EXHIBIT 10.22
CREDIT AGREEMENT
CREDIT AGREEMENT dated as of June 21, 1999, among ACTIVISION, INC.,
a Delaware corporation ("ACTIVISION"), HEAD GAMES PUBLISHING, INC., a Minnesota
corporation ("HEAD") and, following the Merger, Expert Software, Inc., a
Delaware corporation ("EXPERT"; each of Activision, Head and Expert, a
"BORROWER" and collectively, "BORROWERS"), the Lenders (as defined in
Article I), PNC BANK, NATIONAL ASSOCIATION, a national banking association,
as issuing bank (in such capacity, the "ISSUING BANK"), and as administrative
agent (in such capacity, the "ADMINISTRATIVE AGENT") and collateral agent (in
such capacity, the "COLLATERAL AGENT") for the Lenders and CREDIT SUISSE
FIRST BOSTON, a bank organized under the laws of Switzerland, acting through
its New York branch, as syndication agent (in such capacity, the "SYNDICATION
AGENT").
Pursuant to the Merger Agreement (such term and each other
capitalized term used but not defined herein having the meaning given it in
Article I), Sub will merge (the "MERGER") with and into Expert, with Expert
surviving such Merger as a wholly owned Subsidiary of Activision. In
connection with the Merger, the existing stockholders of Expert will be
entitled to receive an aggregate of approximately $23,000,000 in cash (the
"MERGER CONSIDERATION"). Promptly following the Merger, Expert will become a
party to this Agreement, the Security Documents, the Borrower Guarantee
Agreement and the Indemnity, Subrogation and Contribution Agreement.
The Borrowers have requested the Lenders to extend credit in the
form of (a) Term Loans to be made to Activision on the Closing Date, in an
aggregate principal amount not in excess of $25,000,000, and (b) Revolving
Loans on and after the Closing Date and at any time and from time to time
prior to the Revolving Credit Maturity Date, in an aggregate principal amount
at any time outstanding not in excess of $100,000,000. The Borrowers have
requested the Issuing Bank to issue Letters of Credit, in an aggregate face
amount at any time outstanding not in excess of $80,000,000, to support
payment obligations incurred in the ordinary course of business by the
Borrowers. The proceeds of the Term Loans and up to $36,000,000 of the
Revolving Loans are to be used solely (a) to pay the Merger Consideration,
(b) to repay all amounts outstanding under the Existing Credit Agreement and
(c) to pay related fees and expenses. The proceeds of the Revolving Loans
(other than proceeds used as described above) are to be used solely for
general corporate purposes.
The Lenders are willing to extend such credit to the Borrowers and
the Issuing Bank is willing to issue Letters of Credit for the account of the
Borrowers on the terms and subject to the conditions set forth herein.
Accordingly, the parties hereto agree as follows:
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ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINED TERMS. As used in this Agreement, the following
terms shall have the meanings specified below:
"ABR BORROWING" shall mean a Borrowing comprised of ABR Loans.
"ABR LOAN" shall mean any ABR Term Loan or ABR Revolving Loan.
"ABR REVOLVING LOAN" shall mean any Revolving Loan bearing interest at a
rate determined by reference to the Alternate Base Rate in accordance with
the provisions of Article II.
"ABR TERM BORROWING" shall mean a Borrowing comprised of ABR Term Loans.
"ABR TERM LOAN" shall mean any Term Loan bearing interest at a rate
determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"ACQUIRED DEBT" shall mean Indebtedness of an Acquired Entity existing
at the time of a Permitted Acquisition which was not incurred in
contemplation of such Permitted Acquisition, is Indebtedness permitted under
Section 6.01 and, if owed by a Domestic Subsidiary, the terms of such
Indebtedness permit the Domestic Subsidiary to become a party to the
Subsidiary Guarantee Agreement, the Pledge Agreement and the Security
Agreement, to grant to the Collateral Agent a first priority Lien on its
assets and to make loans, dividends and other distributions to Activision
and, if owed by a Foreign Subsidiary, is not Guaranteed by any Loan Party.
"ACQUIRED ENTITY" shall have the meaning set forth in Section 6.04(h).
"ADJUSTED EBITDA" of a person for any period shall mean (a) EBITDA for
such period PLUS (b) the aggregate amortization with respect to Development
Costs for such period which are not otherwise included as amortization
expenses in calculating EBITDA in accordance with GAAP, MINUS (c) the
principal amount of loans made during such period to officers and employees
permitted under Section 6.04(n), to the extent not included in calculating
EBITDA in accordance with GAAP.
"ADJUSTED LIBO RATE" shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded
upwards, if necessary, to the next 1/100 of 1%) equal to the product of
(a) the LIBO Rate in effect for such Interest Period and (b) Statutory Reserves.
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"ADMINISTRATIVE QUESTIONNAIRE" shall mean an Administrative Questionnaire
in the form of Exhibit A, or such other form as may be supplied from time to
time by the Administrative Agent.
"ADVANCE RATES" shall have the meaning assigned to such term in
Section 2.01(a).
"AFFILIATE" shall mean, when used with respect to a specified person,
another person that directly, or indirectly through one or more
intermediaries, Controls or is Controlled by or is under common Control with
the person specified; PROVIDED, HOWEVER, that for purposes of Section 6.07,
the term "Affiliate" shall also include any person that directly or
indirectly owns 5% or more of any class of Equity Interests of the person
specified or that is an officer or director of the person specified.
"AGENT FEES" shall have the meaning assigned to such term in
Section 2.08(b).
"AGGREGATE REVOLVING CREDIT EXPOSURE" shall mean the aggregate amount of
the Lenders' Revolving Credit Exposures.
"ALTERNATE BASE RATE" shall mean, for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the greater of (a) the
Base Rate in effect on such day and (b) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1%. If for any reason the Administrative
Agent shall have determined (which determination shall be conclusive absent
manifest error) that it is unable to ascertain the Federal Funds Effective
Rate for any reason, including the inability or failure of the Administrative
Agent to obtain sufficient quotations in accordance with the terms of the
definition thereof, the Alternate Base Rate shall be determined without
regard to clause (b) of the preceding sentence until the circumstances giving
rise to such inability no longer exist. Any change in the Alternate Base
Rate due to a change in the Base Rate or the Federal Funds Rate shall be
effective on the effective date of such change in the Base Rate or the
Federal Funds Rate, respectively. The term "BASE RATE" shall mean the base
commercial lending rate of PNC as publicly announced to be in effect from
time to time, such rate to be adjusted automatically, without notice, on the
effective date of any change in such rate. This rate of interest is
determined from time to time by PNC as a means of pricing some loans to its
customers and is neither tied to any external rate of interest or index nor
does it necessarily reflect the lowest rate of interest actually charged by
PNC to any particular class or category of customers of PNC.
"ASSET SALE" shall mean the sale, transfer or other disposition (by way
of merger or otherwise, and including any casualty event or condemnation that
results in the receipt of any insurance or condemnation proceeds) by any
Borrower or any of the Subsidiaries to any person other than a Borrower or
any Subsidiary Guarantor of (a) any Equity Interests of any of the Subsidiaries
or (b) any other assets of a Borrower or any of its Subsidiaries (other than
(i) inventory, excess, damaged, obsolete or worn out assets, scrap
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and Permitted Investments, in each case disposed of in the ordinary course of
business, (ii) assets transferred for an aggregate purchase price not
exceeding $1,000,000 in any four consecutive fiscal quarters of the
Borrowers, (iii) dispositions between or among Foreign Subsidiaries or
(iv) license, distribution or development agreements entered into in the
ordinary course of business which do not transfer all or substantially all of
the rights owned by a Borrower or its Subsidiary), PROVIDED that any asset
sale or series of related asset sales described in clause (b) above having a
value not in excess of $250,000 shall be deemed not to be an "Asset Sale" for
purposes of this Agreement.
"ASSIGNMENT AND ACCEPTANCE" shall mean an assignment and acceptance
entered into by a Lender and an assignee, and accepted by the Administrative
Agent, in the form of Exhibit B, or such other form as shall be approved by
the Administrative Agent.
"BOARD" shall mean the Board of Governors of the Federal Reserve System
of the United States of America.
"BLOCKED ACCOUNTS" shall have the meaning set forth in Section 5.15.
"BORROWER GUARANTEE AGREEMENT" shall mean the Borrower Guarantee
Agreement substantially in the form of Exhibit M, made by the Borrowers in
favor of the Collateral Agent for the benefit of the Secured Parties.
"BORROWERS" shall mean Activision, Head, Expert and any other Subsidiary
of Activision which becomes a Borrower hereunder.
"BORROWERS' ACCOUNT" shall have the meaning given such term in
Section 2.07.
"BORROWING" shall mean a group of Loans of a single Type made by the
Lenders on a single date and as to which a single Interest Period is in
effect.
"BORROWING AGENT" shall mean Activision.
"BORROWING BASE AVAILABILITY" shall mean that amount determined under
clauses (i) and (ii)(A) of the definition of Formula Amount contained in
Section 2.01(a).
"BORROWING REQUEST" shall mean a request by the Borrowing Agent on
behalf of a Borrower in accordance with the terms of Section 2.03 and
substantially in the form of Exhibit C, or such other form as shall be
approved by the Administrative Agent.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or day
on which banks in New York City are authorized or required by law to close;
PROVIDED, HOWEVER, that when used in connection with a Eurodollar Loan, the
term "BUSINESS DAY" shall also exclude any day on which banks are not open
for dealings in dollar deposits in the London and New York interbank markets.
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"CAPITAL EXPENDITURES" shall mean, for any period and with respect to
any person, the aggregate amount of all expenditures during such period by
such person that (a) would be classified as capital expenditures in
accordance with GAAP or are made in property that is the subject of a
synthetic lease to which such person becomes a lessee party during such
period but excluding any such expenditure made (i) to restore, replace or
rebuild property to the condition of such property immediately prior to any
damage, loss, destruction or condemnation of such property, to the extent
such expenditure is made with insurance proceeds or condemnation awards
relating to any such damage, loss, destruction or condemnation, (ii) with
proceeds from the sale or exchange of property to the extent utilized to
purchase functionally equivalent property or equipment or (iii) as the
purchase price of any Permitted Acquisition; and (b) constitute Development
Costs.
"CAPITAL LEASE OBLIGATIONS" of any person shall mean the obligations of
such person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"CASH COLLATERAL" shall mean money or Permitted Investments in the
possession of the Collateral Agent (including in the Investment Account) as
collateral hereunder or under any other Loan Document and in which the
Collateral Agent has a first priority perfected Lien.
"CASH COMPONENTS" shall mean, with respect to any Permitted Acquisition,
the cash expenditures and (without duplication) Indebtedness (including
Acquired Indebtedness) incurred in connection therewith.
"CASUALTY" shall have the meaning set forth in each of the Mortgages.
"CASUALTY PROCEEDS" shall have the meaning set forth in each of the
Mortgages.
"CHANGE IN CONTROL" shall be deemed to have occurred if (a) any person
or group (within the meaning of Rule 13d-5 of the Securities Exchange Act of
1934, as amended, as in effect on the date hereof) shall own directly or
indirectly, beneficially or of record, shares representing more than 35% of
the aggregate ordinary voting power represented by the issued and outstanding
capital stock of Activision, (b) a majority of the seats (other than vacant
seats) on the board of directors of Activision shall at any time be occupied
by persons who were neither (i) nominated by the board of directors of
Activision, nor (ii) appointed by directors so nominated, or (c) any change
in control (or similar event, however denominated) with respect to Activision
or any of its Subsidiaries shall occur under and as defined in any indenture
or agreement in respect of Indebtedness in an aggregate principal amount in
excess of $2,000,000 to which Activision or any of the
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Subsidiaries is a party, or (d) any Subsidiary of Activision which is a
Borrower or UK Sub ceases to be a wholly-owned Subsidiary of Activision.
"CHANGE IN LAW" shall mean (a) the adoption of any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule
or regulation or in the interpretation or application thereof by any
Governmental Authority after the date of this Agreement or (c) compliance by
any Lender or the Issuing Bank (or, for purposes of Section 2.15, by any
lending office of such Lender or by such Lender's or the Issuing Bank's
holding company, if any) with any request, guideline or directive (whether or
not having the force of law) of any Governmental Authority made or issued
after the date of this Agreement.
"CLOSING DATE" shall mean June 22, 1999.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"COLLATERAL" shall mean all the "Collateral" as defined in any Security
Document and shall also include any Mortgaged Properties.
"COMMITMENT" shall mean, with respect to any Lender, such Lender's
Revolving Credit Commitment and Term Loan Commitment.
"COMMITMENT FEE" shall have the meaning assigned to such term in
Section 2.08(a).
"CONDEMNATION" shall have the meaning set forth in each of the Mortgages.
"CONDEMNATION PROCEEDS" shall have the meaning set forth in each of the
Mortgages.
"CONFIDENTIAL INFORMATION MEMORANDUM" shall mean the Confidential
Information Memorandum of Activision dated April 1999.
"CONTROL" shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
person, whether through the ownership of voting securities, by contract or
otherwise, and the terms "CONTROLLING" and "CONTROLLED" shall have meanings
correlative thereto.
"CONVERTIBLE SUBORDINATED NOTE DOCUMENTS" shall mean the Convertible
Subordinated Notes, the Convertible Subordinated Note Indenture and all other
documents executed and delivered with respect to the Convertible Subordinated
Notes or the Convertible Subordinated Note Indenture.
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"CONVERTIBLE SUBORDINATED NOTE INDENTURE" shall mean the Indenture dated
as of December 22, 1997, between Activision and State Street Bank and Trust
Company of California, N.A., as trustee, as in effect on the Closing Date and
as thereafter amended from time to time in accordance with the requirements
hereof and thereof.
"CONVERTIBLE SUBORDINATED NOTES" shall mean Activision's 6-3/4%
Convertible Subordinated Notes due 2005 issued pursuant to the Convertible
Subordinated Note Indenture.
"CREDIT EVENT" shall have the meaning assigned to such term in
Section 4.01.
"DEFAULT" shall mean any event or condition which upon notice, lapse of
time or both would constitute an Event of Default.
"DEFAULTING LENDER" shall have the meaning set forth in Section 2.25(a).
"DEPOSITORY ACCOUNTS" shall have the meaning set forth in Section 5.15.
"DEVELOPMENT COSTS" shall mean prepaid or guaranteed royalties paid to
independent software developers, license fees paid to holders of intellectual
property rights and expenses incurred for product development, in each case
to the extent such amounts are capitalized in accordance with the Statement
of Financial Accounting Standards No. 86, "Accounting for the Costs of Computer
Software to be Sold, Leased or Otherwise Marketed".
"DILUTION RESERVE" shall mean the percentage of dilution of Receivables
for the most recent 12 months as determined in the most recent audit by the
Administrative Agent LESS 20% multiplied by the amount of Eligible
Receivables.
"DOLLARS" or "$" shall mean lawful money of the United States of America.
"DOMESTIC SUBSIDIARIES" shall mean all Subsidiaries incorporated or
organized under the laws of the United States of America, any State thereof
or the District of Columbia.
"EBITDA" for any person for any period shall mean the Net Income of such
person for such period, to which shall be added back, to the extent deducted
in calculating Net Income for such period (a) the Interest Expense of such
person for such period, (b) all charges against income for foreign, Federal,
state and local income taxes of such person for such period, (c) the
aggregate depreciation expense of such person for such period, and (d) the
aggregate amortization expense of such person for such period, each such
component determined in accordance with GAAP.
"ELIGIBLE INVENTORY" shall mean and include, with respect to each
Borrower,
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Inventory owned by such Borrower (excluding (a) work in process, (b) Inventory
not located at a facility owned or leased by a Borrower in the U.S. or a
warehouse located in the U.S., (c) Inventory on consignment and
(d) components), valued at the lower of cost or market value, determined on a
first-in-first-out basis, which is not, in the Administrative Agent's
Permitted Discretion, obsolete, slow moving or unmerchantable and which the
Administrative Agent, in its Permitted Discretion, shall not deem ineligible
Inventory, based on such considerations as the Administrative Agent may from
time to time in its Permitted Discretion deem appropriate, including, without
limitation, whether the Inventory is subject to a perfected, first priority
security interest in favor of the Collateral Agent, subject to no other Lien,
and whether the Inventory conforms to all standards imposed by any governmental
agency, division or department thereof which has regulatory authority over
such goods or the use or sale thereof applicable. Eligible Inventory shall
include all Inventory in-transit for which title has passed to the Borrower,
which is insured to the full value thereof, under policies for which the
Collateral Agent is a loss payee and for which the Administrative Agent shall
have in its possession (a) all negotiable bills of lading properly endorsed
and (b) all non-negotiable bills of lading issued in the Administrative
Agent's name.
"ELIGIBLE RECEIVABLES" shall mean and include with respect to each
Borrower each Receivable of such Borrower arising in the ordinary course of
such Borrower's business and which the Administrative Agent, in its Permitted
Discretion, shall deem to be an Eligible Receivable, based on such
considerations as the Administrative Agent may from time to time in its
Permitted Discretion deem appropriate. A Receivable shall not be deemed
eligible unless such Receivable is subject to the Collateral Agent's first
priority perfected security interest and no other Lien (other than a
Permitted Lien on terms acceptable to the Administrative Agent in its
Permitted Discretion and for which adequate reserves have been established),
and is evidenced by an invoice or other documentary evidence satisfactory to
the Administrative Agent. In addition, no Receivable shall be an Eligible
Receivable if:
(a) it arises out of a sale made by a Borrower to an Affiliate of such
Borrower or to a Person controlled by an Affiliate of such Borrower;
(b) it is due or unpaid more than one hundred twenty (120) days after
the original invoice date or more than sixty (60) days after the due date;
(c) fifty percent (50%) or more of the Receivables from such Customer
are not deemed Eligible Receivables hereunder;
(d) any covenant, representation or warranty contained in this Agreement
or the Security Agreement with respect to such Receivable has been breached in
any material respect;
(e) the Customer shall (i) apply for, suffer, or consent to the
appointment of, or the taking of possession by, a receiver, custodian, trustee
or liquidator of itself or of
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all or a substantial part of its property or call a meeting of its creditors,
(ii) admit in writing its inability, or be generally unable, to pay its debts
as they become due or cease operations of its present business, (iii) make a
general assignment for the benefit of creditors, (iv) commence a voluntary
case under any state or federal bankruptcy laws (as now or hereafter in
effect), (v) be adjudicated a bankrupt or insolvent, (vi) file a petition
seeking to take advantage of any other law providing for the relief of
debtors, (vii) acquiesce to, or fail to have dismissed, any petition which is
filed against it in any involuntary case under such bankruptcy laws, or
(viii) take any action for the purpose of effecting any of the foregoing;
(f) the sale is to a Customer not domiciled in the United States of
America or Canada unless the sale is on letter of credit, guaranty or
acceptance terms, or backed by credit insurance, in each case acceptable to
the Administrative Agent in its Permitted Discretion;
(g) the sale to the Customer is on a xxxx-and-hold, guaranteed sale,
sale-and-return, sale on approval, consignment or any other similar
repurchase or return basis (other than return rights customary in the
Borrower's business) or is evidenced by chattel paper;
(h) the Administrative Agent believes, in its Permitted Discretion,
that collection of such Receivable is insecure or that such Receivable may
not be paid by reason of the Customer's financial inability to pay;
(i) the Customer is the United States of America or Canada , any state
or province or any department, agency or instrumentality of any of them,
unless the Borrower assigns its right to payment of such Receivable to the
Administrative Agent pursuant to the Assignment of Claims Act of 1940, as
amended (31 U.S.C. Sub-Section 3727 ET SEQ. and 41 U.S.C. Sub-Section 15
ET SEQ.) or has otherwise complied with other applicable statutes or ordinances;
(j) the goods giving rise to such Receivable have not been shipped and
delivered to the Customer or the services giving rise to such Receivable have
not been fully performed by the Borrower or the Receivable otherwise does not
represent a final sale;
(k) the Receivables of the Customer exceed a credit limit determined by
the Administrative Agent, in its Permitted Discretion, to the extent such
Receivable exceeds such limit;
(l) the Receivable is subject to any unwaived offset, deduction, defense,
dispute, or counterclaim, the Customer is also a creditor or supplier of a
Borrower or the Receivable is contingent in any respect or for any reason;
(m) the Borrower has made any agreement with the Customer for any
deduction therefrom, except for discounts or allowances made in the ordinary
course of
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business, all of which discounts or allowances are reflected in the
calculation of the face value of each respective invoice related thereto;
(n) any return, rejection or repossession of the merchandise has
occurred but only to the extent of the portion of the Receivable relating to
the returned, rejected or repossessed goods;
(o) such Receivable is not payable to a Borrower;
(p) such Receivable is not otherwise satisfactory to the Administrative
Agent in its Permitted Discretion;
(q) the Borrower has not observed and complied with all laws of the
jurisdiction in which the Customer or the Receivable is located which, if not
observed or complied with, would deny the Borrower access to the courts of
such jurisdiction;
(r) the Receivable arises out of sales of Inventory for which the
Borrower acts solely as a collection agent. or
(s) Receivables from original equipment manufacturers or licensees
unless such Receivables arise out of an invoice issued for shipment of goods
on normal trade terms.
"ENVIRONMENT" shall mean ambient air, surface water and groundwater
(including potable water, navigable water and wetlands), the land surface or
subsurface strata, the workplace or as otherwise defined in any Environmental
Law.
"ENVIRONMENTAL CLAIM" shall mean any written accusation, allegation,
notice of violation, claim, demand, order, directive, cost recovery action or
other cause of action by, or on behalf of, any Governmental Authority or any
person for damages, injunctive or equitable relief, personal injury
(including sickness, disease or death), Remedial Action costs, tangible or
intangible property damage, natural resource damages, nuisance, pollution,
any adverse effect on the environment caused by any Hazardous Material, or
for fines, penalties or restrictions, resulting from or based upon (a) the
existence, or the continuation of the existence, of a Release (including
sudden or non-sudden, accidental or non-accidental Releases), (b) exposure to
any Hazardous Material, (c) the presence, use, handling, transportation,
storage, treatment or disposal of any Hazardous Material or (d) the violation
or alleged violation of any Environmental Law or Environmental Permit.
"ENVIRONMENTAL LAW" shall mean any and all applicable present and future
treaties, laws, rules, regulations, codes, ordinances, orders, decrees,
judgments, injunctions, notices or binding agreements issued, promulgated or
entered into by any Governmental Authority, relating in any way to the
environment, preservation or reclamation of natural resources, the
management, Release or threatened Release of any
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Hazardous Material or to health and safety matters, including the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended by the Superfund Amendments and Reauthorization Act of 1986, 42
U.S.C. Section 9601 ET SEQ. (collectively "CERCLA"), the Solid Waste
Disposal Act, as amended by the Resource Conservation and Recovery Act of
1976 and Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. Section
6901 ET SEQ., the Federal Water Pollution Control Act, as amended by the
Clean Water Act of 1977, 33 U.S.C. Section 1251 ET SEQ., the Clean Air Act
of 1970, as amended 42 U.S.C. Section 7401 ET SEQ., the Toxic Substances
Control Act of 1976, 15 U.S.C. Section 2601 ET SEQ., the Occupational Safety
and Health Act of 1970, as amended, 29 U.S.C. Section 651 ET SEQ., the
Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. Section
11001 ET SEQ., the Safe Drinking Water Act of 1974, as amended, 42 U.S.C.
Section 300(f) ET SEQ., the Hazardous Materials Transportation Act, 49
U.S.C. Section 5101 ET SEQ., and any similar or implementing state, local or
foreign law, and all amendments or regulations promulgated under any of the
foregoing.
"ENVIRONMENTAL PERMIT" shall mean any permit, approval, authorization,
certificate, license, variance, filing or permission required by or from any
Governmental Authority pursuant to any Environmental Law.
"EQUITY INTERESTS" shall mean shares of capital stock, partnership
interests, membership interests in a limited liability company, beneficial
interests in a trust or other equity ownership interests in a person.
"EQUITY ISSUANCE" shall mean any issuance or sale by Activision or any
Subsidiary of any Equity Interests of Activision or any Subsidiary, as
applicable, or any obligations convertible into or exchangeable for, or giving
any person a right, option or warrant to acquire such Equity Interests or such
convertible or exchangeable obligations, except in each case for (a) any
issuance or sale to a Borrower or any Subsidiary, (b) any issuance of directors'
qualifying shares, (c) sales or issuances of common stock of Activision to
management or key employees of Activision or any Subsidiary under any employee
stock option or stock purchase plan or employee benefit plan in existence from
time to time or other stock options from time to time granted to employees or
directors, or in connection with license, distribution or development
agreements, (d) conversion of the Convertible Subordinated Notes into common
stock of Activision, (e) issuance of common stock (or options or warrants to
purchase common stock) of Activision as consideration for any Permitted
Acquisition and (f) other issuances of Equity Interests for non-cash
consideration.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
the same may be amended from time to time.
"ERISA AFFILIATE" shall mean any trade or business (whether or not
incorporated) that, together with any Borrower, is treated as a single employer
under Section 414(b) or
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(c) of the Code, or solely for purposes of Section 302 of ERISA and Section
412 of the Code, is treated as a single employer under Section 414 of the
Code.
"ERISA EVENT" shall mean (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder, with respect to a
Plan (other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by a Borrower or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Borrower or any of its ERISA
Affiliates from the PBGC or a plan administrator of any notice relating to the
intention to terminate any Plan or Plans or to appoint a trustee to administer
any Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates of
any liability with respect to the withdrawal from any Plan or Multiemployer
Plan; (g) the receipt by a Borrower or any of its ERISA Affiliates of any
notice, or the receipt by any Multiemployer Plan from a Borrower or any of its
ERISA Affiliates of any notice, concerning the imposition of Withdrawal
Liability or a determination that a Multiemployer Plan is, or is expected to
be, insolvent or in reorganization, within the meaning of Title IV of ERISA; or
(h) any Foreign Benefit Event.
"EURODOLLAR BORROWING" shall mean a Borrowing comprised of Eurodollar
Loans.
"EURODOLLAR LOAN" shall mean any Eurodollar Revolving Loan or Eurodollar
Term Loan.
"EURODOLLAR REVOLVING LOAN" shall mean any Revolving Loan bearing interest
at a rate determined by reference to the Adjusted LIBO Rate in accordance with
the provisions of Article II.
"EURODOLLAR TERM BORROWING" shall mean a Borrowing comprised of Eurodollar
Term Loans.
"EURODOLLAR TERM LOAN" shall mean any Term Loan bearing interest at a rate
determined by reference to the Adjusted LIBO Rate in accordance with the
provisions of Article II.
"EUROPEAN DISTRIBUTION SUBSIDIARIES" shall mean Combined Distribution
(Holdings) Limited, PDQ Distribution Limited, CentreSoft Limited, NBG EDV
Handels und Verlags GmbH & Co. KG, Target Software Vertriebs GmbH, CD Contact
Data GmbH, Contact Data N.V., and Contact Data Belgium NV and their respective
successors and assignors and any other Foreign Subsidiary engaged primarily in
the business of distributing a Borrower's and other persons' products in Europe.
13
"EVENT OF DEFAULT" shall have the meaning assigned to such term in
Article VII.
"EXCESS CASH FLOW" shall mean, for any fiscal year of Activision, the
excess of (a) the sum, without duplication, of (i) Adjusted EBITDA of the Loan
Parties for such fiscal year, (ii) extraordinary cash receipts of the Loan
Parties during such fiscal year and not included in Adjusted EBITDA and (iii)
Net Cash Proceeds from the issuance of common stock or stock options which are
not Equity Issuances over (b) the sum, without duplication, of (i) the amount of
any cash income taxes payable by the Loan Parties with respect to such fiscal
year, (ii) cash interest paid (net of cash interest received) by the Loan
Parties during such fiscal year, (iii) Capital Expenditures made by the Loan
Parties in cash during such fiscal year, except to the extent financed with the
proceeds of Indebtedness, casualty proceeds or condemnation proceeds, (iv)
permanent repayments of Indebtedness made by the Loan Parties during such fiscal
year, but only to the extent that such repayments by their terms cannot be
reborrowed or redrawn and do not occur in connection with a refinancing of all
or any portion of such Indebtedness, and (v) extraordinary cash expenses
(including fees paid to lenders which are capitalized in accordance with GAAP)
paid by the Loan Parties, if any, during such fiscal year and not included in
Adjusted EBITDA; PROVIDED that to the extent otherwise included therein, the Net
Cash Proceeds of Asset Sales and dispositions resulting in Casualty Proceeds or
Condemnation Proceeds shall be excluded from the calculation of Excess Cash
Flow.
"EXCLUDED TAXES" shall mean, with respect to the Administrative Agent, any
Lender, the Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of a Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction in which a Borrower is located and (c) in the case of
a Foreign Lender (other than an assignee pursuant to a request by the Borrowers
under Section 2.24(a)), any withholding tax that is imposed on amounts payable
to such Foreign Lender at the time such Foreign Lender becomes a party to this
Agreement (or designates a new lending office) or is attributable to such
Foreign Lender's failure to comply with Section 2.23(e), except to the extent
that such Foreign Lender (or its assignor, if any) was entitled, at the time of
designation of a new lending office (or assignment), to receive additional
amounts from the Borrowers with respect to such withholding tax pursuant to
Section 2.23(a).
"EXISTING CREDIT AGREEMENT" shall mean the Amended and Restated Credit
Agreement dated as of January 14, 1999, among Activision, the banks party
thereto and PNC Bank, National Association, as agent.
14
"EXISTING LETTER OF CREDIT" shall mean each letter of credit previously
issued for the account of Activision or its Domestic Subsidiaries pursuant to
the Existing Credit Agreement that (a) is outstanding on the Closing Date and
(b) is listed on Schedule 1.01(a).
"EXPERT" shall mean Expert Software, Inc., a Delaware corporation.
"FEDERAL FUNDS RATE" shall mean, for any day, the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published 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 which is a Business Day, the average of quotations for such day on such
transactions received by PNC from three Federal funds brokers of recognized
standing selected by PNC.
"FEE LETTER" shall mean the Fee Letter dated concurrently herewith, between
Activision, the Administrative Agent and the Collateral Agent.
"FEES" shall mean the Commitment Fees, the Agent Fees, the L/C
Participation Fees and the Issuing Bank Fees.
"FINANCIAL OFFICER" of any corporation shall mean the chief financial
officer, principal accounting officer, Treasurer or Controller of such
corporation.
"FIXED CHARGE COVERAGE RATIO" with respect to any person for any period
shall mean the ratio of (a) Adjusted EBITDA of such person PLUS, in the case of
any Borrower (and without duplication of any amounts included in the Borrowers'
Net Income) the amount of dividends or loans or repayments of loans actually
received from its Foreign Subsidiaries during such period LESS the amount of
loans or capital contributions made to the Foreign Subsidiaries during such
period to (b) Fixed Charges for such period.
"FIXED CHARGES" with respect to any person for any period shall mean,
without duplication, the sum of (a) Interest Expense for such period, PLUS (b)
payments on long term Indebtedness (including Capital Lease Obligations) of such
person for such period, PLUS (c) Capital Expenditures made by such person during
such period, PLUS (d) taxes paid in cash by such person during such period.
"FOREIGN BENEFIT EVENT" shall mean, with respect to any Foreign Pension
Plan, (a) the existence of unfunded liabilities in excess of the amount
permitted under any applicable law, or in excess of the amount that would be
permitted absent a waiver from a Governmental Authority, (b) the failure to make
the required contributions or payments, under any applicable law, on or before
the due date for such contributions or payments, (c) the receipt of a notice by
a Governmental Authority relating to the intention to terminate any such Foreign
Pension Plan or to appoint a trustee or similar official to
15
administer any such Foreign Pension Plan, or alleging the insolvency of any
such Foreign Pension Plan and (d) the incurrence of any liability in excess
of $2,000,000 (or the Dollar equivalent thereof in another currency) by a
Borrower or any of its Subsidiaries under applicable law on account of the
complete or partial termination of such Foreign Pension Plan or the complete
or partial withdrawal of any participating employer therein, or (e) the
occurrence of any transaction that is prohibited under any applicable law and
could reasonably be expected to result in the incurrence of any liability by
the Borrower or any of its Subsidiaries, or the imposition on a Borrower or
any of its Subsidiaries of any fine, excise tax or penalty resulting from any
noncompliance with any applicable law, in each case in excess of $2,000,000
(or the Dollar equivalent thereof in another currency).
"FOREIGN LENDER" shall mean any Lender that is organized under the laws of
a jurisdiction other than that in which a Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"FOREIGN PENSION PLAN" shall mean any plan, fund (including any super
annuating fund) or other similar program established or maintained outside the
United States by a Borrower or any one or more of its Subsidiaries primarily for
the benefit of employees of such Borrower or such Subsidiaries residing outside
the United States, which plan, fund or other similar program provides, or
results in, retirement income, a deferral of income in contemplation of
retirement or payments to be made upon termination of employment, and which plan
is not subject to ERISA or the Code.
"FOREIGN SUBSIDIARY" shall mean any Subsidiary that is not a Domestic
Subsidiary.
"FORMULA AMOUNT" shall have the meaning set forth in Section 2.01(a).
"GAAP" shall mean generally accepted accounting principles in the United
States applied on a consistent basis.
"GOVERNMENTAL AUTHORITY" shall mean any Federal, state, local or foreign
court or governmental agency, authority, instrumentality or regulatory body.
"GRANTING LENDER" shall have the meaning specified in Section 9.04(i).
"GUARANTEE" of or by any person shall mean any obligation, contingent or
otherwise, of such person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation of any other person (the
"PRIMARY OBLIGOR") in any manner, whether directly or indirectly, and including
any obligation of such person, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or
other obligation or to purchase (or to advance or supply
16
funds for the purchase of) any security for the payment of such Indebtedness
or other obligation, (b) to purchase or lease property, securities or
services for the purpose of assuring the owner of such Indebtedness or other
obligation of the payment of such Indebtedness or other obligation or (c) to
maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation; PROVIDED, HOWEVER, that
the term "Guarantee" shall not include endorsements for collection or deposit
in the ordinary course of business.
"HAZARDOUS MATERIALS" shall mean all explosive or radioactive substances or
wastes, hazardous or toxic substances or wastes, pollutants, solid, liquid or
gaseous wastes, including petroleum or petroleum distillates, asbestos or
asbestos containing materials, polychlorinated biphenyls ("PCBS") or
PCB-containing materials or equipment, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"HEDGING AGREEMENT" shall mean any interest rate swap agreement, interest
rate cap agreement, interest rate collar agreement, foreign exchange contract,
currency swap agreement or other similar agreement or arrangement designed to
protect against fluctuations in interest or currency exchange rates and not
entered into for speculation.
