemnified
Liability that a court of competent jurisdiction finally determines to have
resulted from the gross negligence or willful misconduct of such Indemnified
Person. This provision shall survive the termination of this Agreement and the
repayment of the Obligations.
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11.4 Suretyship Waivers and Consents. Each Debtor acknowledges that
the obligations of such Debtor undertaken herein might be construed to consist,
at least in part, of the guaranty of obligations of Persons or entities other
than such Debtor (including the other Debtors party hereto) and, in full
recognition of that fact, each Debtor consents and agrees that Foothill may (if
it has so agreed with another Debtor), at any time and from time to time,
without notice or demand, whether before or after any actual or purported
termination, repudiation or revocation of this Agreement by any one or more
Debtors, and without affecting the enforceability or continuing effectiveness
hereof as to each Debtor: (a) supplement, restate, modify, amend, increase,
decrease, extend, renew, accelerate or otherwise change the time for payment or
the terms of the Obligations or any part thereof, including any increase or
decrease of the rate(s) of interest thereon; (b) supplement, restate, modify,
amend, increase, decrease or waive, or enter into or give any agreement,
approval or consent with respect to, the Obligations or any part thereof, or any
of the Loan Documents or any additional security or guarantees, or any
condition, covenant, default, remedy, right, representation or term thereof or
thereunder; (c) accept new or additional instruments, documents or agreements in
exchange for or relative to any of the Loan Documents or the Obligations or any
part thereof; (d) accept partial payments on the Obligations; (e) receive and
hold additional security or guarantees for the Obligations or any part thereof;
(f) release, reconvey, terminate, waive, abandon, fail to perfect, subordinate,
exchange, substitute, transfer or enforce any security or guarantees, and apply
any security and direct the order or manner of sale thereof as Foothill in its
sole and absolute discretion may determine; (g) release any Person from any
personal liability with respect to the Obligations or any part thereof; (h)
settle, release on terms satisfactory to Foothill or by operation of applicable
laws or otherwise liquidate or enforce any Obligations and any security therefor
or guaranty thereof in any manner, consent to the transfer of any security and
bid and purchase at any sale; or (i) consent to the merger, change or any other
restructuring or termination of the corporate or partnership existence of any
Debtor or any other Person, and correspondingly restructure the Obligations, and
any such merger, change, restructuring or termination shall not affect the
liability of any Debtor or the continuing effectiveness hereof, or the
enforceability hereof with respect to all or any part of the Obligations.
Upon the occurrence and during the continuance of any Event of
Default, Foothill may enforce this Agreement independently as to each Debtor and
independently of any other remedy or security Foothill at any time may have or
hold in connection with the Obligations, and it shall not be necessary for
Foothill to marshal assets in favor of any Debtor or any other Person or to
proceed upon or against or exhaust any security or remedy before proceeding to
enforce this Agreement. Each Debtor expressly waives any right to require
Foothill to marshal assets in favor of any Debtor or any other Person or to
proceed against any other Debtor or any collateral provided by any Person, and
agrees that Foothill may proceed against Debtors or any collateral in such order
as it shall determine in its sole and absolute discretion.
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Foothill may file a separate action or actions against any Debtor,
whether action is brought or prosecuted with respect to any security or against
any other Person, or whether any other Person is joined in any such action or
actions. Each Debtor agrees that Foothill and any Debtor and any Affiliate of
any Debtor may deal with each other in connection with the Obligations or
otherwise, or alter any contracts or agreements now or hereafter existing
between any of them, in any manner whatsoever, all without in any way altering
or affecting the continuing efficacy of this Agreement.
Foothill's rights hereunder shall be reinstated and revived, and the
enforceability of this Agreement shall continue, with respect to any amount at
any time paid on account of the Obligations which thereafter shall be required
to be restored or returned by Foothill, all as though such amount had not been
paid. The rights of Foothill created or granted herein and the enforceability of
this Agreement at all times shall remain effective to cover the full amount of
all the Obligations even though the Obligations, including any part thereof or
any other security or guaranty therefor, may be or hereafter may become invalid
or otherwise unenforceable as against any Debtor and whether or not any other
Debtor shall have any personal liability with respect thereto.
To the maximum extent permitted by applicable law, each Debtor
expressly waives any and all defenses now or hereafter arising or asserted by
reason of (a) any disability or other defense of any other Debtor with respect
to the Obligations, (b) the unenforceability or invalidity of any security or
guaranty for the Obligations or the lack of perfection or continuing perfection
or failure of priority of any security for the Obligations, (c) the cessation
for any cause whatsoever of the liability of any other Debtor (other than by
reason of the full payment and performance of all Obligations), (d) any failure
of Foothill to marshal assets in favor of any Debtor or any other Person, (e)
any failure of Foothill to give notice of sale or other disposition of
collateral to any Debtor or any other Person or any defect in any notice that
may be given in connection with any sale or disposition of collateral; provided,
however, that the foregoing shall not be deemed to include a waiver by the
Debtor that owns the subject collateral of notice of sale or other disposition
thereof, (f) any failure of Foothill to comply with applicable law in connection
with the sale or other disposition of any collateral or other security for any
Obligation, including any failure of Foothill to conduct a commercially
reasonable sale or other disposition of any collateral or other security for any
Obligation; provided, however, that the foregoing shall not be deemed to include
a waiver, by the Debtor that owns the subject collateral, of the requirement of
commercial reasonableness in connection with any such sale or other disposition,
(g) any act or omission of Foothill or others that directly or indirectly
results in or aids the discharge or release of any of any Debtor or the
Obligations or any security or guaranty therefor by operation of law or
otherwise, (h) any law which provides that the obligation of a surety or
guarantor must neither be larger in amount nor in other respects more burdensome
than that of the principal or which reduces a surety's or guarantor's obligation
in proportion to the principal obligation, (i) any failure of Foothill
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to file or enforce a claim in any bankruptcy or other proceeding with respect to
any Person, (j) the election by Foothill of the application or non-application
of Section 1111(b)(2) of the Bankruptcy Code, (k) any extension of credit or the
grant of any lien under Section 364 of the Bankruptcy Code, (l) any use of cash
collateral under Section 363 of the Bankruptcy Code, (m) any agreement or
stipulation with respect to the provision of adequate protection in any
bankruptcy proceeding of any Person, (n) the avoidance of any lien in favor of
Foothill for any reason, or (o) any action taken by Foothill that is authorized
by this section or any other provision of any Loan Document. Until such time as
all of the Obligations have been fully, finally, and indefeasibly paid in full
in cash: (i) each Debtor hereby waives and postpones any right of subrogation it
has or may have as against any other Debtor with respect to the Obligations; and
(ii) in addition, each Debtor also hereby waives and postpones any right to
proceed or to seek recourse against or with respect to any property or asset of
any other Debtor. Each Debtor expressly waives all setoffs and counterclaims and
all presentments, demands for payment or performance, notices of nonpayment or
nonperformance, protests, notices of protest, notices of dishonor, and all
notices of acceptance of this Agreement or of the existence, creation or
incurring of new or additional Obligations.
In the event that all or any part of the Obligations at any time are
secured by any one or more deeds of trust or mortgages or other instruments
creating or granting liens on any interests in real property, each Debtor
authorizes Foothill (or the Collateral Agent (or its agents) on Foothill's
behalf), upon the occurrence of and during the continuance of any Event of
Default, at its sole option, without notice or demand and without affecting the
obligations of any Debtor, the enforceability of this Agreement, or the validity
or enforceability of any liens of, or for the benefit of, Foothill on any
collateral, to foreclose any or all of such deeds of trust or mortgages or other
instruments by judicial or nonjudicial sale.
