CREDIT AGREEMENT
Dated as of December 7, 1999
among
TAKE-TWO INTERACTIVE SOFTWARE, INC.
as the Borrower,
CERTAIN SUBSIDIARIES AND AFFILIATES,
as Guarantors,
THE LENDERS NAMED HEREIN
AND
BANK OF AMERICA, N.A.,
as Administrative Agent
Arranged by:
BANK OF AMERICA SECURITIES LLC,
as Sole Lead Arranger and Sole Book Manager
TABLE OF CONTENTS
Page
SECTION 1 DEFINITIONS.......................................................1
1.1 Definitions...................................................1
1.2 Computation of Time Periods..................................28
1.3 Accounting Terms.............................................28
SECTION 2 CREDIT FACILITIES................................................28
2.1 Commitments..................................................29
2.2 Method of Borrowing..........................................30
2.3 Interest.....................................................32
2.4 Repayment....................................................32
2.5 Notes........................................................32
2.6 Additional Provisions relating to Letters of Credit..........32
2.7 Additional Provisions relating to Swingline Loans............37
SECTION 3 OTHER PROVISIONS RELATING TO CREDIT FACILITIES...................38
3.1 Default Rate.................................................38
3.2 Extension and Conversion.....................................38
3.3 Prepayments..................................................39
3.4 Reduction and Termination of Commitments.....................39
3.5 Fees.........................................................40
3.6 Capital Adequacy.............................................40
3.7 Limitation on Eurodollar Loans...............................41
3.8 Illegality...................................................41
3.9 Requirements of Law..........................................42
3.10 Treatment of Affected Loans..................................43
3.11 Taxes........................................................43
3.12 Compensation.................................................45
3.13 Pro Rata Treatment...........................................46
3.14 Sharing of Payments..........................................47
3.15 Payments, Computations, Etc..................................47
3.16 Certain Limitations..........................................49
3.17 Evidence of Debt.............................................50
SECTION 4 GUARANTY.........................................................51
4.1 The Guaranty.................................................51
4.2 Obligations Unconditional....................................52
4.3 Reinstatement................................................53
4.4 Certain Additional Waivers...................................53
4.5 Remedies.....................................................53
4.6 Rights of Contribution.......................................54
4.7 Guarantee of Payment; Continuing Guarantee...................54
SECTION 5 CONDITIONS.......................................................55
5.1 Closing Conditions...........................................55
5.2 Conditions to all Extensions of Credit.......................57
SECTION 6 REPRESENTATIONS AND WARRANTIES...................................58
6.1 Financial Condition..........................................58
6.2 No Changes or Restricted Payments............................58
6.3 Organization; Existence; Compliance with Law.................59
6.4 Power; Authorization; Enforceable Obligations................59
6.5 No Legal Bar.................................................59
6.6 No Material Litigation and Disputes..........................60
6.7 No Defaults..................................................60
6.8 Ownership and Operation of Property..........................60
6.9 Intellectual Property........................................60
6.10 Taxes........................................................61
6.11 ERISA........................................................62
6.12 Governmental Regulations, Etc................................63
6.13 Subsidiaries.................................................64
6.14 Purpose of Extensions of Credit..............................64
6.15 Environmental Matters........................................64
6.16 Year 2000 Compliance.........................................65
6.17 No Material Misstatements....................................65
6.18 Labor Matters................................................66
6.19 Security Documents...........................................66
6.20 Location of Real Property and Leased Premises................67
6.21 Solvency.....................................................67
6.22 No Other Broker's Fees.......................................67
SECTION 7 AFFIRMATIVE COVENANTS............................................68
7.1 Information Covenants........................................68
7.2 Preservation of Existence and Franchises.....................72
7.3 Books and Records............................................72
7.4 Compliance with Law..........................................72
7.5 Payment of Taxes and Other Indebtedness......................72
7.6 Insurance....................................................72
7.8 Performance of Obligations...................................73
7.9 Use of Proceeds..............................................73
7.10 Audits/Inspections...........................................73
7.11 Financial Covenants..........................................74
7.12 Additional Guarantors........................................74
7.14 Year 2000 Compliance.........................................76
SECTION 8 NEGATIVE COVENANTS...............................................76
8.1 Indebtedness.................................................76
8.2 Liens........................................................78
8.3 Nature of Business...........................................78
8.4 Merger and Consolidation, Dissolution and Acquisitions.......78
8.5 Asset Dispositions...........................................79
8.6 Investments..................................................80
8.7 Restricted Payments..........................................80
8.8 Modifications and Payments in respect of Funded Debt.........80
8.9 Transactions with Affiliates.................................80
8.10 Fiscal Year; Organizational Documents........................81
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8.11 Limitation on Restricted Actions.............................81
8.12 Ownership of Subsidiaries....................................81
8.13 Sale Leasebacks..............................................82
8.14 No Further Negative Pledges..................................82
SECTION 9 EVENTS OF DEFAULT................................................82
9.1 Events of Default............................................82
9.2 Acceleration; Remedies.......................................85
SECTION 10 AGENCY PROVISIONS...............................................86
10.1 Appointment, Powers and Immunities...........................86
10.2 Reliance by Agents...........................................86
10.3 Defaults.....................................................87
10.4 Rights as a Lender...........................................87
10.5 Indemnification..............................................87
10.6 Non-Reliance on Agents and Other Lenders.....................88
10.7 Successor Agent..............................................88
SECTION 11 MISCELLANEOUS...................................................89
11.1 Notices......................................................89
11.2 Right of Set-Off; Adjustments................................89
11.3 Benefit of Agreement.........................................90
11.4 No Waiver; Remedies Cumulative...............................92
11.5 Expenses; Indemnification....................................92
11.6 Amendments, Waivers and Consents............................93
11.7 Counterparts.................................................95
11.8 Headings.....................................................95
11.9 Survival.....................................................95
11.10 Governing Law; Submission to Jurisdiction; Venue.............95
11.11 Severability.................................................96
11.12 Entirety.....................................................96
11.13 Binding Effect; Termination..................................96
11.14 Confidentiality..............................................96
11.15 Source of Funds..............................................97
11.16 Conflict.....................................................98
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SCHEDULES
Schedule 2.1 Lenders and Commitments
Schedule 2.2(a)(i) Form of Notice of Borrowing for Revolving Loans
Schedule 2.2(a)(ii) Form of Notice of Request of Letter of Credit
Schedule 2.2(a)(iii) Form of Notice of Borrowing for Swingline Loans
Schedule 2.5 Form of Revolving Note
Schedule 2.6(b) Existing Letters of Credit
Schedule 3.2 Form of Notice of Extension/Conversion
Schedule 5.1(g)(v) Form of Officer's Certificate
Schedule 6.6 Litigation
Schedule 6.8 Liens
Schedule 6.9 Intellectual Property
Schedule 6.13 North American Subsidiaries
Schedule 6.19 Labor Matters
Schedule 6.20(a) Locations of Owned and Leased Real Property
Schedule 6.20(b) Locations of Tangible Personal Property
Schedule 6.20(c) Locations of Chief Executive Office/Principal
Place of Business
Schedule 7.1(c) Form of Officer's Compliance Certificate
Schedule 7.6 Insurance
Schedule 7.12 Form of Joinder Agreement
Schedule 8.1 Indebtedness
Schedule 8.6 Investments
Schedule 11.1 Lenders' Addresses
Schedule 11.3(b) Form of Assignment and Acceptance
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of December 7, 1999 (the "Credit
Agreement"), is by and among TAKE-TWO INTERACTIVE SOFTWARE, INC., a Delaware
corporation, certain of its subsidiaries party hereto, the lenders identified
herein, and BANK OF AMERICA, N.A., as Administrative Agent (in such capacity,
the "Administrative Agent").
W I T N E S S E T H
WHEREAS, the Credit Parties have requested that the Lenders provide $75
million in credit facilities for the purposes hereinafter set forth; and
WHEREAS, the Lenders have agreed to make the requested credit facilities
available on the terms and conditions hereinafter set forth;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITIONS
1.1 Definitions.
As used in this Credit Agreement, the following terms shall have the
meanings specified below unless the context otherwise requires:
"Acquisition", by any Person, means the purchase or acquisition by
such Person of any Capital Stock of another Person or all or any
substantial portion of the Property (other than Capital Stock) of another
Person, whether or not involving a merger or consolidation with such other
Person.
"Adjusted Base Rate" means the Base Rate plus the Applicable
Percentage.
"Adjusted Eurodollar Rate" means the Eurodollar Rate plus the
Applicable Percentage.
"Administrative Agent" means Bank of America, together with its
successors in such capacity.
"Administrative Agent's Fee Letter" means that letter agreement dated
as of September 9, 1999, between the Administrative Agent and the Borrower,
as amended, modified, supplemented or replaced from time to time.
"Administrative Agent's Fees" shall have the meaning assigned to such
term in Section 3.5(c).
"Affiliate" means, with respect to any Person, any other Person (i)
directly or indirectly controlling or controlled by or under direct or
indirect common control with such Person or (ii) directly or indirectly
owning or holding ten percent (10%) or more of the Capital Stock in such
Person. For purposes of this definition, "control" when used with respect
to any Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agency Services Address" means the notice address for the
Administrative Agent set forth in Section 11.1 or such other address as may
be identified by written notice from the Administrative Agent to the
Borrower.
"Agents" means the Administrative Agent and the Collateral Agent.
"Aggregate Revolving Committed Amount" shall have the meaning provided
such term in Section 2.1(a).
"Applicable Lending Office" means, for each Lender, the office of such
Lender (or of an Affiliate of such Lender) as such Lender may from time to
time specify to the Administrative Agent and the Borrower by written notice
as the office by which its Eurodollar Loans are made and maintained.
"Applicable Percentage" means for any day, the rate per annum set
forth below opposite the applicable Consolidated Leverage Ratio then in
effect, it being understood that the Applicable Percentage for (i) Base
Rate Loans shall be the percentage set forth under the column "Base Rate
Margin", (ii) Eurodollar Loans shall be the percentage set forth under the
column "Eurodollar Margin and Letter of Credit Fee", (iii) the Letter of
Credit Fee shall be the percentage set forth under the column "Eurodollar
Margin and Letter of Credit Fee", and (iv) the Commitment Fee shall be the
percentage set forth under the column "Commitment Fee":
Consolidated Leverage Eurodollar Margin Pricing Ratio Base Rate And
Commitment Level Margin Letter of Credit Fee Fee
Consolidated Leverage Eurodollar Margin
Pricing Ratio Base Rate And Commitment
Level Margin Letter of Credit Fee Fee
I <1.25 0% 2.00% 0.50%
II >1.25 but <1.75 0.25% 2.25% 0.50%
III >1.75 but <2.25 0.50% 2.50% 0.50%
IV >2.25 but <2.75 0.75% 2.75% 0.50%
V >2.75 1.25% 3.25% 0.50%
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The Applicable Percentage shall be determined and adjusted quarterly on the date
(each a "Rate Determination Date") five (5) Business Days after the date by
which each annual and quarterly compliance certificates and related financial
statements and information are required in accordance with the provisions of
Sections 7.1(a), (b) and (c), as appropriate; provided that:
(i) the initial Applicable Percentages shall be based on pricing level
III and shall remain in effect at such pricing level until the first Rate
Determination Date to occur in connection with the delivery of the
quarterly financial statements and appropriate compliance certificate for
the fiscal quarter ending January 31, 2000, and
(ii) notwithstanding the foregoing, in the event an annual or
quarterly compliance certificate and related financial statements and
information are not delivered timely to the Agency Services Address by the
date required by Section 7.1(a), (b) or (c), as appropriate, the Applicable
Percentages shall be based on pricing level V until such time as an
appropriate compliance certificate and related financial statements and
information are delivered, whereupon the applicable pricing level shall be
adjusted based on the information contained in such compliance certificate
and related financial statements and information.
Subject to the qualifications set forth above, each Applicable Percentage shall
be effective from a Rate Determination Date until the next such Rate
Determination Date. The Administrative Agent shall determine the appropriate
Applicable Percentages in the pricing matrix promptly upon receipt of and based
on the quarterly or annual compliance certificate and related financial
information and shall promptly notify the Borrower and the Lenders of any change
thereof. Such determinations by the Administrative Agent shall be conclusive
absent manifest error. Adjustments in the Applicable Percentages shall be
effective as to existing Extensions of Credit as well as new Extensions of
Credit made thereafter.
"Asset Disposition" shall mean and include the sale, lease or other
disposition of any Property by any member of the North American Group
(including the Capital Stock of a Subsidiary); but for purposes hereof
shall not include, in any event, (A) the sale of inventory in the ordinary
course of business, (B) the sale, lease or other disposition of machinery
and equipment no longer used or useful in the conduct of business and (C) a
sale, lease, transfer or disposition of Property to a Domestic Credit
Party.
"Bank of America" means Bank of America, N.A., and its successors.
"Bankruptcy Code" means the Bankruptcy Code in Title 11 of the United
States Code, as amended, modified, succeeded or replaced from time to time.
"Bankruptcy Event" means, with respect to any Person, the occurrence
of any of the following with respect to such Person: (i) a court or
governmental agency having
3
jurisdiction in the premises shall enter a decree or order for relief in
respect of such Person in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of such Person or for any substantial
part of its Property or ordering the winding up or liquidation of its
affairs; or (ii) there shall be commenced against such Person an
involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or any case, proceeding or other
action for the appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of such Person or for any
substantial part of its Property or for the winding up or liquidation of
its affairs, and such involuntary case or other case, proceeding or other
action shall remain undismissed, undischarged or unbonded for a period of
sixty (60) consecutive days; or (iii) such Person shall commence a
voluntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or consent to the entry of an order for
relief in an involuntary case under any such law, or consent to the
appointment or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of such Person or
for any substantial part of its Property or make any general assignment for
the benefit of creditors; or (iv) such Person shall be unable to, or shall
admit in writing its inability to, pay its debts generally as they become
due.
"Base Rate" means, for any day, the rate per annum equal to the higher
of (a) the Federal Funds Rate for such day plus one-half of one percent
(0.5%) and (b) the Prime Rate for such day. Any change in the Base Rate due
to a change in the Prime Rate or the Federal Funds Rate shall be effective
on the effective date of such change in the Prime Rate or Federal Funds
Rate.
"Base Rate Loan" means any Loan bearing interest at a rate determined
by reference to the Base Rate.
"Borrower" means Take-Two Interactive Software, Inc., a Delaware
corporation, as referenced in the opening paragraph, and its successors and
permitted assigns.
"Business Day" means a day other than a Saturday, Sunday or other day
on which commercial banks in Charlotte, North Carolina or New York, New
York are authorized or required by law to close, except that, when used in
connection with a Eurodollar Loan, such day shall also be a day on which
dealings between banks are carried on in Dollar deposits in London,
England.
"Canadian Eligible Inventory" means, as of any date of determination,
the aggregate book value (based on an average cost valuation) of all
inventory owned by any of the Canadian Subsidiaries on a consolidated basis
after deducting allowances or reserves relating thereto, as shown on the
books and records of the Canadian Subsidiaries, but excluding in any event
(a) inventory which is subject to any other Lien that is not a Permitted
Lien, (b) inventory which is not in good condition or fails to meet
standards for sale or use imposed by governmental agencies, departments or
divisions having regulatory authority over such goods, (c) inventory which
is leased or on consignment, (d)
4
displays, (e) inventory in possession of a Person other than a Canadian
Subsidiary, and (f) inventory which fails to meet such other specifications
and requirements as may from time to time be established by the
Administrative Agent in its reasonable discretion.
"Canadian Eligible Receivables" means, as of any date of
determination, the aggregate book value of all Receivables owned by or
owing to any of the Canadian Subsidiaries on a consolidated basis after
deducting retainage and allowances or reserves relating thereto, as shown
on the books and records of the Canadian Subsidiaries, but excluding in any
event (a) Receivables owing by an account debtor which is not solvent or is
subject to any bankruptcy or insolvency proceeding of any kind, (b) any
Receivable which is subject to any Lien that is not a Permitted Lien, (c)
any insured Receivable which is more than 60 days past due or any uninsured
Receivable which is more than 90 days past invoice date (in each case net
of reserves for bad debts in connection with any such Receivables), (d) any
Receivable not otherwise excluded by clause (c) above if more than 50% of
the other Receivables owing from the applicable account debtor are excluded
by clause (c) above, (e) the sum of all credit balances carried on
Receivables that are more than 90 days past due, (f) Receivables that are
more than 90 days past the original invoice date but that have been re-aged
as a result of a dispute by the account debtor, (g) Receivables for which
any Subsidiary or any Affiliate of a member of the Consolidated Group is
the account debtor, (h) any Receivable if and to the extent the amount of
such Receivable, together with all other Receivables of the applicable
account debtor, exceeds an amount equal to 25% of all Receivables owned by
or owing to the members of the North American Group, and (i) Receivables
which fail to meet such other specifications and requirements as may from
time to time be established by the Administrative Agent in its reasonable
discretion.
"Canadian Subsidiary" means any Subsidiary which is incorporated or
organized under the laws of Canada or any province thereof.
"Capital Lease" means, as applied to any Person, any lease of any
Property by that Person as lessee which, in accordance with GAAP, is or
should be accounted for as a capital lease on the balance sheet of that
Person.
"Capital Stock" means (i) in the case of a corporation, capital stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated)
of capital stock, (iii) in the case of a partnership, partnership interests
(whether general or limited) and (iv) in the case of a limited liability
company, membership interests.
"Cash Equivalents" means (a) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the
United States of America is pledged in support thereof) having maturities
of not more than twelve months from the date of acquisition, (b) U.S.
Dollar denominated time deposits and certificates of deposit of (i) any
Lender, (ii) any domestic commercial bank of recognized standing having
capital and surplus in excess of
5
$500,000,000 or (iii) any bank whose short-term commercial paper rating
from S&P is at least A-1 or the equivalent thereof or from Moody's is at
least P-1 or the equivalent thereof (any such bank being an "Approved
Bank"), in each case with maturities of not more than 270 days from the
date of acquisition, (c) commercial paper and variable or fixed rate notes
issued by any Approved Bank (or by the parent company thereof) or any
variable rate notes issued by, or guaranteed by, any domestic corporation
rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or the
equivalent thereof) or better by Moody's and maturing within six months of
the date of acquisition, (d) repurchase agreements entered into by any
Person with a bank or trust company (including any of the Lenders) or
recognized securities dealer having capital and surplus in excess of
$500,000,000 for direct obligations issued by or fully guaranteed by the
United States in which such Person shall have a perfected first priority
security interest (subject to no other Liens) and having, on the date of
purchase thereof, a fair market value of at least 100% of the amount of the
repurchase obligations and (e) Investments, classified in accordance with
GAAP as current assets, in money market investment programs registered
under the Investment Company Act of 1940, as amended, which are
administered by reputable financial institutions having capital of at least
$500,000,000 and the portfolios of which are limited to Investments of the
character described in the foregoing subdivisions (a) through (d).
"Change of Control" means the occurrence of any of the following
events after the Closing Date: (i) any Person or two or more Persons acting
in concert shall have acquired beneficial ownership, directly or
indirectly, of, or shall have acquired by contract or otherwise, or shall
have entered into a contract or arrangement that, upon consummation, will
result in its or their acquisition of or control over, Voting Stock of the
Borrower (or other securities convertible into such Voting Stock)
representing 25% or more of the combined voting power of all Voting Stock
of the Borrower or (ii) during any period of up to 24 consecutive months,
commencing after the Closing Date, individuals who at the beginning of such
24 month period were directors of the Borrower (together with any new
director whose election by the Borrower's board of directors or whose
nomination for election by the Borrower's shareholders was approved by a
vote of at least two-thirds of the directors then still in office who
either were directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the directors of the Borrower then in office. As
used herein, "beneficial ownership" shall have the meaning provided in Rule
13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act.
"Closing Date" means the date hereof.
"Collateral" means a collective reference to the collateral which is
identified in, and at any time will be covered by, the Collateral
Documents.
"Collateral Agent" means Bank of America, together with its successors
in such capacity.
6
"Collateral Documents" means a collective reference to the Security
Agreement, the Pledge Agreement and such other documents executed and
delivered in connection with the attachment and perfection of the security
interests and liens arising thereunder, including without limitation, UCC
financing statements and patent and trademark filings.
"Commitment Fee" shall have the meaning provided in Section 3.5(a).
"Commitment Period" means the period from and including the Closing
Date to but not including the earlier of (i) the Termination Date or (ii)
the date on which the Commitments terminate in accordance with the
provisions of this Credit Agreement.
"Commitments" means the Revolving Commitment, the LOC Commitment and
the Swingline Commitment.
"Committed Amount" means any of the Revolving Committed Amount, the
LOC Committed Amount and/or the Swingline Committed Amount.
"Consolidated Adjusted EBITDAR" means, for any period for the
Consolidated Group, the sum of (i) Consolidated EBITDA, plus (ii) rent and
Operating Lease expense, minus (iii) cash taxes paid, minus (iv) earn-out
and other payments based on performance made in connection with
Acquisitions permitted hereunder and Acquisitions consummated prior to the
Closing Date, in each case on a consolidated basis in accordance with GAAP.
Except as otherwise expressly provided, the applicable period shall be for
the four consecutive fiscal quarters ending as of the date of
determination.
"Consolidated EBITDA" means, for any period for the Consolidated
Group, the sum of Consolidated Net Income, plus, to the extent deducted in
determining Consolidated Net Income, the sum of (i) Consolidated Interest
Expense, (ii) all provisions for federal, state and local income taxes,
(iii) depreciation and amortization, and (iv) one-time non-cash charges
approved by the Administrative Agent in its sole discretion, in each case
on a consolidated basis in accordance with GAAP. Except as otherwise
expressly provided, the applicable period shall be for the four consecutive
fiscal quarters ending as of the date of determination.
"Consolidated Fixed Charge Coverage Ratio" means, for any period, the
ratio of Consolidated Adjusted EBITDAR to Consolidated Fixed Charges.
"Consolidated Fixed Charges" means, for any period for the
Consolidated Group, the sum of (i) the cash portion of Consolidated
Interest Expense, plus (ii) lease and rent expense, in each case on a
consolidated basis in accordance with GAAP. Except as otherwise expressly
provided, the applicable period shall be for the four consecutive fiscal
quarters ending as of the date of determination.
"Consolidated Funded Debt" means Funded Debt of the Consolidated Group
on a consolidated basis in accordance with GAAP.
7
"Consolidated Group" means the Borrower and its consolidated
subsidiaries as determined in accordance with GAAP.
"Consolidated Interest Expense" means, for any period for members of
the Consolidated Group, all interest expense, including the amortization of
debt discount and premium, the interest component under capital leases and
the implied interest component under securitization transactions (without
deduction or reduction for interest income), on a consolidated basis in
accordance with GAAP. Except as otherwise expressly provided, the
applicable period shall be for the four consecutive fiscal quarters ending
as of the date of determination.
"Consolidated Leverage Ratio" means, as of the last day of each fiscal
quarter, the ratio of (i) Consolidated Funded Debt on such day to (ii)
Consolidated EBITDA for the period of four consecutive fiscal quarters
ending as of such day.
"Consolidated Net Income" means, for any period for the Consolidated
Group, net income (or loss) determined on a consolidated basis in
accordance with GAAP, but excluding for purposes of determining the
Consolidated Leverage Ratio and the Consolidated Fixed Charge Coverage
Ratio, any extraordinary gains or losses and related tax effects thereon.
Except as otherwise expressly provided, the applicable period shall be for
the four consecutive fiscal quarters ending as of the date of
determination.
"Consolidated Net Worth" means, as of any day, shareholders' equity or
net worth of the Consolidated Group determined in accordance with GAAP.
"Continue", "Continuation", and "Continued" shall refer to the
continuation pursuant to Section 3.2 hereof of a Eurodollar Loan from one
Interest Period to the next Interest Period.
"Contractual Obligation" means, as to any Person, any material
provision of any security issued by such Person or of any material
provision of any material agreement, instrument or undertaking to which
such Person is a party or by which it or any of its property is bound.
"Convert", "Conversion", and "Converted" shall refer to a conversion
pursuant to Section 3.2 or Sections 3.7 through 3.12, inclusive, of a Base
Rate Loan into a Eurodollar Loan.
"Credit Documents" means, collectively, this Credit Agreement, the
Notes, the LOC Documents, the Collateral Documents, each Joinder Agreement,
the Administrative Agent's Fee Letter, and all other related agreements and
documents issued or delivered hereunder or thereunder or pursuant hereto or
thereto.
"Credit Party" means any of Borrower and the Guarantors.
8
"Default" means any event, act or condition which with notice or lapse
of time, or both, would constitute an Event of Default.
"Defaulting Lender" means, at any time, any Lender that (a) has failed
to make a Loan or purchase a Participation Interest required pursuant to
the terms of this Credit Agreement within one Business Day of when due, (b)
other than as set forth in (a) above, has failed to pay to the
Administrative Agent or any Lender an amount owed by such Lender pursuant
to the terms of this Credit Agreement within one Business Day of when due,
unless such amount is subject to a good faith dispute or (c) has been
deemed insolvent or has become subject to a bankruptcy or insolvency
proceeding or with respect to which (or with respect to any of the assets
of which) a receiver, trustee or similar official has been appointed.
"Domestic Credit Party" means any Credit Party which is incorporated
or organized under the laws of any State of the United States or the
District of Columbia.
"Domestic Subsidiary" means any Subsidiary which is incorporated or
organized under the laws of any State of the United States or the District
of Columbia.
"Eligible Assignee" means (i) a Lender; (ii) an Affiliate of a Lender;
and (iii) any other Person approved by the Administrative Agent and, unless
an Event of Default has occurred and is continuing at the time any
assignment is effected in accordance with Section 11.3, the Borrower (such
approval by the Administrative Agent or the Borrower not to be unreasonably
withheld or delayed and such approval to be deemed given by the Borrower if
no objection is received by the assigning Lender and the Administrative
Agent from the Borrower within five (5) Business Days after notice of such
proposed assignment has been provided by the assigning Lender to the
Borrower); provided, however, that neither the Borrower nor an Affiliate of
the Borrower shall qualify as an Eligible Assignee.
"Environmental Laws" means any and all lawful and applicable federal,
state, local and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders, decrees, permits, concessions, grants, franchises,
licenses, agreements and other governmental restrictions relating to the
environment or to emissions, discharges, releases or threatened releases of
Materials of Environmental Concern into the environment including, without
limitation, ambient air, surface water, ground water, or land, or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of Materials of Environmental
Concern.
"Equity Transaction" means, with respect to any member of the
Consolidated Group, any issuance of shares of its capital stock or other
equity interest, other than an issuance (i) to a member of the Consolidated
Group, (ii) in connection with a conversion of debt securities to equity,
(iii) in connection with exercise by a present or former employee, officer,
director or other eligible participant under a stock incentive plan, stock
9
option plan or other equity-based compensation plan or arrangement, (iv) in
connection with the exercise by any Person of stock options or warrants
issued to such Person as consideration for the licensing or acquisition of
intellectual property rights, or (v) of the capital stock of the Borrower
in connection with an Acquisition permitted hereunder.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute thereto, as interpreted by the rules and
regulations thereunder, all as the same may be in effect from time to time.
References to sections of ERISA shall be construed also to refer to any
successor sections.
"ERISA Affiliate" means an entity which is under common control with
any member of the Consolidated Group within the meaning of Section
4001(a)(14) of ERISA, or is a member of a group which includes any member
of the Consolidated Group and which is treated as a single employer under
Sections 414(b) or (c) of the Internal Revenue Code.
"ERISA Event" means (i) with respect to any Plan, the occurrence of a
Reportable Event or the substantial cessation of operations (within the
meaning of Section 4062(e) of ERISA); (ii) the withdrawal by any member of
the Consolidated Group or any ERISA Affiliate from a Multiple Employer Plan
during a plan year in which it was a substantial employer (as such term is
defined in Section 4001(a)(2) of ERISA), or the termination of a Multiple
Employer Plan; (iii) the distribution of a notice of intent to terminate or
the actual termination of a Plan pursuant to Section 4041(a)(2) or 4041A of
ERISA; (iv) the institution of proceedings to terminate or the actual
termination of a Plan by the PBGC under Section 4042 of ERISA; (v) any
event or condition which might constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to
administer, any Plan; (vi) the complete or partial withdrawal of any member
of the Consolidated Group or any ERISA Affiliate from a Multiemployer Plan;
(vii) the conditions for imposition of a lien under Section 302(f) of ERISA
exist with respect to any Plan; or (viii) the adoption of an amendment to
any Plan requiring the provision of security to such Plan pursuant to
Section 307 of ERISA.
"Eurodollar Loan" means any Loan that bears interest at a rate based
upon the Eurodollar Rate.
"Eurodollar Rate" means, for any Eurodollar Loan for any Interest
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) determined by the Administrative Agent to be equal to
the quotient obtained by dividing (a) the Interbank Offered Rate for such
Eurodollar Loan for such Interest Period by (b) 1 minus the Eurodollar
Reserve Requirement for such Eurodollar Loan for such Interest Period.
"Eurodollar Reserve Requirement" means, at any time, the maximum rate
at which reserves (including, without limitation, any marginal, special,
supplemental, or emergency reserves) are required to be maintained under
regulations issued from time to time by the Board of Governors of the
Federal Reserve System (or any successor) by member banks of
10
the Federal Reserve System against "Eurocurrency liabilities" (as such term
is used in Regulation D). Without limiting the effect of the foregoing, the
Eurodollar Reserve Requirement shall reflect any other reserves required to
be maintained by such member banks with respect to (i) any category of
liabilities which includes deposits by reference to which the Eurodollar
Rate is to be determined, or (ii) any category of extensions of credit or
other assets which include Eurodollar Loans. The Eurodollar Rate shall be
adjusted automatically on and as of the effective date of any change in the
Eurodollar Reserve Requirement.
"Event of Default" shall have the meaning assigned to such term in
Section 9.1.
"Excluded Property" means, with respect to any member of the
Consolidated Group, including any Person joined as a Credit Party pursuant
to Section 7.12,
(i) any Property which, subject to the terms of Section 8.11 and
Section 8.14, is subject to a Lien of the type described in clause (ix) of
the definition of "Permitted Liens" pursuant to documents which prohibit
such member of the Consolidated Group from granting any other Liens in such
Property; and
(ii) any Contract (including any license or use agreement), any
Trademark License for which a Grantor is licensee or any Copyright License
for which a Grantor is licensee if the terms thereof prohibit the
assignment thereof or grant of a security interest or lien therein; and
(iii) any Property (including any Trademark, Copyright or Work)
subject to a Contract (including any license or use agreement), Trademark
License for which a Grantor is licensee or Copyright License for which a
Grantor is licensee if the terms thereof prohibit the assignment of such
Property or grant of a security interest or lien in such Property.
"Executive Officer" of any Person means any of the chief executive
officer, chief operating officer, president, vice president, chief
financial officer or treasurer of such Person.
"Existing Letters of Credit" means those Letters of Credit outstanding
on the Closing Date and identified on Schedule 2.6(b).
"Extension of Credit" means, as to any Lender, the making of, or
participation in, a Loan by such Lender (including Continuations and
Conversions thereof) or the issuance or extension of, or participation in,
a Letter of Credit by such Lender.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New
11
York on the Business Day next succeeding such day; provided that (a) if
such day is not a Business Day, the Federal Funds Rate for such day shall
be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (b) if no such rate is
so published on such next succeeding Business Day, the Federal Funds Rate
for such day shall be the average rate charged to the Administrative Agent
(in its individual capacity) on such day on such transactions as determined
by the Administrative Agent.
"Fees" means all fees payable pursuant to Section 3.5.
"Foreign Subsidiary" means a Subsidiary which is not a Domestic
Subsidiary.
"Funded Debt" means, with respect to any Person, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all obligations
of such Person evidenced by bonds, debentures, notes or similar
instruments, or upon which interest payments are customarily made, (iii)
all purchase money Indebtedness (including for purposes hereof,
indebtedness and obligations in respect of conditional sale or title
retention arrangements described in clause (c) of the definition of
"Indebtedness" and obligations in respect of the deferred purchase price of
property or services described in clause (d) of the definition of
"Indebtedness") of such Person, including without limitation the principal
portion of all obligations of such Person under Capital Leases, (iv) all
Support Obligations of such Person with respect to Funded Debt of another
Person, (v) the maximum available amount of all standby letters of credit
or acceptances issued or created for the account of such Person, (vi) all
Funded Debt of another Person secured by a Lien on any Property of such
Person, whether or not such Funded Debt has been assumed, provided that for
purposes hereof the amount of such Funded Debt shall be limited to the
amount of such Funded Debt as to which there is recourse to such Person or
the fair market value of the property which is subject to the Lien, if
less, (vii) the outstanding attributed principal amount under any
Securitization Transaction, and (viii) the principal balance outstanding
under Synthetic Leases. The Funded Debt of any Person shall include the
Funded Debt of any partnership or joint venture in which such Person is a
general partner or joint venturer, but only to the extent to which there is
recourse to such Person for the payment of such Funded Debt.
"GAAP" means generally accepted accounting principles in the United
States applied on a consistent basis and subject to the terms of Section
1.3.
"Governmental Authority" means any Federal, state, local or foreign
court or governmental agency, authority, instrumentality or regulatory
body.
"Guaranteed Obligations" means, without duplication, (i) all
obligations of the Borrower (including interest accruing after a Bankruptcy
Event regardless of whether such interest is allowed as a claim under the
Bankruptcy Code) to the Lenders and the Agents, whenever arising, under
this Credit Agreement, the Notes or the other Credit Documents, and (ii)
all liabilities and obligations, whenever arising, under any Hedging
12
Agreement between a Lender, or an Affiliate of a Lender, and a Credit Party
relating to the Obligations.
"Guarantors" means (i) the subsidiaries and affiliates identified as
Guarantors on the signature pages hereto and (ii) any other Persons which
may hereafter join as a Guarantor.
"Hedging Agreements" means any interest rate protection agreement or
foreign currency exchange or option agreement.
"Indebtedness" means, with respect to any Person, without duplication,
(a) all obligations of such Person for borrowed money, (b) all obligations
of such Person evidenced by bonds, debentures, notes or similar
instruments, or upon which interest payments are customarily made, (c) all
obligations of such Person under conditional sale or other title retention
agreements relating to Property purchased by such Person (other than
customary reservations or retentions of title under agreements with
suppliers entered into in the ordinary course of business), (d) all
obligations of such Person issued or assumed as the deferred purchase price
of Property or services purchased by such Person (other than trade debt
incurred in the ordinary course of business and due within six months of
the incurrence thereof) which would appear as liabilities on a balance
sheet of such Person, (e) all obligations of such Person under take-or-pay
or similar arrangements or under commodities agreements, (f) all
Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien on, or payable out of the proceeds of production from,
Property owned or acquired by such Person, whether or not the obligations
secured thereby have been assumed, (g) all Support Obligations of such
Person with respect to Indebtedness of another Person, (h) the principal
portion of all obligations of such Person under Capital Leases, (i) all
obligations of such Person under Hedging Agreements, (j) the maximum amount
of all standby letters of credit issued or bankers' acceptances facilities
created for the account of such Person and, without duplication, all drafts
drawn thereunder (to the extent unreimbursed), (k) all preferred Capital
Stock issued by such Person and which by the terms thereof would be (at the
request of the holders thereof or otherwise) subject to mandatory sinking
fund payments, redemption or other acceleration (other than as a result of
a Change of Control or an Asset Disposition that does not in fact result in
a redemption of such preferred Capital Stock) at any time during the term
of the Credit Agreement, (l) the principal portion of all obligations of
such Person under Synthetic Leases, (m) the Indebtedness of any partnership
or unincorporated joint venture in which such Person is a general partner
or a joint venturer and (n) with respect to any member of the Consolidated
Group, the outstanding attributed principal amount under any Securitization
Transaction.
"Interbank Offered Rate" means, for any Eurodollar Loan for any
Interest Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100th of 1%) appearing on Telerate Page 3750
(or any successor or equivalent page) as the London interbank offered rate
for deposits in U.S. Dollars at approximately 11:00 a.m. (London time) two
Business Days prior to the first day of such Interest Period for a term
comparable to such
13
Interest Period. If for any reason such rate is not available, the term
"Interbank Offered Rate" shall mean, for any Eurodollar Loan for any
Interest Period therefor,
(i) the rate per annum (rounded upwards, if necessary, to the
nearest 1/100th of 1%) appearing on Reuters Screen LIBO Page as the
London interbank offered rate for deposits in U.S. Dollars at
approximately 11:00 a.m. (London time) two Business Days prior to the
first day of such Interest Period for a term comparable to such
Interest Period; provided, however, if more than one rate is specified
on Reuters Screen LIBO Page, the applicable rate shall be the
arithmetic mean of all such rates, or
(ii) if no rate is available on the Reuters Screen, then the rate
determined by the Administrative Agent at which U.S. Dollars is
offered by leading banks at approximately 11:00 a.m. (London time) two
Business Days prior to the first day of the applicable Interest
Period.
"Interest Payment Date" means (i) as to any Base Rate Loan (other than
a Swingline Loan), the last day of each March, June, September and
December, and the Termination Date, (ii) as to any Swingline Loan, the last
day of each Interest Period for such Loan, the date of repayment of
principal of such Loan and the Termination Date, or such other days as may
be mutually agreed upon by the Borrower and the Swingline Lender, and (iii)
as to any Eurodollar Loan, the last day of each Interest Period for such
Loan, the date of repayment of principal of such Loan and the Termination
Date, and in addition where the applicable Interest Period is more than
three months, then also on the date three months from the beginning of the
Interest Period, and each three months thereafter. If an Interest Payment
Date falls on a date which is not a Business Day, such Interest Payment
Date shall be deemed to be the next succeeding Business Day.
"Interest Period" means (i) as to any Eurodollar Loan, a period of
one, two, three or six months' duration, as the Borrower may elect,
commencing in each case on the date of the borrowing (including
Conversions, Continuations and renewals) and (ii) as to any Swingline Loan,
a period of such duration as the Borrower may request and the Swingline
Lender may agree in accordance with the provisions of Section 2.2(a)(iii),
commencing in each case on the date of borrowing; provided, however, (A) if
any Interest Period would end on a day which is not a Business Day, such
Interest Period shall be extended to the next succeeding Business Day
(except that in the case of Eurodollar Loans where the next succeeding
Business Day falls in the next succeeding calendar month, then on the next
preceding Business Day), (B) no Interest Period shall extend beyond the
Termination Date, and (C) in the case of Eurodollar Loans, where an
Interest Period begins on a day for which there is no numerically
corresponding day in the calendar month in which the Interest Period is to
end, such Interest Period shall end on the last day of such calendar month.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, and any successor statute thereto, as interpreted by the rules and
regulations issued thereunder, in each case as in effect from time to time.
References to sections of the Internal Revenue Code shall be construed also
to refer to any successor sections.
14
"Investment" in any Person means (a) the acquisition (whether for
cash, property, services, assumption of Indebtedness, securities or
otherwise) of Capital Stock, bonds, notes, debentures, partnership, joint
ventures or other ownership interests or other securities of such other
Person, (b) any deposit with, or advance, loan or other extension of credit
to, such Person (other than deposits made in connection with the purchase
of equipment or other assets in the ordinary course of business) or (c) any
other capital contribution to or investment in such Person, including,
without limitation, any Support Obligations (including any support for a
letter of credit issued on behalf of such Person) incurred for the benefit
of such Person, but excluding any Restricted Payment to such Person.
"Issuing Lender" means Bank of America and its successors in such
capacity.
"Joinder Agreement" means a joinder agreement substantially in the
form of Schedule 7.12 hereto, in each case executed and delivered by such
Subsidiary in accordance with the provisions of Section 7.12.
"Lenders" means each of the Persons identified as a "Lender" on the
signature pages hereto, and their successors and assigns.
"Letter of Credit" means any Existing Letter of Credit and any standby
letter of credit issued by the Issuing Lender for the account of the
Borrower in accordance with the terms of Section 2.1(b).
"Letter of Credit Fee" shall have the meaning assigned such term in
Section 3.5(b)(i).
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, security interest, encumbrance, lien (statutory or otherwise),
preference, priority or charge of any kind (including any agreement to give
any of the foregoing, any conditional sale or other title retention
agreement, any financing or similar statement or notice filed under the
Uniform Commercial Code as adopted and in effect in the relevant
jurisdiction or other similar recording or notice statute, and any lease in
the nature thereof).
"Loan" or "Loans" means the Revolving Loans and/or the Swingline
Loans, and the Base Rate Loans, Eurodollar Loans and Quoted Rate Swingline
Loans comprising such Loans.
"LOC Commitment" means the commitment of the Issuing Lender to issue,
and to honor payment obligations under, Letters of Credit hereunder and
with respect to each Lender, the commitment of each Lender to purchase
participation interests in the Letters of Credit up to such Lender's LOC
Committed Amount.
"LOC Committed Amount" shall have the meaning assigned to such term in
Section 2.1(b).
15
"LOC Documents" means, with respect to any Letter of Credit, such
Letter of Credit, any amendments thereto, any documents delivered in
connection therewith, any application therefor, and any agreements,
instruments, guarantees or other documents (whether general in application
or applicable only to such Letter of Credit) governing or providing for (i)
the rights and obligations of the parties concerned or at risk or (ii) any
collateral security for such obligations.
"LOC Obligations" means, at any time, the sum of (i) the maximum
amount which is, or at any time thereafter may become, available to be
drawn under Letters of Credit then outstanding, assuming compliance with
all requirements for drawings referred to in such Letters of Credit plus
(ii) the aggregate amount of all drawings under Letters of Credit honored
by the Issuing Lender but not theretofore reimbursed.
"Material Adverse Effect" means a material adverse effect on (i) the
condition (financial or otherwise), operations, business, assets or
liabilities of the Consolidated Group taken as a whole, (ii) the ability of
the Credit Parties taken as a whole to perform any material obligation
under the Credit Documents or (iii) the material rights and remedies of the
Agents and the Lenders under the Credit Documents.
"Materials of Environmental Concern" means any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as
such in or under any Environmental Laws, including, without limitation,
asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
"Moody's" means Moody's Investors Service, Inc., or any successor or
assignee of the business of such company in the business of rating
securities.
"Multiemployer Plan" means a Plan which is a "multiemployer plan" as
defined in Sections 3(37) or 4001(a)(3) of ERISA.
"Multiple Employer Plan" means a Plan (other than a Multiemployer
Plan) which any member of the Consolidated Group or any ERISA Affiliate and
at least one employer other than the members of the Consolidated Group or
any ERISA Affiliate are contributing sponsors.
"North American Borrowing Base" means the sum of:
(a) the sum of (i) eighty percent (80%) of U.S. Eligible
Receivables plus (ii) fifty percent (50%) of U.S. Eligible Inventory,
plus
(b) the lesser of (i) $5,000,000 and (ii) the sum of (A) eighty
percent (80%) of Canadian Eligible Receivables plus (ii) fifty percent
(50%) of Canadian Eligible Inventory,
16
in each case as set forth in the most recent North American Borrowing
Base Certificate delivered to the Administrative Agent and the Lenders
in accordance with the terms of Section 7.1(d), provided that, for
purposes of calculating the North American Borrowing Base, the sum of
(a) fifty percent (50%) of U.S. Eligible Inventory plus (b) fifty
percent (50%) of Canadian Eligible Inventory shall not at any time
comprise more than an amount equal to thirty percent (30%) of the
North American Borrowing Base.
"North American Borrowing Base Certificate" shall have the meaning
assigned to such term in Section 7.1(d).
"North American Group" means, collectively, the Borrower, its Domestic
Subsidiaries and its Canadian Subsidiaries.
"North American Subsidiaries" means, collectively, the Domestic
Subsidiaries of the Borrower and the Canadian Subsidiaries of the Borrower.
"Note" or "Notes" means any of the Revolving Notes.
"Notice of Borrowing" means a written notice of borrowing in
substantially the form of (a) with respect to Revolving Loans, Schedule
2.2(a)(i), and (b) with respect to Swingline Loans, Schedule 2.2(a)(iii).
"Notice of Continuation/Conversion" means the written notice of
Continuation or Conversion in substantially the form of Schedule 3.2, as
required by Section 3.2.
"Obligations" means, collectively, the Revolving Loans, the LOC
Obligations and the Swingline Loans.
"Operating Lease" means, as applied to any Person, any lease
(including, without limitation, leases which may be terminated by the
lessee at any time) of any Property which is not a Capital Lease other than
any such lease in which that Person is the lessor.
"Other Taxes" shall have the meaning assigned to such term in Section
3.11.
"Participation Interest" means the purchase by a Lender of a
participation in LOC Obligations as provided in Section 2.6(b), in
Swingline Loans as provided in Section 2.7, in Loans as provided in Section
3.16.
"PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA and any successor thereof.
"Permitted Acquisition" means any Acquisition by a member of the North
American Group, provided (i) in the case of an Acquisition of Capital
Stock, the Person
17
which is the subject of such Acquisition shall be in the same or similar
line of business as that of any member of the Consolidated Group or
otherwise consistent with its strategic objectives, (ii) in the case of a
merger or consolidation, and in other cases where appropriate, the board of
directors or other governing body of the other Person which is the subject
of the transaction of merger or consolidation shall have approved such
Acquisition, (iii) no Default or Event of Default shall exist immediately
after giving effect to such Acquisition, (iv) the Borrower shall have
delivered to the Administrative Agent a Pro Forma Compliance Certificate
demonstrating that, upon giving effect to such Acquisition on a Pro Forma
Basis, the Credit Parties shall be in compliance with all of the covenants
set forth in Section 7.11, (v) if the Acquisition involves an interest in a
partnership and a requirement that a member of the North American Group be
a general partner, the general partner shall be a newly formed special
purpose Subsidiary of the Borrower, (vi) if the Acquisition involves
acquisition of more than 50% of the Capital Stock of a Person, the Credit
Parties shall, and shall cause the party which is the subject of the
Acquisition, to execute and deliver such joinder and pledge agreements and
take such other action as may be necessary for compliance with the
provisions of Sections 7.12 and 7.13, (vii) the consideration (including
cash consideration and any assumption of Indebtedness, but excluding
consideration consisting of any Capital Stock of the Borrower issued to the
seller of the Capital Stock or other Property which is the subject of the
Acquisition) paid shall not exceed $10 million in any instance (or series
of related transactions) or $20 million in the aggregate in any twelve
month period.
"Permitted Investments" means Investments which are (i) cash and Cash
Equivalents; (ii) accounts receivable created, acquired or made in the
ordinary course of business and payable or dischargeable in accordance with
customary trade terms; (iii) Investments consisting of Capital Stock,
obligations, securities or other Property received in settlement of
accounts receivable (created in the ordinary course of business) from
bankrupt obligors; (iv) Investments existing as of the Closing Date and set
forth in Schedule 8.6; (v) advances or loans to directors, officers and
employees that do not exceed $500,000 in the aggregate at any one time
outstanding; (vi) Investments consisting of Capital Stock of developers in
an amount not to exceed in the aggregate an amount equal to ten percent
(10%) of Consolidated Net Worth as of the end of the immediately preceding
fiscal year, (vii) advances to customers and suppliers in the ordinary
course of business that do not exceed $1,000,000 in the aggregate at any
one time outstanding; (viii) recoupable advances, guarantees or payments
made to third parties in the ordinary course of business with respect to
the licensing or acquisition of intellectual property rights or for
development services for specific titles, (viii) Investments by members of
the North American Group in their Subsidiaries and Affiliates existing on
the Closing Date, (ix) Investments by members of the North American Group
in and to Domestic Credit Parties, (x) Investments (including loans and
advances) in Canadian Subsidiaries of up to $5,000,000 outstanding at any
time; (xi) Investments (including loans and advances) in UK Subsidiaries in
amount not to exceed in the aggregate an amount equal to the sum of the UK
Borrowing Base minus amounts outstanding under the UK Subsidiary Credit
Facility; (xii) Investments which constitute Permitted Acquisitions and
(xiii) Investments of a nature not contemplated in
18
the foregoing subsections in an amount not to exceed $3,000,000 in the
aggregate at any time outstanding.
"Permitted Liens" means:
(i) Liens in favor of the Administrative Agent granted under the
Collateral Documents;
(ii) Liens in favor of Bank of America Distribution Finance on all
Property of Jack of All Games, Inc. to secure obligations of Jack of All
Games, Inc. under the floor planning line of credit for Nintendo inventory
described in Section 8.1(g);
(iii) Liens in favor of a Lender or an Affiliate of a Lender pursuant
to a Hedging Agreement permitted hereunder, but only (A) to the extent such
Liens secure obligations under such agreements permitted under Section 8.1,
(B) to the extent such Liens are on the same collateral as to which the
Lenders hereunder also have a Lien, and (C) so long as the obligations
under such Hedging Agreement and the loans and obligations hereunder and
under the other Credit Documents shall share pari passu in the collateral
subject to such Liens;
(iv) Liens (other than Liens created or imposed under ERISA) for
taxes, assessments or governmental charges or levies not yet due or Liens
for taxes being contested in good faith by appropriate proceedings for
which adequate reserves determined in accordance with GAAP have been
established (and as to which the Property subject to any such Lien is not
yet subject to foreclosure, sale or loss on account thereof);
(v) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and suppliers and other Liens imposed by law or
pursuant to customary reservations or retentions of title arising in the
ordinary course of business, provided that such Liens secure only amounts
not yet due and payable or, if due and payable, are unfiled and no other
action has been taken to enforce the same or are being contested in good
faith by appropriate proceedings for which adequate reserves determined in
accordance with GAAP have been established (and as to which the Property
subject to any such Lien is not yet subject to foreclosure, sale or loss on
account thereof);
(vi) Liens (other than Liens created or imposed under ERISA) incurred
or deposits made by any member of the Consolidated Group in the ordinary
course of business in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the performance
of tenders, statutory obligations, bids, leases, government contracts,
performance and return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money);
(vii) Liens in connection with attachments or judgments (including
judgment or appeal bonds) provided that the judgments secured shall, within
45 days after the entry
19
thereof, have been discharged or execution thereof stayed pending appeal,
or shall have been discharged within 45 days after the expiration of any
such stay;
(viii) easements, rights-of-way, restrictions (including zoning
restrictions), minor defects or irregularities in title and other similar
charges or encumbrances not, in any material respect, impairing the use of
the encumbered Property for its intended purposes;
(ix) Liens on Property of any Person securing purchase money
Indebtedness (including Capital Leases and Synthetic Leases) of such Person
to the extent permitted under Section 8.1(c), provided that any such Lien
attaches only to the Property financed or leased and such Lien attaches
concurrently with or within 90 days after the acquisition thereof;
(x) leases or subleases granted to others not interfering in any
material respect with the business of any member of the Consolidated Group;
(xi) any interest or title of a lessor under, and Liens arising from
UCC financing statements (or equivalent filings, registrations or
agreements in foreign jurisdictions) relating to, leases permitted by this
Credit Agreement;
(xii) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
(xiii) Liens deemed to exist in connection with Investments in
repurchase agreements which constitute Permitted Investments;
(xiv) normal and customary rights of setoff upon deposits of cash in
favor of banks or other depository institutions;
(xv) Liens of a collection bank arising under Section 4-210 of the
Uniform Commercial Code on items in the course of collection;
(xvi) Liens on Property of the UK Subsidiaries securing the UK
Subsidiary Credit Facility referenced in Section 8.1(f);
(xvii) Liens existing as of the Closing Date and set forth on Schedule
6.8; provided that (a) no such Lien shall at any time be extended to or
cover any Property other than the Property subject thereto on the Closing
Date and (b) the principal amount of the Indebtedness secured by such Liens
shall not be extended, renewed, refunded or refinanced.
"Person" means any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated) or any Governmental Authority.
20
"Plan" means any employee benefit plan (as defined in Section 3(3) of
ERISA) which is covered by ERISA and with respect to which any member of
the Consolidated Group or any ERISA Affiliate is (or, if such plan were
terminated at such time, would under Section 4069 of ERISA be deemed to be)
an "employer" within the meaning of Section 3(5) of ERISA.
"Pledge Agreement" means the Pledge Agreement dated as of the Closing
Date given by the Borrower and certain other Credit Parties identified
therein to the Collateral Agent to secure the obligations of the Credit
Parties under the Credit Documents, as such Pledge Agreement may be amended
and modified from time to time.
"Prime Rate" means the rate of interest per annum publicly announced
from time to time by Bank of America as its prime rate in effect at its
principal office in Charlotte, North Carolina, with each change in the
Prime Rate being effective on the date such change is publicly announced as
effective (it being understood and agreed that the Prime Rate is a
reference rate used by Bank of America in determining interest rates on
certain loans and is not intended to be the lowest rate of interest charged
on any extension of credit by Bank of America to any debtor).
"Pro Forma Basis" means, for purposes of calculating (utilizing the
principles set forth in the second paragraph of Section 1.3 and subject
thereto) the applicable pricing level under the definition of "Applicable
Percentage" and determining compliance with each of the financial covenants
set forth in Section 7.11, that any transaction shall be deemed to have
occurred as of the first day of the four fiscal-quarter period ending as of
the most recent fiscal quarter end preceding the date of such transaction
with respect to which the Administrative Agent has received the Required
Financial Information. As used herein, "transaction" shall mean (i) any
merger or consolidation as referred to in Section 8.4, (ii) any Asset
Disposition as referred to in Section 8.5, (iii) any Acquisition as
referred to in the definition of "Permitted Acquisition" or (iv) any
Restricted Payment as referred to in Section 8.7. In connection with any
calculation of the financial covenants set forth in Section 7.11 upon
giving effect to a transaction on a Pro Forma Basis:
(A) for purposes of any such calculation in respect of any
material Asset Disposition referred to in Section 8.5, (1) income
statement items (whether positive or negative) attributable to the
Property disposed of in such Asset Disposition shall be excluded and
(2) any Indebtedness which is retired in connection with such Asset
Disposition shall be excluded and deemed to have been retired as of
the first day of the applicable period; and
(B) for purposes of any such calculation in respect of any merger
or consolidation referred to in Section 8.4 or any Acquisition
referred to in the definition of "Permitted Acquisition", (1) any
Indebtedness incurred by any member of the Consolidated Group in
connection with such transaction (x) shall be deemed to have been
incurred as of the first day of the applicable period and
21
(y) if such Indebtedness has a floating or formula rate, shall have an
implied rate of interest for the applicable period for purposes of
this definition determined by utilizing the rate which is or would be
in effect with respect to such Indebtedness as at the relevant date of
determination, and (2) income statement items (whether positive or
negative) attributable to the Property acquired in such transaction or
to the Acquisition comprising such transaction, as applicable, shall
be included beginning as of the first day of the applicable period.
"Pro Forma Compliance Certificate" means a certificate of an Executive
Officer of the Borrower delivered to the Administrative Agent in connection
with (i) any merger or consolidation referred to in Section 8.4, (ii) any
Asset Disposition referred to in Section 8.5, (iii) any Acquisition
referred to in the definition of "Permitted Acquisition" or (iv) any
Restricted Payment as referred to in Section 8.7, as applicable, and
containing reasonably detailed calculations, upon giving effect to the
applicable transaction on a Pro Forma Basis, of the Consolidated Fixed
Charge Coverage Ratio and the Consolidated Leverage Ratio as of the most
recent fiscal quarter end preceding the date of the applicable transaction
with respect to which the Administrative Agent shall have received the
Required Financial Information.
"Property" means any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"Quoted Rate" means, with respect to a Quoted Rate Swingline Loan, the
fixed or floating percentage rate per annum, if any, offered by the
Swingline Lender and accepted by the Borrower in accordance with the
provisions hereof.
"Quoted Rate Swingline Loan" means a Swingline Loan bearing interest
at the Quoted Rate.
"Rate Determination Date" shall have the meaning assigned to such term
in the definition of "Applicable Percentage".
"Receivables" means all accounts, accounts receivable, receivables,
and obligations for payment created or arising from the sale of inventory
or the rendering of services in the ordinary course of business.
"Register" shall have the meaning given such term in Section
11.3(c)(i).
"Regulation D, O, T, U, or X" means Regulation D, O, T, U or X,
respectively, of the Board of Governors of the Federal Reserve System as
from time to time in effect and any successor to all or a portion thereof.
"Reportable Event" means any of the events set forth in Section
4043(c) of ERISA, other than those events as to which the notice
requirement has been waived by regulation.
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"Required Financial Information" means the annual and quarterly
compliance certificates and related financial statements and information
required by the provisions of Sections 7.1(a), (b) and (c), as referenced
in the definition of "Applicable Percentage".
"Required Lenders" means, at any time, Lenders having at least
sixty-six and two-thirds percent (66-2/3%) of the Commitments, or if the
Commitments have been terminated, Lenders having at least sixty-six and
two-thirds percent (66-2/3%) of the aggregate principal amount of the
Obligations outstanding (taking into account in each case Participation
Interests or obligation to participate therein); provided that the
Commitments of, and outstanding principal amount of Obligations (taking
into account Participation Interests therein) owing to, a Defaulting Lender
shall be excluded for purposes hereof in making a determination of Required
Lenders.
"Requirement of Law" means, as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of
such Person, and any law, treaty, rule, regulation or ordinance (including,
without limitation, Environmental Laws) or determination of an arbitrator
or a court or other Governmental Authority, in each case applicable to or
binding upon such Person or to which any of its material Property is
subject.
"Restricted Payment" means (i) any dividend or other payment or
distribution, direct or indirect, on account of any shares of any class of
Capital Stock of any member of the North American Group, now or hereafter
outstanding (including without limitation any payment in connection with
any dissolution, merger, consolidation or disposition involving any member
of the North American Group), or to the holders, in their capacity as such,
of any shares of any class of Capital Stock of any member of the North
American Group, now or hereafter outstanding (other than (A) dividends or
distributions payable in Capital Stock, or options in respect thereof, of
the applicable Person, (B) distributions of rights to purchase Capital
Stock as part of an anti-takeover plan, or (C) dividends or distributions
payable to any Credit Party (directly or indirectly through Subsidiaries)),
(ii) any redemption, retirement, sinking fund or similar payment, purchase
or other acquisition for value, direct or indirect, of any shares of any
class of Capital Stock of any member of the North American Group, now or
hereafter outstanding, (iii) any payment made to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire
shares of any class of Capital Stock of any member of the North American
Group, now or hereafter outstanding.
"Revolving Commitment" means, with respect to each Lender, the
commitment of such Lender to make Revolving Loans in an aggregate principal
amount at any time outstanding of up to such Lender's Revolving Commitment
Percentage of the Aggregate Revolving Committed Amount, as such amount may
be reduced from time to time in accordance with the provisions hereof.
"Revolving Commitment Percentage" means, with respect to each Lender,
a fraction (expressed as a percentage) the numerator of which is the
Revolving
23
Commitment of such Lender at such time and the denominator of which is the
Aggregate Revolving Committed Amount at such time. The initial Revolving
Commitment Percentages are set out on Schedule 2.1.
"Revolving Committed Amount" means, with respect to each Lender, the
amount of each Lender's Revolving Commitment, as specified in Schedule 2.1,
as such amount may be reduced from time to time in accordance with the
provisions hereof.
"Revolving Loans" shall have the meaning assigned to such term in
Section 2.1(a).
"Revolving Note" or "Revolving Notes" means the promissory notes of
the Borrower in favor of each of the Lenders evidencing the Revolving Loans
and the Swingline Loans in substantially the form attached as Schedule 2.5,
individually or collectively, as appropriate, as such promissory notes may
be amended, modified, supplemented, extended, renewed or replaced from time
to time.
"S&P" means Standard & Poor's Ratings Group, a division of The McGraw
Hill Companies, Inc., or any successor or assignee of the business of such
division in the business of rating securities.
"Sale and Leaseback Transaction" means any arrangement pursuant to
which any member of the North American Group, directly or indirectly,
becomes liable as lessee, guarantor or other surety with respect to any
lease, whether an Operating Lease or a Capital Lease, of any Property (a)
which such member of the North American Group has sold or transferred (or
is to sell or transfer) to a Person which is not a member of the North
American Group or (b) which such member of the North American Group intends
to use for substantially the same purpose as any other Property which has
been sold or transferred (or is to be sold or transferred) by such member
of the North American Group to another Person which is not a member of the
North American Group in connection with such lease.
"Securities Exchange Act" means the Securities Exchange Act of 1934.
