CREDIT AGREEMENT
dated as of
May 11, 1998
among
THE TOPPS COMPANY, INC.
The Lenders Party Hereto
and
THE CHASE MANHATTAN BANK,
as Agent
TABLE OF CONTENTS
Page No.
ARTICLE I ................................................................... 1
SECTION 1.01. Defined Terms. .................................. 1
SECTION 1.02. Classification of Loans and Borrowings. ........ 18
SECTION 1.03. Terms Generally. ............................... 18
SECTION 1.04. Accounting Terms; GAAP. ....................... 18
ARTICLE II .................................................................. 18
SECTION 2.01. Commitments. ................................... 18
SECTION 2.02. Loans and Borrowings. .......................... 19
SECTION 2.03. Requests for Borrowings. ....................... 19
SECTION 2.04. [This Section intentionally left blank.] ....... 20
SECTION 2.05. Letters of Credit. ............................. 20
SECTION 2.06. Funding of Borrowings. ......................... 24
SECTION 2.07. Interest Elections. ............................ 25
SECTION 2.08. Termination and Reduction of Commitments ... 26
SECTION 2.09. Repayment of Loans; Evidence of Debt. ......... 26
SECTION 2.10. Amortization of Term Loans. .................... 27
SECTION 2.11. Prepayment of Loans. ........................... 28
SECTION 2.12. Fees. .......................................... 29
SECTION 2.13. Interest. ...................................... 30
SECTION 2.14. Alternate Rate of Interest. .................... 31
SECTION 2.15. Increased Costs. ............................... 31
SECTION 2.16. Break Funding Payments. ........................ 32
SECTION 2.17. Taxes. ......................................... 33
SECTION 2.18. Payments Generally; Pro Rata Treatment;
Sharing of Set-offs. ........................... 34
SECTION 2.19. Mitigation Obligations; Replacement of Lenders.. 35
ARTICLE III ................................................................. 36
SECTION 3.01. Organization; Powers. .......................... 36
SECTION 3.02. Authorization; Enforceability. ................. 36
SECTION 3.03. Governmental Approvals; No Conflicts. .......... 36
SECTION 3.04. Financial Condition; No Material Adverse Change. 37
SECTION 3.05. Properties. .................................... 37
SECTION 3.06. Litigation and Environmental Matters. .......... 38
SECTION 3.07. Compliance with Laws and Agreements. ........... 38
SECTION 3.08. Investment and Holding Company Status. ......... 38
i
SECTION 3.09. Taxes. ......................................... 38
SECTION 3.10. ERISA. ......................................... 39
SECTION 3.11. Disclosure. .................................... 39
SECTION 3.12. Subsidiaries and Affiliates. ................... 39
SECTION 3.13. Insurance. ..................................... 39
SECTION 3.14. Labor Matters. ................................. 40
SECTION 3.15. Solvency. ...................................... 40
SECTION 3.16. No Default. .................................... 40
SECTION 3.17. Place of Business. ............................. 40
SECTION 3.18. Year 2000. ..................................... 40
SECTION 3.19. Federal Reserve Regulations. ................... 41
ARTICLE IV .................................................................. 41
SECTION 4.01. Effective Date. ................................ 41
SECTION 4.02. Each Credit Event. ............................. 43
ARTICLE V ................................................................... 44
SECTION 5.01. Financial Statements and Other Information. .... 44
SECTION 5.02. Notices of Material Events. .................... 46
SECTION 5.03. Information Regarding Collateral. .............. 46
SECTION 5.04. Existence; Conduct of Business. ................ 47
SECTION 5.05. Payment of Obligations. ........................ 48
SECTION 5.06. Maintenance of Properties. ..................... 48
SECTION 5.07. Insurance. ..................................... 48
SECTION 5.08. [This Section intentionally left blank.] ....... 49
SECTION 5.09. Books and Records; Inspection and Audit Rights.. 49
SECTION 5.10. Compliance with Laws. .......................... 49
SECTION 5.11. Notice of Discharge of Hazardous Material
or Environmental Complaint. .................... 49
SECTION 5.12. Environmental Compliance. ...................... 49
SECTION 5.13. Use of Proceeds and Letters of Credit. ......... 50
SECTION 5.14. Additional Subsidiaries. ....................... 50
SECTION 5.15. Further Assurances. ............................ 50
SECTION 5.16. Interest Rate Protection. ...................... 50
ARTICLE VI .................................................................. 51
SECTION 6.01. Indebtedness; Certain Equity Securities. ....... 51
SECTION 6.02. Liens. ......................................... 52
SECTION 6.03. Fundamental Changes. ........................... 53
SECTION 6.04. Investments, Loans, Advances,
Guarantees and Acquisitions. ................... 53
SECTION 6.05. Asset Sales. ................................... 54
SECTION 6.06. Hedging Agreements. ............................ 55
SECTION 6.07. Restricted Payments; Certain Payments
of Indebtedness. ............................... 55
SECTION 6.08. Transactions with Affiliates ................... 56
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SECTION 6.09. Restrictive Agreements. ........................ 56
SECTION 6.10. Amendment of Material Documents. ............... 57
SECTION 6.11. Limitations on Sales and Leasebacks. ........... 57
SECTION 6.12. Fiscal Year. ................................... 57
SECTION 6.13. Consolidated Leverage Ratio. ................... 57
SECTION 6.14. Consolidated Fixed Charge Ratio. ............... 57
SECTION 6.15. Consolidated Net Worth. ........................ 58
SECTION 6.16. Consolidated Net Loss. ......................... 58
SECTION 6.17. EBITDA. ........................................ 58
SECTION 6.18. Cumulative EBITDA. ............................. 58
SECTION 6.19. Capital Expenditures. .......................... 59
ARTICLE VII ................................................................. 59
SECTION 7.01. Events of Default. ............................. 59
ARTICLE VIII ................................................................ 61
ARTICLE IX .................................................................. 63
SECTION 9.01. Notices. ....................................... 63
SECTION 9.02. Waivers; Amendments. ........................... 64
SECTION 9.03. Expenses; Indemnity; Damage Waiver. ............ 65
SECTION 9.04. Successors and Assigns. ........................ 66
SECTION 9.05. Survival. ...................................... 68
SECTION 9.06. Counterparts; Integration; Effectiveness. ...... 69
SECTION 9.07. Severability. .................................. 69
SECTION 9.08. Right of Setoff. ............................... 69
SECTION 9.09. Governing Law; Jurisdiction; Consent
to Service of Process. ......................... 69
SECTION 9.10. WAIVER OF JURY TRIAL. .......................... 70
SECTION 9.11. Headings. ...................................... 70
SECTION 9.12. Confidentiality. ............................... 70
SECTION 9.13. Interest Rate Limitation. ...................... 71
SCHEDULES
Schedule 2.01 -- Commitments
Schedule 3.05 -- Real Property
Schedule 3.06 -- Disclosed Matters
Schedule 3.12 -- Subsidiaries
Schedule 3.13 -- Insurance
Schedule 5.04 -- Material License
Schedule 6.01 -- Existing Indebtedness
Schedule 6.02 -- Existing Liens
Schedule 6.04 -- Existing Investments
Schedule 6.09 -- Existing Restrictions
iii
EXHIBITS
Exhibit A -- Form of Assignment and Acceptance
Exhibit B-1 -- Form of Opinion of Borrower's Counsel
Exhibit B-2 -- Form of Opinion of Borrower's U.K. Counsel
Exhibit C -- Form of Perfection Certificate
Exhibit D -- Form of Pledge Agreement
Exhibit E -- Form of Trademark Security Agreement
Exhibit F -- Form of Compliance Certificate
Exhibit G -- Form of Topps SA Guaranty
iv
CREDIT AGREEMENT dated as of May 11, 1998,
among THE TOPPS COMPANY, INC., a Delaware
corporation (the "Borrower"), the LENDERS party hereto (the
"Lenders"), and THE CHASE MANHATTAN BANK, as Agent
(in such capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, the Borrower has requested that the Lenders make available to the
Borrower a term loan facility in the principal amount of $24,950,000, the
proceeds of which are to be used to refinance all amounts outstanding under the
Nationsbank Facility (as hereinafter defined) and a revolving credit facility of
up to $9,450,000, the proceeds of which are to be used as set forth herein; and
WHEREAS, the Lenders are willing to make such loans available to
the Borrower upon the terms and conditions set forth herein.
NOW THEREFORE, the Borrower, the Lenders and the Agent hereby
agree as follows:
ARTICLE I
Definitions
Section 1.01. Defined Terms. As used in this Agreement, the
following terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.
"Adjusted LIBO Rate" means, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/100 of 1%) equal to (a) the LIBO Rate for such
Interest Period multiplied by (b) the Statutory Reserve Rate.
"Administrative Questionnaire" means an Administrative
Questionnaire in a form supplied by the Agent.
"Affiliate" means, with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the Person specified.
"Agent" means The Chase Manhattan Bank, in its capacity as
administrative and collateral agent for the Lenders hereunder.
"Alternate Base Rate" means, for any day, a rate per annum equal
to the greatest of (a) the Prime Rate in effect on such day, (b) the Base CD
Rate in effect on such day plus 1% and (c) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1%. Any change in the Alternate Base Rate due to
a change in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate
shall be effective from and including the effective date of such change in the
Prime Rate, the Base CD Rate or the Federal Funds Effective Rate, respectively.
"Applicable Percentage" means, with respect to any Revolving
Lender, the percentage of the total Revolving Commitments represented by such
Lender's Revolving Commitment. If the Revolving Commitments have terminated or
expired, the Applicable Percentages shall be determined based upon the Revolving
Commitments most recently in effect, giving effect to any assignments.
"Applicable Rate" means, for any day (a) with respect to any
Eurodollar Loan, 2.75% per annum, or (b) with respect to the commitment fees
payable hereunder, 1/2 of 1% per annum.
"Assessment Rate" means, for any day, the annual assessment rate
in effect on such day that is payable by a member of the Bank Insurance Fund
classified as "well-capitalized" and within supervisory subgroup "B" (or a
comparable successor risk classification) within the meaning of 12 C.F.R.
Part 327 (or any successor provision) to the Federal Deposit Insurance
Corporation for insurance by such Corporation of time deposits made in dollars
at the offices of such member in the United States; provided that if, as a
result of any change in any law, rule or regulation, it is no longer possible to
determine the Assessment Rate as aforesaid, then the Assessment Rate shall be
such annual rate as shall be determined by the Agent to be representative of the
cost of such insurance to the Lenders.
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender and an assignee (with the consent of any party whose
consent is required by Section 9.04), and accepted by the Agent, in the form of
Exhibit A or any other form approved by the Agent.
"Bank of Scotland Debt" means the Indebtedness owing to Bank of
Scotland by Topps Europe Limited and Topps U.K. Limited pursuant to that certain
Multi Option Facilities Agreement, dated as of January 7, 1994 (as amended).
"Base CD Rate" means the sum of (a) the Three-Month Secondary CD
Rate multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.
"Board" means the Board of Governors of the Federal Reserve
System of the United States of America.
"Borrower" means The Topps Company, Inc., a Delaware corporation.
"Borrowing" means (a) Loans of the same Class and Type, made,
converted or continued on the same date and, in the case of Eurodollar Loans, as
to which a single Interest Period is in effect.
2
"Borrowing Request" means a request by the Borrower for a
Borrowing in accordance with Section 2.03.
"Business Day" means any day that is not a Saturday, Sunday or
other day on which commercial banks in New York City are authorized or required
by law to remain closed; provided that, when used in connection with a
Eurodollar Loan, the term "Business Day" shall also exclude any day on which
banks are not open for dealings in dollar deposits in the London interbank
market.
"Capital Expenditures" means, for any period, without duplication
(a) the additions to property, plant and equipment and other capital
expenditures of the Borrower and its consolidated Subsidiaries that are (or
would be) set forth in a consolidated statement of cash flows of the Borrower
for such period prepared in accordance with GAAP and (b) Capital Lease
Obligations incurred by the Borrower and its consolidated Subsidiaries during
such period, excluding, however, the amount of any Capital Expenditures paid for
with proceeds of casualty insurance as evidenced in writing and submitted to the
Agent.
"Capital Lease Obligations" of any Person means the obligations
of such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Capitalized Leases" means leases which constitute Capital Lease
Obligations.
"Change in Control" means (a) the acquisition of ownership,
directly or indirectly, beneficially or of record, by any Person or group
(within the meaning of the Securities Exchange Act of 1934 and the rules of the
Securities and Exchange Commission thereunder as in effect on the date hereof)
of shares representing more than 20% of the aggregate ordinary voting power
represented by the issued and outstanding capital stock of the Borrower; or (b)
occupation of a majority of the seats (other than vacant seats) on the board of
directors of the Borrower by Persons who were neither (i) nominated by the board
of directors of the Borrower nor (ii) appointed by directors so nominated.
"Change in Law" means (a) the adoption of any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after the date of this Agreement or (c) compliance by any Lender or
the Issuing Bank (or, for purposes of Section 2.15(b), by any lending office of
such Lender or by such Lender's or the Issuing Bank's holding company, if any)
with any request, guideline or directive (whether or not having the force of
law) of any Governmental Authority made or issued after the date of this
Agreement.
"Class", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are Revolving
Loans or Term Loans, and, when used in reference to any Commitment, refers to
whether such Commitment is a Revolving Commitment or Term Loan Commitment.
3
"Code" means the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral" means any and all "Collateral" and "Trademark
Collateral" as defined in any applicable Security Document.
"Commitment" means a Revolving Commitment or Term Loan
Commitment, or any combination thereof (as the context requires).
"Consolidated Fixed Charge Ratio" means, on any date, the ratio
of (i) the sum of Normalized EBITDA minus unfinanced Capital Expenditures to
(ii) current portion of long term debt (as per GAAP) plus interest expense (as
certified by a Financial Officer on a quarterly basis). For purposes of
calculating Consolidated Fixed Charge Ratio, Normalized EBITDA, unfinanced
Capital Expenditures and interest expense shall be measured for the four fiscal
quarter period ending on the date such ratio is being tested.
"Consolidated Leverage Ratio" means, on any date, the ratio of
(i) the sum of outstanding Consolidated Senior Liabilities plus Capitalized
Leases plus Standby Letters of Credit to (ii) Normalized EBITDA for the four
quarter period ending on such date.
"Consolidated Net Income" means, for any period of computation
thereof, the gross revenues from operations of the Borrower and its Subsidiaries
(including payments received by the Borrower and its Subsidiaries of (i)
interest income, and (ii) dividends and distributions made in the ordinary
course of their businesses by Persons in which investment is permitted pursuant
to this Agreement and not related to an extraordinary event) less all operating
and non-operating expenses (not related to extraordinary events) of the Borrower
and its Subsidiaries including taxes on income, all determined on a consolidated
basis in accordance with GAAP applied on a consistent basis.
"Consolidated Net Worth" means at any time as of which the amount
thereof is to be determined, Consolidated Shareholders' Equity minus (without
duplication of deductions in respect of items already deducted in arriving at
surplus and retained earnings) all reserves (other than contingency reserves not
allocated to any particular purpose), including without limitation reserves for
depreciation, depletion, amortization, obsolescence, deferred income taxes,
insurance and inventory valuation all as determined on a consolidated basis in
accordance with GAAP applied on a consistent basis;
"Consolidated Senior Liabilities" means, on any date, all
Indebtedness for Money Borrowed of the Borrower and its Subsidiaries, all
determined on a consolidated basis.
"Consolidated Shareholders' Equity" means at any time as of which
the amount thereof is to be determined, the sum of the following in respect of
the Borrower and its Subsidiaries (determined on a consolidated basis and
excluding intercompany items among the Borrower and its Subsidiaries and any
upward adjustment after the Effective Date due to revaluation of assets): (i)
the amount of issued and outstanding share capital, plus (ii) the amount of
additional paid-in capital and retained income (or, in the case of a deficit,
minus the amount of such deficit), plus (iii) the amount of any foreign currency
4
translation adjustment (if positive, or, if negative, minus the amount of such
translation adjustment) minus (iv) the amount of any treasury stock, all as
determined in accordance with GAAP applied on a consistent basis.
"Contract Notification Date"means the date which is 30 days prior
to (x) the date that any Material License will, by its own terms, expire, or (y)
the date the Borrower intends to terminate any Material License.
"Control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by contract or
otherwise. "Controlling" and "Controlled" have meanings correlative thereto.
"Cumulative EBITDA" means EBITDA for the four quarter period
ending on the last day of the fiscal quarter for which Cumulative EBITDA is
being tested provided, that (i) for the fiscal quarter ending on August 29,
1998, Cumulative EBITDA shall be measured for the two fiscal quarter period
ending on such date and (ii) for the fiscal quarter ending on November 28, 1998,
Cumulative EBITDA shall be measured for the three fiscal quarter period ending
on such date.
"Default" means any event or condition which constitutes an Event
of Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Disclosed Matters" means the actions, suits and proceedings and
the environmental matters disclosed in Schedule 3.06.
"Documentary Letter of Credit" means a documentary letter of
credit in form and substance customarily issued by the Issuing Bank from time to
time.
"Documentary Letter of Credit Outstandings" means, at any time,
the sum of (i) the aggregate undrawn stated amount of all Documentary Letters of
Credit then outstanding plus (ii) all amounts theretofore drawn under
Documentary Letters of Credit and not then reimbursed.
"dollars" or "$" refers to lawful money of the United States of
America.
"EBITDA" means, for any period, Consolidated Net Income (or net
loss) of the Borrower and its subsidiaries for such period plus the sum of (i)
depreciation expense, (ii) amortization expense, (iii) net total income tax
expense and (iv) interest expense (as certified by a Financial Officer on a
quarterly basis) for such period, all determined on a consolidated basis in
accordance with GAAP applied on a consistent basis.
"Effective Date" means the date on which the conditions specified
in Section 4.01 are satisfied (or waived in accordance with Section 9.02).
"Eligible Assignee" means (i) a commercial bank having total
assets in excess of $250,000,000 and being governed by the Board; (ii) a finance
5
company, insurance company or other financial institution or fund acceptable to
the Agent which in the ordinary course of business extends credit of the type
evidenced by this Agreement and has total assets in excess of $100,000,000 and
being governed by the Board, and if not so governed, acceptable to the Borrower,
whose consent shall not be unreasonably withheld; and (iii) any other financial
institution satisfactory to both the Borrower and the Agent; provided that no
such entity that is organized under the laws of a jurisdiction outside the
United States shall be an Eligible Assignee unless such entity shall, if legally
able to do so, prior to the immediately following due date of any payment by the
Borrower hereunder, deliver to the Borrower such certificates, documents or
other evidence, as required by the Code or Treasury Regulations issued pursuant
thereto, including (A) Internal Revenue Service Form W-8 or W-9 and (B) Internal
Revenue Service Form 1001 or Form 4224 and any other certificate or statement of
exemption required by Treasury Regulation Section 1.1441-1, 1.1441-4 or
1.1441-6(c) or any subsequent version thereof or successors thereto, properly
completed and duly executed by such entity establishing that such payment is (i)
not subject to United States Federal withholding tax under the Code because such
payment is effectively connected with the conduct by such entity of a trade or
business in the United States or (ii) totally exempt from the United States
Federal withholding tax.
"Environmental Laws" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or to environmental protection matters.
"Environmental Liability" means any liability, contingent or
otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of the Borrower or any Subsidiary
directly or indirectly resulting from or based upon (a) violation of any
Environmental Law, (b) the generation, use, handling, transportation, storage,
treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous
Materials, (d) the release or threatened release of any Hazardous Materials into
the environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA
6
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate
from the PBGC or a plan administrator of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f)
the incurrence by the Borrower or any of its ERISA Affiliates of any liability
with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of
any notice concerning the imposition of Withdrawal Liability or a determination
that a Multiemployer Plan is, or is expected to be, insolvent or in
reorganization, within the meaning of Title IV of ERISA.
"Eurodollar", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning assigned to such term in
Article VII.
"Excluded Taxes" means, with respect to the Agent, any Lender,
the Issuing Bank or any other recipient of any payment to be made by or on
account of any obligation of the Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its income, profits, or capital by any
Governmental Authority, or by the jurisdiction under the laws of which such
recipient is organized or in which its principal office is located or, in the
case of any Lender, in which its applicable lending office is located, (b) any
branch profits taxes imposed by the United States of America or any similar tax
imposed by any other jurisdiction in which the Borrower is located and (c) in
the case of a Foreign Lender (other than an assignee pursuant to a request by
the Borrower under Section 2.19(b)), any withholding tax that is imposed on
amounts payable to such Foreign Lender at the time such Foreign Lender becomes a
party to this Agreement (or designates a new lending office) or is attributable
to such Foreign Lender's failure to comply with Section 2.17(e), except to the
extent that such Foreign Lender (or its assignor, if any) was entitled, at the
time of designation of a new lending office (or assignment), to receive
additional amounts from the Borrower with respect to such withholding tax
pursuant to Section 2.17(a).
"Federal Funds Effective Rate" means, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or controller of the Borrower.
"Financing Transactions" means the execution, delivery and
performance by the Borrower of the Loan Documents, the borrowing of Loans, the
use of the proceeds thereof and the issuance of Letters of Credit hereunder.
7
"Foreign Lender" means any Lender that is organized under the
laws of a jurisdiction other than that in which the Borrower is located. For
purposes of this definition, the United States of America, each State thereof
and the District of Columbia shall be deemed to constitute a single
jurisdiction.
"Foreign Subsidiary" means any Subsidiary that is organized under
the laws of a jurisdiction other than the United States of America or any State
thereof or the District of Columbia.
"GAAP" means generally accepted accounting principles in the
United States of America.
"Governmental Authority" means the government of the United
States of America, any other nation or any political subdivision thereof,
whether state or local, and any agency, authority, instrumentality, regulatory
body, court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.
"Guarantee" of or by any Person (the "guarantor") means any
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof,
(c) to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation; provided, that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.
"Hazardous Materials" means all explosive or radioactive
substances or wastes and all hazardous or toxic substances, wastes or other
pollutants, including petroleum or petroleum distillates, asbestos or asbestos
containing materials, polychlorinated biphenyls, radon gas, infectious or
medical wastes and all other substances or wastes of any nature regulated
pursuant to any Environmental Law.
"Hedging Agreement" means any interest rate protection agreement,
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging arrangement.
"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or advances of any kind, (b) all
obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, (c) all obligations of such Person upon which interest charges are
customarily paid, (d) all obligations of such Person under conditional sale or
8
other title retention agreements relating to property acquired by such Person,
(e) all obligations of such Person in respect of the deferred purchase price of
property or services (excluding current accounts payable incurred in the
ordinary course of business), (f) all Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on property owned or acquired by such
Person, whether or not the Indebtedness secured thereby has been assumed,
(g) all Guarantees by such Person of Indebtedness of others, (h) all Capital
Lease Obligations of such Person, (i) all obligations, contingent or otherwise,
of such Person as an account party in respect of letters of credit and letters
of guaranty and (j) all obligations, contingent or otherwise, of such Person in
respect of bankers' acceptances. The Indebtedness of any Person shall include
the Indebtedness of any other entity (including any partnership in which such
Person is a general partner) to the extent such Person is liable therefor as a
result of such Person's ownership interest in or other relationship with such
entity, except to the extent the terms of such Indebtedness provide that such
Person is not liable therefor.
"Indebtedness for Money Borrowed" means for any Person, without
duplication, all Indebtedness in respect of money borrowed, including without
limitation, all Capitalized Leases and the deferred purchase price of any
property or asset, evidenced by a promissory note, bond, debenture or similar
written obligation for the payment of money, other than trade payables incurred
in the ordinary course of business.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Intercompany Debt" means loans, advances and any other
extensions of credit made by the Borrower to any of its Subsidiaries.
"Intercompany Notes" means all promissory notes, instruments or
other written indicia of an obligation by any Subsidiary to repay any
Intercompany Debt owing to the Borrower.
"Interest Election Request" means a request by the Borrower to
convert or continue a Revolving Borrowing or Term Borrowing in accordance with
Section 2.07.
"Interest Payment Date" means (a) with respect to any ABR Loan,
the first day of each month and (b) with respect to any Eurodollar Loan, the
last day of the Interest Period applicable to the Borrowing of which such Loan
is a part and, in the case of a Eurodollar Borrowing with an Interest Period of
more than three months' duration, each day prior to the last day of such
Interest Period that occurs at intervals of three months' duration after the
first day of such Interest Period.
"Interest Period" means with respect to any Eurodollar Borrowing,
the period commencing on the date of such Borrowing and ending on the
numerically corresponding day in the calendar month that is one, two, three or
six months (or, with the consent of each Lender, nine or twelve months)
thereafter, as the Borrower may elect; provided, that (i) if any Interest Period
would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day and (ii) any Interest Period
9
that commences on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the last calendar month of
such Interest Period) shall end on the last Business Day of the last calendar
month of such Interest Period. For purposes hereof, the date of a Borrowing
initially shall be the date on which such Borrowing is made and thereafter shall
be the effective date of the most recent conversion or continuation of such
Borrowing.
"Issuing Bank" means The Chase Manhattan Bank, in its capacity as
the issuer of Letters of Credit hereunder, and its successors in such capacity
as provided in Section 2.05(i). The Issuing Bank may, in its discretion, arrange
for one or more Letters of Credit to be issued by Affiliates of the Issuing
Bank, in which case the term "Issuing Bank" shall include any such Affiliate
with respect to Letters of Credit issued by such Affiliate.
"LC Disbursement" means a payment made by the Issuing Bank
pursuant to a Letter of Credit.
"LC Exposure" means, at any time, the aggregate amount of all
Documentary Letter of Credit Outstandings and all Standby Letter of Credit
Outstandings. The LC Exposure of any Revolving Lender at any time shall be its
Applicable Percentage of the total LC Exposure at such time.
"Lenders" means the Persons listed on Schedule 2.01 and any other
Person that shall have become a party hereto pursuant to an Assignment and
Acceptance, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Acceptance.
"Letter of Credit" means any letter of credit issued pursuant to
this Agreement, which Letter of Credit shall be a Documentary Letter of Credit
(including the Topps SA Letters of Credit) or a Standby Letter of Credit.
"LIBO Rate" means, with respect to any Eurodollar Borrowing for
any Interest Period, the rate appearing on Page 3750 of the Dow Xxxxx Service
(or on any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the Agent from
time to time for purposes of providing quotations of interest rates applicable
to dollar deposits in the London interbank market) at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest
Period, as the rate for dollar deposits with a maturity comparable to such
Interest Period. In the event that such rate is not available at such time for
any reason, then the "LIBO Rate" with respect to such Eurodollar Borrowing for
such Interest Period shall be the rate at which dollar deposits of $5,000,000
and for a maturity comparable to such Interest Period are offered by the
principal London office of the Agent in immediately available funds in the
London interbank market at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period.
"Lien" means, with respect to any asset, (a) any mortgage, deed
of trust, lien, pledge, hypothecation, encumbrance, charge or security interest
in, on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
10
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"Loan Documents" means this Agreement, the Security Documents and
any other instrument or agreement executed and delivered in connection herewith
or therewith.
"Loans" means the loans made by the Lenders to the Borrower
pursuant to this Agreement.
"Margin Stock" means "Margin Stock" as that term is defined in
Regulation U of the Board.
"Material Adverse Effect" means a material adverse effect on
(a) the business, assets, operations or condition, financial or otherwise, of
the Borrower and the Subsidiaries taken as a whole, (b) the ability of the
Borrower to perform any of its obligations under any Loan Document or (c) the
validity or enforceability of any Loan Document or the rights of or benefits
available to the Lenders under any Loan Document.
"Material Indebtedness" means Indebtedness (other than the Loans
and Letters of Credit), or obligations in respect of one or more Hedging
Agreements, of any one or more of the Borrower and its Subsidiaries, in each
case with a principal amount outstanding of at least $750,000. For purposes of
determining Material Indebtedness, the "principal amount" of the obligations of
the Borrower or any Subsidiary in respect of any Hedging Agreement at any time
shall be the maximum aggregate amount (giving effect to any netting agreements)
that the Borrower or such Subsidiary would be required to pay if such Hedging
Agreement were terminated at such time.
"Material Licenses" shall mean the licenses set forth on Schedule
5.04.
"Moody's" means Xxxxx'x Investors Service, Inc.
"Multiemployer Plan" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
Nationsbank Facility" means the term loan and revolving credit
facility made available to the Borrower pursuant to that certain Credit
Agreement, dated as of June 30, 1995, as amended, among the Borrower,
Nationsbank, National Association (Carolinas), as agent, Chemical Bank, as
documentation agent and the lenders party thereto.
"Negative Contribution" shall mean, if negative, the number
obtained by subtracting from revenues anticipated to be generated in respect of
any Material License the direct costs attributable such Material License in a
manner consistent with historical applications.
"Net Proceeds" means, with respect to any event (a) the cash
proceeds received in respect of such event including any cash received in
respect of any non-cash proceeds, but only as and when received, net of (b) the
sum of (i) all reasonable fees and out-of-pocket expenses paid by the Borrower
and the Subsidiaries to third parties (other than Affiliates) in connection with
11
such event, (ii) in the case of a sale or other disposition of an asset, the
amount of all payments required to be made by the Borrower and the Subsidiaries
as a result of such event to repay Indebtedness (other than Loans) secured by
such asset or otherwise subject to mandatory prepayment as a result of such
event, and (iii) the amount of all taxes paid (or reasonably estimated to be
payable) by the Borrower and the Subsidiaries, and the amount of any reserves
established by the Borrower and the Subsidiaries to fund contingent liabilities
reasonably estimated to be payable, in each case during the year that such event
occurred or the next succeeding year and that are directly attributable to such
event (as determined reasonably and in good faith by the chief financial officer
of the Borrower).
"Normalized EBITDA" means, for any period, Consolidated Net
Income (or net loss) of the Borrower and its Subsidiaries for such period plus
the sum of (i) depreciation expense, (ii) amortization expense, (iii) net total
income tax expense and (iv) interest expense (as certified by a Financial
Officer on a quarterly basis) for such period, all determined on a consolidated
basis in accordance with GAAP applied on a consistent basis; provided that for
purposes of calculating Normalized EBITDA for fiscal quarters ending May 30,
1997, November 28, 1997 and February 28, 1998, there shall be added to
Consolidated Net Income (or net loss) for such quarters the amounts of
$2,853,000, $3,044,000 and $10,646,000, respectively, which arise from
extraordinary losses or non-cash charges, as the case may be.
"Obligations" means the collective reference to (i) the unpaid
principal of and interest on the Loans and all other obligations and liabilities
of the Borrower to the Agent or any Lender (including, without limitation,
interest accruing at the then-applicable rate provided herein after the maturity
of the Loans and interest accruing at the then-applicable rate provided herein
after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to the Borrower, whether
or not a claim for post-filing or post-petition interest is allowed in such
proceeding), whether direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter incurred, that may arise under, out of, or
in connection with this Agreement, the other Loan Documents, the Letters of
Credit (including, without limitation, the Topps SA Letters of Credit) or any
other documents made, delivered or given in connection herewith or therewith,
whether on account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation, all
fees and disbursements of counsel to the Agent or the Lenders that are required
to be paid by the Borrower or any Subsidiary pursuant to the terms of this
Agreement or any other Loan Document) and (ii) all obligations and liabilities
of the Borrower to any Lender or any affiliate of a Lender, whether direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter incurred, that may arise under, out of, or in connection with any
Hedging Agreement or any other document made, delivered or given in connection
therewith.
"Other Taxes" means any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made under any Loan Document or from the
execution, delivery or enforcement of, or otherwise with respect to, any Loan
Document, but Other Taxes shall not include Excluded Taxes.
"PBGC" means the Pension Benefit Guaranty Corporation referred to
and defined in ERISA and any successor entity performing similar functions.
12
"Perfection Certificate" means a certificate in the form of
Exhibit C or any other form approved by the Agent.
"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes that are not yet due or are
being contested in compliance with Section 5.05;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's and other like Liens imposed by law, arising in the ordinary
course of business and securing obligations that are not overdue by more
than 30 days or are being contested in compliance with Section 5.05;
(c) pledges and deposits made in the ordinary course of business
in compliance with workers' compensation, unemployment insurance and
other social security laws or regulations;
(d) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature, in each case in the
ordinary course of business;
(e) judgment liens in respect of judgments that do not constitute
an Event of Default under clause (k) of Article VII; and
(f) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary
course of business that do not secure any monetary obligations and do
not materially detract from the value of the affected property or
interfere with the ordinary conduct of business of the Borrower or any
Subsidiary;
provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.
"Permitted Investments" means:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States
of America (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States of America), in
each case maturing within one year from the date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days from
the date of acquisition thereof and having, at such date of acquisition,
the highest credit rating obtainable from S&P or from Moody's;
(c) investments in certificates of deposit, banker's acceptances
and time deposits maturing within 180 days from the date of acquisition
thereof issued or guaranteed by or placed with, and money market deposit
13
accounts issued or offered by, any domestic office of any commercial
bank organized under the laws of the United States of America or any
State thereof which has a combined capital and surplus and undivided
profits of not less than $500,000,000;
(d) fully collateralized repurchase agreements with a term of not
more than 30 days for securities described in clause (a) above and
entered into with a financial institution satisfying the criteria
described in clause (c) above;
(e) shares of mutual funds which invest in obligations described
in paragraphs (a) through (d) above, the shares of which mutual funds
are at all times rated "AAA" by S&P; and
(f) shares of "money market funds" of financial institutions
rated A or better by S&P or A2 or better by Moody's and shares of the
Strong Municipal Money Market Fund.
"Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or
Section 412 of the Code or Section 302 of ERISA, and in respect of which the
Borrower or any ERISA Affiliate is (or, if such plan were terminated, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Pledge Agreement" means the Pledge Agreement, dated as of the
Effective Date, between the Borrower and the Agent, substantially in the form of
Exhibit D.
"Prepayment Event" means the issuance by the Borrower or any
Subsidiary of any equity securities, or the receipt by the Borrower or any
Subsidiary of any capital contribution, other than any such issuance of equity
securities to, or receipt of any such capital contribution from, the Borrower or
a Subsidiary.
"Prime Rate" means the rate of interest per annum publicly
announced from time to time by The Chase Manhattan Bank as its prime rate in
effect at its principal office in New York City; each change in the Prime Rate
shall be effective from and including the date such change is publicly announced
as being effective.
"Register" has the meaning set forth in Section 9.04.
"Related Parties" means, with respect to any specified Person,
such Person's Affiliates and the respective directors, officers, employees,
agents and advisors of such Person and such Person's Affiliates.
"Required Lenders" means, at any time, Lenders having Revolving
Exposures, Term Loans and unused Commitments representing at least 66-2/3% of
the sum of the total Revolving Exposures, outstanding Term Loans and unused
Commitments at such time.
14
"Restricted Payment" means any dividend or other distribution
(whether in cash, securities or other property) with respect to any shares of
any class of capital stock of the Borrower or any Subsidiary, or any payment
(whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancelation or termination of any such shares of capital stock of
the Borrower or any Subsidiary or any option, warrant or other right to acquire
any such shares of capital stock of the Borrower or any Subsidiary.
"Revolving Availability Period" means the period from and
including the Effective Date to but excluding the earlier of the Revolving
Maturity Date and the date of termination of the Revolving Commitments.
"Revolving Commitment" means, with respect to each Lender, the
commitment, if any, of such Lender to make Revolving Loans and to acquire
participations in Letters of Credit hereunder, expressed as an amount
representing the maximum aggregate amount of such Lender's Revolving Exposure
hereunder, as such commitment may be (a) reduced from time to time pursuant to
Section 2.08 and (b) reduced or increased from time to time pursuant to
assignments by or to such Lender pursuant to Section 9.04. The amount of each
Lender's Revolving Commitment is set forth on Schedule 2.01, or in the
Assignment and Acceptance pursuant to which such Lender shall have assumed its
Revolving Commitment, as applicable. The aggregate amount of the Lenders'
Revolving Commitments is $9,450,000.
"Revolving Direct Borrowing Maximum Amount" means $6,000,000.
"Revolving Exposure" means, with respect to any Lender at any
time, the sum of the outstanding principal amount of such Lender's Revolving
Loans and its LC Exposure at such time.
"Revolving Lender" means a Lender with a Revolving Commitment or,
if the Revolving Commitments have terminated or expired, a Lender with Revolving
Exposure.
"Revolving Loan" means a Loan made pursuant to clause (b) of
Section 2.01.
"Revolving Maturity Date" means July 6, 2000.
"S&P" means Standard & Poor's.
"Security Documents" means the Pledge Agreement, the Trademark
Security Agreement and each other security agreement or other instrument or
document executed and delivered pursuant to Section 5.14 or 5.15 to secure any
of the Obligations.
"Standby Letter of Credit" shall mean a standby letter of credit
in form and substance customarily issued by the Issuing Bank from time to time
and in form and substance acceptable to the Agent and the Issuing Bank and
issued for such purposes for which the Borrower has historically obtained
standby letters of credit, or for such other purposes as are reasonably
acceptable to the Agent and the Issuing Bank.
15
"Standby Letter of Credit Outstandings" shall mean, at any time,
the sum of (i) the aggregate undrawn stated amount of all Standby Letters of
Credit then outstanding plus (ii) all amounts theretofore drawn under Standby
Letters of Credit and not then reimbursed.
"Statutory Reserve Rate" means a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of which
is the number one minus the aggregate of the maximum reserve percentages
(including any marginal, special, emergency or supplemental reserves) expressed
as a decimal established by the Board to which the Agent is subject (a) with
respect to the Base CD Rate, for new negotiable nonpersonal time deposits in
dollars of over $100,000 with maturities approximately equal to three months and
(b) with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D of the Board). Such
reserve percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.
"subsidiary" means, with respect to any Person (the "parent") at
any date, any corporation, limited liability company, partnership, association
or other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or, in the
case of a partnership, more than 50% of the general partnership interests are,
as of such date, owned, controlled or held, or (b) that is, as of such date,
otherwise Controlled, by the parent or one or more subsidiaries of the parent or
by the parent and one or more subsidiaries of the parent.
"Subsidiary" means any subsidiary of the Borrower.
"Taxes" means any and all present or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Term Loan" means a Loan made pursuant to clause (a) of Section
2.01.
"Term Loan Commitment" means, with respect to each Lender, the
commitment, if any, of such Lender to make a Term Loan hereunder on the
Effective Date, expressed as an amount representing the maximum principal amount
of the Term Loan to be made by such Lender hereunder, as such commitment may be
(a) reduced from time to time pursuant to Section 2.08 and (b) reduced or
increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 9.04. The initial amount of each Lender's Term Loan
Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance
pursuant to which such Lender shall have assumed its Term Loan Commitment, as
applicable. The aggregate amount of the Lenders' Term Loan Commitments is
$24,950,000.
16
"Term Loan Lender" means a Lender with a Term Loan Commitment or
an outstanding Term Loan.
"Term Loan Maturity Date" means July 6, 2000.
"Three-Month Secondary CD Rate" means, for any day, the secondary
market rate for three-month certificates of deposit reported as being in effect
on such day (or, if such day is not a Business Day, the next preceding Business
Day) by the Board through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current practices of the
Board, be published in Federal Reserve Statistical Release H.15(519) during the
week following such day) or, if such rate is not so reported on such day or such
next preceding Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New York City
received at approximately 10:00 a.m., New York City time, on such day (or, if
such day is not a Business Day, on the next preceding Business Day) by the Agent
from three negotiable certificate of deposit dealers of recognized standing
selected by it.
"Topps SA" shall mean Topps Latin America SA, a corporation
organized under the laws of Uruguay.
"Topps SA Guaranty" means the Guaranty, dated as of the Effective
Date, between the Borrower and the Agent, substantially in the form of Exhibit
G.
"Topps SA Letters of Credit" means Documentary Letters of Credit
issued for the account of Topps SA for the benefit of its vendors, reimbursement
obligations in respect of which are guaranteed by the Borrower.
"Topps SA Letter of Credit Outstandings" means, at any time, the
sum of (i) the aggregate undrawn stated amount of all Topps SA Letters of Credit
then outstanding plus (ii) all amounts theretofore drawn under Topps SA Letters
of Credit and not then reimbursed.
"Trademark Security Agreement" means the Trademark Security
Agreement, dated as of the Effective Date, between the Borrower and the Agent,
substantially in the form of Exhibit E.
"Traveler Letter of Credit" shall mean a Standby Letter of Credit
issued under this Agreement in favor of The Travelers Company.
"Type", when used in reference to any Loan or Borrowing, refers
to whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate
Base Rate.
"Ulster Bank Debt" means the Indebtedness owing to Ulster Bank by
Topps Ireland Limited, as described in items a. through f. of Section 6.04(g).
"Withdrawal Liability" means liability to a Multiemployer Plan as
a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
17
Section 1.02. Classification of Loans and Borrowings. For
purposes of this Agreement, Loans may be classified and referred to by Class
(e.g., a "Revolving Loan") or by Type (e.g., a "Eurodollar Loan") or by Class
and Type (e.g., a "Eurodollar Revolving Loan"). Borrowings also may be
classified and referred to by Class (e.g., a "Revolving Borrowing") or by Type
(e.g., a "Eurodollar Borrowing") or by Class and Type (e.g., a "Eurodollar
Revolving Borrowing").
Section 1.03. Terms Generally. The definitions of terms herein
shall apply equally to the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
The word "will" shall be construed to have the same meaning and effect as the
word "shall". Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any Person shall be construed to include such
Person's successors and assigns, (c) the words "herein", "hereof" and
"hereunder", and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words "asset" and "property" shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.
Section 1.04. Accounting Terms; GAAP. Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrower notifies the Agent that the Borrower requests an amendment
to any provision hereof to eliminate the effect of any change occurring after
the date hereof in GAAP or in the application thereof on the operation of such
provision (or if the Agent notifies the Borrower that the Required Lenders
request an amendment to any provision hereof for such purpose), regardless of
whether any such notice is given before or after such change in GAAP or in the
application thereof, then such provision shall be interpreted on the basis of
GAAP as in effect and applied immediately before such change shall have become
effective until such notice shall have been withdrawn or such provision amended
in accordance herewith.
ARTICLE II
The Credits
Section 2.01. Commitments. Subject to the terms and conditions
set forth herein, each Lender agrees (a) to make a Term Loan to the Borrower on
the Effective Date in a principal amount not exceeding its Term Loan Commitment,
and (b) to make Revolving Loans to the Borrower from time to time during the
Revolving Availability Period in an aggregate principal amount that will not
result in (i) such Lender's Revolving Exposure exceeding such Lender's Revolving
Commitment or (ii) the aggregate amount of all Revolving Loans exceeding the
18
Revolving Direct Borrowing Maximum Amount. Within the foregoing limits and
subject to the terms and conditions set forth herein, the Borrower may borrow,
prepay and reborrow Revolving Loans. Amounts repaid in respect of Term Loans may
not be reborrowed.
Section 2.02. Loans and Borrowings. (a) Each Loan shall be made
as part of a Borrowing consisting of Loans of the same Class and Type made by
the Lenders ratably in accordance with their respective Commitments of the
applicable Class. The failure of any Lender to make any Loan required to be made
by it shall not relieve any other Lender of its obligations hereunder; provided
that the Commitments of the Lenders are several and no Lender shall be
responsible for any other Lender's failure to make Loans as required.
(b)Subject to Section 2.14, each Revolving Borrowing and Term
Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the
Borrower may request in accordance herewith. Each Lender at its option may make
any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of
such Lender to make such Loan; provided that any exercise of such option shall
not affect the obligation of the Borrower to repay such Loan in accordance with
the terms of this Agreement.
(c) At the commencement of each Interest Period for any
Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that is an
integral multiple of $100,000 and not less than $1,000,000. At the time that
each ABR Revolving Borrowing is made, such Borrowing shall be in an aggregate
amount that is an integral multiple of $100,000 and not less than $1,000,000;
provided that an ABR Revolving Borrowing may be in an aggregate amount that is
equal to the entire unused balance of the total Revolving Commitments or that is
required to finance the reimbursement of an LC Disbursement as contemplated by
Section 2.05(e). Borrowings of more than one Type and Class may be outstanding
at the same time.
(d)Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request, or to elect to convert or continue,
any Borrowing if the Interest Period requested with respect thereto would end
after the Revolving Maturity Date or the Term Loan Maturity Date, as applicable.
Section 2.03. Requests for Borrowings. To request a Revolving
Borrowing, the Borrower shall notify the Agent of such request by telephone (a)
in the case of a Eurodollar Borrowing, not later than 11:00 a.m., New York City
time, three Business Days before the date of the proposed Borrowing or (b) in
the case of an ABR Borrowing, not later than 11:00 a.m., New York City time, one
Business Day before the date of the proposed Borrowing; provided that any such
notice of an ABR Revolving Borrowing to finance the reimbursement of an LC
Disbursement as contemplated by Section 2.05(e) may be given not later than
10:00 a.m., New York City time, on the date of the proposed Borrowing. Each such
telephonic Borrowing Request shall be irrevocable and shall be confirmed
promptly by hand delivery or telecopy to the Agent of a written Borrowing
Request in a form approved by the Agent and signed by the Borrower. Each such
telephonic and written Borrowing Request shall specify the following information
in compliance with Section 2.02:
(i) the aggregate amount of such Borrowing;
19
(ii) the date of such Borrowing, which shall be a Business Day;
(iii) whether such Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing;
(iv) in the case of a Eurodollar Borrowing, the initial Interest
Period to be applicable thereto, which shall be a period contemplated by the
definition of the term "Interest Period"; and
(v) the location and number of the Borrower's account to which
funds are to be disbursed, which shall comply with the requirements of Section
2.06.
If no election as to the Type of Borrowing is specified, then the
requested Borrowing shall be an ABR Borrowing. If no Interest Period is
specified with respect to any requested Eurodollar Revolving Borrowing, then the
Borrower shall be deemed to have selected an Interest Period of one month's
duration. Promptly following receipt of a Borrowing Request in accordance with
this Section, the Agent shall advise each Lender of the details thereof and of
the amount of such Lender's Loan to be made as part of the requested Borrowing.
Section 2.04. [This Section intentionally left blank.]
Section 2.05. Letters of Credit.(a) General. Subject to the terms
and conditions set forth herein, the Borrower may request the issuance of
Documentary Letters of Credit (including Topps SA Letters of Credit) and Standby
Letters of Credit for its own account and for the account of Topps SA (in the
case of the Topps SA Letters of Credit), in a form reasonably acceptable to the
Agent and the Issuing Bank, at any time and from time to time during the
Revolving Availability Period. In the event of any inconsistency between the
terms and conditions of this Agreement and the terms and conditions of any form
of letter of credit application or other agreement submitted by the Borrower to,
or entered into by the Borrower with, the Issuing Bank relating to any Letter of
Credit, the terms and conditions of this Agreement shall control. The Borrower
shall not be obligated under any such letter of credit application or related
documents to provide collateral to the Issuing Bank other than (x) that which is
required to be provided under this Agreement or (y) a security interest in the
goods in respect of which such letter of credit is being issued.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), the Borrower shall
hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the Issuing Bank) to the Issuing
Bank and the Agent (reasonably in advance of the requested date of issuance,
amendment, renewal or extension) a notice requesting the issuance of a Letter of
Credit, or identifying the Letter of Credit to be amended, renewed or extended,
and specifying the date of issuance, amendment, renewal or extension (which
shall be a Business Day), the date on which such Letter of Credit is to expire
(which shall comply with paragraph (c) of this Section), the amount of such
Letter of Credit, the name and address of the beneficiary thereof and such other
information as shall be necessary to prepare, amend, renew or extend such Letter
of Credit. If requested by the Issuing Bank, the Borrower also shall submit a
20
letter of credit application on the Issuing Bank's standard form in connection
with any request for a Letter of Credit. The Borrower shall not be obligated
under any such letter of credit application or related documents to provide
collateral to the Issuing Bank other than (x) that which is required to be
provided under this Agreement or (y) a security interest in the goods in respect
of which such letter of credit is being issued. A Letter of Credit shall be
issued, amended, renewed or extended only if (and upon issuance, amendment,
renewal or extension of each Letter of Credit the Borrower shall be deemed to
represent and warrant that), after giving effect to such issuance, amendment,
renewal or extension (i) the Documentary Letter of Credit Outstandings shall not
exceed $4,500,000, (ii) the Standby Letter of Credit Outstandings shall not
exceed $700,000, (iii) the Topps SA Letter of Credit Outstandings shall not
exceed $2,000,000, and (iv) the total Revolving Exposures shall not exceed the
total Revolving Commitments.
(c) Expiration Date. Each Letter of Credit other than the
Traveler Letter of Credit shall expire at or prior to the close of business on
the earlier of (i) the date one year after the date of the issuance of such
Letter of Credit (or, in the case of any renewal or extension thereof, one year
after such renewal or extension) and (ii) the date that is five Business Days
prior to the Revolving Maturity Date. The Traveler Letter of Credit shall expire
at or prior to the close of business July 24, 2003.
(d) Participations. By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the Issuing Bank or the Lenders, the Issuing Bank
hereby grants to each Revolving Lender, and each Revolving Lender hereby
acquires from the Issuing Bank, a participation in such Letter of Credit equal
to such Lender's Applicable Percentage of the aggregate amount available to be
drawn under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to
pay to the Agent, for the account of the Issuing Bank, such Lender's Applicable
Percentage of each LC Disbursement made by the Issuing Bank and not reimbursed
by the Borrower on the date due as provided in paragraph (e) of this Section, or
of any reimbursement payment required to be refunded to the Borrower for any
reason. Each Lender acknowledges and agrees that its obligation to acquire
participations pursuant to this paragraph in respect of Letters of Credit is
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including any amendment, renewal or extension of any Letter of
Credit or the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.
(e) Reimbursement. If the Issuing Bank shall make any LC
Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such
LC Disbursement by paying to the Agent an amount equal to such LC Disbursement
not later than 12:00 noon, New York City time, on the date that such LC
Disbursement is made, if the Borrower shall have received notice of such LC
Disbursement prior to 10:00 a.m., New York City time, on such date, or, if such
notice has not been received by the Borrower prior to such time on such date,
then not later than 12:00 noon, New York City time, on (i) the Business Day that
the Borrower receives such notice, if such notice is received prior to 10:00
a.m., New York City time, on the day of receipt, or (ii) the Business Day
immediately following the day that the Borrower receives such notice, if such
notice is not received prior to such time on the day of receipt; provided that
the Borrower may, subject to the conditions to borrowing set forth herein,
21
request in accordance with Section 2.03 that such payment be financed with an
ABR Revolving Borrowing in an equivalent amount and, to the extent so financed,
the Borrower's obligation to make such payment shall be discharged and replaced
by the resulting ABR Revolving Borrowing. If the Borrower fails to make such
payment when due, the Agent shall notify each Revolving Lender of the applicable
LC Disbursement, the payment then due from the Borrower in respect thereof and
such Lender's Applicable Percentage thereof. Promptly following receipt of such
notice, each Revolving Lender shall pay to the Agent its Applicable Percentage
of the payment then due from the Borrower, in the same manner as provided in
Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall
apply, mutatis mutandis, to the payment obligations of the Revolving Lenders),
and the Agent shall promptly pay to the Issuing Bank the amounts so received by
it from the Revolving Lenders. Promptly following receipt by the Agent of any
payment from the Borrower pursuant to this paragraph, the Agent shall distribute
such payment to the Issuing Bank or, to the extent that Revolving Lenders have
made payments pursuant to this paragraph to reimburse the Issuing Bank, then to
such Lenders and the Issuing Bank as their interests may appear. Any payment
made by a Revolving Lender pursuant to this paragraph to reimburse the Issuing
Bank for any LC Disbursement (other than the funding of ABR Revolving Loans as
contemplated above) shall not constitute a Loan and shall not relieve the
Borrower of its obligation to reimburse such LC Disbursement.
(f) Obligations Absolute. The Borrower's obligation to reimburse
LC Disbursements as provided in paragraph (e) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision therein, (ii) any draft or
other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of, or
provide a right of setoff against, the Borrower's obligations hereunder. Neither
the Agent, the Lenders nor the Issuing Bank, nor any of their Related Parties,
shall have any liability or responsibility by reason of or in connection with
the issuance or transfer of any Letter of Credit or any payment or failure to
make any payment thereunder (irrespective of any of the circumstances referred
to in the preceding sentence), or any error, omission, interruption, loss or
delay in transmission or delivery of any draft, notice or other communication
under or relating to any Letter of Credit (including any document required to
make a drawing thereunder), any error in interpretation of technical terms or
any consequence arising from causes beyond the control of the Issuing Bank;
provided that the foregoing shall not be construed to excuse the Issuing Bank
from liability to the Borrower to the extent of any direct damages (as opposed
to consequential damages, claims in respect of which are hereby waived by the
Borrower to the extent permitted by applicable law) suffered by the Borrower
that are caused by the Issuing Bank's failure to exercise care when determining
whether drafts and other documents presented under a Letter of Credit comply
with the terms thereof. The parties hereto expressly agree that, in the absence
of gross negligence or wilful misconduct on the part of the Issuing Bank (as
finally determined by a court of competent jurisdiction), the Issuing Bank shall
22
be deemed to have exercised care in each such determination. In furtherance of
the foregoing and without limiting the generality thereof, the parties agree
that, with respect to documents presented which appear on their face to be in
substantial compliance with the terms of a Letter of Credit, the Issuing Bank
may, in its sole discretion, either accept and make payment upon such documents
without responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.
(g) Disbursement Procedures. The Issuing Bank shall, promptly
following its receipt thereof, examine all documents purporting to represent a
demand for payment under a Letter of Credit. The Issuing Bank shall promptly
notify the Agent and the Borrower by telephone (confirmed by telecopy) of such
demand for payment and whether the Issuing Bank has made or will make an LC
Disbursement thereunder; provided that any failure to give or delay in giving
such notice shall not relieve the Borrower of its obligation to reimburse the
Issuing Bank and the Revolving Lenders with respect to any such LC Disbursement.
(h) Interim Interest. If the Issuing Bank shall make any LC
Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is
made to but excluding the date that the Borrower reimburses such LC
Disbursement, at the rate per annum then applicable to ABR Revolving Loans;
provided that, if the Borrower fails to reimburse such LC Disbursement when due
pursuant to paragraph (e) of this Section, then Section 2.13(c) shall apply.
Interest accrued pursuant to this paragraph shall be for the account of the
Issuing Bank, except that interest accrued on and after the date of payment by
any Revolving Lender pursuant to paragraph (e) of this Section to reimburse the
Issuing Bank shall be for the account of such Lender to the extent of such
payment.
(i) Replacement of the Issuing Bank. The Issuing Bank may be
replaced at any time by written agreement among the Borrower, the Agent, the
replaced Issuing Bank and the successor Issuing Bank. The Agent shall notify the
Lenders of any such replacement of the Issuing Bank. At the time any such
replacement shall become effective, the Borrower shall pay all unpaid fees
accrued for the account of the replaced Issuing Bank pursuant to Section
2.12(b). From and after the effective date of any such replacement, (i) the
successor Issuing Bank shall have all the rights and obligations of the Issuing
Bank under this Agreement with respect to Letters of Credit to be issued
thereafter and (ii) references herein to the term "Issuing Bank" shall be deemed
to refer to such successor or to any previous Issuing Bank, or to such successor
and all previous Issuing Banks, as the context shall require. After the
replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain
a party hereto and shall continue to have all the rights and obligations of an
Issuing Bank under this Agreement with respect to Letters of Credit issued by it
prior to such replacement, but shall not be required to issue additional Letters
of Credit.
(j) Cash Collateralization. Subject to the provision of the
following sentence, the Borrower shall, on or before the Revolving Maturity
Date, deposit in an account with the Agent, in the name of the Agent and for the
benefit of the Lenders, an amount in cash equal to 105% of the sum of (i) the
aggregate undrawn stated amount of the Traveler Letter of Credit plus (ii) all
23
amounts theretofore drawn under the Traveler Letter of Credit and not then
reimbursed plus (iii) any accrued and unpaid interest thereon. If any Event of
Default shall occur and be continuing, on the Business Day that the Borrower
receives notice from the Agent or the Required Lenders (or, if the maturity of
the Loans has been accelerated, Revolving Lenders with LC Exposure representing
greater than 66-2/3% of the total LC Exposure) demanding the deposit of cash
collateral pursuant to this paragraph, the Borrower shall deposit in such cash
collateral account, an amount in cash equal to 105% of the LC Exposure as of
such date plus any accrued and unpaid interest thereon; provided that the
obligation to deposit such cash collateral shall become effective immediately,
and such deposit shall become immediately due and payable, without demand or
other notice of any kind, upon the occurrence of any Event of Default with
respect to the Borrower described in clause (h) or (i) of Section 7.01. Each
such deposit shall be held by the Agent as collateral for the payment and
performance of the obligations of the Borrower under this Agreement. The Agent
shall have exclusive dominion and control, including the exclusive right of
withdrawal, over such account. Other than any interest earned on the investment
of such deposits, which investments shall be made at the option and sole
discretion of the Agent and at the Borrower's risk and expense, such deposits
shall not bear interest. Interest or profits, if any, on such investments shall
accumulate in such account. Moneys in such account shall be applied by the Agent
to reimburse the Issuing Bank for LC Disbursements for which it has not been
reimbursed and, to the extent not so applied, shall be held for the satisfaction
of the reimbursement obligations of the Borrower for the LC Exposure at such
time or, if the maturity of the Loans has been accelerated (but subject to the
consent of Revolving Lenders with LC Exposure representing greater than 66-2/3%
of the total LC Exposure), be applied to satisfy other obligations of the
Borrower under this Agreement. If the Borrower is required to provide an amount
of cash collateral hereunder as a result of the occurrence of an Event of
Default, such amount (to the extent not applied as aforesaid) shall be returned
to the Borrower within three Business Days after all Events of Default have been
cured or waived. It is expressly agreed that amounts deposited into such account
in respect of the Traveler Letter of Credit shall remain on deposit after the
termination of this Agreement so long as such letter of credit remains
outstanding, and to the extent that such funds have not been applied to the
Borrower's obligations, shall be returned to the Borrower following the
expiration of such letter of credit or the return thereof, in each case without
the same having been drawn.
Section 2.06. Funding of Borrowings. (a) Each Lender shall make
each Loan to be made by it hereunder on the proposed date thereof by wire
transfer of immediately available funds by 12:00 noon, New York City time, to
the account of the Agent most recently designated by it for such purpose by
notice to the Lenders. The Agent will make such Loans available to the Borrower
by promptly crediting the amounts so received, in like funds, to an account of
the Borrower maintained with the Agent in New York City and designated by the
Borrower in the applicable Borrowing Request; provided that ABR Revolving Loans
made to finance the reimbursement of an LC Disbursement as provided in Section
2.05(e) shall be remitted by the Agent to the Issuing Bank.
(b) Unless the Agent shall have received notice from a Lender
prior to the proposed date of any Borrowing that such Lender will not make
available to the Agent such Lender's share of such Borrowing, the Agent may
assume that such Lender has made such share available on such date in accordance
with paragraph (a) of this Section and may, in reliance upon such assumption,
24
make available to the Borrower a corresponding amount. In such event, if a
Lender has not in fact made its share of the applicable Borrowing available to
the Agent, then the applicable Lender and the Borrower severally agree to pay to
the Agent forthwith on demand such corresponding amount with interest thereon,
for each day from and including the date such amount is made available to the
Borrower to but excluding the date of payment to the Agent, at (i) in the case
of such Lender, the greater of the Federal Funds Effective Rate and a rate
determined by the Agent in accordance with banking industry rules on interbank
compensation or (ii) in the case of the Borrower, the interest rate applicable
to the Loans so funded by the Agent. If such Lender pays such amount to the
Agent, then such amount shall constitute such Lender's Loan included in such
Borrowing.
SECTION 2.07 INTEREST ELECTIONS (a) Each Revolving Borrowing and
Term Borrowing initially shall be of the Type specified in the applicable
Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an
initial Interest Period as specified in such Borrowing Request. Thereafter, the
Borrower may elect to convert such Borrowing to a different Type or to continue
such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest
Periods therefor, all as provided in this Section. The Borrower may elect
different options with respect to different portions of the affected Borrowing,
in which case each such portion shall be allocated ratably among the Lenders
holding the Loans comprising such Borrowing, and the Loans comprising each such
portion shall be considered a separate Borrowing.
(b) To make an election pursuant to this Section, the Borrower
shall notify the Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.03 if the Borrower were
requesting a Revolving Borrowing of the Type resulting from such election to be
made on the effective date of such election. Each such telephonic Interest
Election Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Agent of a written Interest Election Request in a
form approved by the Agent and signed by the Borrower.
(c) Each telephonic and written Interest Election Request shall
specify the following information in compliance with Section 2.02 and paragraph
(f) of this Section:
(i) the Borrowing to which such Interest Election Request applies
and, if different options are being elected with respect to different
portions thereof, the portions thereof to be allocated to each resulting
Borrowing (in which case the information to be specified pursuant to
clauses (iii) and (iv) below shall be specified for each resulting
Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing
or a Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of the
term "Interest Period".
25
If any such Interest Election Request requests a Eurodollar
Borrowing but does not specify an Interest Period, then the Borrower shall be
deemed to have selected an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election Request,
the Agent shall advise each Lender of the details thereof and of such Lender's
portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest Election
Request with respect to a Eurodollar Borrowing prior to the end of the Interest
Period applicable thereto, then, unless such Borrowing is repaid as provided
herein, at the end of such Interest Period such Borrowing shall be converted to
an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of
Default has occurred and is continuing and the Agent, at the request of the
Required Lenders, so notifies the Borrower, then, so long as an Event of Default
is continuing (i) no outstanding Borrowing may be converted to or continued as a
Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be
converted to an ABR Borrowing at the end of the Interest Period applicable
thereto.
SECTION 2.08. Termination and Reduction of Commitments.(a) Unless
previously terminated, (i) the Term Loan Commitments shall terminate at 5:00
p.m., New York City time, on the Effective Date and (ii) the Revolving
Commitments shall terminate on the Revolving Maturity Date.
(b) The Borrower may at any time terminate, or from time to time
reduce, the Commitments of any Class; provided that (i) each reduction of the
Commitments of any Class shall be in an amount that is an integral multiple of
$100,000 and not less than $1,000,000 and (ii) the Borrower shall not terminate
or reduce the Revolving Commitments if, after giving effect to any concurrent
prepayment of the Revolving Loans in accordance with Section 2.11, the sum of
the Revolving Exposures would exceed the total Revolving Commitments.
(c) The Borrower shall notify the Agent of any election to
terminate or reduce the Commitments under paragraph (b) of this Section at least
three Business Days prior to the effective date of such termination or
reduction, specifying such election and the effective date thereof. Promptly
following receipt of any notice, the Agent shall advise the Lenders of the
contents thereof. Each notice delivered by the Borrower pursuant to this Section
shall be irrevocable; provided that a notice of termination of the Revolving
Commitments delivered by the Borrower may state that such notice is conditioned
upon the effectiveness of other credit facilities, in which case such notice may
be revoked by the Borrower (by notice to the Agent on or prior to the specified
effective date) if such condition is not satisfied. Any termination or reduction
of the Commitments of any Class shall be permanent. Each reduction of the
Commitments of any Class shall be made ratably among the Lenders in accordance
with their respective Commitments of such Class.
SECTION 2.09. Repayment of Loans; Evidence of Debt. (a) The
Borrower hereby unconditionally promises to pay (i) to the Agent for the account
of each Lender the then unpaid principal amount of each Revolving Loan of such
26
Lender on the Revolving Maturity Date and (ii) to the Agent for the account of
each Lender the then unpaid principal amount of each Term Loan of such Lender as
provided in Section 2.10.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness of the Borrower to
such Lender resulting from each Loan made by such Lender, including the amounts
of principal and interest payable and paid to such Lender from time to time
hereunder.
(c) The Agent shall maintain accounts in which it shall record
(i) the amount of each Loan made hereunder, the Class and Type thereof and the
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from the Borrower to each Lender
hereunder and (iii) the amount of any sum received by the Agent hereunder for
the account of the Lenders and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to
paragraph (b) or (c) of this Section shall be prima facie evidence of the
existence and amounts of the obligations recorded therein; provided that the
failure of any Lender or the Agent to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Borrower to repay
the Loans in accordance with the terms of this Agreement.
(e) Any Lender may request that Loans of any Class made by it be
evidenced by a promissory note. In such event, the Borrower shall prepare,
execute and deliver to such Lender a promissory note payable to the order of
such Lender (or, if requested by such Lender, to such Lender and its registered
assigns) and in a form approved by the Agent. Thereafter, the Loans evidenced by
such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.04) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered assigns).
SECTION 2.10. Amortization of Term Loans. (a) Subject to
adjustment pursuant to paragraph (c) of this Section, the Borrower shall repay
Term Borrowings on each date set forth below in the aggregate principal amount
set forth opposite such date:
27
Date Amount
June 1, 1998 $1,666,666.66
July 1, 1998 $ 833,333.33
August 1, 1998 $ 833,333.33
September 1, 1998 $ 833,333.33
October 1, 1998 $ 833,333.33
November 1, 1998 $ 833,333.33
December 1, 1998 $ 833,333.33
January 1, 1999 $ 833,333.33
February 1, 1999 $ 833,333.33
March 1, 1999 $ 833,333.33
April 1, 1999 $ 833,333.33
May 1, 1999 $ 833,333.33
June 1, 1999 $ 833,333.33
July 1, 1999 $ 833,333.33
August 1, 1999 $1,041,666.68
September 1, 1999 $1,041,666.68
October 1, 1999 $1,041,666.68
November 1, 1999 $1,041,666.68
December 1, 1999 $1,041,666.68
January 1, 2000 $1,041,666.68
February 1, 2000 $1,041,666.68
March 1, 2000 $1,041,666.68
April 1, 2000 $1,041,666.68
May 1, 2000 $1,041,666.68
June 1, 2000 $1,041,666.68
July 6, 2000 $ 991,666.57
(b) To the extent not previously paid, Term Loans shall be due
and payable on the Term Loan Maturity Date.
(c) Any prepayment of a Term Borrowing shall be applied to reduce
the subsequent scheduled repayments of the Term Borrowings to be made pursuant
to this Section in reverse chronological order.
SECTION 2.11. Prepayment of Loans. (a) The Borrower shall have the right at any
time and from time to time to prepay any Borrowing in whole or in part, subject
to the requirements of this Section.
(b) Subject to the proviso set forth below, in the event and on
each occasion that any Net Proceeds are received by or on behalf of the Borrower
or any Subsidiary in respect of any Prepayment Event, the Borrower shall,
immediately after such Net Proceeds are received, prepay Term Borrowings in an
aggregate amount equal to the amount by which all such Net Proceeds arising
during the term of this Agreement exceeds $5,000,000 in the manner specified in
Section 2.10(c).
28
(c) Prior to any optional or mandatory prepayment of Borrowings
hereunder, the Borrower shall select the Borrowing or Borrowings to be prepaid
and shall specify such selection in the notice of such prepayment pursuant to
paragraph (d) of this Section; provided that each prepayment of Borrowings of
any Class shall be applied to prepay ABR Borrowings of such Class before any
other Borrowings of such Class.
(d) The Borrower shall notify the Agent by telephone (confirmed
by telecopy) of any prepayment hereunder (i) in the case of prepayment of a
Eurodollar Revolving Borrowing, not later than 11:00 a.m., New York City time,
three Business Days before the date of prepayment or (ii) in the case of
prepayment of an ABR Revolving Borrowing, not later than 11:00 a.m., New York
City time, one Business Day before the date of prepayment. Each such notice
shall be irrevocable and shall specify the prepayment date, the principal amount
of each Borrowing or portion thereof to be prepaid and, in the case of a
mandatory prepayment, a reasonably detailed calculation of the amount of such
prepayment; provided that, if a notice of optional prepayment is given in
connection with a conditional notice of termination of the Revolving Commitments
as contemplated by Section 2.08, then such notice of prepayment may be revoked
if such notice of termination is revoked in accordance with Section 2.08.
Promptly following receipt of any such notice, the Agent shall advise the
Lenders of the contents thereof. Each partial prepayment of any Borrowing shall
be in the amount of $500,000 and $100,000 increments thereof, except as
necessary to apply fully the required amount of a mandatory prepayment. Each
prepayment of a Borrowing shall be applied ratably to the Loans included in the
prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the
extent required by Section 2.13.
SECTION 2.12. Fees. (a) The Borrower agrees to pay to the Agent
for the account of each Lender a commitment fee, which shall accrue at the
Applicable Rate on the average daily unused amount of each Revolving Commitment
of such Lender during the period from and including the Effective Date to but
excluding the date on which such Commitment terminates. Accrued commitment fees
shall be payable in arrears on the last day of May, August, November and
February of each year and on the date on which the Revolving Commitments
terminate, commencing on the first such date to occur after the date hereof. All
commitment fees shall be computed on the basis of a year of 360 days and shall
be payable for the actual number of days elapsed (including the first day but
excluding the last day). For purposes of computing commitment fees, a Revolving
Commitment of a Lender shall be deemed to be used to the extent of the
outstanding Revolving Loans and LC Exposure of such Lender.
(b) The Borrower agrees to pay to the Agent for the account of
each Revolving Lender a participation fee with respect to its participations in
Letters of Credit, which shall accrue at a per annum rate equal to one quarter
of one percent (0.25%) on the face amount of Documentary Letters of Credit and
two and three quarters percent (2.75%) per annum on the face amount of Standby
Letters of Credit during the period from and including the Effective Date to but
excluding the later of the date on which such Lender's Revolving Commitment
terminates and the date on which such Lender ceases to have any LC Exposure. In
addition to the fees in the nature of those referred to in the preceding
sentence (without duplication), the Borrower agrees to pay the Issuing Bank's
standard fees with respect to the issuance, amendment, renewal or extension of
any Letter of Credit or processing of drawings thereunder. Participation fees
accrued through and including the last day of May, August, November and February
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of each year shall be payable on the third Business Day following such last day,
commencing on the first such date to occur after the Effective Date; provided
that all such fees shall be payable on the date on which the Revolving
Commitments terminate and any such fees accruing after the date on which the
Revolving Commitments terminate shall be payable on demand. Any other fees
payable to the Issuing Bank pursuant to this paragraph shall be payable within
10 days after demand. All participation fees and fronting fees shall be computed
on the basis of a year of 360 days and shall be payable for the actual number of
days elapsed (including the first day but excluding the last day).
(c) The Borrower agrees to pay to the Agent, for its own account,
fees payable in the amounts and at the times separately agreed upon between the
Borrower and the Agent.
(d) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Agent (or to the Issuing Bank, in the case
of fees payable to it) for distribution, in the case of commitment fees and
participation fees, to the Lenders entitled thereto. Fees paid shall not be
refundable under any circumstances.
SECTION 2.13. Interest. (a) The Loans comprising each
ABR Borrowing shall bear interest at the Alternate Base Rate.
(b) The Loans comprising each Eurodollar Borrowing shall bear
interest at the Adjusted LIBO Rate for the Interest Period in effect for such
Borrowing plus the Applicable Rate.
(c) Notwithstanding the foregoing, if any principal of or
interest on any Loan or any fee or other amount payable by the Borrower
hereunder is not paid when due, whether at stated maturity, upon acceleration or
otherwise, such overdue amount shall bear interest, after as well as before
judgment, at a rate per annum equal to (i) in the case of overdue principal of
any Loan, 2% plus the rate otherwise applicable to such Loan as provided in the
preceding paragraphs of this Section or (ii) in the case of any other amount, 2%
plus the rate applicable to ABR Revolving Loans as provided in paragraph (a) of
this Section.
(d) Accrued interest on each Loan shall be payable in arrears on
each Interest Payment Date for such Loan and, in the case of Revolving Loans,
upon termination of the Revolving Commitments; provided that (i) interest
accrued pursuant to paragraph (c) of this Section shall be payable on demand,
(ii) in the event of any repayment or prepayment of any Loan (other than a
prepayment of an ABR Revolving Loan prior to the end of the Revolving
Availability Period), accrued interest on the principal amount repaid or prepaid
shall be payable on the date of such repayment or prepayment and (iii) in the
event of any conversion of any Eurodollar Loan prior to the end of the current
Interest Period therefor, accrued interest on such Loan shall be payable on the
effective date of such conversion.
(e) All interest hereunder shall be computed on the basis of a
year of 360 days, except that interest computed by reference to the Alternate
Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall
be computed on the basis of a year of 365 days (or 366 days in a leap year), and
in each case shall be payable for the actual number of days elapsed (including
the first day but excluding the last day). The applicable Alternate Base Rate or
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Adjusted LIBO Rate shall be determined by the Agent, and such determination
shall be conclusive absent manifest error.
SECTION 2.14. ALternate Rate of Interest. If prior to the
commencement of any Interest Period for a Eurodollar Borrowing:
(a) the Agent determines (which determination shall be conclusive
absent manifest error) that adequate and reasonable means do not exist
for ascertaining the Adjusted LIBO Rate for such Interest Period; or
(b) the Agent is advised by the Required Lenders that the
Adjusted LIBO Rate for such Interest Period will not adequately and
fairly reflect the cost to such Lenders (or Lender) of making or
maintaining their Loans (or its Loan) included in such Borrowing for
such Interest Period;
then the Agent shall give notice thereof to the Borrower and the Lenders by
telephone or telecopy as promptly as practicable thereafter and, until the Agent
notifies the Borrower and the Lenders that the circumstances giving rise to such
notice no longer exist, (i) any Interest Election Request that requests the
conversion of any Borrowing to, or continuation of any Borrowing as, a
Eurodollar Borrowing shall be ineffective and (ii) if any Borrowing Request
requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR
Borrowing.
SECTION 2.15. Increased Costs. (a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for
the account of, or credit extended by, any Lender (except any such
reserve requirement reflected in the Adjusted LIBO Rate) or the Issuing
Bank; or
(ii) impose on any Lender or the Issuing Bank or the London
interbank market any other condition affecting this Agreement or
Eurodollar Loans made by such Lender or any Letter of Credit or
participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or the
Issuing Bank of participating in, issuing or maintaining any Letter of Credit or
to reduce the amount of any sum received or receivable by such Lender or the
Issuing Bank hereunder (whether of principal, interest or otherwise), then the
Borrower will pay to such Lender or the Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or the Issuing Bank,
as the case may be, for such additional costs incurred or reduction suffered.
(b) If any Lender or the Issuing Bank determines that any Change
in Law regarding capital requirements has or would have the effect of reducing
the rate of return on such Lender's or the Issuing Bank's capital or on the
capital of such Lender's or the Issuing Bank's holding company, if any, as a
consequence of this Agreement or the Loans made by, or participations in Letters
of Credit held by, such Lender, or the Letters of Credit issued by the Issuing
Bank, to a level below that which such Lender or the Issuing Bank or such
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Lender's or the Issuing Bank's holding company could have achieved but for such
Change in Law (taking into consideration such Lender's or the Issuing Bank's
policies and the policies of such Lender's or the Issuing Bank's holding company
with respect to capital adequacy), then from time to time the Borrower will pay
to such Lender or the Issuing Bank, as the case may be, such additional amount
or amounts as will compensate such Lender or the Issuing Bank or such Lender's
or the Issuing Bank's holding company for any such reduction suffered.
(c) A certificate of a Lender or the Issuing Bank setting forth
the amount or amounts necessary to compensate such Lender or the Issuing Bank or
its holding company, as the case may be, as specified in paragraph (a) or (b) of
this Section shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay such Lender or the Issuing Bank, as the
case may be, the amount shown as due on any such certificate within 10 days
after receipt thereof.
(d) Failure or delay on the part of any Lender or the Issuing
Bank to demand compensation pursuant to this Section shall not constitute a
waiver of such Lender's or the Issuing Bank's right to demand such compensation;
provided that the Borrower shall not be required to compensate a Lender or the
Issuing Bank pursuant to this Section for any increased costs or reductions
incurred more than 270 days prior to the date that such Lender or the Issuing
Bank, as the case may be, notifies the Borrower of the Change in Law giving rise
to such increased costs or reductions and of such Lender's or the Issuing Bank's
intention to claim compensation therefor; provided further that, if the Change
in Law giving rise to such increased costs or reductions is retroactive, then
the 270-day period referred to above shall be extended to include the period of
retroactive effect thereof.
SECTION 2.16. Break Funding Payments. In the event of (a) the
payment of any principal of any Eurodollar Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (b) the Borrower's election to convert a Borrowing of any Class to or
continue a Borrowing of any Class as a Eurodollar Borrowing which results in the
Interest Period therefor commencing before and ending after a date on which any
principal of the Loans of such Class is to be repaid and the payment of such
principal during such interest period, (c) the conversion of any Eurodollar Loan
other than on the last day of the Interest Period applicable thereto, (d) the
failure to borrow, convert, continue or prepay any Revolving Loan or Term Loan
on the date specified in any notice delivered pursuant hereto (regardless of
whether such notice may be revoked under Section 2.11(d) and is revoked in
accordance therewith), or (e) the assignment of any Eurodollar Loan other than
on the last day of the Interest Period applicable thereto as a result of a
request by the Borrower pursuant to Section 2.19, then, in any such event, the
Borrower shall compensate each Lender for the loss, cost and expense
attributable to such event (and in the case of clause (b) above, the Borrower
will make such compensation on the applicable principal repayment date). In the
case of a Eurodollar Loan, such loss, cost or expense to any Lender shall be
deemed to include an amount determined by such Lender to be the excess, if any,
of (i) the amount of interest which would have accrued on the principal amount
of such Loan had such event not occurred, at the Adjusted LIBO Rate that would
have been applicable to such Loan, for the period from the date of such event to
the last day of the then current Interest Period therefor (or, in the case of a
failure to borrow, convert or continue, for the period that would have been the
Interest Period for such Loan), over (ii) the amount of interest which would
32
accrue on such principal amount for such period at the interest rate which such
Lender would bid were it to bid, at the commencement of such period, for dollar
deposits of a comparable amount and period from other banks in the eurodollar
market. A certificate of any Lender setting forth any amount or amounts that
such Lender is entitled to receive pursuant to this Section shall be delivered
to the Borrower and shall be conclusive absent manifest error. The Borrower
shall pay such Lender the amount shown as due on any such certificate within 10
days after receipt thereof.
SECTION 2.17. Taxes. (a) Any and all payments by or on account of
any obligation of the Borrower hereunder or under any other Loan Document shall
be made free and clear of and without deduction for any Indemnified Taxes or
Other Taxes; provided that if the Borrower shall be required to deduct any
Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable
shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section)
the Agent, Lender or Issuing Bank (as the case may be) receives an amount equal
to the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions and (iii) the Borrower shall pay the full
amount deducted to the relevant Governmental Authority in accordance with
applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Agent, each Lender and the
Issuing Bank, within 10 days after written demand therefor, for the full amount
of any Indemnified Taxes or Other Taxes paid by the Agent, such Lender or the
Issuing Bank, as the case may be, on or with respect to any payment by or on
account of any obligation of the Borrower hereunder or under any other Loan
Document (including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) and any penalties, interest
and reasonable expenses arising therefrom or with respect thereto, whether or
not such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate as to the amount
of such payment or liability delivered to the Borrower by a Lender or the
Issuing Bank, or by the Agent on its own behalf or on behalf of a Lender or the
Issuing Bank, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes
or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to the Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Agent.
(e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which the
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Agent), at the time or times prescribed by applicable law, such
properly completed and executed documentation prescribed by applicable law or
reasonably requested by the Borrower as will permit such payments to be made
without withholding or at a reduced rate.
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SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of
Setoffs. (a) The Borrower shall make each payment required to be made by it
hereunder or under any other Loan Document (whether of principal, interest, fees
or reimbursement of LC Disbursements, or of amounts payable under Section 2.15,
2.16 or 2.17, or otherwise) prior to 12:00 noon, New York City time, on the date
when due, in immediately available funds, without set-off or counterclaim. Any
amounts received after such time on any date may, in the discretion of the
Agent, be deemed to have been received on the next succeeding Business Day for
purposes of calculating interest thereon. All such payments shall be made to the
Agent at its offices at 0 Xxxxxxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxx, except payments
to be made directly to the Issuing Bank as expressly provided herein and except
that payments pursuant to Sections 2.15, 2.16, 2.17 and 9.03 shall be made
directly to the Persons entitled thereto and payments pursuant to other Loan
Documents shall be made to the Persons specified therein. The Agent shall
distribute any such payments received by it for the account of any other Person
to the appropriate recipient promptly following receipt thereof. If any payment
under any Loan Document shall be due on a day that is not a Business Day, the
date for payment shall be extended to the next succeeding Business Day, and, in
the case of any payment accruing interest, interest thereon shall be payable for
the period of such extension. All payments under each Loan Document shall be
made in dollars.
(b) If at any time insufficient funds are received by and
available to the Agent to pay fully all amounts of principal, unreimbursed LC
Disbursements, interest and fees then due hereunder, such funds shall be applied
(i) first, towards payment of interest and fees then due hereunder, ratably
among the parties entitled thereto in accordance with the amounts of interest
and fees then due to such parties, and (ii) second, towards payment of principal
and unreimbursed LC Disbursements then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of principal and unreimbursed LC
Disbursements then due to such parties.
(c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Revolving Loans, Term Loans or participations in LC
Disbursements resulting in such Lender receiving payment of a greater proportion
of the aggregate amount of its Revolving Loans, Term Loans and participations in
LC Disbursements and accrued interest thereon than the proportion received by
any other Lender, then the Lender receiving such greater proportion shall
purchase (for cash at face value) participations in the Revolving Loans, Term
Loans and participations in LC Disbursements of other Lenders to the extent
necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Revolving Loans, Term Loans and
participations in LC Disbursements; provided that (i) if any such participations
are purchased and all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any payment made
by the Borrower pursuant to and in accordance with the express terms of this
Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans or participations
in LC Disbursements to any assignee or participant, other than to the Borrower
or any Subsidiary or Affiliate thereof (as to which the provisions of this
paragraph shall apply). The Borrower consents to the foregoing and agrees, to
34
the extent it may effectively do so under applicable law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise
against the Borrower rights of set-off and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of the Borrower
in the amount of such participation.
(d) Unless the Agent shall have received notice from the Borrower
prior to the date on which any payment is due to the Agent for the account of
the Lenders or the Issuing Bank hereunder that the Borrower will not make such
payment, the Agent may assume that the Borrower has made such payment on such
date in accordance herewith and may, in reliance upon such assumption,
distribute to the Lenders or the Issuing Bank, as the case may be, the amount
due. In such event, if the Borrower has not in fact made such payment, then each
of the Lenders or the Issuing Bank, as the case may be, severally agrees to
repay to the Agent forthwith on demand the amount so distributed to such Lender
or Issuing Bank with interest thereon, for each day from and including the date
such amount is distributed to it to but excluding the date of payment to the
Agent, at the greater of the Federal Funds Effective Rate and a rate determined
by the Agent in accordance with banking industry rules on interbank
compensation.
(e) If any Lender shall fail to make any payment required to be
made by it pursuant to Section 2.05(d) or (e), 2.06(b), 2.18(d) or 9.03(c), then
the Agent may, in its discretion (notwithstanding any contrary provision
hereof), apply any amounts thereafter received by the Agent for the account of
such Lender to satisfy such Lender's obligations under such Sections until all
such unsatisfied obligations are fully paid.
SECTION 2.19. Mitigation Obligations; Replacement of Lenders. (a)
If any Lender requests compensation under Section 2.15, or if the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.17, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the judgment
of such Lender, such designation or assignment (i) would eliminate or reduce
amounts payable pursuant to Section 2.15 or 2.17, as the case may be, in the
future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.
(b) If any Lender requests compensation under Section 2.15, or if
the Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.17,
or if any Lender defaults in its obligation to fund Loans hereunder, then the
Borrower may, at its sole expense and effort, upon notice to such Lender and the
Agent, require such Lender to assign and delegate, without recourse (in
accordance with and subject to the restrictions contained in Section 9.04), all
its interests, rights and obligations under this Agreement to an assignee that
shall assume such obligations (which assignee may be another Lender, if a Lender
accepts such assignment); provided that (i) the Borrower shall have received the
prior written consent of the Agent (and, if a Revolving Commitment is being
assigned, the Issuing Bank), which consent shall not unreasonably be withheld,
(ii) such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans and participations in LC Disbursements,
35
accrued interest thereon, accrued fees and all other amounts payable to it
hereunder, from the assignee (to the extent of such outstanding principal and
accrued interest and fees) or the Borrower (in the case of all other amounts)
and (iii) in the case of any such assignment resulting from a claim for
compensation under Section 2.15 or payments required to be made pursuant to
Section 2.17, such assignment will result in a reduction in such compensation or
payments. A Lender shall not be required to make any such assignment and
delegation if, prior thereto, as a result of a waiver by such Lender or
otherwise, the circumstances entitling the Borrower to require such assignment
and delegation cease to apply.
ARTICLE III
Representations and Warranties
The Borrower represents and warrants to the Lenders that:
SECTION 3.01. Organization; Powers. Each of the Borrower and its
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required.
SECTION 3.02. Authorization; Enforceability. The Financing
Transactions to be entered into by the Borrower are within the Borrower's
corporate powers and have been duly authorized by all necessary corporate and,
if required, stockholder action. This Agreement has been duly executed and
delivered by the Borrower and constitutes, and each other Loan Document to which
the Borrower is to be a party, when executed and delivered by the Borrower, will
constitute, a legal, valid and binding obligation of the Borrower, enforceable
in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights generally
and subject to general principles of equity, regardless of whether considered in
a proceeding in equity or at law.
SECTION 3.03. Governmental Approvals; No Conflicts. The Financing
Transactions (a) do not require any consent or approval of, registration or
filing with, or any other action by, any Governmental Authority, except such as
have been obtained or made and are in full force and effect and except filings
necessary to perfect Liens created under the Loan Documents, (b) will not
violate any applicable law or regulation or the charter, by-laws or other
organizational documents of the Borrower or any of its Subsidiaries or any order
of any Governmental Authority, (c) will not violate or result in a default under
any indenture, agreement or other instrument binding upon the Borrower or any of
its Subsidiaries or its assets, or give rise to a right thereunder to require
any payment to be made by the Borrower or any of its Subsidiaries, and (d) will
not result in the creation or imposition of any Lien on any asset of the
Borrower or any of its Subsidiaries, except Liens created under the Loan
Documents.
36
SECTION 3.04. Financial Condition; No Material Adverse Change.
(a) The Borrower has heretofore furnished to the Lenders its consolidated and
consolidating balance sheet and statements of income, stockholders equity and
cash flows (i) as of and for the fiscal years ended March 2, 1996 and March 1,
1997, (A) in the case of the consolidated financials, reported on by Deloitte &
Touche, L.L.P., independent public accountants and (B) in the case of the
consolidating financials, certified by the Borrower's chief financial officer,
and (ii) as of and for the fiscal quarters ended May 30, 1997, November 28, 1997
and February 28, 1998, (A) in the case of the consolidated financials, reviewed
by Deloitte & Touche, L.L.P., independent public accountants and (B) in the case
of consolidating financials, certified by the Borrower's chief financial
officer. Such financial statements present fairly, in all material respects, the
financial position and results of operations and cash flows of the Borrower and
its consolidated Subsidiaries as of such dates and for such periods in
accordance with GAAP, subject to year-end audit adjustments in the case of the
statements referred to in clause (ii) above.
(b) Except as disclosed in the financial statements referred to
above or the notes thereto and except for the Disclosed Matters, after giving
effect to the Financing Transactions, none of the Borrower or its Subsidiaries
has, as of the Effective Date, any material Indebtedness or contingent
liabilities, unusual long-term commitments or unrealized losses.
(c) Since February 28, 1998, there has been no material adverse
change in the business, assets, operations, prospects or condition, financial or
otherwise, of the Borrower and its Subsidiaries, taken as a whole.
SECTION 3.05. Properties. (a) Each of the Borrower and its
Subsidiaries has good title to, or valid leasehold interests in, all its real
and personal property material to its business, subject to no transfer
restrictions or Liens of any kind (other than as set forth on Schedule 6.02),
except for minor defects in title that do not interfere with its ability to
conduct its business as currently conducted or to utilize such properties for
their intended purposes.
(b) Each of the Borrower and its Subsidiaries owns, or is
licensed to use, all trademarks, tradenames, copyrights, patents and other
intellectual property material to its business, and the use thereof by the
Borrower and its Subsidiaries does not infringe upon the rights of any other
Person, except for any such infringements that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
(c) Schedule 3.05 sets forth the address of each real property
that is owned or leased by the Borrower or any of its Subsidiaries as of the
Effective Date after giving effect to the Financing Transactions.
(d) Neither the Borrower nor its Subsidiaries is a party to any
contract, agreement, lease or instrument the performance of which, either
unconditionally or upon the happening of an event, will result in or require the
creation of a Lien on any assets of the Borrower or its Subsidiaries or
otherwise result in a violation of this Agreement other than the Liens granted
to the Agent as provided for in this Agreement and the other Loan Documents.
37
SECTION 3.06. Litigation and Environmental Matters. (a) There are
no actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of the Borrower, threatened
against or affecting the Borrower or any of its Subsidiaries (i) as to which
there is a reasonable likelihood of an adverse determination and that, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect (other than the Disclosed
Matters) or (ii) that involve any of the Loan Documents or the Financing
Transactions.
(b) Except for the Disclosed Matters and except with respect to
any other matters that, individually or in the aggregate, could not reasonably
be expected to result in a Material Adverse Effect, neither the Borrower nor any
of its Subsidiaries (i) has failed to comply with any Environmental Law or to
obtain, maintain or comply with any permit, license or other approval required
under any Environmental Law, (ii) has become subject to any Environmental
Liability, (iii) has received notice of any claim with respect to any
Environmental Liability or (iv) knows of any basis for any Environmental
Liability.
(c) Since the date of this Agreement, there has been no change in
the status of the Disclosed Matters that, individually or in the aggregate, has
resulted in, or materially increased the likelihood of, a Material Adverse
Effect.
SECTION 3.07. Compliance with Laws and Agreements. Each of the
Borrower and its Subsidiaries is in compliance with all laws, regulations and
orders of any Governmental Authority applicable to it or its property and all
indentures, agreements and other instruments binding upon it or its property,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect. Neither the
Borrower nor any subsidiary is (a) a party to any judgment, order, decree or any
agreement or instrument or subject to restrictions which could reasonably be
likely to have a Material Adverse Effect or to materially adversely affect the
ability of the Borrower to observe the covenants and agreements contained herein
or any other Loan, or (b) in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
agreement or instrument to which it is a party, which default has, or if not
remedied within any applicable grace period could reasonably be likely to have,
a Material Adverse Effect or to materially adversely affect the ability of the
Borrower to observe the covenants and agreements contained herein or any other
Loan Document.
SECTION 3.08. Investment and Holding Company Status. Neither the
Borrower nor any of its Subsidiaries is (a) an "investment company" or an
"affiliated Person" of, or "promoter" or "principal underwriter" for, an
"investment company," as defined in, or subject to regulation under, the
Investment Company Act of 1940 or (b) a "holding company" as defined in, or
subject to regulation under, the Public Utility Holding Company Act of 1935.
SECTION 3.09. Taxes. Each of the Borrower and its Subsidiaries
has timely filed or caused to be filed all Tax returns and reports required to
have been filed and has paid or caused to be paid all Taxes required to have
been paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which the Borrower or such Subsidiary, as
applicable, has set aside on its books adequate reserves or (b) to the extent
38
that the failure to do so could not reasonably be expected to result in a
Material Adverse Effect. Each of the Borrower and its Subsidiaries has paid, or
has provided adequate reserves for the payment of, all material Federal, state
and foreign income taxes applicable for all prior fiscal years and for the
current fiscal year to the date hereof.
SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than $3,000,000 the fair market value of the assets of such Plan, and the
present value of all accumulated benefit obligations of all underfunded Plans
(based on the assumptions used for purposes of Statement of Financial Accounting
Standards No. 87) did not, as of the date of the most recent financial
statements reflecting such amounts, exceed by more than $3,000,000 the fair
market value of the assets of all such underfunded Plans.
SECTION 3.11. Disclosure. The Borrower has disclosed to the
Lenders all agreements, instruments and corporate or other restrictions to which
the Borrower or any of its Subsidiaries is subject, and all other matters known
to any of them, that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect. None of the reports, financial
statements, certificates or other information furnished by or on behalf of the
Borrower to the Agent or any Lender in connection with the negotiation of this
Agreement or any other Loan Document or delivered hereunder or thereunder (as
modified or supplemented by other information so furnished) contains any
material misstatement of fact or omits to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided that, with respect to projected financial
information, the Borrower represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time.
SECTION 3.12. Subsidiaries and Affiliates. Schedule 3.12 sets
forth as of the Effective Date the name of, and the ownership interest of the
Borrower in, each Subsidiary and each Affiliate of the Borrower. The outstanding
shares or other equity interests of each such Subsidiary and each Affiliate have
been duly authorized and validly issued and are fully paid and nonassessable;
and the Borrower and each such subsidiary owns beneficially and of record all
the shares and other interests it is listed as owning in Schedule 3.12, free and
clear of any Lien. Schedule II to the Pledge Agreement sets forth as of the
Effective Date a complete description of all Intercompany Notes owned by the
Borrower. The Borrower owns beneficially and legally all such Intercompany
Notes, free and clear of any Lien.
SECTION 3.13. Insurance. Schedule 3.13 sets forth a description
of all insurance maintained by or on behalf of the Borrower and its Subsidiaries
as of the Effective Date. As of the Effective Date, all premiums in respect of
such insurance have been paid.
39
SECTION 3.14. Labor Matters. As of the Effective Date, except for
the Disclosed Matters, none of the employees of the Borrower or any Subsidiary
is subject to any collective bargaining agreement and there are no strikes,
lockouts or slowdowns against the Borrower or any Subsidiary pending or, to the
knowledge of the Borrower, threatened that are reasonably likely to have a
Material Adverse Effect. The hours worked by and payments made to employees of
the Borrower and the Subsidiaries have not been in material violation of the
Fair Labor Standards Act or any other applicable Federal, state, local or
foreign law dealing with such matters except to the extent that any such
violation could not reasonably be expected to result in a Material Adverse
Effect. All payments due from the Borrower or any Subsidiary, or for which any
claim may be made against the Borrower or any Subsidiary, on account of wages
and employee health and welfare insurance and other benefits, have been paid or
accrued as a liability on the books of the Borrower or such Subsidiary. The
consummation of the Financing Transactions will not give rise to any right of
termination or right of renegotiation on the part of any union under any
collective bargaining agreement to which the Borrower or any Subsidiary is bound
that is reasonably likely to have a Material Adverse Effect.
SECTION 3.15. Solvency. Immediately after the consummation of the
Financing Transactions to occur on the Effective Date and immediately following
the making of each Loan made on the Effective Date and after giving effect to
the application of the proceeds of such Loans, (a) the fair value of the assets
of the Borrower, at a fair valuation, will exceed its debts and liabilities,
subordinated, contingent or otherwise; (b) the present fair saleable value of
the property of the Borrower will be greater than the amount that will be
required to pay the probable liability of its debts and other liabilities,
subordinated, contingent or otherwise, as such debts and other liabilities
become absolute and matured; (c) the Borrower will be able to pay its debts and
liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured; and (d) the Borrower will not have
unreasonably small capital with which to conduct the business in which it is
engaged as such business is now conducted and is proposed to be conducted
following the Effective Date.
SECTION 3.16. No Default. As of the date hereof, there does not
exist any Default or Event of Default hereunder.
SECTION 3.17. Place of Business. As of the date hereof, the
Borrower has no office, mailing address or other place of business in the United
Kingdom.
SECTION 3.18. Year 2000. Any reprogramming required to permit the
proper functioning, in and following the year 2000, of (i) the Borrower's
computer systems and (ii) equipment containing embedded microchips (including
systems and equipment supplied by others or with which Borrower's systems
interface) and the testing of all such systems and equipment, as so
reprogrammed, will be substantially completed by February 28, 1999, except to
the extent the failure to do so is not reasonably likely to result in a Material
Adverse Effect. The cost to the Borrower of such reprogramming and testing and
of the reasonably foreseeable consequences of year 2000 to the Borrower
(including, without limitation, reprogramming errors and the failure of others'
systems or equipment) will not result in a Default or a Material Adverse Effect.
Except for such of the reprogramming referred to in the preceding sentence as
may be necessary, the computer and management information systems of the
40
Borrower and its Subsidiaries are and, with ordinary course upgrading and
maintenance, will continue for the term of this Agreement to be, sufficient to
permit the Borrower to conduct its business without Material Adverse Effect.
SECTION 3.19. Federal Reserve Regulations. The Borrower is not
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying Margin Stock.
ARTICLE IV
Conditions
SECTION 4.01. Effective Date. The obligations of the Lenders to
make Loans and of the Issuing Bank to issue Letters of Credit hereunder shall
not become effective until the date on which each of the following conditions is
satisfied (or waived in accordance with Section 9.02):
(a) The Agent (or its counsel) shall have received from each
party hereto either (i) a counterpart of this Agreement signed on behalf
of such party or (ii) written evidence satisfactory to the Agent (which
may include telecopy transmission of a signed signature page of this
Agreement) that such party has signed a counterpart of this Agreement.
(b) The Agent shall have received a favorable written opinion
(addressed to the Agent and the Lenders and dated the Effective Date) of
(i) Xxxxxxx Xxxx & Xxxxxxxxx, counsel for the Borrower, substantially in
the form of Exhibit B-1 and (ii) Xxxxxxx & Xxxxxxx, special U.K. counsel
to the Borrower, substantially in the form of Exhibit B-2, covering such
matters relating to the Borrower, the Loan Documents or the Financing
Transactions as the Required Lenders shall reasonably request. The
Borrower hereby requests such counsel to deliver such opinions.
(c) The Agent shall have received such documents and certificates
as the Agent or its counsel may reasonably request relating to the
organization, existence and good standing of the Borrower, the
authorization of the Financing Transactions and any other legal matters
relating to the Borrower, the Loan Documents or the Financing
Transactions, all in form and substance satisfactory to the Agent and
its counsel.
(d) The Agent shall have received a certificate, dated the
Effective Date and signed by the President, a Vice President or a
Financial Officer of the Borrower, confirming compliance with the
conditions set forth in paragraphs (a) and (b) of Section 4.02.
(e) The Agent shall have received all fees and other amounts due
and payable on or prior to the Effective Date, including, to the extent
invoiced, reimbursement or payment of all out-of-pocket expenses
required to be reimbursed or paid by the Borrower hereunder or under any
other Loan Document.
41
(f) The Agent shall have received counterparts of the Trademark
Security Agreement and the Pledge Agreement signed on behalf of the
Borrower, together with the following:
(i) stock certificates or bearer share warrants representing 65%
of the outstanding shares of capital stock of Topps Europe Limited as of
the Effective Date after giving effect to the Financing Transactions and
stock powers and instruments of transfer, endorsed in blank, with
respect to such stock certificates or bearer share warrants;
(ii) all documents and instruments, including Uniform Commercial
Code financing statements, required by law or reasonably requested by
the Agent to be filed, registered or recorded to create or perfect the
Liens intended to be created under the Security Documents;
(iii) the duly endorsed original of all instruments evidencing
loans and advances made by the Borrower to any Subsidiary to the extent
such instruments do not cause the earnings and profits of such
Subsidiary to be deemed to be a distribution to the Borrower under 26
U.S.C.S. Sec. 956; and
(iv) a completed Perfection Certificate dated the Effective Date
and signed by an executive officer or Financial Officer of the Borrower,
together with all attachments contemplated thereby, including the
results of a search of the Uniform Commercial Code (or equivalent)
filings made with respect to the Borrower in the jurisdictions
contemplated by the Perfection Certificate and a search of the United
States Patent and Trademark Office with respect to the Borrower's
intellectual property and copies of the financing statements (or similar
documents) disclosed by such searches and evidence reasonably
satisfactory to the Agent that the Liens indicated by such financing
statements (or similar documents) are permitted by Section 6.02 or have
been released.
(g) The Agent shall have received evidence satisfactory to it
that the insurance required by Section 5.07 is in effect.
(h) The Borrower and the Subsidiaries shall have granted the
Agent access to and the right to inspect all reports, audits and other
internal information of the Borrower and the Subsidiaries relating to
environmental matters, and any third party verification of certain
matters relating to compliance with environmental laws and regulations
requested by the Agent, and the Agent shall be satisfied that the
Borrower and the Subsidiaries are in compliance in all material respects
with all applicable environmental laws and regulations and be satisfied
with the costs of maintaining such compliance.
(i) All consents and approvals required to be obtained from any
Governmental Authority or other Person as shall be required to
consummate the transactions contemplated hereby shall have been
obtained, and all applicable
42
waiting periods and appeal periods shall have expired, in each case
without the imposition of any burdensome conditions.
(j) The Lenders shall have received (i) audited consolidated
financial statements of the Borrower for the fiscal years ended March 2,
1996 and Xxxxx 0, 0000, (xx) if available, satisfactory audited
consolidated financial statements of the Borrower for the fiscal year
ended February 28, 1998 and (iii) satisfactory reviewed interim
consolidated financial statements of the Borrower for each quarterly
period ended subsequent to the date of the latest financial statements
delivered pursuant to clauses (i) and (ii) of this paragraph as to which
such financial statements are available and (iv) unaudited consolidating
financial statements for all statements above.
(k) The Agent shall be satisfied with the nature and amount of
all Indebtedness of the Borrower and its Subsidiaries, including,
without limitation, the Bank of Scotland Debt and the Ulster Bank Debt,
and the Borrower shall have provided to the Agent copies of all
operative documents in connection with the Bank of Scotland Debt and the
Ulster Bank Debt.
(l) All amounts outstanding under the Nationsbank Facility shall
have been fully and finally paid and satisfied in full and all
promissory notes, credit agreements, reimbursement agreements and other
documents executed in connection therewith, and any Liens granted to
secure payment and performance thereof, have been cancelled or
terminated, as appropriate.
(m) The Agent shall have received such other documents,
instruments, certificates and opinions as are customary for transactions
of this type or as the Agent may reasonably request, and shall be
satisfied with such other conditions as it may reasonably require.
The Agent shall notify the Borrower and the Lenders of the Effective Date, and
such notice shall be conclusive and binding. Notwithstanding the foregoing, the
obligations of the Lenders to make Loans and of the Issuing Bank to issue
Letters of Credit hereunder shall not become effective unless each of the
foregoing conditions is satisfied (or waived pursuant to Section 9.02) at or
prior to 3:00 p.m., New York City time, on May 31, 1998 (and, in the event such
conditions are not so satisfied or waived, the Commitments shall terminate at
such time).
SECTION 4.02. Each Credit Event. The obligation of each Lender to
make a Loan on the occasion of any Borrowing, and of the Issuing Bank to issue,
amend, renew or extend any Letter of Credit, is subject to the satisfaction of
the following conditions:
(a) The representations and warranties of the Borrower set forth
in the Loan Documents shall be true and correct on and as of the date of
such Borrowing or the date of issuance, amendment, renewal or extension
of such Letter of Credit, as applicable, except to the extent they
expressly relate to an earlier date (it being understood that references
43
to a specific date, to "the date hereof" and to "the Effective Date" are
not repeated as of the date of such Borrowing).
(b) At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such
Letter of Credit, as applicable, no Default shall have occurred and be
continuing.
Each Revolving Borrowing shall be accompanied by a certificate, dated the date
of the Borrowing Request, signed by the President, a Vice President or a
Financial Officer of the Borrower as to the matters specified in paragraphs (a)
and (b) of this Section.
ARTICLE V
Affirmative Covenants
Until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder shall have
been paid in full and all Letters of Credit shall have expired or terminated and
all LC Disbursements shall have been reimbursed, the Borrower covenants and
agrees with the Lenders that:
SECTION 5.01. Financial Statements and Other Information. The
Borrower will furnish to the Agent and each Lender:tatements and Other
Information.
(a) within 90 days after the end of each fiscal year of the
Borrower, its audited consolidated and unaudited consolidating balance
sheet and related statements of operations, stockholders' equity and
cash flows as of the end of and for such year, setting forth in each
case in comparative form the figures for the previous fiscal year, (i)
in the case of the audited consolidated financial statements, reported
on by Deloitte & Touche, L.L.P. or other independent public accountants
of recognized national standing (without a "going concern" or like
qualification or exception and without any qualification or exception as
to the scope of such audit) and (ii) in the case of the unaudited
consolidating financial statements, certified by the Borrower's chief
financial officer, to the effect that such consolidated financial
statements present fairly in all material respects the financial
condition and results of operations of the Borrower and its consolidated
Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied;
(b) within 45 days after the end of each of the first three
fiscal quarters of each fiscal year of the Borrower, its consolidated
and consolidating balance sheet and related statements of operations,
stockholders' equity and cash flows as of the end of and for such fiscal
quarter and the then elapsed portion of the fiscal year, setting forth
in each case in comparative form the figures for the corresponding
period or periods of (or, in the case of the balance sheet, as of the
end of) the previous fiscal year, (i) in the case of the consolidated
financial statements, reviewed by Deloitte & Touche, L.L.P. or other
independent public accountants of recognized national standing and (ii)
in the case of the unaudited consolidating financial statements,
certified by the Borrower's chief financial officer as presenting fairly
in all material respects the financial condition and results of
operations of the Borrower and its consolidated Subsidiaries on a
44
consolidated basis in accordance with GAAP consistently applied, subject
to normal year-end audit adjustments;
(c) concurrently with any delivery of financial statements under
clause (a) or (b) above, a certificate of a Financial Officer of the
Borrower, substantially in the form of Exhibit F (or such other form
reasonably satisfactory to the Agent) (i) certifying as to whether a
Default has occurred and, if a Default has occurred, specifying the
details thereof and any action taken or proposed to be taken with
respect thereto, (ii) setting forth reasonably detailed calculations
demonstrating compliance with Sections 6.13 through 6.19 and
(iii) stating whether any change in GAAP or in the application thereof
has occurred since the date of the Borrower's audited financial
statements referred to in Section 3.04 and, if any such change has
occurred, specifying the effect of such change on the financial
statements accompanying such certificate;
(d) concurrently with any delivery of financial statements under
clause (a) above, a certificate of the accounting firm that reported on such
financial statements stating whether they obtained knowledge during the course
of their examination of such financial statements of any Default (which
certificate may be limited to the extent required by accounting rules or
guidelines);
(e) (i) within 7 days after the end of each fiscal month, (a) a
schedule setting forth gross sales by business segment for the previous
fiscal month and for the portion of the fiscal year ended on the last
day of such fiscal month and cash balances by subsidiary as of the last
day of such fiscal month, and setting forth in each case in comparative
form the figures for the corresponding month of the previous fiscal year
and corresponding portion of the previous fiscal year, and; (b) a list
of any Intercompany Notes delivered during such fiscal quarter; and
(ii) within 45 days after the end of each fiscal quarter a
schedule setting forth the results of operations of each business
segment as of the end of such fiscal quarter and for the portion of the
fiscal year ended on the last day of such fiscal quarter, setting forth
in each case in comparative form the figures for the corresponding
period or periods of the previous fiscal year, together with an
explanation of all material variances from such comparative figures.
(f) within six months of the Effective Date, projected balance
sheets, projected statements of operations and projected statements of cash
flows (which projections shall be on a quarterly basis for fiscal year 1999 and
on an annual basis for fiscal year 2000 and fiscal year 2001), which shall set
forth, among other things, the Borrower's projected gross sales, projected net
sales and projected results of operations of each domestic business segment and
each Foreign Subsidiary, for the Borrower and its Subsidiaries in form and
content consistent with Borrower's official plan as presented to its Board of
Directors;
(g) (i) by March 1 of each calendar year preliminary projections
on a quarterly basis for the upcoming fiscal year, and (ii) concurrently
with the Borrower's presentation of same to its board of directors
during each year, final projections on a quarterly basis for the
45
upcoming fiscal year, in each case setting forth the items described in
clause (f) above;
(h) promptly upon any revision of projections previously
delivered to the Agent or the projections referred to in clauses (f) and
(g) above, such revised projected balance sheets, projected statements
of operations and projected statements of cash flows with an explanation
of all material variances to the profit and loss statement from the
projections as they existed prior to such revision;
(i) promptly after the same become publicly available, copies of
all periodic and other reports, proxy statements and other materials
filed by the Borrower or any Subsidiary with the Securities and Exchange
Commission, or any Governmental Authority succeeding to any or all of
the functions of said Commission, or with any national securities
exchange, or distributed by the Borrower to its shareholders generally,
as the case may be; and
(j) promptly following any request therefor, such other
information regarding the operations, business affairs and financial
condition of the Borrower or any Subsidiary, or compliance with the
terms of any Loan Document, as the Agent or any Lender may reasonably
request.
SECTION 5.02. Notices of Material Events. The Borrower will
furnish to the Agent and each Lender prompt written notice of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding
by or before any arbitrator or Governmental Authority against or
affecting the Borrower or any Affiliate thereof that, if adversely
determined, could reasonably be expected to result in a Material Adverse
Effect;
(c) the occurrence of any ERISA Event that, alone or together
with any other ERISA Events that have occurred, could reasonably be
expected to result in liability of the Borrower and its Subsidiaries in
an aggregate amount exceeding $750,000; and
(d) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
SECTION 5.03. Information Regarding Collateral. (a) The Borrower
will furnish to the Agent prompt written notice of any change (i) in the
Borrower's corporate name or in any trade name used to identify it in the
conduct of its business or in the ownership of its properties, (ii) in the
location of the Borrower's chief executive office, its principal place of
46
business, any office in which it maintains books or records relating to
Collateral owned by it or any office or facility at which Collateral owned by it
is located (including the establishment of any such new office or facility),
(iii) in the Borrower's identity or corporate structure or (iv) in the
Borrower's Federal Taxpayer Identification Number. The Borrower agrees not to
effect or permit any change referred to in the preceding sentence unless all
filings have been made under the Uniform Commercial Code or otherwise that are
required in order for the Agent to continue at all times following such change
to have a valid, legal and perfected security interest in all the Collateral.
The Borrower also agrees promptly to notify the Agent if any material portion of
the Collateral is damaged or destroyed.
(b) Each year, at the time of delivery of annual financial
statements with respect to the preceding fiscal year pursuant to clause (a) of
Section 5.01, the Borrower shall deliver to the Agent a certificate of a
Financial Officer of the Borrower (i) setting forth the information required
pursuant to Sections 1 and 2 of the Perfection Certificate or confirming that
there has been no change in such information since the date of the Perfection
Certificate delivered on the Effective Date or the date of the most recent
certificate delivered pursuant to this Section and (ii) certifying that all
Uniform Commercial Code financing statements (including fixture filings, as
applicable) or other appropriate filings, recordings or registrations, including
all refilings, rerecordings and reregistrations, containing a description of the
Collateral have been filed of record in each governmental, municipal or other
appropriate office in each jurisdiction identified pursuant to clause (i) above
to the extent necessary to protect and perfect the security interests under the
Security Documents for a period of not less than 18 months after the date of
such certificate (except as noted therein with respect to any continuation
statements to be filed within such period).
SECTION 5.04. Existence; Conduct of Business. The Borrower will,
and will cause each of its Subsidiaries to, do or cause to be done all things
necessary to preserve, renew and keep in full force and effect (a) its legal
existence and (b) the rights, licenses, permits, privileges, franchises,
patents, copyrights, trademarks and trade names which are material to the
conduct of its business taken, in case of the Borrower, individually and in the
case of any Subsidiary, as a whole with the other Subsidiaries; provided that
the foregoing shall not prohibit any merger, consolidation, liquidation or
dissolution permitted under Section 6.03; provided, further, that the Borrower
shall be permitted to terminate, or allow to lapse, any Material License in the
exercise of its reasonable business judgment to the extent that the Borrower (a)
provides written notice on the Contract Notification Date that such Material
License will terminate or may be terminated, or allowed to lapse without
renewal, (b) if requested by the Agent, advises the Agent of the status of any
negotiations which may be transpiring in respect of such Material License and
(c) furnishes to the Agent either of the following 30 days following the date
that such Material License terminates or is allowed to lapse:
(i) projected consolidated statement of operations for the
Borrower and its Subsidiaries which reflect that, after
giving effect to the termination or lapse of such Material
License, the Borrower will be in compliance with the
financial covenants set forth in Article VI of the Credit
Agreement for the next succeeding four fiscal quarters, such
projections to be certified by a Financial Officer, prepared
in good faith and in accordance with GAAP to the extent
applicable; or
47
(ii) an analysis prepared by the Borrower's chief financial
officer which analysis demonstrates to the reasonable
satisfaction of the Agent that the terms of such Material
License would have given rise to a Negative Contribution
with respect to such Material License for the next four
fiscal quarters after giving effect to (x) existing
contractual terms which would have taken effect during such
fiscal quarters or (y) the terms which the licensor under
such Material License advised in writing that it required in
order to renew such Material License which was expiring by
its own terms.
SECTION 5.05. Payment and Obligations. The Borrower will, and
will cause each of its Subsidiaries to, pay its Indebtedness and other
obligations (for which the failure to pay would constitute an Event of Default
under Section 7.01(f)), including Tax liabilities, before the same shall become
delinquent or in default, except where (a) the validity or amount thereof is
being contested in good faith by appropriate proceedings, (b) the Borrower or
such Subsidiary has set aside on its books adequate reserves with respect
thereto in accordance with GAAP, (c) such contest effectively suspends
collection of the contested obligation and the enforcement of any Lien securing
such obligation and (d) the failure to make payment pending such contest could
not reasonably be expected to result in a Material Adverse Effect.
SECTION 5.06. Maintenance of Properties. The Borrower will, and
will cause each of its Subsidiaries to, keep and maintain or replace all
property material to the conduct of its business in good working order and
condition, ordinary wear and tear excepted.
SECTION 5.07. Insurance. (a) The Borrower will, and will cause
each of its Subsidiaries to, maintain, with financially sound and reputable
insurance companies:
(i) fire and extended coverage insurance, on a replacement cost
basis, with respect to all personal property and improvements to real
property, in such amounts as are customarily maintained by companies in
the same or similar business operating in the same or similar locations;
(ii) commercial general liability insurance against claims for
bodily injury, death or property damage occurring upon, about or in
connection with the use of any properties owned, occupied or controlled
by it, providing coverage on an occurrence basis with a combined single
limit of not less than $10,000,000 and including the broad form CGL
endorsement;
(iii) business interruption insurance, insuring against loss of
gross earnings for a period of not less than 12 months arising from any
risks or occurrences required to be covered by insurance pursuant to
clause (i) above; and
(iv) such other insurance as may be required by law.
Deductibles or self-insured retention shall not exceed $500,000 for fire and
extended coverage policies, $1,000,000 for commercial general liability policies
or 30 days for business interruption policies.
48
(b) Each such policy referred to in this paragraph also shall
provide that it shall not be canceled, materially modified or not renewed (i) by
reason of nonpayment of premium except upon not less than 10 days' prior written
notice thereof by the insurer to the Agent (giving the Agent the right to cure
defaults in the payment of premiums) or (ii) for any other reason except upon
not less than 30 days' prior written notice thereof by the insurer to the Agent.
The Borrower shall deliver to the Agent, prior to the cancellation, modification
or nonrenewal of any such policy of insurance, a copy of a renewal or
replacement policy (or other evidence of renewal of a policy previously
delivered to the Agent) together with evidence satisfactory to the Agent of
payment of the premium therefor.
SECTION 5.08. [This Section intentionally left blank.]
SECTION 5.09. Books and Records; Inspection and Audit Rights. The
Borrower will, and will cause each of its Subsidiaries to, keep proper books of
record and account in which full, true and correct entries are made of all
dealings and transactions in relation to its business and activities. The
Borrower will, and will cause each of its Subsidiaries to, permit any
representatives designated by the Agent or any Lender, upon reasonable prior
notice, to visit and inspect its properties, to examine and make extracts from
its books and records, and to discuss its affairs, finances and condition with
its officers and independent accountants, all at such reasonable times and as
often as reasonably requested.
SECTION 5.10. Compliance with Laws. The Borrower will, and will
cause each of its Subsidiaries to, comply with all laws, rules, regulations and
orders of any Governmental Authority applicable to it or its property, except
where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
SECTION 5.11. Notice of Discharge of Hazardous Material or
Environmental Complaint. The Borrower will, and will cause each of its
Subsidiaries to, promptly provide to the Agent true, accurate and complete
copies of any and all notices, complaints, orders, directives, claims, or
citations received by the Borrower or any Subsidiary relating to any (a)
violation or alleged violation by the Borrower or any Subsidiary of any
applicable Environmental Laws; (b) release or threatened release by the Borrower
or any Subsidiary, or at any facility or property owned or operated by the
Borrower or any Subsidiary, of any Hazardous Material, except where occurring
legally; or (c) liability or alleged liability of the Borrower or any Subsidiary
for the costs of cleaning up, removing, remediating or responding to a release
of Hazardous Materials.
SECTION 5.12. Environmental Compliance. If the Borrower or any
Subsidiary shall receive letter, notice, complaint, order, directive, claim or
citation alleging that the Borrower or any Subsidiary has violated any
Environmental Law or is liable for the costs of cleaning up, removing,
remediating or responding to a release of Hazardous Materials, the Borrower
shall, within the time period permitted by the applicable Environmental Law or
the Governmental Authority responsible for enforcing such Environmental Law,
remove or remedy, or cause the applicable Subsidiary to remove or remedy, such
violation or release or satisfy such liability, except where the failure to do
so is not reasonably likely to result in a Material Adverse Effect or unless the
applicability of the Environmental Law, the fact of such violation or liability
49
or what is required to remove or remedy such violation is being contested by the
Borrower or the applicable Subsidiary by appropriate proceedings diligently
conducted and all reserves with respect thereto as may be required under GAAP,
if any, have been made.
SECTION 5.13. Use of Proceeds and Letters of Credit. The proceeds
of the Term Loans will be used only for the repayment of amounts owing under the
Nationsbank Facility. The proceeds of the Revolving Loans and Letters of Credit
will be used for general working capital needs of the Borrower and to guaranty
the payment of workers' compensation insurance in the ordinary course of
business. No part of the proceeds of any Loan will be used, whether directly or
indirectly, (i) to purchase or carry Margin Stock or to extend credit to others
for the purpose of purchasing or carrying Margin Stock or to refund indebtedness
originally incurred for such purpose, or (ii) for any purpose that entails a
violation of any of the Regulations of the Board, including Regulations G, U and
X.
SECTION 5.14. Additional Subsidiaries. If any additional
Subsidiary is formed or acquired after the Effective Date, the Borrower will
notify the Agent and the Lenders thereof and the Borrower will, to the extent
such Subsidiary is formed in the United States, cause such Subsidiary to become
a guarantor of the Obligations hereunder within three Business Days after such
Subsidiary is formed or acquired.
SECTION 5.15. Further Assurances. (a) The Borrower will execute
any and all further documents, financing statements, agreements and instruments,
and take all such further actions (including the filing and recording of
financing statements, fixture filings, mortgages, deeds of trust and other
documents), which may be required under any applicable law, or which the Agent
or the Required Lenders may reasonably request, to effectuate the transactions
contemplated by the Loan Documents or to grant, preserve, protect or perfect the
Liens created or intended to be created by the Security Documents or the
validity or priority of any such Lien, all at the expense of the Borrower. The
Borrower also agrees to provide to the Agent, from time to time upon request,
evidence reasonably satisfactory to the Agent as to the perfection and priority
of the Liens created or intended to be created by the Security Documents.
(b) If any material trademarks, tradenames or any other
intellectual property are acquired by the Borrower after the Effective Date
(other than assets constituting Collateral under the Security Documents that
become subject to the Lien of the Security Documents upon acquisition thereof),
the Borrower will notify the Agent and the Lenders thereof, and, if requested by
the Agent or the Required Lenders, the Borrower will cause such assets to be
subjected to a Lien securing the Obligations and will take such actions as shall
be necessary or reasonably requested by the Agent to grant and perfect such
Liens, including actions described in paragraph (a) of this Section, all at the
expense of the Borrower.
SECTION 5.16. Interest Rate Protection. As promptly as
practicable, and in any event within 60 days after the Effective Date, the
Borrower will enter into, and thereafter for a period of not less than 2 years
will maintain in effect, one or more interest rate protection agreements on such
terms and with such parties as shall be reasonably satisfactory to the Agent,
the effect of which shall be to fix or limit the interest cost to the Borrower
50
with respect to at least $10,000,000 initially (but which may be reduced from
time to time to an amount not less than one half of the then outstanding
principal amount of the Term Loan) of the notional value of the Term Loans.
ARTICLE VI
Negative Covenants
Until the Commitments have expired or terminated and the
principal of and interest on each Loan and all fees payable hereunder have been
paid in full and all Letters of Credit have expired or terminated and all LC
Disbursements shall have been reimbursed, the Borrower covenants and agrees with
the Lenders that:
SECTION 6.01. Indebtedness; Certain Equity Securities.(a) The
Borrower will not, and will not permit any Subsidiary to, create, incur, assume
or permit to exist any Indebtedness, except:
(i) Indebtedness created under the Loan Documents;
(ii) Hedging Agreements allowed pursuant to Section 6.06;
(iii) Indebtedness existing on the date hereof and set forth in
Schedule 6.01 and extensions, renewals, modifications and replacements
of any such Indebtedness that do not increase the outstanding principal
amount thereof or increase, above a rate deemed commercially reasonable
by the Borrower, the interest rate payable thereon from that existing
immediately prior to such extension, renewal or refinancing;
(iv) Indebtedness of the Borrower to any Subsidiary and of any
Subsidiary to the Borrower or another Subsidiary; provided that such
Indebtedness shall be subject to Section 6.04;
(v) Guarantees by the Borrower of Indebtedness of any Subsidiary
and by any Subsidiary of Indebtedness of the Borrower; provided that
such Guarantees shall be subject to Section 6.04;
(vi) Indebtedness of the Borrower or any Subsidiary incurred
solely for the purpose of financing the acquisition, construction or
improvement of any fixed or capital assets, including Capital Lease
Obligations and any Indebtedness assumed in connection with the
acquisition of any such assets or secured by a Lien on any such assets
prior to the acquisition thereof, and extensions, renewals and
replacements of any such Indebtedness that do not increase the
outstanding principal amount thereof or result in an earlier maturity
date or decreased weighted average life thereof; provided that (A) such
Indebtedness is incurred prior to or within 90 days after such
acquisition or the completion of such construction or improvement and
(B) the aggregate principal amount of Indebtedness permitted by this
clause (vi) shall not exceed 95% of the amount allowed for Capital
Expenditures pursuant to Section 6.19;
51
(vii) trade payables in the ordinary course of business,
endorsements for collection or deposit in the ordinary course of
business, surplus and retained earnings, lease obligations (other than
pursuant to Capitalized Leases), reserves for deferred income taxes and
investment credits, other deferred credits and reserves, and deferred
compensation obligations; and
(viii) additional Indebtedness not to exceed $100,000 outstanding
at any time.
(b) The Borrower will not, and will not permit any Subsidiary to,
issue any preferred stock or be or become liable in respect of any obligation
(contingent or otherwise) to purchase, redeem, retire, acquire or make any other
payment in respect of any shares of capital stock of the Borrower or any
Subsidiary or any option, warrant or other right to acquire any such shares of
capital stock. Nothing in this paragraph shall prohibit the Borrower from
granting stock options to officers, directors, employees and consultants of or
to the Borrower or from issuing common stock of the Borrower pursuant to such
options.
SECTION 6.02. Liens. The Borrower will not, and will not permit
any Subsidiary to, create, incur, assume or permit to exist any Lien on any
property or asset now owned or hereafter acquired by it, or assign or sell any
income or revenues (including accounts receivable) or rights in respect of any
thereof, except:
(i) Liens created under the Loan Documents;
(ii) Permitted Encumbrances;
(iii) any Lien on any property or asset of the Borrower or any
Subsidiary existing on the date hereof and set forth in Schedule 6.02;
provided that (i) such Lien shall not apply to any other property or
asset of the Borrower or any Subsidiary and (ii) such Lien shall secure
only those obligations which it secures on the date hereof; and
(iv) Liens on fixed or capital assets acquired, constructed or
improved by the Borrower or any Subsidiary; provided that (A) such
security interests secure Indebtedness permitted by clause (vi) of
Section 6.01(a), (B) such security interests and the Indebtedness
secured thereby are incurred prior to or within 90 days after such
acquisition or the completion of such construction or improvement, (C)
the Indebtedness secured thereby does not exceed 95% of the cost of
acquiring, constructing or improving such fixed or capital assets and
(D) such security interests shall not apply to any other property or
assets of the Borrower or any Subsidiary.
(v) Liens on property of the Borrower shipped under or in
connection with Documentary Letters of Credit permitted under this
Agreement (if such Liens are in favor of the issuer of such Documentary
Letters of Credit) and all property of the Borrower in the actual or
constructive possession of the Issuing Bank with respect to Documentary
Letters of Credit, other than property held in a fiduciary capacity of
such Issuing Bank.
52
SECTION 6.03. Fundamental Changes. (a) The Borrower will not, and
will not permit any Subsidiary to, merge into or consolidate with any other
Person, or permit any other Person to merge into or consolidate with it, or
liquidate or dissolve, except that, if at the time thereof and immediately after
giving effect thereto no Default shall have occurred and be continuing (i) any
Subsidiary may merge into the Borrower in a transaction in which the Borrower is
the surviving corporation, (ii) any Subsidiary may merge into any Subsidiary in
a transaction in which the surviving entity is a Subsidiary and (iii) any
Subsidiary may liquidate or dissolve if the Borrower determines in good faith
that such liquidation or dissolution is in the best interests of the Borrower
and is not materially disadvantageous to the Lenders; provided that any such
merger involving a Person that is not a wholly owned Subsidiary immediately
prior to such merger shall not be permitted unless also permitted by
Section 6.04.
(b) The Borrower will not, and will not permit any of its
Subsidiaries to, engage to any material extent in any business other than
businesses of the type conducted by the Borrower and its Subsidiaries on the
date of execution of this Agreement and businesses reasonably related thereto.
SECTION 6.04. Investments, Loans, Advances, Guarantees and
Acquisitions. The Borrower will not, and will not permit any of its Subsidiaries
to, purchase, hold or acquire (including pursuant to any merger with any Person
that was not a wholly owned Subsidiary prior to such merger) any capital stock,
evidences of indebtedness or other securities (including any option, warrant or
other right to acquire any of the foregoing) of, make or permit to exist any
loans or advances to, Guarantee any obligations of, or make or permit to exist
any investment or any other interest in, any other Person, or purchase or
otherwise acquire (in one transaction or a series of transactions) any assets of
any other Person constituting a business unit, except:
(a) Permitted Investments;
(b) investments existing on the date hereof and set forth on
Schedule 6.04, to the extent such investments would not be permitted
under any other clause of this Section;
(c) (i) investments by the Borrower in the equity of its
Subsidiaries and (ii) investments, loans and advances by Subsidiaries in
and to other Subsidiaries; provided that any such shares of capital
stock held by the Borrower in Topps Europe Limited shall be pledged
pursuant to the Pledge Agreement (subject to the limitations applicable
to common stock of a Foreign Subsidiary referred to in therein);
provided, further, that the aggregate amount of investments by the
Borrower in its Subsidiaries shall not at any time exceed $3,000,000;
(d) Intercompany Debt evidenced by Intercompany Notes owing to
the Borrower in an aggregate principal amount not to exceed $3,000,000
at any one time;
(e) Intercompany Debt not evidenced by Intercompany Notes but
which is reflected on the books and records of the Borrower and its
Subsidiaries in an aggregate outstanding principal amount not to exceed
$15,000,000 at any one time;
53
(f) a guaranty by the Borrower under the Topps SA Guaranty in an
amount not in excess of $2,000,000;
(g) an unsecured guaranty by the Borrower of each of the
following unsecured obligations of Topps Ireland Limited to a financial
institution:
a. Overdraft facility up to 500,000 Irish pounds;
b. Letter of credit facility up to $3,450,000 (U.S.);
c. 70,000 Irish pound guarantee to the Department of
Agriculture;
d. 20,000 Swiss Franc guarantee to Messrs. Gordernd in
respect of the importation of goods into Switzerland;
e. 2,000,000 Irish pound forward currency hedging facility;
and
f. 58,000 Sterling pound guarantee in favor of VAG
Finance Limited.
; provided that (i) the maximum amount of each unsecured separate
credit facility extended by such financial institution may not be
increased and (ii) the aggregate amount of all such guaranties
shall not exceed $7,200,000;
(h) investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes
with, customers and suppliers, in each case in the ordinary course of
business; and
(i) loans and advances to officers, directors and employees in
the ordinary course of business (including to finance relocation
expenses) not to exceed $100,000 at any one time outstanding.
(j) an unsecured guaranty by the Borrower of the Bank of Scotland
Debt in an amount not to exceed 1,500,000 British pounds.
SECTION 6.05. Asset Sales. The Borrower will not, and will not
permit any of its Subsidiaries to, sell, transfer, lease or otherwise dispose of
any asset, including any capital stock, nor will the Borrower permit any of its
Subsidiaries to issue any additional shares of its capital stock or other
ownership interest in such Subsidiary, except:
(a) sales of inventory, used, surplus or obsolete equipment and
Permitted Investments in the ordinary course of business;
54
(b) the granting of licenses in trademarks or other intellectual
property owned by the Borrower or any of its Subsidiaries provided that
any such licenses granted by the Borrower shall be subject to the terms
of the Trademark Security Agreement;
(c) sales, transfers and dispositions to the Borrower or a
Subsidiary; provided that any such sales, transfers or dispositions
shall be made in compliance with Section 6.08;
(d) a sale of the Plant and equipment owned by Topps Ireland
Limited located in Cork, Ireland;
(e) a sale of the equipment from the Borrower's Plant located in
Duryea, Pennsylvania;
(f) sales, transfers and dispositions of assets (other than
capital stock of a Subsidiary) that are not permitted by any other
clause of this Section; provided that the aggregate fair market value of
all assets sold, transferred or otherwise disposed of in reliance upon
this clause (f) shall not exceed $500,000 during any fiscal year of the
Borrower; and
(g) sales and transfers of assets between and among the Borrower
and the Subsidiaries not to exceed $750,000 in the aggregate during the
term of the Loans.
provided that (i) all sales, transfers, leases and other dispositions permitted
hereby shall be made for fair value and (ii) substantially all the consideration
for such distributions shall be cash consideration.
SECTION 6.06. Hedging Agreements. The Borrower will not, and will
not permit any of its Subsidiaries to, enter into any Hedging Agreement, other
than (a) Hedging Agreements required by Section 5.16 and (b) Hedging Agreements
entered into in the ordinary course of business to hedge or mitigate risks to
which the Borrower or any Subsidiary is exposed in the conduct of its business
or the management of its liabilities in an aggregate notional amount not to
exceed $54,000,000.
SECTION 6.07. Restricted Payments; Certain Payments of
Indebtedness. (a) The Borrower will not, and will not permit any Subsidiary to,
declare or make, or agree to pay or make, directly or indirectly, any Restricted
Payment, except (i) the Borrower may declare and pay dividends with respect to
its capital stock payable solely in additional shares of its common stock, (ii)
Subsidiaries may declare and pay dividends ratably with respect to their capital
stock, and (iii) the Borrower may make Restricted Payments, not exceeding
$250,000 during any fiscal year, pursuant to and in accordance with stock option
plans or other benefit plans for management or employees or consultants of the
Borrower and its Subsidiaries.
(b) The Borrower will not, and will not permit any Subsidiary to,
make or agree to pay or make, directly or indirectly, any payment or other
55
distribution (whether in cash securities or other property) of or in respect of
principal of or interest on any Indebtedness, or any payment or other
distribution (whether in cash, securities or other property), including any
sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancellation or termination of any Indebtedness,
except:
(i) payment of Indebtedness created under the Loan Documents;
(ii) payment of regularly scheduled interest and principal
payments as and when due in respect of any Indebtedness permitted
hereunder;
(iii) refinancings of Indebtedness to the extent permitted by
Section 6.01; and
(iv) payment of secured Indebtedness that becomes due as a result
of the voluntary sale or transfer of the property or assets securing
such Indebtedness.
SECTION 6.08. Transactions with Affiliates.The Borrower will not,
and will not permit any Subsidiary to, sell, lease or otherwise transfer any
property or assets to, or purchase, lease or otherwise acquire any property or
assets from, or otherwise engage in any other transactions with, any of its
Subsidiaries, except (a) transactions in the ordinary course of business that
are at prices and on terms and conditions not less favorable to the Borrower or
such Subsidiary than could be obtained on an arm's-length basis from unrelated
third parties, (b) any Restricted Payment permitted by Section 6.07, (c) the
transactions described in Section 6.04 and (d) transactions permitted under
Section 6.05(g).
SECTION 6.09. Restrictive Agreements. The Borrower will not, and
will not permit any Subsidiary to, directly or indirectly, enter into, incur or
permit to exist any agreement or other arrangement that prohibits, restricts or
imposes any condition upon (a) the ability of the Borrower or any Subsidiary to
create, incur or permit to exist any Lien upon any of its property or assets, or
(b) the ability of any Subsidiary to pay dividends or other distributions with
respect to any shares of its capital stock or to make or repay loans or advances
to the Borrower or any other Subsidiary or to Guarantee Indebtedness of the
Borrower or any other Subsidiary; provided that (i) the foregoing shall not
apply to restrictions and conditions imposed by law or by any Loan Document,
(ii) the foregoing shall not apply to restrictions and conditions existing on
the date hereof identified on Schedule 6.09 (but shall apply to any extension or
renewal of, or any amendment or modification expanding the scope of, any such
restriction or condition other than any extension, renewal, amendment,
modification or refinancing of the obligations of Topps Ireland Limited to
Ulster Bank which such obligations shall not exceed $7.2 million in the
aggregate), (iii) the foregoing shall not apply to customary restrictions and
conditions contained in agreements relating to the sale of a Subsidiary pending
such sale, provided such restrictions and conditions apply only to the
Subsidiary that is to be sold and such sale is permitted hereunder, (iv) clause
(a) of the foregoing shall not apply to restrictions or conditions imposed by
any agreement relating to secured Indebtedness permitted by this Agreement if
such restrictions or conditions apply only to the property or assets securing
such Indebtedness and (v) clause (a) of the foregoing shall not apply to
customary provisions in leases restricting the assignment thereof.
56
SECTION 6.10. Ammendment of Material Documents. The Borrower will
not, and will not permit any Subsidiary to, amend, modify or waive any of its
rights under its certificate of incorporation, by-laws or other organizational
documents if the same is reasonably likely to have a Material Adverse Effect,
would result in an Event of Default under any of the Loan Documents or would
otherwise be adverse to the interests or rights of the Lenders or determined by
the Lenders in their sole discretion.
SECTION 6.11. Limitations on Sales and Leasebacks. The Borrower
will not, and will not permit any Subsidiary to, enter into any arrangement with
any Person providing for the leasing by the Borrower or any Subsidiary of real
or personal property which has been or is to be sold or transferred by the
Borrower or any Subsidiary to such Person or to any other Person to whom funds
have been or are to be advanced by such Person on the security of such property
or rental obligations of the Borrower or any Subsidiary; provided, however, that
nothing in this Section 6.11 shall prevent the Borrower or any Subsidiary from
selling the plant and equipment located in Cork, Ireland and leasing back office
space located in such plant and related equipment.
SECTION 6.12. Fiscal Year. The Borrower will not, and will not
permit any Subsidiary to, change its fiscal year.
SECTION 6.13. Consolidated Leverage Ratio. The Borrower will not
permit Consolidated Leverage Ratio on the dates set forth below to be greater
than the amount specified opposite such dates:
--------------------------------------------------------------------------------
Fiscal Quarter Ending Consolidated Leverage Ratio
--------------------------------------------------------------------------------
February 28, 1998 2.16 to 1
--------------------------------------------------------------------------------
May 30, 1998 3.85 to 1
--------------------------------------------------------------------------------
August 29, 1998 2.03 to 1
--------------------------------------------------------------------------------
November 28, 1998 1.20 to 1
--------------------------------------------------------------------------------
February 27, 1999 and the last day of each 1.60 to 1
quarter thereafter
--------------------------------------------------------------------------------
SECTION 6.14. Consolidated Fixed Charge Ratio. The Borrower will
not permit Consolidated Fixed Charge Ratio on the dates set forth below to be
less than the amount specified opposite such dates:
--------------------------------------------------------------------------------
Fiscal Quarter Ending Consolidated Fixed Charge Ratio
--------------------------------------------------------------------------------
February 28, 1998 1.16 to 1
--------------------------------------------------------------------------------
May 30, 1998 0.49 to 1
--------------------------------------------------------------------------------
August 29, 1998 0.94 to 1
--------------------------------------------------------------------------------
57
November 28, 1998 1.46 to 1
--------------------------------------------------------------------------------
February 27, 1999 0.92 to 1
--------------------------------------------------------------------------------
May 29, 1999 1.10 to 1
--------------------------------------------------------------------------------
August 28, 1999 1.10 to 1
--------------------------------------------------------------------------------
the last day of each quarter thereafter 1.25 to 1
--------------------------------------------------------------------------------
SECTION 6.15. Consolidated Net Worth. The Borrower and its
Subsidiaries will not permit Consolidated Net Worth at any time to be less than
$56,800,000.
SECTION 6.16. Consolidated Net Loss. The Borrower and its
Subsidiaries will not incur a consolidated net loss for any fiscal quarter,
except that the Borrower and its Subsidiaries may incur a consolidated net loss
in one fiscal quarter per each fiscal year as follows: (a) if such consolidated
net loss occurs during the first fiscal quarter of any such year, such loss
shall not exceed ($1,600,000) or if such consolidated net loss occurs during any
fiscal quarter other than the first fiscal quarter, such loss shall not exceed
($2,000,000); (b) the Borrower and its Subsidiaries will not incur a
consolidated net loss for the first six months of such fiscal year, (c) the
Borrower and its Subsidiaries shall earn a consolidated net profit of $447,000
for the first nine months of such fiscal year, and (d) the Borrower and its
Subsidiaries shall earn a consolidated net profit of $4,078,000 in such fiscal
year.
SECTION 6.17. EBITDA. The Borrower and its Subsidiaries will not
permit EBITDA for each quarter ending on the dates set forth below to be less
than the amounts set forth opposite such dates:
--------------------------------------------------------------------------------
Fiscal Quarter Ending EBITDA
--------------------------------------------------------------------------------
February 28, 1998 $4,700,000
--------------------------------------------------------------------------------
May 30, 1998 ($1,800,000)
--------------------------------------------------------------------------------
SECTION 6.18. Cumulative EBITDA. The Borrower and its
Subsidiaries will not permit Cumulative EBITDA on the dates set forth below to
be less than the amounts set forth opposite such dates:
--------------------------------------------------------------------------------
Fiscal Quarter Ending Cumulative EBITDA
--------------------------------------------------------------------------------
August 29, 1998 $3,100,000
--------------------------------------------------------------------------------
November 28, 1998 $5,640,000
--------------------------------------------------------------------------------
February 27, 1999 and on the last day of $14,400,000
each quarter thereafter
--------------------------------------------------------------------------------
58
SECTION 6.19. Capital Expenditures. The Borrower will not permit
Capital Expenditures for the term of the Loans to exceed $6,000,000.
ARTICLE VII
Events of Default
SECTION 7.01. Capital Expenditures. If any of the following
events ("Events of Default") shall occur:
(a) the Borrower shall fail to pay any principal of any Loan or
any reimbursement obligation in respect of any LC Disbursement when and
as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or
any fee or any other amount (other than an amount referred to in clause
(a) of this Article) payable under this Agreement or any other Loan
Document, when and as the same shall become due and payable;
(c) any representation or warranty made or deemed made by or on
behalf of the Borrower or any Subsidiary in or in connection with any
Loan Document or any amendment or modification thereof or waiver
thereunder, or in any report, certificate, financial statement or other
document furnished pursuant to or in connection with any Loan Document
or any amendment or modification thereof or waiver thereunder, shall
prove to have been incorrect when made or deemed made;
(d) the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in Section 5.02, 5.04 (with respect to
the existence of the Borrower), 5.09, 5.13 or 5.14 or in Article VI;
(e) the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in any Loan Document (other than those
specified in clause (a), (b) or (d) of this Article), and such failure
shall continue unremedied for a period of 30 days;
(f) the Borrower or any Subsidiary shall fail to make any payment
(whether of principal or interest and regardless of amount) in respect
of any Material Indebtedness, when and as the same shall become due and
payable;
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that
enables or permits (with or without the giving of notice, the lapse of
time or both) the holder or holders of any Material Indebtedness or any
trustee or agent on its or their behalf to cause any Material
Indebtedness to become due, or to require the prepayment, repurchase,
redemption or defeasance thereof, prior to its scheduled maturity;
provided that this clause (g) shall not apply to secured Indebtedness
that becomes due as a result of the voluntary sale or transfer of the
property or assets securing such Indebtedness;
59
(h) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation,
reorganization or other relief in respect of the Borrower or any
Subsidiary or its debts, or of a substantial part of its assets, under
any Federal, state or foreign bankruptcy, insolvency, receivership or
similar law now or hereafter in effect or (ii) the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar
official for the Borrower or any Subsidiary or for a substantial part of
its assets, and, in any such case, such proceeding or petition shall
continue undismissed for 60 days or an order or decree approving or
ordering any of the foregoing shall be entered;
(i) the Borrower or any Subsidiary shall (i) voluntarily commence
any proceeding or file any petition seeking liquidation, reorganization
or other relief under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect,
(ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or petition described in clause (h)
of this Article, (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar
official for the Borrower or any Subsidiary or for a substantial part of
its assets, (iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v) make a general
assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing;
(j) the Borrower or any Subsidiary shall become unable, admit in
writing its inability or fail generally to pay its debts as they become
due;
(k) one or more judgments for the payment of money in an
aggregate amount in excess of $750,000 shall be rendered against the
Borrower, any Subsidiary or any combination thereof and the same shall
remain undischarged for a period of 30 consecutive days during which
execution shall not be effectively stayed, or any action shall be
legally taken by a judgment creditor to attach or levy upon any assets
of the Borrower or any Subsidiary to enforce any such judgment;
(l) an ERISA Event shall have occurred that, in the opinion of
the Required Lenders, when taken together with all other ERISA Events
that have occurred, could reasonably be expected to result in liability
of the Borrower and its Subsidiaries in an aggregate amount exceeding
$750,000 in any year;
(m) any Lien purported to be created under any Security Document
shall cease to be, or shall be asserted by the Borrower not to be, a
valid and perfected Lien on any Collateral, with the priority required
by the applicable Security Document, except (i) as a result of the sale
or other disposition of the applicable Collateral in a transaction
permitted under the Loan Documents, (ii) as a result of the Agent's
failure to maintain possession of any stock certificates, promissory
notes or other instruments delivered to it under the Security Documents
or (iii) pursuant to the terms of such Security Document;
(n) a Change in Control shall occur;
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(o) if any Loan Document ceases to be in full force and effect
(other than by reason of any action by the Agent), or if without the
written consent of the Lenders, this Agreement or any other Loan
Document shall be disaffirmed or shall terminate, be terminable or be
terminated or become void or unenforceable for any reason whatsoever
(other than in accordance with its terms in the absence of default or by
reason of any action by the Lenders or the Agent); or
(p) if the Borrower shall breach any of the material terms or
conditions of any Hedging Agreement with any of the Lenders and such breach
shall continue beyond any grace period, if any, relating thereto pursuant to its
terms;
then, and in every such event (other than an event with respect to the Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Agent may, and at the request of the
Required Lenders shall, by notice to the Borrower, take either or both of the
following actions, at the same or different times: (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately, and
(ii) declare the Loans then outstanding to be due and payable in whole (or in
part, in which case any principal not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the principal of
the Loans so declared to be due and payable, together with accrued interest
thereon and all fees and other obligations of the Borrower accrued hereunder,
shall become due and payable immediately, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrower; and
in case of any event with respect to the Borrower described in clause (h) or (i)
of this Article, the Commitments shall automatically terminate and the principal
of the Loans then outstanding, together with accrued interest thereon and all
fees and other obligations of the Borrower accrued hereunder, shall
automatically become due and payable, without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Borrower.
ARTICLE VIII
The Agent
Each of the Lenders and the Issuing Bank hereby irrevocably
appoints the Agent as its agent and authorizes the Agent to take such actions on
its behalf and to exercise such powers as are delegated to the Agent by the
terms of the Loan Documents, together with such actions and powers as are
reasonably incidental thereto.
The bank serving as the Agent hereunder shall have the same
rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Agent, and such bank and its
Affiliates may accept deposits from, lend money to and generally engage in any
kind of business with the Borrower or any Subsidiary or other Affiliate thereof
as if it were not the Agent hereunder.
The Agent shall not have any duties or obligations except those
expressly set forth in the Loan Documents. Without limiting the generality of
the foregoing, (a) the Agent shall not be subject to any fiduciary or other
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implied duties, regardless of whether a Default has occurred and is continuing,
(b) the Agent shall not have any duty to take any discretionary action or
exercise any discretionary powers, except discretionary rights and powers
expressly contemplated by the Loan Documents that the Agent is required to
exercise in writing by the Required Lenders (or such other number or percentage
of the Lenders as shall be necessary under the circumstances as provided in
Section 9.02), and (c) except as expressly set forth in the Loan Documents, the
Agent shall not have any duty to disclose, and shall not be liable for the
failure to disclose, any information relating to the Borrower or any of its
Subsidiaries that is communicated to or obtained by the bank serving as Agent or
any of its Affiliates in any capacity. The Agent shall not be liable for any
action taken or not taken by it with the consent or at the request of the
Required Lenders (or such other number or percentage of the Lenders as shall be
necessary under the circumstances as provided in Section 9.02) or in the absence
of its own gross negligence or wilful misconduct. The Agent shall not be deemed
not to have knowledge of any Default unless and until written notice thereof is
given to the Agent by the Borrower or a Lender, and the Agent shall not be
responsible for or have any duty to ascertain or inquire into (i) any statement,
warranty or representation made in or in connection with any Loan Document,
(ii) the contents of any certificate, report or other document delivered
thereunder or in connection therewith, (iii) the performance or observance of
any of the covenants, agreements or other terms or conditions set forth in any
Loan Document, (iv) the validity, enforceability, effectiveness or genuineness
of any Loan Document or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article IV or elsewhere in any Loan
Document, other than to confirm receipt of items expressly required to be
delivered to the Agent.
The Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Agent also may rely
upon any statement made to it orally or by telephone and believed by it to be
made by the proper Person, and shall not incur any liability for relying
thereon. The Agent may consult with legal counsel (who may be counsel for the
Borrower), independent accountants and other experts selected by it, and shall
not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts.
The Agent may perform any and all its duties and exercise its
rights and powers by or through any one or more sub-agents appointed by the
Agent. The Agent and any such sub-agent may perform any and all its duties and
exercise its rights and powers through their respective Related Parties. The
exculpatory provisions of the preceding paragraphs shall apply to any such
sub-agent and to the Related Parties of each Agent and any such sub-agent, and
shall apply to their respective activities in connection with the syndication of
the credit facilities provided for herein as well as activities as Agent.
Subject to the appointment and acceptance of a successor the
Agent as provided in this paragraph, the Agent may resign at any time by
notifying the Lenders, the Issuing Bank and the Borrower. Upon any such
resignation, the Required Lenders shall have the right, in consultation with the
Borrower, to appoint a successor. If no successor shall have been so appointed
by the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Agent gives notice of its resignation, then the retiring
Agent may, on behalf of the Lenders and the Issuing Bank, appoint a successor
62
Agent which shall be a bank with an office in New York, New York, or an
Affiliate of any such bank. Upon the acceptance of its appointment as Agent
hereunder by a successor, such successor shall 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 hereunder.
The fees payable by the Borrower to a successor Agent shall be the same as those
payable to its predecessor unless otherwise agreed between the Borrower and such
successor. After the Agent's resignation hereunder, the provisions of this
Article and Section 9.03 shall continue in effect for the benefit of such
retiring Agent, its sub-agents and their respective Related Parties in respect
of any actions taken or omitted to be taken by any of them while it was acting
as Agent.
Each Lender acknowledges that it has, independently and without
reliance upon the Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Agent or any other Lender and
based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement, any other Loan Document or related agreement
or any document furnished hereunder or thereunder.
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to the Borrower, to it at Xxx Xxxxxxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx, 00000-0000, Attention of Xx. Xxxxxxxxx X. Xxxxxx (Telecopy No.
212-376-0621) with a copy to Xxxxxxx Xxxx & Xxxxxxxxx, One Citicorp
Center, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (Telecopy No.
000-000-0000 (after May 30, 1998 to 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000-0000 (Telecopy No. 212-728-8111), Attention of Xxxxxxx
Xxxxxx, Esq.;
(b) if to the Agent, to The Chase Manhattan Bank, 0 Xxxxxxxxxx
Xxxxx, 00xx Xxxxx, Xxxxxxxx, Xxx Xxxx, 00000-0000, Attention of Xx.
Xxxxxxxxxxx Xxxxxx and Regional Manager (Telecopy No. 718-403-6598),
with a copy to Xxxxxx, Rodin & Xxxxxxx LLP, 000 Xxxxx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx, 00000-0000, Attention of Xxxx X. Xxxxxx, Esq.
(Telecopy No. 212-682-6331); provided that after June 12, 1998, notices
shall be delivered to the Agent at 0 Xxxxxxxxx Xxxxxx, 00xx Xxxxx,
Xxxxxxxx, Xxx Xxxx, 00000.
(c) if to the Issuing Bank, to it at the address provided in
paragraph (b) above;
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(d) if to any other Lender, to it at its address (or telecopy
number) set forth in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
SECTION 9.02. Waivers; Ammendments. (a) No failure or delay by
the Agent, the Issuing Bank or any Lender in exercising any right or power
hereunder or under any other Loan Document shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Agent, the Issuing Bank and the
Lenders hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of any Loan Document or consent to any departure by the Borrower
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) of this Section, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
Without limiting the generality of the foregoing, the making of a Loan or
issuance of a Letter of Credit shall not be construed as a waiver of any
Default, regardless of whether the Agent, any Lender or the Issuing Bank may
have had notice or knowledge of such Default at the time.
(b) Neither this Agreement nor any other Loan Document nor any
provision hereof or thereof may be waived, amended or modified except, in the
case of this Agreement, pursuant to an agreement or agreements in writing
entered into by the Borrower and the Required Lenders or, in the case of any
other Loan Document, pursuant to an agreement or agreements in writing entered
into by the Agent and the Borrower that are parties thereto, in each case with
the consent of the Required Lenders; provided that no such agreement shall (i)
increase the Commitment of any Lender without the written consent of such
Lender, (ii) reduce the principal amount of any Loan or LC Disbursement or
reduce the rate of interest thereon, or reduce any fees payable hereunder,
without the written consent of each Lender affected thereby, (iii) postpone the
scheduled Revolving Maturity Date or Term Loan Maturity Date, or reduce the
amount of, waive or excuse any payment of the principal amount of any Loan or LC
Disbursement, or any interest thereon, or any fees payable hereunder, without
the written consent of each Lender affected thereby, (iv) change Section 2.18(b)
or (c) in a manner that would alter the pro rata sharing of payments required
thereby, without the written consent of each Lender, (v) change any of the
provisions of this Section or the definition of "Required Lenders" or any other
provision of any Loan Document specifying the number or percentage of Lenders
(or Lenders of any Class) required to waive, amend or modify any rights
thereunder or make any determination or grant any consent thereunder, without
the written consent of each Lender (or each Lender of such Class, as the case
may be), (vi) release any Subsidiary (to the extent such Subsidiary is a
Guarantor hereunder) from its Guarantee hereunder, or limit its liability in
respect of such Guarantee, without the written consent of each Lender, (vii)
release all or any substantial part of the Collateral from the Liens of the
Security Documents, without the written consent of each Lender, (viii) change
any provisions of any Loan Document in a manner that by its terms adversely
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affects the rights in respect of payments due to Lenders holding Loans of any
Class differently than those holding Loans of any other Class, without the
written consent of Lenders holding a majority in interest of the outstanding
Loans and unused Commitments of each affected Class or; provided further that
(A) no such agreement shall amend, modify or otherwise affect the rights or
duties of the Agent, or the Issuing Bank without the prior written consent of
the Agent, or the Issuing Bank, as the case may be, and (B) any waiver,
amendment or modification of this Agreement that by its terms affects the rights
or duties under this Agreement of the Revolving Lenders (but not the Term Loan
Lenders) or the Term Loan Lenders (but not the Revolving Lenders) may be
effected by an agreement or agreements in writing entered into by the Borrower
and requisite percentage in interest of the affected Class of Lenders.
SECTION 9.03. Expenses; Indemnity; Damage Waiver.(a) The Borrower
shall pay (i) all reasonable out-of-pocket expenses incurred by the Agent and
its Affiliates, including the reasonable fees, charges and disbursements of
counsel for the Agent, in connection with the syndication of the credit
facilities provided for herein, the preparation and administration of the Loan
Documents or any amendments, modifications or waivers of the provisions thereof
(whether or not the transactions contemplated hereby or thereby shall be
consummated), (ii) all reasonable out-of-pocket expenses incurred by the Issuing
Bank in connection with the issuance, amendment, renewal or extension of any
Letter of Credit or any demand for payment thereunder and (iii) all
out-of-pocket expenses incurred by the Agent, the Issuing Bank or any Lender,
including the fees, charges and disbursements of any counsel for the Agent, the
Issuing Bank or any Lender, in connection with the enforcement or protection of
its rights in connection with the Loan Documents, including its rights under
this Section, or in connection with the Loans made or Letters of Credit issued
hereunder, including all such out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans or Letters of
Credit.
(b) The Borrower shall indemnify the Agent, the Issuing Bank and
each Lender, and each Related Party of any of the foregoing Persons (each such
Person being called an "Indemnitee") against, and hold each Indemnitee harmless
from, any and all losses, claims, damages, liabilities and related expenses,
including the fees, charges and disbursements of any counsel for any Indemnitee,
incurred by or asserted against any Indemnitee arising out of, in connection
with, or as a result of (i) the execution or delivery of any Loan Document or
any other agreement or instrument contemplated hereby, the performance by the
parties to the Loan Documents of their respective obligations thereunder or the
consummation of the Financing Transactions or any other transactions
contemplated hereby, (ii) any Loan or Letter of Credit or the use of the
proceeds therefrom (including any refusal by the Issuing Bank to honor a demand
for payment under a Letter of Credit if the documents presented in connection
with such demand do not strictly comply with the terms of such Letter of
Credit), (iii) any actual or alleged presence or release of Hazardous Materials
on or from any property owned or operated by the Borrower or any of its
Subsidiaries, or any Environmental Liability related in any way to the Borrower
or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory and regardless of whether any Indemnitee is a
party thereto; provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a court of competent jurisdiction by final
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and nonappealable judgment to have resulted from the gross negligence or wilful
misconduct of such Indemnitee.
(c) To the extent that the Borrower fails to pay any amount
required to be paid by it to the Agent or the Issuing Bank under paragraph (a)
or (b) of this Section, each Lender severally agrees to pay to the Agent or the
Issuing Bank, as the case may be, such Lender's pro rata share (determined as of
the time that the applicable unreimbursed expense or indemnity payment is
sought) of such unpaid amount; provided that the unreimbursed expense or
indemnified loss, claim, damage, liability or related expense, as the case may
be, was incurred by or asserted against the Agent or the Issuing Bank in its
capacity as such. For purposes hereof, a Lender's "pro rata share" shall be
determined based upon its share of the sum of the total Revolving Exposures,
outstanding Term Loans and unused Commitments at the time.
(d) To the extent permitted by applicable law, the Borrower shall
not assert, and each hereby waives, any claim against any Indemnitee, on any
theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with, or
as a result of, this Agreement or any agreement or instrument contemplated
hereby, the Financing Transactions, any Loan or Letter of Credit or the use of
the proceeds thereof.
(e) All amounts due under this Section shall be payable promptly
after written demand therefore.
SECTION 9.04. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby (including any
Affiliate of the Issuing Bank that issues any Letter of Credit), except that the
Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any attempted
assignment or transfer by the Borrower without such consent shall be null and
void). Nothing in this Agreement, express or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby (including any Affiliate of the Issuing
Bank that issues any Letter of Credit) and, to the extent expressly contemplated
hereby, the Related Parties of each of the Agent, the Issuing Bank and the
Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.
(b) Any Lender may assign to one or more Eligible Assignees all
or a portion of its rights and obligations under this Agreement (including all
or a portion of its Commitment and the Loans at the time owing to it); provided
that (i) except in the case of an assignment to a Lender or an Affiliate of a
Lender, the Agent (and, in the case of an assignment of all or a portion of a
Revolving Commitment or any Lender's obligations in respect of its LC Exposure,
the Issuing Bank) must give their prior written consent to such assignment
(which consent shall not be unreasonably withheld), (ii) except in the case of
an assignment to a Lender or an Affiliate of a Lender or an assignment of the
entire remaining amount of the assigning Lender's Commitment or Loans, the
amount of the Commitment or Loans of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and Acceptance with respect
to such assignment is delivered to the Agent) shall not be less than $5,000,000
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and, after giving effect thereto, the assigning Lender shall retain Commitments
and Loans aggregating at least $5,000,000, in each case unless the Agent and the
Borrower otherwise consent, (iii) each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender's rights and
obligations under this Agreement, except that this clause (iii) shall not be
construed to prohibit the assignment of a proportionate part of all the
assigning Lender's rights and obligations in respect of one Class of Commitments
or Loans, (iv) the parties to each assignment shall execute and deliver to the
Agent an Assignment and Acceptance, together with a processing and recordation
fee of $3,500, and (v) the assignee, if it shall not be a Lender, shall deliver
to the Agent an Administrative Questionnaire. Subject to acceptance and
recording thereof pursuant to paragraph (d) of this Section, from and after the
effective date specified in each Assignment and Acceptance the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
by such Assignment and Acceptance, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the extent
of the interest assigned by such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.15, 2.16, 2.17 and 9.03). Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this paragraph shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (e) of this Section.
(c) The Agent, acting for this purpose as an agent of the
Borrower, shall maintain at one of its offices in The City of New York a copy of
each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans and LC Disbursements owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The entries in
the Register shall be conclusive, and the Borrower, the Agent, the Issuing Bank
and the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower, the Issuing Bank and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee, the assignee's
completed Administrative Questionnaire (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in
paragraph (b) of this Section and any written consent to such assignment
required by paragraph (b) of this Section, the Agent shall accept such
Assignment and Acceptance and record the information contained therein in the
Register. No assignment shall be effective for purposes of this Agreement unless
it has been recorded in the Register as provided in this paragraph.
(e) Any Lender may, without the consent of the Borrower, the
Agent or the Issuing Bank, sell participations to one or more banks or other
entities (a "Participant") in all or a portion of such Lender's rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans owing to it); provided that (i) such Lender's obligations under
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this Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (iii) the Borrower, the Agent, the Issuing Bank and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement. Any agreement or
instrument pursuant to which a Lender sells such a participation shall provide
that such Lender shall retain the sole right to enforce the Loan Documents and
to approve any amendment, modification or waiver of any provision of the Loan
Documents; provided that such agreement or instrument may provide that such
Lender will not, without the consent of the Participant, agree to any amendment,
modification or waiver described in the first proviso to Section 9.02(b) that
affects such Participant. Subject to paragraph (f) of this Section, the Borrower
agrees that each Participant shall be entitled to the benefits of Sections 2.15,
2.16 and 2.17 to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to paragraph (b) of this Section but the
aggregate amount payable by the Borrower to the Lender selling the participation
and the Participant shall not exceed the amount which would otherwise be payable
in the absence of the participation. To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 9.08 as though it
were a Lender, provided such Participant agrees to be subject to Section 2.18(c)
as though it were a Lender.
(f) A Participant shall not be entitled to receive any greater
payment under Section 2.15 or 2.17 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Borrower's prior written consent. A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 2.17 unless
the Borrower is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Borrower, to comply with Section
2.17(e) as though it were a Lender.
(g) Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.
SECTION 9.05 Survival. All covenants, agreements, representations
and warranties made by the Borrower in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans and issuance of any
Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and notwithstanding that the Agent, the Issuing Bank or any
Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any fee or any other amount payable under this
Agreement is outstanding and unpaid or any Letter of Credit is outstanding and
so long as the Commitments have not expired or terminated. The provisions of
Sections 2.15, 2.16, 2.17 and 9.03 and Article VIII shall survive and remain in
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full force and effect regardless of the consummation of the transactions
contemplated hereby, the repayment of the Loans, the expiration or termination
of the Letters of Credit and the Commitments or the termination of this
Agreement or any provision hereof.
SECTION 9.06. Counterparts; Integration; Effectiveness. This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Agreement,
the other Loan Documents and any separate letter agreements with respect to fees
payable to the Agent constitute the entire contract among the parties relating
to the subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Section 4.01, this Agreement shall become effective when it shall
have been executed by the Agent and when the Agent shall have received
counterparts hereof which, when taken together, bear the signatures of each of
the other parties hereto, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
Delivery of an executed counterpart of a signature page of this Agreement by
telecopy shall be effective as delivery of a manually executed counterpart of
this Agreement.
SECTION 9.07. Severability. Any provision of this Agreement held
to be invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 9.08. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other obligations at any time
owing by such Lender or Affiliate to or for the credit or the account of the
Borrower against any of and all the obligations of the Borrower now or hereafter
existing under this Agreement held by such Lender, irrespective of whether or
not such Lender shall have made any demand under this Agreement and although
such obligations may be unmatured. The rights of each Lender under this Section
are in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.
SECTION 9.09. Governing Law; Jurisduction; Consent to Service of
Process. (a) This Agreement shall be construed in accordance with and governed
by the law of the State of New York.
(b) The Borrower hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive jurisdiction of the Supreme
Court of the State of New York sitting in New York County and of the United
States District Court of the Southern District of New York, and any appellate
court from any thereof, in any action or proceeding arising out of or relating
to any Loan Document, or for recognition or enforcement of any judgment, and
each of the parties hereto hereby irrevocably and unconditionally agrees that
all claims in respect of any such action or proceeding may be heard and
69
determined in such New York State or, to the extent permitted by law, in such
Federal court. Each of the parties hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement or any other Loan Document shall affect any right that
the Agent, the Issuing Bank or any Lender may otherwise have to bring any action
or proceeding relating to this Agreement or any other Loan Document against the
Borrower or its properties in the courts of any jurisdiction.
(c) The Borrower hereby irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection which
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or any other Loan
Document in any court referred to in paragraph (b) of this Section. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service
of process in the manner provided for notices in Section 9.01. Nothing in this
Agreement or any other Loan Document will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE FINANCING
TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION.
SECTION 9.11. Headings. Article and Section headings and the
Table of Contents used herein are for convenience of reference only, are not
part of this Agreement and shall not affect the construction of, or be taken
into consideration in interpreting, this Agreement.
SECTION 9.12. Confidentiality. Each of the Agent, the Issuing
Bank and the Lenders agrees to maintain the confidentiality of the Information
(as defined below), except that Information may be disclosed (a) to its and its
Affiliates' directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority, (c) to the extent required by
70
applicable laws or regulations or by any subpoena or similar legal process, (d)
to any other party to this Agreement, (e) in connection with the exercise of any
remedies hereunder or any suit, action or proceeding relating to this Agreement
or any other Loan Document or the enforcement of rights hereunder or thereunder,
(f) subject to an agreement containing provisions substantially the same as
those of this Section, to any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations under this
Agreement, (g) with the consent of the Borrower or (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section or (ii) becomes available to the Agent, the Issuing Bank or any
Lender on a nonconfidential basis from a source other than the Borrower provided
the Agent, the Issuing Bank or any Lender does not have actual knowledge that
such source is in breach of any confidentiality agreement with the Borrower. For
the purposes of this Section, "Information" means all information received from
the Borrower or its agents relating to the Borrower or its business, other than
any such information that is available to the Agent, the Issuing Bank or any
Lender on a nonconfidential basis prior to disclosure by the Borrower; provided
the Agent, the Issuing Bank or any Lender does not have actual knowledge that
such source is in breach of any confidentiality agreement with the Borrower. The
Agent, the Issuing Bank and each Lender each agrees that neither it nor its
affiliates will use any Information in connection with the performance by it of
services for companies other than the Borrower and its Subsidiaries.
SECTION 9.13. Interest Rate Limitation. Notwithstanding anything
herein to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts which are treated as interest
on such Loan under applicable law (collectively the "Charges"), shall exceed the
maximum lawful rate (the "Maximum Rate") which may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.
71
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized officers as of the day and
year first above written.
THE TOPPS COMPANY, INC.
By:_________________________
Name:
Title:
THE CHASE MANHATTAN BANK,
individually and as Agent,
By:_________________________
Name:
Title:
72
SCHEDULE 2.01
COMMITMENTS
Term Loan Commitment
The Chase Manhattan Bank
$24,950,000
Revolving Commitment
The Chase Manhattan Bank $ 9,450,000
SCHEDULE 3.05
REAL PROPERTY
Office and warehouse
000 Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Manufacturing plant
00 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Manufacturing plant and office*
Innishmore Owned
Ballincollig
County Cork
Republic of Ireland
Executive offices
0 Xxxxxxxxx Xx. Xxxxxx
Xxx Xxxx, XX 00000
Office and warehouse
00 Xxxxxxx Xxxxxx Leased
Xxxxxxxxx, Xxxxxx Xxxxxx
Xxxxxx Xxxxxxx XX0 OAW
Xxxxxx
0000 Xxxxxxxx Xxxxxx Xxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxx
Xxxxxx X0X 0X0
Office
Rua Carmo do Rio Xxxxx Leased
241-Cj. 41
CEP 04729-010
Santo Xxxxx
Sao Paulo SP, Brazil
*Topps Ireland has signed a contract to sell this property and lease back a
small portion for office space.
1
Office
Xxxxxxxx 3139 Leased
0xx Xxxxx "X"
0000 - Xxxxxxx Xxxxxxx
Xxxxxxxxx
Office
Alborado 136, 9 Piso Leased
Col. Parques del Pedregal
Xxxxxx X.X., 00000
Xxxxxx
Office
Xxx Xxxxxxxxx 00, Xxxxxx
00000 Xxxxxx, Xxxxx
2
SCHEDULE 3.06 - DISCLOSED MATTERS
1. In August 1996, the Company was named a defendant in a class action
in the United States District Court for the Eastern District of New
York (the "Court") entitled Xxxxxxxx, et. al. v. The Topps Company,
Inc. No. CV-96-3779 (EDNY) (the "Action"). The Action alleged,
among other things, that the Company violated the federal Racketeer
Influenced and Corrupt Organizations Act by its practice of selling
sports and entertainment cards with randomly-inserted "insert"
cards, in violation of state and federal anti-gambling statutes.
Each of the Company's principal competitors, as well as several of
its principal licensors, was separately sued in its home state for
employing or participating in, the same or similar practices. The
Action sought treble damages and attorneys' fees on behalf of all
purchasers of packs of cards potentially including "insert" cards
over a four-year period. On August 21, 1997, the Court entered a
judgment granting the Company's motion to dismiss the complaint
with prejudice. The plaintiffs have filed a Motion to Alter, Amend
and Vacate Judgment and for Leave to File Amended Complaint. The
Company has opposed the motion.
2. The Company has the following collective bargaining agreements:
A. Certain employees at the Scranton, Pennsylvania manufacturing
facility are covered under a Collective Bargaining Agreement
between Borrower and Teamsters Local Union No. 229.
B. Topps Ireland Limited has agreements in effect with the
following unions:
a) Services Industrial Professional Technical Union
b) Amalgamated Engineering and Electrical Union
c) Technical Engineering and Electrical Union
Schedule 3.12
THE TOPPS COMPANY
SUBSIDIARIES, AFFILIATES and CONTROLLED CORPORATIONS
JURISDICTION OF % OF
NAME STATUS INCORPORATION OWNERSHIP BUSINESS
Topps Comics, Inc. inactive Delaware 100% Publishing
Xxxxxx Gum, Inc. inactive Delaware 100% -
Xxxxxx Gum, Inc. inactive Delaware 100% -
Topps International, Inc. inactive New York 100% -
Topps Ireland Limited active Ireland 100% Sales-confectionery
Topps Distributors, Ltd. inactive Ireland 100% -
Sweetco Limited active Ireland 100% Sales-gum
Topps Sales Company, Inc. active Barbados 100% Commissioned Broker
Topps Canada, Inc. active Canada 100% Wholesaler
Topps Europe Limited active U.K. 100% Publishing
Merlin Marketing Services, Ltd. inactive U.K. 100% -
Merlin Publishing Limited active U.K. 100% Publishing
Square Circle Limited inactive U.K. 100% -
Merlin Holdings, Inc. inactive Delaware 100% -
Merlin Editions, Inc. inactive Delaware 100% -
Editions Merlin SARL inactive France 100% Publishing
Topps Italia S.R.L. active Italy 100% Publishing
Merlin Publishing BV inactive Netherlands 100% Publishing
Merlin Publishing SL inactive Spain 100% Publishing
Topps International Holding, Inc. active Delaware 100% Holding Company
Topps Mexico S.A. de C.V. active Mexico 100% Sales-confectionery
Topps Brasil Ltda. active Brazil 100% Sales-confectionery
Topps Argentina S.A. active Argentina 100% Sales-confectionery
Servmex S.A. de C.V. active Mexico 100% Management company
Topps Latin America S.A. active Uruguary 100% Sales-confectionery
SCHEDULE 3.13
INSURANCE
TOPPS EUROPE INSURANCE POLICIES
TYPE OF INSURANCE UNDERWRITER
Combined Property/Liability Commercial Union Assurance Co.
includes:- Property Damage
Business Interruption
Employers Liability
Public/Products Liability
Money
Fidelity
Personal Accident
Travel ITT London and Edinburgh
Computer National Vulcan
Motor Fleet Eagle Star
Uninsured Loss Recovery Hambro Legal Protection
Legal Expenses Hambro Legal Protection
Directors and Officers Chubb Insurance Europe
Marine Cargo Maritime
TOPPS ITALIA INSURANCE POLICIES
Property - Fire, Theft Gan Italia
Managing Director Legal Responsibility Gan Italia
Employees Accident Insurance Gan Italia
Car Insurance Vittoria
MD Health Insurance Assicassa
Retired Pension Insurance Gan Italia
IRELAND LIMITED INSURANCE POLICIES
TYPE UNDERWRITER
Curtain Bond Hibernian
Employer's Liability Royal Sun Alliance
Private Car Hibernian
Forklifts Hibernian
Contingent Motor Hibernian
Fidelity Guarantee Royal Sun Alliance
Engineering (Plant) Hibernian
Business Travel Xxxxx
Property Damage Chubb
Business Interruption Chubb
Money Chubb
Public/Products Liability Chubb
SCHEDULE 5.04
MATERIAL LICENSES
1. Agreement dated July 25, 1995 between Borrower and NBA Properties,
Inc. as amended from time to time.
2. Agreement dated May 19, 1997 between Borrower and National Football
League Properties, Inc. as amended from time to time; Agreement
dated June 18, 1997 between Borrower and NFL Players Association as
amended from time to time.
3. Individual licenses with Major League Baseball Players pursuant to
Borrower's standard form of Baseball Player's Picture License
Agreement of various dates. Agreement dated January 1, 1969 between
Borrower and Major League Baseball Properties as amended from time
to time.
4. Agreement dated August 3, 1994 between Borrower and Premier League
Soccer as amended from time to time.
SCHEDULE 6.01
EXISTING INDEBTEDNESS
1. Topps Ireland Limited ("TIL") has various credit facilities
pursuant to an agreement dated July 9, 1997 with Ulster Bank
("Ulster"). They are as follows:
a) Overdraft facility up to 500,000 Irish pounds.
b) Letter of credit facility of up to $3,450,000 million
(U.S.).
c) 70,000 Irish pound guarantee to the Department of
Agriculture.
d) 20,000 Swiss Franc guarantee to Messrs. Gordernd in
respect of the importation of goods into Switzerland.
e) 2,000,000 Irish pound forward currency hedging facility.
The Company may have up to 20 million Irish pounds in
currency contracts open at any time.
f) 58,000 Sterling pound guarantee in favor of VAG Finance
Limited.
The documentation relating to these facilities includes a negative
pledge in respect of the assets of TIL.
2. 1,500,000 British pounds available under the Bank of Scotland
credit facility.
SCHEDULE 6.02
EXISTING LIENS
Lien in favor of IBM Corp. as set forth in the attached financing
statement.
Lien in favor of Xxxxx Xxx Xxxxxxxx as set forth on the attached
Judgment & Lien Report.
SCHEDULE 6.04
EXISTING INVESTMENTS
1. Investments in subsidiaries listed on Schedule 3.12
SCHEDULE 6.09
EXISTING RESTRICTIONS
1. Negative pledge of the assets of TIL contained within Ulster Bank
Credit Agreement referred to in Schedule 6.01.
EXHIBIT A
to the
Credit Agreement
ASSIGNMENT AND ACCEPTANCE
Dated: __________, ____
Reference is made to the Credit Agreement, dated as of May 11,
1998 (as amended, amended and restated, supplemented, modified and in effect
from time to time, the "Credit Agreement"), among THE TOPPS COMPANY, INC., a
Delaware corporation (the "Borrower"), the Lenders party thereto (together with
their successors and assigns, the "Lenders"), and THE CHASE MANHATTAN BANK, as
agent (in such capacity, the "Agent") for the Lenders. Capitalized terms used
herein and not otherwise defined shall have the meanings assigned to such terms
in the Credit Agreement. This Assignment and Acceptance between the Assignor (as
set forth on Schedule I hereto and made a part hereof) and the Assignee (as set
forth on Schedule I hereto and made a part hereof) is dated as of the Assignment
Effective Date (as set forth on Schedule I hereto and made a part hereof).
The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably purchases
and assumes from the Assignor without recourse to the Assignor, as of the
Assignment Effective Date, an undivided interest (the "Assigned Interest") in
and to all the Assignor's rights and obligations under the Credit Agreement
respecting those, and only those, credit facilities contained in the Credit
Agreement as are set forth on Schedule I hereto (the "Assigned Facilities"), in
a principal amount for each Assigned Facility as set forth on Schedule I hereto.
The Assignor (i) makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or any other of the Loan
Documents or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Credit Agreement, any other of the Loan Documents or
any other instrument or document furnished pursuant thereto, other than that it
is the legal and beneficial owner of the interest being assigned by it hereunder
and that such interest is free and clear of any adverse claim; [and] (ii) makes
no representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower, any of its Subsidiaries or any other
obligor of any of their respective obligations under the Credit Agreement or the
performance or observance by the Borrower or any of its Subsidiaries of any of
their respective obligations under the Credit Agreement, any of the other Loan
Documents or any other instrument or document furnished pursuant thereto; [and
(iii) attaches the Note(s) (representing the Revolving Loan(s) and/or Term
Loan(s) held by it, singularly or collectively, the "Notes(s)") held by it
evidencing the Assigned Facilities and requests that the Agent exchange such
Note(s) for a new Note or Notes payable to the Assignor (if the Assignor has
retained any interest in the Assigned Facility) and a new Note or Notes payable
to the Assignee in the respective amounts which reflect the assignment being
made hereby (and after giving effect to any other assignments which have become
effective on the Assignment Effective Date)].
The Assignee (i) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance and that it is an
Eligible Assignee; (ii) confirms that it has received a copy of the Credit
Agreement, together with copies of the most recent financial statements
delivered pursuant to Section 5.01 thereof, and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Acceptance; (iii) agrees that it
will, independently and without reliance upon the Agent, the Assignor, any other
Lender or any other Secured Party 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 the Credit Agreement, any of the other Loan
Documents or any other instrument or document furnished pursuant thereto; (iv)
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers and discretion under the Credit Agreement, the other
Loan Documents or any other instrument or document furnished pursuant thereto as
are delegated to the Agent by the terms thereof, together with such powers as
are reasonably incidental thereto; (v) agrees that it will be bound by the
provisions of the Credit Agreement and will perform in accordance with its terms
all the obligations which by the terms of the Credit Agreement are required to
be performed by it as a Lender; and (vi) if the Assignee is organized under the
laws of a jurisdiction outside the United States, attaches the forms prescribed
by the Internal Revenue Service of the United States certifying as to the
Assignee's exemption from United States withholding taxes with respect to all
payments to be made to the Assignee under the Credit Agreement or such other
documents as are necessary to indicate that all such payments are subject to
such tax at a rate reduced by an applicable tax treaty.
Following the execution of this Assignment and Acceptance, it
will be delivered to the Agent, together with a processing and recordation fee
of $3,500 for acceptance by it and recording by the Agent pursuant to Section
9.04(b) of the Credit Agreement, effective as of the Assignment Effective Date
(which Assignment Effective Date shall be, unless otherwise agreed to by the
Agent, at least five Business Days after the execution of this Assignment and
Acceptance).
Upon such acceptance and recording, from and after the Assignment
Effective Date, the Agent shall make all payments in respect of the Assigned
Interest (including payments of principal, interest, fees and other amounts) to
the Assignee, whether such amounts have accrued prior to the Assignment
Effective Date or accrue subsequent to the Assignment Effective Date. The
Assignor and the Assignee shall make all appropriate adjustments in payments for
periods prior to the Assignment Effective Date by the Agent or with respect to
the making of this assignment directly between themselves.
From and after the Assignment Effective Date, (i) the Assignee
shall be a party to the Credit Agreement and, to the extent provided in (x) this
Assignment and Acceptance and (y) Section 9.04 of the Credit Agreement, have the
rights and obligations of a Lender thereunder and under the other Loan Documents
and shall be bound by the provisions thereof, and (ii) the Assignor shall, to
the extent provided in (x) this Assignment and Acceptance and (y) Section 9.04
of the Credit Agreement, relinquish its rights and be released from its
obligations under the Credit Agreement; provided, that Assignor hereby
represents and warrants that the restrictions set forth in Section 9.04(b) of
the Credit Agreement pertaining to the minimum amount of assignments have been
satisfied.
This Assignment and Acceptance shall be construed in accordance
with and governed by the laws of the State of New York, without regard to
conflicts of laws principles and by federal law to the extent applicable.
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Acceptance to be executed by their respective duly authorized
officers on Schedule I hereto.
Schedule I to Assignment and Acceptance
Respecting the Credit Agreement, dated as of May 11,
1998, among The Topps Company, Inc., the Lenders party
thereto, together with their successors and assigns and The
Chase Manhattan Bank, as Agent
Legal Name of Assignor:
Legal Name of Assignee:
Assignment Effective Date:
Principal New Term Loan Amount
Assigned: $___________
Principal New Term Loan Amount
Retained: $___________
Principal Revolving Credit Commitment
Amount Assigned $___________
Revolving Credit Commitment
Percentage Assigned:
__________%
Principal Revolving Credit
Commitment Amount
Retained:
$___________
Revolving Credit Commitment Percentage Retained: __________%
Face Amount of Pre-Petition
Letters of Credit
Assigned:
$___________
Face Amount of Pre-Petition
Letters of Credit
Retained:
$___________
ACCEPTED:
THE CHASE MANHATTAN BANK,
as Agent
_________________________,
as Assignor
By__________________________
By_______________________
Name:
Name:
Title:
Title:
___________________________,
as Assignee
By__________________________
Name:
Title:
CONSENT OF THE BORROWER
to the extent that the assignee is not
an Eligible Assignee or as required
in Section 9.04(b)(ii) of the Credit
Agreement where such assignment
is not to a Lender or an Affiliate
of a Lender or is not an assignment
of the entire remaining amount of
the assigning Lender's Commitment
or Loan
THE TOPPS COMPANY, INC.
By____________________________
Name:
Title:
EXHIBIT B-1
TO
CREDIT AGREEMENT
FORM OF OPINION OF BORROWER'S COUNSEL
May 11, 1998
The Chase Manhattan Bank, as Agent
and each of the other Lenders party to
the Credit Agreement referenced below
Xxx Xxxxxxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000-0000
Re: $34,400,000 Term Loan, Revolving Credit
and Letter of Credit Facilities among The
Topps Company, Inc., The Chase Manhattan
Bank, as Agent, and the other lenders
party
hereto__________________________________
Ladies and Gentlemen:
We have acted as special counsel to The Topps Company, Inc., a Delaware
corporation (the "Company"), in connection with (i) the Term Loan in the amount
of $24,950,000 (the "Term Loan"), (ii) the Revolving Credit facility (inclusive
of Letters of Credit) in the amount of $9,450,000 (the "Revolving Facility"),
each being made available to the Company by you on this date pursuant to the
Credit Agreement dated as of May 11, 1998 among you, the Lenders and the Company
(the "Credit Agreement") and (iii) the other transactions contemplated under the
Credit Agreement.
This opinion is being delivered in accordance with the condition set forth
in Section 4.01 of the Credit Agreement. All capitalized terms not otherwise
defined herein shall have the meanings provided therefor in the Credit
Agreement.
The terms "Actual Knowledge" and "Primary Lawyer Group" have the meanings
provided in the Legal Opinion Accord of the ABA Section of Business law (1991)
(the "Accord"), except the term "Primary Lawyer Group" shall also include Xxxx
X. Xxxxxxx. The above reference to the Accord is made solely with respect to
such definitions and not for any other purpose.
2
As such counsel, we have reviewed the following documents:
1. the Credit Agreement;
2. the Trademark Security Agreement;
3. the Pledge Agreement,
4. the Topps Guarantee Agreement; and
5. the Financing Statements (as
hereinafter defined).
All the foregoing documents are collectively referred to
hereinafter as the "Loan Documents."
In connection with this opinion, we have made such examinations of law and
inquiries of officers of the Company and have examined certificates of public
officials, execution copies of the Loan Documents and such corporate documents
and records of the Company and certificates of officers of the Company and such
other documents as we have deemed necessary or appropriate for the purposes of
this opinion. In such examination, we have assumed the genuineness of all
signatures (other than those of the Company), the authenticity of all documents
submitted to us as originals and the conformity to authentic original documents
of all documents submitted to us as certified, conformed or photostatic copies.
As to various questions of fact material to this opinion, we have relied upon
the certifications, representations and warranties of officers and
representatives of the Company and upon the representations and warranties of
the Company set forth in the Loan Documents.
(A) Based upon and subject to the foregoing,
we are of the opinion that:
1. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and is duly qualified to transact business as a foreign corporation
3
and is in good standing in the State of New York (except the Company's biennial
report is past due but the Company continues to be authorized to transact
business in the State of New York) and the Commonwealth of Pennsylvania. The
Company has the corporate power and authority to own its assets and conduct the
businesses in which it is now engaged and has the corporate power and authority
to enter into each of the Loan Documents and to perform its obligations
thereunder.
2. The execution, delivery and performance by the Company of
the Loan Documents and the consummation and performance of the transactions
contemplated thereby have been approved by all necessary corporate and
stockholder action on the part of the Company. Each of the Loan Documents has
been duly authorized, executed and delivered by the Company and constitutes the
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its respective terms.
3. Neither the execution or delivery of, nor performance by
the Company of its obligations under, the Loan Documents does or will conflict
with, violate or constitute a breach of the charter or bylaws of the Company.
4. To the Actual Knowledge of the Primary Lawyer Group, there
except as disclosed in the Credit Agreement, there is no pending or threatened
action, suit, investigation or proceeding, before or by any court, governmental
department, commission, board, bureau, instrumentality, agency or arbitral
authority, which calls into question the validity or enforceability of any of
the Loan Documents or the titles to their respective offices or authority of any
officers of the Company or which, if determined adversely to the Company or its
Subsidiaries would have a Material Adverse Effect on the financial condition of
the Company and its Subsidiaries on a consolidated basis or the ability of the
Company to perform its obligations under the Loan Documents.
5. Assuming the proceeds of the Loans are used in compliance
with the provisions of the Credit Agreement, the making of the Loans and use of
4
the proceeds thereof contemplated by the Loan Documents and the pledge of and
granting of security interests in collateral contemplated by the Loan Documents
will not violate any New York or Federal law, including Section 7 of the
Securities Exchange Act of 1934, as amended, any regulations issued pursuant
thereto, or regulations G, T, U or X of the Board of Governors of the Federal
Reserve System.
6. The Company is not (i) an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended or (ii) a "holding company" or a
"subsidiary company" of a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
7. The provisions of the Pledge Agreement are effective to
create in favor of the Agent for the benefit of the Lenders a legal, valid and
enforceable security interest in all right, title and interest of the Company in
the Collateral referred to therein. So long as the Agent has possession in the
State of New York of (i) the certificates evidencing the Pledged Shares and (ii)
the Intercompany Notes, has acquired the security interest therein in good faith
and without notice of any adverse claim and value has been given by the Lenders
to the Company, such security interest will be perfected and will be free of any
"adverse claim" (as defined in Section 8-102 of the New York Uniform Commercial
Code (the "NYUCC")) with the rights of a "protected purchaser" (as defined in
Section 8-303 of the NYUCC and which term includes, pursuant to the definition
of the terms "purchase" and "purchaser" in Section 1-201 of the NYUCC, a holder,
such as the Agent for the benefit of the Lenders, of a security interest).
8. The provisions of the Trademark Security Agreement are
effective to create in favor of the Agent for the benefit of the Lenders a
legal, valid and enforceable security interest in all right, title and interest
of the Grantor party thereto in the Trademark Collateral referred to therein.
5
The filing of the Trademark Security Agreement in the United States Patent and
Trademark Office will result in the perfection of the Liens which have been
created and granted pursuant to the Trademark Security Agreement. To the Actual
Knowledge of the Primary Lawyer Group there are no Liens on the Collateral
subject to the Trademark Security Agreement except for liens permitted under the
Credit Agreement and the Liens in favor of you expressly created pursuant to the
Loan Documents.
9. Neither the execution or delivery of, nor performance by
the Company of its obligations under, the Loan Documents (a) to the Actual
Knowledge of the Primary Lawyer Group, does or will violate or constitute a
breach of any material contract, agreement, indenture, lease, instrument, other
document, judgment, writ, determination, order or decree to which the Company is
a party or by which the Company or any of its properties is bound or (b) does or
will violate any law, rules or regulations applicable to the Company or (c) to
the Actual Knowledge of the Primary Lawyer Group, does or will result in the
creation or imposition of any lien, pledge, charge or encumbrance of any nature
upon or with respect to any of the properties of the Company, except for liens
permitted under the Credit Agreement and the Liens in favor of you expressly
created pursuant to the Loan Documents.
10. Neither the execution or delivery of, nor performance by
the Company of its obligations under, the Loan Documents requires the prior
approval, consent, waiver, permission or authorization of, notice to or
registration or filing with any court or New York or Federal governmental
authority, except for filings expressly contemplated by the Loan Documents
(which have been made), the filing of Uniform Commercial Code financing
statements (the "Financing Statements") and future filings, if any, required to
continue the perfection of security interests perfected by the Financing
Statements or to perfect any security interests in proceeds of collateral.
11. The Company is not subject to any charter or bylaw provision
which restricts, limits, or prohibits payment of the Term Loan or advances made
6
or reimbursement obligations arising under the Revolving Facility or performance
of any of the obligations pursuant to the terms of the Loan Documents.
(B) The opinions expressed herein, however,
are subject to the following:
1. We are members of the Bar of the State of New York and do
not purport to be experts in the laws of jurisdictions other than the State of
New York, the General Corporation Law of the State of Delaware and the Federal
laws of the United Sates of America and we do not express any opinion as to the
laws of any jurisdiction other than the present laws of the State of New York,
the General Corporation Law of the State of Delaware and Federal laws of the
United States, in each case of the type specifically applicable to transactions
of the type contemplated by the Loan Documents and the present judicial
interpretations thereof and to the facts as they presently exist.
2. The opinions set forth in Paragraph A, insofar as they
relate to the enforceability of the Loan Documents, are subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting or
limiting the enforcement of creditors' rights generally and to equitable
principles affecting the availability of equitable relief (regardless of whether
enforcement is considered in a proceeding in equity or at law), including
principles of commercial reasonableness or conscionability and an implied
covenant of good faith and fair dealing. Such principles of equity are of
general application, and in applying such principles, a court, among other
things, might not allow a creditor to accelerate the maturity of a debt for an
immaterial default. Such principles applied by a court might include a
requirement that a creditor act with reasonableness and good faith. Such
requirement might be applied, for example, to any provision of the Loan
Documents purporting to authorize conclusive determinations by any Lender or the
Agent. Insofar as provisions contained in the Loan Documents provide for
7
indemnification, the enforcement thereof may be limited by public policy
considerations.
3. A partner of this firm, Xxxx X. Xxxxxxx, is a member of the
Board of Directors of the Company.
4. We have made no independent investigations except as
specifically set forth herein.
5. We express no opinion as to the effect of the law of any
jurisdiction other than the State of New York wherein any Lender or the Agent
(or any assignee of any of the rights and/or obligations of any Lender or the
Agent under the Loan Documents) may be located or wherein enforcement of the
Loan Documents may be sought which limits the rates of interest legally
chargeable or collectible.
6. We express no opinion as to (i) whether a federal or state
court outside of the State of New York would give effect to the choice of New
York law provided for in the Loan Documents, (ii) sections of the Loan Documents
insofar as such sections relate to the subject matter jurisdiction of the courts
specified therein to adjudicate any controversy related to the Loan Documents,
(iii) sections of the Loan Documents insofar as such sections relate to the
waiver of trial by jury, (iv) the waiver of defenses and the waiver of objection
to venue set forth in the Loan Documents with respect to proceedings in the
courts specified therein or (v) the enforceability of any provision of the Loan
Documents that purports to define acts that will constitute a commercially
reasonable disposition of collateral.
7. We express no opinion as to the effect of any Federal or
state fraudulent transfer or preferential transfer law, including Sections 547
or 548 of the Bankruptcy Reform Act, as amended, on the opinions set forth in
paragraphs 2 and 5 of the Part A or as to the enforceability of any guarantee
agreement provided pursuant to Section 5.14 of the Credit Agreement.
8
8. We have made no examination of and express no opinion
as to (i) the ownership of any Collateral described in the Loan Documents or any
other matters affecting title or (ii) the priority of any Lien purported to be
created by any Loan Documents (except as otherwise expressly noted in paragraph
7 of Part A above).
9. Our opinions contained herein are rendered solely
for your information in connection with the transactions contemplated under the
Loan Documents and may not be relied upon in any manner by any other person,
entity or agency, or by you for any other purpose. Our opinions herein shall not
be quoted or otherwise included, summarized or referred to in any publication or
document, in whole or in part, for any purposes whatsoever, or furnished to any
other person, entity or agency, except as may be required by you by applicable
law or regulation or request of regulatory agencies to which you are subjects.
We further advise you that we are not assuming any obligation to notify the
Agent or the Lenders of any changes in this opinion as a result of any facts
that may come to our attention in the future which may cause a change in this
opinion, including any action necessary to maintain perfection of the security
interest referred to in paragraphs 7 or 8 of Part A above.
10. This opinion is limited to matters expressly set
forth herein and no opinion is to be implied or may be inferred beyond the
matters expressly stated herein.
Very truly yours,
9
EXHIBIT B-2
TO
CREDIT AGREEMENT
FORM OF OPINION OF BORROWER'S U.K. COUNSEL
11 May 1998
CONFORMED COPY
The Chase Manhattan Bank, as Agent and
Each of the Lenders party to the Credit Agreement
Referenced Below.
Xxx Xxxxxxxxxx Xxxxx
Xxxxxxxx
XX 00000-0000
XXX
Dear Sirs
Re: US$34,400,000 Term Loan, Revolving Credit Facility and Letter of Credit
amongst The Chase Manhattan Bank, as Agent, the Lenders party thereto and
The Topps Company, Inc.
1. We have been instructed to opine on certain specific matters
concerning Topps Europe Limited ("Topps Europe") as English
legal advisers to The Topps Company, Inc. ("Topps") in
connection with a Credit Agreement (the "Credit Agreement") of
11 May 1998 and expressed to be between Topps and The Chase
Manhattan Bank (the "Agent") for each of the lenders (the
"Lenders") now or hereafter party to the Credit Agreement. We
have taken instructions solely from Topps in respect of this
matter. We understand that the Agent proposes to take a pledge
(the "Pledge") to be governed by New York law over certain
shares in Topps Europe. We have not advised Topps, the Lenders,
the Agent or any other person on the terms and we express no
opinion on the effect (if any) or the enforceability (or
otherwise) of the Pledge (whether under English Law or under the
laws of any other country) nor on whether the Pledge creates
security or is an appropriate form of taking security over
shares in a company incorporated in England.
2. For the purposes of this opinion, we have examined:
2.1 the entries shown on the microfiche (obtained by us
from Companies House, London, on 11 May 1998) of the
memorandum and articles of association and the files
of Topps Europe maintained at Companies House ("the
Microfiche"); and
2.2 the Share Register (as referred to in paragraph 6.3
below).
3. This opinion is limited to English law as applied by the English
courts at the date hereof and is given on the basis that it will
be governed by and construed in accordance with English law. We
have made no investigation of, and express no opinion as to, any
laws other than the law of England. In particular we understand
that the Pledge and the Credit Agreement are expressed to be
governed by the laws of the State of New York.
4. This opinion is being delivered in accordance with the condition
in section 4.01(b) of the Credit Agreement. We would draw your
attention to the fact that we have not reviewed the Credit
Agreement or any amendments, supplements or exhibits thereof.
We have assumed that there is nothing in the Credit Agreement
which would be relevant to, or which would otherwise affect the
opinions which we express in this letter.
5. We would also draw your attention to the fact that we have not
reviewed the Pledge or any amendments, supplements or exhibits
thereof. We have assumed that there is nothing in the Pledge
which would be relevant to, or which would otherwise affect the
opinions which we express in this letter.
ASSUMPTIONS
6. For the purposes of this opinion we have assumed the following:
6.1 both Topps and the Agent are duly incorporated and
validly existing under the laws of the jurisdiction
of their incorporation and the Pledge has been
validly authorised, executed and delivered by both
Topps and the Lender and the entry into and
performance of the Pledge are within the capacity and
powers of both Topps and the Lender;
6.2 all factual statements made in the Secretary's
Certificate, attached hereto as Schedule 1 (the
"Secretary's Certificate"), are true and correct;
6.3 the share register of Topps Europe (the "Share
Register") is true and correct;
6.4 the information on the Microfiche is accurate and it
should be noted that we have made no investigation
into whether all necessary documents have been filed
by Topps Europe or whether the register maintained by
the Registrar in respect of Topps Europe correctly
records all such information and consequently it
should be noted that such information could be
incomplete or incorrect;
6.5 the searches and enquiries referred to in paragraphs
7.5 and 7.6 below were accurate and complete and
disclosed all information which is material for the
purposes of this opinion; it should be noted,
however, that searches at the Companies Registry are
not capable of revealing whether or not a winding up
petition or a petition for an administration order
has been presented; notice of a winding up order made
or resolution passed, or administration order made,
3
or a receiver or administrative receiver appointed
may not be filed at the Companies Registry
immediately; also, the results of oral telephone
enquiries of the Central Index of Winding Up
Petitions have been found to be unreliable.
OPINION
7. Subject to the foregoing assumptions and subject to the
reservations mentioned in paragraph 8 below and to any matters
not disclosed to us, we are of the opinion, based upon our
examination of the documents referred to above, that:
7.1 Topps Europe is a company duly incorporated and
validly existing in England under the Companies Xxx
0000 under the registered number 2331336;
7.2 based solely upon an examination on the date hereof
of Topps Europe's Share Register and the Secretary's
Certificate:
o the present issued share capital of Topps
Europe consists of 178,571 Ordinary Shares
of US$0.01 and 178,571 Deferred Shares of
Br Pds 1 each, in each case, fully paid or
credited as fully paid;
o all of such Ordinary Shares and Deferred
Shares are registered in the name of Topps;
7.3 under the articles of association of Topps Europe the
holders of Deferred Shares are only entitled to
participate in the assets of Topps Europe after the
holders of every other class of shares in the capital
of Topps Europe shall have received on a return of
assets on liquidation or otherwise the sum of Br pds 1
million in respect of each share (other than Deferred
Shares) held by them;
7.4 under the articles of association of Topps Europe
none of the Deferred Shares carry any right to
receive notice of or attend and vote at any general
meeting of Topps Europe;
7.5 entries shown on the Microfiche (obtained by us from
Companies House, London on 11 May 1998) revealed no
order or resolution for the winding up of Topps
Europe, no interim or final administration order in
relation to Topps Europe and no notice of the
appointment of a receiver, administrative receiver or
administrator of Topps Europe or its assets;
7.6 telephone enquiries of the Central Index of Winding
Up Petitions made on 11 May 1998 did not reveal that
any petition for the winding up or administration of
Topps Europe had been presented;
7.7 subject to the same being duly completed and signed
by or on behalf of the person who as transferor is
named in the Share Register as the registered holder
of a share or shares in the issued share capital of
Topps Europe, to it being duly stamped and the
provisions of Article 9 of the Articles of
Association of Topps Europe in the form referred to
4
in paragraph 2 of the Secretary's Certificate
otherwise being complied with, a stock transfer form
in the form attached hereto as Schedule 2 is
effective, upon registration in the Share Register,
to transfer such share or shares to the person named
as the transferee on such stock transfer form and
entered in the Share Register.
RESERVATIONS
8.
8.1 No opinion is expressed in relation to any tax
consequences arising out of any transactions
contemplated herein.
8.2 We have assumed that there will be no changes in the
matters relevant for the purposes of this opinion
after the date of this opinion.
8.3 No opinion is expressed as to whether the Pledge is
capable of registration with the Registrar of
Companies, whether the Pledge should be so registered
or as to the consequences of non-registration within
the applicable time-limit. We would, however, draw
your attention to section 409 of the Companies Xxx
0000 which provides that a charge created by a
company incorporated outside Great Britain which has
an established place of business in England and Wales
on property situate in England and Wales (which would
include shares in Topps Europe) will be void as
against a liquidator, administrator or any creditor
of the company unless it is presented to the
Registrar of Companies, together with the prescribed
particulars, within 21 days of its creation. We have
not been instructed to register the Pledge.
8.4 No opinion is expressed as to the capacity in which
Topps holds the Shares.
8.5 No opinion is expressed as to the priority of any
security interest which may be created by the Pledge.
8.6 We would point out that, notwithstanding the choice
of law contained in the Pledge (which we understand
to be New York law), an English court will give
effect to mandatory provisions of the English law in
relation to the Pledge and that, in particular, the
Pledge may be subject to any laws from time to time
in effect relating to bankruptcy, insolvency,
administration, liquidation, reorganisation, court
schemes, moratorium, the doctrine of frustration and
any other laws or other legal procedures affecting
generally the enforcement of security or of
creditors' rights.
DISCLOSURE
9. This opinion is addressed to you solely for your own use and
benefit in connection with the Credit Agreement and is neither
to be transmitted to any other person, nor relied upon by and
5
other person or for any other purpose, nor quoted or referred to
in any public document nor filed with any government agency or
other person, without our prior written consent.
Yours faithfully,
XXXXXXX & XXXXXXX
6
EXHIBIT C
TO
CREDIT AGREEMENT
PERFECTION CERTIFICATE
The undersigned, being the Vice President - Chief Financial Officer of THE
TOPPS COMPANY, INC., a Delaware corporation (the "Borrower"), pursuant to the
requirements of Sec 4.01(f)(iv) of the Credit Agreement (the "Credit Agreement")
of even date herewith by and between the Borrower, THE CHASE MANHATTAN BANK, as
Agent (the "Agent") and the lenders party thereto, hereby certifies as follows:
A. Set forth on Exhibit A are the results of the search of the Uniform Code
filings made with respect to the Borrower in the following jurisdictions:
1. Secretary of State, New York
2. City Register, New York County, New York
3. City Register, New York County, New York
4. County Clerk, New York County, New York
5. Central Filing Office, Pennsylvania
6. County of Luzerne, Pennsylvania
B. Set forth on Exhibit B are the results of the search of the United States
Patent and Trademark Office with respect to the Borrower's intellectual
property.
C. This certificate is being given in the corporate and not the personal
capacity of the undersigned.
Dated: May 11, 1998
THE TOPPS COMPANY, INC.
By:_____________________________
Title: Vice President -
Chief Financial Officer
EXHIBIT D
TO THE CREDIT AGREEMENT
FORM OF PLEDGE AGREEMENT
PLEDGE AGREEMENT dated as of May 11, 1998 between THE TOPPS COMPANY,
INC., a Delaware corporation (the "Pledgor") and THE CHASE MANHATTAN BANK, as
agent (in such capacity, the "Agent") for the lenders (the "Lenders") from time
to time parties to the Credit Agreement dated as of May 11, 1998 (as the same
may be amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Pledgor, the Lenders and the Agent.
W I T N E S S E T H:WHEREAS, (a) pursuant to the Credit Agreement, the
Lenders have severally agreed to make Loans and other extensions of credit
(collectively, the "Extensions of Credit") to the Pledgor upon the terms and
subject to the conditions set forth therein and (b) one or more Lenders or
affiliates of Lenders may from time to time enter into Hedging Agreements (as
defined in the Credit Agreement) with the Pledgor;
WHEREAS, the proceeds of the Extensions of Credit will be used in part
to enable the Pledgor to make valuable transfers to certain of its Subsidiaries
(as defined in the Credit Agreement) in connection with the operation of their
respective businesses, which transfers are evidenced by Intercompany Notes (as
defined in the Credit Agreement);
WHEREAS, the Pledgor and such Subsidiaries are engaged in related
businesses and the Pledgor and such Subsidiaries will derive substantial direct
and indirect benefit from the making of the Extensions of Credit;
WHEREAS, it is a condition precedent to the obligation of the Lenders
to make their respective Extensions of Credit to the Pledgor under the Credit
Agreement that the Pledgor shall have executed and delivered this Pledge
Agreement to the Agent for the ratable benefit of the Lenders; and
WHEREAS, Pledgor is the legal and beneficial owner of (a) the shares
of stock of Topps Europe Limited, a company registered in England under number
2331336 (the "Issuer") described on Schedule I hereto (the "Pledged Shares"),
which Pledged Shares constitute the percentage of all the issued and outstanding
shares of capital stock of the Issuer identified on such Schedule I, and (b) the
indebtedness evidenced by the Intercompany Notes more fully described on
Schedule II and the indebtedness described from time to time on amendments to
Schedule II hereafter delivered to the Agent in accordance with the terms of the
Credit Agreement (collectively, the "Pledged Debt");
NOW, THEREFORE, in consideration of the premises and to induce the
Agent and the Lenders to enter into the Credit Agreement, the Pledgor hereby
agrees with the Agent, for the ratable benefit of the Lenders, as follows:
1. Defined Terms.
(a) Unless otherwise defined herein, terms defined
in the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement.
(b) References to "Lenders" in this Pledge Agreement
shall be deemed to include affiliates of Lenders that may from time to time
enter into Hedging Agreements with the Pledgor.
(c) The words "hereof," "herein," and "hereunder"
and words of similar import when used in this Pledge Agreement shall refer to
this Pledge Agreement as a whole and not to any particular provision of this
Pledge Agreement, and Section references are to Sections of this Pledge
Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall
be equally applicable to both the singular and plural forms of such terms.
2. Grant of Security.
(a) Subject to the provisions of subparagraph (b)
hereof, the Pledgor hereby transfers, assigns and pledges to the Agent for the
ratable benefit of the Lenders, and hereby grants to the Agent for the ratable
benefit of the Lenders, a security interest in, the following, whether now owned
or existing or hereafter acquired or existing (collectively, the "Collateral"):
(i) the Pledged Shares and the
certificates representing the Pledged Shares and any
interest of the Pledgor in the entries on the books of
any financial intermediary pertaining to the Pledged
Shares, and all dividends, cash, warrants, rights,
instruments and other property or proceeds from time to
time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Pledged
Shares; and
(ii) the Pledged Debt and the
instruments evidencing the Pledged Debt, and all
interest, cash, instruments and other property or
proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for
any or all of the Pledged Debt; and
(iii) to the extent not
covered by clauses (i) and (ii) above, respectively,
all proceeds or any or all of the foregoing Collateral.
For purposes of this Pledge Agreement, the term
"proceeds" includes whatever is receivable or received
when Collateral or proceeds are sold, exchanged,
collected or otherwise disposed of, whether such
disposition is voluntary or involuntary, and includes,
without limitation, proceeds of any indemnity or
guaranty payable to the Pledgor or the Agent from time
to time with respect to any of the Collateral.
(b) Notwithstanding any other provision of this Pledge
Agreement, at no time shall the aggregate Pledged Shares hereunder comprise more
than 65% of the outstanding ordinary shares of the Issuer, and the Agent shall
release, upon the request of the Pledgor, any shares of Pledged Shares in the
event and to the extent such Pledged Shares shall represent in excess of such
amount.
3. Security for Obligations. This Pledge Agreement secures
the payment of all Obligations of the Pledgor. Without limiting the generality
of the foregoing, this Pledge Agreement secures the payment of all amounts that
constitute part of the Obligations and would be owed by the Pledgor to the Agent
or the Lenders under the Loan Documents but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involved the Pledgor.
4. Delivery of the Collateral. All certificates or instruments,
if any, representing or evidencing the Collateral shall be promptly delivered to
and held by or on behalf of the Agent pursuant hereto and shall be in suitable
form for transfer by delivery, or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
reasonably satisfactory to the Agent. The Agent shall have the right, at any
time after the occurrence and during the continuance of an Event of Default and
without notice to the Pledgor, to transfer to or to register in the name of the
Agent or any of its nominees any or all of the Pledged Shares.
5. Representations and Warranties. The Pledgor represents and
warrants as follows:
(a) The Pledged Shares set forth on Schedule I hereto
represent on the date hereof the percentage of all the issued and outstanding
capital stock of the Issuer thereof as identified on Schedule I.
(b) The Pledgor is the legal and beneficial owner
of the Collateral, as indicated on Schedule I and Schedule II, pledged or
assigned by the Pledgor hereunder free and clear of any Lien, except for the
Lien created by this Pledge Agreement or Liens permitted under Section 8 hereof.
(c) As of the date of this Pledge Agreement, the
Pledged Shares pledged by the Pledgor hereunder have been duly authorized and
validly issued and are fully paid and non-assessable.
(d) The execution and delivery by the Pledgor of
this Pledge Agreement and the pledge of the Collateral hereunder pursuant hereto
create a valid and perfected first priority security interest in the Collateral,
securing the payment of the Obligations.
(e) The Pledgor has full power, authority and legal
right to pledge all the Collateral pledged pursuant to this Pledge Agreement and
will defend its and the Agent's title or interest thereto or therein (and in the
proceeds thereof) against any and all Liens (other than the Lien of this Pledge
Agreement), however arising, or any and all persons whomsoever.
6. Further Assurances. The Pledgor agrees that at any time
and from time to time, at its own expense, it will promptly execute and deliver
all further instruments and documents, and take all further action, that may be
necessary, or that the Agent may reasonably request, in order to perfect and
protect any pledge, assignment or security interest granted or purported to be
granted hereby or to enable the Agent to exercise and enforce its rights and
remedies hereunder with respect to any Collateral.
7. Voting Rights; Dividends and Distributions; Etc.
(a) So long as no Event of Default shall have occurred
and be continuing:
(i) The Pledgor shall be entitled
to exercise any and all voting and other consensual
rights pertaining to the Collateral or any part thereof
for any purpose not prohibited by the terms of this
Pledge Agreement or the other Loan Documents.
(ii) The Agent shall execute and
deliver (or cause to be executed and delivered) to the
Pledgor all such proxies and other instruments as the
Pledgor may reasonably request for the purpose of
enabling the Pledgor to exercise the voting and other
rights that it is entitled to exercise pursuant to
paragraph (i) above.
(b) Subject to paragraph (c) below, the Pledgor shall
be entitled to receive and retain and use, free and clear of the Lien of this
Pledge Agreement, any and all dividends, distributions, principal and interest
made or paid in respect of the Collateral; provided, however, that any and all
dividends and other distributions in equity securities included in the
Collateral shall be, and shall be forthwith delivered to the Agent to hold as,
Collateral and shall, if received by the Pledgor, be received in trust for the
benefit of the Agent, be segregated from the other property or funds of the
Pledgor and be forthwith delivered to the Agent as Collateral in the same form
as so received (with any necessary endorsement).
(c) Upon written notice to the Pledgor by the Agent
following the occurrence and during the continuance of an Event of Default,
(i) all rights of the Pledgor to
exercise or refrain from exercising the voting and other
consensual rights that it would otherwise be entitled to
exercise pursuant to Section 7(a)(i) shall cease, and
all such rights shall thereupon become vested in the
Agent, which shall thereupon have the sole right to
exercise or refrain from exercising such voting and
other consensual rights during the continuance of
such Event of Default;
(ii) all rights of the Pledgor to
receive the dividends, distributions and principal and
interest payments that the Pledgor would otherwise be
authorized to receive and retain pursuant to Section
7(b) shall cease, and all such rights shall thereupon
become vested in the Agent, which shall thereupon have
the sole right to receive and hold as Collateral such
dividends, distributions and principal and interest
payments during the continuance of such Event ofDefault;
(iii) all dividends, distributions
and principal and interest payments that are received
by the Pledgor contrary to the provisions of Section
7(b) shall be received in trust for the benefit of the
Agent, shall be segregated from other funds of the
Pledgor and shall forthwith be paid over to the Agent
as Collateral in the same form as so received (with
any necessary indorsements); and
(iv) in order to permit the Agent
to receive all dividends, distributions and principal
and interest payments to which it may be entitled under
Section 7(b) above, to exercise the voting and other
consensual rights that it may be entitled to exercise
pursuant to Section 7(c)(i) above, and to receive all
dividends, distributions and principal and interest
payments that it may be entitled to under Section 7(c)
(ii) above, the Pledgor shall, if necessary,upon written
notice from the Agent, from time to time execute and
deliver to the Agent, appropriate proxies, dividend
payment orders and other instruments as the Agent may
reasonably request.
8. Transfers and Other Liens; Additional Collateral; Etc.
The Pledgor shall:
(a) not, except as permitted by the Credit Agreement,
(i) sell or otherwise dispose of, or grant any option or warrant with respect
to, any of the Collateral or (ii) create or suffer to exist any consensual Lien
upon or with respect to any of the Collateral, except for the Lien under this
Pledge Agreement; and
b. (i)cause the Issuer of Pledged Shares not to issue
any stock or other securities in addition to or in substitution for the Pledged
Shares issued by the Issuer, except to the Pledgor, and (ii) subject to the
provision of Section 2(b), pledge hereunder, immediately upon its acquisition
(directly or indirectly) thereof, any and all additional shares of stock or
other securities of the Issuer within 60 Business Days of such acquisition.
9. Agent Appointed Attorney-in-Fact. The Pledgor hereby
irrevocably appoints the Agent as the Pledgor's attorney-in-fact, with full
authority in the place and stead of the Pledgor and in the name of the Pledgor
or otherwise to take any action and to execute any instrument, in each case
after the occurrence and during the continuance of an Event of Default, that the
Agent may deem reasonably necessary or advisable to accomplish the purposes of
this Pledge Agreement, including, without limitation, to receive, indorse and
collect all instruments made payable to the Pledgor representing any dividend,
distribution or principal or interest payment in respect of the Collateral or
any part thereof and to give full discharge for the same.
10. The Agent's Duties. The powers conferred on the Agent
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the safe custody
of any Collateral in its possession and the accounting for moneys actually
received by it hereunder, the Agent shall have no duty as to any Collateral, as
to ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Pledged Shares, whether or
not the Agent or any Lender has or is deemed to have knowledge of such matters,
or as to the taking of any necessary steps to preserve rights against any
parties or any other rights pertaining to any Collateral. The Agent shall be
deemed to have exercised reasonable care in the custody and preservation of any
Collateral in its possession if such Collateral is accorded treatment
substantially equal to that which the Agent accords its own property.
11. Remedies. If any Event of Default shall have occurred
and be continuing:
(a) The Agent may exercise in respect of the Collateral,
in addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party upon default
under the Uniform Commercial Code in effect in the State of New York at such
time (the "N.Y. Uniform Commercial Code") (whether or not the N.Y. Uniform
Commercial Code applies to the affected Collateral) and also may without notice
except as specified below, sell the Collateral or any part thereof in one or
more parcels at public or private sale, at any exchange broker's board or at any
of the Agent's offices or elsewhere, for cash, on credit or for future delivery,
at such price or prices and upon such other terms as are commercially reasonable
irrespective of the impact of any such sales on the market price of the
Collateral. Each purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of the Pledgor, and the
Pledgor hereby waives (to the extent permitted by law) all rights of redemption,
stay and/or appraisal which it now has or may at any time in the future have
under any rule or statute now existing or hereafter enacted. The Pledgor agrees
that, to the extent notice of sale shall be required by law, at least ten days'
notice to the Pledgor of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable notification.
The Agent shall not be obligated to make any sale of Collateral regardless of
notice of sale having been given. The Agent may adjourn any public or private
sale from time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to which it
was so adjourned. To the extent permitted by law, the Pledgor hereby waives any
claim against the Agent arising by reason of the fact that the price at which
any Collateral may have been sold at such a private sale was less than the price
that might have been obtained at a public sale, even if the Agent accepts the
first offer received and does not offer such Collateral to more than one
offeree.
(b) All cash and cash proceeds received by the Agent
in respect of any sale of, collection from, or other realization upon, all or
any part of the Collateral may, in the discretion of the Agent, be held by the
Agent as collateral for, and/or then or at any time thereafter applied (after
payment of any amounts payable to the Agent pursuant to Section 9.03 of the
Credit Agreement) in whole or in part by the Agent for the ratable benefit of
the Lenders against, all or any part of the Obligations in such order as the
Agent shall elect. Any surplus of such cash or cash proceeds held by the Agent
and remaining after payment in full of the Obligations shall be paid over to the
Pledgor or to any other Person that may be lawfully entitled to receive such
surplus.
(c) The Agent may exercise any and all rights and
remedies of the Pledgor in respect of the Collateral.
(d) All payments received by the Pledgor after the
occurrence and during the continuance of an Event of Default in respect of the
Collateral shall be received in trust for the benefit of the Agent, shall be
segregated from other funds of the Pledgor and shall be forthwith paid over to
the Agent in the same form as so received (with any necessary indorsement).
If at any time when the Agent shall determine to exercise its right
to sell all or any part of the Pledged Shares pursuant to this Section, such
Pledged Shares or the part thereof to be sold shall not be effectively
registered under the Securities Act of 1933, as amended, and as from time to
time in effect, and the rules and regulations thereunder (the "Securities Act"),
the Agent is hereby expressly authorized to sell such Pledged Shares or such
part thereof by private sale in such manner and under such circumstances as the
Agent may deem necessary or advisable in order that such sale may legally be
effected without such registration. Without limiting the generality of the
foregoing, in any such event the Agent (a) may proceed to make such private sale
notwithstanding that a registration statement for the purpose of registering
such Pledged Shares or such part thereof shall have been filed under such
Securities Act, (b) may approach and negotiate with a restricted number of
potential purchasers to effect such sale and (c) may restrict such sale to
purchasers as to their number, nature of business and investment intention
including without limitation to purchasers each of whom will represent and agree
to the satisfaction of the Lender that such purchaser is purchasing for its own
account, for investment, and not with a view to the distribution or sale of such
Pledged Shares, or part thereof, it being understood that the Agent may cause or
require the Pledgor, and the Pledgor hereby agrees upon the written request of
the Agent, to cause (i) a legend or legends to be placed on the certificates to
be delivered to such purchasers to the effect that the Pledged Shares
represented thereby have not been registered under the Securities Act and
setting forth or referring to restrictions on the transferability of such
securities; and (ii) the issuance of stop transfer instructions to the Issuer's
transfer agent, if any, with respect to the Pledged Shares, or, if the Issuer
transfers its own securities, a notation in the appropriate records of the
Issuer. In the event of any such sale, the Pledgor does hereby consent and agree
that the Agent shall incur no responsibility or liability for selling all or any
part of the Pledged Shares at a price which the Agent may deem reasonable under
the circumstances, notwithstanding the possibility that a substantially higher
price might be realized if the sale were public and deferred until after
registration as aforesaid. [The provisions of the U.K. Law of Property Xxx 0000
relating to the power of sale conferred thereby are hereby varied so that
section 103 shall not apply, and such provisions are hereby extended as set
forth herein.]
1. Amendments, etc. with Respect to the Obligations;
Waiver of Rights. The Pledgor shall remain obligated hereunder notwithstanding
that, without any reservation of rights against the Pledgor and without notice
to or further assent by the Pledgor, any demand for payment of any of the
Obligations made by the Agent or the Lender may be rescinded by such party and
any of the Obligations continued, and the Obligations, or the liability of any
other party upon or for any part thereof, or any collateral security, or
guarantee therefor or right of offset with respect thereto, may, from time to
time, in whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by the Agent or any Lender, and the
Credit Agreement, the other Loan Documents, the Letters of Credit and any other
documents executed and delivered in connection therewith and the Hedging
Agreements and any other documents executed and delivered in connection
therewith may be amended, modified, supplemented or terminated, in whole or in
part, as the Agent (or the Required Lenders, as the case may be, or, in the case
of any Hedging Agreement, the Lender party thereto) may deem advisable from time
to time, and any collateral security, guarantee or right of offset at any time
held by the Agent or any Lender for the payment of the Obligations may be sold,
exchanged, waived, surrendered or released. Neither the Agent nor any Lender
shall have any obligation to protect, secure, perfect or insure any Lien at any
time held by it as security for the Obligations or for this Pledge Agreement or
any property subject thereto. The Agent or any Lender may, but shall be under no
obligation to, make demand hereunder against the Pledgor, and any failure by the
Agent or a Lender to make any such demand or to collect any payments from the
Pledgor or release the Pledgor shall not relieve the Pledgor in respect of which
a demand is made or collection is not made or the Pledgor is not so released of
its obligations or liabilities hereunder, and shall not impair or affect the
rights and remedies, express or implied, or as a matter of law, of the Agent or
any Lender against the Pledgor. For the purposes hereof, "demand" shall include
the commencement and continuance of any legal proceedings.
2. Continuing Security Interest; Assignments Under the
Credit Agreement. This Pledge Agreement shall create a continuing security
interest in the Collateral and shall (a) remain in full force and effect until
the payment in full in cash of the Obligations, (b) be binding upon each
Pledgor, its successors and assigns and (c) inure, together with the rights and
remedies of the Agent hereunder, to the benefit of the Agent, the Lenders and
their respective successors, transferees and assigns.
3. Reinstatement. This Pledge Agreement shall continue
to be effective, or be reinstated, as the case may be, if at any time payment,
or any part thereof, of any of the Obligations is rescinded or must otherwise be
restored or returned by the Agent or any Lender upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Pledgor, or upon or as a
result of the appointment of a receiver, intervenor or conservator of, or
trustee or similar officer for, the Pledgor or any substantial part of its
property, or otherwise, all as though such payments had not been made.
4. Notices. All notices, requests and demands pursuant
hereto shall be made in accordance with Section 9.01 of the Credit Agreement.
5. Counterparts. This Pledge Agreement may be executed by
one or more of the parties hereto on any number of separate counterparts, and
all of said counterparts taken together shall be deemed to constitute one and
the same instrument.
6. Severability. Any provision of this Pledge Agreement
that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
7. Integration. This Pledge Agreement represents the
agreement of the Pledgor with respect to the subject matter hereof and there are
no promises or representations by the Agent or the Lender relative to the
subject matter hereof not reflected herein or in the other Loan Documents.
8. Amendments in Writing; No Waiver; Cumulative Remedies.
(a) None of the terms or provisions of this Pledge
Agreement may be waived, amended, supplemented or otherwise modified except by a
written instrument executed by the Pledgor and the Agent.
(b) Neither the Agent nor any Lender shall by any act
(except by a written instrument pursuant to Section 19(a)), delay, indulgence,
omission or otherwise be deemed to have waived any right or remedy hereunder or
to have acquiesced in any Default or Event of Default or in any breach of any of
the terms and conditions hereof. No failure to exercise, nor any delay in
exercising, on the part of the Agent or any Lender, any right, power or
privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
A waiver by the Agent or any Lender of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy that the Agent
or such Lender would otherwise have on any future occasion.
(c) The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of any
other rights or remedies provided by law.
9. Section Headings. The Section headings used in this
Pledge Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
10. Successors and Assigns. This Pledge Agreement shall be
binding upon the successors and assigns of the Pledgor and shall inure to the
benefit of the Agent and the Lenders and their successors and assigns, except
that the Pledgor may not assign, transfer or delegate any of its rights or
obligations under this Pledge Agreement without the prior written consent of the
Agent.
11. Governing Law; Jurisdiction; Consent to Service of
Process.
(a) This Pledge Agreement shall be construed in
accordance with and governed by the law of the State of New York.
(b) The Pledgor hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of the
Supreme Court of the State of New York sitting in New York County and of the
United States District Court of the Southern District of New York, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to any Loan Document, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in such New York State or, to the extent permitted by law, in
such Federal court. Each of the parties hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Pledge Agreement or any other Loan Document shall affect any
right that the Agent or any Lender may otherwise have to bring any action or
proceeding relating to this Pledge Agreement or any other Loan Document against
the Pledgor or its properties in the courts of any jurisdiction.
(c) The Pledgor hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Pledge Agreement or any
other Loan Document in any court referred to in paragraph (b) of this Section.
Each of the parties hereto hereby irrevocably waives, to the fullest extent
permitted by law, the defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court.
(d) Each party to this Pledge Agreement irrevocably
consents to service of process in the manner provided for notices in
Section 9.01 of the Credit Agreement. Nothing in this Pledge Agreement or any
other Loan Document will affect the right of any party to this Agreement to
serve process in any other manner permitted by law.
12. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS PLEDGE AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
IN WITNESS WHEREOF, each of the undersigned has caused this Pledge
Agreement to be duly executed and delivered by its duly authorized officer as of
the day and year first above written.
THE TOPPS COMPANY, INC.
By:______________________________
Name:
Title:
THE CHASE MANHATTAN BANK, as
Agent and as a Lender,
By:______________________________
Name:
Title:
SCHEDULE II
1. Loan Agreement, dated February 3, 1997 by and between Topps Brasil
Ltda. and the Pledgor in the original prinicpal amount of $1,000,000.
1. Loan Agreement, dated September 16, 1997 by and between Topps
Brasil Ltda. and the Pledgor in the original principal amount of
$650,000.
EXHIBIT E
TO
CREDIT AGREEMENT
TRADEMARK SECURITY AGREEMENT
TRADEMARK SECURITY AGREEMENT (the "Agreement"), dated as of May 11, 1998,
made by THE TOPPS COMPANY, INC., a Delaware corporation (the "Grantor") to THE
CHASE MANHATTAN BANK, with an office at 0 Xxxxxxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxx
00000, as agent (the "Agent") for the benefit of the Lenders (as defined in the
Credit Agreement referred to below).
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the Agent, the Lenders and the Grantor are entering into a Credit
Agreement dated as of the date hereof (as amended, modified or supplemented from
time to time, the "Credit Agreement"); and
WHEREAS, unless otherwise defined herein, terms defined in the Credit
Agreement are used herein as therein defined; and
WHEREAS, it is a condition precedent to the making of Loans that the
Grantor shall have executed and delivered this Agreement;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Grantor and the Agent agree as follows:
X. Xxxxx of Security. The Grantor hereby assigns and pledges to
the Agent for its benefit and for the ratable benefit of the Lenders, and hereby
grants to the Agent for its benefit and for the ratable benefit of the Lenders,
a lien on and first priority security interest in (except to the extent such
assignment, pledge or grant would violate the terms of any license agreement
with any other person in connection with any of the Trademarks, as defined
below, whether the Grantor is a licensee o licensor under any such license
agreement), the entire right, title and interest of the Grantor in and to the
following, whether now owned or hereafter acquired (the "Trademark Collateral"):
(a) All owned domestic trademarks, service marks, trade
names and trade dress and all trademark and service xxxx registrations and
applications for trademark or service xxxx registration in the United
States (except for "intent to use" applications for trademark or service
xxxx registrations filed pursuant to Section l(b) of the Xxxxxx Act, unless
and until an Amendment to Allege Use or a Statement of Use under Sections
l(c) and l(d) of said Act has been filed) and (i) all renewals thereof, (ii
all income, royalties, damages and payments now and hereafter due and/or
payable with respect thereto (including, without limitation, payments under
all licenses entered into in connection therewith, and damages and payments
for past or future infringements thereof), (iii) the right to xxx or
otherwise recover for all past, present and future infringements thereof,
and (iv) all rights corresponding thereto throughout the world (but only
such rights as now exist or may come to exist under applicable local law),
together, in each case, with the goodwill of the business connected with
the use of, and symbolized by each such trademark, service xxxx, trade name
and trade dress (all of the foregoing and other rights being, collectively,
the "Trademarks");
(b) All license agreements with any other Person in connection
with any of the Trademarks when the Grantor is a licensor under any such
license agreement (subject, in each case, to the terms of such license
agreements), and the right to prepare for sale, sell and advertise for
sale, all inventory (as defined in the Uniform Commercial Code in effect in
the State of New York (the "NYUCC")), to the extent now or hereafter owned
by the Grantor and now or hereafter covered by such licenses (the
"Licenses").
SECTION 2. Security for Obligations. The assignment and pledge of
and grant of a security interest in the Trademark Collateral by the Grantor
pursuant to this Agreement (collectively, the "Security Interests") secures the
payment of all Obligations of the Grantor now or hereafter existing (and any
other documents in respect of such Obligations), whether for principal,
interest, fees, expenses or otherwise (all such Obligations being the "Secured
Obligations").
The Security Interests granted by this Agreement are granted in conjunction
with the security interests granted to the Agent in other assets of the Grantor,
as set forth in the Credit Agreement and the other Loan Documents.
SECTION I. Representations and Warranties. The Grantor represents and
warrants on the date hereof as follows:
(a) The Grantor is the sole, legal and beneficial owner of
the entire right, title and interest in and to the federal registrations
and applications for registration of the Trademarks listed on Schedule I
hereto and the Licenses free and clear of any lien, security interest,
option, charge, pledge, registered user agreement, assignment (whether
conditional or not), or covenant, or any other encumbrance, except for the
Security Interests created or permitted by this Agreement or the Credit
Agreement, and except for any such encumbrances which do not have a
material adverse impact on the economic value of any of the federal
registrations and applications for registration of the Trademarks listed on
Schedule I hereto, and except as permitted by Section 5 of this Agreement.
No effective financing statement or other instrument similar in effect
covering all or any part of the federal registrations and applications for
registration of the Trademarks listed on Schedule I hereto or the Licenses
purported to be granted by the Grantor hereunder is on file in any
recording office, including, without limitation, the United States Patent
and Trademark Office, except such as may have been filed in favor of the
Agent relating to this Agreement.
(b) Set forth on Schedule I is a complete and accurate list
of all of the United States federal registrations and applications for
federal registration of the Trademarks owned by the Grantor.
(c) Each federal trademark and service xxxx registration
and application for registration of the Grantor identified on Schedule I is
subsisting and, to the best of the Grantor's knowledge, has not been
adjudged invalid, unregistrable or unenforceable, in whole or in part, and
is, to the best of the Grantor's knowledge, valid, registrable and
enforceable. Each License of the Grantor, to the best of the Grantor's
knowledge, is subsisting and has not been adjudged invalid or
unenforceable, in who or in part, and is, to the best of the Grantor's
knowledge, valid and enforceable. The Grantor has notified the Agent in
writing of all prior uses of any federal registrations and applications for
registration of the Trademarks listed on Schedule I hereto of which the
Grantor is aware, which would lead, in the reasonable judgment of the
Grantor, to such Trademarks becoming invalid or unenforceable, including
prior unauthorized uses by third parties and uses which were not supported
by the goodwill of the business connected with such item.
(d) The Grantor has not, except as permitted under the
Credit Agreement, granted any license, release, covenant not to xxx, or
non-assertion assurance to any third person with respect to any part of the
federal registrations and applications for registration of the Trademarks
listed on Schedule I hereto which would materially interfere with its
business as currently carried on under any such registrations or
applications for registrations.
(e) The Grantor has used reasonable and proper statutory
notice in connection with its use of each registered trademark and service
xxxx listed on Schedule I, except inadvertent omissions thereof.
(f) Except for (i) the appropriate filings with the United
States Patent and Trademark Office, and (ii) the appropriate filings under
Article 9 of the Uniform Commercial Code, no consent of any other Person
(other than licensors of any License to which the Grantor is a licensee),
no authorization, consent, approval or other action by, and no notice to or
filing or recording with, any governmental, administrative or judicial
authority or regulatory body is required in the United States either (x for
the granting by the Grantor of the Security Interests granted hereby or for
the execution, delivery or performance of this Agreement by the Grantor, or
(y) for the perfection of or the exercise by the Agent of its rights and
remedies hereunder, except where the failure to obtain, take, give or make
such authorizations, consents, approvals, actions, notices or filings would
not, and would not be reasonably likely to, have a material adverse effect
on the financial condition, operations, business, properties or assets of
the Grantor.
(g) The consummation of actions contemplated under or in
connection with the Loan Documents to be performed by the Grantor, will not
impair the legal right of the Grantor to use any of the federal
registrations and applications for registration of the Trademarks listed on
Schedule I hereto.
(h) The Grantor has no knowledge of the existence of any
trademark, service xxxx, trade name or trade dress, or license agreement
held or claimed by any other Person that, if upheld, would preclude the
Grantor from distributing, marketing, selling or providing any product
(except as set forth on Schedule II hereto) or service currently
distributed, marketed, sold or provided by it, as the case may be, under or
in connection with any of the federal registrations and applications for
registration the Trademarks listed on Schedule I hereto (except, in each
case, to the extent that the Grantor has granted an exclusive license to
another person), or that would materially interfere with the ability of the
Grantor to carry on its business as currently carried on, and, the Grantor
has no knowledge of any claim that is likely to be made that if upheld
would preclude or materially interfere with its business as currently
carried on under any of the federal registrations and applications for
registration of the Trademarks listed on Schedule I hereto.
(i) No material claim in any court or in the United States
Patent and Trademark Office has been made (and, as to any trademark,
service xxxx, trade name, or trade dress with respect to which the Grantor
is a licensee, to the best knowledge of the Grantor, no material claim has
been made against the third party licensor), and the Grantor has no
knowledge of any material claim that has been made or (except as set forth
on Schedule II hereto) is likely to be made, that the use by the Grantor of
an Trademark Collateral does or may violate the rights of any Person.
(j) The Grantor, to the best of its knowledge, has used
commercially reasonable standards of quality in manufacturing, distribution
and marketing of each product sold and provision of each service provided
under or in connection with any Trademark Collateral, and has taken
whatever steps necessary to ensure that all licensed users of any Trademark
Collateral use such commercially reasonable standards of quality.
SECTION 2. Further Assurances.
(a) The Grantor agrees that from time to time, at the
expense of the Grantor, the Grantor will promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary or desirable, as the Agent may reasonably request, in order to
(i) continue, perfect and protect any Security Interest granted or
purported to be granted hereby, or (ii) enable the Agent to exercise and
enforce its rights and remedies hereunder with respect to any part of the
Trademar Collateral. Without limiting the generality of the foregoing, the
Grantor will execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices, as may be
necessary or desirable, or as the Agent may reasonably request, in order to
perfect and preserve the Security Interests granted or purported to be
granted hereby.
(b) The Grantor hereby authorizes the Agent to file one or
more financing or continuation statements, and amendments thereto, relative
to all or any part of the Trademark Collateral without the signature of the
Grantor where permitted by law. A carbon, photographic or other
reproduction of this Agreement or any financing statement covering the
Trademark Collateral or any part thereof shall be sufficient as a financing
statement where permitted by law.
(c) The Grantor will furnish to the Agent from time to time
statements and schedules further identifying and describing the Trademark
Collateral and such other reports in connection with the Trademark
Collateral as the Agent may reasonably request, all in reasonable detail.
(d) The Grantor agrees that, if, before the Secured
Obligations have been satisfied in full, it (i) obtains an ownership
interest in any new trademark, service xxxx, trade name and trade dress, or
trademark or service xxxx registration or application for trademark or
service xxxx registration which is not now identified on Schedule I, (ii)
enters into any new license agreement, subject, in each case, to the terms
of the license agreements, or (iii) becomes entitled to the benefit of any
tradema service xxxx, trade name and trade dress (which is materially
important to the business of the Grantor), trademark or service xxxx
registration, application for trademark or service xxxx registration,
license agreement or license agreement renewal, (x) the provisions of
Section 1 of this Agreement shall automatically apply thereto, and (y) any
such trademark, xxxx, registration, application, or license agreement,
together with the goodwill of the business connected with the use of the
xxxx or symbolized by it, shall automatically become part of the Trademark
Collateral. The Grantor shall, on the fifteenth day of each month, give
written notice to the Agent of each new trademark or service xxxx
registration or application for registration which arose or was filed
during the preceding month. The Grantor authorizes the Agent to modify this
Agreement by amending Schedule I to include any such new trademark or
service xxxx registration, or application for trademark or service xxxx
registration which becomes part of the Trademark Collateral under this
Section, or which, in the reasonable business judgment of the Grantor, is a
material trademark or service xxxx registration or application for
trademark or service xxxx registration.
(e) The Grantor agrees (i) to prosecute diligently any
trademark or service xxxx application that is part of Schedule I, (ii) to
file applications for registration of any trademark or service xxxx which
is or becomes material to its business, (iii) to take all necessary steps
in any proceeding before the United States Patent and Trademark Office or
in any court, to maintain and protect each material trademark, service
xxxx, trade name, trade dress and trademark or service xxxx registration,
and each License agreement, and (iv) to participate in opposition,
cancellation and infringement proceedings in each case, such actions under
clauses (i) through (iv) above, to be taken as and to the extent Grantor,
in the exercise of its reasonable commercial judgment, deems necessary or
desirable. Any expenses incurred in connection with such activities shall
be borne by the Grantor. If the Grantor fails to comply with any of the
foregoing duties, the Agent shall have the right, but not the obligation,
to effect compliance in the name of the Grantor to the extent permitted by
law, at the Grantor's expense.
(f) Except as may be permitted by Section 5.04 of the Credit
Agreement, the Grantor shall not (i) abandon any trademark or service xxxx
registration or application for trademark or service xxxx registration, or
any trademark, service xxxx or trade name, without the written consent of
the Agent, which consent shall not be unreasonably withheld, except where
such abandonment would not be reasonably likely to have a material adverse
effect on the financial condition, operations, business, properti or assets
of the Grantor, or (ii) take any action, or permit any action to be taken
by any other Persons to the extent such Persons are subject to its control,
or fail to take any action, which would materially and adversely affect the
validity, perfection, priority or enforcement of the rights transferred
herein to the Agent under this Agreement, and any such action or agreement
if it shall be entered into or taken, shall be null and void and of no
effect whatsoever. The Grantor agrees to notify the Agent immediately and
in writing if the Grantor learns (i) that any material item of the
Trademark Collateral may become abandoned, or (ii) of any adverse
determination or any development (including, without limitation, the
institution of any proceeding in the United States Patent and Trademark
Office or any court) regarding any material part of the Trademark
Collateral.
(g) In the event that any material item of the Trademark
Collateral is infringed or misappropriated by a third party, the Grantor
shall (i) promptly notify the Agent and (ii) take all reasonable steps and
actions to defend against and enjoin the infringement or misappropriation
and take such other actions as the Grantor shall reasonably deem
appropriate under the circumstances to protect and enforce such Trademark
Collateral unless (A) the Grantor shall reasonably determine that such
Trademark Collateral is of immaterial economic value to the Grantor or (B)
such infringement or misappropriation would not be reasonably likely to
have a material adverse effect on the financial condition, operations,
business, properties or assets of the Grantor taken as a whole. Any expense
incurred in connection with such activities shall be borne by the Grantor.
(h) The Grantor shall continue to use reasonable and proper
statutory notice in connection with its use of each registered trademark or
service xxxx.
(i) The Grantor agrees (i) to maintain the quality of any
and all products or services of the Grantor used or provided in connection
with the Trademark Collateral, consistent with the quality of said products
and services as of the date hereof and (ii) to take all reasonable steps to
ensure that all licensees of any Trademark Collateral maintain consistent
standards of quality, consistent with the standards in effect on the date
hereof, except in each case as may otherwise be determined by the Borrower
in the exercise of its prudent business judgment to the extent that the
failure to do so would not have an adverse affect on any material Trademark
Collateral.
SECTION 3. Transfers and Other Liens. The Grantor shall not, except as
otherwise permitted under Section 5.04 the Credit Agreement:
(a) sell, assign (by operation of law or otherwise) or
otherwise dispose of any of, or grant any option with respect to, the
Trademark Collateral, except that the Grantor may license the Trademark
Collateral (i) in the ordinary course of the Grantor's business, provided
that the Grantor, in the exercise of its reasonable commercial judgment,
determines that such license is necessary or desirable in the conduct of
the Grantor's business, or (ii) in connection with a sale or transfer of
assets as provided in the Credit Agreement, provided that such license
shall be on terms reasonably expected to maximize the gain to the Grantor
resulting from the granting of such license,
(b) create or suffer to exist any Lien upon or with respect
to any of the Trademark Collateral except for the Security Interests
created by this Agreement or permitted by the Credit Agreement, or take any
other action in connection with any of the Trademark Collateral that would
impair the value of the interest or rights thereunder of the Grantor or
that would impair the interest or rights of the Agent or the Lenders.
SECTION 4. Agent Appointed Attorney-in-Fact. The Grantor hereby
irrevocably appoints the Agent the Grantor's attorney-in-fact, with full
authority in the place and stead of the Grantor and in the name of the Grantor
or otherwise, from time to time in the Agent's discretion upon the occurrence
and during the continuance of an Event of Default, to take any action and to
execute any instrument that the Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation:
(a) to ask, demand, collect, xxx for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become due
under or in respect of any of the Trademark Collateral,
(b) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a)
above, and
(c) to file any claims or take any action or institute any
proceedings which the Agent may deem necessary or desirable for the
collection of any payments relating to the Trademark Collateral or
otherwise to enforce the rights of the Agent with respect to any of the
Trademark Collateral.
SECTION 5. Agent May Perform.
(a) If the Grantor fails to perform any agreement contained
herein, the Agent may itself perform, or cause performance of, such
agreement, and the expenses of the Agent incurred in connection therewith
shall be payable by the Grantor under Section 10(b) of this Agreement.
The Agent or its designated representatives shall have the right, at any
reasonable time during normal business hours and from time to time, upon
reasonable notice, and without undue interruption to the business of the
Grantor, to inspect the premises of the Grantor and to examine the books,
records and operations of the Grantor (including, without limitation, the
Grantor's quality control processes) relating to the Trademark Collateral.
SECTION 6. The Agent's Duties.The powers conferred on the Agent hereunder are
solely to protect its interest in the Trademark Collateral and shall not impose
any duty upon it to exercise any such powers.
SECTION 7. Remedies. If any Event of Default shall have occurred and be
continuing:
(a) The Agent may exercise in respect of the Trademark
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to the Agent, all the rights and remedies of a Lender
in default under the NYUCC (whether or not the NYUCC applies to the
affected Trademark Collateral) and also may (i) exercise any and all rights
and remedies of the Grantor under or otherwise in respect of the Trademark
Collateral, (ii) require the Grantor to, and the Grantor hereby agrees that
will at its expense and upon request of the Agent forthwith, assemble all
or any part of the documents embodying the Trademark Collateral as directed
by the Agent and make such documents available to the Agent at a place to
be designated by the Agent which is reasonably convenient to both the Agent
and the Grantor, (iii) occupy, for a reasonable period and without
obligation to the Grantor in respect of such occupation, any premises owned
or leased by the Grantor where documents embodying the Trademark Collateral
or any part thereof are assembled in order to effectuate the Agent's rights
and remedies hereunder or under law, and (iv) without notice except as
specified below, sell the Trademark Collateral or any part thereof in one
or more parcels at public or private sale, at any of the Agent's offices or
elsewhere, for cash, on credit or for future delivery, and upon such other
terms as the Agent may deem commercially reasonable. In the event of any
sale, assignment, or other disposition of any of the Trademark Collateral
by the Grantor, the goodwill of the business connected with and symbolized
by any Trademark Collateral subject to such disposition shall be included,
and the Grantor shall supply to the Agent or its designee the Grantor's
know-how and expertise relating to the manufacture and sale of products or
the provision of services relating to any Trademark Collateral subject to
such disposition, and its customer lists and other records relating to such
Trademark Collateral and to the distribution of such products and services.
The Grantor agrees that, to the extent notice of sale shall be required by
law, at least ten days' notice to the Grantor of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Agent shall not be obligated to
make any sale of Trademark Collateral regardless of notice of sale having
been given. The Agent may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was
so adjourned.
(b) All payments received by the Grantor under or in connection
with any of the Trademark Collateral shall be received in trust for the
benefit of the Agent, shall be segregated from other funds of the Grantor
and shall be forthwith paid over to the Agent in the same form as so
received (with any necessary endorsement). All payments made under or in
connection with or otherwise in respect of the Trademark Collateral and all
cash proceeds received by the Agent in respect of any sale of, collection
from, or other realization upon all or any part of the Trademark Collateral
may, in the discretion of the Agent, be held by the Agent as collateral
for, and/or then or at any time thereafter applied (after payment of any
amounts payable to the Agent pursuant to Section 10 of this Agreement) in
whole or in part by Agent for the ratable benefit of the Lenders against,
all or any part of the Secured Obligations, in such order as the Agent
shall elect. Any surplus of such cash or cash proceeds held by the Agent
and remaining after payment in full of all the Secured Obligations shall be
paid over to the respective Grantor or to whomsoever may be lawfully
entitled to receive such surplus.
SECTION 8. Indemnity and Expenses.
(a) The Grantor agrees to indemnify the Agent from and
against any and all claims, losses and liabilities arising out of, or in
connection with or resulting from this Agreement or the transactions
contemplated hereby (including, without limitation, enforcement of this
Agreement), except to the extent such claims, losses or liabilities result
from the Agent's gross negligence or willful misconduct as determined by a
final judgment of a court of competent jurisdiction.
(b) The Grantor will upon demand pay to the Agent the amount
of any and all reasonable expenses, including, without limitation, the
reasonable fees and costs of its counsel and of any experts and agents,
that the Agent may incur in connection with (i) the administration of this
Agreement, (ii) the custody, preservation, use or operation of, or the sale
of, collection from, or other realization upon, any of the Trademark
Collateral, (iii) the exercise or enforcement of any of the rights of the
Agent or the Lenders hereunder or (iv) the failure by the Grantor to
perform or observe any of the provisions hereof.
SECTION 9. Security Interest Absolute. All rights of the Agent and
Security Interests granted hereunder, and the Grantor's Obligations, shall, to
the extent permitted by law, be absolute and unconditional irrespective of:
(i) any lack of validity or enforceability of the Credit
Agreement or any other Loan Document, or any agreement
or instrument relating thereto;
(ii) any change in the time, manner or place of payment of,
or in any other term of, all or any of the Secured
Obligations, or any other amendment or waiver of or any
consent to departure from, the Credit Agreement or any other
Loan Document (other than this Agreement), including,
without limitation, any increase in the Secured Obligations
resulting from the extension of additional credit to the
Borrowers or otherwise;
(iii) any taking and holding of Trademark Collateral or
guarantees for all or any of the Secured Obligations; or any
amendment, alteration, exchange, substitution, transfer,
enforcement, waiver, subordination, termination or release
of any Trademark Collateral or such guarantees, or any
nonperfection of any Trademark Collateral, or any consent to
departure from any such guaranty;
(iv) any manner of application of Trademark Collateral, or
proceeds thereof, to all or any of the Secured Obligations,
or the manner of sale or other disposition of any Trademark
Collateral;
(v) any consent by any Lender or the Agent to the change,
restructuring or termination of the corporate structure or
existence of the Grantor and any corresponding restructure
of the Secured Obligations, or any other restructure or
refinancing of the Secured Obligations or any portion
thereof;
(vi) any modification, compromise, settlement or release by
the Agent or any Lender, by operation of law or otherwise
(except any of the foregoing with respect to this
Agreement), collection or other liquidation of the Secured
Obligations or the liability of the Grantor, or of the
Trademark Collateral, in whole or in part, and any refusal
of payment by the Agent or any Lender, in whole or in part,
from any obligor, the Grantor in connection with any of the
Secured Obligations, whether or not with notice to, or
further assent by, or any reservation of rights against, the
Grantor; or
(vii) any other circumstance (including, but not limited to,
any statute of limitations) that might otherwise constitute
a defense available to, or a discharge of, the Grantor.
The granting of a Security Interest in the Trademark Collateral shall continue
to be effective or shall be reinstated, as the case may be, if at any time any
payment of any of the Secured Obligations is rescinded or must be otherwise
returned by the Agent or any Lender upon the insolvency, bankruptcy or
reorganization of the Grantor or otherwise, all as though such payment had not
been made.
SECTION I. Waiver. The Grantor hereby waives promptness, diligence,
notice of acceptance and any other notice with respect to any of the Secured
Obligations (as that term is defined in this Agreement) and this Agreement and
any requirement that the Agent or any Lender protect, secure, perfect or insure
any Security Interest or any property subject thereto or exhaust any right or
take any action against the Grantor or any other Person or any collateral.
SECTION 2. Amendments, Etc.
(a) Except as provided in subsection (b) to this Section 13,
no amendment or waiver of any provision of this Agreement, and no consent
to any departure by the Grantor herefrom, shall be in any event effective
unless the same shall be in writing and signed by the Agent, and then such
waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given. No failure to exercise nor any delay
in exercising, on the part of the Agent or any of the Lenders, a right,
power or privilege under this Agreement shall operate as a waiver thereof;
further, no single or partial exercise of any right, power or privilege
under this Agreement shall preclude any other or further exercise thereof
or the exercise of any other right, power or privilege.
(b) Any trademark security agreement supplement hereto shall
be in substantially the form of Exhibit A hereto (each a "Trademark
Security Agreement Supplement"), and upon the execution and delivery
thereof by the Grantor the supplements attached to each Trademark Security
Agreement Supplement shall be incorporated into and become a part of and
supplement Schedule I hereto, and the Agent may attach such supplements to
such Schedule as supplemented pursuant hereto.
SECTION 3. Addresses for Notices. All notices and other communications
to any party provided for hereunder shall be in writing (including telegraphic,
telecopy, telex or cable communication) and mailed, telegraphed, telecopied,
telexed, cabled or delivered, addressed to such party, in the case of the
Grantor, at its address referred to in Section 9.01(a) of the Credit Agreement,
in the case of the Agent, at the address of the Agent referred to in Section
9.01(b) of the Credit Agreement, or as to any party at such other address as
shall be designated by such party in a written notice to each other party
complying as to delivery with the terms of this Section. All such notices and
other communications shall be effective (a) when received, if mailed or
delivered, or (b) when delivered to the telegraph company, transmitted by
telecopier, confirmed by telex answerback or delivered to the cable company,
respectively, addressed as aforesaid.
SECTION 4. Continuing Security Interest; Release and Reassignment of
Collateral.
(a) This Agreement shall create a continuing Security
Interest in the Trademark Collateral and shall (i) remain in full force and
effect until the cash payment in full of the Secured Obligations, (ii) be
binding upon the Grantor, its successors and assigns, and (iii) inure,
together with the rights and remedies of the Agent hereunder, to the
benefit of the Agent, the Lenders and their respective successors,
transferees and assigns, including, but not limited to, those provided in
the Credit Agreement. Without limiting the generality of the foregoing
clause (iii), any Lender may assign or otherwise transfer all or any
portion of its rights and obligations under the Credit Agreement
(including, without limitation, all or any portion of the Loans owing to
it) to any other Person, and such other Person shall thereupon become
vested with all the benefits in respect thereof granted to such Lender
herein or otherwise, in each case subject to and as provided for in Section
9.04 of the Credit Agreement.
(b) In the case of any Trademark Collateral pledged or
assigned, or in which a security interest is granted hereunder by the
Grantor, upon any sale, lease, transfer or other disposition of any item of
Trademark Collateral in accordance with the terms of the Credit Agreement
(other than sales of Inventory in the ordinary course of business), the
Agent will, at the Grantor's expense, execute and deliver to the Grantor,
any such documents as the Grantor shall reasonably request to evidence the
release of such item of Trademark Collateral from the assignment and
security interest granted hereby; provided, however, as to clause (ii)
above, that (x) at the time of such request and such release no Event of
Default (or event or condition which upon notice or lapse of time or both
would constitute an Event of Default) shall have occurred and be
continuing, (y) the Grantor shall have delivered to the Agent, at least 10
Business Days prior to the date of the proposed release, or such shorter
period acceptable to the Agent under this Agreement, a written request for
release describing the item of Trademark Collateral and the terms of the
sale, lease, transfer or other disposition in reasonable detail, including
the price thereof and any expenses in connection therewith, together with a
form of release for execution by the Agent and a certification by the
Grantor to the effect that the transaction is in compliance with the Credit
Agreement and as to such other matters as the Agent may request, and (z)
any proceeds of any such sale, lease, transfer or other disposition
required to be applied to the prepayment of Loans in accordance with the
Credit Agreement shalll be so applied.
(c) Upon the cash payment in full of the Secured Obligations,
the Security Interests granted hereby shall terminate and all rights to the
Trademark Collateral shall revert and be reassigned to the respective
Grantor. Upon any such termination, the Agent will, at the Grantor's
expense, execute and deliver to the Grantor such documents as the Grantor
shall reasonably request to evidence such termination and reassignment.
SECTION 5. Transactions Permitted Under the Credit Agreement. Nothing contained
in this Agreement shall in any manner prohibit or restrict the Grantor or any of
its Subsidiaries from consummating any transaction, entering into any agreement
or otherwise taking any action expressly permitted under the Credit Agreement.
SECTION 6. Severability. If any term or provision of this Agreement is or shall
become illegal, invalid or unenforceable in any jurisdiction, all other terms
and provisions of this Agreement shall remain legal, valid and enforceable in
such jurisdiction and such illegal, invalid or unenforceable provision shall be
legal, valid and enforceable in any other jurisdiction.
SECTION 7. Execution in Counterparts. This Agreement may be executed in any
number of counterparts each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
agreement.
SECTION 8. GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE
EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR
REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR TRADEMARK COLLATERAL ARE
GOVERNED BY THE LAWS OF THE UNITED STATES OR ANY OTHER JURISDICTION OTHER THAN
THE STATE OF NEW YORK. UNLESS OTHERWISE DEFINED HEREIN OR IN THE CREDIT
AGREEMENT, TERMS USED IN ARTICLE 8 OR 9 OF THE U.C.C. ARE USED HEREIN AS THEREIN
DEFINED.
SECTION 6. WAIVER OF TRIAL BY JURY. The Grantor HEREBY UNCONDITIONALLY AND
IRREVOCABLY WAIVES TO THE EXTENT PERMITTED BY LAW ALL RIGHT TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO ANY OF THE
LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.
IN WITNESS WHEREOF, the Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
GRANTOR:
THE TOPPS COMPANY, INC.
By:____________________________________________
Title:
AGENT:
THE CHASE MANHATTAN BANK
By:____________________________________________
Title:
STATE OF NEW YORK )
)ss.:
COUNTY OF NEW YORK )
On the ____ day of ___________, 1997, before me personally came
______________________, to me known, who, being by me duly sworn, did depose and
say she resides at _____________________________ and that she is a
_____________________________ of The Topps Company, Inc., the corporation
described in and which executed the above instrument.
_________________________________________
Notary Public
[Notarial Seal]
SCHEDULE I
TRADEMARKS
See Attached.
EXHIBIT A
TO
TRADEMARK SECURITY AGREEMENT
TRADEMARK SECURITY AGREEMENT SUPPLEMENT
TRADEMARK SECURITY AGREEMENT SUPPLEMENT, dated as of ____________
__, 1998 (this "Supplement"), made by THE TOPPS COMPANY, INC., a Delaware
corporation (the "Grantor") to The Chase Manhattan Bank, with an office at Xxx
Xxxxxxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxx 00000, as agent (the "Agent") for the
benefit of each of the lenders (the "Lenders") signatory to the Credit Agreement
dated as of May 11, 1998 (as may have been or may be amended, supplemented or
otherwise modified from time to time, the "Credit Agreement") among the Grantor,
the Agent and the Lenders.
WHEREAS, all terms used herein and not otherwise defined herein
shall, unless the context specifically requires otherwise, have the respective
meanings ascribed to them in, or pursuant to the provisions of, the Trademark
Security Agreement (as hereinafter defined);
WHEREAS, pursuant to the terms of the Credit Agreement and the
other Loan Documents, the Lenders agreed to make Loans to the Borrower upon the
terms and subject to the conditions set forth therein to be evidenced by the
Notes issued by the Borrower and to be guarantied by the Guarantors thereunder;
WHEREAS, the Trademark Security Agreement dated as of
___________, 1998 (the "Trademark Security Agreement") and recorded on
___________, 1998 in Reel ____, Frame ___-___ in the United States Patent and
Trademark Office was delivered by the Grantor in favor of the Agent to secure
its obligations under the Credit Agreement and the other Loan Documents; and
WHEREAS, the Grantor and the Agent mutually desire to supplement
the Trademark Security Agreement to add certain additional Trademarks as
collateral for the respective obligations of Grantor under the Credit Agreement.
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree that
Schedule I to the Trademark Security Agreement is hereby supplemented to add the
Trademark(s) set forth on Schedule A hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the day and year first above written.
THE TOPPS COMPANY, INC.
By:_____________________________________________
Name:
Title:
AGENT:
THE CHASE MANHATTAN BANK
By:_____________________________________________
Name:
Title:
By:_____________________________________________
Name:
Title:
EXHIBIT F
TO
CREDIT AGREEMENT
Form of Covenant Compliance Certificate
A. Compliance with Section 6.01(a)(vii): Indebtedness
1. additional Indebtedness
Required: Line A1 must not be greater than $100,000
B. Compliance with Section 6.04: Investments, Loans, Advances,
Guarantees and Acquisitions
1. investments by Borrower in its Subsidiaries (6.04(c))
2. Intercompany Debt evidenced by notes owing to Borrower by
Subsidiaries (6.04(d))
3. Intercompany Debt not evidenced by notes owing to Borrower
by Subsidiaries (6.04(e))
------------------ ----------- ----------- ------------ ----------- ----------- ----------- ------------ -----------
Topps Topps Topps Topps Topps Topps Topps Other
Ireland Canada Europe Mexico Brazil Argentina Latin
America
------------------ ----------- ----------- ------------ ----------- ----------- ----------- ------------ -----------
------------------ ----------- ----------- ------------ ----------- ----------- ----------- ------------ -----------
Investments
------------------ ----------- ----------- ------------ ----------- ----------- ----------- ------------ -----------
------------------ ----------- ----------- ------------ ----------- ----------- ----------- ------------ -----------
Interco. Debt
evidenced by
notes
------------------ ----------- ----------- ------------ ----------- ----------- ----------- ------------ -----------
------------------ ----------- ----------- ------------ ----------- ----------- ----------- ------------ -----------
Interco. Debt
not evidenced by
notes
------------------ ----------- ----------- ------------ ----------- ----------- ----------- ------------ -----------
4. loans and advances to officers, directors and employees
(6.04(i))
Required: Line B1 must not be greater than $3,000,000
Line B2 must not be greater than $3,000,000
Line B3 must not be greater than $15,000,000
Line B4 must not be greater than $100,000
C. Compliance with Section 6.05: Asset Sales
1. aggregate fair market value of sales, transfers and
dispositions of assets (6.05(f))
2. aggregate fair market value of sales, transfers and
dispositions of assets between the Borrower and any
Subsidiary (6.05(g))
Required: Line C1 must not be greater than $500,000 during
any fiscal year
Line C2 must not be greater than $750,000 during
the term of the Loans
D. Compliance with Section 6.06: Hedging Agreements
1. Hedging Agreements
Required: Line D1 must not be greater than $54,000,000
E. Compliance with Section 6.07: Restricted Payments
1. Restricted Payments pursuant to and in accordance with
stock option plans or other benefit plans for management or
employees or consultants
Required: Line E1 must not be greater than $250,000 during
any fiscal year
F. Compliance with Section 6.13: Consolidated Leverage Ratio
1. Indebtedness for Money Borrowed of the Borrower
2. Indebtedness for Money Borrower of Subsidiaries
3. Capitalized Leases
4. Standby Letters of Credit
5. F1 + F2 + F3 + F4
6. Normalized EBITDA
QE1 QE2 XX0 XX0 Total
a. Consolidated Net Income (or net loss)
b. depreciation expense
c. amortization expense
d. net total income tax expense
e. interest expense
f. $2,853,000 for periods that include the quarter ended
5/30/97
g. $3,044,000 for periods that include the quarter ended
11/28/97
h. $10,646,000 for periods that include the quarter ended
2/28/98
I. a + b + c + d + e + f + g + h
7. Ratio of F5 to F6
Required: Line F7 must not be greater than the amount
specified opposite such dates:
(Insert chart from Section 6.13)
G. Compliance with Section 6.14: Consolidated Fixed Charge Ratio
QE1 QE2 QE3 QE4 Total
1. Normalized EBITDA (as calculated above)
2. unfinanced Capital Expenditures
3. G1 - G2
4. current portion of long term debt
5. interest expense
6. G4 + G5
7. Ratio of G3 to G6
Required: Line G7 must not be less than the amount specified
opposite such dates:
(Insert chart from Section 6.14)
H. Compliance with Section 6.15: Consolidated Net Worth
1. Consolidated Shareholders' Equity
2. all reserves
3. H1 - H2
Required: Line H3 must not be less than $56,800,000
I. Compliance with Section 6.16: Consolidated Net Loss
1Q 2Q Total 1+2 3Q Total 1+2+3 4Q Total 1+2+3+4
1. net loss or profit
Required: the net loss or profit reflected on Line I1 must
not (Insert language from Section 6.16)
J. Compliance with Section 6.17: EBITDA
1. Consolidated Net Income (or net loss)
2. depreciation expense
3. amortization expense
4. net total income tax expense
5. interest expense
6. J1 + J2 + J3 + J4 + J5
Required: Line J6 must not be less than $4,700,000 for the
fiscal quarter ending 2/28/98 and ($1,800,000) for the fiscal quarter
ending 5/30/98
K. Compliance with Section 6.18: Cumulative EBITDA
QE1 QE2 XX0 XX0 Total
1. Consolidated Net Income (or net loss)
2. depreciation expense
3. amortization expense
4. net total income tax expense
5. interest expense
6. K1 + K2 + K3 + K4 + K5
Required:Line K6 must not be less than $3,100,000 for the two
fiscal quarter period ending 8/29/98, and $5,640,000
for the three fiscal quarter period ending 11/28/98,
and $14,400,000 for the four fiscal quarter periods
thereafter.
L. Compliance with Section 6.19: Capital Expenditures
1Q99 2Q99 3Q99 4Q99 1Q00 2Q00 3Q00 4Q00 1Q01 2Q01
1. Capital Expenditures
Required: Line L1 must not be more than $6,000,000 for the
term of the Loans.
EXHIBIT G
TO
CREDIT AGREEMENT
TOPPS SA GUARANTY
TOPPS SA GUARANTY, dated as of May 11, 1998 (together with any
amendments, restatements, modifications and supplements, the "Guaranty") made by
THE TOPPS COMPANY, INC., a Delaware corporation (the "Guarantor"), in favor of
THE CHASE MANHATTAN BANK, as agent (the "Agent") for the lenders (the "Lenders")
party to the Credit Agreement (as hereinafter defined). Capitalized terms not
otherwise defined herein shall have the meanings assigned to such terms in the
Credit Agreement.
WHEREAS, contemporaneously with the execution and delivery of
this Guaranty, the Guarantor, the Agent and the Lenders are entering into a
Credit Agreement dated as of the date hereof (as amended, modified or
supplemented from time to time, the "Credit Agreement");
WHEREAS, pursuant to the terms of the Credit Agreement, the
Issuing Bank has agreed, among other things, to issue and the Lenders have
agreed, among other things, to participate in the Topps SA Letters of Credit
which letters of credit are issued at the request of the Borrower for the
account of Topps Latin America SA (the "Obligor").
WHEREAS, it is a condition precedent to the effectiveness of the
Credit Agreement that the Guarantor shall have executed and delivered to the
Lenders this Guaranty;
NOW, THEREFORE, in consideration of the Lenders' agreement to
extend credit to the Guarantor and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged by the Guarantor,
the Guarantor agrees with the Lenders as follows:
SECTION 1. Guaranty. (a) The Guarantor hereby unconditionally
guarantees the punctual payment when due, of all obligations of every kind or
character now or hereafter existing, whether matured or unmatured, contingent or
liquidated, of the Obligor to each of the Agent and the Lenders under the Topps
SA Letters of Credit and any agreements executed in connection therewith (the
Topps SA Letters of Credit and all such agreements, as may hereafter be amended,
restated, modified or supplemented collectively, the "SA Documents") whether for
principal, interest, fees, expenses or otherwise and whether in United States
dollars or other currencies, and any and all reasonable expenses (including
reasonable counsel fees and expenses) incurred by the Agent and the Lenders in
enforcing any of their respective rights under this Guaranty (all such
obligations being collectively referred to as the "Obligations").
SECTION 2. Guaranty of Payment. The Guarantor further agrees that
its guarantee hereunder constitutes a guarantee of payment and performance when
due and not of collection, and waives any right to require that any resort be
had by any of the Lenders to (i) the Obligor, (ii) any other guarantor, (iii)
any Collateral held for payment of the Obligations or to any balance of any
deposit account or credit on the books of the Lenders in favor of the Obligor or
any other person or (iv) recourse against any other party.
SECTION 3. Guaranty Absolute. The Guarantor guarantees that the
Obligations will be performed and paid strictly in accordance with the terms of
the SA Documents, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of any of
the Lenders with respect thereto and is not subject to any setoff, counterclaim
or defense. The Obligations of the Guarantor hereunder are independent of the
obligations of other persons under any other related document, and a separate
action or actions may be brought and prosecuted hereunder whether the action is
brought against any such person or whether any such person is joined in any such
action or actions. The liability of the Guarantor under this Guaranty shall be
absolute and unconditional, and shall not be affected or released in any way,
irrespective of:
(i) any lack of validity or enforceability of the SA Documents,
or to the Obligations;
(ii) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to departure from any
document evidencing or relating to any of the Obligations or the
SA Documents, including, but not limited to, an increase or
decrease in the Obligations;
(iii) any taking and holding of Collateral or any other
collateral or additional guaranties for all or any of the
Obligations, or any amendment, alteration, exchange,
substitution, transfer, enforcement, waiver, subordination,
termination, or release of any collateral securing the
Obligations, if any (the "Collateral") or any other collateral or
such guaranties, or any non-perfection of any collateral or any
consent to departure from any such guaranty;
(iv) any manner of application of Collateral or any other
collateral, or proceeds thereof, to all or any of the
Obligations, or the manner of sale of any Collateral or any other
collateral;
(v) any consent by one or more of the Lenders to the change,
restructuring or termination of the corporate structure or
existence of the Obligor or any affiliate thereof and any
corresponding restructuring of the Obligations, or any other
restructuring or refinancing of the Obligations or any portion
thereof;
(vi) any modification, compromise, settlement or release by one
or more of the Lenders, by operation of law or otherwise,
collection or other liquidation of the Obligations or the
liability of the Obligor and any other guarantor, or of the
Collateral or any other collateral, in whole or in part, and any
refusal of payment by one or more of the Lenders, in whole or in
part, from any Obligor or guarantor in connection with any of the
Obligations, whether or not with notice to, or further assent by,
or any reservation of rights against, the Guarantor;
(vii) the waiver of the performance or observance by the Obligor
of any agreement, covenant, term or condition to be performed by
it;
(viii) the voluntary or involuntary liquidation, dissolution,
sale of all or substantially all of the property, marshaling of
assets and liabilities, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization,
arrangement, composition or readjustment of, or other similar
application or proceeding affecting the Obligor or any of its
assets;
(ix) the release of the Obligor from the performance or
observance of any agreements, covenants, terms or conditions
contained in any agreement or document evidencing or relating to
the Obligations or the SA Documents by operation of law; or
(x) any other circumstance (including, but not limited to, any
statute of limitations) which might otherwise constitute a
defense available to, or a discharge of, the Guarantor.
Without limiting the generality of the foregoing, the Guarantor
hereby consents, and hereby agrees, that the rights of the Lenders hereunder,
and the liability of the Guarantor hereunder, shall not be affected by any and
all releases of any Collateral or any other collateral. This Guaranty shall
continue to be effective or be reinstated, as the case may be, if at any time
any payment of any of the Obligations is rescinded or must otherwise be returned
by the Lender upon the insolvency, bankruptcy or reorganization of the Obligor
or otherwise, all as though such payment had not been made.
SECTION 4. Waivers. The Guarantor waives presentment to, demand
of payment from and protest to the Obligor, or any other guarantor of any of the
Obligations, and also waives notice of acceptance of its guarantee and notice of
protest for non-payment. The Guarantor hereby further waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Obligations and this Guaranty and any requirement that the Lenders protect,
secure, perfect or insure any security interest or lien or any property subject
thereto or exhaust any right or take any action against the Obligor, or any
other person or any Collateral or any other collateral.
SECTION 5. Covenants. The Guarantor hereby waives any right to
require the Lenders to proceed against the Obligor, any other guarantor or any
person or proceed against any Collateral or any other collateral, or pursue any
other remedy in the power of the Agent or the Lenders.
SECTION 6. Subrogation. Upon payment by the Guarantor of any sums
to the Lenders hereunder, all rights of the Guarantor against the Obligor
arising as a result thereof by way of right of subrogation or otherwise, shall
in all respects be subordinate and junior in right of payment to the prior final
and defeasible payment in full of all the Obligations. If any amount shall be
paid to the Guarantor for the account of the Obligor, such amount shall be held
in trust for the benefit of the Lenders and shall forthwith be paid to the
Lenders to be credited and applied to the Obligations, whether matured or
unmatured.
SECTION 7. Amendments, Etc. No amendment or waiver of any
provision of this Guaranty nor consent to any departure by the Guarantor
herefrom shall in any event be effective unless the same shall be in writing and
signed by the Lenders and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
SECTION 8. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing and shall be given in the manner set
forth in Section 9.01 of the Credit Agreement and with copies specified therein,
if to the Guarantor and if to the Lenders, to their respective addresses as
specified in the Credit Agreement.
SECTION 9. No Waiver, Remedies. No failure on the part of any of
the Lenders to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law, the Credit Agreement or any other
agreement relating to the Obligations.
SECTION 10. Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default, the Lenders are hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by the Agent
or the Lenders to or for the credit or the account of the Guarantor against any
and all of the Obligations of the Guarantor now or hereafter existing under this
Guaranty, irrespective of whether the Lenders shall have made any demand under
this Guaranty and although such Obligations may be contingent and unmatured. The
rights of the Lenders under this Section 10 are in addition to other rights and
remedies (including, without limitation, other rights of set-off) which the
Lenders may have.
SECTION 11. Continuing Guaranty; Transfer of Note; Release of
Guaranty. This Guaranty is a continuing guaranty and shall (i) remain in full
force and effect until the payment in full of all of the Obligations and all
other amounts payable under this Guaranty, (ii) be binding upon the Guarantor,
its successors and assigns, and (iii) inure to the benefit of and be enforceable
by the Lenders and their respective successors, transferees and assigns. Without
limiting the generality of the foregoing clause (iii), each Lender may assign or
otherwise transfer any instrument of indebtedness of the Obligor held by it, or
any interest therein, or grant any participation in its rights or Obligations
under any agreement relating to the Obligations and the SA Documents subject to
the provisions of such agreement to any other person, and such other person
shall thereupon become vested with all the rights in respect thereof granted to
the Lender.
SECTION 12. Jurisdiction; Waiver of Jury Trial. (a) THE GUARANTOR
HEREBY IRREVOCABLY SUBMITS ITSELF TO THE EXCLUSIVE JURISDICTION OF BOTH THE
SUPREME COURT OF THE STATE OF NEW YORK, NEW YORK COUNTY AND THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPEAL THEREFROM,
FOR THE PURPOSE OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF OR
RELATING TO THIS GUARANTY, AND HEREBY WAIVES, AND AGREES NOT TO ASSERT, BY WAY
OF MOTION, AS A DEFENSE OR OTHERWISE, IN ANY SUIT, ACTION OR PROCEEDING, ANY
CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF THE ABOVE-NAMED
COURTS FOR ANY REASON WHATSOEVER, THAT SUCH SUIT, ACTION OR PROCEEDING IS
BROUGHT IN AN INCONVENIENT FORUM OR THAT THIS GUARANTY MAY NOT BE ENFORCED IN OR
BY SUCH COURTS. NEITHER THE GUARANTOR NOR THE LENDER WILL SEEK TO CONSOLIDATE
SUCH PROCEEDING INTO ANY ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN
WAIVED.
SECTION 13. Applicable Law. THIS GUARANTY SHALL IN ALL RESPECTS
BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE.
SECTION 14. Expenses of the Agent and the Lenders. The Guarantor
agrees to pay all reasonable and necessary out-of-pocket expenses incurred by
the Agent and the Lenders in connection with the enforcement or protection of
its rights or the rights of the Agent and the Lenders generally in connection
with the Guaranty including, but not limited to, the reasonable fees and
disbursements of counsel for the Agent and the Lenders.
[Signature on Following Page]
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
THE TOPPS COMPANY, INC.
By: _______________________
Name:
Title:
