EXHIBIT 28
SECOND AMENDED AND RESTATED
LOAN, GUARANTY AND SECURITY AGREEMENT
Dated as of July 23, 2001
Among
THE FINANCIAL INSTITUTIONS NAMED HEREIN,
as the Lenders,
BANK OF AMERICA, N.A.
as the Agent,
XXXXXXX SPORTS INC.,
as the Parent Guarantor,
and
VARSITY SPIRIT CORPORATION,
VARSITY SPIRIT FASHIONS & SUPPLIES, INC.,
VARSITY USA, INC., VARSITY/INTROPA TOURS, INC.,
and
INTERNATIONAL LOGOS, INC.,
collectively, as the Borrower
TABLE OF CONTENTS
ARTICLE 1
INTERPRETATION OF THIS AGREEMENT
1.1 Definitions...........................................................2
1.2 Accounting Terms.....................................................25
1.3 Interpretive Provisions..............................................25
ARTICLE 2
LOANS AND LETTERS OF CREDIT
2.1 Total Facility.......................................................26
2.2 Revolving Loans......................................................26
2.3 [INTENTIONALLY OMITTED]..............................................31
2.4 Letters of Credit....................................................31
ARTICLE 3
INTEREST AND FEES
3.1 Interest.............................................................37
3.2 [INTENTIONALLY OMITTED]..............................................38
3.3 Maximum Interest Rate................................................38
3.4 [INTENTIONALLY OMITTED]..............................................41
3.5 Unused Line Fee......................................................38
3.6 Letter of Credit Fee.................................................38
3.7 Agent's Fee..........................................................39
ARTICLE 4
PAYMENTS AND PREPAYMENTS
4.1 Revolving Loans......................................................39
4.2 Termination or Reduction of Facility.................................39
4.3 [INTENTIONALLY OMITTED]..............................................39
4.4 [INTENTIONALLY OMITTED]..............................................39
4.5 [INTENTIONALLY OMITTED]..............................................39
4.6 Payments by the Borrower.............................................40
4.7 Payments as Revolving Loans..........................................40
4.8 Apportionment, Application and Reversal of Payments..................40
4.9 Indemnity for Returned Payments......................................41
4.10 Agent's and Lenders' Books and Records; Monthly Statements...........41
ARTICLE 5
TAXES, YIELD PROTECTION AND ILLEGALITY
5.1 Taxes................................................................41
5.2 [INTENTIONALLY OMITTED]..............................................42
5.3 Increased Costs and Reduction of Return..............................42
5.4 [INTENTIONALLY OMITTED]..............................................43
5.5 Certificates of Lenders..............................................43
5.6 Survival.............................................................43
ARTICLE 6
COLLATERAL
6.1 Grant of Security Interest...........................................43
6.2 Perfection and Protection of Security Interest.......................44
6.3 Location of Collateral...............................................46
6.4 Title to, Liens on, and Sale and Use of Collateral...................46
6.5 Appraisals...........................................................47
6.6 Access and Examination; Confidentiality..............................47
6.7 Collateral Reporting.................................................48
6.8 Accounts.............................................................48
6.9 Collection of Accounts; Payments.....................................50
6.10 Inventory; Perpetual Inventory.......................................50
6.11 Equipment............................................................51
6.12 Assigned Contracts...................................................52
6.13 Documents, Instruments, and Chattel Paper............................52
6.14 Right to Cure........................................................53
6.15 Power of Attorney....................................................53
6.16 The Agent's and Lenders' Rights, Duties and Liabilities..............53
6.17 Site Visits, Observations and Testing................................54
6.18 [INTENTIONALLY OMITTED]..............................................54
6.19 [INTENTIONALLY OMITTED]..............................................54
ARTICLE 7
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
7.1 Books and Records....................................................54
7.2 Financial Information................................................55
7.3 Notices to the Lenders...............................................57
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ARTICLE 8
GENERAL WARRANTIES AND REPRESENTATIONS
8.1 Authorization, Validity, and Enforceability of this
Agreement and the Loan Documents....................................59
8.2 Validity and Priority of Security Interest...........................60
8.3 Organization and Qualification.......................................60
8.4 Corporate Name; Prior Transactions...................................60
8.5 Subsidiaries and Affiliates..........................................60
8.6 Financial Statements and Projections.................................60
8.7 Capitalization.......................................................61
8.8 Solvency.............................................................61
8.9 Debt.................................................................61
8.10 Distributions........................................................61
8.11 Title to Property....................................................61
8.12 Real Estate; Leases..................................................61
8.13 Proprietary Rights...................................................62
8.14 Trade Names and Terms of Sale........................................62
8.15 Litigation...........................................................62
8.16 Restrictive Agreements...............................................62
8.17 Labor Disputes.......................................................62
8.18 Environmental Laws...................................................62
8.19 No Violation of Law..................................................63
8.20 No Default...........................................................63
8.21 ERISA Compliance.....................................................63
8.22 Taxes................................................................64
8.23 Regulated Entities...................................................64
8.24 Use of Proceeds; Margin Regulations..................................64
8.25 Copyrights, Patents, Trademarks and Licenses.........................64
8.26 No Material Adverse Effect...........................................64
8.27 Full Disclosure......................................................65
8.28 Material Agreements..................................................65
8.29 Bank Accounts........................................................65
8.30 Governmental Authorization...........................................65
ARTICLE 9 65
9.1 Taxes and Other Obligations..........................................65
9.2 Corporate Existence and Good Standing................................65
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9.3 Compliance with Law and Agreements; Maintenance of Licenses..........66
9.4 Maintenance of Property..............................................66
9.5 Insurance............................................................66
9.6 Condemnation.........................................................67
9.7 Environmental Laws...................................................68
9.8 Compliance with ERISA................................................69
9.9 Mergers, Consolidations or Sales.....................................69
9.10 Distributions; Capital Change; Restricted Investments................70
9.11 Transactions Affecting Collateral or Obligations.....................70
9.12 Guaranties...........................................................70
9.13 Debt.................................................................70
9.14 Prepayment...........................................................71
9.15 Transactions with Affiliates.........................................71
9.16 Investment Banking and Finder's Fees.................................71
9.17 [INTENTIONALLY OMITTED]..............................................71
9.18 Business Conducted...................................................71
9.19 Liens................................................................71
9.20 Sale and Leaseback Transactions......................................71
9.21 New Subsidiaries.....................................................72
9.22 Fiscal Year..........................................................72
9.23 Capital Expenditures.................................................72
9.24 Operating Lease Obligations..........................................72
9.25 Net Worth............................................................72
9.26 Fixed Charge Coverage Ratio..........................................73
9.27 Use of Proceeds......................................................73
9.28 Umbro Consent........................................................73
9.29 Further Assurances...................................................73
ARTICLE 10
CONDITIONS OF LENDING
10.1 Conditions Precedent to Making of Loans to be Satisfied
on the Closing Date ................................................73
10.2 Additional Conditions Precedent to Each Loan.........................75
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ARTICLE 11
DEFAULT; REMEDIES
11.1 Events of Default....................................................76
11.2 Remedies.............................................................78
ARTICLE 12
TERM AND TERMINATION
12.1 Term and Termination.................................................80
ARTICLE 13
AMENDMENTS; WAIVER; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS
13.1 No Waivers Cumulative Remedies.......................................80
13.2 Amendments and Waivers...............................................80
13.3 Assignments; Participations..........................................81
ARTICLE 14
THE AGENT
14.1 Appointment and Authorization........................................83
14.2 Delegation of Duties.................................................83
14.3 Liability of Agent...................................................83
14.4 Reliance by Agent....................................................84
14.5 Notice of Default....................................................84
14.6 Credit Decision......................................................84
14.7 Indemnification......................................................85
14.8 Agent in Individual Capacity.........................................85
14.9 Successor Agent......................................................85
14.10 Withholding Tax......................................................86
14.11 [INTENTIONALLY OMITTED]..............................................87
14.12 Collateral Matters...................................................87
14.13 Restrictions on Actions by Lenders; Sharing of Payments..............88
14.14 Agency for Perfection................................................89
14.15 Payments by Agent to Lenders.........................................89
14.16 Concerning the Collateral and the Related Loan Documents.............89
14.17 Field Audit and Examination Reports; Disclaimer by Lenders...........89
14.18 Relation Among Lenders...............................................90
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ARTICLE 15
MISCELLANEOUS
15.1 Cumulative Remedies; No Prior Recourse to Collateral.................90
15.2 Severability.........................................................90
15.3 Governing Law; Choice of Forum; Service of Process;
Jury Trial Waiver ..................................................90
15.4 Submission to Jurisdiction; Waivers..................................92
15.5 Survival of Representations and Warranties...........................92
15.6 Other Security and Guaranties........................................92
15.7 Fees and Expenses....................................................92
15.8 Notices..............................................................93
15.9 Waiver of Notices....................................................94
15.10 Binding Effect.......................................................94
15.11 Indemnity of the Agent and the Lenders by the Borrower...............94
15.12 Limitation of Liability..............................................95
15.13 Final Agreement......................................................95
15.14 Counterparts.........................................................95
15.15 Captions.............................................................96
15.16 Right of Setoff......................................................96
15.17 Borrower Joint and Several Liability.................................96
15.18 Contribution and Indemnification among the Borrowers.................97
15.19 Agency of the Parent Guarantor for each Borrower
and other Loan Party ...............................................97
ARTICLE 16
GUARANTEE
16.1 Guaranteed Obligations...............................................98
16.2 Guarantee Absolute; Alteration of Obligations........................98
16.3 Obligations Joint and Several; Rights Not Exclusive..................99
16.4 Waivers.............................................................100
16.5 Contribution and Indemnification; Subrogation.......................101
16.6 Subordination.......................................................102
16.7 No Effect on Guarantee..............................................102
16.8 Continuing Guarantee................................................102
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EXHIBITS AND SCHEDULES
EXHIBIT A - INTENTIONALLY OMITTED
EXHIBIT B - FORM OF BORROWING BASE CERTIFICATE
EXHIBIT C - FINANCIAL STATEMENTS
EXHIBIT D - LIST OF CLOSING DOCUMENTS
EXHIBIT E - NOTICE OF BORROWING
EXHIBIT F - NOTICE OF CONVERSION/CONTINUATION
EXHIBIT G - FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
SCHEDULE 1--NOTICE OF ASSIGNMENT AND ACCEPTANCE
SCHEDULE 1.1--MATERIAL LICENSE AGREEMENTS
SCHEDULE 6.3--LOCATION OF COLLATERAL
SCHEDULE 8.3--ORGANIZATION AND QUALIFICATION
SCHEDULE 8.4--CORPORATE NAME; PRIOR TRANSACTIONS
SCHEDULE 8.5--SUBSIDIARIES AND AFFILIATES
SCHEDULE 8.9--DEBT
SCHEDULE 8.12--REAL ESTATE; LEASES
SCHEDULE 8.13--PROPRIETARY RIGHTS
SCHEDULE 8.14--TRADE NAMES AND TERMS OF SALE
SCHEDULE 8.15--LITIGATION
SCHEDULE 8.17--LABOR DISPUTES
SCHEDULE 8.18--ENVIRONMENTAL LAWS
SCHEDULE 8.21--ERISA COMPLIANCE
SCHEDULE 8.28--MATERIAL AGREEMENTS
SCHEDULE 8.29--BANK ACCOUNTS
SCHEDULE 9.5--INSURANCE
SCHEDULE 9.19--LIENS
SCHEDULE 9.14--PREPAYMENT
SCHEDULE 10.1 --
vii
SECOND AMENDED AND RESTATED
LOAN, GUARANTY AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED LOAN, GUARANTY AND SECURITY AGREEMENT, dated
as of July 23, 2001, is among the financial institutions listed on the signature
pages hereof (such financial institutions, together with their respective
successors and assigns (provided such assignees satisfy the conditions in
SECTION 13.3 hereof), are referred to hereinafter each individually as a
"Lender" and collectively as the "Lenders"), Bank America, N.A., a national
banking association, as successor in interest to Bank of America National Trust
and Savings Association, a national banking association ("Bank of America") with
an office at 0000 Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxx 00000, as agent for the
Lenders (in its capacity as agent), together with its successors in its capacity
as agent (the "Agent"), Xxxxxxx Sports Inc., a Delaware corporation, with
offices at 0000 Xxxxxxx Xxxx Xxxxx, Xxxxx Xxx, Xxxxxxx, XX 00000 (the "Parent
Guarantor"), and each of Varsity Spirit Corporation, a Tennessee corporation
("Spirit"), with offices at 0000 Xxxxxxx Xxxx Xxxxx, Xxxxx Xxx, Xxxxxxx, XX
00000, Varsity Spirit Fashions & Supplies, Inc., a Minnesota corporation
("Fashions"), with offices at 0000 Xxxxxxx Xxxx Xxxxx, Xxxxx Xxx, Xxxxxxx, XX
00000, Varsity USA, Inc., a Tennessee corporation ("USA"), with offices at 0000
Xxxxxxx Xxxx Xxxxx, Xxxxx Xxx, Xxxxxxx, XX 00000, Varsity/Intropa Tours, Inc., a
Tennessee corporation ("Intropa"), with offices at 0000 Xxxxxxx Xxxx Xxxxx,
Xxxxx Xxx, Xxxxxxx, XX 00000, and International Logos, Inc., a Tennessee
corporation ("Logos"), with offices at 0000 Xxxxxxx Xxxx Xxxxx, Xxxxx Xxx,
Xxxxxxx, XX 00000 (Spirit, Fashions, USA, Intropa and Logos are collectively
referred to as the "Borrower").
W I T N E S S E T H
WHEREAS, the Parent Guarantor, as borrower, together with certain of
the parties comprising the Borrower and certain other subsidiaries of the Parent
Guarantor as guarantors, NBD Bank, as administrative and collateral agent (the
"Prior Administrative Agent"), NationsBank, N.A., as documentation agent (the
"Prior Documentation Agent"), and certain lenders (the "Prior Lenders") entered
into that certain Credit Agreement, dated as of June 19, 1997 (as amended, the
"First Loan Agreement");
WHEREAS, the Lenders acquired the rights and obligations of the Prior
Lenders under the First Loan Agreement and the other Credit Documents (as
defined in the First Loan Agreement) pursuant to the Loan Purchase and
Assignment Agreement, dated as of April 20, 1999 (the "Loan Assignment
Agreement"), and the Lenders replaced the Prior Lenders;
WHEREAS, the Lenders agreed to modify the credit facility evidenced by
the First Loan Agreement to make available to Parent Guarantor and certain of
its subsidiaries a $48,000,000 revolving line of credit facility ("Original
Loan") pursuant to that certain Amended and Restated Loan, Guaranty, and
Security Agreement dated as of April 20, 1999, as amended ("Second Loan
Agreement"); and
WHEREAS, Bank of America has previously acquired all of the other
Lenders' interests in the Original Loan pursuant to Assignment and Acceptance
dated July 6, 2001; and
WHEREAS, certain of the parties comprising "Borrower" and "Subsidiary
Guarantors", as defined and described in the Second Loan Agreement, have been
terminated and released as Loan Parties under the Second Loan Agreement in
connection with the sale of such parties by Parent Guarantor, all pursuant to
that certain Paydown Letter dated June 22, 2001; and
1
WHEREAS, the Parent and the Borrower have now requested (i) a decrease
in the maximum available revolving line of credit for loans and letters of
credit to an amount not to exceed $15,000,000 and which extensions of credit the
Borrower will use for its working capital needs and general business purposes,
(ii) a shortening of the maturity date of the credit facility, (iii) changes to
the interest rates on the loans, and (iv) certain other amendments to the Second
Loan Agreement and the other documents evidencing, security or relating to the
Original Loan, and the Lenders and the Agent have agreed thereto on the terms
and subject to the conditions set forth herein;
WHEREAS, to effectuate the foregoing, the parties hereto desire to
amend and restate in its entirety the Second Loan Agreement as hereinafter set
forth, and the Lenders have agreed to make available to the Borrower a revolving
credit facility described herein upon the terms and conditions set forth in this
Agreement;
WHEREAS, Spirit is a wholly-owned subsidiary of the Parent Guarantor,
and Fashions, Intropa, Logos and USA are wholly-owned subsidiaries of Spirit,
and Parent Guarantor desires to guaranty such extensions of credit to induce the
Lenders to make available to the Borrower such extensions of credit, as the
Parent Guarantor will directly benefit therefrom and which extensions of credit
and guarantees thereof will further the promotion, conduct and attainment of the
business of the Parent Guarantor; and
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth in this Agreement, and for good and valuable consideration,
the receipt of which is hereby acknowledged, the Lenders, the Agent, the Parent
Guarantor and the Borrower hereby amend and restate the Second Loan Agreement,
and agree, as follows.
ARTICLE 1
INTERPRETATION OF THIS AGREEMENT
1.1 Definitions. As used herein:
"Accounts" means, without duplication, all of each Loan Party's now
owned or hereafter acquired or arising accounts and receivables, and any other
rights to payment for the sale or lease of goods or rendition of services,
whether or not they have been earned by performance.
"Account Debtor" means each Person obligated in any way on or in
connection with an Account.
"Adjusted Net Earnings from Operations" means, with respect to any
fiscal period of the Parent Guarantor, the Parent Guarantor's consolidated net
income (including only those Subsidiaries that comprise Borrower) after
provision for income taxes for such fiscal period, as determined in accordance
with GAAP and reported on the Financial Statements for such period, excluding
any and all of the following included in such net income: (a) gain or loss
arising from the sale of any capital assets; (b) gain arising from any write-up
or loss arising from any write- downs in the book value of any asset; (c)
earnings or losses of any corporation, substantially all the assets of which
have been acquired by the Borrower, with the consent of the Lenders, in any
manner, to the extent realized by such other corporation prior to the date of
acquisition; (d) earnings (or loss) of any business entity (other than a Loan
Party) in which the Parent Guarantor or any of its Subsidiaries has an ownership
interest unless (and only to the extent) such earnings (or loss) shall actually
have been
2
received (or paid) by the Parent Guarantor or any of its Subsidiaries in the
form of cash distributions or payments; (e) earnings of any Person to which
assets of the Parent Guarantor or any of its Subsidiaries shall have been sold,
transferred or disposed of, or into which the Parent Guarantor or any of its
Subsidiaries shall have been merged, or which has been a party with the Parent
Guarantor or any of its Subsidiaries to any consolidation or other form of
reorganization, prior to the date of such transaction, unless (and only to the
extent) such earnings shall actually have been received by the Parent Guarantor
or any of its Subsidiaries in the form of cash distributions; (f) gain (or loss)
arising from the acquisition of debt or equity securities of the Parent
Guarantor or any of its Subsidiaries or from cancellation or forgiveness of
Debt; and (g) gain or non-cash loss (meaning that non-cash losses when initially
recorded for accounting purposes shall be excluded from the calculation of net
income, but to the extent cash is paid at a later date in respect of such
non-cash loss, such cash payment, and all other losses paid in cash, shall be
included in the calculation of net income (that is, deducted from income) for
the period in which such cash is paid) arising from extraordinary items, as
determined in accordance with GAAP, or from any other non-recurring transaction;
and (h) Expenses from Discontinued Operations.
"Affiliate" means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person or which owns, directly or indirectly, ten percent (10%) or
more of the outstanding equity interest of such Person. A Person shall be deemed
to control another Person if the controlling Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of the other Person, whether through the ownership of voting
securities, by contract, or otherwise.
"Agent" means Bank of America, solely in its capacity as agent for the
Lenders, and any successor agent.
"Agent Advances" has the meaning specified in SECTION 2.2(i).
"Agent's Fee" has the meaning specified in SECTION 3.7.
"Agent's Liens" means the Liens in the Collateral granted to the Agent,
for the ratable benefit of the Lenders, and Agent pursuant to this Agreement and
the other Loan Documents.
"Agent-Related Persons" means the Agent and any successor agent,
together with their respective Affiliates, and the officers, directors,
employees, agents and attorneys-in-fact of such Persons and Affiliates.
"Aggregate Additional Debt and Investment Basket Amount" means the
maximum amount of all Restricted Investments permitted to be outstanding under
clause (m) of the definition of such term and the maximum amount of Debt
permitted to be outstanding under clause (g) of SECTION 9.13, which when
aggregated together shall not exceed $1,000,000 outstanding at any time.
"Aggregate Revolver Outstandings" means, at any time: without
duplication the sum of (a) the unpaid principal balance of Revolving Loans, (b)
the aggregate amount of Pending Revolving Loans, (c) one hundred percent (100%)
of the aggregate undrawn face amount of all outstanding Letters of Credit, and
(d) the aggregate amount of any unpaid reimbursement obligations in respect of
Letters of Credit.
"Agreement" means this Second Amended and Restated Loan, Guaranty and
Security Agreement, as amended, supplemented or otherwise modified from time to
time.
3
"Alternative Permitted Uses" shall have the meaning specified in
SCHEDULE 9.14 hereto.
"Anniversary Date" means each anniversary of the Closing Date.
"Applicable Margin" means, for the period from the date hereof to and
including the Stated Termination Date, 1.00% for Base Rate Loans and 2.50% for
Letter of Credit Fees.
"Assigned Contracts" means, collectively, all of the Loan Party's
rights and remedies under, and all moneys and claims for money due or to become
due to the Loan Party under, those contracts set forth on SCHEDULE 1.1
(including the Material License Agreements) and any other material contracts,
and any and all amendments, supplements, extensions, and renewals thereof
including, without limitation, all rights and claims of the Loan Party now or
hereafter existing: (i) under any insurance, indemnities, warranties, and
guarantees provided for or arising out of or in connection with any of the
foregoing agreements; (ii) for any damages arising out of or for breach or
default under or in connection with any of the foregoing contracts; (iii) to all
other amounts from time to time paid or payable under or in connection with any
of the foregoing agreements; or (iv) to exercise or enforce any and all
covenants, remedies, powers and privileges thereunder.
"Assignee" has the meaning specified in SECTION 13.3(a).
"Assignment and Acceptance" has the meaning specified in SECTION
13.3(a).
"Attorney Costs" means and includes all reasonable fees, expenses and
disbursements of any law firm or other external counsel engaged by the Agent,
the allocated cost of internal legal services of the Agent and all expenses and
disbursements of internal counsel of the Agent.
"Availability" means, at any time: (a) the lesser of (i) the
Maximum Revolver Amount or (ii) the sum without duplication of (A) eighty
percent (80%) of the Net Amount of Eligible Accounts; (B) (without duplication)
fifty percent (50%) of Eligible Unbilled Accounts Receivable; (C) fifty percent
(50%) of the value (lower of FIFO cost or market) of the first quality finished
goods Eligible Inventory; and (D) forty percent (40%) of the value (lower of
FIFO cost or market) of Eligible Raw Material Inventory; MINUS (b) the sum of
(i) the Aggregate Revolver Outstandings (ii) reserves for accrued interest on
the Obligations, (iii) the Environmental Compliance Reserve, (iv) all other
reserves which the Agent deems necessary in the exercise of its reasonable
credit judgment to maintain with respect to the Borrower's account, including,
without limitation, (x) reserves for amounts that may be payable by the Agent or
any Lender to or for the benefit of institutions at which a Loan Party maintains
accounts in connection with lockbox account or blocked account arrangements, (y)
reserves for any amounts which the Agent or any Lender may be obligated to pay
in the future for the account of the Borrower royalties, and (z) reserves for
royalties, license fees, rent, processing charges and any other amounts which
the Agent in the exercise of its reasonable credit judgment believes may have to
be paid to third parties in connection with exercise of the Agent's or the
Lenders' rights or remedies under this Agreement or any other Loan Document, and
(v) unless and until the Umbro Consent has been obtained and the Lenders have
properly perfected a first lien security interest in the Umbro Collateral to the
satisfaction of Agent, the value of any Umbro Collateral to the extent otherwise
included in the calculation of "Availability" pursuant to clauses (a)(ii)(A)-(D)
above, inclusive.
"Available Proceeds" shall have the meaning specified in SCHEDULE 9.14
hereto.
4
"Bank of America" has the meaning specified in the introductory
paragraph of this Agreement.
"Bank of America Loan" and "Bank of America Loans" have the meanings
specified in SECTION 2.2(h).
"Bankruptcy Code" means Title 11 of the United States Code (11
U.S.C.SS.101 ET SEQ.).
"Base Rate" means, for any day, the rate of interest on a per annum
basis (rounded upwards, if necessary, to the nearest whole multiple of 1/100 of
1%) equal to the greater of (a) the Federal Funds Rate in effect on such day
plus 1/2 of 1% or (b) the rate of interest in effect for such day as publicly
announced from time to time by Bank of America in Charlotte, North Carolina, as
its "reference rate" or "prime rate" (the "reference rate" or "prime rate" being
a rate set by Bank of America based upon various factors including Bank of
America's costs and desired return, general economic conditions and other
factors, and is used as a reference point for pricing some loans, which may be
priced at, above, or below such announced rate). Any change in the reference
rate or prime rate announced by Bank of America shall take effect at the opening
of business on the day specified in the public announcement of such change. Each
Interest Rate based upon the Base Rate shall be adjusted simultaneously with any
change in the Base Rate.
"Base Rate Loans" means any Revolving Loan.
"Borrowing" means a borrowing hereunder consisting of Revolving Loans
made on the same day by the Lenders to the Borrower (or by Bank of America in
the case of a Borrowing funded by Bank of America Loans) or by the Agent in the
case of a Borrowing consisting of an Agent Advance.
"Borrowing Base Certificate" means a certificate by a Responsible
Officer of the Borrower, substantially in the form of Exhibit B (or another form
acceptable to the Agent) setting forth the calculation of the Availability,
including a calculation of each component thereof, as of the close of business
no more than five (5) Business Days prior to the date of such certificate, all
in such detail as shall be satisfactory to the Agent. All calculations of
Availability in connection with the preparation of any Borrowing Base
Certificate shall originally be made by the Borrower and certified to the Agent;
provided, that the Agent shall have the right to review and adjust, in the
exercise of its reasonable credit judgment, any such calculation (1) (with three
(3) Business Days' prior written notice to Borrower) to reflect its reasonable
estimate of declines in value of any of the Collateral described therein, and
(2) (without prior notice) to the extent that such calculation is not in
accordance with this Agreement.
"Business Day" means any day that is not a Saturday, Sunday, or a day
on which banks in Memphis, Tennessee, are required or permitted to be closed.
"Capital Adequacy Regulation" means any guideline, request or directive
of any central bank or other Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any bank or of any corporation controlling a bank.
5
"Capital Expenditures" means all payments due (whether or not paid) in
respect of the cost of any fixed asset or improvement, or replacement,
substitution, or addition thereto, which has a useful life of more than one
year, including, without limitation, those costs arising in connection with the
direct or indirect acquisition of such asset by way of increased product or
service charges or offset items or in connection with a Capital Lease, including
all payments due in respect of the acquisition of any division, operating unit
or other assets of any business, and including all payments due (whether or not
paid) in respect of the cost of data or other information processing products or
services; PROVIDED, HOWEVER, that "Capital Expenditures" shall not include up to
$400,000 of expenditures by Parent Guarantor on tenant improvements to the
Leased Space to the extent funded or reimbursed to Parent Guarantor directly by
Lessor without any increase in the rental rate under the Lease.
"Capital Lease" means any lease of property by a Person which, in
accordance with GAAP, is or should be reflected as a capital lease on the
balance sheet of such Person.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) in equity of such Person, whether outstanding on the
Closing Date or issued thereafter.
"Change of Control" means either of the following events: (a) any
"person" or "group" (within the meaning of Section 13(d) or 14(d) of the
Exchange Act), in each case, other than the Principals and the Related Parties,
has become, directly or indirectly, the "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act, except that a Person shall be deemed to
have "beneficial ownership" of all shares that any such Person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time), by way of merger, consolidation or otherwise, of 35% or more of the
voting power of the Capital Stock of the Parent Guarantor on a fully-diluted
basis, after giving effect to the conversion and exercise of all outstanding
warrants, options and other securities of the Parent Guarantor (whether or not
such securities are then currently convertible or exercisable), (b) the first
day on which a majority of the members of the Board of Directors of the Parent
Guarantor are not Continuing Directors or (c) a "change in control" (as defined
in the documentation evidencing the Senior Notes or the Subordinated Debt)
occurs.
"Closing Date" means the date of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute, and regulations promulgated thereunder.
"Collateral" has the meaning specified in SECTION 6.1.
"Collateral License Agreement Assignment" has the meaning specified in
clause (f)(ii)(y) of the definition of Eligible Inventory.
"Commitment" means, at any time with respect to a Lender, the principal
amount set forth beside such Lender's name under the heading "Commitment" on the
signature pages of this Agreement or on the signature page of the Assignment and
Acceptance pursuant to which such Lender became a Lender hereunder in accordance
with the provisions of SECTION 13.3, as such Commitment may be adjusted from
time to time in accordance with the provisions of SECTION 13.3, and
"Commitments" means, collectively, the aggregate amount of the commitments of
all of the Lenders.
6
"Commitment Letter" means that certain Commitment Letter of Bank of
America dated June 13, 2001.
"Credit Support" has the meaning specified in SECTION 2.4(a).
"Contaminant" means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos in any form or condition, polychlorinated biphenyls
("PCBs"), or any constituent of any such substance or waste.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Parent Guarantor who (i) was a member of
such Board of Directors on the date of this Agreement or (ii) was nominated for
election or elected to such Board of Directors with the approval of a majority
of the Continuing Directors who were members of such Board at the time of such
nomination or election.
"Copyright" means any and all copyrights in works of authorship of any
kind in any country or political subdivision thereof throughout the world, for
the full term thereof, and all applications, registrations and recordings
thereof in the Office of the United States Register of Copyrights, Library of
Congress, or in any similar office or agency of any country or political
subdivision thereof throughout the world, including but not limited to those set
forth on SCHEDULE 8.13 (as from time to time amended, modified or supplemented
in accordance with the terms hereof) attached hereto and made a part hereof,
together with all extensions, renewals and corrections thereof, whether such
rights are vested, contingent or reversionary under any copyright law now or
hereafter in force or effect throughout the world, and all licenses thereof, and
all causes of action or claims arising out of or pertaining thereto (including
but not limited to claims of infringement) and any legal, beneficial or
equitable right to the use or ownership of the works to which they relate, by
means of any technology now known or hereafter developed, including but not
limited to the rights to reproduce, adapt, transform, derive, distribute,
perform, record, display or otherwise exploit in any way those works.
"Debt" means, with respect to any Person, without duplication, all
liabilities, obligations and indebtedness of such Person to any other Person, of
any kind or nature, now or hereafter owing, arising, due or payable, howsoever
evidenced, created, incurred, acquired or owing, whether primary, secondary,
direct, contingent, fixed or otherwise, and including, without in any way
limiting the generality of the foregoing: (i) liabilities and obligations to
trade creditors; (ii) all Obligations; (iii) all obligations and liabilities of
any Person secured by any Lien on such Person's property, even though such
Person shall not have assumed or become liable for the payment thereof;
PROVIDED, HOWEVER, that all such obligations and liabilities which are limited
in recourse to such property shall be included in Debt only to the extent of the
book value of such property as would be shown on a balance sheet of such Person
prepared in accordance with GAAP; (iv) all obligations or liabilities created or
arising under any Capital Lease or conditional sale or other title retention
agreement with respect to property used or acquired by such Person, even if the
rights and remedies of the lessor, seller or lender thereunder are limited to
repossession of such property and all obligations and liabilities under any
synthetic lease, tax retention operating lease, off-balance sheet loan or
similar off-balance sheet financing product where such transaction is considered
borrowed money indebtedness for tax purposes but is classified as an operating
lease in accordance with GAAP; PROVIDED, HOWEVER, that all such obligations and
liabilities which are limited in recourse to such property shall be included in
Debt only to the extent of the book value of such property as would be shown on
a balance sheet of such Person prepared in accordance with GAAP; (v) all
7
accrued pension fund and other employee benefit plan obligations and
liabilities; (vi) all obligations and liabilities under Guaranties; (vii) all
obligations in respect of deferred taxes; (viii) all obligations in respect of
Hedging Agreements; and (ix) all obligations in respect of preferred stock
issued by such Person and required by the terms thereof to pay dividends or to
be redeemed, or for which mandatory sinking fund payments are due within one (1)
year of the date of determination.
"Default" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured or otherwise remedied
during such time) constitute an Event of Default.
"Defaulting Lender" has the meaning specified in SECTION 2.2(g)(ii).
"Default Rate" means a fluctuating per annum interest rate at all times
equal to the sum of: (a) the otherwise applicable Interest Rate plus (b) two
percent (2%). Each Default Rate shall be adjusted simultaneously with any change
in the applicable Interest Rate. In addition, with respect to Letters of Credit,
the Default Rate shall mean an increase in the Letter of Credit Fee by two (2)
percentage points.
"Distribution" means, in respect of any corporation: (a) the payment or
making of any dividend or other distribution of property in respect of capital
stock (or any options or warrants for such stock) of such corporation, other
than distributions in capital stock of the same class (or any options or
warrants for such stock); or (b) the redemption or other acquisition by such
corporation of any capital stock (or any options or warrants for such stock) of
such corporation.
"DOL" means the United States Department of Labor or any successor
department or agency.
"Dollar" and "$" means dollars in the lawful currency of the United
States.
"EBITDA" means, for any period, with respect to the Parent Guarantor
and the Subsidiaries comprising Borrower on a consolidated basis, the sum of (a)
Adjusted Net Earnings from Operations for such period plus (b) an amount which,
in the determination of Adjusted Net Earnings from Operations for such period
has been deducted for (i) Interest Expense for such period, (ii) total Federal,
state, foreign or other income taxes for such period, and (iii) all depreciation
and amortization for such period, all as determined in accordance with GAAP.
"Eligible Accounts" means all Accounts of the Borrower created in the
ordinary course of its business arising out of the sale of the Borrower's
Inventory or the rendition of services by the Borrower, which the Agent in the
exercise of its reasonable commercial discretion determines to be Eligible
Accounts. Without limiting the discretion of the Agent to reasonably establish
other criteria of ineligibility, Eligible Accounts shall not, unless the Agent
in its sole discretion elects, include any Account:
(a) with respect to which a valid invoice has not been issued
(provided, that an invoice shall not be required to have been issued in respect
of Eligible Unbilled Accounts Receivable) or which is "Past Due" (As used
herein, "Past Due" means an Account with respect to which the invoice therefor
has not been paid within 120 days of the invoice date);
8
(b) with respect to which any of the representations, warranties,
covenants, and agreements contained in SECTION 6.8 are not or have ceased to be
complete and correct or have been breached;
(c) with respect to which, in whole or in part, a check, promissory
note, draft, trade acceptance or other instrument for the payment of money has
been received, presented for payment and returned uncollected for any reason
(unless resulting solely from a bank clerical error);
(d) which represents a progress billing (as hereinafter defined) or as
to which the Borrower has extended the time for payment to a date that without
such extension such Account would have been "Past Due" as defined in clause (a)
above, without the consent of the Agent (which consent, however, shall not make
such Account an Eligible Account); for the purposes hereof, "progress billing"
means any invoice (provided no invoice is required, as provided above, for any
Eligible Unbilled Accounts Receivable) for goods sold or leased or services
rendered under a contract or agreement pursuant to which the Account Debtor's
obligation to pay such invoice is conditioned upon the Borrower's completion of
any further performance under the contract or agreement (provided that, for the
sake of clarification, "progress billing" does not include the allocable and
severable portion of an invoice for goods sold and shipped or services rendered
for which payment is not conditional, even if other portions of such invoice are
for future sales or shipments of goods or future performance of services);
(e) as to which any one or more of the following events has occurred
with respect to the Account Debtor on such Account: death or judicial
declaration of incompetency of an Account Debtor who is an individual; the
filing by or against the Account Debtor of a request or petition for
liquidation, reorganization, arrangement, adjustment of debts, adjudication as a
bankrupt, winding-up, or other relief under the bankruptcy, insolvency, or
similar laws of the United States, any state or territory thereof, or any
foreign jurisdiction, now or hereafter in effect; the making of any general
assignment by the Account Debtor for the benefit of creditors; the appointment
of a receiver or trustee for the Account Debtor or for any of the assets of the
Account Debtor, including, without limitation, the appointment of or taking
possession by a "custodian," as defined in the Federal Bankruptcy Code; the
institution by or against the Account Debtor of any other type of insolvency
proceeding (under the bankruptcy laws of the United States or otherwise) or of
any formal or informal proceeding for the dissolution or liquidation of,
settlement of claims against, or winding up of affairs of, the Account Debtor;
the sale, assignment, or transfer of all or any material part of the assets of
the Account Debtor; the nonpayment generally by the Account Debtor of its debts
as they become due; or the cessation of the business of the Account Debtor as a
going concern;
(f) if fifty percent (50%) or more of the aggregate Dollar amount of
outstanding Accounts owed at such time by the Account Debtor thereon is
classified as ineligible under the other criteria set forth herein or otherwise
established by the Agent (provided that an Account for which the Account Debtor
thereon is a school shall not be ineligible under this clause (f) solely because
more than 50% of the aggregate Dollar amount of outstanding Accounts for such
Account Debtor are "Past Due" as defined in clause (a) above);
(g) owed by an Account Debtor which: (i) does not maintain its chief
executive office in the United States; or (ii) is not organized under the laws
of the United States or any state thereof; or (iii) is the government of any
foreign country or sovereign state, or of any state, province, municipality, or
other political subdivision thereof, or of any department, agency, public
corporation, or other instrumentality thereof; except to the extent that either
(i) such Account is secured or payable by a letter of credit satisfactory to the
Agent in its discretion or (ii) such Account is approved
9
by the Agent in its sole discretion to be an Eligible Account (which
determination may be made by the Agent without the consent of the Majority
Lenders or Required Lenders so long as not more than $1,000,000 of such Accounts
are Eligible Accounts at any one time);
(h) owed by an Account Debtor which is an Affiliate or employee of the
Borrower; except to the extent that such Account is for a bona fide sale of
goods at fair market prices and otherwise on "arms-length" terms to an Affiliate
listed on SCHEDULE 8.5 hereto;
(i) except as provided in (k) below, as to which either the perfection,
enforceability, or validity of the Agent's Lien in such Account, or the Agent's
right or ability to obtain direct payment to the Agent of the proceeds of such
Account, is governed by any federal, state, or local statutory requirements
other than those of the UCC;
(j) which is owed by an Account Debtor to which the Borrower is
indebted in any way, or which is subject to any right of setoff or recoupment by
the Account Debtor, unless the Account Debtor has entered into an agreement
acceptable to the Agent to waive setoff rights; or if the Account Debtor thereon
has disputed liability or made any claim with respect to any other Account due
from such Account Debtor; but in each such case only to the extent of such
indebtedness, setoff, recoupment, dispute, or claim;
(k) which is owed by the government of the United States of America, or
any department, agency, public corporation, or other instrumentality thereof,
unless the Federal Assignment of Claims Act of 1940, as amended (31 U.S.C. SS.
3727 et seq.), and any other steps necessary to perfect the Agent's Lien
therein, have been complied with to the Agent's satisfaction with respect to
such Account; except to the extent that such Account is approved by the Agent in
its sole discretion to be an Eligible Account (which determination may be made
by the Agent without the consent of the Majority Lenders or Required Lenders so
long as not more than $1,000,000 of such Accounts are Eligible Accounts at any
one time);
(l) which is owed by any state, municipality, or other political
subdivision of the United States of America, or any department, agency, public
corporation, or other instrumentality thereof and as to which the Agent
determines that its Lien therein is not or cannot be perfected;
(m) which represents a sale on a xxxx-and-hold, guaranteed sale, sale
and return, sale on approval, consignment, or other repurchase or return basis;
(n) which is evidenced by a promissory note or other instrument or by
chattel paper;
(o) if the Agent believes, in the exercise of its reasonable judgment,
that the prospect of collection of such Account is impaired or that the Account
may not be paid by reason of the Account Debtor's financial inability to pay;
(p) with respect to which the Account Debtor is located in any state
requiring the filing of a Notice of Business Activities Report or similar report
in order to permit the Borrower to seek judicial enforcement in such State of
payment of such Account, unless such Borrower has qualified to do business in
such state or has filed a Notice of Business Activities Report or equivalent
report for the then current year;
10
(q) which arises out of a sale not made in the ordinary course of the
Borrower's business;
(r) as to which the goods giving rise to such Account have not been
shipped and delivered to and accepted by the Account Debtor or the services
giving rise to such Account have not been performed by the Borrower, and, if
applicable, accepted by the Account Debtor, or the Account Debtor revokes its
acceptance of such goods or services;
(s) is owed by an Account Debtor which is obligated to the Borrower
respecting Accounts the aggregate unpaid balance of which exceeds fifteen
percent (15%) of the aggregate unpaid balance of all Accounts owed to the
Borrower at such time by all of the Borrower's Account Debtors, but only to the
extent of such excess;
(t) arises out of an enforceable contract or order which, by its terms,
forbids, restricts or makes void or unenforceable the granting of a Lien by the
Borrower to the Agent with respect to such Account;
(u) which is not subject to a first priority and perfected security
interest in favor of the Agent for the benefit of the Lenders; and/or
(v) which is an Intercompany Account.
If any Account at any time ceases to be an Eligible Account by reason
of any of the foregoing exclusions or any failure to meet any other eligibility
criteria established by the Agent in the exercise of its reasonable discretion
then such Account shall promptly be excluded from the calculation of Eligible
Accounts.
"Eligible Inventory" means Inventory of the Borrower, valued at the
lower of cost (on a FIFO basis) or market, that constitutes "first quality
finished goods" Inventory and that, unless the Agent in its sole discretion
elects: (a) is not, in the Agent's reasonable opinion, obsolete, slow moving, or
unmerchantable; (b) is located at premises owned by the Borrower or on premises
otherwise reasonably acceptable to the Agent, PROVIDED, HOWEVER, that Inventory
located on premises leased to the Borrower, on a vendor's premises or otherwise
on premises owned by a Person other than the Borrower shall not be Eligible
Inventory unless (i) the Borrower shall have delivered to the Agent a written
waiver, duly executed on behalf of the appropriate landlord, vendor or other
Person and in form and substance acceptable to the Agent, of all Liens or other
rights which the landlord for such premises, vendor or other Person may be
entitled to assert against such Inventory, or (ii) unless Eligible Inventory
having a book value (determined on a FIFO basis if applicable) of less than
$100,000 is located on such premises and, if the Agent or the Majority Lenders
so elect in its or their sole discretion, as to which reserves in an amount for
ninety (90) days rent at such premises, estimated processing charges and other
applicable charges for lessors, vendors or such other Persons have been
established under clause (b) (iv) (z) of the definition of Availability; (c)
upon which the Agent for the benefit of the Lenders has a first priority
perfected security interest; (d) is not work-in-process or raw materials, (e) is
not spare parts, packaging and shipping materials, supplies, xxxx-and-hold
Inventory for Account Debtors, returned or defective Inventory, or Inventory
delivered to the Borrower on consignment; (f) is not subject to a Material
License Agreement unless (i) the Material License Agreement is in full force and
effect and (ii) the Agent has received (y) a collateral assignment of license
agreement (a "Collateral License Agreement Assignment") for such Material
License Agreement and (z) a consent thereto from all other parties to such
Material License Agreement, each in a form reasonably acceptable to it; and (g)
the Agent, in the exercise of its
11
reasonable commercial discretion, deems eligible as the basis for Revolving
Loans based on such collateral and credit criteria as the Agent may from time to
time establish. If any Inventory at any time ceases to be Eligible Inventory,
such Inventory shall promptly be excluded from the calculation of Eligible
Inventory.
"Eligible Raw Material Inventory" means raw material Inventory of the
Borrower meeting all of the requirements of clauses (a), (b), (c), (e), (f) and
(g) of the definition of Eligible Inventory.
"Eligible Unbilled Account Receivable" means, solely during the period
of April 1 to September 1 of each calendar year and not at any other time, an
Account of Fashions that has been created and is outstanding during such period
in such year (and not created during such period in a prior year or created
during any other period), but has not yet been invoiced, that represents an
obligation for payment created by shipment of Inventory to the Account Debtor
pursuant to a purchase order issued to Fashions in the ordinary course of
business. During the period of September 2 to December 31 and January 1 to March
31 of each year there will be no Eligible Unbilled Account Receivables.
"Environmental Claims" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or injury
to the environment.
"Environmental Compliance Reserve" means any reserves which the Agent,
after the Closing Date, and upon three (3) days' prior written notice to the
Borrower, establishes from time to time for amounts that are reasonably likely
(as determined by the Borrower and the Agent or by an independent environmental
consultant engaged by the Agent or the Borrower and reasonably acceptable to the
Agent) to be expended by the Borrower in order for the Borrower and its
operations and property: (a) to comply with any notice from a Governmental
Authority asserting material non-compliance with Environmental Laws, or (b) to
correct any such material non-compliance identified in a report delivered to the
Agent and the Lenders pursuant to SECTION 9.7.
"Environmental Laws" means all federal, state or local laws, statutes,
common law duties, rules, regulations, ordinances and codes, together with all
administrative orders, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any Governmental Authority, in each case
relating to environmental, health, safety and land use matters.
"Environmental Lien" means a Lien in favor of any Governmental
Authority for: (1) any liability under any Environmental Laws, or (2) damages
arising from, or costs incurred by such Governmental Authority in response to, a
Release or threatened Release of a Contaminant into the environment.
"Environmental Property Transfer Act" means any applicable requirement
of law that conditions, restricts, prohibits or requires any notification or
disclosure triggered by the closure of any property or the transfer, sale or
lease of any property or deed or title for any property for environmental
reasons, including, but not limited to, any so-called "Environmental Cleanup
Responsibility Acts" or "Responsible Property Transfer Acts."
"Equipment" means all of each Loan Party's now owned and hereafter
acquired machinery, equipment, furniture, furnishings, fixtures, and other
tangible personal property (except Inventory), including motor vehicles with
respect to which a certificate of title has been issued,
12
aircraft, dies, tools, jigs, and office equipment, as well as all of such types
of property leased by any Loan Party and all of each Loan Party's rights and
interests with respect thereto under such leases (including, without limitation,
options to purchase); together with all present and future additions and
accessions thereto, replacements therefor, component and auxiliary parts and
supplies used or to be used in connection therewith, and all substitutes for any
of the foregoing, and all manuals, drawings, instructions, warranties and rights
with respect thereto; wherever any of the foregoing is located.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Borrower within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).
"ERISA Event" means: (a) a Reportable Event with respect to a Pension
Plan; (b) a withdrawal by the Borrower or any ERISA Affiliate from a Pension
Plan subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations which is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA
Affiliate from a Multi-employer Plan or notification that a Multi-employer Plan
is in reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Section 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multi-employer Plan; (e) the occurrence of an event or condition which
might reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan or Multi-employer Plan; or (f) the imposition of any liability
under Title IV of ERISA, other than for PBGC premiums due but not delinquent
under Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate.
"Event of Default" has the meaning specified in SECTION 11.1.
"Exchange Act" means the Securities Exchange Act of 1934, and
regulations promulgated thereunder.
"Expenses from Discontinued Operations" means any non-recurring
expenses associated with Parent Guarantor's discontinuing operations (i) at its
office at 00 Xxxx 00xx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx, (xx) of Fox
Athletic LLC, and (iii) of Parent Guarantor's internet web site.
"FDIC" means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including any
such successor, "H.15(519)") on the preceding Business Day opposite the caption
"Federal Funds (Effective)"; or, if for any relevant day such rate is not so
published on any such preceding Business Day, the rate for such day will be the
arithmetic mean as determined by the Agent of the rates for the last transaction
in overnight Federal funds arranged prior to 9:00 a.m. (Central time) on that
day by each of three leading brokers of Federal funds transactions in New York
City selected by the Agent.
13
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any successor thereto.
"Fee Letter" means the letter dated as of the date hereof by and
between Bank of America and the Borrower with respect to the Agent's Fee.
"FIFO" means the "first-in, first-out" method of calculating the book
value of inventory in accordance with GAAP.
"Financial Statements" means, according to the context in which it is
used, the financial statements referred to in SECTION 8.6 or any other financial
statements required to be given to the Lenders pursuant to this Agreement.
"First Loan Agreement" shall have the meaning set forth in the Recitals
hereto.
"Fiscal Year" means the Parent Guarantor's fiscal year for financial
accounting purposes. The current Fiscal Year of the Parent Guarantor will end on
December 31, 2001.
"Fixed Assets" means Equipment of any Loan Party.
"Fixed Charge Coverage Ratio" means, for the applicable period, the
ratio of (a) EBITDA during such period to (b) the sum of cash Interest Expense
during such period, Scheduled Principal Payments during such period, Capital
Expenditures during such period, all Rentals during such period, and all cash
tax expenses (state, federal, local, foreign or other) of Parent Guarantor
and/or Borrower during such period. During the period from the date hereof until
March 20, 2002, the following adjustment shall be made in computing the Fixed
Charge Coverage Ratio: (i) actual cash interest earnings on the Available
Proceeds for such period shall be excluded from EBITDA in the numerator, and
(ii) actual cash interest expense for such period attributable to Senior Notes
with a face amount equal to the amount of the Available Proceeds shall be
excluded from Interest Expense in the denominator.
"Funded Debt" means, without duplication, the sum of (a) all Debt of
the Parent Guarantor and its Subsidiaries for borrowed money, (b) all purchase
money Debt of the Parent Guarantor and its Subsidiaries, (c) the principal
portion of all obligations of the Parent Guarantor and its Subsidiaries under
Capital Leases and the principal portion under any synthetic lease, tax
retention operating lease, off-balance sheet loan or similar off-balance sheet
financing product where such transaction is considered borrowed money
indebtedness for tax purposes but is classified as an operating lease in
accordance with GAAP, (d) all obligations, contingent or otherwise, relative to
the face amount of all letters of credit (other than letters of credit
supporting trade payables in the ordinary course of business), whether or not
drawn, and banker's acceptances issued for the account of such Person (it being
understood that, to the extent an undrawn letter of credit supports another
obligation consisting of Indebtedness, in calculating aggregated Indebtedness
only such other obligation shall be included), (e) any Guaranty of the Parent
Guarantor and its Subsidiaries with respect to Funded Debt of another Person,
(f) all Funded Debt of another entity secured by a Lien on any property of the
Parent Guarantor or any of its Subsidiaries whether or not such Funded Debt has
been assumed by a Parent Guarantor or any of its Subsidiaries, and (g) all
Funded Debt of any partnership, limited liability company or unincorporated
joint venture to the extent the Parent Guarantor or one of its Subsidiaries is
legally obligated or has a reasonable expectation of being liable with respect
thereto, net of any assets of such partnership or joint venture.
14
"Funding Date" means the date on which a Borrowing occurs.
"GAAP" means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession).
"General Intangibles" means all of each Loan Party's now owned or
hereafter acquired general intangibles, choses in action and causes of action
and all other intangible personal property of any Loan Party of every kind and
nature (other than Accounts, goods and money), including, without limitation,
all contract rights, Proprietary Rights, corporate or other business records,
inventions, designs, blueprints, plans, specifications, patents, patent
applications, trademarks, service marks, trade names, trade secrets, goodwill,
copyrights, computer software, customer lists, registrations, licenses,
franchises, tax refund claims, any funds which may become due to any Loan Party
in connection with the termination of any Plan or other employee benefit plan or
any rights thereto and any other amounts payable to any Loan Party from any Plan
or other employee benefit plan, rights and claims against carriers and shippers,
rights to indemnification, business interruption insurance and proceeds thereof,
property, casualty or any similar type of insurance and any proceeds thereof,
proceeds of insurance covering the lives of key employees on which any Loan
Party is beneficiary, and any letter of credit, guarantee, claim, security
interest or other security held by or granted to any Loan Party.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"Guarantee" has the meaning specified in SECTION 16.1.
"Guarantor" has the meaning specified in SECTION 16.1.
"Guaranty" means, with respect to any Person, without duplication, all
obligations of such Person which in any manner directly or indirectly guarantee
or assure, or in effect guarantee or assure, the payment or performance of any
indebtedness, dividend or other obligations of any other Person (the "guaranteed
obligations"), or assure or in effect assure the holder of the guaranteed
obligations against loss in respect thereof, including, without limitation, any
such obligations incurred through an agreement, contingent or otherwise: (a) to
purchase the guaranteed obligations or any property constituting security
therefor; (b) to advance or supply funds for the purchase or payment of the
guaranteed obligations or to maintain a working capital or other balance sheet
condition; or (c) to lease property or to purchase any debt or equity securities
or other property or services.
"Hedging Agreements" means, collectively, interest rate protection
agreements, foreign currency exchange agreements, commodity purchase or option
agreements or other interest or exchange rate or commodity price hedging
agreements, in each case, entered into or purchased by the Parent Guarantor or
any of its Subsidiaries.
"Indenture" has the meaning specified in the definition of Senior
Notes.
15
"Insolvency Proceeding" has the meaning specified in clause (v) of
SECTION 16.2(B).
"Intellectual Property" means the present and future Patents,
Trademarks, Copyrights and related licenses and rights held by the Loan Parties.
"Intercompany Accounts" means without duplication all assets and
liabilities, however arising, which are due to a Loan Party from, which are due
from a Loan Party to, or which otherwise arise from any transaction by a Loan
Party with, any Affiliate.
"Interest Expense" means, for any period, total interest expense of the
Parent Guarantor and its Subsidiaries during such period, including the interest
portion of Capital Leases and "synthetic" and other such off-balance sheet
leases as described in the definition of Debt.
"Interest Rate" means each or any of the interest rates, including the
Default Rate, set forth in SECTION 3.1.
"Inventory" means without duplication all of each Loan Party's now
owned and hereafter acquired inventory, goods and merchandise, wherever located,
to be furnished under any contract of service or held for sale or lease, all
returned goods, raw materials, work in process, other materials and supplies of
any kind, nature or description which are or might be consumed in the Loan
Party's business or used in connection with the printing, packing, shipping,
advertising, selling, leasing or finishing of such goods, merchandise and such
other personal property, and all documents of title or other documents
representing them.
"Investment Property" means: (a) a security, whether certificated or
uncertificated; (b) a security entitlement; (c) a securities account; (d) a
commodity contract; or (e) a commodity account.
"IRS" means the Internal Revenue Service and any Governmental Authority
succeeding to any of its principal functions under the Code.
"Latest Projections" means: (a) on the Closing Date and thereafter
until the Agent receives new projections pursuant to SECTION 7.2(f), the
projections of the Borrower's financial condition, results of operations, and
cash flow, for the period commencing on January 1, 2001 and ending on December
31, 2001 and delivered to the Agent prior to the Closing Date; and (b)
thereafter, the projections most recently received by the Agent pursuant to
SECTION 7.2(f).
"Lease" shall mean that certain Lease Agreement dated February 1, 2001
between Lenox Park Building F Partners, as Lessor ("Lessor") and Parent
Guarantor as Lessee for approximately 51,045 square feet of rentable space at
Building F at 0000 Xxxxx Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxxx 00000 ("Leased
Space").
"Lender" and "Lenders" have the meanings specified in the introductory
paragraph hereof and shall include the Agent to the extent of any Agent Advance
outstanding and Bank of America to the extent of any Bank of America Loan
outstanding; provided that no such Agent Advance or Bank of America Loan shall
be taken into account in determining any Lender's Pro Rata Share.
16
"Letter of Credit" means a standby Letter of Credit or documentary
Letter of Credit issued or caused to be issued for the account of the Borrower
pursuant to SECTION 2.4.
"Letter of Credit Fee" has the meaning specified in SECTION 3.6.
"Lien" means: (a) any interest in property securing an obligation owed
to, or a claim by, a Person other than the owner of the property, whether such
interest is based on the common law, statute, or contract, and including without
limitation, a security interest, charge, claim, or lien arising from a mortgage,
deed of trust, encumbrance, pledge, hypothecation, assignment, deposit
arrangement, agreement, security agreement, conditional sale or trust receipt or
a lease, consignment or bailment for security purposes; and (b) to the extent
not included under clause (a), any reservation, exception, encroachment,
easement, right-of-way, covenant, condition, restriction, lease or other title
exception or encumbrance affecting property.
"Loan Account" means the loan account of the Borrower, which account
shall be maintained by the Agent.
"Loan Documents" means the Commitment Letter, which by its terms
survives the closing of the transactions contemplated hereby, the Note, this
Agreement, the Pledge Agreement, the Collateral License Agreement Assignments
and any other agreements, instruments, and documents heretofore, now or
hereafter evidencing, securing, guaranteeing or otherwise relating to the
Obligations, the Collateral, or any other aspect of the transactions
contemplated by this Agreement.
"Loan Party" means each Person defined as the Borrower and the Parent
Guarantor, and their permitted successors and assigns.
"Loans" means, collectively, all loans and advances provided for in
ARTICLE 2.
"Majority Lenders" means at anytime Lenders whose Pro Rata shares
aggregate more than 50.1% of the Commitments or, if no Commitments shall then be
in effect, Lenders who hold more than 50.1% of the aggregate principal amount of
the Loans then outstanding.
"Margin Stock" means "margin stock" as such term is defined in
Regulation U of the Federal Reserve Board.
"Material Adverse Effect" means: (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties, condition
(financial or otherwise), profits or prospects of the Loan Parties, taken as a
whole, or the value or condition of the Collateral; (b) a material impairment of
the ability of the Parent or the Borrower or the Loan Parties taken as a whole
to perform satisfactorily under any Loan Document or to avoid any Event of
Default; or (c) a material adverse effect upon the legality, validity, binding
effect or enforceability against the Parent or the Borrower or the Loan Parties
taken as a whole or any third party of any Loan Document or the Lien on the
Collateral in favor of the Agent.
"Material License Agreements" means (a) that certain License Agreement with
Umbro set forth on SCHEDULE 1.1 and (b) all other license agreements entered
into by the Borrower or any of its Subsidiaries pursuant to which (i) Borrower
or such Subsidiary either Guarantees or actually pays royalties to the licensor
party to such license agreement in an amount equal or greater
17
than $100,000 per year or (ii) Borrower carries Eligible Inventory with a book
value of in excess of $100,000.
"Maximum Revolver Amount" means $15,000,000 (or such lesser amount to
which the Total Facility may be permanently reduced by the Borrower pursuant to
SECTION 4.2 hereof).
"Multi-employer Plan" means a "multi-employer plan" as defined in
Section 4001(a)(3) of ERISA which is or was at any time during the current year
or the immediately preceding six (6) years contributed to by the Borrower or any
ERISA Affiliate.
"Net Amount of Eligible Accounts" means, at any time, the gross amount
of Eligible Accounts less sales, excise or similar taxes, and less returns,
discounts, claims, credits and allowances of any nature at any time issued,
owing, granted, outstanding, available or claimed.
"Net Worth" means, at any date: (a) the book value (after deducting
related depreciation, obsolescence, amortization, valuation, and other proper
reserves as determined in accordance with GAAP) at which the assets would be
shown on a balance sheet of the Parent Guarantor and its consolidated
Subsidiaries at such date prepared in accordance with GAAP; less (b) the amount
at which the Parent Guarantor's and its consolidated Subsidiaries' liabilities
would be shown on such balance sheet, including as liabilities all Debt and
reserves for contingencies and other potential liabilities which would be
required to be shown on such balance sheet.
"Note" means the Amended and Restated Master Secured Promissory Note
dated as of the date hereof, executed and delivered by Borrower to Agent and
evidencing the Total Facility.
"Notice of Borrowing" has the meaning specified in SECTION 2.2(b).
"Notice of Conversion/Continuation" has the meaning specified in
SECTION 3.2(b).
"Obligations" means without duplication all present and future loans,
advances, liabilities, obligations, covenants, duties, and debts owing by the
Borrower or any other Loan Party to the Agent and/or any Lender, arising under
or pursuant to this Agreement or any of the other Loan Documents, or any Hedge
Agreement, whether or not evidenced by any note, or other instrument or
document, whether arising from an extension of credit, opening of a letter of
credit, acceptance, loan, guaranty, indemnification or otherwise, whether direct
or indirect (including, without limitation, those acquired by assignment from
others, absolute or contingent, due or to become due, primary or secondary, as
principal or guarantor, and including, without limitation, all principal,
interest, charges, expenses, fees, attorneys' fees, filing fees and any other
sums chargeable to the Borrower or any other Loan Party hereunder or under any
of the other Loan Documents. "Obligations" includes, without limitation or
duplication, all debts, liabilities, and obligations now or hereafter owing from
the Borrower to the Agent and/or any Lender under or in connection with the
Letters of Credit and includes, without limitation, all interest that would have
accrued but for the commencement of any Insolvency Proceeding with respect to
any Person.
"Original Loan" has the meaning specified in the Recitals hereto.
"Other Taxes" means any present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies which arise from
any payment made hereunder or from the execution, delivery or registration of,
or otherwise with respect to, this Agreement or any other Loan Documents.
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"Participant" means any Person who shall have been granted, pursuant
and subject to the terms and conditions of ARTICLE 13 hereof, the right by any
Lender to participate in the financing provided by such Lender under this
Agreement, and who shall have entered into a participation agreement in form and
substance satisfactory to such Lender.
"Patent" means any and all letters patent and applications therefor,
and all registrations and recordings thereof, including, without limitation,
applications, registrations and recordings in the United States Patent and
Trademark Office, or in any similar office or agency of the United States, or
any state thereof, or in any similar office or agency of any country or
political subdivision thereof throughout the world, including, but not limited
to, those described in SCHEDULE 8.13 (as from time to time amended, modified or
supplemented in accordance with the terms hereof) attached hereto and made a
part hereof, together with all re-examinations, reissues, continuations,
continuations-in-part, divisions, improvements and extensions thereof and all
licenses thereof or pertaining thereto, including, without limitation, the
License Agreements with respect thereto, and all claims for infringement thereof
or pertaining thereto, and the rights to make, use and sell, and all other
rights with respect to, the inventions disclosed or claimed therein, all
inventions, designs, proprietary or technical information, know-how, other data
or information, software, databases, all embodiments or fixations thereof and
related documentation, and all other trade secret rights not described above.
"Payment Account" means each blocked bank account established pursuant
to SECTION 6.9, to which the funds of a Loan Party (including, without
limitation, proceeds of Accounts and other Collateral) are deposited or
credited, and which is maintained in the name of the Agent or such Loan Party,
as the Agent may determine, on terms acceptable to the Agent.
"PBGC" means the Pension Benefit Guaranty Corporation or any
Governmental Authority succeeding to the functions thereof.
"Pending Revolving Loans" means, at any time, the aggregate principal
amount of all Revolving Loans requested in any Notice(s) of Borrowing received
by the Agent which have not yet been advanced.
"Pension Plan" means a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA which the Parent Guarantor or any of its
Subsidiaries sponsors, maintains, or to which it makes, is making, or is
obligated to make contributions, or in the case of a Multi-employer Plan has
made contributions at any time during the immediately preceding five (5) plan
years.
"Period of Availability" means the period from January 15 through and
including September 15th of each calendar year.
"Period of Unavailability" means the period from September 16 of each
calendar year through and including January 14 of the subsequent calendar year.
"Permitted Liens" means:
(a) Liens for taxes not delinquent; or statutory Liens for taxes in an
amount not to exceed $1,000,000 outstanding at any one time, provided that the
payment of such taxes which are due and payable is being contested in good faith
and by appropriate proceedings diligently pursued and as to which reserves in
such amount have been established under clause
19
(b)(iv) of the definition of Availability and adequate financial reserves have
been established on the applicable Loan Party's books and records and a stay of
enforcement of any such Lien is in effect.
(b) the Agent's Liens;
(c) deposits under . worker's compensation, unemployment insurance,
social security and other similar laws, or to secure the performance of bids,
tenders, leases (other than Capital Leases) or contracts (other than for the
repayment of borrowed money) or to secure indemnity, performance or other
similar bonds for the performance of bids, tenders or contracts (other than for
the repayment of borrowed money) or to secure statutory obligations (other than
liens arising under ERISA or Environmental Liens) or surety or appeal bonds, or
to secure indemnity, performance or other similar bonds in the ordinary course
of business;
(d) Liens securing the claims or demands of materialmen, mechanics,
carriers, warehousemen, landlords and other like Persons, provided that if any
such Lien arises from the nonpayment of such claims or demand when due, such
claims or demands do not exceed $1,000,000 in the aggregate unless such Lien is
being contested in good faith by appropriate proceedings diligently pursued and
as to which reserves in such amount have been established under clause (b)(iv)
of the definition of Availability and adequate financial reserves have been
established on the applicable Loan Party's books and records;
(e) [INTENTIONALLY OMITTED];
(f) Judgment and other similar Liens arising in connection with court
proceedings to the extent the attachment or enforcement of such Liens would not
result in an Event of Default hereunder;
(g) Liens existing on the date hereof as set forth on SCHEDULE 9.19;
(h) [INTENTIONALLY OMITTED];
(i) [INTENTIONALLY OMITTED]; and
(j) Liens securing Debt as and to the extent permitted under clause (f)
of SECTION 9.13.
"Permitted Rentals" has the meaning specified in SECTION 9.24.
"Person" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
Governmental Authority, or any other entity.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which the Parent Guarantor or any of its Subsidiaries sponsors or
maintains or to which the Parent Guarantor or any of its Subsidiaries makes, is
making, or is obligated to make contributions and includes any Pension Plan.
"Pledge Agreement" means the Amended and Restated Pledge Agreement
dated as of the date hereof executed and delivered to the Agent by the Parent
Guarantor and each of its Subsidiaries that holds any Capital Stock of the
Borrower or any other Subsidiary of the Parent Guarantor, or any promissory note
representing any intercompany Debt issued by the Parent
20
Guarantor or any Subsidiary thereof to the Parent Guarantor or any Subsidiary
thereof, to evidence and perfect the Agent's security interest for the benefit
of itself and the Lenders in all Capital Stock of the Borrower, each other
Subsidiary of the Parent Guarantor, and in all promissory notes representing any
intercompany Debt issued by the Parent Guarantor or any Subsidiary thereof to
the Parent Guarantor or any Subsidiary thereof.
"Principals" means Xxxxxx X. Xxxxxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxx
XxXxxxxxxxx, Xx., Xxxxxxx X. Xxxx, Xxxx Xxxxxxx or Xxxxx Xxxxxxxxxx.
"Pro Rata Share" means, with respect to a Lender, a fraction (expressed
as a percentage), the numerator of which is the amount of such Lender's
Commitment and the denominator of which is the sum of the amounts of all of the
Lenders' Commitments, or if no Commitments are outstanding, a fraction
(expressed as a percentage), the numerator of which is the amount of Obligations
owed to such Lender and the denominator of which is the aggregate amount of the
Obligations owed to the Lenders.
"Proprietary Rights" means all of each Loan Party's now owned and
hereafter arising or acquired: all Intellectual Property and, to the extent not
covered in such definition, all other licenses, franchises, permits, patents,
patent rights, copyrights, works which are the subject matter of copyrights,
trademarks, service marks, trade names, trade styles, patent, trademark and
service xxxx applications, and all licenses and rights related to any of the
foregoing, including, without limitation, those patents, trademarks, service
marks, trade names and copyrights set forth on SCHEDULE 8.13 hereto, and all
other rights under any of the foregoing, all extensions, renewals, reissues,
divisions, continuations, and continuations-in-part of any of the foregoing, and
all rights to xxx for past, present and future infringement of any of the
foregoing.
"Redemption" shall have the meaning specified in SCHEDULE 9.14 HERETO.
"Related Party" means, with respect to any Principal, (A) any spouse or
immediate family member of such Principal, (B) the estate or any heir of such
Principal, (C) any Subsidiary of any of the Principals or any other Related
Party or (D) any trust, the beneficiaries of whom are Principals or Related
Parties.
"Release" means a release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration of a
Contaminant into the indoor or outdoor environment or into or out of any
property, including the movement of Contaminants through or in the air, soil,
surface water, groundwater or property.
"Rentals" has the meaning specified in SECTION 9.24.
"Reportable Event" means, any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder, other than any such event for
which the 30-day notice requirement under ERISA has been waived in regulations
issued by the PBGC.
"Required Lenders" means at any time Lenders whose Pro Rata Shares
aggregate more than 66.7% of the Commitments or, if no Commitments shall then be
in effect, Lenders who hold more than 66.7% of the aggregate principal amount of
the Loans then outstanding.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or final non-appealable determination of an
arbitrator or of a Governmental
21
Authority, in each case applicable to or binding upon the Person or any of its
property or to which the Person or any of its property is subject.
"Responsible Officer" means the chief executive officer or the
president of the Parent Guarantor, or any other officer having substantially the
same authority and responsibility; or, with respect to compliance with financial
covenants and the preparation of the Borrowing Base Certificate, the chief
financial officer, the treasurer or the chief accounting officer of the
Borrower, or any other officer having substantially the same authority and
responsibility.
"Restricted Investment" means, as to any Person, any acquisition of
property by such Person in exchange for cash or other property, whether in the
form of an acquisition of stock, debt, or other indebtedness or obligation, or
the purchase or acquisition of any other property, or a loan, advance, capital
contribution, or subscription, except holdings or acquisitions of the following:
(a) Equipment to be used in the business of the Borrower or any Loan Party so
long as the acquisition costs thereof constitute Capital Expenditures permitted
hereunder; (b) Inventory in the ordinary course of business; (c) current assets
arising from the sale or lease of goods or the rendition of services in the
ordinary course of business of the Borrower or any Loan Party; (d) direct
obligations of the United States of America, or any agency thereof, or
obligations guaranteed by the United States of America, which are subject to a
first-priority perfected Lien in favor of the Agent, provided that such
obligations mature within one year from the date of acquisition thereof; (e)
certificates of deposit maturing within one year from the date of acquisition,
bankers' acceptances, Eurodollar bank deposits, or overnight bank deposits, in
each case issued by, created by, or with a bank or trust company organized under
the laws of the United States or any state thereof having capital and surplus
aggregating at least $100,000,000, which are subject to a first-priority
perfected Lien in favor of the Agent; (f) commercial paper given a rating of
"A2" or better by Standard & Poor's Corporation or "P2" or better by Xxxxx'x
Investors Service, Inc. and maturing not more than 270 days from the date of
creation thereof, which are subject to a first-priority perfected Lien in favor
of the Agent; (g) Capital Stock or Debt of the Borrower or other Subsidiaries
and in Fox Athletic LLC held by the Parent Guarantor and disclosed on SCHEDULE
8.5; (h) Debt of the Parent Guarantor held by the Borrower and disclosed on
SCHEDULE 8.5; (i) (w) additional investments after the date hereof made by the
Borrower consisting of Debt of another Person within the definition of the
Borrower, (x) intentionally omitted, (y) additional investments made after the
date hereof by the Borrower consisting of Debt of the Parent Guarantor owing to
the Borrower which is pari passu with the Senior Notes and is advanced to the
Parent Guarantor to pay interest on the Senior Notes when due, scheduled
payments of principal and interest on the Subordinated Debt when due and the
Parent Guarantor's expenses incurred in the ordinary course of its business
consistent with customary business practices and (z) additional investments
after the date hereof made by the Parent Guarantor in the form of contributions
of equity to or Capital Stock (pledged to the Agent hereunder) of the Borrower;
(j) investments consisting of Debt or Capital Stock received in connection with
the bankruptcy or reorganization of suppliers and customers in settlement of
delinquent obligations of, and other bona fide disputes with, suppliers and
customers; (k) deposit accounts maintained by any Loan Party which, except for
travel agent escrow accounts, are subject to a Lien in favor of the Agent; (l)
loans and advances made to employees in the ordinary course of employment
consistent with past practices; (m) investments in Persons other than the Parent
Guarantor and its Subsidiaries consisting of Debt or Capital Stock not to exceed
the Aggregate Additional Debt and Investment Basket Amount at any time
outstanding; (n) Intentionally Omitted; (o) investments consisting of money
market accounts with the Agent, a Lender or another financial institution
reasonably acceptable to the Agent, provided such money market accounts are
subject to a first-priority perfected Lien in favor of the Agent; and (p)
expenditures otherwise permitted under SCHEDULE 9.14 hereto; provided, that in
each case an investment of any type described in clauses (d) through (p)
22
shall not be a made if a Default or Event of Default has occurred and is
continuing or would result therefrom.
"Revolving Loans" has the meaning specified in SECTION 2.2 and includes
each Agent Advance and Bank of America Loan.
"Scheduled Principal Payments" means all principal payments in respect
of Funded Debt (other than under this Agreement) scheduled to be made or
actually made pursuant to the terms thereof during the applicable period; which
shall include, in the case of reducing revolving commitments, the difference
between the revolving commitment amount on the first day of such period and the
revolving commitment amount at the end of such period, but shall not include
revolving loan repayments.
"Second Loan Agreement" shall have the meaning set forth in the
Recitals hereto.
"Senior Notes" means the $115,000,000 of 10 1/2% Senior Notes due 2007
issued pursuant to the Indenture by and between the Borrower and Marine Midland
Bank, dated June 19, 1997 (the "Indenture").
"Settlement" and "Settlement Date" have the meanings specified in
SECTION 2.2(j)(i).
"Solvent" means when used with respect to any Person that at the time
of determination:
(i) the assets of such Person, at a fair valuation, are in excess of
the total amount of its debts (including, without limitation, contingent
liabilities); and
(ii) the present fair saleable value of its assets is greater than its
probable liability on its existing debts as such debts become absolute and
matured; and
(iii) it is then able and expects to be able to pay its debts
(including, without limitation, contingent debts and other commitments) as they
mature; and
(iv) it has capital sufficient to carry on its business as conducted
and as proposed to be conducted.
For purposes of determining whether a Person is Solvent, the amount of
any contingent liability shall be computed as the amount that, in light of all
the facts and circumstances existing at such time, represents the amount that
can reasonably be expected to become an actual or matured liability.
"Stated Termination Date" means September 15, 2002.
"Subordinated Debt" means those certain convertible subordinated notes
issued by the Parent Guarantor, in the aggregate amount of $7,500,000, and
maturing on November 1, 2007.
"Subsidiary" of a Person means any corporation, association,
partnership, joint venture or other business entity of which more than fifty
percent (50%) of the voting stock or other equity interests (in the case of
Persons other than corporations), is owned or controlled directly or indirectly
by the Person, or one or more of the Subsidiaries of the Person, or a
combination thereof.
23
Unless the context otherwise clearly requires, references herein to a
"Subsidiary" refer to a Subsidiary of the Parent Guarantor.
"Swap Transactions" means Hedging Agreements providing for any interest
rate swap transaction, forward rate transaction, treasury lock transaction,
interest rate cap, floor or collar transaction, any similar transaction, any
option to enter into any of the foregoing, or any combination of any of the
foregoing.
"Taxes" means any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Lender and the Agent, such taxes (including
income taxes or franchise taxes) as are imposed on or measured by each Lender's
net income by the jurisdiction (or any political subdivision thereof) under the
laws of which such Lender or the Agent, as the case may be, is organized or
maintains a lending office.
"Termination Date" means the earliest to occur of (i) the Stated
Termination Date, (ii) the date the Total Facility is terminated either by the
Borrower pursuant to SECTION 4.2 or by the Agent or the Majority Lenders
pursuant to SECTION 11.2, and (iii) the date this Agreement is otherwise
terminated for any reason whatsoever (provided, that this clause (iii) shall not
be construed as giving any party hereto any right hereunder to terminate this
Agreement).
"Total Facility" has the meaning specified in SECTION 2.1.
"Trademark" means any and all trademarks, trade names, trade styles,
service marks, corporate names, company names, business names, fictitious
business names, logos, emblems, designs, prints and labels, all elements of
package, trade styles or trade dress of goods and services, and all general
intangibles of like nature, together with the goodwill of each Grantor's
business connected with the use thereof and symbolized thereby, and all
applications, registrations and recordings thereof, including, without
limitation, applications, registrations and recordings in the United States
Patent and Trademark Office, or in any similar office or agency of the United
States, or in any office of the Secretary of State (or equivalent) of any state
thereof, or in any similar office or agency of any country or political
subdivision thereof throughout the world, including, but not limited to, those
described in SCHEDULE 8.13 (as from time to time amended, modified or
supplemented in accordance with the terms hereof) attached hereto and made a
part hereof, together with all extensions, renewals and corrections thereof, and
all licenses thereof or pertaining thereto, including, without limitation, the
License Agreements with respect thereto, and all claims for infringement or
dilution thereto or injury to goodwill of the business connected.
"UCC" means the Uniform Commercial Code (or any successor statute) of
the State of Tennessee or of any other state the laws of which are required by
Section 9-103 thereof to be applied in connection with the issue of perfection
of security interests.
"Umbro" has the meaning specified in SECTION 9.28.
"Umbro Collateral" means any Inventory of Fashions to be acquired,
produced, owned, sold or otherwise disposed of or dealt with pursuant to the
terms of the Material License Agreement with Umbro.
"Umbro Consent" has the meaning specified in SECTION 9.28.
24
"Unfunded Pension Liability" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Plan's assets, determined in accordance with the assumptions used for funding
the Pension Plan pursuant to Section 412 of the Code for the applicable plan
year.
"Unused Letter of Credit Subfacility" means an amount equal to
$4,000,000 during each Period of Availability, and $2,000,000 during each Period
of Unavailability, minus in either case the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit plus (b) the aggregate unpaid
reimbursement obligations with respect to all Letters of Credit.
"Unused Line Fee" has the meaning specified in SECTION 3.5.
1.2 ACCOUNTING TERMS. Any accounting term used in this Agreement shall
have, unless otherwise specifically provided herein, the meaning customarily
given in accordance with GAAP, and all financial computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance with GAAP
as consistently applied and using the same method for inventory valuation as
used in the preparation of the Financial Statements.
1.3 INTERPRETIVE PROVISIONS.
(a) The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.
(b) The words "hereof," "herein," "hereunder" and similar words refer
to this Agreement as a whole and not to any particular provision of this
Agreement; and Subsection, Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced.
(ii) The term "including" is not limiting and means "including
without limitation."
(iii) In the computation of periods of time from a specified date
to a later specified date, the word "from" means "from and including," the words
"to" and "until" each mean "to but excluding" and the word "through" means "to
and including."
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document, and (ii) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation; provided, that any representation or warranty by any Loan Party made
herein or in any other Loan Document (or certificate given hereunder or
thereunder) with respect to compliance with any statute or regulation shall be
limited to the statutes and regulations in effect on the date of such
representation and/or warranty; and, provided, further, that the immediately
preceding proviso shall not limit any Loan Party's covenants contained in this
Agreement or any other Loan Document to comply with statutes and regulations.
25
(e) The captions and headings of this Agreement are for convenience of
reference only and shall not affect the interpretation of this Agreement.
(f) This Agreement and other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are cumulative and shall each be
performed in accordance with their terms.
(g) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agent, the Borrower
and the other parties, and are the products of all parties. Accordingly, they
shall not be construed against the Lenders or the Agent merely because of the
Agent's or Lenders' involvement in their preparation.
ARTICLE 2
LOANS AND LETTERS OF CREDIT
2.1 TOTAL FACILITY. Subject to all of the terms and conditions of this
Agreement, the Lenders severally agree to make available a total credit facility
of up to $15,000,000 (as such amount is, if at all, reduced pursuant to SECTION
4.2, the "Total Facility") for the Borrower's use from time to time during the
term of this Agreement. The Total Facility shall be comprised of a revolving
line of credit consisting of revolving loans and letters of credit up to the
Maximum Revolver Amount, as described in SECTIONS 2.2 and 2.4.
2.2 REVOLVING LOANS.
(a) AMOUNTS. Subject to the satisfaction of the conditions precedent
set forth in ARTICLE 10, each Lender severally agrees, upon the Borrower's
request from time to time on any Business Day during any Period of Availability
from the Closing Date to the Termination Date, to make revolving loans (the
"Revolving Loans") to the Borrower, in amounts not to exceed (except for Bank of
America with respect to Bank of America Loans or Agent Advances) such Lender's
Pro Rata Share of the Borrower's Availability. The Lenders, however, in their
discretion, may elect to make Revolving Loans or participate (as provided for in
SECTION 2.4(f)) in the credit support or enhancement provided through the Agent
to the issuers of Letters of Credit in excess of the Availability on one or more
occasions, but if they do so, neither the Agent nor the Lenders shall be deemed
thereby to have changed the limits of the Maximum Revolver Amount or the
Availability or to be obligated to exceed such limits on any other occasion. If
the Aggregate Revolver Outstandings exceed the Availability (with the
Availability for this purpose calculated as if the Aggregate Revolver
Outstandings were zero), the Lenders may refuse to make or otherwise restrict
the making of Revolving Loans as the Lenders determine until such excess has
been eliminated, subject to the Agent's authority, in its sole discretion, to
make Agent Advances pursuant to the terms of SECTION 2.2(i).
(b) PROCEDURE FOR BORROWING. (1) Each Borrowing shall be made upon the
Borrower's irrevocable written notice delivered to the Agent in the form of a
notice of borrowing ("Notice of Borrowing") together with a Borrowing Base
Certificate reflecting sufficient Availability (which must be received by the
Agent prior to 12:00 p.m. (Central time) on the requested Funding Date),
specifying:
(A) the amount of the Borrowing; and
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(B) the requested Funding Date, which shall be a Business Day.
(2) In lieu of delivering the above-described Notice of Borrowing
the Borrower may give the Agent telephonic notice of such request by the
required time, with such telephonic notice to be confirmed in writing within 24
hours of the giving of such notice but the Agent shall be entitled to rely on
the telephonic notice in making such Revolving Loans.
(c) RELIANCE UPON AUTHORITY. On or prior to the Closing Date and
thereafter prior to any change with respect to any of the information contained
in the following clauses (i) and (ii), the Borrower shall deliver to the Agent a
writing setting forth (i) the account of the Borrower to which the Agent is
authorized to transfer the proceeds of the Revolving Loans requested pursuant to
this SECTION 2.2, and (ii) the names of the persons authorized to request
Revolving Loans on behalf of the Borrower, and shall provide the Agent with a
specimen signature of each such person. The Agent shall be entitled to rely
conclusively on such person's authority to request Revolving Loans on behalf of
the Borrower, the proceeds of which are to be transferred to any of the accounts
specified by the Borrower pursuant to the immediately preceding sentence, until
the Agent receives written notice from the Borrower to the contrary. The Agent
shall have no duty to verify the identity of any individual representing him or
herself as one of the officers authorized by the Borrower to make such requests
on its behalf.
(d) NO LIABILITY. The Agent shall not incur any liability to the
Borrower as a result of acting upon any notice referred to in SECTIONS 2.2(b)
and (c), which notice the Agent believes in good faith to have been given by an
officer duly authorized by the Borrower to request Revolving Loans on its behalf
or for otherwise acting in good faith under this SECTION 2.2, and the crediting
of Revolving Loans to the Borrower's deposit account, or transmittal to such
Person as the Borrower shall direct, shall conclusively establish the obligation
of the Borrower to repay such Revolving Loans as provided herein.
(e) NOTICE IRREVOCABLE. Any Notice of Borrowing (or telephonic notice
in lieu thereof) made pursuant to SECTION 2.2(b) shall be irrevocable and the
Borrower shall be bound to borrow the funds requested therein in accordance
therewith.
(f) AGENT'S ELECTION. Promptly after receipt of a Notice of Borrowing
(or telephonic notice in lieu thereof) pursuant to SECTION 2.2(b), the Agent
shall elect, in its discretion, (i) to have the terms of SECTION 2.2(g) apply to
such requested Borrowing, or (ii) to request Bank of America to make a Bank of
America Loan pursuant to the terms of SECTION 2.2(h) in the amount of the
requested Borrowing; PROVIDED, however, that if Bank of America declines in its
sole discretion to make a Bank of America Loan pursuant to SECTION 2.2(h), the
Agent shall elect to have the terms of SECTION 2.2(g) apply to such requested
Borrowing.
(g) MAKING OF REVOLVING LOANS. (i) In the event that the Agent shall
elect to have the terms of this SECTION 2.2(g) apply to a requested Borrowing as
described IN SECTION 2.2(f), then promptly after receipt of a Notice of
Borrowing or telephonic notice pursuant to SECTION 2.2(b), the Agent shall
notify the Lenders by telecopy, telephone or other similar form of transmission,
of the requested Borrowing. Each Lender shall make the amount of such Lender's
Pro Rata Share of the requested Borrowing available to the Agent in same day
funds, to such account of the Agent as the Agent may designate, not later than
1:30 p.m. (Central time) on the Funding Date applicable thereto. After the
Agent's receipt of the proceeds of such Revolving Loans, upon satisfaction of
the applicable conditions precedent set forth in ARTICLE 10, the Agent shall
make the proceeds of such Revolving Loans available to the Borrower on the
applicable Funding Date by transferring same day
27
funds equal to the proceeds of such Revolving Loans received by the Agent to the
account of the Borrower, designated in writing by the Borrower and acceptable to
the Agent; PROVIDED, however, that the amount of Revolving Loans so made on any
date shall in no event exceed the Availability on such date.
(ii) Unless the Agent receives notice from a Lender on or prior to
the Closing Date or, with respect to any Borrowing after the Closing Date, at
least one Business Day prior to the date of such Borrowing, that such Lender
will not make available as and when required hereunder to the Agent for the
account of the Borrower the amount of that Lender's Pro Rata Share of the
Borrowing, the Agent may assume that each Lender has made such amount available
to the Agent in immediately available funds on the Funding Date and the Agent
may (but shall not be so required), in reliance upon such assumption, make
available to the Borrower on such date a corresponding amount. If and to the
extent any Lender shall not have made its full amount available to the Agent in
immediately available funds and the Agent in such circumstances has made
available to the Borrower such amount, that Lender shall on the Business Day
following such Funding Date make such amount available to the Agent, together
with interest at the Federal Funds Rate for each day during such period. A
notice of the Agent submitted to any Lender with respect to amounts owing under
this subsection shall be conclusive, absent manifest error. If such amount is so
made available, such payment to the Agent shall constitute such Lender's Loan on
the payment date for all purposes of this Agreement. If such amount is not made
available to the Agent on the Business Day following the Funding Date, the Agent
will notify the Borrower of such failure to fund and, upon demand by the Agent,
the Borrower shall pay such amount to the Agent for the Agent's account,
together with interest thereon for each day elapsed since the date of such
Borrowing, at a rate per annum equal to the Interest Rate applicable at the time
to the Loans comprising such Borrowing. The failure of any Lender to make any
Loan on any Funding Date (any such Lender, prior to the cure of such failure,
being hereinafter referred to as a "Defaulting Lender") shall not relieve any
other Lender of any obligation hereunder to make a Loan on such Funding Date,
but no Lender shall be responsible for the failure of any other Lender to make
the Loan to be made by such other Lender on any Funding Date.
(iii) The Agent shall not be obligated to transfer to a Defaulting
Lender any payments made by Borrower to the Agent for the Defaulting Lender's
benefit; nor shall a Defaulting Lender be entitled to the sharing of any
payments hereunder. Amounts payable to a Defaulting Lender shall instead be paid
to or retained by the Agent. The Agent may hold and, in its discretion, re-lend
to Borrower the amount of all such payments received or retained by it for the
account of such Defaulting Lender. Any amounts so re-lent to the Borrower shall
bear interest at the rate applicable to Base Rate Loans and for all other
purposes of this Agreement shall be treated as if they were Revolving Loans,
PROVIDED, HOWEVER, that for purposes of voting or consenting to matters with
respect to the Loan Documents and determining Pro Rata Shares, such Defaulting
Lender shall be deemed not to be a "Lender" and such Lender's Commitment shall
be deemed to be zero (-0-). Until a Defaulting Lender cures its failure to fund
its Pro Rata Share of any Borrowing (1) such Defaulting Lender shall not be
entitled to any portion of the Unused Line Fee and (2) the Unused Line Fee shall
accrue in favor of the Lenders which have funded their respective Pro Rata
Shares of such requested Borrowing and shall be allocated among such performing
Lenders ratably based upon their relative Commitments. This Section shall remain
effective with respect to such Lender until such time as the Defaulting Lender
shall no longer be in default of any of its obligations under this Agreement.
The terms of this Section shall not be construed to increase or otherwise affect
the Commitment of any Lender, or relieve or excuse the performance by the
Borrower of its duties and obligations hereunder.
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(h) MAKING OF BANK OF AMERICA LOANS. (i) In the event the Agent shall
elect, with the consent of Bank of America, to have the terms of this SECTION
2.2(h) apply to a requested Borrowing as described in SECTION 2.2(f), Bank of
America shall make a Revolving Loan in the amount of such Borrowing (any such
Revolving Loan made solely by Bank of America pursuant to this SECTION 2.2(h)
being referred to as a "Bank of America Loan" and such Revolving Loans being
referred to collectively as "Bank of America Loans") available to the Borrower
on the Funding Date applicable thereto by transferring same day funds to an
account of the Borrower, designated in writing by the Borrower and acceptable to
the Agent. Each Bank of America Loan is a Revolving Loan hereunder and shall be
subject to all the terms and conditions applicable to other Revolving Loans
except that all payments thereon shall be payable to Bank of America solely for
its own account (and for the account of the holder of any participation interest
with respect to such Revolving Loan). The Agent shall not request Bank of
America to make any Bank of America Loan if (i) the Agent shall have received
written notice from any Lender, or otherwise has actual knowledge, that one or
more of the applicable conditions precedent set forth in ARTICLE 10 will not be
satisfied on the requested Funding Date for the applicable Borrowing, or (ii)
the requested Borrowing would exceed the Availability on such Funding Date. Bank
of America shall not otherwise be required to determine whether the applicable
conditions precedent set forth in ARTICLE 10 have been satisfied or the
requested Borrowing would exceed the Availability on the Funding Date applicable
thereto prior to making, in its sole discretion, any Bank of America Loan.
(ii) The Bank of America Loans shall be secured by the Collateral,
shall constitute Revolving Loans and Obligations hereunder, and shall bear
interest at the rate applicable to the Revolving Loans from time to time.
(i) AGENT ADVANCES. (i) Subject to the limitations set forth in the
provisos contained in this SECTION 2.2(i), the Agent is hereby authorized by the
Borrower and the Lenders, from time to time in the Agent's sole discretion, (1)
after the occurrence of a Default or an Event of Default, or (2) at any time
that any of the other applicable conditions precedent set forth in ARTICLE 10
have not been satisfied, to make Revolving Loans to the Borrower on behalf of
the Lenders which the Agent, in its reasonable business judgment, deems
necessary or desirable (A) to preserve or protect the Collateral, or any portion
thereof, (B) to enhance the likelihood of, or maximize the amount of, repayment
of the Loans and other Obligations, or (C) to pay any other amount chargeable to
the Borrower pursuant to the terms of this Agreement, including, without
limitation, costs, fees and expenses as described in SECTION 15.7 (any of the
advances described in this SECTION 2.2(i) being hereinafter referred to as
"Agent Advances"); PROVIDED, that the Required Lenders may at any time revoke
the Agent's authorization contained in this SECTION 2.2(i) to make Agent
Advances, any such revocation to be in writing and to become effective
prospectively upon the Agent's receipt thereof; PROVIDED, FURTHER, that an Agent
Advance which results in Aggregate Revolver Outstandings to be in excess of the
Borrower's Availability shall not by itself alone cause an Event of Default
hereunder; and PROVIDED, FURTHER, that an Agent Advance for an amount not paid
by the Borrower when due shall not be considered to have cured any such failure
to pay when due.
(ii) The Agent Advances shall be secured by the Collateral, shall
constitute Revolving Loans and Obligations hereunder, and shall bear interest at
the rate applicable to the Revolving Loans from time to time. The Agent shall
notify each Lender in writing of each such Agent Advance.
(j) SETTLEMENT. It is agreed that each Lender's funded portion of the
Revolving Loan is intended by the Lenders to be equal at all times to such
Lender's Pro Rata Share of the outstanding Revolving Loans. Notwithstanding such
agreement, the Agent, Bank of America, and
29
the other Lenders agree (which agreement shall not be for the benefit of or
enforceable by the Borrower) that in order to facilitate the administration of
this Agreement and the other Loan Documents, settlement among them as to the
Revolving Loans, the Bank of America Loans and the Agent Advances shall take
place on a periodic basis in accordance with the following provisions:
(i) The Agent shall request settlement ("Settlement") with the
Lenders on a weekly basis, or on a more frequent basis if so determined by the
Agent, (1) on behalf of Bank of America, with respect to each outstanding Bank
of America Loan, (2) for itself, with respect to each Agent Advance, and (3)
with respect to collections received, in each case, by notifying the Lenders of
such requested Settlement by telecopy, telephone or other similar form of
transmission, of such requested Settlement, no later than 11:00 a.m. (Central
time) on the date of such requested Settlement (the "Settlement Date"). Each
Lender (other than Bank of America, in the case of Bank of America Loans) shall
make the amount of such Lender's Pro Rata Share of the outstanding principal
amount of the Bank of America Loans and Agent Advances with respect to which
Settlement is requested available to the Agent, for itself or for the account of
Bank of America, in same day funds, to such account of the Agent as the Agent
may designate, not later than 1:30 p.m. (Central time), on the Settlement Date
applicable thereto, regardless of whether the applicable conditions precedent
set forth in ARTICLE 10 have then been satisfied. Such amounts made available to
the Agent shall be applied against the amounts of the applicable Bank of America
Loan or Agent Advance and, together with the portion of such Bank of America
Loan or Agent Advance representing Bank of America's Pro Rata Share thereof,
shall constitute Revolving Loans of such Lenders. If any such amount is not made
available to the Agent by any Lender on the Settlement Date applicable thereto,
the Agent shall be entitled to recover such amount on demand from such Lender
together with interest thereon at the Federal Funds Rate for the first three (3)
days from and after the Settlement Date and thereafter at the Interest Rate then
applicable to the Revolving Loans.
(ii) Notwithstanding the foregoing, not more than one (1) Business
Day after demand is made by the Agent (whether before or after the occurrence of
a Default or an Event of Default and regardless of whether the Agent has
requested a Settlement with respect to a Bank of America Loan or Agent Advance),
each other Lender shall irrevocably and unconditionally purchase and receive
from Bank of America or the Agent, as applicable, without recourse or warranty,
an undivided interest and participation in such Bank of America Loan or Agent
Advance to the extent of such Lender's Pro Rata Share thereof by paying to the
Agent, in same day funds, an amount equal to such Lender's Pro Rata Share of
such Bank of America Loan or Agent Advance. If such amount is not in fact made
available to the Agent by any Lender, the Agent shall be entitled to recover
such amount on demand from such Lender together with interest thereon at the
Federal Funds Rate for the first three (3) days from and after such demand and
thereafter at the Interest Rate then applicable to the Revolving Loans.
(iii) From and after the date, if any, on which any Lender
purchases an undivided interest and participation in any Bank of America Loan or
Agent Advance pursuant to subsection (ii) above, the Agent shall promptly
distribute to such Lender at such address as such Lender may request in writing,
such Lender's Pro Rata Share of all payments of principal and interest and all
proceeds of Collateral received by the Agent in respect of such Bank of America
Loan or Agent Advance.
(iv) Between Settlement Dates, the Agent, to the extent no Agent
Advances or Bank of America Loans are outstanding, may pay over to Bank of
America any payments received by the Agent, which in accordance with the terms
of this Agreement would be applied to the reduction of the Revolving Loans, for
application to Bank of America's other
30
outstanding Revolving Loans. If, as of any Settlement Date, collections received
since the then immediately preceding Settlement Date have been applied to Bank
of America's other outstanding Revolving Loans other than to Bank of America
Loans or Agent Advances, as provided for in the previous sentence, Bank of
America shall pay to the Agent for the accounts of the Lenders, to be applied to
the outstanding Revolving Loans of such Lenders, an amount such that each Lender
shall, upon receipt of such amount, have, as of such Settlement Date, its Pro
Rata Share of the Revolving Loans. During the period between Settlement Dates,
Bank of America with respect to Bank of America Loans, the Agent with respect to
Agent Advances, and each Lender with respect to the Revolving Loans other than
Bank of America Loans and Agent Advances, shall be entitled to interest at the
applicable rate or rates payable under this Agreement on the actual average
daily amount of funds employed by Bank of America, the Agent and the other
Lenders.
(k) NOTATION. The Agent shall record on its books the principal amount
of the Revolving Loans owing to each Lender, including the Bank of America Loans
owing to Bank of America, and the Agent Advances owing to the Agent, from time
to time. In addition, each Lender is authorized, at such Lender's option, to
note the date and amount of each payment or prepayment of principal of such
Lender's Revolving Loans in its books and records, including computer records,
such books and records constituting rebuttably presumptive evidence, absent
manifest error, of the accuracy of the information contained therein.
(l) LENDERS' FAILURE TO PERFORM. All Loans (other than Bank of America
Loans and Agent Advances) shall be made by the Lenders simultaneously and in
accordance with their Pro Rata Shares. It is understood that (a) no Lender shall
be responsible for any failure by any other Lender to perform its obligation to
make any Loans hereunder, nor shall any Commitment of any Lender be increased or
decreased as a result of any failure by any other Lender to perform its
obligation to make any Loans hereunder, (b) no failure by any Lender to perform
its obligation to make any Loans hereunder shall excuse any other Lender from
its obligation to make any Loans hereunder, and (c) the obligations of each
Lender hereunder shall be several, not joint and several.
2.3 [INTENTIONALLY OMITTED]
2.4 Letters of Credit.
(a) AGREEMENT TO CAUSE ISSUANCE. Subject to the terms and conditions of
this Agreement, and in reliance upon the representations and warranties of the
Borrower herein set forth, the Agent agrees (i) to issue or cause to be issued
by Bank of America or any of its Affiliates or another financial institution
that has its principal place of business in the United States and combined
capital and surplus of at least $400,000,000 for the account of the Borrower one
or more documentary and standby letters of credit (" Letters of Credit") and
(ii) to provide credit support or other enhancement to banks acceptable to
Agent, which issue Letters of Credit for the account of the Borrower (any such
credit support or enhancement being herein referred to as a "Credit Support") in
accordance with this SECTION 2.4 from time to time during the term of this
Agreement.
(b) AMOUNTS; OUTSIDE EXPIRATION DATE. The Agent shall not have any
obligation to take steps to cause to be issued any Letter of Credit or to
provide Credit Support for any Letter of Credit at any time if: (1) the maximum
undrawn amount of the requested Letter of Credit is greater than the Unused
Letter of Credit Subfacility at such time; (2) the maximum undrawn amount of the
requested Letter of Credit and all commissions, fees, and charges due from the
Borrower in connection with the opening thereof exceed the Availability of the
Borrower at such time; or (3) such Letter of Credit has an expiration date later
than twelve (12) months from the date of issuance in the
31
case of a stand-by Letter of Credit (or 180 days in the case of a documentary
Letter of Credit); PROVIDED, however, that standby Letters of Credit shall, upon
Borrower's request, have "evergreen" clauses providing for automatic annual
renewals unless terminated by the Agent and/or the issuer thereof by written
notice to the beneficiary thereof thirty (30) days prior to the annual renewal
date.
(c) OTHER CONDITIONS. In addition to being subject to the satisfaction
of the applicable conditions precedent contained in ARTICLE 10, the obligation
of the Agent to issue or cause to be issued any Letter of Credit or to provide
Credit Support for any Letter of Credit is subject to the following conditions
precedent having been satisfied in a manner satisfactory to the Agent:
(1) The Borrower shall have delivered to the proposed issuer
of such Letter of Credit, at such times and in such manner as such
proposed issuer may prescribe, an application in form and substance
satisfactory to such proposed issuer and the Agent for the issuance of
the Letter of Credit and such other documents as may be required
pursuant to the terms thereof, and the form and terms of the proposed
Letter of Credit shall be satisfactory to the Agent and such proposed
issuer; and
(2) As of the date of issuance, no order of any court,
arbitrator or Governmental Authority shall purport by its terms to
enjoin or restrain money center banks generally from issuing letters of
credit of the type and in the amount of the proposed Letter of Credit,
and no law, rule or regulation applicable to money center banks
generally and no request or directive (whether or not having the force
of law) from any Governmental Authority with jurisdiction over money
center banks generally shall prohibit, or request that the proposed
issuer of such Letter of Credit refrain from, the issuance of letters
of credit generally or the issuance of such Letters of Credit.
(d) Issuance of Letters of Credit.
(1) REQUEST FOR ISSUANCE. The Borrower shall give the Agent
three (3) Business Days' prior written notice of the Borrower's request
for the issuance of a Letter of Credit together with a completed
application for such Letter of Credit. Such notice shall be irrevocable
and shall specify the original face amount of the Letter of Credit
requested, the effective date (which date shall be a Business Day) of
issuance of such requested Letter of Credit, whether such Letter of
Credit may be drawn in a single or in partial draws, the date on which
such requested Letter of Credit is to expire (which date shall be a
Business Day), the purpose for which such Letter of Credit is to be
issued, and the beneficiary of the requested Letter of Credit. The
Borrower shall attach to such notice the proposed form of the Letter of
Credit.
(2) RESPONSIBILITIES OF THE AGENT; ISSUANCE. The Agent shall
determine, as of the Business Day immediately preceding the requested
effective date of issuance of the Letter of Credit set forth in the
notice from the Borrower pursuant to SECTION 2.4(d)(1), (i) the amount
of the applicable Unused Letter of Credit Subfacility and (ii) the
Availability as of such date. If (i) the undrawn amount of the
requested Letter of Credit is not greater than the applicable Unused
Letter of Credit Subfacility and (ii) the issuance of such requested
Letter of Credit and all commissions, fees, and charges due from the
Borrower in connection with the opening thereof would not exceed the
Availability of the Borrower, the Agent shall
32
issue or cause such issuer to issue the requested Letter of Credit on
such requested effective date of issuance.
(3) NOTICE OF ISSUANCE. On each Settlement Date the Agent
shall give notice to each Lender of the issuance of all Letters of
Credit issued since the last Settlement Date.
(4) NO EXTENSIONS OR AMENDMENT. The Agent shall not be
obligated to cause any Letter of Credit to be extended or amended
unless the requirements of this SECTION 2.4(d) are met as though a new
Letter of Credit were being requested and issued. With respect to any
Letter of Credit which contains any "evergreen" or automatic renewal
provision, each Lender shall be deemed to have consented to any such
extension or renewal unless any such Lender shall have provided to the
Agent, not less than 30 days prior to the last date on which the
applicable issuer can in accordance with the terms of the applicable
Letter of Credit decline to extend or renew such Letter of Credit,
written notice that it declines to consent to any such extension or
renewal, PROVIDED, that if all of the requirements of this SECTION 2.4
are met and no Default or Event of Default exists, no Lender shall
decline to consent to any such extension or renewal.
(e) PAYMENTS PURSUANT TO LETTERS OF CREDIT.
(1) PAYMENT OF LETTER OF CREDIT OBLIGATIONS. The Borrower
agrees to reimburse the issuer for any draw under any Letter of Credit
and the Agent for the account of the Lenders upon any payment pursuant
to any Credit Support immediately upon demand, and to pay the issuer of
the Letter of Credit the amount of all other obligations and other
amounts payable to such issuer under or in connection with any Letter
of Credit immediately when due, irrespective of any claim, setoff,
defense or other right which the Borrower may have at any time against
such issuer or any other Person (it being understood and agreed that no
such payment shall be deemed a waiver of any claim the Borrower may
have against the Agent or the Lenders for a breach of its obligations
under this Agreement and/or any issuer for the breach of its
obligations under a Letter of Credit).
(2) REVOLVING LOANS TO SATISFY REIMBURSEMENT OBLIGATIONS. In
the event that the issuer of any Letter of Credit honors a draw under
such Letter of Credit or the Agent shall have made any payment pursuant
to any Credit Support and the Borrower shall not have repaid such
amount to the issuer of such Letter of Credit or the Agent, as
applicable, pursuant to SECTION 2.4(e)(1), the Agent shall, upon
receiving notice of such failure, notify each Lender of such failure,
and each Lender shall unconditionally pay to the Agent, for the account
of such issuer or the Agent, as applicable, as and when provided
hereinbelow, an amount equal to such Lender's Pro Rata Share of the
amount of such payment in Dollars and in same day funds. If the Agent
so notifies the Lenders prior to 11:00 a.m. (Central time) on any
Business Day, each Lender shall make available to the Agent the amount
of such payment, as provided in the immediately preceding sentence, on
such Business Day. Such amounts paid by the Lenders to the Agent shall
constitute Revolving Loans which shall be deemed to have been requested
by the Borrower pursuant to SECTION 2.2 as set forth in SECTION 4.7.
33
(f) PARTICIPATIONS.
(1) PURCHASE OF PARTICIPATIONS. Immediately upon issuance of
any Letter of Credit in accordance with SECTION 2.4(d), each Lender
shall be deemed to have irrevocably and unconditionally purchased and
received without recourse or warranty, an undivided interest and
participation in the Letter of Credit or the Credit Support provided
through the Agent to such issuer in connection with the issuance of
such Letter of Credit, equal to such Lender's Pro Rata Share of the
face amount of such Letter of Credit or the amount of such Credit
Support (including, without limitation, all obligations of the Borrower
with respect thereto, and any security therefor or guaranty pertaining
thereto).
(2) SHARING OF REIMBURSEMENT OBLIGATION PAYMENTS. Whenever the
Agent receives a payment from the Borrower on account of reimbursement
obligations in respect of a Letter of Credit or Credit Support as to
which the Agent has previously received for the account of the issuer
thereof payment from a Lender pursuant to SECTION 2.4(e)(2), the Agent
shall promptly pay to such Lender such Lender's Pro Rata Share of such
payment from the Borrower in Dollars. Each such payment shall be made
by the Agent on the Business Day on which the Agent receives
immediately available funds paid to such Person pursuant to the
immediately preceding sentence, if received prior to 1:30 p.m. (Central
time) on such Business Day and otherwise on the next succeeding
Business Day.
(3) DOCUMENTATION. Upon the request of any Lender, the Agent
shall furnish to such Lender copies of any Letter of Credit,
reimbursement agreements executed in connection therewith, application
for any Letter of Credit and credit support or enhancement provided
through the Agent in connection with the issuance of any Letter of
Credit, and such other documentation as may reasonably be requested by
such Lender.
(4) OBLIGATIONS IRREVOCABLE. The obligations of each Lender to
make payments to the Agent with respect to any Letter of Credit or with
respect to any Credit Support provided through the Agent with respect
to a Letter of Credit, and the obligations of the Borrower to make
payments to the Agent, for the account of the Lenders, shall be
irrevocable, not subject to any qualification or exception whatsoever ,
including, without limitation, any of the following circumstances:
(i) any lack of validity or enforceability of this Agreement
or any of the other Loan Documents;
(ii) the existence of any claim, setoff, defense or other
right which the Borrower may have at any time against a beneficiary
named in a Letter of Credit or any transferee of any Letter of Credit
(or any Person for whom any such transferee may be acting), any Lender,
the Agent, the issuer of such Letter of Credit, or any other Person,
whether in connection with this Agreement, any Letter of Credit, the
transactions contemplated herein or any unrelated transactions
(including any underlying transactions between the Borrower or any
other Person and the beneficiary named in any Letter of Credit)
(provided that no such payment shall be deemed a waiver of any claim
the Borrower may have);
34
(iii) any draft, certificate or any other document presented
under the Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan
Documents; or
(v) the occurrence of any Default or Event of Default.
(g) RECOVERY OR AVOIDANCE OF PAYMENTS. In the event any payment by or
on behalf of the Borrower received by the Agent with respect to any Letter of
Credit or Credit Support provided for any Letter of Credit (or any guaranty by
the Borrower or reimbursement obligation of the Borrower relating thereto) and
distributed by the Agent to the Lenders on account of their respective
participations therein is thereafter set aside, avoided or recovered from the
Agent in connection with any receivership, liquidation or bankruptcy proceeding,
the Lenders shall, upon demand by the Agent, pay to the Agent their respective
Pro Rata Shares of such amount set aside, avoided or recovered, together with
interest at the rate required to be paid by the Agent upon the amount required
to be repaid by it.
(h) COMPENSATION FOR LETTERS OF CREDIT.
(1) LETTER OF CREDIT FEE. The Borrower agrees to pay to the
Agent with respect to each Letter of Credit, for the account of the
Lenders, the Letter of Credit Fee specified in, and in accordance with
the terms of, SECTION 3.6.
(2) ISSUER FEES AND CHARGES. The Borrower shall pay to the
issuer of any Letter of Credit, or to the Agent, for the account of the
issuer of any such Letter of Credit, solely for such issuer's account,
such fees and other charges as are charged by such issuer for letters
of credit issued by it, including, without limitation, its standard
fees for issuing, administering, amending, renewing, paying and
canceling letters of credit and all other fees associated with issuing
or servicing letters of credit, as and when assessed.
(i) INDEMNIFICATION; EXONERATION; POWER OF ATTORNEY
(1) INDEMNIFICATION. In addition to amounts payable as
elsewhere provided in this SECTION 2.4, the Borrower hereby agrees to
protect, indemnify, pay and save the Lenders and the Agent harmless
from and against any and all claims, demands, liabilities, damages,
losses, costs, charges and expenses (including reasonable attorneys'
fees) which any Lender or the Agent may incur or be subject to as a
consequence, direct or indirect, of the issuance of any Letter of
Credit or the provision of any credit support or enhancement in
connection therewith, except to the extent resulting directly from the
gross negligence or willful misconduct of the Agent or such Lender. The
agreement in this SECTION 2.4(i)(1) shall survive payment of all
Obligations.
(2) ASSUMPTION OF RISK BY THE BORROWER. As among the Borrower,
the Lenders, and the Agent, the Borrower assumes all risks of the acts
and omissions of, or misuse of any of the Letters of Credit by, the
respective beneficiaries of such Letters of Credit. In furtherance and
not in limitation of the foregoing, the
35
Lenders and the Agent shall not be responsible for: (A) the form,
validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any Person in connection with the application
for and issuance of and presentation of drafts with respect to any of
the Letters of Credit, even if it should prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged; (B)
the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign any Letter of Credit or
the rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any reason; (C)
the failure of the beneficiary of any Letter of Credit to comply duly
with conditions required in order to draw upon such Letter of Credit;
(D) errors, omissions, interruptions, or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they be in cipher; (E) errors in
interpretation of technical terms; (F) any loss or delay in the
transmission or otherwise of any document required in order make a
drawing under any Letter of Credit or of the proceeds thereof; (G) the
misapplication by the beneficiary of any Letter of Credit of the
proceeds of any drawing under such Letter of Credit; or (H) any
consequences arising from causes beyond the control of the Lenders or
the Agent, including, without limitation, any act or omission, whether
rightful or wrongful, of any present or future de jure or de facto
Governmental Authority. None of the foregoing shall affect, impair or
prevent the vesting of any rights or powers of the Agent or any Lender
under this SECTION 2.4(i).
(3) EXONERATION. In furtherance and extension, and not in
limitation, of the specific provisions set forth above, any action
taken or omitted by the Agent or any Lender under or in connection with
any of the Letters of Credit or any related certificates, if taken or
omitted in the absence of gross negligence or willful misconduct, shall
not put the Agent or any Lender under any resulting liability to the
Borrower or relieve the Borrower of any of its obligations hereunder to
any such Person.
(4) POWER OF ATTORNEY. In connection with all Inventory
financed by Letters of Credit, the Borrower hereby appoints the Agent,
or the Agent's designee, as its attorney, with full power and
authority: (a) to sign and/or endorse the Borrower's name upon any
warehouse or other receipts; (b) to sign the Borrower's name on bills
of lading and other negotiable and non-negotiable documents; (c) to
clear Inventory through customs in the Agent's or the Borrower's name,
and to sign and deliver to customs officials powers of attorney in the
Borrower's name for such purpose; (d) to complete in the Borrower's or
the Agent's name, any order, sale, or transaction, obtain the necessary
documents in connection therewith, and collect the proceeds thereof;
and (e) to do such other acts and things as are necessary in order to
enable the Agent to obtain possession of the Inventory and to obtain
payment of the Obligations. Neither the Agent nor its designee, as the
Borrower's attorney, will be liable for any acts or omissions, nor for
any error of judgment or mistakes of fact or law, except to the extent
directly resulting from the Agent's (or the Agent's designee's) gross
negligence or willful misconduct. This power, being coupled with an
interest, is irrevocable until all Obligations have been paid and
satisfied.
(5) ACCOUNT PARTY. The Borrower hereby authorizes and directs
any issuer of a Letter of Credit to name the Borrower as the "Account
Party" therein and to deliver to the Agent all instruments, documents
and other writings and
36
property received by the issuer pursuant to the Letter of Credit, and
to accept and rely upon the Agent's instructions and agreements with
respect to all matters arising in connection with the Letter of Credit
or the application therefor.
(6) CONTROL OF INVENTORY. In connection with all Inventory
financed by Letters of Credit, the Borrower will, at the Agent's
request, instruct all suppliers, carriers, forwarders, warehouses or
others receiving or holding cash, checks, Inventory, documents or
instruments in which the Agent holds a security interest to deliver
them to the Agent and/or subject to the Agent's order, and if they
shall come into the Borrower's possession, to deliver them, upon
request, to the Agent in their original form. The Borrower shall also,
at the Agent's request, designate the Agent as the consignee on all
bills of lading and other negotiable and non-negotiable documents.
(j) SUPPORTING LETTER OF CREDIT; CASH COLLATERAL. If, notwithstanding
the provisions of SECTION 2.4(b) and SECTION 12.1, any Letter of Credit is
outstanding upon the termination of this Agreement, then upon such termination
the Borrower shall deposit with the Agent, for the ratable benefit of the Agent
and the Lenders, with respect to each Letter of Credit then outstanding, as the
Majority Lenders, in their discretion shall specify, either (A) a standby letter
of credit (a "Supporting Letter of Credit") in form and substance satisfactory
to the Agent, issued by an issuer reasonably satisfactory to the Agent in an
amount equal to the greatest amount for which such Letter of Credit may be drawn
plus any fees and expenses associated with such Letter of Credit, under which
Supporting Letter of Credit the Agent is entitled to draw amounts necessary to
reimburse the Agent and the Lenders for payments made by the Agent and the
Lenders under such Letter of Credit or under any credit support or enhancement
provided through the Agent with respect thereto and any fees and expenses
associated with such Letter of Credit, or (B) cash in amounts necessary to
reimburse the Agent and the Lenders for payments made by the Agent or the
Lenders under such Letter of Credit or under any credit support or enhancement
provided through the Agent with respect thereto and any fees and expenses
associated with such Letter of Credit. Such Supporting Letter of Credit or
deposit of cash shall be held by the Agent, for the ratable benefit of the Agent
and the Lenders, as security for, and to provide for the payment of, the
aggregate undrawn amount of such Letters of Credit remaining outstanding, and
shall be returned by the Agent upon the Borrower's request, to the extent not
utilized, at the end of the 91-day period following the expiration of such
Letter of Credit and the payment of all fees and expenses associated with such
Letter of Credit.
ARTICLE 3
INTEREST AND FEES
3.1 INTEREST.
(a) INTEREST RATES. All outstanding Obligations shall bear interest on
the unpaid principal amount thereof (including, to the extent permitted by law,
on interest thereon not paid when due) from the date made until paid in full in
cash at a rate determined as set forth in this SECTION 3.1, but not to exceed
the Maximum Rate described in SECTION 3.3. Except as otherwise provided herein,
all Base Rate Loans and other Obligations shall bear interest at a fluctuating
per annum rate equal to the Base Rate plus the Applicable Margin.
Each change in the Base Rate shall be reflected in the interest rate described
in clause (i) above as of the effective date of such change. All interest
charges shall be computed on the basis of a year of
37
360 days and actual days elapsed (which results in more interest being paid than
if computed on the basis of a 365-day year). Interest accrued on all Base Rate
Loans will be payable in arrears on the first day of each month hereafter.
(b) DEFAULT RATE. If any Event of Default occurs and is continuing and
the Majority Lenders in their discretion so elect, then, while any such Event of
Default is outstanding, all of the Obligations shall bear interest at the
Default Rate applicable thereto.
3.2 [INTENTIONALLY OMITTED]
3.3 MAXIMUM INTEREST RATE. In no event shall any interest rate provided for
hereunder exceed the maximum rate legally chargeable by any Lender under
applicable law for loans of the type provided for hereunder (the "Maximum
Rate"). If, in any month, any interest rate, absent such limitation, would have
exceeded the Maximum Rate, then the interest rate for that month shall be the
Maximum Rate, and, if in future months, that interest rate would otherwise be
less than the Maximum Rate, then that interest rate shall remain at the Maximum
Rate until such time as the amount of interest paid hereunder equals the amount
of interest which would have been paid if the same had not been limited by the
Maximum Rate. In the event that, upon payment in full of the Obligations, the
total amount of interest paid or accrued under the terms of this Agreement is
less than the total amount of interest which would, but for this SECTION 3.3,
have been paid or accrued if the interest rates otherwise set forth in this
Agreement had at all times been in effect, then the Borrower shall, to the
extent permitted by applicable law, pay the Agent, for the account of the
Lenders, an amount equal to the excess of (a) the lesser of (i) the amount of
interest which would have been charged if the Maximum Rate had, at all times,
been in effect or (ii) the amount of interest which would have accrued had the
interest rates otherwise set forth in this Agreement, at all times, been in
effect over (b) the amount of interest actually paid or accrued under this
Agreement. In the event that a court determines that the Agent and/or any Lender
has received interest and other charges hereunder in excess of the Maximum Rate,
such excess shall be deemed received on account of, and shall automatically be
applied to reduce, the Obligations other than interest, in the inverse order of
maturity, and if there are no Obligations outstanding, the Agent and/or such
Lender shall refund to the Borrower such excess.
3.4 [INTENTIONALLY OMITTED]
3.5 UNUSED LINE FEE. Until the Obligations have been paid in full and the
Agreement terminated, the Borrower agrees to pay, on the first day of each month
and on the Termination Date, to the Agent, for the ratable account of the
Lenders, an unused line fee equal to one-half of one percent (0.5%) per annum on
the average daily amount by which the Maximum Revolver Amount exceeded the sum
of the average daily outstanding amount of Revolving Loans and the undrawn face
amount of all outstanding Letters of Credit, during the immediately preceding
month or shorter period if calculated on the Termination Date. The unused line
fee shall be computed on the basis of a 360-day year for the actual number of
days elapsed. All payments received by the Agent on account of Accounts or as
proceeds of other Collateral shall be deemed to be credited to the Borrower's
Loan Account immediately upon receipt for purposes of calculating the unused
line fee pursuant to this SECTION 3.5.
3.6 LETTER OF CREDIT FEE. The Borrower agrees to pay to the Agent, for the
ratable account of the Lenders, for each Letter of Credit, a percent per annum
fee (the "Letter of Credit Fee") equal to the Applicable Margin identified in
the definition of such term as the Letter of Credit Fee of the undrawn face
amount of each Letter of Credit issued for the Borrower's account at the
Borrower's request, PLUS all out-of-pocket costs, fees and expenses incurred by
the Agent in
38
connection with the application for, issuance of, or amendment to any Letter of
Credit, which costs, fees and expenses could include a "fronting fee" required
to be paid by the Agent to such issuer for the assumption of the settlement risk
in connection with the issuance of such Letter of Credit; The Letter of Credit
Fee shall be payable monthly in arrears on the first day of each month following
any month in which a Letter of Credit was issued and/or in which a Letter of
Credit remains outstanding. The Letter of Credit Fee shall be computed on the
basis of a 360-day year for the actual number of days elapsed.
3.7 AGENT'S FEE. The Borrower agrees to pay to the Agent for its own
account an annual fee of $35,000 plus an asset based lending monitoring fee of
$17,000 per year (the "Agent's Fee") on the Closing Date and annually thereafter
in the amount set forth in the Fee Letter, which fees shall be payable in
advance, non-refundable and fully earned on each such payment date.
ARTICLE 4
PAYMENTS AND PREPAYMENTS
4.1 REVOLVING LOANS. The Borrower shall repay the outstanding principal
balance of the Revolving Loans, plus all accrued but unpaid interest thereon, on
the Termination Date; PROVIDED, HOWEVER, that Borrower shall repay the
outstanding principal balance of any Revolving Loans, plus all accrued but
unpaid interest thereon, on the last day of each Period of Availability. The
Borrower may prepay Revolving Loans at any time, and reborrow during any Period
of Availability subject to the terms of this Agreement. In addition, and without
limiting the generality of the foregoing, upon demand the Borrower promises to
pay to the Agent, for account of the Lenders, the amount, without duplication,
by which the Aggregate Revolver Outstanding exceeds the Availability (with
Availability for this purpose calculated as if the Aggregate Revolver
Outstandings were zero).
4.2 TERMINATION OR REDUCTION OF FACILITY.
(a) The Borrower may terminate this Agreement upon at least thirty (30)
days' prior notice to the Agent and the Lenders, upon (i) the payment in full of
all outstanding Revolving Loans, together with accrued interest thereon, and the
cancellation of all outstanding Letters of Credit (or payment of sufficient cash
or delivery of a supporting letter of credit in accordance with SECTION 2.4(j)
if any such Letter of Credit cannot be canceled), and (ii) the payment in full
in cash of all other Obligations together with accrued interest thereon.
(b) The Borrower may from time to time permanently reduce the amount of
the Total Facility upon thirty (30) days prior notice to the Agent and the
Lenders; provided that (i) Aggregate Revolver Outstandings shall not exceed the
Total Facility amount after giving effect to such reduction, and (ii) all Unused
Line Fees on the amount of the reduction and all other Obligations then due and
payable shall have been paid in full.
(c) Except as expressly provided in this SECTION 4.2, the Borrower may
not reduce the Total Facility or terminate this Agreement.
4.3 [INTENTIONALLY OMITTED]
4.4 [INTENTIONALLY OMITTED]
4.5 [INTENTIONALLY OMITTED]
39
4.6 PAYMENTS BY THE BORROWER.
(a) All payments to be made by the Borrower shall be made without
set-off, recoupment or counterclaim. Except as otherwise expressly provided
herein, all payments by the Borrower shall be made to the Agent for the account
of the Lenders at the Agent's address set forth in SECTION 15.8, and shall be
made in Dollars and in immediately available funds, no later than 1:00 p.m.
(Central time) on the date specified herein. Any payment received by the Agent
later than 1:00 p.m. (Central time) shall be deemed to have been received on the
following Business Day and any applicable interest or fee shall continue to
accrue.
(b) Subject to the provisions set forth in the definition of "Interest
Period" herein, whenever any payment is due on a day other than a Business Day,
such payment shall be made on the following Business Day, and such extension of
time shall in such case be included in the computation of interest or fees, as
the case may be.
(c) Unless the Agent receives notice from the Borrower prior to the
date on which any payment is due to the Lenders that the Borrower will not make
such payment in full as and when required, the Agent may assume that the
Borrower has made such payment in full to the Agent on such date in immediately
available funds and the Agent may (but shall not be so required), in reliance
upon such assumption, distribute to each Lender on such due date an amount equal
to the amount then due such Lender. If and to the extent the Borrower has not
made such payment in full to the Agent, each Lender shall repay to the Agent on
demand such amount distributed to such Lender, together with interest thereon at
the Federal Funds Rate for each day from the date such amount is distributed to
such Lender until the date repaid.
4.7 PAYMENTS AS REVOLVING LOANS. All payments of principal, interest,
reimbursement obligations in connection with Letters of Credit, fees, premiums
and other sums payable hereunder, including all reimbursement for expenses
pursuant to SECTION 15.7, may, at the option of the Agent, in its sole
discretion, subject only to the terms of this SECTION 4.7, be paid from the
proceeds of Revolving Loans made hereunder, whether made following a request by
the Borrower pursuant to SECTION 2.2 or a deemed request as provided in this
SECTION 4.7. The Borrower hereby irrevocably authorizes the Agent to charge the
Loan Account for the purpose of paying principal, interest, reimbursement
obligations in connection with Letters of Credit, fees, premiums and other sums
payable hereunder, including reimbursing expenses pursuant to SECTION 15.7, and
agrees that all such amounts charged shall constitute Revolving Loans (including
Bank of America Loans and Agent Advances) and that all such Revolving Loans so
made shall be deemed to have been requested by Borrower pursuant to SECTION 2.2.
4.8 APPORTIONMENT, APPLICATION AND REVERSAL OF PAYMENTS. Aggregate
principal and interest payments shall be apportioned ratably among the Lenders
(according to the unpaid principal balance of the Loans to which such payments
relate held by each Lender) and payments of the fees shall, as applicable, be
apportioned ratably among the Lenders. All payments shall be remitted to the
Agent and all such payments not relating to principal or interest of specific
Loans, or not constituting payment of specific fees, and all proceeds of
Accounts or other Collateral received by the Agent, shall be applied, ratably,
subject to the provisions of this Agreement: first, to pay any fees, indemnities
or expense reimbursements then due to the Agent from the Borrower; second, to
pay any fees or expense reimbursements then due to the Lenders from the
Borrower; third, to pay interest due in respect of all Revolving Loans,
including Bank of America Loans and Agent Advances; fourth, to pay or prepay
principal of the Bank of America Loans and Agent Advances; fifth, to pay or
prepay principal of the Revolving Loans (other than Bank of America Loans and
Agent Advances) and
40
unpaid reimbursement obligations in respect of Letters of Credit; and sixth, to
the payment of any other Obligation due to the Agent or any Lender by the
Borrower. The Agent shall promptly distribute to each Lender, pursuant to the
applicable wire transfer instructions received from each Lender in writing, such
funds as it may be entitled to receive, subject to a Settlement delay as
provided for in SECTION 2.2(j). The Agent and the Lenders shall have the
continuing and exclusive right to apply and reverse and reapply any and all such
proceeds and payments to any portion of the Obligations.
4.9 INDEMNITY FOR RETURNED PAYMENTS. If, after receipt of any payment of,
or proceeds applied to the payment of, all or any part of the Obligations, the
Agent or any Lender is for any reason compelled to surrender such payment or
proceeds to any Person, because such payment or application of proceeds is
invalidated, declared fraudulent, set aside, determined to be void or voidable
as a preference, impermissible setoff, or a diversion of trust funds, or for any
other reason, then the Obligations or part thereof intended to be satisfied
shall be revived and continue and this Agreement shall continue in full force as
if such payment or proceeds had not been received by the Agent or such Lender,
and the Borrower shall be liable to pay to the Agent, and hereby does indemnify
the Agent and the Lenders and hold the Agent and the Lenders harmless for, the
amount of such payment or proceeds surrendered. The provisions of this SECTION
4.9 shall be and remain effective notwithstanding any contrary action which may
have been taken by the Agent or any Lender in reliance upon such payment or
application of proceeds, and any such contrary action so taken shall be without
prejudice to the Agent's and the Lenders' rights under this Agreement and shall
be deemed to have been conditioned upon such payment or application of proceeds
having become final and irrevocable. The provisions of this SECTION 4.9 shall
survive the termination of this Agreement.
4.10 AGENT'S AND LENDERS' BOOKS AND RECORDS; MONTHLY STATEMENTS. The
Borrower agrees that the Agent's and each Lender's books and records showing the
Obligations and the transactions pursuant to this Agreement and the other Loan
Documents shall be admissible in any action or proceeding arising therefrom, and
shall constitute rebuttably presumptive proof thereof, irrespective of whether
any Obligation is also evidenced by a promissory note or other instrument. The
Agent will provide to the Borrower a monthly statement of Loans, payments, and
other transactions pursuant to this Agreement. Such statement shall be deemed
correct, accurate, and binding on the Borrower and an account stated (except for
reversals and reapplications of payments made as provided in SECTION 4.8 and
corrections of errors discovered by the Agent), unless the Borrower notifies the
Agent in writing to the contrary within sixty (60) days after such statement is
rendered. In the event a timely written notice of objections is given by the
Borrower, only the items to which exception is expressly made will be considered
to be disputed by the Borrower.
ARTICLE 5
TAXES, YIELD PROTECTION AND ILLEGALITY
5.1 TAXES.
(a) Any and all payments by the Borrower to each Lender or the Agent
under this Agreement and any other Loan Document shall be made free and clear
of, and without deduction or withholding for any Taxes (except Taxes that a
Borrower is required by law to withhold). In addition, the Borrower shall pay
all Other Taxes.
(b) The Borrower agrees to indemnify and hold harmless each Lender and
the Agent for the full amount of Taxes or Other Taxes (including any Taxes or
Other Taxes imposed by
41
any jurisdiction on amounts payable under this Section) paid by the Lender or
the Agent and any liability (including penalties, interest, additions to tax and
reasonable expenses) arising therefrom or with respect thereto, whether or not
such Taxes or Other Taxes were correctly or legally asserted. Payment under this
indemnification shall be made within 30 days after the date the Lender or the
Agent makes written demand therefor and provides evidence in reasonable detail
of the payment of, or the obligation to make payment of, such Taxes, Other Taxes
or other liability arising therefrom or with respect thereto.
(c) If the Borrower shall be required by law to deduct or withhold any
Taxes or Other Taxes from or in respect of any sum payable hereunder to any
Lender or the Agent, then:
(i) the sum payable shall be increased as necessary so that
after making all required deductions and withholdings (including
deductions and withholdings applicable to additional sums payable under
this Section) such Lender or the Agent, as the case may be, receives an
amount equal to the sum it would have received had no such deductions
or withholdings been made;
(ii) the Borrower shall make such deductions and withholdings;
(iii) the Borrower shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in
accordance with applicable law; and
(iv) the Borrower shall also pay to each Lender or the Agent
for the account of such Lender, at the time interest is paid, all
additional amounts which the respective Lender specifies as necessary
to preserve the after-tax yield the Lender would have received if such
Taxes or Other Taxes had not been imposed.
(d) Within 30 days after the date of any payment by the Borrower of
Taxes or Other Taxes, the Borrower shall furnish the Agent the original or a
certified copy of a receipt evidencing payment thereof, or other evidence of
payment reasonably satisfactory to the Agent.
(e) If the Borrower is required to pay additional amounts to any Lender
or the Agent pursuant to subsection (c) of this Section, then such Lender shall
use reasonable efforts (consistent with legal and regulatory restrictions) to
change the jurisdiction of its lending office so as to eliminate any such
additional payment by the Borrower which may thereafter accrue, if such change
in the judgment of such Lender is not otherwise disadvantageous to such Lender.
5.2 [INTENTIONALLY OMITTED]
5.3 INCREASED COSTS AND REDUCTION OF RETURN.
(a) [INTENTIONALLY OMITTED]
(b) If any Lender shall have determined that, in each case occurring
after the Closing Date, (i) the introduction of any Capital Adequacy Regulation,
(ii) any change in any Capital Adequacy Regulation, (iii) any change in the
interpretation or administration of any Capital Adequacy Regulation by any
central bank or other Governmental Authority charged with the interpretation or
administration thereof, or (iv) compliance by the Lender or any corporation or
other entity controlling the Lender with any Capital Adequacy Regulation,
affects or would affect the amount of capital required or expected to be
maintained by the Lender or any corporation or other
42
entity controlling the Lender and (taking into consideration such Lender's or
such corporation's or other entity's policies with respect to capital adequacy
and such Lender's desired return on capital) determines that the amount of such
capital is increased as a consequence of its Commitments, loans, credits or
obligations (including to participate in Letters of Credit) under this
Agreement, then, upon demand of such Lender to the Borrower through the Agent,
the Borrower shall pay to the Lender, from time to time as specified by the
Lender, additional amounts sufficient to compensate the Lender for such
increase.
(c) [INTENTIONALLY OMITTED]
5.4 [INTENTIONALLY OMITTED]
5.5 CERTIFICATES OF LENDERS. Any Lender claiming reimbursement or
compensation under this ARTICLE 5 shall deliver to the Borrower (with a copy to
the Agent) a certificate setting forth in reasonable detail the amount payable
to the Lender hereunder and such certificate shall be conclusive and binding on
the Borrower in the absence of manifest error.
5.6 SURVIVAL. The agreements and obligations of the Borrower in this
ARTICLE 5 shall survive the payment of all other Obligations and the termination
of this Agreement.
ARTICLE 6
COLLATERAL
6.1 GRANT OF SECURITY INTEREST.
(a) As security for all present and future Obligations, each Loan Party
hereby grants to the Agent, for the ratable benefit of the Agent and the
Lenders, a continuing security interest in, lien on, assignment of and right of
set-off against, all of the following property of such Loan Party, whether now
owned or existing or hereafter acquired or arising, regardless of where located:
(i) all Accounts;
(ii) all Inventory;
(iii) all contract rights, letters of credit, Assigned
Contracts (including without limitation all rights and interests under
Material License Agreements), chattel paper, instruments, notes,
documents and documents of title with respect to or arising out of or
resulting from any Accounts, Inventory or Equipment;
(iv) all Equipment (other than Equipment subject to a Lien
described in clause (j) of the definition of Permitted Liens the terms
of which expressly prohibit the granting of this Lien thereon);
(v) all money, Investment Property, securities accounts,
securities and other property of any kind of such Loan Party in the
possession or under the control of the Agent or any Lender, any
assignee of or participant in the Obligations, or a bailee of any such
party or such party's affiliates, or any other financial institution;
(vi) all of such Loan Party's deposit accounts, credits, and
balances with
43
and other claims against the Agent or any Lender or any of its
affiliates or any other financial institution with which such Loan
Party maintains deposits;
(vii) all books, records and other property related to or
referring to any of the foregoing, including, without limitation,
books, records, account ledgers, data processing records, computer
software and other property, and General Intangibles at any time
evidencing or relating to any of the foregoing; and
(viii) all accessions to, substitutions for and replacements,
products and proceeds of any of the foregoing, including, but not
limited to, proceeds of any insurance policies (including insurance
proceeds payable on account of business interruption), claims against
third parties, and condemnation or requisition payments with respect to
all or any of the foregoing.
All of the foregoing, together with all other "Collateral" as defined in any
other Loan Document and all other property of any Loan Party in which the Agent
or any Lender may at any time be granted a Lien, is herein collectively referred
to as the "Collateral"; provided, that unless and until the Umbro Consent has
been obtained, "Collateral" shall not include any Umbro Collateral. After the
Umbro Consent has been obtained, the Umbro Collateral shall be included in the
"Collateral" for all purposes, and the Loan Parties shall promptly execute and
deliver any UCC-3 amendments or other instruments or agreements requested by
Agent to evidence the same and/or perfect Lenders' security interest in the
Umbro Collateral.
(b) As security for all Obligations, each applicable Loan Party shall
simultaneously herewith execute and deliver, or cause to be executed and
delivered, to the Agent the Pledge Agreement to grant to the Agent, for the
ratable benefit of the Agent and the Lenders, a security interest in all
"Collateral" as defined in any such document.
(c) All of the Obligations shall be secured by all of the Collateral.
(d) Upon the termination, expiration or defeasance of and, with the
consent of the requisite percentage of the holders of the Senior Notes, which
consent the Parent Guarantor shall use reasonable efforts to obtain unless the
Parent Guarantor has a reasonable basis for concluding that a request for
consent to the granting of such security interest would materially prejudice its
ability to obtain such amendment, modification or change, upon any material
amendment, modification or change to the Indenture, each of the Loan Parties
shall (i) grant to the Agent, for the ratable benefit of the Agent and the
Lenders, a continuing security interest in, lien on, assignment of and right of
set-off against, all General Intangibles and Intellectual Property of such Loan
Party, whether now owned or existing or hereafter acquired or arising,
regardless of where located and (ii) execute and deliver a security agreement
and applicable assignments with respect thereto in forms acceptable to the Agent
and the Majority Lenders.
6.2 PERFECTION AND PROTECTION OF SECURITY INTEREST.
(a) Each Loan Party shall, at its expense, perform all steps requested
by the Agent at any time to perfect, maintain, protect, and enforce the Agent's
Liens, including, without limitation: (i) executing, delivering and/or filing
and recording of financing or continuation statements, and amendments thereof,
in form and substance satisfactory to the Agent; (ii) delivering to the Agent
the originals of all instruments, documents, certificates, and chattel paper,
and all other Collateral of which the Agent determines it should have physical
possession in order to perfect and
44
protect the Agent's security interest therein, duly pledged, endorsed or
assigned to the Agent or in blank without restriction; (iii) after a Default or
Event of Default, delivering to the Agent warehouse receipts covering any
portion of the Collateral located in warehouses and for which warehouse receipts
are issued and certificates of title covering any portion of the collateral for
which certificates of title have been issued; (iv) when an Event of Default
exists, transferring Inventory to warehouses designated by the Agent; (v)
placing notations on such Loan Party's books of account to disclose the Agent's
security interest; (vi) delivering to the Agent all letters of credit on which
such Loan Party is named beneficiary; and (vii) taking such other steps as are
deemed necessary or desirable by the Agent to maintain and protect the Agent's
Liens. To the extent permitted by applicable law, the Agent may file, without
any Loan Party's signature, one or more financing statements disclosing the
Agent's Liens. Each Loan Party agrees that a carbon, photographic, photostatic,
or other reproduction of this Agreement or of a financing statement is
sufficient as a financing statement.
(b) If any Collateral having a book value (determined on a FIFO basis
if applicable) of $100,000 or more is at any time located at, or in the
possession or control of any warehouseman, bailee or any of a Loan Party's
agents, vendors or processors, then such Loan Party shall notify the Agent
thereof and shall, at the request of Agent, notify such Person of the Agent's
security interest in such Collateral , obtain a lien waiver from such Person in
form and substance reasonably acceptable to the Agent and instruct such Person
to hold all such Collateral for the Agent's account subject to the Agent's
instructions (which instructions the Agent will not give unless an Event of
Default has occurred and is continuing). If at any time any Collateral having a
book value (determined on a FIFO basis if applicable) of $100,000 or more is
located on any operating facility of a Loan Party which is not owned by such
Loan Party, then such Loan Party shall, at the request of the Agent, obtain
written waivers, in form and substance satisfactory to the Agent, of all present
and future Liens to which the owner or lessor of such premises may be entitled
to assert against the Collateral.
(c) From time to time, each Loan Party shall, upon the Agent's request,
execute and deliver confirmatory written instruments pledging to the Agent, for
the ratable benefit of the Agent and the Lenders, the Collateral with respect to
such Loan Party, but such Loan Party's failure to do so shall not affect or
limit any security interest or any other rights of the Agent or any Lender in
and to the Collateral with respect to such Loan Party. So long as this Agreement
is in effect and until all Obligations have been fully satisfied, the Agent's
Liens shall continue in full force and effect in all Collateral (whether or not
deemed eligible for the purpose of calculating the Availability or as the basis
for any advance, loan, extension of credit, or other financial accommodation).
(d) Without limiting SECTION 9.21, if the Lenders permit the creation
or acquisition of any new Subsidiary, at the time any Person becomes a
Subsidiary of the Parent Guarantor, the Parent Guarantor shall so notify the
Agent and promptly thereafter (but in any event within 30 days after the date
thereof) shall (i) cause such Person to become a party to this Agreement in a
manner acceptable to the Agent, (ii) cause all of the Capital Stock of such
Person to be delivered to the Agent (together with undated stock powers signed
in blank) and pledged to the Agent pursuant to an appropriate Pledge Agreement
in substantially the form of the Pledge Agreement and otherwise in a form
reasonably acceptable to the Agent, (iii) pledge all of its assets to the
Lenders pursuant to this Agreement and such other security agreements consistent
with this Agreement as may be requested by the Agent, including a separate
collateral assignment of any Material License Agreements to which it is a party,
(iv) if such Person has any Subsidiaries, (y) deliver all of the Capital Stock
of such Subsidiaries (together with undated stock powers signed in blank) to the
Agent and (z) execute a pledge agreement in substantially the form of the Pledge
Agreement and otherwise in a form reasonably acceptable to the Agent, (v) if
such Person owns any Real Estate, execute any
45
and all necessary mortgages, deeds of trust, deeds to secure debt or other
appropriate real estate collateral documentation in a form reasonably acceptable
to the Agent, and (vi) deliver such other documentation as the Agent may
reasonably request in connection with the foregoing, including appropriate UCC-1
financing statements, real estate title insurance policies, environmental
reports, certified resolutions and other organizational and authorizing
documents of such Person and favorable opinions of counsel to such Person (which
shall cover, among other things, the legality, validity, binding effect and
enforceability of the documentation referred to above subject to standard
assumptions, qualifications and limitations that are customary in legal opinions
of such type), all in form, content and scope reasonably satisfactory to the
Agents; PROVIDED, HOWEVER, that the requirement of clause (ii) shall apply only
to all Capital Stock held directly or indirectly by or for the benefit of the
Parent Guarantor or any of its Subsidiaries.
(e) If, subsequent to the Closing Date, any Loan Party shall (i)
acquire any real property or (ii) acquire any intellectual property or any
Capital Stock or other personal property required to be delivered to the Agent
as Collateral hereunder or under any of the Loan Documents, or (iii) enter into
any Material License Agreement, the Parent Guarantor shall immediately notify
the Agent of same. The Parent Guarantor and its applicable Subsidiaries shall
take such action, as requested by the Agent and at the Borrower's own expense,
to ensure that (x) the Lenders have a perfected Lien in all owned real and
personal property of the Parent Guarantor and its Subsidiaries as set forth in
the Loan Documents (whether now owned or hereafter acquired), subject only to
Permitted Liens, (y) the Lenders have Collateral License Agreement Assignments
of all Material License Agreements in the form requested by the Agent to the
extent permitted under the terms of the applicable Material License Agreement
(and, if not so permitted, the Borrower agrees to use prompt continuing
reasonable efforts to obtain the consent of the licensor under each Material
License Agreement to such Collateral License Agreement Assignment), and (z)
during the occurrence of a Default or Event of Default, the Agent and the
Lenders have the right to use all Proprietary Rights of the Parent Guarantor and
its Subsidiaries as set forth in SECTION 11.2(b).
6.3 LOCATION OF COLLATERAL. Each Loan Party represents and warrants to the
Agent and the Lenders that: (a) SCHEDULE 6.3 is a correct and complete list of
its chief executive office, the location of its books and records, the locations
of the Collateral, and the locations of all of its other places of business; and
(b) SCHEDULE 6.3 correctly identifies any of such facilities and locations that
are not owned by it and sets forth the names of the owners and lessors or
sublessors of and, to the best of its knowledge, the holders of any mortgages
on, such facilities and locations. Each Loan Party covenants and agrees that it
will not (i) maintain any Collateral at any location other than those locations
listed for it on SCHEDULE 6.3, (ii) otherwise change or add to any of such
locations, or (iii) change the location of its chief executive office from the
location identified in SCHEDULE 6.3, unless it gives the Agent at least thirty
(30) days' prior written notice thereof and executes any and all financing
statements and other documents that the Agent requests in connection therewith.
Without limiting the foregoing, except as otherwise permitted in SECTION 6.2(b),
each Loan Party represents that all of its Inventory (other than Inventory in
transit) is, and covenants that all of its Inventory will be, located either (a)
on premises owned by it, (b) on premises leased by it, provided that the Agent
has, if requested by the Agent, received an executed landlord waiver from the
landlord of such premises in form and substance satisfactory to the Agent, or
(c) in a public warehouse, provided that the Agent has, if requested by the
Agent, received an executed bailee letter from the applicable public
warehouseman in form and substance satisfactory to the Agent.
6.4 TITLE TO, LIENS ON, AND SALE AND USE OF COLLATERAL. Each Loan Party
represents and warrants to the Agent and the Lenders and agrees with the Agent
and the Lenders that: (a) all of the Collateral is and will continue to be owned
by it free and clear of all Liens whatsoever, except for
46
Permitted Liens; (b) the Agent's Liens in the Collateral will not be subject to
any prior Lien (other than Permitted Liens described in clause (a), (d), or (j)
of the definition of such term); (c) it will use, store, and maintain the
Collateral with all reasonable care and will use such Collateral for lawful
purposes only; and (d) it will not, without the Agent's prior written approval,
sell, or dispose of or permit the sale or disposition of any of the Collateral
except for sales of Inventory in the ordinary course of business and sales of
Equipment as permitted by SECTION 6.11. The inclusion of proceeds in the
Collateral shall not be deemed to constitute the Agent's or any Lender's consent
to any sale or other disposition of the Collateral except as expressly permitted
herein.
6.5 APPRAISALS. Whenever a Default or an Event of Default exists, each Loan
Party shall, at its expense and upon the Agent's request, provide the Agent with
appraisals or updates thereof of any or all of the Collateral from an appraiser,
and prepared on a basis, satisfactory to the Agent, such appraisals and updates
to include, without limitation, information required by applicable law and
regulation and by the internal policies of the Lenders.
6.6 ACCESS AND EXAMINATION; CONFIDENTIALITY.
(a) The Agent, accompanied by any Lender which so elects, may at all
reasonable times during regular business hours (and at any time when a Default
or Event of Default exists and is continuing) have access to, examine, audit,
make extracts from or copies of and inspect any or all of any Loan Party's
records, files, and books of account and the Collateral, and discuss any Loan
Party's affairs with its and the Parent Guarantor's officers and management.
Each Loan Party will deliver to the Agent any instrument necessary for the Agent
to obtain records from any service bureau maintaining records for such Loan
Party. The Agent may, and at the direction of the Majority Lenders shall, at any
time when a Default or Event of Default exists, and at the Borrower's expense,
make copies of all of any Loan Party's books and records, or require any Loan
Party to deliver such copies to the Agent. The Agent may, without expense to the
Agent, use such of any Loan Party's respective personnel, supplies, and premises
as may be reasonably necessary for maintaining or enforcing the Agent's Liens.
The Agent shall have the right, at any time, in the Agent's name or in the name
of a nominee of the Agent, to verify the validity, amount or any other matter
relating to the Accounts, Inventory, or other Collateral, by mail, telephone, or
otherwise.
(b) Each Loan Party agrees that, subject to the Parent Guarantor's
prior consent for uses other than in a traditional tombstone, which consent
shall not be unreasonably withheld or delayed, the Agent and each Lender may use
any Loan Party's name in advertising and promotional material and in conjunction
therewith disclose the general terms of this Agreement. The Agent and each
Lender agree to take normal and reasonable precautions and exercise due care to
maintain the confidentiality of all information identified as "confidential" or
"secret" by a Loan Party and provided to the Agent or such Lender by or on
behalf of such Loan Party, under this Agreement or any other Loan Document, and
neither the Agent, nor such Lender nor any of their respective Affiliates shall
use any such information other than in connection with or in enforcement of this
Agreement and the other Loan Documents, except to the extent that such
information (i) was or becomes generally available to the public other than as a
result of disclosure by the Agent or such Lender, or (ii) was or becomes
available on a nonconfidential basis from a source other than such Loan Party,
provided that such source is not bound by a confidentiality agreement with such
Loan Party known to the Agent or such Lender; PROVIDED, HOWEVER, that the Agent
and any Lender may disclose such information (1) at the request or pursuant to
any requirement of any Governmental Authority to which the Agent or such Lender
is subject or in connection with an examination of the Agent or such Lender by
any such Governmental Authority; (2) pursuant to subpoena or other court
process; (3) when required to do so in accordance with the provisions of any
applicable requirement
47
of law; (4) to the extent reasonably required in connection with any litigation
or proceeding (including, but not limited to, any bankruptcy proceeding) to
which the Agent, any Lender or their respective Affiliates may be party; (5) to
the extent reasonably required in connection with the exercise of any remedy
hereunder or under any other Loan Document; (6) to the Agent's or such Lender's
independent auditors, accountants, attorneys and other professional advisors;
(7) to any prospective Participant or assignee under any Assignment and
Acceptance, actual or potential, provided that such prospective Participant or
assignee agrees to keep such information confidential to the same extent
required of the Agent and the Lenders hereunder; (8) as expressly permitted
under the terms of any other document or agreement regarding confidentiality to
which such Loan Party is party or is deemed party with the Agent or such Lender,
and (9) to its Affiliates.
6.7 COLLATERAL REPORTING. The Borrower shall provide the Agent with the
following documents at the following times in form satisfactory to the Agent:
(a) on a monthly basis, or more frequently if requested by the Agent, and on a
weekly basis during any period in which the outstanding amount of the Loans
exceeds seventy percent (70%) of Availability, a schedule of the Borrower's
Accounts (with the information for Eligible Unbilled Account Receivables
separately broken out and stated) created since the last such schedule and a
Borrowing Base Certificate; (b) on a monthly basis, or more frequently if
requested by Agent, an aging of the Borrower's Accounts, together with a
reconciliation to the previous month's aging of the Borrower's Accounts and to
the Borrower's general ledger, in each case with the information for Eligible
Unbilled Account Receivables separately broken out and stated; (c) on a monthly
basis, or more frequently if requested by Agent, an aging of the Borrower's
accounts payable; (d) on a monthly basis (or more frequently if requested by the
Agent), Inventory reports by category, with additional detail showing additions
to and deletions from the Inventory; (e) upon request, copies of invoices in
connection with the Borrower's Accounts, customer statements, credit memos,
remittance advices and reports, deposit slips, shipping and delivery documents
in connection with the Borrower's Accounts (with the information for Eligible
Unbilled Account Receivables separately broken out and stated) and for Inventory
and Equipment acquired by the Borrower, purchase orders and invoices; (f) upon
request, a statement of the balance of each of the Intercompany Accounts; (g)
such other reports as to the Collateral of the Borrower as the Agent shall
reasonably request from time to time (with the information for Eligible Unbilled
Account Receivables separately broken out and stated); and (h) with the delivery
of each of the foregoing, a certificate of the Borrower executed by an officer
thereof certifying as to the accuracy and completeness of the foregoing. If any
of the Borrower's records or reports of the Collateral are prepared by an
accounting service or other agent, the Borrower hereby authorizes such service
or agent to deliver such records, reports, and related documents to the Agent,
for distribution to the Lenders.
6.8 ACCOUNTS.
(a) Each Loan Party hereby represents and warrants to the Agent and the
Lenders, with respect to the Loan Parties' Accounts, that: (i) each existing
Account represents, and each future Account will represent, a bona fide sale or
lease and delivery of goods by such Loan Party, or rendition of services by such
Loan Party, in the ordinary course of such Loan Party's business; (ii) each
existing Account is, and each future Account will be, for a liquidated amount
payable by the Account Debtor thereon on the terms set forth in the invoice
therefor (or, in the case of Eligible Unbilled Account Receivables, will be so
invoiced) or in the schedule thereof delivered to the Agent, without any offset,
deduction, defense, or counterclaim except those known to such Loan Party and
disclosed to the Agent and the Lenders pursuant to this Agreement; (iii) no
payment will be received with respect to any Account, and no credit, discount,
or extension, or agreement therefor will be granted on any Account, except as
reported to the Agent and the Lenders in accordance with
48
this Agreement; (iv) each copy of an invoice delivered to the Agent by such Loan
Party will be a genuine copy of the original invoice sent to the Account Debtor
named therein; and (v) all goods described in any invoice representing a sale of
goods will have been delivered to the Account Debtor and all services of such
Loan Party described in each invoice will have been performed.
(b) No Loan Party shall re-date any invoice or sale or make sales on
extended dating beyond that customary in the Borrower's business or, except as
and to the extent permitted in clause (d) of the definition of Eligible
Accounts, extend or modify any Account. If a Loan Party becomes aware of any
matter adversely affecting the collectability of any Account or Account Debtor
involving an amount greater than $100,000, including information regarding the
Account Debtor's creditworthiness, such Loan Party will promptly so advise the
Agent.
(c) No Loan Party shall accept any note or other instrument (except a
check or other instrument for the immediate payment of money) with respect to
any Account without the Agent's written consent. If the Agent consents to the
acceptance of any such instrument, it shall be considered as evidence of the
Account and not payment thereof and such Loan Party will promptly deliver such
instrument to the Agent, endorsed by such Loan Party to the Agent in a manner
satisfactory in form and substance to the Agent. Regardless of the form of
presentment, demand, notice of protest with respect thereto, the Loan Party
shall remain liable thereon until such instrument is paid in full.
(d) Each Loan Party shall notify the Agent promptly of all disputes and
claims in excess of $25,000 with any Account Debtor, and agrees to settle,
contest, or adjust such dispute or claim at no expense to the Agent or any
Lender. No discount, credit or allowance shall be granted to any such Account
Debtor without the Agent's prior written consent, except for discounts, credits
and allowances made or given in the ordinary course of the Borrower's business
when no Event of Default exists hereunder. Each Loan Party shall issue promptly
and report to the Agent promptly any credit memorandum and shall send the Agent
a copy of each credit memorandum in excess of $100,000 as soon as issued. The
Agent may, and at the direction of the Majority Lenders shall, at all times when
an Event of Default exists hereunder, settle or adjust disputes and claims
directly with Account Debtors for amounts and upon terms which the Agent or the
Majority Lenders, as applicable, shall consider advisable and, in all cases, the
Agent will credit the Borrower's Loan Account with only the net amounts received
by the Agent in payment of any Accounts.
(e) Except for de minimus exchanges of Inventory, if an Account Debtor
returns any Inventory to a Loan Party when no Event of Default exists, then such
Loan Party shall promptly determine the reason for such return and shall issue a
credit memorandum to the Account Debtor in the appropriate amount. Such Loan
Party shall immediately report to the Agent any return involving an amount in
excess of $50,000. Each such report shall indicate the reasons for the returns
and the locations and condition of the returned Inventory. In the event any
Account Debtor returns Inventory to a Loan Party when an Event of Default
exists, such Loan Party upon request of the Agent, shall: (i) hold the returned
Inventory in trust for the Agent; (ii) segregate all returned Inventory from all
of its other property; (iii) dispose of the returned Inventory solely according
to the Agent's written instructions; and (iv) not issue any credits or
allowances with respect thereto without the Agent's prior written consent. All
returned Inventory shall be subject to the Agent's Liens thereon. Whenever any
Inventory is returned, the related Account shall be deemed ineligible to the
extent of the amount owing by the Account Debtor with respect to such returned
Inventory.
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6.9 COLLECTION OF ACCOUNTS; PAYMENTS.
(a) Each Loan Party shall establish a lock-box service and/or other
blocked account for collections of Accounts at a bank acceptable to the Agent
and pursuant to documentation satisfactory to the Agent, including lock-box
agreements and blocked account agreements satisfactory to the Agent. Each Loan
Party shall instruct all Account Debtors to make all payments directly to the
address established for such lock-box service. If, notwithstanding such
instructions, a Loan Party receives any proceeds of Accounts, it shall receive
such payments as the Agent's trustee, and shall immediately deliver such
payments to the Agent in their original form duly endorsed in blank or deposit
them into a Payment Account, as the Agent may direct. All collections received
in any such lock-box or Payment Account or directly by a Loan Party or the
Agent, and all funds in any Payment Account or other account to which such
collections are deposited shall be subject to the Agent's sole control. The
Agent or the Agent's designee may, at any time after the occurrence of an Event
of Default, notify Account Debtors that the Accounts have been assigned to the
Agent and of the Agent's security interest therein, and may collect them
directly and charge the collection costs and expenses to the Borrower's Loan
Account as a Revolving Loan. So long as an Event of Default has occurred and is
continuing, each Loan Party, at the Agent's request, shall execute and deliver
to the Agent such documents as the Agent shall require to grant the Agent access
to any post office box in which collections of Accounts are received.
(b) If sales of Inventory are made or services are rendered for cash,
each Loan Party shall immediately deliver to the Agent or deposit into a Payment
Account the cash which such Loan Party receives.
(c) All payments, including immediately available funds received by the
Agent at a bank designated by it, received by the Agent on account of Accounts
or as proceeds of other Collateral will be the Agent's sole property for its
benefit and the benefit of the Lenders and will be credited to the Borrower's
Loan Account (conditional upon final collection) on the same Business Day in the
case of wire transfers (received by 1:30 p.m., Central time, and if not received
by such time on the next Business Day) and account debits and, after allowing
three (3) Business Days for collection, in the case of checks; PROVIDED,
HOWEVER, that such payments shall be deemed to be credited to the Borrower's
Loan Account, immediately upon receipt, for purposes of (i) determining
Availability, (ii) calculating the unused line fee pursuant to SECTION 3.5, and
(iii) calculating the amount of interest accrued thereon solely for purposes of
determining the amount of interest to be distributed by the Agent to the Lenders
(but not the amount of interest payable by the Borrower).
(d) In the event the Borrower repays all of the Obligations upon the
termination of this Agreement or upon acceleration of the Obligations, other
than through the Agent's receipt of payments on account of the Accounts or
proceeds of the other Collateral, such payment will be credited (conditional
upon final collection) to the Borrower's Loan Account one (1) Business Day after
the Agent's receipt of such funds.
(e) Each Loan Party agrees to execute and deliver, and cause to be
executed and delivered, such control agreements, endorsements in blank,
registrations, acknowledgments, transaction statements or other documents as the
Agent may request to perfect, maintain, protect or enforce the Agent's Lien in
Investment Property, securities, securities accounts or other similar
Collateral.
6.10 INVENTORY; PERPETUAL INVENTORY. Each Loan Party represents and warrants
to the Agent and the Lenders and agrees with the Agent and the Lenders that,
except for Inventory used as
50
demonstration or display models, all of the Inventory owned by such Loan Party
is and will be held for sale or lease, or to be furnished in connection with the
rendition of services, in the ordinary course of such Loan Party's business, and
is and will be fit for such purposes. Each Loan Party will keep its Inventory in
good and marketable condition, at its own expense. No Loan Party will, without
the prior written consent of the Agent, acquire or accept any inventory on
consignment or approval, except for inventory not to exceed $500,000 of book
value (determined on a FIFO basis) held on consignment at any time to be sold
for cash. Each Loan Party agrees that all inventory produced by it in the United
States will be produced, and it will use reasonable efforts to ensure that all
inventory produced by others will be produced, in accordance with the Federal
Fair Labor Standards Act of 1938, as amended, and all rules, regulations, and
orders thereunder. Each Loan Party will conduct a physical count of the
Inventory at least once per Fiscal Year, and after and during the continuation
of an Event of Default, at such other times as the Agent requests. Each Loan
Party will maintain at all times the inventory reporting system in effect on the
date hereof or another type of inventory reporting system reasonably acceptable
to the Agent. No Loan Party will, without the Agent's written consent, sell any
Inventory on a xxxx-and-hold, guaranteed sale, sale and return, sale on
approval, consignment, or other repurchase or return basis.
6.11 EQUIPMENT.
(a) Each Loan Party represents and warrants to the Agent and the
Lenders and agrees with the Agent and the Lenders that all of the Equipment
owned by such Loan Party is and will be used or held for use in such Loan
Party's business, and is and will be fit for such purposes. Each Loan Party
shall keep and maintain its Equipment in good operating condition and repair
(ordinary wear and tear and damage from casualty excepted) and shall make all
necessary replacements thereof.
(b) Each Loan Party shall promptly inform the Agent of any material
additions to or deletions from the Equipment. No Loan Party shall permit any
Equipment having a book value (determined on a FIFO basis if applicable) of
$100,000 or more to become a fixture with respect to real property or to become
an accession with respect to other personal property with respect to which real
or personal property the Agent does not have a Lien. No Loan Party will, without
the Agent's prior written consent, alter or remove any identifying symbol or
number on any of such Loan Party's Equipment consisting of Collateral.
(c) No Loan Party shall, without the Agent's prior written consent,
sell, lease as a lessor, or otherwise dispose of any of such Loan Party's
Equipment; PROVIDED, HOWEVER, that a Loan Party may dispose of obsolete or
unusable Equipment having an orderly liquidation value no greater than $250,000
in the aggregate in any Fiscal Year, or $500,000 in the aggregate during the
term of this Agreement, without the Majority Lenders' consent, subject to the
conditions set forth in the next sentence. In the event any of such Equipment is
sold, transferred or otherwise disposed of pursuant to the proviso contained in
the immediately preceding sentence, (1) if such sale, transfer or disposition is
effected without replacement of such Equipment, or such Equipment is replaced by
Equipment leased by such Loan Party or by Equipment purchased by such Loan Party
subject to a Lien, then such Loan Party shall deliver all of the cash proceeds
of any such sale, transfer or disposition to the Agent, which proceeds shall be
applied ratably to the reduction of the Obligation as provided in SECTION 4.8,
or (2) if such sale, transfer or disposition is made in connection with the
purchase by such Loan Party of replacement Equipment, then such Loan Party shall
use the proceeds of such sale, transfer or disposition to purchase such
replacement Equipment and shall deliver to the Agent written evidence of the use
of the proceeds for such purchase (and such proceeds as so expended shall not be
considered a Capital Expenditure for the purposes of SECTION 9.23). All
51
replacement Equipment purchased by a Loan Party shall be free and clear of all
Liens except the Agent's Lien and Liens described in clause (d) or (j) of the
definition of the term Permitted Liens.
6.12 ASSIGNED CONTRACTS. Each Loan Party shall fully perform all of its
material obligations under each of the Assigned Contracts, and shall enforce all
of its rights and remedies thereunder, in each case, as it deems appropriate in
its business judgment; PROVIDED, HOWEVER, that no Loan Party shall take any
action or fail to take any action with respect to its Assigned Contracts which
would cause the termination of a material Assigned Contract, if the termination
of such Assigned Contract could reasonably be expected to have a Material
Adverse Effect unless (i) the other party thereto is in material default
thereunder or (ii) the Loan Party is simultaneously entering into a similar
contract on terms the same as or more favorable to such Loan Party. Without
limiting the generality of, but subject to, the foregoing, each Loan Party shall
take all action necessary or appropriate to permit, and shall not take any
action which would have any materially adverse effect upon, the full enforcement
of all indemnification rights under its Assigned Contracts. No Loan Party shall,
without the Agent's and the Majority Lenders' prior written consent, modify,
amend, supplement, compromise, satisfy, release, or discharge any of its
Assigned Contracts, any collateral securing the same, any Person liable directly
or indirectly with respect thereto, or any agreement relating to any of its
Assigned Contracts or the collateral therefor, if the result of such action
could reasonably be expected to have a Material Adverse Effect. Each Loan Party
shall notify the Agent and the Lenders in writing, promptly after such Loan
Party becomes aware thereof, of any event or fact which could give rise to a
claim by it for indemnification under any of its Assigned Contracts, and shall
diligently pursue any such material right and report to the Agent on all further
developments with respect thereto. Each Loan Party shall remit directly to the
Agent for application to the Obligations in such order as the Majority Lenders
shall determine, all amounts received by such Loan Party as indemnification or
otherwise pursuant to its Assigned Contracts. If a Loan Party shall fail after
the Agent's demand to pursue diligently any material right under its Assigned
Contracts, or if an Event of Default then exists, the Agent may, and at the
direction of the Majority Lenders shall, directly enforce such right in its own
or such Loan Party's name and may enter into such settlements or other
agreements with respect thereto as the Agent or the Majority Lenders, as
applicable, shall determine. In any suit, proceeding or action brought by the
Agent for the benefit of the Lenders under any Assigned Contract for any sum
owing thereunder or to enforce any provision thereof, the Borrower shall
indemnify and hold the Agent and Lenders harmless from and against all expense,
loss or damage suffered by reason of any defense, setoff, counterclaims,
recoupment, or reduction of liability whatsoever of the obligor thereunder
arising out of a breach by a Loan Party of any obligation thereunder or arising
out of any other agreement, indebtedness or liability at any time owing from a
Loan Party to or in favor of such obligor or its successors. All such
obligations of a Loan Party shall be and remain enforceable only against such
Loan Party and shall not be enforceable against the Agent. Notwithstanding any
provision hereof to the contrary, each Loan Party shall at all times remain
liable to observe and perform all of its duties and obligations under its
Assigned Contracts, and the Agent's or any Lender's exercise of any of their
respective rights with respect to the Collateral shall not release such Loan
Party from any of such duties and obligations. Neither the Agent nor any Lender
shall be obligated to perform or fulfill any of a Loan Party's duties or
obligations under its Assigned Contracts or to make any payment thereunder, or
to make any inquiry as to the nature or sufficiency of any payment or property
received by it thereunder or the sufficiency of performance by any party
thereunder, or to present or file any claim, or to take any action to collect or
enforce any performance, any payment of any amounts, or any delivery of any
property.
6.13 DOCUMENTS, INSTRUMENTS, AND CHATTEL PAPER. Each Loan Party represents
and warrants to the Agent and the Lenders that (a) all documents, instruments,
and chattel paper
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describing, evidencing, or constituting Collateral, and all signatures and
endorsements thereon, are and will be complete, valid, and genuine, and (b) all
goods evidenced by such documents, instruments, and chattel paper are and will
be owned by such Loan Party, free and clear of all Liens other than Permitted
Liens.
6.14 RIGHT TO CURE. At any time if a Default or Event of Default exists, or
otherwise after such notice as the Agent deems in good faith can be given
without prejudice to its rights or remedies hereunder, the Agent may, in its
discretion, and shall, at the direction of the Majority Lenders, pay any amount
or do any act required of any Loan Party hereunder or under any other Loan
Document in order to preserve, protect, maintain or enforce the Obligations, the
Collateral or the Agent's Liens therein, and which such Loan Party fails to pay
or do, including, without limitation, payment of any judgment against such Loan
Party, any insurance premium, any warehouse charge, any finishing or processing
charge, any landlord's claim, and any other Lien upon or with respect to the
Collateral. All payments that the Agent makes under this SECTION 6.14 and all
out-of-pocket costs and expenses that the Agent pays or incurs in connection
with any action taken by it hereunder shall be charged to the Borrower's Loan
Account as a Revolving Loan. Any payment made or other action taken by the Agent
under this SECTION 6.14 shall be without prejudice to any right to assert an
Event of Default hereunder and to proceed thereafter as herein provided.
6.15 POWER OF ATTORNEY. Each Loan Party hereby appoints the Agent and the
Agent's designee as such Loan Party's attorney, with power: (a) to endorse such
Loan Party's name on any checks, notes, acceptances, money orders, or other
forms of payment or security that come into the Agent's or any Lender's
possession; (b) to sign such Loan Party's name on any invoice, xxxx of lading,
warehouse receipt or other document of title relating to any Collateral, on
drafts against customers, on assignments of Accounts, on notices of assignment,
financing statements and other public records and to file any such financing
statements by electronic means with or without a signature as authorized or
required by applicable law or filing procedure; (c) so long as any Event of
Default has occurred and is continuing, to notify the post office authorities to
change the address for delivery of such Loan Party's mail to an address
designated by the Agent and to receive, open and dispose of all mail addressed
to such Loan Party; (d) to send requests for verification of Accounts to
customers or Account Debtors; (e) to clear Inventory, the purchase of which was
financed with Letters of Credit, through customs in such Loan Party's name, the
Agent's name or the name of the Agent's designee, and to sign and deliver to
customs officials powers of attorney in such Loan Party's name for such purpose;
and (f) to do all things necessary to carry out this Agreement. Each Loan Party
ratifies and approves all acts of such attorney. None of the Lenders or the
Agent nor their attorneys will be liable for any acts or omissions or for any
error of judgment or mistake of fact or law. This power, being coupled with an
interest, is irrevocable until this Agreement has been terminated and the
Obligations have been fully satisfied.
6.16 THE AGENT'S AND LENDERS' RIGHTS, DUTIES AND LIABILITIES. Each Loan
Party assumes all responsibility and liability arising from or relating to the
use, sale or other disposition of the Collateral, except as otherwise expressly
provided in SECTION 11.2. The Obligations shall not be affected by any failure
of the Agent or any Lender to take any steps to perfect the Agent's Liens or to
collect or realize upon the Collateral, nor shall loss of or damage to the
Collateral release any Loan Party from any of the Obligations. Following the
occurrence and continuation of an Event of Default, the Agent may (but shall not
be required to), and at the direction of the Majority Lenders shall, without
notice to or consent from any Loan Party, xxx upon or otherwise collect, extend
the time for payment of, modify or amend the terms of, compromise or settle for
cash, credit, or otherwise upon any terms, grant other indulgences, extensions,
renewals, compositions, or releases, and take or omit to take any other action
with respect to the Collateral, any security therefor, any
53
agreement relating thereto, any insurance applicable thereto, or any Person
liable directly or indirectly in connection with any of the foregoing, without
discharging or otherwise affecting the liability of any Loan Party for the
Obligations or under this Agreement or any other agreement now or hereafter
existing between the Agent and/or any Lender and any Loan Party.
6.17 SITE VISITS, OBSERVATIONS AND TESTING. The Agent and its
representatives will have the right at any reasonable time to enter and visit
the Premises and any other place where any property of any Loan Party is located
for the purposes of observing the Premises, and subject to the terms of any
lease of Premises and if the Agent has a reasonable basis for doing so (such as
a Phase I report recommending any such action), taking and removing soil or
groundwater samples, and conducting tests on any part of the Premises. The Agent
is under no duty, however, to visit or observe the Premises or to conduct tests,
and any such acts by the Agent will be solely for the purposes of protecting the
Agent's Liens and preserving the Agent and the Lenders' rights under this
Agreement. No site visit, observation or testing by the Agent and the Lenders
will result in a waiver of any default of any Loan Party or impose any liability
on the Agent or any Lender (except for the Agent's or such Lender's gross
negligence or willful misconduct). In no event will any site visit, observation
or testing by the Agent be a representation that hazardous substances are or are
not present in, on or under the Premises, or that there has been or will be
compliance with any Environmental Law. Neither any Loan Party nor any other
party is entitled to rely on any site visit, observation or testing by the
Agent. The Agent and the Lenders owe no duty of care to protect any Loan Party
or any other party against, or, except to the extent the Agent is required to do
so by applicable Environmental Laws, to inform any Loan Party or any other party
of, any hazardous substances or any other adverse condition affecting the
Premises. The Agent may in its discretion, except to the extent the Agent is
required to do so by applicable Environmental Laws, disclose to any Loan Party
or any other party any report or findings made as a result of, or in connection
with, any site visit, observation or testing by the Agent. Each Loan Party
understands and agrees that the Agent makes no warranty or representation to any
Loan Party or any other party regarding the truth, accuracy or completeness of
any such report or findings that may be disclosed. Each Loan Party also
understands that depending on the results of any site visit, observation or
testing by the Agent and disclosed to such Loan Party, such Loan Party may have
a legal obligation to notify one or more environmental agencies of the results,
that such reporting requirements are site-specific, and are to be evaluated by
such Loan Party without advice or assistance from the Agent. In each instance,
the Agent will give such Loan Party reasonable notice before entering the
Premises or any other place the Agent is permitted to enter under this SECTION
6.17. The Agent will make reasonable efforts to avoid interfering with such Loan
Party's use of the Premises or any other property in exercising any rights
provided hereunder.
6.18 [INTENTIONALLY OMITTED]
6.19 [INTENTIONALLY OMITTED]
ARTICLE 7
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
7.1 BOOKS AND RECORDS. Each Loan Party shall maintain, at all times,
correct and complete books, records and accounts in which complete, correct and
timely entries are made of its transactions in accordance with GAAP applied
consistently with the audited Financial Statements required to be delivered
pursuant to SECTION 7.2(a). Each Loan Party shall, by means of appropriate
entries, reflect in such accounts and in all Financial Statements proper
liabilities and reserves for all taxes and proper provision for depreciation and
amortization of property and bad debts, all in
54
accordance with GAAP. Each Loan Party shall maintain at all times books and
records pertaining to the Collateral in such detail, form and scope as the Agent
or any Lender shall reasonably require, including, but not limited to, records
of (a) all payments received and all credits and extensions granted with respect
to the Accounts; (b) the return, rejections, repossession, stoppage in transit,
loss, damage, or destruction of any Inventory; and (c) all other dealings
affecting the Collateral.
7.2 FINANCIAL INFORMATION. Each Loan Party shall promptly furnish to each
Lender, all such financial information as the Agent or any Lender shall
reasonably request, and notify its auditors and accountants that the Agent, on
behalf of the Lenders, is authorized to obtain such information directly from
them. Without limiting the foregoing, the Borrower will furnish to the Agent, in
sufficient copies for distribution by the Agent to each Lender, in such detail
as the Agent or the Lenders shall reasonably request, the following:
(a) As soon as available, but in any event not later than one hundred
twenty (120) days after the close of each Fiscal Year, consolidated audited, and
consolidating unaudited, balance sheets, and statements of income and expense,
cash flow and of stockholders' equity for the Parent Guarantor and its
Subsidiaries for such Fiscal Year, and the accompanying notes thereto, setting
forth in each case in comparative form figures for the previous Fiscal Year, all
in reasonable detail, fairly presenting the financial position and the results
of operations of the Parent Guarantor and its consolidated Subsidiaries as at
the date thereof and for the Fiscal Year then ended, and prepared in accordance
with GAAP. Such audited statements shall be examined in accordance with
generally accepted auditing standards by and, in the case of such statements
performed on a consolidated basis, accompanied by a report thereon unqualified
as to scope of Xxxxx Xxxxxxxx LLP or other independent certified public
accountants selected by the Parent Guarantor and reasonably satisfactory to the
Agent. The Parent Guarantor, simultaneously with retaining such independent
public accountants to conduct such annual audit, shall send a letter to such
accountants, with a copy to the Agent and the Lenders, notifying such
accountants that one of the primary purposes for retaining such accountants'
services and having audited financial statements prepared by them is for use by
the Agent and the Lenders. Each Loan Party hereby authorizes the Agent to
communicate directly with its certified public accountants and, by this
provision, authorizes those accountants to disclose to the Agent any and all
financial statements and other supporting financial documents and schedules
relating to the Borrower and to discuss directly with the Agent the finances and
affairs of the Parent Guarantor and its Subsidiaries.
(b) As soon as available, but in any event not later than forty-five
(45) days after the end of each month, consolidated unaudited balance sheets of
the Parent Guarantor and its consolidated Subsidiaries as at the end of such
month, and consolidated unaudited statements of income and expense and cash flow
for the Parent Guarantor and its consolidated Subsidiaries for such month and
for the period from the beginning of the Fiscal Year to the end of such month,
all in reasonable detail, fairly presenting the financial position and results
of operations of the Parent Guarantor and its consolidated Subsidiaries as at
the date thereof and for such periods, and prepared in accordance with GAAP
applied consistently with the audited Financial Statements required to be
delivered pursuant to SECTION 7.2(a) (provided that such statements may omit
earnings per share amounts, footnotes and other disclosure items otherwise
required by GAAP). The Parent Guarantor shall certify by a certificate signed by
its chief financial officer that all such statements have been prepared in
accordance with GAAP and present fairly, subject to normal year-end adjustments,
the Parent Guarantor's and its consolidated Subsidiaries' financial position as
at the dates thereof and its results of operations for the periods then ended.
55
(c) As soon as available, but in any event not later than forty-five
(45) days after the close of each fiscal quarter other than the fourth quarter
of a Fiscal Year, consolidated and consolidating unaudited balance sheets of the
Parent Guarantor and its consolidated Subsidiaries as at the end of such
quarter, and consolidated and consolidating unaudited statements of income and
expense and statement of cash flows for the Parent Guarantor and its
Subsidiaries for such quarter and for the period from the beginning of the
Fiscal Year to the end of such quarter, all in reasonable detail, fairly
presenting the financial position and results of operation of the Parent
Guarantor and its Subsidiaries as at the date thereof and for such periods,
prepared in accordance with GAAP consistent with the audited Financial
Statements required to be delivered pursuant to SECTION 7.2(a) (provided that
such statements may omit those footnotes and other GAAP disclosures which are
not required to be included in quarterly interim financial statements). The
Parent Guarantor shall certify by a certificate signed by its chief financial
officer that all such statements have been prepared in accordance with GAAP and
present fairly, subject to normal year-end adjustments, the Parent Guarantor's
and its consolidated Subsidiaries' financial position as at the dates thereof
and its results of operations for the periods then ended.
(d) With each of the audited Financial Statements delivered pursuant to
SECTION 7.2(a), a certificate of the independent certified public accountants
that examined such statement to the effect that they have reviewed and are
familiar with this Agreement and that, in examining such Financial Statements,
they did not become aware of any fact or condition which then constituted a
Default or Event of Default, except for those, if any, described in reasonable
detail in such certificate.
(e) With each of the annual audited Financial Statements delivered
pursuant to SECTION 7.2(a), and within forty-five (45) days after the end of
each fiscal quarter, a certificate of the chief financial officer of the Parent
Guarantor (i) setting forth in reasonable detail the calculations required to
establish that the Loan Parties were in compliance with the covenants set forth
in SECTION 9.23 THROUGH 9.26 during the period covered in such Financial
Statements and as at the end thereof, (ii) stating that, except as explained in
reasonable detail in such certificate, (A) all of the representations and
warranties of the Loan Parties contained in this Agreement and the other Loan
Documents are correct and complete in all material respects as at the date of
such certificate as if made at such time, except for those that speak as of a
particular day, (B) each Loan Party is, at the date of such certificate, in
compliance in all material respects with all of its respective covenants and
agreements in this Agreement and the other Loan Documents, (C) no Default or
Event of Default then exists or existed during the period covered by such
Financial Statements, (D) describing and analyzing in reasonable detail all
material trends, changes, and developments in each and all Financial Statements;
and (E) explaining the variances of the figures in the corresponding budgets and
prior Fiscal Year financial statements, and (iii) setting forth in reasonable
detail a summary of all pending suits, proceedings or counterclaims, including
all reserves taken with respect thereto. If such certificate discloses that a
representation or warranty is not correct or complete in any material respect,
or that a covenant has not been complied with, or that a Default or Event of
Default existed or exists, such certificate shall set forth what action the
Borrower has taken or proposes to take with respect thereto.
(f) No sooner than sixty (60) days prior to, and not later than
eighty-five (85) days after, the beginning of each Fiscal Year, annual forecasts
(to include forecasted consolidated and consolidating balance sheets, statements
of income and expenses and statements of cash flow) for the Parent Guarantor and
its Subsidiaries as at the end of and for each month of such Fiscal Year.
56
(g) Promptly after filing with the PBGC and the IRS, a copy of each
annual report or other filing filed with respect to each Plan of the Parent
Guarantor or any of its ERISA Affiliates.
(h) Promptly upon the filing thereof, copies of all reports, if any, to
or other documents filed by the Parent Guarantor or any of its Subsidiaries with
the Securities and Exchange Commission under the Exchange Act, and all reports,
notices, or statements sent or received by the Parent Guarantor or any of its
Subsidiaries to or from the holders of any equity interests of the Parent
Guarantor (other than routine non-material correspondence sent by shareholders
of the Parent Guarantor to the Parent Guarantor) or any such Subsidiary or of
any Funded Debt of the Parent Guarantor or any of its Subsidiaries registered
under the Securities Act of 1933 or to or from the trustee under any indenture
under which the same is issued.
(i) As soon as available, but in any event not later than 15 days after
the Parent Guarantor's receipt thereof, a copy of all management reports and
management letters prepared for the Parent Guarantor by Xxxxx Xxxxxxxx LLP or
any other independent certified public accountants of the Parent Guarantor.
(j) Promptly after their preparation, copies of any and all proxy
statements, financial statements, and reports which the Parent Guarantor makes
available to its shareholders.
(k) Promptly after filing with the IRS, a copy of each tax return filed
by the Parent Guarantor or by any of its Subsidiaries.
(l) Such additional information as the Agent and/or any Lender may from
time to time reasonably request regarding the financial and business affairs of
the Parent Guarantor or any Subsidiary.
7.3 NOTICES TO THE LENDERS. Each Loan Party shall notify the Agent and the
Lenders, in writing of the following matters at the following times:
(a) Within one Business Day after a responsible officer of the Parent
Guarantor becomes aware of any Default or Event of Default.
(b) Within one Business Day after a responsible officer of the Parent
Guarantor becomes aware of the assertion by the holder of any capital stock of
the Parent Guarantor or Subsidiary thereof or of any Debt that a default exists
with respect thereto or that the Parent Guarantor or any Subsidiary thereof is
not in compliance with the terms thereof, or the threat or commencement by such
holder of any enforcement action because of such asserted default or
non-compliance.
(c) Within one Business Day after a responsible officer of the Parent
Guarantor becomes aware of any Material Adverse Effect.
(d) Within one Business Day after a responsible officer of the Parent
Guarantor becomes aware of any pending action, suit, proceeding, or counterclaim
by any Person which may have a Material Adverse Effect, or any pending or
threatened investigation by a Governmental Authority, in each case with respect
to any Loan Party or any portion of the Collateral.
57
(e) Within one Business Day after a responsible officer of the Parent
Guarantor becomes aware of any pending or threatened strike, work stoppage,
unfair labor practice claim, or other labor dispute affecting the Parent
Guarantor or any of its Subsidiaries in a manner which could reasonably be
expected to have a Material Adverse Effect.
(f) Within one Business Day after a responsible officer of the Parent
Guarantor becomes aware of any violation of any law, statute, regulation, or
ordinance of a Governmental Authority affecting the Parent Guarantor or any
Subsidiary which could reasonably be expected to have a Material Adverse Effect.
(g) Within one Business Day after a responsible officer of the Parent
Guarantor receives any notice of any violation by the Parent Guarantor or any of
its Subsidiaries of any Environmental Law which could reasonably be expected to
have a Material Adverse Effect or that any Governmental Authority has asserted
that the Parent Guarantor or any Subsidiary thereof is not in compliance with
any Environmental Law or is investigating the Parent Guarantor's or such
Subsidiary's compliance therewith, and such non-compliance could reasonably be
expected to have a Material Adverse Effect.
(h) Within one Business Day after a responsible officer of the Parent
Guarantor receives any written notice that the Parent Guarantor or any of its
Subsidiaries is or may be liable to any Person as a result of the Release or
threatened Release of any Contaminant or that the Borrower or any Subsidiary is
subject to investigation by any Governmental Authority evaluating whether any
remedial action is needed to respond to the Release or threatened Release of any
Contaminant which, in either case, is reasonably likely to give rise to
liability in excess of $1,000,000.
(i) Within one Business Day after a responsible officer of the Parent
Guarantor receives any written notice of the imposition of any Environmental
Lien against any property of the Parent Guarantor or any of its Subsidiaries.
(j) Any change in any Loan Party's name, state of incorporation, or
form of organization, trade names under which any Loan Party will sell Inventory
or create Accounts, or to which instruments in payment of Accounts may be made
payable, in each case at least thirty (30) days prior thereto.
(k) Within ten (10) Business Days after a responsible officer of the
Parent Guarantor or any ERISA Affiliate knows or has reason to know, that an
ERISA Event or a prohibited transaction (as defined in Sections 406 of ERISA and
4975 of the Code) has occurred, and, when known, any action taken or threatened
by the IRS, the DOL or the PBGC with respect thereto.
(l) Upon request, or, in the event that such filing reflects a
significant change with respect to the matters covered thereby, within three (3)
Business Days after the filing thereof with the PBGC, the DOL or the IRS, as
applicable, copies of the following: (i) each annual report (form 5500 series),
including Schedule B thereto, filed with the PBGC, the DOL or the IRS with
respect to each Plan, (ii) a copy of each funding waiver request filed with the
PBGC, the DOL or the IRS with respect to any Plan and all communications
received by the Parent Guarantor or any ERISA Affiliate from the PBGC, the DOL
or the IRS with respect to such request, and (iii) a copy of each other filing
or notice filed with the PBGC, the DOL or the IRS, with respect to each Plan of
either Borrower or any ERISA Affiliate.
58
(m) Upon request, copies of each actuarial report for any Plan or
Multi-employer Plan and annual report for any Multi-employer Plan; and within
three (3) Business Days after receipt thereof by the Borrower or any ERISA
Affiliate, copies of the following: (i) any notices of the PBGC's intention to
terminate a Plan or to have a trustee appointed to administer such Plan; (ii)
any favorable or unfavorable determination letter from the IRS regarding the
qualification of a Plan under Section 401(a) of the Code; or (iii) any notice
from a Multi-employer Plan regarding the imposition of withdrawal liability.
(n) Within three (3) Business Days after the occurrence thereof: (i)
any changes in the benefits of any existing Plan which increase the Parent
Guarantor's annual costs with respect thereto by an amount in excess of
$1,000,000, or the establishment of any new Plan or the commencement of
contributions to any Plan to which the Parent Guarantor or any ERISA Affiliate
was not previously contributing; or (ii) any failure by the Parent Guarantor or
any ERISA Affiliate to make a required installment or any other required payment
under Section 412 of the Code on or before the due date for such installment or
payment.
(o) Within three (3) Business Days after a responsible officer of the
Parent Guarantor or any ERISA Affiliate knows or has reason to know that any of
the following events has or will occur: (i) a Multi-employer Plan has been or
will be terminated; (ii) the administrator or plan sponsor of a Multi-employer
Plan intends to terminate a Multi-employer Plan; or (iii) the PBGC has
instituted or will institute proceedings under Section 4042 of ERISA to
terminate a Multi-employer Plan.
(p) Without limiting SECTION 6.12, within one Business Day after a
responsible officer of the Parent Guarantor becomes aware of any (i) failure by
a Loan Party to comply with the terms of any Material License Agreement, (ii)
failure of a Material License Agreement to be in full force and effect and (iii)
any material modification or amendment to any Material License Agreement.
Each notice given under this Section shall describe the subject matter
thereof in reasonable detail, and shall set forth the action that the Parent
Guarantor, its Subsidiary, or any ERISA Affiliate, as applicable, has taken or
proposes to take, if any, with respect thereto.
ARTICLE 8
GENERAL WARRANTIES AND REPRESENTATIONS
Each Loan Party warrants and represents to the Agent and the Lenders
that except as hereafter disclosed to and accepted by the Agent and the Majority
Lenders in writing:
8.1 AUTHORIZATION, VALIDITY, AND ENFORCEABILITY OF THIS AGREEMENT AND THE
LOAN DOCUMENTS. Each Loan Party has the corporate power and authority to
execute, deliver and perform this Agreement and the other Loan Documents, to
incur the Obligations, and to grant to the Agent Liens upon and security
interests in the Collateral. Each Loan Party has taken all necessary corporate
action (including, without limitation, obtaining approval of its stockholders if
necessary) to authorize its execution, delivery, and performance of this
Agreement and the other Loan Documents to which it is a party. This Agreement
and the other Loan Documents have been duly executed and delivered by it, and
constitute the legal, valid and binding obligations of it, enforceable against
it in accordance with their respective terms without defense, setoff or
counterclaim, except as enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization or similar laws affecting the rights of
creditors generally or by general principles of equity. The Loan Party's
execution, delivery,
59
and performance of this Agreement and the other Loan Documents, and the
incurrence of any Debt and the granting of the Liens hereunder and under the
other Loan Documents, do not and will not conflict with, or constitute a
violation or breach of, or constitute a default under, or result in the creation
or imposition of any Lien (other than the Agent's Lien) upon the property of the
Loan Party or any of its Subsidiaries by reason of the terms of (a) any
contract, mortgage, Lien, lease, agreement, indenture, or instrument to which
the Loan Party is or any of its Subsidiaries is a party or which is binding upon
it, including under the Senior Notes, the Subordinated Debt or any indenture,
loan agreement, note purchase agreement or other document related thereto, (b)
any Requirement of Law applicable to the Loan Party or any of its Subsidiaries,
or (c) the certificate or articles of incorporation or by-laws of the Loan
Parties or any of its Subsidiaries.
8.2 VALIDITY AND PRIORITY OF SECURITY INTEREST. The provisions of this
Agreement and the other Loan Documents create legal and valid Liens on all the
Collateral in favor of the Agent, for the ratable benefit of the Agent and the
Lenders, and such Liens constitute perfected and continuing Liens on all the
Collateral, having priority over all other Liens on the Collateral (except for
Liens described in clause (a), (d), or (j) of the definition of Permitted Liens,
securing all the Obligations, and enforceable against the Loan Party and all
third parties.
8.3 ORGANIZATION AND QUALIFICATION. Each Loan Party (a) is duly
incorporated and organized and validly existing in good standing under the laws
of the state of its incorporation, (b) is qualified to do business as a foreign
corporation and is in good standing in the jurisdictions set forth on SCHEDULE
8.3 which, except as set forth in SCHEDULE 8.3, are the only jurisdictions in
which failure to so qualify or be in good standing could reasonably be expected
to have a material adverse effect on such Loan Party's business, operations,
prospects, property or condition (financial or otherwise) or on the value or
collectibility of any Collateral and (c) has all requisite power and authority
to conduct its business and to own its property.
8.4 CORPORATE NAME; PRIOR TRANSACTIONS. No Loan Party has, during the past
five (5) years, been known by or used any other corporate or fictitious name, or
been a party to any merger or consolidation, or acquired all or substantially
all of the assets of any Person, or acquired any of its property outside of the
ordinary course of business, except in each case as set forth on SCHEDULE 8.4.
8.5 SUBSIDIARIES AND AFFILIATES. SCHEDULE 8.5 is a correct and complete
list of the name and relationship (including the ownership of Capital Stock with
respect thereto) to the Parent Guarantor of each and all of its Subsidiaries and
other Affiliates. Each Subsidiary is (a) duly incorporated and organized and
validly existing in good standing under the laws of its state of incorporation
set forth on SCHEDULE 8.3, and (b), except as set forth in SCHEDULE 8.3,
qualified to do business as a foreign corporation and in good standing in each
jurisdiction in which the failure to so qualify or be in good standing could
reasonably be expected to have a material adverse effect on any such
Subsidiary's business, operations, prospects, property, or condition (financial
or otherwise) or on the value or the collectibility of any Collateral and (c)
has all requisite power and authority to conduct its business and own its
property.
8.6 FINANCIAL STATEMENTS AND PROJECTIONS.
(a) The Parent Guarantor has delivered to the Agent and the Lenders the
audited balance sheet and related statements of income, retained earnings, cash
flows, and changes in stockholders equity for the Parent Guarantor and its
consolidated Subsidiaries as of December 31, 2000, and for the Fiscal Year then
ended, accompanied by the report thereon of the Parent Guarantor's independent
certified public accountants, Xxxxx Xxxxxxxx LLP. The Parent Guarantor
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has also delivered to the Agent and the Lenders the unaudited balance sheet and
related statements of income and cash flows for the Parent Guarantor and its
consolidated Subsidiaries as of March 31, 2001. Such financial statements are
attached hereto as EXHIBIT C. All such financial statements have been prepared
in accordance with GAAP and present accurately and fairly the financial position
of the Parent Guarantor and its consolidated Subsidiaries as at the dates
thereof and their results of operations for the periods then ended.
(b) The Latest Projections when submitted to the Lenders as required
herein represent the Parent Guarantor's best estimate of the future financial
performance of the Parent Guarantor and its consolidated Subsidiaries for the
periods set forth therein. The Latest Projections have been prepared on the
basis of the assumptions set forth therein, which the Parent Guarantor believes
are fair and reasonable in light of current and reasonably foreseeable business
conditions at the time submitted to the Lender.
8.7 CAPITALIZATION. The Parent Guarantor's authorized capital stock
consists of (i) 40,000,000 shares of common stock, par value $.01 per share, of
which 9,452,250 shares are validly issued and outstanding as of June 22, 2001,
fully paid and non-assessable and not less than 47% of which outstanding shares
are owned beneficially and of record, in the aggregate, by the Principals, and
(ii) 5,000,000 shares of preferred stock, par value $.01 per share, of which
none are issued and outstanding. The Parent Guarantor owns directly or
indirectly 100% of the issued and outstanding Capital Stock of each other Loan
Party.
8.8 SOLVENCY. Each Loan Party is Solvent prior to and after giving effect
to the making of the Revolving Loans to be made on the Closing Date and on the
date of each Loan thereafter and the issuance of the Letters of Credit to be
issued on the Closing Date and on any date thereafter, and shall remain Solvent
during the term of this Agreement.
8.9 DEBT. After giving effect to the making of the Revolving Loans to be
made on the Closing Date, the Loan Party and its Subsidiaries have no Debt,
except (a) the Obligations, (b) the Senior Notes, the Subordinated Debt and the
other Debt described on SCHEDULE 8.9, and (c) trade payables and other
contractual obligations arising in the ordinary course of business.
8.10 DISTRIBUTIONS. Since December 31, 2000, no Distribution has been
declared, paid, or made upon or in respect of any Capital Stock or other
securities of the Parent Guarantor.
8.11 TITLE TO PROPERTY. Each Loan Party has good, indefeasible, and
merchantable title to all of its property (including, without limitation, the
assets reflected on the December 31, 2000 Financial Statements delivered to the
Agent and the Lenders, except as disposed of in the ordinary course of business
since the date thereof), free of all Liens except Permitted Liens.
8.12 REAL ESTATE; LEASES. SCHEDULE 8.12 sets forth, as of the Closing Date,
a correct and complete list of all leases and subleases of real or personal
property by the Loan Party or its Subsidiaries as lessee or sublessee (other
than leases of personal property as to which the Loan Party is lessee or
sublessee for which the value of such personal property is less than $100,000),
and all leases and subleases of real or personal property by the Loan Party or
its Subsidiaries as lessor, lessee, sublessor or sublessee. Each of such leases
and subleases is valid and enforceable in accordance with its terms and is in
full force and effect, and, to the best of such Loan Party's knowledge, no
default by any party to any such lease or sublease exists. No Loan Party owns or
has contracted to acquire a fee interest in any real property as of the Closing
Date.
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8.13 PROPRIETARY RIGHTS. SCHEDULE 8.13 sets forth a correct and complete
list of all of the Loan Parties' material Proprietary Rights. None of the
material Proprietary Rights is subject to any licensing agreement or similar
arrangement except as set forth on SCHEDULE 8.13. To the best of any Loan
Party's knowledge, none of the Proprietary Rights infringes on or conflicts with
any other Person's property, and no other Person's property infringes on or
conflicts with the Proprietary Rights. The Proprietary Rights described on
SCHEDULE 8.13 constitute all of the property of such type necessary to the
current and anticipated future conduct of the each Loan Party's business.
8.14 TRADE NAMES AND TERMS OF SALE. All trade names or styles under which
the Loan Party or any of its Subsidiaries will sell Inventory or create
Accounts, or to which instruments in payment of Accounts may be made payable,
are listed on SCHEDULE 8.14.
8.15 LITIGATION. Except as set forth on SCHEDULE 8.15, there is no pending
or (to the best of any Loan Party's knowledge) threatened, action, suit,
proceeding, or counterclaim by any Person, or investigation by any Governmental
Authority which could reasonably be expected to cause a Material Adverse Effect.
8.16 RESTRICTIVE AGREEMENTS. Neither the Loan Party nor any of its
Subsidiaries is a party to any contract or agreement, or subject to any charter
or other corporate restriction, which affects its ability to execute, deliver,
and perform the Loan Documents and repay the Obligations or which materially and
adversely affects or, insofar as any Loan Party can reasonably foresee, could
reasonably be expected to materially and adversely affect, the property,
business, operations, or condition (financial or otherwise) of the Loan Party or
such Subsidiary, or would otherwise in any respect cause a Material Adverse
Effect.
8.17 LABOR DISPUTES. Except as set forth on SCHEDULE 8.17, (a) there is no
collective bargaining agreement or other labor contract covering employees of
the Loan Party or any of its Subsidiaries, (b) no such collective bargaining
agreement or other labor contract is scheduled to expire during the term of this
Agreement, (c) to the best of such Loan Party's knowledge, no union or other
labor organization is seeking to organize, or to be recognized as, a collective
bargaining unit of employees of the Loan Party or any of its Subsidiaries or for
any similar purpose, and (d) there is no pending or (to the best of any Loan
Party's knowledge) threatened, strike, work stoppage, material unfair labor
practice claim, or other material labor dispute against or affecting the Loan
Party or its Subsidiaries or their employees.
8.18 ENVIRONMENTAL LAWS. Except as otherwise disclosed on SCHEDULE 8.18:
(a) The Loan Party and its Subsidiaries have complied in all material
respects with all Environmental Laws applicable to its business, and neither the
Loan Party nor any Subsidiary nor, to the best of such Loan Party's knowledge,
any of its present Premises or operations, nor, to the best of such Loan Party's
knowledge, its past property or operations, is subject to any enforcement order
from or liability agreement with any Governmental Authority or private Person
respecting (i) compliance with any Environmental Law or (ii) any potential
liabilities and costs or remedial action arising from the Release or threatened
Release of a Contaminant.
(b) The Loan Party and its Subsidiaries have obtained all permits
necessary for their current operations under Environmental Laws, and all such
permits are in good standing and the Loan Party and its Subsidiaries are in
material compliance with all terms and conditions of such permits.
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(c) Neither the Loan Party nor any of its Subsidiaries, nor, to the
best of any Loan Party's knowledge, any of its predecessors in interest, has in
violation of applicable law stored, treated or disposed of any hazardous waste,
as defined pursuant to 40 CFR Part 261 or any equivalent Environmental Law.
(d) Neither the Loan Party nor any of its Subsidiaries has received any
summons, complaint, order or similar written notice that it is not currently in
compliance with, or that any Governmental Authority is investigating its
compliance with, any Environmental Laws or that it is or may be liable to any
other Person as a result of a Release or threatened Release of a Contaminant.
(e) To the best of such Loan Party's knowledge, none of the present or
past operations of the Loan Party and its Subsidiaries is the subject of any
investigation by any Governmental Authority evaluating whether any remedial
action is needed to respond to a Release or threatened Release of a Contaminant.
(f) [INTENTIONALLY OMITTED]
(g) Neither the Loan Party nor any of its Subsidiaries has filed any
notice under any requirement of Environmental Law reporting a spill or
accidental and unpermitted release or discharge of a Contaminant into the
environment.
(h) Neither the Loan Party nor any of its Subsidiaries has entered into
any negotiations or settlement agreements with any Person (including, without
limitation, the prior owner of its property) imposing material obligations or
liabilities on the Loan Party or any of its Subsidiaries with respect to any
remedial action in response to the Release of a Contaminant or environmentally
related claim (other than customary indemnities under leases with respect to
which no claim has arisen thereunder).
(i) None of the products manufactured, distributed or sold by the Loan
Party or any of its Subsidiaries contain asbestos containing material.
(j) No Environmental Lien has attached to any property of the Loan
Party or any of its Subsidiaries.
8.19 NO VIOLATION OF LAW. Neither the Loan Party nor any of its Subsidiaries
is in violation of any law, statute, regulation, ordinance, judgment, order, or
decree applicable to it which violation could reasonably be expected to have a
Material Adverse Effect.
8.20 NO DEFAULT. Neither the Loan Party nor any of its Subsidiaries is in
default with respect to any note, indenture, loan agreement, mortgage, lease,
deed, or other agreement to which the Loan Party or such Subsidiary is a party
or by which it is bound, which default could reasonably be expected to have a
Material Adverse Effect.
8.21 ERISA COMPLIANCE. Except as specifically disclosed in SCHEDULE 8.21:
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state law. Each
Plan which is intended to qualify under Section 401(a) of the Code has received
a favorable determination letter from the IRS and to the best knowledge of any
Loan Party, nothing has occurred which would cause the loss of such
qualification. The Loan Party and each ERISA Affiliate has made all required
contributions to any
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Plan subject to Section 412 of the Code, and no application for a funding waiver
or an extension of any amortization period pursuant to Section 412 of the Code
has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of any Loan Party,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan which has resulted or could reasonably be expected to
result in a Material Adverse Effect. There has been no prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan which
has resulted or could reasonably be expected to result in a Material Adverse
Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected to occur;
(ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither the Loan
Party nor any ERISA Affiliate has incurred, or reasonably expects to incur, any
liability under Title IV of ERISA with respect to any Pension Plan (other than
premiums due and not delinquent under Section 4007 of ERISA); (iv) neither the
Loan Party nor any ERISA Affiliate has incurred, or reasonably expects to incur,
any liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under Section 4201 or
4243 of ERISA with respect to a Multi-employer Plan; and (v) neither the Loan
Party nor any ERISA Affiliate has engaged in a transaction that could be subject
to Section 4069 or 4212(c) of ERISA.
8.22 TAXES. The Loan Party and its Subsidiaries have filed all federal and
other tax returns and reports required to be filed, and have paid all federal
and other taxes, assessments, fees and other governmental charges levied or
imposed upon them or their properties, income or assets otherwise due and
payable.
8.23 REGULATED ENTITIES. None of the Borrower, any Person controlling the
Loan Party, or any Subsidiary of it, is an "Investment Company" within the
meaning of the Investment Company Act of 1940. No Loan Party is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act, any state public utilities code or law,
or any other federal or state statute or regulation limiting its ability to
incur indebtedness.
8.24 USE OF PROCEEDS; MARGIN REGULATIONS. The proceeds of the Loans are to
be used solely for working capital purposes. Neither the Loan Party nor any
Subsidiary of it is engaged in the business of purchasing or selling Margin
Stock or extending credit for the purpose of purchasing or carrying Margin
Stock.
8.25 COPYRIGHTS, PATENTS, TRADEMARKS AND LICENSES. Each Loan Party owns or
is licensed or otherwise has the right to use all of the patents, trademarks,
service marks, trade names, copyrights, contractual franchises, authorizations
and other rights that are reasonably necessary for the operation of its
businesses, without conflict with the rights of any other Person (but subject to
the limitations contained in the Material License Agreements). To the best
knowledge of any Loan Party, no Proprietary Rights, and no slogan or other
advertising device, product, process, method, substance, part or other material
now employed, or now contemplated to be employed, by the Loan Party or any
Subsidiary infringes upon any valid rights held by any other Person. No
meritorious claim or litigation regarding any of the foregoing is pending or, to
the best of such Loan Party's knowledge, threatened, and no patent, invention,
device, application, principle or any statute, law, rule, regulation, standard
or code is pending or, to the knowledge of any Loan Party, proposed, which, in
either case, could reasonably be expected to have a Material Adverse Effect.
8.26 NO MATERIAL ADVERSE EFFECT. No Material Adverse Effect has occurred
since the date of the most recent Financial Statements delivered to the Lender.
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8.27 FULL DISCLOSURE. None of the representations or warranties made by the
Loan Party or any Subsidiary of it in the Loan Documents as of the date such
representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate furnished
by or on behalf of the Loan Party or any Subsidiary of it in connection with the
Loan Documents (including the offering and disclosure materials delivered by or
on behalf of the Loan Party to the Lenders prior to the Closing Date), contains
any untrue statement of a material fact or omits any material fact required to
be stated therein or necessary to make the statements made therein, in light of
the circumstances under which they are made, not misleading as of the time when
made or delivered.
8.28 MATERIAL AGREEMENTS. SCHEDULE 8.28 hereto sets forth all material
agreements and contracts to which the Loan Party or any of its Subsidiaries is a
party or is bound as of the date hereof.
8.29 BANK ACCOUNTS. SCHEDULE 8.29 contains a complete and accurate list of
all bank accounts maintained by the Loan Party or any of its Subsidiaries with
any bank or other financial institution.
8.30 GOVERNMENTAL AUTHORIZATION. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority or other Person is necessary or required in connection
with the execution, delivery or performance by, or enforcement against, the Loan
Party or any of its Subsidiaries of this Agreement or any other Loan Document.
ARTICLE 9
AFFIRMATIVE AND NEGATIVE COVENANTS
Each Loan Party covenants to the Agent and each Lender that, so long as
any of the Obligations remain outstanding or this Agreement is in effect:
9.1 TAXES AND OTHER OBLIGATIONS. The Loan Party shall, and shall cause each
of its Subsidiaries to, (a) file when due (after giving effect to extensions
obtained in accordance with applicable law) all tax returns and other reports
which it is required to file; (b) pay, or provide for the payment, when due, of
all taxes, fees, assessments and other governmental charges against it or upon
its property, income and franchises, make all required withholding and other tax
deposits, and establish adequate reserves for the payment of all such items, and
provide to the Agent and the Lenders, upon request, satisfactory evidence of its
timely compliance with the foregoing; and (c) pay when due all Debt owed by it
and all claims of materialmen, mechanics, carriers, warehousemen, landlords,
processors and other like Persons, and all other Debt owed by it and perform and
discharge in a timely manner all other obligations undertaken by it; PROVIDED,
HOWEVER, so long as the Loan Party has notified the Agent in writing, neither
the Loan Party nor any of its Subsidiaries need pay any tax, fee, assessment, or
governmental charge, or claims or Debt described in clause (b) or (c), that (i)
it is contesting in good faith by appropriate proceedings diligently pursued,
(ii) the Loan Party or its Subsidiary, as the case may be, has established
proper reserves for as provided in GAAP, and (iii) no Lien (other than a
Permitted Lien) results from such non-payment.
9.2 CORPORATE EXISTENCE AND GOOD STANDING. Except as permitted in SECTION
9.9, the Loan Party shall, and shall cause each of its Subsidiaries to, maintain
its corporate existence and its
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qualification and good standing in all jurisdictions in which the failure to
maintain such existence and qualification or good standing could reasonably be
expected to have a Material Adverse Effect.
9.3 COMPLIANCE WITH LAW AND AGREEMENTS; MAINTENANCE OF LICENSES. The Loan
Party shall comply, and shall cause each Subsidiary to comply, in all material
respects with all Requirements of Law of any Governmental Authority having
jurisdiction over it or its business (including the Federal Fair Labor Standards
Act). The Loan Party shall, and shall cause each of its Subsidiaries to, obtain
and maintain all licenses, permits, franchises, and governmental authorizations
necessary to own its property and to conduct its business as conducted on the
Closing Date, the failure to obtain or loss of which would reasonably be
expected to result in a Material Adverse Effect. No Loan Party shall modify,
amend or alter its certificate or article of incorporation other than in a
manner which does not adversely affect the rights of the Lenders or the Agent.
9.4 MAINTENANCE OF PROPERTY. The Loan Party shall, and shall cause each of
its Subsidiaries to, maintain all of its property necessary and useful in the
conduct of its business, in good operating condition and repair, ordinary wear
and tear excepted.
9.5 INSURANCE.
(a) The Loan Party shall maintain, and shall cause each of its
Subsidiaries to maintain, with financially sound and reputable insurers having a
rating of at least A-VII or better by Best Rating Guide, insurance against loss
or damage by fire with extended coverage; theft, burglary, pilferage and loss in
transit; public liability and third party property damage; larceny, embezzlement
or other criminal liability; business interruption; public liability and third
party property damage; and such other hazards or of such other types as is
customary for Persons engaged in the same or similar business, as the Agent, in
its discretion, or acting at the direction of the Majority Lenders, shall
specify, in amounts, and under policies reasonably acceptable to the Agent and
the Majority Lenders (it being agreed that the amounts of insurance now being
maintained by the Loan Parties, as described on SCHEDULE 9.5 hereof, is
acceptable to the Agent and the Majority Lenders). Without limiting the
foregoing, the Loan Party shall also maintain, and shall cause each of its
Subsidiaries to maintain, flood insurance, in the event of a designation of the
area in which any Real Estate covered by the Mortgages and any of the Equipment
and Inventory located on such Real Estate is located as "flood prone" or a
"flood risk area," (hereinafter "SFHA") as defined by the Flood Disaster
Protection Act of 1973, in an amount to be reasonably determined by the Agent,
and shall comply with the additional requirements of the National Flood
Insurance Program as set forth in said Act. The Borrower shall also maintain
flood insurance for its Inventory and Equipment which is, at any time, located
in a SFHA.
(b) The Loan Party shall cause the Agent, for the ratable benefit of
the Agent and the Lenders, to be named in each such policy as secured party or
mortgagee and sole loss payee or additional insured, in a manner acceptable to
the Agent. Each policy of insurance shall contain a clause or endorsement
requiring the insurer to give not less than thirty (30) days' prior written
notice to the Agent in the event of cancellation of the policy for any reason
whatsoever and a clause or endorsement stating that the interest of the Agent
shall not be impaired or invalidated by any act or neglect of the Loan Party or
any of its Subsidiaries or the owner of any premises for purposes more hazardous
than are permitted by such policy. All premiums for such insurance shall be paid
by the Borrower when due, and certificates of insurance and, if requested by the
Agent or any Lender, photocopies of the policies, shall be delivered to the
Agent, in each case in sufficient quantity for distribution by the Agent to each
of the Lenders. If the Loan Party fails to procure such insurance or
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to pay the premiums therefor when due, the Agent may, and at the direction of
the Majority Lenders shall, do so from the proceeds of Revolving Loans.
(c) The Loan Party shall promptly notify the Agent and the Lenders of
any loss, damage, or destruction to the Collateral arising from its use, whether
or not covered by insurance. The Agent is hereby authorized to collect all
insurance proceeds directly, and to apply or remit them as follows:
(i) So long as there does not then exist any Default or Event
of Default, with respect to insurance proceeds relating to property
other than Collateral, after deducting from such proceeds the
reasonable expenses, if any, incurred by the Agent in the collection or
handling thereof, the Agent shall promptly remit to the Loan Party such
proceeds.
(ii) With respect to insurance proceeds relating to Collateral
other than Fixed Assets, or if a Default or Event of Default then
exists, after deducting from such proceeds the reasonable expenses, if
any, incurred by the Agent in the collection or handling thereof, the
Agent shall apply such proceeds, ratably, to the reduction of the
Obligations in the order provided for in SECTION 4.8.
(iii) With respect to insurance proceeds relating to
Collateral consisting of Fixed Assets, after deducting from such
proceeds the reasonable expenses, if any, incurred by the Agent in the
collection or handling thereof, the Agent shall apply such proceeds to
the permanent reduction of the Revolving Loans Commitment and the
payment of the Obligations in the order provided for in SECTION 4.8, or
at the option of the Majority Lenders or the Agent, may permit or
require the Borrower to use such money, or any part thereof, to
replace, repair, restore or rebuild the relevant Fixed Assets in a
diligent and expeditious manner with materials and workmanship of
substantially the same quality as existed before the loss, damage or
destruction; PROVIDED, HOWEVER, that so long as there does not then
exist any Default or Event of Default, the Borrower shall be permitted
to use insurance proceeds relating to Collateral consisting of Fixed
Assets in an aggregate amount not to exceed $1,000,000 with respect to
any occurrence, to replace, repair, restore or rebuild the relevant
Fixed Assets, in the manner set forth in this sentence; and PROVIDED,
FURTHER, that the Loan Party first (i) provides the Agent and the
Majority Lenders with plans and specifications for any such repair or
restoration, if any, which shall be reasonably satisfactory to the
Agent and the Majority Lenders and (ii) demonstrates to the reasonable
satisfaction of the Agent and the Majority Lenders that the funds
available to it (taking into account the insurance proceeds that will
be available) will be sufficient to complete such project in the manner
provided therein.
9.6 CONDEMNATION.
(a) The Loan Party shall, within one Business Day after a responsible
officer of the Parent Guarantor becomes aware of the institution of any
proceeding for the condemnation or other taking of any of its property, notify
the Agent of the pendency of such proceeding, and agrees that the Agent may
participate in any such proceeding, and the Loan Party from time to time will
deliver to the Agent all instruments reasonably requested by the Agent to permit
such participation.
(b) The Agent is hereby authorized to collect the proceeds of any
condemnation claim or award directly, and to apply or remit them as follows:
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(i) So long as there does not then exist any Default or Event
of Default, with respect to condemnation proceeds relating to property
other than Collateral, after deducting from such proceeds the
reasonable expenses, if any, incurred by the Agent in the collection or
handling thereof, the Agent shall remit to the Borrower such proceeds.
(ii) With respect to condemnation proceeds relating to
Collateral other than Fixed Assets, or if a Default or Event of Default
then exists, after deducting from such proceeds the reasonable
expenses, if any, incurred by the Agent in the collection or handling
thereof, the Agent shall apply such proceeds, ratably, to the reduction
of the Obligations in the order provided for in SECTION 4.8.
(iii) With respect to condemnation proceeds relating to
Collateral consisting of Fixed Assets, after deducting from such
proceeds the reasonable expenses, if any, incurred by the Agent in the
collection or handling thereof, the Agent shall apply such proceeds to
the permanent reduction of the Revolving Loan Commitment and the
payment of the Obligations in the order provided for in SECTION 4.8, or
at the option of the Majority Lenders or the Agent, may permit or
require the Loan Party to use such money, or any part thereof, to
replace, repair, restore or rebuild the relevant Fixed Assets in a
diligent and expeditious manner with materials and workmanship of
substantially the same quality as existed before the condemnation;
PROVIDED, HOWEVER, that so long as there does not then exist any
Default or Event of Default, the Borrower shall be permitted to use
proceeds relating to Collateral consisting of Fixed Assets in an
aggregate amount not to exceed $1,000,000 with respect to any
occurrence, to replace, repair, restore or rebuild the relevant Fixed
Assets, in the manner set forth in this sentence; and PROVIDED,
FURTHER, that plans and specifications for any such repair or
restoration, if any, shall be reasonably satisfactory to the Agent and
the Majority Lenders.
9.7 ENVIRONMENTAL LAWS.
(a) The Loan Party shall, and shall cause each of its Subsidiaries to,
conduct its business in compliance in all material respects with all
Environmental Laws applicable to it, including, without limitation, those
relating to the generation, handling, use, storage, and disposal of any
Contaminant. The Loan Party shall, and shall cause each of its Subsidiaries to,
take prompt and appropriate action to respond to any non-compliance with
Environmental Laws and shall regularly report to the Agent on such response.
(b) Without limiting the generality of the foregoing, the Loan Party
shall submit to the Agent and the Lenders annually, commencing on the first
Anniversary Date, and on each Anniversary Date thereafter, an update of the
status of each environmental compliance or liability issue. The Agent or any
Lender may request copies of technical reports prepared by the Loan Party and
its communications with any Governmental Authority to determine whether the
Borrower or any of its Subsidiaries is proceeding reasonably to correct, cure or
contest in good faith any alleged non-compliance or environmental liability.
Subject to any express limitations thereon contained in the terms of a lease for
Premises not owned by a Loan Party, the Loan Party shall, at the Agent's or the
Majority Lenders' request and at the Borrower's expense, (a) retain an
independent environmental engineer acceptable to the Agent to evaluate the site,
including tests if appropriate, where the non-compliance or alleged
non-compliance with Environmental Laws has occurred and prepare and deliver to
the Agent, in sufficient quantity for distribution by the Agent to the Lenders,
a report setting forth the results of such evaluation, a proposed plan for
responding to any environmental problems described therein, and an estimate of
the costs thereof, and (b) provide to the Agent and the
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Lenders a supplemental report of such engineer whenever the scope of the
environmental problems, or the response thereto or the estimated costs thereof,
shall change in any material respect.
9.8 COMPLIANCE WITH ERISA. The Loan Party shall, and shall cause each of
its ERISA Affiliates to: (a) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other federal or
state law; (b) cause each Plan which is qualified under Section 401(a) of the
Code to maintain such qualification; (c) make all required contributions to any
Plan subject to Section 412 of the Code; (d) not engage in a prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan; and (e) not engage in a transaction that could be subject to Section
4069 or 4212(c) of ERISA.
9.9 MERGERS, CONSOLIDATIONS OR SALES. Neither the Loan Party nor any of its
Subsidiaries shall enter into any transaction of merger, reorganization, or
consolidation, or transfer, sell, assign, lease, or otherwise dispose of all or
any part of its property, or wind up, liquidate or dissolve, or agree to do any
of the foregoing, except (i) for sales of Inventory in the ordinary course of
its business, (ii) for sales or other dispositions of Equipment in the ordinary
course of business that are obsolete or no longer useable by Loan Party in its
business as permitted by SECTION 6.11, (iii) a Subsidiary of Parent Guarantor,
or Fox Athletic LLC, may merge, reorganize or consolidate with or into, or
wind-up, liquidate or dissolve in a transaction whereby all of the assets of
such Subsidiary, or Fox Athletic LLC, are transferred to, another Subsidiary
which is wholly-owned by the Parent Guarantor or the Borrower so long as the
Borrower is the continuing or surviving Person, (iv) a Borrower may merge,
reorganize or consolidate into another, or transfer all of its assets and
liabilities to another, Borrower, (v) a Loan Party may transfer property to make
an investment of the type described in clauses (a) through (p) of the definition
of Restricted Investment as and to the extent permitted therein or to make
Distributions permitted under SECTION 9.10 below, and (vi) a Loan Party may
dispose of property in a bona fide arms' length transaction for cash
consideration at fair market value so long as the aggregate amount of
consideration for all dispositions from and including the date hereof does not
exceed $5,000,000 and on the last day of the quarter immediately preceding the
date of any such transfer, and after giving proforma effect to any such
transfer, the Parent Guarantor was in compliance by more than 120% of the
consolidated Net Worth required under SECTION 9.25 and by more than 120% of the
Fixed Charge Coverage Ratio required under SECTION 9.26; provided, HOWEVER, the
Parent Guarantor shall give the Agent not less than ten (10) Business Days prior
written notice of any such transaction described in clauses (iii) through (vi)
above setting forth the terms of and parties to such transaction in reasonable
detail, and certifying that it complies with the requirements of this Section,
and no such transaction described in clauses (ii) through (vi) above shall be
permitted if after giving effect thereto a Material Adverse Effect could
reasonably be expected to result therefrom or any other Default or Event of
Default has occurred and is continuing or would result therefrom; and PROVIDED,
FURTHER, that, in the case of any such transaction described in clause (iii) or
(iv) above, the applicable continuing, surviving or transferee Person (the
"Successor") shall deliver not less than ten (10) Business Days prior to the
consummation of such transaction an agreement in form and substance satisfactory
to the Agent whereby the Successor agrees to assume and be bound by all of the
other Person's obligations under this Agreement and all other Loan Documents, an
opinion of counsel reasonably satisfactory to the Agent with respect to such
agreement, the continued perfection of all Liens granted hereunder and under the
other Loan Documents to the Agent in all Collateral which is the subject of such
transfer and as to all other matters reasonably requested by the Agent, and such
other documents and take such other actions as the Agent or the Majority Lenders
may reasonably request. Without limiting the foregoing, the Parent Guarantor
shall at all times own, directly or indirectly, 100% of the issued and
outstanding Capital Stock of each other Loan Party, and no Loan Party shall
dispose of any interest in any Capital Stock of any other Loan Party held by it.
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9.10 DISTRIBUTIONS; CAPITAL CHANGE; RESTRICTED INVESTMENTS. Neither the Loan
Party nor any of its Subsidiaries shall (i) directly or indirectly declare or
make, or incur any liability to make, any Distribution, except Distributions to
the Borrower by its Subsidiaries and, so long as no Default or Event of Default
has occurred and is continuing or would result therefrom, (y) Distributions to
the Parent Guarantor to make scheduled payments of interest on the Senior Notes
and scheduled payments of principal and interest on the Subordinated Debt or to
effect the Redemption as expressly permitted by the terms of SCHEDULE 9.14
hereto, and (z) Distributions by the Parent Guarantor constituting up to 100% of
the net proceeds raised from the sale of additional common Capital Stock of the
Parent Guarantor to redeem (in whole or in part) the Senior Notes, and
Distributions of additional common Capital Stock of the Parent Guarantor to make
an acquisition of the property or Capital Stock of any other Person, and
Distributions constituting up to 75% of the net proceeds raised from the sale of
common Capital Stock of the Parent Guarantor to make an acquisition of the
property or Capital Stock of any other Person, so long as in each such case no
Material Adverse Effect could reasonably be expected to result therefrom and no
Default or Event of Default has occurred and is continuing or would result
therefrom (and the Agent and the Majority Lender will not unreasonably withhold
their consent to the creation of a Subsidiary in connection therewith if all of
the requirements of SECTION 6.2(d) will be complied with), (ii) make any change
in its capital structure which could have a Material Adverse Effect or (iii)
make any Restricted Investment.
9.11 TRANSACTIONS AFFECTING COLLATERAL OR OBLIGATIONS. Neither the Loan
Party nor any of its Subsidiaries shall enter into any transaction which would
be reasonably expected to have a Material Adverse Effect.
9.12 GUARANTIES. Neither the Loan Party nor any of its Subsidiaries shall
make, issue, or become liable on any Guaranty, except Guaranties of the
Obligations in favor of the Agent and Guaranties of Debt permitted as described
in clause (c) or (g) of SECTION 9.13.
9.13 DEBT. Neither the Loan Party nor any of its Subsidiaries shall incur or
maintain any Debt, other than: (a) the Obligations; (b) trade payables and
contractual obligations to suppliers and customers incurred in the ordinary
course of business; (c) the Senior Notes, the Subordinated Debt and other Debt
existing on the Closing Date and reflected in SCHEDULE 8.9 and refinancings,
renewals and extensions of the Senior Notes, the Subordinated Debt and such
other Debt that have been notified to the Agent not less than ten (10) Business
Days prior to the consummation thereof and are on terms and conditions
(including interest rate, principal amortization and term, and, in the case of
the Subordinated Debt, subordination) not less favorable to the Loan Parties and
the Lenders than the terms thereof when initially issued; (d) intercompany Debt
permitted by clauses (g), (h) and (i) of the definition of Restricted
Investment; (e) Debt consisting of interest rate Swap Agreements entered into
the ordinary course of business with a Lender; (f) Debt in a principal amount
not to exceed $3,000,000 outstanding at any time owing to, and secured by Liens
in favor of, lessors or vendors of Equipment for the Loan Parties, or financial
institutions designated by a lessor or vendor, exclusive of any Loan Party or
any Affiliate thereof, upon property constituting fixed or capital assets
acquired by a Loan Party in compliance with SECTION 9.23 hereof; provided, that
(i) any such Lien secures Debt not in excess of the acquisition cost of the item
of property subject thereto, and (ii) such Lien does not extend to or cover any
item of property other than such property; (g) additional Debt not to exceed at
any time outstanding the Aggregate Additional Debt and Investment Basket Amount;
and (h) Debt with respect to orders or judgments for the payment of money the
amount of which would not result in an Event of Default under SECTION 11.1
hereof.
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9.14 PREPAYMENT. Neither the Loan Party nor any of its Subsidiaries shall
voluntarily prepay any Debt, except the Obligations in accordance with the terms
of this Agreement or a refinancing of Debt permitted under SECTION 9.13(c) or as
otherwise permitted under SCHEDULE 9.14 hereto. Without limiting the foregoing,
except as provided on SCHEDULE 9.14, the Loan Party will not, and it will not
permit any of its Subsidiaries to, (a) make or offer to make any voluntary or
optional principal payments with respect to the Senior Notes or Subordinated
Debt, (b) redeem or offer to redeem any of the Senior Notes or Subordinated
Debt, or (c) deposit any funds intended to discharge or defease any or all of
the Senior Notes or Subordinated Debt. Neither the terms of the Senior Notes nor
the Subordinated Debt shall be amended or modified in any manner without the
prior written consent of the Required Lenders. Notwithstanding the foregoing, so
long as no Default or Event of Default has occurred, is continuing or could
result therefrom, the Parent Guarantor shall also be permitted to prepay the
Senior Notes with the net proceeds of common Capital Stock issued by the Parent
Guarantor.
9.15 TRANSACTIONS WITH AFFILIATES. Except for loans or advances to, or other
investments in an Affiliate to the extent (i) existing on the date hereof and
listed on SCHEDULE 8.5 and (ii) permitted to be incurred from and after the
Closing Date by clause (m) of the definition of Restricted Investment and except
as set forth below, neither the Loan Party nor any of its Subsidiaries shall,
sell, transfer, distribute, or pay any money or property, including, but not
limited to, any fees or expenses of any nature (including, but not limited to,
any fees or expenses for management services), to any Affiliate, or lend or
advance money or property to any Affiliate, or invest in (by capital
contribution or otherwise) or purchase or repurchase any stock or indebtedness,
or any property, of any Affiliate, or become liable on any Guaranty of the
indebtedness, dividends, or other obligations of any Affiliate. Notwithstanding
the foregoing, the Loan Party and its Subsidiaries may engage in transactions
with Affiliates in the ordinary course of business consistent with past
practices, in amounts and upon terms fully disclosed to the Agent and the
Lenders, and no less favorable to the Loan Party and its Subsidiaries than would
be obtained in a comparable arm's-length transaction with a third party who is
not an Affiliate.
9.16 INVESTMENT BANKING AND FINDER'S FEES. Neither the Loan Party nor any of
its Subsidiaries shall pay or agree to pay, or reimburse any other party with
respect to, any investment banking or similar or related fee, underwriter's fee,
finder's fee, or broker's fee to any Person in connection with this Agreement.
The Loan Party shall defend and indemnify the Agent and the Lenders against and
hold them harmless from all claims of any Person that the Loan Party is
obligated to pay for any such fees, and all costs and expenses (including
without limitation, attorneys' fees) incurred by the Agent and/or any Lender in
connection therewith.
9.17 [INTENTIONALLY OMITTED]
9.18 BUSINESS CONDUCTED. The Loan Party shall not and shall not permit any
of its Subsidiaries to, engage directly or indirectly, in any line of business
other than the businesses in which the Loan Party is engaged on the Closing
Date, and businesses reasonably incidental thereto.
9.19 LIENS. No the Loan Party or any of its Subsidiaries shall create,
incur, assume, or permit to exist any Lien on any property or other assets
(tangible or intangible, real or personal) now owned or hereafter acquired by
any of them, except Permitted Liens.
9.20 SALE AND LEASEBACK TRANSACTIONS. Neither the Loan Party nor any of its
Subsidiaries shall, directly or indirectly, enter into any arrangement with any
Person providing for the Loan Party
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or such Subsidiary to lease or rent property that the Loan Party or such
Subsidiary has sold or will sell or otherwise transfer to such Person.
9.21 NEW SUBSIDIARIES. The Loan Party shall not, directly or indirectly,
organize, create, acquire or permit to exist any Subsidiary other than those
listed on SCHEDULE 8.5.
9.22 FISCAL YEAR. The Loan Party shall not change its Fiscal Year.
9.23 CAPITAL EXPENDITURES. Neither the Loan Party nor any of its
Subsidiaries shall make or incur any Capital Expenditure if, after giving effect
thereto, the aggregate amount of all Capital Expenditures by the Parent
Guarantor and its Subsidiaries on a consolidated basis during any Fiscal Year
would exceed $2,000,000.
9.24 OPERATING LEASE OBLIGATIONS. Neither the Loan Party nor any of its
Subsidiaries shall enter into, or suffer to exist, any lease of real or personal
property as lessee or sublessee (other than a Capital Lease), if, after giving
effect thereto, the aggregate amount of Rentals (as hereinafter defined) payable
by the Parent Guarantor and its Subsidiaries on a consolidated basis in any
Fiscal Year in respect of such lease and all other such leases would exceed
$3,250,000 for Fiscal Year 2001 and $3,500,000 for Fiscal Year 2002 and any
Fiscal Year thereafter (such amounts being referred to herein as "Permitted
Rentals"). The term "Rentals" means all payments due from Parent Guarantor
and/or Borrower and/or any other Subsidiary of a Loan Party as the lessee or
sublessee under a lease of real or personal property, including, without
limitation, basic rent, percentage rent, property taxes, utility or maintenance
costs, and insurance premiums.
9.25 NET WORTH. The Parent Guarantor will maintain a consolidated Net Worth,
determined as of the last day of each calendar quarter, of not less than the
amount set forth below for such calendar quarter.
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12/31/01 $8,500,000
6/30/02 $8,500,000 plus (i) 75% of Parent
Guarantor's net income, determined
in accordance with GAAP, and (ii)
100% of any equity capital
contributions to Parent Guarantor,
in both cases for the period from
1/01/02 though and including
6/30/02.
9.26 FIXED CHARGE COVERAGE RATIO. The Parent Guarantor will maintain a
consolidated (i.e., for Parent Guarantor and its Subsidiaries that are Loan
Parties) Fixed Charge Coverage Ratio of 1.05 as of the last day of each period
consisting of the four quarters ending December 31, 2001 and each period of four
quarters ending on the last day of each calendar quarter thereafter (i.e., each
four quarter period ending March 31, June 30, September 30 and December 31
thereafter).
9.27 USE OF PROCEEDS. The Loan Party shall not, and shall not suffer or
permit any Subsidiary to, use any portion of the Loan proceeds, directly or
indirectly, (i) to purchase or carry Margin Stock, (ii) to repay or otherwise
refinance indebtedness of the Loan Party or others incurred to purchase or carry
Margin Stock, (iii) to extend credit for the purpose of purchasing or carrying
any Margin Stock, or (iv) to acquire any security in any transaction that is
subject to Section 13 or 14 of the Exchange Act.
9.28 UMBRO CONSENT. The Parent Guarantor shall use reasonable efforts to
deliver to the Agent a licensor consent ("Umbro Consent") from Umbro
International, Inc. ("Umbro") in form and substance reasonably satisfactory to
the Agent within 90 days from the Closing Date or as soon thereafter as is
reasonably practicable. Promptly after obtaining the Umbro Consent, Parent
Guarantor shall execute and deliver an amended and restated Collateral License
Agreement Assignment in the form requested by the Agent with respect to the
Material License Agreement with Umbro.
9.29 FURTHER ASSURANCES. The Loan Party shall execute and deliver, or cause
to be executed and delivered, to the Agent and/or the Lenders such documents and
agreements, and shall take or cause to be taken such actions, as the Agent or
any Lender may, from time to time, request to carry out the terms and conditions
of this Agreement and the other Loan Documents.
ARTICLE 10
CONDITIONS OF LENDING
10.1 CONDITIONS PRECEDENT TO MAKING OF LOANS TO BE SATISFIED ON THE CLOSING
DATE. The obligation of the Lenders to make any Revolving Loans, and the
obligation of the Agent to cause to be issued or provide Credit Support for any
Letter of Credit and the obligation of the Lenders to participate in Letters of
Credit or in Credit Support for any Letters of Credit, are subject to the
following conditions precedent having been satisfied in a manner satisfactory to
the Agent and each Lender as of the Closing Date (except that the condition set
forth at SECTION 10.1(B) shall not be a condition precedent to Agent's or
Lender's issuance of or provision of Credit Support for any Letter of Credit):
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(a) This Agreement and the other Loan Documents have been executed by
each party thereto and each Loan Party shall have performed and complied with
all covenants, agreements and conditions contained herein and the other Loan
Documents which are required to be performed or complied with by the Borrower
before or on such Closing Date.
(b) Parent Guarantor shall have utilized the Available Proceeds for one
or more of the Alternative Permitted Uses as expressly provided for in and
pursuant to the terms of SCHEDULE 9.14 hereto.
(c) All representations and warranties made hereunder and in the other
Loan Documents shall be true and correct in all material respects as of the
Closing Date as if made on such date.
(d) No Default or Event of Default shall exist on the Closing Date, or
would exist after giving effect to the Loans to be made on such date.
(e) The Agent and the Lenders shall have received such opinions of
counsel for the Loan Parties as the Agent or any Lender shall request, each such
opinion to be in a form, scope, and substance satisfactory to the Agent, the
Lenders, and their respective counsel.
(f) [INTENTIONALLY OMITTED]
(g) The Agent shall have received:
(i) acknowledgment copies of proper financing statements, duly
filed on or before the Closing Date under the UCC of all jurisdictions
as the Agent may deem necessary or desirable in order to perfect the
Agent's Lien in all Collateral;
(ii) duly executed UCC-3 Termination Statements for any Lien
which is not a Permitted Lien and any other UCC-1 financing statements
and/or UCC-3 amendments reasonably deemed necessary by Agent, and such
other instruments, in form and substance satisfactory to the Agent, as
shall be necessary to terminate and satisfy all Liens on the Property
of the Loan Parties except Permitted Liens; and
(iii) certificates representing all Capital Stock of the
Subsidiaries of the Parent Guarantor, together with assignments
separate from such certificates undated and executed in blank and
voting proxies executed in blank, and all promissory notes representing
any intercompany Debt between the Parent Guarantor and any of its
Subsidiaries, together with endorsements separate from such promissory
notes undated and issued in blank.
(h) The Borrower shall have paid all fees and expenses of the Agent and
the Attorney Costs incurred in connection with any of the Loan Documents and the
transactions contemplated thereby to the extent invoiced.
(i) The Agent shall have received evidence, in form, scope, and
substance, reasonably satisfactory to the Agent, of all insurance coverage as
required by this Agreement.
(j) The Agent and the Lenders shall have had an opportunity, if they so
choose, to examine the books of account and other records and files of the
Borrower and to make copies thereof, and to conduct a pre-closing audit which
shall include, without limitation, verification of
74
Inventory, Accounts, and Availability, and the results of such examination and
audit shall have been satisfactory to the Agent and the Lenders in all respects.
(k) Except as set forth on SCHEDULE 10.1 hereto, all Obligations of the
Parent Guarantor and any of its Subsidiaries under the Second Loan Agreement
shall have been paid in full and the outstanding principal balance thereof shall
have been reduced to zero (provided that the same shall in no event be deemed to
be a termination of the Original Loan evidenced by the Second Loan Agreement),
all Liens securing the Second Loan Agreement, and any and all extensions of
credit thereunder, shall continue to be perfected for the benefit of Lenders as
to all Collateral owned by the Loan Parties, and Agent shall have received such
documents, assignments or other instruments as the Agent may reasonably request
and in form and substance satisfactory to the Agent.
(l) The Agent and the Lenders shall have received copies certified as
being correct and complete of all documentation related to the Senior Notes, the
Subordinated Debt and the Material License Agreements and such documentation
shall be satisfactory to the Agent and the Lenders in all respects.
(m) All proceedings taken in connection with the execution of this
Agreement, all other Loan Documents and all documents and papers relating
thereto shall be satisfactory in form, scope, and substance to the Agent and the
Lenders.
(n) No Material Adverse Effect shall have occurred since the Financial
Statements dated December 31, 2000.
The acceptance by the Borrower of any Loans shall be deemed to be a
representation and warranty made by the Borrower to the effect that all of the
conditions precedent to the making of such Loans have been satisfied, with the
same effect as delivery to the Agent and the Lenders of a certificate signed by
a Responsible Officer of the Borrower, dated as of the date of such Loans, to
such effect.
Execution and delivery to the Agent by a Lender of a counterpart of
this Agreement shall be deemed confirmation by such Lender that (i) all
conditions precedent in this SECTION 10.1 have been fulfilled to the
satisfaction of such Lender and (ii) the decision of such Lender to execute and
deliver to the Agent an executed counterpart of this Agreement was made by such
Lender independently and without reliance on the Agent or any other Lender as to
the satisfaction of any condition precedent set forth in this SECTION 10.1.
10.2 ADDITIONAL CONDITIONS PRECEDENT TO EACH LOAN. The obligation of the
Lenders to make each Loan and the obligation of the Agent to take reasonable
steps to cause to be issued or to provide Credit Support for any Letter of
Credit and the obligation of the Lenders to participate in Letters of Credit or
Credit Support for Letters of Credit, shall be subject to the further conditions
precedent that on and as of the date of any such extension of credit:
(a) the following statements shall be true, and the acceptance by the
Borrower of any extension of credit shall be deemed to be a statement to the
effect set forth in clauses (i) and (ii), with the same effect as the delivery
to the Agent and the Lenders of a certificate signed by a Responsible Officer,
dated the date of such extension of credit, stating that:
(i) The representations and warranties contained in this
Agreement and the other Loan Documents are correct in all material
respects on and as of the date of such
75
extension of credit as though made on and as of such date, other than
any such representation or warranty which relates to a specified prior
date and except to the extent the Agent and the Lenders have been
notified by the Borrower that any such representation or warranty is
not correct in any material respect and the Majority Lenders have
explicitly waived in writing compliance with such representation or
warranty; and
(ii) No event has occurred and is continuing, or would result
from such extension of credit, which constitutes a Default or an Event
of Default; and
(b) without limiting any other provision hereof, the amount of the
Availability shall be sufficient to make such Revolving Loan without exceeding
the Availability, PROVIDED, HOWEVER, that the foregoing conditions precedent are
not conditions to each Lender participating in or reimbursing Bank of America or
the Agent for such Lenders' Pro Rata Share of any Bank of America Loan or Agent
Advance as provided in SECTIONS 2.2(h), (i) and (j); and
(c) without limiting SECTION 10.2(a), there shall exist no action,
suit, investigation, litigation, or proceeding pending or threatened in any
court or before any arbitrator or governmental instrumentality that in Lenders'
reasonable judgment could reasonably be expected to have a Material Adverse
Effect.
ARTICLE 11
DEFAULT; REMEDIES
11.1 EVENTS OF DEFAULT. It shall constitute an event of default ("Event of
Default") if any one or more of the following shall occur for any reason:
(a) any failure to pay the principal of or interest or premium on any
of the Obligations, when due, whether upon demand or otherwise, and, solely in
the case of interest, such failure continues for three (3) Business Days or more
after the due date thereof;
(b) any representation or warranty made or deemed made by any Loan
Party in this Agreement or by any Loan Party in any of the other Loan Documents,
any Financial Statement, or any certificate furnished by any Loan Party or any
of its Subsidiaries at any time to the Agent or any Lender shall prove to be
untrue in any material respect as of the date on which made, deemed made, or
furnished;
(c) (i) any default shall occur in the observance or performance of any
of the agreements contained in ARTICLE 6, ARTICLE 7 or ARTICLE 9 (other than
SECTIONS 9.3, 9.4, 9.6, 9.7(b), 9.16 or 9.29) of this Agreement (PROVIDED,
HOWEVER, to the extent that any covenant in ARTICLE 6 or SECTIONS 7.2(a) through
(f) specifies the number of days within which the Loan Party must comply
(including, without limitation, for the giving of notice or delivery, of a
financial statement, forecast or report), the Loan Party shall have the number
of days specified in such covenant within which to comply, plus in the case of
SECTIONS 7.2(a) through (f) five (5) additional days after notice thereof from
the Agent or any Lender of the failure to provide such material, before such
non-compliance becomes an Event of Default under this clause (i)), or (ii) any
default shall occur in the observance or performance of any of the agreements
contained in any of SECTIONS 9.3, 9.4, 9.6, 9.7(b), 9.16 or 9.29 of this
Agreement and such default shall continue unremedied for a period of 10 days
after the earlier to occur of (x) notice thereof from the Agent or any Lender to
any Loan Party or (y) any Loan Party's actual knowledge thereof, or (iii) any
default shall occur in the observance or performance of any of the agreements
contained in this Agreement (other than as specified in clause (a) or (c)(i) or
76
(ii) above), any other Loan Documents, or any other agreement entered into at
any time to which any Loan Party and the Agent or any Lender are party and such
default shall continue unremedied for a period of 30 days after the earlier to
occur of (x) notice thereof from the Agent or any Lender to any Loan Party or
(y) any Loan Party's actual knowledge thereof, or (iv) if any agreement or
document referred to in clauses (i), (ii) or (iii) above shall terminate (other
than in accordance with its terms or the terms hereof or with the written
consent of the Agent and the Majority Lenders) or become void or unenforceable,
without the written consent of the Agent and the Majority Lenders; or (v) any
default shall occur with respect to the Senior Notes, the Subordinated Debt or
any other Debt (other than the Obligations) in an outstanding principal amount
which exceeds $2,000,000, or under any agreement or instrument under or pursuant
to which any such Debt may have been issued, created, assumed, or guaranteed by
any Loan Party or any of its Subsidiaries, and such default shall continue for
more than the period of grace, if any, therein specified, if the effect thereof
(with or without the giving of notice or further lapse of time or both) is to
accelerate, or to permit the holders of any such Debt to accelerate, the
maturity of any such Debt; or any such Debt shall be declared due and payable or
be required to be prepaid (other than by a regularly scheduled required
prepayment) prior to the stated maturity thereof;
(d) any Loan Party or any of its Subsidiaries shall (i) file a
voluntary petition in bankruptcy or file a voluntary petition or an answer or
otherwise commence any action or proceeding seeking reorganization, arrangement
or readjustment of its debts or for any other relief under the federal
Bankruptcy Code, as amended, or under any other bankruptcy or insolvency act or
law, state, federal or foreign, now or hereafter existing, or take any corporate
action in furtherance of any of the foregoing or consent to, approve of, or
acquiesce in, any such petition, action or proceeding; (ii) apply for or
acquiesce in the appointment of a receiver, assignee, liquidator, sequestrator,
custodian, monitor, trustee or similar officer for it or for all or any part of
its property; (iii) make an assignment for the benefit of creditors; or (iv) be
unable generally to pay its debts as they become due;
(e) an involuntary petition or proposal shall be filed or an action or
proceeding otherwise commenced seeking reorganization, arrangement,
consolidation or readjustment of the debts of any Loan Party or any of its
Subsidiaries or for any other relief under the federal Bankruptcy Code, as
amended, or under any other bankruptcy or insolvency act or law, state, federal
or foreign, now or hereafter existing and either (i) such petition, proposal,
action or proceeding shall not have been dismissed within a period of sixty (60)
days after its commencement or (ii) an order for relief against any Loan Party
or such Subsidiary shall have been entered in such proceeding;
(f) a receiver, assignee, liquidator, sequestrator, custodian, monitor,
trustee or similar officer for any Loan Party or any of its Subsidiaries or for
all or any part of its property shall be appointed or a warrant of attachment,
execution or similar process shall be issued against any part of the property of
any Loan Party or any of its Subsidiaries;
(g) except as permitted in SECTION 9.9, any Loan Party or any of its
Subsidiaries shall file a certificate of dissolution under applicable state law
or shall be liquidated, dissolved or wound-up or shall commence or have
commenced against it any action or proceeding for dissolution, winding-up or
liquidation, or shall take any corporate action in furtherance thereof;
(h) all or any material part of the property of any Loan Party or any
of its Subsidiaries shall be nationalized, expropriated or condemned, seized or
otherwise appropriated, or custody or control of such property or of any Loan
Party or such Subsidiary shall be assumed by any Governmental Authority or any
court of competent jurisdiction at the instance of any Governmental
77
Authority, except where contested in good faith by proper proceedings diligently
pursued where a stay of enforcement is in effect;
(i) any guaranty of the Obligations shall be terminated, revoked or
declared void or invalid;
(j) one or more judgments or orders for the payment of money
aggregating in excess of $2,000,000, not payable by insurance, shall be rendered
in any one Fiscal Year against the Loan Parties and their Subsidiaries taken as
a whole;
(k) any loss, theft, damage or destruction of any item or items of
Collateral or other property of any Loan Party or any Subsidiary of it occurs
which materially and adversely affects the property, business, operation,
prospects, or condition of the Borrower or any of its Subsidiaries and is not
adequately covered by insurance;
(l) there occurs a Material Adverse Effect;
(m) there is filed against any Loan Party or any of its Subsidiaries
any civil or criminal action, suit or proceeding under any federal or state
racketeering statute (including, without limitation, the Racketeer Influenced
and Corrupt Organization Act of 1970), which action, suit or proceeding (1) is
not dismissed within one hundred twenty (120) days, and (2) could reasonably be
expected to result in the confiscation or forfeiture of any material portion of
the Collateral;
(n) for any reason other than the failure of the Agent to take any
action available to it to maintain perfection of the Agent's Liens, pursuant to
the Loan Documents, any Loan Document ceases to be in full force and effect or
any Lien with respect to any material portion of the Collateral intended to be
secured thereby ceases to be, or is not, valid, perfected and prior to all other
Liens (other than Permitted Liens described in clause (a) of the definition
thereof) or is terminated, revoked or declared void;
(o) (i) an ERISA Event shall occur with respect to a Pension Plan or
Multi-employer Plan which has resulted or could reasonably be expected to result
in liability of the Borrower under Title IV of ERISA to the Pension Plan,
Multi-employer Plan or the PBGC in an aggregate amount in excess of $2,000,000;
(ii) the aggregate amount of Unfunded Pension Liability among all Pension Plans
at any time exceeds $2,000,000; or (iii) the Borrower or any ERISA Affiliate
shall fail to pay when due, after the expiration of any applicable grace period,
any installment payment with respect to its withdrawal liability under Section
4201 of ERISA under a Multi-employer Plan in an aggregate amount in excess of
$2,000,000; or
(p) there occurs a Change of Control.
11.2 REMEDIES.
(a) If a Default or an Event of Default exists, the Agent may, in its
discretion, and shall, at the direction of the Majority Lenders, do one or more
of the following at any time or times and in any order, without notice to or
demand on the Borrower: (i) reduce the Maximum Revolver Amount, or the advance
rates against Eligible Accounts and/or Eligible Inventory used in computing the
Availability, or reduce one or more of the other elements used in computing the
Availability; (ii) restrict the amount of or refuse to make Revolving Loans; and
(iii) restrict or refuse to arrange for or provide Letters of Credit or Credit
Support. If an Event of Default exists, the Agent
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shall, at the direction of the Majority Lenders, do one or more of the
following, in addition to the actions described in the preceding sentence, at
any time or times and in any order, without notice to or demand on the Borrower:
(a) terminate the Commitments and this Agreement; (b) declare any or all
Obligations to be immediately due and payable; PROVIDED, HOWEVER, that upon the
occurrence of any Event of Default described in SECTIONS 11.1(e), 11.1(g), or
11.1(h), the Commitments shall automatically and immediately expire and all
Obligations shall automatically become immediately due and payable without
notice or demand of any kind; and (c) pursue its other rights and remedies under
the Loan Documents (including with respect to any and all Collateral provided
hereunder or thereunder) and applicable law.
(b) If an Event of Default has occurred and is continuing: (i) the
Agent shall have for the benefit of the Lenders, in addition to all other rights
of the Agent and the Lenders, the rights and remedies of a secured party under
the UCC; (ii) the Agent may, at any time, take possession of the Collateral and
keep it on any Loan Party's premises, at no cost to the Agent or any Lender, or
remove any part of it to such other place or places as the Agent may desire, or
any Loan Party shall, upon the Agent's demand, at the Borrower's cost, assemble
the Collateral and make it available to the Agent at a place reasonably
convenient to the Agent; and (iii) the Agent may sell and deliver any Collateral
at public or private sales, for cash, upon credit or otherwise, at such prices
and upon such terms as the Agent deems advisable, in its sole discretion, and
may, if the Agent deems it reasonable, postpone or adjourn any sale of the
Collateral by an announcement at the time and place of sale or of such postponed
or adjourned sale without giving a new notice of sale. Without in any way
requiring notice to be given in the following manner, each Loan Party agrees
that any notice by the Agent of sale, disposition or other intended action
hereunder or in connection herewith, whether required by the UCC or otherwise,
shall constitute reasonable notice to such Loan Party if such notice is mailed
by registered or certified mail, return receipt requested, postage prepaid, or
is delivered personally against receipt, at least five (5) Business Days prior
to such action to such Loan Party's address specified in or pursuant to SECTION
15.8. If any Collateral is sold on terms other than payment in full at the time
of sale, no credit shall be given against the Obligations until the Agent or the
Lenders receive payment (including partial payments), and if the buyer defaults
in payment, the Agent may resell the Collateral without further notice to any
Loan Party. In the event the Agent seeks to take possession of all or any
portion of the Collateral by judicial process, each Loan Party irrevocably
waives: (a) the posting of any bond, surety or security with respect thereto
which might otherwise be required; (b) any demand for possession prior to the
commencement of any suit or action to recover the Collateral; and (c) any
requirement that the Agent retain possession and not dispose of any Collateral
until after trial or final judgment. Each Loan Party agrees that the Agent has
no obligation to preserve rights to the Collateral or marshal any Collateral for
the benefit of any Person. The Agent is hereby granted a license or other right
to use, exercisable only after the occurrence of, and during the continuance of
a Default or an Event of Default, without charge, each Loan Party's labels,
patents, copyrights, name, trade secrets, trade names, trademarks, and
advertising matter, or any similar property or other Proprietary Rights, in
completing production of, advertising or selling any Collateral, and each Loan
Party's rights under all licenses and all franchise agreements shall inure to
the Agent's benefit for such purpose. The proceeds of sale shall be applied
first to all expenses of sale, including attorneys' fees, and then to the
Obligations in whatever order the Agent elects. The Agent will return any excess
to the Borrower and the Borrower shall remain liable for any deficiency.
(c) If an Event of Default occurs, each Loan Party hereby waives all
rights to notice and hearing prior to the exercise by the Agent of the Agent's
rights to repossess the Collateral without judicial process or to replevy,
attach or levy upon the Collateral without notice or hearing.
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ARTICLE 12
TERM AND TERMINATION
12.1 TERM AND TERMINATION. The term of this Agreement shall end on the
Stated Termination Date. The Agent upon direction from the Majority Lenders may
terminate this Agreement without notice upon the occurrence of an Event of
Default. Upon the effective date of termination of this Agreement for any reason
whatsoever, all Obligations (including, without limitation, all unpaid
principal, accrued interest and any early termination or prepayment fees or
penalties) shall become immediately due and payable and the Borrower shall
immediately arrange for the cancellation of Letters of Credit then outstanding.
Notwithstanding the termination of this Agreement, until all Obligations are
indefeasibly paid and performed in full in cash, each Loan Party shall remain
bound by the terms of this Agreement and shall not be relieved of any of its
Obligations hereunder, and the Agent and the Lenders shall retain all their
rights and remedies hereunder (including, without limitation, the Agent's Liens
in and all rights and remedies with respect to all then existing and
after-arising Collateral). Without limiting the foregoing or any provision
hereof that by its terms survives termination of this Agreement, the provisions
of ARTICLE 5 and SECTIONS 14.7, 15.7, 15.11 and 15.12 shall survive the
termination of this Agreement and the release of any of the Agent's Liens in any
of the Collateral.
ARTICLE 13
AMENDMENTS; WAIVER; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS
13.1 NO WAIVERS CUMULATIVE REMEDIES. No failure by the Agent or any Lender
to exercise any right, remedy, or option under this Agreement or any present or
future supplement thereto, or in any other agreement between or among any Loan
Party and the Agent and/or any Lender, or delay by the Agent or any Lender in
exercising the same, will operate as a waiver thereof. No waiver by the Agent or
any Lender will be effective unless it is in writing, and then only to the
extent specifically stated. No waiver by the Agent or the Lenders on any
occasion shall affect or diminish the Agent's and each Lender's rights
thereafter to require strict performance by any Loan Party of any provision of
this Agreement. The Agent's and each Lender's rights under this Agreement will
be cumulative and not exclusive of any other right or remedy which the Agent or
any Lender may have.
13.2 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent with respect to any
departure by any Loan Party therefrom, shall be effective unless the same shall
be in writing and signed by the Majority Lenders (or by the Agent at the written
request of the Majority Lenders) and such Loan Party and then any such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; PROVIDED, HOWEVER, that no such waiver, amendment, or
consent shall, unless in writing and signed by all the Lenders and the Borrower
and acknowledged by the Agent, do any of the following:
(a) increase or extend the Commitment of any Lender;
(b) postpone or delay any date fixed by this Agreement or any other
Loan Document for any payment of principal, interest, fees or other amounts due
to the Lenders (or any of them) hereunder or under any other Loan Document;
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(c) reduce the principal of, or the rate of interest specified herein
on any Loan, or any fees or other amounts payable hereunder or under any other
Loan Document;
(d) change the percentage of the Commitments or of the aggregate unpaid
principal amount of the Loans which is required for the Lenders or any of them
to take any action hereunder;
(e) increase any of the percentages set forth in the definition of
Availability;
(f) amend this Section or any provision of the Agreement providing for
consent or other action by all Lenders;
(g) release Collateral other than as permitted by SECTION 14.12;
(h) change the definitions of "Majority Lenders" or "Required Lenders";
(i) increase the Maximum Revolver Amount, the Maximum Inventory Loan,
and Unused Letter of Credit Subfacility.
and, PROVIDED FURTHER, that no amendment, waiver or consent shall, unless in
writing and signed by the Agent, affect the rights or duties of the Agent under
this Agreement or any other Loan Document.
13.3 ASSIGNMENTS; PARTICIPATIONS.
(a) Any Lender may, with the written consent of the Agent, assign and
delegate to one or more assignees (provided that no written consent of the Agent
shall be required in connection with any assignment and delegation by a Lender
to an Affiliate of such Lender) (each an "Assignee") all, or any ratable part of
all, of the Loans, the Commitments and the other rights and obligations of such
Lender hereunder, in a minimum amount of $10,000,000 or if less the entire
amount of such Lender's Commitment or as the Agent and the Borrower may
otherwise agree; PROVIDED, HOWEVER, that the Borrower and the Agent may continue
to deal solely and directly with such Lender in connection with the interest so
assigned to an Assignee until (i) written notice of such assignment, together
with payment instructions, addresses and related information with respect to the
Assignee, shall have been given to the Borrower and the Agent by such Lender and
the Assignee; (ii) such Lender and its Assignee shall have delivered to the
Borrower and the Agent a fully executed and completed Assignment and Acceptance
in the form of EXHIBIT G ("Assignment and Acceptance"); and (iii) the assignor
Lender or Assignee has paid to the Agent a processing fee in the amount of
$3,000.
(b) From and after the date that the Agent notifies the assignor Lender
that it has received an executed Assignment and Acceptance and payment of the
above-referenced processing fee, (i) the Assignee thereunder shall be a party
hereto and, to the extent that rights and obligations, including, but not
limited to, the obligation to participate in Letters of Credit and Credit
Support have been assigned to it pursuant to such Assignment and Acceptance,
shall have the rights and obligations of a Lender under the Loan Documents, and
(ii) the assignor Lender shall, to the extent that rights and obligations
hereunder and under the other Loan Documents have been assigned by it pursuant
to such Assignment and Acceptance, relinquish its rights and be released from
its obligations under this Agreement (and in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto).
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(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (1) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto; (2) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of any
Loan Party or the performance or observance by any Loan Party of any of its
obligations under this Agreement or any other Loan Document furnished pursuant
hereto; (3) such Assignee confirms that it has received a copy of this
Agreement, together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (4) such Assignee will, independently and without
reliance upon the Agent, such assigning Lender or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (5) such Assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
as are delegated to the Agent by the terms hereof, together with such powers as
are reasonably incidental thereto; and (6) such Assignee agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of this Agreement are required to be performed by it as a Lender.
(d) Immediately upon each Assignee's making its processing fee payment
under the Assignment and Acceptance, this Agreement shall be deemed to be
amended to the extent, but only to the extent, necessary to reflect the addition
of the Assignee and the resulting adjustment of the Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Lender pro tanto.
(e) Any Lender may at any time sell to one or more commercial banks,
financial institutions, or other Persons not Affiliates of the Borrower (a
"Participant") participating interests in any Loans, the Commitment of that
Lender and the other interests of that Lender (the "originating Lender")
hereunder and under the other Loan Documents; PROVIDED, HOWEVER, that (i) the
originating Lender's obligations under this Agreement shall remain unchanged,
(ii) the originating Lender shall remain solely responsible for the performance
of such obligations, (iii) Loan Parties and the Agent shall continue to deal
solely and directly with the originating Lender in connection with the
originating Lender's rights and obligations under this Agreement and the other
Loan Documents, and (iv) no Lender shall transfer or grant any participating
interest under which the Participant has rights to approve any amendment to, or
any consent or waiver with respect to, this Agreement or any other Loan
Document, and all amounts payable by the Borrower or any other Loan Party
hereunder shall be determined as if such Lender had not sold such participation;
except that, if amounts outstanding under this Agreement are due and unpaid, or
shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant that has notified the Parent
Guarantor of its participation shall be deemed to have the right of set-off in
respect of its participating interest in amounts owing under this Agreement to
the same extent and subject to the same limitation as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement.
(f) Notwithstanding any other provision in this Agreement, any Lender
may at any time create a security interest in, or pledge, all or any portion of
its rights under and interest in this Agreement in favor of any Federal Reserve
Bank in accordance with Regulation A of the FRB or
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U.S. Treasury Regulation 31 CFR SS.203.14, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted under
applicable law.
(g) No assignment or participation described in this SECTION 13.3
shall, on the date of such assignment or participation, result in an Obligation
payable by the Borrower under SECTION 5.1 OR 5.3 in an amount in excess of the
amount that would otherwise have been payable on such date if such assignment or
participation had not occurred.
ARTICLE 14
THE AGENT
14.1 APPOINTMENT AND AUTHORIZATION. Each Lender hereby designates and
appoints Bank of America National Trust and Savings Association, and its
successors in the capacity as agent, as its Agent under this Agreement and the
other Loan Documents and each Lender hereby irrevocably authorizes the Agent to
take such action on its behalf under the provisions of this Agreement and each
other Loan Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto. The
Agent agrees to act as such on the express conditions contained in this ARTICLE
14. The provisions of this ARTICLE 14 are solely for the benefit of the Agent
and the Lenders and no Loan Party shall have any rights as a third party
beneficiary of any of the provisions contained herein. Notwithstanding any
provision to the contrary contained elsewhere in this Agreement or in any other
Loan Document, the Agent shall not have any duties or responsibilities, except
those expressly set forth herein, nor shall the Agent have or be deemed to have
any fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.
Without limiting the generality of the foregoing sentence, the use of the term
"agent" in this Agreement with reference to the Agent is not intended to connote
any fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable law. Instead, such term is used merely as a matter of
market custom, and is intended to create or reflect only an administrative
relationship between independent contracting parties. Except as expressly
otherwise provided in this Agreement, the Agent shall have and may use its sole
discretion with respect to exercising or refraining from exercising any
discretionary rights or taking or refraining from taking any actions which the
Agent is expressly entitled to take or assert under this Agreement and the other
Loan Documents, including, without limitation, (a) the determination of the
applicability of ineligibility criteria with respect to the calculation of the
Availability, (b) the making of Agent Advances pursuant to SECTION 2.2(i), and
(c) the exercise of remedies pursuant to SECTION 11.2, and any action so taken
or not taken shall be deemed consented to by the Lenders.
14.2 DELEGATION OF DUTIES. The Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
14.3 LIABILITY OF AGENT. None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by Loan Party or any Subsidiary or
Affiliate of any Loan Party, or any officer thereof, contained in this Agreement
or in any other Loan Document, or in any
83
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this Agreement or any
other Loan Document, or the validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any other Loan Document, or for any failure
of any Loan Party or any other party to any Loan Document to perform its
obligations hereunder or thereunder. No Agent-Related Person shall be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of any Loan Party or any of a Loan Party's Subsidiaries or Affiliates.
14.4 RELIANCE BY AGENT.
(a) The Agent shall be entitled to rely, and shall be fully protected
in relying, upon any writing, resolution, notice, consent, certificate,
affidavit, letter, telegram, facsimile, telex or telephone message, statement or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons, and upon advice
and statements of legal counsel (including counsel to any Loan Party),
independent accountants and other experts selected by the Agent. The Agent shall
be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive such advice
or concurrence of the Majority Lenders as it deems appropriate and, if it so
requests, it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement or
any other Loan Document in accordance with a request or consent of the Majority
Lenders and such request and any action taken or failure to act pursuant thereto
shall be binding upon all of the Lenders.
(b) For purposes of determining compliance with the conditions
specified in SECTION 10.1, each Lender that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by the Agent to such Lender for consent,
approval, acceptance or satisfaction, or required thereunder to be consented to
or approved by or acceptable or satisfactory to the Lender.
14.5 NOTICE OF DEFAULT. The Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default, except with respect
to defaults in the payment of principal, interest and fees required to be paid
to the Agent for the account of the Lenders, unless the Agent shall have
received written notice from a Lender or the Borrower referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default." The Agent will notify the Lenders of its
receipt of any such notice. The Agent shall take such action with respect to
such Default or Event of Default as may be requested by the Majority Lenders in
accordance with SECTION 11; PROVIDED, HOWEVER, that unless and until the Agent
has received any such request, the Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable.
14.6 CREDIT DECISION. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Agent hereinafter taken, including any review of the affairs of any
Loan Party and its Affiliates, shall be deemed to constitute any representation
or warranty by any Agent-Related Person to any Lender. Each Lender represents to
the Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and creditworthiness of any
Loan Party and its Affiliates, and all applicable bank regulatory laws relating
84
to the transactions contemplated hereby, and made its own decision to enter into
this Agreement and to extend credit to any Loan Party. Each Lender also
represents that it will, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations, property, financial
and other condition and creditworthiness of any Loan Party. Except for notices,
reports and other documents expressly herein required to be furnished to the
Lenders by the Agent, the Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the business,
prospects, operations, property, financial and other condition or
creditworthiness of any Loan Party which may come into the possession of any of
the Agent-Related Persons.
14.7 INDEMNIFICATION. Whether or not the transactions contemplated hereby
are consummated, the Lenders shall indemnify upon demand the Agent-Related
Persons (to the extent not reimbursed by or on behalf of the Borrower and
without limiting the obligation of the Borrower to do so), pro rata, from and
against any and all Indemnified Liabilities as such term is defined in SECTION
15.11; PROVIDED, HOWEVER, that no Lender shall be liable for the payment to the
Agent-Related Persons of any portion of such Indemnified Liabilities resulting
solely from such Person's gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender shall reimburse the Agent upon demand
for its ratable share of any costs or out-of-pocket expenses (including Attorney
Costs) incurred by the Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement, any other Loan
Document, or any document contemplated by or referred to herein, to the extent
that the Agent is not reimbursed for such expenses by or on behalf of the
Borrower. The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of the Agent.
14.8 AGENT IN INDIVIDUAL CAPACITY. Bank of America and its Affiliates may
make loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with any Loan Party and its
Subsidiaries and Affiliates as though Bank of America were not the Agent
hereunder and without notice to or consent of the Lenders. The Lenders
acknowledge that, pursuant to such activities, Bank of America or its Affiliates
may receive information regarding any Loan Party or its Affiliates (including
information that may be subject to confidentiality obligations in favor of any
Loan Party or such Subsidiary) and acknowledge that the Agent shall be under no
obligation to provide such information to them. With respect to its Loans, Bank
of America shall have the same rights and powers under this Agreement as any
other Lender and may exercise the same as though it were not the Agent, and the
terms "Lender" and "Lenders" include Bank of America in its individual capacity.
14.9 SUCCESSOR AGENT. The Agent may resign as Agent upon 30 days' notice to
the Lenders and the Borrower. In the event Bank of America sells all of its
Commitments and Revolving Loans as part of a sale, transfer or other disposition
by Bank of America of substantially all of its loan portfolio, Bank of America
shall resign as Agent and such purchaser or transferee shall become the
successor Agent hereunder. In addition, Bank of America may be merged into (and
transfer its agency thereby to) or transfer its agency hereunder to an Affiliate
without the consent of any Person. If the Agent resigns under this Agreement,
except as provided in the preceding two sentences, the Majority Lenders shall
appoint from among the Lenders a successor agent for the Lenders. If no
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successor agent is appointed prior to the effective date of the resignation of
the Agent, the Agent may appoint, after consulting with the Lenders and the
Borrower, a successor agent from among the Lenders. Upon the acceptance of its
appointment as successor agent hereunder, such successor agent shall succeed to
all the rights, powers and duties of the retiring Agent and the term "Agent"
shall mean such successor agent and the retiring Agent's appointment, powers and
duties as Agent shall be terminated. After any retiring Agent's resignation
hereunder as Agent, the provisions of this SECTION 14 shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was Agent under
this Agreement. If no successor agent has accepted appointment as Agent by the
date which is 30 days following a retiring Agent's notice of resignation, the
retiring Agent's resignation shall nevertheless thereupon become effective and
the Lenders shall perform all of the duties of the Agent hereunder until such
time, if any, as the Majority Lenders appoint a successor agent as provided for
above.
14.10 WITHHOLDING TAX.
(a) If any Lender is a "foreign corporation, partnership or trust"
within the meaning of the Code and such Lender claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the Code, such
Lender agrees with and in favor of the Agent, to deliver to the Agent:
(i) if such Lender claims an exemption from, or a reduction
of, withholding tax under a United States tax treaty, properly
completed IRS Forms 1001 and W-8 before the payment of any interest in
the first calendar year and before the payment of any interest in each
third succeeding calendar year during which interest may be paid under
this Agreement;
(ii) if such Lender claims that interest paid under this
Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such
Lender, two properly completed and executed copies of IRS Form 4224
before the payment of any interest is due in the first taxable year of
such Lender and in each succeeding taxable year of such Lender during
which interest may be paid under this Agreement, and IRS Form W-9; and
(iii) such other form or forms as may be required under the
Code or other laws of the United States as a condition to exemption
from, or reduction of, United States withholding tax.
Such Lender agrees to promptly notify the Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.
(b) If any Lender claims exemption from, or reduction of, withholding
tax under a United States tax treaty by providing IRS Form 1001 and such Lender
sells, assigns, grants a participation in, or otherwise transfers all or part of
the Obligations of the Borrower to such Lender, such Lender agrees to notify the
Agent of the percentage amount in which it is no longer the beneficial owner of
Obligations of the Borrower to such Lender. To the extent of such percentage
amount, the Agent will treat such Lender's IRS Form 1001 as no longer valid.
(c) If any Lender claiming exemption from United States withholding tax
by filing IRS Form 4224 with the Agent sells, assigns, grants a participation
in, or otherwise transfers all or part of the Obligations of the Borrower to
such Lender, such Lender agrees to undertake sole
86
responsibility for complying with the withholding tax requirements imposed by
Sections 1441 and 1442 of the Code.
(d) If any Lender is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such Lender
an amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (a)
of this Section are not delivered to the Agent, then the Agent may withhold from
any interest payment to such Lender not providing such forms or other
documentation an amount equivalent to the applicable withholding tax.
(e) If the IRS or any other Governmental Authority of the United States
or other jurisdiction asserts a claim that the Agent did not properly withhold
tax from amounts paid to or for the account of any Lender (because the
appropriate form was not delivered, was not properly executed, or because such
Lender failed to notify the Agent of a change in circumstances which rendered
the exemption from, or reduction of, withholding tax ineffective, or for any
other reason) such Lender shall indemnify the Agent fully for all amounts paid,
directly or indirectly, by the Agent as tax or otherwise, including penalties
and interest, and including any taxes imposed by any jurisdiction on the amounts
payable to the Agent under this Section, together with all costs and expenses
(including Attorney Costs). The obligation of the Lenders under this subsection
shall survive the payment of all Obligations and the resignation or replacement
of the Agent.
Each such Lender not so incorporated under the laws of the United
States of America or a state thereof agrees to deliver to the Borrower and the
Agent two copies of Form 1001 or 4224 and Form W-8 or W-9, or successor
applicable forms or other manner of certification, as the case may be, on or
before the date that any such form expires or becomes obsolete or after the
occurrence of any event requiring a change in the most recent form previously
delivered by it to the Borrower or the Agent, and such extensions or renewals
thereof as may reasonably be requested by the Borrower or the Agent unless in
any such case an event (including any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Lender from duly completing and delivering any such form with respect to it and
such Lender so advises the Borrower and the Agent.
14.11 [INTENTIONALLY OMITTED]
14.12 COLLATERAL MATTERS.
(a) The Lenders hereby irrevocably authorize the Agent, at its option
and in its sole discretion, to release (and upon Borrower's request, Agent shall
so release) any Agent's Lien upon any Collateral (i) upon the termination of the
Commitments and this Agreement and payment and satisfaction in full by Borrower
of all Loans and reimbursement obligations in respect of Letters of Credit and
Credit Support, and the termination of all outstanding Letters of Credit
(whether or not any of such obligations are due) and all other Obligations; (ii)
constituting property being sold or disposed of if the Borrower certifies to the
Agent that the sale or disposition is made in compliance with SECTION 9.9 (and
the Agent may rely conclusively on any such certificate, without further
inquiry); (iii) constituting property in which a Loan Party owned no interest at
the time the Lien was granted or at any time thereafter; or (iv) constituting
property leased to a Loan Party under a lease which has expired or been
terminated in a transaction permitted under this Agreement. Except as provided
above, the Agent will not release any of the Agent's Liens without the prior
written authorization of the Lenders; provided that the Agent may, in its
discretion, release the Agent's Liens on Collateral valued in the aggregate not
in excess of $5,000,000 during any one year period without
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the prior written authorization of the Lenders. Upon request by the Agent or the
Borrower at any time, the Lenders will confirm in writing the Agent's authority
to release any Agent's Liens upon particular types or items of Collateral
pursuant to this SECTION 14.12.
(b) Upon receipt by the Agent of any authorization required pursuant to
SECTION 14.12(a) from the Lenders of the Agent's authority to release any
Agent's Liens upon particular types or items of Collateral, and upon at least
five (5) Business Days' prior written request by the Borrower, the Agent shall
(and is hereby irrevocably authorized by the Lenders to) execute such documents
as may be necessary to evidence the release of the Agent's Liens upon such
Collateral; PROVIDED, HOWEVER, that (i) the Agent shall not be required to
execute any such document on terms which, in the Agent's opinion, would expose
the Agent to liability or create any obligation or entail any consequence other
than the release of such Liens without recourse or warranty, and (ii) such
release shall not in any manner discharge, affect or impair the Obligations or
any Liens (other than those expressly being released) upon (or obligations of
any Loan Party in respect of) all interests retained by any Loan Party,
including (without limitation) the proceeds of any sale, all of which shall
continue to constitute part of the Collateral.
(c) The Agent shall have no obligation whatsoever to any of the Lenders
to assure that the Collateral exists or is owned by any Loan Party or is cared
for, protected or insured or has been encumbered, or that the Agent's Liens have
been properly or sufficiently or lawfully created, perfected, protected or
enforced or are entitled to any particular priority, or to exercise at all or in
any particular manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to the Agent pursuant to any of the Loan Documents, it being
understood and agreed that in respect of the Collateral, or any act, omission or
event related thereto, the Agent may act in any manner it may deem appropriate,
in its sole discretion given the Agent's own interest in the Collateral in its
capacity as one of the Lenders and that the Agent shall have no other duty or
liability whatsoever to any Lender as to any of the foregoing.
14.13 RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF PAYMENTS.
(a) Each of the Lenders agrees that it shall not, without the express
consent of all Lenders, and that it shall, to the extent it is lawfully entitled
to do so, upon the request of all Lenders, set off against the Obligations, any
amounts owing by such Lender to the Borrower or any accounts of any Loan Party
now or hereafter maintained with such Lender. Each of the Lenders further agrees
that it shall not, unless specifically requested to do so by the Agent, take or
cause to be taken any action to enforce its rights under this Agreement or
against any Loan Party, including, without limitation, the commencement of any
legal or equitable proceedings, to foreclose any Lien on, or otherwise enforce
any security interest in, any of the Collateral.
(b) If at any time or times any Lender shall receive (i) by payment,
foreclosure, setoff or otherwise, any proceeds of Collateral or any payments
with respect to the Obligations of any Loan Party to such Lender arising under,
or relating to, this Agreement or the other Loan Documents, except for any such
proceeds or payments received by such Lender from the Agent pursuant to the
terms of this Agreement, or (ii) payments from the Agent in excess of such
Lender's ratable portion of all such distributions by the Agent, such Lender
shall promptly (1) turn the same over to the Agent, in kind, and with such
endorsements as may be required to negotiate the same to the Agent, or in same
day funds, as applicable, for the account of all of the Lenders and for
application to the Obligations in accordance with the applicable provisions of
this Agreement, or (2) purchase, without recourse or warranty, an undivided
interest and participation in the Obligations owed to the other
88
Lenders so that such excess payment received shall be applied ratably as among
the Lenders in accordance with their Pro Rata Shares; PROVIDED, HOWEVER, that if
all or part of such excess payment received by the purchasing party is
thereafter recovered from it, those purchases of participations shall be
rescinded in whole or in part, as applicable, and the applicable portion of the
purchase price paid therefor shall be returned to such purchasing party, but
without interest except to the extent that such purchasing party is required to
pay interest in connection with the recovery of the excess payment.
14.14 AGENCY FOR PERFECTION. Each Lender hereby appoints each other Lender as
agent for the purpose of perfecting the Lenders' security interest in assets
which, in accordance with ARTICLE 9 of the UCC can be perfected only by
possession. Should any Lender (other than the Agent) obtain possession of any
such Collateral, such Lender shall notify the Agent thereof, and, promptly upon
the Agent's request therefor shall deliver such Collateral to the Agent or in
accordance with the Agent's instructions.
14.15 PAYMENTS BY AGENT TO LENDERS. All payments to be made by the Agent to
the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds as each party may designate for itself by written
notice to the Agent. Concurrently with each such payment, the Agent shall
identify whether such payment (or any portion thereof) represents principal,
premium or interest on the Revolving Loans or otherwise.
14.16 CONCERNING THE COLLATERAL AND THE RELATED LOAN DOCUMENTS. Each Lender
authorizes and directs the Agent to enter into this Agreement and the other Loan
Documents relating to the Collateral, for the ratable benefit of the Agent and
the Lenders. Each Lender agrees that any action taken by the Agent, Majority
Lenders or Required Lenders, as applicable, in accordance with the terms of this
Agreement or the other Loan Documents relating to the Collateral, and the
exercise by the Agent, the Majority Lenders, or the Required Lenders, as
applicable, of their respective powers set forth therein or herein, together
with such other powers that are reasonably incidental thereto, shall be binding
upon all of the Lenders.
14.17 FIELD AUDIT AND EXAMINATION REPORTS; DISCLAIMER BY LENDERS. By signing
this Agreement, each Lender:
(a) is deemed to have requested that the Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or examination
report (each a "Report" and collectively, "Reports") prepared by the Agent;
(b) expressly agrees and acknowledges that neither Bank of America nor
the Agent (i) makes any representation or warranty as to the accuracy of any
Report, or (ii) shall be liable for any information contained in any Report;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that the Agent or other party performing
any audit or examination will inspect only specific information regarding the
Borrower and will rely significantly upon the Loan Parties' books and records,
as well as on representations of the Loan Parties' personnel;
(d) agrees to keep all Reports confidential and strictly for its
internal use, and not to distribute except to its participants, or use any
Report in any other manner; and
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(e) without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold the Agent and any
such other Lender preparing a Report harmless from any action the indemnifying
Lender may take or conclusion the indemnifying Lender may reach or draw from any
Report in connection with any loans or other credit accommodations that the
indemnifying Lender has made or may make to any Loan Party, or the indemnifying
Lender's participation in, or the indemnifying Lender's purchase of, a loan or
loans of the Borrower; and (ii) to pay and protect, and indemnify, defend and
hold the Agent and any such other Lender preparing a Report harmless from and
against, the claims, actions, proceedings, damages, costs, expenses and other
amounts (including, without limitation Attorney Costs) incurred by the Agent and
any such other Lender preparing a Report as the direct or indirect result of any
third parties who might obtain all or part of any Report through the
indemnifying Lender.
14.18 RELATION AMONG LENDERS. The Lenders are not partners or co-venturers,
and no Lender shall be liable for the acts or omissions of, or (except as
otherwise set forth herein in case of the Agent) authorized to act for, any
other Lender.
ARTICLE 15
MISCELLANEOUS
15.1 CUMULATIVE REMEDIES; NO PRIOR RECOURSE TO COLLATERAL. The enumeration
herein of the Agent's and each Lender's rights and remedies is not intended to
be exclusive, and such rights and remedies are in addition to and not by way of
limitation of any other rights or remedies that the Agent and the Lenders may
have under the UCC or other applicable law. The Agent and the Lenders shall have
the right, in their sole discretion, to determine which rights and remedies are
to be exercised and in which order. The exercise of one right or remedy shall
not preclude the exercise of any others, all of which shall be cumulative. The
Agent and the Lenders may, without limitation, when an Event of Default exists,
proceed directly against the Borrower or any other Loan Party to collect the
Obligations without any prior recourse to the Collateral. No failure to exercise
and no delay in exercising, on the part of the Agent or any Lender, any right,
remedy, power or privilege hereunder, shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege.
15.2 SEVERABILITY. The illegality or unenforceability of any provision of
this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
15.3 GOVERNING LAW; CHOICE OF FORUM; SERVICE OF PROCESS; JURY TRIAL WAIVER.
(a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES
OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS (AS
OPPOSED TO THE CONFLICT OF LAWS PROVISIONS PROVIDED THAT PERFECTION ISSUES WITH
RESPECT TO ARTICLE 9 OF THE UCC MAY GIVE EFFECT TO APPLICABLE CHOICE OR CONFLICT
OF LAW RULES SET FORTH IN ARTICLE 9 OF THE UCC) OF THE STATE OF TENNESSEE;
PROVIDED THAT THE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER
FEDERAL LAW.
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(b) TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE
PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM
THEREIN.
ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES HERETO INCLUDING
BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS INSTRUMENT,
AGREEMENT OR DOCUMENT OR ANY RELATED INSTRUMENTS, AGREEMENTS OR DOCUMENTS,
INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL BE
DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION ACT
(OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF PRACTICE AND
PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF J.A.M.S./ENDISPUTE OR
ANY SUCCESSOR THEREOF ("J.A.M.S."), AND THE "SPECIAL RULES" SET FORTH BELOW. IN
THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON
ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY
TO THIS INSTRUMENT, AGREEMENT OR DOCUMENT MAY BRING AN ACTION, INCLUDING A
SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR
CLAIM TO WHICH THIS AGREEMENT APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH
ACTION.
(i) SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN
SHELBY COUNTY, TENNESSEE AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT
AN ARBITRATOR; IF J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM
ADMINISTERING THE ARBITRATION, THEN THE AMERICAN ARBITRATION
ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS WILL BE COMMENCED
WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE ARBITRATOR
SHALL ONLY, UPON A SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE
COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL 60 DAYS.
(ii) RESERVATION OF RIGHTS. NOTHING IN THIS ARBITRATION
PROVISION SHALL BE DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY
OTHERWISE APPLICABLE STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS
CONTAINED IN THIS INSTRUMENT, AGREEMENT OR DOCUMENT; OR (II) BE A
WAIVER BY AGENT OR LENDERS OF THE PROTECTION AFFORDED TO THEM BY 12
U.S.C. SEC. 91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III)
LIMIT THE RIGHT OF AGENT OR LENDERS (A) TO EXERCISE SELF HELP REMEDIES
SUCH AS (BUT NOT LIMITED TO) SETOFF, OR (B) TO FORECLOSE AGAINST ANY
REAL OR PERSONAL PROPERTY COLLATERAL, OR (C) TO OBTAIN FROM A COURT
PROVISIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO)
INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT OF A RECEIVER.
AGENT OR LENDERS MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE UPON
SUCH PROPERTY, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE,
DURING OR AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT
PURSUANT TO THIS INSTRUMENT, AGREEMENT OR DOCUMENT. NEITHER THIS
EXERCISE OF SELF HELP REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF AN
ACTION FOR
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FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE A
WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN ANY SUCH
ACTION, TO ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM
OCCASIONING RESORT TO SUCH REMEDIES.
15.4 SUBMISSION TO JURISDICTION; WAIVERS. Subject to SECTION 15.3 above,
each of the parties hereto irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement to which it is a party, or for recognition
and enforcement of any judgment in respect thereof, to the non-exclusive general
jurisdiction of the courts of the State of Tennessee and the courts of the
United States of America, for the Western District of Tennessee, Western
Division, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same,
(c) agrees that service of process in any such action or proceeding may
be effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail) postage prepaid, to the respective party at
its address set forth in SECTION 15.8 hereof or at such other address of which
the Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect service
of process in any other manner permitted by law or shall limit the right to xxx
in any other jurisdiction; and waives, to the maximum extent not prohibited by
law, any right it may have to claim or recover in any legal action or proceeding
referred to in this SECTION 15.4 any special, exemplary, punitive or
consequential damages.
15.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the Loan Parties'
representations and warranties contained in this Agreement shall survive the
execution, delivery, and acceptance thereof by the parties, notwithstanding any
investigation by the Agent or the Lenders or their respective agents.
15.6 OTHER SECURITY AND GUARANTIES. The Agent, may, without notice or demand
and without affecting the Borrower's or any other Loan Party's obligations
hereunder, from time to time: (a) take from any Person and hold collateral
(other than the Collateral) for the payment of all or any part of the
Obligations and exchange, enforce or release such collateral or any part
thereof; and (b) accept and hold any endorsement or guaranty of payment of all
or any part of the Obligations and release or substitute any such endorser or
guarantor, or any Person who has given any Lien in any other collateral as
security for the payment of all or any part of the Obligations, or any other
Person in any way obligated to pay all or any part of the Obligations.
15.7 FEES AND EXPENSES. The Borrower agrees to pay to the Agent, for its
benefit, on demand, all costs and expenses that Agent pays or incurs in
connection with the negotiation, preparation, syndication, consummation,
administration, enforcement, and termination of this Agreement or any of the
other Loan Documents, including, without limitation: (a) Attorney Costs; (b)
costs and expenses (including attorneys' and paralegals' fees and disbursements
which shall include the allocated costs of Agent's in-house counsel fees and
disbursements) for any amendment,
92
supplement, waiver, consent, or subsequent closing in connection with the Loan
Documents and the transactions contemplated thereby; (c) costs and expenses of
lien and title searches and title insurance; (d) taxes, fees and other charges
for recording the Mortgages, filing trademark, patent or copyright assignments,
filing financing statements and continuations, and other actions to perfect,
protect, and continue the Agent's Liens (including costs and expenses paid or
incurred by the Agent in connection with the consummation of Agreement); (e)
sums paid or incurred to pay any amount or take any action required of the
Borrower or any other Loan Party under the Loan Documents that the Borrower or
such Loan Party fails to pay or take; (f) costs of appraisals, inspections, and
verifications of the Collateral, including, without limitation, travel, lodging,
and meals for inspections of the Collateral and the Borrower's operations by the
Agent and Agent's representatives plus the Agent's then customary charge for
field examinations and audits and the preparation of reports thereof (such
charge is currently $650.00 per day (or portion thereof) for each agent or
employee of the Agent with respect to each field examination or audit); (g)
costs and expenses of forwarding loan proceeds, collecting checks and other
items of payment, and establishing and maintaining Payment Accounts and lock
boxes; (h) costs and expenses of preserving and protecting the Collateral; and
(i) costs and expenses (including attorneys' and paralegals' fees and
disbursements which shall include the allocated cost of Agent's in-house counsel
fees and disbursements) paid or incurred to obtain payment of the Obligations,
enforce the Agent's Liens, sell or otherwise realize upon the Collateral, and
otherwise enforce the provisions of the Loan Documents (including SECTION
15.11), or to defend any claims made or threatened against the Agent or any
Lender arising out of the transactions contemplated hereby (including without
limitation, preparations for and consultations concerning any such matters and
including in connection with any insolvency, reorganization or other
proceedings). The foregoing shall not be construed to limit any other provisions
of the Loan Documents regarding costs and expenses to be paid by the Borrower or
any other Loan Party. All of the foregoing costs and expenses shall be charged
to the Borrower's Loan Account as Revolving Loans as described in SECTION 4.7.
15.8 NOTICES. Except as otherwise provided herein, all notices, demands and
requests that any party is required or elects to give to any other shall be in
writing, or by a telecommunications device capable of creating a written record,
and any such notice shall become effective (a) upon personal delivery thereof,
including, but not limited to, delivery by overnight mail and courier service,
(b) four (4) days after it shall have been mailed by United States mail, first
class, certified or registered, with postage prepaid, or (c) in the case of
notice by such a telecommunications device, when properly transmitted, in each
case addressed to the party to be notified as follows:
If to the Agent or to Bank of America:
Bank of America, N.A.
0000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxx
Fax No.: (000)000-0000
with copies to:
Xxxxxxx Xxxxx, Esq.
Bass, Xxxxx & Xxxx PLC
000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000-0000
Fax No. (000)000-0000
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If to the Borrower or any other Loan Party:
c/x Xxxxxxx Sports Inc.
0000 Xxxxxxx Xxxx Xxxxx, Xxxxx Xxx
Xxxxxxx, Xxxxxxxxx 00000
Fax No: (000) 000-0000
with a copy to:
Xxxxxxxx Xxxx & Brandeis, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxx, Esq.
Fax No.: (000) 000-0000
or to such other address as each party may designate for itself by like notice.
Failure or delay in delivering copies of any notice, demand, request, consent,
approval, declaration or other communication to the persons designated above to
receive copies shall not adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other communication.
15.9 WAIVER OF NOTICES. Unless otherwise expressly provided herein, each
Loan Party waives presentment, protest and notice of demand or dishonor and
protest as to any instrument, notice of intent to accelerate the Obligations and
notice of acceleration of the Obligations, as well as any and all other notices
to which it might otherwise be entitled. No notice to or demand on the Borrower
or any other Loan Party which the Agent or any Lender may elect to give shall
entitle the Borrower or any other Loan Party to any or further notice or demand
in the same, similar or other circumstances.
15.10 BINDING EFFECT. The provisions of this Agreement shall be binding upon
and inure to the benefit of the respective representatives, successors, and
assigns of the parties hereto; PROVIDED, HOWEVER, that, except in connection
with a merger or other combination permitted by SECTION 9.9 hereof, no interest
herein may be assigned by the Borrower or any other Loan Party without prior
written consent of the Agent and each Lender. The rights and benefits of the
Agent and the Lenders hereunder shall, if such Persons so agree, inure to any
party acquiring any interest in the Obligations or any part thereof.
15.11 INDEMNITY OF THE AGENT AND THE LENDERS BY THE BORROWER.
(a) The Borrower agrees to defend, indemnify and hold the Agent-Related
Persons, and each Lender and each of its respective officers, directors,
employees, counsel, agents and attorneys-in-fact (each, an "Indemnified Person")
harmless from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, charges, expenses and disbursements
(including Attorney Costs) of any kind or nature whatsoever which may at any
time (including at any time following repayment of the Loans and payment of all
other Obligations, the termination of this Agreement and the termination,
resignation or replacement of the Agent or replacement of any Lender) be imposed
on, incurred by or asserted against any such Person in any way relating to or
arising out of this Agreement or any document contemplated by or referred to
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herein, or the transactions contemplated hereby, or any action taken or omitted
by any such Person under or in connection with any of the foregoing, including
with respect to any investigation, litigation or proceeding (including any
Insolvency Proceeding or appellate proceeding) related to or arising out of this
Agreement, any other Loan Document, or the Loans or the use of the proceeds
thereof, whether or not any Indemnified Person is a party thereto (all the
foregoing, collectively, the "Indemnified Liabilities"); provided, that the
Borrower shall have no obligation hereunder to any Indemnified Person with
respect to Indemnified Liabilities resulting solely from the willful misconduct
or gross negligence of such Indemnified Person. The agreements in this Section
shall survive payment of all other Obligations.
(b) The Borrower agrees to indemnify, defend and hold harmless the
Agent and the Lenders from any loss or liability directly or indirectly arising
out of the use, generation, manufacture, production, storage, release,
threatened release, discharge, disposal or presence of a hazardous substance
relating to the Borrower's operations, business or property unless resulting
from gross negligence or willful misconduct of the Agent. This indemnity will
apply whether the hazardous substance is on, under or about the Borrower's
property or operations or property leased to the Borrower. The indemnity
includes but is not limited to reasonable attorneys' fees (including the
reasonable estimate of the allocated cost of in-house counsel and staff). The
indemnity extends to the Agent and the Lenders, their parents, affiliates,
subsidiaries and all of their directors, officers, employees, agents,
successors, attorneys and assigns. "Hazardous substances" means any substance,
material or waste that is or becomes designated or regulated as "toxic,"
"hazardous," "pollutant," or "contaminant" or a similar designation or
regulation under any federal, state or local law (whether under common law,
statute, regulation or otherwise) or judicial or administrative interpretation
of such, including without limitation petroleum or natural gas. This indemnity
will survive repayment of all other Obligations.
15.12 LIMITATION OF LIABILITY. No claim may be made by any Loan Party, any
Lender or other Person against the Agent, any Lender, or the affiliates,
directors, officers, employees, or agents of any of them for any special,
indirect, consequential or punitive damages in respect of any claim for breach
of contract or any other theory of liability arising out of or related to the
transactions contemplated by this Agreement or any other Loan Document, or any
act, omission or event occurring in connection therewith, and each Loan Party
and each Lender hereby waive, release and agree not to xxx upon any claim for
such damages, whether or not accrued and whether or not known or suspected to
exist in its favor.
15.13 FINAL AGREEMENT. This Agreement and the other Loan Documents are
intended by the Loan Parties, the Agent and the Lenders to be the final,
complete, and exclusive expression of the agreement between them. This Agreement
supersedes any and all prior oral or written agreements relating to the subject
matter hereof. No modification, rescission, waiver, release, or amendment of any
provision of this Agreement or any other Loan Document shall be made, except by
a written agreement signed by the applicable Loan Party and a duly authorized
officer of each of the Agent and the requisite Lenders.
15.14 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and by the Agent, each Lender and each Loan Party in separate
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same agreement; signature pages may be detached
from multiple separate counterparts and attached to a single counterpart so that
all signature pages are physically attached to the same document.
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15.15 CAPTIONS. The captions contained in this Agreement are for convenience
of reference only, are without substantive meaning and should not be construed
to modify, enlarge, or restrict any provision.
15.16 RIGHT OF SETOFF. In addition to any rights and remedies of the Lenders
provided by law, if an Event of Default exists or the Loans have been
accelerated, each Lender is authorized at any time and from time to time,
without prior notice to any Loan Party, any such notice being waived by each
Loan Party 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 by, and other indebtedness at any time owing by, such Lender to or for
the credit or the account of any Loan Party against any and all Obligations
owing to such Lender, now or hereafter existing, irrespective of whether or not
the Agent or such Lender shall have made demand under this Agreement or any Loan
Document and although such Obligations may be contingent or unmatured. Each
Lender agrees promptly to notify the Borrower and the Agent after any such
set-off and application made by such Lender; PROVIDED, HOWEVER, that the failure
to give such notice shall not affect the validity of such set-off and
application. NOTWITHSTANDING THE FOREGOING, NO LENDER SHALL EXERCISE ANY RIGHT
OF SET-OFF, BANKER'S LIEN, OR THE LIKE AGAINST ANY DEPOSIT ACCOUNT OR PROPERTY
OF ANY LOAN PARTY HELD OR MAINTAINED BY SUCH LENDER WITHOUT THE PRIOR WRITTEN
UNANIMOUS CONSENT OF THE LENDERS.
15.17 BORROWER JOINT AND SEVERAL LIABILITY. Each Person defined as the
"Borrower" shall be liable for all amounts due to the Agent and/or any Lender
under this Agreement, regardless of which Borrower actually receives Loans or
other extensions of credit hereunder or the amount of such Loans received or the
manner in which the Agent and/or such Lender accounts for such Loans or other
extensions of credit on its books and records. The Borrower's Obligations with
respect to Loans made to it, and the Borrower's Obligations arising as a result
of the joint and several liability of the Borrower hereunder, with respect to
Loans made to the other Borrower hereunder, shall be separate and distinct
obligations, but all such Obligations shall be primary obligations of each
Person defined as the "Borrower."
The Borrower's Obligations arising as a result of the joint and several
liability of the Borrower hereunder with respect to Loans or other extensions of
credit made to the other Borrower hereunder shall, to the fullest extent
permitted by law, be unconditional irrespective of (i) the validity or
enforceability, avoidance or subordination of the Obligations of the other
Borrower or of any promissory note or other document evidencing all or any part
of the Obligations of the other Borrower, (ii) the absence of any attempt to
collect the Obligations from the other Borrower, any other guarantor, or any
other security therefor, or the absence of any other action to enforce the same,
(iii) the waiver, consent, extension, forbearance or granting of any indulgence
by the Agent and/or any Lender with respect to any provision of any instrument
evidencing the Obligations of the other Borrower, or any part thereof, or any
other agreement now or hereafter executed by the other Borrower and delivered to
the Agent and/or any Lender, (iv) the failure by the Agent and/or any Lender to
take any steps to perfect and maintain its security interest in, or to preserve
its rights to, any security or collateral for the Obligations of the other
Borrower, (v) the Agent's and/or any Lender's election, in any proceeding
instituted under the Bankruptcy Code, of the application of Section 1111(b)(2)
of the Bankruptcy Code, (vi) any borrowing or grant of a security interest by
the other Borrower, as debtor-in-possession under Section 364 of the Bankruptcy
Code, (vii) the disallowance of all or any portion of the Agent's and/or any
Lender's claim(s) for the repayment of the Obligations of the other Borrower
under Section 502 of the Bankruptcy Code, or (viii) any other circumstances
which might constitute a legal or equitable discharge or defense of a guarantor
or of the other Borrower. With respect to the Borrower's Obligations arising as
a result of the joint and
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several liability of the Borrower hereunder with respect to Loans or other
extensions of credit made to either of the other Borrower hereunder, the
Borrower waives, until the Obligations shall have been paid in full and the Loan
Agreement shall have been terminated, any right to enforce any right of
subrogation or any remedy which the Agent and/or any Lender now has or may
hereafter have against the Borrower, any endorser or any guarantor of all or any
part of the Obligations, and any benefit of, and any right to participate in,
any security or collateral given to the Agent and/or any Lender to secure
payment of the Obligations or any other liability of the Borrower to the Agent
and/or any Lender.
Upon any Event of Default, the Agent may proceed directly and at once,
without notice, against the Borrower to collect and recover the full amount, or
any portion of the Obligations, without first proceeding against the other
Borrower or any other Person, or against any security or collateral for the
Obligations. The Borrower consents and agrees that the Agent shall be under no
obligation to marshal any assets in favor of the Borrower or against or in
payment of any or all of the Obligations.
15.18 CONTRIBUTION AND INDEMNIFICATION AMONG THE BORROWERS. Each Borrower is
obligated to repay the Obligations as joint and several obligors under this
Agreement. To the extent that any Borrower shall, under this Agreement as a
joint and several obligor, repay any of the Obligations constituting Loans made
to another Borrower hereunder or other Obligations incurred directly and
primarily by any other Borrower (an "Accommodation Payment"), then the Borrower
making such Accommodation Payment shall be entitled to contribution and
indemnification from, and be reimbursed by, each of the other Borrowers in an
amount, for each of such other Borrowers, equal to a fraction of such
Accommodation Payment, the numerator of which fraction is such other Borrower's
"Allocable Amount" (as defined below) and the denominator of which is the sum of
the Allocable Amounts of all of the Borrowers. As of any date of determination,
the "Allocable Amount" of each Borrower shall be equal to the maximum amount of
liability for Accommodation Payments which could be asserted against such
Borrower hereunder without (a) rendering such Borrower "insolvent" within the
meaning of Section 101 (31) of the Bankruptcy Code, Section 2 of the Uniform
Fraudulent Transfer Act ("UFTA") or Section 2 of the Uniform Fraudulent
Conveyance Act ("UFCA"), (ii) leaving such Borrower with unreasonably small
capital or assets, within the meaning of Section 548 of the Bankruptcy Code,
Section 4 of the UFTA, or Section 5 of the UFCA, or (iii) leaving such Borrower
unable to pay its debts as they become due within the meaning of Section 548 of
the Bankruptcy Code or Section 4 of the UFTA, or Section 5 of the UFCA. All
rights and claims of contribution, indemnification, subrogation and
reimbursement under this section shall be subordinate in right of payment to the
prior payment in full of the Obligations. The provisions of this section shall,
to the extent expressly inconsistent with any provision in any Loan Document,
supersede such inconsistent provision.
15.19 AGENCY OF THE PARENT GUARANTOR FOR EACH BORROWER AND OTHER LOAN PARTY.
Each of the Borrowers and each other Loan Party appoints the Parent Guarantor as
its agent for all purposes relevant to this Agreement, including (without
limitation) the giving and receipt of notices and execution and delivery of all
documents, instruments and certificates contemplated herein and all
modifications hereto. Any acknowledgment, consent, direction, certification or
other action which might otherwise be valid or effective only if given or taken
by all of the Borrowers and other Loan Parties or acting singly, shall be valid
and effective if gent or taken only by the Parent Guarantor, whether or not
either of the Borrowers or any other Loan Party joins therein.
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ARTICLE 16
GUARANTEE
16.1 GUARANTEED OBLIGATIONS. By its execution of this Agreement, Parent
Guarantor ("Guarantor") hereby, jointly and severally, irrevocably and
unconditionally guarantees the payment and performance, in full, when due
(whether at stated maturity, by acceleration or otherwise), of any and all
Obligations (including all amounts payable with respect to all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses and disbursements (including Attorney Costs) with respect
thereto, and all fees, costs expenses and other amounts payable by the Borrower
under this Agreement or under any provision of any other Loan Document (the
"Guarantee"). Nothing in this ARTICLE 16 shall, or shall be deemed to, waive any
of the notice or cure periods contained in ARTICLE 11 hereof and neither Agent
nor Lenders shall be entitled to enforce the Guarantee unless an Event of
Default shall have occurred and be continuing; provided, neither the foregoing
nor any other provision of the Guarantee shall be construed as requiring as a
condition to enforcement of the Guarantee any notice to a Guarantor.
16.2 GUARANTEE ABSOLUTE; ALTERATION OF OBLIGATIONS.
(a) The obligations of each Guarantor hereunder are those of a primary
obligor, and not merely a surety, and are independent of the Obligations. A
separate action or actions may be brought against the Borrower or any Other
Guarantor (each an "Other Guarantor"), whether or not an action is brought
against the Borrower, any Other Guarantor or any other obligor in respect of the
Obligations or whether the Borrower, any Other Guarantor or any other obligor in
respect of the Obligations is joined in any such action or actions. Neither the
Agent's nor any Lender's rights hereunder shall be exhausted by its exercise of
any of its rights or remedies or by any such action or by any number of
successive actions unless and until all Obligations and all other obligations
hereunder have been paid and fully performed.
(b) Each Guarantor, jointly and severally, irrevocably guarantees that
the Obligations will be paid and performed strictly in accordance with the terms
of this Agreement, and the other Loan 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 the Agent or the Lenders with respect thereto.
The liability of each Guarantor under this Guarantee shall be absolute and
unconditional irrespective of:
(i) any lack of genuineness, validity, legality or
enforceability of this Agreement, any other Loan Document or any other
document, agreement or instrument relating thereto or any assignment or
transfer of any thereof;
(ii) any change in the time, manner or place of payment of, or
in any other term of (including a reduction or an increase), in the
rate of interest on, or other payment in respect of the Loans) all or
any of the Obligations, or any waiver, indulgence, compromise, renewal,
extension, amendment, modification of, or addition, supplement, or
consent to, or departure from, or any other action or inaction under or
in respect of, the Obligations or this Agreement, or any other Loan
Document or any document, instrument or agreement relating to the
Obligations or any other instrument or agreement referred to herein or
any assignment or transfer of any thereof;
(iii) any change, subordination, impairment or release of all
or any of the Obligations or the absence of any attempt to collect the
Obligations from the Borrower or any
98
other Guarantor or any suspension of any right or remedy of the Agent
or any Lender against any Person, including the Borrower, any Other
Guarantor or other obligor in respect of the Obligations; and no such
event shall in any way affect any of the obligations of any Guarantor
hereunder or give any Guarantor any recourse against the Agent or any
Lender;
(iv) any failure to perfect, or preserve any rights to, or any
change, subordination, impairment or release of, all or any part of the
Collateral or any furnishing of any additional security (including
letters of credit and surety bonds) for any of the Obligations;
(v) any insolvency, reorganization, bankruptcy or similar
proceeding ("Insolvency Proceedings") (whether voluntary or
involuntary) in respect of the Borrower, any Other Guarantor or any
other obligor in respect of the Obligations is commenced or filed or
any action is taken with respect to this Guarantee by any trustee or
receiver, or by any court, in any such proceeding;
(vi) any modification or termination of any intercreditor or
subordination agreement pursuant to which the claims of other creditors
of the Borrower or any Other Guarantor are subordinated to those of the
Agent or any Lender;
(vii) the Agent's or any Lender's election, in any proceeding
under the Bankruptcy Code, of the application of Section 1111(b)(2) of
the Bankruptcy Code;
(viii) any borrowing or grant of a security interest by any
Other Guarantor or the Borrower, or debtor-in-possession under Section
364 of the Bankruptcy Code;
(ix) any disallowance of all or any portion of the Agent's or
any Lender's claim(s) for the repayment of the Obligations of any Other
Guarantor or the Borrower under Section 502 of the Bankruptcy code; or
(x) any other circumstance which might otherwise constitute a
defense available to, or a legal or equitable discharge of, any
Guarantor.
(c) This Guarantee shall continue to be effective or be reinstated, as
the case may be, if at any time payment of the Obligations, or any part thereof,
is, upon any Insolvency Proceeding in respect of the Borrower or any Guarantor
or otherwise pursuant to applicable law, rescinded or reduced in amount or must
otherwise be restored or returned by the Agent or any Lender, all as though such
payment had not been made.
(d) If an event permitting the acceleration of any of the Obligations
shall at any time have occurred and be continuing and such acceleration shall at
such time be prevented by reason of the pendency against the Borrower of any
Insolvency Proceeding, each Guarantor agrees that, for purposes of this
Guarantee and its obligations hereunder, the Obligations shall be deemed to have
been accelerated and each Guarantor shall forthwith pay the Obligations
(including interest which, but for the filing of such Insolvency Proceeding with
respect to the Company, would accrue on such Obligations), without any further
notice or demand.
16.3 OBLIGATIONS JOINT AND SEVERAL; RIGHTS NOT EXCLUSIVE. The obligations of
each Guarantor hereunder are joint and several. The rights provided for this
Guarantee are cumulative and
99
are not exclusive of any other rights, powers, privileges or remedies provided
by law or in equity, or under any other instrument, document or agreement now
existing or hereafter arising.
16.4 WAIVERS. In consideration of this Agreement, the Loan Documents and the
agreements of the Agent and the Lenders hereunder, each Guarantor hereby
relinquishes all rights and remedies accorded by applicable law to sureties or
guarantors which such Guarantor may have in connection with this Guarantee, and
agrees not to assert or take advantage of any such rights or remedies,
including:
(a) any right to require the Agent or any Lender to proceed against the
Borrower, the Other Guarantors or any other Person or to proceed against or
exhaust any security, letter of credit or surety bond issued in respect of the
Obligations held by the Agent or to require any Lender at any time to pursue any
other remedy in its power before proceeding against such Guarantor;
(b) the defense of the statute of limitations in any action hereunder
or in any action for the collection of the Obligations guaranteed hereunder or
any of the other obligations of Guarantor hereunder;
(c) any defense that may arise by reason of the release of any Other
Guarantor;
(d) acceptance of this Guarantee, demand, presentment, protest,
promptness, diligence and notice of any kind, including notice of the existence,
creation or incurrence of any new or additional Debt or Obligation or of any
action or non-action on the part of the Borrower, the Agent, any Lender, any
Other Guarantor or any endorser or creditor of the Company or any Guarantor or
on the part of any other Person under this or any other instrument in connection
with any obligation or evidence of indebtedness held by the Agent or any Lender
as collateral or support or in connection with the Obligations or any other
obligations hereby guaranteed;
(e) all rights and defenses arising out of an election of remedies by
the Agent or any Lender, even though that election of remedies, such as a
non-judicial foreclosure with respect to security for a guaranteed obligation,
has destroyed or may destroy such Guarantor's right of subrogation and
reimbursement against the Borrower, or any Other Guarantor, if any;
(f) any defense based upon any statute or rule of law which provides
that the obligation of a surety must be neither larger in amount nor in other
respects more burdensome than that of the principal;
(g) any duty on the part of the Agent or any Lender to disclose to any
Guarantor any facts the Agent or any Lender may now or hereafter know about the
Borrower or any Other Guarantor, regardless of whether the Administrative Agent
or any Lender has reason to believe that any such facts materially increase the
risk beyond that which such Guarantor intended to assume, or has reason to
believe that such facts are unknown to such Guarantor, or has a reasonable
opportunity to communicate such facts to such Guarantor, since each Guarantor
acknowledges that such Guarantor is fully responsible for being and keeping
informed of the financial condition of the Borrower and the Other Guarantors and
of all circumstances bearing on the risk of nonperformance of any obligations
hereby guaranteed;
(h) any defense based upon any borrowing or grant of any security
interest under Section 364 of the Bankruptcy Code or any similar provision under
the Bankruptcy Law;
100
(i) any requirement that at any time any action be taken by any Person
against the Borrower or any other Person;
(j) any right to which it may be entitled in connection with any
obligation of the Lenders to xxx the Borrower or any Other Guarantor prior to a
claim being made against the Guarantor hereunder;
(k) any right to which it may be entitled to have the assets of the
Borrower first be used as payment of the Borrower's or any Guarantor's
obligations hereunder prior to any amounts being claimed from or paid by any
such Guarantor hereunder; and
(l) any and all other rights and remedies accorded by applicable law to
guarantors or sureties.
16.5 CONTRIBUTION AND INDEMNIFICATION; SUBROGATION. Each Guarantor is
obligated to repay the Obligations as joint and several obligors under this
Agreement. To the extent that any Guarantor shall, under this Agreement as a
joint and several obligor, repay any of the Obligations constituting Loans made
to the Borrower hereunder or other Obligations incurred directly and primarily
by the Borrower (an "Guarantor Accommodation Payment"), then the Guarantor
making such Guarantor Accommodation Payment shall be entitled to contribution
and indemnification from, and be reimbursed by, each of the individual Borrowers
and Other Guarantors in an amount, for each of the individual Borrowers and
Other Guarantors, equal to a fraction of such Guarantor Accommodation Payment,
the numerator of which fraction is such Borrower's or Other Guarantor's
"Allocable Amount" (as defined below) and the denominator of which is the sum of
the Allocable Amounts of all of the individual Borrowers and Other Guarantors.
As of any date of determination, the "Allocable Amount" of each Borrower or
Other Guarantor shall be equal to the maximum amount of liability for Guarantor
Accommodation Payments which could be asserted against such Borrower or Other
Guarantor hereunder without (a) rendering such Borrower or Other Guarantor
"insolvent" within the meaning of Section 101 (31) of the Bankruptcy Code,
Section 2 of the Uniform Fraudulent Transfer Act ("UFTA") or Section 2 of the
Uniform Fraudulent Conveyance Act ("UFCA"), (ii) leaving such Borrower or Other
Guarantor with unreasonably small capital or assets, within the meaning of
Section 548 of the Bankruptcy Code, Section 4 of the UFTA, or Section 5 of the
UFCA, or (iii) leaving such Borrower or Other Guarantor unable to pay its debts
as they become due within the meaning of Section 548 of the Bankruptcy Code or
Section 4 of the UFTA, or Section 5 of the UFCA. All rights and claims of
contribution, indemnification, subrogation and reimbursement under this Section
shall be subordinate in right of payment to the prior payment to the Agent and
the Lender of the Obligations. In furtherance of the foregoing, notwithstanding
any payment or payments made by any Guarantor hereunder, or any set-off or
application of funds of any Guarantor by the Agent or any Lender, no Guarantor
shall be entitled to be subrogated to any of the rights of the Administrative
Agent or any Lender against the Borrower or any Other Guarantor or against any
Collateral, support or guaranty or right of offset held by the Agent or any
Lender for the payment of the Obligations, nor shall any Guarantor seek or be
entitled to seek any contribution, indemnification or reimbursement from the
Borrower or any Other Guarantor in respect of payments made hereunder, unless
and until such time as all Obligations have been paid in full to the Agent and
the Lenders and this Agreement has been terminated. If any amount shall be paid
to any Guarantor on account of any subrogation, contribution, indemnification or
reimburesement rights at any time when all of the Obligations shall not have
been finally paid in full and the Agreement terminated, such amount shall be
held by such Guarantor in trust for the Agent and the Lenders, segregated from
other funds of such Guarantor, and shall, forthwith upon receipt by such
Guarantor, be turned over to the Agent in the exact form received by such
Guarantor (duly indorsed by such Guarantor to the Agent, if
101
required), to be held and/or applied to the Obligations, whether matured or
unmatured, in such order as the Agent may determine, but without reducing or
affecting in any manner the liability of such Guarantor under this Guarantee.
16.6 SUBORDINATION. Each Guarantor hereby expressly covenants and agrees for
the benefit of the Agent and each Lender that all existing and future Debt of
the Borrower or any Other Guarantor or any of its Subsidiaries (including all
rights of contribution, reimbursement or subrogation), including any Debt listed
on SCHEDULE 8.9 or described in the definition of Restricted Investment, to such
Guarantor and any right of such Guarantor or any of its Subsidiaries to the
return or withdrawal of any capital invested by such Guarantor or any of its
Subsidiaries in the Borrower or any Other Guarantor, shall be subordinated to
and junior in right of payment to the Obligations. Without the prior written
consent of the Agent, such subordinated Debt shall not be paid or withdrawn in
whole or in part, nor shall any Guarantor or any of its Subsidiaries accept any
payment of, or on account of, any such Debt or as a withdrawal of capital while
this Guarantee is in effect, except in each case from the cash proceeds of the
issuance of common Capital Stock of the Parent Guarantor. Any such payment to
any Guarantor or any of its Subsidiaries in violation of this Guarantee shall be
received by such Guarantor or such Subsidiary, as the case may be, in trust for
the benefit of the Agent and the Lenders, segregated from other funds of such
Guarantor or such Subsidiary, and shall, forthwith upon receipt by such
Guarantor or such Subsidiary, be turned over to the Agent in the exact form
received by such Guarantor or such Subsidiary (duly endorsed by such Guarantor
or such Subsidiary to the Agent, if required), to be held and/or applied against
the Obligations, whether matured or unmatured, in such order as the Agent may
determine, but without reducing or affecting in any manner the liability of such
Guarantor under this Guarantee.
16.7 NO EFFECT ON GUARANTEE. The obligations of any Guarantor under this
Guarantee shall not be altered, limited or affected by any Insolvency Proceeding
of the Borrower or any of the Other Guarantors, or by any defense which the
Borrower or any Other Guarantor may have by reason of any order, decree or
decision of any court or administrative body resulting from any such proceeding.
16.8 CONTINUING GUARANTEE. This Guarantee is a continuing guarantee and
shall (a) remain in full force and effect until termination of the Commitment
and payment in full of all Obligations and all of Guarantors' obligations
hereunder; (b) be binding upon each Guarantor, its successors and assigns; and
(c) inure to the benefit of the Agent-Related Persons, the Agent and each Lender
and their respective successors, transferees and assigns. Without limiting the
generality of the foregoing, the Agent and each Lender may assign or otherwise
transfer its rights under this Guarantee to any Person to whom a transfer by the
Agent or Lender is permitted under this Agreement, and such Person shall
thereupon become vested with all the benefits in respect hereof granted to the
Agent or Lender herein or otherwise, all as provided in, and to the extent set
forth in, this Agreement. No Guarantor may assign or otherwise transfer any of
its obligations hereunder to any Person without the prior written consent of the
Agent and all Lenders other than in connection with a merger or other
combination permitted under SECTION 9.9 hereof.
[Remainder of Page Intentionally Left Blank-
Counterpart Signature Pages Follow]
102
IN WITNESS WHEREOF, the parties have entered into this Agreement on the
date first above written.
"PARENT GUARANTOR"
Xxxxxxx Sports Inc.
By: /S/ XXXX XXXXXXX
------------------------------------------
Title: CHIEF FINANCIAL OFFICER AND SECRETARY
---------------------------------------
"BORROWERS"
Varsity Spirit Corporation
By: /S/ XXXX XXXXXXX
------------------------------------------
Title: CHIEF FINANCIAL OFFICER AND SECRETARY
---------------------------------------
Varsity Spirit Fashions & Supplies, Inc.
By: /S/ XXXX XXXXXXX
------------------------------------------
Title: CHIEF FINANCIAL OFFICER AND SECRETARY
---------------------------------------
Varsity USA, Inc.
By: /S/ XXXX XXXXXXX
------------------------------------------
Title: CHIEF FINANCIAL OFFICER AND SECRETARY
---------------------------------------
Varsity/Intropa Tours, Inc.
By: /S/ XXXX XXXXXXX
------------------------------------------
Title: CHIEF FINANCIAL OFFICER AND SECRETARY
---------------------------------------
International Logos, Inc.
By: /S/ XXXX XXXXXXX
------------------------------------------
Title: CHIEF FINANCIAL OFFICER AND SECRETARY
---------------------------------------
103
"AGENT"
Bank of America, N.A., as the Agent
By: /S/ XXXXXX XXXXXXX
------------------------------------------
Xxxxxx Xxxxxxx, Senior Vice President
"LENDERS"
Commitment: $15,000,000 Bank of America, N.A., as a Lender
By: /S/ XXXXXX XXXXXXX
------------------------------------------
Xxxxxx Xxxxxxx, Senior Vice President
104
EXHIBIT A
INTENTIONALLY OMITTED
105
EXHIBIT B
FORM OF BORROWING BASE CERTIFICATE
106
EXHIBIT C
FINANCIAL STATEMENTS
107
EXHIBIT D
LIST OF CLOSING DOCUMENTS
108
EXHIBIT E
NOTICE OF BORROWING
Date: _____________
To: Bank of America, N.A., as Agent for the Lenders who are parties to the
Second Amended and Restated Loan, Guaranty and Security Agreement dated
as of __________________, 2001 (as extended, renewed, amended or
restated from time to time, the "Loan and Security Agreement") among
Xxxxxxx Sports Inc., as Parent Guarantor, Varsity Spirit Corporation,
Varsity Spirit Fashions & Supplies, Inc., Varsity/Intropa Tours, Inc.,
Varsity USA, Inc., and International Logos, Inc. (collectively, the
"Borrower"), and certain Lenders which are signatories thereto and, as
Agent
Ladies and Gentlemen:
The undersigned, ____________________________ (the "Borrower"), refers
to the Loan and Security Agreement, the terms defined therein being used herein
as therein defined, and hereby gives you notice irrevocably of the Borrowing
specified below:
1. The Business Day of the proposed Borrowing is ______________, _____.
2. The aggregate amount of the proposed Borrowing is $_____________.
3. The amount of the Letter of Credit is $ .
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the proposed Borrowing,
before and after giving effect thereto and to the application of the proceeds
therefrom:
(a) The representations and warranties of the Borrower contained in the
Loan and Security Agreement are true and correct as though made on and as of
such date. Without limiting the foregoing, the incurrence of the Debt
represented by the proposed Borrowing is permitted to be incurred by the
Borrower under the terms of the Senior Notes, the Subordinated Debt and any
indenture, loan agreement, note purchase agreement or other document related
thereto;
(b) No Default or Event of Default has occurred and is continuing, or
would result from such proposed Borrowing; and
109
(c) The proposed Borrowing will not cause the aggregate principal
amount of all outstanding Revolving Loans plus the aggregate amount available
for drawing under all outstanding Letters of Credit, to exceed the Availability
or the combined Commitments of the Lenders.
Name of Borrower
By:_____________________________
Title:__________________________
By:_____________________________
Title:__________________________
110
EXHIBIT F
INTENTIONALLY OMITTED
111
EXHIBIT G
[FORM OF] ASSIGNMENT AND ACCEPTANCE AGREEMENT
This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Assignment and
Acceptance") dated as of ____________________, _____ is made between
______________________________ (the "Assignor") and __________________________
(the "Assignee").
RECITALS
WHEREAS, the Assignor is party to that certain Second Amended and
Restated Loan, Guaranty and Security Agreement dated as of ________________,
2001 (as amended, amended and restated, modified, supplemented or renewed, the
"Credit Agreement") among _________________________________, a[n] ______________
corporation (the "Borrower"), the several financial institutions from time to
time party thereto (including the Assignor, the "Lenders"), and Bank of America,
N.A., as agent for the Lenders (the "Agent"). Any terms defined in the Credit
Agreement and not defined in this Assignment and Acceptance are used herein as
defined in the Credit Agreement;
WHEREAS, as provided under the Credit Agreement, the Assignor
has committed to making Loans (the "Committed Loans") to the Borrower in an
aggregate amount not to exceed $__________ (the "Commitment");
WHEREAS, the Assignor has made Committed Loans in the
aggregate principal amount of $__________ to the Borrower
WHEREAS, [the Assignor has acquired a participation in its pro
rata share of the Lenders' liabilities under Letters of Credit in an aggregate
principal amount of $____________ (the "L/C Obligations")] [no Letters of Credit
are outstanding under the Credit Agreement]; and
WHEREAS, the Assignor wishes to assign to the Assignee [part
of the] [all] rights and obligations of the Assignor under the Credit Agreement
in respect of its Commitment, together with a corresponding portion of each of
its outstanding Committed Loans and L/C Obligations, in an amount equal to
$__________ (the "Assigned Amount") on the terms and subject to the conditions
set forth herein and the Assignee wishes to accept assignment of such rights and
to assume such obligations from the Assignor on such terms and subject to such
conditions;
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements contained herein, the parties hereto agree as follows:
1. ASSIGNMENT AND ACCEPTANCE.
(a) Subject to the terms and conditions of this Assignment and
Acceptance, (i) the Assignor hereby sells, transfers and assigns to the
Assignee, and (ii) the Assignee hereby purchases, assumes and undertakes from
the Assignor, without recourse and without representation or warranty (except as
provided in this Assignment and Acceptance) __% (the "Assignee's Percentage
Share") of (A) the Commitment, the Committed Loans and the L/C Obligations of
the Assignor and (B) all related rights, benefits, obligations, liabilities and
indemnities of the Assignor under and in connection with the Credit Agreement
and the Loan Documents.
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(b) With effect on and after the Effective Date (as defined in
SECTION 5 hereof), the Assignee shall be a party to the Credit Agreement and
succeed to all of the rights and be obligated to perform all of the obligations
of a Lender under the Credit Agreement, including the requirements concerning
confidentiality and the payment of indemnification, with a Commitment in an
amount equal to the Assigned Amount. The Assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of the
Credit Agreement are required to be performed by it as a Lender. It is the
intent of the parties hereto that the Commitment of the Assignor shall, as of
the Effective Date, be reduced by an amount equal to the Assigned Amount and the
Assignor shall relinquish its rights and be released from its obligations under
the Credit Agreement to the extent such obligations have been assumed by the
Assignee; PROVIDED, HOWEVER, the Assignor shall not relinquish its rights under
Sections __ and __ of the Credit Agreement to the extent such rights relate to
the time prior to the Effective Date.
(c) After giving effect to the assignment and assumption set
forth herein, on the Effective Date the Assignee's Commitment will be
$__________.
(d) After giving effect to the assignment and assumption set
forth herein, on the Effective Date the Assignor's Commitment will be
$__________.
2. PAYMENTS.
(a) As consideration for the sale, assignment and transfer
contemplated in SECTION 1 hereof, the Assignee shall pay to the Assignor on the
Effective Date in immediately available funds an amount equal to $__________,
representing the Assignee's Pro Rata Share of the principal amount of all
Committed Loans.
(b) The Assignee further agrees to pay to the Agent a
processing fee in the amount specified in Section (__) of the Credit
Agreement.
3. REALLOCATION OF PAYMENTS.
Any interest, fees and other payments accrued to the Effective Date
with respect to the Commitment, and Committed Loans and L/C Obligations shall be
for the account of the Assignor. Any interest, fees and other payments accrued
on and after the Effective Date with respect to the Assigned Amount shall be for
the account of the Assignee. Each of the Assignor and the Assignee agrees that
it will hold in trust for the other party any interest, fees and other amounts
which it may receive to which the other party is entitled pursuant to the
preceding sentence and pay to the other party any such amounts which it may
receive promptly upon receipt.
4. INDEPENDENT CREDIT DECISION.
The Assignee (a) acknowledges that it has received a copy of the Credit
Agreement and the Schedules and Exhibits thereto, together with copies of the
most recent financial statements of the Borrower, and such other documents and
information as it has deemed appropriate to make its own credit and legal
analysis and decision to enter into this Assignment and Acceptance; and (b)
agrees that it will, independently and without reliance upon the Assignor, the
Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit and legal
decisions in taking or not taking action under the Credit Agreement.
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5. EFFECTIVE DATE; NOTICES.
(a) As between the Assignor and the Assignee, the effective
date for this Assignment and Acceptance shall be __________, _____ (the
"Effective Date"); provided that the following conditions precedent have been
satisfied on or before the Effective Date:
(i) this Assignment and Acceptance shall be executed and
delivered by the Assignor and the Assignee;
[(ii) the consent of the Agent required for an effective
assignment of the Assigned Amount by the Assignor to the Assignee shall have
been duly obtained and shall be in full force and effect as of the Effective
Date;]
(iii) the Assignee shall pay to the Assignor all amounts
due to the Assignor under this Assignment and Acceptance;
[(iv) the Assignee shall have complied with Section ( ) of
the Credit Agreement (if applicable);]
(v) the processing fee referred to in SECTION 2(b) hereof
and in Section _____ of the Credit Agreement shall have been paid to the Agent;
and
(b) Promptly following the execution of this Assignment and
Acceptance, the Assignor shall deliver to the Borrower and the Agent for
acknowledgment by the Agent, a Notice of Assignment in the form attached hereto
as SCHEDULE 1.
6. [Agent. [INCLUDE ONLY IF ASSIGNOR IS AGENT]
(a) The Assignee hereby appoints and authorizes the Assignor
to take such action as agent on its behalf and to exercise such powers under the
Credit Agreement as are delegated to the Agent by the Lenders pursuant to the
terms of the Credit Agreement.
(b) The Assignee shall assume no duties or obligations held by
the Assignor in its capacity as Agent under the Credit Agreement.]
7. WITHHOLDING TAX.
The Assignee (a) represents and warrants to the Lender, the Agent and
the Borrower that under applicable law and treaties no tax will be required to
be withheld by the Lender with respect to any payments to be made to the
Assignee hereunder, (b) agrees to furnish (if it is organized under the laws of
any jurisdiction other than the United States or any State thereof) to the Agent
and the Borrower prior to the time that the Agent or Borrower is required to
make any payment of principal, interest or fees hereunder, duplicate executed
originals of either U.S. Internal Revenue Service Form 4224 or U.S. Internal
Revenue Service Form 1001 (wherein the Assignee claims entitlement to the
benefits of a tax treaty that provides for a complete exemption from U.S.
federal income withholding tax on all payments hereunder) and agrees to provide
new Forms 4224 or 1001 upon the expiration of any previously delivered form or
comparable statements in accordance with applicable U.S. law and regulations and
amendments thereto, duly executed and completed by the Assignee, and (c) agrees
to comply with all applicable U.S. laws and regulations with regard to such
withholding tax exemption.
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8. REPRESENTATIONS AND WARRANTIES.
(a) The Assignor represents and warrants that (i) 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 Lien or other adverse claim; (ii) it
is duly organized and existing and it has the full power and authority to take,
and has taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance and to fulfill
its obligations hereunder; (iii) no notices to, or consents, authorizations or
approvals of, any Person are required (other than any already given or obtained)
for its due execution, delivery and performance of this Assignment and
Acceptance, and apart from any agreements or undertakings or filings required by
the Credit Agreement, no further action by, or notice to, or filing with, any
Person is required of it for such execution, delivery or performance; and (iv)
this Assignment and Acceptance has been duly executed and delivered by it and
constitutes the legal, valid and binding obligation of the Assignor, enforceable
against the Assignor in accordance with the terms hereof, subject, as to
enforcement, to bankruptcy, insolvency, moratorium, reorganization and other
laws of general application relating to or affecting creditors' rights and to
general equitable principles.
(b) The Assignor 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 the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Credit Agreement or any other instrument or document furnished pursuant
thereto. The Assignor makes no representation or warranty in connection with,
and assumes no responsibility with respect to, the solvency, financial condition
or statements of the Borrower, or the performance or observance by the Borrower,
of any of its respective obligations under the Credit Agreement or any other
instrument or document furnished in connection therewith.
(c) The Assignee represents and warrants that (i) it is duly
organized and existing and it has full power and authority to take, and has
taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance, and to
fulfill its obligations hereunder; (ii) no notices to, or consents,
authorizations or approvals of, any Person are required (other than any already
given or obtained) for its due execution, delivery and performance of this
Assignment and Acceptance; and apart from any agreements or undertakings or
filings required by the Credit Agreement, no further action by, or notice to, or
filing with, any Person is required of it for such execution, delivery or
performance; (iii) this Assignment and Acceptance has been duly executed and
delivered by it and constitutes the legal, valid and binding obligation of the
Assignee, enforceable against the Assignee in accordance with the terms hereof,
subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or affecting
creditors' rights and to general equitable principles; [and (iv) it is an
Eligible Assignee.]
9. FURTHER ASSURANCES.
The Assignor and the Assignee each hereby agree to execute and deliver
such other instruments, and take such other action, as either party may
reasonably request in connection with the transactions contemplated by this
Assignment and Acceptance, including the delivery of any notices or other
documents or instruments to the Borrower or the Agent, which may be required in
connection with the assignment and assumption contemplated hereby.
10. MISCELLANEOUS.
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(a) Any amendment or waiver of any provision of this
Assignment and Acceptance shall be in writing and signed by the parties hereto.
No failure or delay by either party hereto in exercising any right, power or
privilege hereunder shall operate as a waiver thereof and any waiver of any
breach of the provisions of this Assignment and Acceptance shall be without
prejudice to any rights with respect to any other or further breach thereof.
(b) All payments made hereunder shall be made without any
set-off or counterclaim.
(c) The Assignor and the Assignee shall each pay its own costs
and expenses incurred in connection with the negotiation, preparation, execution
and performance of this Assignment and Acceptance.
(d) This Assignment and Acceptance may be executed in any
number of counterparts and all of such counterparts taken together shall be
deemed to constitute one and the same instrument.
(e) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF TENNESSEE. The Assignor and
the Assignee each irrevocably submits to the non-exclusive jurisdiction of any
State or Federal court sitting in New York over any suit, action or proceeding
arising out of or relating to this Assignment and Acceptance and irrevocably
agrees that all claims in respect of such action or proceeding may be heard and
determined in such New York State or Federal court. Each party to this
Assignment and Acceptance hereby irrevocably waives, to the fullest extent it
may effectively do so, the defense of an inconvenient forum to the maintenance
of such action or proceeding.
(f) THE ASSIGNOR AND THE ASSIGNEE EACH HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH THIS ASSIGNMENT AND ACCEPTANCE, THE CREDIT AGREEMENT, ANY
RELATED DOCUMENTS AND AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, OR
STATEMENTS (WHETHER ORAL OR WRITTEN).
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Assignment and Acceptance to be executed and delivered by their duly authorized
officers as of the date first above written.
[ASSIGNOR]
By:_________________________________
Title:______________________________
By:_________________________________
Title:______________________________
116
Address:____________________________
[ASSIGNEE]
By:_________________________________
Title:______________________________
By:_________________________________
Title:______________________________
Address:____________________________
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SCHEDULE 1
NOTICE OF ASSIGNMENT AND ACCEPTANCE
_______________, 20__
Bank of America, N.A., as agent
_______________________________
_______________________________
Attn:__________________________
Re: [Name and Address of Borrower]
Ladies and Gentlemen:
We refer to the Second Amended and Restated Loan, Guaranty and Security
Agreement dated as of _________________, 2001 (as amended, amended and restated,
modified, supplemented or renewed from time to time the "Credit Agreement")
among ______________________ (the "Borrower"), the Lenders referred to therein
and Bank of America, N.A., as Agent for the Lenders (the "Agent"). Terms defined
in the Credit Agreement are used herein as therein defined.
1. We hereby give you notice of, and request your consent to,
the assignment by __________________ (the "Assignor") to _______________ (the
"Assignee") of _____% of the right, title and interest of the Assignor in and to
the Credit Agreement (including, without limitation, the right, title and
interest of the Assignor in and to the Commitments of the Assignor, all
outstanding Loans made by the Assignor and the Assignor's participation in the
Letters of Credit pursuant to the Assignment and Acceptance Agreement attached
hereto (the "Assignment and Acceptance"). We understand and agree that the
Assignor's Commitment, as of _______, 20____, is $ ___________, the aggregate
amount of its outstanding Loans is $_____________, and its participation in L/C
Obligations is $_____________.
2. The Assignee agrees that, upon receiving the consent of the Agent
and, if applicable, [NAME OF BORROWER] to such assignment, the Assignee will be
bound by the terms of the Credit Agreement as fully and to the same extent as if
the Assignee were the Lender originally holding such interest in the Credit
Agreement.
3. The following administrative details apply to the Assignee:
(A) Notice Address:
Assignee name:
______________________________
Address:
____________________________________
____________________________________
____________________________________
Attention:__________________________________
Telephone: (___)___________________________
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Telecopier: (___)__________________________
Telex (Answerback):_________________________
(B) Payment Instructions:
Account No.:________________________________
At:_________________________________________
____________________________________________
____________________________________________
Reference:__________________________________
Attention:__________________________________
4. You are entitled to rely upon the representations, warranties
and covenants of each of the Assignor and Assignee contained in the Assignment
and Acceptance.
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Notice of Assignment and Acceptance to be executed by their respective duly
authorized officials, officers or agents as of the date first above mentioned.
Very truly yours,
[NAME OF ASSIGNOR]
By:__________________________________
Title:_______________________________
[NAME OF ASSIGNEE]
By:__________________________________
Title:_______________________________
ACKNOWLEDGED AND ASSIGNMENT
CONSENTED TO:
Bank of America National Trust and Savings
Association, as Agent
By:__________________________
Title:_______________________
119
SCHEDULE 9.14
REPAYMENT
Parent Guarantor will use the Available Proceeds for one or more of the
Alternative Permitted Uses. If Parent Guarantor desires to use Available
Proceeds for any Alternative Permitted Use other than the Redemption, it must
obtain Agent's prior written consent, which consent Agent may withhold in its
sole and absolute discretion. If Parent Guarantor effects the Redemption, it
will do so using an advisor that is acceptable to Bank of America.
For purposes of the immediately preceding paragraph, the following definitions
will apply:
"Alternative Permitted Uses" means any use of the Available Proceeds permitted
by the Indenture which includes the following: (i) the Redemption, (ii)
acquisition of a controlling interest in a Permitted Business (as defined in the
Indenture), (iii) capital expenditures, or (iv) acquisition of other long-term
assets.
"Available Proceeds" means the net proceeds of the sale transaction evidenced by
that certain Stock Purchase Agreement dated as of April 27, 2001 between Xxxxxxx
Sports, Inc. and Xxxxxxx Acquisition Sub, among others, after Parent Guarantor
has used such proceeds to pay the current outstanding balance of its credit
facility with Bank of America down to zero. It is anticipated that the Available
Proceeds will total approximately $31,500,000.
"Indenture" means that certain Indenture dated June 19, 1997 by Xxxxxxx Sports
Inc., as Issuer, in favor of Marine Midland Bank, as Trustee, and relating to
the Senior Notes.
"Redemption" means Parent Guarantor's purchase and/or redemption of at least
$31,500,000 in face value of the Senior Notes.
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SCHEDULE 10.1
121