"INDEBTEDNESS" of any person shall mean, without duplication, (a) all
obligations of such person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such person
upon which interest charges are customarily paid, (d) all obligations of such
person under conditional sale or other title retention agreements relating to
property or assets purchased by such person, (e) all obligations of such person
issued or assumed as the deferred purchase price of property or services
(excluding trade accounts payable and accrued obligations incurred in the
ordinary course of business), (f) all Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on property owned or acquired by such
person, whether or not the obligations secured thereby have been assumed,
(g) all Guarantees by such person of Indebtedness of others, (h) all Capital
Lease Obligations of such person, (i) all obligations of such person in respect
of Hedging Agreements and (j) all obligations of such person as an account party
in respect of letters of credit and bankers' acceptances. The Indebtedness of
any person shall include the Indebtedness of any partnership in which such
person is a general partner. Prepaid or guaranteed royalties to independent
software developers, license fees paid or guaranteed to holders of intellectual
property rights and expenses incurred for product development, whether or not
capitalized, are not Indebtedness hereunder.
"INDEMNIFIED TAXES" shall mean Taxes other than Excluded Taxes.
17
"INDEMNITY, SUBROGATION AND CONTRIBUTION AGREEMENT" shall mean the
Indemnity, Subrogation and Contribution Agreement, substantially in the form of
Exhibit D, among the Borrowers, the Subsidiary Guarantors and the Collateral
Agent.
"INDIVIDUAL FORMULA AMOUNT shall mean, at the date of determination
thereof, with respect to each Borrower an amount equal to: (a) up to the
Receivables Advance Rate of the sum of Eligible Receivables of such Borrower
LESS its Dilution Reserve, PLUS (b) up to the Inventory Advance Rate of the
value of Eligible Inventory of such Borrower; PLUS (c) the product of (i) the
aggregate amount of outstanding Trade L/C Exposure of such Borrower TIMES (ii)
the Inventory Advance Rate, PLUS (d) Cash Collateral of such Borrower, MINUS (e)
such other reserves as the Administrative Agent in its Permitted Discretion
deems proper and necessary from time to time.
"INTERCOMPANY NOTE" shall mean the demand promissory note in the original
principal amount of approximately $23,000,000 from UK Sub to Activision
evidencing the obligations of UK Sub to Activision, which is secured by the UK
Charge Documents.
"INTEREST COVERAGE RATIO" with respect to any person for any period shall
mean the ratio of Adjusted EBITDA of such person for such period to the Interest
Expense of such person for such period.
"INTEREST EXPENSE" with respect to any person for any period shall mean the
total cash interest expense of such person (including amortization of deferred
financing fees, premiums or interest rate protection agreements and original
issue discounts) for such period determined in accordance with GAAP.
"INTEREST PAYMENT DATE" shall mean (a) with respect to any ABR Loan, the
last Business Day of each month, and (b) with respect to any Eurodollar Loan,
the last day of the Interest Period applicable to the Borrowing of which such
Loan is a part and, in the case of a Eurodollar Borrowing with an Interest
Period of more than three months' duration, each day that would have been an
Interest Payment Date had successive Interest Periods of three months' duration
been applicable to such Borrowing, and, in addition, the date of any prepayment
of a Eurodollar Borrowing or conversion of a Eurodollar Borrowing to an ABR
Borrowing.
"INTEREST PERIOD" shall mean, with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on the last
day) in the calendar month that is 1, 2, 3 or 6 months thereafter, as the
Borrowing Agent may elect (or such other period thereafter as the Borrowing
Agent may request and all the Lenders with Loans included in such Borrowing may
agree); PROVIDED, HOWEVER, that if any Interest Period would end on a day other
than a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless such next succeeding Business Day would fall in
the next calendar month, in which case such Interest Period
18
shall end on the next preceding Business Day. Interest shall accrue from and
including the first day of an Interest Period to but excluding the last day
of such Interest Period.
"INVESTMENT ACCOUNT" shall mean a cash collateral account maintained by the
Collateral Agent invested in Permitted Investments and under the control of the
Collateral Agent.
"INVENTORY" with respect to any person shall mean and include all of its
now owned or hereafter acquired goods, merchandise and other personal property,
wherever located, to be furnished under any contract of service or held for sale
or lease, all raw materials, work in process, finished goods and materials and
supplies of any kind, nature or description which are or might be used or
consumed in its business or used in selling or furnishing such goods,
merchandise and other personal property, and all documents of title or other
documents representing them.
"INVENTORY ADVANCE RATE" shall have the meaning set forth in Section
2.01(a)(ii) hereof.
"ISSUING BANK" shall mean as the context may require, (a) PNC Bank,
National Association, with respect to Letters of Credit issued by it, (b) with
respect to each Existing Letter of Credit, the Lender that issued such Existing
Letter of Credit, (c) any other Lender that may become an Issuing Bank pursuant
to Section 2.26(h) or (j), with respect to Letters of Credit issued by such
Lender, or (d) collectively, all the foregoing.
"ISSUING BANK FEES" shall have the meaning assigned to such term in
Section 2.08(c).
"JOINDER AGREEMENT" shall mean a Borrower Joinder Agreement substantially
in the form attached hereto as Exhibit E executed by a Domestic Subsidiary which
becomes a Borrower hereunder.
"L/C COMMITMENT" shall mean the commitment of the Issuing Bank to issue
Letters of Credit pursuant to Section 2.26.
"L/C DISBURSEMENT" shall mean a payment or disbursement made by the Issuing
Bank pursuant to a Letter of Credit.
"L/C EXPOSURE" shall mean at any time of determination, the sum of (a) the
Trade L/C Exposure and (b) the Standby L/C Exposure and "L/C Exposure" of a
Borrower shall mean the sum of (a) the Trade L/C Exposure with respect to Trade
Letters of Credit issued for the account of such Borrower and the Standby L/C
Exposure with respect to Standby Letters of Credit issued for the account of
such Borrower.
19
"L/C PARTICIPATION FEE" shall have the meaning assigned to such term in
Section 2.06(c).
"LENDERS" shall mean (a) the financial institutions listed on Schedule 2.01
(other than any such financial institution that has ceased to be a party hereto
pursuant to an Assignment and Acceptance) and (b) any financial institution that
has become a party hereto pursuant to an Assignment and Acceptance.
"LETTER OF CREDIT" shall mean Trade Letters of Credit, Standby Letters of
Credit and any Existing Letter of Credit.
"LEVERAGE RATIO" shall mean, (a) with respect to the Loan Parties on any
date, the ratio of the daily average amount of Total Debt of the Loan Parties
for the two months ended on such date to Adjusted EBITDA of the Loan Parties for
the applicable period; and (b) with respect to Activision and its Subsidiaries
on any date, the ratio of Total Debt of Activision and its Subsidiaries on a
consolidated basis on such date to Adjusted EBITDA of Activision and its
Subsidiaries on a consolidated basis for the applicable period.
"LIBO RATE" shall mean for any Eurodollar Borrowing for the then current
Interest Period relating thereto the interest rate per annum determined by PNC
by dividing (the resulting quotient rounded upwards, if necessary, to the
nearest 1/100th of 1% per annum) (i) the rate of interest determined by PNC in
accordance with its usual procedures (which determination shall be conclusive
absent manifest error) to be the eurodollar rate two (2) Business Days prior to
the first day of such Interest Period for an amount comparable to such
Eurodollar Borrowing and having a borrowing date and a maturity comparable to
such Interest Period by (ii) a number equal to 1.00 minus the Reserve
Percentage.
"LIEN" shall mean, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, encumbrance, charge or security interest in or on such
asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.
"LOAN DOCUMENTS" shall mean this Agreement, the Letters of Credit, the
Borrower Guarantee Agreement, the Subsidiary Guarantee Agreement, the Security
Documents, the Indemnity, Subrogation and Contribution Agreement, any Joinder
Agreement and any and all agreements, instruments and documents now or hereafter
executed by a Borrower or a Subsidiary Guarantor and delivered to the
Administrative Agent, the Issuing Bank or any Lender in connection with this
Agreement.
"LOAN PARTIES" shall mean the Borrowers and the Subsidiary Guarantors.
20
"LOANS" shall mean the Revolving Loans and the Term Loans.
"MARGIN STOCK" shall have the meaning assigned to such term in
Regulation U.
"MASTER NOTE" shall mean any demand promissory note evidencing loans from a
Loan Party to a Foreign Subsidiary.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on (a) the
condition, operations, assets, business or prospects of the Loan Parties, taken
as a whole, or on Activision and its Subsidiaries, taken as a whole; (b) the
ability of the Loan Parties taken as a whole to pay or perform the Obligations
in accordance with the terms thereof; (c) the value of the Collateral or the
Collateral Agent's Liens on the Collateral or the priority of such Liens;
(d) the validity or enforceability of any Loan Document (other than with
respect to a Subsidiary which is not a Material Subsidiary) or (e) the
practical realization of the benefits of the Administrative Agent's, the
Collateral Agent's and each Lender's rights and remedies under this Agreement
and the other Loan Documents.
"MATERIAL CONTRACT" shall mean any and all contracts or agreements of a
Borrower or any Domestic Subsidiary involving amounts remaining to be paid in
excess of $1,000,000.
"MATERIAL SUBSIDIARY" shall mean any Subsidiary which has assets with a
book value in excess of $5,000 as of the date of determination.
"MERGER" shall have the meaning given such term in the preamble to this
Agreement.
"MERGER AGREEMENT" shall mean the Amended and Restated Agreement and Plan
of Merger dated as of April 19, 1999, by and among Activision, Sub and Expert,
as amended, supplemented or otherwise modified from time to time in accordance
with the terms hereof and thereof.
"MORTGAGED PROPERTIES" shall mean the owned real properties and leasehold
and subleasehold interests of the Loan Parties at the time subject to the
Mortgages.
"MORTGAGES" shall mean the mortgages, deeds of trust, leasehold mortgages,
assignments of leases and rents, modifications and other security documents
delivered pursuant to Section 5.12, each in form and substance satisfactory the
Administrative Agent.
"MULTIEMPLOYER PLAN" shall mean a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
21
"NET CASH PROCEEDS" shall mean (a) with respect to any Asset Sale, the cash
proceeds (including cash proceeds subsequently received (as and when received)
in respect of noncash consideration initially received), net of (i) selling
expenses (including reasonable broker's fees or commissions, legal fees,
transfer and similar taxes and the Borrowers' good faith estimate of income
taxes paid or payable in connection with such sale), (ii) amounts provided as a
reserve, in accordance with GAAP, against any liabilities under any
indemnification obligations associated with such Asset Sale (PROVIDED that, to
the extent and at the time any such amounts are released from such reserve, such
amounts shall constitute Net Cash Proceeds) and (iii) the principal amount,
premium or penalty, if any, interest and other amounts on any Indebtedness for
borrowed money which is secured by the asset sold in such Asset Sale and which
is repaid with such proceeds (other than any such Indebtedness assumed by the
purchaser of such asset or repayments of the Revolving Loans) and (b) with
respect to any issuance or disposition of Indebtedness or any Equity Issuance,
the cash proceeds thereof, net of all taxes and customary fees, commissions,
costs and other expenses incurred in connection therewith. Notwithstanding the
foregoing, Net Cash Proceeds shall not include any amounts received by the
Borrowers or any Subsidiary in respect of any casualty or condemnation to the
extent Borrower or such Subsidiary uses the amounts so received within 180 days
of the receipt thereof to rebuild, restore or replace the property subject to
such casualty or condemnation.
"NET INCOME" shall mean, for any period, net income or loss of Activision
and its Subsidiaries, or of the Loan Parties, as the case may be, for such
period determined on a consolidated basis in accordance with GAAP; PROVIDED that
there shall be excluded (a) the income of any Subsidiary to the extent that the
declaration or payment of dividends or similar distributions by the Subsidiary
of that income is prohibited by operation of the terms of its charter or any
agreement, instrument, judgment, decree, statute, rule or governmental
regulation applicable to the Subsidiary except to the extent that dividends or
distributions are actually paid in compliance therewith, (b) the income (or
loss) of any person accrued prior to the date it becomes a Subsidiary or is
merged into or consolidated with a Borrower or any of the Subsidiaries or the
date that person's assets are acquired by a Borrower or any of the Subsidiaries,
and (c) the income of any Subsidiary which is not a wholly owned Subsidiary
except to the extent that dividends or distributions are actually paid to
Activision.
"OBLIGATIONS" shall mean and include any and all of each Borrower's
Indebtedness and/or liabilities to the Administrative Agent, the Collateral
Agent, the Issuing Bank or Lenders or any corporation that directly or
indirectly controls or is controlled by or is under common control with the
Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender of
every kind, nature and description, direct or indirect, secured or unsecured,
joint, several, joint and several, absolute or contingent, due or to become due,
now existing or hereafter arising, contractual or tortious, liquidated or
unliquidated, regardless of how such indebtedness or liabilities arise or by
what agreement or instrument they may be evidenced or whether evidenced by any
agreement
22
or instrument, including, but not limited to, any and all of any Borrower's
Indebtedness and/or liabilities under this Agreement, the other Loan
Documents or under any other agreement between the Administrative Agent, the
Collateral Agent, the Issuing Bank or Lenders and any Borrower and all
obligations of any Borrower to the Administrative Agent, the Collateral
Agent, the Issuing Bank or Lenders to perform acts or refrain from taking any
action.
"OTHER TAXES" shall mean any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made under any Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, any Loan Document.
"PAYMENT OFFICE" shall mean initially Xxx Xxxxx Xxxxxx Xxxxxxxxx, Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000; thereafter, such other office of the Administrative
Agent, if any, which it may designate by notice to the Borrowing Agent and to
each Lender to be the Payment Office.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to and
defined in ERISA.
"PNC" shall mean PNC Bank, National Association.
"PERFECTION CERTIFICATE" shall mean the Perfection Certificate
substantially in the form of Annex 2 to the Security Agreement.
"PERMITTED ACQUISITION" shall have the meaning assigned to such term in
Section 6.04(h).
"PERMITTED DISCRETION" means the Administrative Agent's reasonable and good
faith judgment based upon any factor which the Administrative Agent believes in
good faith (a) could reasonably be expected to adversely affect the value of any
Collateral, the enforceability or priority of the Collateral Agent's Liens or
the amount that the Lenders would be likely to receive upon a liquidation of the
Collateral; (b) suggests that any report of Collateral or financial information
is incomplete, inaccurate or misleading in any material respect; (c) could
reasonably be expected to create a Default or Event of Default or increase the
likelihood of an insolvency or bankruptcy proceeding. In exercising such
judgment with respect to matters relating to the determination of Eligible
Inventory and Eligible Receivables, changes in advance rates or the imposition,
increase or reduction of reserves, the Administrative Agent may reasonably take
into account factors included in the definitions of Eligible Inventory and
Eligible Receivables, as well as changes in concentration of risk of
Receivables, changes in collection history and dilution, changes in demand for
and pricing of Inventory, and other changes in the value of the Inventory or
Receivables that tend to increase the credit risk of lending to the
23
Borrowers on the security of Inventory or Receivables. The burden of
establishing lack of good faith shall be on the Borrowers.
"PERMITTED INVESTMENTS" shall mean any of the following:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed by
the full faith and credit of the United States of America), in each case
maturing within one year from the date of acquisition thereof;
(b) investments in commercial paper maturing within 180 days from the
date of acquisition thereof and having, at such date of acquisition, the highest
credit rating obtainable from Standard & Poor's Ratings Service or from Xxxxx'x
Investors Service, Inc.;
(c) investments in certificates of deposit, banker's acceptances and
time deposits maturing within one year from the date of acquisition thereof
issued or guaranteed by or placed with, and money market deposit accounts issued
or offered by, any domestic office of any commercial bank organized under the
laws of the United States of America or any State thereof that has a combined
capital and surplus and undivided profits of not less than $500,000,000;
(d) fully collateralized repurchase agreements with a term of not
more than 30 days for securities described in clause (a) above and entered into
with a financial institution satisfying the criteria of clause (c) above; and
(e) such other investments that are acceptable to the Administrative
Agent.
"PERSON" shall mean any natural person, corporation, business trust, joint
venture, association, company, limited liability company, partnership or
government, or any agency or political subdivision thereof.
"PLAN" shall mean any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or
Section 412 of the Code or Section 307 of ERISA, and in respect of which the
Borrowers or any ERISA Affiliate is (or, if such plan were terminated, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"PLEDGE AGREEMENT" shall mean the Pledge Agreement, substantially in the
form of Exhibit F, between the Borrowers, the Subsidiaries party thereto and the
Collateral Agent for the benefit of the Secured Parties, together with any
pledge or similar agreement required or advisable under the laws of any foreign
jurisdiction to perfect the pledge the stock of the Foreign Subsidiaries.
24
"PRO RATA PERCENTAGE" of any Revolving Credit Lender at any time shall mean
the percentage of the Total Revolving Credit Commitment represented by such
Lender's Revolving Credit Commitment.
"RECEIVABLES" of a person shall mean and include all of its accounts,
contract rights, instruments (including those evidencing indebtedness owed to it
by its Affiliates), documents, chattel paper, general intangibles relating to
accounts, drafts and acceptances, and all other forms of obligations owing to
such person arising out of or in connection with the sale or lease of Inventory
or the rendition of services, all guarantees and other security therefor,
whether secured or unsecured, now existing or hereafter created, and whether or
not specifically sold or assigned to the Administrative Agent or Collateral
Agent hereunder.
"RECEIVABLES ADVANCE RATE" shall have the meaning set forth in Section
2.01(a)(i) hereof.
"REGISTER" shall have the meaning given such term in Section 9.04(d).
"REGULATION T" shall mean Regulation T of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"REGULATION U" shall mean Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"REGULATION X" shall mean Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"RELATED FUND" shall mean, with respect to any Lender that is a fund that
invests in bank loans, any other fund that invests in bank loans and is advised
or managed by the same investment advisor as such Lender or by an Affiliate of
such investment advisor.
"RELEASE" shall mean any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposing,
depositing, dispersing, emanating or migrating of any Hazardous Material in,
into, onto or through the environment.
"REMEDIAL ACTION" shall mean (a) "remedial action" as such term is defined
in CERCLA, 42 U.S.C. Section 9601(24), and (b) all other actions required by any
Governmental Authority or voluntarily undertaken to: (i) cleanup, remove, treat,
xxxxx or in any other way address any Hazardous Material in the environment;
(ii) prevent the Release or threat of Release, or minimize the further Release
of any Hazardous Material so it does not migrate or endanger or threaten to
endanger public health, welfare or the
25
environment; or (iii) perform studies and investigations in connection
with, or as a precondition to, (i) or (ii) above.
"REPAYMENT DATE" shall have the meaning given such term in Section 2.12.
"REQUIRED LENDERS" shall mean, at any time, Lenders having Loans, L/C
Exposure and unused Revolving Credit and Term Loan Commitments representing at
least a majority of the sum of all Loans outstanding, L/C Exposure and unused
Revolving Credit and Term Loan Commitments at such time, subject, however, to
the provisions of Section 2.25 with respect to Defaulting Lenders.
"RESPONSIBLE OFFICER" of any corporation shall mean any executive officer
or Financial Officer of such corporation and any other officer or similar
official thereof responsible for the administration of the obligations of such
corporation in respect of this Agreement.
"REVOLVING CREDIT BORROWING" shall mean a Borrowing comprised of Revolving
Loans.
"REVOLVING CREDIT COMMITMENT" shall mean, with respect to each Lender, the
commitment of such Lender to make Revolving Loans hereunder as set forth on
Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender
assumed its Revolving Credit Commitment, as applicable, as the same may be
(a) reduced from time to time pursuant to Section 2.11 and (b) reduced or
increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 9.04.
"REVOLVING CREDIT EXPOSURE" shall mean, with respect to any Lender at any
time, the aggregate principal amount at such time of all outstanding Revolving
Loans of such Lender, PLUS the aggregate amount at such time of such Lender's
L/C Exposure.
"REVOLVING CREDIT LENDER" shall mean a Lender with a Revolving Credit
Commitment.
"REVOLVING CREDIT MATURITY DATE" shall mean June 21, 2002.
"REVOLVING LOANS" shall mean the revolving loans made by the Lenders to the
Borrowers pursuant to Section 2.01. Each Revolving Loan shall be a Eurodollar
Revolving Loan or an ABR Revolving Loan.
"SCHEDULE OF RECEIVABLES" shall mean, as to each Borrower, a detailed aged
trial balance of all then existing Receivables of such Borrower in form and
substance satisfactory to the Administrative Agent, specifying in each case the
names, addresses, face amount and dates of invoice(s) for each Customer
obligated on a Receivable so listed and, if requested by the Administrative
Agent, copies of proof of delivery and customer
26
statements and the original copy of all documents, including, without
limitation, repayment histories and present status reports, and such other
matters and information relating to the status of the Receivables and/or the
Customers so scheduled as the Administrative Agent may from time to time
reasonably request.
"SCHEDULE OF PAYABLES" shall mean, as to each Borrower, a detailed aged
listing of such Borrower's existing accounts payable, specifying the names of
each creditor and the amount owed to such creditor and such matters and
information relating to the status of such Borrower's accounts payable so
scheduled as the Administrative Agent may from time to time reasonably request.
"SECURED PARTIES" shall have the meaning assigned to such term in the
Security Agreement.
"SECURITY AGREEMENT" shall mean the Security Agreement, substantially in
the form of Exhibit G, among the Borrowers, the Subsidiaries party thereto and
the Collateral Agent for the benefit of the Secured Parties.
"SECURITY DOCUMENTS" shall mean the Mortgages, the Security Agreement, the
Pledge Agreement and each of the security agreements, mortgages and other
instruments and documents executed and delivered pursuant to any of the
foregoing or pursuant to Section 5.12.
"SETTLEMENT DATE" shall mean the Closing Date and thereafter Wednesday of
each Week unless such day is not a Business Day in which case it shall be the
next succeeding Business Day.
"SPC" shall have the meaning specified in Section 9.04(i).
"STANDBY L/C EXPOSURE" shall mean, at any time of determination, the sum of
(a) the aggregate undrawn amount of all outstanding Standby Letters of Credit
and (b) the aggregate amount that has been drawn under any Standby Letter of
Credit but for which the Issuing Bank or the Lenders, as the case may be, have
not been reimbursed by the Borrowers at such time.
"STANDBY LETTER OF CREDIT" shall mean (a) each irrevocable letter of credit
issued pursuant to Section 2.26(a) under which the Issuing Bank agrees to make
payments for the account of a Borrower, on behalf of such Borrower, in respect
of obligations of such Borrower incurred pursuant to contracts made or
performances undertaken or to be undertaken or like matters relating to
contracts to which a Borrower is or proposes to become a party in the ordinary
course of such Borrower's business and (b) each Existing Letter of Credit.
27
"STATUTORY RESERVES" shall mean a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board and any other banking authority, domestic or foreign,
to which the Administrative Agent or any Lender (including any branch,
Affiliate, or other fronting office making or holding a Loan) is subject with
respect to the Adjusted LIBO Rate, for Eurocurrency Liabilities (as defined in
Regulation D of the Board). Such reserve percentages shall include those
imposed pursuant to such Regulation D. Eurodollar Loans shall be deemed to
constitute Eurocurrency Liabilities and to be subject to such reserve
requirements without benefit of or credit for proration, exemptions or offsets
that may be available from time to time to any Lender under such Regulation D.
Statutory Reserves shall be adjusted automatically on and as of the effective
date of any change in any reserve percentage.
"SUB" shall mean Expert Acquisition Corp., a Delaware corporation.
"SUBORDINATED DEBT" shall mean unsecured Indebtedness of Activision which
has a maturity date at least one year after the Revolving Credit Maturity Date,
no principal payments due prior to one year after the Revolving Credit Maturity
Date and is otherwise on terms and conditions set forth on Exhibit K hereto.
"SUBSIDIARY" shall mean, with respect to any person (herein referred to as
the "PARENT"), any corporation, partnership, association or other business
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or more
than 50% of the general partnership interests are, at the time any determination
is being made, owned, controlled or held, or (b) that is, at the time any
determination is made, otherwise Controlled, by the parent or one or more
subsidiaries of the parent or by the parent and one or more subsidiaries of the
parent and that is consolidated with such person in accordance with GAAP.
"SUBSIDIARY" shall mean any subsidiary of Activision.
"SUBSIDIARY GUARANTEE AGREEMENT" shall mean the Subsidiary Guarantee
Agreement, substantially in the form of Exhibit H, made by the Subsidiary
Guarantors in favor of the Collateral Agent for the benefit of the Secured
Parties.
"SUBSIDIARY GUARANTOR" shall mean each Subsidiary listed on
Schedule 1.01(c), and each other Subsidiary that is or becomes a party to the
Subsidiary Guarantee Agreement.
"TANGIBLE NET WORTH" for any person shall mean, at a particular date (a)
the aggregate amount of all assets of such person as may be properly classified
as such in accordance with GAAP consistently applied, excluding such assets as
are properly
28
classified as intangible assets under GAAP and assets evidencing any
receivable from or investments in any Affiliate LESS (b) the aggregate amount
of all liabilities of such person.
"TAXES" shall mean any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"TERM BORROWING" shall mean a Borrowing comprised of Term Loans.
"TERM LOAN COMMITMENT" shall mean, with respect to each Lender, the
commitment of such Lender to make Term Loans hereunder as set forth on
Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender
assumed its Term Loan Commitment, as applicable, as the same may be (a) reduced
from time to time pursuant to Section 2.11 and (b) reduced or increased from
time to time pursuant to assignments by or to such Lender pursuant to
Section 9.04.
"TERM LOAN MATURITY DATE" shall mean June 21, 2002.
"TERM LOANS" shall mean the term loans made by the Lenders to Activision
pursuant to Section 2.01. Each Term Loan shall be a Eurodollar Term Loan or an
ABR Term Loan.
"TOTAL DEBT" at any time and with respect to any person shall mean the
total Indebtedness of such person at such time (excluding Indebtedness of the
type described in clause (i) of the definition of such term).
"TOTAL REVOLVING CREDIT COMMITMENT" shall mean, at any time, the aggregate
amount of the Revolving Credit Commitments, as in effect at such time.
"TRADE L/C EXPOSURE" shall mean, at any time of determination, the sum of
(a) the aggregate undrawn amount of all outstanding Trade Letters of Credit, (b)
the aggregate unpaid amount of all accepted usance drafts drawn under Letters of
Credit and (c) the aggregate amount that has been drawn under any Trade Letter
of Credit but for which the Issuing Bank or the Lenders, as the case may be,
have not been reimbursed by the Borrowers at such time.
"TRADE LETTER OF CREDIT" shall mean each sight or usance commercial
documentary letter of credit issued by the Issuing Bank for the account of a
Borrower pursuant to Section 2.26(a) for the purchase of goods in the ordinary
course of business.
"TRANSACTIONS" shall have the meaning assigned to such term in
Section 3.02.
"TYPE", when used in respect of any Loan or Borrowing, shall refer to the
Rate by reference to which interest on such Loan or on the Loans comprising such
Borrowing is
29
determined. For purposes hereof, the term "RATE" shall include the Adjusted
LIBO Rate and the Alternate Base Rate.
"UK SUB" shall mean Activision UK, Ltd., a corporation organized under the
laws of England and Wales.
"UK CHARGE DOCUMENTS" shall mean the various pledge and security agreements
securing the Intercompany Note.
"UNDRAWN AVAILABILITY" at a particular date shall mean an amount equal to
(a) the lesser of (i) the Formula Amount or (ii) the Total Revolving Credit
Commitment MINUS (b) the sum of (i) the Aggregate Revolving Credit Exposure,
PLUS (ii) all amounts due and owing to the Loan Parties' trade creditors which
are outstanding more than 60 days after the due date, PLUS (iii) fees and
expenses for which Borrowers are liable but which have not been paid or charged
to Borrowers' Account.
"WEEK" shall mean the time period commencing with the opening of business
on a Wednesday and ending on the end of business the following Tuesday.
"WHOLLY OWNED SUBSIDIARY" of any person shall mean a subsidiary of such
person of which securities (except for directors' qualifying shares) or other
ownership interests representing 100% of the equity or 100% of the ordinary
voting power or 100% of the general partnership interests are, at the time any
determination is being made, owned, controlled or held by such person or one or
more wholly owned subsidiaries of such person or by such person and one or more
wholly owned subsidiaries of such person.
"WITHDRAWAL LIABILITY" shall mean liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. TERMS GENERALLY. The definitions in Section 1.01 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
All references herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and Schedules to,
this Agreement unless the context shall otherwise require. Except as otherwise
expressly provided herein, (a) any reference in this Agreement to any Loan
Document shall mean such document as amended, restated, supplemented or
otherwise modified from time to time and (b) all terms of an accounting or
financial nature shall be construed in accordance with GAAP, as in effect from
time to time; PROVIDED, HOWEVER, that if the Borrowing Agent notifies the
Administrative Agent that the Borrowers wish to amend any covenant in Article VI
or any related definition to eliminate the effect of any change in GAAP
occurring after the date of this Agreement on the operation of such
30
covenant (or if the Administrative Agent notifies the Borrowing Agent that
the Required Lenders wish to amend Article VI or any related definition for
such purpose), then the Borrowers' compliance with such covenant shall be
determined on the basis of GAAP in effect immediately before the relevant
change in GAAP became effective, until either such notice is withdrawn or
such covenant is amended in a manner satisfactory to the Borrowers and the
Required Lenders.
ARTICLE II
The Credits
SECTION 2.01. COMMITMENTS; FORMULA AMOUNT. (a) Subject to the terms and
conditions and relying upon the representations and warranties herein set forth,
each Lender agrees, severally and not jointly, (i) to make a Term Loan to
Activision on the Closing Date in a principal amount not to exceed its Term Loan
Commitment, and (ii) to make Revolving Loans to the Borrowers, at any time and
from time to time on or after the Closing Date and until the earlier of the
Revolving Credit Maturity Date and the termination of the Revolving Credit
Commitment of such Lender in accordance with the terms hereof, in an aggregate
principal amount at any time outstanding that will not result in such Lender's
Revolving Credit Exposure exceeding the lesser of (x) such Lender's Revolving
Credit Commitment and (y) such Lender's Pro Rata Percentage of an amount equal
to the sum of the following (the "Formula Amount"):
(i) up to 70%, subject to the provisions of Section 2.01(c)
hereof ("Receivables Advance Rate"), of the sum of (A) Eligible
Receivables of the Borrowers LESS (B) the Dilution Reserve, PLUS
(ii) up to the lesser of (A) the sum of (a) 50%, subject to
the provisions of Section 2.01(c) hereof ("Inventory Advance Rate"),
of the value of the Eligible Inventory of the Borrowers (the
Receivables Advance Rate and the Inventory Advance Rate shall be
referred to collectively, as the "Advance Rates") and (b) the product
of (x) the Trade L/C Exposure for Inventory for which title has not
yet passed to the Borrower TIMES (y) the Inventory Advance Rate, or
(B) the greater of (a) $15,000,000 or (b) forty percent (40%) of the
Borrowing Base Availability in the aggregate at any one time, MINUS
(iii) the L/C Exposure, MINUS
(iv) during at least 1 month (as designated by the
Borrowing Agent by written notice to the Administrative Agent at least
3 Business Days prior to the beginning of the month) in each of the 6
month periods of January to June and July to December, an amount
equal to the
31
outstanding principal balance of the Term Loans and during at least
1 month (as so designated) during each of such periods, an amount
equal to 60% of the outstanding principal balance of the Term Loans;
PLUS
(v) Cash Collateral; MINUS
(vi) such other reserves as the Administrative Agent may deem
proper and necessary from time to time in its Permitted Discretion.
(b) Each Revolving Credit Lender agrees, severally and not jointly,
to make Revolving Loans to each Borrower in aggregate amounts outstanding at
any time not greater than such Lender's Pro Rata Percentage of such
Borrower's Individual Formula Amount less such Borrower's L/C Exposure.
(c) The Advance Rates may be increased or decreased by the
Administrative Agent at any time and from time to time in the exercise of its
Permitted Discretion; PROVIDED, HOWEVER, that (i) any decrease in any Advance
Rate shall only be effective on the fifth day after the Administrative Agent
has given the Borrowing Agent notice of such decrease and (ii) any increase
or decrease in the Receivables Advance Rate shall only apply to Eligible
Receivables created and assigned to the Administrative Agent after such
change in Advance Rate becomes effective, but any increase or decrease in the
Inventory Advance Rate shall apply to all Eligible Inventory whether then
owned or thereafter acquired. Each Borrower consents to any such increases
or decreases and acknowledges that decreasing the Advance Rates or increasing
the reserves may limit or restrict Revolving Loans or Letters of Credit
requested by the Borrowing Agent..
(d) For purposes of calculating the Formula Amount, Individual
Formula Amount, Eligible Inventory, and Eligible Receivables, the Receivables
and Inventory acquired in any Permitted Acquisition shall not be included
until such time as the Administrative Agent has performed an audit with
results satisfactory to it in its Permitted Discretion.
SECTION 2.02. LOANS. (a) Each Loan shall be made as part of a Borrowing
consisting of Loans made by the Lenders ratably in accordance with their
applicable Commitments; PROVIDED, HOWEVER, that the failure of any Lender to
make any Loan shall not in itself relieve any other Lender of its obligation
to lend hereunder (it being understood, however, that no Lender shall be
responsible for the failure of any other Lender to make any Loan required to
be made by such other Lender). Except for Loans deemed made pursuant to
Section 2.03(a), the Loans comprising any Borrowing shall be in an aggregate
principal amount that is (i) an integral multiple of $1,000,000 or (ii) equal
to the remaining available balance of the applicable Commitments.
(b) Subject to Sections 2.15 and 2.17, each Borrowing shall be
comprised entirely of ABR Loans or Eurodollar Loans as the Borrowing Agent
may request
32
pursuant to Section 2.03. Each Lender may at its option make any
Eurodollar Loan by causing any domestic or foreign branch or Affiliate of
such Lender to make such Loan; PROVIDED that any exercise of such option
shall not affect the obligation of the Borrowers to repay such Loan in
accordance with the terms of this Agreement. Borrowings of more than one
Type may be outstanding at the same time; PROVIDED, HOWEVER, that the
Borrowers shall not be entitled to request any Borrowing that, if made, would
result in more than five Eurodollar Borrowings outstanding hereunder at any
time. For purposes of the foregoing, Borrowings made by a Borrower having
different Interest Periods, regardless of whether they commence on the same
date, shall be considered separate Borrowings.
(c) Notwithstanding any other provision of this Agreement, the
Borrowing Agent shall not be entitled to request any Revolving Credit
Borrowing if the Interest Period requested with respect thereto would end
after the Revolving Credit Maturity Date.