To the fullest extent permitted by applicable law, each Debtor
expressly waives any defenses to the enforcement of this Agreement or any rights
of Foothill created or granted hereby or to the recovery by Foothill against any
Debtor or any other Person liable therefor of any deficiency after a judicial or
nonjudicial foreclosure or sale, even though such a foreclosure or sale may
impair the subrogation rights of Debtors and may preclude Debtors from obtaining
reimbursement or contribution from other Debtors. Each Debtor expressly waives
any defenses or benefits that may be derived from California Code of Civil
Procedure ▇▇.▇▇. 580a, 580b, 580d or 726, or comparable provisions of the laws
of any other jurisdiction, and all other suretyship defenses it otherwise might
or would have under California law or other applicable law. Each Debtor
expressly waives any right to receive notice of any judicial or nonjudicial
foreclosure or sale of any real property or interest therein of another Debtor
that is subject to any such deeds of trust or mortgages or other instruments and
any Debtor's failure to receive any such notice shall not impair or affect such
Debtor's obligations or the enforceability of this Agreement or any rights of
Foothill created or granted hereby; provided, however, that the foregoing shall
not be deemed to include a waiver, by the Debtor that owns
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the subject collateral, of any right to notice. WITHOUT LIMITING THE GENERALITY
OF ANY OTHER WAIVER OR OTHER PROVISION SET FORTH IN THIS SECTION, EACH DEBTOR
WAIVES ALL RIGHTS AND DEFENSES ARISING OUT OF AN ELECTION OF REMEDIES BY
FOOTHILL, EVEN THOUGH THAT ELECTION OF REMEDIES, SUCH AS A NONJUDICIAL
FORECLOSURE WITH RESPECT TO SECURITY FOR THE OBLIGATIONS, HAS DESTROYED SUCH
DEBTOR'S RIGHTS OF SUBROGATION AND REIMBURSEMENT AGAINST THE PRINCIPAL DEBTOR BY
THE OPERATION OF SECTION 580d OF THE CODE OF CIVIL PROCEDURE OR OTHERWISE.
Debtors and each of them warrant and agree that each of the waivers
and consents set forth herein are made after consultation with legal counsel and
with full knowledge of their significance and consequences, with the
understanding that events giving rise to any defense or right waived may
diminish, destroy or otherwise adversely affect rights which Debtors otherwise
may have against other Debtors, Foothill or others, or against Collateral. If
any of the waivers or consents herein are determined to be contrary to any
applicable law or public policy, such waivers and consents shall be effective to
the maximum extent permitted by law.
12. NOTICES.
Unless otherwise provided in this Agreement (including, Section
2.9), all notices or demands by any party relating to this Agreement or any
other Loan Document shall be in writing and (except for financial statements and
other informational documents which may be sent by first-class mail, postage
prepaid) shall be personally delivered or sent by registered or certified mail
(postage prepaid, return receipt requested), overnight courier, or telefacsimile
to Borrower or to Foothill, as the case may be, at its address set forth below:
If to Borrower: c/o MOUNTASIA ENTERTAINMENT
INTERNATIONAL, INC.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Chief Financial Officer
Fax No. ▇▇▇.▇▇▇.▇▇▇▇
with copies to: ▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
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Fax No. ▇▇▇.▇▇▇.▇▇▇▇
If to Foothill: FOOTHILL CAPITAL CORPORATION
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Business Finance Division Manager
Fax No. ▇▇▇.▇▇▇.▇▇▇▇
with copies to: ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇ Hilson, Esq.
Fax No. ▇▇▇.▇▇▇.▇▇▇▇
The parties hereto may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing manner given to
the other. All notices or demands sent in accordance with this Section 12, other
than notices by Foothill in connection with Sections 9504 or 9505 of the Code,
shall be deemed received on the earlier of the date of actual receipt or 3 days
after the deposit thereof in the mail. Borrower acknowledges and agrees that
notices sent by Foothill in connection with Sections 9504 or 9505 of the Code
shall be deemed sent when deposited in the mail or transmitted by telefacsimile
or other similar method set forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS
EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT), THE CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE
PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR
THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA. THE
PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE
STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF LOS ANGELES, STATE OF
CALIFORNIA OR, AT THE SOLE OPTION OF FOOTHILL, IN ANY OTHER COURT IN WHICH
FOOTHILL SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT
MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY. EACH OF BORROWER
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AND FOOTHILL WAIVES, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT
EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO
VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION
13. BORROWER AND FOOTHILL HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN
DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. EACH OF BORROWER AND FOOTHILL REPRESENTS THAT IT HAS REVIEWED
THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
14. DESTRUCTION OF BORROWER'S DOCUMENTS.
All documents, schedules, invoices, agings, or other papers
delivered to Foothill may be destroyed or otherwise disposed of by Foothill 4
months after they are delivered to or received by Foothill, unless Borrower
requests, in writing, the return of said documents, schedules, or other papers
and makes arrangements, at Borrower's expense, for their return.
15. GENERAL PROVISIONS.
15.1 Effectiveness. This Agreement shall be binding and deemed
effective when executed by Borrower and Foothill.
15.2 Successors and Assigns. This Agreement shall bind and inure to
the benefit of the respective successors and assigns of each of the parties;
provided, however, that Borrower may not assign this Agreement or any rights or
duties hereunder without Foothill's prior written consent and any prohibited
assignment shall be absolutely void. No consent to an assignment by Foothill
shall release Borrower from its Obligations. Foothill may assign this Agreement
and its rights and duties hereunder to any Eligible Transferee and no consent or
approval by Borrower is required in connection with any such assignment.
Foothill reserves the right to sell, assign, transfer, negotiate, or grant
participations in all or any part of, or any interest in Foothill's rights and
benefits hereunder, provided that, except in connection with a bulk sale of a
portfolio of loans, Foothill will not sell or assign more than 50% of its total
commitments hereunder without the prior consent of Borrower, which Borrower
shall not unreasonably withhold, condition, or delay. In connection with any
such assignment or participation, Foothill may disclose all documents and
information which Foothill now or
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hereafter may have relating to Borrower or Borrower's business. To the extent
that Foothill assigns its rights and obligations hereunder to a third Person
that is an Eligible Transferee, Foothill thereafter shall be released from such
assigned obligations to Borrower and such assignment shall effect a novation
between Borrower and such third Person.
15.3 Section Headings. Headings and numbers have been set forth
herein for convenience only. Unless the contrary is compelled by the context,
everything contained in each section applies equally to this entire Agreement.
15.4 Interpretation. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against Foothill or Borrower,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to fairly
accomplish the purposes and intentions of all parties hereto.
15.5 Severability of Provisions. Each provision of this Agreement
shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision.
15.6 Amendments in Writing. This Agreement can only be amended by a
writing signed by both Foothill and Borrower.
15.7 Counterparts; Telefacsimile Execution. This Agreement may be
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and
the same Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement.
15.8 Revival and Reinstatement of Obligations. If the incurrence or
payment of the Obligations by Borrower or any guarantor of the Obligations or
the transfer by either or both of such parties to Foothill of any property of
either or both of such parties should for any reason subsequently be declared to
be void or voidable under any state or federal law relating to creditors'
rights, including provisions of the Bankruptcy Code relating to fraudulent
conveyances, preferences, and other voidable or recoverable payments of money or
transfers of property (collectively, a "Voidable Transfer"), and if Foothill is
required to repay or restore, in whole or in part, any such Voidable Transfer,
or elects to do so upon the reasonable advice of its counsel, then, as to any
such Voidable Transfer, or the amount thereof that
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Foothill is required or elects to repay or restore, and as to all reasonable
costs, expenses, and attorneys fees of Foothill related thereto, the liability
of Borrower or such guarantor automatically shall be revived, reinstated, and
restored and shall exist as though such Voidable Transfer had never been made.
15.9 Integration. This Agreement, together with the other Loan
Documents, reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
15.10 Covenant by Foothill Regarding Section 3.2(c). From and after
the effective date of this Agreement, if Section 3.2(c) shall not as of such
date already have been satisfied, Foothill shall, continuously from and after
such date and until the earlier of December 31, 1996, and the date, if any, that
Norwest Corporation provides to Foothill the required approval referred to in
Section 3.2(c), use its reasonable best efforts to obtain, from Participants,
binding commitments that would satisfy Section 3.2(c). If Foothill has not
obtained such binding commitments by September 30, 1996, Foothill formally shall
request from Norwest Corporation the required approval referred to in Section
3.2(c), and, no later than October 7, 1996, Foothill shall inform Borrower of
the approval or non-approval by Norwest Corporation of such request.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in Los Angeles, California.
M O U N T A S I A
ENTERTAINMENT
INTERNATIONAL, INC.,
a Georgia corporation
MOUNTASIA MANAGEMENT COMPANY,
a Georgia corporation
MOUNTASIA PARTNERS I, INC.,
a Georgia corporation
MALIBU GRAND PRIX CORPORATION,
a Delaware corporation
MIAMI CASTLE MGPC, INC.,
a Florida corporation
TEMPE MGPC, INC.,
an Arizona corporation
TUCSON MGPC, INC.,
an Arizona corporation
FRESNO MGPC, INC.,
a California corporation
NORTH HOLLYWOOD CASTLE MGPC, INC.,
a California corporation
▇▇▇▇▇▇ HILLS MGPC, INC.,
a California corporation
▇▇▇▇▇▇ HILLS SHOWBOAT MGPC, INC.,
a California corporation
-▇▇-
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, INC.,
a California corporation
REDWOOD CITY CASTLE MGPC, INC.,
a California corporation
REDWOOD CITY MGPC, INC.,
a California corporation
SAN DIEGO MGPC, INC.,
a California corporation
DENVER MGPC, INC.,
a Colorado corporation
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ MGPC, INC.,
a Florida corporation
ORLANDO MGPC, INC.,
a Florida corporation
TAMPA CASTLE MGPC, INC.,
a Florida corporation
TAMPA MGPC, INC.,
a Florida corporation
LENEXA MGPC, INC.,
a Kansas corporation
MT. LAUREL MGPC, INC.,
a New Jersey corporation
COLUMBUS MGPC, INC.,
an Ohio corporation
CINCINNATI MGPC, INC.,
an Ohio corporation
-▇▇-
▇▇▇▇▇▇▇▇ ▇▇▇▇, INC.,
an Oregon corporation
AUSTIN MGPC, INC.,
a Texas corporation
DALLAS CASTLE MGPC, INC.,
a Texas corporation
DALLAS MGPC, INC.,
a Texas corporation
HOUSTON CASTLE MGPC, INC.,
a Texas corporation
HOUSTON II MGPC, INC.,
a Texas corporation
SAN ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ MGPC, INC.,
a Texas corporation
SAN ANTONIO MGPC, INC.,
a Texas corporation
MOUNTASIA DEVELOPMENT COMPANY,
a Georgia corporation
MALIBU GRAND PRIX DESIGN &
MANUFACTURING, INC.,
a California corporation
MALIBU GRAND PRIX FINANCIAL
SERVICES, INC.,
a California corporation
OFF TRACK MANAGEMENT, INC.,
a California corporation
MGP SPECIAL, INC.,
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a California corporation
AMUSEMENT MANAGEMENT FLORIDA,
INC.,
a Florida corporation
MALIBU GRAND PRIX CONSULTING, INC.,
a California corporation
MOUNTASIA - MEI INTERNATIONAL, INC.,
a Georgia corporation
MOUNTASIA - MEI LIMITED COMPANY,
INC.,
a California corporation
MOUNTASIA - MEI CALIFORNIA, INC.,
a California corporation
MOUNTASIA - MEI CALIFORNIA LIMITED
PARTNERSHIP,
a California limited partnership
By Mountasia - MEI International, Inc., its
general partner
MOUNTASIA - MEI MANUFACTURING
COMPANY, INC.,
a Georgia corporation
AMUSEMENT CO., INC.,
a Delaware corporation
AMUSEMENT CO. PARTNERS, INC.,
a Delaware corporation
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By_________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President
FOOTHILL CAPITAL CORPORATION,
a California corporation
By_________________________
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Senior Vice President
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