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EXHIBIT 10.11
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COLLECTIBLE CHAMPIONS, INC.
RACING CHAMPIONS, INC.
GUARANTEE AND SECURITY AGREEMENT
Dated as of April 30, 1996
THE FIRST NATIONAL BANK OF BOSTON, as Agent
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TABLE OF CONTENTS
Page
1. Reference to Credit Agreement; Definitions; Certain Rules of Construction ..........................1
1.1. "Accounts".................................................................................1
1.2. "Agreement"................................................................................1
1.3. "Pledged Indebtedness".....................................................................1
1.4. "Pledged Rights"...........................................................................1
1.5. "Pledged Securities".......................................................................1
1.6. "Pledged Stock"............................................................................1
1.7. "UCC"......................................................................................2
2. Guarantee...........................................................................................2
2.1. Guarantee of Credit Obligations............................................................2
2.2. Continuing Obligation......................................................................2
2.3. Waivers with Respect to Credit Obligations.................................................3
2.4. Lenders' Power to Waive, etc...............................................................4
2.5. Information Regarding the Borrower, etc....................................................5
2.6. Certain Guarantor Representations..........................................................6
2.7. Subrogation................................................................................6
2.8. Subordination..............................................................................6
2.9. Future Subsidiaries: Further Assurances....................................................7
2.10. Contribution Among Guarantors..............................................................7
3. Security............................................................................................8
3.1. Credit Security............................................................................8
3.1.1. Tangible Personal Property.......................................................8
3.1.2. Rights to Payment of Money.......................................................8
3.1.3. Intangibles......................................................................8
3.1.4. Pledged Stock....................................................................8
3.1.5. Pledged Rights...................................................................9
3.1.6. Pledged Indebtedness.............................................................9
3.1.7. Chattel Paper, Instruments and Document..........................................9
3.1.8. Leases...........................................................................9
3.1.9. Deposit Accounts.................................................................9
3.1.10. Collateral......................................................................9
3.1.11. Books and Records...............................................................9
3.1.12. Insurance.......................................................................9
3.1.13. All Other Property..............................................................9
3.1.14. Proceeds and Products...........................................................9
3.1.15. Excluded Property..............................................................10
3.2. Additional Credit Security.......................................................................10
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3.2.1. Real Property.......................................................................10
3.2.2. Motor Vehicles and Aircraft.........................................................10
3.3. Representations, Warranties and Covenants with Respect to Credit Security....................11
3.3.1. Pledged Stock.......................................................................11
3.3.2. Accounts and Pledged Indebtedness...................................................11
3.3.3. No Liens or Restrictions on Transfer or Change of Control...........................11
3.3.4. Location of Credit Security.........................................................12
3.3.5. Trade Names.........................................................................12
3.3.6. Insurance...........................................................................12
3.3.7. Modifications to Credit Security....................................................13
3.3.8. Delivery of Documents...............................................................13
3.4. Administration of Credit Security............................................................13
3.4.1. Use of Credit Security..............................................................13
3.4.2. Deposits............................................................................13
4. Special Provision Concerning Cash Collateral.......................................................18
5. General............................................................................................18
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EXHIBITS
3.3 - Obligors; Office and Principal Place of Business; Permitted
Jurisdiction for Personal Tangible Property; Trade Names; Depository
Institutions
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COLLECTIBLE CHAMPIONS, INC.
RACING CHAMPIONS, INC.
GUARANTEE AND SECURITY AGREEMENT
This Agreement, dated as of April 30, 1996, is among Collectible
Champions, Inc., a Delaware corporation (the "Company"), the Subsidiaries of
the Company from time to time party hereto and The First National Bank of
Boston, as agent (the "Agent") for itself and the other Lenders under the
Credit Agreement (as defined below). The parties agree as follows:
1. Reference to Credit Agreement; Definitions; Certain Rules of Construction.
Reference is made to the Credit Agreement dated as of the date hereof, as from
time to time in effect (the "Credit Agreement"), among the Company, the
Subsidiaries of the Company from time to time party thereto, the Lenders and
the Agent. Capitalized terms defined in the Credit Agreement and not otherwise
defined herein are used herein with the meanings so defined. Certain other
capitalized terms are used in this Agreement as specifically defined below in
this Section 1. Except as the context otherwise explicitly requires, (a) the
capitalized term "Section" refers to sections of this Agreement, (b) the
capitalized term "Exhibit" refers to exhibits to this Agreement, (c) references
to a particular Section shall include all subsections thereof, (d) the word
"including" shall be construed as "including without limitation", (e) terms
defined in the UCC and not otherwise defined herein have the meaning provided
under the UCC, (f) references to a particular statute or regulation include all
rules and regulations thereunder and any successor statute, regulation or
rules, in each case as from time to time in effect and (g) references to a
particular Person include such Person's successors and assigns to the extent
not prohibited by this Agreement and the other Credit Documents. References to
"the date hereof" mean the date first set forth above.
1.1. "Accounts" is defined in Section 3.1.2.
1.2. "Agreement" means this Guarantee and Security Agreement as from time
to time in effect.
1.3. "Pledged Indebtedness" is defined in Section 3.1.6.
1.4. "Pledged Rights" is defined in Section 3.1.5.
1.5. "Pledged Securities" means the Pledged Stock, the Pledged Rights and
the Pledged Indebtedness, collectively.
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1.6. "Pledged Stock" is defined in Section 3.1.4.
1.7. "UCC" means the Uniform Commercial Code as in effect in
Massachusetts on the date hereof; provided, however, that with respect to the
perfection of the Agent's Lien in the Credit Security and the effect of
nonperfection thereof, the term "UCC" means the Uniform Commercial Code as in
effect in any jurisdiction the laws of which are made applicable by section
9-103 of the Uniform Commercial Code as in effect in Massachusetts.
2. Guarantee.
2.1. Guarantee of Credit Obligations. Each Guarantor unconditionally
guarantees that the Credit Obligations will be performed and paid in full in
cash when due and payable, whether at the stated or accelerated maturity
thereof or otherwise, this guarantee being a guarantee of payment and not of
collectability and being absolute and in no way conditional or contingent. In
the event any part of the Credit Obligations shall not have been so paid in
full when due and payable, each Guarantor will, immediately upon notice by the
Agent or, without notice, immediately upon the occurrence of a Bankruptcy
Default, pay or cause to be paid to the Agent for the account of each Lender in
accordance with the Lenders' respective Percentage Interests therein the amount
of such Credit Obligations which are then due and payable and unpaid. The
obligations of each Guarantor hereunder shall not be affected by the
invalidity, unenforceability or irrecoverability of any of the Credit
Obligations as against any other Obligor, any other guarantor thereof or any
other Person. For purposes hereof, the Credit Obligations shall be due and
payable when and as the same shall be due and payable under the terms of the
Credit Agreement or any other Credit Document notwithstanding the fact that the
collection or enforcement thereof may be stayed or enjoined under the
Bankruptcy Code or other applicable law.
2.2. Continuing Obligation. Each Guarantor acknowledges that the Lenders
have entered into the Credit Agreement (and, to the extent that the Lenders or
the Agent may enter into any future Credit Document, will have entered into
such agreement) in reliance on this Section 2 being a continuing irrevocable
agreement, and such Guarantor agrees that its guarantee may not be revoked in
whole or in part. The obligations of the Guarantors hereunder shall terminate
when the commitment of the Lenders to extend credit under the Credit Agreement
shall have terminated and all of the Credit Obligations have been indefeasibly
paid in full in cash and discharged; provided, however, that:
(a) if a claim is made upon the Lenders at any time for repayment
or recovery of any amounts or any property received by the Lenders from
any source on account of any of the Credit Obligations and the Lenders
repay or return any amounts or property so received (including interest
thereon to the extent required to be paid by the Lenders) or
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(b) if the Lenders become liable for any part of such claim by
reason of (i) any judgment or order of any court or administrative
authority having competent jurisdiction, or (ii) any settlement or
compromise of any such claim,
then the Guarantors shall remain liable under this Agreement for the amounts so
repaid or property so returned or the amounts for which the Lenders become
liable (such amounts being deemed part of the Credit Obligations) to the same
extent as if such amounts or property had never been received by the Lenders,
notwithstanding any termination hereof or the cancellation of any instrument or
agreement evidencing any of the Credit Obligations. Not later than five days
after receipt of notice from the Agent, the Guarantors shall pay to the Agent
an amount equal to the amount of such repayment or return for which the Lenders
have so become liable. Payments hereunder by a Guarantor may be required by
the Agent on any number of occasions.
2.3. Waivers with Respect to Credit Obligations. Except to the extent
expressly required by the Credit Agreement or any other Credit Document, each
Guarantor waives, to the fullest extent permitted by the provisions of
applicable law, all of the following (including all defenses, counterclaims and
other rights of any nature based upon any of the following):
(a) presentment, demand for payment and protest of nonpayment of
any of the Credit Obligations, and notice of protest, dishonor or
nonperformance;
(b) notice of acceptance of this guarantee and notice that credit
has been extended in reliance on such Guarantor's guarantee of the Credit
Obligations;
(c) notice of any Default or of any inability to enforce
performance of the obligations of the Borrower or any other Person with
respect to any Credit Document, or notice of any acceleration of maturity
of any Credit Obligations;
(d) demand for performance or observance of, and any enforcement of
any provision of the Credit Agreement, the Credit Obligations or any
other Credit Document or any pursuit or exhaustion of rights or remedies
with respect to any Credit Security or against the Borrower or any other
Person in respect of the Credit Obligations or any requirement of
diligence or promptness on the part of the Agent or the Lenders in
connection with any of the foregoing;
(e) any act or omission on the part of the Agent or the Lenders
which may impair or prejudice the rights of such Guarantor, including
rights to obtain subrogation, exoneration, contribution, indemnification
or any other reimbursement from the Borrower or any other Person, or
otherwise operate as a deemed release or discharge;
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(f) failure or delay to perfect or continue the perfection of any
security interest in any Credit Security or any other action which xxxxx
or impairs the value of, or any failure to preserve or protect the value
of, any Credit Security;
(g) any statute of limitations or any statute or rule of law which
provides that the obligation of a surety must be neither larger in amount
nor in other respects more burdensome than the obligation of the
principal;
(h) any "single action" or "anti-deficiency" law which would
otherwise prevent the Lenders from bringing any action, including any
claim for a deficiency, against such Guarantor before or after the
Agent's or the Lenders' commencement or completion of any foreclosure
action, whether judicially, by exercise of power of sale or otherwise, or
any other law which would otherwise require any election of remedies by
the Agent or the Lenders;
(i) all demands and notices of every kind with respect to the
foregoing; and
(j) to the extent not referred to above, all defenses (other than
payment) which the Borrower may now or hereafter have to the payment of
the Credit Obligations, together with all suretyship defenses, which
could otherwise be asserted by such Guarantor.
Each Guarantor represents that it has obtained the advice of counsel as to the
extent to which suretyship and other defenses may be available to it with
respect to its obligations hereunder in the absence of the waivers contained in
this Section 2.3.
No delay or omission on the part of the Agent or the Lenders in exercising
any right under this Agreement or any other Credit Document or under any
guarantee of the Credit Obligations or with respect to the Credit Security
shall operate as a waiver or relinquishment of such right. No action which the
Agent or the Lenders or the Borrower may take or refrain from taking with
respect to the Credit Obligations, including any amendments thereto or
modifications thereof or waivers with respect thereto, shall affect the
provisions of this Agreement or the obligations of each Guarantor hereunder.
None of the Lenders' or the Agent's rights shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of any Obligor,
or by any noncompliance by the Borrower with the terms, provisions and
covenants of the Credit Agreement, regardless of any knowledge thereof which
the Agent or the Lenders may have or otherwise be charged with.