"Securitization Transaction" means any financing transaction or series
of financing transactions that have been or may be entered into by a member
of the Consolidated Group pursuant to which such member of the Consolidated
Group may sell, convey or otherwise transfer to (i) a Subsidiary or
affiliate (a "Securitization Subsidiary"), or (ii) any other Person, or may
grant a security interest in, any accounts receivable, notes receivable,
rights to future lease payments or residuals or other similar rights to
payment (the "Securitization Receivables") (whether such Securitization
Receivables are then existing or arising in the future) of such member of
the Consolidated Group, and any assets related thereto, including without
limitation, all security interests in merchandise or services financed
thereby, the proceeds of such Securitization Receivables, and other assets
which are customarily sold or in respect of which security interests are
customarily granted in connection with securitization transactions
involving such assets.
24
"Security Agreement" means the Security Agreement dated as of the
Closing Date given by the Credit Parties to the Collateral Agent to secure
the obligations of the Credit Parties under the Credit Documents, as such
Security Agreement may be amended and modified from time to time.
"Single Employer Plan" means any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan or a Multiple Employer Plan.
"Subordinated Debt" means any Indebtedness of a member of the
Consolidated Group which by its terms is expressly subordinated in right of
payment to the prior payment of the loans and obligations under the Credit
Agreement and the other Credit Documents on terms and conditions and
evidenced by documentation satisfactory to the Administrative Agent and the
Required Lenders.
"Subsidiary" means, as to any Person at any time, (a) any corporation
more than 50% of whose Capital Stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of
such corporation (irrespective of whether or not at such time, any class or
classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at such time owned by such Person
directly or indirectly through Subsidiaries, and (b) any partnership,
association, joint venture or other entity of which such Person directly or
indirectly through Subsidiaries owns at such time more than 50% of the
Capital Stock. Except as expressly provided otherwise, references to
"Subsidiary" and "Subsidiaries" shall be deemed to mean Subsidiaries of the
Borrower.
"Support Obligations" means, with respect to any Person, without
duplication, any obligations of such Person (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or
collection) guaranteeing or intended to guarantee any Indebtedness of any
other Person in any manner, whether direct or indirect, and including
without limitation any obligation, whether or not contingent, (i) to
purchase any such Indebtedness or any Property constituting security
therefor, (ii) to advance or provide funds or other support for the payment
or purchase of any such Indebtedness or to maintain working capital,
solvency or other balance sheet condition of such other Person (including
without limitation keep well agreements, maintenance agreements, comfort
letters or similar agreements or arrangements) for the benefit of any
holder of Indebtedness of such other Person, (iii) to lease or purchase
Property, securities or services primarily for the purpose of assuring the
holder of such Indebtedness, or (iv) to otherwise assure or hold harmless
the holder of such Indebtedness against loss in respect thereof. The amount
of any Support Obligation hereunder shall (subject to any limitations set
forth therein) be deemed to be an amount equal to the outstanding principal
amount (or maximum principal amount, if larger) of the Indebtedness in
respect of which such Support Obligation is made.
"Swingline Commitment" means the commitment of the Swingline Lender to
make Swingline Loans in an aggregate principal amount at any time
outstanding up to the Swingline Committed Amount and the commitment of the
Lenders to purchase
25
participation interests in the Swingline Loans up to their respective
Revolving Commitment Percentage as provided in Section 2.7, as such amounts
may be reduced from time to time in accordance with the provisions hereof.
"Swingline Committed Amount" means the amount of the Swingline
Lender's Swingline Commitment as specified in Section 2.1(c).
"Swingline Lender" means Bank of America and its successors in such
capacity.
"Swingline Loan" means a swingline revolving loan made by the
Swingline Lender pursuant to the provisions of Section 2.1(c).
"Synthetic Lease" means 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 under GAAP.
"Taxes" shall have the meaning assigned to such term in Section 3.11.
"Termination Date" means December 7, 2002, or such later date as to
which all of the Lenders may in their sole discretion by written consent
agree.
"UK Borrowing Base" means an amount equal to eighty percent (80%) of
the aggregate book value of all Receivables owed or owing to the UK
Subsidiaries on a consolidated basis as shown on the books and records of
the UK Subsidiaries, as set forth in the most recent UK Borrowing Base
Certificate delivered to the Administrative Agent in accordance with the
terms of Section 7.1(e).
"UK Borrowing Base Certificate" shall have the meaning assigned to
such term in Section 7.1(e).
"UK Subsidiary" means any Subsidiary which is incorporated or
organized under the laws of the United Kingdom or its member states.
"U.S. Eligible Inventory" means, as of any date of determination, the
aggregate book value (based on an average cost valuation) of all inventory
owned by the Borrower or any of its Domestic Subsidiaries on a consolidated
basis after deducting allowances or reserves relating thereto, as shown on
the books and records of the Borrower and its Domestic Subsidiaries, but
excluding in any event (a) inventory which is (i) not subject to a
perfected, first priority Lien in favor of the Collateral Agent to secure
the obligations under the Security Agreement (including, without
limitation, inventory which constitutes Excluded Property), or (ii) subject
to any other Lien that is not a Permitted Lien, (b) inventory which is not
in good condition or fails to meet standards for sale or use imposed by
governmental agencies, departments or divisions having regulatory authority
over such goods, (c) inventory which is leased or on consignment, (d)
displays, (e)
26
inventory which is subject to Liens of the type described in clause (ii) of
the definition of "Permitted Liens", (f) inventory located outside of the
United States, (g) inventory in possession of a Person other than the
Borrower or any of its Domestic Subsidiaries, and (h) inventory which fails
to meet such other specifications and requirements as may from time to time
be established by the Administrative Agent in its reasonable discretion.
"U.S. Eligible Receivables" means, as of any date of determination,
the aggregate book value of all Receivables owned by or owing to the
Borrower or any of its Domestic Subsidiaries on a consolidated basis after
deducting retainage and allowances or reserves relating thereto, as shown
on the books and records of the Borrower and its Domestic Subsidiaries, but
excluding in any event (a) Receivables owing by an account debtor which is
not solvent or is subject to any bankruptcy or insolvency proceeding of any
kind, (b) any Receivable which is (i) not subject to a perfected, first
priority Lien in favor of the Collateral Agent to secure the obligations
under the Security Agreement, or (ii) subject to any other Lien that is not
a Permitted Lien, (c) any insured Receivable which is more than 60 days
past due or any uninsured Receivable which is more than 90 days past
invoice date (in each case net of reserves for bad debts in connection with
any such Receivables), (d) any Receivable not otherwise excluded by clause
(c) above if more than 50% of the other Receivables owing from the
applicable account debtor are excluded by clause (c) above, (e) the sum of
all credit balances carried on Receivables that are more than 90 days past
due, (f) Receivables that are more than 90 days past the original invoice
date but that have been re-aged as a result of a dispute by the account
debtor, (g) Receivables for which any Subsidiary or any Affiliate is the
account debtor, (h) any Receivable if and to the extent the amount of such
Receivable, together with all other Receivables of the applicable account
debtor, exceeds an amount equal to 25% of all Receivables owned by or owing
to the members of the North American Group, (i) any Receivable which is
subject to Liens of the type described in clause (ii) of the definition of
"Permitted Liens", and (j) Receivables which fail to meet such other
specifications and requirements as may from time to time be established by
the Administrative Agent in its reasonable discretion.
"Voting Stock" means, with respect to any Person, Capital Stock issued
by such Person the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors (or persons
performing similar functions) of such Person, even though the right so to
vote has been suspended by the happening of such a contingency.
"Wholly Owned Subsidiary" of any Person means any Subsidiary 100% of
whose Voting Stock is at the time owned by such Person directly or
indirectly through other Wholly Owned Subsidiaries.
"Year 2000 Compliant" shall have the meaning assigned to such term in
Section 6.16.
27
1.2 Computation of Time Periods.
For purposes of computation of periods of time hereunder, the word "from"
means "from and including" and the words "to" and "until" each mean "to but
excluding."
1.3 Accounting Terms.
Except as otherwise expressly provided herein, all accounting terms used
herein shall be interpreted, and all financial statements and certificates and
reports as to financial matters required to be delivered to the Lenders
hereunder shall be prepared, in accordance with GAAP applied on a consistent
basis. All calculations made for the purposes of determining compliance with
this Credit Agreement shall (except as otherwise expressly provided herein) be
made by application of GAAP applied on a basis consistent with the most recent
annual or quarterly financial statements delivered pursuant to Section 7.1 (or,
prior to the delivery of the first financial statements pursuant to Section 7.1,
consistent with the annual audited financial statements referenced in Section
6.1(i)); provided, however, if (a) the Borrower shall object to determining such
compliance on such basis at the time of delivery of such financial statements
due to any change in GAAP or the rules promulgated with respect thereto or (b)
the Administrative Agent or the Required Lenders shall so object in writing
within 60 days after delivery of such financial statements, then such
calculations shall be made on a basis consistent with the most recent financial
statements delivered by the Borrower to the Lenders as to which no such
objection shall have been made.
Notwithstanding the above, the parties hereto acknowledge and agree that,
for purposes of all calculations made under the financial covenants set forth in
Section 7.11 (including without limitation for purposes of the definitions of
"Applicable Percentage" and "Pro Forma Basis"), (i) in connection with any Asset
Disposition referred to in Section 8.5, (A) income statement items (whether
positive or negative) attributable to the Property disposed of shall be excluded
to the extent relating to any period occurring prior to the date of such
transaction and (B) Indebtedness which is retired shall be excluded and deemed
to have been retired as of the first day of the applicable period and (ii) in
connection with any merger or consolidation referred to in Section 8.4 or any
Acquisition referred to in the definition of "Permitted Acquisition", (A) income
statement items attributable to the Person or Property acquired shall, to the
extent not otherwise included in such income statement items for the members of
the Consolidated Group in accordance with GAAP or in accordance with any defined
terms set forth in Section 1.1, be included to the extent relating to any period
applicable in such calculations, (B) Indebtedness of the Person or Property
acquired shall be deemed to have been incurred as of the first day of the
applicable period and (C) pro forma adjustments may be included to the extent
that such adjustments would be permitted under GAAP and give effect to items
that are (x) directly attributable to such transaction, (y) expected to have a
continuing impact on the Consolidated Group and (z) factually supportable.
SECTION 2
CREDIT FACILITIES
28
2.1 Commitments.
(a) Revolving Commitment. During the Commitment Period, subject to the
terms and conditions hereof, each Lender severally agrees to make revolving
credit loans (the " Revolving Loans") to the Borrower in U.S. Dollars from time
to time in the amount of such Lender's Revolving Commitment Percentage of such
Revolving Loans for the purposes hereinafter set forth; provided that (i) with
regard to the Lenders collectively, the aggregate principal amount of
Obligations outstanding at any time shall not exceed the lesser of (A)
SEVENTY-FIVE MILLION DOLLARS ($75,000,000) (as such amount may be reduced from
time to time in accordance with the provisions hereof, the "Aggregate Revolving
Committed Amount") or (B) the North American Borrowing Base, and (ii) with
regard to each Lender individually, such Lender's Revolving Commitment
Percentage of Obligations outstanding at any time shall not exceed the lesser of
(A) such Lender's Revolving Committed Amount or (B) an amount equal to such
Lender's Revolving Commitment Percentage of the North American Borrowing Base.
Revolving Loans may consist of Base Rate Loans or Eurodollar Loans, or a
combination thereof, as the Borrower may request, and may be repaid and
reborrowed in accordance with the provisions hereof.
(b) Letter of Credit Commitment. During the Commitment Period, subject to
the terms and conditions hereof and of the LOC Documents, if any, and such other
terms and conditions which the Issuing Lender may reasonably require, the
Issuing Lender shall issue, and the Lenders shall participate in, such standby
Letters of Credit in U.S. Dollars as the Borrower may request for its own
account or for the account of another Domestic Credit Party as provided herein,
in a form acceptable to the Issuing Lender, for the purposes hereinafter set
forth; provided that (i) the aggregate amount of LOC Obligations shall not
exceed TWENTY MILLION DOLLARS ($20,000,000) at any time (as such amount may be
reduced from time to time in accordance with the provisions hereof, the "LOC
Committed Amount"), (ii) with regard to the Lenders collectively, the aggregate
principal amount of Obligations outstanding at any time shall not exceed the
lesser of (A) the Aggregate Revolving Committed Amount or (B) the North American
Borrowing Base, and (iii) with regard to each Lender individually, such Lender's
Revolving Commitment Percentage of Obligations outstanding at any time shall not
exceed the lesser of (A) such Lender's Revolving Committed Amount or (B) an
amount equal to such Lender's Revolving Commitment Percentage of the North
American Borrowing Base. Letters of Credit issued hereunder shall not have an
original expiry date more than one year from the date of issuance or extension.
No Letter of Credit issued hereunder shall have an expiry date, whether as
originally issued or by extension, extending beyond the Termination Date. Each
Letter of Credit shall comply with the related LOC Documents. The issuance date
of each Letter of Credit shall be a Business Day.
(c) Swingline Commitment. During the Commitment Period, subject to the
terms and conditions hereof, the Swingline Lender agrees to make certain
revolving credit loans (the "Swingline Loans") to the Borrower in U.S. Dollars
from time to time for the purposes hereinafter set forth; provided that (i) the
aggregate principal amount of Swingline Loans shall not exceed FIVE MILLION
DOLLARS ($5,000,000) (as such amount may be reduced from time to time in
accordance with the provisions hereof, the "Swingline Committed Amount"), and
(ii)
29
with regard to the Lenders collectively, the aggregate principal amount of
Obligations outstanding at any time shall not exceed the lesser of (A) the
Aggregate Revolving Committed Amount or (B) the North American Borrowing Base.
Swingline Loans may consist of Base Rate Loans or Quoted Rate Swingline Loans,
or a combination thereof, as the Borrower may request, and may be repaid and
reborrowed in accordance with the provisions hereof.
(d) Increase in Revolving Commitments. Upon thirty (30) days advance
written notice to the Administrative Agent, the Borrower shall have the right,
at any time and from time to time from the Closing Date until the Termination
Date, to increase the Aggregate Revolving Committed Amount to an amount not to
exceed $100,000,000 by requesting such additional Revolving Commitments from
existing Lenders and/or other commercial banks and financial institutions
reasonably acceptable to the Administrative Agent; provided that (i) any such
increase shall be in a minimum principal amount of $5,000,000 and integral
multiples of $1,000,000 in excess thereof (or the remaining amount, if less),
(ii) if any Revolving Loans are outstanding at the time of any such increase,
the Borrower shall make such payments on the Revolving Loans (including payment
of any break-funding amount owing under Section 3.12) as necessary to give
effect to the revised Revolving Commitment Percentages resulting from such
increase, (iii) the conditions to Extensions of Credit in Sections 5.2(a), (b)
and (c) shall be satisfied as of the date of such increase, (iv) if any bank or
other financial institution providing additional Revolving Commitments is not
already a Lender hereunder, such new Lender shall enter into a joinder agreement
and such other documents as the Administrative Agent and the Borrower may
reasonably request, (v) no Lender shall be required to increase its Commitment
without such Lender consenting to such increase, and (vi) any increases in the
Aggregate Revolving Committed Amount to an amount in excess of $85,000,000 shall
require the written consent of the Required Lenders. In connection with any
increase in the Aggregate Revolving Committed Amount pursuant to this Section
2.1(d), Schedule 2.1 shall be revised to reflect the modified Revolving
Commitment Percentages and Revolving Committed Amounts of the Lenders.
2.2 Method of Borrowing.
(a) Notice of Request for Extensions of Credit. The applicable Borrower
shall request an Extension of Credit hereunder by written notice (or telephonic
notice promptly confirmed in writing) as follows:
(i) Revolving Loans. In the case of Revolving Loans, by the Borrower
to the Administrative Agent not later than 11:00 A.M. (Charlotte, North
Carolina time) on the Business Day prior to date of the requested borrowing
in the case of Base Rate Loans, and on the third Business Day prior to the
date of the requested borrowing in the case of Eurodollar Loans. Each such
request for borrowing shall be irrevocable and shall specify (A) that a
Revolving Loan is requested, (B) the date of the requested borrowing (which
shall be a Business Day), (C) the aggregate principal amount to be
borrowed, and (D) whether the borrowing shall be comprised of Base Rate
Loans, Eurodollar Loans or a combination thereof, and if Eurodollar Loans
are requested, the Interest Period(s) therefor. A form of Notice of
Borrowing is attached as Schedule 2.2(a)(i). The Administrative Agent shall
give
30
notice to each Lender promptly upon receipt of each Notice of Borrowing
pursuant to this Section 2.2(a)(i), the contents thereof and each Lender's
share of any borrowing to be made pursuant thereto.
(ii) Letters of Credit. In the case of Letters of Credit, by the
Borrower to the Issuing Lender with a copy to the Administrative Agent not
later than 11:00 A.M. (Charlotte, North Carolina time) on the third
Business Day prior to the date of the requested issuance or extension (or
such shorter period as may be agreed by the Issuing Lender). Each such
request for issuance or extension of a Letter of Credit shall be
irrevocable and shall specify, among other things, (A) that a Letter of
Credit is requested, (B) the date of the requested issuance or extension,
(C) the type, amount, expiry date and terms on which the Letter of Credit
is to be issued or extended, and (D) the beneficiary. A form of Notice of
Request for Letter of Credit is attached as Schedule 2.2(a)(ii).
(iii) Swingline Loans. In the case of Swingline Loans, by the Borrower
to the Swingline Lender with a copy to the Administrative Agent not later
than 11:00 A.M. (Charlotte, North Carolina time) on the Business Day of the
requested borrowing. Each such request for borrowing shall be irrevocable
and shall specify (A) that a Swingline Loan is requested, (B) the date of
the requested borrowing (which shall be a Business Day), (C) the aggregate
principal amount to be borrowed, and (D) the interest rate option and
maturity requested therefor. A form of Notice of Borrowing is attached as
Schedule 2.2(a)(iii). Notwithstanding the foregoing, however, in the event
that an "auto borrow" or "zero balance" or similar arrangement shall then
be in place with the Swingline Lender, the Borrower shall request Swingline
Loans pursuant to such alternative notice arrangements, if any, provided
thereunder or in connection therewith. Each Swingline Loan shall have a
maturity date as the Borrower may request and the Swingline Lender may
agree.
(b) Minimum Amounts. Each Revolving Loan advance shall be in a minimum
principal amount of $5,000,000, in the case of Eurodollar Loans, or $1,000,000
(or, if less, the Aggregate Revolving Committed Amount), in the case of Base
Rate Loans, and integral multiples of $250,000 in excess thereof. Each Swingline
Loan advance shall be in a minimum principal amount of $1,000,000 and integral
multiples of $100,000 in excess thereof (or the remaining amount of the
Swingline Committed Amount, if less) provided that in the event that an "auto
borrow" or "zero balance" or similar arrangement shall then be in place with the
Swingline Lender, each Swingline Loans advance shall be in such minimum amounts,
if any, provided by such agreement
(c) Information Not Provided. If in connection with any request for a
Revolving Loan, the applicable Borrower shall fail to specify (i) an applicable
Interest Period in the case of a Eurodollar Loan, the applicable Borrower shall
be deemed to have requested an Interest Period of one month, or (ii)the type of
Loan requested in the case of a Revolving Loan or a Swingline Loan, the Borrower
shall be deemed to have requested a Base Rate Loan.
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(d) Maximum Number of Eurodollar Loans. In connection with any request for
a Revolving Loan, Revolving Loans may be comprised of no more than five (5)
Eurodollar Loans outstanding at any time. For purposes hereof, Eurodollar Loans
with separate or different Interest Periods will be considered as separate
Eurodollar Loans even if their Interest Periods expire on the same date.
2.3 Interest.
Subject to Section 3.1, the Loans hereunder shall bear interest at a per
annum rate, payable in arrears on each applicable Interest Payment Date (or at
such other times as may be specified herein), as follows:
(a) Base Rate Loans. During such periods as the Loans shall be
comprised of Base Rate Loans, the Adjusted Base Rate;
(b) Eurodollar Loans. During such periods as the Loans shall be
comprised of Eurodollar Loans, the Adjusted Eurodollar Rate; and
(c) Quoted Rate Swingline Loans. During such periods as the Swingline
Loans shall be comprised of Quoted Rate Swingline Loans, the Quoted Rate.
2.4 Repayment.
(a) Revolving Loans. The principal amount of all Revolving Loans shall
be due and payable in full on the Termination Date.
(b) Swingline Loans. The principal amount of all Swingline Loans shall
be due and payable on the earlier of (A) the maturity date agreed to by the
Swingline Lender and the Borrower with respect to such Loan, or (B) the
Termination Date.
2.5 Notes.
The Revolving Loans and Swingline Loans shall be evidenced by the Revolving
Notes.
2.6 Additional Provisions relating to Letters of Credit.
(a) Reports. The Issuing Lender will provide to the Administrative Agent
and the Borrower at least monthly, and more frequently upon request, a detailed
summary report on the Letters of Credit and the activity thereon, in form and
substance acceptable to the Administrative Agent. In addition, the Issuing
Lender will provide to the Administrative Agent and the Borrower for
dissemination to the Lenders at least quarterly, and more frequently upon
request, a detailed summary report on the Letters of Credit and the activity
thereon, including, among other things, the Credit Party for whose account the
Letter of Credit is issued, the beneficiary, the face amount, and the expiry
date. Further, the Issuing Lender will provide to the Administrative Agent for
dissemination to the Borrower and the Lenders promptly after the issuance of a
Letter
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of Credit a detailed summary report on such Letter of Credit including
the Credit Party for whose account the Letter of Credit is issued, the
beneficiary, the face amount, and the expiry date. The Issuing Lender will
provide copies of the Letters of Credit to the Administrative Agent and the
Lenders promptly upon request.
(b) Participation. Each Lender, with respect to the Existing Letters of
Credit, hereby purchases a participation interest in the Existing Letters of
Credit, and with respect to Letters of Credit issued on or after the Closing
Date, upon issuance of a Letter of Credit, shall be deemed to have purchased
without recourse a risk participation from the Issuing Lender in such Letter of
Credit and the obligations arising thereunder, in each case in an amount equal
to its pro rata share of the obligations under such Letter of Credit (based on
the respective Revolving Commitment Percentages of the Lenders) and shall
absolutely, unconditionally and irrevocably assume, as primary obligor and not
as surety, and be obligated to pay to the Issuing Lender therefor and discharge
when due, its pro rata share of the obligations arising under such Letter of
Credit. Without limiting the scope and nature of each Lender's participation in
any Letter of Credit, to the extent that the Issuing Lender has not been
reimbursed as required hereunder or under any such Letter of Credit, each Lender
shall pay to the Issuing Lender its pro rata share of such unreimbursed drawing
in same day funds on the day of notification by the Issuing Lender of an
unreimbursed drawing pursuant to the provisions of subsection (d) hereof. The
obligation of each Lender to so reimburse the Issuing Lender shall be absolute
and unconditional and shall not be affected by the occurrence of a Default, an
Event of Default or any other occurrence or event. Any such reimbursement shall
not relieve or otherwise impair the obligation of the Borrower to reimburse the
Issuing Lender under any Letter of Credit, together with interest as hereinafter
provided.
(c) Reimbursement. In the event of any drawing under any Letter of Credit,
the Issuing Lender will promptly notify the Borrower. Unless the Borrower shall
immediately notify the Issuing Lender that the Borrower intends to otherwise
reimburse the Issuing Lender for such drawing, the Borrower shall be deemed to
have requested that the Lenders make a Revolving Loan in the amount of the
drawing as provided in subsection (d) hereof on the related Letter of Credit,
the proceeds of which will be used to satisfy the related reimbursement
obligations. The Borrower promises to reimburse the Issuing Lender on the day of
drawing under any Letter of Credit (either with the proceeds of a Revolving Loan
obtained hereunder or otherwise) in same day funds. If the Borrower shall fail
to reimburse the Issuing Lender as provided hereinabove, the unreimbursed amount
of such drawing shall bear interest at a per annum rate equal to the Adjusted
Base Rate plus two percent (2%). The Borrower's reimbursement obligations
hereunder shall be absolute and unconditional under all circumstances
irrespective of any rights of setoff, counterclaim or defense to payment the
Borrower may claim or have against the Issuing Lender, the Agents, the Lenders,
the beneficiary of the Letter of Credit drawn upon or any other Person,
including without limitation any defense based on any failure of the Borrower or
any other Credit Party to receive consideration or the legality, validity,
regularity or unenforceability of the Letter of Credit. The Issuing Lender will
promptly notify the other Lenders of the amount of any unreimbursed drawing and
each Lender shall promptly pay to the Administrative Agent for the account of
the Issuing Lender in U.S. Dollars and in immediately available funds, the
amount of such Lender's Revolving Commitment Percentage of such unreimbursed
drawing. Such payment shall be made on the day such notice is received by such
Lender from the Issuing Lender if such notice is received at or before 2:00 P.M.
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(Charlotte, North Carolina time) otherwise such payment shall be made at or
before 12:00 Noon (Charlotte, North Carolina time) on the Business Day next
succeeding the day such notice is received. If such Lender does not pay such
amount to the Issuing Lender in full upon such request, such Lender shall, on
demand, pay to the Administrative Agent for the account of the Issuing Lender
interest on the unpaid amount during the period from the date of such drawing
until such Lender pays such amount to the Issuing Lender in full at a rate per
annum equal to, if paid within two (2) Business Days of the date that such
Lender is required to make payments of such amount pursuant to the preceding
sentence, the Federal Funds Rate and thereafter at a rate equal to the Base
Rate. Each Lender's obligation to make such payment to the Issuing Lender, and
the right of the Issuing Lender to receive the same, shall be absolute and
unconditional, shall not be affected by any circumstance whatsoever and without
regard to the termination of this Credit Agreement or the Commitments hereunder,
the existence of a Default or Event of Default or the acceleration of the
obligations of the Borrower hereunder and shall be made without any offset,
abatement, withholding or reduction whatsoever. Simultaneously with the making
of each such payment by a Lender to the Issuing Lender, such Lender shall,
automatically and without any further action on the part of the Issuing Lender
or such Lender, acquire a participation in an amount equal to such payment
(excluding the portion of such payment constituting interest owing to the
Issuing Lender) in the related unreimbursed drawing portion of the LOC
Obligation and in the interest thereon and in the related LOC Documents, and
shall have a claim against the Borrower with respect thereto.
(d) Repayment with Revolving Loans. On any day on which the Borrower shall
have requested, or been deemed to have requested, a Revolving Loan advance to
reimburse a drawing under a Letter of Credit, the Administrative Agent shall
give notice to the Lenders that a Revolving Loan has been requested or deemed
requested by the Borrower to be made in connection with a drawing under a Letter
of Credit, in which case a Revolving Loan advance comprised of Base Rate Loans
shall be immediately made to the Borrower by all Lenders (notwithstanding any
termination of the Commitments pursuant to Section 9.2) pro rata based on the
respective Revolving Commitment Percentages of the Lenders (determined before
giving effect to any termination of the Commitments pursuant to Section 9.2) and
the proceeds thereof shall be paid directly to the Issuing Lender for
application to the respective LOC Obligations. Each such Lender hereby
irrevocably agrees to make its pro rata share of each such Revolving Loan
immediately upon any such request or deemed request in the amount, in the manner
and on the date specified in the preceding sentence notwithstanding (i) the
amount of such borrowing may not comply with the minimum amount for advances of
Revolving Loans otherwise required hereunder, (ii) whether any conditions
specified in Section 5.2 are then satisfied, (iii) whether a Default or an Event
of Default then exists, (iv) failure for any such request or deemed request for
Revolving Loan to be made by the time otherwise required hereunder, (v) whether
the date of such borrowing is a date on which Revolving Loans are otherwise
permitted to be made hereunder or (vi) any termination of the Commitments
relating thereto immediately prior to or contemporaneously with such borrowing.
In the event that any Revolving Loan cannot for any reason be made on the date
otherwise required above (including, without limitation, as a result of the
commencement of a proceeding under the Bankruptcy Code with respect to the
Borrower or any other Credit Party), then each such Lender hereby agrees that it
shall forthwith purchase (as of the date such borrowing would otherwise have
occurred, but adjusted for any payments received from the Borrower on or after
such date and prior to such purchase) from the Issuing Lender such participation
in the outstanding LOC Obligations as shall
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be necessary to cause each such Lender to share in such LOC Obligations ratably
(based upon the respective Revolving Commitment Percentages of the Lenders
(determined before giving effect to any termination of the Commitments pursuant
to Section 9.2)), provided that in the event such payment is not made by any
Lender on the day of drawing, such Lender shall pay in addition to the Issuing
Lender interest on the amount of its unfunded Participation Interest at a rate
equal to, if paid within two (2) Business Days of the date of drawing, the
Federal Funds Rate, and thereafter at the Base Rate.
(e) Designation of other Credit Parties as Account Parties. Notwithstanding
anything to the contrary set forth in this Credit Agreement, including without
limitation Section 2.2(a)(ii) hereof, a Letter of Credit issued hereunder may
contain a statement to the effect that such Letter of Credit is issued for the
account of a Domestic Credit Party other than the Borrower, provided that
notwithstanding such statement, the Borrower shall be the actual account party
for all purposes of this Credit Agreement for such Letter of Credit and such
statement shall not affect the Borrower's reimbursement obligations hereunder
with respect to such Letter of Credit.
(f) Renewal, Extension. The renewal or extension of any Letter of Credit
shall, for purposes hereof, be treated in all respects the same as the issuance
of a new Letter of Credit hereunder.
(g) Uniform Customs and Practices. The Issuing Lender may have the Letters
of Credit be subject to The Uniform Customs and Practice for Documentary Credits
(the "UCP") or the International Standby Practices 1998 (the "ISP98"), in either
case as published as of the date of issue by the International Chamber of
Commerce, in which case the UCP or the ISP98, as applicable, may be incorporated
therein and deemed in all respects to be a part thereof.
(h) Indemnification; Nature of Issuing Lender's Duties.
(i) In addition to its other obligations under this Section 2.6, the
Borrower hereby agrees to protect, indemnify, pay and save the Issuing
Lender harmless from and against any and all claims, demands, liabilities,
damages, losses, costs, charges and expenses (including reasonable
attorneys' fees) that the Issuing Lender may incur or be subject to as a
consequence, direct or indirect, of (A) the issuance of any Letter of
Credit or (B) the failure of the Issuing Lender to honor a drawing under a
Letter of Credit as a result of any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto government or
governmental authority (all such acts or omissions, herein called
"Government Acts").
