CREDIT AGREEMENT
among
XXXXXXX SPORTS INC.
as Borrower,
AND
THE SUBSIDIARIES OF XXXXXXX SPORTS INC.
as Guarantors,
AND
THE LENDERS IDENTIFIED HEREIN,
AND
NBD BANK,
as Administrative Agent
AND
NATIONSBANK, N.A.,
as Documentation Agent
DATED AS OF JUNE 19, 1997
TABLE OF CONTENTS
SECTION 1 DEFINITIONS AND ACCOUNTING TERMS.......................................................................1
1.1 Definitions..........................................................................................1
1.2 Computation of Time Periods and Other Definitional Provisions.......................................23
1.3 Accounting Terms....................................................................................23
SECTION 2 CREDIT FACILITIES.....................................................................................24
2.1 Revolving Loans.....................................................................................24
2.2 Letter of Credit Subfacility........................................................................26
SECTION 3 GENERAL PROVISIONS APPLICABLE TO LOANS AND LETTERS OF CREDIT..........................................32
3.1 Interest............................................................................................32
3.2 Place and Manner of Payments........................................................................33
3.3 Prepayments.........................................................................................33
3.4 Fees................................................................................................34
3.5 Payment in full at Maturity.........................................................................35
3.6 Computations of Interest and Fees...................................................................35
3.7 Pro Rata Treatment..................................................................................36
3.8 Sharing of Payments.................................................................................37
3.9 Capital Adequacy....................................................................................38
3.10 Inability To Determine Interest Rate...............................................................38
3.11 Illegality.........................................................................................39
3.12 Requirements of Law................................................................................39
3.13 Taxes..............................................................................................40
3.14 Compensation.......................................................................................43
3.15 Substitution of Lender.............................................................................43
SECTION 4 GUARANTY..............................................................................................44
4.1 Guaranty of Payment.................................................................................44
4.2 Obligations Unconditional...........................................................................44
4.3 Modifications.......................................................................................45
4.4 Waiver of Rights....................................................................................46
4.5 Reinstatement.......................................................................................46
4.6 Remedies............................................................................................46
4.7 Limitation of Guaranty..............................................................................47
4.8 Rights of Contribution..............................................................................47
SECTION 5 CONDITIONS PRECEDENT..................................................................................47
5.1 Closing Conditions..................................................................................47
5.2 Conditions to All Extensions of Credit..............................................................51
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SECTION 6 REPRESENTATIONS AND WARRANTIES........................................................................52
6.1 Financial Condition.................................................................................52
6.2 No Material Change..................................................................................52
6.3 Organization and Good Standing......................................................................52
6.4 Due Authorization...................................................................................53
6.5 No Conflicts........................................................................................53
6.6 Consents............................................................................................53
6.7 Enforceable Obligations.............................................................................53
6.8 No Default..........................................................................................54
6.9 Ownership...........................................................................................54
6.10 Indebtedness.......................................................................................54
6.11 Litigation.........................................................................................54
6.12 Taxes..............................................................................................54
6.13 Compliance with Law................................................................................55
6.14 ERISA..............................................................................................55
6.15 Subsidiaries.......................................................................................56
6.16 Use of Proceeds; Margin Stock......................................................................57
6.17 Government Regulation..............................................................................57
6.18 Environmental Matters..............................................................................57
6.19 Intellectual Property..............................................................................59
6.20 Solvency...........................................................................................59
6.21 Investments........................................................................................59
6.22 Location of Collateral.............................................................................59
6.23 Disclosure.........................................................................................59
6.24 Licenses, etc......................................................................................60
6.25 No Burdensome Restrictions.........................................................................60
6.26 Collateral Documents...............................................................................60
SECTION 7 AFFIRMATIVE COVENANTS.................................................................................60
7.1 Information Covenants...............................................................................60
7.2 Financial Covenants.................................................................................64
7.3 Preservation of Existence and Franchises............................................................66
7.4 Books and Records...................................................................................66
7.5 Compliance with Law.................................................................................66
7.6 Payment of Taxes and Other Indebtedness.............................................................66
7.7 Insurance...........................................................................................66
7.8 Maintenance of Property.............................................................................67
7.9 Performance of Obligations..........................................................................68
7.10 Collateral.........................................................................................68
7.11 Use of Proceeds....................................................................................68
7.12 Audits/Inspections.................................................................................68
7.13 Additional Credit Parties..........................................................................69
7.14 Material License Agreements........................................................................69
7.15 Merger.............................................................................................70
7.16 Further Assurances Regarding Real Estate Collateral................................................70
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SECTION 8 NEGATIVE COVENANTS....................................................................................71
8.1 Indebtedness........................................................................................71
8.2 Liens...............................................................................................72
8.3 Nature of Business..................................................................................72
8.4 Consolidation and Merger............................................................................73
8.5 Sale or Lease of Assets.............................................................................73
8.6 Sale Leasebacks.....................................................................................74
8.7 Advances, Investments and Loans.....................................................................74
8.8 Restricted Payments.................................................................................74
8.9 Transactions with Affiliates........................................................................74
8.10 Fiscal Year; Organizational Documents..............................................................75
8.11 Senior Notes/Subordinated Debt.....................................................................75
8.12 No Limitations.....................................................................................75
8.13 No Other Negative Pledges..........................................................................75
SECTION 9 EVENTS OF DEFAULT.....................................................................................76
9.1 Events of Default...................................................................................76
9.2 Acceleration; Remedies..............................................................................79
9.3 Allocation of Payments After Event of Default.......................................................80
SECTION 10 AGENCY PROVISIONS....................................................................................81
10.1 Appointment........................................................................................81
10.2 Delegation of Duties...............................................................................82
10.3 Exculpatory Provisions.............................................................................82
10.4 Reliance on Communications.........................................................................83
10.5 Notice of Default..................................................................................83
10.6 Non-Reliance on Agents and Other Lenders...........................................................83
10.7 Indemnification....................................................................................84
10.8 Agents in Their Individual Capacity................................................................84
10.9 Successor Agent....................................................................................85
SECTION 11 MISCELLANEOUS........................................................................................85
11.1 Notices............................................................................................85
11.2 Right of Set-Off...................................................................................85
11.3 Benefit of Agreement...............................................................................86
11.4 No Waiver; Remedies Cumulative.....................................................................88
11.5 Payment of Expenses; Indemnification...............................................................89
11.6 Amendments, Waivers and Consents...................................................................89
11.7 Counterparts.......................................................................................90
11.8 Headings...........................................................................................91
11.9 Defaulting Lender..................................................................................91
11.10 Survival of Indemnification and Representations and Warranties....................................91
11.11 Governing Law; Jurisdiction.......................................................................91
11.12 Waiver of Jury Trial..............................................................................92
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11.13 Time..............................................................................................92
11.14 Severability......................................................................................92
11.15 Further Assurances................................................................................92
11.16 Confidentiality...................................................................................93
11.17 Entirety..........................................................................................93
11.18 Binding Effect....................................................................................93
11.19 Release of Collateral.............................................................................93
11.20 Consent to M.O.U..................................................................................94
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SCHEDULES
Schedule 1.1(a) Commitment Percentages
Schedule 5.1(f) Mortgaged Properties
Schedule 6.10 Indebtedness
Schedule 6.15 Subsidiaries
Schedule 6.18 Environmental Matters
Schedule 6.19 Intellectual Property
Schedule 6.21 Investments
Schedule 6.22(a) Real Property Locations
Schedule 6.22(b) Personal Property Locations
Schedule 6.22(c) Chief Executive Offices
Schedule 6.24 Material License Agreements
Schedule 7.7 Insurance
Schedule 7.11 Use of Proceeds
Schedule 8.2 Liens
Schedule 11.1 Notices
Schedule 11.20 M.O.U.
EXHIBITS
Exhibit 2.1(b) Form of Notice of Borrowing
Exhibit 2.1(e) Form of Notice of Continuation/Conversion
Exhibit 2.1(g) Form of Revolving Note
Exhibit 7.1(c) Form of Borrowing Base Certificate
Exhibit 7.1(d) Form of Officer's Certificate
Exhibit 7.13 Form of Joinder Agreement
Exhibit 11.3 Form of Assignment Agreement
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "Credit Agreement"), is entered into as of
June 19, 1997 among XXXXXXX SPORTS INC., a Delaware corporation ("Borrower"),
each of Borrower's Material Subsidiaries (individually a "Guarantor" and
collectively the "Guarantors"), the Lenders (as defined herein), NBD BANK, as
Administrative Agent for the Lenders and NATIONSBANK, N.A., as Documentation
Agent for the Lenders.
RECITALS
WHEREAS, the Borrower and the Guarantors have requested the Lenders to
provide a senior secured revolving credit facility in an amount up to $40
million; and
WHEREAS, the Lenders party hereto have agreed to make the requested
senior secured revolving credit facility available to the Borrower on the terms
and conditions hereinafter set forth.
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITIONS AND ACCOUNTING TERMS
1.1 Definitions.
As used herein, the following terms shall have the meanings herein
specified unless the context otherwise requires. Defined terms herein shall
include in the singular number the plural and in the plural the singular:
"Additional Credit Party" means each Person that becomes a
Guarantor after the Closing Date, as provided in Section 7.13.
"Adjusted Base Rate" means the Base Rate plus the Applicable
Percentage.
"Adjusted Eurodollar Rate" means the Eurodollar Rate plus the
Applicable Percentage.
"Administrative Agent" means NBD Bank (or any successor
thereto) or any successor administrative agent appointed pursuant to
Section 10.9.
"Agents" mean the Administrative Agent, the Documentation
Agent and the Collateral Agent and any successors and assigns in such
capacity.
"Affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling (including but not limited
to all directors and officers of such Person), controlled by or under
direct or indirect common control with such Person. A Person shall be
deemed to control a corporation if such Person possesses, directly or
indirectly, the power (i) to vote 10% or more of the securities having
ordinary voting power for the election of directors of such
corporation or (ii) to direct or cause direction of the management and
policies of such corporation, whether through the ownership of voting
securities, by contract or otherwise.
"Applicable Percentage" means the appropriate applicable
percentages corresponding to the Leverage Ratio in effect as of the
most recent Calculation Date as shown below:
--------------------------------------------------------------------------------------------------------------------------
Applicable Applicable Applicable
Pricing Percentage For Percentage For Percentage for Applicable
Level Leverage Ratio Eurodollar Loans Base Rate Loans Letter of Credit Percentage For
Fees Commitment Fees
--------------------------------------------------------------------------------------------------------------------------
I (less than) 3.5 to 1.0 1.50% 0% 1.50% .40%
--------------------------------------------------------------------------------------------------------------------------
II (less than) 4.0 to 1.0 but 1.75% .25% 1.75% .50%
(greater than or equal) 3.5 to 1.0
--------------------------------------------------------------------------------------------------------------------------
III (less than) 4.5 to 1.0 but 2.00% .50% 2.00% .50%
(greater than or equal) 4.0 to 1.0
--------------------------------------------------------------------------------------------------------------------------
IV (less than) 5.0 to 1.0 but 2.25% .75% 2.25% .50%
(greater than or equal) 4.5 to 1.0
--------------------------------------------------------------------------------------------------------------------------
V (greater than or equal) 5.0 to 1.0 2.50% 1.00% 2.50% .50%
--------------------------------------------------------------------------------------------------------------------------
The Applicable Percentage for Revolving Loans, the Letter of
Credit Fees and the Commitment Fees shall, in each case, be determined
and adjusted quarterly on the date (each a "Calculation Date") five
Business Days after the date by which the Borrower is required to
provide the officer's certificate in accordance with the provisions of
Section 7.1(d); provided that the initial Applicable Percentage for
Revolving Loans, the Letter of Credit Fees and the Commitment Fees
shall be based on Pricing Level IV (as shown above) and shall remain
at Pricing Level IV until June 30, 1998 and, thereafter, the Pricing
Level shall be determined by the then current Leverage Ratio; and
provided further that if the Borrower fails to provide the officer's
certificate required by Section 7.1(d) on or before the most recent
Calculation Date, the Applicable Percentage for Revolving Loans, the
Letter of Credit Fees and the Commitment Fees from such Calculation
Date shall be based on Pricing Level V until such time that an
appropriate officer's certificate is provided whereupon the Pricing
Level shall be determined by the then current Leverage Ratio. Each
Applicable Percentage shall be effective from one Calculation Date
until the next Calculation Date. Any adjustment in the Applicable
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Percentage shall be applicable to all existing Loans and Letters of
Credit as well as any new Loans made or Letters of Credit issued.
"Bankruptcy Code" means the Bankruptcy Code in Title 11 of
the United States Code, as amended, modified, succeeded or replaced
from time to time.
"Base Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest whole multiple of 1/100 of 1%)
equal to the greater of (a) the Federal Funds Rate in effect on such
day plus 1/2 of 1% or (b) the Prime Rate in effect on such day. If for
any reason the Administrative Agent shall have determined (which
determination shall be conclusive absent manifest error) that it is
unable after due inquiry to ascertain the Federal Funds Rate for any
reason, including the inability or failure of the Administrative Agent
to obtain sufficient quotations in accordance with the terms hereof,
the Base Rate shall be determined without regard to clause (a) of the
first sentence of this definition until the circumstances giving rise
to such inability no longer exist. Any change in the Base Rate due to
a change in the Prime Rate or the Federal Funds Rate shall be
effective on the effective date of such change in the Prime Rate or
the Federal Funds Rate, respectively.
"Base Rate Loan" means any Loan bearing interest at a rate
determined by reference to the Base Rate.
"Beginning Net Worth" means 80% of the Net Worth determined
as of September 30, 1997.
"Borrower" means Xxxxxxx Sports Inc., a Delaware corporation,
together with any successors and permitted assigns.
"Borrowing Base Assets" means, at any date of determination,
the sum of (a) 80% of Eligible Accounts Receivable plus (b) 50% of
Eligible Inventory plus (c) 35% of Eligible Work in Process plus (d)
at the request of the Borrower, for any one period of 90 consecutive
days ending prior to December 31, 1998, $5,000,000 (the
"Overadvance"); provided that the Borrower must provide written notice
to the Agents of the commencement of such 90 day period (and forward
to the Agents the fee set forth in Section 3.4(d)), and the Borrower
may only choose one 90 day period for such Overadvance.
"Business Day" means any day other than a Saturday, a Sunday,
a legal holiday or a day on which banking institutions are authorized
or required by law or other governmental action to close in Detroit,
Michigan, Charlotte, North Carolina or New York, New York; provided
that in the case of Eurodollar Loans, such day is also a day
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on which dealings between banks are carried on in U.S. dollar deposits
in the London interbank market.
"Calculation Date" has the meaning set forth in the
definition of Applicable Percentage.
"Capital Expenditures" means all expenditures of the Credit
Parties and their Subsidiaries which, in accordance with GAAP, would
be classified as capital expenditures, including, without limitation,
Capital Leases.
"Capital Lease" means, as applied to any Person, any lease of
any property (whether real, personal or mixed) by that Person as
lessee which, in accordance with GAAP, is or should be accounted for
as a capital lease on the balance sheet of that Person.
"Cash Equivalents" means (a) securities issued or directly
and fully guaranteed or insured by the United States of America or any
agency or instrumentality thereof (provided that the full faith and
credit of the United States of America is pledged in support thereof)
having maturities of not more than twelve months from the date of
acquisition, (b) U.S. dollar denominated time and demand deposits and
certificates of deposit of (i) any Lender, (ii) any domestic
commercial bank having capital and surplus in excess of $500,000,000
or (iii) any bank whose short-term commercial paper rating from S&P is
at least A-1 or the equivalent thereof or from Xxxxx'x is at least P-1
or the equivalent thereof (any such bank being an "Approved Bank"), in
each case with maturities of not more than 270 days from the date of
acquisition, (c) commercial paper and variable or fixed rate notes
issued by any Approved Bank (or by the parent company thereof) or any
variable rate notes issued by, or guaranteed by, any domestic
corporation rated A-1 (or the equivalent thereof) or better by S&P or
P-1 (or the equivalent thereof) or better by Moody's and maturing
within six months of the date of acquisition, (d) repurchase
agreements with a bank or trust company (including any of the Lenders)
or recognized securities dealer having capital and surplus in excess
of $500,000,000 for direct obligations issued by or fully guaranteed
by the United States of America in which the Borrower shall have a
perfected first priority security interest (subject to no other Liens)
and having, on the date of purchase thereof, a fair market value of at
least 100% of the amount of the repurchase obligations and (e)
Investments, classified in accordance with GAAP as current assets, in
money market investment programs registered under the Investment
Company Act of 1940, as amended, which are administered by reputable
financial institutions having capital of at least $500,000,000 and the
portfolios of which are limited to Investments of the character
described in the foregoing subdivisions (a) through (d).
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"Change of Control" means either of the following events: (a)
any "person" or "group" (within the meaning of Section 13(d) or 14(d)
of the Exchange Act), in each case, other than the Principals and the
Related Parties has become, directly or indirectly, the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act,
except that a Person shall be deemed to have "beneficial ownership" of
all shares that any such Person has the right to acquire, whether such
right is exercisable immediately or only after the passage of time),
by way of merger, consolidation or otherwise, of 35% or more of the
voting power of the Voting Stock of the Borrower on a fully-diluted
basis, after giving effect to the conversion and exercise of all
outstanding warrants, options and other securities of the Borrower
(whether or not such securities are then currently convertible or
exercisable) or (b) a change in control (as defined in the
documentation evidencing the Senior Notes or the Subordinated Debt)
occurs.
"Closing Date" means the date hereof.
"Code" means the Internal Revenue Code of 1986 and the rules
and regulations promulgated thereunder, as amended, modified,
succeeded or replaced from time to time.
"Collateral" means all collateral described in and covered by
the Collateral Documents.
"Collateral Agent" means NBD Bank (or any successor thereto)
or any successor collateral agent appointed pursuant to Section 10.9.
"Collateral Assignments of License Agreements" means any
collateral assignment of a Material License Agreement executed and
delivered by a Credit Party in favor of the Collateral Agent, for the
benefit of the Lenders, to secure its obligations under the Credit
Documents, as such may be amended, modified, extended, renewed,
restated or replaced from time to time.
"Collateral Documents" means the Security Agreements, the
Pledge Agreements, the Mortgage Documents, the Collateral Assignments
of License Agreements and such other documents executed and delivered
in connection with the attachment and perfection of the Lenders'
security interests in the assets of the Credit Parties, including
without limitation, the Mortgage Policies, UCC financing statements
and collateral assignments of certain license agreements and
intellectual property.
"Commitment Fees" means the fees payable to the Lenders
pursuant to Section 3.4(a).
"Commitments" means the commitment of each Lender with
respect to the Revolving Committed Amount.
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"Coverage Ratio" means, for the applicable period, the ratio
of (a) EBITDA minus Capital Expenditures to (b) cash Interest Expense.
"Credit Documents" means this Credit Agreement, the Notes,
any Joinder Agreement, the Collateral Documents, the LOC Documents,
and all other related agreements and documents issued or delivered
hereunder or thereunder or pursuant hereto or thereto.
"Credit Parties" means the Borrower and the Guarantors and
"Credit Party" means any one of them.
"Credit Party Obligations" means, without duplication, (a)
all of the obligations of the Credit Parties to the Lenders (including
the Issuing Lender) and the Agents, whenever arising, under this
Credit Agreement, the Notes, the Collateral Documents or any of the
other Credit Documents to which the Borrower or any other Credit Party
is a party and (b) all liabilities and obligations owing from such
Credit Party to any Lender, or any Affiliate of a Lender, arising
under Hedging Agreements.
"Default" means any event, act or condition which with notice
or lapse of time, or both, would constitute an Event of Default.
"Defaulting Lender" means, at any time, any Lender that, (a)
has failed to make a Loan or purchase a Participation Interest
required pursuant to the terms of this Credit Agreement (but only for
so long as such Loan is not made or such Participation Interest is not
purchased), (b) has failed to pay to the Agents or any Lender an
amount owed by such Lender pursuant to the terms of this Credit
Agreement (but only for so long as such amount has not been repaid) or
(c) has been deemed insolvent or has become subject to a bankruptcy or
insolvency proceeding or to a receiver, trustee or similar official.
"Documentation Agent" means NationsBank, N.A. (or any
successor thereto) or any successor documentation agent appointed
pursuant to Section 10.9.
"Dollars" and "$" means dollars in lawful currency of the
United States of America.
"EBITDA" means, for any period, with respect to the Credit
Parties and their Subsidiaries on a consolidated basis, the sum of (a)
Net Income for such period (excluding the effect of any extraordinary
or other non-recurring gains (including any gain from the sale of
property) or non-cash losses) plus (b) an amount which, in the
determination of Net Income for such period has been deducted for (i)
Interest Expense for such period, (ii) total Federal, state, foreign
or other income taxes for such period,
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(iii) all depreciation and amortization for such period, all as
determined in accordance with GAAP, (iv) Transaction Costs and any
amounts paid in connection with or pursuant to the M.O.U. or the
transactions contemplated thereby, including, without limitation,
reasonable attorneys fees and disbursements and (v) without
duplication, any write down of intangible assets not to exceed
$5,000,000, in the aggregate.
"Effective Date" means the date on which the conditions set
forth in Section 5.1 shall have been fulfilled (or waived in the sole
discretion of the Lenders) and on which the initial Loans shall have
been made and/or the initial Letters of Credit shall have been issued.
"Eligible Assignee" means (a) any Lender or Affiliate or
subsidiary of a Lender and (b) any other commercial bank, financial
institution, institutional lender or "accredited investor" (as defined
in Regulation D of the Securities and Exchange Commission).
"Eligible Accounts Receivable" means, as of any date of
determination, and without duplication, the aggregate book value of
all accounts receivable, receivables, and obligations for payment
created or arising from the sale or shipment (if such shipment is
pursuant to a purchase order to Varsity Spirit Corporation or All
American Sports Corporation) of inventory or the rendering of services
in the ordinary course of business (collectively, the "Receivables"),
owned by or owing to the Credit Parties and in which the Lenders have
a first priority perfected security interest, net of any service
charges included in such aggregate value and sales adjustments
consistent with a Credit Party's internal policies and in any event in
accordance with GAAP, but excluding in any event (i) Receivables
subject to any Lien, other than any Lien described in clauses (a)
through (d) of the definition of Permitted Liens, (ii) Receivables
which are (A) if owing to a Credit Party other than Varsity Spirit
Corporation, more than 90 days past due and (B) if owing to Varsity
Spirit Corporation, more than 120 days past due; it being understood
that, for purposes of this clause (ii), any Receivables owing from
schools which are stated to have a due date between April 1 and
October 1 of any year shall be deemed to have a due date of October 1
of such year, and Receivables supported by a valid, existing and
enforceable irrevocable letter of credit or performance bond
acceptable to the Agents shall not be deemed to have a due date, (iii)
Receivables evidenced by notes, chattel paper or other instruments,
unless such notes, chattel paper or instruments have been delivered to
and are in the possession of the Collateral Agent, (iv) Receivables
owing by an account debtor which is subject to any bankruptcy or
insolvency proceeding of any kind, (v) Receivables owing by an account
debtor located outside of the United States or Canada (unless (A)
payment for the goods shipped is secured by an irrevocable letter of
credit or (B) export insurance is obtained, in each case in a form and
from an institution acceptable to the Agents), (vi) Receivables which
are contingent or subject to offset, deduction, counterclaim, dispute
or other defense to payment, in each case to the extent of such
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offset, deduction, counterclaim, dispute or other defense, (vii)
Receivables for which any direct or indirect Subsidiary of the
Borrower or any Affiliate of the Borrower is the account debtor,
(viii) Receivables representing a sale to the government of the United
States of America or any subdivision thereof, but not including any
state, county or municipal government as long as there are no
restrictions as to the assignability or collection as to such
Receivables, (ix) Receivables owing from any National Football League
team subject to the Promotional Rights Agreement dated June 1, 1990
between Xxxxxxx, Inc. and NFL Properties, Inc. or any replacement or
substitution agreement thereof or any similar agreement entered into
by the Borrower or any of its Subsidiaries, (x) all Receivables from
an account debtor who has more than 50% of its Receivables owing to
the Credit Parties that are more than 90 days past due and (xi)
Receivables which fail to meet such other specifications and
requirements as may from time to time be established by the Agents in
their reasonable discretion.
"Eligible Inventory" means, as of any date of determination
and without duplication, the lower of the aggregate book value (based
on a FIFO or a moving average cost valuation, consistently applied) or
fair market value (provided that the value of any inventory sold
between Credit Parties shall be calculated using the value of the
inventory prior to any such sale between Credit Parties) of all raw
materials and finished goods inventory owned by any Credit Party and
in which the Lenders have a first priority perfected security interest
less appropriate reserves determined in accordance with GAAP, but
excluding in any event (i) inventory subject to any Lien, other than
any Lien described in clauses (a) through (d) of the definition of
Permitted Liens, (ii) inventory which is not in good condition or
fails to meet standards for sale or use imposed by governmental
agencies, departments or divisions having regulatory authority over
such goods, (iii) inventory which is discontinued or not useable or
saleable at prices approximating their cost in the ordinary course of
the applicable Credit Party's business (including without duplication
the amount of any reserves for obsolescence, unsalability or decline
in value), (iv) inventory located outside of the United States or
Canada, (v) subsequent to the date 90 days after the Closing Date,
inventory located at a location not owned or leased by the applicable
Credit Party unless the Agents have received a waiver and estoppel
agreement, reasonably satisfactory to the Agents, from the
owner/operator of such location, and, if deemed appropriate by the
Collateral Agent, a UCC financing statement has been filed with
respect to such location, (vi) subsequent to the date 90 days after
the Closing Date, inventory located at a location leased by the
applicable Credit Party with respect to which the Collateral Agent
shall not have received a landlord's waiver and estoppel agreement
reasonably satisfactory to the Agents, (vii)
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inventory which is subject to a Material License Agreement unless (A)
the Material License Agreement is in full force and effect and (B) the
Agents have received (x) a Collateral Assignment of License Agreement
for such Material License Agreement and (y) a consent to such
Collateral Assignment of License Agreement from all other parties to
such Material License Agreement, in a form reasonably satisfactory to
the Agents, (viii) inventory which is leased or on consignment, (ix)
inventory which constitutes supplies and packaging, letter inventory,
parade inventory or screws or washers and (x) inventory which fails to
meet such other specifications and requirements as may from time to
time be established by the Agents in their reasonable discretion; it
being agreed that the value of Eligible Inventory shall not include
any capitalized procurement costs other than shipping costs and
customs duty and other landing costs for imported goods.
"Eligible Work in Process" means the book value of all work
in process of Xxxxxxx, Inc. (and only Xxxxxxx, Inc.) in which the
Lenders have a first priority perfected security interest, as such
work in process relates to materials but specifically excluding any
labor or overhead attributed to such work in process.
"Environmental Claim" means any investigation, written
notice, violation, written demand, written allegation, action, suit,
injunction, judgment, order, consent decree, penalty, fine, lien,
proceeding, or written claim whether administrative, judicial, or
private in nature arising (a) pursuant to, or in connection with, an
actual or alleged violation of, any Environmental Law, (b) in
connection with any Hazardous Material, (c) from any assessment,
abatement, removal, remedial, corrective, or other response action in
connection with an Environmental Law or other order of a Governmental
Authority or (d) from any actual or alleged damage, injury, threat, or
harm to health, safety, natural resources, or the environment.
"Environmental Laws" means any current or future legal
requirement of any Governmental Authority pertaining to (a) the
protection of health, safety, and the indoor or outdoor environment,
(b) the conservation, management, or use of natural resources and
wildlife, (c) the protection or use of surface water and groundwater
or (d) the management, manufacture, possession, presence, use,
generation, transportation, treatment, storage, disposal, release,
threatened release, abatement, removal, remediation or handling of, or
exposure to, any hazardous or toxic substance or material or (e)
pollution (including any release to land surface water and
groundwater) and includes, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as
amended by the Superfund Amendments and Reauthorization Act of 1986,
42 USC 9601 et seq., Solid Waste Disposal Act, as amended by the
Resource Conservation and Recovery Act of 1976 and Hazardous and Solid
Waste Amendment of 1984, 42 USC 6901 et seq., Federal Water Pollution
Control Act, as amended by the Clean Water Act of 1977, 33 USC 1251 et
seq., Clean Air Act of 1966, as amended, 42 USC 7401 et seq., Toxic
Substances Control Act of 1976, 15 USC 2601 et seq., Hazardous
Materials Transportation Act, 49 USC App. 1801 et seq., Occupational
Safety and Health Act of 1970, as amended, 29 USC 651 et seq., Oil
Pollution Act of 1990, 33 USC 2701 et seq., Emergency Planning and
Community Right-to-Know Act of 1986, 42 USC 11001 et seq., National
Environmental Policy Act of 1969, 42 USC 4321 et seq., Safe Drinking
Water Act of 1974, as amended, 42 USC
-9-
300(f) et seq., any analogous implementing or successor law, and any
amendment, rule, regulation, order, or directive issued thereunder.
"Equity Issuance" means any issuance by the Borrower to any
Person of (a) shares of its capital stock or other equity interests,
(b) any shares of its capital stock or other equity interests pursuant
to the exercise of options or warrants or (c) any shares of its
capital stock or other equity interests pursuant to the conversion of
any debt securities to equity.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto, as interpreted by
the rules and regulations thereunder, all as the same may be in effect
from time to time. References to sections of ERISA shall be construed
also to refer to any successor sections.
"ERISA Affiliate" means an entity, whether or not
incorporated, which is under common control with any Credit Party or
any of its Subsidiaries within the meaning of Section 4001(a)(14) of
ERISA, or is a member of a group which includes any Credit Party or
any of its Subsidiaries and which is treated as a single employer
under Sections 414(b), (c), (m), or (o) of the Code.
"Eurodollar Loan" means a Loan bearing interest based at a
rate determined by reference to the Eurodollar Rate.
"Eurodollar Rate" means, for the Interest Period for each
Eurodollar Loan comprising part of the same borrowing (including
conversions, extensions and renewals), a per annum interest rate
determined pursuant to the following formula:
Eurodollar Rate = London Interbank Offered Rate
-----------------------------------
1 - Eurodollar Reserve Percentage
"Eurodollar Reserve Percentage" means for any day, that
percentage (expressed as a decimal) which is in effect from time to
time under Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as such regulation may be amended
from time to time or any successor regulation, as the maximum reserve
requirement (including, without limitation, any basic, supplemental,
emergency, special, or marginal reserves) applicable with respect to
Eurocurrency liabilities as that term is defined in Regulation D (or
against any other category of liabilities that includes deposits by
reference to which the interest rate of Eurodollar Loans is
determined), whether or not Lender has any Eurocurrency liabilities
subject to such reserve requirement at that time. Eurodollar Loans
shall be deemed to constitute Eurocurrency liabilities and as such
shall be deemed subject to reserve requirements without benefits of
credits for proration, exceptions or offsets that may be available
from time to time to a Lender. The Eurodollar
-10-
Rate shall be adjusted automatically on and as of the effective date
of any change in the Eurodollar Reserve Percentage.
"Event of Default" means any of the events or circumstances
described in Section 9.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder, as
amended, modified, succeeded or replaced from time to time.
"Extension of Credit" means, as to any Lender, the making of
a Loan by such Lender (or a participation therein by a Lender) or the
issuance of, or participation in, a Letter of Credit by such Lender.
"Federal Funds Rate" means for any day the rate per annum
(rounded upward, if necessary, to the nearest 1/100th of 1%) equal to
the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by
Federal funds brokers on such day, as published by the Federal Reserve
Bank of New York on the Business Day next succeeding such day;
provided that (a) if such day is not a Business Day, the Federal Funds
Rate for such day shall be such rate on such transactions on the next
preceding Business Day and (b) if no such rate is so published on such
next preceding Business Day, the Federal Funds Rate for such day shall
be the average rate quoted to the Administrative Agent on such day on
such transactions as determined by the Administrative Agent.
"Fee Letter" means that certain letter agreement between the
Borrower and the Agents dated as of the Closing Date.
"Funded Debt" means, without duplication, the sum of (a) all
Indebtedness of the Credit Parties and their Subsidiaries for borrowed
money, (b) all purchase money Indebtedness of the Credit Parties and
their Subsidiaries, (c) the principal portion of all obligations of
the Borrower and its Subsidiaries under Capital Leases, (d) all
obligations, contingent or otherwise, relative to the face amount of
all letters of credit (other than letters of credit supporting trade
payables in the ordinary course of business), whether or not drawn,
and banker's acceptances issued for the account of such Person (it
being understood that, to the extent an undrawn letter of credit
supports another obligation consisting of Indebtedness, in calculating
aggregated Indebtedness only such other obligation shall be included),
(e) all Guaranty Obligations of the Credit Parties and their
Subsidiaries with respect to Funded Debt of another Person, (f) all
Funded Debt of another entity secured by a Lien on any property of the
Credit Parties and their Subsidiaries whether or not such Funded Debt
has been assumed by a Credit Party or any of its Subsidiaries, (g) all
Funded Debt of any partnership or unincorporated joint venture
-11-
to the extent a Credit Party or one of its Subsidiaries is legally
obligated or has a reasonable expectation of being liable with respect
thereto, net of any assets of such partnership or joint venture and
(h) the principal balance outstanding under any synthetic lease, tax
retention operating lease, off-balance sheet loan or similar
off-balance sheet financing product where such transaction is
considered borrowed money indebtedness for tax purposes but is
classified as an operating lease in accordance with GAAP.
"GAAP" means generally accepted accounting principles in the
United States applied on a consistent basis and subject to Section
1.3.
"Governmental Authority" means any Federal, state, local,
provincial or foreign court or governmental agency, authority,
instrumentality or regulatory body.
"Guarantor" means each of the Material Subsidiaries of the
Borrower and each Additional Credit Party which has executed a Joinder
Agreement, together with their successors and assigns.
"Guaranty Obligations" means, with respect to any Person,
without duplication, any obligations (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or
collection) guaranteeing any Indebtedness of any other Person in any
manner, whether direct or indirect, and including without limitation
any obligation, whether or not contingent, (a) to purchase any such
Indebtedness or other obligation or any property constituting security
therefor, (b) to advance or provide funds or other support for the
payment or purchase of such indebtedness or obligation or to maintain
working capital, solvency or other balance sheet condition of such
other Person (including, without limitation, maintenance agreements,
comfort letters, take or pay arrangements, put agreements or similar
agreements or arrangements) for the benefit of the holder of
Indebtedness of such other Person, (c) to lease or purchase property,
securities or services primarily for the purpose of assuring the owner
of such Indebtedness or (d) to otherwise assure or hold harmless the
owner of such Indebtedness or obligation against loss in respect
thereof. The amount of any Guaranty Obligation hereunder shall
(subject to any limitations set forth therein) be deemed to be an
amount equal to the outstanding principal amount (or maximum principal
amount, if larger) of the Indebtedness in respect of which such
Guaranty Obligation is made.
"Hazardous Materials" means any substance, material or waste
defined or regulated in or under any Environmental Laws.
"Hedging Agreements" means, collectively, interest rate
protection agreements, foreign currency exchange agreements, commodity
purchase or option agreements or other interest or exchange rate or
commodity price hedging agreements, in each case, entered into or
purchased by a Credit Party.
-12-
"Indebtedness" of any Person means, without duplication, (a)
all obligations of such Person for borrowed money, (b) all obligations
of such Person evidenced by bonds, debentures, notes or similar
instruments, or upon which interest payments are customarily made (c)
all obligations of such Person under conditional sale or other title
retention agreements relating to property purchased by such Person to
the extent of the value of such property (other than customary
reservations or retentions of title under agreements with suppliers
entered into in the ordinary course of business), (d) all obligations,
other than intercompany items, of such Person issued or assumed as the
deferred purchase price of property or services purchased by such
Person which would appear as liabilities on a balance sheet of such
Person, (e) 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, or payable out of the
proceeds of production from, property owned or acquired by such
Person, whether or not the obligations secured thereby have been
assumed, (f) all Guaranty Obligations of such Person, (g) the
principal portion of all obligations of such Person under (i) Capital
Leases and (ii) any synthetic lease, tax retention operating lease,
off-balance sheet loan or similar off-balance sheet financing product
of such Person where such transaction is considered borrowed money
indebtedness for tax purposes but is classified as an operating lease
in accordance with GAAP, (h) all net obligations of such Person in
respect of Hedging Agreements, (i) the maximum amount of all
performance and standby letters of credit issued or bankers'
acceptances facilities created for the account of such Person and,
without duplication, all drafts drawn thereunder (to the extent
unreimbursed), (j) all preferred stock issued by such Person and
required by the terms thereof to be redeemed, or for which mandatory
sinking fund payments are due within one year of the date of
determination and (k) the aggregate amount of uncollected accounts
receivable of such Person subject at such time to a sale of
receivables (or similar transaction) regardless of whether such
transaction is effected without recourse to such Person or in a manner
that would not be reflected on the balance sheet of such Person in
accordance with GAAP. The Indebtedness of any Person shall include the
Indebtedness of any partnership or unincorporated joint venture in
which such Person is legally obligated.
"Interest Expense" means, for any period, with respect to the
Credit Parties and their Subsidiaries on a consolidated basis, all net
interest expense, including the interest component under Capital
Leases, as determined in accordance with GAAP.
"Interest Payment Date" means (a) as to Base Rate Loans, the
tenth day of each month and the Revolving Loan Maturity Date and (b)
as to Eurodollar Loans, the last day of each applicable Interest
Period and the Revolving Loan Maturity Date and in addition where the
applicable Interest Period for a Eurodollar Loan is greater than three
months, then also the date three months from the beginning of the
Interest Period and each three months thereafter.
-13-
"Interest Period" means, as to Eurodollar Loans, a period of
one, two, three or six months' duration, as the Borrower may elect,
commencing, in each case, on the date of the borrowing (including
continuations and conversions thereof); provided, however, (a) if any
Interest Period would end on a day which is not a Business Day, such
Interest Period shall be extended to the next succeeding Business Day
(except that where the next succeeding Business Day falls in the next
succeeding calendar month, then on the next preceding Business Day),
(b) no Interest Period shall extend beyond the Revolving Loan Maturity
Date and (c) where an Interest Period begins on a day for which there
is no numerically corresponding day in the calendar month in which the
Interest Period is to end, such Interest Period shall end on the last
Business Day of such calendar month.
"Investment" in any Person means (a) the acquisition (whether
for cash, property, services, assumption of Indebtedness, securities
or otherwise) of assets, shares of capital stock, bonds, notes,
debentures, partnership, joint ventures or other ownership interests
or other securities of such other Person or (b) any deposit with, or
advance, loan or other extension of credit to, such Person (other than
deposits made in connection with the purchase of equipment or other
assets in the ordinary course of business) or (c) any other capital
contribution to or investment in such Person, including, without
limitation, any Guaranty Obligation (including any support for a
Letter of Credit issued on behalf of such Person) incurred for the
benefit of such Person.
"Issuing Lender" means NBD Bank or any successor
Administrative Agent.
"Issuing Lender Fees" has the meaning set forth in Section
3.4(b).
"Joinder Agreement" means a Joinder Agreement substantially
in the form of Exhibit 7.13.
"Lender" means any of the Persons identified as a "Lender" on
the signature pages hereto, and any Person which may become a Lender
by way of assignment in accordance with the terms hereof, together
with their successors and permitted assigns.
"Letter of Credit" means a Letter of Credit issued for the
account of a Credit Party by the Issuing Lender pursuant to Section
2.2, as such Letter of Credit may be amended, modified, extended,
renewed or replaced.
"Letter of Credit Fees" has the meaning assigned to such term
in Section 3.4(b).
"Leverage Ratio" means, as of the end of each fiscal quarter,
the ratio of (a) total Funded Debt on such date to (b) EBITDA for the
twelve month period ending on such date.
-14-
"Lien" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, security interest, encumbrance, lien (statutory
or otherwise), preference, priority or charge of any kind, including,
without limitation, any agreement to give any of the foregoing, any
conditional sale or other title retention agreement, and any lease in
the nature thereof.
"Loan" or "Loans" means the Revolving Loans (or a portion of
any Revolving Loan), individually or collectively, as appropriate.
"LOC Documents" means, with respect to any Letter of Credit,
such Letter of Credit, any amendments thereto, any documents delivered
in connection therewith, any application therefor, and any agreements,
instruments, guarantees or other documents (whether general in
application or applicable only to such Letter of Credit) governing or
providing for (a) the rights and obligations of the parties concerned
or at risk or (b) any collateral security for such obligations.
"LOC Obligations" means, at any time, the sum of (a) the
maximum amount which is, or at any time thereafter may become,
available to be drawn under Letters of Credit then outstanding,
assuming compliance with all requirements for drawings referred to in
such Letters of Credit plus (b) the aggregate amount of all drawings
under Letters of Credit honored by an Issuing Lender but not
theretofore reimbursed.
"LOC Participants" means the Lenders.
"London Interbank Offered Rate" means, with respect to any
Eurodollar Loan for the Interest Period applicable thereto, the rate
of interest per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) appearing on Telerate Page 3750 (or any successor page)
as the London interbank offered rate for deposits in Dollars at
approximately 11:00 A.M. (London time) two Business Days prior to the
first day of such Interest Period for a term comparable to such
Interest Period; provided, however, if more than one rate is specified
on Telerate Page 3750, the applicable rate shall be the arithmetic
mean of all such rates. If, for any reason, such rate is not
available, the term "London Interbank Offered Rate" shall mean, with
respect to any Eurodollar Loan for the Interest Period applicable
thereto, the rate of interest per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen
LIBO Page as the London interbank offered rate for deposits in Dollars
at approximately 11:00 A.M. (London time) two Business Days prior to
the first day of such Interest Period for a term comparable to such
Interest Period; provided, however, if more than one rate is specified
on Reuters Screen LIBO Page, the applicable rate shall be the
arithmetic mean of all such rates.
"Mandatory Borrowing" has the meaning set forth in Section
2.2(e).
-15-
"Material Adverse Effect" means a material adverse effect on
(a) the operations, financial condition, business or prospects of the
Credit Parties and their Subsidiaries taken as a whole, (b) the
ability of the Borrower or the Credit Parties, taken as a whole, to
perform its or their respective obligations under this Credit
Agreement or any of the other Credit Documents, or (c) the validity or
enforceability of this Credit Agreement, any of the other Credit
Documents, or the rights and remedies of the Lenders hereunder or
thereunder taken as a whole.
"Material License Agreements" means (a) all License
Agreements set forth on Schedule 6.24 and (b) all other License
Agreements entered into by a Credit Party in which such Credit Party
either guaranties or actually pays royalties to the licensor party to
such License Agreement in an amount equal to or greater than $100,000
per year.
"Material Subsidiary" means, as of any date of determination,
all Subsidiaries, direct or indirect, of the Borrower that, together
with its Subsidiaries on a consolidated basis, owns assets equal to or
greater than five percent (5%) of the total assets of the Borrower and
its Subsidiaries on a consolidated basis; provided that at no time
shall the then Credit Parties, in the aggregate, own less than ninety
percent (90%) of the total assets of the Borrower and its Subsidiaries
on a consolidated basis. As of the Effective Date, the Material
Subsidiaries are Xxxxxxx, Inc., Equilink Licensing Corporation, RHC
Licensing Corporation, Ridmark Corporation, All American Sports
Corporation, Cheer Acquisition Corp., Varsity Spirit Corporation,
Varsity Spirit Fashions & Supplies, Inc., International Logos, Inc.,
Varsity/Intropa Tours, Inc., and Varsity USA, Inc.
"M.O.U." means the Memorandum of Understanding entered into
as of the 3rd day of June, 1997, by and among Xxxxxxx Sports Inc., RHC
Licensing Corporation, Xxxxxxx, Inc., Equilink Licensing Corporation,
Ridmark Corporation, MacMark Corporation, NBD Bank N.A., MLC Partners
Limited Partnership, Xxxxxx Xxxxxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxx
XxXxxxxxxxx, Xx., Xxxxxxxx X. Xxxxxx, Connecticut Economics
Corporation, Xxxxxx Xxxxxxx, Xxxxx X. Xxxxxx, as Bankruptcy Trustee of
M Holdings Corporation, Xxxx Xxxxxxx, as Bankruptcy Trustee of MGS
Acquisition, Inc., Official Unsecured Creditors Committee of MacGregor
Sporting Goods, Inc. and MacGregor Sports, Inc., Official Unsecured
Creditors' Committee of MacGregor Sporting Goods, Inc., M Holdings
Corporation, f/k/a MacGregor Sporting Goods, Inc., Innovative
Promotions, Inc., Xxxxxx Xxxx, Xx., Xxxxx Xxxx, Pursuit Athletic
Footwear, Inc., and Xxxxxxx Athletic Footwear, Inc. in the form set
forth on Schedule 11.20 and any non-material modifications or
amendments thereto.
"Moody's" means Xxxxx'x Investors Service, Inc., or any
successor or assignee of the business of such company in the business
of rating securities.
-16-
"Mortgage Documents" means the Mortgages, the Mortgage
Policies and such other documents and agreements executed or delivered
in connection with the Real Properties.
"Mortgage Policies" has the meaning set forth in Section
5.1(f).
"Mortgages" has the meaning set forth in Section 5.1(f).
"Mortgaged Properties" has the meaning set forth in Section
5.1(f).
"Multiemployer Plan" means a Plan covered by Title IV of
ERISA which is a multiemployer plan as defined in Section 3(37) or
4001(a)(3) of ERISA.
"Multiple Employer Plan" means a Plan covered by Title IV of
ERISA, other than a Multiemployer Plan, which any Credit Party or any
of its Subsidiaries or any ERISA Affiliate and at least one employer
other than a Credit Party or any of its Subsidiaries or any ERISA
Affiliate are contributing sponsors.
"Net Cash Proceeds" means the gross cash proceeds received
from an Equity Issuance net of (a) transaction costs payable to third
parties and (b) a good faith estimate of the taxes payable with
respect to such proceeds.
"Net Income" means, for any period, the net income after
taxes for such period of the Credit Parties and their Subsidiaries on
a consolidated basis, as determined in accordance with GAAP.
"Net Worth" means, as of any date, shareholders' equity or
net worth of the Credit Parties and their Subsidiaries on a
consolidated basis, as determined in accordance with GAAP plus,
without duplication, any reduction in Net Worth as a result of (a) a
write down in the value of intangibles not to exceed $5 million in the
aggregate, (b) the sum of all amounts paid pursuant to or in
connection with the M.O.U. or the transactions contemplated thereby
and (c) Transaction Costs.
"Non-Excluded Taxes" has the meaning set forth in Section
3.13.
"Non-Material Subsidiary" means, as of any date of
determination, all Subsidiaries of the Borrower, direct or indirect,
other than Material Subsidiaries.
"Note" or "Notes" means the Revolving Loan Notes,
individually or collectively, as appropriate.
-17-
"Notice of Borrowing" means a request by the Borrower for a
Revolving Loan, in the form of Exhibit 2.1(b).
"Notice of Continuation/Conversion" means a request by the
Borrower to continue an existing Eurodollar Loan to a new Interest
Period or to convert a Eurodollar Loan to a Base Rate Loan or a Base
Rate Loan to a Eurodollar Loan, in the form of Exhibit 2.1(e).
"Overadvance" has the meaning set forth in the definition of
Borrowing Base Assets.
"Participation Interest" means the Extension of Credit by a
Lender by way of a purchase of a participation in Letters of Credit or
LOC Obligations as provided in Section 2.2 or in any Loans as provided
in Section 3.8.
"PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA and any
successor thereto.
"Permitted Investments" means Investments which are (a) cash
or Cash Equivalents, (b) accounts receivable created, acquired or made
in the ordinary course of business and payable or dischargeable in
accordance with customary trade terms, (c) inventory, raw materials
and general intangibles (to the extent such general intangible is not
a Capital Expenditure) acquired in the ordinary course of business,
(d) Investments by one Credit Party in another Credit Party, (e)
Investments by a Credit Party in a Non-Material Subsidiary, not to
exceed $250,000, in the aggregate, at any one time, (f) loans to
directors, officers or employees in the ordinary course of business
for reasonable business expenses, not to exceed, in the aggregate,
$250,000 at any one time; (g) Investments in Capital Expenditures and
(g) other Investments not to exceed, in the aggregate, $2,500,000 at
any one time.
"Permitted Liens" means (a) Liens securing Credit Party
Obligations, (b) Liens for taxes not yet due or Liens for taxes being
contested in good faith by appropriate proceedings for which adequate
reserves determined in accordance with GAAP have been established (and
as to which the property subject to any such Lien is not yet subject
to foreclosure, sale, collection, levy or loss on account thereof),
(c) Liens in respect of property imposed by law arising in the
ordinary course of business such as materialmen's, mechanics',
warehousemen's, carrier's, landlords' and other nonconsensual
statutory Liens which are not yet due and payable or which are being
contested in good faith by appropriate proceedings for which adequate
reserves determined in accordance with GAAP have been established (and
as to which the property subject to any such Lien is not yet subject
to foreclosure, sale or loss on account thereof), (d) pledges or
deposits made in the ordinary course of business to secure payment of
worker's compensation insurance,
-18-
unemployment insurance, pensions or social security programs, (e)
Liens arising from good faith deposits in connection with or to secure
performance of tenders, bids, leases, government contracts,
performance and return-of-money bonds and other similar obligations
incurred in the ordinary course of business (other than obligations in
respect of the payment of borrowed money), (f) Liens arising from good
faith deposits in connection with or to secure performance of
statutory obligations and surety and appeal bonds, (g) easements,
rights-of-way, restrictions (including zoning restrictions), matters
of plat, minor defects or irregularities in title and other similar
charges or encumbrances not, in any material respect, impairing the
use of the encumbered property for its intended purposes, (h) judgment
Liens that would not constitute an Event of Default, (i) Liens in
connection with Indebtedness permitted by Section 8.1(g), (j) Liens
arising by virtue of any statutory or common law provision relating to
banker's liens, rights of setoff or similar rights as to deposit
accounts or other funds maintained with a creditor depository
institution, (k) Liens existing on the date hereof and identified on
Schedule 8.2; provided that no such Lien shall extend to any property
other than the property subject thereto on the Closing Date (l)
Permitted Encumbrances (as defined in any Mortgage Document) and (m)
Liens on Unrestricted Margin Stock.
"Person" means any individual, partnership, joint venture,
firm, corporation, limited liability company, association, trust or
other enterprise (whether or not incorporated), or any Governmental
Authority.
"Plan" means any employee benefit plan (as defined in Section
3(3) of ERISA) which is covered by ERISA and with respect to which any
Credit Party or any of its Subsidiaries or any ERISA Affiliate is (or,
if such plan were terminated at such time, would under Section 4069 of
ERISA be deemed to be) an "employer" within the meaning of Section
3(5) of ERISA.
"Pledge Agreements" means any Pledge Agreement executed and
delivered by a Credit Party in favor of the Collateral Agent, for the
benefit of the Lenders, to secure its obligations under the Credit
Documents, as amended, modified, extended, renewed or replaced from
time to time.
"Prime Rate" means the per annum rate of interest established
from time to time by the Administrative Agent at its principal office
in Detroit, Michigan (or such other principal office of the
Administrative Agent as communicated in writing to the Borrower and
the Lenders) as its Prime Rate. Any change in the interest rate
resulting from a change in the Prime Rate shall become effective as of
12:01 a.m. of the Business Day on which each change in the Prime Rate
is announced by the Administrative Agent. The Prime Rate is a
reference rate used by the Administrative Agent in determining
interest rates on certain loans and is not intended to be the lowest
rate of interest charged on any extension of credit to any debtor.
-19-
"Principals" means Xxxxxx X. Xxxxxxxxxxx, Xxxxxxx Xxxxxxxx,
Xxxx XxXxxxxxxxx, Xx., Xxxxx Xxxxx, Xxx Xxxxxxx, Xxxxx Xxxxxxxxxx or
Xxxxxxx X. Xxxx.
"Real Properties" means the Mortgaged Properties and such
other real properties as the Credit Parties may lease from third
parties from time to time.
"Regulation D, G, U, or X" means Regulation D, G, U or X,
respectively, of the Board of Governors of the Federal Reserve System
as from time to time in effect and any successor to all or a portion
thereof.
"Related Party" with respect to any Principal means (a) any
spouse or former spouse or immediate family member of such Principal,
(b) the estate or any heir of such Principal, (c) any Subsidiary of
any of the Principals or any other Related Party or (d) any trust, the
beneficiaries of whom are Principals or Related Parties.
"Reportable Event" means a "reportable event" as defined in
Section 4043 of ERISA with respect to which the notice requirements to
the PBGC have not been waived.
"Required Lenders" means Lenders whose aggregate Credit
Exposure (as hereinafter defined) constitutes at least 51% of the
Credit Exposure of all Lenders at such time; provided, however, that
if any Lender shall be a Defaulting Lender at such time then there
shall be excluded from the determination of Required Lenders the
aggregate principal amount of Credit Exposure of such Lender at such
time. For purposes of the preceding sentence, the term "Credit
Exposure" as applied to each Lender shall mean (a) at any time prior
to the termination of the Commitments, the sum of the Revolving
Commitment Percentage of such Lender multiplied by the Revolving
Committed Amount and (b) at any time after the termination of the
Commitments, the sum of (i) the principal balance of the outstanding
Loans of such Lender plus (ii) such Lender's Participation Interests
in the face amount of the outstanding Letters of Credit.
"Requirement of Law" means, as to any Person, the articles or
certificate of incorporation and by-laws or other organizational or
governing documents of such Person, and any law, treaty, rule or
regulation or final, non-appealable determination of an arbitrator or
a court or other Governmental Authority, in each case applicable to or
binding upon such Person or to which any of its material property is
subject.
"Responsible Officer" means the Chief Executive Officer, the
Chief Financial Officer, the Treasurer, the Chief Accounting Officer
or the General Counsel of the Borrower and such other officers of the
Borrower who may be involved in administrating and complying with the
Credit Documents and communicating with the Agents with respect
thereto.
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"Revolving Loan Commitment Percentage" means, for each
Lender, the percentage identified as its Revolving Commitment
Percentage on Schedule 1.1(a), as such percentage may be modified in
connection with any assignment made in accordance with the provisions
of Section 11.3.
"Revolving Committed Amount" means (a) from the Closing Date
to September 30, 1997, FORTY MILLION DOLLARS ($40,000,000) and (b)
from October 1, 1997 to the Revolving Loan Maturity Date, THIRTY FIVE
MILLION DOLLARS ($35,000,000) or such lesser amount as the Revolving
Committed Amount may be reduced pursuant to Section 2.1(d).
"Revolving Loan Maturity Date" means June 30, 2002.
"Revolving Loans" means the Revolving Loans made to the
Borrower pursuant to Section 2.1.
"Revolving Note" or "Revolving Notes" means the promissory
notes of the Borrower in favor of each of the Lenders evidencing the
Revolving Loans provided pursuant to Section 2.1, individually or
collectively, as appropriate, as such promissory notes may be amended,
modified, supplemented, extended, renewed or replaced from time to
time and as evidenced in the form of Exhibit 2.1(g).
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw Hill, Inc., or any successor or assignee of the business of
such division in the business of rating securities.
"Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Security Agreements" means any security agreement executed
and delivered by a Credit Party in favor of the Collateral Agent for
the benefit of the Lenders to secure its obligations under the Credit
Documents, as such may be amended, modified, extended, renewed,
restated or replaced from time to time.
"Senior Notes" means those certain notes issued by the
Borrower pursuant to that certain Indenture dated June 19, 1997, in
the amount of $115 million and maturing July 15, 2007, the terms of
which are acceptable to the Agents.
"Single Employer Plan" means any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan.
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"Solvent" means, with respect to any Person as of a
particular date, that on such date (a) such Person is able to pay its
debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business, (b) such
Person does not intend to, and does not believe that it will, incur
debts or liabilities beyond such Person's ability to pay as such debts
and liabilities mature in their ordinary course, (c) such Person is
not engaged in a business or a transaction, and is not about to engage
in a business or a transaction, for which such Person's assets would
constitute unreasonably small capital after giving due consideration
to the prevailing practice in the industry in which such Person is
engaged or is to engage, (d) the fair value of the assets of such
Person is greater than the total amount of liabilities, including,
without limitation, contingent liabilities, of such Person and (e) the
present fair saleable value of the assets of such Person is not less
than the amount that will be required to pay the probable liability of
such Person on its debts as they become absolute and matured. In
computing the amount of contingent liabilities at any time, it is
intended that such liabilities will be computed at the amount which,
in light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an
actual or matured liability.
"Subordinated Debt" means those certain convertible
subordinated notes issued by the Borrower, in the aggregate amount of
$7.5 million, and maturing November 1, 2004.
"Subordinated Secured Note" means that certain Subordinated
Secured Note dated as of November 30, 1995 in the original face amount
of $2,950,000 executed by Xxxxxxx Sports Inc. and Xxxxxxx, Inc. in
favor of Xxxxx X. Xxxxxx, Xxxxx Xxxxxx and Xxxxxx Xxxxxx.
"Subsidiary" means, as to any Person, (a) any corporation
more than 50% of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the
directors of such corporation (irrespective of whether or not at the
time, any class or classes of such corporation shall have or might
have voting power by reason of the happening of any contingency) is at
the time owned by such Person directly or indirectly through
Subsidiaries, and (b) any partnership, association, joint venture or
other entity in which such person directly or indirectly through
Subsidiaries has more than a 50% equity interest at any time.
"Termination Event" means (a) with respect to any Single
Employer Plan, the occurrence of a Reportable Event or the substantial
cessation of operations (within the meaning of Section 4062(e) of
ERISA); (b) the withdrawal of any Credit Party or any of its
Subsidiaries or any ERISA Affiliate from a Multiple Employer Plan
during a plan year in which it was a substantial employer (as such
term is defined in Section 4001(a)(2) of ERISA), or the termination of
a Multiple Employer Plan; (c) the distribution of a notice of intent
to terminate or the actual termination of a Plan pursuant to Section
4041(a)(2) or
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4041A of ERISA; (d) the institution of proceedings to terminate or the
actual termination of a Plan by the PBGC under Section 4042 of ERISA;
(e) any event or condition which might reasonably constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan; or (f) the complete or partial
withdrawal of any Credit Party or any of its Subsidiaries or any ERISA
Affiliate from a Multiemployer Plan.
"Transaction Costs" means all usual and necessary legal,
administrative and contractual obligations incurred by the Borrower in
connection with the consummation of (a) the acquisition of Varsity
Spirit Corporation, (b) the issuance of the Senior Notes and (c) the
Credit Documents.
"Unrestricted Margin Stock" means the capital stock of
Varsity Spirit Corporation that constitutes "margin stock" (as defined
in Regulation U of the Board of Governors of the Federal Reserve
System as from time to time in effect), if, and to the extent that the
value of such margin stock exceeds 25% of the total assets of the
Borrower and its Subsidiaries; provided that it is understood that
upon completion of the merger of Cheer Acquisition Corp. into Varsity
Spirit Corporation there shall be no Unrestricted Margin Stock
outstanding.
"Unused Commitment" means, for any period, the amount by
which (a) the then applicable aggregate Revolving Committed Amount
exceeds (b) the daily average sum for such period of the outstanding
aggregate principal amount of all Revolving Loans plus the aggregate
amount of LOC Obligations outstanding.
"Voting Stock" of a corporation means all classes of the
capital stock of such corporation then outstanding and normally
entitled to vote in the election of directors.
1.2 Computation of Time Periods and Other Definitional Provisions.
For purposes of computation of periods of time hereunder, the word
"from" means "from and including" and the words "to" and "until" each mean "to
but excluding." References in this Agreement to "Articles", "Sections",
"Schedules" or "Exhibits" shall be to Articles, Sections, Schedules or Exhibits
of or to this Agreement unless otherwise specifically provided.
1.3 Accounting Terms.
Except as otherwise expressly provided herein, all accounting terms
used herein shall be interpreted, and all financial statements and certificates
and reports as to financial matters required to be delivered to the Lenders
hereunder shall be prepared, in accordance with GAAP as of the Closing Date.
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SECTION 2
CREDIT FACILITIES
2.1 Revolving Loans.
(a) Revolving Loan Commitment. Subject to the terms and
conditions set forth herein, each Lender severally agrees to make
revolving loans (each a "Revolving Loan" and collectively the
"Revolving Loans") to the Borrower, in Dollars, at any time and from
time to time, during the period from and including the Effective Date
to but not including the Revolving Loan Maturity Date (or such earlier
date if the Revolving Committed Amount has been terminated as provided
herein); provided, however, that (i) the sum of the aggregate amount
of Revolving Loans outstanding plus the aggregate amount of LOC
Obligations outstanding shall not exceed the Revolving Committed
Amount and (ii) with respect to each individual Lender, the Lender's
pro rata share of outstanding Revolving Loans plus such Lender's pro
rata share of outstanding LOC Obligations shall not exceed such
Lender's Revolving Loan Commitment Percentage of the Revolving
Committed Amount. Subject to the terms of this Credit Agreement
(including Section 3.3), the Borrower may borrow, repay and reborrow
Revolving Loans.
(b) Method of Borrowing for Revolving Loans. By no later than
11:00 a.m. (i) on the date of the requested borrowing of Revolving
Loans that will be Base Rate Loans or (ii) three Business Days prior
to the date of the requested borrowing of Revolving Loans that will be
Eurodollar Loans, the Borrower shall submit a written Notice of
Borrowing in the form of Exhibit 2.1(b) to the Administrative Agent
setting forth (A) the amount requested, (B) whether such Revolving
Loans shall accrue interest at the Adjusted Base Rate or the Adjusted
Eurodollar Rate, (C) with respect to Revolving Loans that will be
Eurodollar Loans, the Interest Period applicable thereto and (D)
certification that the Borrower has complied in all respects with
Section 5.2.
(c) Funding of Revolving Loans. Upon receipt of a Notice of
Borrowing, the Administrative Agent shall promptly inform the Lenders
as to the terms thereof. Each Lender shall make its Revolving Loan
Commitment Percentage of the requested Revolving Loans available to
the Administrative Agent by 1:00 p.m. on the date specified in the
Notice of Borrowing by deposit, in Dollars, of immediately available
funds at the offices of the Administrative Agent at its principal
office in Detroit, Michigan or at such other address as the
Administrative Agent may designate in writing. The amount of the
requested Revolving Loans will then be made available to the Borrower
by the Administrative Agent by crediting the account of the Borrower
on the books of such office of the Administrative Agent, to the extent
the amount of such Revolving Loans are made available to the
Administrative Agent.
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No Lender shall be responsible for the failure or delay by
any other Lender in its obligation to make Revolving Loans hereunder;
provided, however, that the failure of any Lender to fulfill its
obligations hereunder shall not relieve any other Lender of its
obligations hereunder. Unless the Administrative Agent shall have been
notified by any Lender prior to the date of any such Revolving Loan
that such Lender does not intend to make available to the
Administrative Agent its portion of the Revolving Loans to be made on
such date, the Administrative Agent may assume that such Lender has
made such amount available to the Administrative Agent on the date of
such Revolving Loans, and the Administrative Agent in reliance upon
such assumption, may (in its sole discretion but without any
obligation to do so) make available to the Borrower a corresponding
amount. If such corresponding amount is not in fact made available to
the Administrative Agent, the Administrative Agent shall be able to
recover such corresponding amount from such Lender. If such Lender
does not pay such corresponding amount forthwith upon the
Administrative Agent's demand therefor, the Administrative Agent will
promptly notify the Borrower, and the Borrower shall immediately pay
such corresponding amount to the Administrative Agent. The
Administrative Agent shall also be entitled to recover from the Lender
or the Borrower, as the case may be, interest on such corresponding
amount in respect of each day from the date such corresponding amount
was made available by the Administrative Agent to the Borrower to the
date such corresponding amount is recovered by the Administrative
Agent at a per annum rate equal to (i) from the Borrower at the
applicable rate for such Revolving Loan pursuant to the Notice of
Borrowing and (ii) from a Lender at the Federal Funds Rate.
(d) Reductions of Revolving Committed Amount. Upon at least
three Business Days' notice, the Borrower shall have the right to
permanently reduce all or part of the aggregate unused amount of the
Revolving Committed Amount at any time or from time to time; provided
that (i) each partial reduction shall be in an aggregate amount at
least equal to $5,000,000 and in integral multiples of $1,000,000
above such amount and (ii) no reduction shall be made which would
reduce the Revolving Committed Amount to an amount less than the
aggregate amount of outstanding Revolving Loans plus the aggregate
amount of outstanding LOC Obligations. Any reduction in (or
termination of) the Revolving Committed Amount shall be permanent and
may not be reinstated. The Administrative Agent shall immediately
notify the Lenders of any reduction in the Revolving Committed Amount.
(e) Continuations and Conversions. Subject to the terms of
Section 5.2, the Borrower shall have the option, on any Business Day,
to continue existing Eurodollar Loans for a subsequent Interest
Period, to convert Base Rate Loans into Eurodollar Loans or to convert
Eurodollar Loans into Base Rate Loans; provided, however, that (i)
each such continuation or conversion must be requested by the Borrower
pursuant to a written Notice of Continuation/Conversion, in the form
of Exhibit 2.1(e), in compliance with the
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terms set forth below, (ii) except as provided in Section 3.11,
Eurodollar Loans may only be continued or converted into Base Rate
Loans on the last day of the Interest Period applicable thereto, (iii)
Eurodollar Loans may not be continued nor may Base Rate Loans be
converted into Eurodollar Loans during the existence and continuation
of an Event of Default and (iv) any request to continue a Eurodollar
Loan that fails to comply with the terms hereof or any failure to
request a continuation of a Eurodollar Loan at the end of an Interest
Period shall constitute a conversion to a Base Rate Loan on the last
day of the applicable Interest Period. Each continuation or conversion
must be requested by the Borrower no later than 11:00 a.m. (A) on the
date for a requested conversion of a Eurodollar Loan to a Base Rate
Loan or (B) three Business Days prior to the date for a requested
continuation of a Eurodollar Loan or conversion of a Base Rate Loan to
a Eurodollar Loan, in each case pursuant to a written Notice of
Continuation/Conversion submitted to the Administrative Agent which
shall set forth (x) whether the Borrower wishes to continue or convert
such Loans and (y) if the request is to continue a Eurodollar Loan or
convert a Base Rate Loan to a Eurodollar Loan, the Interest Period
applicable thereto.
(f) Minimum Amounts. Each request for a borrowing, conversion
or continuation shall be subject to the requirements that (i) each
Eurodollar Loan shall be in a minimum amount of $1,000,000 and in
integral multiples of $100,000 in excess thereof, (ii) each Base Rate
Loan shall be in a minimum amount of the lesser of $100,000 (and
integral multiples of $50,000 in excess thereof) or the remaining
amount available under the Revolving Committed Amount and (iii) no
more than ten Eurodollar Loans shall be outstanding hereunder at any
one time. For the purposes of this Section, all Eurodollar Loans with
the same Interest Periods that begin and end on the same date shall be
considered as one Eurodollar Loan, but Eurodollar Loans with different
Interest Periods, even if they begin on the same date, shall be
considered as separate Eurodollar Loans.
(g) Notes. The Revolving Loans made by each Lender shall be
evidenced by a duly executed promissory note of the Borrower to each
applicable Lender in the face amount of its Revolving Loan Commitment
Percentage of the Revolving Committed Amount in substantially the form
of Exhibit 2.1(g).
2.2 Letter of Credit Subfacility.
(a) Issuance. Subject to the terms and conditions hereof and
of the LOC Documents, if any, and any other terms and conditions which
the Issuing Lender may reasonably require (so long as such terms and
conditions do not impose any financial obligation on or require any
Lien (not otherwise contemplated by this Agreement) to be given by any
Credit Party or conflict with any obligation of, or detract from any
action which may be taken by, any Credit Party or their Subsidiaries
under this Agreement), the Issuing Lender shall from time to time upon
request issue (from the Effective Date to the
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Revolving Loan Maturity Date and in a form reasonably acceptable to
the Issuing Lender), in Dollars, and the LOC Participants shall
participate in, letters of credit (the "Letters of Credit") for the
account of the Borrower; provided, however, that (i) the aggregate
amount of LOC Obligations shall not at any time exceed FIVE MILLION
DOLLARS ($5,000,000), (ii) the sum of the aggregate amount of LOC
Obligations outstanding plus Revolving Loans outstanding shall not
exceed the Revolving Committed Amount and (iii) with respect to each
individual LOC Participant, the LOC Participant's pro rata share of
outstanding Revolving Loans plus its pro rata share of outstanding LOC
Obligations shall not exceed such LOC Participant's Revolving Loan
Commitment Percentage of the Revolving Committed Amount. The issuance
and expiry date of each Letter of Credit shall be a Business Day.
Except as otherwise expressly agreed upon by all the LOC Participants,
no Letter of Credit shall have an original expiry date more than one
year from the date of issuance, or as extended, shall have an expiry
date extending beyond the Revolving Loan Maturity Date. Each Letter of
Credit shall be either (x) a standby letter of credit issued to
support the obligations (including pension or insurance obligations),
contingent or otherwise, of the Borrower or any of its Subsidiaries,
or (y) a commercial letter of credit in respect of the purchase of
goods or services by the Borrower or any of its Subsidiaries in the
ordinary course of business. Each Letter of Credit shall comply with
the related LOC Documents.
(b) Notice and Reports. The request for the issuance of a
Letter of Credit shall be submitted to the Issuing Lender at least
three Business Days prior to the requested date of issuance. The
Issuing Lender will, at least quarterly and more frequently upon
request, provide to the Administrative Agent for dissemination to the
Lenders a detailed report specifying the Letters of Credit which are
then issued and outstanding and any activity with respect thereto
which may have occurred since the date of the prior report, and
including therein, among other things, the account party, the
beneficiary, the face amount, and the expiry date as well as any
payments or expirations which may have occurred. The Issuing Lender
will further provide to the Administrative Agent, promptly upon
request, copies of the Letters of Credit and the other LOC Documents.
(c) Participations. Each LOC Participant, upon issuance of a
Letter of Credit, shall be deemed to have purchased without recourse a
risk participation from the Issuing Lender in such Letter of Credit
and each LOC Document related thereto and the rights and obligations
arising thereunder and any collateral relating thereto, in each case
in an amount equal to its Revolving Loan Commitment Percentage of the
obligations under such Letter of Credit, and shall absolutely,
unconditionally and irrevocably assume, as primary obligor and not as
surety, and be obligated to pay to the Issuing Lender therefor and
discharge when due, its Revolving Loan Commitment Percentage of the
obligations arising under such Letter of Credit. Without limiting the
scope and nature of each LOC Participant's participation in any Letter
of Credit, to the extent that the Issuing Lender has
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not been reimbursed as required hereunder or under any such Letter of
Credit, each such LOC Participant shall pay to the Issuing Lender its
Revolving Loan Commitment Percentage of such unreimbursed drawing in
same day funds on the day of notification by the Issuing Lender of an
unreimbursed drawing pursuant to the provisions of subsection (d)
hereof. The obligation of each LOC Participant to so reimburse the
Issuing Lender shall be absolute and unconditional and shall not be
affected by the occurrence of a Default, an Event of Default or any
other occurrence or event. Any such reimbursement shall not relieve or
otherwise impair the obligation of the Borrower or any other Credit
Party to reimburse the Issuing Lender under any Letter of Credit,
together with interest as hereinafter provided.
(d) Reimbursement. In the event of any drawing under any
Letter of Credit, the Issuing Lender will promptly notify the
Borrower. Unless the Borrower shall immediately notify the Issuing
Lender of its intent to otherwise reimburse the Issuing Lender, the
Borrower shall be deemed to have requested a Revolving Loan at the
Adjusted Base Rate in the amount of the drawing as provided in
subsection (e) hereof, the proceeds of which will be used to satisfy
the reimbursement obligations. The Borrower shall reimburse the
Issuing Lender on the day of drawing under any Letter of Credit either
with the proceeds of a Revolving Loan obtained hereunder or otherwise
in same day funds as provided herein or in the LOC Documents. If the
Borrower shall fail to reimburse the Issuing Lender as provided
hereinabove, the unreimbursed amount of such drawing shall bear
interest at a per annum rate equal to the Base Rate plus the
Applicable Percentage for the Base Rate Loans that are Revolving Loans
plus two percent (2%). The Borrower's reimbursement obligations
hereunder shall be absolute and unconditional under all circumstances
irrespective of (but without waiver of) any rights of set-off,
counterclaim or defense to payment the applicable account party or the
Borrower may claim or have against the Issuing Lender, the Agent, the
Lenders, the beneficiary of the Letter of Credit drawn upon or any
other Person, including without limitation, any defense based on any
failure of the applicable account party, the Borrower or any other
Credit Party to receive consideration or the legality, validity,
regularity or unenforceability of the Letter of Credit. The Issuing
Lender will promptly notify the LOC Participants of the amount of any
unreimbursed drawing and each LOC Participant shall promptly pay to
the Administrative Agent for the account of the Issuing Lender, in
Dollars and in immediately available funds, the amount of such LOC
Participant's Revolving Loan Commitment Percentage of such
unreimbursed drawing. Such payment shall be made on the day such
notice is received by such Lender from the Issuing Lender if such
notice is received at or before 2:00 p.m., otherwise such payment
shall be made at or before 12:00 Noon on the Business Day next
succeeding the day such notice is received. If such LOC Participant
does not pay such amount to the Issuing Lender in full upon such
request, such LOC Participant shall, on demand, pay to the
Administrative Agent for the account of the Issuing Lender interest on
the unpaid amount during the period from the date the LOC Participant
received the notice regarding the unreimbursed
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drawing until such LOC Participant pays such amount to the Issuing
Lender in full at a rate per annum equal to, if paid within two
Business Days of the date of drawing, the Federal Funds Rate and
thereafter at a rate equal to the Base Rate. Each LOC Participant's
obligation to make such payment to the Issuing Lender, and the right
of the Issuing Lender to receive the same, shall be absolute and
unconditional, shall not be affected by any circumstance whatsoever
and without regard to the termination of this Credit Agreement or the
Commitments hereunder, the existence of a Default or Event of Default
or the acceleration of the obligations hereunder and shall be made
without any offset, abatement, withholding or reduction whatsoever.
Simultaneously with the making of each such payment by a LOC
Participant to the Issuing Lender, such LOC Participant shall,
automatically and without any further action on the part of the
Issuing Lender or such LOC Participant, acquire a participation in an
amount equal to such payment (excluding the portion of such payment
constituting interest owing to the Issuing Lender) in the related
unreimbursed drawing portion of the LOC Obligation and in the interest
thereon and in the related LOC Documents, and shall have a claim
against the Borrower and the other Credit Parties with respect
thereto.
(e) Repayment with Revolving Loans. On any day on which the
Borrower shall have requested, or been deemed to have requested, a
Revolving Loan borrowing to reimburse a drawing under a Letter of
Credit, the Administrative Agent shall give notice to the applicable
Lenders that a Revolving Loan has been requested or deemed requested
in connection with a drawing under a Letter of Credit, in which case a
Revolving Loan borrowing comprised solely of Base Rate Loans (each
such borrowing, a "Mandatory Borrowing") shall be immediately made
from all applicable Lenders (without giving effect to any termination
of the Commitments pursuant to Section 9.2) pro rata based on each
Lender's respective Revolving Loan Commitment Percentage and the
proceeds thereof shall be paid directly to the Issuing Lender for
application to the respective LOC Obligations. Each such Lender hereby
irrevocably agrees to make such Revolving Loans immediately upon any
such request or deemed request on account of each such Mandatory
Borrowing in the amount and in the manner specified in the preceding
sentence and on the same such date notwithstanding (i) the amount of
Mandatory Borrowing may not comply with the minimum amount for
borrowings of Revolving Loans otherwise required hereunder, (ii)
whether any conditions specified in Section 5 are then satisfied,
(iii) whether a Default or Event of Default then exists, (iv) failure
of any such request or deemed request for Revolving Loans to be made
by the time otherwise required hereunder, (v) the date of such
Mandatory Borrowing, or (vi) any reduction in the Revolving Committed
Amount or any termination of the Commitments. In the event that any
Mandatory Borrowing cannot for any reason be made on the date
otherwise required above (including, without limitation, as a result
of the commencement of a proceeding under the Bankruptcy Code with
respect to the Borrower or any other Credit Party), then each such
Lender hereby agrees that it shall forthwith fund (as of the date the
Mandatory Borrowing would otherwise have occurred, but adjusted for
any payments received from
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the Borrower on or after such date and prior to such purchase) its
Participation Interest in the outstanding LOC Obligations; provided,
further, that in the event any Lender shall fail to fund its
Participation Interest on the day the Mandatory Borrowing would
otherwise have occurred, then the amount of such Lender's unfunded
Participation Interest therein shall bear interest payable to the
Issuing Lender upon demand, at the rate equal to, if paid within two
Business Days of such date, the Federal Funds Rate, and thereafter at
a rate equal to the Base Rate.
(f) Modification and Extension. The issuance of any
supplement, modification, amendment, renewal, or extensions to any
Letter of Credit shall, for purposes hereof, be treated in all
respects the same as the issuance of a new Letter of Credit hereunder.
(g) Uniform Customs and Practices. The Issuing Lender may
have the Letters of Credit be subject to The Uniform Customs and
Practice for Documentary Credits, as published as of the date of issue
by the International Chamber of Commerce (Publication No. 500 or the
most recent publication, the "UCP"), in which case the UCP may be
incorporated therein and deemed in all respects to be a part thereof.
(h) Responsibility of Issuing Lender. It is expressly
understood and agreed as between the Lenders that the obligations of
the Issuing Lender hereunder to the LOC Participants are only those
expressly set forth in this Credit Agreement and that the Issuing
Lender shall be entitled to assume that the conditions precedent set
forth in Section 5 have been satisfied unless it shall have acquired
actual knowledge that any such condition precedent has not been
satisfied; provided, however, that nothing set forth in this Section
2.2 shall be deemed to prejudice the right of any LOC Participant to
recover from the Issuing Lender any amounts made available by such LOC
Participant to the Issuing Lender pursuant to this Section 2.2 in the
event that it is determined by a court of competent jurisdiction that
the payment with respect to a Letter of Credit constituted gross
negligence or willful misconduct on the part of the Issuing Lender.
(i) Conflict with LOC Documents. In the event of any conflict
between this Credit Agreement and any LOC Document, this Credit
Agreement shall govern.
(j) Indemnification of Issuing Lender.
(i) In addition to its other obligations under this
Credit Agreement, the Borrower hereby agrees to protect,
indemnify, pay and save the Issuing Lender harmless from and
against any and all claims, demands, liabilities, damages,
losses, costs, charges and expenses (including reasonable
attorneys' fees) that the Issuing Lender may incur or be
subject to as a consequence, direct or indirect, of (A) the
issuance of any Letter of Credit or (B) the failure of the
Issuing Lender to
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honor a drawing under a Letter of Credit as a result of any
act or omission, whether rightful or wrongful, of any present
or future de jure or de facto government or governmental
authority (all such acts or omissions, herein called
"Government Acts").
(ii) As between the Borrower and the Issuing Lender,
the Borrower shall assume all risks of the acts, omissions or
misuse of any Letter of Credit by the beneficiary thereof.
The Issuing Lender shall not be responsible for (except in
the case of (A), (B) and (C) below if the Issuing Lender has
actual knowledge to the contrary): (A) the form, validity,
sufficiency, accuracy, genuineness or legal effect of any
document submitted by any party in connection with the
application for and issuance of any Letter of Credit, even if
it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (B) the
validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign any Letter of
Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, that may prove to be invalid or
ineffective for any reason; (C) failure of the beneficiary of
a Letter of Credit to comply fully with conditions required
in order to draw upon a Letter of Credit; (D) errors,
omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they be in cipher; (E) errors in
interpretation of technical terms; (F) any loss or delay in
the transmission or otherwise of any document required in
order to make a drawing under a Letter of Credit or of the
proceeds thereof; and (G) any consequences arising from
causes beyond the control of the Issuing Lender, including,
without limitation, any Government Acts. None of the above
shall affect, impair, or prevent the vesting of the Issuing
Lender's rights or powers hereunder.
(iii) In furtherance and extension and not in
limitation of the specific provisions hereinabove set forth,
any action taken or omitted by the Issuing Lender, under or
in connection with any Letter of Credit or the related
certificates, if taken or omitted in good faith, shall not
put the Issuing Lender under any resulting liability to the
Borrower or any other Credit Party. It is the intention of
the parties that this Credit Agreement shall be construed and
applied to protect and indemnify the Issuing Lender against
any and all risks involved in the issuance of the Letters of
Credit, all of which risks are hereby assumed by the
Borrower, including, without limitation, any and all risks of
the acts or omissions, whether rightful or wrongful, of any
present or future Government Acts. The Issuing Lender shall
not, in any way, be liable for any failure by the Issuing
Lender or anyone else to pay any drawing under any Letter of
Credit as a result of any Government Acts or any other cause
beyond the control of the Issuing Lender.
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(iv) Nothing in this subsection (j) is intended to
limit the reimbursement obligation of the Borrower contained
in this Section 2.2. The obligations of the Borrower under
this subsection (j) shall survive the termination of this
Credit Agreement. No act or omission of any current or prior
beneficiary of a Letter of Credit shall in any way affect or
impair the rights of the Issuing Lender to enforce any right,
power or benefit under this Credit Agreement.
(v) Notwithstanding anything to the contrary
contained in this subsection (j), the Borrower shall have no
obligation to indemnify the Issuing Lender in respect of any
liability incurred by the Issuing Lender arising solely out
of the gross negligence or willful misconduct of the Issuing
Lender, as determined by a court of competent jurisdiction.
Nothing in this Agreement shall relieve the Issuing Lender of
any liability to the Borrower in respect of any action taken
by the Issuing Lender which action constitutes gross
negligence or willful misconduct of the Issuing Lender or a
violation of the UCP or Uniform Commercial Code (as
applicable), as determined by a court of competent
jurisdiction.
SECTION 3
GENERAL PROVISIONS APPLICABLE TO LOANS AND LETTERS OF CREDIT
3.1 Interest.
(a) Interest Rate. All Base Rate Loans shall accrue interest
at the Adjusted Base Rate and all Eurodollar Loans shall accrue
interest at the Adjusted Eurodollar Rate.
(b) Default Rate of Interest. Upon the occurrence, and during
the continuance, of an Event of Default, the principal of and, to the
extent permitted by law, interest on the Loans and any other amounts
owing hereunder or under the other Credit Documents (including without
limitation fees and expenses) shall bear interest, payable on demand,
at a per annum rate equal to 2% plus the rate which would otherwise be
applicable (or if no rate is applicable, then the rate for Revolving
Loans that are Base Rate Loans plus two percent (2%) per annum).
(c) Interest Payments. Interest on Loans shall be due and
payable in arrears on each Interest Payment Date. If an Interest
Payment Date falls on a date which is not a Business Day, such
Interest Payment Date shall be deemed to be the next succeeding
Business Day, except that in the case of Eurodollar Loans where the
next succeeding Business Day falls in the next succeeding calendar
month, then on the next preceding day.
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3.2 Place and Manner of Payments.
All payments of principal, interest, fees, expenses and other amounts
to be made by a Credit Party under this Agreement shall be received not later
than 2:00 p.m. on the date when due, in Dollars and in immediately available
funds, by the Administrative Agent at its offices in Detroit, Michigan.
Payments received after such time shall be deemed to have been received on the
next Business Day. The Borrower shall, at the time it makes any payment under
this Agreement, specify to the Administrative Agent, the Loans, Letters of
Credit, fees or other amounts payable by the Borrower hereunder to which such
payment is to be applied (and in the event that it fails to specify, or if such
application would be inconsistent with the terms hereof, the Administrative
Agent shall, subject to Section 3.7, distribute such payment to the Lenders in
such manner as the Administrative Agent may deem appropriate). The
Administrative Agent will distribute such payments to the applicable Lenders if
any such payment is received prior to 2:00 p.m.; otherwise the Administrative
Agent will distribute such payment to the applicable Lenders on the next
succeeding Business Day. Whenever any payment hereunder shall be stated to be
due on a day which is not a Business Day, the due date thereof shall be
extended to the next succeeding Business Day (subject to accrual of interest
and fees for the period of such extension), except that in the case of
Eurodollar Loans, if the extension would cause the payment to be made in the
next following calendar month, then such payment shall instead be made on the
next preceding Business Day.
3.3 Prepayments.
(a) Voluntary Prepayments. The Borrower shall have the right
to prepay Loans in whole or in part from time to time without premium
or penalty; provided, however, that (i) Eurodollar Loans may only be
prepaid on three Business Days' prior written notice to the
Administrative Agent and any prepayment of Eurodollar Loans will be
subject to Section 3.14 and (ii) each such partial prepayment of Loans
shall be in the minimum principal amount of $1,000,000 and integral
multiples of $100,000 in excess thereof.
(b) Mandatory Prepayments.
(i) Revolving Committed Amount. If at any time the
sum of the aggregate amount of Revolving Loans outstanding
plus LOC Obligations outstanding exceeds the Revolving
Committed Amount, the Borrower shall immediately make a
principal payment to the Administrative Agent in the manner
and in an amount necessary to be in compliance with Section
2.1.
(ii) Application of Prepayments. All amounts
required to be paid pursuant to Section 3.3(b)(i) shall be
applied first to Revolving Loans and second to a cash
collateral account in respect of LOC Obligations. Within the
parameters
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of the application set forth above, prepayments
shall be applied first to Base Rate Loans and then to
Eurodollar Loans in direct order of Interest Period
maturities. All prepayments hereunder shall be subject to
Section 3.14.
3.4 Fees.
(a) Commitment Fees. In consideration of the Revolving
Committed Amount being made available by the Lenders hereunder, the
Borrower agrees to pay to the Administrative Agent, for the pro rata
benefit of each applicable Lender (based on each Lender's Revolving
Loan Commitment Percentage of the Revolving Committed Amount), a fee
equal to the Applicable Percentage for Commitment Fees multiplied by
the Unused Commitment (the "Commitment Fees"). The Commitment Fees
accrued prior to the Closing Date shall be paid on the Closing Date
and future Commitment Fees shall commence to accrue on the Effective
Date and shall be due and payable in arrears on the last day of each
fiscal quarter of the Borrower (as well as on the Revolving Loan
Maturity Date and on any date that the Revolving Committed Amount is
reduced) for the immediately preceding fiscal quarter (or portion
thereof), beginning with the first of such dates to occur after the
Closing Date.
(b) Letter of Credit Fees.
(i) Letter of Credit Fees. In consideration of the
issuance of Letters of Credit hereunder, the Borrower agrees
to pay to the Issuing Lender for the pro rata benefit of the
applicable Lenders (based on each Lender's Revolving Loan
Commitment Percentage of the Revolving Committed Amount), a
fee (the "Letter of Credit Fees") equal to the Applicable
Percentage for the Letter of Credit Fees on the average daily
maximum amount available to be drawn under each such Letter
of Credit from the date of issuance to the date of
expiration. The Letter of Credit Fees will be payable in
arrears on the last day of each fiscal quarter of the
Borrower (as well as on the Revolving Loan Maturity Date) for
the immediately preceding fiscal quarter (or portion
thereof), beginning with the first of such dates to occur
after the Closing Date.
(ii) Issuing Lender Fees. In addition to the Letter
of Credit Fees payable pursuant to subsection (i) above, the
Borrower shall pay to the Issuing Lender for its own account,
without sharing by the other Lenders, (A) a fee equal to
one-fourth of one percent (.25%) per annum on the total sum
of all Letters of Credit issued by the Issuing Lender, such
fee to be paid in arrears on the last day of each fiscal
quarter of the Borrower (as well as on the Revolving Loan
Maturity Date) and (B) the customary charges from time to
time to the Issuing Lender for its services in connection
with the issuance, amendment, payment, transfer,
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administration, cancellation and conversion of, and drawings
under, such Letters of Credit (collectively, the "Issuing
Lender Fees").
(c) Administrative Fees. The Borrower agrees to pay to the
Administrative Agent, for its own account, an annual fee in accordance
with the terms of the Fee Letter.
(d) Overadvance Fee. If the Borrower provides to the Agents
written notice that it desires to commence the 90 day period for the
Overadvance (as set forth in the definition of Borrowing Base Assets),
the Borrower shall simultaneous with such notice pay to the Lenders a
nonrefundable fee of $12,500 to be shared pro rata by the Lenders
(based on each Lender's Revolving Loan Commitment Percentage of the
Revolving Committed Amount).
3.5 Payment in full at Maturity.
On the Revolving Loan Maturity Date, the entire outstanding principal
balance of all Revolving Loans and all LOC Obligations, together with accrued
but unpaid interest and all other sums owing with respect thereto, shall be due
and payable in full, unless accelerated sooner pursuant to Section 9.
3.6 Computations of Interest and Fees.
(a) All computations of interest and fees hereunder shall be
made on the basis of the actual number of days elapsed over a year of
360 days. Interest shall accrue from and include the date of borrowing
(or continuation or conversion) but exclude the date of payment.
(b) It is the intent of the Lenders and the Credit Parties to
conform to and contract in strict compliance with applicable usury law
from time to time in effect. All agreements between the Lenders and
the Borrower are hereby limited by the provisions of this paragraph
which shall override and control all such agreements, whether now
existing or hereafter arising and whether written or oral. In no way,
nor in any event or contingency (including but not limited to
prepayment or acceleration of the maturity of any obligation), shall
the interest taken, reserved, contracted for, charged, or received
under this Credit Agreement, under the Notes or otherwise, exceed the
maximum nonusurious amount permissible under applicable law. If, from
any possible construction of any of the Credit Documents or any other
document, interest would otherwise be payable in excess of the maximum
nonusurious amount, any such construction shall be subject to the
provisions of this paragraph and such documents shall be automatically
reduced to the maximum nonusurious amount permitted under applicable
law, without the necessity of execution of any amendment or new
document. If any Lender shall ever receive anything of value which is
characterized as interest on the Loans under applicable
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law and which would, apart from this provision, be in excess of the
maximum lawful amount, an amount equal to the amount which would have
been excessive interest shall, without penalty, be applied to the
reduction of the principal amount owing on the Loans and not to the
payment of interest, or refunded to the Borrower or the other payor
thereof if and to the extent such amount which would have been
excessive exceeds such unpaid principal amount of the Loans. The right
to demand payment of the Loans or any other indebtedness evidenced by
any of the Credit Documents does not include the right to accelerate
the payment of any interest which has not otherwise accrued on the
date of such demand, and the Lenders do not intend to charge or
receive any unearned interest in the event of such demand. All
interest paid or agreed to be paid to the Lenders with respect to the
Loans shall, to the extent permitted by applicable law, be amortized,
prorated, allocated, and spread throughout the full stated term
(including any renewal or extension) of the Loans so that the amount
of interest on account of such indebtedness does not exceed the
maximum nonusurious amount permitted by applicable law.
3.7 Pro Rata Treatment.
Except to the extent otherwise provided herein:
(a) Loans. Each Revolving Loan borrowing (including, without
limitation, each Mandatory Borrowing), each payment or prepayment of
principal of any Loan, each payment of fees (other than the Issuing
Lender Fees retained by the Issuing Lender for its own account and the
Administrative Fees retained by the Administrative Agent for its own
account), each reduction of the Revolving Committed Amount, and each
conversion or continuation of any Loan, shall (except as otherwise
provided in Section 3.11) be allocated pro rata among the relevant
Lenders in accordance with the respective Revolving Loan Commitment
Percentages of such Lenders (or, if the Commitments of such Lenders
have expired or been terminated, in accordance with the respective
principal amounts of the outstanding Loans and Participation Interests
of such Lenders); provided that, if any Lender shall have failed to
pay its applicable pro rata share of any Revolving Loan, then any
amount to which such Lender would otherwise be entitled pursuant to
this subsection (a) shall instead be payable to the Administrative
Agent until the share of such Loan not funded by such Lender has been
repaid; provided further, that in the event any amount paid to any
Lender pursuant to this subsection (a) is rescinded or must otherwise
be returned by the Administrative Agent, each Lender shall, upon the
request of the Administrative Agent, repay to the Administrative Agent
the amount so paid to such Lender, with interest for the period
commencing on the date such payment is returned by the Administrative
Agent until the date the Administrative Agent receives such repayment
at a rate per annum equal to, during the period to but excluding the
date two Business Days after such request, the Federal Funds Rate, and
thereafter, the Base Rate plus two percent (2%) per annum; and
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(b) Letters of Credit. Each payment of unreimbursed drawings
in respect of LOC Obligations shall be allocated to each LOC
Participant pro rata in accordance with its Revolving Loan Commitment
Percentage; provided that, if any LOC Participant shall have failed to
pay its applicable pro rata share of any drawing under any Letter of
Credit, then any amount to which such LOC Participant would otherwise
be entitled pursuant to this subsection (b) shall instead be payable
to the Issuing Lender until the share of such unreimbursed drawing not
funded by such Lender has been repaid; provided further, that in the
event any amount paid to any LOC Participant pursuant to this
subsection (b) is rescinded or must otherwise be returned by the
Issuing Lender, each LOC Participant shall, upon the request of the
Issuing Lender, repay to the Administrative Agent for the account of
the Issuing Lender the amount so paid to such LOC Participant, with
interest for the period commencing on the date such payment is
returned by the Issuing Lender until the date the Issuing Lender
receives such repayment at a rate per annum equal to, during the
period to but excluding the date two Business Days after such request,
the Federal Funds Rate, and thereafter, the Base Rate plus two percent
(2%) per annum.
3.8 Sharing of Payments.
The Lenders agree among themselves that, except to the extent
otherwise provided herein, in the event that any Lender shall obtain payment in
respect of any Loan, unreimbursed drawing with respect to any LOC Obligations
or any other obligation owing to such Lender under this Credit Agreement
through the exercise of a right of setoff, banker's lien or counterclaim, or
pursuant to a secured claim under Section 506 of the Bankruptcy 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 similar law
or otherwise, or by any other means, in excess of its pro rata share of such
payment as provided for in this Credit Agreement, such Lender shall promptly
pay in cash or purchase from the other Lenders a participation in such Loans,
LOC Obligations, and other obligations in such amounts, and make such other
adjustments from time to time, as shall be equitable to the end that all
Lenders share such payment in accordance with their respective ratable shares
as provided for in this Credit Agreement. The Lenders further agree among
themselves that if payment to a Lender obtained by such Lender through the
exercise of a right of setoff, banker's lien, counterclaim or other event as
aforesaid shall be rescinded or must otherwise be restored, each Lender which
shall have shared the benefit of such payment shall, by payment in cash or a
repurchase of a participation theretofore sold, return its share of that
benefit (together with its share of any accrued interest payable with respect
thereto) to each Lender whose payment shall have been rescinded or otherwise
restored. The Borrower agrees that any Lender so purchasing such a
participation may, to the fullest extent permitted by law, exercise all rights
of payment, including setoff, banker's lien or counterclaim, with respect to
such participation as fully as if such Lender were a holder of such Loan, LOC
Obligation or other obligation in the amount of such participation. Except as
otherwise expressly provided in this Credit Agreement, if any Lender or an
Agent shall fail to remit to an Agent or any other Lender an amount payable by
such Lender or such Agent to
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such Agent or such other Lender pursuant to this Credit Agreement on the date
when such amount is due, such payments shall be made together with interest
thereon for each date from the date such amount is due until the date such
amount is paid to such Agent or such other Lender at a rate per annum equal to
the Federal Funds Rate. If under any applicable bankruptcy, insolvency or other
similar law, any Lender receives a secured claim in lieu of a setoff to which
this Section 3.8 applies, such Lender shall, to the extent practicable,
exercise its rights in respect of such secured claim in a manner consistent
with the rights of the Lenders under this Section 3.8 to share in the benefits
of any recovery on such secured claim.
3.9 Capital Adequacy.
If, after the date hereof, any Lender has determined that the adoption
or the becoming effective of, or any change in, or any change by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof in the interpretation or
administration of, any applicable law, rule or regulation regarding capital
adequacy, or compliance by such Lender, or its parent corporation, with any
request or directive regarding capital adequacy (whether or not having the
force of law) of any such authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on such Lender's (or
parent corporation's) capital or assets as a consequence of its commitments or
obligations hereunder to a level below that which such Lender, or its parent
corporation, could have achieved but for such adoption, effectiveness, change
or compliance (taking into consideration such Lender's (or parent
corporation's) policies with respect to capital adequacy), then, upon notice
from such Lender to the Borrower, the Borrower shall be obligated to pay to
such Lender such additional amount or amounts as will compensate such Lender on
an after-tax basis (after taking into account applicable deductions and credits
in respect of the amount indemnified) for such reduction. Each determination by
any such Lender of amounts owing under this Section shall, absent manifest
error, be conclusive and binding on the parties hereto. This covenant shall
survive the termination of this Credit Agreement and the payment of the Loans
and all other amounts payable hereunder.
3.10 Inability To Determine Interest Rate.
If prior to the first day of any Interest Period, the Administrative
Agent shall have determined in good faith (which determination shall be
conclusive and binding upon the Borrower) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for such Interest Period, the Administrative
Agent shall give telecopy or telephonic notice thereof to the Borrower and the
Lenders as soon as practicable thereafter, and will also give prompt written
notice to the Borrower when such conditions no longer exist. If such notice is
given (a) any Eurodollar Loans requested to be made on the first day of such
Interest Period shall be made as Base Rate Loans, (b) any Loans that were to
have been converted on the first day of such Interest Period to or continued as
Eurodollar Loans shall be converted to or continued as Base Rate Loans and (c)
any
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outstanding Eurodollar Loans shall be converted, on the first day of such
Interest Period, to Base Rate Loans. Until such notice has been withdrawn by
the Agent, no further Eurodollar Loans shall be made or continued as such, nor
shall the Borrower have the right to convert Base Rate Loans to Eurodollar
Loans.
3.11 Illegality.
Notwithstanding any other provision herein, if the adoption of or any
change in any Requirement of Law or in the interpretation or application
thereof occurring after the Closing Date shall make it unlawful for any Lender
to make or maintain Eurodollar Loans as contemplated by this Credit Agreement,
(a) such Lender shall promptly give written notice of such circumstances to the
Borrower and the Administrative Agent (which notice shall be withdrawn whenever
such circumstances no longer exist), (b) the commitment of such Lender
hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert a Base Rate Loan to Eurodollar Loans shall forthwith be canceled and,
until such time as it shall no longer be unlawful for such Lender to make or
maintain Eurodollar Loans, such Lender shall then have a commitment only to
make a Base Rate Loan when a Eurodollar Loan is requested and (c) such Lender's
Loans then outstanding as Eurodollar Loans, if any, shall be converted
automatically to Base Rate Loans on the respective last days or the then
current Interest Periods with respect to such Loans or within such earlier
period as required by law. If any such conversion of a Eurodollar Loan occurs
on a day which is not the last day of the then current Interest Period with
respect thereto, the Borrower shall pay to such Lender such amounts, if any, as
may be required pursuant to Section 3.14.
3.12 Requirements of Law.
If the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof applicable to any Lender, or compliance
by any Lender with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority, in each case made
subsequent to the Closing Date (or, if later, the date on which such Lender
becomes a Lender):
(a) shall subject such Lender to any tax of any kind
whatsoever with respect to any Letter of Credit, any Eurodollar Loans
made by it or its obligation to make Eurodollar Loans, or change the
basis of taxation of payments to such Lender in respect thereof
(except for Non-Excluded Taxes covered by Section 3.13 (including
Non-Excluded Taxes imposed solely by reason of any failure of such
Lender to comply with its obligations under Section 3.13(b)) and
changes in taxes measured by or imposed upon the overall net income,
or franchise tax (imposed in lieu of such net income tax), of such
Lender or its applicable lending office, branch, or any affiliate
thereof);
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(b) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of the Eurodollar Rate
hereunder; or
(c) shall impose on such Lender any other condition
(excluding any tax of any kind whatsoever);
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting
into, continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, upon notice to the Borrower from such Lender,
through the Administrative Agent, in accordance herewith, the Borrower shall be
obligated to promptly pay such Lender, upon its demand, any additional amounts
necessary to compensate such Lender on an after-tax basis (after taking into
account applicable deductions and credits in respect of the amount indemnified)
for such increased cost or reduced amount receivable, provided that, in any
such case, the Borrower may elect to convert the Eurodollar Loans made by such
Lender hereunder to Base Rate Loans by giving the Administrative Agent at least
one Business Day's notice of such election, in which case the Borrower shall
promptly pay to such Lender, upon demand, without duplication, such amounts, if
any, as may be required pursuant to Section 3.14. If any Lender becomes
entitled to claim any additional amounts pursuant to this Section 3.12, it
shall provide prompt notice thereof to the Borrower, through the Administrative
Agent, certifying (x) that one of the events described in this Section 3.12 has
occurred and describing in reasonable detail the nature of such event, (y) as
to the increased cost or reduced amount resulting from such event and (z) as to
the additional amount demanded by such Lender and a reasonably detailed
explanation of the calculation thereof. Such a certificate as to any additional
amounts payable pursuant to this Section 3.12 submitted by such Lender, through
the Administrative Agent, to the Borrower shall be conclusive and binding on
the parties hereto in the absence of manifest error. This covenant shall
survive the termination of this Credit Agreement and the payment of the Loans
and all other amounts payable hereunder.
3.13 Taxes.
(a) Except as provided below in this Section 3.13, all
payments made by the Borrower under this Credit Agreement and any
Notes shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future income, stamp
or other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any court, or governmental body, agency or other official,
excluding taxes measured by or imposed upon the overall net income of
any Lender or its applicable lending office, or any branch or
affiliate thereof, and all franchise taxes, branch taxes, taxes on
doing business or taxes
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on the overall capital or net worth of any Lender or its applicable
lending office, or any branch or affiliate thereof, in each case
imposed in lieu of net income taxes: (i) by the jurisdiction under the
laws of which such Lender, applicable lending office, branch or
affiliate is organized or is located, or in which its principal
executive office is located, or any nation within which such
jurisdiction is located or any political subdivision thereof; or (ii)
by reason of any connection between the jurisdiction imposing such tax
and such Lender, applicable lending office, branch or affiliate other
than a connection arising solely from such Lender having executed,
delivered or performed its obligations, or received payment under or
enforced, this Credit Agreement or any Notes. If any such non-excluded
taxes, levies, imposts, duties, charges, fees, deductions or
withholdings ("Non-Excluded Taxes") are required to be withheld from
any amounts payable to an Agent or any Lender hereunder or under any
Notes, (A) the amounts so payable to an Agent or such Lender shall be
increased to the extent necessary to yield to an Agent or such Lender
(after payment of all Non-Excluded Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in
this Credit Agreement and any Notes, provided, however, that the
Borrower shall be entitled to deduct and withhold any Non-Excluded
Taxes and shall not be required to increase any such amounts payable
to any Lender that is not organized under the laws of the United
States of America or a state thereof if such Lender fails to comply
with the requirements of paragraph (b) of this Section 3.13 whenever
any Non-Excluded Taxes are payable by the Borrower, and (B) as
promptly as possible after requested the Borrower shall send to such
Agent for its own account or for the account of such Lender, as the
case may be, a certified copy of an original official receipt received
by the Borrower showing payment thereof. If the Borrower fails to pay
any Non-Excluded Taxes when due to the appropriate taxing authority or
fails to remit to the Administrative Agent the required receipts or
other required documentary evidence, the Borrower shall indemnify the
Agents and any Lender for any incremental taxes, interest or penalties
that may become payable by an Agent or any Lender as a result of any
such failure. The agreements in this subsection shall survive the
termination of this Credit Agreement and the payment of the Loans and
all other amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws of
the United States of America or a state thereof shall:
(i) (A) on or before the date of any payment by the
Borrower under this Credit Agreement or Notes to such Lender,
deliver to the Borrower and the Administrative Agent (x) two
duly completed copies of United States Internal Revenue
Service Form 1001 or 4224, or successor applicable form, as
the case may be, certifying that it is entitled to receive
payments under this Credit Agreement and any Notes without
deduction or withholding of any United States federal income
taxes and (y) an Internal Revenue Service Form W-8 or W-9, or
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successor applicable form, as the case may be, certifying
that it is entitled to an exemption from United States backup
withholding tax;
(B) deliver to the Borrower and the
Administrative Agent two further copies of any such form or
certification on or before the date that any such form or
certification expires or becomes obsolete and after the
occurrence of any event requiring a change in the most recent
form previously delivered by it to the Borrower; and
(C) obtain such extensions of time for
filing and complete such forms or certifications as may
reasonably be requested by the Borrower or the Administrative
Agent; or
(ii) in the case of any such Lender that is not a
"bank" within the meaning of Section 881(c)(3)(A) of the
Internal Revenue Code, (A) represent to the Borrower (for the
benefit of the Borrower and the Agents) that it is not a bank
within the meaning of Section 881(c)(3)(A) of the Internal
Revenue Code, (B) agree to furnish to the Borrower, on or
before the date of any payment by the Borrower, with a copy
to the Administrative Agent, two accurate and complete
original signed copies of Internal Revenue Service Form W-8,
or successor applicable form certifying to such Lender's
legal entitlement at the date of such certificate to an
exemption from U.S. withholding tax under the provisions of
Section 881(c) of the Internal Revenue Code with respect to
payments to be made under this Credit Agreement and any Notes
(and to deliver to the Borrower and the Administrative Agent
two further copies of such form on or before the date it
expires or becomes obsolete and after the occurrence of any
event requiring a change in the most recently provided form
and, if necessary, obtain any extensions of time reasonably
requested by the Borrower or the Administrative Agent for
filing and completing such forms), and (C) agree, to the
extent legally entitled to do so, upon reasonable request by
the Borrower, to provide to the Borrower (for the benefit of
the Borrower and the Agents) such other forms as may be
reasonably required in order to establish the legal
entitlement of such Lender to an exemption from withholding
with respect to payments under this Credit Agreement and any
Notes.
Notwithstanding the above, if any change in treaty, law or regulation
has occurred after the date such Person becomes a Lender hereunder
which renders all such forms inapplicable or which would prevent such
Lender from duly completing and delivering any such form with respect
to it and such Lender so advises the Borrower and the Administrative
Agent then such Lender shall be exempt from such requirements. Each
Person that shall become a Lender or a participant of a Lender
pursuant to Section 11.3 shall, upon the effectiveness of the related
transfer, be required to provide all of the
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forms, certifications and statements required pursuant to this
subsection (b); provided that in the case of a participant of a
Lender, the obligations of such participant of a Lender pursuant to
this subsection (b) shall be determined as if the participant of a
Lender were a Lender except that such participant of a Lender shall
furnish all such required forms, certifications and statements to the
Lender from which the related participation shall have been purchased.
3.14 Compensation.
The Borrower promises to indemnify each Lender and to hold each Lender
harmless from any loss or expense which such Lender may sustain or incur as a
consequence of (a) default by the Borrower in making a borrowing of, conversion
into or continuation of Eurodollar Loans after the Borrower has given a notice
requesting the same in accordance with the provisions of this Credit Agreement,
(b) default by the Borrower in making any prepayment of a Eurodollar Loan after
the Borrower has given a notice thereof in accordance with the provisions of
this Credit Agreement and (c) the making of a prepayment of Eurodollar Loans on
a day which is not the last day of an Interest Period with respect thereto.
Such indemnification may include an amount equal to (i) the amount of interest
which would have accrued on the amount so prepaid, or not so borrowed,
converted or continued, for the period from the date of such prepayment or of
such failure to borrow, convert or continue to the last day of the applicable
Interest Period (or, in the case of a failure to borrow, convert or continue,
the Interest Period that would have commenced on the date of such failure) in
each case at the applicable rate of interest for such Eurodollar Loans provided
for herein (excluding, however, the Applicable Percentage included therein, if
any) minus (ii) the amount of interest (as reasonably determined by such
Lender) which would have accrued to such Lender on such amount by placing such
amount on deposit for a comparable period with leading banks in the interbank
Eurodollar market. The agreements in this Section shall survive the termination
of this Credit Agreement and the payment of the Loans and all other amounts
payable hereunder.
3.15 Substitution of Lender.
If (a) the obligation of any Lender to make Eurodollar Loans has been
suspended pursuant to Section 3.11 or (b) any Lender has demanded compensation
under Section 3.9, 3.11, 3.12, 3.13 or 3.14, the Borrower shall have the right,
with the assistance of the Administrative Agent, to seek a mutually
satisfactory substitute lender or lenders. Any substitution under this Section
3.15 may be accomplished, at the Borrower's option, either (i) by the replaced
Lender assigning its rights and obligations hereunder to a replacement lender
or lenders pursuant to Section 11.3(b) at a mutually agreeable price or (ii) by
the Borrower prepaying all outstanding Loans and LOC Obligations from the
replaced Lender and terminating such Lender's Commitment on a date specified in
a notice delivered to the Administrative Agent and the replaced Lender at least
three Business Days before the date so specified (and compensating such Lender
for any resulting funding losses as provided in Section 3.14) and concurrently
a replacement Lender or Lenders
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assuming a Commitment in an amount equal to the Commitment being terminated and
making Loans in the same aggregate amount and having the same maturity date or
dates, respectively, as the Loans being prepaid, all pursuant to documents
reasonably satisfactory to the Administrative Agent (and in the case of any
document to be signed by the replaced Lender, reasonably satisfactory to such
Lender). No such substitution shall relieve the Borrower of its obligations to
compensate and/or indemnify the replaced Lender as required by Section 3.9,
3.11, 3.12, 3.13 or 3.14 with respect to the period before it is replaced and
to pay all accrued interest, accrued fees and other amounts owing to the
replaced Lender hereunder.
SECTION 4
GUARANTY
4.1 Guaranty of Payment.
Subject to Section 4.7 below, each of the Guarantors hereby, jointly
and severally, unconditionally guarantees to each Lender, each Affiliate of
Lender that enters into a Hedging Agreement and the Agents the prompt payment
of the Credit Party Obligations in full when due (whether at stated maturity,
as a mandatory prepayment, by acceleration or otherwise). The Guarantors
additionally, jointly and severally, unconditionally guarantee to each Lender,
each Affiliate of a Lender that enters into a Hedging Agreement and the Agents
the timely performance of all other obligations under the Credit Documents and
such Hedging Agreements. This Guaranty is a guaranty of payment and not of
collection and is a continuing guaranty and shall apply to all Credit Party
Obligations whenever arising.
4.2 Obligations Unconditional.
The obligations of the Guarantors hereunder are absolute and
unconditional, irrespective of the value, genuineness, validity, regularity or
enforceability of any of the Credit Documents or the Hedging Agreements, or any
other agreement or instrument referred to therein, to the fullest extent
permitted by applicable law, irrespective of any other circumstance whatsoever
which might otherwise constitute a legal or equitable discharge or defense of a
surety or guarantor. Each Guarantor agrees that this Guaranty may be enforced
by the Lenders without the necessity at any time of resorting to or exhausting
any other security or collateral and without the necessity at any time of
having recourse to the Notes or any other of the Credit Documents or any
collateral, if any, hereafter securing the Credit Party Obligations or
otherwise and each Guarantor hereby waives the right to require the Lenders to
proceed against the Borrower or any other Person (including a co-guarantor) or
to require the Lenders to pursue any other remedy or enforce any other right.
Each Guarantor further agrees that it shall have no right of subrogation,
indemnity, reimbursement or contribution against the Borrower or any other
Guarantor of the Credit Party Obligations for amounts paid under this Guaranty
until such time as the Lenders
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(and any Affiliates of Lenders entering into Hedging Agreements) have been paid
in full, all Commitments under the Credit Agreement have been terminated and no
Person or Governmental Authority shall have any right to request any return or
reimbursement of funds from the Lenders in connection with monies received
under the Credit Documents. Each Guarantor further agrees that nothing
contained herein shall prevent the Lenders from suing on the Notes or any of
the other Credit Documents or any of the Hedging Agreements or foreclosing its
security interest in or Lien on any collateral, if any, securing the Credit
Party Obligations or from exercising any other rights available to it under
this Credit Agreement, the Notes, any other of the Credit Documents, or any
other instrument of security, if any, and the exercise of any of the aforesaid
rights and the completion of any foreclosure proceedings shall not constitute a
discharge of any of any Guarantor's obligations hereunder; it being the purpose
and intent of each Guarantor that its obligations hereunder shall be absolute,
independent and unconditional under any and all circumstances. Neither any
Guarantor's obligations under this Guaranty nor any remedy for the enforcement
thereof shall be impaired, modified, changed or released in any manner
whatsoever by an impairment, modification, change, release or limitation of the
liability of the Borrower or by reason of the bankruptcy or insolvency of the
Borrower. Each Guarantor waives any and all notice of the creation, renewal,
extension or accrual of any of the Credit Party Obligations and notice of or
proof of reliance of by any Agent or any Lender upon this Guarantee or
acceptance of this Guarantee. The Credit Party Obligations, and any of them,
shall conclusively be deemed to have been created, contracted or incurred, or
renewed, extended, amended or waived, in reliance upon this Guarantee. All
dealings between the Borrower and any of the Guarantors, on the one hand, and
the Agents and the Lenders, on the other hand, likewise shall be conclusively
presumed to have been had or consummated in reliance upon this Guarantee.
4.3 Modifications.
Each Guarantor agrees that (a) all or any part of the security now or
hereafter held for the Credit Party Obligations, if any, may be exchanged,
compromised or surrendered from time to time; (b) the Lenders shall not have
any obligation to protect, perfect, secure or insure any such security
interests, liens or encumbrances now or hereafter held, if any, for the Credit
Party Obligations or the properties subject thereto; (c) the time or place of
payment of the Credit Party Obligations may be changed or extended, in whole or
in part, to a time certain or otherwise, and may be renewed or accelerated, in
whole or in part; (d) the Borrower and any other party liable for payment under
the Credit Documents may be granted indulgences generally; (e) any of the
provisions of the Notes or any of the other Credit Documents may be modified,
amended or waived; (f) any party (including any co-guarantor) liable for the
payment thereof may be granted indulgences or be released; and (g) any deposit
balance for the credit of the Borrower or any other party liable for the
payment of the Credit Party Obligations or liable upon any security therefor
may be released, in whole or in part, at, before or after the stated, extended
or accelerated maturity of the Credit Party Obligations, all without notice to
or further assent by such Guarantor, which shall remain bound thereon,
notwithstanding any such exchange, compromise, surrender, extension, renewal,
acceleration, modification, indulgence or release.
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4.4 Waiver of Rights.
Each Guarantor expressly waives to the fullest extent permitted by
applicable law: (a) notice of acceptance of this Guaranty by the Lenders and of
all extensions of credit to the Borrower by the Lenders; (b) presentment and
demand for payment or performance of any of the Credit Party Obligations; (c)
protest and notice of dishonor or of default (except as specifically required
in the Credit Agreement) with respect to the Credit Party Obligations or with
respect to any security therefor; (d) notice of the Lenders obtaining,
amending, substituting for, releasing, waiving or modifying any security
interest, lien or encumbrance, if any, hereafter securing the Credit Party
Obligations, or the Lenders' subordinating, compromising, discharging or
releasing such security interests, liens or encumbrances, if any; (e) all other
notices to which such Guarantor might otherwise be entitled; and (f) demand for
payment under this Guaranty.
4.5 Reinstatement.
The obligations of the Guarantors under this Section 4 shall be
automatically reinstated if and to the extent that for any reason any payment
by or on behalf of any Person in respect of the Credit Party Obligations is
rescinded or must be otherwise restored by any holder of any of the Credit
Party Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it will indemnify
the Agents and each Lender on demand for all reasonable costs and expenses
(including, without limitation, reasonable fees of counsel) incurred by an
Agent or such Lender in connection with such rescission or restoration,
including any such costs and expenses incurred in defending against any claim
alleging that such payment constituted a preference, fraudulent transfer or
similar payment under any bankruptcy, insolvency or similar law.
4.6 Remedies.
The Guarantors agree that, as between the Guarantors, on the one hand,
and the Agents and the Lenders, on the other hand, the Credit Party Obligations
may be declared to be forthwith due and payable as provided in Section 9 (and
shall be deemed to have become automatically due and payable in the
circumstances provided in Section 9) notwithstanding any stay, injunction or
other prohibition preventing such declaration (or preventing such Credit Party
Obligations from becoming automatically due and payable) as against any other
Person and that, in the event of such declaration (or such Credit Party
Obligations being deemed to have become automatically due and payable), such
Credit Party Obligations (whether or not due and payable by any other Person)
shall forthwith become due and payable by the Guarantors. The Guarantors
acknowledge and agree that their obligations hereunder are secured in
accordance with the terms of the Security Agreements and the other Collateral
Documents and that the Lenders may exercise their remedies thereunder in
accordance with the terms thereof.
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4.7 Limitation of Guaranty.
Notwithstanding any provision to the contrary contained herein or in
any of the other Credit Documents, to the extent the obligations of any
Guarantor shall be adjudicated to be invalid or unenforceable for any reason
(including, without limitation, because of any applicable state or federal law
relating to fraudulent conveyances or transfers) then the obligations of such
Guarantor hereunder shall be limited to the maximum amount that is permissible
under applicable law (whether federal or state and including, without
limitation, the Bankruptcy Code).
4.8 Rights of Contribution.
The Credit Parties agree among themselves that, in connection with
payments made hereunder, each Credit Party shall have contribution rights
against the other Credit Parties as permitted under applicable law. Such
contribution rights shall be subordinate and subject in right of payment to the
obligations of the Credit Parties under the Credit Documents and no Credit
Party shall exercise such rights of contribution until all Credit Party
Obligations have been paid in full and the Commitments terminated.
SECTION 5
CONDITIONS PRECEDENT
5.1 Closing Conditions.
The obligation of the Lenders to enter into this Credit Agreement and
make the initial Extension of Credit is subject to satisfaction of the
following conditions:
(a) Executed Credit Documents. Receipt by the Agents of duly
executed copies of: (i) this Credit Agreement; (ii) the Notes; (iii)
the Collateral Documents; and (iv) all other Credit Documents, each in
form and substance reasonably acceptable to the Agents in their sole
discretion.
(b) Corporate Documents. Receipt by the Agents of the
following:
(i) Charter Documents. Copies of the articles or
certificates of incorporation or other charter documents of
each Credit Party certified to be true and complete as of a
recent date by the appropriate Governmental Authority of the
state or other jurisdiction of its incorporation and
certified by a secretary or assistant secretary of such
Credit Party to be true and correct as of the Effective Date.
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(ii) Bylaws. A copy of the bylaws of each Credit
Party certified by a secretary or assistant secretary of such
Credit Party to be true and correct as of the Effective Date.
(iii) Resolutions. Copies of resolutions of the
Board of Directors of each Credit Party approving and
adopting the Credit Documents to which it is a party, the
transactions contemplated therein and authorizing execution
and delivery thereof, certified by a secretary or assistant
secretary of such Credit Party to be true and correct and in
force and effect as of the Effective Date.
(iv) Good Standing. Copies of (A) certificates of
good standing, existence or its equivalent with respect to
each Credit Party certified as of a recent date by the
appropriate Governmental Authorities of the state or other
jurisdiction of incorporation and each other jurisdiction in
which the failure to so qualify and be in good standing would
have a Material Adverse Effect on the business or operations
of a Credit Party in such jurisdiction and (B) to the extent
available, a certificate indicating payment of all corporate
franchise taxes certified as of a recent date by the
appropriate governmental taxing authorities.
(v) Incumbency. An incumbency certificate of each
Credit Party certified by a secretary or assistant secretary
to be true and correct as of the Effective Date.
(c) Opinion of Counsel. Receipt by the Agents of an opinion,
or opinions (which shall cover, among other things, authority,
legality, validity, binding effect, enforceability and attachment and
perfection of liens), reasonably satisfactory to the Agents, addressed
to the Agents on behalf of the Lenders and dated as of the Effective
Date, from legal counsel to the Credit Parties.
(d) Acquisition. Receipt by the Agents of evidence that the
Borrower, through a wholly owned Subsidiary, has acquired, on terms
acceptable to the Agents, at least 51% of the shares of Varsity Spirit
Corporation for a price not to exceed $18.90 per share.
(e) Personal Property Collateral. The Collateral Agent shall
have received, in form and substance reasonably satisfactory to the
Collateral Agent:
(i) searches of Uniform Commercial Code ("UCC")
filings in the jurisdiction of the chief executive office of
each Credit Party and each jurisdiction where any Collateral
is located or where a filing would need to be made in order
to perfect the Lenders' security interest in the Collateral,
copies of the financing
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statements on file in such jurisdictions and evidence that no
Liens exist other than Permitted Liens;
(ii) duly executed UCC financing statements for each
appropriate jurisdiction as is necessary, in the Collateral
Agent's sole discretion, to perfect the Lenders' security
interest in the Collateral;
(iii) searches of ownership of intellectual property
in the appropriate governmental offices as requested by the
Collateral Agent; and
(iv) all stock certificates evidencing the stock
pledged to the Collateral Agent pursuant to the Pledge
Agreements, together with duly executed in blank undated
stock powers attached thereto.
(f) Real Property Collateral. The Collateral Agent shall have
received, in form and substance reasonably satisfactory to the
Collateral Agent:
(i) fully executed and notarized mortgages, deeds of
trust or deeds to secure debt (each a "Mortgage" and
collectively the "Mortgages") encumbering the fee interest of
the Credit Parties in each real property asset owned by a
Credit Party set forth on Schedule 5.1(f) (each a "Mortgaged
Property" and collectively the "Mortgaged Properties"),
together with such UCC-1 financing statements as the
Collateral Agent shall deem appropriate with respect to each
such Mortgaged Property; and
(ii) an opinion of counsel in the state in which
each Mortgaged Property is located with respect to the
enforceability of the form of Mortgage, standard remedies
with respect thereto and sufficiency of the form of UCC-1
financing statements to be recorded or filed in such state
and such other matters as the Collateral Agent may request,
in form and substance reasonably satisfactory to the
Collateral Agent.
(g) Evidence of Insurance. Receipt by the Agents of copies of
insurance policies or certificates of insurance of the Credit Parties
evidencing liability and casualty insurance meeting the requirements
set forth in the Credit Documents, including, but not limited to,
naming the Collateral Agent as additional insured on behalf of the
Lenders.
(h) Senior Notes. Receipt by the Agents of evidence that the
Senior Notes have been issued, on terms acceptable to the Agents, and
that the Borrower shall have received at least $115 million less
Transactions Costs incurred in connection therewith.
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(i) Government Consent. Receipt by the Agents of evidence
that all governmental, shareholder and third party consents and
approvals necessary or desireable in connection with the acquisition
of Varsity Spirit Corporation and the related financings and other
transactions contemplated hereby have been received and no condition
or Requirement of Law exists which could reasonably be likely to
restrain, prevent or impose any material adverse conditions on the
acquisition or ownership of Varsity Spirit Corporation or the
financings or other transactions contemplated hereby.
(j) Litigation. There shall not exist any pending or
threatened action, suit, investigation or proceeding against a Credit
Party or any of their Subsidiaries that would have or would reasonably
be expected to have a Material Adverse Effect.
(k) Officer's Certificates. The Agents shall have received a
certificate or certificates executed by the chief financial officer of
the Borrower on behalf of the Borrower as of the Effective Date
stating that (i) the Borrower and each of the Borrower's Subsidiaries
are in compliance with all existing material financial obligations,
(ii) no action, suit, investigation or proceeding is pending or
threatened in any court or before any arbitrator or governmental
instrumentality that purports to effect the Borrower, any of the
Borrower's Subsidiaries or any transaction contemplated by the Credit
Documents, if such action, suit, investigation or proceeding could
have or could be reasonably expected to have a Material Adverse
Effect, (iii) the financial statements and information delivered to
the Agents on or before the Effective Date were prepared in good faith
and using reasonable assumptions and (iv) immediately after giving
effect to this Credit Agreement, the other Credit Documents and all
the transactions contemplated therein to occur on such date, (A) the
Borrower and each of the Borrower's Subsidiaries is Solvent, (B) no
Default or Event of Default exists, (C) all representations and
warranties contained herein and in the other Credit Documents are true
and correct in all material respects, and (D) the Credit Parties are
in compliance with each of the financial covenants set forth in
Section 7.2.
(l) Fees and Expenses. Payment by the Credit Parties of (i)
an upfront fee in accordance with the terms of the Fee Letter and (ii)
all other fees and expenses owed by them to the Lenders and the
Agents, including, without limitation, any accrued Commitment Fees.
(m) Borrowing Base Report. A Borrowing Base Report, in the
form of Exhibit 7.1(c), dated as of May 31, 1997.
(n) Other. Receipt by the Lenders of such other documents,
instruments, agreements or information as reasonably and timely
requested by any Lender, including, but not limited to, information
regarding litigation, tax, accounting, labor, insurance, pension
liabilities (actual or contingent), real estate leases, material
contracts, debt
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agreements, property ownership and contingent liabilities of the
Borrower and its Subsidiaries.
5.2 Conditions to All Extensions of Credit.
In addition to the conditions precedent stated elsewhere herein, the
Lenders shall not be obligated to make Loans nor shall an Issuing Lender be
required to issue or extend a Letter of Credit unless:
(a) Notice. The Borrower shall have delivered (i) in the case
of any new Revolving Loan, a Notice of Borrowing, duly executed and
completed, by the time specified in Section 2.1 and (ii) in the case
of any Letter of Credit, the Issuing Lender shall have received an
appropriate request for issuance in accordance with the provisions of
Section 2.2;
(b) Representations and Warranties. The representations and
warranties made by the Credit Parties in any Credit Document are true
and correct in all material respects at and as if made as of such date
except to the extent they expressly relate to an earlier date;
(c) No Default. No Default or Event of Default shall exist or
be continuing either prior to or after giving effect thereto;
(d) No Material Adverse Effect. Since the Effective Date,
there shall not have occurred any Material Adverse Effect; and
(e) Availability. Immediately after giving effect to the
making of a Revolving Loan (and the application of the proceeds
thereof) or to the issuance of a Letter of Credit, as the case may be,
the sum of the Revolving Loans outstanding plus LOC Obligations
outstanding shall not exceed the Revolving Commitment Amount.
The delivery of each Notice of Borrowing and each request for a Letter of
Credit shall constitute a representation and warranty by the Borrower of the
correctness of the matters specified in subsections (b), (c), (d) and (e)
above.
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SECTION 6
REPRESENTATIONS AND WARRANTIES
The Credit Parties hereby represent to the Agents and each Lender
that:
6.1 Financial Condition.
(a) The financial statements delivered to the Lenders prior
to the Effective Date and pursuant to Section 7.1(a) and (b): (i) have
been prepared in accordance with GAAP and (ii) present fairly the
consolidated and consolidating (as applicable) financial condition,
results of operations and cash flows of the Credit Parties and their
Subsidiaries as of such date and for such periods.
(b) The financial statements delivered to the Lenders prior
to the Effective Date with respect to Varsity Spirit Corporation (i)
have been prepared in accordance with GAAP and (ii) present fairly the
financial condition, results of operations and cash flows of Varsity
Spirit Corporation as of such dates and for such periods.
(c) Since December 31, 1996, there has been no sale, transfer
or other disposition by any Credit Party or any of their Subsidiaries
of any material part of the business or property of the Credit
Parties, taken as a whole, and no purchase or other acquisition by any
of them of any business or property (including any capital stock of
any other Person) material in relation to the consolidated financial
condition of the Credit Parties, taken as a whole, in each case,
which, is not (i) reflected in the most recent financial statements
delivered to the Lenders pursuant to Section 7.1 or in the notes
thereto or (ii) otherwise permitted by the terms of this Credit
Agreement and communicated to the Administrative Agent.
6.2 No Material Change.
Since the Effective Date, there has been no development or event
relating to or affecting a Credit Party or any of their Subsidiaries which has
had or would be reasonably expected to have a Material Adverse Effect.
6.3 Organization and Good Standing.
Each Credit Party (a) is a corporation duly incorporated, validly
existing and in good standing under the laws of the State (or other
jurisdiction) of its incorporation, (b) is duly qualified and in good standing
as a foreign corporation and authorized to do business in every jurisdiction
unless the failure to be so qualified, in good standing or authorized would
have a Material Adverse Effect and (c) has the requisite corporate power and
authority to own its properties and to carry on its business as now conducted
and as proposed to be conducted.
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6.4 Due Authorization.
Each Credit Party (a) has the requisite corporate power and authority
to execute, deliver and perform this Credit Agreement and the other Credit
Documents to which it is a party and to incur the obligations herein and
therein provided for and (b) is duly authorized to, and has been authorized by
all necessary corporate action, to execute, deliver and perform this Credit
Agreement and the other Credit Documents to which it is a party.
6.5 No Conflicts.
Neither the execution and delivery of the Credit Documents, nor the
consummation of the transactions contemplated therein, nor performance of and
compliance with the terms and provisions thereof by such Credit Party will (a)
violate or conflict with any provision of its articles or certificate of
incorporation or bylaws, (b) violate, contravene or materially conflict with
any Requirement of Law or any other law, regulation (including, without
limitation, Regulation U or Regulation X), order, writ, judgment, injunction,
decree or permit applicable to it, (c) violate, contravene or conflict with
contractual provisions of, or cause an event of default under, any indenture,
loan agreement, mortgage, deed of trust, contract or other agreement or
instrument to which it is a party or by which it may be bound, the violation of
which could have or might be reasonably expected to have a Material Adverse
Effect, or (d) result in or require the creation of any Lien (other than those
contemplated in or created in connection with the Credit Documents) upon or
with respect to its properties.
6.6 Consents.
Except for consents, approvals and authorizations which have been
obtained, no consent, approval, authorization or order of, or filing,
registration or qualification with, any court or Governmental Authority or
third party in respect of any Credit Party is required in connection with the
execution, delivery or performance of this Credit Agreement or any of the other
Credit Documents by such Credit Party.
6.7 Enforceable Obligations.
This Credit Agreement and the other Credit Documents have been duly
executed and delivered and constitute legal, valid and binding obligations of
each Credit Party enforceable against such Credit Party in accordance with
their respective terms, except as may be limited by bankruptcy or insolvency
laws or similar laws affecting creditors' rights generally or by general
equitable principles.
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6.8 No Default.
No Credit Party, nor any of their Subsidiaries, is in default in any
respect under any contract, lease, loan agreement, indenture, mortgage,
security agreement or other agreement or obligation to which it is a party or
by which any of its properties is bound which default would have or would be
reasonably expected to have a Material Adverse Effect. No Default or Event of
Default has occurred or exists except as previously disclosed in writing to the
Lenders.
6.9 Ownership.
Each Credit Party, and each of its Subsidiaries, is the owner of, and
has good and marketable title to, all of its respective assets and none of such
assets is subject to any Lien other than Permitted Liens.
6.10 Indebtedness.
The Credit Parties and their Subsidiaries have no Indebtedness except
(a) as disclosed in the financial statements referenced in Section 6.1, (b) as
set forth on Schedule 6.10 and (c) as otherwise permitted by this Credit
Agreement. There are no mandatory principal payments due with respect to the
Senior Notes or the Subordinated Debt prior to the Revolving Loan Maturity
Date.
6.11 Litigation.
Except for any litigation outstanding as set forth in the M.O.U.,
there are no actions, suits or legal, equitable, arbitration or administrative
proceedings, pending or, to the knowledge of any Credit Party, threatened
against, the Borrower or any of its Subsidiaries which could have or might be
reasonably expected to have a Material Adverse Effect.
6.12 Taxes.
Each Credit Party, and each of its Subsidiaries, has filed, or caused
to be filed, all material tax returns (federal, state, local and foreign)
required to be filed and paid (a) all material amounts of taxes shown thereon
to be due (including interest and penalties) and (b) all material other taxes,
fees, assessments and other governmental charges (including mortgage recording
taxes, documentary stamp taxes and intangibles taxes) owing by it, except for
such taxes (i) which are not yet delinquent or (ii) that are being contested in
good faith and by proper proceedings, and against which adequate reserves are
being maintained in accordance with GAAP. No Credit Party is aware of any
material proposed tax assessments against it.
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6.13 Compliance with Law.
Each Credit Party, and each of its Subsidiaries, is in compliance with
all Requirements of Law and all other laws, rules, regulations, orders and
decrees (including without limitation Environmental Laws) applicable to it, or
to its properties, unless such failure to comply would not have or would not be
reasonably expected to have a Material Adverse Effect. No Requirement of Law
would be reasonably expected to cause a Material Adverse Effect.
6.14 ERISA.
Except as would not result or be reasonably expected to result in a
Material Adverse Effect:
(a) During the five-year period prior to the date on which
this representation is made or deemed made: (i) no Termination Event
has occurred, and, to the best knowledge of the Credit Parties, no
event or condition has occurred or exists as a result of which any
Termination Event could reasonably be expected to occur, with respect
to any Plan; (ii) no "accumulated funding deficiency," as such term is
defined in Section 302 of ERISA and Section 412 of the Code, whether
or not waived, has occurred with respect to any Plan; (iii) each Plan
has been maintained, operated, and funded in compliance with its own
terms and in material compliance with the provisions of ERISA, the
Code, and any other applicable federal or state laws; and (iv) no lien
in favor or the PBGC or a Plan has arisen or is reasonably likely to
arise on account of any Plan.
(b) The actuarial present value of all "benefit liabilities"
under each Single Employer Plan (determined within the meaning of
Section 401(a)(2) of the Code, utilizing the actuarial assumptions
used to fund such Plans), whether or not vested, did not, as of the
last annual valuation date prior to the date on which this
representation is made or deemed made, exceed the current value of the
assets of such Plan allocable to such accrued liabilities.
(c) Neither the Borrower, nor any of its Subsidiaries nor any
ERISA Affiliate has incurred, or, to the best knowledge of the Credit
Parties, are reasonably expected to incur, any withdrawal liability
under ERISA to any Multiemployer Plan or Multiple Employer Plan.
Neither the Borrower, any of its Subsidiaries nor any ERISA Affiliate
has received any notification that any Multiemployer Plan is in
reorganization (within the meaning of Section 4241 of ERISA), is
insolvent (within the meaning of Section 4245 of ERISA), or has been
terminated (within the meaning of Title IV of ERISA), and no
Multiemployer Plan is, to the best knowledge of the Credit Parties,
reasonably expected to be in reorganization, insolvent, or terminated.
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(d) No prohibited transaction (within the meaning of Section
406 of ERISA or Section 4975 of the Code) or breach of fiduciary
responsibility has occurred with respect to a Plan which has subjected
or is reasonably likely to subject the Borrower or any of its
Subsidiaries or any ERISA Affiliate to any liability under Sections
406, 409, 502(i), or 502(l) of ERISA or Section 4975 of the Code, or
under any agreement or other instrument pursuant to which the Borrower
or any of its Subsidiaries or any ERISA Affiliate has agreed or is
required to indemnify any person against any such liability.
(e) The present value (determined using actuarial and other
assumptions which are reasonable with respect to the benefits provided
and the employees participating) of the liability of the Borrower and
its Subsidiaries and each ERISA Affiliate for post-retirement welfare
benefits to be provided to their current and former employees under
Plans which are welfare benefit plans (as defined in Section 3(1) of
ERISA), net of all assets under all such Plans allocable to such
benefits, are reflected on the Financial Statements in accordance with
FASB 106.
(f) Each Plan which is a welfare plan (as defined in Section
3(1) of ERISA) to which Sections 601-609 of ERISA and Section 4980B of
the Code apply has been administered in compliance in all material
respects with such sections.
6.15 Subsidiaries.
Set forth on Schedule 6.15 is a complete and accurate list of all
Subsidiaries of each Credit Party. Information on Schedule 6.15 includes
jurisdiction of incorporation, the number of shares of each class of capital
stock or other equity interests outstanding, the number and percentage of
outstanding shares of each class owned (directly or indirectly) by such Credit
Party; and the number and effect, if exercised, of all outstanding options,
warrants, rights of conversion or purchase and all other similar rights with
respect thereto. The outstanding capital stock and other equity interests of
all such Subsidiaries is validly issued, fully paid and non-assessable and is
owned by each such Credit Party, directly or indirectly, free and clear of all
Liens (other than those arising under or contemplated in connection with the
Credit Documents). Other than as set forth in Schedule 6.15, neither any Credit
Party nor any Subsidiary thereof has outstanding any securities convertible
into or exchangeable for its capital stock nor does any such Person have
outstanding any rights to subscribe for or to purchase or any options for the
purchase of, or any agreements providing for the issuance (contingent or
otherwise) of, or any calls, commitments or claims of any character relating to
its capital stock. Schedule 6.15 may be updated from time to time by the
Borrower by giving written notice thereof to the Administrative Agent.
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6.16 Use of Proceeds; Margin Stock.
The proceeds of the Loans hereunder will be used solely for the
purposes specified in Section 7.11. None of the proceeds of the Loans will be
used for the purpose of purchasing or carrying any "margin stock" as defined in
Regulation U, Regulation X or Regulation G, or for the purpose of reducing or
retiring any Indebtedness which was originally incurred to purchase or carry
"margin stock" or any "margin security" or for any other purpose which might
constitute this transaction a "purpose credit" within the meaning of Regulation
U, Regulation X, Regulation G or Regulation T. None of the Credit Parties owns
any "margin stock".
6.17 Government Regulation.
No Credit Party, nor any of its Subsidiaries, is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act,
the Investment Company Act of 1940 or the Interstate Commerce Act, each as
amended. In addition, no Credit Party is an "investment company" registered or
required to be registered under the Investment Company Act of 1940, as amended,
or controlled by such a company, or a "holding company," or a "Subsidiary
company" of a "holding company," or an "affiliate" of a "holding company" or of
a "Subsidiary" or a "holding company," within the meaning of the Public Utility
Holding Company Act of 1935, as amended. No director, executive officer or
principal shareholder of the Borrower or any of its Subsidiaries is a director,
executive officer or principal shareholder of any Lender. For the purposes
hereof the terms "director", "executive officer" and "principal shareholder"
(when used with reference to any Lender) have the respective meanings assigned
thereto in Regulation O issued by the Board of Governors of the Federal Reserve
System.
6.18 Environmental Matters.
(a) Except as set forth on Schedule 6.18:
(i) Each of the Real Properties and all operations
at the Real Properties are in compliance with all applicable
Environmental Laws, and there is no violation of any
Environmental Law with respect to the Real Properties or the
businesses operated by the Borrower or any of their
Subsidiaries (the "Businesses"), and there are no conditions
relating to the Businesses or Real Properties that would be
reasonably expected to give rise to liability under any
applicable Environmental Laws.
(ii) No Credit Party has received any written notice
of, or inquiry from any Governmental Authority regarding, any
violation, alleged violation, non-compliance, liability or
potential liability regarding Hazardous Materials or
compliance with Environmental Laws with regard to any of the
Real Properties or
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the Businesses, nor does the Borrower or any of its
Subsidiaries have knowledge or reason to believe that any
such notice is being threatened.
(iii) Hazardous Materials have not been transported
or disposed of from the Real Properties, or generated,
treated, stored or disposed of at, on or under any of the
Real Properties or any other location, in each case by, or on
behalf or with the permission of, the Borrower or any of its
Subsidiaries in a manner that would reasonably be expected to
give rise to a Material Adverse Effect.
(iv) No judicial proceeding or governmental or
administrative action is pending or, to the knowledge of the
Borrower or any of its Subsidiaries, threatened, under any
Environmental Law to which the Borrower or any of its
Subsidiaries is or will be named as a party, nor are there
any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other
administrative or judicial requirements outstanding under any
Environmental Law with respect to the Borrower or any of its
Subsidiaries, the Real Properties or the Businesses, in any
amount reportable under the federal Comprehensive
Environmental Response, Compensation and Liability Act or any
analogous state law, except releases in compliance with any
Environmental Laws.
(v) There has been no release or threat of release
of Hazardous Materials at or from the Real Properties, or
arising from or related to the operations (including, without
limitation, disposal) of the Borrower or any of its
Subsidiaries in connection with the Real Properties or
otherwise in connection with the Businesses.
(vi) None of the Real Properties contains, or has
previously contained, any Hazardous Materials at, on or under
the Real Properties in amounts or concentrations that, if
released, constitute or constituted a violation of, or could
give rise to liability under, Environmental Laws and could
reasonably be expected to have a Material Adverse Effect.
(vii) No Credit Party, nor any of its Subsidiaries,
has assumed any liability of any Person (other than another
Credit Party, or one of its Subsidiaries) under any
Environmental Law.
(b) The Borrower has adopted procedures that are designed to
(i) ensure that each Credit Party, any of its operations and each of
the properties owned or leased by each Credit Party remains in
compliance with applicable Environmental Laws and (ii) minimize any
liabilities or potential liabilities that each Credit Party, any of
its operations and each of the properties owned or leased by each
Credit Party may have under applicable Environmental Laws.
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6.19 Intellectual Property.
Each Credit Party owns, or has the legal right to use, all patents,
trademarks, tradenames, copyrights, technology, know-how and processes (the
"Intellectual Property") necessary for each of them to conduct its business as
currently conducted except for those the failure to own or have such legal
right to use would not have or be reasonably expected to have a Material
Adverse Effect. Set forth on Schedule 6.19 is a list of all Intellectual
Property owned by each Credit Party or that any Credit Party has the right to
use. Except as provided on Schedule 6.19, no claim has been asserted and is
pending by any Person challenging or questioning the use of any such
Intellectual Property or the validity or effectiveness of any such Intellectual
Property, nor does any Credit Party know of any such claim, and to the Credit
Parties' knowledge the use of such Intellectual Property by the Borrower or any
of their Subsidiaries does not infringe on the rights of any Person, except for
such claims and infringements that in the aggregate, would not have or be
reasonably expected to have a Material Adverse Effect. Schedule 6.19 may be
updated from time to time by the Borrower by giving written notice thereof to
the Administrative Agent.
6.20 Solvency.
Each Credit Party is and, after consummation of the transactions
contemplated by this Credit Agreement, will be Solvent.
6.21 Investments.
All Investments of each Credit Party and its Subsidiaries are (a) as
set forth on Schedule 6.21, (b) Permitted Investments or (c) otherwise
permitted by the terms of this Credit Agreement.
6.22 Location of Collateral.
Set forth on Schedule 6.22(a) is a list of all Mortgaged Properties
with street address, county and state where located. Set forth on Schedule
6.22(b) is a list of all locations where any personal property of a Credit
Party is located, including county and state where located. Set forth on
Schedule 6.22(c) is the chief executive office and principal place of business
of each Credit Party. Schedule 6.22(a), 6.22(b) and 6.22(c) may be updated from
time to time by the Borrower by giving written notice thereof to the
Administrative Agent.
6.23 Disclosure.
Neither this Agreement nor any financial statements delivered to the
Lenders nor any other document, certificate or statement furnished to the
Lenders by or on behalf of any Credit Party in connection with the transactions
contemplated hereby contains any untrue statement of a
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material fact or omits to state a material fact necessary in order to make the
statements contained therein or herein, taken as a whole, not misleading.
6.24 Licenses, etc.
The Credit Parties have obtained and hold in full force and effect,
all franchises, licenses, permits, certificates, authorizations,
qualifications, accreditations, easements, rights of way and other rights,
consents and approvals which are necessary for the operation of their
respective businesses as presently conducted, except where the failure to
obtain same would not have a Material Adverse Effect. Set forth on Schedule
6.24 is a list of all Material License Agreements to which a Credit Party is a
party, as such schedule may be updated from time to time by the Borrower giving
written notice thereof to the Administrative Agent.
6.25 No Burdensome Restrictions.
No Credit Party, nor any of their Subsidiaries, is a party to any
agreement or instrument or subject to any other obligation or any charter or
corporate restriction or any provision of any applicable law, rule or
regulation which, individually or in the aggregate, would have or be reasonably
expected to have a Material Adverse Effect.
6.26 Collateral Documents.
The Collateral Documents create valid security interests in, and Liens
on, the Collateral purported to be covered thereby, which security interests
and Liens are and will remain perfected security interests and Liens, prior to
all other Liens other than Permitted Liens. Each of the representations and
warranties made by the Borrower and its Subsidiaries in the Collateral
Documents is true and correct in all material respects.
SECTION 7
AFFIRMATIVE COVENANTS
Each Credit Party hereby covenants and agrees that so long as this
Credit Agreement is in effect and until the Loans and LOC Obligations, together
with interest and fees and other obligations hereunder, have been paid in full
and the Commitments and Letters of Credit hereunder shall have terminated:
7.1 Information Covenants.
The Borrower will furnish, or cause to be furnished, to the
Administrative Agent and each of the Lenders:
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(a) Annual Financial Statements. As soon as available, and in
any event within 120 days after the close of each fiscal year of the
Borrower, a consolidated and consolidating balance sheet and income
statement of the Borrower and its Subsidiaries, as of the end of such
fiscal year, together with related consolidated and consolidating
statements of operations and consolidated statements of retained
earnings and of cash flows for such fiscal year, setting forth in
comparative form consolidated and consolidating figures for the
preceding fiscal year, all such consolidated financial information
described above to be in reasonable form and detail and audited by
independent certified public accountants of recognized national
standing reasonably acceptable to the Agents and whose opinion shall
be to the effect that such financial statements have been prepared in
accordance with GAAP (except for changes with which such accountants
concur) and shall not be limited as to the scope of the audit or
qualified in any manner.
(b) Quarterly Financial Statements. As soon as available, and
in any event within 60 days after the close of each of the first three
fiscal quarter of the Borrower, (i) a consolidated and consolidating
balance sheet and income statement of the Borrower and its
Subsidiaries, as of the end of such fiscal quarter, together with
related consolidated and consolidating statements of operations and
consolidated statements of retained earnings and of cash flows for
such fiscal quarter in each case setting forth in comparative form
consolidated and consolidating figures for (A) the corresponding
period of the preceding fiscal year and (B) management's proposed
budget for such period, all such financial information described above
to be in reasonable form and detail and reasonably acceptable to the
Agent, and accompanied by a certificate of the chief financial officer
or the chief accounting officer of the Borrower to the effect that
such quarterly financial statements fairly present in all material
respects the financial condition of the Borrower and its Subsidiaries
and have been prepared in accordance with GAAP, subject to changes
resulting from audit and normal year-end audit adjustments and (ii) a
management discussion and analysis of operating results for such
fiscal quarter.
(c) Borrowing Base Report. (i) on the 25th day of each month,
a Borrowing Base Report, as of the end of the immediately preceding
month and (ii) on the last day of each month a Borrowing Base Report,
as of the 15th day of such month with respect to Eligible Receivables
and as of the end of the immediately preceding month with respect to
Eligible Inventory and Eligible Work in Process, in each case in
substantially in the form of Exhibit 7.1(c) and certified by the chief
financial officer of the Borrower to be true and correct as of the
date thereof. Notwithstanding the above, the Borrowing Base Report
delivered on June 30, 1997 shall reflect Eligible Receivables as of
June 19, 1997.
(d) Officer's Certificate. At the time of delivery of the
financial statements provided for in Sections 7.1(a) and 7.1(b) above,
a certificate of the chief financial officer of the Borrower
substantially in the form of Exhibit 7.1(d), (i) demonstrating
compliance
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with the financial covenants contained in Section 7.2 by calculation
thereof as of the end of each such fiscal period, (ii) demonstrating
compliance with any other terms of the Credit Agreement as requested
by the Agents and (iii) stating that no Default or Event of Default
exists, or if any Default or Event of Default does exist, specifying
the nature and extent thereof and what action the Borrower proposes to
take with respect thereto.
(e) Annual Business Plan and Budgets. Within 90 days after
the end of each fiscal year of the Borrower, an annual business plan
and budget of the Borrower and its Subsidiaries on a consolidated
basis containing, among other things, pro forma financial projections
for the next fiscal year.
(f) Accountant's Certificate. Within the period for delivery
of the annual financial statements provided in Section 7.1(a), a
certificate of the accountants conducting the annual audit stating
that they have reviewed this Credit Agreement and stating further
whether, in the course of their audit, they have (based on the
financial statements prepared in accordance with then existing GAAP)
become aware of any Default or Event of Default and, if any such
Default or Event of Default exists, specifying the nature and extent
thereof.
(g) Auditor's Reports. Promptly upon receipt thereof, a copy
of any "management letter" submitted by independent accountants to the
Borrower or any of its Subsidiaries in connection with any annual,
interim or special audit of the books of the Borrower or any of its
Subsidiaries.
(h) Reports. Promptly upon transmission or receipt thereof,
(a) copies of any filings and registrations with, and reports to or
from, the Securities and Exchange Commission, or any successor agency,
and copies of all financial statements, proxy statements, notices and
reports as the Borrower or any of its Subsidiaries shall send to its
shareholders generally or to a holder of the Subordinated Debt in its
capacity as such a holder and (b) upon the written request of an
Agent, all reports and written information to and from the United
States Environmental Protection Agency, or any state or local agency
responsible for environmental matters, the United States Occupational
Health and Safety Administration, or any state or local agency
responsible for health and safety matters, or any successor agencies
or authorities concerning environmental, health or safety matters.
(i) Notices. Upon a Responsible Officer obtaining knowledge
thereof, the Borrower will give written notice to the Administrative
Agent immediately of (a) the occurrence of an event or condition
consisting of a Default or Event of Default, specifying the nature and
existence thereof and what action the Borrower proposes to take with
respect thereto, and (b) the occurrence of any of the following with
respect to the Borrower or any of its Subsidiaries (i) the pendency or
commencement of any litigation, arbitral or governmental proceeding
against the Borrower or any of its Subsidiaries which
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if adversely determined would have or would be reasonably expected to
have a Material Adverse Effect, or (ii) the institution of any
proceedings against the Borrower or any of its Subsidiaries with
respect to, or the receipt of notice by such Person of potential
liability or responsibility for violation, or alleged violation of any
federal, state or local law, rule or regulation, including but not
limited to, Environmental Laws, the violation of which would have or
would be reasonably expected to have a Material Adverse Effect.
(j) ERISA. Upon any of the Credit Parties or any ERISA
Affiliate obtaining knowledge thereof, Borrower will give written
notice to the Administrative Agent and each of the Lenders promptly
(and in any event within five Business Days) of: (i) any event or
condition, including, but not limited to, any Reportable Event, that
constitutes, or might reasonably lead to, a Termination Event; (ii)
with respect to any Multiemployer Plan, the receipt of notice as
prescribed in ERISA or otherwise of any withdrawal liability assessed
against the Borrowers or any of their ERISA Affiliates, or of a
determination that any Multiemployer Plan is in reorganization or
insolvent (both within the meaning of Title IV of ERISA); (iii) the
failure to make full payment on or before the due date (including
extensions) thereof of all amounts which the Borrower or any of its
Subsidiaries or ERISA Affiliates is required to contribute to each
Plan pursuant to its terms and as required to meet the minimum funding
standard set forth in ERISA and the Code with respect thereto; or (iv)
any change in the funding status of any Plan that could have a
Material Adverse Effect; together, with a description of any such
event or condition or a copy of any such notice and a statement by the
principal financial officer of the Borrower briefly setting forth the
details regarding such event, condition, or notice, and the action, if
any, which has been or is being taken or is proposed to be taken by
the Credit Parties with respect thereto. Promptly upon request, the
Borrower shall furnish the Administrative Agent and each of the
Lenders with such additional information concerning any Plan as may be
reasonably requested, including, but not limited to, copies of each
annual report/return (Form 5500 series), as well as all schedules and
attachments thereto required to be filed with the Department of Labor
and/or the Internal Revenue Service pursuant to ERISA and the Code,
respectively, for each "plan year" (within the meaning of Section
3(39) of ERISA).
(k) Environmental.
(i) Subsequent to a notice from any Governmental
Authority that would reasonably cause concern or during the
existence of an Event of Default, and upon the written
request of an Agent, the Borrower will furnish or cause to be
furnished to the Administrative Agent, at the Borrower's
expense, a report of an environmental assessment of
reasonable scope, form and depth, including, where
appropriate, invasive soil or groundwater sampling, by a
consultant reasonably acceptable to the Agents as to the
nature and extent of the presence of any Hazardous Materials
on any property owned, leased or operated by a Credit Party
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and as to the compliance by the Credit Parties with
Environmental Laws. If the Borrower fails to deliver such an
environmental report within seventy-five (75) days after
receipt of such written request then the Agents may arrange
for same, and the Borrower hereby grants to the Agents and
their representatives access to the Real Properties and a
license of a scope reasonably necessary to undertake such an
assessment (including, where appropriate, invasive soil or
groundwater sampling). The reasonable cost of any assessment
arranged for by the Agents pursuant to this provision will be
payable by the Borrower on demand and added to the
obligations secured by the Collateral Documents.
(ii) Each Credit Party will conduct and complete all
investigations, studies, sampling, and testing and all
remedial, removal, and other actions necessary to address all
Hazardous Materials on, from, or affecting any real property
owned or leased by a Credit Party to the extent necessary to
be in compliance with all Environmental Laws and all other
applicable federal, state, and local laws, regulations, rules
and policies and with the orders and directives of all
Governmental Authorities exercising jurisdiction over such
real property to the extent any failure would have or be
reasonably expected to have a Material Adverse Effect.
(l) Other Information. With reasonable promptness upon any
such request, such other information regarding the business,
properties or financial condition of the Credit Parties and their
Subsidiaries as an Agent may reasonably request.
7.2 Financial Covenants.
(a) Leverage Ratio. The Leverage Ratio shall be less than or
equal to the ratios set forth below for the last day of each fiscal
quarter within the period set forth below:
(i) From the Effective Date to June 30, 1997,
8.0 to 1.0;
(ii) From July 1, 1997 to September 30, 1997,
7.40 to 1.0;
(iii) From October 1, 1997 to June 30, 1998, 6.50
to 1.0;
(iv) From July 1, 1998 to September 30, 1999,
5.50 to 1.0;
(v) From October 1, 1999 to September 30, 2000,
4.50 to 1.0;
(vi) From October 1, 2000 to September 30, 2001,
3.50 to 1.0; and
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(vii) From October 1, 2001 thereafter, 3.0 to
1.0.
(b) Coverage Ratio. The Coverage Ratio, for the twelve month
period ending on such date, shall be greater than or equal to the
ratios set forth below for the last day of each fiscal quarter within
the period set forth below:
(i) From the Effective Date to September 30,
1998, 1.25 to 1.0;
(ii) From October 1, 1998 to September 30, 1999,
1.50 to 1.0;
(iii) From October 1, 1999 to September 30, 2000,
2.0 to 1.0; and
(iv) From October 1, 2000 thereafter, 2.5 to
1.0.
(c) Net Worth. For the dates set forth below, Net Worth shall
be greater than or equal to the sum of (i) 75% of the Net Cash
Proceeds from each Equity Issuance subsequent to the Effective Date
plus (ii) the amount set forth below:
Date Amount
---- ------
December 31, 1997 Beginning Net Worth
March 31, 1998 Beginning Net Worth minus $4 million
June 30, 1998 Beginning Net Worth minus $1 million
September 30, 1998 Beginning Net Worth plus $5 million
December 31, 1998 Beginning Net Worth plus $1 million
March 31, 1999 Beginning Net Worth minus $2 million
June 30, 1999 Beginning Net Worth plus $1 million
September 30, 1999 Beginning Net Worth plus $7.5 million
December 31, 1999 Beginning Net Worth plus $4.5 million
March 31, 2000 Beginning Net Worth plus $1.5 million
June 30, 2000 Beginning Net Worth plus $4.5 million
September 30, 2000 Beginning Net Worth plus $10.5 million
December 31, 2000 Beginning Net Worth plus $7.5 million
March 31, 2001 Beginning Net Worth plus $4.5 million
June 30, 2001 Beginning Net Worth plus $8 million
September 30, 2001 Beginning Net Worth plus $14 million
December 31, 2001 Beginning Net Worth plus $11 million
March 31, 2002 Beginning Net Worth plus $8 million
June 30, 2002 Beginning Net Worth plus $12 million
(d) Net Income. For the fiscal quarters ending June 30, 1997
and September 30, 1997, the sum of Net Income plus (i) any amounts
deducted in determining Net Income representing any amounts paid
pursuant to or in connection with the M.O.U. or the transactions
contemplated thereby and (ii) Transaction Costs shall be greater than
zero.
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7.3 Preservation of Existence and Franchises.
Each of the Credit Parties will do all things necessary to preserve
and keep in full force and effect its existence, rights, franchises and
authority except as permitted by Section 8.4.
7.4 Books and Records.
Each of the Credit Parties will keep complete and accurate books and
records of its transactions in accordance with good accounting practices on the
basis of GAAP (including the establishment and maintenance of appropriate
reserves).
7.5 Compliance with Law.
Each of the Credit Parties will comply with all material laws, rules,
regulations and orders, and all applicable material restrictions imposed by all
Governmental Authorities, applicable to it and its property (including, without
limitation, Environmental Laws).
7.6 Payment of Taxes and Other Indebtedness.
Each of the Credit Parties will pay, settle or discharge (a) all
taxes, assessments and governmental charges or levies imposed upon it, or upon
its income or profits, or upon any of its properties, before they shall become
delinquent, (b) all lawful claims (including claims for labor, materials and
supplies) which, if unpaid, might give rise to a Lien upon any of its
properties, and (c) all of its other Indebtedness as it shall become due,
including, without limitation, the Subordinated Secured Note; provided,
however, that a Credit Party shall not be required to pay any such tax,
assessment, charge, levy, claim or Indebtedness which is being contested in
good faith by appropriate proceedings and as to which adequate reserves
therefor have been established in accordance with GAAP, unless the failure to
make any such payment (i) would give rise to an immediate right to foreclose or
collect on a Lien securing such amounts or (ii) would have a Material Adverse
Effect.
7.7 Insurance.
Each of the Credit Parties will at all times maintain in full force
and effect insurance (including worker's compensation insurance, liability
insurance, casualty insurance and business interruption insurance) in such
amounts, covering such risks and liabilities and with such deductibles or
self-insurance retentions as are in accordance with normal industry practice.
All policies shall have the Collateral Agent, on behalf of the Lenders, as an
additional insured.
In the event there occurs any material loss, damage to or destruction of the
Collateral of any Credit Party or any part thereof, such Credit Party shall
promptly give written notice thereof to the Administrative Agent generally
describing the nature and extent of such damage or
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destruction. Subsequent to any loss, damage to or destruction of the Collateral
of any Credit Party or any part thereof, such Credit Party, whether or not the
insurance proceeds, if any, received on account of such damage or destruction
shall be sufficient for that purpose, at such Credit Party's cost and expense,
will promptly repair or replace the Collateral of such Credit Party so lost,
damaged or destroyed; provided, however, that such Credit Party need not repair
or replace the Collateral of such Credit Party so lost, damaged or destroyed to
the extent the failure to make such repair or replacement (a) is desirable to
the proper conduct of the business of such Credit Party in the ordinary course
and otherwise is in the best interest of such Credit Party and (b) would not
materially impair the rights and benefits of the Agents or the Lenders under
this Credit Agreement or any other Credit Document. In the event a Credit Party
shall receive any insurance proceeds, as a result of any loss, damage or
destruction of Collateral, in a net amount in excess of $1,000,000, such Credit
Party will immediately pay over such proceeds to the Administrative Agent as
cash collateral for the Credit Party Obligations. The Administrative Agent
agrees to release such insurance proceeds to such Credit Party for replacement
or restoration of the portion of the Collateral of such Credit Party lost,
damaged or destroyed if (A) within 15 days from the date the Administrative
Agent receives such insurance proceeds, the Administrative Agent has received
written application for such release from such Credit Party together with
evidence reasonably satisfactory to it that the Collateral lost, damaged or
destroyed has been or will be replaced or restored to its condition (or by
Collateral having a value at least equal to the condition of the asset subject
to the loss, damage or destruction) immediately prior to the loss, destruction
or other event giving rise to the payment of such insurance proceeds and (B) on
the date of such release no Default or Event of Default exists. If the
conditions in the preceding sentence are not met, the Administrative Agent may
or, upon the request of the Required Lenders, shall at any time after the first
Business Day subsequent to the date 30 days after it received such insurance
proceeds, apply such insurance proceeds as a mandatory prepayment of the Credit
Party Obligations for application in accordance with the terms of Section
3.3(b)(ii). All insurance proceeds shall be subject to the security interest of
the Lenders under the Collateral Documents.
The present insurance coverage of the Borrower and its Subsidiaries is outlined
as to carrier, policy number, expiration date, type and amount on Schedule 7.7,
as Schedule 7.7 may be amended from time to time by written notice to the
Administrative Agent.
7.8 Maintenance of Property.
Each of the Credit Parties will maintain and preserve its properties
and equipment in good repair, working order and condition, normal wear and tear
excepted, and will make, or cause to be made, in such properties and equipment
from time to time all repairs, renewals, replacements, extensions, additions,
betterments and improvements thereto as may be needed or proper, to the extent
and in the manner customary for companies in similar businesses.
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7.9 Performance of Obligations.
Each of the Credit Parties will perform in all material respects all
of its obligations under the terms of all material agreements, indentures,
mortgages, security agreements or other debt instruments to which it is a party
or by which it is bound.
7.10 Collateral.
If, subsequent to the Closing Date, a Credit Party shall (a) acquire
any real property or (b) acquire any intellectual property or any securities or
other personal property required to be delivered to the Collateral Agent as
Collateral hereunder or under any of the Collateral Documents, or (c) enter
into any Material License Agreement, the Borrower shall immediately notify the
Collateral Agent of same. Each Credit Party shall take such action (including,
but not limited to, the actions set forth in Sections 5.1(e) and (f)), as
requested by the Collateral Agent and at its own expense, to ensure that (i)
the Lenders have a perfected Lien in all owned real property (unless the
Borrower has exercised its rights pursuant to Section 11.19) and such personal
property of the Credit Parties as set forth in the Security Agreements (whether
now owned or hereafter acquired), subject only to Permitted Liens and (ii) the
Lenders have collateral assignments of all Material License Agreements and the
right to use all intellectual property of the Credit Parties as set forth in
the Security Agreements. Each Credit Party shall adhere to the covenants
regarding the location of personal property as set forth in the Security
Agreements.
7.11 Use of Proceeds.
The Credit Parties will use the proceeds of the Loans solely (a) to
refinance or repay existing Indebtedness owing from the Credit Parties to NBD
Bank, NationsBank, N.A. and the other creditors set forth on Schedule 7.11
(together with the amounts owed to each), (b) to assist in financing the
acquisition of Varsity Spirit Corporation (to the extent the proceeds of the
Senior Notes are insufficient with respect thereto), (c) to pay related fees
and expenses in connection with the foregoing, (d) to provide working capital,
(e) to make Capital Expenditures permitted under this Credit Agreement and (f)
for general corporate purposes. The Credit Parties will use the Letters of
Credit solely for the purposes set forth in Section 2.2(a).
7.12 Audits/Inspections.
Upon reasonable notice and during normal business hours, each Credit
Party will permit representatives appointed by an Agent, including, without
limitation, independent accountants, agents, attorneys and appraisers to visit
and inspect such Credit Party's property, including its books and records, its
accounts receivable and inventory, its facilities and its other business
assets, and to make photocopies or photographs thereof and to write down and
record any information such representative obtains and shall permit an Agent or
its representatives to investigate and verify the accuracy of information
provided to the Lenders, including, without limitation, the performance of
collateral valuation reviews from time to time to assess the
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composition of the Borrowing Base Assets, and to discuss all such matters with
the officers, employees and representatives of the Credit Parties. The Borrower
agrees that the Collateral Agent may conduct such collateral reviews, at the
Borrower's expense, as it reasonably deems appropriate; provided that absent an
Event of Default such reviews shall not occur more frequently than twice a
year.
7.13 Additional Credit Parties.
At the time any Person becomes a Material Subsidiary of a Credit
Party, the Borrower shall so notify the Administrative Agent and promptly
thereafter (but in any event within 30 days after the date thereof) shall cause
such Person to execute a Joinder Agreement in substantially the same form as
Exhibit 7.13, (b) cause all of the capital stock of such Person to be delivered
to the Collateral Agent (together with undated stock powers signed in blank)
and pledged to the Collateral Agent pursuant to an appropriate pledge agreement
in substantially the form of the Pledge Agreements and otherwise in a form
reasonably acceptable to the Collateral Agent, (c) pledge such of its assets to
the Lenders pursuant to a security agreement in substantially the form of the
Security Agreements and otherwise in a form reasonably acceptable to the
Collateral Agent, and collaterally assign any Material License Agreements to
which it is a party, (d) if such Person has any Subsidiaries, (i) deliver all
of the capital stock of such Subsidiaries (together with undated stock powers
signed in blank) to the Collateral Agent and (ii) execute a pledge agreement in
substantially the form of the Pledge Agreements and otherwise in a form
reasonably acceptable to the Collateral Agent, (e) if such Person owns any real
property, execute any and all necessary mortgages, deeds of trust, deeds to
secure debt or other appropriate real estate collateral documentation in a form
substantially similar to the Mortgages, with appropriate covenants as necessary
unless the Borrower has previously exercised its rights pursuant to Section
11.19 and (f) deliver such other documentation as the Collateral Agent may
reasonably request in connection with the foregoing, including, without
limitation, appropriate UCC-1 financing statements, real estate title insurance
policies, environmental reports, certified resolutions and other organizational
and authorizing documents of such Person and favorable opinions of counsel to
such Person (which shall cover, among other things, the legality, validity,
binding effect and enforceability of the documentation referred to above), all
in form, content and scope reasonably satisfactory to the Agents.
7.14 Material License Agreements.
The Credit Parties will notify the Agents promptly regarding (a)
failure to comply with the terms of any Material License Agreement, (b) failure
to keep each Material License Agreement in full force and effect and (c) any
modification or amendment to any Material License Agreement other than royalty
rate increases or minimum guaranteed amounts thereunder.
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7.15 Merger.
As soon as practicable after the Closing Date, cause the merger of
Cheer Acquisition Corp. with and into Varsity Spirit Corporation, and deliver
to the Agents such evidence of same as the Agents may reasonably request,
including, without limitation, a legal opinion from counsel to the Credit
Parties.
7.16 Further Assurances Regarding Real Estate Collateral.
As soon as possible after the Effective Date but in any event no later
than July 31, 1997, the Credit Parties shall provide, or cause to be delivered,
to the Collateral Agent:
(a) ALTA or other appropriate form mortgagee title insurance
policies (the "Mortgage Policies") issued by a title insurer
reasonably satisfactory to the Collateral Agent (the "Title Insurance
Company"), in an amount reasonably satisfactory to the Collateral
Agent with respect to each Mortgaged Property, assuring the Collateral
Agent that the applicable Mortgages create valid and enforceable
mortgage liens on the respective Mortgaged Properties, free and clear
of all defects and encumbrances except Permitted Liens which Mortgage
Policies shall be in form and substance reasonably satisfactory to the
Collateral Agent and containing such endorsements as shall be
reasonably satisfactory to the Collateral Agent and for any other
matters that the Collateral Agent may request, and providing
affirmative insurance and such reinsurance as the Collateral Agent may
request, all of the foregoing in form and substance reasonably
satisfactory to the Agents;
(b) Surveys. Maps or plats of an as-built survey of the sites
of the Mortgaged Properties certified to the Collateral Agent and the
Title Insurance Company in a manner reasonably satisfactory to them,
dated a date satisfactory to the Collateral Agent and the Title
Insurance Company by an independent professional licensed land
surveyor reasonably satisfactory to the Collateral Agent and the Title
Insurance Company, which maps or plats and the surveys on which they
are based shall be sufficient to delete any standard printed survey
exception contained in the applicable title policy and be made in
accordance with the Minimum Standard Detail Requirements for Land
Title Surveys jointly established and adopted by the American Land
Title Association and the American Congress on Surveying and Mapping
in 1992, and, without limiting the generality of the foregoing, there
shall be surveyed and shown on such maps, plats or surveys the
following: (A) the locations on such sites of all the buildings,
structures and other improvements and the established building setback
lines; (B) the lines of streets abutting the sites and width thereof;
(C) all access and other easements appurtenant to the sites necessary
to use the sites; (D) all roadways, paths, driveways, easements,
encroachments and overhanging projections and similar encumbrances
affecting the site, whether recorded, apparent from a physical
inspection of the sites or otherwise known to the
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surveyor; (E) any encroachments on any adjoining property by the
building structures and improvements on the sites; and (F) if the site
is described as being on a filed map, a legend relating the survey to
said map;
(c) Flood Certificates. Certification from a registered
engineer or land surveyor or other evidence reasonably acceptable to
the Collateral Agent that none of the improvements on the Mortgaged
Properties are located within any area designated by the Director of
the Federal Emergency Management Agency as a "special flood hazard"
area or if any improvements on the Mortgaged Properties are located
within a "special flood hazard" area, evidence of a flood insurance
policy from a company and in an amount reasonably satisfactory to the
Collateral Agent for the applicable portion of the premises, naming
the Collateral Agent, for the benefit of the Lenders, as mortgagee;
and
(d) Environmental Reports. If requested by the Agents,
environmental assessment reports and related documents with respect to
all Mortgaged Properties.
SECTION 8
NEGATIVE COVENANTS
Each Credit Party hereby covenants and agrees that so long as this
Credit Agreement is in effect and until the Loans and LOC Obligations, together
with interest, fees and other obligations hereunder, have been paid in full and
the Commitments and Letters of Credit hereunder shall have terminated:
8.1 Indebtedness.
No Credit Party will, nor will it permit any of its Subsidiaries to,
contract, create, incur, assume or permit to exist any Indebtedness, except:
(a) Indebtedness arising under this Credit Agreement and the
other Credit Documents;
(b) the Senior Notes;
(c) the Subordinated Debt;
(d) Indebtedness existing as of the Closing Date (other than
the Senior Notes or the Subordinated Debt) as referenced in Section
6.10 (and renewals, refinancings, replacements or extensions thereof
on terms and conditions no more favorable, in the aggregate, to such
Person than such existing Indebtedness and in a principal amount not
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in excess of that outstanding as of the date of such renewal,
refinancing, replacement or extension);
(e) Indebtedness in respect of current accounts payable and
accrued expenses incurred in the ordinary course of business and to
the extent not current, accounts payable and accrued expenses that are
subject to bona fide dispute;
(f) Indebtedness owing by one Credit Party to another Credit
Party or from a Non-Material Subsidiary to a Credit Party;
(g) purchase money Indebtedness (including Capital Leases)
incurred by the Borrower or any of its Subsidiaries to finance the
purchase of fixed assets (including equipment); provided that (i) the
total of all such Indebtedness for all such Persons taken together
shall not exceed an aggregate principal amount of $2,000,000 at any
one time outstanding (including any such Indebtedness referred to in
subsection (c) above); (ii) such Indebtedness when incurred shall not
exceed the purchase price of the asset(s) financed; and (iii) no such
Indebtedness shall be refinanced for a principal amount in excess of
the principal balance outstanding thereon at the time of such
refinancing;
(h) Indebtedness arising from Hedging Agreements entered into
in the ordinary course and not for speculative purposes;
(i) Indebtedness incurred in connection with the settlement
of product liability litigation not to exceed $3 million, in the
aggregate;
(j) from the Closing Date to September 30, 1999, other
unsecured Indebtedness not to exceed $2,000,000 at any one time; and
(k) from October 1, 1999 and thereafter, other unsecured
Indebtedness if the incurrence of such Indebtedness would not cause a
violation of Section 7.2(a).
8.2 Liens.
No Credit Party will, nor will it permit its Subsidiaries to contract,
create, incur, assume or permit to exist any Lien with respect to any of its
property or assets of any kind (whether real or personal, tangible or
intangible), whether now owned or after acquired, except for Permitted Liens.
8.3 Nature of Business.
No Credit Party will, nor will it permit its Subsidiaries to, alter
the character of its business from (a) the lines of businesses that any Credit
Party or one of its Subsidiaries was
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engaged in on the date hereof, (b) the businesses engaged in by an acquired
businesses; provided that a substantial portion of their business at the time
of acquisition was related or ancillary to a Credit Party or one of its
Subsidiaries then existing lines of businesses, (c) reasonable extensions of
the businesses referred to in clause (a) and (b) above, including, without
limitation, new products and services to its markets or new distribution
channels, (d) any other lines of business or activities that are related or
ancillary to the businesses referred to in clauses (a) - (c) above, and (e)
other unrelated lines of business; provided that the Credit Parties and their
Subsidiaries may not engage in lines of business unrelated to those engaged in
on the Closing Date (including, without limitation, the opening of retail
locations by a Credit Party that does not currently operate retail locations)
that, in the aggregate, exceed any of the following (i) 20% of total assets of
the Credit Parties and their Subsidiaries, (ii) 15% of total revenues of the
Credit Parties and their Subsidiaries or (iii) 25% total Net Income of the
Credit Parties and their Subsidiaries.
8.4 Consolidation and Merger.
No Credit Party will enter into any transaction of merger or
consolidation or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution); provided that notwithstanding the foregoing
provisions of this Section 8.4, any Credit Party may be merged or consolidated
with or into the Borrower or any other Credit Party if (a) such transaction is
between the Borrower and another Credit Party, the Borrower is the continuing
or surviving corporation; (b) the Administrative Agent is given prior written
notice of such action, and the Credit Parties execute and deliver such
documents, instruments and certificates as the Collateral Agent may request in
order to maintain the perfection and priority of the Liens on the assets of the
Credit Parties; and (c) after giving effect thereto no Default or Event of
Default exists.
8.5 Sale or Lease of Assets.
No Credit Party will, nor will it permit its Subsidiaries to, convey,
sell, lease, transfer or otherwise dispose of, in one transaction or a series
of transactions, all or any part of its business or assets whether now owned or
hereafter acquired, including, without limitation, inventory, receivables,
equipment, real property interests (whether owned or leasehold), and
securities, other than (a) any inventory sold or otherwise disposed of in the
ordinary course of business; (b) the sale, lease, transfer or other disposal by
a Credit Party (other than the Borrower) of any or all of its assets to the
Borrower or to another Credit Party; (c) obsolete, slow-moving, idle or
worn-out assets no longer used or useful in its business; (d) the transfer of
assets which constitute a Permitted Investment; (e) the issuance of capital
stock by the Borrower; (f) sales of Unrestricted Margin Stock for fair market
value in cash (provided that notwithstanding Section 8.7, the proceeds of such
sales may only be invested in cash and Cash Equivalents) and (g) other sales of
assets not to exceed $1,000,000, in the aggregate, during the term of this
Agreement.
Upon a sale of assets permitted by this Section 8.5(c) or (g), the
Collateral Agent shall promptly deliver to the Borrower, upon the Borrower's
request and at the Borrower's
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expense, such documentation as is reasonably necessary to evidence the release
of the Lenders' security interest in such assets, including, without
limitation, amendments or terminations of UCC financing statements.
8.6 Sale Leasebacks.
No Credit Party will, nor will it permit its Subsidiaries to, directly
or indirectly become or remain liable as lessee or as guarantor or other surety
with respect to any lease of any property (whether real or personal or mixed),
whether now owned or hereafter acquired, (a) which such Credit Party has sold
or transferred or is to sell or transfer to any other Person other than a
Credit Party or (b) which such Credit Party intends to use for substantially
the same purpose as any other property which has been sold or is to be sold or
transferred by such Credit Party to any Person in connection with such lease.
8.7 Advances, Investments and Loans.
No Credit Party will, nor will it permit its Subsidiaries to, make any
Investments except for Permitted Investments.
8.8 Restricted Payments.
No Credit Party will, nor will it permit its Subsidiaries to, directly
or indirectly, (a) declare or pay any dividends or make any other distribution
upon any shares of its capital stock of any class or (b) purchase, redeem or
otherwise acquire or retire or make any provisions for redemption, acquisition
or retirement of any shares of its capital stock of any class or any warrants
or options to purchase any such shares; provided that (i) any Subsidiary of the
Borrower may pay dividends to its parent and (ii) as long as no Event of
Default exists or is caused as a result thereof, the Borrower may make
purchases of (A) its capital stock from former or departing employees and (B)
its warrants from NBD Bank and M.L.C. Partners Limited Partnership.
8.9 Transactions with Affiliates.
Other than (a) transactions between Credit Parties or (b) non-material
transactions between Credit Parties and their Subsidiaries otherwise permitted
by 8.7, no Credit Party will, nor will it permit its Subsidiaries to, enter
into any transaction or series of transactions, whether or not in the ordinary
course of business, with any officer, director, shareholder, Subsidiary or
Affiliate other than on terms and conditions substantially as favorable as
would be obtainable in a comparable arm's-length transaction with a Person
other than an officer, director, shareholder, Subsidiary or Affiliate.
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8.10 Fiscal Year; Organizational Documents.
No Credit Party will, nor will it permit its Subsidiaries to, (a)
change its fiscal year or (b) in any manner that would reasonably be likely to
adversely affect the rights of the Lenders, change its articles or certificate
of incorporation or its bylaws.
8.11 Senior Notes/Subordinated Debt.
No Credit Party will, nor will it permit its Subsidiaries to, (a) make
or offer to make any voluntary or optional principal payments with respect to
the Senior Notes or Subordinated Debt, (b) redeem or offer to redeem any of the
Senior Notes or Subordinated Debt, or (c) deposit any funds intended to
discharge or defease any or all of the Senior Notes or Subordinated Debt.
Neither the terms of the Senior Notes nor the Subordinated Debt shall be
amended or modified in any manner without the prior written consent of the
Required Lenders.
8.12 No Limitations.
No Credit Party will, nor will it permit its Subsidiaries to, directly
or indirectly, create or otherwise cause, incur, assume, suffer or permit to
exist or become effective any consensual encumbrance or restriction of any kind
on the ability of any such Person to (a) pay dividends or make any other
distribution on any of such Person's capital stock, (b) pay any Indebtedness
owed to the Borrower or any other Credit Party, (c) make loans or advances to
any other Credit Party or (d) transfer any of its property to any other Credit
Party, except for encumbrances or restrictions existing under or by reason of
(i) customary non-assignment or net worth provisions in any lease governing a
leasehold interest, (ii) any agreement or other instrument of a Person existing
at the time it becomes a Subsidiary of the Borrower; provided that such
encumbrance or restriction is not applicable to any other Person, or any
property of any other Person, other than such Person becoming a Subsidiary of
the Borrower and was not entered into in contemplation of such Person becoming
a Subsidiary of the Borrower, and (iii) this Credit Agreement and the other
Credit Documents.
8.13 No Other Negative Pledges.
No Credit Party will, nor will it permit its Subsidiaries to, enter
into, assume or become subject to any agreement prohibiting or otherwise
restricting the creation or assumption of any Lien upon its properties or
assets, whether now owned or hereafter acquired, or requiring the grant of any
security for such obligation if security is given for some other obligation.
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SECTION 9
EVENTS OF DEFAULT
9.1 Events of Default.
An Event of Default shall exist upon the occurrence of any of the
following specified events (each an "Event of Default"):
(a) Payment. Any Credit Party shall default in the payment
(i) when due of any principal of any of the Loans or any reimbursement
obligation arising from drawings under Letters of Credit or (ii)
within three Business Days of when due of any interest on the Loans or
any fees or other amounts owing hereunder, under any of the other
Credit Documents or in connection herewith.
(b) Representations. Any representation, warranty or
statement made or deemed to be made by any Credit Party herein, in any
of the other Credit Documents, or in any statement or certificate
delivered or required to be delivered pursuant hereto or thereto shall
prove untrue in any material respect on the date as of which it was
made or deemed to have been made.
(c) Covenants. Any Credit Party shall:
(i) default in the due performance or observance of
any term, covenant or agreement contained in Sections 7.2,
7.11, 7.12, or 8.1 through 8.13 inclusive; or
(ii) default in the due performance or observance by
it of any term, covenant or agreement contained in Sections
7.1 (other than Section 7.1(c)) and such default shall
continue unremedied for a period of ten days after notice
thereof is given by an Agent; or
(iii) default in the due performance or observance
by it of any term, covenant or agreement contained in Section
7.1(c) and such default shall continue unremedied for a
period of two Business Days after notice thereof is given by
an Agent; or
(iv) default in the due performance or observance by
it of any term, covenant or agreement (other than those
referred to in subsections (a), (b) or (c)(i), (ii) or (iii)
of this Section 9.1) contained in this Credit Agreement and
such default shall continue unremedied for a period of at
least 30 days after the earlier
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of a Responsible Officer becoming aware of such default or
notice thereof given by an Agent.
(d) Other Credit Documents. (i) Any Credit Party shall
default in the due performance or observance of any term, covenant or
agreement in any of the other Credit Documents and such default shall
continue unremedied for a period of at least 30 days after the earlier
of a Responsible Officer becoming aware of such default or notice
thereof given by the Agent, or (ii) any Credit Document shall fail to
be in full force and effect or any Credit Party shall so assert or any
Credit Document shall fail to give the Agents and/or the Lenders the
security interests, liens, rights, powers and privileges purported to
be created thereby.
(e) Guaranties. The guaranty given by the Credit Parties
hereunder or by any Additional Credit Party hereafter or any provision
thereof shall cease to be in full force and effect, or any guarantor
thereunder or any Person acting by or on behalf of such guarantor
shall deny or disaffirm such Guarantor's obligations under such
guaranty.
(f) Bankruptcy, etc. The occurrence of any of the following
with respect to the Borrower or any of its Subsidiaries (i) a court or
governmental agency having jurisdiction in the premises shall enter a
decree or order for relief in respect of the Borrower or any of its
Subsidiaries in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or appoint
a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of the Borrower or any of its Subsidiaries or for any
substantial part of its property or ordering the winding up or
liquidation of its affairs; or (ii) an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or
hereafter in effect is commenced against the Borrower or any of its
Subsidiaries and such petition remains unstayed and in effect for a
period of 60 consecutive days; or (iii) the Borrower or any of its
Subsidiaries shall commence a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in
effect, or consent to the entry of an order for relief in an
involuntary case under any such law, or consent to the appointment or
taking possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official of such Person or any
substantial part of its property or make any general assignment for
the benefit of creditors; or (iv) the Borrower or any of its
Subsidiaries shall admit in writing its inability to pay its debts
generally as they become due or any action shall be taken by such
Person in furtherance of any of the aforesaid purposes.
(g) Defaults under Other Agreements. With respect to any
Indebtedness (other than Indebtedness outstanding under this Credit
Agreement) of the Borrower or any of its Subsidiaries in an aggregate
principal amount in excess of $2,000,000, including, without
limitation, the Senior Notes or the Subordinated Debt (i) a Credit
Party shall (A) default in any payment (beyond the applicable grace
period with respect thereto, if any)
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with respect to any such Indebtedness, or (B) default (after giving
effect to any applicable grace period) in the observance or
performance relating to such Indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto, or
any other event or condition shall occur or condition exist, the
effect of which default or other event or condition is to cause, or
permit, the holder or holders of such Indebtedness (or trustee or
agent on behalf of such holders) to cause (determined without regard
to whether any notice or lapse of time is required) any such
Indebtedness to become due prior to its stated maturity; or (ii) any
such Indebtedness shall be declared due and payable, or required to be
prepaid other than by a regularly scheduled required prepayment prior
to the stated maturity thereof; or (iii) any such Indebtedness shall
mature and remain unpaid.
(h) Judgments. One or more judgments, orders, or decrees
shall be entered against any one or more of the Credit Parties and its
Subsidiaries involving a liability of $1,000,000 or more, in the
aggregate, (to the extent not paid or covered by insurance provided by
a carrier who has acknowledged coverage) and such judgments, orders or
decrees (i) are the subject of any enforcement proceeding commenced by
any creditor or (ii) shall continue unsatisfied, undischarged and
unstayed for a period ending on the first to occur of (A) the last day
on which such judgment, order or decree becomes final and unappealable
or (B) 60 days.
(i) ERISA. The occurrence of any of the following events or
conditions: (A) any "accumulated funding deficiency," as such term is
defined in Section 302 of ERISA and Section 412 of the Code, whether
or not waived, shall exist with respect to any Plan, or any lien shall
arise on the assets of the Borrower or any of its Subsidiaries or any
ERISA Affiliate in favor of the PBGC or a Plan; (B) a Termination
Event shall occur with respect to a Single Employer Plan, which is, in
the reasonable opinion of the Administrative Agent, likely to result
in the termination of such Plan for purposes of Title IV of ERISA; (C)
a Termination Event shall occur with respect to a Multiemployer Plan
or Multiple Employer Plan, which is, in the reasonable opinion of the
Administrative Agent, likely to result in (i) the termination of such
Plan for purposes of Title IV of ERISA, or (ii) the Borrower or any of
its Subsidiaries or any ERISA Affiliate incurring any liability in
connection with a withdrawal from, reorganization of (within the
meaning of Section 4241 of ERISA), or insolvency (within the meaning
of Section 4245 of ERISA) of such Plan; or (D) any prohibited
transaction (within the meaning of Section 406 of ERISA or Section
4975 of the Code) or breach of fiduciary responsibility shall occur
which may subject the Borrower or any of its Subsidiaries or any ERISA
Affiliate to any liability under Sections 406, 409, 502(i), or 502(l)
of ERISA or Section 4975 of the Code, or under any agreement or other
instrument pursuant to which the Borrower or any of its Subsidiaries
or any ERISA Affiliate has agreed or is required to indemnify any
person against any such liability.
(j) Ownership. There shall occur a Change of Control.
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(k) Subordinated Debt. (i) Any Governmental Authority with
applicable jurisdiction determines that the Lenders are not holders of
Senior Indebtedness (as defined in the documentation evidencing the
Subordinated Debt) or Senior Debt (as defined in the Subordinated
Secured Note) or (ii) the subordination provisions creating the
Subordinated Debt or the Subordinated Secured Note shall, in whole or
in part, terminate, cease to be effective or cease to be legally
valid, binding and enforceable as to any holder of the Subordinated
Debt or the Subordinated Secured Note.
(l) Borrowing Base Assets. The sum of the amount of Revolving
Loans outstanding plus LOC Obligations outstanding, as of the date of
the Borrowing Base Report, shall exceed the Borrowing Base Assets, as
determined on two consecutive Borrowing Base Reports delivered by the
Borrower.
9.2 Acceleration; Remedies.
Upon the occurrence of an Event of Default, and at any time thereafter
unless and until such Event of Default has been waived in writing by the
Required Lenders (or the Lenders as may be required hereunder), the
Administrative Agent shall, (x) upon the request and direction of the Required
Lenders or (y) on the day after an Event of Default has occurred and been
continuing for 90 days, unless otherwise consented to by all Lenders, by
written notice to the Borrower, take the following actions without prejudice to
the rights of the Agents or any Lender to enforce its claims against the Credit
Parties, except as otherwise specifically provided for herein:
(a) Termination of Commitments. Declare the Commitments
terminated whereupon the Commitments shall be immediately terminated.
(b) Acceleration of Loans. Declare the unpaid principal of
and any accrued interest in respect of all Loans, any reimbursement
obligations arising from drawings under Letters of Credit and any and
all other indebtedness or obligations of any and every kind owing by a
Credit Party to any of the Lenders hereunder to be due whereupon the
same shall be immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by
the Credit Parties.
(c) Cash Collateral. Direct the Borrower to pay (and the
Borrower agrees that upon receipt of such notice, or upon the
occurrence of an Event of Default under Section 9.1(f), they will
immediately pay) to the Administrative Agent additional cash, to be
held by the Administrative Agent, for the benefit of the Lenders, in a
cash collateral account as additional security for the LOC Obligations
in respect of subsequent drawings under all then outstanding Letters
of Credit in an amount equal to the maximum aggregate amount which may
be drawn under all Letters of Credits then outstanding.
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(d) Enforcement of Rights. Enforce any and all rights and
interests created and existing under the Credit Documents, including,
without limitation, all rights and remedies existing under the
Collateral Documents, all rights and remedies against a Guarantor and
all rights of set-off.
Notwithstanding the foregoing, if an Event of Default specified in Section
9.1(f) shall occur, then the Commitments shall automatically terminate and all
Loans, all reimbursement obligations under Letters of Credit, all accrued
interest in respect thereof, all accrued and unpaid fees and other indebtedness
or obligations owing to the Lenders hereunder shall immediately become due and
payable without the giving of any notice or other action by the Agents or the
Lenders, which notice or other action is expressly waived by the Credit
Parties.
Notwithstanding the fact that enforcement powers reside primarily with the
Administrative Agent, each Lender has, to the extent permitted by law, a
separate right of payment and shall be considered a separate "creditor" holding
a separate "claim" within the meaning of Section 101(5) of the Bankruptcy Code
or any other insolvency statute.
9.3 Allocation of Payments After Event of Default.
Notwithstanding any other provisions of this Credit Agreement, after
the occurrence and during the continuance of an Event of Default, all amounts
collected or received by an Agent or any Lender on account of amounts
outstanding under any of the Credit Documents or in respect of the Collateral
shall be paid over or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket costs
and expenses (including without limitation reasonable attorneys' fees)
of the Agents in connection with enforcing the rights of the Lenders
under the Credit Documents and any protective advances made by the
Agents with respect to the Collateral under or pursuant to the terms
of the Collateral Documents;
SECOND, to payment of any fees owed to an Agent or a Issuing
Lender;
THIRD, to the payment of all reasonable out-of-pocket costs
and expenses, (including, without limitation, reasonable attorneys'
fees) of each of the Lenders in connection with enforcing its rights
under the Credit Documents;
FOURTH, to the payment of all accrued fees and interest
payable to the Lenders hereunder;
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FIFTH, to the payment of the outstanding principal amount of
the Loans and unreimbursed drawings under Letters of Credit, to the
payment or cash collateralization of the outstanding LOC Obligations,
pro rata as set forth below;
SIXTH, to any principal amounts outstanding under Hedging
Agreements, pro rata, as set forth below;
SEVENTH, to all other obligations which shall have become due
and payable under the Credit Documents and not repaid pursuant to
clauses "FIRST" through "SIXTH" above; and
EIGHTH, to the payment of the surplus, if any, to whoever may
be lawfully entitled to receive such surplus.
In carrying out the foregoing, (a) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; (b) each of the Lenders shall receive an amount equal to
its pro rata share (based on the proportion that the then outstanding Loans,
LOC Obligations and obligations under Hedging Agreements held by such Lender
bears to the aggregate then outstanding Loans, LOC Obligations and obligations
under Hedging Agreements) of amounts available to be applied pursuant to
clauses "THIRD", "FOURTH," "FIFTH," "SIXTH" and "SEVENTH" above; and (c) to the
extent that any amounts available for distribution pursuant to clause "FIFTH"
above are attributable to the issued but undrawn amount of outstanding Letters
of Credit, such amounts shall be held by the Collateral Agent in a cash
collateral account and applied (x) first, to reimburse the Issuing Lender from
time to time for any drawings under such Letters of Credit and (y) then,
following the expiration of all Letters of Credit, to all other obligations of
the types described in clauses "FIFTH," "SIXTH" and "SEVENTH" above in the
manner provided in this Section 9.3.
SECTION 10
AGENCY PROVISIONS
10.1 Appointment.
Each Lender hereby designates and appoints NBD Bank as Administrative
Agent and Collateral Agent and NationsBank, N.A. as Documentation Agent of such
Lender to act as specified herein and the other Credit Documents, and each such
Lender hereby authorizes the Agents, as the agents for such Lender, to take
such action on its behalf under the provisions of this Credit Agreement and the
other Credit Documents and to exercise such powers and perform such duties as
are expressly delegated by the terms hereof and of the other Credit Documents,
together with such other powers as are reasonably incidental thereto.
Notwithstanding any
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provision to the contrary elsewhere herein and in the other Credit Documents,
the Agents shall not have any duties or responsibilities, except those
expressly set forth herein and therein, or any fiduciary relationship with any
Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Credit Agreement or any of
the other Credit Documents, or shall otherwise exist against the Agents. The
provisions of this Section are solely for the benefit of the Agents and the
Lenders and none of the Credit Parties shall have any rights as a third party
beneficiary of the provisions hereof. In performing its functions and duties
under this Credit Agreement and the other Credit Documents, each Agent shall
act solely as an agent of the Lenders and does not assume and shall not be
deemed to have assumed any obligation or relationship of agency or trust with
or for any Credit Party.
10.2 Delegation of Duties.
An Agent may execute any of its duties hereunder or under the other
Credit Documents by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
An Agent shall not be responsible for the negligence or misconduct of any
agents or attorneys-in-fact selected by it with reasonable care.
10.3 Exculpatory Provisions.
Neither the Agents nor any of their officers, directors, employees,
agents, attorneys-in-fact or affiliates shall be liable for any action lawfully
taken or omitted to be taken by it or such Person under or in connection
herewith or in connection with any of the other Credit Documents (except for
its or such Person's own gross negligence or willful misconduct) or responsible
in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by any of the Credit Parties contained
herein or in any of the other Credit Documents or in any certificate, report,
document, financial statement or other written or oral statement referred to or
provided for in, or received by an Agent under or in connection herewith or in
connection with the other Credit Documents, or enforceability or sufficiency
therefor of any of the other Credit Documents, or for any failure of the
Borrower to perform its obligations hereunder or thereunder. The Agents shall
not be responsible to any Lender for the effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Credit Agreement, or any
of the other Credit Documents or for any representations, warranties, recitals
or statements made herein or therein or made by the Borrower or any Credit
Party in any written or oral statement or in any financial or other statements,
instruments, reports, certificates or any other documents in connection
herewith or therewith furnished or made by an Agent to the Lenders or by or on
behalf of the Credit Parties to the Agents or any Lender or be required to
ascertain or inquire as to the performance or observance of any of the terms,
conditions, provisions, covenants or agreements contained herein or therein or
as to the use of the proceeds of the Loans or the use of the Letters of Credit
or of the existence or possible existence of any Default or Event of Default or
to inspect the properties, books or records of the Credit Parties. The Agents
are not trustees for the Lenders and owe no fiduciary duty to the Lenders.
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10.4 Reliance on Communications.
The Agents shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to any of the Credit Parties, independent accountants and
other experts selected by the Agents with reasonable care). The Agents may deem
and treat the Lenders as the owner of its interests hereunder for all purposes
unless a written notice of assignment, negotiation or transfer thereof shall
have been filed with the Administrative Agent in accordance with Section
11.3(b). The Agents shall be fully justified in failing or refusing to take any
action under this Credit Agreement or under any of the other Credit Documents
unless it shall first receive such advice or concurrence of the Required
Lenders as it deems appropriate or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action.
The Agents shall in all cases be fully protected in acting, or in refraining
from acting, hereunder or under any of the other Credit Documents in accordance
with a request of the Required Lenders (or to the extent specifically provided
in Section 11.6, all the Lenders) and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders
(including their successors and assigns).
10.5 Notice of Default.
An Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default hereunder unless such Agent has
received notice from a Lender or a Credit Party referring to the Credit
Document, describing such Default or Event of Default and stating that such
notice is a "notice of default." In the event that the Administrative Agent
receives such a notice, the Administrative Agent shall give prompt notice
thereof to the Lenders. The Administrative Agent shall take such action with
respect to such Default or Event of Default as shall be reasonably directed by
the Required Lenders.
10.6 Non-Reliance on Agents and Other Lenders.
Each Lender expressly acknowledges that neither the Agents nor any of
their officers, directors, employees, agents, attorneys-in-fact or affiliates
has made any representations or warranties to it and that no act by the Agents
or any affiliate thereof hereinafter taken, including any review of the affairs
of any Credit Party, shall be deemed to constitute any representation or
warranty by the Agents to any Lender. Each Lender represents to the Agents 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 appraisal of and investigation into the business, assets, operations,
property, financial and other conditions,
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prospects and creditworthiness of the Credit Parties and made its own decision
to make its Loans hereunder and enter into this Credit Agreement. Each Lender
also represents that it will, independently and without reliance upon the
Agents 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 analysis,
appraisals and decisions in taking or not taking action under this Credit
Agreement, and to make such investigation as it deems necessary to inform
itself as to the business, assets, operations, property, financial and other
conditions, prospects and creditworthiness of the Credit Parties. Except for
notices, reports and other documents expressly required to be furnished to the
Lenders by the Administrative Agent hereunder, the Agents shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, assets, property, financial or
other conditions, prospects or creditworthiness of the Credit Parties which may
come into the possession of the Agents or any of their officers, directors,
employees, agents, attorneys-in-fact or affiliates.
10.7 Indemnification.
The Lenders agree to indemnify each Agent in its capacity as such (to
the extent not reimbursed by the Borrower and without limiting the obligation
of the Borrower to do so), ratably according to their respective Commitments
(or if the Commitments have expired or been terminated, in accordance with the
respective principal amounts of outstanding Loans and Participation Interest of
the Lenders), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever which may at any time (including without limitation at
any time following payment in full of the Credit Party Obligations) be imposed
on, incurred by or asserted against an Agent in its capacity as such in any way
relating to or arising out of this Credit Agreement or the other Credit
Documents or any documents contemplated by or referred to herein or therein or
the transactions contemplated hereby or thereby or any action taken or omitted
by an Agent under or in connection with any of the foregoing; provided that no
Lender shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the gross negligence or willful
misconduct of an Agent. If any indemnity furnished to an Agent for any purpose
shall, in the opinion of such Agent, be insufficient or become impaired, such
Agent may call for additional indemnity and cease, or not commence, to do the
acts indemnified against until such additional indemnity is furnished. The
agreements in this Section shall survive the payment of the Credit Party
Obligations and all other amounts payable hereunder and under the other Credit
Documents.
10.8 Agents in Their Individual Capacity.
Each Agent and its affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Borrower or any other
Credit Party as though such Agent were not an Agent hereunder. With respect to
the Loans made and Letters of Credit issued and all obligations owing to it, an
Agent shall have the same rights and powers under this Credit
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Agreement as any Lender and may exercise the same as though they were not an
Agent, and the terms "Lender" and "Lenders" shall include each Agent in its
individual capacity.
10.9 Successor Agent.
Any Agent may, at any time, resign upon 20 days written notice to the
Lenders. Upon any such resignation, the Required Lenders shall have the right
to appoint a successor Agent. If no successor Agent shall have been so
appointed by the Required Lenders, and shall have accepted such appointment,
within 45 days after the notice of resignation, then the retiring Agent shall
select a successor Agent provided such successor is a Lender hereunder or a
commercial bank organized under the laws of the United States of America or of
any State thereof and has a combined capital and surplus of at least
$400,000,000. Upon the acceptance of any appointment as an Agent hereunder by a
successor, such successor Agent shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring Agent, and
the retiring Agent shall be discharged from its duties and obligations as an
Agent, as appropriate, under this Credit Agreement and the other Credit
Documents and the provisions of this Section 10.9 shall inure to its benefit as
to any actions taken or omitted to be taken by it while it was an Agent under
this Credit Agreement.
SECTION 11
MISCELLANEOUS
11.1 Notices.
Except as otherwise expressly provided herein, all notices and other
communications shall have been duly given and shall be effective (a) when
delivered, (b) when transmitted via telecopy (or other facsimile device) to the
number set out below, (c) the Business Day following the day on which the same
has been delivered prepaid to a reputable national overnight air courier
service, or (d) the third Business Day following the day on which the same is
sent by certified or registered mail, postage prepaid, in each case to the
respective parties at the address or telecopy numbers set forth on Schedule
11.1, or at such other address as such party may specify by written notice to
the other parties hereto.
11.2 Right of Set-Off.
In addition to any rights now or hereafter granted under applicable
law or otherwise, and not by way of limitation of any such rights, upon the
occurrence of an Event of Default and the commencement of remedies described in
Section 9.2, each Lender is authorized at any time and from time to time,
without presentment, demand, protest or other notice of any kind (all of which
rights being hereby expressly waived), to set-off and to appropriate and apply
any and all deposits (general or special) and any other indebtedness at any
time held or owing by such
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Lender (including, without limitation, branches, agencies or Affiliates of such
Lender wherever located) to or for the credit or the account of any Credit
Party against obligations and liabilities of such Credit Party to the Lenders
hereunder, under the Notes, the other Credit Documents or otherwise,
irrespective of whether the Administrative Agent or the Lenders shall have made
any demand hereunder and although such obligations, liabilities or claims, or
any of them, may be contingent or unmatured, and any such set-off shall be
deemed to have been made immediately upon the occurrence of an Event of Default
even though such charge is made or entered on the books of such Lender
subsequent thereto. The Credit Parties hereby agree that any Person purchasing
a participation in the Loans and Commitments hereunder pursuant to Section
11.3(c) or 3.8 may exercise all rights of set-off with respect to its
participation interest as fully as if such Person were a Lender hereunder.
11.3 Benefit of Agreement.
(a) Generally. This Credit Agreement shall be binding upon
and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto; provided that none of
the Credit Parties may assign and transfer any of its interests
(except as permitted by Section 8.4 or 8.5) without the prior written
consent of the Lenders; and provided further that the rights of each
Lender to transfer, assign or grant participations in its rights
and/or obligations hereunder shall be limited as set forth below in
subsections (b) and (c) of this Section 11.3. Notwithstanding the
above (including anything set forth in subsections (b) and (c) of this
Section 11.3), nothing herein shall restrict, prevent or prohibit any
Lender from (A) pledging its Loans hereunder to a Federal Reserve Bank
in support of borrowings made by such Lender from such Federal Reserve
Bank, or (B) granting assignments or participations in such Lender's
Loans and/or Commitments hereunder to its parent company and/or to any
Affiliate of such Lender or to any existing Lender or Affiliate
thereof.
(b) Assignments. Each Lender may, with the prior written
consent of the Borrower and the Agents (provided that no consent of
the Borrower shall be required during the existence and continuation
of an Event of Default), which consent shall not be unreasonably
withheld or delayed, assign all or a portion of its rights and
obligations hereunder pursuant to an assignment agreement
substantially in the form of Exhibit 11.3 to one or more Eligible
Assignees; provided that (i) any such assignment shall be in a minimum
aggregate amount of $5,000,000 of the Commitments and in integral
multiples of $1,000,000 above such amount (or the remaining amount of
Commitments held by such Lender), (ii) each such assignment shall be
of a constant, not varying, percentage of all of the assigning
Lender's rights and obligations under the Commitment being assigned
and (iii) an Agent may not, in the aggregate, (unless there exists an
Event of Default) assign more than 50% of its original Commitment as
of the Closing Date. Any assignment hereunder shall be effective upon
satisfaction of the conditions set forth above and delivery to the
Administrative Agent of a duly executed assignment agreement
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together with a transfer fee of $3,500 payable to the Administrative
Agent for its own account. Upon the effectiveness of any such
assignment, the assignee shall become a "Lender" for all purposes of
this Credit Agreement and the other Credit Documents and, to the
extent of such assignment, the assigning Lender shall be relieved of
its obligations hereunder to the extent of the Loans and Commitment
components being assigned. Along such lines the Borrower agrees that
upon notice of any such assignment and surrender of the appropriate
Note or Notes, it will promptly provide to the assigning Lender and to
the assignee separate promissory notes in the amount of their
respective interests substantially in the form of the original Note or
Notes (but with notation thereon that it is given in substitution for
and replacement of the original Note or Notes or any replacement notes
thereof).
By executing and delivering an assignment agreement in accordance with
this Section 11.3(b), 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 the
assignee warrants that it is an Eligible Assignee; (ii) except as set
forth in clause (i) above, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in
connection with this Credit Agreement, any of the other Credit
Documents or any other instrument or document furnished pursuant
hereto or thereto, or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Credit
Agreement, any of the other Credit Documents or any other instrument
or document furnished pursuant hereto or thereto or the financial
condition of any Credit Party or the performance or observance by any
Credit Party of any of its obligations under this Credit Agreement,
any of the other Credit Documents or any other instrument or document
furnished pursuant hereto or thereto; (iii) such assignee represents
and warrants that it is legally authorized to enter into such
assignment agreement; (iv) such assignee confirms that it has received
a copy of this Credit Agreement, the other Credit Documents and such
other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into such assignment
agreement; (v) such assignee will independently and without reliance
upon the Agents, 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 Credit Agreement and the other Credit
Documents; (vi) such assignee appoints and authorizes the Agents to
take such action on its behalf and to exercise such powers under this
Credit Agreement or any other Credit Document as are delegated to the
Agents by the terms hereof or thereof, 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 Credit Agreement and the other Credit
Documents are required to be performed by it as a Lender.
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(c) Participations. Each Lender may sell, transfer, grant or
assign participations in all or any part of such Lender's interests
and obligations hereunder; provided that (i) such selling Lender shall
remain a "Lender" for all purposes under this Credit Agreement (such
selling Lender's obligations under the Credit Documents remaining
unchanged) and the participant shall not constitute a Lender
hereunder, (ii) no such participant shall have, or be granted, rights
to approve any amendment or waiver relating to this Credit Agreement
or the other Credit Documents except to the extent any such amendment
or waiver would (A) reduce the principal of or rate of interest on or
fees in respect of any Loans in which the participant is participating
or increase any Commitments with respect thereto, (B) postpone the
date fixed for any payment of principal (including the extension of
the final maturity of any Loan or the date of any mandatory
prepayment), interest or fees in which the participant is
participating, or (C) release all or substantially all of the
collateral or guaranties (except as expressly provided in the Credit
Documents) supporting any of the Loans or Commitments in which the
participant is participating, (iii) sub-participations by the
participant (except to an Affiliate, parent company or Affiliate of a
parent company of the participant) shall be prohibited and (iv) any
such participations shall be in a minimum aggregate amount of
$5,000,000 of the Commitments and in integral multiples of $1,000,000
in excess thereof. In the case of any such participation, the
participant shall not have any rights under this Credit Agreement or
the other Credit Documents (the participant's rights against the
selling Lender in respect of such participation to be those set forth
in the participation agreement with such Lender creating such
participation) and all amounts payable by the Borrower hereunder shall
be determined as if such Lender had not sold such participation;
provided, however, that such participant shall be entitled to receive
additional amounts under Sections 3.9, 3.12, 3.13 and 3.14 to the same
extent that the Lender from which such participant acquired its
participation would be entitled to the benefit of such cost protection
provisions.
11.4 No Waiver; Remedies Cumulative.
No failure or delay on the part of an Agent or any Lender in
exercising any right, power or privilege hereunder or under any other Credit
Document and no course of dealing between the Borrower or any Credit Party and
the Agents or any Lender shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, power or privilege hereunder or under
any other Credit Document preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder or thereunder. The
rights and remedies provided herein are cumulative and not exclusive of any
rights or remedies which the Agents or any Lender would otherwise have. No
notice to or demand on any Credit Party in any case shall entitle any Credit
Party to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Agents or the Lenders
to any other or further action in any circumstances without notice or demand.
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11.5 Payment of Expenses; Indemnification.
The Credit Parties agree to: (a) pay all reasonable out-of-pocket
costs and expenses of (i) the Documentation Agent in connection with (A) the
negotiation, preparation, execution and delivery and administration of this
Credit Agreement and the other Credit Documents and the documents and
instruments referred to therein (including, without limitation, the reasonable
fees and expenses of Xxxxx & Xxx Xxxxx, special counsel to the Documentation
Agent and the fees and expenses of counsel for the Documentation Agent in
connection with collateral issues), and (B) any amendment, waiver or consent
relating hereto and thereto including, but not limited to, any such amendments,
waivers or consents resulting from or related to any work-out, renegotiation or
restructure relating to the performance by the Credit Parties under this Credit
Agreement and (ii) the Agents and the Lenders in connection with (A)
enforcement of the Credit Documents and the documents and instruments referred
to therein, including, without limitation, in connection with any such
enforcement, the reasonable fees and disbursements of counsel for the Agents
and each of the Lenders, and (B) any bankruptcy or insolvency proceeding of a
Credit Party of any of its Subsidiaries and (b) indemnify each Agent, and each
Lender, its officers, directors, employees, representatives and agents from and
hold each of them harmless against any and all losses, liabilities, claims,
damages or expenses incurred by any of them as a result of, or arising out of,
or in any way related to, or by reason of, any investigation, litigation or
other proceeding (whether or not any Agent, or Lender is a party thereto)
related to (i) the entering into and/or performance of any Credit Document or
the use of proceeds of any Loans (including other extensions of credit)
hereunder or the consummation of any other transactions contemplated in any
Credit Document, including, without limitation, the reasonable fees and
disbursements of counsel incurred in connection with any such investigation,
litigation or other proceeding (but excluding any such losses, liabilities,
claims, damages or expenses to the extent incurred by reason of gross
negligence or willful misconduct on the part of the Person to be indemnified),
(ii) any Environmental Claim and (iii) any claims for Non-Excluded Taxes.
11.6 Amendments, Waivers and Consents.
Neither this Credit Agreement nor any other Credit Document nor any of
the terms hereof or thereof may be amended, changed, waived, discharged or
terminated unless such amendment, change, waiver, discharge or termination is
in writing and signed by the Required Lenders and the then Credit Parties;
provided that no such amendment, change, waiver, discharge or termination shall
without the consent of each Lender:
(a) extend the Revolving Loan Maturity Date or postpone or
extend the time for any payment or prepayment of principal;
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(b) reduce the rate or extend the time of payment of interest
(other than as a result of waiving the applicability of any
post-default increase in interest rates) thereon or fees hereunder;
(c) reduce or waive the principal amount of any Loan;
(d) increase or extend the Commitment of a Lender or the
total Commitments over the amount thereof in effect (it being
understood and agreed that a waiver of any Default or Event of Default
or a waiver of any mandatory reduction in the Commitments shall not
constitute a change in the terms of any Commitment of any Lender);
(e) release all or substantially all of the Collateral
securing the Credit Party Obligations hereunder (provided that the
Collateral Agent may, without consent from any other Lender, release
any Collateral that is sold or transferred by a Credit Party in
conformance with Section 8.5);
(f) release the Borrower from its obligations or release all
or substantially all of the other Credit Parties from their respective
obligations under the Credit Documents;
(g) amend, modify or waive any provision of this Section or
Section 3.4(a), 3.4(b)(i), 3.7, 3.8, 3.9, 3.10, 3.11, 3.12, 3.13,
3.14, 9.1(a), 9.1(l), 11.2, 11.3 or 11.5;
(h) reduce any percentage specified in, or otherwise modify,
the definition of Required Lenders; or
(i) consent to the assignment or transfer by the Borrower of
any of its rights and obligations under (or in respect of) the Credit
Documents.
Notwithstanding the fact that the consent of all the Lenders is required in
certain circumstances as set forth above, (x) each Lender is entitled to vote
as such Lender sees fit on any reorganization plan that affects the Loans or
the Letters of Credit, and each Lender acknowledges that the provisions of
Section 1126(c) of the Bankruptcy Code supersedes the unanimous consent
provisions set forth herein and (y) the Required Lenders may consent to allow a
Credit Party to use cash collateral in the context of a bankruptcy or
insolvency proceeding.
11.7 Counterparts.
This Credit Agreement may be executed in any number of counterparts,
each of which where so executed and delivered shall be an original, but all of
which shall constitute one and the same instrument. It shall not be necessary
in making proof of this Credit Agreement to produce or account for more than
one such counterpart. Delivery of executed counterparts by telecopy
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shall be as effective as an original and shall constitute a representation that
an original will be delivered.
11.8 Headings.
The headings of the sections and subsections hereof are provided for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Credit Agreement.
11.9 Defaulting Lender.
Each Lender understands and agrees that if such Lender is a Defaulting
Lender then notwithstanding the provisions of Section 11.6 it shall not be
entitled to vote on any matter requiring the consent of the Required Lenders or
to object to any matter requiring the consent of all the Lenders; provided,
however, that all other benefits and obligations under the Credit Documents
shall apply to such Defaulting Lender.
11.10 Survival of Indemnification and Representations and
Warranties.
All indemnities set forth herein and all representations and
warranties made herein shall survive the execution and delivery of this Credit
Agreement, the making of the Loans, the issuance of the Letters of Credit and
the repayment of the Loans, LOC Obligations and other obligations and the
termination of the Commitments hereunder.
11.11 Governing Law; Jurisdiction.
(a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL
BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK. Any legal action or proceeding with
respect to this Agreement or any other Credit Document may be brought
in the courts of the State of Michigan or of the United States for the
Eastern District of Michigan, and, by execution and delivery of this
Credit Agreement, each Credit Party hereby irrevocably accepts for
itself and in respect of its property, generally and unconditionally,
the jurisdiction of such courts. Each Credit Party further irrevocably
consents to the service of process out of any of the aforementioned
courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to it at the
address for notices pursuant to Section 11.1, such service to become
effective 15 days after such mailing. Nothing herein shall affect the
right of a Lender to serve process in any other manner permitted by
law or to commence legal proceedings or to otherwise proceed against a
Credit Party in any other jurisdiction. Each Credit Party agrees
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that a final judgment in any 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; provided that nothing in this
Section 11.11(a) is intended to impair a Credit Party's right under
applicable law to appeal or seek a stay of any judgment.
(b) Each Credit Party hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of
the aforesaid actions or proceedings arising out of or in connection
with this Agreement or any other Credit Document brought in the courts
referred to in subsection (a) hereof and hereby further irrevocably
waives and agrees not to plead or claim in any such court that any
such action or proceeding brought in any such court has been brought
in an inconvenient forum.
11.12 Waiver of Jury Trial.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF
OR RELATING TO THIS CREDIT AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
11.13 Time.
All references to time herein shall be references to Eastern Standard
Time or Eastern Daylight time, as the case may be, unless specified otherwise.
11.14 Severability.
If any provision of any of the Credit Documents is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
11.15 Further Assurances.
The Credit Parties agree, upon the request of the Agents, to promptly
take such actions, as reasonably requested, as is necessary to carry out the
intent of this Credit Agreement and the other Credit Documents, including, but
not limited to, such actions as are necessary to ensure that the Lenders have a
perfected security interest in the Collateral subject to no Liens other than
Permitted Liens.
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11.16 Confidentiality.
Each Lender agrees that it will use its reasonable best efforts to
keep confidential and to cause any representative designated under Section 7.12
to keep confidential any non-public information from time to time supplied to
it under any Credit Document; provided, however, that nothing herein shall
prevent the disclosure of any such information to (a) the extent a Lender in
good faith believes such disclosure is required by Requirement of Law, (b)
counsel for a Lender or to its accountants, (c) bank examiners or auditors or
comparable Persons, (d) any affiliate of a Lender, (e) any other Lender, or any
assignee, transferee or participant, or any potential assignee, transferee or
participant, of all or any portion of any Lender's rights under this Agreement
who is notified of the confidential nature of the information or (f) any other
Person in connection with any litigation to which any one or more of the
Lenders is a party; and provided further that no Lender shall have any
obligation under this Section 11.16 to the extent any such information becomes
available on a non-confidential basis from a source other than a Credit Party
or that any information becomes publicly available other than by a breach of
this Section 11.16.
11.17 Entirety.
This Credit Agreement together with the other Credit Documents
represent the entire agreement of the parties hereto and thereto, and supersede
all prior agreements and understandings, oral or written, if any, including any
commitment letters or correspondence relating to the Credit Documents or the
transactions contemplated herein and therein.
11.18 Binding Effect.
This Credit Agreement shall become effective at such time when all of
the conditions set forth in Section 5.1 have been satisfied or waived by the
Lenders and it shall have been executed by the Borrower, the Guarantors and the
Agents, and the Agents shall have received copies hereof (telefaxed or
otherwise) which, when taken together, bear the signatures of each Lender, and
thereafter this Credit Agreement shall be binding upon and inure to the benefit
of the Borrower, the Guarantors, the Agents and each Lender and their
respective successors and assigns.
11.19 Release of Collateral.
Subsequent to the date that the Overadvance is no longer available
(whether as a result of the Overadvance being requested and the 90 day period
thereafter having occurred or the time period available to use the Overadvance
has expired), the Lenders agree, upon the request and at the expense of the
Borrower, and so long as (a) the sum of the aggregate amount of Revolving Loans
outstanding plus LOC Obligations outstanding exceeds the Borrowing Base Assets
and (b) no Default or Event of Default exists and is continuing, to take such
action as is necessary to release any real property Collateral or Collateral
consisting of equipment. The Lenders hereby
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authorize the Collateral Agent to execute and deliver such documentation or to
take such other action as is necessary to give effect to this Section 11.19.
11.20 Consent to M.O.U.
Notwithstanding anything to the contrary contained in this Agreement,
each of the Credit Parties may execute, deliver, and perform its obligations
under the M.O.U. including, without limitation, the execution, delivery, and
performance of the definitive documents contemplated thereby; provided that
such definitive documents will be submitted to each Lender prior to the
execution of any such document (or, if such prior submission is not
practicable, contemporaneously with the execution of such document) for
confirmation by such Lender that such definitive document conforms with the
M.O.U., such confirmation not to be unreasonably withheld.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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Each of the parties hereto has caused a counterpart of this Credit
Agreement to be duly executed and delivered as of the date first above written.
BORROWER:
XXXXXXX SPORTS INC.,
a Delaware corporation
By: /s/ Xxxxx Xxxxxxxxxx
-----------------------------
Name: Xxxxx Xxxxxxxxxx
---------------------------
Title: Executive Vice President
--------------------------
GUARANTORS:
XXXXXXX, INC.,
a Illinois corporation
By: /s/ Xxxxx Xxxxxxxxxx
-----------------------------
Name: Xxxxx Xxxxxxxxxx
---------------------------
Title: Vice President
--------------------------
EQUILINK LICENSING CORPORATION,
a Delaware corporation
By: /s/ Xxxxx Xxxxxxxxxx
-----------------------------
Name: Xxxxx Xxxxxxxxxx
---------------------------
Title: Senior Vice President
--------------------------
RHC LICENSING CORPORATION,
a Delaware corporation
By: /s/ Xxxxx Xxxxxxxxxx
-----------------------------
Name: Xxxxx Xxxxxxxxxx
---------------------------
Title: Senior Vice President
--------------------------
RIDMARK CORPORATION,
a Delaware corporation
By: /s/ Xxxxx Xxxxxxxxxx
-----------------------------
Name: Xxxxx Xxxxxxxxxx
---------------------------
Title: Senior Vice President
--------------------------
ALL AMERICAN SPORTS CORPORATION,
a Delaware corporation
By: /s/ Xxxxx Xxxxxxxxxx
-----------------------------
Name: Xxxxx Xxxxxxxxxx
---------------------------
Title: Senior Vice President
--------------------------
VARSITY SPIRIT CORPORATION,
a Tennessee corporation
By: /s/ Xxxx X. Xxxxxxx
-----------------------------
Name: Xxxx X. Xxxxxxx
---------------------------
Title: Senior Vice President
--------------------------
CHEER ACQUISITION CORP.
a Tennessee corporation
By: /s/ Xxxxx Xxxxxxxxxx
-----------------------------
Name: Xxxxx Xxxxxxxxxx
---------------------------
Title: Vice President
--------------------------
VARSITY SPIRIT FASHIONS & SUPPLIES, INC.
a Minnesota corporation
By: /s/ Xxxx X. Xxxxxxx
-----------------------------
Name: Xxxx X. Xxxxxxx
---------------------------
Title: Senior Vice President
--------------------------
INTERNATIONAL LOGOS, INC.
a Tennessee corporation
By: /s/ Xxxx X. Xxxxxxx
-----------------------------
Name: Xxxx X. Xxxxxxx
---------------------------
Title: Senior Vice President
--------------------------
VARSITY/INTROPA TOURS, INC.
a Tennessee corporation
By: /s/ Xxxx X. Xxxxxxx
-----------------------------
Name: Xxxx X. Xxxxxxx
---------------------------
Title: Senior Vice President
--------------------------
VARSITY USA, INC.
a Tennessee corporation
By: /s/ Xxxx X. Xxxxxxx
-----------------------------
Name: Xxxx X. Xxxxxxx
---------------------------
Title: Senior Vice President
--------------------------
LENDERS:
NBD BANK
individually in its capacity as a
Lender and in its capacity as Administrative
Agent and Collateral Agent
By: /s/ Xxx X. Xxxx
-----------------------------
Name: Xxx X. Xxxx
---------------------------
Title: First Vice President
--------------------------
NATIONSBANK, N.A.,
individually in its capacity as a Lender
and in its capacity as Documentation Agent
By: /s/ Xxxxxxxx X. Xxxxx
-----------------------------
Name: Xxxxxxxx X. Xxxxx
---------------------------
Title: Vice President
--------------------------