2.4. Lenders' Power to Waive, etc. Each Guarantor grants to the Agent
and the Lenders full power in their discretion, without notice to or consent of
such Guarantor, such notice and consent being expressly waived to the fullest
extent permitted by applicable law, and without in any way affecting the
liability of such Guarantor under its guarantee hereunder:
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(a) To waive compliance with, and any Default under, and to consent
to any amendment to or modification or termination of any terms or
provisions of, or to give any waiver in respect of, the Credit Agreement,
any other Credit Document, the Credit Security, the Credit Obligations or
any guarantee thereof (each as from time to time in effect);
(b) To grant any extensions of the Credit Obligations (for any
duration), and any other indulgence with respect thereto, and to effect
any total or partial release (by operation of law or otherwise),
discharge, compromise or settlement with respect to the obligations of
the Obligors or any other Person in respect of the Credit Obligations,
whether or not rights against such Guarantor under this Agreement are
reserved in connection therewith;
(c) To take security in any form for the Credit Obligations, and to
consent to the addition to or the substitution, exchange, release or
other disposition of, or to deal in any other manner with, any part of
any property contained in the Credit Security whether or not the
property, if any, received upon the exercise of such power shall be of a
character or value the same as or different from the character or value
of any property disposed of, and to obtain, modify or release any present
or future guarantees of the Credit Obligations and to proceed against any
of the Credit Security or such guarantees in any order;
(d) To collect or liquidate or realize upon any of the Credit
Obligations or the Credit Security in any manner or to refrain from
collecting or liquidating or realizing upon any of the Credit Obligations
or the Credit Security; and
(e) To extend credit under the Credit Agreement, any other Credit
Document or otherwise in such amount as the Lenders may determine,
including increasing the amount of credit and the interest rate and fees
with respect thereto, even though the condition of the Obligors
(financial or otherwise, on an individual or Consolidated basis) may have
deteriorated since the date hereof.
2.5. Information Regarding the Borrower, etc. Each Guarantor has made
such investigation as it deems desirable of the risks undertaken by it in
entering into this Agreement and is fully satisfied that it understands all
such risks. Each Guarantor waives any obligation which may now or hereafter
exist on the part of the Agent or the Lenders to inform it of the risks being
undertaken by entering into this Agreement or of any changes in such risks and,
from and after the date hereof, each Guarantor undertakes to keep itself
informed of such risks and any changes therein. Each Guarantor expressly
waives any duty which may now or hereafter exist on the part of the Agent or
the Lenders to disclose to such Guarantor any matter related to the business,
operations, character, collateral, credit, condition (financial or
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otherwise), income or prospects of the Borrower or its Affiliates or their
properties or management, whether now or hereafter known by the Agent or the
Lenders. Each Guarantor represents, warrants and agrees that it assumes sole
responsibility for obtaining from the Borrower all information concerning the
Credit Agreement and all other Credit Documents and all other information as to
the Borrower and its Affiliates or their properties or management as such
Guarantor deems necessary or desirable.
2.6. Certain Guarantor Representations. Each Guarantor represents that:
(a) it is in its best interest and in pursuit of the purposes for
which it was organized as an integral part of the business conducted and
proposed to be conducted by the Company and its Subsidiaries, and
reasonably necessary and convenient in connection with the conduct of the
business conducted and proposed to be conducted by them, to induce the
Lenders to enter into the Credit Agreement and to extend credit to the
Borrower by making the Guarantee contemplated by this Section 2;
(b) the credit available hereunder will directly or indirectly
inure to its benefit;
(c) by virtue of the foregoing it is receiving at least reasonably
equivalent value from the Lenders for its Guarantee;
(d) it will not be rendered insolvent as a result of entering into
this Agreement;
(e) after giving effect to the transactions contemplated by this
Agreement, it will have assets having a fair saleable value in excess of
the amount required to pay its probable liability on its existing debts
as they become absolute and matured;
(f) it has, and will have, access to adequate capital for the
conduct of its business;
(g) it has the ability to pay its debts from time to time incurred
in connection therewith as such debts mature; and
(h) it has been advised by the Agent that the Lenders are unwilling
to enter into the Credit Agreement unless the Guarantee contemplated by
this Section 2 is given by it.
2.7. Subrogation. Each Guarantor agrees that, until the Credit
Obligations are paid in full, it will not exercise any right of reimbursement,
subrogation, contribution, offset or other claims against the other Obligors
arising by contract or operation of law in connection with any payment made or
required to be made by such Guarantor under this Agreement. After the payment
in full of the Credit Obligations, each Guarantor shall be entitled to exercise
against
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the Borrower and the other Obligors all such rights of reimbursement,
subrogation, contribution and offset, and all such other claims, to the fullest
extent permitted by law.
2.8. Subordination. Each Guarantor covenants and agrees that, after the
occurrence of an Event of Default, all Indebtedness, claims and liabilities
then or thereafter owing by the Borrower or any other Obligor to such Guarantor
whether arising hereunder or otherwise are subordinated to the prior payment in
full of the Credit Obligations and are so subordinated as a claim against such
Obligor or any of its assets, whether such claim be in the ordinary course of
business or in the event of voluntary or involuntary liquidation, dissolution,
insolvency or bankruptcy, so that no payment with respect to any such
Indebtedness, claim or liability will be made or received while any Event of
Default exists.
2.9. Future Subsidiaries: Further Assurances. The Company will from
time to time cause (a) any present Wholly Owned Subsidiary that is not a
Guarantor within 30 days after notice from the Agent or (b) any future Wholly
Owned Subsidiary within 30 days after any such Person becomes a Wholly Owned
Subsidiary, to join this Agreement as a Guarantor pursuant to a joinder
agreement in form and substance satisfactory to the Agent; provided, however,
that in the event such a Wholly Owned Subsidiary is prohibited by any valid
law, statute, rule or regulation from guaranteeing the Credit Obligations, such
guarantee will be limited to the extent necessary to comply with such
prohibition. Each Guarantor will, promptly upon the request of the Agent from
time to time, execute, acknowledge and deliver, and file and record, all such
instruments, and take all such action, as the Agent deems necessary or
advisable to carry out the intent and purpose of this Section 2.