SECTION 2.03. PROCEDURE FOR REVOLVING CREDIT BORROWINGS. (a) The
Borrowing Agent on behalf of any Borrower may notify the Administrative Agent
prior to 1:00 p.m., New York time, on a Business Day of a Borrower's request
to make, on that day, a Revolving Credit Borrowing hereunder. Should any
amount required to be paid as interest hereunder, or as fees or other charges
under this Agreement or any other agreement with the Administrative Agent,
the Collateral Agent or Lenders, or any L/C Disbursement, or with respect to
any other Obligation, become due, same shall be deemed a request for a
Revolving Credit Borrowing as of the date such payment is due, in the amount
required to pay in full such interest, fee, charge or Obligation under this
Agreement or any other agreement with the Administrative Agent, the
Collateral Agent or Lenders, and such request shall be irrevocable. The
Administrative Agent is hereby irrevocably authorized, in its sole
discretion, to make Revolving Loans from time to time, or to charge
Borrowers' Account, to pay any interest, fees or other amounts (including any
L/C Disbursement) for which payment is due under this Agreement, or at any
time after the occurrence of an Event of Default to cash collateralize the
L/C Exposure.
(b) Notwithstanding the provisions of Section 2.03(a) above, in
the event a Borrower desires to make a Eurodollar Borrowing, the Borrowing
Agent shall give the Administrative Agent at least three (3) Business Days'
prior written notice, specifying (i) the date of the proposed Borrowing
(which shall be a Business Day), (ii) the amount on the date of such
Revolving Credit Borrowing, which amount shall be an integral multiple of
$1,000,000, and (iii) the duration of the first Interest Period therefor. No
Eurodollar Borrowing shall be made available to the Borrowers during the
continuance of a Default or an Event of Default.
(c) The Borrowing Agent shall elect the initial Interest Period
applicable to a Eurodollar Borrowing by its notice of borrowing given to the
Administrative Agent pursuant to Section 2.03 (a) or by its notice of
conversion given to the Administrative
33
Agent pursuant to Section 2.03(d), as the case may be. The Borrowing Agent
shall elect the duration of each succeeding Interest Period by giving
irrevocable written notice to the Administrative Agent of such duration not
less than three (3) Business Days prior to the last day of the then current
Interest Period applicable to such Eurodollar Borrowing. If the Administrative
Agent does not receive timely notice of the Interest Period elected by the
Borrowing Agent, the applicable Borrower shall be deemed to have elected to
convert to an ABR Loan, subject to Section 2.03(d) hereinbelow.
(d) Provided that no Default or Event of Default shall have
occurred and be continuing, the Borrowing Agent may, on the last Business Day
of the then current Interest Period applicable to any outstanding Eurodollar
Loan, or on any Business Day with respect to ABR Loans, convert any such Loan
into a Loan of another type in the same aggregate principal amount; PROVIDED
that any conversion of a Eurodollar Loan shall be made only on the last
Business Day of the then current Interest Period applicable to such
Eurodollar Loan. If a Borrower desires to convert a Loan, the Borrowing
Agent shall give the Administrative Agent not less than three (3) Business
Days' prior written notice to convert from an ABR Loan to a Eurodollar Loan
or one (1) Business Day's prior written notice to convert from a Eurodollar
Loan to an ABR Loan, specifying the date of such conversion, the Loans to be
converted and if the conversion is from an ABR Loan to a Eurodollar Loan, the
duration of the first Interest Period therefor. After giving effect to each
such conversion, there shall not be outstanding more than five (5) Eurodollar
Borrowings, in the aggregate.
SECTION 2.04. DISBURSEMENT OF LOANS. All Loans shall be disbursed from
whichever office or other place the Administrative Agent may designate from
time to time and, together with any and all other Obligations of the
Borrowers to the Administrative Agent, the Collateral Agent or Lenders, shall
be charged to the Borrowers' Account on the Administrative Agent's books.
The Borrowers may use the Revolving Loans by borrowing, prepaying and
reborrowing, all in accordance with the terms and conditions hereof. The
proceeds of each Revolving Credit Borrowing requested by a Borrower or deemed
to have been requested by or on behalf of a Borrower under Section 2.03(a)
hereof shall, with respect to requested Revolving Credit Borrowings to the
extent Lenders make such Revolving Credit Borrowings, be made available to
such Borrower on the day so requested by way of credit to such Borrower's
operating account at PNC, in immediately available federal funds or other
immediately available funds or, with respect to Revolving Credit Borrowings
deemed to have been requested by the Borrowers, be disbursed to the
Administrative Agent to be applied to the outstanding Obligations giving rise
to such deemed request.
SECTION 2.05. MANNER OF BORROWING AND PAYMENT. (a) Each Revolving
Credit Borrowing shall be advanced according to the applicable Pro Rata
Percentages of the Revolving Credit Lenders. The Term Loans shall be
advanced pro rata by the Term Lenders.
34
(b) Each payment (including each prepayment) by a Borrower on
account of the principal of and interest on the Revolving Loans shall be
applied to the Revolving Loans of such Borrower according to the applicable
Pro Rata Percentages of the Revolving Credit Lenders. Each payment
(including each prepayment) by Activision on account of the principal of and
interest on the Term Loans, shall be made pro rata to the Term Lenders.
Except as expressly provided herein, all payments (including prepayments) to
be made by the Borrowers on account of principal, interest and fees shall be
made without set off or counterclaim and shall be made to the Administrative
Agent on behalf of the Lenders to the Payment Office, in each case on or
prior to 1:00 P.M., New York time, in Dollars and in immediately available
funds.
(c) (i) Notwithstanding anything to the contrary contained in
Sections 2.03 or 2.05 (a) and (b) hereof, commencing with the first Business
Day following the Closing Date, each Revolving Loan shall be advanced by the
Administrative Agent and each payment by the Borrowers on account of
Revolving Loans shall be applied first to those Revolving Loans advanced by
the Administrative Agent. On or before 1:00 P.M., New York time, on each
Settlement Date commencing with the first Settlement Date following the
Closing Date, the Administrative Agent and Lenders shall make certain
payments as follows: (I) if the aggregate amount of new Revolving Loans made
by the Administrative Agent during the preceding Week (if any) exceeds the
aggregate amount of repayments applied to outstanding Revolving Loans during
such preceding Week, then each Lender shall provide the Administrative Agent
with immediately available funds in an amount equal to its applicable Pro
Rata Percentage of the difference between (w) such Revolving Loans and
(x) such repayments and (II) if the aggregate amount of repayments applied to
outstanding Revolving Loans during such Week exceeds the aggregate amount of
new Revolving Credit Loans made during such Week, then the Administrative
Agent shall provide each Lender with immediately available funds in an amount
equal to its applicable Pro Rata Percentage of the difference between (y) such
repayments and (z) such Revolving Loans.
(ii) Each Lender shall be entitled to earn interest at the
rate applicable to the rate on the outstanding Revolving Loans which
it has funded.
(iii) Promptly following each Settlement Date, the
Administrative Agent shall submit to each Lender a certificate with
respect to payments received and Revolving Loans made during the Week
immediately preceding such Settlement Date. Such certificate of the
Administrative Agent shall be conclusive in the absence of manifest
error.
(d) Unless the Administrative Agent shall have been notified by
telephone, confirmed in writing, by any Lender that such Lender will not make
the amount which would constitute its applicable Pro Rata Percentage of the
Revolving Loans available to the Administrative Agent, the Administrative
Agent may (but shall not be obligated to) assume that such Lender shall make
such amount available to the
35
Administrative Agent on the next Settlement Date and, in reliance upon such
assumption, make available to the Borrowers a corresponding amount. The
Administrative Agent will promptly notify the Borrowing Agent of its receipt
of any such notice from a Lender. If such amount is made available to the
Administrative Agent on a date after such next Settlement Date, such Lender
shall pay to the Administrative Agent on demand an amount equal to the
product of (i) the daily average Federal Funds Rate (computed on the basis of
a year of 360 days) during such period as quoted by the Administrative Agent,
times (ii) such amount, times (iii) the number of days from and including
such Settlement Date to the date on which such amount becomes immediately
available to the Administrative Agent. A certificate of the Administrative
Agent submitted to any Lender with respect to any amounts owing under this
paragraph shall be conclusive, in the absence of manifest error. If such
amount is not in fact made available to the Administrative Agent by such
Lender within three (3) Business Days after such Settlement Date, the
Administrative Agent shall be entitled to recover such an amount, with
interest thereon at the rate per annum then applicable to such Revolving
Loans hereunder, on demand from the applicable Borrower; PROVIDED, HOWEVER,
that the Administrative Agent's right to such recovery shall not prejudice or
otherwise adversely affect the Borrower's rights (if any) against such Lender.
SECTION 2.06. EVIDENCE OF DEBT. (a) Activision hereby unconditionally
promises to pay to the Administrative Agent for the account of each Lender
holding Term Loans, the principal amount of each Term Loan of such Lender as
provided in Section 2.12(a) and each Borrower hereby unconditionally and
jointly and severably promises to pay to the Administrative Agent on the
Revolving Credit Maturity Date (or earlier termination of the Revolving
Credit Commitments) for the account of each Revolving Credit Lender, the then
unpaid principal amount of each Revolving Loan made by such Lender to
Borrowers.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness of the Borrowers
to such Lender resulting from each Loan made by such Lender from time to
time, including the amounts of principal and interest payable and paid such
Lender from time to time under this Agreement.
(c) The Administrative Agent shall maintain accounts in which it
will record (i) the amount of each Loan made hereunder, the Type thereof and
the Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrowers to
each Lender hereunder and (iii) the amount of any sum received by the
Administrative Agent hereunder from the Borrowers or any Subsidiary Guarantor
and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to
paragraphs (b) and (c) above shall be PRIMA FACIE evidence of the existence
and amounts of the obligations therein recorded; PROVIDED, HOWEVER, that the
failure of any Lender or
36
the Administrative Agent to maintain such accounts or any error therein shall
not in any manner affect the obligations of the Borrowers to repay the Loans
in accordance with their terms.
(e) Any Lender may request that Loans made by it hereunder be
evidenced by a promissory note. In such event, the Borrowers shall execute
and deliver to such Lender a promissory note payable to such Lender and its
registered assigns and in a form and substance reasonably acceptable to the
Administrative Agent and the Borrowers. Notwithstanding any other provision
of this Agreement, in the event any Lender shall request and receive such a
promissory note, the interests represented by such note shall at all times
(including after any assignment of all or part of such interests pursuant to
Section 9.04) be represented by one or more promissory notes payable to the
payee named therein or its registered assigns.
SECTION 2.07. STATEMENT OF ACCOUNT. (a) The Administrative Agent shall
maintain, in accordance with its customary procedures, a loan account
("Borrowers' Account") in the name of the Borrowers in which shall be
recorded the date and amount of each Borrowing, each L/C Disbursement and the
date and amount of each payment in respect thereof; PROVIDED, HOWEVER, the
failure by the Administrative Agent to record the date and amount of any
Borrowing or L/C Disbursement shall not adversely affect the Administrative
Agent or any Lender. Each month, the Administrative Agent shall send to the
Borrowing Agent a statement showing the accounting for the Borrowings made,
payments made or credited in respect thereof, and other transactions between
the Administrative Agent and the Borrowers during such month. The monthly
statements shall be deemed correct and binding upon the Borrowers in the
absence of manifest error and shall constitute an account stated between
Lenders and Borrowers unless the Administrative Agent receives a written
statement of the Borrowers' specific exceptions thereto within thirty (30) days
after such statement is received by the Borrowers. The records of the
Administrative Agent with respect to Borrowers' Account shall be conclusive
evidence absent manifest error of the amounts of Loans and other charges
thereto and of payments applicable thereto.
(b) Any sums expended by the Administrative Agent or any Lender
due to a Borrower's failure to perform or comply with its obligations under
this Agreement or any Loan Document may be charged to Borrowers' Account as a
Revolving Loan and added to the Obligations.
SECTION 2.08. FEES. (a) The Borrowers jointly and severally agree to
pay to each Lender, through the Administrative Agent, on the last day of
March, June, September and December in each year and on each date on which
any Commitment of such Lender shall expire or be terminated as provided
herein, a commitment fee (a "COMMITMENT FEE") equal to 1/2 of 1% per annum on
the daily unused amount of the Commitments of such Lender during the
preceding quarter (or other period commencing with the date hereof or ending
with the Revolving Credit Maturity Date or the date on
37
which the Commitments of such Lender shall expire or be terminated). All
Commitment Fees shall be computed on the basis of the actual number of days
elapsed in a year of 360 days. The Commitment Fee due to each Lender shall
commence to accrue on the date hereof and shall cease to accrue on the date
on which the Commitment of such Lender shall expire or be terminated as
provided herein.
(b) The Borrowers jointly and severally agree to pay to the
Administrative Agent and Collateral Agent, for its own account, the fees set
forth in the Fee Letter at the times and in the amounts specified therein
(the "AGENT FEES").
(c) The Borrowers jointly and severally agree to pay (i) to each
Revolving Credit Lender, through the Administrative Agent, on the last
Business Day of March, June, September and December of each year and on the
date on which the Revolving Credit Commitment of such Lender shall be
terminated as provided herein, a fee (an "L/C PARTICIPATION FEE") calculated
on such Lender's Pro Rata Percentage of the average daily aggregate L/C
Exposure (excluding the portion thereof attributable to unreimbursed L/C
Disbursements) during the preceding quarter (or shorter period commencing
with the date hereof or ending with the Revolving Credit Maturity Date or the
date on which all Letters of Credit have been canceled or have expired and
the Revolving Credit Commitments of all Lenders shall have been terminated)
at a rate equal to (x) in the case of the Standby L/C Exposure, 2.75% per
annum, and (y) in the case of the Trade L/C Exposure, 1.375% per annum, and
(ii) to the Issuing Bank with respect to each Letter of Credit a fronting,
issuance and drawing fee equal to .25% per annum on the face amount of all
outstanding Letters of Credit, payable quarterly in arrears and on the
Revolving Credit Maturity Date or the date on which all Letters of Credit
have been canceled or have expired and the Revolving Credit Commitments of
all Lenders shall have been terminated (the "ISSUING BANK FEES"). All L/C
Participation Fees and Issuing Bank Fees shall be computed on the basis of
the actual number of days elapsed in a year of 360 days.
(d) All Fees shall be paid on the dates due, in immediately
available funds, to the Administrative Agent for distribution, if and as
appropriate, among the Lenders, except that the Issuing Bank Fees shall be
paid directly to the Issuing Bank. Once paid, none of the Fees shall be
refundable under any circumstances.
SECTION 2.09. INTEREST ON LOANS. (a) Subject to the provisions of
Section 2.10, the Loans comprising each ABR Borrowing shall bear interest
(computed on the basis of the actual number of days elapsed over a year of
365 or 366 days, as the case may be, when the Alternate Base Rate is
determined by reference to the Base Rate and over a year of 360 days at all
other times and calculated from and including the date of such Borrowing to
but excluding the date of repayment thereof) at a rate per annum equal to the
Alternate Base Rate plus 1.75% for Revolving Loans and the Alternate Base
Rate plus 2.0% for Term Loans.
38
(b) Subject to the provisions of Section 2.10, the Loans
comprising each Eurodollar Borrowing shall bear interest (computed on the
basis of the actual number of days elapsed over a year of 360 days) at a rate
per annum equal to the Adjusted LIBO Rate for the Interest Period in effect
for such Borrowing plus 2.75% for Revolving Loans and the Adjusted LIBO Rate
for the Interest Period in effect for such Borrowing plus 3.00% for Term
Loans.
(c) Interest on each Loan shall be payable on the Interest Payment
Dates applicable to such Loan except as otherwise provided in this Agreement.
The applicable Alternate Base Rate or Adjusted LIBO Rate shall be determined
by the Administrative Agent, and such determination shall be conclusive
absent manifest error.
(d) In no event whatsoever shall interest and other charges
charged hereunder exceed the highest rate permissible under law. In the
event interest and other charges as computed hereunder would otherwise exceed
the highest rate permitted under law, such excess amount shall be first
applied to any unpaid principal balance owed by the Borrowers, and if the
then remaining excess amount is greater than the previously unpaid principal
balance, Lenders shall promptly refund such excess amount to the Borrowers
and the provisions hereof shall be deemed amended to provided for such
permissible rate.
SECTION 2.10. DEFAULT INTEREST. Upon and after the occurrence of an
Event of Default and during the continuation thereof, (i) the Obligations
other than Eurodollar Loans shall bear interest at the rate otherwise
applicable to ABR Loans plus two percent (2%) per annum and (ii) Eurodollar
Loans shall bear interest at the rate otherwise applicable to Eurodollar
Loans plus two percent (2%) per annum (as applicable, the "Default Rate").
SECTION 2.11. TERMINATION AND REDUCTION OF COMMITMENTS. (a) The Term
Loan Commitments shall automatically terminate at 5:00 p.m., New York City
time, on the Closing Date. The Revolving Credit Commitments, and the L/C
Commitment shall automatically terminate on the Revolving Credit Maturity
Date. Notwithstanding the foregoing, all the Commitments shall automatically
terminate at 5:00 p.m., New York City time, on June 30, 1999, if the initial
Credit Event shall not have occurred by such time.
(b) Upon at least three Business Days' prior irrevocable written
or telecopy notice to the Administrative Agent, the Borrowers may at any time
in whole permanently terminate, or from time to time in part permanently
reduce, the Term Loan Commitments or the Revolving Credit Commitments;
PROVIDED, HOWEVER, that (i) each partial reduction of the Term Loan
Commitments or the Revolving Credit Commitments shall be in an integral
multiple of $1,000,000 and (ii) the Total Revolving Credit Commitment shall
not be reduced to an amount that is less than the sum of the Aggregate
Revolving Credit Exposure at the time.
39
(c) Each reduction in the Term Loan Commitments or the Revolving
Credit Commitments hereunder shall be made ratably among the Lenders in
accordance with their respective applicable Commitments. The Borrowers shall
pay to the Administrative Agent for the account of the applicable Lenders, on
the date of each termination or reduction, the Commitment Fees on the amount
of the Commitments so terminated or reduced accrued to but excluding the date
of such termination or reduction.
SECTION 2.12. REPAYMENT OF BORROWINGS. (a) The Term Borrowings shall
be payable as to principal in 10 consecutive installments payable on the last
Business Day of March, June, September and December of each year, commencing
on the last Business Day in December 1999 and ending on the Term Loan Maturity
Date (each such date being called a "REPAYMENT DATE") and shall be due and
payable in full on the date that the Revolving Credit Commitments terminate.
Each installment shall be in an amount equal to $2,500,000, with the balance
due and payable on the Term Loan Maturity Date or any earlier date that the
Revolving Credit Commitments terminate.
(b) Each payment of Term Borrowings pursuant to this Section 2.12
shall be accompanied by accrued interest on the principal amount paid to but
excluding the date of payment.
(c) The Revolving Loans shall be due and payable in full on the
Revolving Credit Maturity Date subject to earlier prepayment as herein
provided.
(d) With respect to any deposits in any lockbox or Blocked Account,
the Borrowers recognize that the amounts evidenced by checks, notes, drafts
or any other items of payment relating to and/or proceeds of Collateral may
not be collectible by the Administrative Agent on the date received. In
consideration of the Administrative Agent's agreement to conditionally credit
Borrowers' Account as of the Business Day on which the Administrative Agent
receives those items of payment, the Borrowers agree that, in computing the
charges under this Agreement, all items of payment shall be deemed applied by
the Administrative Agent on account of the Obligations on the Business Day
the Administrative Agent receives such payments via wire transfer or
electronic depository check. The Administrative Agent is not, however,
required to credit Borrowers' Account for the amount of any item of payment
which is unsatisfactory to the Administrative Agent and the Administrative
Agent may charge Borrowers' Account for the amount of any item of payment
which is returned to the Administrative Agent unpaid.
(e) All payments of principal, interest and other amounts payable
hereunder, or under any of the other Loan Documents, shall be made to the
Administrative Agent at the Payment Office not later than 1:00 P.M. (New York
Time) on the due date therefor in lawful money of the United States of
America in federal funds or other funds immediately available to the
Administrative Agent. The Administrative Agent shall have the right to
effectuate payment on any and all Obligations due and
40
owing hereunder by charging Borrowers' Account or by making Revolving Loans
as provided in Section 2.02(a) hereof.
(f) Borrowers shall pay principal, interest, and all other amounts
payable hereunder, or under any related agreement, without any deduction
whatsoever, including, but not limited to, any deduction for any setoff or
counterclaim.
SECTION 2.13. PREPAYMENT. (a) The Borrowers shall have the right at
any time and from time to time to prepay any Borrowing, in whole or in part,
upon at least three Business Days' prior written or telecopy notice (or
telephone notice promptly confirmed by written or telecopy notice) in the
case of Eurodollar Loans, or written or telecopy notice (or telephone notice
promptly confirmed by written or telecopy notice) on or prior to the date of
prepayment in the case of ABR Loans, to the Administrative Agent before
1:00 p.m., New York City time; PROVIDED, HOWEVER, that each partial
prepayment shall be in an amount that is an integral multiple of $1,000,000.
(b) Optional prepayments of Term Loans shall be applied pro rata
against the remaining scheduled installments of principal due in respect of
the Term Loans.
(c) Each notice of prepayment shall specify the prepayment date
and the principal amount of each Borrowing (or portion thereof) to be
prepaid, shall be irrevocable and shall commit the Borrowers to prepay such
Borrowing by the amount stated therein on the date stated therein. All
prepayments under this Section 2.13 shall be subject to Section 2.19 but
otherwise without premium or penalty. All prepayments under this Section 2.13
shall be accompanied by accrued interest on the principal amount being prepaid
to the date of payment.
SECTION 2.14. MANDATORY PREPAYMENTS. (a) In the event of any
termination of all the Revolving Credit Commitments in accordance with this
Agreement, the Borrowers shall, on the effective date of such termination,
repay or prepay all outstanding Revolving Credit Borrowings and Term Loans
and replace all outstanding Letters of Credit and/or deposit an amount equal
to 105% of the L/C Exposure in cash in a cash collateral account established
with the Collateral Agent for the benefit of the Secured Parties and/or
provide an irrevocable letter of credit in form and substance reasonably
acceptable to the Administrative Agent from a bank reasonably acceptable to
the Administrative Agent. In the event of any partial reduction of the
Revolving Credit Commitments, then (i) at or prior to the effective date of
such reduction, the Administrative Agent shall notify the Borrowers and the
Revolving Credit Lenders of the Aggregate Revolving Credit Exposure after
giving effect thereto and (ii) if the Aggregate Revolving Credit Exposure
would exceed the Total Revolving Credit Commitment after giving effect to
such reduction or termination, then the Borrowers shall, on the effective
date of such reduction or termination, repay or prepay Revolving Credit
Borrowings and/or replace or cash collateralize outstanding Letters of Credit
in an amount sufficient to eliminate such excess.
41
(b) If on any date the Aggregate Revolving Credit Exposure shall
exceed the Formula Amount, or the Revolving Loans to a Borrower plus the L/C
Exposure of such Borrower shall exceed the Individual Formula Amount, the
Borrowers shall on such date repay or prepay Revolving Credit Borrowings and/or
replace or cash collateralize outstanding L/C Exposure in an amount sufficient
to eliminate such excess. Any such excess amount shall constitute part of the
Obligations and be secured by the Collateral.
(c) Not later than the third Business Day following the
completion of any Asset Sale, Activision shall apply an amount equal to 100% of
the Net Cash Proceeds received with respect thereto to prepay outstanding Term
Loans in accordance with Section 2.14(h).
(d) In the event and on each occasion that an Equity Issuance occurs,
Activision shall, substantially simultaneously with (and in any event not later
than the third Business Day next following) the occurrence of such Equity
Issuance, apply 100% of the Net Cash Proceeds therefrom to prepay outstanding
Term Loans in accordance with Section 2.14(h).
(e) No later than the earlier of (i) 90 days after the end of each
fiscal year of the Borrowers, commencing with the fiscal year ending on
March 31, 2000, and (ii) the date on which the financial statements with respect
to such period are delivered pursuant to Section 5.04(a), Activision shall
prepay outstanding Term Loans in accordance with Section 2.14(h) in an aggregate
principal amount equal to fifty percent (50%) of Excess Cash Flow for the fiscal
year then ended.
(f) In the event that any Loan Party or any subsidiary of a Loan
Party shall receive Net Cash Proceeds from the issuance or other disposition of
Indebtedness for money borrowed of any Loan Party or any subsidiary of a Loan
Party (including any Subordinated Debt but excluding any other Indebtedness for
money borrowed permitted pursuant to Section 6.01), Activision shall,
substantially simultaneously with (and in any event not later than the third
Business Day next following) the receipt of such Net Cash Proceeds by such Loan
Party or such subsidiary, apply an amount equal to 100% of such Net Cash
Proceeds to prepay outstanding Term Loans in accordance with Section 2.14(h).
(g) In the event that there shall occur any Casualty or Condemnation
and, pursuant to the applicable Mortgage, the Casualty Proceeds or Condemnation
Proceeds, as the case may be, are required to be used to prepay the Term Loans,
then Activision shall apply an amount equal to 100% of such Casualty Proceeds or
Condemnation Proceeds, as the case may be, to prepay outstanding Term Loans in
accordance with Section 2.14(h).
42
(h) Mandatory prepayments of outstanding Term Loans under this
Agreement shall be applied pro rata against the remaining scheduled installments
of principal due in respect of the Term Loans.
(i) The Borrowing Agent shall deliver to the Administrative Agent, at
the time of each prepayment required under this Section 2.14, (i) a certificate
signed by a Financial Officer of the Borrowing Agent setting forth in reasonable
detail the calculation of the amount of such prepayment and (ii) to the extent
practicable, at least three days prior written notice of such prepayment. Each
notice of prepayment shall specify the prepayment date, the Type of each Loan
being prepaid and the principal amount of each Loan (or portion thereof) to be
prepaid. All prepayments of Borrowings under this Section 2.14 shall be subject
to Section 2.19, but shall otherwise be without premium or penalty.
SECTION 2.15. ILLEGALITY. Notwithstanding any other provision hereof, if
any applicable law, treaty, regulation or directive, or any change therein or
in the interpretation or application thereof, shall make it unlawful for any
Lender (for purposes of this subsection (g), the term "Lender" shall include any
Lender and the office or branch where any Lender or any corporation or bank
controlling such Lender makes or maintains any Eurodollar Loans) to make or
maintain its Eurodollar Loans, the obligation of Lenders to make Eurodollar
Loans hereunder shall forthwith be canceled and the Borrower shall, if any
affected Eurodollar Loans are then outstanding, promptly upon request from the
Administrative Agent, either pay all such affected Eurodollar Loans or convert
such affected Eurodollar Loans into ABR Loans. If any such payment or conversion
of any Eurodollar Loan is made on a day that is not the last day of the Interest
Period applicable to such Eurodollar Loan, the Borrowers shall pay the
Administrative Agent upon the Administrative Agent's request, such amount or
amounts as may be necessary to compensate Lenders for any loss or expense
sustained or incurred by Lenders in respect of such Eurodollar Loan as a result
of such payment or conversion, including (but not limited to) any interest or
other amounts payable by Lenders to lenders of funds obtained by Lenders in
order to make or maintain such Eurodollar Loan. A certificate as to any
additional amounts payable pursuant to the foregoing sentence submitted by any
Lender to the Borrowing Agent shall be conclusive absent manifest error.
SECTION 2.16. INCREASED COSTS. In the event that any applicable law,
treaty or governmental regulation, or any change therein or in the
interpretation or application thereof, or compliance by any Lender (for purposes
of this Section 3.7, the term "Lender" shall include the Administrative Agent or
any Lender and any corporation or bank controlling the Administrative Agent or
any Lender) and the office or branch where the Administrative Agent or any
Lender (as so defined) makes or maintains any Eurodollar Loans with any request
or directive (whether or not having the force of law) from any central bank or
other financial, monetary or other authority, shall:
43
(a) subject the Administrative Agent or any Lender to any tax of any
kind whatsoever not currently applicable with respect to this Agreement or any
Loan Document or change the basis of taxation of payments to the Administrative
Agent or any Lender of principal, fees, interest or any other amount payable
hereunder or under any Loan Documents (except for any imposition or changes in
the rate of tax on the overall net income of the Administrative Agent or any
Lender by the jurisdiction in which it maintains its principal office);
(b) impose, modify or hold applicable any reserve, special deposit,
assessment or similar requirement against assets held by, or deposits in or for
the account of, Loans or loans by, or other credit extended by, any office of
the Administrative Agent or any Lender, including (without limitation) pursuant
to Regulation D of the Board of Governors of the Federal Reserve System; or
(c) impose, modify or hold applicable on the Administrative Agent
or any Lender or the London interbank Eurodollar market any other condition
with respect to this Agreement or any Loan Document;
and the result of any of the foregoing is to increase the cost to the
Administrative Agent or any Lender of making, renewing or maintaining its
Loans hereunder by an amount that the Administrative Agent or such Lender
reasonably deems to be material or to reduce the amount of any payment
(whether of principal, interest or otherwise) in respect of any of the Loans
by an amount that the Administrative Agent or such Lender reasonably deems to
be material, then, in any case the Borrowers shall promptly pay the
Administrative Agent or such Lender, upon its demand, such additional amount
as will compensate the Administrative Agent or such Lender for such
additional cost or such reduction, as the case may be, PROVIDED that the
foregoing shall not apply to increased costs which are reflected in the
Adjusted LIBO Rate. The Administrative Agent or such Lender shall certify
the amount of such additional cost or reduced amount to the Borrowers, and
such certification shall be conclusive absent manifest error.
SECTION 2.17. BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR UNFAIR.
In the event that the Administrative Agent or any Lender shall have determined
that:
(a) reasonable means do not exist for ascertaining the LIBO Rate for
any Interest Period; or
(b) Dollar deposits in the relevant amount and for the relevant
maturity are not available in the London interbank Eurodollar market, with
respect to an outstanding Eurodollar Loan, a proposed Eurodollar Borrowing, or a
proposed conversion of an ABR Loan into a Eurodollar Loan;
then the Administrative Agent shall give the Borrowing Agent prompt written,
telephonic or telegraphic notice of such determination. If such notice is
given, (i) any such
44
requested Eurodollar Loan shall be made as an ABR Borrowing, unless the
Borrowing Agent shall notify the Administrative Agent no later than 10:00
a.m. (New York City time) two (2) Business Days prior to the date of such
proposed Borrowing, that its request for such Borrowing shall be canceled,
(ii) any ABR Loan or Eurodollar Loan which was to have been converted to an
affected type of Eurodollar Loan shall be continued as or converted into an
ABR Loan, or, if the Borrowing Agent shall notify the Administrative Agent,
no later than 10:00 a.m. (New York City time) two (2) Business Days prior to
the proposed conversion, shall be maintained as an unaffected type of
Eurodollar Loan and (iii) any outstanding affected Eurodollar Loans shall be
converted into an ABR Loan, or, if Borrower shall notify the Administrative
Agent, no later than 10:00 a.m. (New York City time) two (2) Business Days
prior to the last Business Day of the then current Interest Period applicable
to such affected Eurodollar Loan, shall be converted into an unaffected type
of Eurodollar Loan on the last Business Day of the then current Interest
Period for such affected Eurodollar Loans. Until such notice has been
withdrawn, Lenders shall have no obligation to make an affected type of
Eurodollar Loan or maintain outstanding affected Eurodollar Loans and the
Borrowers shall not have the right to convert an ABR Loan or an unaffected
type of Eurodollar Loan into an affected type of Eurodollar Loan.
SECTION 2.18. CAPITAL ADEQUACY. In the event that the Administrative
Agent or any Lender shall have determined that any applicable law, rule,
regulation or guideline regarding capital adequacy, or any change therein, or
any change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Administrative Agent or any Lender
(for purposes of this Section 2.18, the term "Lender" shall include the
Administrative Agent or any Lender and any corporation or bank controlling the
Administrative Agent or any Lender) and the office or branch where the
Administrative Agent or any Lender (as so defined) makes or maintains any
Eurodollar Loans with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on the Administrative Agent or any Lender's capital as a consequence of its
obligations hereunder to a level below that which the Administrative Agent or
such Lender could have achieved but for such adoption, change or compliance
(taking into consideration the Administrative Agent's and each Lender's policies
with respect to capital adequacy) by an amount deemed by the Administrative
Agent or any Lender to be material, then, from time to time, the Borrowers shall
pay upon demand to the Administrative Agent or such Lender such additional
amount or amounts as will compensate the Administrative Agent or such Lender for
such reduction. In determining such amount or amounts, the Administrative Agent
or such Lender may use any reasonable averaging or attribution methods. The
protection of this Section shall be available to the Administrative Agent and
each Lender regardless of any possible contention of invalidity or
inapplicability with respect to the applicable law, regulation or condition. A
certificate of the Administrative Agent or a Lender setting forth such amount or
amounts as shall be necessary to compensate the Administrative Agent or such
45
Lender with respect to this Section 2.18 when delivered to the Borrowing Agent
shall be conclusive absent manifest error.
SECTION 2.19. INDEMNITY. The Borrowers shall jointly and severally
indemnify the Administrative Agent, the Collateral Agent and each Lender against
any loss or expense that the Administrative Agent, the Collateral Agent and such
Lender may sustain or incur as a consequence of (a) any event, other than a
default by such Lender in the performance of its obligations hereunder, which
results in (i) such Lender receiving or being deemed to receive any amount on
account of the principal of any Eurodollar Loan prior to the end of the Interest
Period in effect therefor, (ii) the conversion of any Eurodollar Loan to an ABR
Loan, or the conversion of the Interest Period with respect to any Eurodollar
Loan, in each case other than on the last day of the Interest Period in effect
therefor, or (iii) any Eurodollar Loan to be made by such Lender (including any
Eurodollar Loan to be made pursuant to a conversion or continuation under
Section 2.10) not being made after notice of such Loan shall have been given by
the Borrowing Agent hereunder (any of the events referred to in this clause (a)
being called a "BREAKAGE EVENT") or (b) any default in the making of any payment
or prepayment required to be made hereunder. In the case of any Breakage Event,
such loss shall include an amount equal to the excess, as reasonably determined
by such Lender, of (i) its cost of obtaining funds for the Eurodollar Loan that
is the subject of such Breakage Event for the period from the date of such
Breakage Event to the last day of the Interest Period in effect (or that would
have been in effect) for such Loan over (ii) the amount of interest likely to be
realized by such Lender in redeploying the funds released or not utilized by
reason of such Breakage Event for such period. A certificate of any Lender
setting forth any amount or amounts which such Lender is entitled to receive
pursuant to this Section 2.19 shall be delivered to the Borrowers and shall be
conclusive absent manifest error.
SECTION 2.20. PRO RATA TREATMENT. Each payment or prepayment of principal
of any Borrowing, each payment of interest on the Loans, each payment of the
Commitment Fees and L/C Participation Fees, each reduction of the Term Loan
Commitments or the Revolving Credit Commitments and each conversion of any
Borrowing to or continuation of any Borrowing as a Borrowing of any Type shall
be allocated pro rata among the Lenders in accordance with their respective
applicable Commitments (or, if such Commitments shall have expired or been
terminated, in accordance with the respective principal amounts of their
outstanding Loans). Each Lender agrees that in computing such Lender's portion
of any Borrowing to be made hereunder, the Administrative Agent may, in its
discretion, round each Lender's percentage of such Borrowing to the next higher
or lower whole dollar amount.
SECTION 2.21. SHARING OF SETOFFS. Each Lender agrees that if it shall,
through the exercise of a right of banker's lien, setoff or counterclaim against
any Borrower or any other Loan Party, or pursuant to a secured claim under
Section 506 of Title 11 of the United States Code or other security or interest
arising from, or in lieu of, such secured claim, received by such Lender under
any applicable bankruptcy, insolvency or other
46
similar law or otherwise, or by any other means, obtain payment (voluntary or
involuntary) in respect of any Loan or Loans or L/C Disbursement as a result
of which the unpaid principal portion of its Term Loans and Revolving Loans
and participations in L/C Disbursements shall be proportionately less than
the unpaid principal portion of the Term Loans and Revolving Loans and
participations in L/C Disbursements of any other Lender, it shall be deemed
simultaneously to have purchased from such other Lender at face value, and
shall promptly pay to such other Lender the purchase price for, a
participation in the Term Loans and Revolving Loans and L/C Exposure, as the
case may be of such other Lender, so that the aggregate unpaid principal
amount of the Term Loans and Revolving Loans and L/C Exposure and
participations in Term Loans and Revolving Loans and L/C Exposure held by
each Lender shall be in the same proportion to the aggregate unpaid principal
amount of all Term Loans and Revolving Loans and L/C Exposure then
outstanding as the principal amount of its Term Loans and Revolving Loans and
L/C Exposure prior to such exercise of banker's lien, setoff or counterclaim
or other event was to the principal amount of all Term Loans and Revolving
Loans and L/C Exposure outstanding prior to such exercise of banker's lien,
setoff or counterclaim or other event; PROVIDED, HOWEVER, that if any such
purchase or purchases or adjustments shall be made pursuant to this Section
2.21 and the payment giving rise thereto shall thereafter be recovered, such
purchase or purchases or adjustments shall be rescinded to the extent of such
recovery and the purchase price or prices or adjustment restored without
interest. The Borrowers expressly consent to the foregoing arrangements and
agree that any Lender holding a participation in a Term Loan or Revolving
Loan or L/C Disbursement deemed to have been so purchased may exercise any
and all rights of banker's lien, setoff or counterclaim with respect to any
and all moneys owing by the Borrowers to such Lender by reason thereof as
fully as if such Lender had made a Loan directly to the Borrowers in the
amount of such participation.
SECTION 2.22. PAYMENTS. Except as otherwise expressly provided herein,
whenever any payment (including principal of or interest on any Borrowing or any
Fees or other amounts) hereunder or under any other Loan Document shall become
due, or otherwise would occur, on a day that is not a Business Day, such payment
may be made on the next succeeding Business Day, and such extension of time
shall in such case be included in the computation of interest or Fees, if
applicable.
SECTION 2.23. TAXES. (a) Any and all payments by or on account of any
obligation of the Borrowers or any Loan Party hereunder or under any other Loan
Document shall be made free and clear of and without deduction for any
Indemnified Taxes or Other Taxes; PROVIDED that if a Borrower or any Loan Party
shall be required to deduct any Indemnified Taxes or Other Taxes from such
payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent or such
Lender (as the case may be) receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrower or such Loan Party
shall make such deductions and (iii) the Borrower or such Loan Party
47
shall pay the full amount deducted to the relevant Governmental Authority in
accordance with applicable law.
(b) In addition, the Borrowers shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) The Borrowers shall jointly and severally indemnify the
Administrative Agent and each Lender, within 10 days after written demand
therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by
the Administrative Agent or such Lender, as the case may be, on or with respect
to any payment by or on account of any obligation of the Borrowers or any Loan
Party hereunder or under any other Loan Document (including Indemnified Taxes or
Other Taxes imposed or asserted on or attributable to amounts payable under this
Section) and any penalties, interest and reasonable expenses arising therefrom
or with respect thereto, whether or not such Indemnified Taxes or Other Taxes
were correctly or legally imposed or asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or liability
delivered to the Borrowing Agent by a Lender, or by the Administrative Agent on
its behalf or on behalf of a Lender, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrowers or any other Loan Party to a Governmental
Authority, the Borrowers shall deliver to the Administrative Agent the original
or a certified copy of a receipt issued by such Governmental Authority
evidencing such payment, a copy of the return reporting such payment or other
evidence of such payment reasonably satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which a
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrowing Agent
(with a copy to the Administrative Agent), at the time or times prescribed by
applicable law, such properly completed and executed documentation prescribed by
applicable law or reasonably requested by the Borrowers as will permit such
payments to be made without withholding or at a reduced rate, PROVIDED that such
Foreign Lender has received written notice from the Borrowing Agent advising it
of the availability of such exemption or reduction and supplying all applicable
documentation.
SECTION 2.24. ASSIGNMENT OF COMMITMENTS UNDER CERTAIN CIRCUMSTANCES; DUTY
TO MITIGATE. (a) In the event (i) any Lender or the Issuing Bank delivers a
certificate requesting compensation pursuant to Section 2.16, (ii) any Lender or
the Issuing Bank delivers a notice described in Section 2.15 or (iii) the
Borrowers are required to pay any additional amount to any Lender or the Issuing
Bank or any Governmental Authority on account of any Lender or the Issuing Bank
pursuant to Section 2.23, the Borrowers may, at their sole expense and effort
(including with respect to the processing and recordation
48
fee referred to in Section 9.04(b)), upon notice to such Lender or the
Issuing Bank and the Administrative Agent, require such Lender or the Issuing
Bank to transfer and assign, without recourse (in accordance with and subject
to the restrictions contained in Section 9.04), all of its interests, rights
and obligations under this Agreement to an assignee that shall assume such
assigned obligations (which assignee may be another Lender, if a Lender
accepts such assignment); PROVIDED that (x) such assignment shall not
conflict with any law, rule or regulation or order of any court or other
Governmental Authority having jurisdiction, (y) the Borrowers shall have
received the prior written consent of the Administrative Agent (and, if a
Revolving Credit Commitment is being assigned, of the Issuing Bank), which
consent shall not unreasonably be withheld, and (z) the Borrowers or such
assignee shall have paid to the affected Lender or the Issuing Bank in
immediately available funds an amount equal to the sum of the principal of
and interest accrued to the date of such payment on the outstanding Loans or
L/C Disbursements of such Lender or the Issuing Bank, respectively, plus all
Fees and other amounts accrued for the account of such Lender or the Issuing
Bank hereunder (including any amounts under Section 2.15 and Section 2.16);
PROVIDED FURTHER that, if prior to any such transfer and assignment the
circumstances or event that resulted in such Lender's or the Issuing Bank's
claim for compensation under Section 2.16 or notice under Section 2.15 or the
amounts paid pursuant to Section 2.23, as the case may be, cease to cause
such Lender or the Issuing Bank to suffer increased costs or reductions in
amounts received or receivable or reduction in return on capital, or cease to
have the consequences specified in Section 2.15, or cease to result in
amounts being payable under Section 2.23, as the case may be (including as a
result of any action taken by such Lender or the Issuing Bank pursuant to
paragraph (b) below), or if such Lender or the Issuing Bank shall waive its
right to claim further compensation under Section 2.14 in respect of such
circumstances or event or shall withdraw its notice under Section 2.15 or
shall waive its right to further payments under Section 2.20 in respect of
such circumstances or event, as the case may be, then such Lender or the
Issuing Bank shall not thereafter be required to make any such transfer and
assignment hereunder.
(b) If (i) any Lender or the Issuing Bank shall request compensation
under Section 2.16, (ii) any Lender or the Issuing Bank delivers a notice
described in Section 2.15 or (iii) the Borrowers are required to pay any
additional amount to any Lender or the Issuing Bank or any Governmental
Authority on account of any Lender or the Issuing Bank, pursuant to
Section 2.23, then such Lender or the Issuing Bank shall use reasonable efforts
(which shall not require such Lender or the Issuing Bank to incur an
unreimbursed loss or unreimbursed cost or expense or otherwise take any action
inconsistent with its internal policies or legal or regulatory restrictions or
suffer any disadvantage or burden deemed by it to be significant) (x) to file
any certificate or document reasonably requested in writing by the Borrowers or
(y) to assign its rights and delegate and transfer its obligations hereunder to
another of its offices, branches or affiliates, if such filing or assignment
would reduce its claims for compensation under Section 2.16 or enable it to
withdraw its notice pursuant to Section 2.15 or would reduce amounts payable
pursuant to Section 2.23, as the case may be, in the future. The
49
Borrowers hereby agree to pay all reasonable costs and expenses incurred by
any Lender or the Issuing Bank in connection with any such filing or
assignment, delegation and transfer.
SECTION 2.25. DEFAULTING LENDER. (a) Notwithstanding anything to the
contrary contained herein, in the event any Lender (x) has refused (which
refusal constitutes a breach by such Lender of its obligations under this
Agreement) to make available its portion of any Revolving Credit Borrowing or
reimbursement for drawings under Letters of Credit or (y) notifies either the
Administrative Agent or the Borrowers that it does not intend to make available
its portion of any Revolving Credit Borrowing or reimbursement (if the actual
refusal would constitute a breach by such Lender of its obligations under this
Agreement) (each, a "LENDER DEFAULT"), all rights and obligations hereunder of
such Lender (a "DEFAULTING LENDER") as to which a Lender Default is in effect
and of the other parties hereto shall be modified to the extent of the express
provisions of this Section 2.25 while such Lender Default remains in effect.
(b) Revolving Credit Borrowings shall be incurred pro rata from
Lenders (the "NON-DEFAULTING LENDERS") which are not Defaulting Lenders based on
their respective Pro Rata Percentages, and no Pro Rata Percentage of any Lender
or any Pro Rata Percentage of any Revolving Credit Borrowings required to be
advanced by any Lender shall be increased as a result of such Lender Default.
Amounts received in respect of principal of any type of Revolving Loans shall be
applied to reduce the applicable Revolving Loans of each Lender pro rata based
on the aggregate of the outstanding Revolving Loans of that type of all Lenders
at the time of such application; PROVIDED that such amount shall not be applied
to any Revolving Loans of a Defaulting Lender at any time when, and to the
extent that, the aggregate amount of Revolving Loans of any Non-Defaulting
Lender exceeds such Non-Defaulting Lender's Pro Rata Percentage of all Revolving
Loans then outstanding.
(c) A Defaulting Lender shall not be entitled to give instructions to
the Administrative Agent or the Collateral Agent or to approve, disapprove,
consent to or vote on any matters relating to this Agreement and the Loan
Documents. All amendments, waivers and other modifications of this Agreement
and the Loan Documents may be made without regard to a Defaulting Lender and,
for purposes of the definition of "Required Lenders", a Defaulting Lender shall
be deemed not to be a Lender and not to have Loans outstanding.
(d) Other than as expressly set forth in this Section 2.25, the
rights and obligations of a Defaulting Lender (including the obligation to
indemnify the Administrative Agent or the Collateral Agent) and the other
parties hereto shall remain unchanged. Nothing in this Section 2.25 shall be
deemed to release any Defaulting Lender from its obligations under this
Agreement and the Loan Documents, shall alter such obligations, shall operate as
a waiver of any default by such Defaulting Lender hereunder, or shall prejudice
any rights which Borrowers, the Administrative Agent, the
50
Collateral Agent or any Lender may have against any Defaulting Lender as a
result of any default by such Defaulting Lender hereunder.
(e) In the event a Defaulting Lender retroactively cures to the
satisfaction of the Administrative Agent the breach which caused a Lender to
become a Defaulting Lender, such Defaulting Lender shall no longer be a
Defaulting Lender and shall be treated as a Lender under this Agreement.
SECTION 2.26. LETTERS OF CREDIT. (a) The Borrowing Agent on behalf of a
Borrower may request the issuance of a Letter of Credit for its own account or
the account of a Borrower, in a form reasonably acceptable to the Administrative
Agent and the Issuing Bank, at any time and from time to time while the
Revolving Credit Commitments remain in effect. This Section shall not be
construed to impose an obligation upon the Issuing Bank to issue any Letter of
Credit that is inconsistent with the terms and conditions of this Agreement.
(b) In order to request the issuance of a Letter of Credit (or to
amend, renew or extend an existing Letter of Credit), the Borrowing Agent shall
hand deliver or telecopy to the Issuing Bank and the Administrative Agent
(reasonably in advance of the requested date of issuance, amendment, renewal or
extension) the Administrative Agent's form of letter of credit application or
the Issuing Bank's form of Letter of Credit Application, completed to the
satisfaction of the Administrative Agent or the Issuing Bank, respectively, or a
notice identifying the Letter of Credit to be amended, renewed or extended, the
date of issuance, amendment, renewal or extension, the date on which such Letter
of Credit is to expire (which shall comply with paragraph (c) below), the amount
of such Letter of Credit, the name and address of the beneficiary thereof and
such other information as shall be necessary to prepare such Letter of Credit. A
Letter of Credit shall be issued, amended, renewed or extended only if, and upon
issuance, amendment, renewal or extension of each Letter of Credit the Borrowers
shall be deemed to represent and warrant that, after giving effect to such
issuance, amendment, renewal or extension (i) the L/C Exposure shall not exceed
$80,000,000 and (ii) the Aggregate Revolving Credit Exposure shall not exceed
the lesser of (x) the Total Revolving Credit Commitment, and (y) the Formula
Amount in effect at such time and (iii) the outstanding principal amount of
Revolving Loans of any Borrower plus such Borrower's L/C Exposure shall not
exceed the Borrower's Individual Formula Amount.
If the Issuing Bank is not the Administrative Agent, the
Administrative Agent will notify the Issuing Bank via phone, confirmed by
telecopy, of changes in availability to issue Letters of Credit under the
facility, and the Issuing Bank will notify the Administrative Agent via phone,
confirmed by telecopy, of any changes in outstanding balances of Letters of
Credit it has issued. No new Letter of Credit shall be issued, and no existing
Letter of Credit shall be amended, renewed or extended, by the Issuing Bank
until the Administrative Agent shall have approved, via phone, confirmed by
telecopy, such issuance, amendment, renewal or extension.
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(c) No Letter of Credit shall be issued with a stated expiration
date or latest maturity date of the accepted draft if a usance letter of
credit later than the earlier of (i) the close of business on the date that
is five Business Days prior to the Revolving Credit Maturity Date and (ii) the
close of business on the date that is (x) 270 days after the date of issuance
of such Letter of Credit in the case of a Trade Letter of Credit and
(y) 12 months after the date of issuance of such Letter of Credit in the case
of a Standby Letter of Credit. Each Letter of Credit shall, among other
things, (i) provide for the payment of sight drafts or acceptances of usance
drafts when presented for honor thereunder in accordance with the terms
thereof and when accompanied by the documents described therein and (ii) have
an expiry date or latest maturity date in the case of usance drafts not later
than five Business Days prior to the Revolving Credit Maturity Date. Each
Letter of Credit shall be subject to the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, and any amendments or revision thereof adhered to by the
Issuing Bank and, to the extent not inconsistent therewith, the laws of the
State of New York.
(d) By the issuance of a Letter of Credit and without any further
action on the part of the Issuing Bank or the Lenders, the Issuing Bank
hereby grants to each Revolving Credit Lender, and each such Lender hereby
acquires from the applicable Issuing Bank, a participation in such Letter of
Credit equal to such Lender's Pro Rata Percentage of the aggregate amount
available to be drawn under such Letter of Credit, effective upon the
issuance of such Letter of Credit. In consideration and in furtherance of
the foregoing, each Revolving Credit Lender hereby absolutely and
unconditionally agrees to pay to the Administrative Agent, for the account of
the Issuing Bank, such Lender's Pro Rata Percentage of each L/C Disbursement
made by the Issuing Bank and not reimbursed by the Borrowers (or, if
applicable, another party pursuant to its obligations under any other Loan
Document). Each Revolving Credit Lender acknowledges and agrees that its
obligation to acquire participations pursuant to this paragraph in respect of
Letters of Credit is absolute and unconditional and shall not be affected by
any circumstance whatsoever, including the occurrence and continuance of a
Default or an Event of Default, and that each such payment shall be made
without any offset, abatement, withholding or reduction whatsoever.
(e) All disbursements or payments with respect to Letters of
Credit shall be deemed to be Revolving Credit Borrowings consisting of ABR
Revolving Loans and shall bear interest at the ABR Rate.
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(f) The Borrowers' obligations to reimburse L/C Disbursements as
provided in paragraph (e) above shall be absolute, unconditional and
irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement, under any and all circumstances whatsoever, and irrespective
of:
(i) any lack of validity or enforceability of any Letter of Credit
or any Loan Document, or any term or provision therein;
(ii) any amendment or waiver of or any consent to departure from all
or any of the provisions of any Letter of Credit or any Loan Document;
(iii) the existence of any claim, setoff, defense or other right that
a Borrowers, any other party guaranteeing, or otherwise obligated with,
such Borrowers, any Subsidiary or other Affiliate thereof or any other
person may at any time have against the beneficiary under any Letter of
Credit, the Issuing Bank, the Administrative Agent or any Lender or any
other person, whether in connection with this Agreement, any other Loan
Document or any other related or unrelated agreement or transaction;
(iv) any draft or other document presented under a 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;
(v) payment by the Issuing Bank under a Letter of Credit against
presentation of a draft or other document that does not comply with the
terms of such Letter of Credit; and
(vi) any other act or omission to act or delay of any kind of the
Issuing Bank, the Lenders, the Administrative Agent or any other person or
any other event or circumstance whatsoever, whether or not similar to any
of the foregoing, that might, but for the provisions of this Section,
constitute a legal or equitable discharge of the Borrowers' obligations
hereunder.
Without limiting the generality of the foregoing, it is expressly
understood and agreed that the absolute and unconditional obligation of the
Borrowers hereunder to reimburse L/C Disbursements will not be excused by the
gross negligence or willful misconduct of the Issuing Bank. However, the
foregoing shall not be construed to excuse the Issuing Bank from liability to
the Borrowers to the extent of any direct damages (as opposed to consequential
damages, claims in respect of which are hereby waived by the Borrowers to the
extent permitted by applicable law) suffered by the Borrowers that are caused
by the Issuing Bank's gross negligence or willful misconduct in determining
whether drafts and other documents presented under a Letter of Credit comply
with the terms thereof; it is understood that the Issuing Bank may accept
documents that appear on
53
their face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary and, in making any
payment under any Letter of Credit (i) the Issuing Bank's exclusive reliance
on the documents presented to it under such Letter of Credit as to any and
all matters set forth therein, including reliance on the amount of any draft
presented under such Letter of Credit, whether or not the amount due to the
beneficiary thereunder equals the amount of such draft and whether or not any
document presented pursuant to such Letter of Credit proves to be
insufficient in any respect, if such document on its face appears to be in
order, and whether or not any other statement or any other document presented
pursuant to such Letter of Credit proves to be forged or invalid or any
statement therein proves to be inaccurate or untrue in any respect whatsoever
and (ii) any noncompliance in any immaterial respect of the documents
presented under such Letter of Credit with the terms thereof shall, in each
case, be deemed not to constitute willful misconduct or gross negligence of
the Issuing Bank.
(g) The Issuing Bank shall, promptly following its receipt
thereof, examine all documents purporting to represent a demand for payment
under a Letter of Credit. The Issuing Bank shall as promptly as possible
give telephonic notification, confirmed by telecopy, to the Administrative
Agent and the Borrowing Agent of such demand for payment and whether the
Issuing Bank has made or will make an L/C Disbursement thereunder; PROVIDED
that any failure to give or delay in giving such notice shall not relieve the
Borrowers of their obligation to reimburse the Issuing Bank and the Revolving
Credit Lenders with respect to any such L/C Disbursement.
(h) The Issuing Bank may resign at any time by giving 90 days'
prior written notice to the Administrative Agent, the Lenders and the
Borrowers but such resignation shall not be effective until a successor is
appointed. Subject to the next succeeding paragraph, upon the acceptance of
any appointment as the Issuing Bank hereunder by a Lender that shall agree to
serve as successor Issuing Bank, such successor shall succeed to and become
vested with all the interests, rights and obligations of the retiring Issuing
Bank and the retiring Issuing Bank shall be discharged from its obligations
to issue additional Letters of Credit hereunder. At the time such removal or
resignation shall become effective, the Borrowers shall pay all accrued and
unpaid fees pursuant to Section 2.08(c)(ii). The acceptance of any
appointment as the Issuing Bank hereunder by a successor Lender shall be
evidenced by an agreement entered into by such successor, in a form
satisfactory to the Borrowers and the Administrative Agent, and, from and
after the effective date of such agreement, (i) such successor Lender shall
have all the rights and obligations of the previous Issuing Bank under this
Agreement and the other Loan Documents and (ii) references herein and in the
other Loan Documents to the term "Issuing Bank" shall be deemed to refer to
such successor or to any previous Issuing Bank, or to such successor and all
previous Issuing Banks, as the context shall require. After the resignation
or removal of the Issuing Bank hereunder, the retiring Issuing Bank shall
remain a party hereto and shall continue to have all the rights and
obligations of an Issuing Bank under this Agreement and the other Loan
Documents with respect to Letters
54
of Credit issued by it prior to such resignation or removal, but shall not be
required to issue additional Letters of Credit.
(i) If any Event of Default shall occur and be continuing, the
Borrowers shall, on the Business Day the Borrowing Agent receives notice from
the Administrative Agent or the Required Lenders (or, if the maturity of the
Loans has been accelerated, Revolving Credit Lenders holding participations
in outstanding Letters of Credit representing greater than 50% of the
aggregate undrawn amount of all outstanding Letters of Credit) of an Event of
Default and of the amount to be deposited, deposit in an account with the
Collateral Agent, for the benefit of the Revolving Credit Lenders, an amount
in cash equal to 105% of the L/C Exposure as of such date or provide one or
more letters of credit, in form and substance reasonably satisfactory to the
Administrative Agent and from a bank acceptable to the Administrative Agent
for such amount in lieu of or to replace such cash deposit. Such deposit or
letter of credit shall be held by the Collateral Agent as collateral for the
payment and performance of the Obligations. The Collateral Agent shall have
exclusive dominion and control, including the exclusive right of withdrawal,
over such account. Other than any interest earned on the investment of such
deposits in Permitted Investments, which investments shall be made at the
option and sole discretion of the Collateral Agent, such deposits shall not
bear interest. Interest or profits, if any, on such investments shall
accumulate in such account. Moneys in such account shall (i) automatically
be applied by the Administrative Agent to reimburse the Issuing Bank for
L/C Disbursements for which it has not been reimbursed, (ii) be held for the
satisfaction of the reimbursement obligations of the Borrowers for the
L/C Exposure at such time and (iii) if the maturity of the Loans has been
accelerated (but subject to the consent of Revolving Credit Lenders holding
participations in outstanding Letters of Credit representing greater than 50%
of the aggregate undrawn amount of all outstanding Letters of Credit), be
applied to satisfy the Obigations. If the Borrowers are required to provide
an amount of cash collateral hereunder as a result of the occurrence of an
Event of Default, such amount (to the extent not applied as aforesaid) shall
be returned to the Borrowers within three Business Days after all Events of
Default have been cured or waived.
(j) The Borrowers may, at any time and from time to time with the
consent of the Administrative Agent (which consent shall not be unreasonably
withheld) and such Lender, designate one or more additional Lenders to act as
an issuing bank under the terms of this Agreement. Any Lender designated as
an issuing bank pursuant to this paragraph (k) shall be deemed (in addition
to being a Lender) to be the Issuing Bank with respect to Letters of Credit
issued or to be issued by such Lender, and all references herein and in the
other Loan Documents to the term "Issuing Bank" shall, with respect to such
Letters of Credit, be deemed to refer to such Lender in its capacity as
Issuing Bank.
(k) The Existing Letters of Credit shall be deemed to be Letters
of Credit issued hereunder, and on the Closing Date each Revolving Credit
Lender shall be deemed to have been granted and acquired a participation
therein pursuant to paragraph (d) above.
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(l) In connection with the issuance of any Letter of Credit, the
Borrowers shall jointly and severally indemnify, save and hold the
Administrative Agent, each Lender and each Issuing Bank harmless from any
loss, cost, expense or liability, including, without limitation, payments
made by the Administrative Agent, any Lender or any Issuing Bank and expenses
and reasonable attorneys' fees incurred by the Administrative Agent, any
Lender or Issuing Bank arising out of, or in connection with, any Letter of
Credit to be issued or created for any Borrower. The Borrowers shall be
bound by the Administrative Agent's or any Issuing Bank's regulations and
good faith interpretations of any Letter of Credit issued or created for
Borrowers' Account, although this interpretation may be different from its
own; and neither the Administrative Agent, nor any Lender, nor any Issuing
Bank nor any of their correspondents shall be liable for any error,
negligence, or mistakes, whether of omission or commission, in following the
applicable Borrowers' instructions or those contained in any Letter of Credit
or of any modifications, amendments or supplements thereto or in issuing or
paying any Letter of Credit, except for the Administrative Agent's, any
Lender's, any Issuing Bank's or such correspondents' willful misconduct or
gross negligence.
(m) If the Administrative Agent is not the Issuing Bank of any
Letter of Credit, Borrower shall authorize and direct the Issuing Bank to
deliver to the Administrative Agent all instruments, documents, and other
writings and property received by the Issuing Bank pursuant to the Letter of
Credit and to accept and rely upon the Administrative Agent's instructions
and agreements with respect to all matters arising in connection with the
Letter of Credit and the application therefor
(n) In connection with all Letters of Credit issued or caused to
be issued by the Administrative Agent under this Agreement, each Borrower
hereby appoints the Administrative Agent, or its designee, as its attorney,
with full power and authority (i) to sign and/or endorse such Borrower's name
upon any warehouse or other receipts, letter of credit applications and
acceptances; (ii) to sign such Borrower's name on bills of lading; (iii) to
clear Inventory through the United States of America Customs Department
("CUSTOMS") in the name of such Borrower or the Administrative Agent or the
Administrative Agent's designee, and to sign and deliver to Customs officials
powers of attorney in the name of such Borrower for such purpose; and (iv) to
complete in such Borrower's name or the Administrative Agent's, or in the
name of the Administrative Agent's designee, any order, sale or transaction,
obtain the necessary documents in connection therewith, and collect the
proceeds thereof. Neither the Administrative Agent nor its attorneys will be
liable for any acts or omissions nor for any error of judgment or mistakes of
fact or law, except for the Administrative Agent's or its attorney's willful
misconduct. This power, being coupled with an interest, is irrevocable as
long as any Letters of Credit remain outstanding.
SECTION 2.27. BORROWING AGENCY PROVISIONS. (a) Each Borrower hereby
irrevocably designates the Borrowing Agent to be its attorney and agent and
in such capacity to borrow, sign and endorse notes, and execute and deliver
all instruments,
56
documents, writings and further assurances now or hereafter required hereunder,
on behalf of such Borrower or Borrowers, and hereby authorizes the
Administrative Agent to pay over or credit all loan proceeds hereunder in
accordance with the request of the Borrowing Agent.
(b) The handling of this credit facility as a co-borrowing
facility with a borrowing agent in the manner set forth in this Agreement is
solely as an accommodation to the Borrowers and at their request. Neither
the Administrative Agent, the Collateral Agent, nor any Lender shall incur
liability to any Borrower as a result thereof. To induce the Administrative
Agent, the Collateral Agent and Lenders to do so and in consideration
thereof, each Borrower hereby indemnifies the Administrative Agent, the
Collateral Agent and each Lender and holds the Administrative Agent, the
Collateral Agent and each Lender harmless from and against any and all
liabilities, expenses, losses, damages and claims of damage or injury
asserted against the Administrative Agent, the Collateral Agent or any Lender
by any Person arising from or incurred by reason of the handling of the
financing arrangements of the Borrowers as provided herein, reliance by the
Administrative Agent, the Collateral Agent or any Lender on any request or
instruction from the Borrowing Agent or any other action taken by the
Administrative Agent, the Collateral Agent or any Lender with respect to this
Section 2.27, except due to willful misconduct or gross (not mere) negligence
by the indemnified party.
(c) Subject to Section 2.29, all Obligations shall be joint and
several, and each Borrower shall make payment upon the maturity of the
Obligations by acceleration or otherwise, and such obligation and liability
on the part of each Borrower shall in no way be affected by any extensions,
renewals and forbearance granted by the Administrative Agent, the Collateral
Agent or any Lender to any Borrower, failure of the Administrative Agent, the
Collateral Agent or any Lender to give any Borrower notice of borrowing or
any other notice, any failure of the Administrative Agent, the Collateral
Agent or any Lender to pursue or preserve its rights against any Borrower,
the release by Agent or any Lender of any Collateral now or thereafter
acquired from any Borrower, and such agreement by each Borrower to pay upon
any notice issued pursuant thereto is unconditional and unaffected by prior
recourse by the Administrative Agent, the Collateral Agent or any Lender to
the other Borrowers or any Collateral for such Borrower's Obligations or the
lack thereof.
SECTION 2.28. WAIVER OF SUBROGATION. Each Borrower expressly waives
any and all rights of subrogation, reimbursement, indemnity, exoneration,
contribution of any other claim which such Borrower may now or hereafter have
against the other Borrowers or other person directly or contingently liable
for the Obligations hereunder, or against or with respect to the other
Borrowers' property (including, without limitation, any property which is
Collateral for the Obligations), arising from the existence or performance of
this Agreement, until termination of this Agreement and repayment in full of
the Obligations.
SECTION 2.29. BORROWER GUARANTEE AGREEMENT. The Obligations of the
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Borrowers as joint and several obligors shall be subject to all the terms,
conditions, waivers and agreements contained in the Borrower Guarantee
Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Borrowers represent and warrant to the Administrative Agent, the
Collateral Agent, the Issuing Bank and each of the Lenders that:
SECTION 3.01. ORGANIZATION; POWERS. The Borrowers and each of the
Subsidiaries (a) is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, (b) has all requisite
power and authority to own its property and assets and to carry on its
business as now conducted and as proposed to be conducted, (c) is qualified
to do business in, and is in good standing in, every jurisdiction where such
qualification is required, except where the failure so to qualify could not
reasonably be expected to result in a Material Adverse Effect, and (d) has
the power and authority to execute, deliver and perform its obligations under
each of the Loan Documents and each other agreement or instrument contemplated
hereby to which it is or will be a party and, in the case of the Borrowers,
to borrow hereunder.
SECTION 3.02. AUTHORIZATION. The execution, delivery and performance by
(a) each of Activision and Sub of the Merger Agreement and (b) each Loan
Party of each of the Loan Documents and the consummation of the transactions
contemplated by the Merger Agreement and the Loan Documents (including the
borrowings hereunder) (collectively, the "TRANSACTIONS") (i) have been duly
authorized by all requisite corporate and, if required, stockholder action
and (ii) will not (x) violate (A) any provision of law, statute, rule or
regulation, or of the certificate or articles of incorporation or other
constitutive documents or by-laws of any Borrower or any Subsidiary, (B) any
order of any Governmental Authority or (C) any provision of any indenture,
agreement or other instrument to which any Borrower or any Subsidiary is a
party or by which any of them or any of their property is or may be bound,
(y) be in conflict with, result in a breach of or constitute (alone or with
notice or lapse of time or both) a default under, or give rise to any right
to accelerate or to require the prepayment, repurchase or redemption of any
obligation under any such indenture, agreement or other instrument or
(z) result in the creation or imposition of any Lien upon or with respect to
any property or assets now owned or hereafter acquired by any Borrowers or
any Subsidiary (other than any Lien created hereunder or under the Security
Documents).
SECTION 3.03. ENFORCEABILITY. This Agreement has been duly executed and
delivered by each Borrower and constitutes, and each other Loan Document when
executed and delivered by the each Loan Party thereto will constitute, a
legal, valid and binding obligation of such Loan Party enforceable against
such Loan Party in accordance with its terms.
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SECTION 3.04. GOVERNMENTAL APPROVALS. No action, consent or approval
of, registration or filing with or any other action by any Governmental
Authority is or will be required in connection with the Transactions, except
for (i) the filing of Uniform Commercial Code financing statements and
filings with the United States Patent and Trademark Office and the United
States Copyright Office, (ii) recordation of the Mortgages and (iii) such as
have been made or obtained and are in full force and effect.
SECTION 3.05. FINANCIAL STATEMENTS. (a) The Borrowers have heretofore
furnished to the Lenders Activision's consolidated balance sheets and
statements of income, stockholder's equity and cash flows (i) as of and for
the fiscal year ended March 31, 1998, audited by and accompanied by the
opinion of KPMG Peat Marwick LLP, independent public accountants, and (ii) as
of and for the fiscal quarter and the portion of the fiscal year ended
December 31, 1998, certified by its chief financial officer. Such financial
statements present fairly the financial condition and results of operations
and cash flows of Activision and its consolidated Subsidiaries as of such
dates and for such periods. Such balance sheets and the notes thereto
disclose all material liabilities, direct or contingent, of Activision and
its consolidated Subsidiaries as of the dates thereof required to be
disclosed therein in accordance with GAAP. Such financial statements were
prepared in accordance with GAAP applied on a consistent basis.
(b) Activision has heretofore delivered to the Lenders its
unaudited pro forma consolidated balance sheet and statements of income,
stockholder's equity and cash flows as of March 31, 1999, prepared giving
effect to the Transactions as if they had occurred, with respect to such
balance sheet, on such date and, with respect to such other financial
statements, on the first day of the 12-month period ending on such date.
Such pro forma financial statements have been prepared in good faith by the
Borrowers, based on the assumptions used to prepare the pro forma financial
information contained in the Confidential Information Memorandum (which
assumptions are believed by the Borrowers on the date hereof and on the
Closing Date to be reasonable), are based on the best information available
to the Borrowers as of the date of delivery thereof, accurately reflect all
adjustments required to be made to give effect to the Transactions and
presents fairly on a pro forma basis the estimated consolidated financial
position of Activision and its consolidated Subsidiaries as of such date and
for such period, assuming that the Transactions had actually occurred at such
date or at the beginning of such period, as the case may be.
SECTION 3.06. NO MATERIAL ADVERSE CHANGE. There has been no material
adverse change in the business, results of operations, property, condition
(financial or otherwise) or prospects of the Borrowers and the Subsidiaries,
taken as a whole, since December 31, 1998.
SECTION 3.07. TITLE TO PROPERTIES; POSSESSION UNDER LEASES. (a) Each of
the Borrowers and the Subsidiaries has good and marketable title to, or valid
leasehold
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interests in, all its material properties and tangible assets (including all
Mortgaged Property), except for minor defects in title that do not interfere
with its ability to conduct its business as currently conducted or to utilize
such properties and assets for their intended purposes. All such material
properties and assets are free and clear of Liens, other than Liens expressly
permitted by Section 6.02.
(b) Each of the Borrowers and the Subsidiaries has complied in all
material respects with all obligations under all material leases or
warehousing agreements to which it is a party and all such leases or
warehousing agreements are in full force and effect. Each of the Borrowers
and the Subsidiaries enjoys peaceful and undisturbed possession under all
such material leases.
(c) No Borrower has received any notice of, nor has any knowledge
of, any pending or contemplated condemnation proceeding affecting the Mortgaged
Properties or any sale or disposition thereof in lieu of condemnation.
(d) No Borrower nor any of the Subsidiaries is obligated under any
right of first refusal, option or other contractual right to sell, assign or
otherwise dispose of any Mortgaged Property or any interest therein.
SECTION 3.08. SUBSIDIARIES. Schedule 3.08 sets forth as of the Closing
Date a list of all Subsidiaries and the percentage ownership interest of the
Borrowers or their Subsidiaries therein. The shares of capital stock or
other ownership interests so indicated on Schedule 3.08 are fully paid and
non-assessable and are owned by the applicable Borrower or Subsidiary,
directly or indirectly, free and clear of all Liens, other than Liens in
favor of the Collateral Agreement, Liens under the Existing Credit Agreement
and Liens disclosed in Schedule 6.02.
SECTION 3.09. LITIGATION; COMPLIANCE WITH LAWS. (a) Except as set forth
on Schedule 3.09, there are not any actions, suits or proceedings at law or
in equity or by or before any Governmental Authority now pending or, to the
knowledge of the Borrowers, threatened against or affecting any Borrower or
any Subsidiary or any business, property or rights of any such person (i) that
involve any Loan Document or the Transactions or (ii) as to which there is a
reasonable possibility of an adverse determination and that, if adversely
determined, could reasonably be expected, individually or in the aggregate,
to result in a Material Adverse Effect.
(b) Neither any Borrower nor any of the Subsidiaries or any of
their respective material properties or assets is in violation of, nor will
the continued operation of their material properties and assets as currently
conducted violate, any law, rule or regulation (including any zoning,
building, Environmental Law, ordinance, code or approval or any building
permits) or any restrictions of record or agreements affecting the Mortgaged
Property, or is in default with respect to any judgment, writ, injunction,
decree
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or order of any Governmental Authority, where such violation or default could
reasonably be expected to result in a Material Adverse Effect.
SECTION 3.10. AGREEMENTS. (a) Neither any Borrower nor any of the
Subsidiaries is a party to any agreement or instrument or subject to any
corporate restriction that has resulted or could reasonably be expected to
result in a Material Adverse Effect.
(b) Neither any Borrower nor any of the Subsidiaries is in default
in any manner under any provision of any indenture or other agreement or
instrument evidencing Indebtedness, or any Material Contract, where such
default could reasonably be expected to result in a Material Adverse Effect.
SECTION 3.11. FEDERAL RESERVE REGULATIONS. (a) Neither the Borrowers
nor any of the Subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
buying or carrying Margin Stock.
(b) No part of the proceeds of any Loan or any Letter of Credit
will be used, whether directly or indirectly, and whether immediately,
incidentally or ultimately, for any purpose that entails a violation of, or
that is inconsistent with, the provisions of the Regulations of the Board,
including Regulation T, U or X.
SECTION 3.12. INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY
ACT. Neither any Borrower nor any Subsidiary is (a) an "investment company"
as defined in, or subject to regulation under, the Investment Company Act of
1940 or (b) a "holding company" as defined in, or subject to regulation
under, the Public Utility Holding Company Act of 1935.
SECTION 3.13. USE OF PROCEEDS. The Borrowers will use the proceeds of
the Loans and will request the issuance of Letters of Credit only for the
purposes specified in the preamble to this Agreement.
SECTION 3.14. TAX RETURNS. Each of the Borrowers and the Subsidiaries
has filed or caused to be filed all Federal, state, local and foreign tax
returns or materials required to have been filed by it and has paid or caused
to be paid all taxes due and payable by it and all assessments received by
it, except taxes that are being contested in good faith by appropriate
proceedings and for which the applicable Borrowers or such Subsidiary, as
applicable, shall have set aside on its books adequate reserves.
SECTION 3.15. NO MATERIAL MISSTATEMENTS. None of (a) the Confidential
Information Memorandum or (b) any other written information, report,
financial statement, exhibit or schedule furnished by the Borrowers to the
Administrative Agent or any Lender in connection with the Loan Documents or
included therein or delivered pursuant thereto contained, contains or will
contain any material misstatement of fact or
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omitted, omits or will omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were,
are or will be made, not misleading; PROVIDED that to the extent any such
information, report, financial statement, exhibit or schedule was based upon
or constitutes a forecast or projection, the Borrowers represent only that
they acted in good faith and utilized reasonable assumptions and due care in
the preparation of such information, report, financial statement, exhibit or
schedule.
SECTION 3.16. EMPLOYEE BENEFIT PLANS. (a) Each of the Borrowers and
its ERISA Affiliates is in compliance in all material respects with the
applicable provisions of ERISA and the Code and the regulations and published
interpretations thereunder. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events,
could reasonably be expected to result in material liability of the Borrowers
or any of their ERISA Affiliates. The present value of all benefit
liabilities under each Plan (based on those assumptions used to fund such
Plan) did not, as of the last annual valuation date applicable thereto,
exceed the fair market value of the assets of such Plan, and the present
value of all benefit liabilities of all underfunded Plans (based on those
assumptions used to fund each such Plan) did not, as of the last annual
valuation dates applicable thereto, exceed the fair market value of the
assets of all such underfunded Plans.
(b) Each Foreign Pension Plan is in compliance in all material
respects with all requirements of law applicable thereto and the respective
requirements of the governing documents for such plan except to the extent
such non-compliance could not reasonably be expected to result in a Material
Adverse Effect. With respect to each Foreign Pension Plan, none of the
Borrowers, any Affiliates or any of their directors, officers, employees or
agents has engaged in a transaction that subjects any Borrower or any of its
Subsidiaries, directly or indirectly, to a material tax or civil penalty.
With respect to each Foreign Pension Plan, reserves have been established in
the financial statements furnished to the Lenders in respect of any unfunded
liabilities in accordance with applicable law and prudent business practice
or, where required, in accordance with ordinary accounting practices in the
jurisdiction in which such Foreign Pension Plan is maintained. The aggregate
unfunded liabilities, with respect to such Foreign Pension Plans could not
reasonably be expected to result in a Material Adverse Effect. There are no
actions, suits or claims (other than routine claims for benefits) pending or
threatened against any Borrower or any of its Affiliates with respect to any
Foreign Pension Plan that could reasonably be expected, individually or in
the aggregate, to result in a Material Adverse Effect.
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SECTION 3.17. ENVIRONMENTAL MATTERS. Except as set forth in Schedule
3.17:
(a) The properties owned or operated by the Borrowers and the
Subsidiaries (the "PROPERTIES") do not contain any Hazardous Materials in
amounts or concentrations which (i) constitute, or constituted a violation
of, (ii) require Remedial Action under, or (iii) could give rise to liability
under, Environmental Laws, which violations, Remedial Actions and
liabilities, in the aggregate, could reasonably be expected to result in a
Material Adverse Effect;
(b) The Properties and all operations of the Borrowers and the
Subsidiaries are in compliance, and in the last six years have been in
compliance, with all Environmental Laws and all necessary Environmental
Permits have been obtained and are in effect, except to the extent that such
non-compliance or failure to obtain any necessary permits, in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect;
(c) There have been no Releases or threatened Releases at, from,
under or proximate to the Properties or otherwise in connection with the
operations of the Borrowers or the Subsidiaries, which Releases or threatened
Releases, in the aggregate, could reasonably be expected to result in a
Material Adverse Effect;
(d) Neither any Borrowers nor any of the Subsidiaries has received
any notice of an Environmental Claim in connection with the Properties or the
operations of any Borrowers or the Subsidiaries or with regard to any person
whose liabilities for environmental matters any Borrower or any Subsidiary
has retained or assumed, in whole or in part, contractually, by operation of
law or otherwise, which, in the aggregate, could reasonably be expected to
result in a Material Adverse Effect, nor do the Borrowers or the Subsidiaries
have reason to believe that any such notice will be received or is being
threatened; and
(e) Hazardous Materials have not been transported from the
Properties, nor have Hazardous Materials been generated, treated, stored or
disposed of at, on or under any of the Properties in a manner that could give
rise to liability under any Environmental Law, nor have the Borrowers or the
Subsidiaries retained or assumed any liability, contractually, by operation
of law or otherwise, with respect to the generation, treatment, storage or
disposal of Hazardous Materials, which transportation, generation, treatment,
storage or disposal, or retained or assumed liabilities, in the aggregate,
could reasonably be expected to result in a Material Adverse Effect.
SECTION 3.18. INSURANCE. Schedule 3.18 sets forth a true, complete and
correct description of all insurance maintained by the Borrowers or by the
Borrowers for their Subsidiaries as of the date hereof and the Closing Date.
As of each such date, such insurance is in full force and effect and all
premiums have been duly paid. The
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Borrowers and their Subsidiaries have insurance in such amounts and covering
such risks and liabilities as are in accordance with normal industry practice.
SECTION 3.19. SECURITY DOCUMENTS. (a) The Pledge Agreement is
effective to create in favor of the Collateral Agent, for the ratable benefit
of the Secured Parties, a legal, valid and enforceable security interest in
the Collateral (as defined in the Pledge Agreement) and, when the Collateral
is delivered to the Collateral Agent (or in the case of Foreign Subsidiaries
in Germany, the Netherlands and the United Kingdom, when pledge agreements
complying with applicable foreign laws are executed and delivered), the
Pledge Agreement shall constitute a fully perfected first priority Lien on,
and security interest in, all right, title and interest of the pledgors
thereunder in such Collateral, in each case prior and superior in right to
any other person.
(b) The Security Agreement is effective to create in favor of the
Collateral Agent, for the ratable benefit of the Secured Parties, a legal,
valid and enforceable security interest in the Collateral (as defined in the
Security Agreement) and, when financing statements in appropriate form are
filed in the offices specified on Schedule 6 to the Perfection Certificate,
the Security Agreement shall constitute a fully perfected Lien on, and
security interest in, all right, title and interest of the grantors
thereunder in such Collateral (other than the Intellectual Property, as
defined in the Security Agreement), in each case prior and superior in right
to any other person, other than with respect to Liens expressly permitted by
Section 6.02.
(c) When the Security Agreement is filed in the United States
Patent and Trademark Office and the United States Copyright Office, the
Security Agreement shall constitute a fully perfected Lien on, and security
interest in, all right, title and interest of the grantors thereunder in the
Intellectual Property (as defined in the Security Agreement), in each case
prior and superior in right to any other person (it being understood that
subsequent recordings in the United States Patent and Trademark Office and
the United States Copyright Office may be necessary to perfect a lien on
registered trademarks, trademark applications and copyrights acquired by the
grantors after the date hereof).
(d) The Mortgages are effective to create in favor of the
Collateral Agent, for the ratable benefit of the Secured Parties, a legal,
valid and enforceable Lien on all of the Loan Parties' right, title and
interest in and to the Mortgaged Property thereunder and the proceeds
thereof, and when the Mortgages are filed in the appropriate offices in the
jurisdictions in which the Mortgaged Properties are located the Mortgages
shall constitute a fully perfected Lien on, and security interest in, all
right, title and interest of the Loan Parties in such Mortgaged Property and
the proceeds thereof, in each case prior and superior in right to any other
person, other than with respect to the rights of persons pursuant to Liens
expressly permitted by Section 6.02.
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(e) The UK Charge Documents are effective to create in favor of
Activision a legal, valid and enforceable security interest in and charge over
the personal property assets of UK Sub described therein and, when ______ are
filed in _____, such UK Charge Documents shall constitute a fully perfected Lien
on, and security interest on all right, title and interest of UK Sub in such
personal property assets prior and superior in right to any other person.
SECTION 3.20. LOCATION OF REAL PROPERTY AND LEASED PREMISES.
(a) Schedule 3.20(a) lists completely and correctly as of the Closing Date all
real property owned by the Loan Parties and the addresses thereof. The Loan
Parties own in fee all the real property set forth on Schedule 3.20(a).
(b) Schedule 3.20(b) lists completely and correctly as of the
Closing Date all real property leased by the Loan Parties and all locations
of Collateral and the addresses thereof. The Loan Parties have valid leases
in or valid warehouse agreements with respect to all the real property set
forth on Schedule 3.20(b) except to the extent set forth on such Schedule.
SECTION 3.21. LABOR MATTERS. As of the date hereof and the Closing
Date, there are no strikes, lockouts or slowdowns against any Borrower or any
Subsidiary pending or, to the knowledge of the Borrowers, threatened. The
hours worked by and payments made to employees of any Borrower and the
Subsidiaries have not been in violation of the Fair Labor Standards Act or
any other applicable Federal, state, local or foreign law dealing with such
matters. All payments due from the Borrowers or any Subsidiary, or for which
any claim may be made against any Borrowers or any Subsidiary, on account of
wages and employee health and welfare insurance and other benefits, have been
paid or accrued as a liability on the books of such Borrower or such
Subsidiary. The consummation of the Transactions will not give rise to any
right of termination or right of renegotiation on the part of any union under
any collective bargaining agreement to which any Borrower or any Subsidiary
is bound.
SECTION 3.22. SOLVENCY. Immediately after the consummation of the
Transactions to occur on the Closing Date and immediately following the
making of each Loan and after giving effect to the application of the
proceeds of each Loan, (a) the fair value of the assets of each Loan Party,
at a fair valuation, will exceed its debts and liabilities, subordinated,
contingent or otherwise; (b) the present fair saleable value of the property
of each Loan Party will be greater than the amount that will be required to
pay the probable liability of its debts and other liabilities, subordinated,
contingent or otherwise, as such debts and other liabilities become absolute
and matured; (c) each Loan Party will be able to pay its debts and
liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured; and (d) each Loan Party will not
have unreasonably small capital with which to conduct the business in which
it is engaged as such business is now conducted and is proposed to be
conducted following the Closing Date.
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SECTION 3.23. YEAR 2000. No further programming or reprogramming is
required to permit the proper functioning, in and following the year 2000, of
(a) the Borrowers' and their Subsidiaries' computer systems and (b) equipment
containing embedded microchips (including systems and equipment supplied by
others or with which the Borrowers' or their Subsidiaries' systems interface).
The cost to the Borrowers and their Subsidiaries of the reasonably foreseeable
consequences of the year 2000 to the Borrowers and their Subsidiaries (including
reprogramming errors and the failure of others' systems or equipment) will not
result in a Material Adverse Effect. The computer and management information
systems of the Borrowers and their Subsidiaries are and, with ordinary course
upgrading and maintenance, will continue for the term of this Agreement to be,
sufficient to permit the Borrowers and its Subsidiaries to conduct their
business without Material Adverse Effect.
SECTION 3.24. LETTERS OF CREDIT. The Existing Letters of Credit are the
only letters of credit issued for the account of the Borrowers or any of its
Domestic Subsidiaries that are outstanding immediately prior to the Closing
Date.
ARTICLE IV
CONDITIONS OF LENDING
The obligations of the Lenders to make Loans and of the Issuing Bank to
issue Letters of Credit hereunder are subject to the satisfaction of the
following conditions:
SECTION 4.01. ALL CREDIT EVENTS. On the date of each Borrowing, and on the date
of each issuance, amendment, extension or renewal of a Letter of Credit (each
such event being called a "CREDIT EVENT"):
(a) The Administrative Agent shall have received a notice of such
Borrowing as required by Section 2.03 (or such notice shall have been deemed
given in accordance with Section 2.03) or, in the case of the issuance,
amendment, extension or renewal of a Letter of Credit, the Issuing Bank and the
Administrative Agent shall have received a notice requesting the issuance,
amendment, extension or renewal of such Letter of Credit as required by
Section 2.26(b).
(b) The representations and warranties set forth in Article III
hereof and in each other Loan Document shall be true and correct in all material
respects on and as of the date of such Credit Event with the same effect as
though made on and as of such date, except to the extent such representations
and warranties expressly relate to an earlier date, in which case they shall
have been true and correct as of such earlier date.
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(c) The Borrowers and each other Loan Party shall be in compliance in
all material respects with all the terms and provisions set forth herein and in
each other Loan Document on its part to be observed or performed, and at the
time of and immediately after such Credit Event, no Event of Default or Default
shall have occurred and be continuing, or would exist after giving effect to the
Loan to be made or Letter of Credit to be issued on such date.
Each Credit Event shall be deemed to constitute a representation and
warranty by the Borrowers on the date of such Credit Event as to the matters
specified in paragraphs (b) and (c) of this Section 4.01.
SECTION 4.02. FIRST CREDIT EVENT. On the Closing Date (or, as specifically
indicated below, prior to the date hereof):
(a) The Administrative Agent shall have received, on behalf of
itself, the Lenders and the Issuing Bank, a favorable written opinion of (i)
Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx LLP, counsel for the Loan Parties,
substantially to the effect set forth in Exhibit I-1, and (ii) each local
counsel listed on Schedule 4.02(a), substantially to the effect set forth in
Exhibit I-2, in each case (A) dated the Closing Date, (B) addressed to the
Issuing Bank, the Administrative Agent, the Collateral Agent and the Lenders,
and (C) covering such other matters relating to the Loan Documents and the
Transactions as the Administrative Agent shall reasonably request, and the
Borrowers hereby request such counsel to deliver such opinions.
(b) All legal matters incident to this Agreement, the Borrowings and
extensions of credit hereunder and the other Loan Documents shall be
satisfactory to the Lenders, to the Issuing Bank and to the Administrative
Agent.
(c) The Administrative Agent shall have received (i) a copy of the
certificate or articles of incorporation, including all amendments thereto, of
each Loan Party, certified as of a recent date by the Secretary of State of the
state of its organization, and a certificate as to the good standing of each
Loan Party as of a recent date, from such Secretary of State; (ii) a certificate
of the Secretary or Assistant Secretary of each Loan Party dated the Closing
Date and certifying (A) that attached thereto is a true and complete copy of the
by-laws of such Loan Party as in effect on the Closing Date and at all times
since a date prior to the date of the resolutions described in clause (B) below,
(B) that attached thereto is a true and complete copy of resolutions duly
adopted by the Board of Directors of such Loan Party authorizing the execution,
delivery and performance of the Loan Documents to which such person is a party
and, in the case of the Borrowers, the borrowings hereunder, and that such
resolutions have not been modified, rescinded or amended and are in full force
and effect, (C) that the certificate or articles of incorporation of such Loan
Party have not been amended since the date of the last amendment thereto shown
on the certificate of good standing furnished pursuant to clause (i) above, and
(D) as to the incumbency and specimen signature of each officer
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executing any Loan Document or any other document delivered in connection
herewith on behalf of such Loan Party; (iii) a certificate of another officer
as to the incumbency and specimen signature of the Secretary or Assistant
Secretary executing the certificate pursuant to (ii) above; and (iv) such
other documents as the Lenders, the Issuing Bank or the Administrative Agent
may reasonably request; and the Administrative Agent shall have received
equivalent documents with respect to UK Sub, and the charter documents (or
commercial register excerpts thereof) of each Foreign Subsidiary whose stock
is to be pledged under the Pledge Agreement.
(d) The Administrative Agent shall have received a certificate, dated
the Closing Date and signed by a Financial Officer of the Borrowers, confirming
compliance with the conditions precedent set forth in paragraphs (b) and (c) of
Section 4.01.
(e) The Administrative Agent shall have received all Fees and other
amounts due and payable on or prior to the Closing Date (each of which may be
funded out of the initial Loans), including, to the extent invoiced,
reimbursement or payment of all out-of-pocket expenses required to be reimbursed
or paid by the Borrowers hereunder or under any other Loan Document.
(f) The Pledge Agreement shall have been duly executed by the parties
thereto and delivered to the Collateral Agent and shall be in full force and
effect, and all the outstanding Equity Interests of the Subsidiaries and all
instruments, including the Intercompany Note, pledged thereunder shall have been
duly and validly pledged thereunder to the Collateral Agent for the ratable
benefit of the Secured Parties and certificates representing such shares or such
instruments accompanied by instruments of transfer and stock powers endorsed in
blank, shall be in the actual possession of the Collateral Agent or such other
action shall have been taken under applicable laws to perfect the pledge;
PROVIDED that to the extent to do so would cause adverse tax consequences to the
Borrowers, (i) neither any Borrower nor any Domestic Subsidiary shall be
required to pledge more than 65% of the voting stock of any Foreign Subsidiary
and (ii) no Foreign Subsidiary shall be required to pledge the capital stock of
any of its Subsidiaries.
(g) The Security Agreement shall have been duly executed by the
parties thereto and shall have been delivered to the Collateral Agent and shall
be in full force and effect on such date. Each document (including without
limitation any Uniform Commercial Code financing statement) required by this
Agreement or the other Loan Documents, or under law, or reasonably requested by
the Administrative Agent or the Collateral Agent to be filed, registered, or
recorded in order to create, in favor of the Collateral Agent, a perfected
security interest in or Lien upon the Collateral shall have been properly filed,
registered or recorded in each jurisdiction in which the filing, registration or
recordation thereof is so required or requested, and the Administrative Agent
shall have received an acknowledgment copy, or other evidence satisfactory to
it,
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of each such filing registration or recordation and satisfactory evidence of
the payment of any necessary fee, tax or expense relating thereto.
(h) Prior to the date hereof, the Collateral Agent shall have
received the results of a search of the Uniform Commercial Code filings (or
equivalent filings) made with respect to the Loan Parties and UK Sub in the
states (or other jurisdictions) in which the chief executive office of each such
person is located, any offices of such persons in which records have been kept
relating to Receivables and the other jurisdictions in which Uniform Commercial
Code filings (or equivalent filings) are to be made pursuant to the preceding
paragraph, together with copies of the financing statements (or similar
documents) disclosed by such search, and accompanied by evidence satisfactory to
the Collateral Agent that the Liens indicated in any such financing statement
(or similar document) would be permitted under Section 6.02 or have been
released.
(i) The Collateral Agent shall have received a Perfection Certificate
with respect to the Loan Parties dated the Closing Date and duly executed by a
Responsible Officer of each Loan Party.
(j) The Administrative Agent shall have received duly executed
agreements establishing the Blocked Accounts or Depository Accounts, in form and
substance satisfactory to the Administrative Agent.
(k) Each of the Borrower Guarantee Agreement, the Subsidiary
Guarantee Agreement and the Indemnity, Subrogation and Contribution Agreement
shall have been duly executed by the parties thereto, shall have been delivered
to the Collateral Agent and shall be in full force and effect.
(l) The Administrative Agent shall have received such information as
is required to calculate the Formula Amount.
(m) The Administrative Agent shall have received a copy of, or a
certificate as to coverage under, the insurance policies required by
Section 5.02 and the applicable provisions of the Security Documents, each of
which shall be endorsed or otherwise amended to include a "standard" or "New
York" lender's loss payable endorsement and to name the Collateral Agent as
additional insured, in form and substance satisfactory to the Administrative
Agent.
(n) The Merger shall have been consummated or shall be consummated
simultaneously with the initial Credit Event on the Closing Date, in compliance
with applicable laws and in all material respects in accordance with the terms
of the relevant documentation therefor, including the Merger Agreement and the
related schedules and attachments thereto in the form in which they were
initially executed (and without the
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waiver or amendment of any such terms, except as shall be approved by the
Required Lenders (which approval shall not be unreasonably withheld)).
(o) No litigation, investigation or proceeding before or by any
arbitrator or Governmental Agency shall be continuing or threatened against the
Borrowers or any of its Subsidiaries or any of their officers or directors, (A)
in connection with the Loan Documents or any of the transactions contemplated
thereby and which, in the reasonable opinion of Lenders, is deemed material or
(B) which could, in the opinion of Lenders, reasonably be expected to have a
Material Adverse Effect; and (ii) no injunction, writ, restraining order or
other order of any nature preventing or restricting the conduct of the business
of any Borrower or any of its Material Subsidiaries or consummation of the
Transactions shall have been entered by any Governmental Agency.
(p) Prior to the date hereof, the Lenders shall have received (i)
audited consolidated balance sheets and related statements of income,
stockholders' equity and cash flows of the Activision for each of the fiscal
years ended on March 31, 1996, 1997 and 1998, and of Expert for each of the
fiscal years ended on December 31, 1996, 1997 and 1998, and (ii) unaudited
consolidated and consolidating balance sheets and related statements of income,
stockholders' equity and cash flows of Activision and Expert for each subsequent
fiscal quarter, if any, ended 30 days prior to the Closing Date, which financial
statements shall not be materially inconsistent with the financial statements or
forecasts previously provided to the Lenders.
(q) All principal, premium, if any, interest, fees and other amounts
due and owing under the Existing Credit Agreement shall have been paid in full
with the proceeds of the initial Loans (and satisfactory arrangements shall have
been made to replace or continue under this Agreement all letters of credit
outstanding thereunder), the commitments thereunder terminated and all
guarantees and security in support thereof released, and the Administrative
Agent shall have received reasonably satisfactory evidence thereof, and after
giving effect to the Transactions and the other transactions contemplated
hereby, the Borrowers and the Subsidiaries shall have outstanding no
Indebtedness or preferred stock other than (i) the Loans and Letters of Credit
hereunder and (ii) the Indebtedness listed on Schedule 6.01.
(r) After giving pro forma effect to the Transactions, and after
adding back non-cash prepayments of royalties, the Adjusted EBITDA of Activision
and its consolidated Subsidiaries for the four-quarter period ending March 31,
1999, shall be at least $55,000,000.
(s) The Administrative Agent shall have received a Financial
Condition Certificate in the form of Exhibit L.
(t) Prior to the date hereof the Administrative Agent shall have
completed Collateral examinations and received appraisals, the results of which
shall be satisfactory
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in form and substance to Lenders, of the Receivables, Inventory, general
intangibles, intellectual property and equipment of the Borrowers, received
satisfactory trade references and completed a satisfactory review of all
books and records of the Borrowers.
(u) Prior to the date hereof, the Lenders shall have received a copy
of pro forma financial statements after giving effect to the Loans and the
Transactions, which shall be satisfactory in all respects to Lenders, and
projections for the Loan Parties through the Revolving Credit Maturity Date
demonstrating the Borrowers' ability to comply with this Agreement.
(v) The Administrative Agent shall have received written instructions
from the Borrowers directing the application of the proceeds of the Borrowings
to be made on the Closing Date.
(w) Since December 31, 1998, there shall not have occurred any event,
condition or state of facts which could reasonably be expected to have a
Material Adverse Effect and no representations made or information supplied to
the Administrative Agent or the Lenders shall have proven to be inaccurate or
misleading in any material respect.
(x) The Administrative Agent shall have received landlord, mortgagee,
warehouseman or laboratory pledgeholder agreements with respect to all premises
leased by any Loan Party or at which any Inventory is located or appropriate
reserves shall have been established.
(y) After giving effect to the Loans to be made on the Closing Date
and the payment of all fees, costs and expenses in connection with the
Transactions, and to the Existing Letters of Credit, the Borrowers shall have
Undrawn Availability of at least $5,000,000 in the aggregate.
(z) The Lenders shall be mutually acceptable to the Administrative
Agent, the Syndication Agent and Activision.
ARTICLE V
AFFIRMATIVE COVENANTS
The Borrowers covenant and agree with each Lender that so long as this
Agreement shall remain in effect and until the Commitments have been terminated
and the principal of and interest on each Loan, all Fees and all other expenses
or amounts payable under any Loan Document shall have been paid in full and all
Letters of Credit have been canceled or have expired and all amounts drawn
thereunder have been reimbursed in full, unless the Required Lenders shall
otherwise consent in writing, each Borrower will, and will cause each of the
Subsidiaries to:
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SECTION 5.01. EXISTENCE; BUSINESSES AND PROPERTIES. (a) Do or cause to be
done all things necessary to preserve, renew and keep in full force and effect
its legal existence, except as otherwise expressly permitted under Section 6.05.
(b) Do or cause to be done all things necessary to obtain, preserve,
renew, extend and keep in full force and effect the rights, licenses, permits,
franchises, authorizations, patents, copyrights, trademarks and trade names
material to the conduct of its business; maintain and operate such business in
substantially the manner in which it is presently conducted and operated or in a
manner reasonably related to present operations; comply in all material respects
with all applicable laws, rules, regulations (including any zoning, building,
Environmental Law, ordinance, code or approval or any building permits or any
restrictions of record or agreements affecting the Mortgaged Properties) and
decrees and orders of any Governmental Authority, whether now in effect or
hereafter enacted; and at all times maintain and preserve all property material
to the conduct of such business and keep such property in good repair, working
order and condition and from time to time make, or cause to be made, all needful
and proper repairs, renewals, additions, improvements and replacements thereto
necessary in order that the business carried on in connection therewith may be
properly conducted at all times.
SECTION 5.02. INSURANCE. The Loan Parties shall bear the full risk of any
loss of any nature whatsoever with respect to the Collateral. At the cost and
expense of the Loan Parties in amounts and with carriers reasonably acceptable
to the Administrative Agent, the Loan Parties shall (a) keep all insurable
properties and properties in which any Loan Party has an interest insured
against the hazards of fire, flood, sprinkler leakage, those hazards covered by
extended coverage insurance and such other hazards, and for such amounts, as is
customary in the case of companies engaged in businesses similar to the business
of the Loan Parties including, without limitation, business interruption
insurance and marine and air cargo insurance, (b) maintain a bond in such
amounts as is customary in the case of companies engaged in businesses similar
to the business of the Loan Parties insuring against larceny, embezzlement or
other criminal misappropriation of insured's officers and employees who may
either singly or jointly with others at any time have access to the assets or
funds of such Loan Party either directly or through authority to draw upon such
funds or to direct generally the disposition of such assets; (c) maintain public
and product liability insurance against claims for personal injury, death or
property damage suffered by others; (d) maintain all such worker's compensation
or similar insurance as may be required under the laws of any state or
jurisdiction in which such Loan Party is engaged in business; (e) furnish the
Administrative Agent with (i) copies of all policies and evidence of the
maintenance of such policies by the renewal thereof at least thirty (30) days
before any expiration date, and (ii) appropriate loss payable endorsements in
form and substance reasonably satisfactory to the Administrative Agent, naming
the Administrative Agent as a co-insured and loss payee as its interests may
appear with respect to all insurance coverage referred to in clause (a), and
providing (A)
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that all proceeds thereunder shall be payable to the Administrative Agent,
(B) no such insurance shall be affected by any act or neglect of the insured
or owner of the property described in such policy, and (C) that such policy
and loss payable clauses may not be canceled, amended or terminated unless at
least thirty (30) days' prior written notice is given to the Administrative
Agent. In the event of any loss thereunder, the carriers named therein
hereby are directed by the Administrative Agent and the applicable Loan Party
to make payment for such loss to the Administrative Agent and not to such
Loan Party and Administrative Agent jointly. If any insurance losses are
paid by check, draft or other instrument payable to any Loan Party and the
Administrative Agent jointly, the Administrative Agent may endorse such Loan
Party's name thereon and do such Loan Party other things as the
Administrative Agent may deem advisable to reduce the same to case.
Following the occurrence of an Event of Default, the Administrative Agent is
hereby authorized to adjust and compromise claims under insurance coverage
referred to in clauses (a), and (b). All loss recoveries received by the
Administrative Agent upon any such insurance prior to the occurrence of an
Event of Default shall be applied to the Revolving Loans. Any surplus shall
be paid by the Administrative Agent to Borrowers or applied as may be
otherwise required by law.
SECTION 5.03. OBLIGATIONS AND TAXES. Pay its Indebtedness and other
obligations promptly and in accordance with their terms and pay and discharge
promptly when due all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or in respect of its property,
before the same shall become delinquent or in default, as well as all lawful
claims for labor, materials and supplies or otherwise that, if unpaid, might
give rise to a Lien upon such properties or any part thereof; PROVIDED, HOWEVER,
that such payment and discharge shall not be required with respect to any such
tax, assessment, charge, levy or claim so long as the validity or amount thereof
shall be contested in good faith by appropriate proceedings and the Borrowers
shall have set aside on its books adequate reserves with respect thereto in
accordance with GAAP and such contest operates to suspend collection of the
contested obligation, tax, assessment or charge and enforcement of a Lien and,
in the case of a Mortgaged Property, there is no risk of forfeiture of such
property.
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SECTION 5.04. FINANCIAL STATEMENTS, REPORTS, ETC. In the case of the
Borrowers, furnish to the Administrative Agent and each Lender:
(a) within 90 days after the end of each fiscal year, its consolidated
and consolidating balance sheet and related statements of income,
stockholders' equity and cash flows showing the financial condition and
Activision and its consolidated Subsidiaries as of the close of such fiscal
year and the results of its operations and the operations of such
Subsidiaries during such year The consolidated financial statements shall be
audited by KPMG Peat Marwick LLP or other independent public accountants of
recognized national standing and accompanied by an opinion of such
accountants (which shall not be qualified in any material respect) to the
effect that such consolidated financial statements fairly present the
financial condition and results of operations of Activision and its
consolidated Subsidiaries on a consolidated basis in accordance with GAAP.
In addition, Development Costs and the amortization of Development Costs for
such year shall be identified explicitly in the audited financial statements
or in the notes thereto;
(b) within 45 days after the end of each fiscal quarter of each fiscal
year, the consolidated and consolidating balance sheet and related statements
of income, stockholders' equity and cash flows showing the financial
condition of Activision and its consolidated Subsidiaries, and of the Loan
Parties as of the close of such fiscal quarter and the results of its
operations and the operations of such Subsidiaries during such fiscal quarter
and the then elapsed portion of the fiscal year, all certified by one of its
Financial Officers as fairly presenting the financial condition and results
of operations of the Loan Parties and Activision and its consolidated
Subsidiaries in accordance with GAAP, subject to normal year-end audit
adjustments;
(c) within 20 days after the end of each month, the consolidated and
consolidating balance sheet and related statements of income, stockholder's
equity and cash flows showing the financial condition of the Loan Parties
and of Activision and its consolidated Subsidiaries as of the close of such
fiscal month and the results of its operations and the operations of such
Subsidiaries and of the Loan Parties during such fiscal month and the then
elapsed portion of such fiscal year, all certified by one of its Financial
Officers as fairly presenting the financial condition and results of
operations of the Loan Parties and of Activision and its consolidated
Subsidiaries in accordance with GAAP, subject to normal year-end audit
adjustments;
(d) concurrently with the delivery of financial statements under
paragraph (b) above, a report in reasonable detail of amounts accrued and
paid during such quarter for royalties and fees under license, distribution
or development agreements, in a form reasonably satisfactory to the
Administrative Agent.
(e) concurrently with any delivery of financial statements under
paragraph (a) or (b) above, a certificate of the accounting firm (in the case
of paragraph (a)) or Financial Officer (in the case of paragraph (b))
opining on or certifying such statements
74
(which certificate, when furnished by an accounting firm, may be limited to
accounting matters and disclaim responsibility for legal interpretations) (i)
certifying that no Event of Default or Default has occurred or, if such an
Event of Default or Default has occurred, specifying the nature and extent
thereof and any corrective action taken or proposed to be taken with respect
thereto and (ii) setting forth computations in reasonable detail satisfactory
to the Administrative Agent demonstrating compliance with the covenants
contained in Sections 6.08, 6.09, 6.10, 6.11, 6.12 and 6.13 and, in the case
of a certificate delivered with the financial statements required by
paragraph (a) above, setting forth the Borrowers' calculation of Excess Cash
Flow;
(f) [intentionally omitted]
(g) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by
Activision or any Subsidiary with the Securities and Exchange Commission, or
any Governmental Authority succeeding to any or all of the functions of said
Commission, or with any national securities exchange, or distributed to its
shareholders, as the case may be;
(h) promptly after the receipt thereof by any Borrower or any of its
Subsidiaries, a copy of any "management letter" (whether in draft or final
form) received by any such person from its certified public accountants and
the management's responses thereto; and
(i) each year, at the time of delivery of annual financial statements
with respect to the preceding fiscal year pursuant to clause (a) above, the
Borrowers shall deliver to the Administrative Agent a certificate of a
Financial Officer of the Borrowers (i) setting forth the information required
pursuant to Sections 1-4, 6 and 9 of the Perfection Certificate or
confirming that there has been no change in such information since the date
of the Perfection Certificate delivered on the Closing Date or the date of
the most recent certificate delivered pursuant to this Section and (ii)
certifying that all Uniform Commercial Code financing statements (including
fixture filings, as applicable) or other appropriate filings, recordings or
registrations, including all refilings, rerecordings and reregistrations,
containing a description of the Collateral have been filed of record in each
governmental, municipal or other appropriate office in each jurisdiction
identified pursuant to clause (i) above to the extent necessary to protect
and perfect the security interests under the Security Documents for a period
of not less than 18 months after the date of such certificate (except as
noted therein with respect to any continuation statements to be filed within
such period).
(j) on or before the fifteenth (15th) day of each month as and for the
prior month (a) a Schedule of Receivables, (b) a Schedule of Payables and (c)
Inventory reports. In addition, the Borrowers will deliver to the
Administrative Agent at least once every two weeks (or more frequently at the
option of the Borrowers) or as the Administrative Agent may require, (i)
confirmatory assignment schedules, (ii) remittance
75
schedules and (iii) schedules of credits to Receivables, each certified as
complete and correct by a Financial Officer of the Borrowers. Borrowers
shall also deliver to the Administrative Agent at such intervals as the
Administrative Agent may require: (i) copies of Customer invoices (ii)
evidence of shipment or delivery and (iii) such further schedules, documents
and/or information regarding the Collateral as the Administrative Agent may
require including, without limitation, trial balances and test verifications.
The Administrative Agent shall have the right to confirm and verify all
Receivables by any manner and through any medium it considers advisable and
do whatever it may deem reasonably necessary to protect its interests
hereunder. The items to be provided under this Section are to be in form
reasonably satisfactory to the Administrative Agent and executed by the
Borrowers and delivered to the Administrative Agent from time to time solely
for the Administrative Agent's convenience in maintaining records of the
Collateral, and any Borrower's failure to deliver any of such items to the
Administrative Agent shall not affect, terminate, modify or otherwise limit
the Collateral Agent's Lien with respect to the Collateral.
(k) no later than forty-five (45) days after the beginning of each
fiscal year commencing with the fiscal year ending March 31, 2001, a month by
month projected operating budget and cash flow of Activision and of the Loan
Parties for such fiscal year (including an income statement for each month
and a balance sheet as at the end of the last month in each fiscal quarter),
such projections to be accompanied by a certificate signed by a Financial
Officer of the Borrowers to the effect that such projections have been
prepared on the basis of sound financial planning practice consistent with
past budgets and financial statements and that such officer has no reason to
question the reasonableness of any material assumptions on which such
projections were prepared. In addition, concurrently with the delivery of
the financial statements referred to in clauses (a), (b) and (c) above the
Borrowers will deliver a written report summarizing all material variances
from the budgets submitted by the Borrowers and a discussion and analysis by
management with respect to such variances.
(l) promptly, from time to time, such other information regarding the
operations, business affairs and financial condition of the Borrowers or any
Subsidiary, or compliance with the terms of any Loan Document, as the
Administrative Agent or any Lender may reasonably request.
SECTION 5.05. LITIGATION AND OTHER NOTICES. Furnish to the
Administrative Agent, the Issuing Bank and each Lender prompt written notice
of the following:
(a) any Event of Default or Default, specifying the nature and extent
thereof and the corrective action (if any) taken or proposed to be taken with
respect thereto;
76
(b) the filing or commencement of, or any threat or notice of intention
of any person to file or commence, any action, suit or proceeding, whether at
law or in equity or by or before any Governmental Authority, against any
Borrower or any Affiliate thereof that could reasonably be expected to result
in a Material Adverse Effect;
(c) any development that has resulted in, or could reasonably be
expected to result in, a Material Adverse Effect;
(d) any event of default or event which, with notice or lapse of one or
both would constitute an event of default under the Convertible Subordinated
Note Documents or any agreement with respect to Subordinated Debt;
(e) all matters materially affecting the value, enforceability or
collectibility of any portion of the Collateral, including, without
limitation, any Loan Party's reclamation or repossession of, or the returns
to any Loan Party of, a material amount of goods or claims or disputes
asserted by any Customer or other obligor; and
(f) any breach or default under any agreement under which a Loan Party
is the licensee or distributor or any notice of intent to terminate any such
agreement.
SECTION 5.06. EMPLOYEE BENEFITS. (a) Comply in all material respects
with the applicable provisions of ERISA and the Code and (b) furnish to the
Administrative Agent (i) as soon as possible after, and in any event within
10 days after any Responsible Officer of any Borrower or any ERISA Affiliate
knows or has reason to know that, any ERISA Event has occurred that, alone or
together with any other ERISA Event could reasonably be expected to result in
liability of the Borrowers in an aggregate amount exceeding $1,000,000, a
statement of a Financial Officer of the Borrowers setting forth details as to
such ERISA Event and the action, if any, that the Borrowers propose to take
with respect thereto.
SECTION 5.07. MAINTAINING RECORDS; ACCESS TO PROPERTIES AND INSPECTIONS.
Keep proper books of record and account in which full, true and correct
entries in conformity with GAAP and all requirements of law are made of all
dealings and transactions in relation to its business and activities. Each
Loan Party will, and will cause each of its Subsidiaries to, permit any
representatives designated by the Administrative Agent or any Lender to visit
and inspect the financial records and the properties of the Borrowers or any
Subsidiary at reasonable times and as often as reasonably requested and to
make extracts from and copies of such financial records, and permit any
representatives designated by the Administrative Agent or any Lender to
discuss the affairs, finances and condition of the Borrowers or any
Subsidiary with the officers thereof and independent accountants therefor.
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SECTION 5.08. USE OF PROCEEDS. Use the proceeds of the Loans and request
the issuance of Letters of Credit only for the purposes set forth in the
preamble to this Agreement.
SECTION 5.09. COMPLIANCE WITH ENVIRONMENTAL LAWS. Comply, and cause all
lessees and other persons occupying its Properties to comply, in all material
respects with all Environmental Laws and Environmental Permits applicable to
its operations and Properties; obtain and renew all material Environmental
Permits necessary for its operations and Properties; and conduct any Remedial
Action in accordance with Environmental Laws; PROVIDED, HOWEVER, that neither
any Borrowers nor any of the Subsidiaries shall be required to undertake any
Remedial Action to the extent that its obligation to do so is being contested
in good faith and by proper proceedings and appropriate reserves are being
maintained with respect to such circumstances.
SECTION 5.10. PREPARATION OF ENVIRONMENTAL REPORTS. If a Default caused
by reason of a breach of Section 3.17 or 5.09 shall have occurred and be
continuing, at the request of the Required Lenders through the Administrative
Agent, provide to the Lenders within 45 days after such request, at the
expense of the Borrowers, an environmental site assessment report for the
Properties which are the subject of such Default prepared by an environmental
consulting firm acceptable to the Administrative Agent and indicating the
presence or absence of Hazardous Materials and the estimated cost of any
compliance or Remedial Action in connection with such Properties.
SECTION 5.11. AUDITS. From time to time upon the request of the
Collateral Agent or the Required Lenders through the Administrative Agent,
permit the Collateral Agent or the Lenders to conduct evaluations and
appraisals of (a) the Borrowers' practices in the computation of the
Borrowing Base and (b) the assets included in the Borrowing Base. In
connection therewith, Borrowers shall pay the costs of the Collateral Agent's
auditors in accordance with the Agent's Fee Letter.
SECTION 5.12. FURTHER ASSURANCES. Execute any and all further documents,
financing statements, agreements and instruments, and take all further action
(including filing Uniform Commercial Code and other financing statements,
mortgages and deeds of trust) that may be required under applicable law, or
that the Required Lenders, the Administrative Agent or the Collateral Agent
may reasonably request, in order to effectuate the transactions contemplated
by the Loan Documents and in order to grant, preserve, protect and perfect
the validity and first priority of the security interests created or intended
to be created by the Security Documents and the UK Charge Documents. The
Borrowers will cause any subsequently acquired or organized Domestic
Subsidiary which is a Material Subsidiary and any other Domestic Subsidiary
which becomes a Material Subsidiary to execute a Subsidiary Guarantee
Agreement, Indemnity Subrogation and Contribution Agreement and each
applicable Security Document in favor of the Collateral Agent. If any new
Domestic Subsidiary is to become a Borrower hereunder, it will execute and
deliver a Joinder Agreement and the Borrower Guarantee
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Agreement, Indemnity, Subrogation and Contribution Agreement and the Security
Agreement; PROVIDED, HOWEVER, that any new Borrower's Receivables and
Inventory may not be included in calculating the Formula Amount or Individual
Formula Amount until the Administrative Agent has completed its audit with
respect thereto with results satisfactory to it in its Permitted Discretion.
In addition, from time to time, the Borrowers will, at their cost and
expense, promptly secure the Obligations by pledging or creating, or causing
to be pledged or created, perfected security interests with respect to such
of the assets and properties of the Loan Parties as the Administrative Agent
or the Required Lenders shall designate (it being understood that it is the
intent of the parties that the Obligations shall be secured by substantially
all the assets of the Borrowers and their Domestic Subsidiaries (including
real and other properties acquired subsequent to the Closing Date)). Such
security interests and Liens will be created under the Security Documents and
other security agreements, mortgages, deeds of trust and other instruments
and documents in form and substance satisfactory to the Collateral Agent, and
the Borrowers shall deliver or cause to be delivered to the Lenders all such
instruments and documents (including legal opinions, title insurance policies
and lien searches) as the Collateral Agent shall reasonably request to
evidence compliance with this Section. The Borrowers agree to provide such
evidence as the Collateral Agent shall reasonably request as to the
perfection and priority status of each such security interest and Lien.
SECTION 5.13 GOVERNMENT RECEIVABLES. Notify the Administrative Agent
immediately if any Receivables arise out of contracts between any Borrower
and the United States, any state or any department, agency or instrumentality
of any of them and take all steps necessary to protect the Collateral Agent's
interest in the Collateral under the Federal Assignment of Claims Act or
other applicable state or local statutes or ordinances and deliver to the
Administrative Agent appropriately endorsed any instrument or chattel paper
connected with any Receivable arising out of contracts between any Loan Party
and the United States, any state or any department, agency of instrumentality
of any of them.
SECTION 5.14 INTELLECTUAL PROPERTY. (a) Each Loan Party shall
register or cause to be registered (to the extent not already registered)
with the United States Patent and Trademark Office or the United States
Copyright Office, as applicable, those intellectual property rights listed on
the exhibits to the Security Agreement within thirty (30) days of the date of
this Agreement. Each Loan Party shall register or cause to be registered
with the United States Patent and Trademark Office or the United States
Copyright Office, as applicable, those additional material intellectual
property rights developed or acquired by such Loan Party from time to time in
connection with any product prior to the sale or licensing of such product to
any third party, including without limitation revisions or additions to the
intellectual property rights listed on such exhibits, when such Loan Party
reasonably determines that such registration is appropriate; PROVIDED that
such Loan Party shall in any case register such additional patents, and/or
copyrights as are developed or
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obtained in connection with any product accounting for more than five percent
(5%) of such Loan Party's gross revenues in any calendar quarter.
Notwithstanding the foregoing, each Loan Party shall only be required to
register trademarks when such Loan Party reasonably determines that such
registration is appropriate.
(b) Each Loan Party shall execute and deliver such additional
instruments and documents from time to time as the Collateral Agent shall
reasonably request to perfect the Collateral Agent's security interest in the
Collateral consisting of Intellectual Property (as defined in the Security
Agreement).
(c) Each Loan Party shall (i) protect, defend and maintain the validity
and enforceability of the Intellectual Property, (ii) use commercially
reasonable efforts to detect infringements of the Intellectual Property and
promptly advise the Administrative Agent in writing of material infringements
detected, and (iii) not allow any Intellectual Property to be abandoned,
forfeited or dedicated to the public without the written consent of the
Required Lenders, which shall not be unreasonably withheld.
(d) The Collateral Agent shall have the right, but not the obligation,
to take, at Borrowers' sole expense, any actions that Borrowers are required
to take under this Section, but fail to take, after fifteen (15) days' notice
to Borrowers. Borrowers shall reimburse and indemnify the Administrative
Agent for all reasonable costs and reasonable expenses incurred in the
reasonable exercise of its rights under this Section.
SECTION 5.15 BLOCKED ACCOUNTS. All proceeds of Collateral shall, at
the direction of the Administrative Agent, be deposited by the Loan Parties
into a lock box account, dominion account or such other "blocked account"
("Blocked Accounts") with PNC or another bank reasonably acceptable to the
Administrative Agent, that enters into a Lock Box Agreement with the
Administrative Agent in form and substance acceptable to the Administrative
Agent. Each Loan Party shall issue to the institution with which the Blocked
Accounts are maintained an irrevocable letter of instruction directing said
bank to transfer such funds so deposited in accordance with a notice from the
Administrative Agent to the Administrative Agent, either to any account
maintained by the Administrative Agent at said bank or by wire transfer to
appropriate account(s) of the Administrative Agent. All funds deposited in
such Blocked Accounts shall immediately become the property of the
Administrative Agent and Borrowers shall obtain the agreement by such bank to
waive any offset rights against the funds so deposited (except any rights of
PNC as a Lender hereunder). Neither the Administrative Agent, the Collateral
Agent nor any Lender assumes any responsibility for such "blocked account"
arrangement, including without limitation, any claim of accord and
satisfaction or release with respect to deposits accepted by any bank
thereunder. Alternatively, the Administrative Agent may establish depository
accounts (the "Depository Accounts") in
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the name of the Administrative Agent at a bank or banks for the deposit of
such funds and the Loan Parties shall deposit all proceeds of Collateral or
cause same to be deposited, in kind, in such Depository Accounts in lieu of
depositing same to the Blocked Accounts.
All funds in the Blocked Accounts or Depository Accounts shall be
transferred daily to the Administrative Agent to be applied to outstanding
Revolving Loans which are ABR Loans, and applied to the Obligations as they
become due. Any funds remaining after such application may be transferred,
if all ABR Loans and all other Obligations then due have been paid in full,
to the Investment Account to be held as Cash Collateral hereunder and applied
to the Obligations as they become due. From time to time the Administrative
Agent shall, upon the request of the Borrowing Agent, transfer funds from the
Investment Account to Borrower's operating account, but Borrowers may not
make investments in Permitted Investments other than those held in the
Investment Account unless no Revolving Loans are outstanding and, after any
transfer of funds from the Investment Account, Undrawn Availability is at
least $10,000,000 or such lesser amount to which the Administrative Agent
otherwise consents.
SECTION 5.16. RECEIVABLES. (a) Each of the Receivables shall be a
bona fide and valid account representing a bona fide indebtedness incurred by
the Customer therein named and each of the Receivables proposed to be
included as an Eligible Receivable is for a fixed sum as set forth in the
invoice relating thereto (provided immaterial or unintentional invoice errors
shall not be deemed to be a breach hereof) with respect to an absolute sale
or lease and delivery of goods upon stated terms of a Borrower, or work,
labor or services theretofore rendered by a Borrower as of the date each
Receivable is created. Same shall be due and owing in accordance with the
applicable Borrower's standard terms of sale without dispute, setoff or
counterclaim except as may be stated on the Schedules of Receivables
delivered by Borrowers to the Administrative Agent.
(b) Each Customer, to the best of each Borrower's knowledge, as of the
date each Receivable is created, is and will be solvent and able to pay all
Receivables on which the Customer is obligated in full when due or with
respect to such Customers of any Borrower who are not solvent such Borrower
has set up on its books and in its financial records bad debt reserves
adequate to cover such Receivables.
(c) Each Borrower's chief executive office is located at the addresses
set forth on Schedule 3.20(a) or (b) hereto. Until written notice is given
to the Administrative Agent by the Borrowing Agent of any other office at
which any Borrower keeps its records pertaining to Receivables, all such
records shall be kept at such executive office.
(d) Until any Borrower's authority to do so is terminated by the
Administrative Agent (which notice the Administrative Agent may give at any
time following the occurrence of an Event of Default), each Borrower will, at
such Borrower's sole cost and expense, but on the Administrative Agent's
behalf and for the Administrative Agent's account, collect as the
Administrative Agent's property and in
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trust for the Administrative Agent all amounts received on Receivables, and
shall not commingle such collections with any Borrower's funds or use the
same except to pay Obligations. Each Borrower shall, upon request, deliver
to the Administrative Agent, or deposit in the Blocked Account, in original
form and on the date of receipt thereof, all checks, drafts, notes, money
orders, acceptances, cash and other evidences of Indebtedness.
(e) At any time following the occurrence of an Event of Default, the
Administrative Agent shall have the right to send notice of the assignment
of, and the Collateral Agent's security interest in, the Receivables to any
and all Customers or any third party holding or otherwise concerned with any
of the Collateral. Thereafter, the Collateral Agent shall have the sole
right to collect the Receivables, take possession of the Collateral, or both.
The Collateral Agent's actual collection expenses, including, but not
limited to, stationery and postage, telephone and telegraph, secretarial and
clerical expenses and the salaries of any collection personnel used for
collection, may be charged to Borrowers' Account and added to the Obligations.
(f) The Collateral Agent shall have the right to receive, endorse,
assign and/or deliver in the name of the Collateral Agent or any Borrower any
and all checks, drafts and other instruments for the payment of money
relating to the Receivables, and each Borrower hereby waives notice of
presentment, protest and non-payment of any instrument so endorsed. Each
Borrower hereby constitutes the Collateral Agent or its designee as such
Borrower's attorney with power (i) to endorse such Borrower's name upon any
notes, acceptances, checks, drafts, money orders or other evidences of
payment or Collateral; (ii) to sign such Borrower's name on any invoice or
xxxx of lading relating to any of the Receivables, drafts against Customers,
assignments and verifications of Receivables; (iii) to send verifications of
Receivables to any Customer; (iv) to sign such Borrower's name on all
financing statements or any other documents or instruments deemed necessary
or appropriate by the Collateral Agent to preserve, protect, or perfect the
Collateral Agent's interest in the Collateral and to file same; (v) following
an Event of Default, to demand payment of the Receivables; (vi) following an
Event of Default, to enforce payment of the Receivables by legal proceedings
or otherwise; (vii) following an Event of Default, to exercise all of
Borrowers' rights and remedies with respect to the collection of the
Receivables and any other Collateral; (viii)following an Event of Default,
to settle, adjust, compromise, extend or renew the Receivables; (ix)
following an Event of Default, to settle, adjust or compromise any legal
proceedings brought to collect Receivables; (x) following an Event of
Default, to prepare, file and sign such Borrower's name on a proof of claim
in bankruptcy or similar document against any Customer, (xi) following an
Event of Default, to prepare, file and sign such Borrower's name on any
notice of Lien., assignment or satisfaction of Lien or similar document in
connection with the Receivables; and (xii) to do all other acts and things
necessary to carry out this Agreement. All acts of said attorney or designee
are hereby ratified and approved, and said attorney or designee shall not be
liable for any acts of omission or commission nor for any error of judgment
or mistake of fact or of law, unless constituting willful
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misconduct or gross (not mere) negligence; this power being coupled with an
interest is irrevocable while any of the Obligations remain unpaid. The
Collateral Agent shall have the right at any time following the occurrence of
an Event of Default to change the address for delivery of mail addressed to
any Borrower to such address as the Collateral Agent may designate and to
receive, open and dispose of all mail addressed to any Borrower.
(g) Neither the Administrative Agent, the Collateral Agent nor any
Lender shall, under any circumstances or in any event whatsoever, have any
liability for any error or omission or delay of any kind occurring in the
settlement, collection or payment of any of the Receivables or any instrument
received in payment thereof, or for any damage resulting therefrom.
Following the occurrence of an Event of Default the Administrative Agent may,
without notice or consent from any Borrower, xxx upon or otherwise collect,
extend the time of payment of, compromise or settle for cash, credit or upon
any terms any of the Receivables or any other securities, instruments or
insurance applicable thereto and/or release any obligor thereof. The
Collateral Agent is authorized and empowered to accept following the
occurrence of an Event of Default the return of the goods represented by any
of the Receivables, without notice to or consent by any Borrower, all without
discharging or in any way affecting any Borrower's liability hereunder.
(h) No Borrower will, without the Administrative Agent's consent,
compromise or adjust any material amount of the Receivables or extend the
time for payment thereof or accept any material returns of merchandise or
grant any additional discounts, allowances or credits thereon except for
those compromises, adjustments, returns, discounts, credits and allowances as
have been heretofore customary in the business of such Borrower.
ARTICLE VI
NEGATIVE COVENANTS
The Borrowers covenant and agree with each Lender that, so long as this
Agreement shall remain in effect and until the Commitments have been
terminated and the principal of and interest on each Loan, all Fees and all
other expenses or amounts payable under any Loan Document have been paid in
full and all Letters of Credit have been canceled or have expired and all
amounts drawn thereunder have been reimbursed in full, unless the Required
Lenders shall otherwise consent in writing, no Borrower will nor will it
cause or permit any of the Subsidiaries to:
SECTION 6.01. INDEBTEDNESS. Incur, create, assume or permit to exist any
Indebtedness, except:
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(a) Indebtedness for borrowed money existing on the date hereof and set
forth in Schedule 6.01, but not any extensions, renewals or replacements of such
Indebtedness (unless otherwise permitted under this Section 6.01);
(b) Indebtedness created hereunder and under the other Loan Documents;
(c) Indebtedness evidenced by Capital Lease Obligations, or secured
pursuant to Section 6.02(h), in each case so long as the aggregate principal
amount of all Indebtedness permitted to be outstanding under this paragraph (c)
shall not exceed $5,000,000;
(d) Indebtedness in favor of a Lender (or an Affiliate thereof) under one
or more Hedging Agreements approved by the Administrative Agent (such approval
not to be unreasonably withheld);
(e) intercompany Indebtedness of Activision and its Subsidiaries to the
extent permitted by Sections 6.04(e), (g) and (o);
(f) Indebtedness with respect to any surety bonds required in the ordinary
course of business of the Borrowers and the Subsidiaries, PROVIDED that such
Indebtedness shall not at any time exceed $250,000 in the aggregate;
(g) Indebtedness of the European Distribution Subsidiaries in an aggregate
principal amount not to exceed $50,000,000 (or the equivalent thereof) at any
time outstanding, PROVIDED that such Indebtedness shall not be Guaranteed by any
Loan Party other than through one or more Letters of Credit issued hereunder to
support such Indebtedness in a face amount not in excess of $9,000,000;
(h) Indebtedness of Foreign Subsidiaries (other than the European
Distribution Subsidiaries) in an aggregate principal amount not to exceed
$15,000,000 (or the equivalent thereof) at any time outstanding, PROVIDED such
Indebtedness shall not be Guaranteed by any Loan Party;
(i) other unsecured Indebtedness of the Borrowers and the Subsidiaries in
an aggregate principal amount not to exceed $5,000,000 at any time outstanding;
(j) Subordinated Debt in an aggregate principal amount which does not
exceed at the time of incurrence the outstanding principal amount of the Term
Loans plus $15,000,000 in outstanding principal amount; provided that, so long
as the Term Loans are outstanding, the Net Cash Proceeds of any such
Subordinated Debt shall be applied to mandatory prepayment of the Term Loans in
accordance with Section 2.14(f); and
(k) Acquired Debt in connection with a Permitted Acquisition.
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SECTION 6.02. LIENS. Create, incur, assume or permit to exist any Lien on
any property or assets (including stock or other securities of any person,
including any Subsidiary) now owned or hereafter acquired by it or on any income
or revenues or rights in respect of any thereof, except:
(a) Liens on property or assets of the Borrowers and its Subsidiaries
existing on the date hereof and set forth in Schedule 6.02; PROVIDED that such
Liens shall secure only those obligations which they secure on the date hereof
and may not encumber Receivables;
(b) any Lien created under the Loan Documents;
(c) Liens for taxes not yet due or which are being contested in compliance
with Section 5.03; PROVIDED that the Lien shall have no effect on the priority
of the Liens under the Loan Documents or the value of the Collateral and a stay
of enforcement of any such Lien shall be in effect;
(d) carriers', warehousemen's, mechanics', materialmen's, repairmen's or
other like Liens arising in the ordinary course of business and securing
obligations that are not due and payable or which are being contested in
compliance with Section 5.03;
(e) Liens (other than any Lien imposed by ERISA), pledges and deposits
made in the ordinary course of business in compliance with workmen's
compensation, unemployment insurance and other social security laws or
regulations;
(f) deposits to secure the performance of bids, trade contracts (other
than for Indebtedness), leases (other than Capital Lease Obligations), statutory
obligations, surety and appeal bonds, performance bonds and other obligations of
a like nature incurred in the ordinary course of business;
(g) zoning restrictions, easements, rights-of-way, restrictions on use of
real property and other similar encumbrances incurred in the ordinary course of
business which, in the aggregate, are not substantial in amount and do not
materially detract from the value of the property subject thereto or interfere
with the ordinary conduct of the business of the Borrowers or any of its
Subsidiaries;
(h) purchase money security interests in real property, improvements
thereto or equipment hereafter acquired (or, in the case of improvements,
constructed) by the Borrowers or any Subsidiary; PROVIDED that (i) such security
interests secure Indebtedness permitted by Section 6.01, (ii) such security
interests are incurred, and the Indebtedness secured thereby is created, within
90 days after such acquisition (or construction), (iii) the Indebtedness secured
thereby does not exceed 85% of the lesser of the cost or the fair market value
of such real property, improvements or equipment at the
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time of such acquisition (or construction) and (iv) such security interests
do not apply to any other property or assets of the Borrowers or any
Subsidiary;
(i) Liens on assets of Foreign Subsidiaries; PROVIDED that (i) such Liens
do not extend to, or encumber, assets of the Borrowers or any of its Domestic
Subsidiaries and (ii) such Liens secure only Indebtedness incurred by such
Foreign Subsidiaries pursuant to Section 6.01 (g), (h) or (k); and
(j) Liens granted to licensors by a Loan Party which encumber only the
licensed intellectual property and inventory produced thereunder (but not any
Receivables from the sale, distribution or licensing thereof), are subordinated
to the Liens of the Collateral Agent on terms and conditions satisfactory to the
Collateral Agent and expressly permit the Liens granted by the Loan Documents
and the exercise of remedies thereunder.
SECTION 6.03. SALE AND LEASE-BACK TRANSACTIONS. Enter into any arrangement,
directly or indirectly, with any person whereby it shall sell or transfer any
property, real or personal, used or useful in its business, whether now owned or
hereafter acquired, and thereafter rent or lease such property or other property
which it intends to use for substantially the same purpose or purposes as the
property being sold or transferred unless (a) the sale of such property is
permitted by Section 6.05 and (b) the Capital Lease Obligations arising
therefrom are permitted by Section 6.01(c).
SECTION 6.04. INVESTMENTS, LOANS AND ADVANCES. Purchase, hold or acquire
any Equity Interests, evidences of indebtedness or other securities of, make or
permit to exist any loans or advances to, or make or permit to exist any
investment or any other interest in, any other person, except:
(a) investments by the Borrowers existing on the date hereof in the Equity
Interests of the Subsidiaries;
(b) Permitted Investments held in the Investment Account and, if Undrawn
Availability is at least $10,000,000 and there are no outstanding Revolving
Loans (or such lesser amount to which the Administrative Agent consents), other
Permitted Investments;
(c) Receivables owing to any Borrower or any of its Subsidiaries arising
from sales of Inventory under usual and customary terms in the ordinary course
of business;
(d) advances not to exceed $500,000 outstanding at any time to employees
of the Borrowers and the Subsidiaries to meet expenses incurred by such
employees in the ordinary course of business;
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(e) any wholly owned Subsidiary may make intercompany loans to a Borrower
or any other wholly owned Subsidiary and any Borrower may make intercompany
loans and advances to any wholly owned Subsidiary; PROVIDED that any promissory
notes evidencing such intercompany loans shall be pledged (and delivered) by the
applicable Borrower or the respective wholly owned Domestic Subsidiary that is
the lender of such intercompany loan as Collateral pursuant to the Pledge
Agreement; PROVIDED FURTHER that (i) any Borrower or any Domestic Subsidiaries
may make loans to and repay loans from any Foreign Subsidiaries pursuant to this
paragraph (e) only if, after giving effect thereto, the outstanding principal
amount of all loans made by Foreign Subsidiaries to Activision during any Fiscal
Year shall exceed the principal of loans made by any Borrower and its Domestic
Subsidiaries during such period and as of the end of each Fiscal Year the
outstanding principal amount of loans made by Foreign Subsidiaries shall exceed
the outstanding principal amount of loans made by the Borrowers and their
Domestic Subsidiaries by at least $4,000,000 and (ii) any loans made by any
Foreign Subsidiaries to any Borrower or any of its Domestic Subsidiaries
pursuant to this paragraph (e) shall be unsecured and subordinated to the
obligations of the Loan Parties pursuant to subordination provisions in
substantially the form of Exhibit J; and any loans made by any Loan Party to any
Foreign Subsidiary shall be evidenced by one or more revolving Master Notes
pledged to the Collateral Agent pursuant to the Pledge Agreement.
(f) the Borrowers may establish Subsidiaries to the extent permitted by
Section 6.15;
(g) the Borrowers and the Domestic wholly owned Subsidiaries may make
additional loans and advances to, or other investments in, Foreign Subsidiaries
of the Borrowers with the prior written consent of the Required Lenders;
(h) a Borrower or any wholly owned Subsidiary may acquire substantially
all the assets of, or more than 50% of the Equity Interests of, a person (such
assets or such person referred to herein as the "ACQUIRED ENTITY" and any
acquisition completed under this subsection 6.04(h) is a "PERMITTED
ACQUISITION"); PROVIDED that each of the following conditions is satisfied:
(i) the Acquired Entity shall be a going concern and shall be in a
line of business reasonably related to that of the Borrowers and their
Subsidiaries as conducted during the current and most recent calendar year;
(ii) the Acquired Entity shall have approved such transaction;
(iii) the Borrowers shall have delivered to the Administrative Agent
at least 5 Business Days prior to consummation of the acquisition a certificate
of a Financial Officer demonstrating, in reasonable detail, that, at the time of
such transaction (A) both before and after giving effect thereto, no Event of
Default or Default shall have occurred
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and be continuing or shall exist, (B) the Borrowers are in compliance with
the covenants set forth in Sections 6.09, 6.10, 6.11, 6.12 and 6.13 as of the
last day of the most recent fiscal quarter preceding such acquisition, and
would be in compliance on a PRO FORMA basis with such covenants as of the
last day of the month preceding such acquisition, and (C) all calculations
necessary to determine compliance with the conditions in clauses (vi) or
(vii) below. All PRO FORMA calculations required to be made pursuant to
this subsection 6.04(h) shall (i) include only those adjustments that would
be permitted or required by Regulation S-X, (ii) be based on reasonably
detailed written assumptions which accompany the certificate and shall be
acceptable to the Administrative Agent, and (iii) be certified by a Financial
Officer as having been prepared in good faith based upon reasonable
assumptions;
(iv) the Borrowers shall comply with Sections 5.12, 6.15 and the
relevant provisions of the other Loan Documents with respect to the Acquired
Entity and its assets or any new Subsidiary formed to effect the acquisition;
(v) the Borrowers shall have delivered to the Lenders
consolidating financial statements for each Borrower, each Subsidiary and the
Acquired Entity for the most recent fiscal year and fiscal quarter prior to the
date of acquistion in question, and the financial statements of the Acquired
Entity for the most recent fiscal year prior to the date of acquistion in
question audited by an independent certified public accountant; PROVIDED THAT if
the total amount expended (including the value of any Equity Issuance) is LESS
than $30,000,000 and the Cash Components for such acquisition are LESS than
$15,000,000, the Borrowers shall not be required to deliver financial statements
for the Acquired Entity audited by an independent certified public accountant to
the extent such statements have not been delivered to the Borrowers or their
subsidiaries;
(vi) for any acquisition in which the Cash Components are no more
than $4,000,000 for any individual acquisition or $13,000,000 in the aggregate
during the term of this Agreement, (a) the Fixed Charge Coverage Ratio for the
four quarters ending on the last day of the most recent fiscal quarter preceding
such acquisition was, and the Fixed Charge Coverage Ratio for the 12 months
ending on the last day of the month preceding such acquisition (such last day of
the preceding month or such last day of the preceding fiscal quarter, a
"Measurement Date"), would be, on a PRO FORMA basis, at least 0.75 to 1.0 if
the Measurement Date is on or prior to September 30, 1999 and at least 1.0 to
1.0 if the Measurement Date occurs thereafter and (b) after giving effect to the
acquisition, the actual Undrawn Availability at closing (calculated for these
purposes without including the Inventory or Receivables of the Acquired Entity
and without reserving for the Term Loans under Section 2.01(a)(iv)) is at least
the lesser of (x) $5,000,000 and (y) 10% of the sum of the amounts calculated
under clauses (i), (ii) and (v) of the definition of Formula Amount or if the
Administrative Agent has completed its audit of the Acquired Entity with results
satisfactory to the Administrative Agent in its Permitted Discretion, the actual
Undrawn Availability at closing calculated for the Borrowers and the Acquired
Entity (calculated for these purposes without reserving for
88
the Term Loans under Section 2.01(a)(iv)) is at least $10,000,000;
(vii) for any acquisition other than an acquisition described in
clause (vi), (a) the Cash Components may be no more than $15,000,000 for any
acquisition, no more than $40,000,000 in any twelve month period, and no more
than $60,000,000 during the term of this Agreement; (b) the Fixed Charge
Coverage Ratio for the four quarters ending the last day of the most recent
fiscal quarter preceding such acquisition was, and the Fixed Charge Coverage
Ratio for the 12 months ending on the last day of the month preceding such
acquisition would be, on a PRO FORMA basis, at least the higher of (x) 1.1 to
1.0 or (y) the ratio required by Section 6.10; and (c) after giving effect to
the acquisition, the PRO FORMA average daily Undrawn Availability at closing
(calculated for these purposes without including the Inventory or Receivables of
the Acquired Entity and without reserving for the Term Loans under Section
2.01(a)(iv)) for the most recent January to June period (or until June, 2000,
the Undrawn Availability at closing) would be greater than $15,000,000 or, if
the Administrative Agent has completed its audit of the Acquired Entity with
results satisfactory to the Administrative Agent in its Permitted Discretion,
the actual Undrawn Availability at closing calculated for the Borrowers and the
Acquired Entity (calculated for these purposes without reserving for the Term
Loans under Section 2.01(a)(iv)) is at least $20,000,000;
(viii) any Indebtedness incurred in connection with the acquisition,
including any Acquired Debt and any Subordinated Debt, must be permitted under
Section 6.01; and
(ix) in no event may any Equity Issuance in connection with any
acquisition exceed a number of shares of Activision common stock (or
equivalents) equal to 40% of the issued and outstanding common stock of
Activision on such date and all Equity Issuances shall be of common equity or
equivalents;
(i) the Borrowers may enter into Hedging Agreements to the extent
permitted in Section 6.01(d);
(k) Activision and the Subsidiaries may consummate the Transactions;
(l) the Borrowers may make investments in persons not constituting
subsidiaries PROVIDED that such person is in a line of business reasonably
related to the business of the Borrowers and their Subsidiaries as the
Borrowers, any single investment or series of related investments shall not
exceed $2,000,000; all such investments under this Section 6.04(l) shall not
exceed $5,000,000 in any twelve month period; and all capital stock or other
equity interests acquired by a Borrower or any subsidiary shall be pledged to
the Collateral Agent;.
(m) the Borrowers and their Subsidiaries may make advance payments of
royalties under license or distribution agreements in the ordinary course of
business;
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(n) Activision may make loans to directors and employees in
connection with the granting of stock options or as incentive or bonus
compensation; and
(o) loans from Activision to UK Sub evidenced by the Intercompany
Note may remain outstanding.
SECTION 6.05. MERGERS, CONSOLIDATIONS, SALES OF ASSETS AND ACQUISITIONS.
(a) Merge into or consolidate with any other person, or permit any other person
to merge into or consolidate with it, or sell, transfer, lease or otherwise
dispose of (in one transaction or in a series of transactions) all or any
substantial part of the assets of any Borrower (whether now owned or hereafter
acquired) or any Equity Interest of any Subsidiary, or purchase, lease or
otherwise acquire (in one transaction or a series of transactions) all or any
substantial part of the assets of any other person, except that (i) the
Borrowers and any Subsidiary may purchase and sell Inventory in the ordinary
course of business, (ii) the Borrowers or any wholly owned Subsidiary may make
acquisitions permitted under Section 6.04 above, (iii) if at the time thereof
and immediately after giving effect thereto no Event of Default or Default shall
have occurred and be continuing (x) any wholly owned Subsidiary may merge into a
Borrower in a transaction in which the Borrower is the surviving corporation and
(y) any wholly owned Subsidiary may merge into or consolidate with any other
wholly owned Subsidiary in a transaction in which the surviving entity is a
wholly owned Subsidiary and no person other than a Borrower or a wholly owned
Subsidiary receives any consideration, PROVIDED that if any such merger
described in this clause (y) shall involve a Domestic Subsidiary, the surviving
entity of such merger shall be a Domestic Subsidiary; and (iv) any Subsidiary
which is not a Material Subsidiary may be wound up and dissolved.
(b) Engage in any Asset Sale unless (i) such Asset Sale is for
consideration at least 85% of which is cash, (ii) such consideration is at least
equal to the fair market value of the assets being sold, transferred, leased or
disposed of, (iii) the fair market value of all assets sold, transferred, leased
or disposed of pursuant to this paragraph (b) shall not exceed (i) $5,000,000 in
any fiscal year or (ii) $10,000,000 in the aggregate, and (iv) the Net Cash
Proceeds are applied as required by subsection 2.14(c).
SECTION 6.06. DIVIDENDS AND DISTRIBUTIONS; RESTRICTIONS ON ABILITY OF
SUBSIDIARIES TO PAY DIVIDENDS. (a) Declare or pay, directly or indirectly, any
dividend or make any other distribution (by reduction of capital or otherwise),
whether in cash, property, securities or a combination thereof, with respect to
any of its Equity Interests or directly or indirectly redeem, purchase, retire
or otherwise acquire for value (or permit any Subsidiary to purchase or acquire)
any of its Equity Interests or set aside any amount for any such purpose;
PROVIDED, HOWEVER, that any wholly owned Subsidiary may declare and pay
dividends or make other distributions to the holders of its Equity Interests,
but other Subsidiaries which are not wholly owned may not make dividends or
distributions.
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(b) Permit its Subsidiaries to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any such Subsidiary to (i) pay any dividends or
make any other distributions on its Equity Interests or (ii) make or repay any
loans or advances to a Borrower or the parent of such Subsidiary except (w) for
such encumbrances or restrictions existing under or by reason of (A) applicable
law, (B) this Agreement and the other Loan Documents, (C) the Convertible
Subordinated Note Documents, (x) customary provisions restricting subletting or
assignment of any lease governing a leasehold interest of a Borrower or a
Subsidiary of a Borrower, (y) customary provisions restricting assignment of any
agreement entered into by a Borrower or a Subsidiary in the ordinary course of
business, and (z) any holder of a Lien permitted by Section 6.02 may restrict
the transfer of the asset or assets subject thereto.
SECTION 6.07. TRANSACTIONS WITH AFFILIATES. Except for transactions by or
among Loan Parties, sell or transfer any property or assets to, or purchase or
acquire any property or assets from, or otherwise engage in any other
transactions with, any of its Affiliates, except that:
(a) a Borrower or any Subsidiary may engage in any of the foregoing
transactions in the ordinary course of business at prices and on terms and
conditions not less favorable to such Borrower or such Subsidiary than could be
obtained on an arm's-length basis from unrelated third parties;
(b) dividends may be paid to the extent provided in Section 6.06;
(c) loans may be made and other transactions may be entered into between
and among the Borrowers, the Subsidiaries and their respective Affiliates to the
extent permitted by Sections 6.01 and 6.04; and
(d) a Borrower or any Subsidiary may pay reasonable compensation to
officers and directors in the ordinary course of business.
SECTION 6.08. [intentionally omitted].
SECTION 6.09. INTEREST COVERAGE RATIO. Permit the Interest Coverage Ratio
for (a) the six-month period ending September 30, 1999, (b) the nine-month
period ending December 31, 1999 or (c) any period of four consecutive fiscal
quarters thereafter, in each case taken as one accounting period, ended on the
last day of the applicable fiscal quarter to be less than (a) 5.00 to 1.00 for
the Borrowers and their Subsidiaries on a consolidated basis or (b) 5.00 to 1.00
for the Loan Parties on a consolidated basis.
SECTION 6.10. FIXED CHARGE COVERAGE RATIO. (a) Permit the Fixed Charge
Coverage Ratio of the Loan Parties on a consolidated basis for any period of
four consecutive fiscal quarters in each case taken as one accounting period,
ending on the last
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day of any fiscal quarter ending during any period set forth below to be less
than the ratio set forth opposite such period below:
PERIOD RATIO
------ -----
September 30, 1999 .75 to 1.00
December 31, 1999 .85 to 1.00
March 31, 2000 1.00 to 1.00
June 30, 2000 through and including 1.10 to 1.00
March 31, 2001
June 30, 2001 and thereafter 1.20 to 1.00
(b) Permit the Fixed Charge Coverage Ratio of Activision and its
Subsidiaries on a consolidated basis for any period of four consecutive fiscal
quarters in each case taken as one accounting period, ending on the last day of
any fiscal quarter ending during any period set forth below to be less than the
ratio set forth opposite such period below:
PERIOD RATIO
------ -----
September 30, 1999 .75 to 1.00
December 31, 1999 .85 to 1.00
March 31, 2000 1.00 to 1.00
June 30, 2000 through and including 1.10 to 1.00
March 31, 2001
June 30, 2001 and thereafter 1.20 to 1.00
SECTION 6.11. MAXIMUM LEVERAGE RATIO. (a) Permit the Leverage Ratio
of the Loan Parties on a consolidated basis at any time during a period set
forth below to be greater than the ratio set forth opposite such period below:
PERIOD RATIO
------ -----
Closing Date through and including 2.50 to 1.00
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September 30, 1999
October 1, 1999 through and 2.25 to 1.00
including December 31, 1999
January 1, 2000 and thereafter 2.00 to 1.00
(b) Permit the Leverage Ratio of Activision and its Subsidiaries on a
consolidated basis at any time during a period set forth below to be greater
than the ratio set forth opposite such period below:
PERIOD RATIO
------ -----
Closing Date through and including 2.75 to 1.00
September 30, 1999
October 1, 1999 through and 2.50 to 1.00
including December 31, 1999
January 1, 2000 and thereafter 2.00 to 1.00
SECTION 6.12. MINIMUM ADJUSTED EBITDA. (a) Permit Adjusted EBITDA of the
Borrowers and their Subsidiaries on a consolidated basis for any period of four
consecutive fiscal quarters, in each case taken as one accounting period, ended
on the last day of any fiscal quarter set forth below to be less than the amount
set forth opposite such fiscal quarter below:
FISCAL QUARTER AMOUNT
-------------- ------
September 30, 1999 $62,000,000
December 31, 1999 $70,000,000
March 31, 2000 through and $90,000,000
including December 31, 2000
March 31, 2001 through and $100,000,000
including December 31, 2001
March 31, 2002 and thereafter $120,000,000
(b) Permit Adjusted EBITDA of the Loan Parties on a consolidated
basis for any period of four consecutive fiscal quarters, in each case taken as
one accounting
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period, ended on the last day of any fiscal quarter set forth below to be
less than the amount set forth opposite such fiscal quarter below:
FISCAL QUARTER AMOUNT
-------------- ------
Fiscal Quarter Amount
September 30, 1999 $55,000,000
December 31, 1999 $60,000,000
March 31, 2000 through and including $75,000,000
December 31, 2000
March 31, 2001 through and including $85,000,000
December 31, 2001
March 31, 2002 and thereafter $105,000,000
SECTION 6.13. MINIMUM TANGIBLE NET WORTH. (a) Permit Tangible Net Worth
of the Borrowers and their Subsidiaries on a consolidated basis at any date set
forth below to be less than the amount set forth opposite such date below:
FISCAL QUARTER AMOUNT
-------------- ------
September 30, 1999 $60,000,000
December 31, 1999 $70,000,000
March 31, 2000 $70,000,000
June 30, 2000 $70,000,000
September 30, 2000 $75,000,000
December 31, 2000 $85,000,000
March 31, 2001 $90,000,000
June 30, 2001 $90,000,000
September 30, 2001 $95,000,000
December 31, 2001 $110,000,000
March 31, 2002 $115,000,000
(b) Permit Tangible Net Worth of the Loan Parties on a consolidated
basis at any date set forth below to be less than the amount set forth opposite
such date:
FISCAL QUARTER AMOUNT
-------------- ------
September 30, 1999 $26,000,000
December 31, 1999 $29,000,000
March 31, 2000 $34,000,000
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June 30, 2000 $36,000,000
September 30, 2000 $40,000,000
December 31, 2000 $47,000,000
March 31, 2001 $52,000,000
June 30, 2001 $55,000,000
September 30, 2001 $60,000,000
December 31, 2001 $70,000,000
March 31, 2002 $78,000,000
SECTION 6.14. LIMITATION ON MODIFICATIONS OF INDEBTEDNESS; MODIFICATIONS OF
CERTIFICATE OF INCORPORATION, BY-LAWS AND CERTAIN OTHER AGREEMENTS, ETC.
(a) Amend or modify, or permit the amendment or modification of, any provision
of existing Indebtedness or of any agreement (including any purchase agreement,
indenture, loan agreement or security agreement) relating thereto other than any
amendments or modifications to Indebtedness which do not in any way materially
adversely affect the interests of the Lenders, (b) make (or give any notice in
respect thereof) any voluntary or optional payment or prepayment on or
redemption or acquisition for value of, or any prepayment or redemption as a
result of any asset sale, change of control or similar event of, any Convertible
Subordinated Notes, any Subordinated Debt, the Intercompany Note or any other
Indebtedness that is expressly subordinated to the Obligations, (c) amend or
modify, or permit the amendment or modification of, the Merger Agreement or any
of the operating agreements entered into in connection therewith or any tax
sharing agreement, in each case except for amendments or modifications which are
not in any way adverse in any material respect to the interests of the Lenders
or (d) amend, modify or change its Certificate of Incorporation (including by
the filing or modification of any certificate of designation) or By-laws, or any
agreement entered into by it, with respect to its Equity Interests (including
any shareholders' agreement), or enter into any new agreement with respect to
its Equity Interests, other than any amendments, modifications or changes
pursuant to this clause (d) or any such new agreements pursuant to this clause
(d) which do not in any way materially adversely affect the interests of the
Lenders.
SECTION 6.15. LIMITATION ON CREATION OF SUBSIDIARIES. Establish or create
any additional Subsidiaries; PROVIDED that the Borrowers may establish or create
one or more Subsidiaries of the Borrowers so long as (a) 100% of the Equity
Interests of any new Domestic Subsidiary owned by a Loan Party (or all the
Equity Interests of any new Foreign Subsidiary that is owned by any Loan Party,
except that not more than 65% of the voting Equity Interests of any such Foreign
Subsidiary shall be required to be so pledged) is upon the creation or
establishment of any such new Subsidiary pledged and delivered to the Collateral
Agent for the benefit of the Secured Parties under the Pledge Agreement and (b)
upon the creation or establishment of any such new Domestic Subsidiary such
Domestic Subsidiary becomes a party to the applicable Security Documents in
accordance with Section 5.12 and the other Loan Documents.
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SECTION 6.16. BUSINESS. With respect to the Borrowers and their
Subsidiaries, engage (directly or indirectly) in any business other than the
business in which the Borrowers and their Subsidiaries are engaged on the
Closing Date and other businesses reasonably related thereto.
SECTION 6.17. FISCAL YEAR; ACCOUNTING CHANGES. Change its fiscal year end
to a date other than March 31 or make any change in accounting treatment and
reporting practices except as required by GAAP.
ARTICLE VII
EVENTS OF DEFAULT
In case of the happening of any of the following events ("EVENTS OF
DEFAULT"):
(a) any representation or warranty made or deemed made in or in
connection with any Loan Document or the borrowings or issuances of Letters of
Credit hereunder, or any representation, warranty, statement or information
contained in any report, certificate, financial statement or other instrument
furnished in connection with or pursuant to any Loan Document, shall prove to
have been false or misleading in any material respect when so made, deemed made
or furnished;
(b) default shall be made in the payment of any principal of any Loan
or the reimbursement with respect to any L/C Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or by acceleration thereof or otherwise;
(c) default shall be made in the payment of any interest on any Loan
or any Fee or L/C Disbursement or any other amount (other than an amount
referred to in (b) above) due under any Loan Document, when and as the same
shall become due and payable, and such default shall continue unremedied for a
period of three Business Days;
(d) default shall be made in the due observance or performance by any
Borrowers or any Subsidiary of any covenant, condition or agreement contained in
Section 5.01(a), 5.05 or 5.08 or in Article VI;
(e) default shall be made in the due observance or performance by any
Borrower or any Subsidiary or by UK Sub in any UK Charge Document of any
covenant, condition or agreement contained in any Loan Document (other than
those specified in (b), (c) or (d) above) and such default shall continue
unremedied for a period of 30 days;
(f) any Loan Party or UK Sub shall (i) fail to pay any principal or
interest, regardless of amount, due in respect of any Indebtedness in a
principal amount in excess
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of $2,000,000, when and as the same shall become due and payable, or (ii)
fail to observe or perform any other term, covenant, condition or agreement
contained in any agreement or instrument evidencing or governing any such
Indebtedness if the effect of any failure referred to in this clause (ii) is
to cause, or to permit the holder or holders of such Indebtedness or a
trustee on its or their behalf (with or without the giving of notice, the
lapse of time or both) to cause, such Indebtedness to become due prior to its
stated maturity;
(g) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i) relief
in respect of any Borrower or any Subsidiary, or of a substantial part of the
property or assets of any Borrower or a Subsidiary, under Title 11 of the United
States Code, as now constituted or hereafter amended, or any other Federal,
state or foreign bankruptcy, insolvency, receivership or similar law, (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for any Borrower or any Subsidiary or for a substantial part of
the property or assets of any Borrower or a Subsidiary or (iii) the winding-up
or liquidation of any Borrower or any Subsidiary; and such proceeding or
petition shall continue undismissed for 60 days or an order or decree approving
or ordering any of the foregoing shall be entered;
(h) any Borrower or any Subsidiary shall (i) voluntarily commence any
proceeding or file any petition seeking relief under Title 11 of the United
States Code, as now constituted or hereafter amended, or any other Federal,
state or foreign bankruptcy, insolvency, receivership or similar law,
(ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or the filing of any petition described in
(g) above, (iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for any Borrower or any
Subsidiary or for a substantial part of the property or assets of any Borrower
or any Subsidiary, (iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v) make a general assignment
for the benefit of creditors, (vi) become unable, admit in writing its inability
or fail generally to pay its debts as they become due or (vii) take any action
for the purpose of effecting any of the foregoing;
(i) one or more judgments for the payment of money in an aggregate
amount in excess of $250,000 be rendered against any Borrower, any Loan Party or
any combination thereof, unless the same shall be contested in good faith, the
Borrowers have established reserves reasonably satisfactory to the
Administrative Agent and enforcement shall be effectively stayed, satisfied, or
discharged within forty (40) days or any action shall be legally taken by a
judgment creditor to levy upon assets or properties of the Borrowers or any Loan
Party to enforce any such judgment;
(j) an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other such ERISA Events, could
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reasonably be expected to result in liability of the Borrowers and their ERISA
Affiliates in an aggregate amount exceeding $2,000,000;
(k) any security interest purported to be created by any Security
Document or UK Charge Document shall cease to be, or shall be asserted by any
Borrowers or any other Loan Party not to be, a valid, perfected, first priority
(except as otherwise expressly provided in this Agreement or such Security
Document security interest in the securities, assets or properties covered
thereby, except to the extent that any such loss of perfection or priority
results from the failure of the Collateral Agent to maintain possession of
certificates representing securities pledged under the Pledge Agreement and
except to the extent that such loss is covered by a lender's title insurance
policy and the related insurer promptly after such loss shall have acknowledged
in writing that such loss is covered by such title insurance policy;
(l) any of the Obligations shall cease to constitute "Senior
Indebtedness" under and as defined in the Convertible Subordinated Note
Indenture, any Subordinated Debt, the Intercompany Note or any Master Note;
(m) there shall have occurred a Change in Control;
(n) issuance of a notice of Lien, levy, assessment, injunction or
attachment against a material portion of the property of any Loan Party or UK
Sub, or any portion of the Collateral shall be seized or taken by any
Governmental Agency or the title or right of any Loan Party which is the owner
of any material portion, or the Collateral shall have become the subject matter
of any litigation which, in the opinion of the Required Lenders, could
reasonably be expected upon final determination, to result in the impairment or
loss of the security provided by the Security Documents;
(o) termination (other than as a result of any Asset Sale, merger or
liquidation of a Subsidiary permitted hereunder) or breach of any Subsidiary
Guarantee Agreement, or any Subsidiary Guarantor attempts to terminate,
challenge the validity of, or its liability under, any such Subsidiary Guarantee
Agreement or UK Sub attempts to challenge the validity of, or its liability
under the Intercompany Note or any UK Charge Document;
then, and in every such event (other than an event with respect to any Borrower
described in paragraph (g) or (h) above), and at any time thereafter during the
continuance of such event, the Administrative Agent may, and at the request of
the Required Lenders shall, by notice to the Borrowing Agent, take either or
both of the following actions, at the same or different times: (i) terminate
forthwith the Commitments and (ii) declare the Loans then outstanding to be
forthwith due and payable in whole or in part, whereupon the principal of the
Loans so declared to be due and payable, together with accrued interest thereon
and any unpaid accrued Fees and all other liabilities of the Borrowers accrued
hereunder and under any other Loan Document, shall become forthwith due and
payable, without
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presentment, demand, protest or any other notice of any kind, all of which
are hereby expressly waived by the Borrowers, anything contained herein or in
any other Loan Document to the contrary notwithstanding; and in any event
with respect to any Borrower described in paragraph (g) or (h) above, the
Commitments shall automatically terminate and the principal of the Loans then
outstanding, together with accrued interest thereon and any unpaid accrued
Fees and all other liabilities of the Borrowers accrued hereunder and under
any other Loan Document, shall automatically become due and payable, without
presentment, demand, protest or any other notice of any kind, all of which
are hereby expressly waived by the Borrowers, anything contained herein or in
any other Loan Document to the contrary notwithstanding.
The Administrative Agent shall have the right in its sole discretion to
determine which rights, Liens, security interests or remedies the Administrative
Agent may at any time pursue, relinquish, subordinate, or modify or to take any
other action with respect thereto and such determination will not in any way
modify or affect any of the Administrative Agent's or Collateral Agent's or
Lenders' rights hereunder.
ARTICLE VIII
THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT
In order to expedite the transactions contemplated by this Agreement, PNC
Bank, National Association, is hereby appointed to act as Administrative Agent
and Collateral Agent on behalf of the Lenders and the Issuing Bank (for purposes
of this Article VIII, the Administrative Agent and the Collateral Agent are
referred to collectively as the "AGENTS"). Each of the Lenders and each
assignee of any such Lender, hereby irrevocably authorizes the Agents to take
such actions on behalf of such Lender or assignee or the Issuing Bank and to
exercise such powers as are specifically delegated to the Agents by the terms
and provisions hereof and of the other Loan Documents, together with such
actions and powers as are reasonably incidental thereto. As to any matters not
expressly provided for by this Agreement (including without limitation,
collection of the Obligations) the Agents shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Required Lenders (or as otherwise required by
Section 9.08(b)), and such instructions shall be binding; PROVIDED, HOWEVER,
that the Agents shall not be required to take any action which exposes either of
them to liability or which is contrary to this Agreement or the other Loan
Documents or applicable law unless the Agents are furnished with an
indemnification reasonably satisfactory to each of them with respect thereto.
The Administrative Agent is hereby expressly authorized by the Lenders and the
Issuing Bank, without hereby limiting any implied authority, (a) to receive on
behalf of the Lenders and the Issuing Bank all payments of principal of and
interest on the Loans, all payments in respect of L/C Disbursements and all
other amounts due to the Lenders hereunder, and promptly to
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distribute to each Lender or the Issuing Bank its proper share of each
payment so received; (b) to give notice on behalf of each of the Lenders to
the Borrowers of any Event of Default specified in this Agreement of which
the Administrative Agent has actual knowledge acquired in connection with its
agency hereunder; and (c) to distribute to each Lender copies of all notices,
financial statements and other materials delivered by the Borrowers or any
other Loan Party pursuant to this Agreement or the other Loan Documents as
received by the Administrative Agent. Without limiting the generality of the
foregoing, the Agents are hereby expressly authorized to execute any and all
documents (including releases) with respect to the Collateral and the rights
of the Secured Parties with respect thereto, as contemplated by and in
accordance with the provisions of this Agreement and the Security Documents.
Agents shall have no duties or responsibilities except those expressly set
forth in the Loan Documents. Neither the Agents nor any of their respective
directors, officers, employees or agents shall be liable as such for any action
taken or omitted by any of them except for its or his own gross negligence or
willful misconduct, or be responsible for any statement, warranty or
representation herein or in any Loan Document or the contents of any document
delivered in connection herewith, or be required to ascertain or to make any
inquiry concerning the performance or observance by the Borrowers or any other
Loan Party of any of the terms, conditions, covenants or agreements contained in
any Loan Document. The Agents shall not be responsible to the Lenders for the
due execution, genuineness, validity, enforceability or effectiveness of this
Agreement or any other Loan Documents, instruments or agreements. The Agents
shall not be under any obligation to any Lender to ascertain or to inquire as to
the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any of the other Loan Documents, or to inspect
the properties, books or records of the Borrowers or any other Loan Party. The
duties of the Agents as respects the Loans to the Borrowers shall be mechanical
and administrative in nature; the Agents shall not have by reason of this
Agreement or any other Loan Document a fiduciary relationship in respect of any
Lender; and nothing in this Agreement, expressed or implied, is intended to or
shall be so construed as to impose upon the Agents any obligations in respect of
this Agreement except as expressly set forth herein.
The Agents shall in all cases be fully protected in acting, or refraining
from acting, in accordance with written instructions signed by the Required
Lenders (or as otherwise required by Section 9.08(b)) and, except as otherwise
specifically provided herein, such instructions and any action or inaction
pursuant thereto shall be binding on all the Lenders. Each Agent shall, in the
absence of actual knowledge to the contrary, be entitled to rely on any
instrument or document believed by it in good faith to be genuine and correct
and to have been signed or sent by the proper person or persons. Neither the
Agents nor any of their respective directors, officers, employees or agents
shall have any responsibility to the Borrowers or any other Loan Party on
account of the failure of or
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delay in performance or breach by any Lender or the Issuing Bank of any of
its obligations hereunder or to any Lender or the Issuing Bank on account of
the failure of or delay in performance or breach by any other Lender or the
Issuing Bank or the Borrowers or any other Loan Party of any of their
respective obligations hereunder or under any other Loan Document or in
connection herewith or therewith. Each of the Agents may execute any and all
duties hereunder by or through agents or employees and shall be entitled to
rely upon the advice of legal counsel selected by it with respect to all
matters arising hereunder and shall not be liable for any action taken or
suffered in good faith by it in accordance with the advice of such counsel
and the term "Lender" or any similar term shall, unless the context clearly
otherwise indicates, include the Administrative Agent and the Collateral
Agent in its individual capacity as a Lender.
The Agents shall have no duty or responsibility, either initially or on a
continuing basis, to provide any Lender with any credit or other information
with respect thereto, whether coming into its possession before making of the
Loans or at any time or times thereafter except as shall be provided by the
Borrowers pursuant to the terms of this Agreement. The Agents shall not be
responsible to any Lender for any recitals, statements, information,
representations or warranties herein or in any agreement, document, certificate
or a statement delivered in connection herewith or for the execution,
effectiveness, genuineness, validity, enforceability, collectibility or
sufficiency of this Agreement or any other Loan Document, or of the financial
condition of Borrowers, or be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or conditions of this
Agreement, the other Loan Documents or the financial condition of the Borrowers
or any of its subsidiaries, or the existence of any Event of Default or any
Default.
Either Agent may resign on sixty (60) days' written notice to each of the
Lenders and the Borrowers and upon such resignation, the Required Lenders will
promptly designate a successor Administrative Agent or Collateral Agent, as the
case may be, reasonably satisfactory to the Borrowers.
Any such successor Administrative Agent or Collateral shall succeed to the
rights, powers and duties of the Administrative Agent or Collateral Agent, and
the term "the Administrative Agent" or "the Collateral Agent" shall mean such
successor Agent effective upon its appointment, and the former Agent's rights,
powers and duties as Agent shall be terminated, without any other or further act
or deed on the part of such former Agent. After any Agent's resignation, the
provisions of this Article VIII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was an Agent under this Agreement.
If either Agent shall request instructions from Lenders with respect to any
act or action (including failure to act) in connection with this Agreement or
any other Loan Document, such Agent shall be entitled to refrain from such act
or taking such action unless and until it shall have received instructions from
the Required Lenders; and neither Agent shall incur liability to any person by
reason of so refraining. Without limiting the foregoing, Lenders shall not have
any right of action whatsoever against either Agent as a
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result of its acting or refraining from acting hereunder in accordance with
the instructions of the Required Lenders.
The Administrative Agent shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice, statement,
certificate, telex, teletype or telecopier message, cablegram, order or other
document or telephone message believed by it to be genuine and correct and to
have been signed, sent or made by the proper person or entity, and, with respect
to all legal matters pertaining to this Agreement and the Loan Documents and its
duties hereunder, upon advice of counsel selected by it. The Agents may employ
agents and attorneys-in-fact and shall not be liable for the default or
misconduct of any such agents or attorneys-in-fact selected by the applicable
Agent with reasonable care.
No Agent shall be deemed to have knowledge or notice of the occurrence of
any Default or Event of Default hereunder or under the other Loan Documents,
unless it has received notice from a Lender or the Borrowers referring to this
Agreement or the other Loan Documents, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event
that an Agent receives such a notice, it shall give notice thereof to the
Lenders. The Agents shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Lenders;
PROVIDED, THAT, unless and until the Agents shall have received such directions,
the Agents may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of Lenders.
The Lenders hereby acknowledge that neither Agent shall be under any duty
to take any discretionary action permitted to be taken by it pursuant to the
provisions of this Agreement unless it shall be requested in writing to do so by
the Required Lenders.
With respect to the Loans made by it hereunder, each Agent in its
individual capacity and not as Agent shall have the same rights and powers as
any other Lender and may exercise the same as though it were not an Agent, and
the Agents and their Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Borrowers or any Subsidiary or
other Affiliate thereof as if it were not an Agent.
Each Lender agrees (a) to reimburse the Agents, on demand, in the amount of
its pro rata share (based on the aggregate amount of its outstanding Term Loans
and Revolving Credit Commitments hereunder) of any expenses incurred for the
benefit of the Lenders by the Agents, including counsel fees and compensation of
agents and employees paid for services rendered on behalf of the Lenders, that
shall not have been reimbursed by the Borrowers and (b) to indemnify and hold
harmless each Agent and any of its directors, officers, employees or agents, on
demand, in the amount of such pro rata share, from and against any and all
liabilities, taxes, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or
102
nature whatsoever that may be imposed on, incurred by or asserted against it
in its capacity as Agent or any of them in any way relating to or arising
out of this Agreement or any other Loan Document or any action taken or
omitted by it or any of them under this Agreement or any other Loan Document,
to the extent the same shall not have been reimbursed by the Borrowers or any
other Loan Party, PROVIDED that no Lender shall be liable to an Agent or any
such other indemnified person for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements that are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the
gross negligence or willful misconduct of such Agent or any of its directors,
officers, employees or agents. Each Revolving Credit Lender agrees to
reimburse the Issuing Bank and its directors, employees and agents, in each
case, to the same extent and subject to the same limitations as provided
above for the Agents.
Each Lender acknowledges that it has, independently and without reliance
upon the Agents or any other Lender and based on such 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 upon the Agents or any other Lender and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based
upon this Agreement or any other Loan Document, any related agreement or any
document furnished hereunder or thereunder. Each of the parties hereto
acknowledges and agrees that the Syndication Agent shall not have any duties,
responsibilities, obligations or liabilities, as such, hereunder or under the
other Loan Documents.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. NOTICES. Notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by telecopy, as follows:
(a) if to the Borrowers or the Borrowing Agent, to Activision, Inc.
at 0000 Xxxxx Xxxx Xxxx., Xxxxx Xxxxxx, Xxxxxxxxxx 00000, Attention of Chief
Financial Officer (Telecopy No. 310-255-2191);
(b) if to the Administrative Agent, to PNC Bank, National
Association, Xxx Xxxxx Xxxxxx Xxxxxxxxx, Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000,
Attention of Xxxx Peak, (Telecopy No. 000-000-0000 ); and
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(c) if to a Lender, to it at its address (or telecopy number) set
forth on Schedule 2.01 or in the Assignment and Acceptance pursuant to which
such Lender shall have become a party hereto.
Any party may change the directions for delivery of notices hereunder by
notice delivered in accordance with this Section 9.01. All notices and other
communications given to any party hereto in accordance with the provisions of
this Agreement shall be deemed to have been given on the date of receipt if
delivered by hand or overnight courier service or sent by telecopy or on the
date five Business Days after dispatch by certified or registered mail if
mailed, in each case delivered, sent or mailed (properly addressed) to such
party as provided in this Section 9.01 or in accordance with the latest
unrevoked direction from such party given in accordance with this Section 9.01.
SECTION 9.02. SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by the Borrowers herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Lenders and the Issuing Bank and shall survive the
making by the Lenders of the Loans and the issuance of Letters of Credit by the
Issuing Bank, regardless of any investigation made by the Lenders or the Issuing
Bank or on their behalf, and shall continue in full force and effect as long as
the principal of or any accrued interest on any Loan or any Fee or any other
amount payable under this Agreement or any other Loan Document is outstanding
and unpaid or any Letter of Credit is outstanding and so long as the Commitments
have not been terminated. The provisions of Sections 2.16, 2.18, 2.19, 2.23 and
9.05 shall remain operative and in full force and effect regardless of the
expiration of the term of this Agreement, the consummation of the transactions
contemplated hereby, the repayment of any of the Loans, the expiration of the
Commitments, the expiration of any Letter of Credit, the invalidity or
unenforceability of any term or provision of this Agreement or any other Loan
Document, or any investigation made by or on behalf of the Administrative Agent,
the Collateral Agent, any Lender or the Issuing Bank.
SECTION 9.03. BINDING EFFECT. This Agreement shall become effective when it
shall have been executed by the Borrowers and the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective permitted successors and assigns.
SECTION 9.04. SUCCESSORS AND ASSIGNS. (a) Whenever in this Agreement any
of the parties hereto is referred to, such reference shall be deemed to include
the permitted successors and assigns of such party; and all covenants, promises
and agreements by or on behalf of the Borrowers, the Administrative Agent, the
Issuing Bank or the Lenders that are contained in this Agreement shall bind and
inure to the benefit of their respective successors and assigns.
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(b) Each Lender may assign to one or more assignees all or a portion
of its interests, rights and obligations under this Agreement (including all or
a portion of its Commitment and the Loans at the time owing to it); PROVIDED,
HOWEVER, that (i) except in the case of an assignment to a Lender or an
Affiliate or Related Fund of such Lender, (x) the Borrowers and the
Administrative Agent (and, in the case of any assignment of a Revolving Credit
Commitment, the Issuing Bank) must give their prior written consent to such
assignment (which consent shall not be unreasonably withheld or delayed);
PROVIDED, HOWEVER, that the consent of the Borrowers shall not be required to
any such assignment during the continuance of any Event of Default described in
subsection (g) or (h) of Article VII, and (y) the amount of the Commitment of
the assigning Lender subject to each such assignment (determined as of the date
the Assignment and Acceptance with respect to such assignment is delivered to
the Administrative Agent) shall not be less than $5,000,000 (or, if less, the
entire remaining amount of such Lender's Commitment) or such lesser amount as
the Borrowers and the Administrative Agent may from time to time agree (such
agreement to be conclusively evidenced by the execution of the related
Assignment and Acceptance by all the parties thereto), (ii) the parties to each
such assignment shall execute and deliver to the Administrative Agent an
Assignment and Acceptance, together (except in the case of any assignment to an
Affiliate or a Related Fund) with a processing and recordation fee of $[3,500]
(which such fee shall not be required to be paid by the Syndication Agent upon
any assignment by it) and (iii) the assignee, if it shall not be a Lender, shall
deliver to the Administrative Agent an Administrative Questionnaire. Upon
acceptance and recording pursuant to paragraph (e) of this Section 9.04, from
and after the effective date specified in each Assignment and Acceptance, (A)
the assignee thereunder shall be a party hereto and, to the extent of the
interest assigned by such Assignment and Acceptance, have the rights and
obligations of a Lender under this Agreement and (B) the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Acceptance, 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 but shall continue to be entitled to the
benefits of Sections 2.14, 2.16, 2.20 and 9.05, as well as to any Fees accrued
for its account and not yet paid).
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as
follows: (i) such assigning Lender warrants that it is the legal and beneficial
owner of the interest being assigned thereby free and clear of any adverse claim
and that its Term Loan Commitment and Revolving Credit Commitment, and the
outstanding balances of its Term Loans and Revolving Loans, in each case without
giving effect to assignments thereof which have not become effective, are as set
forth in such Assignment and Acceptance, (ii) except as set forth in (i) above,
such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
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made in or in connection with this Agreement, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
any other Loan Document or any other instrument or document furnished pursuant
hereto, or the financial condition of the Borrowers or any Subsidiary or the
performance or observance by the Borrowers or any Subsidiary of any of its
obligations under this Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto; (iii) such assignee represents
and warrants that it is legally authorized to enter into such Assignment and
Acceptance; (iv) such assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial statements referred
to in Section 3.05(a) or delivered pursuant to Section 5.04 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; (v) such
assignee will independently and without reliance upon the Administrative Agent,
the Collateral Agent, such assigning Lender or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (vi) such assignee appoints and authorizes the Administrative
Agent and the Collateral Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to the Administrative
Agent and the Collateral Agent, respectively, by the terms hereof, together with
such powers as are reasonably incidental thereto; and (vii) such assignee agrees
that it will perform in accordance with their terms all the obligations which by
the terms of this Agreement are required to be performed by it as a Lender.
(d) The Administrative Agent, acting for this purpose as an agent of
the Borrowers, shall maintain at one of its offices a copy of each Assignment
and Acceptance delivered to it and a register for the recordation of the names
and addresses of the Lenders, and the Commitment of, and principal amount of the
Loans owing to, each Lender pursuant to the terms hereof from time to time (the
"REGISTER"). The entries in the Register shall be conclusive and the Borrowers,
the Administrative Agent, the Issuing Bank, the Collateral Agent and the Lenders
may treat each person whose name is recorded in the Register pursuant to the
terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for
inspection by the Borrowers, the Issuing Bank, the Collateral Agent and any
Lender, at any reasonable time and from time to time upon reasonable prior
notice.
(e) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, an Administrative Questionnaire
completed in respect of the assignee (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in
paragraph (b) above and, if required, the written consent of the Borrowers, the
Issuing Bank and the Administrative Agent to such assignment, the Administrative
Agent shall (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register and (iii) give prompt notice
thereof to the Lenders and the Issuing Bank. No assignment shall be effective
unless it has been recorded in the Register as provided in this paragraph (e).
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(f) Each Lender may without the consent of the Borrowers, the Issuing
Bank or the Administrative Agent sell participations to one or more banks or
other entities in all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans owing to
it); PROVIDED, HOWEVER, that (i) such Lender's obligations under this Agreement
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) the
participating banks or other entities shall be entitled to the benefit of the
cost protection provisions contained in Sections 2.16 and 2.18 to the same
extent as if they were Lenders and (iv) the Borrowers, the Administrative Agent,
the Issuing Bank and the Lenders shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and obligations under this
Agreement, and such Lender shall retain the sole right to enforce the
obligations of the Borrowers relating to the Loans or L/C Disbursements and to
approve any amendment, modification or waiver of any provision of this Agreement
(other than amendments, modifications or waivers decreasing any fees payable
hereunder or the amount of principal of or the rate at which interest is payable
on the Loans, extending any scheduled principal payment date or date fixed for
the payment of interest on the Loans, increasing or extending the Commitments or
releasing any Subsidiary Guarantor or all or any substantial part of the
Collateral).
(g) Any Lender or participant may, in connection with any assignment
or participation or proposed assignment or participation pursuant to this
Section 9.04, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrowers furnished to such Lender
by or on behalf of the Borrowers; PROVIDED that, prior to any such disclosure of
information designated by the Borrowers as confidential, each such assignee or
participant or proposed assignee or participant shall execute an agreement
whereby such assignee or participant shall agree (subject to customary
exceptions) to preserve the confidentiality of such confidential information on
terms no less restrictive than those applicable to the Lenders pursuant to
Section 9.16.
(h) Any Lender may at any time assign all or any portion of its
rights under this Agreement to secure extensions of credit to such Lender or in
support of obligations owed by such Lender; PROVIDED that no such assignment
shall release a Lender from any of its obligations hereunder or substitute any
such assignee for such Lender as a party hereto.
(i) Notwithstanding anything to the contrary contained herein, any
Lender (a "GRANTING LENDER") may grant to a special purpose funding vehicle (an
"SPC"), identified as such in writing from time to time by the Granting Lender
to the Administrative Agent and the Borrowers, the option to provide to the
Borrowers all or any part of any Loan that such Granting Lender would otherwise
be obligated to make to the Borrowers pursuant to this Agreement; PROVIDED
that (i) nothing herein shall constitute a commitment by any SPC to make any
Loan and (ii) if an SPC elects not to exercise such option or otherwise fails to
provide all or any part of such Loan, the
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Granting Lender shall be obligated to make such Loan pursuant to the terms
hereof. The making of a Loan by an SPC hereunder shall utilize the
Commitment of the Granting Lender to the same extent, and as if, such Loan
were made by such Granting Lender. Each party hereto hereby agrees that no
SPC shall be liable for any indemnity or similar payment obligation under
this Agreement (all liability for which shall remain with the Granting
Lender). In furtherance of the foregoing, each party hereto hereby agrees
(which agreement shall survive the termination of this Agreement) that, prior
to the date that is one year and one day after the payment in full of all
outstanding commercial paper or other senior indebtedness of any SPC, it will
not institute against, or join any other person in instituting against, such
SPC any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings under the laws of the United States or any State thereof. In
addition, notwithstanding anything to the contrary contained in this Section
9.04, any SPC may (i) with notice to, but without the prior written consent
of, the Borrowers and the Administrative Agent and without paying any
processing fee therefore, assign all or a portion of its interests in any
Loans to the Granting Lender or to any financial institutions (consented to
by the Borrowers and Administrative Agent) providing liquidity and/or credit
support to or for the account of such SPC to support the funding or
maintenance of Loans and (ii) disclose on a confidential basis any non-public
information relating to its Loans to any rating agency, commercial paper
dealer or provider of any surety, guarantee or credit or liquidity
enhancement to such SPC.
(j) No Borrower shall assign or delegate any of its rights or duties
hereunder without the prior written consent of the Administrative Agent, the
Issuing Bank and each Lender, and any attempted assignment without such consent
shall be null and void.
(k) In the event that Standard & Poor's Ratings Group, Xxxxx'x
Investors Service, Inc., and Xxxxxxxx'x BankWatch (or InsuranceWatch Ratings
Service, in the case of Lenders that are insurance companies (or Best's
Insurance Reports, if such insurance company is not rated by Insurance Watch
Ratings Service)) shall, after the date that any Lender becomes a Revolving
Credit Lender, downgrade the long-term certificate deposit ratings of such
Lender, and the resulting ratings shall be below BBB-, Baa3 and C (or BB, in the
case of a Lender that is an insurance company (or B, in the case of an insurance
company not rated by InsuranceWatch Ratings Service)), then the Issuing Bank
shall have the right, but not the obligation, at its own expense, upon notice to
such Lender and the Administrative Agent, to replace (or to request the
Borrowers to use their reasonable efforts to assist in the replacement of) such
Lender with an assignee (in accordance with and subject to the restrictions
contained in paragraph (b) above), and such Lender hereby agrees to transfer and
assign without recourse (in accordance with and subject to the restrictions
contained in paragraph (b) above) all its interests, rights and obligations in
respect of its Revolving Credit Commitment to such assignee; PROVIDED, HOWEVER,
that (i) no such assignment shall conflict with any law, rule and regulation or
order of any Governmental Authority and (ii) the Issuing Bank or such assignee,
as the case may be, shall pay to such Lender in immediately available funds on
the date of such
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assignment the principal of and interest accrued to the date of payment on
the Loans made by such Lender hereunder and all other amounts accrued for
such Lender's account or owed to it hereunder.
SECTION 9.05. EXPENSES; INDEMNITY. (a) The Borrowers jointly and severally
agree to pay all out-of-pocket expenses incurred by the Administrative Agent,
the Collateral Agent, and the Issuing Bank in connection with the syndication of
the credit facilities provided for herein and the preparation and administration
of this Agreement and the other Loan Documents or in connection with any
amendments, modifications or waivers of the provisions hereof or thereof
(whether or not the transactions hereby or thereby contemplated shall be
consummated) or incurred by the Administrative Agent, the Collateral Agent or
any Lender in connection with the enforcement or protection of its rights in
connection with this Agreement and the other Loan Documents or in connection
with the Loans made or Letters of Credit issued hereunder, including the fees,
charges and disbursements of counsel for the Administrative Agent and the
Collateral Agent, and, in connection with any such enforcement or protection,
the fees, charges and disbursements of any other counsel for the Administrative
Agent, the Collateral Agent or any Lender.
(b) The Borrowers jointly and severally agree to indemnify the
Administrative Agent, the Collateral Agent, each Lender and the Issuing Bank,
each Affiliate of any of the foregoing persons and each of their respective
directors, officers, trustees, employees and agents (each such person being
called an "INDEMNITEE") against, and to hold each Indemnitee harmless from, any
and all losses, claims, damages, liabilities and related expenses, including
reasonable counsel fees, charges and disbursements, incurred by or asserted
against any Indemnitee arising out of, in any way connected with, or as a result
of (i) the execution or delivery of this Agreement or any other Loan Document or
any agreement or instrument contemplated thereby, the performance by the parties
thereto of their respective obligations thereunder or the consummation of the
Transactions and the other transactions contemplated thereby, (ii) the use of
the proceeds of the Loans or issuance of Letters of Credit, (iii) any claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether or not any Indemnitee is a party thereto, or (iv) any actual or alleged
presence or Release of Hazardous Materials on any property owned or operated by
any Borrowers or any of the Subsidiaries, or any Environmental Claim related in
any way to any Borrowers or the Subsidiaries; PROVIDED that such indemnity shall
not, as to any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnitee.
(c) The provisions of this Section 9.05 shall remain operative and in
full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the expiration of the Commitments, the expiration
of any Letter of Credit, the
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invalidity or unenforceability of any term or provision of this Agreement or
any other Loan Document, or any investigation made by or on behalf of the
Administrative Agent, the Collateral Agent, any Lender or the Issuing Bank.
All amounts due under this Section 9.05 shall be payable on written demand
therefor.
SECTION 9.06. RIGHT OF SETOFF. If an Event of Default shall have occurred
and be continuing, each Lender or any affiliate of a Lender is hereby authorized
at any time and from time to time, except to the extent prohibited by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by such Lender or any affiliate of a Lender to or for the credit or the account
of any Borrowers against any of and all the obligations of the Borrowers now or
hereafter existing under this Agreement and other Loan Documents held by such
Lender, irrespective of whether or not such Lender shall have made any demand
under this Agreement or such other Loan Document and although such obligations
may be unmatured. The rights of each Lender and its affiliate under this
Section 9.06 are in addition to other rights and remedies (including other
rights of setoff) which such Lender may have.
SECTION 9.07. APPLICABLE LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(OTHER THAN LETTERS OF CREDIT AND AS EXPRESSLY SET FORTH IN OTHER LOAN
DOCUMENTS) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK. EACH LETTER OF CREDIT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED IN ACCORDANCE WITH, THE LAWS OR RULES DESIGNATED IN SUCH LETTER OF
CREDIT, OR IF NO SUCH LAWS OR RULES ARE DESIGNATED, THE UNIFORM CUSTOMS AND
PRACTICE FOR DOCUMENTARY CREDITS (1993 REVISION), INTERNATIONAL CHAMBER OF
COMMERCE, PUBLICATION NO. 500 (THE "UNIFORM CUSTOMS") AND, AS TO MATTERS NOT
GOVERNED BY THE UNIFORM CUSTOMS, THE LAWS OF THE STATE OF NEW YORK.
SECTION 9.08. WAIVERS; AMENDMENT. (a) No failure or delay of the
Administrative Agent, the Collateral Agent, any Lender or the Issuing Bank in
exercising any power or right hereunder or under any other Loan Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the
Administrative Agent, the Collateral Agent, the Issuing Bank and the Lenders
hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver
of any provision of this Agreement or any other Loan Document or consent to any
departure by the Borrowers or any other Loan Party therefrom shall in any event
be effective unless the same shall be permitted by paragraph (b) below, and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given. No notice or
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demand on the Borrowers in any case shall entitle the Borrowers to any other
or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrowers and the Required Lenders; PROVIDED, HOWEVER, that
no such agreement shall (i) decrease the principal amount of, or extend the
maturity of or any scheduled principal payment date or date for the payment of
any interest on any Loan or any date for reimbursement of an L/C Disbursement,
or waive or excuse any such payment or any part thereof, or decrease the rate of
interest on any Loan or L/C Disbursement or any Fees, without the prior written
consent of each Lender affected thereby, (ii) change or extend the Commitment or
decrease or extend the date for payment of the Commitment Fees of any Lender
without the prior written consent of such Lender, (iii) amend or modify the pro
rata requirements of Section 2.20, the provisions of Section 9.04(i), the
provisions of this Section, the definition of the term "Required Lenders" or
release any Subsidiary Guarantor or all or any substantial part of the
Collateral, without the prior written consent of each Lender (iv) amend or
modify the protections afforded to an SPC pursuant to the provisions of Section
9.04(i) without the written consent of such SPC, (v) permit any Revolving Credit
Borrowing to be made if after giving effect thereto the Aggregate Revolving
Credit Exposure would exceed the Formula Amount for more than sixty (60)
calendar days or exceed one hundred and ten percent (110%) of the Formula
Amount, or (vi) increase the Advance Rates above the Advance Rates in effect on
the Closing Date, without the prior written consent of each Lender; PROVIDED
FURTHER that no such agreement shall amend, modify or otherwise affect the
rights or duties of the Administrative Agent, the Collateral Agent or the
Issuing Bank hereunder or under any other Loan Document without the prior
written consent of the Administrative Agent, the Collateral Agent or the Issuing
Bank, respectively.
(c) In the event that the Administrative Agent requests the consent
of a Lender pursuant to this Section 9.08 and such Lender shall not respond or
reply to the Administrative Agent in writing within 5 days of delivery of such
request, such Lender shall be deemed to have consented to the matter that was
the subject of the request. In the event that the Administrative Agent requests
the consent of a Lender and such consent is denied, then PNC may, at its option,
require such Lender to assign its interest in the Obligations to PNC or to
another Lender or to any other Person designated by the Administrative Agent
(the "Designated Lender") for a price equal to the then outstanding principal
amount thereof plus accrued and unpaid interest and fees due such Lender, which
interest and fees shall be paid when collected from Borrowers. In the event
that PNC elects to require any Lender to assign its interest to PNC, or a
Designated Lender, PNC will so notify such Lender in writing within 45 days
following such Lender's denial, and such Lender will assign its interest to PNC
or the Designated Lender no later than 5 days following receipt of such notice
pursuant to an Assignment and Acceptance Agreement executed by such Lender, PNC
or the Designated Lender, as appropriate, and the Administrative Agent.
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SECTION 9.09. [Intentionally Deleted]
SECTION 9.10. ENTIRE AGREEMENT. This Agreement, the Fee Letter and the
other Loan Documents constitute the entire contract between the parties relative
to the subject matter hereof. Any other previous agreement among the parties
with respect to the subject matter hereof is superseded by this Agreement and
the other Loan Documents. Nothing in this Agreement or in the other Loan
Documents, expressed or implied, is intended to confer upon any party other than
the parties hereto and thereto any rights, remedies, obligations or liabilities
under or by reason of this Agreement or the other Loan Documents.
SECTION 9.11. WAIVER OF JURY TRIAL; CONSEQUENTIAL DAMAGES. EACH PARTY
HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF
THE OTHER LOAN DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 9.11. Neither the Administrative Agent, the
Collateral Agent nor any Lender, nor any agent or attorney for any of them,
shall be liable to any Borrowers or any other Loan Party for consequential
damages arising from any breach of contract, tort or other wrong relating to the
establishment, administration or collection of the Obligations.
SECTION 9.12. SEVERABILITY. In the event any one or more of the provisions
contained in this Agreement or in any other Loan Document should be held
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby (it being understood that the
invalidity of a particular provision in a particular jurisdiction shall not in
and of itself affect the validity of such provision in any other jurisdiction).
The parties shall endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
SECTION 9.13. COUNTERPARTS. This Agreement may be executed in counterparts
(and by different parties hereto on different counterparts), each of which shall
constitute
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an original but all of which when taken together shall constitute a single
contract, and shall become effective as provided in Section 9.03. Delivery of
an executed signature page to this Agreement by facsimile transmission shall
be as effective as delivery of a manually signed counterpart of this
Agreement.
SECTION 9.14. HEADINGS. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 9.15. JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) Each
Borrower hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the
Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender may
otherwise have to bring any action or proceeding relating to this Agreement or
the other Loan Documents against any Borrowers or its properties in the courts
of any jurisdiction.
(b) Each Borrower hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the other Loan
Documents in any New York State or Federal court. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 9.16. CONFIDENTIALITY. The Administrative Agent, the Collateral
Agent, the Issuing Bank, the Syndication Agent, and each of the Lenders agrees
to keep confidential (and to use its best efforts to cause its respective agents
and representatives to keep confidential) the Information (as defined below) and
all copies thereof, extracts therefrom and analyses or other materials based
thereon, except that the Administrative
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Agent, the Collateral Agent, the Issuing Bank or any Lender shall be
permitted to disclose Information (a) to such of its respective officers,
directors, employees, agents, affiliates and representatives as need to know
such Information, (b) to a potential assignee or participant of such Lender
or any direct or indirect contractual counterparty in any swap agreement
relating to the Loans or such potential assignee's or participant's or
counterparty's advisors who need to know such Information (provided that any
such potential assignee or participant or counterparty shall, and shall use
its best efforts to cause its advisors to, keep confidential all such
information on the terms set forth in this Section 9.16, (c) to the extent
requested by any regulatory authority, (d) to the extent otherwise required
by applicable laws and regulations or by any subpoena or similar legal
process, (e) in connection with any suit, action or proceeding relating to
the enforcement of its rights hereunder or under the other Loan Documents or
(f) to the extent such Information (i) becomes publicly available other than
as a result of a breach of this Section 9.16 or (ii) becomes available to the
Administrative Agent, the Issuing Bank, the Syndication Agent, any Lender or
the Collateral Agent on a nonconfidential basis from a source other than a
Borrower. For the purposes of this Section, "INFORMATION" shall mean all
financial statements, certificates, reports, agreements and information
(including all analyses, compilations and studies prepared by the
Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender
based on any of the foregoing) that are received from any Borrower and
related to such Borrower, any Subsidiary, any shareholder of the Borrowers or
any employee, customer or supplier of the Borrowers, other than any of the
foregoing that were available to the Administrative Agent, the Collateral
Agent, the Issuing Bank or any Lender on a nonconfidential basis prior to its
disclosure thereto by the Borrowers, and which are in the case of Information
provided after the date hereof, clearly identified at the time of delivery as
confidential. The provisions of this Section 9.16 shall remain operative and
in full force and effect regardless of the expiration and term of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
ACTIVISION, INC.,
By
---------------------------------------
Name: Xxxxxxxx Xxxxxxxx
Title: Executive Vice President and
General Counsel
HEAD GAMES PUBLISHING, INC.,
By
---------------------------------------
Name: Xxxxxxxx Xxxxxxxx
Title: Vice President and Secretary
IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
PNC BANK, NATIONAL ASSOCIATION,
individually and as Administrative Agent,
Collateral Agent and Issuing Bank,
By
---------------------------------------
Name: Xxxx Xxxxxx
Title: Vice President
IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
CREDIT SUISSE FIRST BOSTON,
individually and as Syndication Agent,
By
-----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
COMERICA BANK
By:
-----------------------------------
Name:
Title:
IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
GUARANTEE BUSINESS CREDIT
CORPORATION
d/b/a Fidelity Funding
By:
-----------------------------------
Name:
Title:
IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
GREEN TREE FINANCIAL
SERVICING CORPORATION
By:
-----------------------------------
Name:
Title:
IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
LASALLE BANK NATIONAL
ASSOCIATION
By:
-----------------------------------
Name:
Title:
IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
MELLON BANK, N.A.
By:
-----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
NATIONAL BANK OF CANADA,
New York Branch
By:
-----------------------------------
Name: Xxxxx Drum
Title: Vice President
By:
-----------------------------------
Name: Xxxxxx Xxxxxxx
Title:
IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
SANWA BANK CALIFORNIA
By:
-----------------------------------
Name:
Title:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
CREDIT AGREEMENT
dated as of June 21, 1999,
among
ACTIVISION, INC.,
and certain of its Domestic Subsidiaries
THE LENDERS NAMED HEREIN,
PNC BANK, NATIONAL ASSOCIATION,
as Administrative Agent, Collateral Agent and Issuing Bank
and
CREDIT SUISSE FIRST BOSTON,
as Lead Arranger and Syndication Agent
___________________________
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TABLE OF CONTENTS
ARTICLE I
Definitions
SECTION 1.01. DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.02. TERMS GENERALLY.. . . . . . . . . . . . . . . . . . . . . . . .29
ARTICLE II
The Credits
SECTION 2.01. COMMITMENTS; FORMULA AMOUNT. . . . . . . . . . . . . . . . . . .30
SECTION 2.02. LOANS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
SECTION 2.03. PROCEDURE FOR REVOLVING CREDIT BORROWINGS. . . . . . . . . . . .32
SECTION 2.04. DISBURSEMENT OF LOANS. . . . . . . . . . . . . . . . . . . . . .33
SECTION 2.05. MANNER OF BORROWING AND PAYMENT. . . . . . . . . . . . . . . . .33
SECTION 2.06. EVIDENCE OF DEBT . . . . . . . . . . . . . . . . . . . . . . . .35
SECTION 2.07. STATEMENT OF ACCOUNT . . . . . . . . . . . . . . . . . . . . . .36
SECTION 2.08. FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
SECTION 2.09. INTEREST ON LOANS. . . . . . . . . . . . . . . . . . . . . . . .37
SECTION 2.10. DEFAULT INTEREST . . . . . . . . . . . . . . . . . . . . . . . .38
SECTION 2.11. TERMINATION AND REDUCTION OF COMMITMENTS . . . . . . . . . . . .38
SECTION 2.12. REPAYMENT OF BORROWINGS. . . . . . . . . . . . . . . . . . . . .39
SECTION 2.13. PREPAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . .40
SECTION 2.14. MANDATORY PREPAYMENTS. . . . . . . . . . . . . . . . . . . . . .40
SECTION 2.15. ILLEGALITY . . . . . . . . . . . . . . . . . . . . . . . . . . .42
SECTION 2.16. INCREASED COSTS. . . . . . . . . . . . . . . . . . . . . . . . .42
SECTION 2.17. BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR UNFAIR . . . .43
SECTION 2.18. CAPITAL ADEQUACY . . . . . . . . . . . . . . . . . . . . . . . .44
SECTION 2.19. INDEMNITY. . . . . . . . . . . . . . . . . . . . . . . . . . . .45
SECTION 2.20. PRO RATA TREATMENT . . . . . . . . . . . . . . . . . . . . . . .45
SECTION 2.21. SHARING OF SETOFFS . . . . . . . . . . . . . . . . . . . . . . .45
SECTION 2.22. PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
SECTION 2.23. TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
SECTION 2.24. ASSIGNMENT OF COMMITMENTS UNDER CERTAIN CIRCUMSTANCES; DUTY TO
MITIGATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
SECTION 2.25. DEFAULTING LENDER. . . . . . . . . . . . . . . . . . . . . . . .49
SECTION 2.26. LETTERS OF CREDIT. . . . . . . . . . . . . . . . . . . . . . . .50
SECTION 2.27. BORROWING AGENCY PROVISIONS. . . . . . . . . . . . . . . . . . .50
SECTION 2.28. WAIVER OF SUBROGATION. . . . . . . . . . . . . . . . . . . . . .51
ARTICLE III
Representations and Warranties
SECTION 3.01. ORGANIZATION; POWERS . . . . . . . . . . . . . . . . . . . . . .57
SECTION 3.02. AUTHORIZATION. . . . . . . . . . . . . . . . . . . . . . . . . .57
SECTION 3.03. ENFORCEABILITY . . . . . . . . . . . . . . . . . . . . . . . . .57
SECTION 3.04. GOVERNMENTAL APPROVALS . . . . . . . . . . . . . . . . . . . . .58
SECTION 3.05. FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . .58
SECTION 3.06. NO MATERIAL ADVERSE CHANGE . . . . . . . . . . . . . . . . . . .58
SECTION 3.07. TITLE TO PROPERTIES; POSSESSION UNDER LEASES . . . . . . . . . .58
SECTION 3.08. SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . . .59
SECTION 3.09. LITIGATION; COMPLIANCE WITH LAWS . . . . . . . . . . . . . . . .59
SECTION 3.10. AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . .60
SECTION 3.12. INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY ACT . . .60
SECTION 3.13. USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . .60
SECTION 3.14. TAX RETURNS. . . . . . . . . . . . . . . . . . . . . . . . . . .60
SECTION 3.15. NO MATERIAL MISSTATEMENTS. . . . . . . . . . . . . . . . . . . .60
SECTION 3.16. EMPLOYEE BENEFIT PLANS . . . . . . . . . . . . . . . . . . . . .61
SECTION 3.17. ENVIRONMENTAL MATTERS. . . . . . . . . . . . . . . . . . . . . .62
SECTION 3.18. INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . .62
SECTION 3.19. SECURITY DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . .63
SECTION 3.20. LOCATION OF REAL PROPERTY AND LEASED PREMISES. . . . . . . . . .64
SECTION 3.21. LABOR MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . .64
SECTION 3.22. SOLVENCY . . . . . . . . . . . . . . . . . . . . . . . . . . . .64
SECTION 3.23. YEAR 2000. . . . . . . . . . . . . . . . . . . . . . . . . . . .65
SECTION 3.24. LETTERS OF CREDIT. . . . . . . . . . . . . . . . . . . . . . . .65
ARTICLE IV
Conditions of Lending
SECTION 4.01. ALL CREDIT EVENTS. . . . . . . . . . . . . . . . . . . . . . . .65
SECTION 4.02. FIRST CREDIT EVENT . . . . . . . . . . . . . . . . . . . . . . .66
ARTICLE V
Affirmative Covenants
SECTION 5.01. EXISTENCE; BUSINESSES AND PROPERTIES . . . . . . . . . . . . . .71
SECTION 5.02. INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . .71
SECTION 5.03. OBLIGATIONS AND TAXES. . . . . . . . . . . . . . . . . . . . . .72
SECTION 5.04. FINANCIAL STATEMENTS, REPORTS, ETC.. . . . . . . . . . . . . . .73
SECTION 5.05. LITIGATION AND OTHER NOTICES . . . . . . . . . . . . . . . . . .75
SECTION 5.06. EMPLOYEE BENEFITS. . . . . . . . . . . . . . . . . . . . . . . .76
SECTION 5.07. MAINTAINING RECORDS; ACCESS TO PROPERTIES AND INSPECTIONS. . . .76
SECTION 5.08. USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . .77
SECTION 5.09. COMPLIANCE WITH ENVIRONMENTAL LAWS . . . . . . . . . . . . . . .77
SECTION 5.10. PREPARATION OF ENVIRONMENTAL REPORTS . . . . . . . . . . . . . .77
SECTION 5.11. AUDITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .77
SECTION 5.12. FURTHER ASSURANCES . . . . . . . . . . . . . . . . . . . . . . .77
SECTION 5.13. GOVERNMENT RECEIVABLES . . . . . . . . . . . . . . . . . . . . .78
SECTION 5.14 INTELLECTUAL PROPERTY. . . . . . . . . . . . . . . . . . . . . .78
SECTION 5.15 BLOCKED ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . .79
ARTICLE VI
Negative Covenants
SECTION 6.01. INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . .82
SECTION 6.02. LIENS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .84
SECTION 6.03. SALE AND LEASE-BACK TRANSACTIONS . . . . . . . . . . . . . . . .85
SECTION 6.04. INVESTMENTS, LOANS AND ADVANCES. . . . . . . . . . . . . . . . .85
SECTION 6.05. MERGERS, CONSOLIDATIONS, SALES OF ASSETS AND ACQUISITIONS. . . .89
SECTION 6.06. DIVIDENDS AND DISTRIBUTIONS; RESTRICTIONS ON ABILITY OF
SUBSIDIARIES TO PAY DIVIDENDS. . . . . . . . . . . . . . . . . . . . . . . . .89
SECTION 6.07. TRANSACTIONS WITH AFFILIATES . . . . . . . . . . . . . . . . . .90
SECTION 6.08. CAPITAL EXPENDITURES . . . . . . . . . . . . . . . . . . . . . .90
SECTION 6.09. INTEREST COVERAGE RATIO. . . . . . . . . . . . . . . . . . . . .90
SECTION 6.10. FIXED CHARGE COVERAGE RATIO. . . . . . . . . . . . . . . . . . .90
SECTION 6.11. MAXIMUM LEVERAGE RATIO . . . . . . . . . . . . . . . . . . . . .91
SECTION 6.12. MINIMUM ADJUSTED EBITDA. . . . . . . . . . . . . . . . . . . . .92
SECTION 6.13. MINIMUM TANGIBLE NET WORTH . . . . . . . . . . . . . . . . . . .93
SECTION 6.14. LIMITATION ON MODIFICATIONS OF INDEBTEDNESS; MODIFICATIONS OF
CERTIFICATE OF INCORPORATION, BY-LAWS AND CERTAIN OTHER AGREEMENTS, ETC. . . .94
SECTION 6.15. LIMITATION ON CREATION OF SUBSIDIARIES . . . . . . . . . . . . .94
SECTION 6.16. BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . .95
SECTION 6.17. FISCAL YEAR; ACCOUNTING CHANGES. . . . . . . . . . . . . . . . .95
ARTICLE VII
Events of Default
ARTICLE VIII
The Administrative Agent and the Collateral Agent
ARTICLE IX
Miscellaneous
SECTION 9.01. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
SECTION 9.02. SURVIVAL OF AGREEMENT. . . . . . . . . . . . . . . . . . . . . 103
SECTION 9.03. BINDING EFFECT . . . . . . . . . . . . . . . . . . . . . . . . 103
SECTION 9.04. SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . . . 103
SECTION 9.05. EXPENSES; INDEMNITY. . . . . . . . . . . . . . . . . . . . . . 108
SECTION 9.06. RIGHT OF SETOFF. . . . . . . . . . . . . . . . . . . . . . . . 109
SECTION 9.07. APPLICABLE LAW . . . . . . . . . . . . . . . . . . . . . . . . 109
SECTION 9.08. WAIVERS; AMENDMENT . . . . . . . . . . . . . . . . . . . . . . 109
SECTION 9.09. [Intentionally Deleted]. . . . . . . . . . . . . . . . . . . . 111
SECTION 9.10. ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . 111
SECTION 9.11. WAIVER OF JURY TRIAL; CONSEQUENTIAL DAMAGES. . . . . . . . . . 111
SECTION 9.12. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . 111
SECTION 9.13. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . 111
SECTION 9.14. HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
SECTION 9.15. JURISDICTION; CONSENT TO SERVICE OF PROCESS. . . . . . . . . . 112
SECTION 9.16. CONFIDENTIALITY. . . . . . . . . . . . . . . . . . . . . . . . 112
Schedule 1.01(a) Existing Letters of Credit
Schedule 1.01(b) Subsidiary Guarantors
Schedule 2.01 Lenders and Commitments
Schedule 3.08 Subsidiaries
Schedule 3.09 Litigation
Schedule 3.17 Environmental Matters
Schedule 3.18 Insurance
Schedule 3.20(a) Real Property Owned In Fee
Schedule 3.20(b) Leased Real Property
Schedule 4.02(a) Other Local Counsel
Schedule 6.01 Outstanding Indebtedness on Closing Date
Schedule 6.02 Liens Existing on Closing Date
Exhibit A Form of Administrative Questionnaire
Exhibit B Form of Assignment and Acceptance
Exhibit C Form of Borrowing Request
Exhibit D Form of Indemnity, Subrogation and Contribution Agreement
Exhibit E Form of Joinder Agreement
Exhibit F Form of Pledge Agreement
Exhibit G Form of Security Agreement
Exhibit H Form of Subsidiary Guarantee Agreement
Exhibit I-1 Form of Opinion of Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx &
Xxxxxx LLP
Exhibit I-2 Form of Opinion of Local Counsel
Exhibit J Form of Affiliate Subordination Provisions
Exhibit K Form of Subordinated Debt Terms
Exhibit L Form of Financial Condition Certificate
Exhibit M Form of Borrower Guarantee
