EXHIBIT 10.2
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$35,000,000
REVOLVING CREDIT AGREEMENT
among
THQ INC.
and
THE LENDERS NAMED HEREIN
and
UNION BANK OF CALIFORNIA, N.A.,
as Administrative Agent, Syndication Agent and Arranger
September 27, 2002
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Table of Contents
Page
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ARTICLE 1.....................................................................................1
INTERPRETATION AND DEFINITIONS................................................................1
Section 1.1 Definitions..............................................................1
Section 1.2 Accounting Terms........................................................10
Section 1.3 Interpretation..........................................................10
ARTICLE 2. COMMITMENTS.......................................................................11
Section 2.1 Commitments.............................................................11
Section 2.2 Fees....................................................................11
Section 2.3 Mandatory Prepayment or Pledge..........................................12
Section 2.4 Making Advances.........................................................13
Section 2.5 Repayment...............................................................14
Section 2.6 Interest................................................................14
Section 2.7 Optional Prepayments....................................................15
Section 2.8 Conversion of Advances..................................................15
Section 2.9 Issuance of Letters of Credit...........................................16
Section 2.10 Drawing and Reimbursement...............................................16
Section 2.11 Obligations Absolute....................................................17
Section 2.12 Limits of Liability of Agent and Lenders................................17
Section 2.13 Payments................................................................18
Section 2.14 Computation of Interest and Fees........................................19
Section 2.15 Payments on Non-Business Days...........................................19
Section 2.16 Sharing of Payments, Etc................................................19
Section 2.17 Evidence of Debt........................................................19
Section 2.18 Extensions of Credit Outstanding under Old Credit Agreement.............20
ARTICLE 3. YIELD PROTECTION..................................................................20
Section 3.1 Increased LIBOR Advance Costs...........................................20
Section 3.2 Illegality..............................................................20
Section 3.3 Inadequacy of LIBOR.....................................................21
Section 3.4 Increased Letter of Credit Costs........................................21
Section 3.5 Capital Adequacy........................................................21
Section 3.6 Funding Losses..........................................................22
ARTICLE 4. CONDITIONS OF LENDING.............................................................22
Section 4.1 Effectiveness of Agreement..............................................23
Section 4.2 Advances................................................................24
Section 4.3 Letters of Credit.......................................................24
Section 4.4 Determinations under Section 4.1........................................25
ARTICLE 5. REPRESENTATIONS AND WARRANTIES....................................................26
Section 5.1 Corporate Existence and Power...........................................26
Section 5.2 Authorization...........................................................26
Section 5.3 Governmental Action.....................................................27
Section 5.4 Binding Effect..........................................................27
Section 5.5 Financial Information...................................................27
Section 5.6 Other Information.......................................................27
i
Section 5.7 Litigation..............................................................27
Section 5.8 Subsidiaries............................................................28
Section 5.9 Intellectual Property...................................................28
Section 5.10 Fire, Etc..............................................................28
Section 5.11 Burdensome Agreements..................................................28
Section 5.12 Taxes..................................................................28
Section 5.13 Title to Property......................................................28
Section 5.14 Margin Stock...........................................................28
Section 5.15 ERISA..................................................................29
Section 5.16 Solvency...............................................................29
ARTICLE 6. COVENANTS........................................................................29
Section 6.1 Affirmative Covenants...................................................29
Section 6.2 Negative Covenants......................................................32
ARTICLE 7. EVENTS OF DEFAULT................................................................37
Section 7.1 Events of Default.......................................................37
ARTICLE 8. THE AGENT........................................................................39
Section 8.1 Authorization and Action................................................39
Section 8.2 Agent's Reliance, Etc...................................................39
Section 8.3 UBOC and Affiliates.....................................................39
Section 8.4 Lender Credit Decision..................................................40
Section 8.5 Indemnification.........................................................40
Section 8.6 Successor Agent.........................................................40
Section 8.7 Agent as Collateral Holder..............................................41
Section 8.8 Lenders' Responsibilities...............................................41
ARTICLE 9. MISCELLANEOUS....................................................................42
Section 9.1 Amendments, Etc.........................................................42
Section 9.2 Notices, Etc............................................................43
Section 9.3 No Waiver; Remedies.....................................................43
Section 9.4 Costs and Expenses......................................................43
Section 9.5 Indemnification.........................................................43
Section 9.6 Right of Setoff.........................................................44
Section 9.7 Binding Effect..........................................................44
Section 9.8 Assignments and Participations..........................................45
Section 9.9 Governing Law...........................................................47
Section 9.10 Headings...............................................................47
Section 9.11 Execution in Counterparts..............................................47
Section 9.12 Reference to and Effect on Credit Documents............................47
Section 9.13 Waiver of Jury Trial..................................................S-1
Schedule 1: Facility Amount and Advance Sublimit
Schedule 2: Subsidiaries
Exhibit A: Revolving Note
Exhibit B: Notice of Borrowing
Exhibit C: Notice of Conversion/Continuation
Exhibit D: Assignment and Acceptance
ii
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
This Agreement, dated as of September 27, 2002, is entered into by (1)
THQ INC., a Delaware corporation (the "Borrower"), (2) the financial
institutions listed on the signature pages hereof and each other financial
institution that becomes a party hereto pursuant to Section 9.8 (collectively
the "Lenders"), and (3) UNION BANK OF CALIFORNIA, N.A., a national banking
association, as administrative agent (in such capacity, the "Agent") for the
Lenders, as syndication agent and as arranger.
Recital
The Borrower, the lenders referred to therein and the Agent are parties
to a Revolving Credit Agreement dated as of August 31, 2000, as amended by a
First Amendment to Revolving Credit Agreement dated October 23, 2000, a Second
Amendment to Revolving Credit Agreement dated February 20, 2001, a Third
Amendment to Revolving Credit Agreement dated June 12, 2001, a Fourth Amendment
to Revolving Credit Agreement dated as of July 31, 2001, a Fifth Amendment to
Revolving Credit Agreement dated August 28, 2001, a Sixth Amendment to Revolving
Credit Agreement dated October 26, 2001, a Seventh Amendment to Revolving Credit
Agreement and First Amendment to Security Agreement dated as of January 8, 2002,
an Eighth Amendment to Revolving Credit Agreement dated as of May 1, 2002 and a
Ninth Amendment to Revolving Credit Agreement dated July 26, 2002 (said
Agreement, as so amended, herein called the "Old Credit Agreement"). The
Borrower, the Lenders and the Agent now wish to amend and restate the Old Credit
Agreement, and they accordingly agree as set forth below.
ARTICLE 1.
INTERPRETATION AND DEFINITIONS
Section 1.1 Definitions. The terms set forth below, as used herein,
shall have the respective meanings set forth below.
"Advances" has the meaning set forth in Section 2.1(a).
"Advance Sublimit" means, for each calendar month (or applicable
portion thereof), the amount set forth opposite such month (or applicable
portion thereof) in part II of Schedule 1.
"Affiliate" means, as to any Person, any other Person that, directly
or indirectly, controls, is controlled by or is under common control with such
Person or is a director or officer of such Person. For purposes of this
definition, the term "control" (including the terms "controlling," "controlled
by" and "under common control with") of a Person means the possession, direct or
indirect, of the power to vote 10% or more of the equity interests having
ordinary voting power for the election of directors of such Person or to direct
or cause the
direction of the management and policies of such Person, whether through the
ownership of equity interests, by contract or otherwise.
"Asset Based Audit" means an audit of the Borrower's books, records
and accounting procedures conducted by the Agent or a Person engaged by the
Agent.
"Assignment and Acceptance" means an Assignment and Acceptance
substantially in the form of Exhibit D.
"Authorized Officer" means, with respect to any action, an officer of
the Borrower or THQI, as applicable, authorized to take such action pursuant to
resolutions of the Borrower or THQI delivered to the Agent from time to time.
"Borrower's Account" means the Borrower's operating account number
0000000000 maintained with the Agent.
"Borrowing" means a borrowing by the Borrower consisting of Advances
of the same Type made by the Lenders on the same day.
"Business Day" means a day of the year on which banks are not
required or authorized to close in Los Angeles and, if the applicable Business
Day relates to any LIBOR Advances, on which dealings are carried on in the
London interbank market.
"Capitalized Leases" has the meaning set forth in clause (e) of the
definition of Debt in this Section 1.1.
"Cash Equivalents" means any of the following: (a) obligations having
a term of not greater than five years issued or unconditionally guaranteed by
the United States of America or any agency or instrumentality thereof, provided
that the full faith and credit of the United States of America is pledged in
support thereof; (b) bankers acceptances, deposit notes, time-deposit accounts
and certificates of deposit issued by a bank or trust company organized under
the laws of the United States of America, any state thereof or any foreign
country recognized by the United States of America, provided that such bank or
trust company has a long-term unsecured debt rating of at least "A" from
Standard & Poor's Ratings Services, a division of The XxXxxx-Xxxx Companies,
Inc. ("S&P"); (c) repurchase obligations with a term of not more than 30 days
for underlying securities of the types described in clause (a) above that are
entered into with a bank meeting the qualifications described in clause (b)
above; (d) commercial paper or medium-term notes issued by any corporation
organized under the laws of any state of the United States of America and having
a rating of at least "Prime-1" from Xxxxx'x Investors Service, Inc. ("Moody's")
or "A-1" from S&P; (e) securities issued, or fully and unconditionally
guaranteed, by any state, commonwealth or territory of the Untied States of
America, or by any political subdivision or taxing authority thereof, and rated
at least "A" by Moody's or S&P; (f) other dollar-denominated securities issued
by any Person incorporated in the United States of America or any state thereof,
provided that such securities are rated at least "A" or the equivalent by S&P or
at least "A2" or the equivalent by Moody's; (g) investments in money-market
funds substantially all of whose assets comprise securities of the types
described in clauses (a) through
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(f) above; or (h) other investments agreed to in writing from time to time by
the Borrower and the Agent.
"Closing Date" means the date on which the conditions precedent set
forth in Section 4.1 have been fulfilled.
"Collateral" has the meaning set forth in Section 1 of the Security
Agreement.
"Commitment" has the meaning set forth in Section 2.1(a).
"Commitment Termination Date" means August 31, 2004.
"Conversion," "Convert" and "Converted" each refer to a conversion of
Advances of one Type into Advances of the other Type pursuant to Section 2.6,
2.8, 3.2 or 3.3.
"Credit Documents" means this Agreement, the Notes, the Security
Agreement, the Fee Letter, the Letter of Credit Documents and any other
documents executed by the Borrower or any other Credit Party from time to time
with respect to the subject matter of this Agreement.
"Credit Parties" means the Borrower and THQI.
"Currency Agreement" means, with respect to any Person, a
foreign-exchange contract, a currency-swap agreement, a currency-future or
-option contract or any similar agreement or arrangement designed to protect
such Person against fluctuations in currency values.
"Debt" of any Person means, at any date without duplication, (a) all
obligations of such Person for borrowed money; (b) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments; (c)
all obligations of such Person to pay the deferred purchase price of property or
services (excluding normal trade payables not overdue that are incurred in the
ordinary course of such Person's business); (d) all indebtedness created or
arising under any conditional-sale or other title-retention agreement with
respect to property acquired by such Person (even though the rights and remedies
of the seller or lender under such agreement in the event of a default are
limited to repossession or sale of such property); (e) all obligations of such
Person as lessee under leases that have been or should be, in accordance with
GAAP, recorded as capitalized leases; (f) all obligations, contingent or
otherwise of such Person under acceptance, letter-of-credit or similar
facilities; (g) all obligations of such Person to purchase, redeem, retire,
defease or otherwise acquire for value any capital stock of such Person or any
warrants, rights or options to acquire such capital stock, valued, in the case
of redeemable preferred stock, at the greater of its voluntary and involuntary
liquidation preference plus accrued and unpaid dividends; (h) all executory
obligations of such Person in respect of interest-rate swap agreements and other
similar agreements designed to hedge against fluctuations in interest rates; (i)
all Debt referred to in any of clauses (a) through (h) above that is guaranteed
directly or indirectly by such Person, or in effect guaranteed directly or
indirectly by such Person through an agreement (i) to pay or purchase such Debt
or to advance or supply funds for the payment or
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purchase of such Debt, (ii) to purchase, sell or lease (as lessee or lessor)
property, or to purchase or sell services, primarily for the purpose of enabling
the debtor to make payment of such Debt or to assure the holder of such Debt
against loss, (iii) to advance or supply funds to maintain working capital or
equity capital of another Person or otherwise to maintain the net worth or
solvency of such Person (including any agreement in the nature of a support
arrangement to pay for property or services irrespective of whether such
property is received or such services are rendered) or (iv) otherwise to assure
a creditor against loss; (j) all Debt referred to in any of clauses (a) through
(h) above secured by (or for which the holder of such Debt has an existing
right, contingent or otherwise, to be secured by) any Lien on property
(including accounts receivable and contract rights) owned by such Person, even
though such Person has not assumed or become liable for the payment of such
Debt; and (k) any accumulated funding deficiency (as defined in Section 412(a)
of the Internal Revenue Code of 1986) for a Plan of such Person; provided,
however, that in any case "Debt" shall not include any obligation of any Person
pursuant to any Currency Agreement.
"Default" means any Event of Default or any event or condition that,
with the giving of notice or the lapse of time, or both, would become an Event
of Default.
"Environmental Law" means any Governmental Rule relating to pollution
or protection of the environment or any natural resource, to any Hazardous
Material or to health or safety, including any Governmental Rule relating to the
use, handling, transportation, treatment, storage, disposal, release or
discharge of any Hazardous Material.
"Environmental Permit" means any Governmental Action required under
any Environmental Law.
"Environmental Proceeding" means any action, suit, written demand,
demand letter, claim, notice of noncompliance or violation, notice of liability
or potential liability, investigation, proceeding, consent order or consent
agreement relating in any way to any Environmental Law, any Environmental Permit
or any Hazardous Material or arising from alleged injury or threat to health,
safety or the environment, including (a) by any Governmental Person for
enforcement, cleanup, removal, response, remedial or other actions or damages
and (b) by any Person for damages, contribution, indemnification, cost recovery,
compensation or injunctive relief.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA Affiliate" means, with respect to any Person, any trade or
business (whether or not incorporated) that is a "commonly controlled entity"
within the meaning of the regulations under Section 414 of the Internal Revenue
Code of 1986.
"Eurocurrency Liabilities" has the meaning set forth in Regulation D
of the Board of Governors of the Federal Reserve System.
"Event of Default" has the meaning set forth in Section 7.1.
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"Facility Amount" means, for each calendar month, the amount set
forth opposite such month in part I of Schedule 1.
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted average of
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York or, if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three federal funds brokers of
recognized standing selected by it.
"Fee Letter" means each letter agreement entered into from time to
time between the Borrower and UBOC concerning fees payable by the Borrower to
UBOC for its own account with respect to this Agreement.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time, including those set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and in the statements and
pronouncements of the Financial Accounting Standards Board.
"Governmental Action" means any authorization, approval, consent,
waiver, exception, license, filing, registration, permit, notarization, special
lease or other requirement of any Governmental Person.
"Governmental Person" means, whether domestic or foreign, any
national, federal, state or local government, any political subdivision thereof,
or any governmental, quasi-governmental, judicial, public or statutory
instrumentality, authority, body or entity, including any central bank and any
comparable authority.
"Governmental Rule" means any treaty, law, rule, regulation,
ordinance, order, code, interpretation, judgment, writ, injunction, decree,
determination, directive, award, guideline, request, policy or similar form of
decision of any Governmental Person or arbitrator.
"Hazardous Material" means any substance or material that is
described as a toxic or hazardous substance, waste or material or as a
pollutant, contaminant or infectious waste, or words of similar import, in any
Environmental Law, including asbestos, petroleum (including crude oil or any
fraction thereof, natural gas, natural-gas liquid, liquefied natural gas or
synthetic gas usable for fuel, or any mixture of any of the foregoing),
polychlorinated biphenyls, urea formaldehyde, radon gas, radioactive matter, and
any chemical that may cause cancer or reproductive toxicity.
"Interest Period' means, with respect to each LIBOR Advance making up
part of the same Borrowing, the period commencing on the date of such Advance or
the date of the Conversion of any Advance into such an Advance and ending on the
last day of the period selected by the Borrower pursuant to the provisions below
and, thereafter, each subsequent
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period commencing on the last day of the immediately preceding Interest Period
and ending on the last day of the period selected by the Borrower pursuant to
the provisions below. The duration of each Interest Period shall be 1, 2, 3 or 6
months or 7, 14 or 21 days, as the Borrower may select upon notice (by means of
a Notice of Borrowing or a Notice of Conversion/Continuation) received by the
Agent not later than 11:00 a.m., Los Angeles time, on the third Business Day
before the first day of such Interest Period; provided, however, that
(a) Interest Periods commencing on the same date for Advances
making up part of the same Borrowing shall be of the same duration;
(b) whenever the last day of an Interest Period would otherwise
occur on a day other than a Business Day, the last day of such Interest Period
shall be extended to occur on the next succeeding Business Day, unless, if such
Interest Period relates to LIBOR Advances, such extension would cause the last
day of such Interest Period to occur in the next succeeding calendar month, in
which case the last day of such Interest Period shall occur on the next
preceding Business Day;
(c) not more than 5 different Interest Periods may be outstanding
at any one time; and
(d) no Interest Period may end after the Commitment Termination
Date.
"Inventory" has the meaning set forth in Section 1(b) of the Security
Agreement.
"Issuing Bank" means UBOC in its capacity as issuer of Letters of
Credit hereunder. Each reference in this Agreement to a Lender or the Lenders
shall be deemed to include the Issuing Bank.
"Jakks Pacific" means Jakks Pacific, Inc., a Delaware corporation.
"Letter of Credit Amount" means the stated maximum amount available
to be drawn under a particular Letter of Credit, as such amount may be reduced
or reinstated from time to time in accordance with the terms of such Letter of
Credit.
"Letter of Credit Documents" means any and all Letter of Credit
Requests, letter of credit agreements and other documents executed from time to
time by any Credit Party in connection with the issuance of Letters of Credit.
"Letter of Credit Request" means a request by the Borrower or THQI
for the issuance of a Letter of Credit, either on the Issuing Bank's standard
form of letter of credit application or by electronic means.
"Letters of Credit" has the meaning set forth in Section 2.1(a).
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"LIBOR Advance" means, at any time, any Advance that bears interest
as provided in Section 2.6(a)(ii).
"LIBOR" means, for any Interest Period for each LIBOR Advance that is
part of the same Borrowing, the rate per annum obtained by dividing (a) the rate
of interest per annum (rounded upward, if necessary, to the nearest 1/100th of
1%) at which U.S.-dollar deposits would be offered to UBOC outside the United
States of America 2 Business Days before the first day of such Interest Period,
in an amount comparable to the amount of UBOC's LIBOR Advance for such Interest
Period and for a term coinciding with such Interest Period, by (b) a percentage
equal to 100% minus the LIBOR Reserve Percentage for such Interest Period.
"LIBOR Reserve Percentage" means, for any Interest Period for each
LIBOR Advance that is part of the same Borrowing, the reserve percentage
applicable on any day not more than 2 Business Days before the first day of such
Interest Period under regulations issued from time to time by the Board of
Governors of the Federal Reserve System for determining the maximum reserve
requirement (including any emergency, supplemental or other marginal reserve
requirement) for UBOC with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities (or with respect to any other category of
liabilities that includes deposits by reference to which the interest rate on
LIBOR Advances is determined) having a term equal to such Interest Period.
"Lien" means, with respect to any asset, (a) any lien, charge,
option, claim, mortgage, security interest, pledge or other encumbrance or any
other type of preferential arrangement of any kind in respect of such asset or
(b) the interest of a vendor or lessor under any conditional-sale agreement,
capital lease or other title-retention agreement relating to such asset.
"Material Contracts" means the THQ/Jakks Operating Agreement and the
WWF License Agreement.
"Multiemployer Plan" means, with respect to any Person, a
multiemployer plan, as defined in Section 4001(a)(3) of ERISA and subject to
Title IV thereof, to which such Person or any of its ERISA Affiliates is making
or accruing an obligation to make contributions, or has within any of the
preceding 5 plan years made or accrued an obligation to make contributions, such
plan being maintained pursuant to one or more collective-bargaining agreements.
"Note" means a Revolving Note of the Borrower payable to the order of
a Lender, substantially in the form of Exhibit A, evidencing the indebtedness of
the Borrower to such Lender resulting from the Advances made by such Lender from
time to time.
"Notice of Borrowing" has the meaning set forth in Section 2.4(a).
"Notice of Conversion/Continuation" has the meaning set forth in
Section 2.8(a).
"Obligations" means all payment obligations of the Borrower
outstanding from time to time under this Agreement and the other Credit
Documents, whether for principal,
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reimbursement of drawings under Letters of Credit (including contingent
reimbursement obligations under outstanding Letters of Credit), interest, fees,
expenses, indemnification or otherwise.
"Old Credit Agreement" has the meaning set forth in the Recital to
this Agreement.
"Operating Profit" means, for any period, the sum of (a) the net
earnings (or loss) of the Borrower and its Subsidiaries on a consolidated basis
determined in conformity with GAAP plus (b) any extraordinary losses or noncash
and nonrecurring losses plus (c) any losses attributable to discontinued
operations (including operations disposed of during such period, whether or not
such operations were classified as discontinued) minus (d) any extraordinary
gains.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Liens" means the following: (a) Liens for taxes,
assessments and governmental charges or levies to the extent not required to be
paid under Section 6.1(c); (b) Liens imposed by law, such as materialmen's,
mechanics', carriers', workmen's and repairmen's Liens and other similar Liens
arising in the ordinary course of business securing obligations that are not
overdue for a period of more than 30 days; (c) pledges or deposits to secure
obligations under workers' compensation laws or similar legislation or to secure
public or statutory obligations; (d) easements, rights of way and other minor
encumbrances on title to real property that do not render title to the property
encumbered thereby unmarketable or materially and adversely affect the use of
such property for its present purposes; and (e) deposits to secure the
performance of bids, trade contracts (other than for borrowed money), leases,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of like nature incurred in the ordinary course of business.
"Person" means an individual, a corporation, a limited liability
company, a partnership, an association, a business trust or any other entity or
organization, including any Governmental Person.
"Plan" means, with respect to any Person, an employee benefit plan
(other than a Multiemployer Plan) maintained for employees of such Person or any
ERISA Affiliate and covered by Title IV of ERISA.
"Plan Termination Event" means, with respect to any Person, (a) a
Reportable Event described in Section 4043 of ERISA and the regulations issued
thereunder (other than a Reportable Event not subject to the provision for
30-day notice to the PBGC under such regulations), or (b) the withdrawal of such
Person or any of its ERISA Affiliates from a Plan during a plan year in which it
was a "substantial employer" as defined in Section 4001(a)(2) of ERISA, or (c)
the filing of a notice of intent to terminate a Plan or the treatment of a Plan
under Section 4041 of ERISA, or (d) the institution of proceedings to terminate
a Plan by the PBGC, or (e) any other event or condition that could reasonably be
expected to constitute grounds under
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Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, a Plan.
"Reference" means a judicial reference conducted pursuant to any
Credit Document in accordance with the law of the State of California, as in
effect at the time the referee is selected pursuant to the judicial reference
provision contained in such Credit Document.
"Reference Rate" means the variable rate of interest per annum
established by UBOC from time to time as its "reference rate." Such "reference
rate" is set by UBOC as a general reference rate of interest, taking into
account such factors as UBOC may deem appropriate, it being understood that many
of UBOC's commercial or other loans are priced in relation to such rate, that it
is not necessarily the lowest or best rate actually charged to any customer and
that UBOC may make various commercial or other loans at rates of interest having
no relationship to such rate. For purposes of this Agreement, each change in the
Reference Rate shall be effective as of the opening of business on the date
announced as the effective date of any change in such "reference rate."
"Reference Rate Advance" means, at any time, any Advance that bears
interest as provided in Section 2.6(a)(i).
"Register" has the meaning set forth in Section 9.8(c).
"Required Lenders" means, at any time, Lenders owed at least 51% of
the Obligations then outstanding or, if no Obligations are then outstanding,
Lenders having at least 51% of the Commitments; provided, however, that, if and
so long as there are only two Lenders, "Required Lenders" shall mean both of the
Lenders.
"Security Agreement" means the Security Agreement dated as of August
31, 2000 executed by the Borrower in favor of the Agent.
"Significant Subsidiary" means each Subsidiary that (a) for the most
recently completed fiscal year of the Borrower, accounted for more than 10% of
the consolidated revenues of the Borrower and its Subsidiaries or (b) as of the
end of the most recently completed fiscal year of the Borrower, was the owner,
direct or indirect, of more than 10% of the consolidated assets of the Borrower
and its Subsidiaries, all as shown in the Borrower's consolidated financial
statements for such fiscal year.
"Solvent" means, with respect to any Person on a particular date,
that on such date (a) the fair value of the property of such Person is greater
than the total amount of liabilities, including contingent liabilities, of such
Person, (b) the present fair salable value of the 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 does
not intend to, and does not believe that it will, incur debts or liabilities
beyond such Person's ability to pay as such debts and liabilities mature and (d)
such Person is not engaged in business or a transaction, and is
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not about to engage in business or a transaction, for which such Person's
property would constitute unreasonably small capital.
"Subsidiary" means, as to any Person, any corporation, limited
liability company, partnership, joint venture or other entity of which (a) a
majority of the outstanding capital stock or other ownership interests having
ordinary voting power to elect a majority of the board of directors or Persons
performing similar functions (irrespective of whether at the time other such
capital stock or interests have or might have voting power upon the occurrence
of a contingency) or (b) a majority of the interests in the capital or profits
of which is at the time directly or indirectly owned by such Person, by such
Person and one or more of its other Subsidiaries or by one or more of such
Person's other Subsidiaries; provided, however, that THQ/Jakks shall in any
event be considered a Subsidiary of the Borrower. Unless otherwise specified
herein, "Subsidiary" means a Subsidiary of the Borrower.
"THQI" means T.HQ International, Ltd., an English corporation.
"THQ/Jakks" means THQ/Jakks Pacific LLC, a Delaware limited liability
company.
"THQ/Jakks Operating Agreement" means the letter agreement dated
October 25, 1999 between the Borrower and Jakks Pacific.
"Type" refers to the distinction between Reference Rate Advances and
LIBOR Advances."
"UBOC" means Union Bank of California, N.A. in its individual
capacity.
"ValuSoft" means ValuSoft, Inc., a Minnesota corporation.
"WWF License Agreement" means the World Wrestling Federation Consumer
Products License Agreement dated June 10, 1998 between Titan Sports, Inc., a
Delaware corporation, and THQ/Jakks.
Section 1.2 Accounting Terms. Unless otherwise specified herein, all
accounting terms used herein shall be interpreted, all accounting determinations
hereunder shall be made, and all financial statements required to be delivered
hereunder shall be prepared, in accordance with GAAP as in effect from time to
time, on a basis consistent with the audited consolidated financial statements
of the Borrower referred to in Section 5.5.
Section 1.3 Interpretation. In this Agreement the singular includes the
plural and the plural the singular; words importing any gender include the other
genders; references to statutes are to be construed as including all statutory
provisions consolidating, amending or replacing the statute referred to;
references to "writing" include printing, typing, lithography and other means of
reproducing words in a tangible, visible form; the words "including," "includes"
and "include" are deemed to be followed by the words "without limitation";
references to sections (or subdivisions of sections), recitals, exhibits,
annexes or schedules are to those of this Agreement
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unless otherwise provided; references to agreements and other contractual
instruments are deemed to include all subsequent amendments and other
modifications to such instruments, but only to the extent such amendments and
other modifications are not prohibited by the terms of this Agreement; and
references to Persons include their respective permitted successors and assigns.
ARTICLE 2.
COMMITMENTS
Section 2.1 Commitments.
(a) Each Lender agrees severally, on the terms and conditions
contained in this Agreement, to extend credit to the Borrower from time to time
from the Closing Date to the Commitment Termination Date by making funded
advances to the Borrower (the "Advances") pursuant to Section 2.4 and
participating in letters of credit issued for the account of the Borrower (the
"Letters of Credit") pursuant to Section 2.9, in an aggregate amount not to
exceed at any time outstanding the amount set forth opposite such Lender's name
on the signature pages hereof or, if such Lender has entered into one or more
Assignments and Acceptances, set forth for such Lender in the Register
maintained by the Agent pursuant to Section 9.8(c); provided, however, that,
during any calendar month, the sum of (i) the aggregate principal amount of all
Advances outstanding, (ii) the aggregate Letter of Credit Amount of all Letters
of Credit outstanding and (iii) the aggregate amount of unreimbursed drawings
under all Letters of Credit shall not exceed the Facility Amount for such month
at any time; further provided, however, that, during any calendar month (or
applicable portion thereof), the aggregate principal amount of all Advances
outstanding shall not exceed the Advance Sublimit for such month (or applicable
portion thereof) at any time; and further provided, however, that the sum of (i)
the aggregate Letter of Credit Amount of all Letters of Credit outstanding that
were issued at the request of THQI and (ii) the aggregate amount of unreimbursed
drawings under all Letters of Credit that were issued at the request of THQI
shall not exceed $10,000,000 at any time (said agreement by each Lender, subject
to the foregoing provisos, herein called such Lender's "Commitment"). Within the
limits of each Lender's Commitment, the Borrower may borrow under Section 2.4,
have Letters of Credit issued for the Borrower's account under Section 2.9,
prepay Advances under Section 2.7, reborrow under Section 2.4, and have
additional Letters Credit issued for the Borrower's account under Section 2.9
after the expiration or cancellation of previously issued Letters of Credit.
(b) Reduction of Commitments. The Borrower shall have the right, upon
at least 7 Business Days' notice to the Agent, to terminate in whole or reduce
ratably in part the unused portions of the respective Commitments of the
Lenders; provided, however, that each partial reduction shall be in the
aggregate amount of $5,000,000 or an integral multiple thereof.
Section 2.2 Fees.
(a) The Borrower will pay to the Agent for the account of the
Lenders, on the date of issuance of each commercial Letter of Credit, a
nonrefundable issuance fee equal to the
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greater of (i) the product of (A) 0.125% and (B) the initial Letter of Credit
Amount of such Letter of Credit and (ii) $90.
(b) The Borrower will pay to the Agent for the account of the
Lenders, on the date of amendment of any commercial Letter of Credit, a
nonrefundable amendment fee equal to the greater of (i) the product of (A)
0.125% and (B) the Letter of Credit Amount of such Letter of Credit, as so
amended, and (ii) $60.
(c) The Borrower will pay to the Agent for the account of the
Lenders, on the date of payment of any drawing under any commercial Letter of
Credit, a nonrefundable negotiation fee equal to the greater of (i) the product
of (A) 0.125% and (B) the amount of such drawing paid by the Issuing Bank and
(ii) $70.
(d) The Borrower will pay to the Agent for the account of the
Lenders, from the Closing Date to the Commitment Termination Date (or, if later,
the date on which all outstanding standby Letters of Credit have expired), a
letter of credit fee at the rate of 1.60% per annum on the average of the
aggregate daily Letter of Credit Amounts of all standby Letters of Credit
outstanding from time to time.
(e) The Borrower will pay to the Issuing Bank such additional fees
and charges (including cable charges) as are generally associated with letters
of credit, in accordance with the Bank's standard internal charge guidelines.
(f) The Borrower will pay to the Agent for the account of the Lenders
an upfront fee of $175,000, payable on the Closing Date and on the first
anniversary of the Closing Date.
(g) The Borrower will pay to the Agent for its own account such fees
as specified in the Fee Letter.
(h) Fees payable by the Borrower to the Agent for the account of the
Lenders pursuant to Sections 2.2(a), (b), (c) and (d) shall be payable to the
Lenders quarterly in arrears on the 10th day of each January, April, July and
October, commencing on October 10, 2002, with respect to the calendar quarter
ended as of the last day of the preceding month in each case, and on the 10th
day after the last Letter of Credit outstanding hereunder has expired.
Section 2.3 Mandatory Prepayment or Pledge.
(a) If, at any time during any calendar month, (i) the sum of (A) the
aggregate principal amount of all Advances outstanding, (B) the aggregate Letter
of Credit Amount of all Letters of Credit outstanding and (C) the aggregate
amount of unreimbursed drawings under all Letters of Credit exceeds (ii) the
Facility Amount for such month, then the Borrower will immediately, without
notice or request by the Agent or any Lender, prepay the Advances (together, in
the case of LIBOR Advances, with accrued interest to the date of prepayment on
the principal amount prepaid), reimburse such unreimbursed drawings and/or
pledge additional cash
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collateral to the Agent to secure reimbursement of amounts available to be drawn
under outstanding Letters of Credit, in the aggregate amount equal to such
excess.
(b) If, at any time during any calendar month, the aggregate
principal amount of all Advances outstanding exceeds the Advance Sublimit for
such month (or applicable portion thereof), then the Borrower will immediately,
without notice or request by the Agent or any Lender, prepay the Advances
(together, in the case of LIBOR Advances, with accrued interest to the date of
prepayment on the principal amount prepaid) in the aggregate amount equal to
such excess.
(c) If at any time (i) the sum of (A) the aggregate Letter of Credit
Amount of all Letters of Credit outstanding that were issued at the request of
THQI and (B) the aggregate amount of unreimbursed drawings under all Letters of
Credit that were issued at the request of THQI exceeds (ii) $10,000,000, then
the Borrower will immediately, without notice or request by the Agent or any
Lender, reimburse such unreimbursed drawings and/or pledge additional cash
collateral to the Agent to secure reimbursement of amounts available to be drawn
under outstanding Letters of Credit issued at the request of THQI, in the
aggregate amount equal to such excess.
A. ADVANCES
Section 2.4 Making Advances. Any Borrowing not made in accordance with
Section 2.10 shall be made in accordance with this Section 2.4.
(a) A Borrowing pursuant to this Section 2.4(a) shall be made on
notice, given (i) with respect to any Borrowing consisting of Reference Rate
Advances, not later than noon, Los Angeles time, on the Business Day before the
date of the proposed Borrowing and (ii) with respect to any Borrowing consisting
of LIBOR Advances, not later than 11:00 a.m., Los Angeles time, on the third
Business Day before the date of the proposed Borrowing, each such notice to be
given by the Borrower to the Agent, which shall give each Lender prompt notice
thereof by telecopier. Each such notice of a Borrowing shall be in writing in
the form of Exhibit B (a "Notice of Borrowing"), or by telephone confirmed
promptly in writing, by an Authorized Officer, specifying (A) the requested date
of such Borrowing (which shall be a Business Day), (B) the requested Type of
Advances making up such Borrowing, (C) the requested aggregate amount of such
Borrowing, (D) in the case of a Borrowing comprising LIBOR Advances, the
requested initial Interest Period for such Advances and (E) the fact that the
statements set forth in Section 4.2(b) are true as of the date of such
Borrowing. Each Lender shall, before 11:00 a.m., Los Angeles time, on the day of
such Borrowing, make available to the Agent at its address specified in Section
9.2, in immediately available funds, such Lender's ratable portion of such
Borrowing. After the Agent's receipt of such funds and upon fulfillment of the
applicable conditions set forth in Article 4, the Agent will make such funds
available to the Borrower by crediting the Borrower's Account.
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(b) Each Notice of Borrowing shall be irrevocable and binding on the
Borrower. The Borrower will indemnify each Lender against any loss, cost or
expense incurred by such Lender as a result of any failure to fulfill, on or
before the date specified for such Borrowing in the related Notice of Borrowing,
the applicable conditions set forth in Article 4, including any loss (including
loss of anticipated profits), cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such Lender
to fund the Advance to be made by such Lender as part of such Borrowing when
such Advance, as a result of such failure, is not made on such date.
(c) Unless the Agent receives notice from a Lender before the date of
any Borrowing under this Section 2.4 that such Lender will not make available to
the Agent such Lender's ratable portion of such Borrowing, the Agent may assume
that such Lender has made such portion available to the Agent on the date of
such Borrowing in accordance with Section 2.4(a), and the Agent may, in reliance
upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Lender has not made such
ratable portion available to the Agent, such Lender and the Borrower severally
agree to repay to the Agent forthwith on demand such corresponding amount,
together with interest thereon, for each day from the date such amount is made
available to the Borrower until the date such amount is repaid to the Agent, at
(i) in the case of the Borrower, the interest rate applicable at the time to the
Advances making up such Borrowing and (ii) in the case of such Lender, the
Federal Funds Rate. If such Lender repays to the Agent such corresponding
amount, such amount so repaid shall constitute such Lender's Advance as part of
such Borrowing for purposes of this Agreement.
(d) The failure of any Lender to make the Advance to be made by it as
part of any Borrowing shall not relieve any other Lender of its obligation, if
any, hereunder to make its Advance on the date of such Borrowing, but no Lender
shall be responsible for the failure of any other Lender to make the Advance to
be made by such other Lender on the date of any Borrowing.
Section 2.5 Repayment. On the Commitment Termination Date, the Borrower
will repay to the Agent for the account of the Lenders the outstanding principal
amount of the Advances.
Section 2.6 Interest.
(a) The Borrower will pay interest on the unpaid principal amount of
each Advance, from the date of such Advance until such principal amount has been
paid in full, (i) during such periods as such Advance is a Reference Rate
Advance, at a rate per annum equal at all times to the Reference Rate in effect
from time to time, payable monthly in arrears on the last Business Day of each
calendar month during such periods and on the Commitment Termination Date, and
(ii) during such periods as such Advance is a LIBOR Advance, at a rate per annum
equal at all times during each Interest Period for such Advance to the sum of
LIBOR for such Interest Period for such Advance plus 1.60% per annum, payable on
the last day of such Interest Period.
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(b) Upon the occurrence and during the continuation of any Default,
interest on the unpaid principal amount of each Advance owing to each Lender
shall instead accrue at a rate per annum equal at all times to the sum of the
otherwise applicable interest rate plus 2.00% per annum, and such interest shall
be payable on demand.
(c) If the Borrower fails to select the duration of any Interest
Period for any LIBOR Advances in accordance with the provisions contained in the
definition of "Interest Period" in Section 1.1, the Agent will forthwith so
notify the Borrower and the Lenders, and such Advances shall automatically, on
the last day of the then existing Interest Period therefor, Convert into
Reference Rate Advances.
Section 2.7 Optional Prepayments. The Borrower may on any Business Day,
in the case of Reference Rate Advances upon prior written notice not later than
9:00 a.m., Los Angeles time, on the day of any prepayment of such Advances, and
in the case of LIBOR Advances upon at least 3 Business Days' prior written
notice, to the Agent stating the proposed date and aggregate principal amount of
the prepayment, and if such notice is given the Borrower will, prepay the
outstanding principal amounts of the Advances making up a Borrowing in whole or
ratably in part, together, in the case of LIBOR Advances, with accrued interest
to the date of such prepayment on the principal amount prepaid; provided,
however, that any prepayment of LIBOR Advances shall be made on, and only on,
the last day of an Interest Period for such Advances; and further provided,
however, that each partial prepayment shall be in the aggregate principal amount
of $1,000,000 or an integral multiple of $1,000,000 in excess thereof.
Section 2.8 Conversion of Advances.
(a) The Borrower may on any Business Day, upon prior written notice
in the form of Exhibit C (a "Notice of Conversion/Continuation") signed by an
Authorized Officer and given to the Agent (a) with respect to any Conversion to
Reference Rate Advances, not later than 11:00 a.m., Los Angeles time, on the
Business Day immediately preceding the date of the proposed Conversion and (b)
with respect to any Conversion to LIBOR Advances, not later than 11:00 a.m., Los
Angeles time, on the third Business Day before the date of the proposed
Conversion, subject to the provisions of Sections 3.2 and 3.3, Convert all the
Advances of one Type making up the same Borrowing into Advances of another Type;
provided, however, that any Conversion of LIBOR Advances into Reference Rate
Advances shall be made on, and only on, the last day of an Interest Period for
such LIBOR Advances. Each notice of a Conversion shall, within the restrictions
specified above, specify (i) the date of such Conversion, (ii) the Advances to
be Converted and (iii) if such Conversion is into LIBOR Advances, the duration
of the initial Interest Period for such Advances. Each Notice of Conversion
shall be irrevocable and binding on the Borrower.
(b) On any date on which the aggregate unpaid principal amount of
LIBOR Advances composing any Borrowing is reduced, by payment or prepayment or
otherwise, to less than $1,000,000, such Advances shall automatically Convert
into Reference Rate Advances. Upon the occurrence and during the continuation of
any Default, (A) each LIBOR Advance shall automatically, on the last day of the
then existing Interest Period therefor, Convert into a
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Reference Rate Advance, and (B) the obligation of the Lenders to make, or to
Convert Advances into, LIBOR Advances shall be suspended.
B. LETTERS OF CREDIT
Section 2.9 Issuance of Letters of Credit.
(a) The Borrower and THQI shall be entitled to request the issuance
of Letters of Credit by giving the Issuing Bank a Letter of Credit Request at
least 1 Business Day before the requested date of issuance of such Letter of
Credit (which shall be a Business Day). Any Letter of Credit Request received by
the Issuing Bank later than 3:00 p.m., Los Angeles time, shall be deemed to have
been received on the next Business Day. Each Letter of Credit Request shall be
delivered by computer, telecopier or other electronic means (subject to the
terms and conditions of any agreement with respect thereto entered into by the
Issuing Bank with the Borrower or THQI, as applicable), shall be signed by an
Authorized Officer of the Borrower or THQI, as applicable, shall be irrevocable,
shall be effective upon receipt by the Issuing Bank and shall, if submitted by
the Borrower, specify whether it is being submitted in connection with the
purchase of Inventory by the Borrower or by THQ/Jakks. Provided that a valid
Letter of Credit Request has been received by the Issuing Bank and upon
fulfillment of the other applicable conditions set forth in Article 4, the
Issuing Bank will issue the requested Letter of Credit. No Letter of Credit
shall have an expiration date later than 90 days after the Commitment
Termination Date.
(b) Immediately upon the issuance of each Letter of Credit, the
Issuing Bank shall be deemed to have sold and transferred to each Lender, and
each Lender shall be deemed to have purchased and received from the Issuing
Bank, in each case irrevocably and without any further action by any party, an
undivided interest and participation in such Letter of Credit, each drawing
thereunder and the obligations of the Borrower under this Agreement in respect
thereof in an amount equal to the product of (i) a fraction the numerator of
which is the amount of the Commitment of such Lender and the denominator of
which is the aggregate amount of all of the Commitments and (ii) the maximum
amount available to be drawn under such Letter of Credit (assuming compliance
with all conditions to drawing).
(c) The Borrower acknowledges and agrees that (i) the Issuing Bank,
the Lenders and the Agent shall be entitled to rely upon Letter of Credit
Requests delivered to the Issuing Bank from time to time by Authorized Officers
of THQI and (ii) the Borrower shall be obligated under this Agreement and the
other Credit Documents for reimbursement of drawings under such Letters of
Credit and for all other Obligations in respect of such Letters of Credit.
Section 2.10 Drawing and Reimbursement. The payment by the Issuing Bank
of a draft drawn under any Letter of Credit shall constitute for all purposes of
this Agreement the making by UBOC of a Reference Rate Advance in the amount of
such payment (without any requirement of compliance with the conditions set
forth in Article 4 or with the limitations contained in Section 2.1(a), but
subject to Section 2.3). In the event that any such Advance by UBOC resulting
from a drawing under a Letter of Credit is not repaid by the Borrower by the
Agent's deduction of the amount of such Advance, for UBOC's account, from the
Borrower's
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Account on the day of such drawing, the Agent will promptly so notify each other
Lender. Each such Lender will, on the day of such notification, make a Reference
Rate Advance, which shall be used to repay the applicable portion of UBOC's
Reference Rate Advance with respect to such Letter of Credit drawing, in an
amount equal to the amount of such Lender's participation in such drawing
(without any requirement of compliance with the conditions set forth in Article
4 or with the limitations contained in Section 2.1(a), but subject to Section
2.3), and will deliver to the Agent for UBOC's account, on the day of such
notification and in immediately available funds, the amount of such Reference
Rate Advance. In the event that any Lender fails to make available to the Agent
for the account of UBOC the amount of such Reference Rate Advance, UBOC shall be
entitled to recover such amount on demand from such Lender, together with
interest thereon at the Federal Funds Rate.
Section 2.11 Obligations Absolute. The obligations of the Borrower under
this Agreement, any Letter of Credit Request and any other Letter of Credit
Document shall be absolute, unconditional and irrevocable and shall be paid
strictly in accordance with the terms of the aforementioned documents under all
circumstances, including the following:
(a) any lack of validity or enforceability of any Letter of Credit,
this Agreement or any other Credit Document;
(b) the existence of any claim, setoff, defense or other right that
the Borrower may have at any time against any beneficiary or transferee of any
Letter of Credit (or any Person for whom any such beneficiary or transferee may
be acting), the Issuing Bank, any Lender (other than the defense of payment in
accordance with the terms of this Agreement) or any other Person, whether in
connection with this Agreement, any other Credit Document, the transactions
contemplated hereby or thereby or any unrelated transaction;
(c) any statement or other document presented under any Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect,
or any statement therein being untrue or inaccurate in any respect whatsoever;
(d) payment by the Issuing Bank under any Letter of Credit against
presentation of a draft or certificate that does not comply with the terms of
such Letter of Credit;
(e) any exchange, release or nonperfection of any Collateral or other
collateral, or any release, amendment or waiver of or consent to departure from
any guaranty, for any of the Obligations of the Borrower in respect of the
Letters of Credit; and
(f) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing.
Section 2.12 Limits of Liability of Agent and Lenders.
(a) The Borrower agrees to the provisions in the Letter of Credit
Documents executed thereby; provided, however, that the terms of this Agreement
shall take precedence if
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there is any inconsistency between the terms of this Agreement and the terms of
any such Letter of Credit Document.
(b) The Borrower assumes all risks of the acts or omissions of any
beneficiary or transferee of any Letter of Credit with respect to its use of
such Letter of Credit. Neither the Issuing Bank nor any other Lender nor any of
their respective officers or directors shall be liable or responsible for (i)
the use that may be made of any Letter of Credit or any acts or omissions of any
beneficiary or transferee in connection therewith; (ii) the validity,
sufficiency or genuineness of documents, or of any endorsement thereof, even if
such documents should prove to be in any or all respects invalid, insufficient,
fraudulent or forged; (iii) payment by the Issuing Bank against presentation of
documents that do not comply with the terms of any Letter of Credit, including
failure of any documents to bear any reference or adequate reference to any
Letter of Credit; or (iv) any other circumstance whatsoever in making or failing
to make payment under any Letter of Credit; provided, however, that the Borrower
shall have a claim against the Issuing Bank, and the Issuing Bank shall be
liable to the Borrower, to the extent of any direct, but not consequential,
damages suffered by the Borrower that the Borrower proves were caused by (A) the
Issuing Bank's willful misconduct or gross negligence in determining whether
documents presented under any Letter of Credit comply with the terms of such
Letter of Credit or (B) the Issuing Bank's willful failure to make lawful
payment under any Letter of Credit after the presentation to the Issuing Bank by
the beneficiary or transferee of such Letter of Credit of a draft and
certificates strictly complying with the terms and conditions of such Letter of
Credit. In furtherance and not in limitation of the foregoing, the Issuing Bank
may accept any document that appears on its face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary.
C. PAYMENT PROVISIONS
Section 2.13 Payments.
(a) The Borrower will make each payment hereunder and under the Notes
not later than 11:00 a.m., Los Angeles time, on the day when due, in U.S.
dollars and immediately available funds, to the Agent at its address set forth
in Section 9.2. The Agent will promptly thereafter cause to be distributed like
funds relating to the payment of principal, interest or fees ratably (other than
amounts payable pursuant to Section 2.2(e) or (g) or Article 3) to the Lenders
and like funds relating to the payment of any other amount payable to any Lender
to such Lender, in each case to be applied in accordance with the terms of this
Agreement.
(b) The Borrower hereby authorizes each Lender, if and to the extent
that any payment owed to such Lender is not made when due hereunder or under any
other Credit Document, to charge from time to time against any or all of the
Borrower's accounts with such Lender any amount so due.
(c) Unless the Agent receives notice from the Borrower before the
date on which any payment is due to the Lenders hereunder that the Borrower will
not make such payment in full, the Agent may assume that the Borrower has made
such payment in full to the Agent on such date, and the Agent may, in reliance
upon such assumption, cause to be
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distributed to each Lender on such due date an amount equal to the amount then
due to such Lender. If and to the extent that the Borrower has not so made such
payment in full to the Agent, each Lender will repay to the Agent forthwith upon
demand such amount distributed to such Lender, together with interest thereon,
for each day from the date such amount was distributed to such Lender until the
date on which such Lender repays such amount to the Agent, at the Federal Funds
Rate.
Section 2.14 Computation of Interest and Fees. All computations of
interest and fees hereunder shall be made on the basis of a year of 360 days for
the actual number of days (including the first day but excluding the last day)
occurring in the period for which such interest or fees are payable. Each
determination by the Agent of an interest rate hereunder shall be conclusive and
binding for all purposes, absent manifest error.
Section 2.15 Payments on Non-Business Days. Whenever any payment
hereunder or under any other Credit Document is stated to be due on a day other
than a Business Day, such payment shall be made on the next succeeding Business
Day, and such extension of time shall in such case be included in the
computation of payment of interest or fee, as the case may be; provided,
however, that, if such extension would cause payment of interest on or principal
of LIBOR Advances to be made in the next succeeding calendar month, such payment
shall be made on the next preceding Business Day.
Section 2.16 Sharing of Payments, Etc. If any Lender obtains any payment
(whether voluntary, involuntary, through the exercise of any right of setoff, or
otherwise) on account of the Advances made by it or the Letters of Credit
participated in by it (other than pursuant to Section 2.2(e) or (g) or Article
3) in excess of its ratable share of payments on account of the Advances and
Letters of Credit obtained by all of the Lenders, then such Lender will
forthwith purchase from the other Lenders such participations in the Advances
made by them and the Letters of Credit participated in by them as necessary to
cause such purchasing Lender to share the excess payment ratably with each of
them; provided, however, that, if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase from each other
Lender shall be rescinded, and each such other Lender shall repay to the
purchasing Lender the purchase price to the extent of such recovery, together
with an amount equal to such Lender's ratable share (according to the proportion
of (a) the amount of such Lender's required repayment to (b) the total amount so
recovered from the purchasing Lender) of any interest or other amount paid or
payable by the purchasing Lender in respect of the total amount so recovered.
The Borrower agrees that any Lender so purchasing a participation from another
Lender pursuant to this section may, to the fullest extent permitted by law,
exercise all of its rights of payment (including the right of setoff) with
respect to such participation as fully as if such Lender were the direct
creditor of the Borrower in the amount of such participation.
Section 2.17 Evidence of Debt.
(a) The indebtedness of the Borrower resulting from all Advances made
by each Lender from time to time shall be evidenced by the Notes.
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(b) The books and accounts of the Agent shall be conclusive evidence,
absent manifest error, of all Letter of Credit Amounts and of the amounts of all
Advances, drawings under Letters of Credit, reimbursements under Letters of
Credit, fees, interest and other charges advanced, due, outstanding or paid
pursuant to this Agreement or any other Credit Document.
Section 2.18 Extensions of Credit Outstanding under Old Credit
Agreement. On the Closing Date, any "Advances" or "Letters of Credit"
outstanding under the Old Credit Agreement shall be deemed to be Advances and
Letters of Credit, respectively, outstanding under this Agreement.
ARTICLE 3.
YIELD PROTECTION
Section 3.1 Increased LIBOR Advance Costs. If, due to either (a) the
introduction of or any change (other than any change by way of imposition or
increase of reserve requirements, in the case of LIBOR Advances, included in the
LIBOR Reserve Percentage) in or in the interpretation of any Governmental Rule
or (b) compliance with any Governmental Rule (whether or not having the force of
law), there is an increase in the cost to any Lender of agreeing to make,
making, funding or maintaining any LIBOR Advance, then the Borrower will from
time to time, promptly upon such Lender's delivery to the Borrower (with a copy
to the Agent) of a certificate setting forth any such increased cost and a
reasonably detailed explanation thereof, pay to the Agent for the account of
such Lender additional amounts sufficient to compensate such Lender for such
increased cost, but only to the extent incurred after the delivery of such
certificate or during a period of not more than 90 days before the delivery of
such certificate; provided, however, that each Lender will, before submitting
any such certificate, use reasonable efforts to mitigate the amount of any such
increased cost to the extent that such efforts are consistent with applicable
Governmental Rules, are not materially disadvantageous to such Lender's business
or operations (in the reasonable judgment of such Lender) and would not cause
such Lender to incur additional costs (unless the Borrower agrees to reimburse
such Lender for such costs). Any certificate submitted to the Borrower and the
Agent by a Lender in accordance with this section shall be conclusive and
binding for all purposes, absent manifest error.
Section 3.2 Illegality. Notwithstanding any other provision of this
Agreement, if the introduction of, or any change in or in the interpretation of,
any Governmental Rule makes it unlawful, or any Governmental Person asserts that
it is unlawful, for any Lender to perform its obligations hereunder to make
LIBOR Advances or to continue to fund or maintain LIBOR Advances hereunder,
then, on notice thereof and demand therefor by such Lender to the Borrower
through the Agent, (a) the obligation of such Lender to make LIBOR Advances and
to Convert Advances into LIBOR Advances shall be suspended until the Agent
notifies the Borrower that such Lender has determined that the circumstances
causing such suspension no longer exist, and (b) the Borrower will forthwith
prepay in full all LIBOR Advances of such Lender then outstanding, together with
interest accrued thereon, unless the Borrower, within 5 Business Days of such
notice and demand, Converts all LIBOR Advances of all Lenders then outstanding
into Reference Rate Advances in accordance with Section 2.8.
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Section 3.3 Inadequacy of LIBOR. If, with respect to any LIBOR Advances,
the Required Lenders notify the Agent that LIBOR determined pursuant to Section
2.6(a)(ii) for any Interest Period for such Advances will not adequately reflect
the cost to the Required Lenders of making, funding or maintaining their
respective LIBOR Advances for such Interest Period, then the Agent will
forthwith so notify the Borrower and the Lenders, whereupon (a) such LIBOR
Advances shall automatically, on the last day of the then existing respective
Interest Periods therefor, Convert into Reference Rate Advances, and (b) the
obligations of the Lenders to make, or to Convert Advances into, LIBOR Advances
shall be suspended until the Agent notifies the Borrower and the Lenders that
the circumstances causing such suspension no longer exist.
Section 3.4 Increased Letter of Credit Costs. If, after the date hereof,
any change in any Governmental Rule or in the interpretation thereof by any
Governmental Person charged with the administration thereof either (a) imposes,
modifies or deems applicable any reserve, special deposit or similar requirement
against letters of credit or guaranties issued by or participated in, or assets
held by, or deposits in or for the account of, the Issuing Bank or any Lender or
(b) imposes on the Issuing Bank or any Lender any other condition regarding this
Agreement, the Issuing Bank, such Lender or any Letter of Credit, and the result
of any event referred to in the preceding clause (a) or (b) is to increase the
cost to the Issuing Bank of issuing or maintaining any Letter of Credit or to
any Lender of purchasing or maintaining any participation therein, then the
Borrower will from time to time, promptly upon the Issuing Bank's or such
Lender's delivery to the Borrower (with a copy to the Agent) of a certificate
setting forth any such increased cost and a reasonably detailed explanation
thereof, pay to the Agent for the account of the Issuing Bank or such Lender, as
applicable, additional amounts sufficient to compensate the Issuing Bank or such
Lender for such increased cost, but only to the extent incurred after the
delivery of such certificate or during a period of not more than 90 days before
the delivery of such certificate; provided, however, that the Issuing Bank and
each Lender will, before submitting any such certificate, use reasonable efforts
to mitigate the amount of any such increased cost to the extent that such
efforts are consistent with applicable Governmental Rules, are not materially
disadvantageous to the Issuing Bank's or such Lender's business or operations
(in the reasonable judgment of the Issuing Bank or such Lender, as applicable)
and would not cause the Issuing Bank or such Lender to incur additional costs
(unless the Borrower agrees to reimburse the Issuing Bank or such Lender, as
applicable, for such costs). Any certificate submitted to the Borrower and the
Agent by the Issuing Bank or a Lender in accordance with this section shall be
conclusive and binding for all purposes, absent manifest error.
Section 3.5 Capital Adequacy. If any Lender determines that compliance
with any Governmental Rule (whether or not having the force of law) affects or
would affect the amount of capital required or expected to be maintained by such
Lender or any corporation controlling such Lender and that the amount of such
capital is increased by or based upon the existence of such Lender's commitment
to lend hereunder and other commitments of this type or the commitment to issue
or participate in, or the issuance of or participation in, the Letters of Credit
(or similar contingent obligations), then the Borrower will from time to time,
promptly upon such Lender's delivery to the Borrower (with a copy to the Agent)
of a certificate setting forth any such increase in capital and a reasonably
detailed explanation thereof, pay to the Agent for
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the account of such Lender additional amounts sufficient to compensate such
Lender for such increase in capital, but only to the extent that (a) such
increase in capital is incurred after the delivery of such certificate or was
incurred during a period of not more than 90 days before the delivery of such
certificate and (b) such Lender reasonably determines such increase in capital
to be allocable to the existence of such Lender's commitment to lend hereunder
or commitment to issue or participate in, or the issuance of or participation
in, Letters of Credit; provided, however, that each Lender will, before
submitting any such certificate, use reasonable efforts to mitigate the amount
of any such increase in capital to the extent that such efforts are consistent
with applicable Governmental Rules, are not materially disadvantageous to such
Lender's business or operations (in the reasonable judgment of such Lender) and
would not cause such Lender to incur additional costs (unless the Borrower
agrees to reimburse such Lender for such costs). Any certificate submitted to
the Borrower and the Agent by a Lender in accordance with this section shall be
conclusive and binding for all purposes, absent manifest error.
Section 3.6 Funding Losses. If any payment of principal of, or any
Conversion of, any LIBOR Advance is made other than on the last day of an
Interest Period for such Advance, as a result of a prepayment pursuant to
Section 2.3, a payment or Conversion pursuant to Section 3.2 or 3.3 or
acceleration of the maturity of the Obligations pursuant to Section 7.1 or for
any other reason, the Borrower will, upon demand by any Lender (with a copy of
such demand to the Agent), pay to the Agent for the account of such Lender any
amounts required to compensate such Lender for any additional losses, costs or
expenses that it may reasonably incur as a result of such payment or Conversion,
including any loss (other than loss of anticipated profits), cost or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by such Lender to fund or maintain such Advance.
Section 3.7 Replacement of Lender. If any Lender makes a demand for
payment under Section 3.1, 3.4 or 3.5, the Borrower may, within 120 days of such
demand if no Default then exists, (a) reduce the aggregate amount of the
Commitments by the full amount of such Lender's Commitment by simultaneously
repaying all outstanding Advances owed to such Lender, pledging cash collateral
to the Agent in the aggregate amount of such Lender's participations in
outstanding Letters of Credit and paying all accrued and unpaid interest, fees
and other amounts payable to such Lender hereunder through the date of such
reduction or (b) replace such Lender with another Person in accordance with the
terms of Section 9.8. Whether or not a Lender making a demand for payment under
Section 3.1, 3.4 or 3.5 has its Commitment eliminated or is replaced in
accordance with the preceding sentence, the Borrower shall be obligated to make
any payments to such Lender that are required under Section 3.1, 3.4 or 3.5, as
applicable.
ARTICLE 4.
CONDITIONS OF LENDING
Section 4.1 Effectiveness of Agreement. The effectiveness of this
Agreement is subject to the conditions precedent that the Borrower has paid all
accrued fees and expenses of the Agent (as provided in Sections 2.2 and 9.4 and
as otherwise agreed between the Borrower and the Agent), including the accrued
fees and disbursements of legal counsel to the Agent, to
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the extent one or more statements for such fees and expenses have been presented
for payment, and the Agent has received the following, each dated the Closing
Date unless otherwise specified below, in form and substance satisfactory to the
Lenders and in the number of originals required by the Agent:
(a) this Agreement, duly executed by the Borrower and the Lenders;
(b) the Note in favor of UBOC, duly executed by the Borrower;
(c) an amendment to the Security Agreement, duly executed by the
Borrower;
(d) certificates of the appropriate Governmental Persons of the State
of California and of the State of Delaware, dated as of a recent date, listing
all effective financing statements filed therewith that name the Borrower as
debtor, together with copies of such financing statements;
(e) copies of (i) the resolutions of the Board of Directors of the
Borrower approving the Credit Documents (excluding any Fee Letter) to which the
Borrower is or is to be a party and (ii) all documents evidencing other
necessary corporate action and Governmental Action, if any, with respect to such
Credit Documents, in each case certified by the Secretary, an Assistant
Secretary or another appropriate officer of the Borrower to be correct and
complete and in full force and effect as of the date of execution of each such
document and as of the Closing Date;
(f) a certificate of the Secretary, an Assistant Secretary or another
appropriate officer of the Borrower as to the incumbency, and setting forth a
specimen signature, of each of the persons (i) who has signed or will sign any
Credit Document on behalf of the Borrower and (ii) who will, until replaced by
other persons duly authorized for that purpose, act as the representatives of
the Borrower for the purpose of signing documents in connection with this
Agreement and the transactions contemplated hereby;
(g) a certificate of the Borrower, signed on behalf of the Borrower
by the President or a Vice President (or another appropriate officer) thereof
and the Secretary or an Assistant Secretary (or another appropriate officer)
thereof, certifying as to the following: (i) the absence of any amendments to
the certificate of incorporation of the Borrower since the date of the
certification with respect thereto referred to in Section 4.1(h); (ii) the
correctness and completeness of the copy of the bylaws of the Borrower attached
to such certificate and that such bylaws are in full force and effect; (iii) the
due organization and good standing of the Borrower as a corporation organized
under the laws of the State of Delaware and the absence of any proceeding for
the dissolution or liquidation of the Borrower; (iv) the truthfulness in all
material respects of the representations and warranties of the Borrower
contained in the Credit Documents, as though made on and as of the Closing Date;
and (v) the absence of any event occurring and continuing, or resulting from the
effectiveness of the Credit Documents, that constitutes a Default with respect
to the Borrower;
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(h) certificates of the appropriate Governmental Person(s) of the
State of Delaware, dated reasonably near the Closing Date, attaching the
articles of incorporation of the Borrower and all amendments thereto and
certifying that (A) such amendments are the only amendments to such articles of
incorporation on file in such Governmental Person's office, (B) the Borrower has
paid all franchise taxes to the date of such certificate and (C) the Borrower is
duly organized and in good standing under the laws of the State of Delaware; and
(i) good-standing certificates, dated reasonably near the Closing
Date, with respect to the good standing of such of the Credit Parties to do
business in such jurisdictions as the Agent may reasonably request.
Section 4.2 Advances. The obligation of each Lender to make an Advance
on the occasion of each Borrowing is subject to the limitations of the
Commitments, to the performance by the Borrower of all of its obligations under
this Agreement and to the satisfaction of the following further conditions:
(a) the Agent has received a Notice of Borrowing with respect to such
Advance, if required pursuant to Section 2.4;
(b) the following statements are true (and the acceptance by the
Borrower of the proceeds of such Borrowing shall constitute a representation and
warranty by the Borrower that on the date of such Borrowing such statements are
true):
(i) the representations and warranties contained in each Credit
Document are correct in all material respects on and as of the date of such
Borrowing, before and after giving effect to such Borrowing and to the
application of the proceeds thereof, as though made on and as of such date; and
(ii) no event has occurred and is continuing, or would result
from such Borrowing or from the application of the proceeds thereof, that
constitutes a Default; and
(c) the Agent has received such other approvals, evidence and
documents as any Lender through the Agent may reasonably request.
Section 4.3 Letters of Credit. The obligation of the Issuing Bank to
issue, and of each Lender to participate in, any Letter of Credit is subject to
the limitations of the Commitments, to the performance by the Borrower of all of
its obligations under this Agreement and to the satisfaction of the following
further conditions:
(a) the Agent has received a Letter of Credit Request with respect to
such Letter of Credit;
(b) the following statements are true (and each delivery of a Letter
of Credit Request by the Borrower or THQI shall constitute a representation and
warranty by the Borrower that on the date of issuance of the applicable Letter
of Credit such statements are true):
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(i) the representations and warranties contained in each Credit
Document are correct in all material respects on and as of the date of issuance
of such Letter of Credit, before and after giving effect to the issuance of such
Letter of Credit, as though made on and as of such date; and
(ii) no event has occurred and is continuing, or would result
from the issuance of such Letter of Credit, that constitutes a Default; and
(c) the Agent has received such other approvals, evidence and
documents as any Lender through the Agent may reasonably request.
Section 4.4 Determinations under Section 4.1. For purposes of
determining compliance with the conditions specified in Section 4.1, each Lender
shall be deemed to have consented to, approved or accepted, or to be satisfied
with, each document or other matter required under Section 4.1 to be consented
to, approved by, accepted or satisfactory to the Lenders unless an officer of
the Agent responsible for the transactions contemplated by the Credit Documents
and holding the position of Vice President or a more senior position receives
notice from such Lender before the earlier of the initial Borrowing hereunder
and the issuance of the initial Letter of Credit hereunder specifying such
Lender's objection thereto, and such objection is not withdrawn by notice to the
Agent to that effect.
Section 4.5 Conditions Subsequent. The continuing effectiveness of this
Agreement is subject to the conditions subsequent that the Agent has received
the following not later than October 31, 2002, in form and substance
satisfactory to the Lenders and in the number of originals required by the
Agent:
(a) copies of (i) the resolutions of the Board of Directors or
equivalent body of THQI approving the Credit Documents to which THQI is or is to
be a party and (ii) all documents evidencing other necessary corporate action
and Governmental Action, if any, with respect to such Credit Documents, in each
case certified by the Secretary, an Assistant Secretary or another appropriate
officer of THQI to be correct and complete and in full force and effect as of
the date of execution of each such document and as of the date of such
certification;
(b) a certificate of the Secretary, an Assistant Secretary or another
appropriate officer of THQI as to the incumbency, and setting forth a specimen
signature, of each of the persons (i) who has signed or will sign any Credit
Document on behalf of THQI and (ii) who will, until replaced by other persons
duly authorized for that purpose, act as the representatives of THQI for the
purpose of signing documents in connection with this Agreement and the
transactions contemplated hereby; and
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(c) a certificate of THQI, signed on behalf of THQI by the President
or a Vice President (or another appropriate officer) thereof and the Secretary
or an Assistant Secretary (or another appropriate officer) thereof, certifying
as to the following: (i) the correctness and completeness of the copies of the
memorandum of association and articles of association of THQI attached to such
certificate and that such documents are in full force and effect; (ii) the due
organization and good standing of THQI as a corporation organized under the laws
of England and the absence of any proceeding for the dissolution or liquidation
of THQI; and (iii) the absence of any event occurring and continuing, or
resulting from the effectiveness of the Credit Documents, that constitutes a
Default with respect to THQI.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders and the Agent as set
forth below.
Section 5.1 Corporate Existence and Power. The Borrower (a) is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, (b) is duly qualified or licensed as a foreign
corporation, and is in good standing, in California and in each other
jurisdiction in which it owns or leases property or in which the conduct of its
business requires it to so qualify or be licensed (except for jurisdictions in
which the failure to so qualify or be licensed could not reasonably be expected
to have a material and adverse effect on the business, condition (financial or
otherwise), operations, performance, properties or prospects of the Borrower)
and (c) has all requisite corporate power and authority to own or lease and
operate its properties and to carry on its business as now conducted and as
proposed to be conducted.
Section 5.2 Authorization. The execution, delivery and performance by
the Borrower of this Agreement and each other Credit Document to which the
Borrower is or is to be a party, and the consummation of the transactions
contemplated hereby and thereby, are within the Borrower's corporate powers,
have been duly authorized by all necessary corporate action and do not (a)
contravene the Borrower's certificate of incorporation or bylaws, (b) violate
any Governmental Rule, (c) conflict with or result in the breach of, or
constitute a default under, any loan agreement, indenture, mortgage, deed of
trust or lease, or any other contract or instrument, binding on or affecting the
Borrower or any of its properties, the conflict, breach or default of which
could reasonably be expected to have a material and adverse effect on the
business, condition (financial or otherwise), operations, performance,
properties or prospects of the Borrower or any Subsidiary on the ability of the
Borrower to perform its obligations under any of the Credit Documents, or (d)
result in or require the creation or imposition of any Lien upon or with respect
to any of the properties of the Borrower, other than in favor of the Agent. The
Borrower is not in violation of any such Governmental Rule or in breach of any
such loan agreement, indenture, mortgage, deed of trust, lease, contract or
instrument, the violation or breach of which could reasonably be expected to
have a material and adverse effect on the business, condition (financial or
otherwise), operations, performance, properties or prospects of the Borrower or
any Subsidiary.
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Section 5.3 Governmental Action. No Governmental Action is required for
the due execution, delivery or performance by the Borrower of this Agreement or
any other Credit Document to which the Borrower is or is to be a party, or for
the consummation of the transactions contemplated hereby or thereby.
Section 5.4 Binding Effect. This Agreement has been, and each other
Credit Document to which the Borrower is or is to be a party when delivered
hereunder will be, duly executed and delivered by the Borrower. This Agreement
is, and each other Credit Document to which the Borrower is or is to be a party
when delivered hereunder will be, the legal, valid and binding obligation of the
Borrower, enforceable against the Borrower in accordance with its terms, except
as the enforceability thereof may be limited to bankruptcy, insolvency,
moratorium, reorganization or other similar laws affecting creditors' rights
generally or by equitable principles relating to enforceability.
Section 5.5 Financial Information. The consolidated balance sheet of the
Borrower and its Subsidiaries as of December 31, 2001, and the related
consolidated statements of income and retained earnings of the Borrower and its
Subsidiaries for the fiscal year then ended, certified by Deloitte & Touche LLP,
independent public accountants, fairly present the consolidated financial
condition of the Borrower and its Subsidiaries as of such date and the
consolidated results of the operations of the Borrower and its Subsidiaries for
the fiscal year ended on such date, all in accordance with GAAP applied on a
consistent basis. The unaudited consolidated balance sheet of the Borrower and
its Subsidiaries as of June 30, 2002, and the related unaudited consolidated
statements of income and retained earnings of the Borrower and its Subsidiaries
for the 6-month fiscal period ended on such date, certified (subject to normal
year-end audit adjustments and the absence of footnotes) by the Vice President
Finance & Administration of the Borrower as having been prepared in accordance
with GAAP, fairly present the consolidated financial condition of the Borrower
and its Subsidiaries as of such date and the consolidated results of the
operations of the Borrower and its Subsidiaries for the 3-month fiscal period
ended on such date. Since June 30, 2002 there has been no material adverse
change in the business, condition (financial or otherwise), operations,
performance, properties or prospects of the Borrower and its Subsidiaries taken
as a whole. The Borrower and its Subsidiaries taken as a whole have no material
contingent liabilities except as disclosed in such consolidated balance sheets
or the notes thereto.
Section 5.6 Other Information. No information, exhibit or report
furnished by the Borrower to the Agent or any Lender in connection with the
negotiation of the Credit Documents or pursuant to the terms of any of the
Credit Documents contains any material misstatement of fact or omits to state a
material fact or any fact necessary to make the statements contained therein, in
light of the circumstances in which made and when the Credit Documents are taken
as a whole, not misleading.
Section 5.7 Litigation. There is no action, suit, investigation,
litigation or proceeding affecting the Borrower or any Subsidiary pending or, to
the best knowledge of the Borrower, threatened before any Governmental Person,
arbitrator or referee (a) that could reasonably be expected to have a material
and adverse effect on the business, condition (financial or otherwise),
operations, performance, properties or prospects of the Borrower and its
Subsidiaries taken as a
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whole or (b) that purports to affect the legality, validity or enforceability of
this Agreement or any other Credit Document or the consummation of the
transactions contemplated hereby or thereby.
Section 5.8 Subsidiaries. The Borrower has no Subsidiaries except as
listed in Schedule 2. Each Subsidiary is organized in the jurisdiction specified
in Schedule 2, is owned by the Borrower or another Subsidiary as specified in
Schedule 2 and is so owned in the percentage specified in Schedule 2.
Section 5.9 Intellectual Property. Each of the Borrower and its
Significant Subsidiaries possesses all trademarks, trade names, copyrights,
patents and licenses necessary to conduct its business as now operated, without
any known conflict with the valid trademarks, trade names, copyrights, patents
or licenses of others.
Section 5.10 Fire, Etc. Neither the business nor the properties of the
Borrower or any Subsidiary are affected by any fire, explosion, accident,
strike, lockout or other labor dispute, or other casualty (whether or not
covered by insurance) that could reasonably be expected to have a material and
adverse effect on the business, condition (financial or otherwise), operations,
performance, properties or prospects of the Borrower and its Subsidiaries taken
as a whole.
Section 5.11 Burdensome Agreements. Neither the Borrower nor any
Subsidiary is a party to any indenture, loan agreement, credit agreement, lease
or other agreement or instrument, or subject to any charter or corporate
restriction, that could reasonably be expected to have a material and adverse
effect on the business, condition (financial or otherwise), operations,
performance, properties or prospects of the Borrower and its Subsidiaries taken
as a whole or on the ability of the Borrower or any Subsidiary to carry out its
obligations under this Agreement or any other Credit Document.
Section 5.12 Taxes. Each of the Borrower and its Significant
Subsidiaries has filed, or there has been filed on its behalf, all tax returns
(federal, state, local and foreign) required to be filed before the date of the
making of this representation and warranty, and each of the Borrower and its
Subsidiaries has paid all taxes shown thereon to be due, including interest,
additions to taxes and penalties, or has provided adequate reserves for the
payment thereof.
Section 5.13 Title to Property. Each of the Borrower and its Significant
Subsidiaries has good and marketable title to all property, real or personal,
purported to be owned by it.
Section 5.14 Margin Stock. Neither the Borrower nor any Subsidiary is
engaged in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation U issued by the Board of
Governors of the Federal Reserve System), and no proceeds of any Advance will be
used to purchase or carry any margin stock or to extend credit to another for
the purpose of purchasing or carrying any margin stock.
Section 5.15 ERISA. No Plan Termination Event has occurred or could
reasonably be expected to occur with respect to any Plan of the Borrower or any
of its ERISA Affiliates that could reasonably be expected to result in a
material liability to the Borrower or any of its ERISA
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Affiliates. Since the date of the most recent Schedule B (Actuarial Information)
to the annual report of each of the Borrower and its ERISA Affiliates (Form 5500
Series), if any, there has been no material adverse change in the funding status
of the Plans referred to therein, and no "prohibited transaction" has occurred
with respect thereto that could reasonably be expected to result in a material
liability to the Borrower or any of its ERISA Affiliates. Neither the Borrower
nor any of its ERISA Affiliates has incurred or could reasonably be expected to
incur any material withdrawal liability under ERISA to any Multiemployer Plan.
Section 5.16 Solvency. The Borrower is, individually and together with
its Subsidiaries, Solvent.
ARTICLE 6.
COVENANTS
Section 6.1 Affirmative Covenants. So long as any Commitment is in
effect, any Letter of Credit is outstanding or any Obligation remains unpaid,
unless compliance has been waived in writing by the Required Lenders, the
Borrower will observe the affirmative covenants set forth below.
(a) Information. The Borrower will deliver the following directly to
each Lender:
(i) as soon as available and in any event within 60 days after
the end of each of the first three quarters of each fiscal year of the Borrower,
an unaudited balance sheet of the Borrower and its Subsidiaries as of the end of
such quarter and unaudited consolidated statements of income, retained earnings
and cash flows of the Borrower and its Subsidiaries for the period commencing at
the end of the previous fiscal year and ending with the end of such quarter,
setting forth in each case in comparative form the corresponding figures for the
corresponding period of the preceding fiscal year, all in reasonable detail and
duly certified (subject to normal year-end audit adjustments and the absence of
footnotes) by the chief financial officer or chief accounting officer of the
Borrower as having been prepared in accordance with GAAP consistently applied,
together with (A) a certificate of said officer stating that no Default has
occurred and is continuing or, if a Default has occurred and is continuing, a
statement as to the nature thereof and the action that the Borrower proposes to
take with respect thereto and (B) a schedule in reasonable detail and otherwise
in form satisfactory to the Agent showing the computations used by the Borrower
in determining, as of the end of such fiscal quarter, compliance with the
covenants contained in Sections 6.2(i), (j), (l) and (m);
(ii) as soon as available and in any event within 120 days after
the end of each fiscal year of the Borrower, a copy of the annual audit report
for such year for the Borrower and its Subsidiaries, including therein a
consolidated balance sheet of the Borrower and its Subsidiaries as of the end of
such fiscal year and consolidated statements of income, retained earnings and
cash flows of the Borrower and its Subsidiaries for such fiscal year, in each
case accompanied by an unqualified opinion in a form acceptable to the Agent by
Deloitte & Touche LLP or other independent public accountants of recognized
standing acceptable to the
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Agent, together with (A) a certificate of the chief financial officer or chief
accounting officer of the Borrower stating that no Default has occurred and is
continuing or, if a Default has occurred and is continuing, a statement as to
the nature thereof and the action that the Borrower proposes to take with
respect thereto, (B) a schedule in reasonable detail and otherwise in form
satisfactory to the Agent showing the computations used by the Borrower in
determining, as of the end of such fiscal year, compliance with the covenants
contained in Sections 6.2(i), (j), (k), (l) and (m) and (C) projections of the
financial performance of the Borrower and its Subsidiaries for the then current
fiscal year, in a form reasonably acceptable to the Agent;
(iii) together with the information provided pursuant to Section
6.1(a)(ii), in form and scope satisfactory to the Agent, (A) a schedule showing
the aging of the accounts receivable of the Borrower and its Subsidiaries for
the relevant period, including details of any charges against reserves and of
current reserves, (B) a report concerning the inventory of the Borrower and its
Subsidiaries for the relevant period, including details as to any write-downs or
returns, and (C) a "Royalty and Minimum Guaranty Schedule" in the form
customarily delivered to UBOC before the date of this Agreement;
(iv) as soon as possible and in any event within 10 days after
the Borrower or any Subsidiary thereof knows or has reason to know that any Plan
Termination Event has occurred, a statement of the chief financial officer or
chief accounting officer of the Borrower describing such Plan Termination Event
and the action, if any, that the Borrower proposes to take with respect thereto;
(v) promptly and in any event within 2 Business Days after
receipt thereof by the Borrower or any of its ERISA Affiliates from the PBGC,
copies of each notice received by the Borrower or any such ERISA Affiliate of
the PBGC's intention to terminate any Plan or to have a trustee appointed to
administer any Plan;
(vi) promptly and in any event within 30 days after the filing
thereof with the Internal Revenue Service, copies of each Schedule B (Actuarial
Information) to the annual report (Form 5500 Series) with respect to each Plan
to which the Borrower or any of its ERISA Affiliates is a contributing employer;
(vii) promptly and in any event within 5 Business Days after
receipt thereof by the Borrower or any of its ERISA Affiliates from a
Multiemployer Plan sponsor, a copy of each notice received by the Borrower or
any such ERISA Affiliate concerning the imposition or amount of withdrawal
liability pursuant to Section 4202 of ERISA;
(viii) promptly after the commencement thereof, notice of all
actions, suits and proceedings before any Governmental Person, arbitrator or
referee, affecting the Borrower or any Subsidiary, of the type described in
Section 5.7;
(ix) promptly after the occurrence of any Default, a certificate
of the chief financial officer or chief accounting officer of the Borrower
setting forth the details thereof and the action that the Borrower is taking or
proposes to take with respect thereto; and
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(x) promptly upon request, such other information respecting the
business, condition (financial or otherwise), operations, performance,
properties or prospects of the Borrower or any of its Subsidiaries as any Lender
may from time to time reasonably request.
(b) Compliance with Governmental Rules. The Borrower will comply, and
cause each Subsidiary to comply, in all material respects, with the requirements
of all applicable Governmental Rules, including ERISA and all applicable
Environmental Laws.
(c) Payment of Taxes, Etc. The Borrower will pay and discharge, and
cause each Significant Subsidiary to pay and discharge, before the same become
delinquent, (i) all taxes, assessments and governmental charges or levies
imposed upon it or upon its property and (ii) all lawful claims that, if unpaid,
might by law become a Lien upon its property; provided, however, that neither
the Borrower nor any Significant Subsidiary shall be required to pay or
discharge any such tax, assessment, charge or claim that is being contested in
good faith and by proper proceedings and as to which appropriate reserves are
being maintained.
(d) Maintenance of Insurance. The Borrower will maintain, and cause
each Subsidiary to maintain, insurance with responsible and reputable insurance
companies or associations in such amounts and covering such risks as is usually
carried by companies engaged in similar businesses and owning similar properties
in the same general areas in which the Borrower or such Subsidiary operates. The
Agent shall be named loss payee on all insurance policies of the Borrower
providing for the insuring of Collateral, and each insurance policy maintained
by the Borrower or any Significant Subsidiary shall require at least 10 days'
prior written notice to the Agent before such policy may be modified in any way
or cancelled.
(e) Preservation of Corporate Existence, Etc. The Borrower will
preserve and maintain, and cause each Subsidiary to preserve and maintain, its
corporate existence (in the jurisdiction of its incorporation), rights (charter
and statutory), franchises, approvals, permits and governmental licenses, except
to the extent that the failure to so preserve and maintain the same could not
reasonably be expected to have a material and adverse effect on the business,
condition (financial or otherwise), operations, performance, properties or
prospects of the Borrower and its Subsidiaries taken as a whole.
(f) Visitation Rights. At any reasonable time and from time to time,
upon reasonable prior notice to the Borrower, the Borrower will permit the Agent
and any of the Lenders, or any consultants, agents or representatives thereof,
to examine and make copies of and abstracts from the records and books of
account of, and visit the properties and have access to the assets of, the
Borrower and its Subsidiaries and to discuss the affairs, finances and accounts
of the Borrower and its Subsidiaries with any of their respective officers,
directors and employees and with their independent public accountants, including
for the purpose of conducting Asset Based Audits.
(g) Keeping of Books. The Borrower will keep, and cause each
Subsidiary to keep, proper books of record and account in which full and correct
entries shall be made of all financial transactions and of the assets and
business of the Borrower and each Subsidiary to the
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extent necessary to permit the preparation of the financial statements required
to be delivered hereunder and under the other Credit Documents.
(h) Maintenance of Properties, Etc. The Borrower will maintain and
preserve, and cause each Significant Subsidiary to maintain and preserve, all of
its properties that are used or useful in the conduct of its business in good
working order and condition, ordinary wear and tear excepted.
(i) Transactions with Affiliates. The Borrower will conduct, and
cause each Subsidiary to conduct, all transactions otherwise permitted under the
Credit Documents with any Affiliate thereof on terms that are fair and
reasonable and not less favorable than it would obtain in a comparable
arm's-length transaction with a Person not an Affiliate thereof; provided,
however, that the Borrower may (i) pay customary and reasonable directors' fees
to its directors, (ii) provide customary and reasonable indemnities to its
directors and (iii) comply with the terms of the THQ/Jakks Operating Agreement.
Section 6.2 Negative Covenants. So long as any Commitment is in effect,
any Letter of Credit is outstanding or any Obligation remains unpaid, unless
compliance has been waived in writing by the Required Lenders, the Borrower will
observe the negative covenants set forth below.
(a) Liens, Etc. The Borrower will not create, incur, assume or suffer
to exist, or permit any Subsidiary to create, incur, assume or suffer to exist,
any Lien upon or with respect to any of its property of any character (including
capital stock, other securities and accounts receivable), whether now owned or
hereafter acquired, or sign, or permit any Subsidiary to sign, any security
agreement authorizing any secured party thereunder to file a financing statement
under the Uniform Commercial Code of any jurisdiction, or assign, or permit any
Subsidiary to assign, any accounts receivable; provided, however, that the
foregoing restrictions shall not apply to the following:
(i) Liens created by any of the Credit Documents;
(ii) Liens securing any Debt permitted under Section 6.2(b)(ii),
provided that any such Lien is limited to the fixed assets acquired or financed
and any subsequent improvements thereto;
(iii) Liens created by any Capitalized Leases permitted under
Section 6.2(c)(ii);
(iv) Permitted Liens;
(v) any assignment by the Borrower or any Subsidiary of accounts
receivable due from Kmart Corporation or any Subsidiary thereof;
(vi) Liens securing obligations of the Borrower under Currency
Agreements; and
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(vii) Liens securing any Debt permitted under Section
6.2(b)(vii).
(b) Debt. The Borrower will not create, incur, assume or suffer to
exist, or permit any Subsidiary to create, incur, assume or suffer to exist, any
Debt other than the following:
(i) Debt of the Credit Parties under the Credit Documents;
(ii) Debt (commonly known as "purchase-money debt") of the
Borrower and its Subsidiaries incurred to purchase, or to finance the purchase
of, fixed assets; provided, however, that the aggregate principal amount of such
Debt shall not exceed $5,000,000 at any time outstanding;
(iii) Capitalized Leases permitted under Section 6.2(c)(ii);
(iv) Debt of Subsidiaries permitted pursuant to Section
6.2(f)(vi); and
(v) Debt of the Borrower to any Subsidiary;
(vi) Debt of the Borrower to ValuSoft in respect of
contingent future payments that the Borrower may be required to make to ValuSoft
based on the pretax net income of the division of the Borrower that will hold
and operate the assets acquired thereby from ValuSoft; and
(vii) Debt of the Borrower or any Subsidiary, in addition to
that otherwise permitted under this Section 6.2(b), not exceeding $5,000,000 in
aggregate principal amount at any time outstanding.
(c) Lease Obligations. The Borrower will not create, incur, assume or
suffer to exist, or permit any Subsidiary to create, incur, assume or suffer to
exist, any obligations as lessee (i) for the rental or hire of real or personal
property in connection with any sale-and-leaseback transaction or (ii) for the
rental or hire of other real or personal property of any kind under leases or
agreements to lease (including Capitalized Leases) having an original term of
one year or more that would cause the direct or contingent liabilities of the
Borrower and its Subsidiaries, on a consolidated basis, in respect of all of
such obligations to exceed $5,000,000 payable in any fiscal year.
(d) Mergers, Etc. The Borrower will not merge or consolidate with or
into any Person, sell, assign, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or substantially all of its
assets (whether now owned or hereafter acquired) to any Person, acquire all or
substantially all of the stock or other equity interests in any Person (except
as permitted by Section 6.2(f)) or acquire all or substantially all of the
assets of any Person or of any division, branch or other operational unit
thereof, or permit any Subsidiary to do any of the foregoing; provided, however,
that the Borrower and its Subsidiaries shall be permitted to enter into such a
merger or make such an acquisition of assets or equity interests if
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(A) no Default has occurred and is continuing or would be caused by such merger
or acquisition, (B) the Borrower gives the Lenders at least 15 days' (or such
shorter period as to which the Required Lenders may agree in writing) prior
written notice of such merger or acquisition, (C) the cash consideration paid
for all such mergers and acquisitions during any fiscal year does not exceed
$15,000,000 in the aggregate, (D) the total consideration paid for all such
mergers and acquisitions during any fiscal year does not exceed $50,000,000 in
the aggregate, (E) the total consideration paid for any one such merger or
acquisition does not exceed $30,000,000 and (F) in the case of any such merger,
the Borrower or a Subsidiary, as applicable, is the surviving entity.
(e) Sales, Etc. of Assets. The Borrower will not sell, lease,
transfer or otherwise dispose of, or permit any Subsidiary to sell, lease,
transfer or otherwise dispose of, any substantial part of its assets, including
any equity interests in any Subsidiary and substantially all assets constituting
the business of a division, branch or other operational unit; provided, however,
that the Borrower and its Subsidiaries shall be permitted to sell assets for
aggregate consideration of up to $5,000,000 in any fiscal year.
(f) Investments in Other Persons. The Borrower will not make, or
permit any Subsidiary to make, any loan or advance to any Person, or purchase or
otherwise acquire, or permit any Subsidiary to purchase or otherwise acquire,
any capital stock, warrants, rights, options, obligations or other equity
interests in, make any capital contribution to, or otherwise invest in, any
Person; provided, however, that nothing in this section shall prevent any of the
following:
(i) the Borrower or any Subsidiary from acquiring or holding Cash
Equivalents, provided that not more than 50% of the aggregate value of such Cash
Equivalents at any time is composed of assets denominated in one or more
currencies other than United States dollars;
(ii) the Borrower or any Subsidiary from generating and holding
accounts receivable in the ordinary course of business;
(iii) the Borrower or any Subsidiary from acquiring stock or
other equity interests in any Person as permitted by Section 6.2(d);
(iv) the Borrower from making equity contributions and loans to
THQ/Jakks as required by the terms of the THQ/Jakks Operating Agreement;
(v) the Borrower or any Subsidiary from entering into any
Currency Agreement;
(vi) the Borrower or any Subsidiary from making and/or
maintaining loans and other advances to any Subsidiaries in the normal course of
business for the normal operating purposes of such Subsidiaries, provided that
the aggregate principal amount of such loans and advances does not exceed
$30,000,000 at any time outstanding;
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(vii) the Borrower or any Subsidiary from making equity
contributions to any Subsidiaries in the normal course of business for the
normal operating purposes of such Subsidiaries, provided that the aggregate
amount of such contributions does not exceed $15,000,000 on a cumulative basis
after the date of this Agreement;
(viii) the Borrower or any Subsidiary from making loans and
advances to its officers and employees in the ordinary course of business,
provided that the aggregate principal amount of such loans and advances does not
exceed $1,000,000 at any time outstanding;
(ix) the Borrower from making loans to, or acquiring equity
interests in, Xxxxxx Holding AG, a Swiss company, provided that the aggregate
amount of (A) such loans (excluding a loan of $1,500,000 made before the date
hereof) and (B) the consideration paid for such acquisitions does not exceed
$5,000,000; and
(x) in addition to the foregoing, the Borrower or any Subsidiary
from making loans and advances, in an aggregate amount not exceeding $7,500,000
in any fiscal year, to any Persons in businesses related to, ancillary to or
complementary to the business of the Borrower.
(g) Dividends, Etc. The Borrower will not, and will not permit any
Subsidiary to, declare or pay any dividends or other distributions, purchase,
redeem, retire, defease or otherwise acquire for value any of its equity
interests or any warrants, rights or options to acquire such equity interests,
now or hereafter outstanding, return any capital to its stockholders as such, or
make any distribution of assets, equity interests, warrants, rights, options,
obligations or securities to its equity holders as such; provided, however, that
(i) the Borrower may declare and pay dividends payable solely in common stock of
the Borrower, (ii) THQ/Jakks may declare and make distributions to Jakks Pacific
as required by the terms of the THQ/Jakks Operating Agreement, (iii) any
Subsidiary may declare and pay dividends, and declare and make other
distributions, to the Borrower, (iv) the Borrower may distribute certificates
evidencing, and may redeem, the "Rights" provided for in the Amended and
Restated Rights Agreement dated as of August 22, 2001 between the Borrower and
Computershare Investor Services, LLC, a Delaware limited liability company, as
Rights Agent, on the terms provided in such Agreement as it exists on August 28,
2001 and (v) the Borrower may repurchase its common stock for an aggregate
purchase price paid on or after September 10, 2002 of up to $25,000,000.
(h) Maintenance of Ownership of Subsidiaries. The Borrower will not
sell, encumber or otherwise dispose of any of its equity interests in any
Significant Subsidiary or any warrants, rights or options to acquire such equity
interests, or permit any Significant Subsidiary to issue, sell or otherwise
dispose of any equity interests or any warrants, rights or options to acquire
such equity interests, except to the Borrower.
(i) Capital Expenditures. The Borrower will not make, or permit any
Subsidiary to make, any expenditure for fixed or capital assets that would cause
the aggregate of
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all such expenditures by the Borrower and its Subsidiaries to exceed $14,000,000
for any fiscal year.
(j) Maintenance of Ratio of Total Liabilities to Shareholders'
Equity. The Borrower will not permit the ratio of (i) the consolidated total
liabilities of the Borrower and its Subsidiaries to (ii) the consolidated
shareholders' equity of the Borrower and its Subsidiaries to be more than 1.0 to
1.0 as of the end of any fiscal quarter.
(k) Maintenance of Net Worth. The Borrower will not permit the
consolidated net worth of it and its Subsidiaries as of the end of any fiscal
year to be less than the sum of (i) $398,000,000 plus (ii) the greater of (A)
90% of any positive net income of the Borrower and its Subsidiaries on a
consolidated basis for such fiscal year and (B) $15,000,000.
(l) Maintenance of Quick Ratio. The Borrower will not permit the
ratio of (i) the sum of consolidated cash, Cash Equivalents and accounts
receivable of the Borrower and its Subsidiaries to (ii) the consolidated current
liabilities of the Borrower and its Subsidiaries to be less than 1.0 to 1.0 as
of the end of any fiscal quarter.
(m) Operating Profit. The Borrower will not permit any fiscal quarter
thereof to pass, commencing with the fiscal quarter ending on September 30,
2002, without the Borrower and its Subsidiaries, on a consolidated basis, making
an Operating Profit of at least $1 for such fiscal quarter.
(n) Cleanup Period. The Borrower will not permit any fiscal year to
pass without there being a period of at least 60 consecutive days in such fiscal
year during which the Borrower has no Advances outstanding.
(o) Use of Advances and Letters of Credit. The Borrower will not use
the proceeds of any Advance other than for seasonal working capital, and other
general corporate purposes, of the Borrower and its Subsidiaries. The Borrower
will not request, or permit THQI to request, the issuance of any Letter of
Credit other than for the purchase of inventory from any Sony, Nintendo, Sega or
Microsoft Affiliate or from any supplier of packaging.
(p) Amendment, Etc. of Material Contracts. The Borrower will not, and
will not permit any Subsidiary to, cancel or terminate any Material Contract or
consent to or accept any cancellation or termination thereof. The Borrower will
not, and will not permit any Subsidiary to, (a) amend or otherwise modify any
Material Contract or give any consent, waiver or approval thereunder, (b) waive
any default under, or breach of, any Material Contract, (c) agree in any manner
to any other amendment, modification or change of any term or condition of any
Material Contract or (d) take any other action in connection with any Material
Contract, except in each case described in clause (a), (b), (c) or (d) above to
the extent that doing so could not reasonably be expected to have a material and
adverse effect on the business, condition (financial or otherwise), operations,
performance, properties or prospects of the Borrower or such Subsidiary, as the
case may be.
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(q) Change of Fiscal Year. The Borrower will not, and will not permit
any Subsidiary to, change the last day of its fiscal year from December 31 to
another date; provided, however, that the Borrower and its Subsidiaries shall be
permitted to change their fiscal year-end to March 31, and in such case all of
the covenants and other provisions of this Agreement containing references to a
fiscal year shall be applied to such new fiscal year (on a full 12-month basis)
when it first occurs and each time thereafter.
ARTICLE 7.
EVENTS OF DEFAULT
Section 7.1 Events of Default. If any one or more of the following
events (each an "Event of Default") occurs and is continuing:
(a) the Borrower fails to pay any Obligation when due;
(b) any representation or warranty made by the Borrower or any
Subsidiary (or any of their respective officers) in or in connection with any
Credit Document proves to have been incorrect in any material respect when made;
(c) the Borrower fails to perform or observe any term, covenant or
agreement in Section 6.1(a)(ix), 6.1(d), 6.1(e) or 6.2 hereof or in Section 4,
5, 8(a), 9(a) or 11 of the Security Agreement on its part to be performed or
observed; or the Borrower fails to perform or observe any other term, covenant
or agreement of any Credit Document on its part to be performed or observed, and
the same is not remedied within 30 days after written notice thereof has been
given to the Borrower by the Agent;
(d) the Borrower or any Subsidiary fails to pay any principal of any
Debt thereof outstanding in a principal amount of at least $5,000,000 in the
aggregate (excluding the Obligations), or any interest or premium thereon, when
due (whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise), and such failure continues after the applicable grace period, if
any, specified in the agreement or instrument relating to such Debt; any other
event occurs or condition exists under any agreement or instrument relating to
any such Debt and continues after the applicable grace period, if any, specified
in such agreement or instrument, if the effect of such event or condition is to
accelerate, or to permit the acceleration of, the maturity of such Debt; or any
such Debt is declared to be due and payable, or is required to be prepaid,
redeemed, purchased or defeased (other than by a regularly scheduled required
prepayment, redemption, purchase or defeasance), or an offer to prepay, redeem,
purchase or defease such Debt is required to be made, in each case before the
stated maturity thereof;
(e) the Borrower or any Subsidiary generally does not pay its debts
as such debts become due, admits in writing its inability to pay its debts
generally or makes a general assignment for the benefit of creditors; any
proceeding is instituted by or against the Borrower or any Subsidiary seeking to
adjudicate it a bankrupt or insolvent, seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition of
it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors or seeking the
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entry of an order for relief or the appointment of a receiver, trustee or other
similar official for it or for any substantial part of its property; or the
Borrower or any Subsidiary takes any corporate or equivalent action to authorize
any of the actions set forth above in this Section 7.1(e);
(f) any single judgment or order for the payment of money in excess
of $5,000,000 is rendered against the Borrower or any Subsidiary, or two or more
judgments or orders for the payment of money in excess of $5,000,000 are
rendered against the Borrower or any Subsidiary, and either (i) enforcement
proceedings are commenced by any creditor upon such judgment(s) or order(s) or
(ii) there is any period of 30 consecutive days during which a stay of
enforcement of such judgment(s) or order(s), by reason of a pending appeal or
otherwise, is not in effect, unless such judgment or order has been vacated,
satisfied, dismissed, or bonded pending appeal;
(g) any provision of any Credit Document for any reason ceases to be
valid and binding on or enforceable against, in any material respect, any Credit
Party that is a party thereto, or such Credit Party so states in writing; or
(h) for any reason except to the extent permitted by the terms of the
Security Agreement, there ceases to be a valid and perfected first-priority
security interest in favor of the Agent in any of the Collateral purported to be
covered by the Security Agreement;
then, and in any such event, the Agent (i) shall at the request, or may with the
consent, of the Required Lenders, by notice to the Borrower, declare the
obligation of each Lender to make Advances, and the obligation of the Issuing
Bank to issue Letters of Credit, to be terminated, whereupon the same shall
forthwith terminate, and (ii) shall at the request, or may with the consent, of
the Required Lenders, by notice to the Borrower, declare the Obligations, all
interest thereon and all other amounts payable under this Agreement and the
other Credit Documents to be forthwith due and payable, whereupon (A) the
Obligations, all such interest and all such amounts shall become and be
forthwith due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Borrower,
and (B) to the extent any Letters of Credit are then outstanding, the Borrower
will deposit with and pledge to the Agent cash collateral in the aggregate
Letter of Credit Amount of such Letters of Credit; provided, however, that, in
the event of an actual or deemed entry of an order for relief with respect to
the Borrower or any Subsidiary under the United States Bankruptcy Code, (x) the
obligation of each Lender to make Advances and of the Issuing Bank to issue
Letters of Credit shall be terminated automatically, and (y) the Advances, all
such interest and all such amounts (including such cash collateral) shall
automatically become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived by
the Borrower.
ARTICLE 8.
THE AGENT
Section 8.1 Authorization and Action. Each Lender hereby appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this
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Agreement as are delegated to the Agent by the terms hereof, together with such
powers as are reasonably incidental thereto. As to any matters not expressly
provided for by the Credit Documents (including enforcement of and collection
under the Credit Documents), the Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Required Lenders, and such instructions shall be
binding upon all Lenders and all holders of Notes; provided, however, that the
Agent shall not be required to take any action that exposes the Agent to
personal liability or that is contrary to the Credit Documents or applicable
law.
Section 8.2 Agent's Reliance, Etc. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them under or in connection with the Credit
Documents, except for its or their own gross negligence or willful misconduct.
Without limitation of the generality of the foregoing, the Agent (a) may treat
any Lender that has signed this Agreement or an Assignment and Acceptance as the
holder of the applicable portion of the Obligations; (b) may consult with legal
counsel (including legal counsel for any Credit Party), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such legal counsel, accountants or experts; (c) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations made in or in connection with the
Credit Documents; (d) shall not have any duty to ascertain or to inquire as to
the performance or observance of any of the terms, covenants or conditions of
any Credit Document on the part of any Credit Party or to inspect the property
(including the books and records) of any Credit Party; (e) shall not be
responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of any Credit Document or any
other instrument or document furnished pursuant thereto; and (f) shall incur no
liability under or in respect of any Credit Document by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telecopier
or otherwise) believed by it to be genuine and signed or sent by the proper
party or parties.
Section 8.3 UBOC and Affiliates. With respect to its Commitment, the
Advances made by it, the Note issued to it and the Letters of Credit
participated in by it, UBOC shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not
the Agent; and the term "Lender" or "Lenders" shall, unless otherwise expressly
indicated, include UBOC in its individual capacity (including in its capacity as
Issuing Bank). UBOC and its Affiliates may accept deposits from, lend money to,
act as trustee under indentures of, and generally engage in any kind of business
with, any Credit Party, any Subsidiary and any Person that may do business with
or own securities of any Credit Party or any Subsidiary, all as if UBOC were not
the Agent and without any duty to account therefor to the Lenders.
Section 8.4 Lender Credit Decision. Each Lender acknowledges that it
has, independently and without reliance on the Agent or any other Lender and
based on the financial statements referred to in Section 5.5 and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance on the Agent or
any other
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Lender and based on such documents and information as it deems appropriate at
the time, continue to make its own credit decisions in taking or not taking
action under this Agreement.
Section 8.5 Indemnification. The Lenders agree to indemnify the Agent
(to the extent not promptly reimbursed by the Borrower), ratably according to
the respective principal amounts of the Obligations then held by each of them
(or, if no Obligations are at the time outstanding or if any Obligations are
then held by Persons that are not Lenders, ratably according to the respective
amounts of their Commitments), from and against all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses and
disbursements of any kind or nature whatsoever that may be imposed on, incurred
by or asserted against the Agent in any way relating to or arising out of any of
the Credit Documents or any action taken or omitted by the Agent under any of
the Credit Documents; provided, however, that no Lender shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Agent's
gross negligence or willful misconduct. Without limitation of the foregoing,
each Lender agrees to reimburse the Agent promptly upon demand for its ratable
share of any costs and expenses payable by the Borrower under Section 9.4, to
the extent that the Agent is not promptly reimbursed for such costs and expenses
by the Borrower.
Section 8.6 Successor Agent. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrower and may be removed at any
time with or without cause with the written approval of the Required Lenders.
Upon any such resignation or removal, the Required Lenders shall have the right
to appoint a successor Agent. If no successor Agent has been so appointed by the
Required Lenders, and has accepted such appointment, within 30 days after the
retiring Agent's giving of notice of resignation or the Required Lenders'
removal of the retiring Agent, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent, which shall be a commercial bank organized
under the laws of the United States of America or of any state thereof and
having a combined capital and surplus of at least $1,000,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all of the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under the Credit
Documents. After any retiring Agent's resignation or removal hereunder as Agent,
the provisions of this Article 8 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was agent under this Agreement.
Section 8.7 Agent as Collateral Holder.
(a) Except for action expressly required of the Agent hereunder or
under any other Credit Document as holder of any Collateral, the Agent shall in
all cases be fully justified in refusing to act hereunder and thereunder unless
it is further indemnified to its satisfaction by the Lenders, proportionately in
accordance with the Obligations then due and payable to each of them, against
all liability and expense that may be incurred by the Agent by reason of taking
or continuing to take any such action.
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(b) Except as expressly provided herein or in any other Credit
Document, the Agent shall have no duty to take any affirmative steps with
respect to the collection of amounts payable in respect of the Collateral. The
Agent shall incur no liability as a result of any private sale of the
Collateral.
(c) The Lenders hereby consent, and agree upon written request by the
Agent to execute and deliver such instruments and other documents as the Agent
may deem desirable to confirm such consent, to the release of the Liens on the
Collateral, including any release in connection with any sale, transfer or other
disposition of the Collateral or any part thereof, in accordance with the Credit
Documents.
(d) The Agent shall be deemed to have exercised reasonable care in
the custody and preservation of the Collateral in its possession if the
Collateral is accorded treatment substantially equal to that the Agent accords
its own property, it being understood that neither the Agent nor any Lender
shall have responsibility for (i) ascertaining or taking action with respect to
calls, conversions, exchanges, maturities, tenders or other matters relative to
any Collateral, whether or not the Agent or any Lender is deemed to have
knowledge of such matters, or (ii) taking any necessary steps to preserve rights
against any parties with respect to any Collateral.
Section 8.8 Lenders' Responsibilities.
(a) Each Lender represents and warrants to the Agent as follows: (i)
such Lender is entitled to receive any payments under this Agreement without the
withholding of any tax; (ii) if such Lender is not organized under the laws of
the United States of America or a state thereof but is lawfully engaged in the
conduct of a trade or business in the United States of America, payments to such
Lender under this Agreement are, or are reasonably expected to be, effectively
connected with the conduct of such trade or business and are or will be
includable in such Lender's gross income; and (iii) if such Lender is not
engaged in a trade or business in the United States of America to which payments
to such Lender under this Agreement are, or are reasonably expected to be,
effectively connected, such Lender is entitled to the benefits of a tax
convention that exempts income earned by such Lender in respect of this
Agreement from United States withholding tax, and such Lender has satisfied all
requirements to qualify for such exemption. Each Lender will reimburse and
indemnify the Agent for, and hold the Agent harmless from and against, any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses and disbursements of any kind or nature whatsoever that
may be imposed upon, incurred by or asserted against Agent due to its reliance
upon the representations of such Lender contained in this section. Unless the
Agent receives written notice to the contrary, each Lender shall be deemed to
have made the representations contained in this section for the current and each
subsequent tax year of such Lender.
(b) Each Lender will promptly furnish to the Agent such forms,
certifications, statements and other documents as the Agent may reasonably
request from time to time to evidence such Lender's exemption from withholding
of any tax imposed by any jurisdiction in respect of payments hereunder or to
enable the Agent to comply with any applicable Governmental Rules relating
thereto. Each Lender agrees that it will, immediately upon request by the Agent,
furnish to the Agent such forms of the Internal Revenue Service, or such other
forms, certifications, statements and documents, duly executed and completed by
such Lender, as
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required to evidence such Lender's exemption from the withholding of U.S. tax
with respect to payments hereunder. If any Lender determines that, as a result
of any change in any applicable Governmental Rule or in any application or
interpretation thereof by any Governmental Person charged with the
administration thereof, it ceases to qualify for exemption from any tax imposed
by any jurisdiction with respect to payments hereunder, such Lender will
promptly notify the Agent of such fact, and the Agent may, but shall not be
obligated to, withhold the amount of any such applicable tax from amounts
payable to such Lender hereunder. The Agent shall not be obligated to make any
payment to any Lender hereunder, and the Agent may withhold the amount of any
applicable tax from amounts payable to such Lender hereunder, until such Lender
has furnished to the Agent each form, certification, statement and document
required to be delivered by such Lender to the Agent in accordance with this
section.
ARTICLE 9.
MISCELLANEOUS
Section 9.1 Amendments, Etc. No amendment or waiver of any provision of
this Agreement, or consent to any departure by the Borrower therefrom, shall be
effective unless in writing and signed or consented to (in writing) by the
Required Lenders and, in the case of amendments, the Borrower, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no amendment, waiver
or consent shall, unless in writing and signed or consented to (in writing) by
all of the Lenders, do any of the following: (a) waive any of the conditions
specified in Article 4; (b) increase the Commitments of the Lenders or subject
the Lenders to any additional obligations; (c) release any Collateral, except in
accordance with the terms of the Credit Documents; (d) reduce the principal of,
or interest on, the Advances or any fees or other amounts payable hereunder; (e)
postpone any date fixed for (i) payment of principal of, or interest on, the
Advances, (ii) reimbursement of drawings under Letters of Credit or (iii)
payment of fees or other amounts payable hereunder; (f) change the percentage of
the Commitments or of the Obligations outstanding, or the number of Lenders,
required for the Lenders or any of them to take any action hereunder; or (g)
amend this Section 9.1; further provided, however, that no amendment, waiver or
consent shall, unless in writing and signed or consented to (in writing) by the
Agent in addition to the Lenders required above to take such action, affect the
rights or duties of the Agent under this Agreement or any other Credit Document.
Section 9.2 Notices, Etc. All notices and other communications provided
for hereunder shall be in writing (including by telecopier) and shall be mailed,
telecopied or delivered, if to the Borrower, to it at 00000 Xxxxxx Xxxx, Xxxxx
000, Xxxxxxxxx Xxxxx, Xxxxxxxxxx 00000, telecopier number 000-000-0000,
Attention: Xxxx Xxxx, Senior Vice President, Finance & Administration; if to any
Lender, to it at the address or telecopier number set forth below its name on
the signature pages hereof or in the Assignment and Acceptance by which it
became a party hereto; if to the Agent, to it at 000 Xxxxx Xxxxxxxx Xxxxxx, Xxx
Xxxxxxx, Xxxxxxxxxx 00000, telecopier number 000-000-0000, Attention: Xxxx Xxxx,
Vice President & Senior Credit Executive; or, as to each party, to it at such
other address or telecopier number as designated by such party in a written
notice to the other parties. All such notices and communications shall be deemed
received, (a) if personally delivered, upon delivery, (b) if sent by first-class
mail, on the
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third Business Day following deposit into the mails and (c) if sent by
telecopier, on the Business Day following such sending, except that notices and
communications to the Agent pursuant to Article 2 or 8 shall not be effective
until received by the Agent.
Section 9.3 No Waiver; Remedies. No failure on the part of any Lender or
the Agent to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof, and no single or partial exercise of any such right
shall preclude any other or further exercise thereof or the exercise of any
other right. The remedies provided herein are cumulative and not exclusive of
any remedies provided by law.
Section 9.4 Costs and Expenses. The Borrower agrees to pay on demand (a)
all costs and expenses of the Agent in connection with the preparation,
execution, delivery, administration, modification and amendment of this
Agreement, the other Credit Documents and the other documents to be delivered
hereunder, including (i) the reasonable fees and out-of-pocket expenses of legal
counsel for the Agent with respect thereto and with respect to advising the
Agent as to its rights and responsibilities, or the perfection, protection or
reservation of rights or interests, under this Agreement, the other Credit
Documents and such other documents to be delivered hereunder, and (ii) the fees
and expenses of any consultants, auditors or accountants engaged by the Agent
pursuant hereto (including for Asset Based Audits), and (b) all costs and
expenses of the Agent and the Lenders (including reasonable attorneys' fees and
expenses of the Agent and the Lenders) in connection with the enforcement
(whether through negotiations, legal proceedings or otherwise) of this
Agreement, the other Credit Documents and the other documents to be delivered
hereunder, whether in any action, suit or litigation, any bankruptcy, insolvency
or similar proceeding or otherwise.
Section 9.5 Indemnification.
(a) The Borrower hereby agrees to indemnify and hold harmless the
Agent and each Lender and each of their respective officers, directors,
employees, agents, advisors and Affiliates (each an "Indemnified Person") from
and against all claims, damages, losses, liabilities, costs and expenses
(including reasonable attorneys' fees and expenses, whether or not such
Indemnified Person is named as a party to any proceeding or is otherwise
subjected to judicial or legal process arising from any such proceeding) that
any of them may incur, or that may be claimed, asserted or awarded against any
of them by any Person, in each case arising out of, related to or in connection
with, or in connection with the preparation for a defense of any investigation,
litigation or proceeding arising out of, related to or in connection with, any
Credit Document, any Advance, any Letter of Credit or the consummation of any
transaction contemplated hereby or thereby, the transfer of or payment or
failure to pay under any Letter of Credit or the use by the Borrower or the
beneficiary of any Letter of Credit of the proceeds of any Advance or of any
drawing under any Letter of Credit, except to the extent that any such claim,
damage, loss, liability, cost or expense is found in a final, nonappealable
judgment by a court of competent jurisdiction to have resulted from such
Indemnified Person's gross negligence or willful misconduct.
(b) The Borrower hereby agrees to indemnify each Indemnified Person
from and against any and all claims, demands, actions, damages (including all
foreseeable and
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unforeseeable consequential damages), losses, assessments, liabilities and
expenses (including reasonable fees and expenses of counsel) that may be
incurred by or awarded against any Indemnified Person, in each case arising out
of or in connection with or by reason of, or in connection with the preparation
for a defense of, any investigation, litigation or proceeding arising out of,
related to or in connection with (i) the actual or alleged presence of any
Hazardous Material in, on or under (A) any property owned or operated by the
Borrower or any Subsidiary, (B) any property to which any Hazardous Material has
migrated from any property owned or operated by the Borrower or any Subsidiary
or (C) any property at which the Borrower or any Subsidiary thereof has disposed
of any Hazardous Material (whether or not legal at the time of such disposal) or
(ii) any Environmental Proceeding relating in any way to the Borrower or any
Subsidiary thereof, in any case whether or not such investigation, litigation or
proceeding is brought by the Borrower, any Subsidiary thereof, any of their
respective directors, shareholders or creditors or an Indemnified Person,
whether or not any Indemnified Person is otherwise a party thereto and whether
or not the transactions contemplated hereby are consummated.
Section 9.6 Right of Setoff. Upon (a) the occurrence and during the
continuation of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 7.1 to authorize the Agent to
declare the Obligations due and payable pursuant to the provisions of Section
7.1, each Lender is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any or all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Lender to or for the credit or the
account of the Borrower against any or all of the obligations of the Borrower
now or hereafter existing under this Agreement and the other Credit Documents,
irrespective of whether such Lender has made any demand under this Agreement or
any such other Credit Document and although such obligations may be unmatured.
Each Lender agrees to notify the Borrower promptly after any such setoff and
application made by such Lender; provided, however, that the failure to give
such notice shall not affect the validity of such setoff and application. The
rights of each Lender under this section are in addition to other rights and
remedies (including other rights of setoff) that such Lender may have.
Section 9.7 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the Borrower, the Agent and the Lenders and their
respective successors and assigns, except that (a) the Borrower shall not have
the right to assign any of its rights and obligations hereunder without the
prior written consent of the Required Lenders and (b) the Lenders shall have the
right to assign their respective rights and obligations hereunder only in
accordance with Section 9.8.
Section 9.8 Assignments and Participations.
(a) Each Lender may assign to one or more banks or other entities
acceptable to the Agent, in the exercise of its reasonable discretion, all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment, the Advances owing to it and its participations in
outstanding Letters of Credit); provided, however, that (i) each such assignment
shall be subject to the prior written approval of the Borrower (unless a Default
has occurred and is continuing), which approval shall not be unreasonably
withheld or delayed, (ii) except in the case of an assignment to a Person that,
immediately before such
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assignment, was a Lender, the amount of the Commitment of the assigning Lender
being assigned pursuant to each such assignment (determined as of the date of
the Assignment and Acceptance with respect to such assignment) shall in no event
be less than the lesser of (A) the entire Commitment of such Lender at such time
and (B) $5,000,000 and (iii) the parties to each such assignment shall execute
and deliver to the Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance, together with a processing and recording fee of
$3,500. Upon such execution, delivery, acceptance and recording (and subject to
such approval), from and after the effective date specified in each Assignment
and Acceptance, which effective date shall be at least 5 Business Days after the
date of delivery thereof to the Agent or, if so specified in such Assignment and
Acceptance, the date of acceptance thereof by the Agent, (i) the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, shall have the rights and obligations of a Lender hereunder and (ii)
the Lender assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this Agreement,
such Lender shall cease to be a party hereto, except that such Lender shall
continue to be an "Indemnified Person" under Section 9.5).
(b) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statement,
warranty or representation made in or in connection with this Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or any other instrument or document furnished pursuant hereto;
(ii) such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Credit Party or
any Subsidiary or the performance or observance by any Credit Party of any of
its obligations under any Credit Document or any other instrument or document
furnished pursuant hereto; (iii) such assignee confirms that it has received a
copy of this Agreement, together with copies of the financial statements
referred to in Section 5.5 and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (iv) such assignee will, independently and
without reliance upon the Agent, such assigning Lender or any other Lender and
based on such documents and information as it may deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (v) such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under the Credit
Documents as are delegated to the Agent by the terms thereof, together with such
powers as are reasonably incidental thereto; and (vi) such assignee agrees that
it will perform in accordance with their terms all of the obligations that by
the terms of the Credit Documents are required to be performed by it as a
Lender.
(c) The Agent shall maintain at its address set forth in Section 9.2
a copy of each Assignment and Acceptance delivered to and accepted by it and a
register for the recordation of the names and addresses of the Lenders and the
Commitment of, and the principal
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amount of Obligations owing to, each Lender from time to time (the "Register").
The entries in the Register shall be conclusive and binding for all purposes,
absent manifest error, and the Borrower, the Agent and the Lenders may treat
each Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee, the Agent shall, if such Assignment and
Acceptance has been completed and is in proper form and if such assignee is
acceptable to the Agent, in the exercise of its reasonable discretion, (i)
accept such Assignment and Acceptance, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to the Borrower.
(e) Each Lender may sell participations to one or more banks or other
entities in or to all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitments, the Advances owing to
it and its participations in outstanding Letters of Credit); provided, however,
that (i) such Lender's obligations under this Agreement (including its
Commitment) shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) the Borrower, the Agent and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and (iv) no participant under any such
participation shall have any right to approve any amendment or waiver of any
provision of any Credit Document, or any consent to any departure by any Credit
Party therefrom, except to the extent that such amendment, waiver or consent
would reduce the principal of, or interest on, the Advances, the amount to be
reimbursed in respect of any drawing under a Letter of Credit or any fees or
other amounts payable hereunder, in each case to the extent subject to such
participation, postpone any date fixed for any payment of principal of, or
interest on, the Advances, the amount to be reimbursed in respect of any drawing
under a Letter of Credit or any fees or other amounts payable hereunder, in each
case to the extent subject to such participation, or release all or
substantially all of the Collateral, except as provided in the Credit Documents.
(f) Any Lender may, in connection with any assignment or
participation or proposed assigned or participation pursuant to this Section
9.8, disclose to the assignee or participant or proposed assignee or participant
any information relating to the Borrower that was furnished to such Lender by or
on behalf of the Borrower.
Section 9.9 Governing Law. THIS AGREEMENT AND THE NOTES SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF CALIFORNIA APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THE STATE OF
CALIFORNIA.
Section 9.10 Headings. The section and subsection headings used herein
have been inserted for convenience of reference only and do not constitute
matters to be considered in interpreting this Agreement.
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Section 9.11 Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Section 9.12 Reference to and Effect on Credit Documents.
(a) This Agreement is an amendment and restatement of the Old Credit
Agreement. On and after the effective date of this Agreement, each reference in
those Credit Documents in effect before the Closing Date and continuing in
effect after the Closing Date to "the Credit Agreement," "thereunder,"
"thereof," "therein" or any other expression of like import referring to the Old
Credit Agreement shall mean and be a reference to this Agreement.
(b) The Credit Documents in effect before the Closing Date (except to
the extent amended and restated or otherwise replaced pursuant to the terms of
this Agreement) shall remain in full force and effect and are hereby ratified
and confirmed. Without limiting the generality of the foregoing, the Security
Agreement and all of the Collateral described therein do and shall continue to
secure the payment of all obligations of the Borrower under the Credit
Documents, either in their original form or as amended and restated or otherwise
replaced pursuant to the terms hereof.
(c) The execution, delivery and effectiveness of this Agreement shall
not operate as a waiver of any right, power or remedy of the Agent or any Lender
under any of the Credit Documents or constitute a waiver of any provision of any
of the Credit Documents.
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Section 9.13 Waiver of Jury Trial. THE BORROWER, THE LENDERS AND THE AGENT
HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO ANY OF THE CREDIT DOCUMENTS OR ANY OF
THE TRANSACTIONS CONTEMPLATED THEREBY.
THQ INC.
By: /s/ Xxxx Xxxx
-------------------------------
Xxxx Xxxx
Senior Vice President,
Finance & Administration
Commitment of Lender
$35,000,000 UNION BANK OF CALIFORNIA, N.A.,
as Administrative Agent, Syndication
Agent, Arranger and Lender
By: /s/ Xxxx Xxxx
--------------------------------
Xxxx Xxxx
Vice President & Senior
Credit Executive
Union Bank of California, N.A.
000 Xxxxx Xxxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopier: 000-000-0000
Attention: Xxxx Xxxx
S-1
SCHEDULE 1
FACILITY AMOUNT AND ADVANCE SUBLIMIT
I. Facility Amount
Month Amount
--------------- -----------
August 2002 $20,000,000
September 2002 $35,000,000
October 2002 $35,000,000
November 2002 $35,000,000
December 2002 $35,000,000
January 2003 $35,000,000
February 2003 $20,000,000
March 2003 $20,000,000
April 2003 $20,000,000
May 2003 $20,000,000
June 2003 $20,000,000
July 2003 $20,000,000
August 2003 $20,000,000
September 2003 $35,000,000
October 2003 $35,000,000
November 2003 $35,000,000
December 2003 $35,000,000
January 2004 $35,000,000
February 2004 $20,000,000
March 2004 $20,000,000
April 2004 $20,000,000
May 2004 $20,000,000
June 2004 $20,000,000
July 2004 $20,000,000
August 2004 $20,000,000
II. Advance Sublimit
Month Amount
-------------- -----------
August 2002 $10,000,000
September 2002 $10,000,000
October 2002 $10,000,000
November 2002 $20,000,000
December 2002 $20,000,000
January 2003 $20,000,000
February 2003 $10,000,000
March 2003 $10,000,000
April 2003 $10,000,000
May 2003 $10,000,000
June 2003 $10,000,000
July 2003 $10,000,000
August 2003 $10,000,000
September 2003 $10,000,000
October 2003 $10,000,000
November 2003 $20,000,000
December 2003 $20,000,000
January 2004 $20,000,000
February 2004 $10,000,000
March 2004 $10,000,000
April 2004 $10,000,000
May 2004 $10,000,000
June 2004 $10,000,000
July 2004 $10,000,000
August 2004 $10,000,000
SCHEDULE 2
SUBSIDIARIES
Jurisdiction of Direct Percentage
Subsidiary Organization Owner Ownership
---------- --------------- -------- -----------
Black Pearl Software, THQ Inc. 100%
Inc. (in dissolution) Illinois
GameFx, Inc. Delaware THQ Inc. 100%
(in dissolution)
Genetic Anomalies, Inc. Delaware THQ Inc. 100%
Pacific Coast Power THQ Inc. 100%
and Light Company California
Volition, Inc. Delaware THQ Inc. 100%
T.HQ Deutschland THQ Inc. 100%
GmbH (in liquidation) Germany
THQ (Holdings) Ltd. England THQ Inc. 100%
T.HQ International, THQ Inc. 100%
Ltd. England
THQ/Jakks Pacific, THQ Inc. 50%
LLC Delaware
THQ Entertainment THQ Holdings 100%
GmbH Germany
THQ Asia Pacific Pty THQ Holdings 100%
Ltd. Australia
THQ France France THQ Holdings 100%
Softgold Computerspiele Germany THQ Entertainment 100%
GmbH GmbH
ABC Spielspass GmbH Germany THQ Entertainment 100%
GmbH
Rainbow Multimedia Arizona THQ Inc. 100%
Group, Inc.