2.10. Contribution Among Guarantors. The Guarantors agree that, as among
themselves in their capacity as guarantors of the Credit Obligations, the
ultimate responsibility for repayment of the Credit Obligations, in the event
that the Borrower fails to pay when due its Credit Obligations, shall be
equitably apportioned, to the extent consistent with the Credit Documents,
among the respective Guarantors (a) in the proportion that each, in its
capacity as a guarantor, has benefited from the extensions of credit to the
Borrower by the Lenders under the Credit Agreement, or (b) if such equitable
apportionment cannot reasonably be determined or agreed upon among the affected
Guarantors, in proportion to their respective net worths determined on or about
the date hereof (or such later date as such Guarantor becomes party hereto).
In the event that any Guarantor, in its capacity as a guarantor, pays an amount
with respect to the Credit Obligations in excess of its proportionate share as
set forth in this Section 2.10, each other Guarantor shall, to the extent
consistent with the Credit Documents, make a contribution payment to such
Guarantor in an amount such that the aggregate amount paid by each Guarantor
reflects its proportionate share of the Credit Obligations. In the event of
any default by any Guarantor under this Section 2.10, each other Guarantor will
bear, to the extent consistent with the Credit Documents, its proportionate
share of the defaulting Guarantor's obligation under this Section 2.10. This
Section 2.10 is intended to set forth only the rights and obligations of the
Guarantors among themselves and shall not in any way affect the
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obligations of any Guarantor to the Lenders under the Credit Documents (which
obligations shall at all times constitute the joint and several obligations of
all the Guarantors).
3. Security.
3.1. Credit Security. As security for the payment and performance of the
Credit Obligations, each Obligor mortgages, pledges and collaterally grants and
assigns to the Agent for the benefit of the Lenders and the holders from time
to time of any Credit Obligation, and creates a security interest in favor of
the Agent for the benefit of the Lenders and such holders in, all of such
Obligor's right, title and interest in and to (but none of its obligations or
liabilities with respect to) the items and types of present and future property
described in Sections 3.1.1 through 3.1.14 (subject, however, to Section
3.1.15), whether now owned or hereafter acquired, all of which shall be
included in the term "Credit Security":
3.1.1. Tangible Personal Property. All goods, machinery,
equipment, inventory and all other tangible personal property of any
nature whatsoever, wherever located, including raw materials, work in
process, finished parts and products, supplies, spare parts, replacement
parts, merchandise for resale, dies, molds, tools, computers, tapes,
disks and computer equipment.
3.1.2. Rights to Payment of Money. All rights to receive the
payment of money, including accounts and receivables, rights to receive
the payment of money under contracts, franchises, licenses, permits,
subscriptions or other agreements (whether or not earned by performance),
and rights to receive payments from any other source (all such rights,
other than Financing Debt, being referred to herein as "Accounts").
3.1.3. Intangibles. All of the following (to the extent not
included in Section 3.1.2): (a) contracts, franchises, licenses,
permits, subscriptions and other agreements and all other rights
thereunder; (b) rights granted by others which permit such Obligor to
sell or market items of personal property; (c) United States and foreign
common law and statutory copyrights and rights in literary property and
rights and licenses thereunder; (d) trade names, United States and
foreign trademarks, service marks, any registrations thereof and any
related good will; (e) United States and foreign patents and patent
applications; (f) computer software, designs, models, know-how, trade
secrets, rights in proprietary information, formulas, customer lists,
backlog, orders, subscriptions, royalties, catalogues, sales material,
documents, good will, inventions and processes; (g) judgments, causes in
action and claims, whether or not inchoate, and (h) all other general
intangibles and intangible property and all rights thereunder.
3.1.4. Pledged Stock. (a) All shares of capital stock or other
evidence of beneficial interest in any corporation, business trust or
limited liability company, (b) all
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limited partnership interests in any limited partnership, (c) all general
partnership interests in any general partnership, (d) all joint venture
interests in any joint venture and (e) all options, warrants and similar
rights to acquire such capital stock or such interests. All such capital
stock, interests, options, warrants and other rights are collectively
referred to as the "Pledged Stock".
3.1.5. Pledged Rights. All rights to receive profits or surplus
of, or other Distributions (including income, return of capital and
liquidating distributions) from, any partnership, joint venture or
limited liability company, including any distributions by any such Person
to partners, joint venturers or members. All such rights are
collectively referred to as the "Pledged Rights".
3.1.6. Pledged Indebtedness. All Financing Debt from time to time
owing to such Obligor from any Person (all such Financing Debt being
referred to as the "Pledged Indebtedness").
3.1.7. Chattel Paper, Instruments and Documents. All chattel
paper, non-negotiable instruments, negotiable instruments and documents.
3.1.8. Leases. All leases of personal property, whether such
Obligor is the lessor or the lessee thereunder.
3.1.9. Deposit Accounts. All general or special deposit accounts,
including any demand, time, savings, passbook or similar account
maintained by such Obligor with any bank, trust company, savings and loan
association, credit union or similar organization, and all money, cash
and cash equivalents of such Obligor, whether or not deposited in any
such deposit account.
3.1.10. Collateral. All collateral granted by third party Obligors
to, or held by, such Obligor with respect to the Accounts, Pledged
Securities, chattel paper, instruments, leases and other items of Credit
Security.
3.1.11. Books and Records. All books and records, including books
of account and ledgers of every kind and nature, all electronically
recorded data (including all computer programs, disks, tapes, electronic
data processing media and software used in connection with maintaining
such Obligor's books and records), all files and correspondence and all
receptacles and containers for the foregoing.
3.1.12. Insurance. All insurance policies which insure against any
loss or damage to any other Credit Security.
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3.1.13. All Other Property. All other property, assets and items
of value of every kind and nature, tangible or intangible, absolute or
contingent, legal or equitable.
3.1.14. Proceeds and Products. All proceeds, including insurance
proceeds, and products of the items of Credit Security described or
referred to in Sections 3.1.1 through 3.1.13 and, to the extent not
included in the foregoing, all Distributions with respect to the Pledged
Securities.
3.1.15. Excluded Property. Notwithstanding Sections 3.1.1 through
3.1.14, the payment and performance of the Credit Obligations shall not
be secured by:
(a) any rights arising under, and any property, tangible or
intangible, acquired under, any agreement which validly prohibits the
creation by such Obligor of a security interest in such rights or
property;
(b) any rights or property to the extent that any valid and
enforceable law or regulation applicable to such rights or property
prohibits the creation of a security interest therein; or
(c) the items described in Section 3.2 (but only in the event and
to the extent the Agent has not specified that such items be included in
the Credit Security pursuant thereto).
In addition, in the event any Obligor disposes of assets to third parties
in a transaction permitted by section 6.11 of the Credit Agreement, such
assets, but not the proceeds or products thereof, shall be released from the
Lien of the Credit Security.
3.2. Additional Credit Security. As additional Credit Security, each
Obligor covenants that it will mortgage, pledge and collaterally grant and
assign to the Agent for the benefit of the Lenders and the holders from time to
time of any Credit Obligation, and will create a security interest in favor of
the Agent for the benefit of the Lenders and such holders in, all of its right,
title and interest in and to (but none of its obligations with respect to) such
of the following present or future items as the Agent may from time to time
specify by notice to such Obligor, whether now owned or hereafter acquired, and
the proceeds and products thereof, except to the extent consisting of rights or
property of the types referred to in Section 3.1.15(a) through (b), subject
only to Liens permitted by Section 3.3.3, all of which shall thereupon be
included in the term "Credit Security":
3.2.1. Real Property. All real property and immovable property and
fixtures, leasehold interests and easements wherever located, together
with any and all estates and interests of such Obligor therein, including
lands, buildings, stores, manufacturing facilities and other structures
erected on such property, fixed plant, fixed equipment
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and all permits, rights, licenses, benefits and other interests of any
kind or nature whatsoever in respect of such real and immovable property.
3.2.2. Motor Vehicles and Aircraft. All motor vehicles and
aircraft.
3.3. Representations, Warranties and Covenants with Respect to Credit
Security. Each Obligor severally represents, warrants and covenants with
respect to itself and its respective Credit Security that:
3.3.1. Pledged Stock. All shares of capital stock, limited
partnership interests and similar securities included in the Pledged
Stock are and shall be at all times duly authorized, validly issued,
fully paid and (in the case of capital stock and limited partnership
interests) nonassessable. Each Obligor will deliver to the Agent
certificates representing the Pledged Stock, registered, if the Agent so
requests, in the name of the Agent or its nominee, as pledgee, or
accompanied by a stock transfer power executed in blank and, if the Agent
so requests, with the signature guaranteed, all in form and manner
satisfactory to the Agent. Pledged Stock that is not evidenced by a
certificate will be registered in the Agent's name as pledgee on the
issuer's records, all in form and substance satisfactory to the Agent.
The Agent may at any time after the occurrence of an Event of Default
transfer into its name or the name of its nominee, as pledgee, any
Pledged Stock. In the event the Pledged Stock includes any Margin Stock,
the Obligors will furnish to the Lenders Federal Reserve Form U-1 and
take such other action as the Agent may request to ensure compliance with
applicable laws.
3.3.2. Accounts and Pledged Indebtedness. All Accounts and Pledged
Indebtedness owed by an Affiliate of any Obligor shall be on open account
and shall not be evidenced by any note or other instrument; provided,
however, that all Pledged Indebtedness owed by an Affiliate of any
Obligor shall, if the Agent requests, be evidenced by a promissory note,
which note shall be delivered to the Agent after having been endorsed in
blank. Each Obligor will, immediately upon the receipt thereof, deliver
to the Agent any promissory note or similar instrument representing any
Account or Pledged Indebtedness, after having endorsed such promissory
note or instrument in blank.
3.3.3. No Liens or Restrictions on Transfer or Change of Control.
All Credit Security shall be free and clear of any Liens and restrictions
on the transfer thereof, including contractual provisions which prohibit
the assignment of rights under contracts, except for Liens permitted by
section 6.8 of the Credit Agreement. Without limiting the generality of
the foregoing, each Obligor will in good faith attempt to exclude from
contracts to which it becomes a party after the date hereof provisions
that would prevent such Obligor from creating a security interest in such
contract or any property acquired thereunder as contemplated hereby.
None of the Pledged Stock is
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subject to any option to purchase or similar rights of any Person.
Except with the written consent of the Agent, each Obligor will in good
faith attempt to exclude from any agreement, instrument, deed or lease
provisions that would restrict the change of control or ownership of the
Company or any of its Subsidiaries, or create a security interest in the
ownership of the Company or any of its Subsidiaries.
3.3.4. Location of Credit Security. Each Obligor shall at all
times keep its records concerning the Accounts at its chief executive
office and principal place of business, which office and place of
business shall be set forth in Exhibit 3.3 or, so long as such Obligor
shall have taken all steps reasonably necessary to perfect the Lenders'
security interest in the Credit Security with respect to such new
address, at such other address as such Obligor may specify by notice
actually received by the Agent not less than 10 Banking Days prior to
such change of address. No Obligor shall at any time keep tangible
personal property of the type referred to in Section 3.1.1 in any
jurisdiction other than the jurisdictions specified in Exhibit 3.3 or, so
long as such Obligor shall have taken all steps reasonably necessary to
perfect the Lenders' security interest in the Credit Security with
respect to such other jurisdiction, other jurisdictions as such Obligor
may specify by notice actually received by the Agent not less than 10
days prior to moving such tangible personal property into such other
jurisdiction.
3.3.5. Trade Names. No Obligor will adopt or do business under any
name other than its name or names designated in Exhibit 3.3 or any other
name specified by notice actually received by the Agent not less than 10
Banking Days prior to the conduct of business under such additional name.
Since its incorporation, no Obligor has changed its corporate name or
adopted or conducted business under any trade name other than a name
specified on Exhibit 3.3 (as from time to time supplemented in accordance
with sections 6.4.1 and 6.4.2 of the Credit Agreement).
3.3.6. Insurance. Each insurance policy included in, or insuring
against loss or damage to, the Credit Security shall name the Agent as
additional insured party or as loss payee. No such insurance policy
shall be cancelable or subject to termination or reduction in amount or
scope of coverage until after at least 30 days' prior written notice from
the insurer to the Agent. At least 10 days prior to the expiration of
any such insurance policy for any reason, each Obligor shall furnish the
Agent with a renewal or replacement policy and evidence of payment of the
premiums therefor when due. Each Obligor grants to the Agent full power
and authority as its attorney-in-fact, effective upon notice to such
Obligor after the occurrence of an Event of Default, to obtain, cancel,
transfer, adjust and settle any such insurance policy and to endorse any
drafts thereon. Any amounts that the Agent receives under any such
policy (including return of unearned premiums) insuring against loss or
damage to the Credit Security prior to the occurrence of an Event of
Default shall be delivered to the Obligors for the replacement,
restoration and maintenance of the Credit Security. Any such amounts
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that the Agent receives after the occurrence of an Event of Default
shall, at the Agent's option, be applied to payment of the Credit
Obligations or to the replacement, restoration and maintenance of the
Credit Security. If any Obligor fails to provide insurance as required
by this Agreement, the Agent may, at its option, purchase such insurance,
and such Obligor will on demand pay to the Agent the amount of any
payments made by the Agent or the Lenders for such purpose, together with
interest on the amounts so disbursed from five Banking Days after the
date demanded until payment in full thereof at the Overdue Reimbursement
Rate.
3.3.7. Modifications to Credit Security. Except with the prior
written consent of the Agent, no Obligor shall amend or modify, or waive
any of its rights under or with respect to, any material Accounts,
general intangibles, Pledged Securities or leases if the effect of such
amendment, modification or waiver would be to reduce the amount of any
such items or to extend the time of payment thereof, to waive any default
by any other party thereto, or to waive or impair any remedies of the
Obligors or the Lenders under or with respect to any such Accounts,
general intangibles, Pledged Securities or leases, in each case other
than consistent with past practice in the ordinary course of business and
on an arm's-length basis. Each Obligor will promptly give the Agent
written notice of any request by any Person for any material credit or
adjustment with respect to any Account, general intangible, Pledged
Securities or leases.
3.3.8. Delivery of Documents. Upon the Agent's request, each
Obligor shall deliver to the Agent, promptly upon such Obligor's receipt
thereof, copies of any agreements, instruments, documents or invoices
comprising or relating to the Credit Security. Pending such request,
such Obligor shall keep such items at its chief executive office and
principal place of business (as specified pursuant to Section 3.3.4).
3.3.9. Perfection of Credit Security. Upon the Agent's request
from time to time, subject to Section 5 hereof, the Obligors will execute
and deliver, and file and record in the proper filing and recording
places, all such instruments, including financing statements, collateral
assignments of copyrights, trademarks and patents, mortgages or deeds of
trust and notations on certificates of title, and will take all such
other action, as the Agent reasonably deems advisable for confirming to
it the Credit Security or to carry out any other purpose of this
Agreement or any other Credit Document.
3.4. Administration of Credit Security. The Credit Security shall be
administered as follows, and if an Event of Default shall have occurred,
Section 3.5 shall also apply.
3.4.1. Use of Credit Security. Until the Agent provides written
notice to the contrary upon an Event of Default, each Obligor may use,
commingle and dispose of
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any part of the Credit Security in the ordinary course of its business,
all subject to section 6.11 of the Credit Agreement.
3.4.2. Deposits. Each Obligor shall keep all its bank and deposit
accounts only with such financial institutions listed on Exhibit 3.3 (as
from time to time supplemented in accordance with sections 6.4.1 and
6.4.2 of the Credit Agreement).
3.4.3. Distributions on Pledged Securities.
(a) Until an Event of Default shall occur, the respective Obligors
shall be entitled, to the extent permitted by the Credit Documents, to
receive and retain all Distributions on or with respect to the Pledged
Securities (other than Distributions constituting additional Pledged
Securities). All Distributions constituting additional Pledged
Securities will be retained by the Agent (or if received by any Obligor
shall be held by such Person in trust and shall be immediately delivered
by such Person to the Agent in the original form received, endorsed in
blank) and held by the Agent as part of the Credit Security.
(b) If an Event of Default shall have occurred, all Distributions
on or with respect to the Pledged Securities shall be retained by the
Agent (or if received by any Obligor shall be held by such Person in
trust and shall be immediately delivered by it to the Agent in the
original form received, endorsed in blank) and held by the Agent as part
of the Credit Security or applied by the Agent to the payment of the
Credit Obligations in accordance with Section 3.5.6.
3.4.4. Voting Pledged Securities.
(a) Until an Event of Default shall occur, the respective Obligors
shall be entitled to vote or consent with respect to the Pledged
Securities in any manner not inconsistent with the terms of any Credit
Document, and the Agent will, if so requested, execute appropriate
revocable proxies therefor.
(b) If an Event of Default shall have occurred, if and to the
extent that the Agent shall so notify in writing the Obligor pledging the
Pledged Securities in question, only the Agent shall be entitled to vote
or consent or take any other action with respect to the Pledged
Securities (and any Obligor will, if so requested, execute appropriate
proxies therefor).
3.5. Right to Realize upon Credit Security. Except to the extent
prohibited by applicable law that cannot be waived, this Section 3.5 shall
govern the Lender's and the Agent's rights to realize upon the Credit Security
if any Event of Default shall have occurred. The provisions of this Section
3.5 are in addition to any rights and remedies available at law
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or in equity and in addition to the provisions of any other Credit Document.
In the case of a conflict between this Section 3.5 and any other Credit
Document, this Section 3.5 shall govern.
3.5.1. Assembly of Credit Security; Receiver. Each Obligor shall,
upon the Agent's request, assemble the Credit Security and otherwise make
it available to the Agent. The Agent may have a receiver appointed for
all or any portion of the Obligors' assets or business which constitutes
the Credit Security in order to manage, protect, preserve, sell and
otherwise dispose of all or any portion of the Credit Security in
accordance with the terms of the Credit Documents, to continue the
operations of the Obligors and to collect all revenues and profits
therefrom to be applied to the payment of the Credit Obligations,
including the compensation and expenses of such receiver.
3.5.2. General Authority. To the extent specified in written
notice from the Agent to the Obligor in question, each Obligor grants the
Agent full and exclusive power and authority, subject to the other terms
hereof and applicable law, to take any of the following actions (for the
sole benefit of the Agent on behalf of the Lenders and the holders from
time to time of any Credit Obligations, but at such Obligor's expense):
(a) To ask for, demand, take, collect, xxx for and receive all
payments in respect of any Accounts, general intangibles, Pledged
Securities or leases which such Obligor could otherwise ask for, demand,
take, collect, xxx for and receive for its own use.
(b) To extend the time of payment of any Accounts, general
intangibles, Pledged Securities or leases and to make any allowance or
other adjustment with respect thereto.
(c) To settle, compromise, prosecute or defend any action or
proceeding with respect to any Accounts, general intangibles, Pledged
Securities or leases and to enforce all rights and remedies thereunder
which such Obligor could otherwise enforce.
(d) To enforce the payment of any Accounts, general intangibles,
Pledged Securities or leases, either in the name of such Obligor or in
its own name, and to endorse the name of such Obligor on all checks,
drafts, money orders and other instruments tendered to or received in
payment of any Credit Security.
(e) To notify the third party payor with respect to any Accounts,
general intangibles, Pledged Securities or leases of the existence of the
security interest created hereby and to cause all payments in respect
thereof thereafter to be made directly to the Agent; provided, however,
that whether or not the Agent shall have so notified such
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payor, such Obligor will at its expense render all reasonable assistance
to the Agent in collecting such items and in enforcing claims thereon.
(f) To sell, transfer, assign or otherwise deal in or with any
Credit Security or the proceeds thereof, as fully as such Obligor
otherwise could do.
3.5.3. Marshaling, etc. Neither the Agent nor the Lenders shall be
required to make any demand upon, or pursue or exhaust any of their
rights or remedies against, any Obligor or any other guarantor, pledgor
or any other Person with respect to the payment of the Credit Obligations
or to pursue or exhaust any of their rights or remedies with respect to
any collateral therefor or any direct or indirect guarantee thereof.
Neither the Agent nor the Lenders shall be required to marshal the Credit
Security or any guarantee of the Credit Obligations or to resort to the
Credit Security or any such guarantee in any particular order, and all of
its and their rights hereunder or under any other Credit Document shall
be cumulative. To the extent it may lawfully do so, each Obligor
absolutely and irrevocably waives and relinquishes the benefit and
advantage of, and covenants not to assert against the Agent or the
Lenders, any valuation, stay, appraisement, extension, redemption or
similar laws now or hereafter existing which, but for this provision,
might be applicable to the sale of any Credit Security made under the
judgment, order or decree of any court, or privately under the power of
sale conferred by this Agreement, or otherwise. Without limiting the
generality of the foregoing, each Obligor (a) agrees that it will not
invoke or utilize any law which might prevent, cause a delay in or
otherwise impede the enforcement of the rights of the Agent or any Lender
in the Credit Security, (b) waives all such laws, and (c) agrees that it
will not invoke or raise as a defense to any enforcement by the Agent or
any Lender of any rights and remedies relating to the Credit Security or
the Credit Obligations any legal or contractual requirement with which
the Agent or any Lender may have in good faith failed to comply. In
addition, each Obligor waives any right to prior notice (except to the
extent expressly required by this Agreement or by law) or judicial
hearing in connection with foreclosure on or disposition of any Credit
Security, including any such right which such Obligor would otherwise
have under the Constitution of the United States of America, any state or
territory thereof or any other jurisdiction.
3.5.4. Sales of Credit Security. All or any part of the Credit
Security may be sold for cash or other value in any number of lots at
public or private sale, without demand, advertisement or notice;
provided, however, that unless the Credit Security to be sold threatens
to decline speedily in value or is of a type customarily sold on a
recognized market, the Agent shall give the Obligor granting the security
interest in such Credit Security 10 days' prior written notice of the
time and place of any public sale, or the time after which a private sale
may be made, which notice each of the Obligors and the Agent agrees to be
reasonable. At any sale or sales of Credit
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Security, any Lender or any of its respective officers acting on its
behalf, or such Lender's assigns, may bid for and purchase all or any
part of the property and rights so sold, may use all or any portion of
the Credit Obligations owed to such Lender as payment for the property or
rights so purchased, and upon compliance with the terms of such sale may
hold and dispose of such property and rights without further
accountability to the respective Obligors, except for the proceeds of
such sale or sales pursuant to Section 3.5.6. The Obligors acknowledge
that any such sale will be made by the Agent on an "as is" basis with
disclaimers of all warranties, whether express or implied. The
respective Obligors will execute and deliver or cause to be executed and
delivered such instruments, documents, assignments, waivers, certificates
and affidavits, will supply or cause to be supplied such further
information and will take such further action, as the Agent shall
reasonably request in connection with any such sale.
3.5.5. Sale without Registration. If, at any time when the Agent
shall determine to exercise its rights hereunder to sell all or part of
the securities included in the Credit Security, the securities in
question shall not be effectively registered under the Securities Act (or
other applicable law), the Agent may, in its sole discretion, sell such
securities by private or other sale not requiring such registration in
such manner and in such circumstances as the Agent may deem necessary or
advisable in order that such sale may be effected in accordance with
applicable securities laws without such registration and the related
delays, uncertainty and expense. Without limiting the generality of the
foregoing, in any event the Agent may, in its sole discretion, (a)
approach and negotiate with a single purchaser or one or more possible
purchasers to effect such sale, (b) restrict such sale to one or more
purchasers each of whom will represent and agree that such purchaser is
purchasing for its own account, for investment and not with a view to the
distribution or sale of such securities and (c) cause to be placed on
certificates representing the securities in question a legend to the
effect that such securities have not been registered under the Securities
Act (or other applicable law) and may not be disposed of in violation of
the provisions thereof. Each Obligor agrees that such manner of
disposition is commercially reasonable, that it will upon the Agent's
request give any such purchaser access to such information regarding the
issuer of the securities in question as the Agent may reasonably request
and that the Agent and the Lenders shall not incur any responsibility for
selling all or part of the securities included in the Credit Security at
any private or other sale not requiring such registration,
notwithstanding the possibility that a substantially higher price might
be realized if the sale were deferred until after registration under the
Securities Act (or other applicable law) or until made in compliance with
certain other rules or exemptions from the registration provisions under
the Securities Act (or other applicable law). Each Obligor acknowledges
that no adequate remedy at law exists for breach by it of this Section
3.5.5 and that such breach would not be adequately
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compensable in damages and therefore agrees that this Section 3.5.5 may
be specifically enforced.
3.5.6. Application of Proceeds. The proceeds of all sales and
collections in respect of any Credit Security or other assets of any
Obligor, all funds collected from the Obligors and any cash contained in
the Credit Security, the application of which is not otherwise
specifically provided for herein, shall be applied as follows:
First, to the payment of the costs and expenses of such sales and
collections, the reasonable expenses of the Agent and the reasonable fees
and expenses of its special counsel;
Second, any surplus then remaining to the payment of the Credit
Obligations in such order and manner as the Agent may in its sole
discretion determine; provided, however, that any such payment of Credit
Obligations owed to all Lenders shall be proposed Policy rata in
accordance with the respective Percentage Interests of the Lenders in
such Credit Obligations; and
Third, any surplus then remaining shall be paid to the Obligors,
subject, however, to the rights of the holder of any then existing Lien
of which the Agent has actual notice.
3.6. Custody of Credit Security. Except as provided by applicable law
that cannot be waived, the Agent will have no duty as to the custody and
protection of the Credit Security, the collection of any part thereof or of any
income thereon or the preservation or exercise of any rights pertaining
thereto, including rights against prior parties, except for the use of
reasonable care in the custody and physical preservation of any Credit Security
in its possession. The Lenders will not be liable or responsible for any loss
or damage to any Credit Security, or for any diminution in the value thereof,
by reason of the act or omission of any agent selected by the Agent acting in
good faith.
4. Special Provision Concerning Cash Collateral. Notwithstanding anything to
the contrary contained herein (including, without limitation, pursuant to
Section 3.3.9 hereof), until the Agent shall exercise its remedies upon an
Event of Default, no Obligor shall be obligated to perform any act or execute
or deliver any document or instrument which conveys control over such Obligor's
cash, Cash Equivalents or deposit or similar depositary accounts.
5. General. Addresses for notices, consent to jurisdiction, jury trial
waiver, defeasance and numerous other provisions applicable to this Agreement
are contained in the Credit Agreement. The invalidity or unenforceability of
any term or provision hereof shall not affect the validity or enforceability of
any other term or provision hereof. The headings in this Agreement are for
convenience of reference only and shall not limit, alter or otherwise affect
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the meaning hereof. This Agreement and the other Credit Documents constitute
the entire understanding of the parties with respect to the subject matter
hereof and thereof and supersede all prior and current understandings and
agreements, whether written or oral. This Agreement is a Credit Document and
may be executed in any number of counterparts, which together shall constitute
one instrument. This Agreement shall be governed by and construed in
accordance with the laws (other than the conflict of laws rules) of the
Commonwealth of Massachusetts, except as may be required by the UCC or other
applicable laws of other jurisdictions with respect to matters involving the
perfection of the Agent's Lien on the Credit Security located in such other
jurisdictions.
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Each of the undersigned has caused this Agreement to be executed and
delivered by its duly authorized officer as an agreement under seal as of the
dated first written above.
COLLECTIBLE CHAMPIONS, INC.
By /s/ Xxxxxx X. Xxxx
--------------------------------
Title: President
RACING CHAMPIONS, INC.
By /s/ Xxxx X. Xxxxx
--------------------------------
Title: Executive Vice President
THE FIRST NATIONAL BANK OF BOSTON,
as Agent under the Credit Agreement
By /s/ Xxxxx X. Xxxxx
--------------------------------
Title: Managing Director
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EXHIBIT 3.3
OBLIGORS; OFFICE AND PRINCIPAL PLACE OF BUSINESS;
PERMITTED JURISDICTION FOR PERSONAL TANGIBLE PROPERTY;
TRADE NAMES; DEPOSITORY INSTITUTIONS
1. Office and Principal Place of Business.
The address of the principal executive office and chief place of
business of both Collectible Champions, Inc. and Racing Champions, Inc.:
000 Xxxxxxxxx Xxxxxx
Xxxxxxxx X, Xxxxx 000
Glen Ellyn, IL 60137
2. Permitted Jurisdiction for Personal Tangible Property.
The jurisdictions in which Collectible Champions, Inc. and its
subsidiaries keep material amounts of tangible personal property (other than
inventory in transit) are as follows:
Chicago, IL
Glen Ellyn, IL
Charlotte, NC
Dallas, TX
Hong Kong
3. Trade Names.
Neither Collectible Champions, Inc. nor Racing Champions, Inc. have
conducted business under any trade names or changed names since their
respective incorporations.
4. Depository Institutions.
The bank and deposit accounts of Collectible Champions, Inc. and/or
Racing Champions, Inc. are kept at the following financial institution(s):
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Xxxxxxxx Xxxxx Xxxx, Xxxxxxx, Xxxxxxxx
Belgian Bank, Kowloon, Hong Kong