(ii) As between the Borrower and the Issuing Lender, the Borrower
shall assume all risks of the acts, omissions or misuse of any Letter of
Credit by the beneficiary thereof. The Issuing Lender shall not be
responsible: (A) for the form, validity, sufficiency, accuracy, genuineness
or legal effect of any document submitted by any party in connection with
the application for and issuance of any Letter of Credit, even if it should
in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged; (B) for the validity or sufficiency of
any instrument transferring or assigning or purporting to transfer or
35
assign any Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, that may prove to be invalid or
ineffective for any reason; (C) for 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; (D) for
any loss or delay in the transmission or otherwise of any document required
in order to make a drawing under a Letter of Credit or of the proceeds
thereof; and (E) for any consequences arising from causes beyond the
control of the Issuing Lender, including, without limitation, any
Government Acts. None of the above shall affect, impair, or prevent the
vesting of the Issuing Lender's rights or powers hereunder.
(iii) In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or omitted by
the Issuing Lender, under or in connection with any Letter of Credit or the
related certificates, if taken or omitted in good faith, shall not put such
Issuing Lender under any resulting liability to the Borrower or any other
Credit Party. It is the intention of the parties that this Credit Agreement
shall be construed and applied to protect and indemnify the Issuing Lender
against any and all risks involved in the issuance of the Letters of
Credit, all of which risks are hereby assumed by the Borrower (on behalf of
itself and each of the other Credit Parties), including, without
limitation, any and all Government Acts. The Issuing Lender shall not, in
any way, be liable for any failure by the Issuing Lender or anyone else to
pay any drawing under any Letter of Credit as a result of any Government
Acts or any other cause beyond the control of the Issuing Lender.
(iv) Nothing in this subsection (h) (except as provided in clause (v)
below) is intended to limit the reimbursement obligations of the Borrower
contained in subsection (d) above. The obligations of the Borrower under
this subsection (h) shall survive the termination of this Credit Agreement.
No act or omissions of any current or prior beneficiary of a Letter of
Credit shall in any way affect or impair the rights of the Issuing Lender
to enforce any right, power or benefit under this Credit Agreement.
(v) Notwithstanding anything to the contrary contained in this
subsection (h), the Borrower shall have no obligation to indemnify the
Issuing Lender in respect of any liability incurred by the Issuing Lender
(A) arising solely out of the gross negligence or willful misconduct of the
Issuing Lender, as determined by a court of competent jurisdiction, or (B)
caused by the Issuing Lender's failure to pay under any Letter of Credit
after presentation to it of a request strictly complying with the terms and
conditions of such Letter of Credit, as determined by a court of competent
jurisdiction, unless such payment is prohibited by any law, regulation,
court order or decree.
(i) Responsibility of Issuing Lender. It is expressly understood and agreed
that the obligations of the Issuing Lender hereunder to the Lenders are only
those expressly set forth in this Credit Agreement and that the Issuing Lender
shall be entitled to assume that the conditions precedent set forth in Section
5.2 have been satisfied unless it shall have acquired actual knowledge that any
such condition precedent has not been satisfied; provided, however, that nothing
set forth in this Section 2.6 shall be deemed to prejudice the right of any
Lender to recover from the Issuing
36
Lender any amounts made available by such Lender to the Issuing Lender pursuant
to this Section 2.6 in the event that it is determined by a court of competent
jurisdiction that the payment with respect to a Letter of Credit constituted
gross negligence or willful misconduct on the part of the Issuing Lender.
(j) Conflict with LOC Documents. In the event of any conflict between this
Credit Agreement and any LOC Document (including any letter of credit
application), this Credit Agreement shall control.
2.7 Additional Provisions relating to Swingline Loans.
The Swingline Lender may, at any time, in its sole discretion, by written
notice to the Borrower and the Lenders, demand repayment of its Swingline Loans
by way of a Revolving Loan advance, in which case the Borrower shall be deemed
to have requested a Revolving Loan advance comprised solely of Base Rate Loans
in the amount of such Swingline Loans; provided, however, that any such demand
shall be deemed to have been given one Business Day prior to the Termination
Date and on the date of the occurrence of any Event of Default described in
Section 9.1 and upon acceleration of the indebtedness hereunder and the exercise
of remedies in accordance with the provisions of Section 9.2. Each Lender hereby
irrevocably agrees to make its Revolving Commitment Percentage of each such
Revolving Loan in the amount, in the manner and on the date specified in the
preceding sentence notwithstanding (I) the amount of such borrowing may not
comply with the minimum amount for advances of Revolving Loans otherwise
required hereunder, (II) whether any conditions specified in Section 5.2 are
then satisfied, (III) whether a Default or an Event of Default then exists, (IV)
failure of any such request or deemed request for Revolving Loan to be made by
the time otherwise required hereunder, (V) whether the date of such borrowing is
a date on which Revolving Loans are otherwise permitted to be made hereunder or
(VI) any termination of the Commitments relating thereto immediately prior to or
contemporaneously with such borrowing. In the event that any Revolving Loan
cannot for any reason be made on the date otherwise required above (including,
without limitation, as a result of the commencement of a proceeding under the
Bankruptcy Code with respect to the Borrower or any other Credit Party), then
each Lender hereby agrees that it shall forthwith purchase (as of the date such
borrowing would otherwise have occurred, but adjusted for any payments received
from the Borrower on or after such date and prior to such purchase) from the
Swingline Lender such Participation Interests in the outstanding Swingline Loans
as shall be necessary to cause each such Lender to share in such Swingline Loans
ratably based upon its Revolving Commitment Percentage, provided that (A) all
interest payable on the Swingline Loans shall be for the account of the
Swingline Lender until the date as of which the respective Participation
Interest is funded and (B) at the time any purchase of Participation Interests
pursuant to this sentence is actually made, the purchasing Lender shall be
required to pay to the Swingline Lender, to the extent not paid to the Swingline
Lender by the Borrower in accordance with the terms of Section 2.4(b), interest
on the principal amount of Participation Interests purchased for each day from
and including the day upon which such borrowing would otherwise have occurred to
but excluding the date of payment by such lender for such Participation
Interests, at the rate equal to the Federal Funds Rate.
37
SECTION 3
OTHER PROVISIONS RELATING TO CREDIT FACILITIES
3.1 Default Rate.
Upon the occurrence, and during the continuance, of an Event of Default,
(i) the principal of and, to the extent permitted by law, interest on the Loans
and any other amounts owing hereunder or under the other Credit Documents shall
bear interest, payable on demand, at a per annum rate 2% greater than the rate
which would otherwise be applicable (or if no rate is applicable, whether in
respect of interest, fees or other amounts, then the Adjusted Base Rate plus 2%)
and (ii) the Letter of Credit Fee shall accrue at a per annum rate 2% greater
than the rate which would otherwise be applicable.
3.2 Extension and Conversion.
The Borrower shall have the option, on any Business Day, to extend existing
Loans into a subsequent permissible Interest Period or to convert Loans into
Loans of another interest rate type; provided, however, that (i) except as
provided in Section 3.8, Eurodollar Loans may be converted into Base Rate Loans
or extended as Eurodollar Loans for new Interest Periods only on the last day of
the Interest Period applicable thereto, (ii) Eurodollar Loans may be extended,
and Base Rate Loans may be converted into Eurodollar Loans, only if the
conditions precedent set forth in Section 5.2 are satisfied on the date of
Continuation or Conversion, (iii) Loans extended as, or converted into,
Eurodollar Loans shall be subject to the terms of the definition of "Interest
Period" and shall be in such minimum amounts as provided in Section 2.2(b) and
(iv) any request for Continuation or Conversion of a Eurodollar Loan which shall
fail to specify an Interest Period shall be deemed to be a request for an
Interest Period of one month. Each such Continuation or Conversion shall be
effected by the applicable Borrower by giving a Notice of Extension/Conversion
(or telephonic notice promptly confirmed in writing) to the office of the
Administrative Agent specified in Section 11.1, or at such other office as the
Administrative Agent may designate in writing, prior to 11:00 A.M. (Charlotte,
North Carolina time), on the Business Day of, in the case of the Conversion of a
Eurodollar Loan into a Base Rate Loan, and on the third Business Day prior to,
in the case of the Continuation of a Eurodollar Loan as, or Conversion of a Base
Rate Loan into, a Eurodollar Loan, the date of the proposed Continuation or
Conversion, the Loans to be so extended or converted, the types of Loans into
which such Loans are to be converted and, if appropriate, the applicable
Interest Periods with respect thereto. Each request for Continuation or
Conversion shall be irrevocable and shall constitute a representation and
warranty by the applicable Borrower of the matters specified in Section 5.2. In
the event the applicable Borrower fails to request Continuation or Conversion of
any Eurodollar Loan in accordance with this Section, or any such Conversion or
Continuation is not permitted or required by this Section, then such Eurodollar
Loan shall be automatically Converted into a Base Rate Loan at the end of the
Interest Period applicable thereto. The Administrative Agent shall give each
Lender notice as promptly as practicable of any such proposed Continuation or
Conversion affecting any Revolving Loan.
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3.3 Prepayments.
(a) Voluntary Prepayments. The Loans may be repaid in whole or in part
without premium or penalty; provided that (i) Eurodollar Loans may be prepaid
only upon three (3) Business Days' prior written notice to the Administrative
Agent and must be accompanied by payment of any amounts owing under Section
3.12, and (ii) partial prepayments shall be minimum principal amounts of (A) in
the case of Revolving Loans which are Eurodollar Loans, a minimum aggregate
principal amount of $1,000,000 and integral multiples of $250,000 in excess
thereof, (B) in the case of Revolving Loans which are Base Rate Loans, a minimum
aggregate principal amount of $1,000,000 and integral multiples of $250,000 in
excess thereof, and (C) in the case of Swingline Loans, a minimum aggregate
principal amount of $1,000,000 and integral multiples of $100,000 in excess
thereof, provided that in the event that an "auto borrow" or "zero balance" or
other similar arrangement shall then be in place with the Swingline Lender,
Swingline Loans may be prepaid in such other minimum amounts, if any, provided
under such arrangement.
(b) Mandatory Prepayments. If at any time, (i) the aggregate principal
amount of Obligations shall exceed the lesser of (A) the Aggregate Revolving
Committed Amount or (B) the North American Borrowing Base, (ii) the aggregate
principal amount of LOC Obligations shall exceed the LOC Committed Amount, or
(iii) the aggregate principal amount of Swingline Loans shall exceed the
Swingline Committed Amount, the Borrower shall immediately make payment on the
Revolving Loans, the Swingline Loans and/or to a cash collateral account in
respect of the LOC Obligations, in the amount of the difference.
(c) Application. Unless otherwise specified by the applicable Borrower,
prepayments on the Obligations shall be applied first to Swingline Loans, then
to Revolving Loans which are Base Rate Loans, then to Revolving Loans which are
Eurodollar Loans in direct order of Interest Period maturities, and then to a
cash collateral account to secure LOC Obligations.
3.4 Reduction and Termination of Commitments.
(a) Voluntary Reduction of Commitments. The Commitments may be terminated
or permanently reduced in whole or in part by the Borrower upon three (3)
Business Days' prior written notice by the Borrower to the Administrative Agent
(and the Administrative Agent shall promptly notify the Lenders), provided that
after giving effect to any voluntary reduction in the Revolving Commitments, the
aggregate principal amount of Obligations shall not exceed the Aggregate
Revolving Committed Amount, as reduced, and (ii) partial reductions shall be in
a minimum aggregate principal amount of in the case of Aggregate Revolving
Committed Amount, $5,000,000 and integral multiples of $1,000,000 in excess
thereof.
(b) Termination of Commitments. The Commitments shall terminate on the
Termination Date.
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3.5 Fees.
(a) Commitment Fee. In consideration of the Revolving Commitments, the
Borrower agrees to pay to the Administrative Agent for the ratable benefit of
the Lenders a commitment fee (the "Commitment Fee") equal to the Applicable
Percentage per annum on the average daily unused amount of the Aggregate
Revolving Committed Amount for the applicable period. The Commitment Fee shall
be payable quarterly in arrears on the 15th day following the last day of each
calendar quarter for the immediately preceding calendar quarter (or portion
thereof) beginning with the first such date to occur after the Closing Date (as
well as on the Termination Date). For purposes of computation of the Commitment
Fee, (A) Swingline Loans shall not be counted toward or considered usage of the
Aggregate Revolving Committed Amount and (B) LOC Obligations shall be counted
toward and considered usage of the Aggregate Revolving Committed Amount.
(b) Letter of Credit Fees.
(i) Letter of Credit Issuance Fee. In consideration of the issuance of
Letters of Credit, the Borrower promises to pay to the Administrative Agent
for the account of each Lender a fee (the "Letter of Credit Fee") on such
Lender's Revolving Commitment Percentage of the average daily maximum
amount available to be drawn under each such Letter of Credit computed at a
per annum rate for each day from the date of issuance to the date of
expiration equal to the Applicable Percentage. The Letter of Credit Fee
shall be payable quarterly in arrears on the last Business Day of each
March, June, September and December for the immediately preceding quarter
(or a portion thereof).
(ii) Issuing Lender Fees. In addition to the Letter of Credit Fee, the
Borrower promises to pay to the Administrative Agent for the account of the
Issuing Lender without sharing by the other Lenders (i) a letter of credit
fronting fee of one-eighth of one percent (0.125%) on the average daily
maximum amount available to be drawn under each Letter of Credit computed
at a per annum rate for each day from the date of issuance to the date of
expiration and (ii) the customary charges from time to time of the Issuing
Lender with respect to the issuance, amendment, transfer, administration,
cancellation and conversion of, and drawings under, such Letters of Credit.
(c) Administrative Fees. The Borrower agrees to pay to the Administrative
Agent, for its own account, the fees referred to in the Administrative Agent's
Fee Letter (the "Administrative Agent's Fees").
3.6 Capital Adequacy.
If any Lender has reasonably determined, after the date hereof, that the
adoption or the becoming effective of, or any change in, or any change by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof in the interpretation or administration
of, any applicable law, rule or regulation regarding capital adequacy, or
compliance by such Lender with any request or directive regarding capital
adequacy
40
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on such Lender's (including, for purposes hereof, the parent company of such
Lender) capital or assets as a consequence of its commitments or obligations
hereunder to a level below that which such Lender would have achieved but for
such adoption, effectiveness, change or compliance (taking into consideration
such Lender's policies with respect to capital adequacy), then, upon notice from
such Lender to the Borrower, the Borrower shall be obligated to pay to such
Lender such additional amount or amounts as will compensate such Lender for such
reduction. Each determination by any such Lender of amounts owing under this
Section shall, absent manifest error, be conclusive and binding on the parties
hereto. If any Lender requests compensation by the Borrower under this Section
3.6, the Borrower may, by notice to such Lender (with a copy to the
Administrative Agent), suspend the obligation of such Lender to make or Continue
Eurodollar Loans, or to Convert Base Rate Loans into Eurodollar Loans, until the
event or condition giving rise to such request ceases to be in effect (in which
case the provisions of Section 3.10 shall be applicable); provided that such
suspension shall not affect the right of such Lender to receive the compensation
so requested.
3.7 Limitation on Eurodollar Loans.
If on or prior to the first day of any Interest Period for any Eurodollar
Loan:
(a) the Administrative Agent reasonably determines (which
determination shall be conclusive absent manifest error) that by reason of
circumstances affecting the relevant market, adequate and reasonable means
do not exist for ascertaining the Eurodollar Rate for such Interest Period;
or
(b) the Required Lenders reasonably determine (which determination
shall be conclusive absent manifest error) and notify the Administrative
Agent that the Eurodollar Rate will not adequately and fairly reflect the
cost to the Lenders of funding Eurodollar Loans for such Interest Period;
then the Administrative Agent shall give the Borrower prompt notice thereof, and
so long as such condition remains in effect, the Lenders shall be under no
obligation to make additional Eurodollar Loans, Continue Eurodollar Loans, or to
Convert Base Rate Loans into Eurodollar Loans with respect to the affected
currency.
3.8 Illegality.
Notwithstanding any other provision of this Credit Agreement, in the event
that it becomes unlawful for any Lender (or its Applicable Lending Office) to
make, maintain, or fund Eurodollar Loans hereunder, then such Lender shall
promptly notify the Borrower thereof and such Lender's obligation to make or
Continue Eurodollar Loans and to Convert Base Rate Loans into Eurodollar Loans
shall be suspended until such time as such Lender may again make, maintain, and
fund Eurodollar Loans (in which case the provisions of Section 3.10 shall be
applicable).
41
3.9 Requirements of Law.
If, after the date hereof, the adoption of any applicable law, rule, or
regulation, or any change in any applicable law, rule, or regulation, or any
change in the interpretation or administration thereof by any Governmental
Authority, central bank, or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or its Applicable Lending
Office) with any request or directive (whether or not having the force of law)
of any such Governmental Authority, central bank, or comparable agency:
(i) shall subject such Lender (or its Applicable Lending Office) to
any additional tax, duty, or other charge with respect to any Eurodollar
Loans, its Notes, or its obligation to make Eurodollar Loans, or change the
basis of taxation of any amounts payable to such Lender (or its Applicable
Lending Office) under this Credit Agreement or its Notes in respect of any
Eurodollar Loans (other than taxes imposed on the overall net income of
such Lender by the jurisdiction in which such Lender has its principal
office or such Applicable Lending Office);
(ii) shall impose, modify, or deem applicable any reserve, special
deposit, assessment, or similar requirement (other than the Eurodollar
Reserve Requirement utilized in the determination of the Adjusted
Eurodollar Rate) relating to any extensions of credit or other assets of,
or any deposits with or other liabilities or commitments of, such Lender
(or its Applicable Lending Office), including the Commitment of such Lender
hereunder; or
(iii) shall impose on such Lender (or its Applicable Lending Office)
or the London interbank market any other condition affecting this Credit
Agreement or its Notes or any of such extensions of credit or liabilities
or commitments;
and the result of any of the foregoing is to increase the cost to such Lender
(or its Applicable Lending Office) of making, Converting into, Continuing, or
maintaining any Eurodollar Loans or to reduce any sum received or receivable by
such Lender (or its Applicable Lending Office) under this Credit Agreement or
its Notes with respect to any Eurodollar Loans, then the Borrower shall pay to
such Lender on demand such amount or amounts as will compensate such Lender for
such increased cost or reduction. If any Lender requests compensation by the
Borrower under this Section 3.9, the Borrower may, by notice to such Lender
(with a copy to the Administrative Agent), suspend the obligation of such Lender
to make or Continue Eurodollar Loans, or to Convert Base Rate Loans into
Eurodollar Loans, until the event or condition giving rise to such request
ceases to be in effect (in which case the provisions of Section 3.10 shall be
applicable); provided that such suspension shall not affect the right of such
Lender to receive the compensation so requested. Each Lender shall promptly
notify the Borrower and the Administrative Agent of any event of which it has
knowledge, occurring after the date hereof, which will entitle such Lender to
compensation pursuant to this Section 3.9 and will designate a different
Applicable Lending Office if such designation will avoid the need for, or reduce
the amount of, such compensation and will not, in the judgment of such Lender,
be otherwise disadvantageous to it. Any Lender claiming compensation under this
Section 3.9 shall furnish to the Borrower and the Administrative Agent a
statement setting forth the additional amount or amounts to be paid to it
hereunder which shall be conclusive
42
in the absence of manifest error. In determining such amount, such Lender may
use any reasonable averaging and attribution methods.
3.10 Treatment of Affected Loans.
If the obligation of any Lender to make any Eurodollar Loan or to Continue,
or to Convert Base Rate Loans into, Eurodollar Loans shall be suspended pursuant
to Section 3.6, 3.8 or 3.9 hereof, such Lender's Eurodollar Loans shall be
automatically Converted into Base Rate Loans on the last day(s) of the then
current Interest Period(s) for such Eurodollar Loans (or, in the case of a
Conversion required by Section 3.8 hereof, on such earlier date as such Lender
may specify to the Borrower with a copy to the Administrative Agent) and, unless
and until such Lender gives notice as provided below that the circumstances
specified in Section 3.6, 3.8 or 3.9 hereof that gave rise to such Conversion no
longer exist:
(a) to the extent that such Lender's Eurodollar Loans have been so
Converted, all payments and prepayments of principal that would otherwise
be applied to such Lender's Eurodollar Loans shall be applied instead to
its Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued by such Lender
as Eurodollar Loans shall be made or Continued instead as Base Rate Loans,
and all Base Rate Loans of such Lender that would otherwise be Converted
into Eurodollar Loans shall remain as Base Rate Loans.
If such Lender gives notice to the Borrower (with a copy to the Administrative
Agent) that the circumstances specified in Section 3.6, 3.8 or 3.9 hereof that
gave rise to the Conversion of such Lender's Eurodollar Loans pursuant to this
Section 3.10 no longer exist (which such Lender agrees to do promptly upon such
circumstances ceasing to exist) at a time when Eurodollar Loans made by other
Lenders are outstanding, such Lender's Base Rate Loans shall be automatically
Converted, on the first day(s) of the next succeeding Interest Period(s) for
such outstanding Eurodollar Loans, to the extent necessary so that, after giving
effect thereto, all Loans held by the Lenders holding Eurodollar Loans and by
such Lender are held pro rata (as to principal amounts, interest rate basis, and
Interest Periods) in accordance with their respective Commitments.
3.11 Taxes.
(a) Any and all payments by any Credit Party to or for the account of any
Lender or the Administrative Agent hereunder or under any other Credit Document
shall be made free and clear of and without deduction for any and all present or
future taxes, duties, levies, imposts, deductions, charges or withholdings, and
all liabilities with respect thereto, excluding, in the case of each Lender and
the Administrative Agent, taxes imposed on its income, and franchise taxes
imposed on it, by the jurisdiction under the laws of which such Lender (or its
Applicable Lending Office) or the Administrative Agent (as the case may be) is
organized or does business or any political subdivision thereof (all such
non-excluded taxes, duties, levies, imposts, deductions, charges, withholdings,
and liabilities being hereinafter referred to as "Taxes"). If any Credit Party
shall be required by law to deduct or withhold any Taxes from or in respect of
any sum payable under this
43
Credit Agreement or any other Credit Document to any Lender or the
Administrative Agent, (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 3.11)
such Lender or the Administrative Agent receives an amount equal to the sum it
would have received had no such deductions been made, (ii) such Credit Party
shall make such deductions and withholdings, (iii) such Credit Party shall pay
the full amount deducted or withheld to the relevant taxation authority or other
authority in accordance with applicable law, and (iv) such Credit Party shall
furnish to the Administrative Agent, at its address referred to in Section 11.1,
the original or a certified copy of a receipt evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any and all present or future
stamp or documentary taxes and any other excise or property taxes or charges or
similar levies which arise from any payment made under this Credit Agreement or
any other Credit Document or from the execution or delivery of, or otherwise
with respect to, this Credit Agreement or any other Credit Document (hereinafter
referred to as "Other Taxes").
(c) The Borrower agrees to indemnify each Lender and the Administrative
Agent for the full amount of Taxes and Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed or asserted by any jurisdiction on
amounts payable under this Section 3.11) paid by such Lender or the
Administrative Agent (as the case may be) and any liability (including
penalties, interest, and expenses) arising therefrom or with respect thereto.
(d) Each Lender that is not a United States person under Section
7701(a)(30) of the Internal Revenue Code, on or prior to the date of its
execution and delivery of this Credit Agreement in the case of each Lender
listed on the signature pages hereof and on or prior to the date on which it
becomes a Lender in the case of each other Lender, and from time to time
thereafter if requested in writing by the Borrower or the Administrative Agent
(but only so long as such Lender remains lawfully able to do so), shall provide
the Borrower and the Administrative Agent with (i) Internal Revenue Service Form
W-8 BEN or W-8 ECI, as appropriate, or any successor form prescribed by the
Internal Revenue Service, certifying that such Lender is entitled to benefits
under an income tax treaty to which the United States is a party which reduces
to zero the rate of withholding tax on payments of interest or certifying that
the income receivable pursuant to this Credit Agreement is effectively connected
with the conduct of a trade or business in the United States, (ii) Internal
Revenue Service Form W-8 or W-9, as appropriate, or any successor form
prescribed by the Internal Revenue Service, and/or (iii) any other form or
certificate required by any taxing authority (including any certificate required
by Sections 871(h) and 881(c) of the Internal Revenue Code), certifying that
such Lender is entitled to an exemption from tax on payments pursuant to this
Credit Agreement or any of the other Credit Documents.
(e) For any period with respect to which a Lender has failed to provide the
Borrower and the Administrative Agent with the appropriate form pursuant to
Section 3.11(d) (unless such failure is due to a change in treaty, law, or
regulation occurring subsequent to the date on which a form originally was
required to be provided), such Lender shall not be entitled to indemnification
under Section 3.11(a) or 3.11(b) with respect to Taxes imposed by the United
States; provided,
44
however, that should a Lender, which is otherwise exempt from or subject to a
reduced rate of withholding tax, become subject to Taxes because of its failure
to deliver a form required hereunder, the Borrower shall take such steps as such
Lender shall reasonably request to assist such Lender to recover such Taxes.
(f) If any Credit Party is required to pay additional amounts to or for the
account of any Lender pursuant to this Section 3.11, then such Lender will agree
to use reasonable efforts to change the jurisdiction of its Applicable Lending
Office so as to eliminate or reduce any such additional payment which may
thereafter accrue if such change, in the judgment of such Lender, is not
otherwise disadvantageous to such Lender.
(g) Within thirty (30) days after the date of any payment of Taxes, the
applicable Credit Party shall furnish to the Administrative Agent the original
or a certified copy of a receipt evidencing such payment.
(h) Without prejudice to the survival of any other agreement of the Credit
Parties hereunder, the agreements and obligations of the Credit Parties
contained in this Section 3.11 shall survive the repayment of the Loans, LOC
Obligations and other obligations under the Credit Documents and the termination
of the Commitments hereunder.
3.12 Compensation.
Upon the request of any Lender, the respective Borrower shall pay to such
Lender such amount or amounts as shall be sufficient (in the reasonable opinion
of such Lender) to compensate it for any loss, cost, or expense (including loss
of anticipated profits) incurred by it as a result of:
(a) any payment, prepayment, or Conversion of a Eurodollar Loan for
any reason (including, without limitation, the acceleration of the Loans
pursuant to Section 9.2) on a date other than the last day of the Interest
Period for such Loan; or
(b) any failure by the applicable Borrower for any reason (including,
without limitation, the failure of any condition precedent specified in
Section 5 to be satisfied) to borrow, Convert, Continue, or prepay a
Eurodollar Loan on the date for such borrowing, Conversion, Continuation,
or prepayment specified in the relevant notice of borrowing, prepayment,
Continuation, or Conversion under this Credit Agreement.
With respect to Eurodollar Loans, such indemnification may include an amount
equal to the excess, if any, of (a) the amount of interest which would have
accrued on the amount so prepaid, or not so borrowed, Converted or Continued,
for the period from the date of such prepayment or of such failure to borrow,
Convert or Continue to the last day of the applicable Interest Period (or, in
the case of a failure to borrow, Convert or Continue, the Interest Period that
would have commenced on the date of such failure) in each case at the applicable
rate of interest for such Eurodollar Loans provided for herein (excluding,
however, the Applicable Percentage included therein, if any) over (b) the amount
of interest (as reasonably determined by such Lender) which would have accrued
to such Lender on such amount by placing such amount on deposit for a comparable
period with
45
leading banks in the interbank Eurodollar market. The covenants of the Borrower
set forth in this Section 3.12 shall survive the repayment of the Loans, LOC
Obligations and other obligations under the Credit Documents and the termination
of the Commitments hereunder.
3.13 Pro Rata Treatment.
Except to the extent otherwise provided herein:
(a) Obligations. Each Revolving Loan advance, each payment or
prepayment of principal of any Revolving Loan, each payment of interest on
any Revolving Loan, each payment on or in respect of the LOC Obligations
and each payment of interest thereon, each payment of the Commitment Fee,
each payment of the Letter of Credit Fee, each reduction of aggregate
Revolving Committed Amounts, and each conversion or extension of Revolving
Loan shall be allocated pro rata among the Lenders according to the
respective Revolving Commitment Percentages of the Lenders.
(b) Advances. No Lender shall be responsible for the failure or delay
by any other Lender in its obligation to make its ratable share of a
borrowing hereunder; provided, however, that the failure of any Lender to
fulfill its obligations hereunder shall not relieve any other Lender of its
obligations hereunder. If any Lender shall notify the Administrative Agent
prior to the date of any requested borrowing that such Lender does not
intend to make available to the Administrative Agent its ratable share of
such borrowing to be made on such date, the Administrative Agent shall
notify the Borrower thereof. Unless the Administrative Agent shall have
been notified by any Lender prior to the date of any requested borrowing
that such Lender does not intend to make available to the Administrative
Agent its ratable share of such borrowing to be made on such date, the
Administrative Agent may assume that such Lender has made such amount
available to the Administrative Agent on the date of such borrowing, and
the Administrative Agent in reliance upon such assumption, may (in its sole
discretion but without any obligation to do so) make available to the
Borrower a corresponding amount. If such corresponding amount is not in
fact made available to the Administrative Agent, the Administrative Agent
shall be able to recover such corresponding amount from such Lender. If
such Lender does not pay such corresponding amount forthwith upon the
Administrative Agent's demand therefor, the Administrative Agent will
promptly notify the Borrower, and the Borrower shall immediately pay such
corresponding amount to the Administrative Agent. The Administrative Agent
shall also be entitled to recover from the Lender or the Borrower, as the
case may be, interest on such corresponding amount in respect of each day
from the date such corresponding amount was made available by the
Administrative Agent to the Borrower to the date such corresponding amount
is recovered by the Administrative Agent at a per annum rate equal to (i)
from the Borrower at the applicable rate for the applicable borrowing
pursuant to the Notice of Borrowing and (ii) from a Lender, if paid within
two (2) Business Days of the date such amount was made available by the
Administrative Agent to the Borrower, the Federal Funds Rate and thereafter
at a rate equal to the Base Rate
46
3.14 Sharing of Payments.
(a) Lenders. The Lenders agree that, in the event that any Lender shall
obtain payment in respect of any Revolving Loan, LOC Obligation or any other
obligation owing to such Lender under this Credit Agreement through the exercise
of a right of setoff, banker's lien or counterclaim, or pursuant to a secured
claim under Section 506 of the Bankruptcy Code or other security or interest
arising from, or in lieu of, such secured claim, received by such Lender under
any applicable bankruptcy, insolvency or other similar law or otherwise, or by
any other means, in excess of its pro rata share of such payment as provided for
in this Credit Agreement, such Lender shall promptly purchase from the other
Lenders a participation in such Revolving Loan, LOC Obligation and other
obligations in such amounts, and make such other adjustments from time to time,
as shall be equitable to the end that all such Lenders share such payment in
accordance with the respective Revolving Commitment Percentages of such Lenders,
as provided for in this Credit Agreement. The Lenders further agree that if
payment to any such Lender obtained by such Lender through the exercise of a
right of setoff, banker's lien, counterclaim or other event as aforesaid shall
be rescinded or must otherwise be restored, each Lender which shall have shared
the benefit of such payment shall, by repurchase of a participation theretofore
sold, return its share of that benefit (together with its share of any accrued
interest payable with respect thereto) to each such Lender whose payment shall
have been rescinded or otherwise restored. The Borrower agrees that any Lender
so purchasing such a participation may, to the fullest extent permitted by law,
exercise all rights of payment, including setoff, banker's lien or counterclaim,
with respect to such participation as fully as if such Lender were a holder of
such Revolving Loan, LOC Obligation or other obligation in the amount of such
participation. If under any applicable bankruptcy, insolvency or other similar
law, any Lender receives a secured claim in lieu of a setoff to which this
Section 3.16 applies, such Lender shall, to the extent practicable, exercise its
rights in respect of such secured claim in a manner consistent with the rights
of the Lenders under this Section 3.16 to share in the benefits of any recovery
on such secured claim.
(b) Lenders and Agents. Except as otherwise expressly provided in this
Credit Agreement, if any Lender or the Administrative Agent shall fail to remit
to the Administrative Agent or any other Lender an amount payable by such Lender
or the Administrative Agent to the Administrative Agent or such other Lender
pursuant to this Credit Agreement on the date when such amount is due, such
payments shall be made together with interest thereon for each date from the
date such amount is due until the date such amount is paid to the Administrative
Agent or such other Lender at a rate per annum equal to the Federal Funds Rate.
3.15 Payments, Computations, Etc.
(a) Generally. Except as otherwise specifically provided herein, all
payments of principal, interest and fees in connection with Revolving Loans, LOC
Obligations, Swingline Loans, the Commitment Fee, the Letter of Credit Fee, the
Issuing Lender Fees and the Administrative Agent's Fees shall be made to the
Administrative Agent in US Dollars in immediately available funds, without
setoff, deduction, counterclaim or withholding of any kind, at the
Administrative Agent's office specified in Section 11.1 not later than 2:00 P.M.
(Charlotte, North Carolina time) on the date when due. Payments received after
such time shall be deemed to
47
have been received on the next succeeding Business Day. The Administrative Agent
may (but shall not be obligated to) debit the amount of any such payment which
is not made by such time to any ordinary deposit account of the Borrower
maintained with the Administrative Agent (with notice to the Borrower). The
Borrower shall, at the time it makes any payment under this Credit Agreement,
specify to the Administrative Agent the Loans, LOC Obligations, Fees, interest
or other amounts payable by the Borrower hereunder to which such payment is to
be applied (and in the event that it fails so to specify, or if such application
would be inconsistent with the terms hereof, the Administrative Agent shall
distribute such payment to the relevant Lenders in such manner as the
Administrative Agent may determine to be appropriate in respect of obligations
owing by the Borrower hereunder, subject to the terms of Section 3.15(a) and
Section 3.17). The Administrative Agent will distribute such payments to the
applicable Lenders if any such payment is received prior to 2:00 P.M.
(Charlotte, North Carolina time or London time, as appropriate) on a Business
Day in like funds as received prior to the end of such Business Day and
otherwise the Administrative Agent will distribute such payment to such Lenders
entitled thereto on the next succeeding Business Day. Whenever any payment
hereunder shall be stated to be due on a day which is not a Business Day, the
due date thereof shall be extended to the next succeeding Business Day (subject
to accrual of interest and Fees for the period of such extension). Except as
expressly provided otherwise herein, all computations of interest and fees shall
be made on the basis of the actual number of days elapsed over a year of 360
days, except with respect to computation of interest on Base Rate Loans
determined by reference to the Prime Rate which shall be calculated based on a
year of 365 or 366 days, as appropriate. Interest shall accrue from and include
the date of borrowing, but exclude the date of payment.
(b) Allocation of Payments After Event of Default. Notwithstanding any
other provisions of this Credit Agreement to the contrary, after the occurrence
and during the continuance of an Event of Default, all amounts collected or
received on or in respect of the Obligations (or other amounts owing under the
Credit Documents in connection therewith) shall be paid over or delivered as
follows:
FIRST, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation reasonable attorneys' fees) of the
Collateral Agent actually incurred in connection with the execution of its
duties as Collateral Agent in exercising or attempting to exercise rights
and remedies in respect of the collateral and all protective advances made
with respect thereto;
SECOND, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation reasonable attorneys' fees) of the
Administrative Agent in connection with enforcing the rights and remedies
of the Lenders under the Credit Documents and any protective advances made
with respect thereto;
THIRD, to payment of any fees owed to the Administrative Agent;
FOURTH, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation, reasonable attorneys' fees) of each
of the Lenders
48
hereunder in connection with enforcing its rights under the Credit
Documents or otherwise with respect to the Obligations owing to such
Lender;
FIFTH, to the payment of all accrued interest and fees on or in
respect of the Obligations;
SIXTH, to the payment of the outstanding principal amount of the
Obligations hereunder (including the payment or cash collateralization of
the outstanding LOC Obligations);
SEVENTH, to all other Obligations hereunder and other obligations
which shall have become due and payable under the Credit Documents
otherwise and not repaid pursuant to clauses "FIRST" through "SIXTH" above;
and
EIGHTH, to the payment of the surplus, if any, to the Borrower and/or
whoever may be lawfully entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; and (ii) except as otherwise provided, the Lenders
shall receive amounts ratably in accordance with their respective pro rata
share (based on the proportion that the then outstanding Obligations held
by such Lenders bears to the aggregate amount of Obligations then
outstanding) of amounts available to be applied pursuant to clauses
"FOURTH", "FIFTH", "SIXTH" and "SEVENTH" above; and (iii) to the extent
that any amounts available for distribution pursuant to clause "SIXTH"
above are attributable to the issued but undrawn amount of outstanding
Letters of Credit, such amounts shall be held by the Administrative Agent
in a cash collateral account and applied (A) first, to reimburse the
Issuing Lender for any drawings under such Letters of Credit and (B) then,
following the expiration of all Letters of Credit, to all other obligations
of the types described in clauses "FIFTH" and "SIXTH" above in the manner
provided in this Section 3.15(b).
3.16 Certain Limitations.
The provisions of Sections 3.6, 3.8, 3.9 and 3.11 shall be subject to the
following:
(a) If any Lender demands compensation or indemnification from the Borrower
under Section 3.6, 3.9 or 3.11, then such Lender will agree to use reasonable
efforts to change the jurisdiction of its applicable lending office so as to
eliminate or reduce any such additional payment which may thereafter accrue if
such change, in the judgment of such Lender, is not otherwise disadvantageous to
such Lender.
(b) If any Lender determines that it has recovered or used as a credit any
amount withheld on its account pursuant to Section 3.6, 3.9 or Section 3.11, it
shall reimburse (without any interest) the Borrower to the extent of such amount
so determined to have been recovered (to the extent of any tax benefit actually
received) or used as a credit, provided that nothing in this
49
clause (b) shall require any Lender to make available its tax returns (or any
other information relating to its taxes which it deems to be confidential).
(c) If any Lender demands compensation or indemnification from the Borrower
under Section 3.6, 3.9 or 3.11, such Lender shall be entitled to compensation or
indemnification only for increased costs or other amounts (i) incurred during
the period of ninety (90) days preceding the date of such Lender's demand
therefor and (ii) which such Lender charges to similarly situated borrowers.
(d) If any Lender notifies the Borrower that it demands compensation or
indemnification from the Borrower under Section 3.6, 3.9 or 3.11, or if that it
has become unlawful for any Lender to make, maintain, or fund Eurodollar Loans
under Section 3.8, the Borrower may, at its option, so long as no Event of
Default shall have occurred and be continuing, obtain, at the Borrower's
expense, a replacement Lender for the affected Lender. If the Borrower elects to
obtain a replacement Lender for the affected Lender, the Borrower shall within
thirty (30) after the date of such notification from such affected Lender,
notify the Administrative Agent and such affected Lender of its intention to
replace the affected Lender. If the Borrower obtains a replacement Lender (which
replacement Lender shall be acceptable to the Administrative Agent in its
reasonable discretion) within ninety (90) days following notice of its intention
to do so, the affected Lender must sell and assign its Loans and Commitments to
such replacement Lender pursuant to Section 11.6(b), for an amount equal to the
principal balance of all Revolving Loans held by the affected Lender and all
accrued interest and Fees with respect thereto through the date of such sale,
provided that the Borrower shall have paid to such affected Lender the
compensation or indemnification that it is entitled to receive under Section
3.6, 3.9 or 3.11 through the date of such sale and assignment. Notwithstanding
the foregoing, if the Borrower shall fail to give the Administrative Agent and
the affected Lender notice of its intention to replace the affected Lender or if
the Borrower timely gives notice to the Administrative Agent and an affected
Lender of its intention to replace such affected Lender and does not so replace
such affected Lender within ninety (90) days following such notice, then, in
either case, the Borrower's rights under this Section 3.16 to replace such
Lender for the particular circumstances shall terminate.
3.17 Evidence of Debt.
(a) Each Lender shall maintain an account or accounts evidencing each
Revolving Loan made by such Lender to the Borrower from time to time, including
the amounts of principal and interest payable and paid to such Lender from time
to time under this Credit Agreement. Each Lender will make reasonable efforts to
maintain the accuracy of its account or accounts and to promptly update its
account or accounts from time to time, as necessary.
(b) The Administrative Agent shall maintain the Register pursuant to
Section 11.3(c)(i), and a subaccount for each Lender, in which Register and
subaccounts (taken together) shall be recorded (A) the amount, type and Interest
Period of each such Revolving Loan hereunder, (B) the amount of any principal or
interest due and payable or to become due and payable to each Lender hereunder
and (C) the amount of any sum received by the Administrative Agent hereunder
from or
50
for the account of the Borrower and each Lender's share thereof. The
Administrative Agent will make reasonable efforts to maintain the accuracy of
the respective subaccounts referred to in the preceding sentences and to
promptly update such subaccounts from time to time, as necessary.
(c) The entries made in the accounts, Register and subaccounts maintained
pursuant to subsection (b) of this Section 3.17 (and, if consistent with the
entries of the Administrative Agent, subsection (a)) shall be prima facie
evidence of the existence and amounts of the obligations of the Credit Parties
therein recorded; provided, however, that the failure of any Lender or the
Administrative Agent to maintain any such account, such Register or such
subaccount, as applicable, or any error therein, shall not in any manner affect
the obligation of the Credit Parties to repay the loans and obligations owing to
such Lender.
SECTION 4
GUARANTY
4.1 The Guaranty.
(a) Each of the Guarantors hereby jointly and severally guarantees to each
Lender, to each Lender and each Affiliate of a Lender that enters into a Hedging
Agreement with a Credit Party relating to the Obligations and to the Agents, as
hereinafter provided, the prompt payment of the Guaranteed Obligations in full
when due (whether at stated maturity, as a mandatory prepayment, by
acceleration, as a mandatory cash collateralization or otherwise) strictly in
accordance with the terms thereof. The Guarantors hereby further agree that if
any of the Guaranteed Obligations are not paid in full when due (whether at
stated maturity, as a mandatory prepayment, by acceleration, as a mandatory cash
collateralization or otherwise), the Guarantors will, jointly and severally,
promptly pay the same, without any demand or notice whatsoever, and that in the
case of any extension of time of payment or renewal of any of the Guaranteed
Obligations, the same will be promptly paid in full when due (whether at
extended maturity, as a mandatory prepayment, by acceleration, as a mandatory
cash collateralization or otherwise) in accordance with the terms of such
extension or renewal.
(b) Notwithstanding any provision to the contrary contained herein or in
any other of the Credit Documents or Hedging Agreements, to the extent the
obligations of a Guarantor shall be adjudicated to be invalid or unenforceable
for any reason (including, without limitation, because of any applicable state,
provincial or federal law relating to fraudulent conveyances or transfers or the
granting of financial assistance) then the obligations of each Guarantor
hereunder shall be limited to the maximum amount that is permissible under
applicable law (whether federal, state or provincial and including, without
limitation, the Bankruptcy Code). In such case or otherwise at the request of an
Agent, each Credit Party shall take such action and shall execute and deliver
all such further documents required by such Agent to cause the obligations of
such Guarantor to be enforceable to the extent required by this Agreement.
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4.2 Obligations Unconditional.
The obligations of all of the Guarantors under Section 4.1 are joint and
several, absolute and unconditional, irrespective of the value, genuineness,
validity, regularity or enforceability of any of the Credit Documents or Hedging
Agreements, or any other agreement or instrument referred to therein, or any
substitution, release, impairment or exchange of any other guarantee of or
security for any of the Guaranteed Obligations, and, to the fullest extent
permitted by applicable law, irrespective of any other circumstance whatsoever
which might otherwise constitute a legal or equitable discharge or defense of a
surety or guarantor, it being the intent of this Section 4.2 that the
obligations of the Guarantors hereunder shall be absolute and unconditional
under any and all circumstances. Each Guarantor agrees that such Guarantor shall
have no right of subrogation, indemnity, reimbursement or contribution against
the Borrower or any other Guarantor for amounts paid under this Section 4 until
such time as the Lenders (and any Affiliates of Lenders entering into Hedging
Agreements relating to the Obligations to the extent permitted hereunder) have
been paid in full in respect of all Guaranteed Obligations, all Commitments
under this Credit Agreement have been terminated and no Person or Governmental
Authority shall have any right to request any return or reimbursement of funds
from the Lenders in connection with monies received under the Credit Documents
or Hedging Agreements between any Credit Party and any Lender, or any Affiliate
of a Lender. Without limiting the generality of the foregoing, it is agreed
that, to the fullest extent permitted by law, the occurrence of any one or more
of the following shall not alter or impair the liability of any Guarantor
hereunder which shall remain absolute and unconditional as described above:
(a) at any time or from time to time, without notice to any Guarantor,
the time for any performance of or compliance with any of the Guaranteed
Obligations shall be extended, or such performance or compliance shall be
waived;
(b) any of the acts mentioned in any of the provisions of any of the
Credit Documents, any Hedging Agreement between any Credit Party and any
Lender or any Affiliate of a Lender, or any other agreement or instrument
referred to in the Credit Documents or such Hedging Agreements shall be
done or omitted;
(c) the maturity of any of the Guaranteed Obligations shall be
accelerated, or any of the Guaranteed Obligations shall be modified,
supplemented or amended in any respect, or any right under any of the
Credit Documents, any Hedging Agreement between any Credit Party and any
Lender or any Affiliate of a Lender, or any other agreement or instrument
referred to in the Credit Documents or such Hedging Agreements shall be
waived or any other guarantee of any of the Guaranteed Obligations or any
security therefor shall be released, impaired or exchanged in whole or in
part or otherwise dealt with;
(d) any Lien granted to, or in favor of, any Agent or any Lender or
Lenders as security for any of the Guaranteed Obligations shall fail to
attach or be perfected; or
(e) any of the Guaranteed Obligations shall be determined to be void
or voidable (including, without limitation, for the benefit of any creditor
of any Guarantor) or
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shall be subordinated to the claims of any Person (including, without
limitation, any creditor of any Guarantor).
With respect to its obligations hereunder, each Guarantor hereby expressly
waives diligence, presentment, demand of payment, protest and all notices
whatsoever, and any requirement that any Agent or any Lender exhaust any right,
power or remedy or proceed against any Person under any of the Credit Documents,
any Hedging Agreement between any Credit Party and any Lender, or any Affiliate
of a Lender, or any other agreement or instrument referred to in the Credit
Documents or such Hedging Agreements, or against any other Person under any
other guarantee of, or security for, any of the Guaranteed Obligations.
4.3 Reinstatement.
The obligations of the Guarantors under this Section 4 shall be
automatically reinstated if and to the extent that for any reason any payment by
or on behalf of any Person in respect of the Guaranteed Obligations is rescinded
or must be otherwise restored by any holder of any of the Guaranteed
Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it will indemnify
the Agents and each Lender on demand for all reasonable costs and expenses
(including, without limitation, reasonable fees and expenses of counsel)
incurred by the Agents or such Lender in connection with such rescission or
restoration, including any such costs and expenses incurred in defending against
any claim alleging that such payment constituted a preference, fraudulent
transfer or similar payment under any bankruptcy, insolvency or similar law.
4.4 Certain Additional Waivers.
Without limiting the generality of any other provisions of this Section 4,
each Guarantor hereby specifically waives the benefits of North Carolina General
Statutes Sections 26-7 through 26-9, inclusive. Each Guarantor further agrees
that such Guarantor shall have no right of recourse to security for the
Guaranteed Obligations, except through the exercise of rights of subrogation
pursuant to Section 4.2 and through the exercise of rights of contribution
pursuant to Section 4.6.
4.5 Remedies.
The Guarantors agree that, to the fullest extent permitted by law, as
between the Guarantors, on the one hand, and the Agents and the Lenders, on the
other hand, the Guaranteed Obligations may be declared to be forthwith due and
payable as provided in Section 9.2 (and shall be deemed to have become
automatically due and payable in the circumstances provided in said Section 9.2)
for purposes of Section 4.1 notwithstanding any stay, injunction or other
prohibition preventing such declaration (or preventing the Guaranteed
Obligations from becoming automatically due and payable) as against any other
Person and that, in the event of such declaration (or the Guaranteed Obligations
being deemed to have become automatically due and payable), the Guaranteed
Obligations (whether or not due and payable by any other Person) shall forthwith
become due and payable by the Guarantors for purposes of Section 4.1. The
Guarantors acknowledge and agree that
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their obligations hereunder are secured in accordance with the terms of the
Collateral Documents and that the Lenders may exercise their remedies thereunder
in accordance with the terms thereof.
4.6 Rights of Contribution.
The Guarantors hereby agree, as among themselves, that if any Guarantor
shall become an Excess Funding Guarantor (as defined below), each other
Guarantor shall, on demand of such Excess Funding Guarantor (but subject to the
succeeding provisions of this Section 4.6), pay to such Excess Funding Guarantor
an amount equal to such Guarantor's Pro Rata Share (as defined below and
determined, for this purpose, without reference to the properties, assets,
liabilities and debts of such Excess Funding Guarantor) of such Excess Payment
(as defined below). The payment obligation of any Guarantor to any Excess
Funding Guarantor under this Section 4.6 shall be subordinate and subject in
right of payment to the prior payment in full of the obligations of such
Guarantor under the other provisions of this Section 4, and such Excess Funding
Guarantor shall not exercise any right or remedy with respect to such excess
until payment and satisfaction in full of all of such obligations. For purposes
hereof, (a) "Excess Funding Guarantor" shall mean, in respect of any obligations
arising under the other provisions of this Section 4 (hereafter, the "Guarantied
Obligations"), a Guarantor that has paid an amount in excess of its Pro Rata
Share of the Guarantied Obligations; (b) "Excess Payment" shall mean, in respect
of any Guarantied Obligations, the amount paid by an Excess Funding Guarantor in
excess of its Pro Rata Share of such Guarantied Obligations; and (c) "Pro Rata
Share", for the purposes of this Section 4.6, shall mean, for any Guarantor, the
ratio (expressed as a percentage) of (i) the amount by which the aggregate
present fair saleable value of all of its assets and properties exceeds the
amount of all debts and liabilities of such Guarantor (including contingent,
subordinated, unmatured, and unliquidated liabilities, but excluding the
obligations of such Guarantor hereunder) to (ii) the amount by which the
aggregate present fair saleable value of all assets and other properties of the
Borrower and all of the Guarantors exceeds the amount of all of the debts and
liabilities (including contingent, subordinated, unmatured, and unliquidated
liabilities, but excluding the obligations of the Borrower and the Guarantors
hereunder) of the Borrower and all of the Guarantors, all as of the Closing Date
(in each case, if any Guarantor becomes a party hereto subsequent to the Closing
Date, then for the purposes of this Section 4.6 such subsequent Guarantor shall
be deemed to have been a Guarantor as of the Closing Date and the information
pertaining to, and only pertaining to, such Guarantor as of the date such
Guarantor became a Guarantor shall be deemed true as of the Closing Date).
4.7 Guarantee of Payment; Continuing Guarantee.
The guarantee in this Section 4 is a guaranty of payment and not of
collection, is a continuing guarantee, and shall apply to all Guaranteed
Obligations whenever arising.
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SECTION 5
CONDITIONS
5.1 Closing Conditions.
The obligation of the Lenders to enter into this Credit Agreement and to
make the initial Extensions of Credit shall be subject to satisfaction of the
following conditions (in form and substance acceptable to the Lenders):
(a) Executed Credit Documents. Receipt by (i) the Administrative Agent
of (A) multiple counterparts of this Credit Agreement, (B) a Revolving Note
for each Lender, and (C) multiple counterparts of the Collateral Documents,
in each case executed by a duly authorized officer of each party thereto
and in each case conforming to the requirements of this Credit Agreement,
and (ii) each Lender of an executed facsimile copy of the Credit Agreement
and an executed facsimile copy of the Revolving Note for such Lender (the
Administrative Agent shall provide executed copies of the Collateral
Documents to the Lenders after the Closing Date).
(b) Legal Opinions. Receipt by the Administrative Agent of multiple
counterparts of opinions of counsel for the Credit Parties relating to the
Credit Documents and the transactions contemplated therein, in form and
substance reasonably satisfactory to the Administrative Agent and the
Lenders, and including, among other things, opinions regarding
enforceability of the Credit Documents and the perfection of the security
interests created thereby.
(c) Financial Information. Receipt by the Lenders of such financial
information regarding the members of the Consolidated Group as may be
requested by, and in each case in form and substance reasonably
satisfactory to, the Administrative Agent and the Lenders.
(d) Personal Property Collateral. Receipt by the Administrative Agent
of the following:
(i) UCC Financing Statements. Duly executed UCC financing
statements for each jurisdiction as is necessary or appropriate, in
the Collateral Agent's discretion, to perfect the security interests
in the Collateral.
(ii) Certificated Interests. Original certificates evidencing the
Capital Stock which is the subject of the Pledge Agreement, together
with undated stock transfer powers executed in blank.
(iii) Intellectual Property. Such patent, trademark and copyright
notices and filings as necessary or appropriate, in the Collateral
Agent's reasonable discretion, to perfect the security interests in
Intellectual Property.
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(iv) Landlord Consents. Landlord consents, estoppel letters or
consents and waivers in respect of Collateral held on leased premises
as reasonably required by the Administrative Agent.
(e) Evidence of Insurance. Receipt by the Administrative Agent of
insurance certificates or policies evidencing casualty insurance (including
builders' risk and all-risk permanent policies) and liability conforming to
the requirements of this Credit Agreement and the other Credit Documents,
showing the Collateral Agent as sole loss payee with respect to casualty
insurance and as additional insured with respect to liability insurance, in
each case together with evidence of payment of premiums thereon.
(f) Absence of Legal Proceedings. There shall not exist any action,
suit, investigation or proceeding pending in any court or before any
arbitrator or Governmental Authority which would reasonably be expected to
have a Material Adverse Effect.
(g) Corporate Documents. Receipt by the Administrative Agent of the
following (or their equivalent) for each of the Credit Parties:
(i) Charter Documents. Copies of the articles or certificates of
incorporation or other charter documents of such Credit Party
certified to be true and complete as of a recent date by the
appropriate Governmental Authority of the state or other jurisdiction
of its incorporation and certified by a secretary or assistant
secretary of such Credit Party to be true and correct as of the
Closing Date.
(ii) Bylaws. A copy of the bylaws, operating agreement or
equivalent of such Credit Party certified by a secretary or assistant
secretary of such Credit Party to be true and correct and in force and
effect as of the Closing Date.
(iii) Resolutions. Copies of resolutions of the board of
directors of such Credit Party approving and adopting the Credit
Documents to which it is a party, the transactions contemplated
therein and authorizing execution and delivery thereof, certified by a
secretary or assistant secretary of such Credit Party to be true and
correct and in force and effect as of the Closing Date.
(iv) Good Standing. (A) certificates of good standing, existence
or its equivalent certified as of a recent date by the appropriate
governmental authorities of the state of incorporation and the state
in which the principal place of business is located and (B)
certificates indicating payment of all corporate franchise taxes
certified as of a recent date by the appropriate governmental taxing
authorities of the state of incorporation and the state in which the
principal place of business is located.
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(v) Officer's Certificate. An officer's certificate for each of
the Credit Parties dated as of the Closing Date substantially in the
form of Schedule 5.1(g)(v) with appropriate insertions and
attachments.
(h) Fees and Expenses. Payment by the Credit Parties of all fees and
expenses owed by them to the Lenders and the Administrative Agent,
including, without limitation, payment to the Administrative Agent of the
fees set forth in the Administrative Agent's Fee Letter.
5.2 Conditions to all Extensions of Credit.
The obligation of each Lender to make any Extension of Credit hereunder
(including the initial Extension of Credit to be made hereunder) is subject to
the satisfaction of the following conditions precedent on the date of making
such Extension of Credit:
(a) Representations and Warranties. The representations and warranties made
by the Credit Parties herein and in the other Credit Documents and which are
contained in any certificate furnished at any time under or in connection
herewith shall be true and correct in all material respects on and as of the
date of such Extension of Credit as if made on and as of such date (except for
those which expressly relate to an earlier date).
(b) No Default or Event of Default. No Default or Event of Default shall
have occurred and be continuing on such date or after giving effect to the
Extension of Credit to be made on such date unless such Default or Event of
Default shall have been waived in accordance with this Credit Agreement.
(c) Additional Conditions to Revolving Loans. If a Revolving Loan is
requested, all conditions set forth in Section 2 shall have been satisfied.
(d) Additional Conditions to Letters of Credit. If the issuance of a Letter
of Credit is requested, all conditions set forth in Section 2 shall have been
satisfied.
(e) Additional Conditions to Swingline Loans. If a Swingline Loan is
requested, all conditions set forth in Section 2 shall have been satisfied.
Each request for an Extension of Credit (including Continuations and
Conversions) and each acceptance by the applicable Borrower of an Extension of
Credit (including Continuations and Conversions) shall be deemed to constitute a
representation and warranty by the applicable Borrower as of the date of such
Extension of Credit that the applicable conditions in paragraphs (a) and (b),
and in (c), (d) or (e) of this subsection have been satisfied.
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SECTION 6
REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Credit Agreement and to make the
Extensions of Credit hereunder, each of the Credit Parties hereby represents and
warrants to the Administrative Agent and to each Lender that:
6.1 Financial Condition.
Each of the financial statements described below (copies of which have
heretofore been provided to the Administrative Agent for distribution to the
Lenders) have been prepared in accordance with GAAP consistently applied
throughout the periods covered thereby, are complete and correct in all material
respects and present fairly the financial condition (including disclosure of all
material liabilities, contingent or otherwise) and results from operations of
the entities and for the periods specified, subject in the case of interim
company-prepared statements to normal year-end adjustments and the absence of
footnotes:
(i) the audited consolidated balance sheets of the Borrower and its
consolidated subsidiaries dated as of October 31, 1996, October 31, 1997
and October 31, 1998, together with the related audited statements of
income, stockholders' equity and cash flows for the respective fiscal years
then ended, certified by PriceWaterhouseCoopers, LLP, certified public
accountants;
(ii) the unaudited, company-prepared balance sheets of the Borrower
and its consolidated subsidiaries as at July 31, 1999 and the related
unaudited, company-prepared statements of income, stockholders' equity and
cash flows for the fiscal quarter then ended; and
(iii) after the Closing Date, the annual and quarterly financial
statements provided in accordance with Sections 7.1(a) and (b).
6.2 No Changes or Restricted Payments.
Since July 31, 1999,
(i) for the period to the Closing Date, except as previously disclosed
in writing to the Administrative Agent and the Lenders, (A) there have been
no material sales, transfers or other dispositions of any material part of
the business or property of the members of the Consolidated Group (except
for sales of inventory in the ordinary course of business), nor have there
been any material purchases or other acquisitions of any business or
property (including the Capital Stock of any other person) by the members
of the Consolidated Group, which are not reflected in the annual audited or
company-prepared quarterly financial statements referenced in Section
6.1(i) and (ii) hereof, and
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(B) no Restricted Payments have been declared or paid by members of the
Consolidated Group; and
(ii) there has been no circumstance, development or event relating to
or affecting the members of the Consolidated Group which has had or would
reasonably be expected to have a Material Adverse Effect.
6.3 Organization; Existence; Compliance with Law.
Each of the members of the North American Group (a) is duly organized,
validly existing in good standing under the laws of the jurisdiction of its
incorporation or organization, (b) has the corporate power and authority, and
the legal right to own and operate its Property, to lease the Property it
operates as lessee and to conduct the business in which it is currently engaged,
(c) is duly qualified as a foreign entity and in good standing under the laws of
each jurisdiction where its ownership, lease or operation of Property or the
conduct of its business requires such qualification, other than in such
jurisdictions where the failure to be so qualified and in good standing would
not, in the aggregate, have a Material Adverse Effect, and (d) is in compliance
with all Requirements of Law, except to the extent that the failure to comply
therewith would not, in the aggregate, be reasonably expected to have a Material
Adverse Effect.
6.4 Power; Authorization; Enforceable Obligations.
Each of the members of the North American Group has the corporate power and
authority, and the legal right, to make, deliver and perform the Credit
Documents to which it is a party and has taken all necessary corporate or other
action to authorize the execution, delivery and performance by it of the Credit
Documents to which it is a party. No consent or authorization of, filing with,
notice to or other act by or in respect of, any Governmental Authority or any
other Person is required in connection with acceptance of Extensions of Credit
or the making of the guaranties hereunder or with the execution, delivery or
performance of any Credit Documents by the Credit Parties (other than those
which have been obtained, such filings as are required by the Securities and
Exchange Commission and to fulfill other reporting requirements with
Governmental Authorities) or with the validity or enforceability of any Credit
Document against the Credit Parties (except such filings as are necessary in
connection with the perfection of the Liens created by such Credit Documents).
Each Credit Document to which it is a party constitutes a legal, valid and
binding obligation of such Credit Party enforceable against such Credit Party in
accordance with their respective terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).
6.5 No Legal Bar.
The execution, delivery and performance of the Credit Documents, the
borrowings hereunder and the use of the Extensions of Credit will not violate
any Requirement of Law or any Contractual Obligation of any member of the North
American Group (except those as to which
59
(a) waivers or consents have been obtained and (b) the violation of which would
not be reasonably expected to have a Material Adverse Effect), and will not
result in, or require, the creation or imposition of any Lien on any of its
respective properties or revenues pursuant to any Requirement of Law or
Contractual Obligation other than the Liens arising under or contemplated in
connection with the Credit Documents.
6.6 No Material Litigation and Disputes.
(a) No claim, litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the knowledge of the
Credit Parties, threatened by or against, any members of the Consolidated Group
or against any of their respective properties or revenues which (a) relate to
the Credit Documents or any of the transactions contemplated hereby or thereby
or (b) if adversely determined, would reasonably be expected to have a Material
Adverse Effect. Set forth on Schedule 6.6 is a summary of all claims,
litigation, investigations and proceedings pending or, to the knowledge of the
Credit Parties, threatened by or against the members of the Consolidated Group
or against any of their respective properties or revenues, and none of such
actions, individually or in the aggregate, would reasonably be expected to have
a Material Adverse Effect.
(b) No default exists and, to the knowledge of the Credit Parties, no
default has been asserted, under any Contractual Obligations to which any
members of the Consolidated Group are party which individually or in the
aggregate would reasonably be expected to have a Material Adverse Effect.
6.7 No Defaults.
No Default or Event of Default exists and is continuing.
6.8 Ownership and Operation of Property.
Each of the members of the North American Group (i) has valid and
marketable title to, or a valid leasehold interest in, all its material real
property, and valid title to, or a valid leasehold interest in, all its other
material property, and none of such property is subject to any Lien, except for
Permitted Liens, and (ii) except to the extent that the failure to do so would
not be reasonably expected to have a Material Adverse Effect, has obtained all
licenses, permits, franchises or other certifications, consents, approvals and
authorizations, governmental or private, necessary to the ownership of its
Property and to the conduct of its business.
6.9 Intellectual Property.
(a) Each of the members of the North American Group owns, or has the legal
right to use, all United States trademarks, tradenames, copyrights, patents,
technology, know-how and processes, if any, necessary for each of them to
conduct its business as currently conducted (the "Intellectual Property") except
for those the failure to own or have such legal right to use would not be
reasonably expected to have a Material Adverse Effect. Set forth on Schedule 6.9
is a list of (A)
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all Trademarks (as defined in the Security Agreement) owned by a Credit Party in
its own name as of the date hereof and (B) all Copyrights, Copyright Licenses,
Patents, Patent Licenses and Trademark Licenses (each as defined in the Security
Agreement) owned by a Credit Party in its own name as of the date hereof the
loss of which would reasonably be expected to have a Material Adverse Effect. No
claim has been asserted and is pending by any Person challenging or questioning
the use of any Intellectual Property or the validity or effectiveness of any
Intellectual Property, nor does any Credit Party know of any such claim, and the
use of any Intellectual Property by the members of the North American Group does
not infringe on the rights of any Person, except for such claims and
infringements that, in the aggregate, would not be reasonably expected to have a
Material Adverse Effect.
(b) No member of the North American Group owns any Intellectual Property
the loss of which would have a Material Adverse Effect except for the trademark
"Grand Theft Auto".
(c) To the extent any member of the North American Group licenses
trademarks from third parties, either (i) such licenses permit the disposition
by such member of the North American Group, or its successors in interest, of
the inventory bearing such trademarks or (ii) the inventory bearing such
licensed trademarks is not material to the business of the members of the North
American Group.
(d) The members of the North American Group hold copyright, patent, and/or
software licenses from numerous third parties, which permit the members of the
North American Group to carry on their respective business. To the knowledge of
the Credit Parties, except with respect to publishing rights granted under
License from Sony Computer Entertainment America, Nintendo of America, Inc. and
Sega Enterprises, Inc., there are substitute sources for equivalent intellectual
property rights on equivalent financial terms for all such licenses, and the
loss of even a material number of such licenses (except with respect to
publishing rights granted under License from Sony Computer Entertainment
America, Nintendo of America, Inc. and Sega Enterprises, Inc.) would not be
reasonably expected to have a Material Adverse Effect.
6.10 Taxes.
Each of the members of the North American Group has filed or caused to be
filed all income tax returns (federal, state, local and foreign) and all other
material tax returns which are required to be filed and has paid (i) all amounts
shown therein to be due (including interest and penalties) and (ii) all other
taxes, fees, assessments and other governmental charges (including mortgage
recording taxes, documentary stamp taxes and intangibles taxes) owing, except
for such taxes which are not yet delinquent or as are being contested in good
faith by appropriate proceedings for which adequate reserves determined in
accordance with GAAP have been established unless the failure to make any such
payment could give rise to an immediate right to foreclose on a Lien securing
such amounts. No tax claim or assessment has been asserted against members of
the Consolidated which if adversely determined would reasonably be expected to
have a Material Adverse Effect.
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6.11 ERISA
Except as would not reasonably be expected to have a Material Adverse
Effect:
(a) During the five-year period prior to the date on which this
representation is made or deemed made: (i) no ERISA Event has occurred, and, to
the knowledge of the Credit Parties, no event or condition has occurred or
exists as a result of which any ERISA Event could reasonably be expected to
occur, with respect to any Plan; (ii) no "accumulated funding deficiency," as
such term is defined in Section 302 of ERISA and Section 412 of the Internal
Revenue Code, whether or not waived, has occurred with respect to any Plan;
(iii) each Plan has been maintained, operated, and funded in compliance with its
own terms and in material compliance with the provisions of ERISA, the Internal
Revenue Code, and any other applicable federal or state laws; and (iv) no lien
in favor of the PBGC or a Plan has arisen or is reasonably likely to arise on
account of any Plan.
(b) The actuarial present value of all "benefit liabilities" (as defined in
Section 4001(a)(16) of ERISA), whether or not vested, under each Single Employer
Plan, as of the last annual valuation date prior to the date on which this
representation is made or deemed made (determined, in each case, in accordance
with Financial Accounting Standards Board Statement 87, utilizing the actuarial
assumptions used in such Plan's most recent actuarial valuation report), did not
exceed as of such valuation date the fair market value of the assets of such
Plan.
(c) No member of the Consolidated Group nor any ERISA Affiliate has
incurred, or, to the knowledge of the Credit Parties, could be reasonably
expected to incur, any withdrawal liability under ERISA to any Multiemployer
Plan or Multiple Employer Plan. No member of the Consolidated Group nor any
ERISA Affiliate would become subject to any withdrawal liability under ERISA if
any member of the Consolidated Group or any ERISA Affiliate were to withdraw
completely from all Multiemployer Plans and Multiple Employer Plans as of the
valuation date most closely preceding the date on which this representation is
made or deemed made. No member of the Consolidated Group nor any ERISA Affiliate
has received any notification that any Multiemployer Plan is in reorganization
(within the meaning of Section 4241 of ERISA), is insolvent (within the meaning
of Section 4245 of ERISA), or has been terminated (within the meaning of Title
IV of ERISA), and no Multiemployer Plan is, to the knowledge of the Credit
Parties, reasonably expected to be in reorganization, insolvent, or terminated.
(d) No prohibited transaction (within the meaning of Section 406 of ERISA
or Section 4975 of the Internal Revenue Code) or breach of fiduciary
responsibility has occurred with respect to a Plan which has subjected or may
subject any member of the Consolidated Group or any ERISA Affiliate to any
liability under Sections 406, 409, 502(i), or 502(l) of ERISA or Section 4975 of
the Internal Revenue Code, or under any agreement or other instrument pursuant
to which any member of the Consolidated Group or any ERISA Affiliate has agreed
or is required to indemnify any person against any such liability.
(e) No member of the Consolidated Group nor any ERISA Affiliates has any
material liability with respect to "expected post-retirement benefit
obligations" within the meaning of the Financial Accounting Standards Board
Statement 106. Each Plan which is a welfare plan (as
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defined in Section 3(1) of ERISA) to which Sections 601-609 of ERISA and Section
4980B of the Internal Revenue Code apply has been administered in compliance in
all material respects of such sections.
(f) Neither the execution and delivery of this Credit Agreement nor the
consummation of the financing transactions contemplated thereunder will involve
any transaction which is subject to the prohibitions of Sections 404, 406 or 407
of ERISA or in connection with which a tax could be imposed pursuant to Section
4975 of the Internal Revenue Code. The representation by the Credit Parties in
the preceding sentence is made in reliance upon and subject to the accuracy of
the Lenders' representation in Section 11.15 with respect to their source of
funds and is subject, in the event that the source of the funds used by the
Lenders in connection with this transaction is an insurance company's general
asset account, to the application of Prohibited Transaction Class Exemption
95-60, 60 Fed. Reg. 35,925 (1995), compliance with the regulations issued under
Section 401(c)(1)(A) of ERISA, or the issuance of any other prohibited
transaction exemption or similar relief, to the effect that assets in an
insurance company's general asset account do not constitute assets of an
"employee benefit plan" within the meaning of Section 3(3) of ERISA of a "plan"
within the meaning of Section 4975(e)(1) of the Internal Revenue Code.
6.12 Governmental Regulations, Etc.
(a) No part of the proceeds of the Extensions of Credit hereunder will be
used, directly or indirectly, for the purpose of purchasing or carrying any
"margin stock" within the meaning of Regulation U, or for the purpose of
purchasing or carrying or trading in any other securities. If requested by any
Lender or the Administrative Agent, the Borrower will furnish to the
Administrative Agent and each Lender a statement to the foregoing effect in
conformity with the requirements of FR Form U-1 referred to in said Regulation
U. No indebtedness being reduced or retired out of the proceeds of the
Extensions of Credit hereunder was or will be incurred for the purpose of
purchasing or carrying any margin stock within the meaning of Regulation U or
any "margin security" within the meaning of Regulation T. "Margin stock" within
the meanings of Regulation U does not constitute more than 25% of the value of
the consolidated assets of the Borrower and its Subsidiaries. None of the
transactions contemplated by this Credit Agreement (including, without
limitation, the direct or indirect use of the proceeds of the Loans) will
violate or result in a violation of Regulation T, U or X.
(b) None of the members of the Consolidated Group is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act or
the Investment Company Act of 1940, each as amended. In addition, none of the
members of the Consolidated Group is (i) an "investment company" registered or
required to be registered under the Investment Company Act of 1940, as amended,
and is not controlled by such a company, or (ii) a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of a "holding
company" or of a "subsidiary" of a "holding company", within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
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6.13 Subsidiaries.
Set forth on Schedule 6.13 are all the North American Subsidiaries,
including the jurisdiction of organization, classes of Capital Stock (including
options, warrants, rights of subscription, conversion and exchangeability and
other similar rights), ownership and ownership percentages thereof. The
outstanding shares of Capital Stock shown have been validly issued, fully paid
and are non-assessable and owned free of Liens other than Permitted Liens. The
outstanding shares of Capital Stock shown are not the subject of buy-sell,
voting trust or other shareholder agreement except as identified on Schedule
6.13.
6.14 Purpose of Extensions of Credit.
The Loans will be used solely to finance working capital, capital
expenditures and other general corporate purposes (including, but not limited
to, Permitted Acquisitions).
6.15 Environmental Matters.
Except as would not reasonably be expected to have a Material Adverse
Effect:
(a) To the knowledge of the Credit Parties, each of the facilities and
properties owned, leased or operated by the members of the Consolidated Group
(the "Subject Properties") and all operations at the Subject Properties are in
compliance with all applicable Environmental Laws, and there is no violation of
any Environmental Law with respect to the Subject Properties or the businesses
operated by the members of the Consolidated Group (the "Businesses"), and there
are no conditions relating to the Businesses or Subject Properties that could
give rise to liability under any applicable Environmental Laws.
(b) To the knowledge of the Credit Parties, none of the Subject Properties
contains, or has previously contained, any Materials of Environmental Concern
at, on or under the Subject Properties in amounts or concentrations that
constitute or constituted a violation of, or could give rise to liability under,
Environmental Laws.
(c) None of the members of the Consolidated Group has received any written
or verbal notice of, or inquiry from any Governmental Authority regarding, any
violation, alleged violation, non-compliance, liability or potential liability
regarding environmental matters or compliance with Environmental Laws with
regard to any of the Subject Properties or the Businesses, nor does any member
of the Consolidated Group have knowledge or reason to believe that any such
notice will be received or is being threatened.
(d) To the knowledge of the Credit Parties, Materials of Environmental
Concern have not been transported or disposed of from the Subject Properties, or
generated, treated, stored or disposed of at, on or under any of the Subject
Properties or any other location, in each case by or on behalf any members of
the Consolidated Group in violation of, or in a manner that would be reasonably
likely to give rise to liability under, any applicable Environmental Law.
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(e) No judicial proceeding or governmental or administrative action is
pending or, to the knowledge of any Credit Party, threatened, under any
Environmental Law to which any member of the Consolidated Group is or will be
named as a party, nor are there any consent decrees or other decrees, consent
orders, administrative orders or other orders, or other administrative or
judicial requirements outstanding under any Environmental Law with respect to
any member of the Consolidated Group, the Subject Properties or the Businesses.
(f) To the knowledge of the Credit Parties, there has been no release or,
threat of release of Materials of Environmental Concern at or from the Subject
Properties, or arising from or related to the operations (including, without
limitation, disposal) of any member of the Consolidated Group in connection with
the Subject Properties or otherwise in connection with the Businesses, in
violation of or in amounts or in a manner that could give rise to liability
under Environmental Laws.
6.16 Year 2000 Compliance.
The Borrower has (i) initiated a review and assessment of all areas within
its and each of its North American Subsidiaries' business and operations
(including those affected by material suppliers, vendors and customers) that
could be adversely affected by the "Year 2000 Problem" (that is, the risk that
computer applications used by the Borrower or any of its North American
Subsidiaries (or material suppliers, vendors and customers) may be unable to
recognize and perform properly date-sensitive functions involving certain dates
prior to and any date after December 31, 1999), (ii) developed a plan and
timeline for addressing the Year 2000 Problem on a timely basis, and (iii) to
date, implemented that plan in accordance with that timetable. Based on the
foregoing, the Borrower believes that all computer applications (including those
of its material suppliers, vendors and customers) that are material to its or
any of its North American Subsidiaries' business and operations are reasonably
expected on a timely basis to be able to perform properly date-sensitive
functions for all dates before and after January 1, 2000 (that is, be "Year 2000
Compliant"), except to the extent that a failure to do so would not reasonably
be expected to have a Material Adverse Effect.
6.17 No Material Misstatements.
None of the written information, reports, financial statements, exhibits or
schedules, taken as a whole, furnished by or on behalf of any member of the
Consolidated Group to the Administrative Agent or any Lender in connection with
the negotiation of the Credit Documents or included therein or delivered
pursuant thereto contained or contains any misstatement of material fact or
omitted or omits to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were, are or will be
made, not materially misleading, provided that to the extent any such
information, report, financial statement, exhibit or schedule was based upon or
constitutes a forecast or projection (statistical and numerical information
furnished by third parties (or, if disclosed to the Administrative Agent and the
Lenders in writing, derived from such information) to the Administrative Agent
or any Lender on behalf of any member of the Consolidated Group shall constitute
a forecast or projection), each of the Credit Parties represents only that it
acted in good faith and utilized reasonable
65
assumptions and due care in the preparation of such information, report,
financial statement, exhibit or schedule.
6.18 Labor Matters.
Except as set forth in Schedule 6.19,
(i) There are no strikes or lockouts against any members of the North
American Group pending or, to the knowledge of the Credit Parties,
threatened;
(ii) the hours worked by and payments made to employees of the
Consolidated Group have not been in violation of the Fair Labor Standards
Act or any other applicable federal, state, local or foreign law dealing
with such matters in any case where a Material Adverse Effect would
reasonably be expected to occur as a result of the violation thereof;
(iii) all payments due from members of the North American Group, or
for which any claim may be made against a member of the North American
Group, on account of wages and employee health and welfare insurance and
other benefits, have been paid or accrued as a liability on the books of
the respective members of the North American Group; and
(iv) none of the members of the North American Group is party to a
collective bargaining agreement.
6.19 Security Documents.
(a) Security Agreement. The Security Agreement is effective to create
in favor of the Collateral Agent, for the ratable benefit of the holders of
the Secured Obligations identified therein, a legal valid and enforceable
security interest in the Collateral (as defined in the Security Agreement)
and, when financing statements in appropriate form are filed in the
appropriate offices for the locations specified in Schedule 2 to the
Security Agreement, the Security Agreement shall constitute a fully
perfected Lien on, and security interest in, all right, title and interest
of the grantors thereunder in such Collateral that may be perfected by
filing, recording or registering a financing statement under the Uniform
Commercial Code as in effect, in each case prior and superior in right to
any other Lien on any Collateral other than Permitted Liens.
(b) Pledge Agreements. The Pledge Agreement is effective to create in
favor of the Collateral Agent, for the ratable benefit of the holders of
the Secured Obligations identified therein, a legal valid and enforceable
security interest in the Collateral (as defined in the Pledge Agreement)
and, when such Collateral is delivered to the Collateral Agent, the Pledge
Agreement shall constitute a fully perfected first priority Lien on, and
security interest in, all right, title and interest of the pledgors
thereunder in such Collateral, in each case prior and superior in right to
any other Lien.
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(c) Intellectual Property. The Security Agreement together with the
Notice of Grant of Security Interest in Trademarks and the Notice of Grant
of Security Interest in Patents filed with the United States Patent and
Trademark Office, and the Notice of Grant of Security Interest in
Copyrights filed with the United States Copyright Office will constitute a
fully perfected Lien on, and security interest in, all right, title and
interest of the grantors thereunder in all Patents and Patent Licenses,
Trademarks and Trademark Licenses and Copyrights and Copyright Licenses
(each as defined in the Security Agreement) and in which a security
interest may be perfected by filing, recording or registration of a Notice
in the United States Patent and Trademark Office and the United States
Copyright Office, in each case prior and superior in right to any other
Lien other than Permitted Liens.
6.20 Location of Real Property and Leased Premises.
Set forth on Schedule 6.20(a) is a complete and correct list of all real
property located in the United States and owned or leased by any member of the
North American Group with street address and state where located. Set forth on
Schedule 6.20(b) is a list of all locations where any tangible personal property
of any member of the North American Group is located, including street address
and state where located. Set forth on Schedule 6.20(c) is the chief executive
office and principal place of business of each member of the North American
Group.
6.21 Solvency.
Immediately after giving effect to the initial Extensions of Credit made on
the Closing Date, (i) the fair value of the assets of each Credit Party will
exceed its debts and liabilities, subordinated, contingent or otherwise; (ii)
the present fair saleable value of the property of each Credit Party will be
greater than the amount that will be required to pay the probable liability of
its debts and other liabilities, subordinated, contingent or otherwise, as such
debts and other liabilities become absolute and mature; and (iii) each Credit
Party will not have unreasonably small capital with which to conduct the
business in which it is engaged as such business is now conducted and is
proposed to be conducted following the Closing Date.
6.22 No Other Broker's Fees.
None of the members of the Consolidated Group owes to any Person other than
the Lenders and their affiliates, or otherwise has any obligation in respect of
any finder's, broker's, investment banker's or other similar fee in connection
with the transactions contemplated in the Credit Agreement and the other Credit
Documents.
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SECTION 7
AFFIRMATIVE COVENANTS
Each Credit Party hereby covenants and agrees that so long as this Credit
Agreement is in effect or any amounts payable hereunder or under any other
Credit Document shall remain outstanding or any Letter of Credit is outstanding,
and until all of the Commitments hereunder shall have terminated:
7.1 Information Covenants.
The Credit Parties will furnish, or cause to be furnished, to the
Administrative Agent and each of the Lenders:
(a) Annual Financial Statements. As soon as available, and in any
event within 90 days after the close of each fiscal year of the members of
the Consolidated Group, audited consolidated and unaudited company-prepared
consolidating balance sheet and income statement of the members of the
Consolidated Group as of the end of such fiscal year, together with related
audited consolidated and unaudited company-prepared consolidating
statements of operations and retained earnings and of cash flows for such
fiscal year, in each case setting forth in comparative form consolidated
and consolidating figures for the preceding fiscal year, all such financial
information described above to be in reasonable form and detail and audited
by PriceWaterhouseCoopers LLP or other independent certified public
accountants of recognized national standing reasonably acceptable to the
Administrative Agent and the Required Lenders and whose opinion shall be to
the effect that such financial statements have been prepared in accordance
with GAAP (except for changes with which such accountants concur) and shall
not be limited as to the scope of the audit or qualified as to the status
of the members of the Consolidated Group as a going concern or any other
material qualifications or exceptions.
(b) Quarterly Financial Statements. As soon as available, and in any
event within 45 days after the close of each fiscal quarter of the
Consolidated Group (other than the fourth fiscal quarter, in which case 90
days after the end thereof) a consolidated and consolidating balance sheet
and income statement of the Consolidated Group as of the end of such fiscal
quarter, together with related consolidated and consolidating statements of
operations and retained earnings and of cash flows for such fiscal quarter,
in each case setting forth in comparative form consolidated and
consolidating figures for the corresponding period of the preceding fiscal
year, all such financial information described above to be in reasonable
form and detail and reasonably acceptable to the Administrative Agent, and
accompanied by a certificate of an Executive Officer of the Borrower to the
effect that such quarterly financial statements fairly present in all
material respects the financial condition of the Consolidated Group and
have been prepared in accordance with GAAP, subject to changes resulting
from audit and normal year-end audit adjustments and absence of footnotes.
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(c) Officer's Certificate. At the time of delivery of the financial
statements provided for in Sections 7.1(a) and 7.1(b) above, a certificate
of an Executive Officer of the Borrower substantially in the form of
Schedule 7.1(c), (i) demonstrating compliance with the financial covenants
contained in Section 7.11 by calculation thereof as of the end of each such
fiscal period and (ii) stating that no Default or Event of Default exists,
or if any Default or Event of Default does exist, specifying the nature and
extent thereof and what action the Credit Parties propose to take with
respect thereto.
(d) North American Borrowing Base Certificate. Within 15 days after
the end of each calendar month, a statement of the North American Borrowing
Base and its components as of the end of such calendar month, in form and
content satisfactory to the Administrative Agent and certified by the chief
financial officer of the Borrower to be true and correct as of the date
thereof (the "North American Borrowing Base Certificate").
(e) UK Borrowing Base Certificate. Upon request of the Administrative
Agent, within 15 days after the end of each calendar month, a statement of
the UK Borrowing Base and its components as of the end of such calendar
month, in form and content satisfactory to the Administrative Agent and
certified by the chief financial officer of the Borrower to be true and
correct as of the date thereof (the "UK Borrowing Base Certificate").
(f) Annual Business Plan and Budgets. At least 30 days prior to the
end of each fiscal year of the Borrower, beginning with the fiscal year
ending October 31, 2000, an annual business plan and budget of the
Consolidated Group containing, among other things, pro forma financial
statements for the next fiscal year.
(g) Accountant's Certificate. Within the period for delivery of the
annual financial statements provided in Section 7.1(a), a certificate of
the accountants conducting the annual audit stating that they have reviewed
this Credit Agreement and stating further whether, in the course of their
audit, they have become aware of any Default or Event of Default relating
to the financial covenants contained in Section 7.11 and, if any such
Default or Event of Default exists, specifying the nature and extent
thereof.
(h) Auditor's Reports. Promptly upon receipt thereof, a copy of any
other report or "management letter" submitted by independent accountants to
any member of the Consolidated Group in connection with any annual, interim
or special audit of the books of such Person.
(i) Reports. Promptly upon transmission or receipt thereof, (i) copies
of any filings and registrations with, and reports to or from, the
Securities and Exchange Commission, or any successor agency, and copies of
all financial statements, proxy statements, notices and reports as any
member of the Consolidated Group shall send to its shareholders or to a
holder of any Indebtedness owed by any member of the Consolidated Group in
its capacity as such a holder and (ii) upon the request of the
Administrative Agent,
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all reports and written information to and from the United States
Environmental Protection Agency, or any state or local agency responsible
for environmental matters, the United States Occupational Health and Safety
Administration, or any state or local agency responsible for health and
safety matters, or any successor agencies or authorities concerning
environmental, health or safety matters.
(j) Notices. Upon any Executive Officer of a Credit Party obtaining
knowledge thereof, the Credit Parties will give written notice to the
Administrative Agent immediately of (i) the occurrence of an event or
condition constituting a Default or Event of Default, specifying the nature
and existence thereof and what action the Credit Parties propose to take
with respect thereto, and (ii) the occurrence of any of the following with
respect to any member of the Consolidated Group (A) the pendency or
commencement of any litigation, arbitral or governmental proceeding against
such Person which if adversely determined would reasonably be expected to
have a Material Adverse Effect or (B) the institution of any proceedings
against such Person with respect to, or the receipt of notice by such
Person of potential liability or responsibility for violation, or alleged
violation of any federal, state or local law, rule or regulation, including
but not limited to, Environmental Laws, the violation of which would
reasonably be expected to have a Material Adverse Effect.
(k) ERISA. Upon any Executive Officer of a Credit Party obtaining
knowledge thereof, the Credit Parties will give written notice to the
Administrative Agent promptly (and in any event within five Business Days)
of: (i) any event or condition, including, but not limited to, any
Reportable Event, that constitutes, or would reasonably be expected to lead
to, an ERISA Event; (ii) with respect to any Multiemployer Plan, the
receipt of notice as prescribed in ERISA or otherwise of any withdrawal
liability assessed against the Credit Parties or any ERISA Affiliates, or
of a determination that any Multiemployer Plan is in reorganization or
insolvent (both within the meaning of Title IV of ERISA); (iii) the failure
to make full payment on or before the due date (including extensions)
thereof of all amounts which any member of the Consolidated Group or any
ERISA Affiliate is required to contribute to each Plan pursuant to its
terms and as required to meet the minimum funding standard set forth in
ERISA and the Internal Revenue Code with respect thereto; or (iv) any
change in the funding status of any Plan that would reasonably be expected
to have a Material Adverse Effect, together with a description of any such
event or condition or a copy of any such notice and a statement by an
Executive Officer of the Borrower briefly setting forth the details
regarding such event, condition, or notice, and the action, if any, which
has been or is being taken or is proposed to be taken by the Credit Parties
with respect thereto. Promptly upon request, the Credit Parties shall
furnish the Administrative Agent and the Lenders with such additional
information concerning any Plan as may be reasonably requested, including,
but not limited to, copies of each annual report/return (Form 5500 series),
as well as all schedules and attachments thereto required to be filed with
the Department of Labor and/or the Internal Revenue Service pursuant to
ERISA and the Internal Revenue Code, respectively, for each "plan year"
(within the meaning of Section 3(39) of ERISA).
(l) Environmental.
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(i) Upon the reasonable written request of the Administrative
Agent following the occurrence of any event or the discovery of any
condition which the Administrative Agent or the Required Lenders
reasonably believe has caused (or would be reasonably expected to
cause) the representations and warranties set forth in Section 6.16 to
be untrue in any material respect, the Credit Parties will furnish or
cause to be furnished to the Administrative Agent, at the Credit
Parties' expense, a report of an environmental assessment of
reasonable scope, form and depth, (including, where appropriate,
invasive soil or groundwater sampling) by a consultant reasonably
acceptable to the Administrative Agent as to the nature and extent of
the presence of any Materials of Environmental Concern on any Subject
Properties (as defined in Section 6.16) and as to the compliance by
any member of the Consolidated Group with Environmental Laws at such
Subject Properties. If the Credit Parties fail to deliver such an
environmental report within seventy-five (75) days after receipt of
such written request then the Administrative Agent may arrange for
same, and the members of the Consolidated Group hereby grant to the
Administrative Agent and their representatives access to the Subject
Properties to reasonably undertake such an assessment (including,
where appropriate, invasive soil or groundwater sampling). The
reasonable cost of any assessment arranged for by the Administrative
Agent pursuant to this provision will be payable by the Credit Parties
on demand and added to the obligations secured by the Collateral
Documents.
(ii) The members of the Consolidated Group will conduct and
complete all investigations, studies, sampling, and testing and all
remedial, removal, and other actions necessary to address all
Materials of Environmental Concern on, from or affecting any of the
Subject Properties to the extent necessary to be in compliance with
all Environmental Laws and with the validly issued orders and
directives of all Governmental Authorities with jurisdiction over such
Subject Properties to the extent any failure could have a Material
Adverse Effect.
(m) Additional Patents and Trademarks. At the time of delivery of the
financial statements and reports provided for in Section 7.1(a), a report
signed by an Executive Officer of the Borrower setting forth (i) a list of
registration numbers for all patents, trademarks, service marks, tradenames
and copyrights awarded to any Credit Party since the last day of the
immediately preceding fiscal year and (ii) a list of all patent
applications, trademark applications, service mark applications, trade name
applications and copyright applications submitted by any Credit Party since
the last day of the immediately preceding fiscal year and the status of
each such application, all in such form as shall be reasonably satisfactory
to the Administrative Agent.
(n) Other Information. With reasonable promptness upon any such
request, such other information regarding the business, properties or
financial condition of any member of the Consolidated Group as the
Administrative Agent or any Lender may reasonably request.
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7.2 Preservation of Existence and Franchises.
Except as a result of or in connection with a dissolution, merger or
disposition of a Subsidiary permitted under Section 8.4 or Section 8.5, each
Credit Party will, and will cause each of its Subsidiaries to, do all things
necessary to preserve and keep in full force and effect its existence, rights,
franchises and authority.
7.3 Books and Records.
Each Credit Party will, and will cause each of its Subsidiaries to, keep
complete and accurate books and records of its transactions in accordance with
good accounting practices on the basis of GAAP (including the establishment and
maintenance of appropriate reserves).
7.4 Compliance with Law.
Each Credit Party will, and will cause each of its Subsidiaries to, comply
with all laws, rules, regulations and orders, and all applicable restrictions
imposed by all Governmental Authorities, applicable to it and its Property if
noncompliance with any such law, rule, regulation, order or restriction could
have a Material Adverse Effect.
7.5 Payment of Taxes and Other Indebtedness.
Each Credit Party will, and will cause each of its Subsidiaries to, pay and
discharge (a) all taxes, assessments and governmental charges or levies imposed
upon it, or upon its income or profits, or upon any of its properties, before
they shall become delinquent, (b) all lawful claims (including claims for labor,
materials and supplies) which, if unpaid, would give rise to a Lien upon any of
its properties, and (c) except as prohibited hereunder, all of its other
Indebtedness as it shall become due; provided, however, that no member of the
Consolidated Group shall be required to pay any such tax, assessment, charge,
levy, claim or Indebtedness which is being contested in good faith by
appropriate proceedings for which adequate reserves determined in accordance
with GAAP have been established, unless the failure to make any such payment (i)
would give rise to an immediate right to foreclose on a Lien securing such
amounts or (ii) would reasonably be expected to have a Material Adverse Effect.
7.6 Insurance.
Each Credit Party will, and will cause each of its Subsidiaries to, at all
times maintain in full force and effect insurance (including worker's
compensation insurance, liability insurance, casualty insurance and business
interruption insurance) in such amounts, covering such risks and liabilities and
with such deductibles or self-insurance retentions as are in accordance with
normal industry practice (or as otherwise required by the Collateral Documents).
The or Collateral Agent shall be named as loss payee or mortgagee, as its
interest may appear, and/or additional insured with respect to any such
insurance providing coverage in respect of any Collateral, and each provider of
any such insurance shall agree, by endorsement upon the policy or policies
issued by it or by
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independent instruments furnished to the Agent, that it will give the Collateral
Agent thirty (30) days prior written notice before any such policy or policies
shall be altered or canceled, and that no act or default of any member of the
Consolidated Group or any other Person shall affect the rights of the Collateral
Agent or the Lenders under such policy or policies. The present insurance
coverage of the members of the Consolidated Group is outlined as to carrier,
policy number, expiration date, type and amount on Schedule 7.6.
7.7 Maintenance of Property.
Each Credit Party will, and will cause each of its Subsidiaries to,
maintain and preserve its properties and equipment material to the conduct of
its business in good repair, working order and condition, normal wear and tear
and casualty and condemnation excepted, and will make, or cause to be made, in
such properties and equipment from time to time all repairs, renewals,
replacements, extensions, additions, betterments and improvements thereto as may
be needed or proper, to the extent and in the manner customary for companies in
similar businesses.
7.8 Performance of Obligations.
Each Credit Party will, and will cause each of its Subsidiaries to, perform
in all material respects all of its obligations under the terms of all material
agreements, indentures, mortgages, security agreements and other debt
instruments to which it is a party or by which it is bound.
7.9 Use of Proceeds.
The Borrower will use the proceeds of Extensions of Credit solely for the
purposes set forth in Section 6.14.
7.10 Audits/Inspections.
Upon reasonable notice and during normal business hours, each Credit Party
will, and will cause each of its North American Subsidiaries to, permit
representatives appointed by the Administrative Agent, including, without
limitation, independent accountants, agents, attorneys, and appraisers to visit
and inspect its property, including its books and records, its accounts
receivable and inventory, its facilities and its other business assets, and to
make photocopies or photographs thereof and to write down and record any
information such representative obtains and shall permit the Administrative
Agent or its representatives to investigate and verify the accuracy of
information provided to the Lenders and to discuss all such matters with the
officers, employees and representatives of such Person. The Credit Parties agree
that the Administrative Agent, and its representatives, may conduct periodic
audits of the Collateral. As provided in Section 11.5, (a) at any time that an
Event of Default is not continuing, the reasonable costs and expenses of the
Administrative Agent, and its representatives, for up to two (2) audits of the
Collateral in any fiscal year shall be paid by the Credit Parties and (b) during
the continuance of an Event of Default, the reasonable costs and expenses of the
Administrative Agent, and its representatives, for additional audits of the
Collateral shall be paid for by the Credit Parties.
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7.11 Financial Covenants.
(a) Consolidated Net Worth. As of the end of each fiscal quarter,
Consolidated Net Worth shall be not less than the sum of $67.1 million, plus on
the last day of each fiscal quarter to end after the Closing Date, an amount
equal to seventy-five percent (75%) of Consolidated Net Income for the fiscal
quarter then ending (but not less than zero), such increases to be cumulative,
plus an amount equal to one hundred percent (100%) of the net proceeds received
from any Equity Transactions occurring after the Closing Date.
(b) Consolidated Leverage Ratio. As of the end of each fiscal quarter, the
Consolidated Leverage Ratio shall not be greater than 3.0:1.0.
(c) Consolidated Fixed Charge Coverage Ratio. As of the end of each fiscal
quarter, the Consolidated Fixed Charge Coverage Ratio shall be not less than
2.0:1.0.
7.12 Additional Guarantors.
(a) Domestic Subsidiaries. Where Domestic Subsidiaries which are not
Guarantors (the "Non-Guarantor Domestic Subsidiaries") shall at any time (the
"Domestic Threshold Requirement"):
(i) in any instance for any such Non-Guarantor Domestic Subsidiary,
constitute more than five percent (5%) of consolidated assets for the
Consolidated Group as of the end of the immediately preceding fiscal
quarter or generate more than five percent (5%) of consolidated revenues
for the Consolidated Group for the period of four consecutive fiscal
quarters ending as of the end of the immediately preceding fiscal quarter,
or
(ii) in the aggregate for all such Non-Guarantor Domestic
Subsidiaries, constitute more than ten percent (10%) of consolidated assets
for the Consolidated Group as of the end of the immediately preceding
fiscal quarter or generate more than ten percent (10%) of consolidated
revenues for the Consolidated Group for the period of four consecutive
fiscal quarters ending as of the end of the immediately preceding fiscal
quarter,
then the Borrower shall (i) notify the Administrative Agent thereof within 10
days after a Responsible Officer has knowledge thereof, and (ii) within 45 days
thereafter, (A) cause each such Domestic Subsidiary to become a Guarantor by
execution of a Joinder Agreement, such that immediately after joinder as a
Guarantor, the remaining Non-Guarantor Domestic Subsidiaries shall not in any
instance, or collectively, exceed the Domestic Threshold Requirement, (B)
deliver with the Joinder Agreement such supporting resolutions, incumbency
certificates, corporate formation and organizational documentation and opinions
of counsel as the Administrative Agent may reasonably request, and (C) deliver
stock certificates and related pledge agreements or pledge joinder agreements
evidencing the pledge of 100% of the capital stock of each Domestic Subsidiary
(whether or not it is a Guarantor) of the Borrower and 66%
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(or such greater percentage which would not result in material adverse tax
consequences) of the issued and outstanding capital stock entitled to vote
(within the meaning of Treas. Reg. Section 1.956-2(c)(2)) and 100% of the issued
and outstanding Capital Stock not entitled to vote (within the meaning of Treas.
Reg. Section 1.956-2(c)(2)) of each Canadian Subsidiary directly owned by each
such Domestic Subsidiary to secure the obligations of the Credit Parties under
the Credit Documents, together with undated stock transfer powers executed in
blank.
(b) Foreign Subsidiaries. At any time that Foreign Subsidiaries (other than
Canadian Subsidiaries) shall in the aggregate generate more than ten percent
(10%) of consolidated revenues for the Consolidated Group for the period of four
consecutive fiscal quarters ending as of the end of the immediately preceding
fiscal quarter or more than ten percent (10%) of Consolidated EBITDA for the
period of four consecutive fiscal quarters ending as of the end of the
immediately preceding fiscal quarter, then the Borrower shall (a) notify the
Administrative Agent thereof within 10 days after a Responsible Officer has
knowledge thereof, and (b) if the Capital Stock of such Foreign Subsidiaries is
not required (or reasonably expected to be required) to be pledged to secure the
UK Subsidiary Credit Facility, cause, within 45 days thereafter, (i) delivery of
supporting resolutions, incumbency certificates, corporation formation and
organizational documentation and opinions of counsel as the Administrative Agent
may reasonably request, and (ii) delivery of stock certificates (where required
for perfection under local law) and a related pledge agreement or pledge joinder
agreement evidencing the pledge of 66% (or such greater percentage which would
not result in material adverse tax consequences) of the issued and outstanding
capital stock entitled to vote (within the meaning of Treas. Reg. Section
1.956-2(c)(2)) and 100% of the issued and outstanding Capital Stock not entitled
to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) of each
Foreign Subsidiary (other than Canadian Subsidiaries) directly owned by the
Borrower or any Domestic Subsidiary of the Borrower to secure the obligations of
the Credit Parties under the Credit Documents.
(c) Guaranties Given in respect of Other Indebtedness. Notwithstanding
anything to the contrary contained herein, the Borrower will promptly provide,
or cause to be provided, to the Administrative Agent, appropriate Joinder
Agreements in respect of the obligations of the Domestic Guarantors under the
Credit Documents from any Subsidiary or Affiliate which shall give a guaranty in
respect of any other Funded Debt, together with the other items referenced in
subsection (a) above, as appropriate.
7.13 Pledged Assets.
Each Credit Party will cause all of its owned personal property located in
the United States other than Excluded Property to be subject at all times to
first priority, perfected Liens in favor of the Administrative Agent to secure
the loans and obligations owing hereunder pursuant to the terms and conditions
of the Collateral Documents or, with respect to any such Property acquired
subsequent to the Closing Date, such other additional security documents as the
Administrative Agent shall reasonably request, subject in any case to Permitted
Liens. Without limiting the generality of the above, the Credit Parties will
cause (i) 100% of the issued and outstanding Capital
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Stock of each Domestic Subsidiary and (ii) 66% (or such greater percentage which
would not result in material adverse tax consequences) of the issued and
outstanding Capital Stock entitled to vote (within the meaning of Treas. Reg.
Section 1.956-2(c)(2)) and 100% of the issued and outstanding Capital Stock not
entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) of
each Canadian Subsidiary directly owned by the Borrower or any Domestic
Subsidiary of the Borrower to be subject at all times to a first priority,
perfected Lien in favor of the Administrative Agent pursuant to the terms and
conditions of the Collateral Documents or such other security documents as the
Administrative Agent shall reasonably request.
If, subsequent to the Closing Date, a Credit Party shall acquire any
Property required to be pledged to the Administrative Agent as Collateral by
this Section 7.13 or by any of the Collateral Documents, the Credit Parties
shall promptly notify the Administrative Agent of the same and each Credit Party
shall, and shall cause each of its Domestic Subsidiaries to, take such action
(including but not limited to the actions set forth in Sections 5.1(d) and (e))
at its own expense as requested by the Administrative Agent to ensure that the
Administrative Agent has a first priority, perfected Lien to secure the
obligations of the Credit Parties under the Credit Documents in all owned
personal property of the Credit Parties located in the United States other than
Excluded Property, subject in each case only to Permitted Liens. Each Credit
Party shall, and shall cause each of its Subsidiaries to, adhere to the
covenants regarding the location of personal property as set forth in the
Security Agreement.
7.14 Year 2000 Compliance.
The Credit Parties will promptly notify the Administrative Agent in the
event any North American Subsidiary discovers or determines that any computer
application (including those of its material suppliers, vendors and customers)
that is material to its or any of its Subsidiaries' business and operations will
not be Year 2000 Compliant, except to the extent that such failure would not
reasonably be expected to have a Material Adverse Effect.
SECTION 8
NEGATIVE COVENANTS
Each Credit Party hereby covenants and agrees that so long as this Credit
Agreement is in effect or any amounts payable hereunder or under any other
Credit Document shall remain outstanding or any Letter of Credit is outstanding,
and until all of the Commitments hereunder shall have terminated:
8.1 Indebtedness.
The Credit Parties will not permit any member of the Consolidated Group to
contract, create, incur, assume or permit to exist any Indebtedness, except:
(a) Indebtedness existing or arising under this Credit Agreement or
the other Credit Documents;
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(b) Indebtedness existing on the Closing Date and set forth on
Schedule 8.1, and renewals, refinancings and extensions thereof on terms
and conditions no less favorable to such Person than such existing
Indebtedness;
(c) purchase money Indebtedness (including obligations in respect of
Capital Leases or Synthetic Leases) hereafter incurred by the Borrower or
any of its Subsidiaries to finance the purchase of fixed assets provided
that (i) the total of all such Indebtedness for the Borrower and its
Subsidiaries taken together shall not exceed an aggregate principal amount
of $3,000,000 at any one time outstanding; (ii) such Indebtedness when
incurred shall not exceed the purchase price of the asset(s) financed; and
(iii) no such Indebtedness shall be refinanced for a principal amount in
excess of the principal balance outstanding thereon at the time of such
refinancing;
(d) obligations owing under interest rate, commodities and foreign
currency exchange protection agreements entered into in the ordinary course
of business to manage existing or anticipated risks and not for speculative
purposes;
(e) unsecured intercompany Indebtedness owing to another member of the
Consolidated Group (subject, however, to the limitations of Section 8.6 in
the case of the member of the Consolidated Group extending the loan,
advance or credit);
(f) secured Funded Debt of the UK Subsidiaries under a revolving
credit facility (the "UK Subsidiary Credit Facility") in an aggregate
principal amount not to exceed an amount equal to the sum of the UK
Borrowing Base minus the aggregate amount of Investments (including loans
and advances) made by the members of the North American Group in the UK
Subsidiaries after the Closing Date;
(g) secured Funded Debt of Jack of All Games, Inc. under the floor
planning line of credit for Nintendo inventory provided by Bank of America
Distribution Finance in an aggregate principal amount not to exceed (i)
prior to January 1, 2000, $6,500,000 and (ii) on or after January 1, 2000,
$5,000,000;
(h) unsecured Funded Debt assumed by the Borrower and its Subsidiaries
in connection with Acquisitions permitted hereunder;
(i) other unsecured Funded Debt of the Borrower and its Subsidiaries
in an aggregate outstanding principal amount of up to $2,000,000 at any
time; and
(j) Support Obligations of any Credit Party with respect to any
Indebtedness permitted under this Section 8.1.
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8.2 Liens.
The Credit Parties will not permit any member of the Consolidated Group to
contract, create, incur, assume or permit to exist any Lien with respect to any
of its Property, whether now owned or after acquired, except for Permitted
Liens.
8.3 Nature of Business.
The Credit Parties will not permit any member of the Consolidated Group to
substantively alter the character or conduct of the business conducted by such
Person as of the Closing Date.
8.4 Merger and Consolidation, Dissolution and Acquisitions.
(a) No member of the North American Group will enter into any transaction
of merger or consolidation, except that
(i) a Domestic Credit Party may be party to a transaction of merger or
consolidation with another Domestic Credit Party, provided that if the
Borrower is a party to such transaction, it shall be the surviving entity;
(ii) a Domestic Subsidiary may be party to a transaction of merger or
consolidation with a Foreign Subsidiary, provided that such Domestic
Subsidiary shall be the surviving entity and if such Domestic Subsidiary is
not already a Credit Party, it shall execute and deliver such joinder and
pledge agreements as may be necessary for compliance with the provisions of
Sections 7.12 and 7.13;
(iii) a Domestic Subsidiary may be a party to a transaction of merger
or consolidation with a Person other than a member of the Consolidated
Group, provided that (A) the surviving entity shall be a Domestic
Subsidiary and shall execute and deliver such joinder and pledge agreements
as may be necessary for compliance with the provisions of Sections 7.12 and
7.13, (B) no Default or Event of Default shall exist immediately after
giving effect thereto, and (C) the transaction shall otherwise constitute a
Permitted Acquisition; and
(iv) a Domestic Subsidiary may enter into a transaction of merger or
consolidation in connection with an Asset Disposition permitted under
Section 8.5.
(b) No member of the North American Group, other than a Wholly Owned
Subsidiary (and then only if no Material Adverse Effect shall result on account
thereof), may dissolve, liquidate or wind up its affairs.
(c) No member of the North American Group shall make any Acquisition,
unless:
(i) in the case of an acquisition of Capital Stock of another Person,
after giving effect to such acquisition,
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(A) if the Acquisition is not of a controlling interest in the
subject Person such that after giving effect thereto the subject
Person will not be a Subsidiary, then such Acquisition constitutes a
Permitted Investment; and
(B) if the Acquisition is of a controlling interest in the
subject Person such that after giving effect thereto the subject
Person will be a Subsidiary, then such Acquisition constitutes a
Permitted Acquisition;
(ii) in the case of an Acquisition of all or any substantial portion
of the Property (other than Capital Stock) of another Person, then such
Acquisition constitutes a Permitted Acquisition.
8.5 Asset Dispositions.
The Credit Parties will not permit any member of the North American Group
to make any Asset Disposition (including, without limitation, any Sale and
Leaseback Transaction), unless
(i) the sale, lease or other disposition is to a Credit Party;
(ii) in all other cases, (A) if the subject transaction is a Sale and
Leaseback Transaction, such transaction shall be permitted by Section 8.13,
(B) if the subject transaction involves Capital Stock of a Subsidiary, the
subject transaction is of a controlling interest in such Subsidiary, (C)
the aggregate net book value of all assets sold, leased or otherwise
disposed of shall not exceed an amount in any fiscal year equal to the
lesser of (i) ten percent (10%) of consolidated assets for the Borrower and
its Domestic Subsidiaries as of the end of the immediately preceding fiscal
year or (ii) assets producing ten percent (10%) of Consolidated EBITDA, (D)
no Default or Event of Default shall exist immediately after giving effect
thereto, (E) the Borrower shall have demonstrated compliance with the
financial covenants hereunder on a Pro Forma Basis after giving effect to
the disposition and shall have delivered to the Administrative Agent a Pro
Forma Compliance Certificate (including reaffirmation of the
representations and warranties hereunder as of such date before and after
giving effect to such transaction) in connection therewith, and (F) the
Borrower shall have given written notice to the Administrative Agent at
least 30 days in advance of the prospective disposition, and the terms
thereof, in sufficient detail as to the book value and consideration to be
paid, terms of disposition, and net proceeds expected therefrom and
intended application thereof.
The Administrative Agent will promptly deliver to the Borrower upon
request, at the Borrower's expense, such release documentation (including
delivery of applicable stock certificates) as may be reasonably requested to
give effect to the release of subject Property from the security interests
securing the obligations hereunder in connection with Asset Dispositions
permitted hereunder.
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8.6 Investments.
The Credit Parties will not permit any member of the North American Group
to make or permit to exist Investments in or to any Person, except for Permitted
Investments.
8.7 Restricted Payments.
The Credit Parties will not make, or permit any member of the North
American Group to make, any Restricted Payment, unless (i) no Default or Event
of Default shall exist immediately after giving effect thereto and (ii) the
Borrower shall have demonstrated compliance with the financial covenants
hereunder on a Pro Forma Basis after giving effect to the Restricted Payment and
shall have delivered to the Administrative Agent a Pro Forma Compliance
Certificate (including reaffirmation of the representations and warranties
hereunder as of such date before and after giving effect to such transaction) in
connection therewith.
8.8 Modifications and Payments in respect of Funded Debt.
None of the members of the Consolidated Group will
(a) After the issuance thereof, amend or modify (or permit the amendment or
modification of) the terms of any Funded Debt in a manner adverse to the
interests of the Lenders (including specifically shortening any maturity or
average life to maturity or requiring any payment sooner than previously
scheduled or increasing the interest rate or fees applicable thereto);
(b) Amend or modify, or permit or acquiesce to the amendment or
modification (including waivers) of, any material provisions of any Subordinated
Debt, including any notes or instruments evidencing any Subordinated Debt and
any indenture or other governing instrument relating thereto;
(c) Make any payment in contravention of the terms of any Subordinated
Debt; or
(d) Except in connection with a refinancing or refunding permitted
hereunder, make any prepayment, redemption, defeasance or acquisition for value
of (including without limitation, by way of depositing money or securities with
the trustee with respect thereto before due for the purpose of paying when due),
or refund, refinance or exchange of any Funded Debt (other than the Indebtedness
under the Credit Documents and intercompany Indebtedness permitted hereunder)
other than regularly scheduled payments of principal and interest on such Funded
Debt.
8.9 Transactions with Affiliates.
The Credit Parties will not permit any member of the Consolidated Group to
enter into or permit to exist any transaction or series of transactions with any
officer, director, shareholder, Subsidiary or Affiliate of such Person other
than (a) advances of working capital to any Credit
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Party, (b) transfers of cash and assets to any Credit Party, (c) transactions
permitted by Section 8.1, Section 8.4, Section 8.5, Section 8.6, or Section 8.7,
(d) normal compensation and reimbursement of expenses of officers and directors
and (e) except as otherwise specifically limited in this Credit Agreement, other
transactions which are entered into in the ordinary course of such Person's
business on terms and conditions substantially as favorable to such Person as
would be obtainable by it in a comparable arms-length transaction with a Person
other than an officer, director, shareholder, Subsidiary or Affiliate.
8.10 Fiscal Year; Organizational Documents.
The Credit Parties will not permit any member of the Consolidated Group to
change its fiscal year or amend, modify or change its articles of incorporation
(or corporate charter or other similar organizational document) or bylaws (or
other similar document) without the prior written consent of the Required
Lenders (which consent shall not be unreasonably withheld).
8.11 Limitation on Restricted Actions.
The Credit Parties will not permit any member of the Consolidated Group to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any encumbrance or restriction on the ability of any such Person to
(a) pay dividends or make any other distributions on its Capital Stock or with
respect to any other interest or participation in, or measured by, its profits,
(b) pay any Indebtedness or other obligation, (c) make loans, advances or
capital contributions, (d) sell, lease or otherwise transfer any of its
properties or assets, or (e) act as a guarantor or pledge its assets, except for
such encumbrances or restrictions existing under or by reason of (i) this Credit
Agreement and the other Credit Documents, (ii) pursuant to the terms of any
purchase money Indebtedness permitted by Section 8.1(c) to the extent such
limitations relate only to the property which is the subject of such financing,
(iii) pursuant to the terms of any licensing or use agreement to the extent such
agreements prohibit the assignment of, or the grant of a security interest in,
such agreement or the Property subject thereto and (iv) with respect to the UK
Subsidiaries only, the loan documents governing the UK Subsidiary Credit
Facility.
8.12 Ownership of Subsidiaries.
Notwithstanding any other provisions of this Credit Agreement to the
contrary, the Credit Parties will not, and will not permit any member of the
North American Group to, (i) permit any Person (other than the Borrower or any
Wholly Owned Subsidiary of the Borrower) to own any Capital Stock of any North
American Subsidiary, except (A) to qualify directors where required by
applicable law or to satisfy other requirements of applicable law with respect
to the ownership of Capital Stock of North American Subsidiaries or (B) as a
result of or in connection with a dissolution, merger, consolidation or
disposition of a North American Subsidiary permitted under Section 8.4 or
Section 8.5, (ii) permit any Subsidiary of the Borrower to issue any shares of
preferred Capital Stock or (iii) permit, create, incur, assume or suffer to
exist any Lien on any Capital Stock of any Subsidiary of the Borrower, except
for Permitted Liens.
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8.13 Sale Leasebacks.
The Credit Parties will not permit any member of the North American Group
to enter into any Sale and Leaseback Transaction unless such Sale and Leaseback
Transaction constitutes purchase money Indebtedness permitted by Section 8.1(c).
8.14 No Further Negative Pledges.
The Credit Parties will not permit any member of the Consolidated Group to
enter into, assume or become subject to any agreement prohibiting or otherwise
restricting the creation or assumption of any Lien upon its properties or
assets, whether now owned or hereafter acquired, or requiring the grant of any
security for any obligation if security is given for any other obligation,
except (a) pursuant to this Credit Agreement and the other Credit Documents, (b)
pursuant to the terms of any purchase money Indebtedness permitted by Section
8.1(c) to the extent such limitations relate only to the property which is the
subject of such financing, (c) pursuant to the terms of any licensing or use
agreement to the extent such agreements prohibit the assignment of, or the grant
of a security interest in, such agreement or the Property subject thereto and
(d) with respect to the UK Subsidiaries only, the loan documents governing the
UK Subsidiary Credit Facility.
SECTION 9
EVENTS OF DEFAULT
9.1 Events of Default.
An Event of Default shall exist upon the occurrence of any of the following
specified events (each an "Event of Default"):
(a) Payment. Any Credit Party shall
(i) default in the payment when due of any principal of any of
the Loans or of any reimbursement obligations arising from drawings
under Letters of Credit, or
(ii) default, and such default shall continue for three (3) or
more Business Days, in the payment when due of any interest on the
Loans or on any reimbursement obligations arising from drawings under
Letters of Credit, or of any Fees or other amounts owing hereunder,
under any of the other Credit Documents or in connection herewith or
therewith; or
(b) Representations. Any representation or warranty made or deemed to
be made by any Credit Party herein, in any of the other Credit Documents,
or in any written statement or certificate delivered or required to be
delivered pursuant hereto or thereto shall
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prove untrue in any material respect on the date as of which it was deemed
to have been made; or
(c) Covenants. Any Credit Party shall
(i) default in the due performance or observance of any term,
covenant or agreement contained in Sections 7.2, 7.9, 7.11, 7.12, 7.13
or 8.1 through 8.14, inclusive;
(ii) default in the due performance or observance of any term,
covenant or agreement contained in Sections 7.1(a), (b) (c) or (d) and
such default shall continue unremedied for a period of at least 5 days
after the earlier of an Executive Officer of a Credit Party becoming
aware of such default or notice thereof by the Administrative Agent;
or
(iii) default in the due performance or observance by it of any
term, covenant or agreement (other than those referred to in
subsections (a), (b), (c)(i) or (c)(ii) of this Section 9.1) contained
in this Credit Agreement or any other Credit Document and such default
shall continue unremedied for a period of at least 30 days after the
earlier of an Executive Officer of a Credit Party becoming aware of
such default or notice thereof by the Administrative Agent; or
(d) Other Credit Documents. Except as a result of or in connection
with a dissolution, merger or disposition of a Subsidiary permitted under
Section 8.4 or Section 8.5, any Credit Document shall fail to be in full
force and effect or to give the Administrative Agent and/or the Lenders the
Liens, rights, powers and privileges purported to be created thereby, or
any Credit Party shall so state in writing; or
(e) Guaranties. Except as the result of or in connection with a
dissolution, merger or disposition of a Subsidiary permitted under Section
8.4 or Section 8.5, the guaranty given by any Guarantor (including any
Person which becomes a Guarantor after the Closing Date in accordance with
Section 7.12) or any provision thereof shall cease to be in full force and
effect, or any Guarantor (including any Person which becomes a Guarantor
after the Closing Date in accordance with Section 7.12) or any Person
acting by or on behalf of such Guarantor shall deny or disaffirm such
Guarantor's obligations under such guaranty, or any Guarantor shall default
in the due performance or observance of any term, covenant or agreement on
its part to be performed or observed pursuant to any guaranty; or
(f) Bankruptcy, etc. Any Bankruptcy Event shall occur with respect to
any member of the Consolidated Group; or
(g) Defaults under Other Agreements. With respect to any Funded Debt
(other than Funded Debt outstanding under this Credit Agreement) in excess
of $2,500,000 in the aggregate for the members of the Consolidated Group
taken as a whole, (i) any member of the Consolidated Group shall (A)
default in any payment (beyond the applicable grace
83
period with respect thereto, if any) with respect to any such Funded Debt,
or (B) the occurrence and continuance of a default in the observance or
performance relating to such Funded Debt or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event or
condition shall occur or condition exist, the effect of which default or
other event or condition is to cause, or to permit, the holder or holders
of such Funded Debt (or trustee or agent on behalf of such holders) to
cause (determined without regard to whether any notice or lapse of time is
required), any such Funded Debt to become due prior to its stated maturity;
or (ii) any such Funded Debt shall be declared due and payable, or required
to be prepaid other than by a regularly scheduled required prepayment,
prior to the stated maturity thereof; or
(h) Judgments. One or more judgments or decrees shall be entered
against one or more of the members of the Consolidated Group involving a
liability of $2,500,000 or more in the aggregate (to the extent not paid or
fully covered by insurance provided by a carrier who has acknowledged
coverage and has the ability to perform) and any such judgments or decrees
shall not have been vacated, discharged or stayed or bonded pending appeal
within 45 days from the entry thereof; or
(i) ERISA. Any of the following events or conditions, if such event or
condition could involve possible taxes, penalties, and other liabilities in
an aggregate amount which would have a Material Adverse Effect: (i) any
"accumulated funding deficiency," as such term is defined in Section 302 of
ERISA and Section 412 of the Internal Revenue Code, whether or not waived,
shall exist with respect to any Plan, or any lien shall arise on the assets
of any member of the Consolidated Group or any ERISA Affiliate in favor of
the PBGC or a Plan; (ii) an ERISA Event shall occur with respect to a
Single Employer Plan, which is, in the reasonable opinion of the
Administrative Agent, likely to result in the termination of such Plan for
purposes of Title IV of ERISA; (iii) an ERISA Event shall occur with
respect to a Multiemployer Plan or Multiple Employer Plan, which is, in the
reasonable opinion of the Administrative Agent, likely to result in (A) the
termination of such Plan for purposes of Title IV of ERISA, or (B) any
member of the Consolidated Group or any ERISA Affiliate incurring any
liability in connection with a withdrawal from, reorganization of (within
the meaning of Section 4241 of ERISA), or insolvency (within the meaning of
Section 4245 of ERISA) of such Plan; or (iv) any prohibited transaction
(within the meaning of Section 406 of ERISA or Section 4975 of the Internal
Revenue Code) or breach of fiduciary responsibility shall occur which may
subject any member of the Consolidated Group or any ERISA Affiliate to any
liability under Sections 406, 409, 502(i), or 502(l) of ERISA or Section
4975 of the Internal Revenue Code, or under any agreement or other
instrument pursuant to which any member of the Consolidated Group or any
ERISA Affiliate has agreed or is required to indemnify any person against
any such liability; or
(j) Ownership. There shall occur a Change of Control.
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9.2 Acceleration; Remedies.
Upon the occurrence of an Event of Default, and at any time thereafter
unless and until such Event of Default has been waived by the requisite Lenders
(pursuant to the voting requirements of Section 11.6) or cured to the
satisfaction of the requisite Lenders (pursuant to the voting procedures in
Section 11.6), the Administrative Agent shall, upon the request and direction of
the Required Lenders, by written notice to the Credit Parties take any of the
following actions:
(a) Termination of Commitments. Declare the Commitments terminated
whereupon the Commitments shall be immediately terminated.
(b) Acceleration. Declare the unpaid principal of and any accrued
interest in respect of all Loans, any reimbursement obligations arising
from drawings under Letters of Credit and any and all other indebtedness or
obligations of any and every kind owing by the Credit Parties to the Agents
and/or any of the Lenders hereunder to be due whereupon the same shall be
immediately due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Credit Parties.
(c) Cash Collateral. Direct the Credit Parties to pay (and the Credit
Parties agree that upon receipt of such notice, or upon the occurrence of
an Event of Default under Section 9.1(f), they will immediately pay) to the
Administrative Agent additional cash, to be held by the Administrative
Agent, for the benefit of the Lenders, in a cash collateral account as
additional security for the LOC Obligations in respect of subsequent
drawings under all then outstanding Letters of Credit in an amount equal to
the maximum aggregate amount which may be drawn under all Letters of
Credits then outstanding.
(d) Enforcement of Rights. Enforce any and all rights and interests
created and existing under the Credit Documents including, without
limitation, all rights and remedies existing under the Collateral
Documents, all rights and remedies against a Guarantor and all rights of
set-off.
Notwithstanding the foregoing, if an Event of Default specified in Section
9.1(f) shall occur with respect to the Borrower, then the Commitments shall
automatically terminate and all Loans, all reimbursement obligations arising
from drawings under Letters of Credit, all accrued interest in respect thereof,
all accrued and unpaid Fees and other indebtedness or obligations owing to the
Agents and/or any of the Lenders hereunder automatically shall immediately
become due and payable without the giving of any notice or other action by the
Agents or the Lenders.
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SECTION 10
AGENCY PROVISIONS
10.1 Appointment, Powers and Immunities.
The Lenders hereby designate and appoint Bank of America, N.A., as
Administrative Agent and as Collateral Agent for the Lenders to act as specified
herein, and authorize the Agents to take such action on their behalf under the
provisions of the Credit Agreement and the other Credit Documents and to
exercise such powers and perform such duties as are expressly delegated by the
terms hereof and of the other Credit Documents, together with such other powers
as are reasonably incidental thereto. Each Lender further authorizes and directs
the Agents to execute and deliver releases (or similar agreements) to give
effect to the provisions of this Credit Agreement and the other Credit
Documents, including specifically, without limitation, the provisions of Section
8.5 hereof. The Agents (which term as used in this sentence and in Section 10.5
and the first sentence of Section 10.6 shall include their Affiliates and their
own and their Affiliates' officers, directors, employees, and agents): (a) shall
not have any duties or responsibilities except those expressly set forth in this
Credit Agreement and shall not be a trustee or fiduciary for any Lender; (b)
shall not be responsible to the Lenders for any recital, statement,
representation, or warranty (whether written or oral) made in or in connection
with any Credit Document or any certificate or other document referred to or
provided for in, or received by any of them under, any Credit Document, or for
the value, validity, effectiveness, genuineness, enforceability, or sufficiency
of any Credit Document, or any other document referred to or provided for
therein or for any failure by any Credit Party or any other Person to perform
any of its obligations thereunder; (c) shall not be responsible for or have any
duty to ascertain, inquire into, or verify the performance or observance of any
covenants or agreements by any Credit Party or the satisfaction of any condition
or to inspect the property (including the books and records) of any Credit Party
or any of its Subsidiaries or Affiliates; (d) shall not be required to initiate
or conduct any litigation or collection proceedings under any Credit Document;
and (e) shall not be responsible for any action taken or omitted to be taken by
it under or in connection with any Credit Document, except for its own gross
negligence or willful misconduct. Each Agent may employ agents and
attorneys-in-fact and shall not be responsible for the negligence or misconduct
of any such agents or attorneys-in-fact selected by it with reasonable care.
10.2 Reliance by Agents.
Each Agent shall be entitled to rely upon any certification, notice,
instrument, writing, or other communication (including, without limitation, any
thereof by telephone or telecopy) believed by them to be genuine and correct and
to have been signed, sent or made by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel (including counsel for
any Credit Party), independent accountants, and other experts selected by such
Agent. Each Agent may deem and treat the payee of any Note as the holder thereof
for all purposes hereof unless and until the Administrative Agent receives and
accepts an Assignment and Acceptance executed in accordance with Section 11.3(b)
hereof. As to any matters not expressly
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provided for by this Credit Agreement, neither Agent shall be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Required Lenders, and such
instructions shall be binding on all of the Lenders; provided, however, that
neither Agent shall be required to take any action that exposes such Agent to
personal liability or that is contrary to any Credit Document or applicable law
or unless 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 any such action.
10.3 Defaults.
Neither Agent shall be deemed to have knowledge or notice of the occurrence
of a Default or Event of Default unless the Administrative Agent has received
written notice from a Lender or a Credit Party specifying such Default or Event
of Default and stating that such notice is a "Notice of Default". In the event
that the Administrative Agent receive such a notice of the occurrence of a
Default or Event of Default, the Administrative Agent shall give prompt notice
thereof to the Collateral Agent and to the Lenders. The Agents shall (subject to
Section 10.2) take such action with respect to such Default or Event of Default
as shall reasonably be directed by the Required Lenders (or such other Lenders
as required by Section 11.6), provided that, unless and until the Agents shall
have received such directions, the Agents may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable in the best interest of
the Lenders.
10.4 Rights as a Lender.
With respect to its Commitment and the Loans made by it, Bank of America
(and any successor acting as Administrative Agent and/or Collateral Agent) in
its capacity as a Lender hereunder shall have the same rights and powers
hereunder as any other Lender and may exercise the same as though it were not
acting as Administrative Agent and/or Collateral Agent, and the term "Lender" or
"Lenders" shall, unless the context otherwise indicates, include the
Administrative Agent and/or Collateral Agent in its individual capacity. Bank of
America (and any successor acting as Administrative Agent and/or Collateral
Agent) and its Affiliates may (without having to account therefor to any Lender)
accept deposits from, lend money to, make investments in, provide services to,
and generally engage in any kind of lending, trust, or other business with any
Credit Party or any of its Subsidiaries or Affiliates as if it were not acting
as Administrative Agent and/or Collateral Agent, and Bank of America (and any
successor acting as Administrative Agent and/or Collateral Agent) and its
Affiliates may accept fees and other consideration from any Credit Party or any
of its Subsidiaries or Affiliates for services in connection with this Credit
Agreement or otherwise without having to account for the same to the Lenders.
10.5 Indemnification.
The Lenders agree to indemnify the Agents (to the extent not reimbursed
under Section 11.5 hereof, but without limiting the obligations of the Credit
Parties under Section 11.5) ratably
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(in accordance with their respective Revolving Commitments (or, if the Revolving
Commitments have been terminated, the outstanding Revolving Loans, Swingline
Loans and Participation Interests in Letters of Credit and Swingline Loan
(including the Participation Interests of the Issuing Lender in Letters of
Credit and the Participation Interests of the Swingline Lender in Swingline
Loans)) for any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including attorneys' fees), or
disbursements of any kind and nature whatsoever that may be imposed on, incurred
by or asserted against the Agents (including by any Lender) in any way relating
to or arising out of any Credit Document or the transactions contemplated
thereby or any action taken or omitted by the Agents under any Credit Document;
provided that no Lender shall be liable for any of the foregoing to the extent
they arise from the gross negligence or willful misconduct of the Person to be
indemnified. Without limitation of the foregoing, each Lender agrees to
reimburse the Agents promptly upon demand for its ratable share of any costs or
expenses payable by the Credit Parties under Section 11.5, to the extent that
the Agents are not promptly reimbursed for such costs and expenses by the Credit
Parties. The agreements in this Section 10.5 shall survive the repayment of the
Loans, LOC Obligations and other obligations under the Credit Documents and the
termination of the Commitments hereunder.
10.6 Non-Reliance on Agents and Other Lenders.
Each Lender agrees that it has, independently and without reliance on
either Agent or any other Lender, and based on such documents and information as
it has deemed appropriate, made its own credit analysis of the Credit Parties
and their Subsidiaries and decision to enter into this Credit Agreement and that
it will, independently and without reliance upon either 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 analysis and decisions in taking or not
taking action under the Credit Documents. Except for notices, reports, and other
documents and information expressly required to be furnished to the Lenders by
the Administrative Agent hereunder, the Agents shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the affairs, financial condition, or business of any Credit Party or
any of its Subsidiaries or Affiliates that may come into the possession of
either Agent or any of its Affiliates.
10.7 Successor Agent.
The Administrative Agent and/or the Collateral Agent may resign at any time
by giving notice thereof to the Lenders and the Credit Parties. Upon any such
resignation, the Required Lenders shall have the right to appoint a successor
Agent (which Agent shall be reasonably acceptable to the Borrower). If no
successor Agent shall have been so appointed by the Required Lenders and shall
have accepted such appointment within thirty (30) days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on behalf
of the Lenders, appoint a successor Agent which shall be a commercial bank
organized under the laws of the United States having combined capital and
surplus of at least $500,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor, such successor shall thereupon succeed to and
become vested with all the rights, powers, discretion, privileges, and duties of
the retiring Agent, and the retiring Agent shall be discharged from its duties
and
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obligations hereunder. After any retiring Agent's resignation hereunder as
Administrative Agent, the provisions of this Section 10 shall continue in effect
for its benefit in respect of any actions taken or omitted to be taken by it
while it was acting as Agent.
SECTION 11
MISCELLANEOUS
11.1 Notices.
Except as otherwise expressly provided herein, all notices and other
communications shall have been duly given and shall be effective (a) when
delivered, (b) when transmitted via telecopy (or other facsimile device) to the
number set out below (followed by delivery by a reputable national overnight air
courier service or by certified or registered mail), (c) the Business Day
following the day on which the same has been delivered prepaid to a reputable
national overnight air courier service, or (d) the third Business Day following
the day on which the same is sent by certified or registered mail, postage
prepaid, in each case to the respective parties at the address, in the case of
the Credit Parties and the Agents, set forth below, and, in the case of the
Lenders, set forth on Schedule 11.1, or at such other address as such party may
specify by written notice to the other parties hereto:
if to any Credit Party:
Take-Two Interactive Software, Inc.
575 Broadway, Third Floor
New York, New York 10012
Attn: Larry Muller, Chief Financial Officer
Telephone: 212- 334-6633
Telecopy:
if to the Administrative Agent: with a copy to:
Bank of America, N.A. Bank of America, N.A.
101 N. Tryon Street 1111 East Main Street
Independence Center, 15th Floor Richmond, VA 23219
NC1-001-15-04 Attn: Austin Welder
Charlotte, North Carolina 28255 Telephone: (804) 788-2534
Attn: William Cessna Telecopy: (804) 788-3432
Agency Services
Telephone: (704) 386-7637
Telecopy: (704) 409-0029
11.2 Right of Set-Off; Adjustments.
Upon the occurrence and during the continuance of any Event of Default,
each Lender (and each of its domestic Affiliates) is hereby authorized at any
time and from time to time, to
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the fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Lender (or any of its domestic
Affiliates) to or for the credit or the account of any Credit Party against any
and all of the obligations of such Person now or hereafter existing under this
Credit Agreement, under the Notes, under any other Credit Document or otherwise,
irrespective of whether such Lender shall have made any demand under hereunder
or thereunder and although such obligations may be unmatured. Each Lender agrees
promptly to notify any affected Credit Party 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. The
rights of each Lender under this Section 11.2 are in addition to other rights
and remedies (including, without limitation, other rights of set-off) that such
Lender may have.
11.3 Benefit of Agreement.
(a) This Credit Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns of
the parties hereto; provided that none of the Credit Parties may assign or
transfer any of its interests and obligations without prior written consent
of each of the Lenders; provided further that the rights of each Lender to
transfer, assign or grant participations in its rights and/or obligations
hereunder shall be limited as set forth in this Section 11.3.
(b) Each Lender may assign to one or more Eligible Assignees all or a
portion of its rights and obligations under this Credit Agreement
(including, without limitation, all or a portion of its Loans, its Notes,
and its Commitment); provided, however, that
(i) each such assignment shall be to an Eligible Assignee;
(ii) except in the case of an assignment to another Lender, an
Affiliate of an existing Lender or any fund that invests in bank loans
and is advised or managed by an investment advisor to an existing
Lender or an assignment of all of a Lender's rights and obligations
under this Credit Agreement, any such partial assignment shall be in
an amount at least equal to $5,000,000 (or, if less, the remaining
amount of the Commitment being assigned by such Lender) or an integral
multiple of $1,000,000 in excess thereof;
(iii) any such assignment shall be of a constant, not varying,
percentage of all of the Obligations and Commitments hereunder; and
(iv) the parties to such assignment shall execute and deliver to
the Administrative Agent for its acceptance an Assignment and
Acceptance in the form of Schedule 11.3(b) hereto, together with any
Note subject to such assignment and a processing fee of $3,500.
Upon execution, delivery, and acceptance of such Assignment and Acceptance,
the assignee thereunder shall be a party hereto and, to the extent of such
assignment, have the
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obligations, rights, and benefits of a Lender hereunder and the assigning
Lender shall, to the extent of such assignment, relinquish its rights and
be released from its obligations under this Credit Agreement. Upon the
consummation of any assignment pursuant to this Section 11.3(b), the
assignor, the Administrative Agent and the Credit Parties shall make
appropriate arrangements so that, if required, new Notes are issued to the
assignor and the assignee. If the assignee is not a United States person
under Section 6701(a)(30) of the Internal Revenue Code, it shall deliver to
the Credit Parties and the Administrative Agent certification as to
exemption from deduction or withholding of Taxes in accordance with Section
3.11.
(c) Maintenance of Register. The Administrative Agent shall maintain
at one of its offices in Charlotte, North Carolina a copy of each Lender
assignment agreement delivered to it in accordance with the terms of
subsection (b) above and a register for the recordation of the identity of
the principal amount, type and Interest Period of each Domestic Loan
outstanding hereunder, the names, addresses and the Commitments of the
Lenders pursuant to the terms hereof from time to time (the "Register").
The Administrative Agent will make reasonable efforts to maintain the
accuracy of the Register and to promptly update the Register from time to
time, as necessary. The entries in the Register shall be conclusive in the
absence of manifest error and the Borrower, the Agents and the Lenders may
treat each Person whose name is recorded in the Register pursuant to the
terms hereof as a Lender hereunder for all purposes of this Credit
Agreement. The Register shall be available for inspection by the Borrower
and each Lender, at any reasonable time and from time to time upon
reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed by the
parties thereto, together with any Note subject to such assignment and
payment of the processing fee, the Administrative Agent shall, if such
Assignment and Acceptance has been completed and is in substantially the
form of Schedule 11.3(b) hereto, (i) accept such Assignment and Acceptance,
(ii) record the information contained therein in the Register and (iii)
give prompt notice thereof to the parties thereto.
(e) Each Lender may sell participations to one or more Persons in all
or a portion of its rights, obligations or rights and obligations under
this Credit Agreement (including all or a portion of its Commitment or its
Loans); provided, however, that (i) such Lender's obligations under this
Credit Agreement shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, (iii) the participant shall be entitled to the benefit of the
yield protection provisions contained in Sections 3.7 through 3.12,
inclusive (but only to the extent of the rights of such Lender therein),
and the right of set-off contained in Section 11.2 (but only to the extent
of the rights of such Lender therein), and (iv) the Credit Parties shall
continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Credit Agreement, and such
Lender shall retain the sole right to enforce the obligations of the Credit
Parties relating to the Credit Party Obligations owing to such Lender and
to approve any amendment, modification, or waiver of any provision of this
Credit Agreement (other than amendments, modifications,
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or waivers decreasing the amount of principal of or the rate at which
interest is payable on such Loans or Notes, extending any scheduled
principal payment date or date fixed for the payment of interest on such
Loans or Notes, or extending its Commitment).
(f) Notwithstanding any other provision set forth in this Credit
Agreement, any Lender may at any time assign and pledge all or any portion
of its Loans and its Notes to any Federal Reserve Bank as collateral
security pursuant to Regulation A and any Operating Circular issued by such
Federal Reserve Bank. No such assignment shall release the assigning Lender
from its obligations hereunder.
(g) Any Lender may furnish any information concerning the members of
the Consolidated Group in the possession of such Lender from time to time
to assignees and participants (including prospective assignees and
participants), subject, however, to the provisions of Section 11.14 hereof.
11.4 No Waiver; Remedies Cumulative.
No failure or delay on the part of either Agent or any Lender in exercising
any right, power or privilege hereunder or under any other Credit Document and
no course of dealing between either Agent or any Lender and any of the Credit
Parties shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or under any other Credit
Document preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder or thereunder. The rights and remedies
provided herein are cumulative and not exclusive of any rights or remedies which
either Agent or any Lender would otherwise have. No notice to or demand on any
Credit Party in any case shall entitle the Credit Parties to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the Agents or the Lenders to any other or further action
in any circumstances without notice or demand.
11.5 Expenses; Indemnification.
(a) The Credit Parties jointly and severally agree to pay on demand all
reasonable costs and expenses of the Agents in connection with the syndication,
preparation, execution, delivery, modification, and amendment of this Credit
Agreement, the other Credit Documents, and the other documents to be delivered
hereunder, including, without limitation, the reasonable fees and expenses of
counsel for the Agents. The Credit Parties also jointly and severally agree to
pay on demand all reasonable costs and expenses of the Agents and the Lenders,
if any (including, without limitation, reasonable attorneys' fees and expenses),
in connection with the enforcement (whether through negotiations, legal
proceedings, or otherwise) of the Credit Documents and the other documents to be
delivered thereunder. The Credit Parties further jointly and severally agree to
pay all reasonable costs and expenses of the Administrative Agent, and its
representatives, for up to two (2) audits of the Collateral in any fiscal year,
provided that during the continuance of an Event of Default, the reasonable
costs and expenses of the Administrative Agent, and its representatives, for
additional audits of the Collateral shall be paid for by the Credit Parties.
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(b) The Credit Parties jointly and severally agree to indemnify and hold
harmless each Agent and each Lender and each of their Affiliates and their
respective officers, directors, employees, agents, and advisors (each, an
"Indemnified Party") from and against any and all claims, damages, losses,
liabilities, costs, and expenses (including, without limitation, reasonable
attorneys' fees) that may be incurred by or asserted or awarded against any
Indemnified Party, in each case arising out of or in connection with or by
reason of (including, without limitation, in connection with any investigation,
litigation, or proceeding or preparation of defense in connection therewith) the
Credit Documents, any of the transactions contemplated herein or the actual or
proposed use of the proceeds of the Loans, except to the extent such claim,
damage, loss, liability, cost, or expense is found in a final, non-appealable
judgment by a court of competent jurisdiction to have resulted from such
Indemnified Party's gross negligence or willful misconduct. In the case of an
investigation, litigation or other proceeding to which the indemnity in this
Section 11.5 applies, such indemnity shall be effective whether or not such
investigation, litigation or proceeding is brought by any of the Credit Parties,
their respective directors, shareholders or creditors or an Indemnified Party or
any other Person or any Indemnified Party is otherwise a party thereto and
whether or not the transactions contemplated hereby are consummated. The Credit
Parties agree not to assert any claim against either Agent, any Lender, any of
their Affiliates, or any of their respective directors, officers, employees,
attorneys, agents, and advisors, on any theory of liability, for special,
indirect, consequential, or punitive damages arising out of or otherwise
relating to the Credit Documents, any of the transactions contemplated herein or
the actual or proposed use of the proceeds of the Loans.
(c) Without prejudice to the survival of any other agreement of the Credit
Parties hereunder, the agreements and obligations of the Credit Parties
contained in this Section 11.5 shall survive the repayment of the Loans, LOC
Obligations and other obligations under the Credit Documents and the termination
of the Commitments hereunder.
11.6 Amendments, Waivers and Consents.
Neither this Credit Agreement nor any other Credit Document nor any of the
terms hereof or thereof may be amended, changed, waived, discharged or
terminated unless such amendment, change, waiver, discharge or termination is in
writing entered into by, or approved in writing by, the Required Lenders and the
Borrower, provided, however, that:
(a) without the consent of each Lender affected thereby, neither this
Credit Agreement nor any other Credit Document may be amended to
(i) extend the final maturity of any Loan or of any reimbursement
obligation, or any portion thereof, arising from drawings under
Letters of Credit,
(ii) reduce the rate or extend the time of payment of interest
(other than as a result of waiving the applicability of any
post-default increase in interest rates) thereon or Fees hereunder,
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(iii) reduce or waive the principal amount of any Loan or of any
reimbursement obligation, or any portion thereof, arising from
drawings under Letters of Credit,
(iv) increase the Commitment of a Lender over the amount thereof
in effect (it being understood and agreed that a waiver of any Default
or Event of Default or mandatory reduction in the Commitments shall
not constitute a change in the terms of any Commitment of any Lender),
(v) except as the result of or in connection with a dissolution,
merger or disposition of a member of the North American Group
permitted under Section 8.3, release the Borrower or substantially all
of the Guarantors from its or their obligations under the Credit
Documents,
(vi) except as the result of or in connection with an Asset
Disposition permitted under Section 8.3(b), release all or
substantially all of the Collateral,
(vii) amend, modify or waive any provision of this Section 11.6
or Section 3.6, 3.7, 3.8, 3.9, 3.10, 3.11, 3.12, 3.13, 3.14, 3.15,
9.1(a), 11.2, 11.3, 11.5 or 11.9,
(viii) reduce any percentage specified in, or otherwise modify,
the definition of Required Lenders, or
(ix) consent to the assignment or transfer by the Borrower or all
or substantially all of the other Credit Parties of any of its or
their rights and obligations under (or in respect of) the Credit
Documents except as permitted thereby;
(b) without the consent of the Agents, no provision of Section 10 may
be amended; and
(c) without the consent of the Issuing Lender, no provision of Section
2.2 may be amended.
Notwithstanding the fact that the consent of all the Lenders is required in
certain circumstances as set forth above, (x) each Lender is entitled to
vote as such Lender sees fit on any bankruptcy reorganization plan that
affects the Loans, and each Lender acknowledges that the provisions of
Section 1126(c) of the Bankruptcy Code supersedes the unanimous consent
provisions set forth herein and (y) the Required Lenders may consent to
allow a Credit Party to use cash collateral in the context of a bankruptcy
or insolvency proceeding.
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11.7 Counterparts.
This Credit Agreement may be executed in any number of counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall constitute one and the same instrument. It shall not be necessary in
making proof of this Credit Agreement to produce or account for more than one
such counterpart for each of the parties hereto. Delivery by facsimile by any of
the parties hereto of an executed counterpart of this Credit Agreement shall be
as effective as an original executed counterpart hereof and shall be deemed a
representation that an original executed counterpart hereof will be delivered.
11.8 Headings.
The headings of the sections and subsections hereof are provided for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Credit Agreement.
11.9 Survival.
All indemnities set forth herein, including, without limitation, in Section
2.6(h), 3.11, 3.12, 10.5 or 11.5 shall survive the execution and delivery of
this Credit Agreement, the making of the Loans, the issuance of the Letters of
Credit, the repayment of the Loans, LOC Obligations and other obligations under
the Credit Documents and the termination of the Commitments hereunder, and all
representations and warranties made by the Credit Parties herein shall survive
delivery of the Notes and the making of the Loans hereunder.
11.10 Governing Law; Submission to Jurisdiction; Venue.
(a) THIS CREDIT AGREEMENT AND, UNLESS OTHERWISE EXPRESSLY PROVIDED THEREIN,
THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA. Any legal action or
proceeding with respect to this Credit Agreement or any other Credit Document
may be brought in the State or Federal courts located in Charlotte, North
Carolina, and, by execution and delivery of this Credit Agreement, each of the
Credit Parties hereby irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the nonexclusive jurisdiction of such
courts. Each of the Credit Parties further irrevocably consents to the service
of process out of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to it at the address set out for notices pursuant to Section
11.1, such service to become effective three (3) Business Days after such
mailing. Nothing herein shall affect the right of the Administrative Agent or
any Lender to serve process in any other manner permitted by law or to commence
legal proceedings or to otherwise proceed against any Credit Party in any other
jurisdiction.
(b) Each of the Credit Parties hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising
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out of or in connection with this Credit Agreement or any other Credit Document
brought in the courts referred to in subsection (a) above and hereby further
irrevocably waives and agrees not to plead or claim in any such court that any
such action or proceeding brought in any such court has been brought in an
inconvenient forum.
(c) TO THE EXTENT PERMITTED BY LAW, EACH OF THE ADMINISTRATIVE AGENT, THE
LENDERS AND EACH OF THE CREDIT PARTIES HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS CREDIT AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
11.11 Severability.
If any provision of any of the Credit Documents is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
11.12 Entirety.
This Credit Agreement together with the other Credit Documents represent
the entire agreement of the parties hereto and thereto, and supersede all prior
agreements and understandings, oral or written, if any, including any commitment
letters or correspondence relating to the Credit Documents or the transactions
contemplated herein and therein.
11.13 Binding Effect; Termination.
(a) This Credit Agreement shall become effective at such time on or after
the Closing Date when it shall have been executed by each Credit Party and the
Administrative Agent, and the Administrative Agent and each Lender shall have
received copies hereof (telefaxed or otherwise) which, when taken together, bear
the signatures of each Lender, and thereafter this Credit Agreement shall be
binding upon and inure to the benefit of each Credit Party, the Administrative
Agent and each Lender and their respective successors and assigns.
(b) The term of this Credit Agreement shall be until no Loans, LOC
Obligations or any other amounts payable hereunder or under any of the other
Credit Documents shall remain outstanding, no Letters of Credit shall be
outstanding, all of the Credit Party Obligations have been irrevocably satisfied
in full and all of the Commitments hereunder shall have expired or been
terminated.
11.14 Confidentiality.
Each Agent and each Lender (each, a "Lending Party") agrees to keep
confidential any information furnished or made available to it by the Credit
Parties pursuant to this Credit
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Agreement that is marked confidential; provided that nothing herein shall
prevent any Lending Party from disclosing such information (a) to any other
Lending Party or any Affiliate of any Lending Party, or any officer, director,
employee, agent, or advisor of any Lending Party or Affiliate of any Lending
Party, (b) to any other Person if reasonably incidental to the administration of
the credit facility provided herein, (c) as required by any law, rule, or
regulation, (d) upon the order of any court or administrative agency, (e) upon
the request or demand of any regulatory agency or authority, (f) that is or
becomes available to the public or that is or becomes available to any Lending
Party other than as a result of a disclosure by any Lending Party prohibited by
this Credit Agreement, (g) in connection with any litigation to which such
Lending Party or any of its Affiliates may be a party, (h) to the extent
necessary in connection with the exercise of any remedy under this Credit
Agreement or any other Credit Document, (i) to the National Association of
Insurance Commissioners or any similar organization or any nationally recognized
rating agency that requires access to information about a Lender's investment
portfolio in connection with ratings issued with respect to such Lender, (j) to
any direct or indirect contractual counterparty in swap agreements or such
contractual counterparty's professional advisor (so long as such contractual
counterparty or professional advisor to such contractual counterparty (i) has
been approved in writing by the Borrower and (ii) agrees in a writing
enforceable by the Borrower to be bound by the provisions of this Section 11.14)
and (k) subject to provisions substantially similar to those contained in this
Section 11.14, to any actual or proposed participant or assignee.
11.15 Source of Funds.
Each of the Lenders hereby represents and warrants to the Borrower that at
least one of the following statements is an accurate representation as to the
source of funds to be used by such Lender in connection with the financing
hereunder:
(a) no part of such funds constitutes assets allocated to any separate
account maintained by such Lender in which any employee benefit plan (or
its related trust) has any interest;
(b) to the extent that any part of such funds constitutes assets
allocated to any separate account maintained by such Lender, such Lender
has disclosed to the Borrower the name of each employee benefit plan whose
assets in such account exceed 10% of the total assets of such account as of
the date of such purchase (and, for purposes of this subsection (b), all
employee benefit plans maintained by the same employer or employee
organization are deemed to be a single plan);
(c) to the extent that any part of such funds constitutes assets of an
insurance company's general account, such insurance company has complied
with all of the requirements of the regulations issued under Section
401(c)(1)(A) of ERISA; or
(d) such funds constitute assets of one or more specific benefit plans
which such Lender has identified in writing to the Borrower.
97
As used in this Section 11.15, the terms "employee benefit plan" and "separate
account" shall have the respective meanings assigned to such terms in Section 3
of ERISA.
11.16 Conflict.
To the extent that there is a conflict or inconsistency between any
provision hereof, on the one hand, and any provision of any Credit Document, on
the other hand, this Credit Agreement shall control.
[Signature Pages to Follow]
98
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Credit Agreement to be duly executed and delivered as of the date first
above written.
BORROWER: TAKE-TWO INTERACTIVE SOFTWARE, INC.,
a Delaware Corporation
By:
-------------------------------------
Name: Larry Muller
Title: Chief Financial Officer
GUARANTORS: FALCON VENTURES CORPORATION,
a California corporation
GEARHEAD ENTERTAINMENT, INC.,
a Pennsylvania corporation
MISSION STUDIOS, INC.,
an Illinois corporation
INVENTORY MANAGEMENT SYSTEMS, INC.,
a Delaware corporation
JACK OF ALL GAMES, INC.,
a New York corporation
TALONSOFT, INC.,
a Delaware Corporation
By:
-------------------------------------
Name: Larry Muller
Title: Chief Financial Officer of
each of the foregoing Guarantors
[Signature Pages Continue]
ADMINISTRATIVE AGENT: BANK OF AMERICA, N.A.,
in its capacity as Administrative Agent
and individually in its capacity as a Lender
By:
----------------------------------
Name:
Title:
COMERICA BANK
By:
----------------------------------
Name:
Title:
THE PROVIDENT BANK
By:
----------------------------------
Name:
Title:
SUMMIT BANK, N.A.
By:
----------------------------------
Name:
Title: