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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported):
August 13, 1998 (August 3, 1998)
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THE MARQUEE GROUP, INC.
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(Exact name of registrant as specified in charter)
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<CAPTION>
<S> <C> <C>
Delaware 0-21711 13-3878295
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(State or Other Jurisdiction (Commission File No.) (IRS Employer Identification No.)
of Incorporation)
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888 Seventh Avenue 37th Floor, New York, New York 10019
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 977 - 0300
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N/A
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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITIONS OR DISPOSITIONS OF ASSETS
On August 3, 1998, The Marquee Group, Inc. (the "Company") consummated
its acquisition of substantially all of the assets of Alphabet City Industries,
Inc. ("Industries") and all of the outstanding stock of Alphabet City Sports
Records, Inc. ("Sports"), both of which are sports and music marketing companies
which develop strategic alliances among sports leagues, music companies and
corporate sponsors (collectively, the "Alphabet City Acquisition"). Industries
produces national television spots, in-arena video programming and radio
advertising campaigns for clients, such as Foot Locker and Coca-Cola. Sports
develops music compilation compact discs for sports teams, such as the Chicago
Bulls, the Green Bay Packers and the Denver Broncos, which it distributes
through retail chain stores. The aggregate purchase price for the Alphabet City
Acquisition was approximately $3.3 million in cash, plus assumed liabilities
subject to certain adjustments, and the issuance of 200,000 shares of the
Company's common stock. The funds used to consummate the Alphabet City
Acquisition were obtained from the Company's working capital and borrowings
under the Company's Credit Agreement (as defined below). In addition, the
Company may be obligated to make additional payments (up to $9 million) based
upon the financial performance of the acquired businesses.
The foregoing description does not purport to be a complete description
of the terms of the Alphabet City Acquisition agreement and is qualified by
reference to such agreement, a copy of which is attached hereto as Exhibit 2.1.
ITEM 5. OTHER EVENTS.
On July 31, 1998, the Company, its subsidiaries and the lender that is
a party thereto executed a Credit Agreement (the "Credit Agreement") that
established a $35.0 revolving credit facility. Borrowings under the Credit
Agreement are guaranteed by the Company and certain subsidiaries and secured by
liens on substantially all of the Company's assets (including the stock of
certain subsidiaries).
The foregoing description of the terms of the Credit Agreement does not
purport to be complete and is qualified by reference to the Credit Agreement, a
copy of which is attached hereto as Exhibit 10.1.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired.
The required financial statements will be filed no later than 60 days
after the date this Form 8-K was required to be filed.
(b) Pro Forma Financial Information.
The required pro forma financial information will be filed no later
than 60 days after the date this Form 8- K was requried to be filed.
(c) Exhibits.
2.1 Stock and Asset Purchase Agreement, dated as of August 3, 1998, by and
among Alphabet City Sports Records, Inc., Alphabet City Indutries,
Inc., Kenneth Dichter, Jesse Itzler, The Marquee Group, Inc., and
Marquee Records, Inc.
10.1 Credit Agreement, dated as of July 31, 1998, among The Marquee Group,
Inc., the Subsidiaries of The Marquee Group, Inc. and BankBoston, N.A.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
THE MARQUEE GROUP, INC.
By: /s/ Jan E. Chason
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Name: Jan E. Chason
Title: Chief Financial Officer and Treasurer
Date: August 13, 1998
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STOCK AND ASSET PURCHASE AGREEMENT
This STOCK AND ASSET PURCHASE AGREEMENT (the "Agreement") is made and
entered into as of the 3rd day of August, 1998 by and among ALPHABET CITY
SPORTS RECORDS, INC., a New York corporation ("Sports"); ALPHABET CITY
INDUSTRIES, INC., a New York corporation ("Industries" and together with
Sports, the "Companies"); Kenneth Dichter, an individual residing at 300 East
75th Street, New York; Jesse Itzler, an individual residing at 235 West 75th
Street, New York (each a "Seller" and together with Industries, the "Sellers");
THE MARQUEE GROUP, INC. ("Marquee"), a Delaware corporation and MARQUEE
RECORDS, INC., a Delaware corporation having its principal place of business in
New York, New York (the "Buyer"):
WHEREAS, Messrs. Dichter and Itzler own beneficially and of record all of
the issued and outstanding shares of stock (the "Shares") of Sports; and
WHEREAS, the Companies conduct all of the activities of Dichter and
Itzler in the recorded music and marketing industries other than Itzler's
activities as an independent producer of third party artists and as a music
writer for projects in the traditional recorded music industry for general
release (the "Business"); and
WHEREAS, Dichter and Itzler do not receive any income related to the
Business from any source other than the Companies (except as set forth herein);
and
WHEREAS, the Sellers desire to sell to the Buyer and the Buyer desires to
purchase from the Sellers all of the issued and outstanding Shares of Sports
and substantially all of the assets of Industries.
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NOW THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements contained herein, and upon the terms and
subject to the conditions hereinafter set forth, the parties hereby agree as
follows:
ARTICLE 1
PURCHASE AND SALE
1.1 Purchase and Sale of Shares of the Companies. On the Closing Date (as
defined in SECTION 3.1), Dichter and Itzler shall sell to the Buyer, and the
Buyer shall purchase from Dichter and Itzler, the Shares for the Purchase Price
(as defined in SECTION 2.1) specified herein. At the Closing (as defined in
SECTION 3.1), Dichter and Itzler shall deliver to the Buyer certificates
representing all of the Shares which are required to be delivered or are
otherwise deliverable by Dichter and Itzler pursuant hereto duly endorsed in
blank for transfer or accompanied by duly executed stock powers assigning such
Shares in blank, and the Buyer shall deliver to Dichter and Itzler the Stock
Purchase Price in accordance with ARTICLE 2 below. The shares shall be
delivered free and clear of all liens and encumbrances other than those set
forth on the Financial Statements (as defined below). In the event that it is
determined, at any time prior to or after the Closing, that any assets related
to the Business or any contractual relationships related to the Business are
owned or are in the name of any person or corporation other than the Companies,
this Agreement shall, at the sole and exclusive option of the Buyer, be deemed
an agreement to acquire such other corporations, assets or contracts without
any additional consideration therefore.
1.2 Transfer of Assets. Subject to the terms and conditions set forth in
this Agreement, at the Closing (as defined herein) Industries shall sell,
convey, assign, transfer and deliver to the Buyer, and the Buyer shall
purchase, acquire and take delivery of, all of the assets of Industries (the
"Assets"), other than the Excluded Assets (as defined below).
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The Assets shall be transferred to Buyer free and clear of all debts,
security interests, mortgages, trusts, claims, pledges, conditional sales
agreements or other liens, liabilities and encumbrances whatsoever, other than
informational filings made by equipment lessors under the Uniform Commercial
Code.
1.3 Excluded Assets. Notwithstanding anything to the contrary contained
herein, it is expressly understood and agreed that the Assets shall not include
the following assets along with all rights, title and interest therein which
shall be referred to as the "Excluded Assets":
1.3.1 all tangible and intangible personal property disposed of or
consumed in the ordinary course of business between the date of this
Agreement and the Closing Date, or as permitted under the terms hereof;
1.3.2 all Contracts that have terminated or expired prior to the Closing
Date in the ordinary course of business or as permitted hereunder;
1.3.3 Industries' corporate seal, minute books, charter documents,
corporate stock record books and such other books and records as pertain
to the organization, existence or share capitalization of Industries and
such records as are necessary to enable Industries to file its tax
returns and reports as well as any other records or materials relating to
Industries generally and not involving specific aspects of the Business;
1.3.4 all pension, profit sharing or cash or deferred (Section 401(k))
plans and trusts and the assets thereof and any other employee benefit
plan or arrangement and the assets thereof, if any, maintained by
Industries; and
1.3.5 any books and records relating to any of the foregoing, including,
but not limited to, tax returns.
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1.4 Assumption of Liabilities. Subject to the provisions of this SECTION 1.4,
on the Closing Date, Buyer shall only assume and undertake to pay, satisfy or
discharge the liabilities, obligations and commitments of Industries arising
under (i) the Real Estate Contracts and the Contracts described more fully in
SECTIONS 7.9 AND 7.10; (ii) all other contracts of Industries arising in the
ordinary course of business and consistent with past practices between the date
hereof and the Closing Date; (iii) any other contracts entered into between the
date hereof and the Closing Date which Buyer expressly agrees in writing to
assume; and (iv) all liabilities of Industries as set forth on the Financial
Statements as well as those incurred in the ordinary course of business
consistent with the terms hereof and set forth on SCHEDULE 7.16 and for taxes
as set forth herein. All of the foregoing liabilities and obligations shall be
referred to herein collectively as the "Assumed Liabilities". Except as set
forth in this SECTION 1.4, Buyer expressly does not, and shall not, assume or
be deemed to assume, under this Agreement or otherwise by reason of the
transactions contemplated hereby, any liabilities, obligations or commitments
of Industries of any nature whatsoever. Without limiting the generality of the
foregoing, except as set forth in this SECTION 1.4 Buyer shall not assume or be
liable for any liability or obligation of Industries arising out of any
contract of employment, collective bargaining agreement, insurance, pension,
retirement, deferred compensation, incentive bonus or profit sharing or
employee benefit plan or trust, or any judgment, litigation, proceeding or
claim by any person or entity relating to Industries prior to the Closing Date,
whether or not such judgment, litigation, proceeding or claim is pending,
threatened or asserted before, on or after the Closing Date.
ARTICLE 2
CONSIDERATION
2.1 Purchase Price. The aggregate consideration (the "Purchase Price")
for the Shares shall be 200,000 shares of Common Stock of Marquee (the "Stock
Purchase Price") and for the transfer of the Assets shall be Three Million
Dollars ($3,000,000) plus the assumption of the
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Assumed Liabilities, subject to the adjustments set forth below. The parties
hereto agree to file their respective tax returns consistent with this Section
with such amendments thereto as either party shall be directed by the Internal
Revenue Service to submit. The Buyer and Industries hereby agree to execute at
the Closing Federal Form 8594 in conformity with Section 1060 of the United
States Internal Revenue Code.
2.2 Payment. At the Closing, the Buyer shall (i) cause to be delivered to
each of Dichter and Itzler for the Shares, 100,000 shares of common stock of
Marquee (the "Common Stock"), and (ii) pay to Industries, by wire transfer in
immediately available funds, the sum of Three Million Dollars ($3,000,000) (the
"Cash Purchase Price"). Notwithstanding the foregoing, Industries may demand,
upon thirty (30) days written notice prior to the anticipated Closing Date,
that Buyer deliver 200,000 shares of Common Stock, valued at the twenty (20)
trading day average closing price of the Common Stock as reported in the Wall
Street Journal, in lieu of that value of the Cash Purchase Price. The Common
Stock shall, when issued, be fully paid and non-assessable and free of
preemptive or similar rights.
2.3 Additional Industries Consideration. In addition to the amounts set
forth above, the Buyer or Marquee shall, upon the occurrence of the following
conditions, pay to Industries the following amounts as deferred consideration
for the Assets (the "Additional Consideration"):
2.3.1 If in any one (1) full fiscal year during the first three (3) full
fiscal years following the Closing (the "Measuring Period"), the Buyer's
EBIT (as defined below), determined by the Buyer's Chief Financial
Officer in accordance with Generally Accepted Accounting Principles
("GAAP"), from the operation of the Companies by the Buyer (the
"Measuring Amount") is at least $ 1.5 million, then the Buyer or Marquee
shall pay to Industries an additional $2 million within ninety (90) days
following the end of the fiscal year in which such test is met.
2.3.2 If in any one (1) full fiscal year during the Measuring Period, the
Measuring Amount is at least $2.25 million, then the Buyer or Marquee
shall pay to Industries an additional $4 million, less any amounts paid
pursuant to paragraph (2.3.1) above, within ninety (90) days following
the end of the fiscal year end in which such test is met.
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2.3.3 If during the first five (5) full fiscal years following the
Closing the cumulative EBIT from the operations of the Companies by the
Buyer is at least $ 10 million, then in addition to the amounts set forth
above, the Buyer or Marquee shall pay to Industries an additional $5
million within ninety (90) days following the end of the fiscal year in
which such test is met.
2.3.4 If in any one (1) full fiscal year during the Measuring Period, the
Measuring Amount is at least $3 million; or, if during the first five (5)
full fiscal years following the Closing the cumulative EBIT from the
operations of the Companies by the Buyer is at least $ 12 million and
EBIT is at least $3 million during either of the fourth or fifth full
years following the Closing, then the Buyer or Marquee shall pay to
Industries an additional $ 16 million, less any amounts paid pursuant to
paragraphs (2.3.1), (2.3.2) and (2.3.3) above, within ninety (90) days
following the end of the fiscal year in which such test is met.
2.3.5 If the cumulative EBIT from the operations of the Companies by the
Buyer result in EBIT over $25 million during the first five (5) full
fiscal years following the Closing, then in addition to the amounts set
forth above, the Buyer or Marquee shall pay to Industries 2x the amount
of such EBIT which is greater than $20 million.
2.3.6 For the purposes hereof, EBIT shall be defined as Buyer's annual
revenues (exclusive of income on extraordinary items and income from the
disposition of assets) before interest (income and/or expense) and taxes
on income, and less actual overhead and operating expenses of the Buyer,
prepared in accordance with generally accepted accounting principles
consistently applied. In addition, Buyer's revenues for purposes of
calculating EBIT will be reduced by a charge for an allocation from
Marquee for finance and general and administrative expenses on an annual
basis. Such allocation will be based upon the ratio of Buyer's revenues
to Marquee's consolidated revenues, but in no event will exceed $100,000
for 1999 and $125,000 for 2000 and beyond. Buyer will not be allocated
any cost of Marquee executive officer compensation, or costs related to
litigation not pertaining to Buyer.
2.3.7 Within ninety (90) days of the end of each of the first five (5)
full fiscal years after the Closing, the Buyer shall deliver to
Industries a notice specifying the Companies' EBIT for such fiscal year,
showing in reasonable detail the computation thereof.
2.3.8 Buyer's computation of any payment under this Section 2.3 shall be
conclusive and binding upon the parties hereto unless, within six (6)
months following Industries' receipt of the aforedescribed schedule and
financial information, Industries notifies Buyer in writing (the
"Notice") that it disagrees with Buyer's computation of the Companies'
EBIT. The Notice by Industries shall
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include a schedule setting forth Industries' computation of the
Companies' EBIT, together with a copy of any financial information, other
than that previously supplied by Buyer to Industries, used in making
Industries' computation. Buyer agrees that Industries or its designees
shall have a right to inspect and make extracts of Buyer's books and
records so that Industries can make a determination hereunder.
2.3.9 Industries' computation of the Company's EBIT shall be conclusive
and binding upon the parties hereto unless, within fifteen (15) business
days following Buyer's receipt of the Notice, Buyer notifies Industries
in writing that it disagrees with Industries' computation of the
Companies' EBIT. If Buyer disagrees with Industries' computation of the
Companies' EBIT, Buyer and Industries shall request a national firm of
independent certified public accountants, mutually agreeable to Buyer and
Industries, compute the amount of Companies' EBIT as promptly as
possible, which computation shall be conclusive and binding upon Buyer
and Industries. In the event that Buyer and Industries cannot agree on
such a national firm of independent certified public accountants within
thirty (30) days, then the name of a "Big 6" national accounting firm,
exclusive of any such firm which is rendering or has within the past
three years rendered services to Buyer or the Industries or their
affiliates, shall be selected by lottery until one such firm is willing
to compute the disputed payment for purposes of this Agreement. The
expenses of any computation by any such national accounting firm selected
by the Buyer and Industries to resolve computational disputes hereunder
shall be borne equally by Buyer and Industries. Notwithstanding the
foregoing, the expenses shall be borne by Buyer if its computation of
EBIT is off by greater than 5% and shall be borne by Industries if its
computation of EBIT is off by greater than 5%.
2.3.10 In the event the amount of the Additional Consideration to be paid
by Buyer or Marquee to Industries pursuant to the terms hereof is
recomputed in accordance with the terms hereof, the adjustment to the
amount of the Additional Consideration shall be paid by Buyer to
Industries within three (3) business days after the date of final
recomputation of such payment. If such final determination of the
Additional Consideration shall exceed Buyer's original computation of
such Additional Consideration by more than ten percent (10%), then the
Additional Consideration shall also include interest on such difference
from the date upon which the original computation was delivered by Buyer
to Industries (the "Delivery Date") to the date of payment of the
Additional Consideration, at a per annum rate equal of 8%.
ARTICLE 3
CLOSING
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3.1 Closing. Except as otherwise mutually agreed upon by the Sellers and
the Buyer, the consummation of the transactions contemplated herein (the
"Closing") shall occur simultaneously herewith.
ARTICLE 4
STOCK LEGEND
4.1 Stock Legend. In addition to any legend imposed by applicable state
securities laws or the certificate of incorporation of Marquee, the stock
issued by Marquee pursuant to this Agreement, shall bear a restrictive legend
stating substantially as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE
OFFERED, SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933 OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.
4.2 Additional Stock Legend. In addition, 50% of the stock issued by
Marquee pursuant to the terms hereof, shall bear a restrictive legend stating
substantially as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN OFFSET PROVISIONS SET FORTH IN THAT CERTAIN STOCK AND ASSET
PURCHASE AGREEMENT BY AND AMONG ALPHABET CITY SPORTS RECORDS, INC.,
ALPHABET CITY INDUSTRIES, INC., KENNETH DICHTER, JESSE ITZLER,
MARQUEE RECORDS, INC., AND THE MARQUEE GROUP, INC. (THE
"AGREEMENT"). AS A RESULT OF THE OFFSET PROVISIONS IN THE
AGREEMENT, SHARES NOT VOLUNTARILY SURRENDERED TO THE MARQUEE GROUP,
INC. MAY BE CANCELED ON THE TRANSFER BOOKS OF
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THE MARQUEE GROUP, INC. WITHOUT NOTICE TO THE HOLDER HEREOF.
TRANSFEREES OF THESE SHARES TAKE THESE SHARE SUBJECT TO SUCH
CANCELLATION RIGHT.
After the first anniversary of the Closing Date and at the request
of any holder of any shares of Common Stock delivered pursuant to
the terms hereof, and subject to any claims which the Buyer or
Marquee may have against the Sellers pursuant to the terms hereof,
Marquee shall remove the legend set forth in this Section 4.2.
notwithstanding the foregoing, such shares of Common Stock shall
not be deemed subject to any offset claim upon which an action has
not been commenced within two (2) years of the receipt of first
notice thereof and such stock shall be released as aforesaid.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE BUYER AND MARQUEE
The Buyer and Marquee hereby make the following representations and
warranties to the Sellers, each of which is true and correct on the date
hereof, shall remain true and correct to and including the Closing Date, shall
be unaffected by any notice to the Sellers and shall survive the Closing to the
extent set forth herein.
5.1 Organization and Standing. Each of the Buyer and Marquee is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, and will at Closing be duly qualified as a
foreign corporation to do business in the State of New York and each other
jurisdiction where the nature of their business requires such qualification and
have the corporate power and authority to own the Shares and to carry on the
business of the Companies as they are now being conducted and as proposed to be
conducted by the Companies between the date hereof and the Closing Date.
5.2 Authorization and Binding Obligation. Each of the Buyer and Marquee
has all necessary power and authority to enter into and perform this Agreement
and the transactions contemplated hereby, and to own the Shares and to carry on
the business of the Companies as they
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are now being conducted. Marquee's and the Buyer's execution, delivery and
performance of this Agreement and the transactions contemplated hereby have
been duly and validly authorized by all necessary action on their part. This
Agreement has been duly executed and delivered by Marquee and the Buyer, and
this Agreement constitutes, and the other agreements to be executed in
connection herewith will constitute, the valid and binding obligation of the
Buyer and Marquee, enforceable in accordance with their terms, except as
limited by laws affecting the enforcement of creditors' rights or equitable
principles generally.
5.3 Absence of Conflicting Agreement or Required Consents. The execution,
delivery and performance of this Agreement by the Buyer and Marquee: (a) does
not require the consent of any third party; (b) will not violate any applicable
law, judgment, order, injunction, decree, rule, regulation or ruling of any
governmental authority to which the Buyer and/or Marquee are a party or by
which either are bound; (c) will not, either alone or with the giving of notice
or the passage of time, or both, conflict with, constitute grounds for
termination of or result in a breach of the terms, conditions or provisions of,
or constitute a default under, any contract, agreement, instrument, license or
permit which the Buyer and/or Marquee are now subject; and (d) will not result
in the creation of any lien, charge or Encumbrance on any of the Common Stock.
5.4 Litigation and Compliance with Law. Neither the Buyer or Marquee is
subject to any judgment, award, order, writ, injunction, arbitration decision
or decree which materially adversely affects the conduct of any of their
businesses, and there is no litigation, arbitration, administration or other
proceeding or, to the best of the Buyer's and Marquee's knowledge,
investigation pending or any basis for any person to assert a claim or, to the
best of the Buyer's or Marquee's knowledge, threatened against the Buyer or
Marquee in any federal, state or local court, or before any administrative
agency or arbitrator, or before any other tribunal duly authorized to resolve
disputes, which would reasonably be expected to have a material adverse effect
upon the business, property, assets or condition (financial or otherwise) of
the Buyer or Marquee or which seeks to enjoin or prohibit, or otherwise
questions the validity of, any action taken or to be taken pursuant to or in
connection with this Agreement. Neither Marquee or the Buyer has received any
notice asserting
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any non-compliance by either of them in connection with their business or
operation with any applicable statute, rule or regulation, whether federal,
state or local which could be expected to have a material adverse effect on
either of them. To the best of their knowledge, the Buyer and Marquee are not
in default with respect to any judgment, order, injunction or decree of any
court, administrative agency or other governmental authority or any other
tribunal duly authorized to resolve disputes in any respect material to the
transactions contemplated hereby. To the best of their knowledge, the Buyer and
Marquee are in compliance with all material laws, regulations and governmental
orders applicable to the conduct of their business and operations and the
present use of the assets does not violate any of such laws, regulations or
orders.
5.5 Investment Intent. The Buyer is acquiring the Shares solely for its
own account and not with a view to sale or distribution thereof in violation of
any securities laws. The Buyer acknowledges that the Shares are restricted
securities under the Securities Act of 1933, as amended, and cannot be sold,
transferred or conveyed without proper registration or an exemption from
registration under the Securities Exchange Act of 1934, as amended and they
will contain the same or a similar legend as is set forth in the first section
of Section 4.1.
5.6 Accuracy of Information. No written statement made by the Buyer or
Marquee herein contains any untrue statement of a material fact or omits a
material fact necessary to make the statements contained therein or herein not
misleading and there is no fact known to the Buyer or Marquee which relates to
this Agreement which the Buyer or Marquee have not disclosed to the Sellers in
writing which could materially adversely affect the Buyer or Marquee. To the
extent that a representation or other information is made to the Buyer's or
Marquee's knowledge or is otherwise qualified by its terms, this representation
shall not be interpreted to expand such limitations or qualifications.
5.7 Stock Ownership. Buyer is a wholly-owned subsidiary of Marquee and
Marquee owns one hundred percent (100%) of the authorized and issued capital
stock of Buyer.
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5.8 SEC Filings. Marquee has made all filings (collectively, the "Public
Reports") with the Securities and Exchange Commission ("SEC") that it has been
required to make under the Securities Act of 1933, as amended (the "1933 Act"),
and the Securities Exchange Act of 1934 (the "1934 Act"). Each of the Public
Reports has complied with the 1933 Act and the 1934 Act, as applicable, in all
material respects. All registration statements ("Registration Statements")
filed, and presently intended to be filed, by Marquee with the SEC, have
complied and will comply with the 1933 Act in all material respects. None of
the Public Reports or the Registration Statements, as the case may be, as of
their respective dates, contained or will contain any untrue statement of a
material fact, or omitted or will omit to state a material fact necessary in
order to make the statements made therein, in light of the circumstances under
which they were or are to be made, not misleading.
5.9 Tax Free Exchange. Buyer and Marquee acknowledge that in connection
with the stock for stock exchange transaction between the Buyer, Kenneth
Dichter and Jesse Itzler, Messrs. Itzler and Dichter are desirous that such
stock for stock exchange constitute a tax free reorganization under Section
368(a)(1)(B) of the Internal Revenue Code of 1986 as amended (the "Code") and
the regulations thereunder, so that no gain or loss will be recognized by them
pursuant to Section 354(a)(1) of the Code. In furtherance thereof, Marquee
represents that it is and will be at the time of Closing in control of the
Buyer within the meaning of Section 368(c) of the Code. That after the Closing,
Marquee has no current plan or intention to issue additional shares of stock of
the Buyer that would result in Marquee losing control of the Buyer within the
meaning of Section 368(c) of the Code. Marquee further represents that after
the Closing, it has no current plan or intention to liquidate or make any
extraordinary distribution in respect of the stock of the Buyer, to sell or
otherwise dispose of the stock of the Buyer or to cause the Buyer to sell or
otherwise dispose of the assets of Sports, except for dispositions made in the
ordinary course of business or transfers described in Section 368(a)(2)(C) of
the Code. Marquee further represents that it currently intends to cause the
Buyer to continue the historic business of Sports or use a significant portion
of the historic business assets of Sports in a business.
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ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF DICHTER AND ITZLER
Dichter and Itzler hereby make the following representations and
warranties to the Buyer, each of which is true and correct on the date hereof,
shall remain true and correct to and including the Closing Date, shall be
unaffected by any notice to the Buyer other than in the Disclosure Schedule
attached hereto and hereby made a part hereof and shall survive the Closing as
provided in ARTICLE 16 hereof.
6.1 No Other Interests. Other than as set forth on Schedule 6.1 of the
Disclosure Schedule, Dichter and Itzler, directly or indirectly, individually
or with others, do not own, manage, operate, control, participate in, perform
consultation services for, and are not connected in any manner with the
ownership, management, operation or control of any business similar to, or
competitive with, the business of the Companies or any of their affiliates or
subsidiaries. Except as otherwise set forth herein, all activities of Dichter
and Itzler in the Business are conducted by the Companies. All income of
Dichter and Itzler generated from the conduct of the Business is generated by
the Companies.
6.2 Ownership of Shares; Title. Dichter and Itzler are the owners of
record and beneficially all of the Shares. Dichter and Itzler have not received
any notice of any adverse claim to the ownership of the Shares, do not have any
reason to know of any such adverse claim and are not aware of existing facts
that would give rise to any adverse claim to the ownership of the Shares. The
sale and delivery of the Shares to the Buyer pursuant to this Agreement shall
vest in the Buyer legal and valid title to the Shares, free and clear of all
liens, security interests, adverse claims or other encumbrances of any
character whatsoever ("Encumbrances"), other than Encumbrances created by the
Buyer and restrictions on resales of the Shares under applicable securities
laws.
6.3 Authorization and Binding Obligation. Dichter and Itzler have all
power and authority to enter into and perform this Agreement and the
transactions contemplated hereby. This
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Agreement has been duly executed and delivered by Dichter and Itzler, and this
Agreement constitutes, and the other agreements to be executed in connection
herewith will constitute, the valid and binding obligation of Dichter and
Itzler, enforceable in accordance with their terms, except as limited by laws
affecting the enforcement of creditor's rights or equitable principles
generally.
6.4 Absence of Conflicting Agreements or Required Consents. The
execution, delivery and performance of this Agreement by Dichter and Itzler:
(a) does not require the consent of any third party; (b) will not violate any
applicable law, judgment, order, injunction, decree, rule, regulation or ruling
of any governmental authority to which Dichter and Itzler are a party or by
which they or the Shares are bound; (c) will not, either alone or with the
giving of notice or the passage of time, or both, conflict with, constitute
grounds for termination of or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any contract, agreement,
instrument, license or permit to which Dichter and Itzler or the Shares are now
subject; and (d) will not result in the creation of any lien, charge or
Encumbrance on any of the Shares.
6.5 Continuation of Companies' Business. Neither Dichter or Itzler knows
of any reason whatsoever why the Buyer would not be able to enjoy all of the
benefits, rights, title and interest of the Companies under all of the
Contracts (as defined below).
6.6 Investment Intention. Dichter and Itzler are acquiring the Common
Stock for investment and not with a view to dispose of their Common Stock to be
issued pursuant to the terms hereof.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
OF THE SELLERS
The Sellers,jointly and severally, hereby make the following
representations and warranties to the Buyer, each of which is true and correct
on the date hereof, shall remain true and correct to
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and including the Closing Date, shall be unaffected by any notice to the Buyer
other than in the Disclosure Schedule and shall survive the Closing as provided
in ARTICLE 16 hereof. Anything disclosed in this Agreement or any of the
Disclosure Schedules shall be deemed to be disclosed for all other purposes
hereof.
7.1 Organization and Standing. Each of the Companies is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and are not required to qualify to transact
business in any other jurisdiction and has the corporate power and authority to
own, lease and operate its properties and to carry on its business as now being
conducted and as proposed to be conducted by the Companies between the date
hereof and the Closing Date. SCHEDULE 7.1 of the Disclosure Schedule sets forth
a complete and correct list of all jurisdictions in which each of the Companies
is incorporated and qualified or licensed to do business. The Seller has
heretofore delivered to the Buyer complete and correct copies of the
Certificate of Incorporation and By-laws (or other similar charter documents)
of each of the Companies.
7.2 Authorization and Binding Obligation. Industries has the corporate
power and authority to enter into and perform this Agreement and the
transactions contemplated hereby, and Industries' execution, delivery and
performance of this Agreement, and the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action on its part.
This Agreement has been duly executed and delivered by Industries, and this
Agreement constitutes, and the other agreements to be executed in connection
herewith will constitute, the valid and binding obligation of Industries,
enforceable in accordance with their terms, except as limited by laws affecting
the enforcement of creditor's rights or equitable principles generally.
7.3 Capitalization. SCHEDULE 7.3 of the Disclosure Schedule sets forth a
complete and correct list of the authorized and issued capital stock of each of
the Companies including the registered holder of each of the Shares. All
outstanding Shares have been duly authorized and validly issued, are fully paid
and non-assessable and were not issued in violation of any pre-emptive rights.
Except as set forth on Schedule 7.3 of the Disclosure Schedule, there is
outstanding no
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security, option, warrant, right, call, subscription, agreement, commitment or
understanding of any nature whatsoever, fixed or contingent, that directly or
indirectly (i) calls for the issuance, sale, pledge or other disposition of
any Shares or of any capital stock of the Companies or any securities
convertible into, or other rights to acquire, any such Shares or other capital
stock of the Companies; or (ii) obligates the Companies or the Sellers to
grant, offer or enter into any of the foregoing; or (iii) relates to the voting
or control of such Shares, capital stock, securities or rights. No person has
any right to require the Companies to register any of its securities under the
Securities Act of 1933 as amended.
7.4 Absence of Conflicting Agreements or Required Consents. The
execution, delivery and performance of this Agreement by the Sellers: (a) does
not require the consent of any third party; (b) will not violate any applicable
law, judgment, order, injunction, decree, rule, regulation or ruling of any
governmental authority to which any of the Companies is a party; (c) will not,
either alone or with the giving of notice or the passage of time, or both,
conflict with, constitute grounds for termination of or result in a breach of
the terms, conditions or provisions of, or constitute a default under, any
contract, agreement, instrument, license or permit to which any of the
Companies is now subject; and (d) will not result in the creation of any lien,
charge or Encumbrance on any of the Shares.
7.5 Government Authorizations. SCHEDULE 7.5 of the Disclosure Schedule
contains a true and complete list of all material licenses, permits or other
authorizations from governmental and regulatory authorities which are required
for the lawful conduct of the business and operations of the Companies in the
manner and to the full extent they are presently conducted. The Companies are
the authorized legal holders of the licenses, permits and authorizations listed
in SCHEDULE 7.5 of the Disclosure Schedule, none of which is subject to any
restrictions or condition which would limit in any respect the full operation
of the Companies as now operated.
7.6 Subsidiaries. The Companies do not own any equity ownership interest,
directly or indirectly, in any person, corporation or other entity.
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7.7 Taxes. The Companies have filed all federal, state, local and foreign
income, franchise, sales, use, property, excise, payroll and other tax returns
required by law and have paid in full all taxes, estimated taxes, interest,
assessments, and penalties due and payable (other than those payable for
current periods without interest or penalty). All returns and forms which have
been filed have been true and correct in all material respects, and no tax or
other payment in a material amount other than as shown on such returns and
forms is required to be paid and has been paid by the Companies (other than
those payable for current periods without interest or penalty). The Buyer and
Marquee hereby agree that they shall not amend Sports' pre-closing income tax
returns if such amendment would result in a larger tax liability without the
prior written consent of Dichter and Itzler. There are no present disputes as
to taxes of any nature payable by the Companies. The Sellers hereby indemnify,
defend, and hold the Buyer harmless with respect to any and all demands,
claims, actions, suits, proceedings, assessments, judgments, costs, losses
(including adjustments to any tax loss carry forwards), damages, liabilities
and expenses (including, without limitation, reasonable attorney's and
accountant's fees), asserted against, resulting from, imposed upon or incurred
by the Buyer directly or indirectly relating to or arising out of the filing of
or the failure to file any tax return or form with any tax authority. The
representations and warranties and the indemnity contained in this SECTION 7.7
shall survive the Closing to the full extent of any applicable statute of
limitations, including any voluntary extensions thereof, (the "Tax Claim
Period") following the Closing Date, and upon the expiration of such period
shall lapse and be of no further effect. Subject to Section 16.5 hereof, the
Buyer shall have the right to offset against, at the discretion of the Sellers
(provided that if no decision is made by the Sellers, then the discretion shall
be the Buyers), any portion of any payments required to be made pursuant to
Section 2.3 above or against shares of the Common Stock delivered pursuant to
the terms hereof, any sums which the Sellers shall become obligated to pay to
the Buyer pursuant to a claim made under this Section during the Tax Claims
Period.
7.8 Personal Property. SCHEDULE 7.8 of the Disclosure Schedule contains a
list of all material tangible personal property and assets owned or held by the
Companies (the "Personal Property"). Except as disclosed in SCHEDULE 7.8 of the
Disclosure Schedule, and except as may be
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subject to lease agreements of the Companies specifically identified in
SCHEDULE 7.10 of the Disclosure Schedule, the Companies own and have, and will
have on the Closing Date, good and marketable title to all such property (and
to all other tangible and intangible personal property and assets to be
transferred to the Buyer hereunder), and none of such property is, or at the
Closing will be, subject to any security interest, mortgage, pledge,
conditional sales agreement or other lien or encumbrance other than as set
forth in the Disclosure Schedule. All of the items of the tangible personal
property and assets included in the Disclosure Schedule are in all respects in
good operating condition (ordinary wear and tear excepted) and are available
for immediate use. The properties listed in the Disclosure Schedule include all
such properties used and necessary to conduct in all material respects the
business and operations of the Companies as now conducted.
7.9 Real Property. SCHEDULE 7.9 of the Disclosure Schedule contains a
complete and accurate list of all real property leased by the Companies
(collectively the "Real Estate Contracts"). The Companies own no real property.
The Real Estate Contracts listed in the Disclosure Schedule constitute valid
and binding obligations of the Companies and, to the best of the Sellers'
knowledge, of all other persons purported to be parties thereto and are in full
force and effect as of the date hereof and will on the Closing Date constitute
valid and binding obligations of the Companies and, to the best of the Sellers'
knowledge, of all other persons purported to be parties thereto and shall be in
full force and effect. Except as set forth in the Disclosure Schedule, none of
the Companies is in default under any of the material terms of such Real Estate
Contracts and none has received or given written notice of any default
thereunder from or to any of the other parties thereto and will not have
received any such notice at or prior to the Closing.
7.10 Contracts. SCHEDULE 7.10 of the Disclosure Schedule lists and
describes the material terms of all written and oral contracts as of the date
of this Agreement to which the Companies are a party (the "Contracts").
7.11 Status of Contracts. Except as noted in SCHEDULE 7.10 of the
Disclosure Schedule, the Sellers have delivered to the Buyer true and
complete copies of all written Contracts, including
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any and all amendments and other modifications to such Contracts. All Contracts
are valid, binding and enforceable by the Companies in accordance with their
respective terms, except as limited by laws affecting creditors' rights or
equitable principles generally. The Companies have all complied in all material
respects with all Contracts and are not in default beyond any applicable grace
periods under any of the Contracts, and, to the best knowledge of Seller's, no
other contracting party is in default under any of the Contracts. Except as
otherwise set forth in the Disclosure Schedule, the Companies have full legal
power and authority to assign their respective rights under the Contracts to
Buyer in accordance with this Agreement on terms and conditions no less
favorable than those in effect on the date hereof, and such assignment will not
affect the validity, enforceability and continuity of any of the Contracts. As
to those Contracts not capable of being assigned, transferred or conveyed so
that Buyer will have all of the rights, title and interests of the Seller
thereunder after the Closing, the Buyer shall obtain the consents of all
parties thereto to the consummation of this transaction so that the Buyer shall
have all rights, title and interests in such Contracts after the Closing.
7.12 Environmental Matters. The Companies have not unlawfully disposed of
any hazardous waste or hazardous substance in a manner which has caused, or
could cause, the Buyer to incur a material liability under applicable law in
connection therewith. To the best of the Sellers' knowledge, the Companies have
complied in all material respects with all federal, state and local
environmental laws, rules and regulations applicable to their operations. No
hazardous waste has been disposed of by the Companies, and to the best of the
Sellers' knowledge, no hazardous waste has been disposed of by any other person
on the real estate owned or leased by the Companies. As used herein, the term
"hazardous waste" shall mean as defined in the Resource Conservation and
Recovery Act (RCRA) as amended and in the equivalent state statute under
applicable law.
7.13 Copyrights Trademarks and Similar Rights. SCHEDULE 7.13 of the
Disclosure Schedule lists, in all material respects, all copyrights, publishing
rights, trademarks, trade names, licenses, patents, permits and other similar
intangible property rights and interests applied for, issued to or owned by the
Companies or under which any of the Companies is a licensee or franchisee and
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used in the conduct of their business and operations. Except as set forth in
the Disclosure Schedule, all of such rights and interests are issued to or
owned by the Companies, or if licensed or franchised to the Companies, to the
best of the Sellers' knowledge, are valid and in good standing and uncontested.
The Sellers have delivered or made available to the Buyer copies of all
material documents, if any, establishing such rights, licenses or other
authority. The Companies have received no written notice and has no knowledge
of any infringements or unlawful use of such property. The properties listed in
SCHEDULE 7.13 of the Disclosure Schedule include all such properties necessary
to conduct in all material respects the business and operations of the
Companies as now conducted.
7.14 Personnel Information. SCHEDULE 7.14 of the Disclosure Schedule
contains a true and complete list of all persons employed by the Companies,
including a description of material compensation arrangements and employee
benefit plans and a list of other terms of any and all agreements affecting
such persons. Except as set forth in the Disclosure Schedule, the Companies
have not received notification that any of the employees of the Companies who
are listed in the Disclosure Schedule presently plan to terminate their
employment, whether by reason of the transactions contemplated hereby or
otherwise.
7.14.1 None of the Companies is a party to any contract with any
labor organization, nor have any of the Companies agreed to recognize any union
or other collective bargaining unit, nor has any union or other collective
bargaining unit been certified as representing any of the Companies' employees.
The Sellers have no knowledge of any organizational effort currently being made
or threatened by or on behalf of any labor union with respect to any of the
employees of the Companies. During the past five (5) years, none of the
Companies has experienced any strikes, work stoppages, grievance proceedings,
claims of unfair labor practices filed or other significant labor difficulties
of any nature.
7.14.2 The Companies have all complied in all material respects
with all laws relating to the employment of labor, including, without
limitation, the Employee Retirement Income
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Security Act of 1974, as amended ("ERISA"), and those laws relating to wages,
hours, collective bargaining, unemployment insurance, workers' compensation,
equal employment opportunity, sexual harassment and payment and withholding of
taxes. More specifically, the Companies have substantially complied with and
are not in default in any material respect under any laws, rules and
regulations relating to employment of labor, including those relating to wages,
hours, equal employment opportunities, sexual harassment, employment of
protected minorities (including women and persons over 40 years of age),
collective bargaining and the withholding and payment of taxes and
contributions and have withheld all amounts required or agreed to be withheld
from wages and salaries of its employees, and are not liable for any arrearage
of wages or for any tax or penalty or failure to comply with the foregoing.
There are no claims or complaints pending or, to the knowledge of the Seller,
threatened against the Companies before any court or governmental agency and
involving any alleged unlawful employment practices, whether or not relating to
the laws described above. The Companies have not consented to any decree
involving any claim of unfair labor practice and have not been held in any
judicial proceeding to have committed any unfair labor practice and there are
no material controversies pending or threatened between the Companies and any
of its employees.
7.15 Financial Statements. A copy of (i) the unaudited consolidated and
consolidating balance sheet statements on income, retained earnings and changes
in financial position of the Companies as of the fiscal years ended 1995 and
1996; and (ii) the audited consolidated balance sheet of the Companies as of
the fiscal year ended 1997 (collectively the "Annual Statements") are attached
hereto as Schedule 7.15. A copy of the unaudited consolidated and consolidating
balance sheet of the Companies and the unaudited consolidated and consolidating
statements of income and retained earnings and changes in financial position of
the Companies for the three (3) month period ending March 31, 1997 and March 31,
1998 (the "Interim Statements"; and together with the Annual Statements, the
"Financial Statements"), are attached hereto as Schedule 7.15. Except as noted
therein, the Financial Statements fairly present the consolidated financial
position of the Companies and their results of operations as of those dates in
conformity with GAAP consistently applied for such period. The Companies have
not acquired, either directly or indirectly, any other corporation,
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business or assets with respect to which there is not available financial
information which would permit the Companies to comply with, and the Companies
are presently able to comply with, all applicable regulations relating to the
certification of financial statements in connection with a registration
statement filed under the Securities Act.
7.16 Liabilities. Except as set forth on SCHEDULE 7.16 of the Disclosure
Schedules, in the Disclosure Schedule and the Financial Statements or elsewhere
disclosed in this Agreement or any schedules made a part hereof, the Companies
have no debts, obligations or liabilities of any kind or nature, either direct
or indirect, absolute or contingent, matured or unmatured except for those
incurred in the ordinary and regular course of business with an aggregate value
not in excess of $40,000.
7.17 Absence of Certain Changes or Events. Except as set forth in the
Disclosure Schedule or except as otherwise contemplated by this Agreement,
since March 31, 1998 there has not been (a) any damage, destruction or casualty
loss to the physical properties of the Companies (whether covered by insurance
or not in excess of $50,000); (b) any material change in the business,
operations or financial condition of the Companies; (c) any entry into any
transaction, commitment or agreement (including without limitation any
borrowing or capital expenditure) material to any of the Companies' course of
business; (d) any redemption or other acquisition by the Companies of the
Companies' capital stock or any declaration, setting aside or payment of any
dividend or other distribution in cash, stock or property with respect to the
Companies' capital stock; (e) any increase in the rate or terms of compensation
payable or to become payable by the Companies to its directors, officers or
employees or any increase in the rate or terms of any bonus, pension, insurance
or other employee benefit plan, payment or arrangement made to, for or with any
such directors, officers or key employees; (f) any change in or acceleration of
sales, or reduction of aggregate administrative, marketing, advertising and
promotional expenses or research expenditures other than in the ordinary course
of business; (g) any sale, transfer or other disposition of any asset of the
Companies to any party, including the Seller, except for payment of third-party
obligations incurred in the ordinary course of business in accordance with the
Companies' regular payment practices; (h) any
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termination or waiver of any rights of value to the business of the Companies;
or (i) any failure by the Companies to pay their accounts payable or other
obligations in the ordinary course of business consistent with past practices.
7.18 Title to Properties. Except as set forth on the Disclosure Schedule,
the Companies have good and marketable title to all of the assets and
properties which they purport to own and which are reflected on the Financial
Statements, free and clear of all Encumbrances, except for (a) liens for
current taxes not yet due and payable or for taxes the validity of which is
being contested in good faith by appropriate proceedings, and (b) Encumbrances
which individually or in the aggregate do not materially and adversely affect
the business, operations or financial condition of the Companies.
7.19 Litigation. Except as set forth in SCHEDULE 7.19 of the Disclosure
Schedule, none of the Companies is subject to any judgment, award, order, writ,
injunction, arbitration decision or decree which could materially and adversely
affect the conduct of any of their businesses, and there is no litigation,
arbitration, administration or other proceeding or, to the best of the Sellers'
knowledge, investigation pending or any basis for any person to assert a claim
or, to the best of the Sellers' knowledge, threatened against the Companies or
the Sellers in any federal, state or local court, or before any administrative
agency or arbitrator, or before any other tribunal duly authorized to resolve
disputes, which would reasonably be expected to have any adverse effect upon
the business, property, assets or condition (financial or otherwise) of the
Companies or which seeks to enjoin or prohibit, or otherwise questions the
validity of, any action taken or to be taken pursuant to or in connection with
this Agreement.
7.20 Compliance With Laws. The Companies have not received any notice
asserting any non-compliance by them in connection with their business or
operation with any applicable statute, rule or regulation, whether federal,
state or local. To the best of their knowledge, the Companies are not in
default with respect to any judgment, order, injunction or decree of any court,
administrative agency or other governmental authority or any other tribunal
duly authorized to resolve disputes in any respect material to the transactions
contemplated hereby. To the best of their knowledge, the
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Companies are in compliance with all material laws, regulations and
governmental orders applicable to the conduct of their business and operations
and the present use of the assets does not violate any of such laws,
regulations or orders.
7.21 Insurance. All insurance policies with respect to the properties,
assets, operations and business of the Companies (the "Insurance Policies") are
in full force and effect. Except as set forth on SCHEDULE 7.21 of the
Disclosure Schedule, there are no pending claims against the Insurance Policies
by the Companies as to which the insurers have denied liability and with
respect to which there is a reasonable likelihood of a settlement or
determination adverse to the Companies. To the best of the Companies' and the
Sellers' knowledge, there are no circumstances existing which would enable the
insurers to avoid liability under the Insurance Policies, nor are there any
other parties having an interest under the Insurance Policies. Except as set
forth in SCHEDULE 7.21 of the Disclosure Schedule, (i) there exist no material
claims under the Insurance Policies that have not been properly filed by the
Companies; (ii) no insurance company has refused to renew any material
insurance policy of the Companies during the past eighteen (18) months; and
(iii) there have been no material rate or premium increases or written notice
of prospective changes therein on general liability, property or directors and
officers liability Insurance Policies during the past eighteen (18) months. The
Disclosure Schedule contains a list that includes all Insurance Policies.
7.22 Payola/Plugola. Neither the Sellers nor any of the Companies has
paid or agreed to pay any money, service or any valuable consideration, as
defined in Sections 317 and 507 of the Communications Act of 1934, as amended,
for the radio broadcast of any matter whatsoever.
7.23 Affiliate Transactions. Except as set forth on SCHEDULE 7.23 hereof,
none of the stockholders, officers or directors, or individuals related to any
of them by blood or marriage, and none of its other employees, is currently a
party (either directly or through any ownership, beneficial, contingent or
other interest in an entity, business or enterprise of any kind) to any
transaction with or involving the Companies or any assets used in the operation
of the Business including, without limitation, any arrangement providing for:
(a) the furnishing of services by or to; (b) the rental of the
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sites on which the Real Property is located; (c) any loan or other indebtedness
from or to; (d) the grant of any mortgage, security interest, pledge or other
encumbrance from or to; or (e) otherwise requiring payments or other
consideration (including a promise of forbearance) from or to, any such
person.
7.24 Accuracy of Information. No written statement made by the Sellers or
the Companies herein contains any untrue statement of a material fact or omits
a material fact necessary to make the statements contained herein not
misleading and there is no fact known to the Seller or the Companies which
relates to this Agreement which the Seller or the Companies have not disclosed
to the Buyer in writing which materially affects adversely the Companies. To
the extent that a representation or other information is made to the Seller's
knowledge or is otherwise qualified by its terms, this representation shall not
be interpreted to expand such limitations or qualifications.
ARTICLE 8
COVENANTS OF THE BUYER
8.1 Closing. On the Closing Date, the Buyer shall: (i) purchase the
Shares from Dichter and Itzler as provided in ARTICLES 1 and 2 hereof; (ii)
purchase the Assets of Industries and assume the Assumed Liabilities' and (iii)
shall deliver or cause to be delivered to the Sellers the Purchase Price as
provided in ARTICLE 2 hereof.
8.2 Notification. The Buyer shall notify the Sellers of any litigation,
arbitration or administrative proceeding pending or, to its knowledge,
threatened against the Buyer which challenges the transactions contemplated
hereby or adversely affects the business or projects of the Buyer or Marquee.
8.3 No Inconsistent Action. The Buyer shall not take any other action
which is materially inconsistent with its obligations under this Agreement.
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8.4 Tax Filing. Buyer agrees on its own behalf and on behalf of Sports to
file as part of their respective Federal Tax returns for their respective
taxable years within which the contemplated stock for stock exchange took
place, the information required by Regulation Section 1.368-3(a) of the Code.
ARTICLE 9
COVENANTS OF THE SELLERS AND THE COMPANIES
9.1 [DELETED PRIOR TO CLOSING]
9.2 Notification. The Sellers and the Companies shall notify the Buyer of
any material litigation, arbitration or administrative proceeding pending or,
to their knowledge, threatened against the Sellers or the Companies which
challenges the transactions contemplated hereby.
9.3 No Inconsistent Action. The Sellers and the Companies shall take no
action which is materially inconsistent with their obligations under this
Agreement.
9.4 Closing Covenant. On the Closing Date, the Sellers shall sell and
deliver the Shares to the Buyer and Industries shall sell the Assets and assign
the Assumed Liabilities as provided in ARTICLES 1 and 2 of this Agreement.
9.5 No Shopping. From and after the date hereof until the termination of
the Agreement in accordance with its terms, neither the Sellers or any
representative or agent of the Sellers, nor the Companies, any officer,
director, employee agent, or representative of the Companies, shall directly or
indirectly solicit or knowingly encourage, including by way of furnishing
information, the initiation of any inquiries or proposals regarding, or engage
in any discussions or enter into any agreements regarding any merger, sale of
shares of capital stock, sale of assets or similar business combination or
transaction involving the Companies.
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9.6 Closing of the Companies Transfer Books. On the date hereof, the
stock transfer books of the Companies shall be closed and no transfer of shares
of the Companies shall thereafter be made.
9.7 Registration Statement for Registering of Stock.
9.7.1 Demand Rights. At the request of the holders of at least 50%
of the Common Stock, Marquee, at its expense, hereby undertakes to file a
Registration Statement under the Securities Act with the U.S. Securities and
Exchange Commission (the "SEC") at any time following the first anniversary of
the Closing Date, to register for resale, the Common Stock pursuant to
brokerage transactions as defined in Rule 144 of the Securities Act of 1933, as
amended (the "Securities Act") and shall use its best efforts to effect
registration under the Securities Act of such shares, provided that, Marquee
shall be required to effect no more than one such registration pursuant to this
Section 9.7.1. Any such registration statement shall remain in effect for not
less than 12 months. Marquee shall notify the holders of said Common Stock of
the disposition of said Marquee Registration Statement and, to the extent that
the Registration Statement shall become effective, shall, at such time, issue
replacement certificates for the Common Stock eliminating the portion of the
legend which provides: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE SECURITIES
HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED, SOLD, TRANSFERRED,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933 OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.
FURTHERMORE,"
9.7.2 Piggyback Registrations. At any time following the first
anniversary of the date of the Closing, whenever Marquee proposes to
register any of its common stock under the Securities Act in any secondary or
combined primary and secondary offering in which any members of
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Marquee's senior management participate as selling shareholders, Marquee will
give timely written notice to Dichter and Itzler of its intentions to effect
such a registration and will include in such registration all shares of Common
Stock, at no cost to the holders, delivered pursuant to the terms hereof with
respect to which Marquee has received written requests for inclusion therein
within thirty (30) days after the receipt of Marquee's notice. Notwithstanding
the foregoing, if the managing underwriter or underwriters of a proposed
combined primary and secondary offering advise Marquee that the inclusion of
all of the shares of Common Stock requested to be included in such offering
would adversely affect the amount or price of the securities that could be sold
by Marquee in such offering, then the shares of Common Stock and the securities
offered by senior management of Marquee to be included in such offering shall
be reduced, to the aggregate extent necessary to eliminate, on the advice of
such underwriters, such adverse effect, pro rata, on the basis of the total
number of shares originally intended to be included therein by the members of
Marquee's senior management, on the one hand, and the Sellers, on the other
hand.
9.8 Use of Financial Statements. Prior to the Closing Date, the Sellers
agree that they will (i) consent to the use of the audited financial statements
in any registration statement or other document filed by Marquee (or any of its
Subsidiaries) under the Securities Act or the Securities Exchange Act of 1934,
as amended, and (ii) execute and deliver, and cause its partners and officers
to execute and deliver, such "representation" letters as are customarily
delivered in connection with audits and as Marquee's independent accountants
may reasonably request.
ARTICLE 10
JOINT COVENANTS
The Buyer, the Sellers and the Companies covenant and agree that between
the date hereof and the Closing Date, they shall act in accordance with the
following:
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10.1 Conditions. Except as otherwise provided in this Agreement, if any
event should occur, either within or without the control of any party hereto,
which would prevent fulfillment of the conditions upon the obligations of any
party hereto to consummate the transactions contemplated by this Agreement, the
parties hereto shall use their reasonable best efforts to cure the event as
expeditiously as possible.
10.2 Confidentiality. The Buyer, the Sellers and the Companies shall each
keep confidential all information obtained by it or them with respect to the
other in connection with this Agreement and the negotiations preceding this
Agreement, and will use such information solely in connection with the
transactions contemplated by this Agreement, and if the transactions
contemplated hereby are not consummated for any reason, each shall return to
the other, without retaining a copy thereof, any schedules, documents or other
written information obtained from the other in connection with this Agreement
and the transactions contemplated hereby or shall deliver an affidavit to the
other party certifying the destruction of such information. Notwithstanding the
foregoing, no party shall be required to keep confidential or return any
information which (i) is known or available through other lawful sources, not
bound by a confidentiality agreement with the disclosing party, (ii) is or
becomes publicly known through no fault of the receiving party or its agents,
(iii) is required to be disclosed pursuant to an order or request of a judicial
or governmental authority or because of the rules and regulations of the
Securities and Exchange Commission (the "SEC") (provided the other parties are
given reasonable prior notice), or (iv) is developed by the receiving party
independently of the disclosure by the disclosing party. The Companies and the
Sellers hereby acknowledge that the Buyer, by virtue of its ownership by
Marquee, is a reporting person under the rules and regulations of the SEC and
will be required, upon the execution of this Agreement, to disclose and file
this Agreement with its regularly required SEC reports.
10.3 Cooperation. The Buyer, the Sellers and the Companies shall
cooperate fully with each other in taking any actions (other than the
institution of legal proceedings against a third party), including actions to
obtain the required consent of any governmental instrumentality or any third
party necessary or helpful to accomplish the transactions contemplated by this
Agreement; provided,
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however, that no party shall be required to take any action which would have a
material adverse effect upon it or any affiliated entity.
10.4 Consents to Assign. To the extent that any Contract is not capable
of being sold, assigned, transferred, delivered or subleased without the waiver
or consent of any third person (including a government or governmental unit),
or if such sale, assignment, transfer, delivery or sublease or attempted sale,
assignment, transfer, delivery of sublease would constitute a breach thereof or
a violation of any law or regulation, this Agreement and any assignment
executed pursuant hereto shall not constitute a sale, assignment, transfer,
delivery or sublease or an attempted sale, assignment, transfer, delivery or
sublease thereof. In those cases where consents, assignments, releases and/or
waivers have not been obtained at or prior to the Closing Date to the transfer
and assignment to the Buyer of the Contracts, this Agreement and any assignment
executed pursuant hereto, to the extent permitted by law, shall constitute an
equitable assignment by Sellers to the Buyer of all of Sellers' rights,
benefits, title and interest in and to the Contracts, and where necessary or
appropriate, the Buyer shall be deemed to be the Sellers' agent for the purpose
of completing, fulfilling and discharging all of Sellers' rights and
liabilities arising after the Closing Date under such Contracts. For the
purposes hereof, such contracts shall be deemed to be "Assumed Obligations".
Sellers shall use its reasonable efforts to provide the Buyer with the benefits
of such Contracts (including, without limitation, permitting the Buyer to
enforce any rights of Sellers arising under such Contracts), and the Buyer
shall, to the extent the Buyer is provided with the benefits of such Contracts,
assume, perform and in due course pay and discharge all debts, obligations and
liabilities of Sellers under such Contracts.
10.5 Bulk of Sales Laws. The Buyer hereby waives compliance by Industries
with the provisions of the "bulk sales" or similar laws of any state. Sellers
agree to indemnify the Buyer and hold it harmless against any and all claims,
losses, damages, liabilities, costs and expenses incurred by the Buyer or any
affiliate as a result of any failure to comply with any "bulk sales" or similar
laws.
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ARTICLE 11
CONDITIONS OF CLOSING BY THE BUYER
The obligations of the Buyer hereunder are, at its option, subject to
satisfaction, at or prior to the Closing Date, of each of the following
conditions:
11.1 Representations Warranties and Covenants.
11.1.1 All representations and warranties of the Companies and the
Sellers made in this Agreement shall be true and complete in all material
respects as of the date hereof and on and as of the Closing Date as if made on
and as of that date.
11.1.2 All of the terms, covenants and conditions to be complied
with and performed by the Companies and the Sellers on or prior to Closing Date
shall have been complied with or performed in all material respects.
11.1.3 The Buyer shall have received a certificate, dated as of
the Closing Date, executed by duly qualified officers of the Companies and by
the Sellers, to the effect that each of their respective representations and
warranties contained in this Agreement are true and complete in all material
respects on and as of the Closing Date as if made on and as of that date, and
that each has complied with or performed all terms, covenants and conditions to
be complied with or performed by him or it in all material respects on or prior
to the Closing Date.
11.2 Financing Statements. Sellers shall have delivered to Buyer
releases, if any, under the Uniform Commercial Code of any financing statements
filed against any Assets in the jurisdiction in which the Assets are and have
been located since such Assets were acquired by Sellers, except for
informational filings made by equipment lessors on lease obligations being
specifically assumed by Buyer as set forth in the Disclosure Schedule.
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11.3 Governmental Authorizations. The Companies shall be the holder of
the material licenses, permits and other authorizations listed in the
Disclosure Schedule, and there shall not have been any modification of any of
such licenses, permits and other authorizations which has an adverse effect on
the Companies or the conduct of their business and operations. No proceeding
shall be pending which seeks or the effect of which reasonably could be to
revoke, cancel, fail to renew, suspend or modify materially and adversely the
material licenses, permits or other authorizations.
11.4 Adverse Proceedings. No suit, action, claim or governmental
proceeding shall be pending against, and no order, decree or judgment of any
court, agency or other governmental authority shall have been rendered against,
any party hereto which would render it unlawful, as of the Closing Date, to
effect the transactions contemplated by this Agreement in accordance with its
terms.
11.5 Legal Opinion. The Companies and the Sellers shall have delivered to
the Buyer a written opinion of their counsel, dated as of the Closing Date,
substantially in the form attached hereto as Exhibit B.
11.6 Delivery of Shares. On the Closing Date, the Buyer shall have
received certificates representing the Shares duly endorsed in blank.
11.7 Resignations. At the discretion of the Buyer, on the Closing Date,
the Buyer shall have received the resignations of all of the officers and
directors of Sports.
11.8 Consents to Assignment. The Companies shall have delivered to the
Buyer any third party consents necessary to ensure that the Buyer shall
continue to be entitled to all of the Companies' uninterrupted rights, title and
interests under all of the Contracts after the Closing.
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11.9 Employment Agreements. Dichter and Itzler shall have entered into
employment agreements with the Buyer in the forms attached hereto as EXHIBIT D
and EXHIBIT E.
11.10. Delivery of Audits. The Sellers and the Companies shall have
delivered to the Buyer the Audits contemplated by SECTION 9.1.10. The
information contained in the Audits and the information contained in the
Financial Statements shall not deviate in any material respects.
ARTICLE 12
CONDITIONS OF CLOSING BY THE SELLERS
The obligations of the Sellers hereunder are, at their option, subject to
satisfaction, at or prior to the Closing Date, of each of the following
conditions:
12.1 Representations, Warranties and Covenants.
12.1.1 All representations and warranties of the Buyer and Marquee
shall be true and complete in all material respects as of the date hereof and
on and as of the Closing Date as if made on and as of that date.
12.1.2 All the terms, covenants and conditions to be complied with
and performed by the Buyer and Marquee on or prior to the Closing Date shall
have been complied with or performed in all material respects.
12.1.3 The Sellers shall have received a certificate, dated as of
the Closing Date, executed by duly qualified officers of the Buyer and Marquee,
to the effect that the representations and warranties of the Buyer and Marquee
contained in this Agreement are true and complete in all material respects on
and as of the Closing Date as if made on and as of that date, and that the
Buyer and Marquee have complied with or performed all terms, covenants and
conditions to be complied with or performed by it in all material respects on
or prior to the Closing Date.
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12.2 [Deleted prior to execution.]
12.3 Adverse Proceedings. No suit, action, claim or governmental
proceeding shall be pending against, and no other, decree or judgment of any
court, agency or other governmental authority shall have been rendered against
any party hereto which would render it unlawful, as of the Closing Date, to
effect the transactions contemplated by this Agreement in accordance with its
terms.
12.4 Legal Opinion. The Buyer shall have delivered to the Sellers an
opinion of its corporate counsel, dated as of the Closing Date, substantially
in the form attached hereto as EXHIBIT A.
12.5 Employment Agreements. The Buyer shall have entered into
Employment Agreements with each of Dichter and Itzler in the forms attached
hereto as Exhibit D and Exhibit E respectively.
12.6 Payment of Purchase Price. The Buyer shall have delivered or caused
to be delivered to the Sellers the Purchase Price in accordance with the terms
of ARTICLE 2 hereof.
ARTICLE 13
TRANSFER TAXES; FEES AND EXPENSES
13.1 Expenses. Except as set forth in SECTION 13.2 hereof, each party
hereto shall be solely responsible for all costs and expense incurred by it in
connection with the negotiation, preparation and performance of and compliance
with the terms of this Agreement.
13.2 Transfer Taxes and Similar Charges. All governmental costs of
transferring the Shares in accordance with this Agreement, including
recordation, transfer and documentary taxes and fees, and any excise, sales or
use taxes, shall be borne equally by the Buyer and the Sellers.
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ARTICLE 14
COMMISSIONS OR FINDER'S FEE
14.1 The Buyer's and Marquee's Representation and Agreement to Indemnify.
The Buyer and Marquee represent and warrant to the Sellers that neither they
nor any person or entity acting on their behalf has agreed to pay a commission,
finder's fee or similar payment in connection with this Agreement or any matter
related hereto to any person or entity. The Buyer and Marquee further agree to
indemnify, defend and hold the Sellers harmless from and against any and all
claims, losses, liabilities and expenses (including reasonable attorney's fees)
arising out of a claim by any person or entity based on any such arrangement or
agreement made or alleged to have been made by the Buyer or Marquee.
14.2 The Sellers' and Companies' Representation and Agreement to
Indemnify. The Sellers and the Companies, jointly and severally, represent and
warrant to the Buyer that neither they nor any person or entity acting on their
behalf has agreed to pay a commission, finder's fee or similar payment in
connection with this Agreement or any matter related hereto to any person or
entity. The Sellers and the Companies further agree to jointly and severally
indemnify, defend and hold the Buyer harmless from and against any and all
claims, losses, liabilities and expenses (including reasonable attorney's fees)
arising out of a claim by any person or entity based on any such arrangement or
agreement made or alleged to have been made by the Sellers or the Companies.
ARTICLE 15
DOCUMENTS TO BE DELIVERED AT CLOSING
15.1 The Sellers' Documents. At the Closing, the Sellers shall, or shall
cause the Companies to, deliver or cause to be delivered to the Buyer the
following:
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15.1.1 Certified resolutions of the Board of Directors of
Industries approving the execution and delivery of this Agreement and each of
the other documents and authorizing the consummation of the transactions
contemplated hereby and thereby;
15.1.2 Certificates, dated the Closing Date, by the Companies and
the Sellers in the form described in Section 11.1.3 above;
15.1.3 Articles of Incorporation and Bylaws of the Companies
certified by each of the Companies' secretary's as of the Closing Date;
15.1.4 The opinion letters, dated the Closing Date, referenced in
Section 11.5;
15.1.5 Certificates evidencing the Shares;
15.1.6 Governmental certificates showing that the Companies are
duly incorporated and in good standing under the laws of New York and any other
states in which they are required to qualify as a foreign corporation, dated
not more than forty-five (45) calendar days before the Closing Date;
15.1.7 Such additional information and material as the Buyer shall
have requested in a timely manner in writing and which is reasonably necessary
for the Closing.
15.1.8 Any consents required pursuant to SECTION 11.8 hereof.
15.1.9 All stock books and records and, minute books of Sports and
all files and records pertaining to the business and operations of the
Companies as elsewhere provided for in this Agreement.
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15.1.10 Bill of Sale, assignments and other good and sufficient
instruments of conveyance, transfer and assignment, all in form and substance
reasonably satisfactory to counsel for Buyer, as shall be effective to vest in
Buyer or its permitted assignees, good and marketable title in and to the
Assets transferred pursuant to this Agreement in accordance with the terms of
this Assignment.
15.1.11 An assignment and assumption and hold harmless agreement or
agreements reasonably satisfactory in from and substance to counsel to Buyer
and the Sellers effecting the assumption of the Contracts, Real Estate
Contracts, Assumed Liabilities and Assumed Obligations.
15.2 The Buyer's Documents. At the Closing, the Buyer shall deliver or
cause to be delivered to the Sellers the following:
15.2.1 The Purchase Price and the Common Stock in accordance with
SECTION 2.2 hereof.
15.2.2 A certificate, dated the Closing Date, by the Buyer and
Marquee in the form described in Section 12.1.3 above.
15.2.3 The opinions of the Buyer's and Marquee's corporate counsel,
dated the Closing Date, to the effect set forth in Section 12.4.
15.2.4 Governmental certificates showing that the Buyer and Marquee
are duly incorporated and in good standing in the State of Delaware and that
the Buyer and Marquee are qualified as foreign corporations in the State of New
York, dated not more than forty-five (45) calendar days before the Closing
Date.
15.2.5 Certified resolutions of the Board of Directors of the Buyer
and Marquee approving the execution and delivery of this Agreement and each of
the other documents and
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agreements referred to herein and authorizing the consummation of the
transactions contemplated hereby and thereby; and
15.2.6 The employment agreements as set forth in SECTION 11.9
hereof.
15.2.7 Such additional information and material as the Seller shall
have requested in a timely manner in writing and which is reasonably necessary
for the Closing.
ARTICLE 16
INDEMNIFICATION
16.1 The Sellers' Indemnities. The Sellers hereby indemnify, defend and
hold the Buyer harmless with respect to any and all demands, claims, actions,
suits, proceedings, assessments, judgments, costs, losses, damages, liabilities
and expenses (including, without limitation, reasonable attorneys' fees)
asserted against, resulting from, imposed upon or incurred by the Buyer
directly or indirectly relating to or arising out of; (a) the inaccuracy of any
representation or warranty, or the breach of any covenant or agreement,
contained herein or in any instrument or certificate delivered pursuant to this
Agreement; and (b)all of the business and operations of the Companies through
the Closing except as permitted by this Agreement or assumed by the Buyer
herein. Fifty percent 50% of the Common Stock delivered pursuant to the terms
hereof shall serve as security for, and the Buyer shall have the right to
offset against, the Sellers' indemnification obligations contained herein.
Buyer shall have similar offset rights against any payments due the Sellers
pursuant to Section 2.3 hereof.
16.2 The Buyer's Indemnities. The Buyer and Marquee hereby jointly and
severally indemnify, defend and hold the Sellers harmless with respect to any
and all demands, claims, actions, suits, proceedings, assessments,judgments,
costs, losses, damages, liabilities and expenses (including, without
limitation, reasonable attorneys' fees) asserted against, resulting from,
imposed
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upon or incurred by the Sellers directly or indirectly relating to or arising
out of: (a) the inaccuracy of any representation or warranty, or the breach of
any covenant or agreement, contained herein or in any instrument or certificate
delivered pursuant hereto; (b) the operation of Sports or use of the Assets
from and after the Closing Date; and (c) the Assumed Obligations and the
Assumed Liabilities.
16.3 Rights. The Buyer and the Sellers agree that the rights of
indemnification provided in this ARTICLE 16 are exclusive of and in addition to
any and all other such rights of the Buyer and the Seller hereunder.
16.4 Survival of Representations and Warranties. Other than the
representations and warranties contained in SECTION 7.7 hereof which shall be
governed by such Section, the representations and warranties contained herein
shall survive the Closing for a period of twenty-four (24) months (the "Claims
Period") following the Closing Date, and upon the expiration of such period
shall lapse and be of no further effect. Notwithstanding the foregoing, Buyer's
and Marquee's indemnities with respect to Assumed Obligations and Assumed
Liabilities shall survive for the term of any such Assumed Obligations or
Assumed Liabilities. Subject to Section 16.5 hereof, the Buyer shall have the
right to offset against any payments set forth in SECTION 2.3, any sums which
the Sellers shall become obligated to pay to the Buyer pursuant to a claim made
under Section 16.1 hereof, or any other provision of this Agreement during the
Claims Period. Prior to the exercise of the right of offset described herein,
the Buyer shall first notify the Sellers in written detail of its intended
exercise of such right. Upon receipt of such notification, the Sellers shall
have thirty (30) calendar days to cure any related claim before the Buyer shall
have the right to exercise the offset.
16.5 Limitation on Indemnity. Notwithstanding anything to the contrary
contained in this Agreement, and subject to the proviso set forth in this
Section 16.5, neither the Buyer nor the Sellers shall have any liability or
obligation to the other for breach of any representation, warranty, covenant or
agreement of such other party made in this Agreement except to the extent that
the aggregate of
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all claims by such other party for such breaches exceed Forty Thousand Dollars
($40,000) (the "Threshold Amount") in the aggregate, in which event the party
so liable shall then be liable for all claims for any such breaches, excluding
the sums constituting the Threshold Amount. Notwithstanding the foregoing, such
liability of the Sellers collectively on the one hand and the liability of
Marquee and the Buyer collectively on the other hand shall be limited to the
amount of any cash consideration paid hereunder.
16.6 Procedures.
16.6.1 Promptly after the receipt by any party (the "Indemnified
Party") of notice of (A) any claim or (B) the commencement of any action or
proceeding which may entitle such party to indemnification under this Section,
such party shall give the other party (the "Indemnifying Party") written notice
of such claim or the commencement of such action or proceeding and shall permit
the Indemnifying Party to assume the defense of any such claim or any
litigation resulting from such claim. The failure to give the Indemnifying
Party timely notice under this clause shall not preclude the Indemnified Party
from seeking indemnification from the Indemnifying Party unless such failure
has materially prejudiced the Indemnifying Party's ability to defend the claim
or litigation.
16.6.2 If Indemnifying Party assumes the defense of any such claim
or litigation resulting therefrom with counsel reasonably acceptable to
Indemnified Party, the obligations of the Indemnifying Party as to such claim
shall be limited to taking all steps reasonably necessary in the defense or
settlement of such claim or litigation resulting therefrom and to holding the
Indemnified Party harmless from and against any losses, damages and liabilities
caused by or arising out of any settlement approved by the Indemnifying Party
or any judgment in connection with such claim or litigation resulting
therefrom; however, the Indemnified Party may participate, at its or his
expense, in the defense of such claim or litigation provided that the
Indemnifying Party shall direct and control the defense of such claim or
litigation. The Indemnified Party shall cooperate and make available all books
and records reasonably necessary and useful in connection with the defense. The
Indemnifying Party shall not, in the defense of such claim or any litigation
resulting therefrom,
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consent to entry of any judgment, except with the written consent of the
Indemnified Party, or enter into any settlement, except with the written
consent of the Indemnified Party, which if the same does not include as an
unconditional term thereof the giving by the claimant or the plaintiff to the
Indemnified Party of a release from all liability in respect of such claim or
litigation.
16.6.3 If the Indemnifying Party shall not assume the defense of
any such claim or litigation resulting therefrom or fails to notify the
Indemnified Party of its intention to assume the defense of any such claim
within ten (10) business days of receipt of such claim by the Indemnifying
Party, the Indemnified Party may, but shall have no obligation to, defend
against such claim or litigation in such manner as it may deem appropriate, and
the Indemnified Party may compromise or settle such claim or litigation without
the Indemnifying Party's consent. The Indemnifying Party shall promptly
reimburse the Indemnified Party for the amount of all reasonable expenses,
legal or otherwise, incurred by the Indemnified Party in connection with the
defense against or settlement of such claim or litigation. If no settlement of
the claim or litigation is made, the Indemnifying Party shall promptly
reimburse the Indemnified Party for the amount of any judgment rendered with
respect to such claim or in such litigation and of all reasonable expenses,
legal or otherwise, incurred by the Indemnified Party in the defense against
such claim or litigation.
ARTICLE 17
TERMINATION RIGHTS
17.1 Termination. This Agreement may be terminated by either the Buyer or
the Sellers, if the party seeking to terminate is not in material default or
breach of this Agreement, upon written notice to the other upon the occurrence
of any of the following:
(a) if on or prior to the Closing Date, the other party
defaults in any respect in the observance or in the due and timely performance
of any of its covenants or agreements
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herein contained and such default shall not be cured within thirty (30)
calendar days of the date of written notice of default served by the party
claiming such material default; or
(b) if there shall be in effect any judgment, final decree
or order that would prevent or make unlawful the Closing of this Agreement; or
(c) as provided in Section 18.2 or any other Section of this
Agreement which specifically provides for termination.
17.2 Liability. The termination of this Agreement under SECTION 17.1
shall not relieve any party of any liability for breach of this Agreement prior
to the date of termination.
ARTICLE 18
OTHER PROVISIONS
18.1 Liquidated Damages. In the event that the Sellers terminate this
Agreement in accordance with Section 17.1(a) above, the Sellers shall be
entitled to retain as liquidated damages any amounts loaned to the Sellers
and/or Sports by Marquee or the Buyer. In such circumstance, Marquee shall
return to the Sellers and/or Sports any notes, guarantees or stock pledges
executed in connection with any such advances.
18.2 Specific Performance. In the event of a material breach by the
Companies or the Sellers of their respective representations and obligations
hereunder, not cured within thirty (30) calendar days after written notice to
that effect from the Buyer, the Buyer shall have the right to bring an action
to enforce the terms of this Agreement by decree of specific performance
without being required to prove actual damages, post bond or furnish other
security, it being agreed that the property to be transferred hereunder is
unique and not readily available in the open market, and the
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Sellers thereby further agree to waive any and all defenses against any such
action for specific performance based on the grounds that there is an adequate
remedy for money damages available.
18.3 Further Assurances. After the Closing, the Sellers shall from time
to time, at the request of and without further cost or expense to the Buyer,
execute and deliver such other instruments of conveyance and transfer and take
such other actions as may reasonably be requested in order to more effectively
consummate the transactions contemplated hereby to vest in the Buyer good and
marketable title to the Assets and the Shares being transferred hereunder, and
the Buyer shall from time to time, at the request of and without further cost
or expense to the Sellers, execute and deliver such other instruments and take
such other actions as may reasonably be requested in order to more effectively
relieve the Sellers of any obligations being assumed by the Buyer hereunder.
18.4 Benefit and Assignment. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. No party may voluntarily or involuntarily
assign its interest under this Agreement without the prior written consent of
the other party, except for any assignment by the Buyer to an affiliate of the
Buyer in which case such assignee, Marquee and the Buyer shall remain fully
obligated,jointly and severally, under this Agreement as an assignor.
18.5 Entire Agreement. This Agreement, the Disclosure Schedule and the
Exhibits hereto embody the entire agreement and understanding of the parties
hereto and supersede any and all prior agreements, arrangements and
understandings relating to the matters provided for herein. In the event of a
conflict between the terms of this Agreement and any other agreement executed
in connection herewith, the terms of this Agreement shall prevail. No
amendment, waiver of compliance with any provision or condition hereof or
consent pursuant to this Agreement shall be effective unless evidenced by an
instrument in writing signed by the party against whom enforcement of any
waiver, amendment, change, extension or discharge is sought.
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18.6 Headings. The headings set forth in this Agreement are for
convenience only and will not control or affect the meaning or construction of
the provisions of this Agreement.
18.7 Governing Law. The construction and performance of this Agreement
shall be governed by the laws of the State of New York without giving effect to
the choice of law provisions thereof.
18.8 Notices. Any notice, demand or request required or permitted to be
given under the provisions of this Agreement shall be in writing and shall be
deemed to have been duly delivered and received on the date of personal
delivery or on the date of receipt, if mailed by registered or certified mail,
postage prepaid and return receipt requested, or on the date of a stamped
receipt, if sent by an overnight delivery service, or on the date of written
confirmation of delivery by facsimile or facsimile transmission, and shall be
addressed to the following addresses, or to such other address as any party may
request, in the case of the Sellers, by notifying the Buyer, and in the case of
the Buyer, by notifying the Sellers:
To the Companies and the Sellers:
Alphabet City Sports
304 Park Avenue South, Ste. 208
New York, New York 10010
Attn: Ken Dichter
Attn: Jesse Itzler
Facsimile #: (212) 780-9104
With a Copy to:
Mike Nadler
Uncyk, Borenkind & Nadler
114 West 47th Street
22nd Floor
New York, New York 10036
Facsimile #: 212-768-4469
With a Copy to:
Elliot Goldman
Elliot Goldman Group
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200 West 57th Street
Suite 1301
New York, New York 10019
Facsimile #: 212-247-2902
To the Buyer:
The Marquee Group
888 Seventh Avenue, 37th Floor
New York, New York 10019
Attention:Robert Gutkowski
Facsimile #: (212) 977-4625
With a Copy to:
The Sillerman Companies
650 Madison Avenue
New York, NY 10022
Attention: Kraig G. Fox
Facsimile #: (212) 486-4840
18.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which
together will constitute one and the same instrument.
18.10 Arbitration. Any dispute between the Buyer and the Sellers over any
of the terms or conditions of this Agreement shall be submitted to the American
Arbitration Association in the City of New York, State of New York for
arbitration under its then prevailing rules, the arbitrator(s) to be selected
as follows: Each of the parties hereto shall by written notice to the other
have the right to appoint one arbitrator. If, within thirty (30) days following
the giving of such notice by one party, the other shall not, by written notice,
appoint another arbitrator, the first arbitrator shall be the sole arbitrator.
If two arbitrators are so appointed, they shall appoint a third arbitrator. If
thirty (30) days elapse after the appointment of the second arbitrator and the
two arbitrators are unable to agree upon
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the third arbitrator, then either party may, in writing, request the American
Arbitration Association to appoint the third arbitrator. The award made in the
arbitration shall be binding and conclusive on the parties and judgment may be,
but need not be, entered in any court having jurisdiction. Such award shall
include the fixing of the costs, expenses and reasonable attorney's fees of
arbitration, which shall be borne by the unsuccessful party.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
THE SELLERS
ALPHABET CITY SPORTS RECORDS, INC. MARQUEE RECORDS, INC.
By: /s/ Ken Dichter By: /s/ Robert M. Gutkowski
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Name: KEN DICHTER. Robert M. Gutkowski
Title: SEC. President and Chief Executive Officer
ALPHABET CITY INDUSTRIES, INC. THE MARQUEE GROUP, INC.
By: /s/ Ken Dichter By: /s/ Robert M. Gutkowski
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Name: KEN DICHTER. Robert M. Gutkowski
Title: SEC. President and Chief Executive Officer
/s/ Ken Dichter
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Ken Dichter
By: /s/ Jesse Itzler
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Jesse Itzler
46
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THE MARQUEE GROUP, INC.
CREDIT AGREEMENT
Dated as of July 31, 1998
BANKBOSTON, N.A., Agent
BANCBOSTON SECURITIES INC.,
Syndication Agent and Manager
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TABLE OF CONTENTS
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1. Definitions; Certain Rules of Construction.............................................................. 1
2. The Credits.............................................................................................21
2.1. Revolving Credit...............................................................................21
2.1.1. Revolving Loan.........................................................................21
2.1.2. Maximum Amount of Revolving Credit.....................................................22
2.1.3. Borrowing Requests.....................................................................22
2.1.4. Revolving Notes........................................................................22
2.2. English Credit.................................................................................23
2.2.1. English Loan...........................................................................23
2.2.2. Borrowing Requests.....................................................................23
2.2.3. English Notes..........................................................................23
2.3. Letters of Credit..............................................................................24
2.3.1. Issuance of Letters of Credit..........................................................24
2.3.2. Requests for Letters of Credit.........................................................24
2.3.3. Form and Expiration of Letters of Credit...............................................24
2.3.4. Lenders' Participation in Letters of Credit............................................25
2.3.5. Reimbursement of Payment...............................................................25
2.3.6. Uniform Customs and Practice...........................................................25
2.3.7. Subrogation............................................................................27
2.3.8. Modification, Consent, etc.............................................................27
2.4. Application of Proceeds........................................................................27
2.4.1. Revolving Loan.........................................................................27
2.4.2. English Loan...........................................................................27
2.4.3. Letters of Credit......................................................................27
2.4.4. Specifically Prohibited Applications...................................................27
2.5. Nature of Obligations of Lenders to Make Extensions of Credit..................................28
3. Interest; Eurocurrency Pricing Options; Fees............................................................28
3.1. Interest on Revolving Loan.....................................................................28
3.2. Interest On English Loan.......................................................................28
3.3. Eurocurrency Pricing Options...................................................................29
3.3.1. Election of Eurocurrency Pricing Options...............................................29
3.3.2. Notice to Lenders and Borrowers........................................................30
3.3.3. Selection of Eurocurrency Interest Periods.............................................30
3.3.4. Additional Interest....................................................................30
3.3.5. Violation of Legal Requirements........................................................31
3.3.6. Funding Procedure......................................................................31
3.4. Commitment Fees................................................................................32
3.5. Letter of Credit Fees..........................................................................32
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3.6. Changes in Circumstances; Yield Protection.....................................................32
3.6.1. Reserve Requirements, etc..............................................................32
3.6.2. Taxes..................................................................................32
3.6.3. Capital Adequacy.......................................................................33
3.6.4. Regulatory Changes.....................................................................33
3.6.5. Compensation Claims....................................................................34
3.6.6. Mitigation.............................................................................34
3.7. Computations of Interest and Fees..............................................................34
4. Payment.................................................................................................34
4.1. Payment at Maturity............................................................................34
4.2. Contingent Required Prepayments................................................................34
4.2.1. Excess Credit Exposure.................................................................35
4.2.2. Net Asset Sale Proceeds................................................................35
4.2.3. Net Debt Proceeds......................................................................35
4.2.4. Net Equity Proceeds....................................................................35
4.3. Voluntary Prepayments..........................................................................35
4.4. Letters of Credit..............................................................................36
4.5. Reborrowing; Application of Payments, etc......................................................36
4.5.1. Reborrowing............................................................................36
4.5.2. Order of Application...................................................................36
4.5.3. Prepayment Account.....................................................................36
4.5.4. Payments for Lenders...................................................................37
5. Conditions to Extending Credit..........................................................................37
5.1. Conditions on Initial Closing Date.............................................................37
5.1.1. Revolving Notes........................................................................38
5.1.2. Payment of Fees........................................................................38
5.1.3. Legal Opinions.........................................................................38
5.1.4. Guarantee and Security Agreement.......................................................38
5.1.5. Perfection of Security.................................................................38
5.1.6. Cash Flow Statements...................................................................38
5.1.7. Proper Proceedings.....................................................................39
5.1.8. General................................................................................39
5.2. Conditions to Each Extension of Credit.........................................................39
5.2.1. Officer's Certificate..................................................................39
5.2.2. Legality, etc..........................................................................39
5.3. Conditions on Initial English Closing Date.....................................................39
5.3.1. English Note...........................................................................40
5.3.2. Joinder Agreement......................................................................40
5.3.3. English Guarantee and Security Agreement...............................................40
5.3.4. Legal Opinion..........................................................................40
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5.3.5. Perfection of Security.................................................................40
5.3.6. Proper Proceedings.....................................................................40
5.3.7. General................................................................................40
6. General Covenants.......................................................................................41
6.1. Taxes and Other Charges; Accounts Payable......................................................41
6.1.1. Taxes and Other Charges................................................................41
6.1.2. Accounts Payable.......................................................................41
6.2. Conduct of Business, etc.......................................................................41
6.2.1. Types of Business......................................................................41
6.2.2. Maintenance of Properties..............................................................41
6.2.3. Statutory Compliance...................................................................42
6.2.4. Compliance with Material Agreements....................................................42
6.3. Insurance......................................................................................42
6.3.1. Business Interruption Insurance........................................................42
6.3.2. Property Insurance.....................................................................42
6.3.3. Liability Insurance....................................................................43
6.3.4. Key Executive Life Insurance...........................................................43
6.4. Financial Statements and Reports...............................................................43
6.4.1. Annual Reports.........................................................................43
6.4.2. Quarterly Reports......................................................................44
6.4.3. Other Reports..........................................................................45
6.4.4. Notice of Litigation, Defaults, etc....................................................45
6.4.5. Other Information......................................................................46
6.5. Certain Financial Tests........................................................................46
6.5.1. Consolidated Total Debt to Consolidated EBITDA.........................................46
6.5.2. Consolidated EBITDA to Consolidated Interest Expense...................................46
6.5.3. Consolidated EBITDA to Consolidated Fixed Charges......................................47
6.6. Indebtedness...................................................................................47
6.7. Guarantees; Letters of Credit..................................................................48
6.8. Liens..........................................................................................49
6.9. Investments and Acquisitions...................................................................50
6.10. Distributions..................................................................................51
6.11. Asset Dispositions and Mergers.................................................................52
6.12. No Restrictions on Subsidiary Distributions....................................................53
6.13. Voluntary Prepayments of Other Indebtedness....................................................53
6.14. Derivative Contracts...........................................................................53
6.15. Negative Pledge Clauses........................................................................53
6.16. ERISA, etc.....................................................................................53
6.17. Transactions with Affiliates...................................................................54
6.18. Interest Rate Protection.......................................................................54
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7. Representations and Warranties..........................................................................54
7.1. Organization and Business......................................................................54
7.1.1. The Company............................................................................54
7.1.2. Subsidiaries...........................................................................54
7.1.3. Qualification..........................................................................55
7.1.4. Capitalization.........................................................................55
7.2. Financial Statements and Other Information; Material Agreements................................55
7.2.1. Financial Statements and Other Information.............................................55
7.2.2. Material Agreements....................................................................56
7.3. Agreements Relating to Financing Debt, Investments, etc........................................57
7.4. Changes in Condition...........................................................................57
7.5. Title to Assets................................................................................57
7.6. Operations in Conformity With Law, etc.........................................................58
7.7. Litigation.....................................................................................58
7.8. Authorization and Enforceability...............................................................58
7.9. No Legal Obstacle to Agreements................................................................58
7.10. Defaults.......................................................................................59
7.11. Licenses, etc..................................................................................59
7.12. Tax Returns....................................................................................60
7.13. Year 2000 Issues...............................................................................60
7.14. Pension Plans..................................................................................60
7.15. Government Regulation; Margin Stock............................................................60
7.15.1. Government Regulation.................................................................60
7.15.2. Margin Stock..........................................................................61
7.16. Disclosure.....................................................................................61
8. Defaults................................................................................................61
8.1. Events of Default..............................................................................61
8.1.1. Payment................................................................................61
8.1.2. Specified Covenants....................................................................61
8.1.3. Other Covenants........................................................................61
8.1.4. Representations and Warranties.........................................................61
8.1.5. Material Financing Debt Cross Default, etc.............................................62
8.1.6. Ownership; Liquidation; etc............................................................62
8.1.7. Enforceability, etc....................................................................63
8.1.8. Judgments..............................................................................63
8.1.9. ERISA..................................................................................63
8.1.10. Bankruptcy, etc.......................................................................64
8.2. Certain Actions Following an Event of Default..................................................64
8.2.1. Terminate Obligation to Extend Credit..................................................64
8.2.2. Specific Performance; Exercise of Rights...............................................64
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8.2.3. Acceleration...........................................................................65
8.2.4. Enforcement of Payment; Credit Security; Setoff........................................65
8.2.5. Cumulative Remedies....................................................................65
8.3. Annulment of Defaults..........................................................................65
8.4. Waivers........................................................................................66
9. Expenses; Indemnity.....................................................................................66
9.1. Expenses.......................................................................................66
9.2. General Indemnity..............................................................................66
9.3. Indemnity With Respect to Foreign Currency Transactions........................................67
9.4. Indemnity With Respect to Letters of Credit....................................................68
10. Operations; Agent.......................................................................................68
10.1. Interests in Credits...........................................................................68
10.2. Agent's Authority to Act, etc..................................................................68
10.3. Company to Pay Agent, etc......................................................................68
10.4. Lender Operations for Advances, Letters of Credit, etc.........................................69
10.4.1. Advances..............................................................................69
10.4.2. Letters of Credit.....................................................................69
10.4.3. Agent to Allocate Payments, etc.......................................................69
10.4.4. Delinquent Lenders; Nonperforming Lenders.............................................70
10.5. Sharing of Payments, etc.......................................................................70
10.6. Agent's Resignation............................................................................71
10.7. Concerning the Agent...........................................................................71
10.7.1. Action in Good Faith, etc.............................................................71
10.7.2. No Implied Duties, etc................................................................72
10.7.3. Validity, etc.........................................................................72
10.7.4. Compliance............................................................................72
10.7.5. Employment of Agents and Counsel......................................................72
10.7.6. Reliance on Documents and Counsel.....................................................72
10.7.7. Agent's Reimbursement.................................................................73
10.8. Rights as a Lender.............................................................................73
10.9. Independent Credit Decision....................................................................73
10.10. Indemnification................................................................................74
11. Successors and Assigns; Lender Assignments and Participations...........................................74
11.1. Assignments by Lenders.........................................................................74
11.1.1. Assignees and Assignment Procedures...................................................74
11.1.2. Terms of Assignment and Acceptance....................................................75
11.1.3. Register..............................................................................76
11.1.4. Acceptance of Assignment and Assumption...............................................77
11.1.5. Federal Reserve Bank..................................................................77
11.1.6. Further Assurances....................................................................77
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11.2. Credit Participants............................................................................77
11.3. Replacement of Lender..........................................................................78
12. Confidentiality.........................................................................................79
13. Foreign Lenders.........................................................................................80
14. Notices.................................................................................................80
15. Amendments, Consents, Waivers, etc......................................................................81
15.1. Lender Consents for Amendments.................................................................81
15.2. Course of Dealing; No Implied Waivers..........................................................82
16. General Provisions......................................................................................83
16.1. Defeasance.....................................................................................83
16.2. No Strict Construction.........................................................................83
16.3. Certain Obligor Acknowledgments................................................................83
16.4. Venue; Service of Process; Certain Waivers.....................................................84
16.5. WAIVER OF JURY TRIAL...........................................................................84
16.6. Interpretation; Governing Law; etc.............................................................85
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EXHIBITS
1 - Excluded Purchasers
2.1.4 - Revolving Note
2.2.3 - English Note
5.1.4 - Guarantee and Security Agreement
5.2.1 - Officer's Certificate
6.4. - Compliance Certificate
6.6.16 - Subordination Terms
6.9.2 - Foreign Subsidiary Subordination Agreement
7.1 - Company and its Subsidiaries
7.1.4 - Options, Warrants, etc.
7.2.2 - Material Agreements
7.3 - Financing Debt, Certain Investments, etc.
7.4 - Changes in Condition
7.6 - Conduct of Operations
7.7 - Litigation
7.11 - Revocation or Termination of Licenses, Franchises, etc.
7.12 - Taxes
7.14 - Multiemployer and Defined Benefit Plans
7.15.2 - Margin Stock
10.1 - Percentage Interests
11.1.1 - Assignment and Acceptance
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THE MARQUEE GROUP, INC.
CREDIT AGREEMENT
This Agreement, dated as of July 31, 1998, is among The Marquee Group,
Inc., a Delaware corporation, the Subsidiaries of The Marquee Group, Inc. from
time to time party hereto, the Lenders from time to time party hereto and
BankBoston, N.A., both in its capacity as a Lender and in its capacity as agent
for the Lenders. The parties agree as follows:
Recitals: Pursuant to this Agreement, the Lenders are extending to the
Company a $35,000,000 revolving credit facility, including a $2,000,000 sublimit
for Letters of Credit and a sublimit for a revolving loan to be made available
to the English Borrower in the amount of (pound)1,600,000. The credit facility
matures on July 31, 2001, and begins reducing availability in July, 1999, as
more fully set forth herein. This credit facility is guaranteed by the Company
and certain of the Company's Subsidiaries and is secured by liens on
substantially all the assets (including the stock of certain Subsidiaries) of
the Company and certain of its Subsidiaries. The proceeds of borrowings under
the credit facility may be used to finance permitted acquisitions and for
general corporate purposes as provided herein.
1. Definitions; Certain Rules of Construction. Certain capitalized terms are
used in this Agreement and in the other Credit Documents with the specific
meanings defined below in this Section 1. Except as otherwise explicitly
specified to the contrary or unless the context clearly requires otherwise, (a)
the capitalized term "Section" refers to sections of this Agreement, (b) the
capitalized term "Exhibit" refers to exhibits to this Agreement, (c) references
to a particular Section include all subsections thereof, (d) the word
"including" shall be construed as "including without limitation", (e) accounting
terms not otherwise defined herein have the meaning provided under GAAP, (f)
references to a particular statute or regulation include all rules and
regulations thereunder and any successor statute, regulation or rules, in each
case as from time to time in effect, (g) references to a particular Person
include such Person's successors and permitted assigns, to the extent assignment
is not prohibited by this Agreement and the other Credit Documents, (h)
references to "Dollars" or "$" mean United States Funds and (i) references to
"(pound)" mean English pounds sterling, the legal currency of the United
Kingdom. References to "the date hereof" mean the date first set forth above.
1.1. "Accumulated Benefit Obligations" means the actuarial present
value of the accumulated benefit obligations under any Plan, calculated in
accordance with Statement No. 87 of the Financial Accounting Standards Board.
1.2. "Affected Lender" is defined in Section 11.3.
1.3. "Affiliate" means, with respect to the Company (or any other
specified Person), any other Person directly or indirectly controlling,
controlled by or under direct or indirect common control with the Company (or
such specified Person), and shall include (a) any
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officer or director or general partner of the Company (or such specified Person)
and (b) any Person of which the Company (or such specified Person) or any
Affiliate (as defined in clause (a) above) of the Company (or such specified
Person) shall, directly or indirectly, beneficially own either (i) at least 10%
of the outstanding equity securities having the general power to vote or (ii) at
least 10% of all equity interests.
1.4. "Agent" means BankBoston in its capacity as agent for the Lenders
hereunder, as well as its successors and assigns in such capacity pursuant to
Section 10.6.
1.5. "Agreed Currency" is defined in Section 9.3
1.6. "Agreement" means this Credit Agreement, as from time to time
amended, modified and in effect.
1.7. "Applicable Margin" means (a) through March 31, 1999, (i) on any
day on which the Reference Leverage Ratio is greater than 400%, the highest
applicable percentage rate set forth in the table below, and (ii) on any day on
which the Reference Leverage Ratio is 400% or less, 2.75% with respect to
Eurocurrencies and 1.50% with respect to the Base Rate, and (b) on each day
after March 31, 1999, the percentage in the table below set opposite the
Reference Leverage Ratio for such date:
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Eurocurrency Base Rate
Reference Leverage Ratio Applicable Margin Applicable Margin
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greater than 400% 3.00% 1.75%
greater than 300% and 400% or less 2.75% 1.50%
greater than 200% and 300% or less 2.50% 1.25%
200% or less 2.00% 0.75%
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Changes in the Applicable Margin shall occur on the third Banking Day after
quarterly financial statements have been furnished to the Agent in accordance
with Sections 6.4.1 or 6.4.2 from time to time. In the event that the financial
statements required to be delivered pursuant to Section 6.4.1 or 6.4.2, as
applicable, are not delivered when due, then during the period from the third
Banking Day after the date such financial statements were due until the date on
which they are actually delivered, the Applicable Margin shall be the maximum
amount set forth in the table above.
1.8. "Applicable Rate" means, at any date, the sum of:
(a) (i) with respect to each portion of the Loan subject to a
Eurocurrency Pricing Option, the sum of the Applicable Margin (which
may change during the Eurocurrency Interest Period for such
Eurocurrency Pricing Option in accordance with
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the definition of "Applicable Margin") with respect to Eurocurrencies
plus the Eurocurrency Rate with respect to such Eurocurrency Pricing
Option;
(ii) with respect to each other portion of the Loan,
the sum of the Applicable Margin with respect to the Base Rate
plus the Base Rate;
plus (b) an additional 2% per annum effective on the day the Agent
provides written notice to the Company or the English Borrower that the
interest rates hereunder are increasing as a result of the occurrence
and continuance of an Event of Default until the earlier of such time
as (i) such Event of Default is no longer continuing or (ii) such Event
of Default is deemed no longer to exist, in each case pursuant to
Section 8.3.
1.9. "Assignee" is defined in Section 11.1.1.
1.10. "Assignment and Acceptance" is defined in Section 11.1.1.
1.11. "BankBoston" means BankBoston, N.A.
1.12. "Banking Day" means any day other than Saturday, Sunday or a day
on which banks in Boston, Massachusetts are authorized or required by law or
other governmental action to close and, if such term is used with reference to a
Eurocurrency Pricing Option, any day on which dealings are effected in the
Eurocurrencies in question by first-class banks in the inter- bank Eurocurrency
markets in New York, New York.
1.13. "Bankruptcy Code" means Title 11 of the United States Code.
1.14. "Bankruptcy Default" means an Event of Default referred to in
Section 8.1.10.
1.15. "Base Rate" means, on any date, the greater of (a) the rate of
interest announced by BankBoston at the Boston Office as its Base Rate or (b)
the sum of 1/2% plus the Federal Funds Rate.
1.16. "Borrowers" means each of the Company and the English Borrower.
1.17. "Boston Office" means the principal banking office of BankBoston
in Boston, Massachusetts.
1.18. "By-laws" means all written by-laws, regulations and all other
similar documents relating to the governance or regulation of any Person other
than an individual, all as from time to time in effect.
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1.19. "Capital Expenditures" means, for any period, amounts added to
the property, plant and equipment or other fixed assets account on the
Consolidated balance sheet of the Company and its Subsidiaries in accordance
with GAAP, in respect of the acquisition, construction, improvement or
replacement of land, buildings, machinery, equipment, leaseholds and any other
real or personal property; provided, however, that Capital Expenditures shall
not include the purchase price for the acquisition of another Person (or
substantially all the assets of another Person) as a going concern permitted by
Section 6.9.
1.20. "Capitalized Lease" means any lease which is required to be
capitalized on the balance sheet of the Company in accordance with GAAP.
1.21. "Capitalized Lease Obligations" means the amount of the liability
reflecting the aggregate discounted amount of future payments under all
Capitalized Leases calculated in accordance with GAAP.
1.22. "Cash Equivalents" means:
(a) negotiable certificates of deposit, time deposits
(including sweep accounts), demand deposits and bankers' acceptances
having a maturity of twelve months or less and issued by any United
States financial institution having capital and surplus and undivided
profits aggregating at least $100,000,000 and rated at least Prime-1 by
Moody's or A-1 by S&P or issued by any Lender;
(b) corporate obligations having a maturity of twelve months
or less and rated at least Prime-1 by Moody's or A-1 by S&P or issued
by any Lender;
(c) any direct obligation of the United States of America or
any agency or instrumentality thereof, or of any state or municipality
thereof, (i) which has a remaining maturity at the time of purchase of
not more than one year or which is subject to a repurchase agreement
with any Lender (or any other financial institution referred to in
clause (a) above) exercisable within one year from the time of purchase
and (ii) which, in the case of obligations of any state or
municipality, is rated at least Aaa by Moody's or AAA by S&P;
(d) any mutual fund or other pooled investment vehicle rated
at least Aa by Moody's or AA by S&P which invests principally in
obligations described above; and
(e) any Investment by a Foreign Subsidiary in its local
jurisdiction comparable to the items described above.
1.23. "Charter" means the articles of organization, certificate of
incorporation, statute, constitution, joint venture agreement, partnership
agreement, limited liability Company
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agreement or other charter document of any Person other than an individual, each
as from time to time in effect.
1.24. "Closing Date" means the Initial Closing Date and each other date
on which any extension of credit is made pursuant to Sections 2.1, 2.2 or 2.3.
1.25. "Code" means the federal Internal Revenue Code of 1986.
1.26. "Commitment" means, with respect to any Lender, such Lender's
obligations to extend the respective credits contemplated by Section 2 and its
interests in such credits at any time outstanding. The original Commitments are
set forth in Exhibit 10.1 and the subsequent Commitments are recorded from time
to time in the Register.
1.27. "Company" means The Marquee Group, Inc., a Delaware corporation.
1.28. "Computation Covenants" means Sections 6.5, 6.6.7, 6.6.10,
6.6.12, 6.6.14, 6.6.16, 6.6.17, 6.9.5, 6.9.6, 6.10.2, 6.11.3 and 6.16.
1.29. "Consolidated" and "Consolidating", when used with reference to
any term, mean that term as applied to the accounts of the Company and all of
its Subsidiaries, or such of its Subsidiaries as may be specified, consolidated
or consolidating, as the case may be, in accordance with GAAP and with
appropriate deductions for minority interests in Subsidiaries.
1.30. "Consolidated EBITDA" means, for any period, the total of:
(a) Consolidated Net Income;
plus (b) all amounts deducted in computing such Consolidated Net
Income in respect of:
(i) depreciation, amortization and other noncash
charges, including deferred compensation (other than
reserves),
(ii) Consolidated Interest Expense, and
(iii) taxes based upon or measured by net income;
minus (c) all amounts included in Consolidated Net Income in
respect of deferred income tax benefits;
plus (d) other adjustments for cost-savings and pro forma amounts
reasonably satisfactory to the Agent.
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1.31. "Consolidated Fixed Charges" means, for any period, the sum of:
(a) Consolidated Interest Expense,
plus (b) the aggregate amount of all mandatory scheduled payments,
sinking fund payments and mandatory reductions in loans as a result of
mandatory reductions in revolving credit availability, all with respect
to Financing Debt of the Company and its Subsidiaries in accordance
with GAAP on a Consolidated basis, including payments in the nature of
principal under Capitalized Leases, but in no event including
contingent prepayments required by Section 4.2,
plus (c) any mandatory dividends paid in cash by the Company or
any of its Subsidiaries to third parties,
plus (d) Capital Expenditures.
1.32. "Consolidated Interest Expense" means, for any period, the total
of:
(a) the aggregate amount of interest, including commitment
fees, payments in the nature of interest under Capitalized Leases and
net payments under Interest Rate Protection Agreements, accrued by the
Company and its Subsidiaries in accordance with GAAP on a Consolidated
basis,
minus (b) to the extent otherwise included in clause (a) above,
upfront, syndication and arranger fees paid on or prior to the Initial
Closing Date, the amortization of deferred financing fees and costs,
original issue discount relating to Indebtedness and accrued interest
on Indebtedness not paid in cash to the extent permitted by the terms,
including subordination terms, of such Indebtedness (including PIK
Interest),
plus (c) actual cash payments with respect to accrued and unpaid
interest (including PIK Interest) that has previously reduced
Consolidated Interest Expense pursuant to clause (b) above.
1.33. "Consolidated Net Income" means, for any period, the net income
(or loss) of the Company and its Subsidiaries, determined in accordance with
GAAP on a Consolidated basis; provided, however, that in the event during such
period the Company and its Subsidiaries make an acquisition permitted by Section
6.9 (whether through stock purchase, asset purchase, merger or consolidation),
Consolidated Net Income shall include the income (or loss) of such acquired
Person (or acquired assets) accrued during such period prior to the date of such
acquisition; and provided, further, however, that Consolidated Net Income shall
not include:
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(a) except as provided in the preceding proviso, the income
(or loss) of any Person (other than a Subsidiary) in which the Company
or any of its Subsidiaries has an ownership interest; provided,
however, that Consolidated Net Income shall include amounts in respect
of the income of such Person when actually received in cash by the
Company or such Subsidiary in the form of dividends or similar
Distributions;
(b) all amounts included in computing such net income (or
loss) in respect of (i) the write-up of any asset on or after December
31, 1997, or (ii) the retirement of any Indebtedness or equity at less
than face value after December 31, 1997;
(c) extraordinary and nonrecurring gains (or losses); and
(d) the income of any Subsidiary to the extent the payment of
such income in the form of a Distribution or repayment of Indebtedness
to the Company or a Wholly Owned Subsidiary is not permitted, whether
on account of any Charter or By-law restriction, any agreement,
instrument, deed or lease or any law, statute, judgment, decree or
governmental order, rule or regulation applicable to such Subsidiary.
Notwithstanding anything to the contrary set forth herein, on any day
immediately preceding the day on which the Company and its Subsidiaries make an
acquisition permitted by Section 6.9, Consolidated Net Income shall be deemed to
include the income (or loss) of such Person to be acquired (or acquired assets).
1.34. "Consolidated Revenues" means, for any period:
(a) the net operating revenues (after reductions for returns,
discounts, commissions and bad debt reserves) of the Company and its
Subsidiaries determined in accordance with GAAP on a Consolidated
basis,
minus (b) any proceeds included in such net operating revenues from
the sale, refinancing, condemnation or destruction of any assets (other
than in the ordinary course of business or the proceeds of business
interruption insurance).
1.35. "Consolidated Total Debt" means, at any date, all Financing Debt
(other than Contingent Acquisition Obligations) of the Company and its
Subsidiaries determined on a Consolidated basis.
1.36. "Contingent Acquisition Obligations" means, as of any date,
obligations of the Company and its Subsidiaries to pay earn-out obligations and
stock put obligations owing to sellers of businesses acquired by the Company and
its Subsidiaries where the amount payable is contingent upon the occurrence of
future events (other than the passage of time) or is not presently fixed or
ascertainable.
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1.37. "Credit Documents" means:
(a) this Agreement, the Revolving Notes, the English Notes,
each Letter of Credit, each draft presented or accepted under a Letter
of Credit, the Guarantee and Security Agreement, the fee agreement
contemplated by Section 5.1.2 and each Interest Rate Protection
Agreement provided by a Lender (or an Affiliate of a Lender) to the
Company or any of its Subsidiaries, each as from time to time in
effect; and
(b) any other present or future agreement (including notes)
from time to time entered into among the Company or any of its
Subsidiaries, on one hand, and the Agent, any Letter of Credit Issuer
or all the Lenders, on the other hand, relating to, amending or
modifying this Agreement or any other Credit Document referred to above
or which is stated to be a Credit Document, each as from time to time
in effect.
1.38. "Credit Obligations" means all present and future liabilities,
obligations and Indebtedness of the Borrowers or any of their Subsidiaries owing
to the Agent or any Lender (or any Affiliate of a Lender) under or in connection
with this Agreement or any other Credit Document, including obligations in
respect of principal, interest, reimbursement obligations under Letters of
Credit and Interest Rate Protection Agreements provided by a Lender (or an
Affiliate of a Lender), commitment fees, Letter of Credit fees amounts provided
for in Sections 3.3.4, 3.6 and 9 and other fees, charges, indemnities and
expenses from time to time owing hereunder or under any other Credit Document
(all whether accruing before or after a Bankruptcy Default and regardless of
whether allowed as a claim in bankruptcy or similar proceedings).
1.39. "Credit Participant" is defined in Section 11.2.
1.40. "Credit Security" means all assets now or from time to time
hereafter in which an Obligor grants a security interest, mortgage or charge (or
required so to be subjected pursuant to the Guarantee and Security Agreement or
any other Credit Document) to secure the payment or performance of any of the
Credit Obligations, including the assets described in section 3.1 of the
Guarantee and Security Agreement.
1.41. "Default" means any Event of Default and any event or condition
which with the passage of time or giving of notice, or both, would become an
Event of Default, including the filing against the Company, any of its
Subsidiaries or any other Obligor of a petition commencing an involuntary case
under the Bankruptcy Code.
1.42. "Delinquency Period" is defined in Section 10.4.4.
1.43. "Delinquent Lender" is defined in Section 10.4.4.
1.44. "Delinquent Payment" is defined in Section 10.4.4.
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1.45. "Designated Acquisition" means the acquisition by the Company of
each of Cambridge Sports International, Park Associates Limited,
Tollin/Robbins/Productions, Halcyon Days Production, Inc., Robbins Entertainment
Group, Inc., Tollin/Robbins/Management LLC, Tony Stephens Associates, Ltd. and
Alphabet City Sports Records, Inc. and Alphabet City Industries, Inc., provided
that the Company shall submit to the Agent, prior to the consummation of each
such acquisition, a due diligence report and shall consummate each such
acquisition on terms previously submitted in writing to the Agent.
1.46. "Distribution" means, with respect to the Company:
(a) the declaration (other than a declaration made expressly
subject to compliance with this Agreement) or payment of any dividend
or distribution on or in respect of any shares of any class of capital
stock of or other equity interests in the Company (or such specified
Person);
(b) the purchase, redemption or other retirement of any shares
of any class of capital stock of or other equity interest in the
Company (or such specified Person) or of options, warrants or other
rights for the purchase of such shares, directly, indirectly through a
Subsidiary or otherwise;
(c) any other general distribution on or in respect of any
shares of any class of capital stock of or equity or other beneficial
interest in the Company (or such specified Person); and
(d) any payment of principal or interest with respect to, or
any purchase, redemption or defeasance of, any Financing Debt of the
Company (or such specified Person) which by its terms or the terms of
any agreement is subordinated to the payment of the Credit Obligations;
provided, however, that the term "Distribution" shall not include (i) dividends
payable in perpetual common stock of or other similar equity interests (or
equity that does not have cash payment requirements while any Credit Obligations
are outstanding) in the Company (or such specified Person) or (ii) payments in
the ordinary course of business in respect of (A) reasonable compensation paid
to employees, officers and directors, (B) advances and reimbursements to
employees for travel expenses, drawing accounts, relocation costs and similar
expenditures, or (C) rent paid to, or accounts payable for services rendered or
goods sold by, non-Affiliates that own capital stock of or other equity
interests in the Company (or such specified Person).
1.47. "Domestic Subsidiary" means any Subsidiary that is not a Foreign
Subsidiary.
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1.48. "English Borrower" means Park Associates Limited, a company
organized under the laws of England.
1.49. "English Loan" is defined in Section 2.2.3.
1.50. "English Notes" is defined in Section 2.2.3.
1.51. "Equivalent Amount of United States Funds" means, as of any date,
with respect to a particular amount of foreign currency outstanding or to be
borrowed or paid at a particular place, an amount of United States Funds which
will enable the Lenders or the Agent, as the case may be, to purchase such
amount of foreign currency, computed at the Lenders' or the Agent's, as the case
may be, spot rate on such date at the place in question; provided, however, that
if no rate of exchange exists for effecting such spot purchases, the Equivalent
Amount of United States Funds shall mean the amount of United States Funds
equivalent to the actual cost to the Lenders or the Agent, as the case may be,
of obtaining the foreign currency in the amount and at the place in question on
such date.
1.52. "ERISA" means the federal Employee Retirement Income Security Act
of 1974.
1.53. "ERISA Group Person" means the Company, any of its Subsidiaries
and any Person which is a member of the controlled group or under common control
with the Company or any of its Subsidiaries within the meaning of section 414 of
the Code or section 4001(a)(14) of ERISA.
1.54. "Eurocurrency" means, with respect to any Lender, deposits of
United States Funds or a Foreign Currency (whether traded pursuant to listed
exchange rates on a recognized inter-bank market or available only on a spot
purchase basis) in a non-United States office or an international banking
facility of such Lender.
1.55. "Eurocurrency Basic Rate" means, for any Eurocurrency Interest
Period, the rate of interest at which Eurocurrency deposits in the designated
Eurocurrency in an amount comparable to the Percentage Interest of each Lender
in the portion of the Loan as to which a Eurocurrency Pricing Option has been
elected and which have a term corresponding to such Eurocurrency Interest Period
are offered to such Lender by first class banks in the inter-bank Eurocurrency
market (or if such Eurocurrency is not available in an inter-bank market, on a
spot purchase basis) for delivery in immediately available funds at a
Eurocurrency Office on the first day of such Eurocurrency Interest Period as
determined by each Lender at approximately 11:00 a.m. (Boston time) two Banking
Days prior to the date upon which such Eurocurrency Interest Period is to
commence (which determination by each Lender shall, in the absence of
demonstrable error, be conclusive) and as furnished promptly thereafter by such
Lender to the Agent.
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1.56. "Eurocurrency Interest Period" means any period, selected as
provided in Section 3.3.1, of one, two, three or six months, or (subject to
availability) nine months, commencing on any Banking Day and ending on the
corresponding date in the subsequent calendar month so indicated (or, if such
subsequent calendar month has no corresponding date, on the last day of such
subsequent calendar month); provided, however, that subject to Section 3.3.3, if
any Eurocurrency Interest Period so selected would otherwise begin or end on a
date which is not a Banking Day, such Eurocurrency Interest Period shall instead
begin or end, as the case may be, on the immediately preceding or succeeding
Banking Day as determined by the Lenders in accordance with the then current
banking practice in the inter-bank Eurocurrency market with respect to
Eurocurrency deposits at the applicable Eurocurrency Office, which determination
by the Lenders shall, in the absence of demonstrable error, be conclusive.
1.57. "Eurocurrency Office" means such non-United States office or
international banking facility of any Lender as such Lender may from time to
time select.
1.58. "Eurocurrency Pricing Options" means the options granted pursuant
to Section 3.3.1 to have the interest on any portion of the Loan computed on the
basis of a Eurocurrency Rate.
1.59. "Eurocurrency Rate" for any Eurocurrency Interest Period means
the rate, rounded upward to the nearest 1/100%, obtained by dividing (a) the
Eurocurrency Basic Rate for such Eurocurrency Interest Period by (b) an amount
equal to 1 minus the Eurocurrency Reserve Rate; provided, however, that if at
any time during such Eurocurrency Interest Period the Eurocurrency Reserve Rate
applicable to any outstanding Eurocurrency Pricing Option changes, the
Eurocurrency Rate for such Eurocurrency Interest Period shall automatically be
adjusted to reflect such change, effective as of the date of such change to the
extent required by the Legal Requirement implementing such change.
1.60. "Eurocurrency Reserve Rate" means the stated maximum rate
(expressed as a decimal) of all reserves (including any basic, supplemental,
marginal or emergency reserve or any reserve asset), if any, as from time to
time in effect, required by any Legal Requirement to be maintained by any
Lender, but without duplication, against (a) "Eurocurrency liabilities" as
specified in Regulation D of the Board of Governors of the Federal Reserve
System applicable to Eurocurrency Pricing Options, (b) any other category of
liabilities that includes Eurocurrency deposits by reference to which the
interest rate on portions of the Loan subject to Eurocurrency Pricing Options is
determined, (c) the principal amount of or interest on any portion of the Loan
subject to a Eurocurrency Pricing Option or (d) any other category of extensions
of credit, or other assets, that includes loans subject to a Eurocurrency
Pricing Option by a non-United States office of any of the Lenders to United
States residents, in each case without the benefits of credits for prorations,
exceptions or offsets that may be available to a Lender.
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1.61. "Event of Default" is defined in Section 8.1.
1.62. "Exchange Act" means the federal Securities Exchange Act of 1934.
1.63. "Excluded Purchaser" means each of the Persons set forth on
Exhibit 1.
1.64. "Excluded Subsidiary" means a Subsidiary acquired solely with the
proceeds of any debt issued to SFX Entertainment, Inc. or a special purpose
Subsidiary formed to acquire the assets of another Person solely with the
proceeds of such debt, and in each case which has been specified in writing by
the Company to the Agent as an "Excluded Subsidiary."
1.65. "Federal Funds Rate" means, for any day, the rate equal to the
weighted average (rounded upward to the nearest 1/8%) of (a) the rates on
overnight federal funds transactions with members of the Federal Reserve System
arranged by federal funds brokers, as such weighted average is published for
such day (or, if such day is not a Banking Day, for the immediately preceding
Banking Day) by the Federal Reserve Bank of New York or (b) if such rate is not
so published for such Banking Day, quotations received by the Agent from three
federal funds brokers of recognized standing reasonably selected by the Agent.
Each determination by the Agent of the Federal Funds Rate shall, in the absence
of demonstrable error, be conclusive.
1.66. "Final Maturity Date" means July 31, 2001.
1.67. "Financial Officer" of the Company (or other specified Person)
means its chief executive officer, chief financial officer, chief operating
officer, chairman, president, treasurer, controller or any of its vice
presidents whose primary responsibility is for its financial affairs, in each
case whose incumbency and signatures have been certified to the Agent by the
secretary or other appropriate attesting officer of the Company (or such
specified Person).
1.68. "Financing Debt" means each of the items described in clauses (a)
through (f) of the definition of the term "Indebtedness" and, without
duplication, any Guarantees of such items.
1.69. "Foreign Currency" means English pounds sterling, the legal
currency of the United Kingdom.
1.70. "Foreign Subsidiary" means each Subsidiary that is organized
under the laws of, and conducting its business primarily in a jurisdiction
outside of, the United States of America and that is not domesticated or dually
incorporated under the laws of the United States of America or the states
thereof.
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1.71. "Funding Liability" means (a) any Eurocurrency deposit which was
used (or deemed by Section 3.3.6 to have been used) to fund any portion of the
Loan subject to a Eurocurrency Pricing Option, and (b) any portion of the Loan
subject to a Eurocurrency Pricing Option funded (or deemed by Section 3.3.6 to
have been funded) with the proceeds of any such Eurocurrency deposit.
1.72. "GAAP" means generally accepted accounting principles as from
time to time in effect, including the published statements and interpretations
of the United States Financial Accounting Standards Board; provided, however,
that (a) for purposes of compliance with Sections 4.2.2, 6 (other than Section
6.4) and the related definitions, "GAAP" means such principles as in effect on
December 31, 1997 as applied by the Company and its Subsidiaries in the
preparation of the most recent annual statements referred to in Section
7.2.1(a), and consistently followed, without giving effect to any subsequent
changes thereto and (b) in the event of a change in generally accepted
accounting principles after such date, either the Company or the Required
Lenders may request a change in the definition of "GAAP", in which case the
parties hereto shall negotiate in good faith with respect to an amendment of
this Agreement implementing such change.
1.73. "Guarantee" means, with respect to the Company (or other
specified Person):
(a) any guarantee by the Company (or such specified Person) of
the payment or performance of, or any contingent obligation by the
Company (or such specified Person) in respect of, any Indebtedness or
other obligation of any primary obligor;
(b) any other arrangement whereby credit is extended to a
primary obligor on the basis of any promise or undertaking of the
Company (or such specified Person), including any binding and
enforceable "comfort letter" or "keep well agreement" written by the
Company (or such specified Person), to a creditor or prospective
creditor of such primary obligor, to (i) pay the Indebtedness of such
primary obligor, (ii) purchase an obligation owed by such primary
obligor, (iii) pay for the purchase or lease of assets or services
regardless of the actual delivery thereof or (iv) maintain the working
capital or solvency of such primary obligor;
(c) any liability of the Company (or such specified Person),
as a general partner of a partnership in respect of Indebtedness or
other obligations of such partnership;
(d) any liability of the Company (or such specified Person)
with respect to the tax liability of others as a member of a group
(other than a group consisting solely of the Company and its
Subsidiaries) that is consolidated for tax purposes; and
(e) obligations, whether contingent or matured, of the Company
(or such specified Person) to reimburse a third party with respect to
letters of credit, bankers
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acceptances, surety bonds, other financial guarantees and Interest Rate
Protection Agreements,
in each case whether or not any of the foregoing are reflected on the balance
sheet of the Company (or such specified Person) or in a footnote thereto;
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business.
1.74. "Guarantee and Security Agreement" is defined in Section 5.1.4.
1.75. "Guarantor" means the Company and each of its Subsidiaries party
to, or which subsequently becomes party to, the Guarantee and Security Agreement
as a Guarantor.
1.76. "Indebtedness" means all obligations which in accordance with
GAAP are required to be classified upon the balance sheet of the Company as
liabilities, but in any event including (without duplication):
(a) borrowed money;
(b) indebtedness evidenced by notes, debentures or similar
instruments;
(c) Capitalized Lease Obligations;
(d) the deferred purchase price of assets, services or
securities, including fixed and determinable amounts with respect to
related noncompetition, consulting and stock repurchase obligations
(other than ordinary trade accounts payable within six months after the
incurrence thereof in the ordinary course of business);
(e) mandatory redemption or dividend rights on capital stock
(or other equity);
(f) reimbursement obligations, whether contingent or matured,
with respect to letters of credit, bankers acceptances, surety bonds,
other financial guarantees and Interest Rate Protection Agreements
(without duplication of other Indebtedness supported or guaranteed
thereby);
(g) liabilities secured by any Lien existing on property owned
or acquired by the Company (or such specified Person), whether or not
the liability secured thereby shall have been assumed; and
(h) all Guarantees in respect of Indebtedness of others.
1.77. "Indemnified Party" is defined in Section 9.2.
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1.78. "Initial Closing Date" means July 31, 1998 or such other date
prior to August 15, 1998 agreed to by the Company and the Agent as the first
Closing Date hereunder.
1.79. "Initial English Closing Date" means the date prior to the Final
Maturity Date agreed to by the English Borrower and the Agent as the first
Closing Date under Section 2.2 and on which all the conditions in Section 5.3
are satisfied.
1.80. "Interest Rate Protection Agreement" means any interest rate
swap, interest rate cap, interest rate hedge or other contractual arrangement
that converts variable interest rates into fixed interest rates, fixed interest
rates into variable interest rates or other similar arrangements.
1.81. "Investment" means, with respect to the Company (or other
specified Person):
(a) any share of capital stock, partnership or other equity
interest, evidence of Indebtedness or other security issued by any
other Person to the Company;
(b) any loan, advance or extension of credit to, or
contribution to the capital of, any other Person;
(c) any Guarantee of the obligations of any other Person;
(d) any acquisition of all, or any division or similar
operating unit of, the business of any other Person or the assets
comprising such business, division or unit; and
(e) any other similar investment.
The investments described in the foregoing clauses (a) through (e)
shall be included in the term "Investment" whether they are made or acquired by
purchase, exchange, issuance of stock or other securities, merger,
reorganization or any other method; provided, however, that the term
"Investment" shall not include (i) trade and customer accounts receivable for
property leased, goods furnished or services rendered in the ordinary course of
business and payable within one year in accordance with customary trade terms,
(ii) deposits, advances or prepayments to suppliers for property leased or
licensed, goods furnished and services rendered in the ordinary course of
business, (iii) advances to employees for relocation and travel expenses,
drawing accounts and similar expenditures, (iv) stock or other securities
acquired in connection with the satisfaction or enforcement of Indebtedness or
claims due to the Company (or such specified Person) or as security for any such
Indebtedness or claim or (v) demand deposits in banks or similar financial
institutions.
In determining the amount of outstanding Investments:
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(A) the amount of any Investment shall be the cost thereof
minus any returns of capital in cash on such Investment (determined in
accordance with GAAP without regard to amounts realized as income on
such Investment);
(B) the amount of any Investment in respect of a purchase
described in clause (d) above shall include the amount of any Financing
Debt assumed in connection with such purchase or secured by any asset
acquired in such purchase (whether or not any Financing Debt is
assumed) or for which any Person that becomes a Subsidiary is liable on
the date on which the securities of such Person are acquired; and
(C) no Investment shall be increased as the result of an
increase in the undistributed retained earnings of the Person in which
the Investment was made or decreased as a result of an equity interest
in the losses of such Person.
1.82. "Legal Requirement" means any present or future requirement
imposed upon any of the Lenders or the Company and its Subsidiaries by any law,
statute, rule, regulation, directive, order or decree (or any interpretation
thereof by courts or of administrative bodies of competent jurisdiction) of the
United States of America, or any jurisdiction in which any Eurocurrency Office
is located or any state or political subdivision of any of the foregoing, or by
any governmental board, governmental or administrative agency, central bank or
monetary authority of the United States of America, any jurisdiction in which
any Eurocurrency Office is located or where the Company or its Subsidiaries, as
applicable, owns property or conducts its business, or any political subdivision
of any of the foregoing. Any such law, statute, rule, regulation, directive,
order, decree, guideline or interpretation imposed on any of the Lenders not
having the force of law shall be deemed to be a Legal Requirement for purposes
of Section 3 if such Lender reasonably believes that compliance therewith is
customary commercial practice.
1.83. "Lender" means each of the Persons listed as lenders on the
signature page hereto, including BankBoston in its capacity as a Lender and such
other Persons who may from time to time own a Percentage Interest in the Credit
Obligations, but the term "Lender" shall not include any Credit Participant.
1.84. "Lending Officer" means such individuals whom the Agent may
designate by notice to the Company from time to time as an officer or employee
who may receive telephone requests for extensions of credit under Sections 2.1.3
and 2.2.2.
1.85. "Letter of Credit" is defined in Section 2.3.1.
1.86. "Letter of Credit Exposure" means, at any date, the sum of (a)
the aggregate face amount of all drafts that may then or thereafter be presented
by beneficiaries under all Letters of Credit then outstanding, plus (b) the
aggregate face amount of all drafts that the Letter of Credit Issuer has
previously accepted under Letters of Credit but has not paid.
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1.87. "Letter of Credit Issuer" means, for any Letter of Credit,
BankBoston or, in the event BankBoston does not for any reason issue a requested
Letter of Credit, another Lender selected by the Company to issue such Letter of
Credit.
1.88. "Lien" means, with respect to the Company (or any other specified
Person):
(a) any lien, encumbrance, mortgage, pledge, charge or
security interest of any kind upon any property or assets of the
Company (or such specified Person), whether now owned or hereafter
acquired, or upon the income or profits therefrom;
(b) the acquisition of any property or asset upon conditional
sale or subject to any other title retention agreement, device or
arrangement (including a Capitalized Lease); and
(c) the sale, assignment, pledge or transfer for security of
any accounts or chattel paper of the Company (or such specified Person)
with recourse.
1.89. "Loan" means, collectively, the Revolving Loan and the English
Loan.
1.90. "Margin Stock" means "margin stock" within the meaning of
Regulations T, U or X of the Board of Governors of the Federal Reserve System.
1.91. "Material Adverse Change" means, since any specified date or from
the circumstances existing immediately prior to the happening of any specified
event, a material adverse change in (a) the business, assets, financial
condition or income of the Company and its Subsidiaries (on a Consolidated
basis) or (b) the ability of the Obligors to perform their obligations under the
Credit Documents or (c) the rights and remedies of the Agent and the Lenders
under the Credit Documents taken as a whole.
1.92. "Material Agreements" is defined in Section 7.2.2.
1.93. "Material Financing Debt" means any Financing Debt (other than
the Credit Obligations) outstanding in an aggregate amount of principal (whether
or not due) and accrued interest exceeding $500,000.
1.94. "Maximum Amount of Revolving Credit" is defined in Section 2.1.2.
1.95. "Moody's" means Moody's Investors Service, Inc., or any successor
thereto.
1.96. "Multiemployer Plan" means any Plan that is a "multiemployer
plan" as defined in section 4001(a)(3) of ERISA.
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1.97. "Net Asset Sale Proceeds" means the cash proceeds of the sale or
disposition of assets (including by way of merger), and the cash proceeds of any
insurance payments on account of the destruction or loss of property, by the
Company or any of its Subsidiaries after the Initial Closing Date, net of (a)
any Indebtedness permitted by Section 6.6.7 (purchase money Indebtedness and
Capitalized Leases) secured by assets being sold in such transaction required to
be paid from such proceeds, (b) taxes that, as estimated by the Company in good
faith, will be required to be paid by the Company or any of its Subsidiaries in
cash as a result of, and within 16 months after, such sale or disposition, (c)
reasonable reserves for liabilities, escrows and purchase price adjustments
resulting from the sale of assets and (d) all reasonable expenses of the Company
or any of its Subsidiaries payable in connection with the sale or disposition
(including reasonable attorney fees and out-of-pocket expenses); provided,
however, that "Net Asset Sale Proceeds" shall not include cash proceeds:
(i) of asset sales permitted by Section 6.11.1,
(ii) of mergers permitted by Section 6.11.2 or
(iii) in an amount not exceeding $750,000 in any
fiscal year in the aggregate that will be used to acquire
replacement or other assets within 360 days after such sale,
disposition, destruction or loss; provided, however, that if
any amount in this clause (iii) is not actually used to
acquire replacement or other assets within such 360-day
period, such amount shall become Net Asset Sale Proceeds.
1.98. "Net Debt Proceeds" means cash proceeds (net of reasonable
out-of-pocket transaction fees and expenses) from the incurrence by the Company
or any of its Subsidiaries after the Initial Closing Date of Financing Debt
other than Financing Debt permitted by Sections 6.6.1 (the Loan), 6.6.7
(purchase money Indebtedness and Capitalized Leases), 6.6.9 (intercompany
Indebtedness) and 6.6.15 (subordinated debt); provided, however, that the term
"Net Debt Proceeds" shall not include cash proceeds received from any such
Financing Debt incurred for the purpose of acquiring a business, or assets
comprising a business (as permitted by Section 6.9.6), or otherwise expanding
the business of the Company and its Subsidiaries, all within 180 days after
receipt of such cash proceeds, as set forth in a written report furnished to the
Agent prior to the receipt of such Net Debt Proceeds, which report shall be
reasonably satisfactory to the Agent.
1.99. "Net Equity Proceeds" means the cash proceeds (net of reasonable
out-of-pocket fees and expenses) received by the Company or any of its
Subsidiaries in connection with any issuance by the Company or any of its
Subsidiaries after the Initial Closing Date of any shares of its capital stock,
other equity interests or options, warrants or other purchase rights to acquire
such capital stock or other equity interests to, or receipt of a capital
contribution from, any Person (other than any Obligors or their officers,
employees and directors or any Excluded Purchasers); provided, however, that the
term "Net Equity Proceeds" shall not include the
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cash proceeds received from any such shares of capital stock or other equity
interests issued for the purpose of acquiring a business, or assets comprising a
business (as permitted by Section 6.9.6), or otherwise expanding the business of
the Company and its Subsidiaries, all within 180 days after receipt of such cash
proceeds, as set forth in a written report furnished to the Agent prior to the
receipt of such Net Equity Proceeds, which report shall be reasonably
satisfactory to the Agent.
1.100. "Nonperforming Lender" is defined in Section 10.4.4.
1.101. "Notes" means, collectively, the Revolving Notes and the English
Notes.
1.102. "Obligor" means the Borrowers and each Guarantor.
1.103. "Overdue Reimbursement Rate" means, at any date, the highest
Applicable Rate then in effect.
1.104. "Payment Currency" is defined in Section 9.3
1.105. "Payment Date" means (a) the last Banking Day of each March,
July, September and December, beginning on the first such date after the date
hereof and (b) the Final Maturity Date.
1.106. "PBGC" means the Pension Benefit Guaranty Corporation or any
successor entity.
1.107. "Percentage Interest" means, with respect to any Lender, the
Commitment of such Lender with respect to the Loan and Letter of Credit
Exposure. For purposes of determining votes or consents by the Lenders, the
Percentage Interest of any Lender shall be computed as follows: (a) at all times
when no Event of Default under Section 8.1.1 and no Bankruptcy Default exists,
the ratio that the respective Commitments of such Lender bears to the total
Commitments of all Lenders as from time to time in effect and reflected in the
Register, and (b) at all other times, the ratio that the respective amounts of
the outstanding Loan and Letter of Credit Exposure owing to such Lender bear to
the total outstanding Loan and Letter of Credit Exposure owing to all Lenders.
1.108. "Performing Lender" is defined in Section 10.4.4.
1.109. "Person" means any present or future natural person or any
corporation, association, partnership, joint venture, limited liability, joint
stock or other company, business trust, trust, organization, business or
government or any governmental agency or political subdivision thereof.
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1.110. "PIK Interest" means any accrued interest payments on Financing
Debt that are made through the issuance of "payment-in-kind" notes or other
similar securities (including book-entry accrual with respect to such postponed
interest payments), all in accordance with the terms of such Financing Debt;
provided, however, that in no event shall PIK Interest include payments made
with cash or Cash Equivalents.
1.111. "Plan" means, at any date, any pension benefit plan subject to
Title IV of ERISA maintained, or to which contributions have been made or are
required to be made, by any ERISA Group Person within six years prior to such
date.
1.112. "Prepayment Account" is defined in Section 4.5.3.
1.113. "Reference Leverage Ratio" means, on any date, the ratio of (a)
Consolidated Total Debt as of the end of the most recent period of four
consecutive fiscal quarters for which financial statements have been furnished
to the Lenders in accordance with Sections 6.4.1 and 6.4.2 prior to such date to
(b) Consolidated EBITDA for such period.
1.114. "Register" is defined in Section 11.1.3.
1.115. "Related Fund" means, with respect to any Lender that is a fund
that invests in senior bank loans, any other fund that invests in senior bank
loans and is managed by the same investment advisor as such Lender or by an
Affiliate of such investment advisor.
1.116. "Replacement Lender" is defined in Section 11.3.
1.117. "Required Lenders" means, with respect to any approval, consent,
modification, waiver or other action to be taken by the Agent or the Lenders
under the Credit Documents which require action by the Required Lenders, such
Lenders as own at least two-thirds of the Percentage Interests; provided,
however, that with respect to any matters referred to in the proviso to Section
15.1, Required Lenders means such Lenders as own at least the respective
portions of the Percentage Interests required by Section 15.1.
1.118. "Revolving Loan" is defined in Section 2.1.4.
1.119. "Revolving Notes" is defined in Section 2.1.4.
1.120. "S&P" means Standard & Poor's, a division of The McGraw Hill
Companies, Inc., or any successor thereto.
1.121. "Securities Act" means the federal Securities Act of 1933.
1.122. "Subsidiary" means any Person of which the Company (or other
specified Person) shall at the time, directly or indirectly through one or more
of its Subsidiaries, (a) own
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at least 50% of the outstanding capital stock (or other shares of beneficial
interest) entitled to vote generally or (b) hold at least 50% of the
partnership, joint venture or similar interests; provided, however, that the
term "Subsidiary" shall not include any Excluded Subsidiary.
1.123. "Syndication Agent" means BancBoston Securities Inc., a Delaware
corporation.
1.124. "Tax" means any present or future tax, levy, duty, impost,
withholding or other charges of whatever nature at any time required by any
Legal Requirement (a) to be paid by any Lender or (b) to be withheld or deducted
from any payment otherwise required hereby to be made to any Lender, in each
case on or with respect to its obligations hereunder, the Loan, any payment in
respect of the Credit Obligations or any Funding Liability not included in the
foregoing; provided, however, that the term "Tax" shall not include taxes
imposed upon or measured by the net income of such Lender or franchise taxes
that are imposed in lieu of net income taxes; provided, further, however, that
the term "Tax" shall include withholding taxes in any event.
1.125. "Uniform Customs and Practice" is defined in Section 2.3.6.
1.126. "United States Funds" means such coin or currency of the United
States of America as at the time shall be legal tender therein for the payment
of public and private debts.
1.127. "Wholly Owned Subsidiary" means any Subsidiary of which all of
the outstanding capital stock (or other shares of beneficial interest) entitled
to vote generally (other than directors' qualifying shares and, in the case of
Foreign Subsidiaries, shares required by Legal Requirements to be held by
foreign nationals) is owned by the Company (or other specified Person) directly,
or indirectly through one or more Wholly Owned Subsidiaries.
2. The Credits.
2.1. Revolving Credit.
2.1.1. Revolving Loan. Subject to all the terms and conditions
of this Agreement and so long as no Default exists, from time to time
on and after the Initial Closing Date and prior to the Final Maturity
Date, the Lenders will, severally in accordance with their respective
Commitments in the Revolving Loan, make loans to the Company in such
amounts as may be requested by the Company in accordance with Section
2.1.3. The sum of the aggregate principal amount of loans made under
this Section 2.1.1 at any one time outstanding plus the English Loan
plus the Letter of Credit Exposure shall in no event exceed the Maximum
Amount of Revolving Credit. In no event will the principal amount of
loans at any one time outstanding made by any Lender pursuant to this
Section 2.1, together with such Lender's Percentage Interest in
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the English Loan and in the Letter of Credit Exposure, exceed such
Lender's Commitment with respect to the Revolving Loan.
2.1.2. Maximum Amount of Revolving Credit. The term "Maximum
Amount of Revolving Credit" means, on any date, the lesser of (a) (i)
the amount specified opposite such date in the table below:
Period Amount
------ ------
Through December 31, 1999 $35,000,000
January 1, 2000 through March 31, 2000 $31,500,000
April 1, 2000 through June 30, 2000 $28,000,000
July 1, 2000 through September 30, 2000 $24,500,000
October 1, 2000 through December 31, 2000 $21,000,000
January 1, 2001 through Final Maturity Date $17,500,000
Final Maturity Date Zero
minus (ii) Net Asset Sale Proceeds described in Section 4.2.2, Net Debt
Proceeds described in Section 4.2.3 and Net Equity Proceeds described
in Section 4.2.4, or (b) the amount (in an integral multiple of
$100,000) to which the amount set forth in clause (a)(i) above shall
have been irrevocably reduced from time to time by at least five
Banking Days notice from the Company to the Agent. For purposes of
computing the Maximum Amount of Revolving Credit and calculating the
amount of each loan made pursuant to Sections 2.1 and 2.2, advances in
a Foreign Currency shall be deemed to remain at the Equivalent Amount
of United States Funds determined by currency exchange rates on the
date of such advance until such advance is repaid (on a first advanced,
first repaid method of calculation).
2.1.3. Borrowing Requests. The Company may from time to time
request a loan under Section 2.1.1 by providing to the Agent a notice
(which may be given by a telephone call received by a Lending Officer
if promptly confirmed in writing). Such notice must be not later than
2:00 p.m. (Boston time) on the first Banking Day (third Banking Day if
any portion of such loan will be subject to a Eurocurrency Pricing
Option on the requested Closing Date) prior to the requested Closing
Date for such loan. The notice must specify (a) the amount of the
requested loan, which shall be not less than $500,000 and an integral
multiple of $100,000 and (b) the requested Closing Date therefor, which
shall be a Banking Day. Upon receipt of such notice, the Agent will
promptly inform each other Lender (by telephone or otherwise). Each
such loan will be made at the Boston Office by depositing the amount
thereof to the general account of the Company with the Agent. In
connection with each such loan, the Company shall furnish to the Agent
a certificate in substantially the form of Exhibit 5.2.1.
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2.1.4. Revolving Notes. The aggregate principal amount of the
loans outstanding from time to time under this Section 2.1 is referred
to as the "Revolving Loan". The Agent shall keep a record of the
Revolving Loan and the respective interests of the Lenders therein as
part of the Register, which shall evidence the Revolving Loan. The
Revolving Loan shall be deemed owed to each Lender having a Commitment
therein severally in accordance with such Lender's Percentage Interest
therein, and all payments thereon shall be for the account of each
Lender in accordance with its Percentage Interest therein. Upon written
request of any Lender, the Company's obligations to pay such Lender's
Percentage Interest in the Revolving Loan shall be further evidenced by
a separate note of the Company in substantially the form of Exhibit
2.1.4 (the "Revolving Notes"), payable to such Lender in accordance
with such Lender's Percentage Interest in the Revolving Loan.
2.2. English Credit.
2.2.1. English Loan. Subject to all the terms and conditions
of this Agreement and so long as no Default exists, from time to time
on and after the Initial English Closing Date and prior to the Final
Maturity Date, the Lenders will, severally in accordance with their
respective Commitments in the English Loan, make loans to the English
Borrower in the Foreign Currency in such amounts as may be requested by
the English Borrower in accordance with Section 2.2.2. The sum of the
aggregate principal amount of loans made under this Section 2.2.1 at
any one time outstanding shall in no event exceed (pound)1,600,000. In
addition, the sum of the Revolving Loan plus the English Loan plus the
Letter of Credit Exposure shall in no event exceed the Maximum Amount
of Revolving Credit.
2.2.2. Borrowing Requests. The English Borrower may from time
to time request a loan under Section 2.2.1 by providing to the Agent a
notice (which may be given by a telephone call received by a Lending
Officer if promptly confirmed in writing). Such notice must be not
later than 2:00 p.m. (Boston time) on the third Banking Day prior to
the requested Closing Date for such loan. The notice must specify (a)
the amount of the requested loan, which shall be not less than $500,000
in an Equivalent Amount of United States Funds (or a similar integral
multiple with respect to a Foreign Currency) and an integral multiple
of $100,000 in an Equivalent Amount of United States Funds (or a
similar integral multiple with respect to a Foreign Currency) and (b)
the requested Closing Date therefor, which shall be a Banking Day. Upon
receipt of such notice, the Agent will promptly inform each other
Lender (by telephone or otherwise). Each such loan will be made by wire
transfer as directed by the English Borrower. In connection with each
such loan, the English Borrower shall furnish to the Agent a
certificate in substantially the form of Exhibit 5.2.1.
2.2.3. English Notes. The aggregate principal amount of the
loans outstanding from time to time under this Section 2.2 is referred
to as the "English Loan". The
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Agent shall keep a record of the English Loan and the respective
interests of the Lenders therein as part of the Register, which shall
evidence the English Loan. The English Loan shall be deemed owed to
each Lender having a Commitment therein severally in accordance with
such Lender's Percentage Interest therein, and all payments thereon
shall be for the account of each Lender in accordance with its
Percentage Interest therein. Upon written request of any Lender, the
Company's obligations to pay such Lender's Percentage Interest in the
English Loan shall be further evidenced by a separate note of the
English Borrower in substantially the form of Exhibit 2.2.3 (the
"English Notes"), payable to such Lender in accordance with such
Lender's Percentage Interest in the English Loan.
2.3. Letters of Credit.
2.3.1. Issuance of Letters of Credit. Subject to all the terms
and conditions of this Agreement and so long as no Default exists, from
time to time on and after the Initial Closing Date and prior to the
date five Banking Days preceding the Final Maturity Date, the Letter of
Credit Issuer will issue for the account of the Company one or more
irrevocable standby letters of credit (the "Letters of Credit"). The
sum of Letter of Credit Exposure plus the Revolving Loan plus the
English Loan shall in no event exceed the Maximum Amount of Revolving
Credit. Letter of Credit Exposure shall in no event exceed $2,000,000
in the aggregate.
2.3.2. Requests for Letters of Credit. The Company may from
time to time request a Letter of Credit to be issued by providing to
the Letter of Credit Issuer (and the Agent if the Letter of Credit
Issuer is not the Agent) a notice which is actually received not less
than five Banking Days (for standby Letters of Credit) and one Banking
Day (for documentary Letters of Credit) prior to the requested Closing
Date for such Letter of Credit specifying (a) the amount of the
requested Letter of Credit, (b) the beneficiary thereof, (c) the
requested Closing Date and (d) a summary of the principal terms of the
text for such Letter of Credit. Each Letter of Credit will be issued by
forwarding it to the Company or to such other Person as directed in
writing by the Company. In connection with the issuance of any Letter
of Credit, the Company shall furnish to the Letter of Credit Issuer
(and the Agent if the Letter of Credit Issuer is not the Agent) a
certificate in substantially the form of Exhibit 5.2.1 and any
customary application forms required by the Letter of Credit Issuer. In
the event of any inconsistency between such application forms and this
Agreement, this Agreement shall govern.
2.3.3. Form and Expiration of Letters of Credit. Each Letter
of Credit issued under this Section 2.3 and each draft accepted or paid
under such a Letter of Credit shall be issued, accepted or paid, as the
case may be, by the Letter of Credit Issuer at its principal office. No
Letter of Credit shall provide for the payment of drafts drawn
thereunder, and no draft shall be payable, at a date which is later
than the earlier of
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(a) the date 12 months after the date of issuance (which expiration
date may be extended at the option of the Letter of Credit Issuer for
additional 12-month periods ending prior to the date referred to in
clause (b) below) or (b) five Banking Days prior to the Final Maturity
Date. Each Letter of Credit and each draft accepted under a Letter of
Credit shall be in such form and minimum amount, and shall contain such
terms, as the Letter of Credit Issuer and the Company may agree upon at
the time such Letter of Credit is issued.
2.3.4. Lenders' Participation in Letters of Credit. Upon the
issuance of any Letter of Credit, a participation therein, in an amount
equal to each Lender's Percentage Interest in the Loan, shall
automatically be deemed granted by the Letter of Credit Issuer to each
such Lender on the date of such issuance and such Lenders shall
automatically be obligated, as set forth in Section 10.4, to reimburse
the Letter of Credit Issuer to the extent of their respective
Percentage Interests in the Loan for all obligations incurred by the
Letter of Credit Issuer to third parties in respect of such Letter of
Credit not reimbursed by the Company. The Letter of Credit Issuer will
send to each Lender (and the Agent if the Letter of Credit Issuer is
not the Agent) a confirmation regarding the participations in Letters
of Credit outstanding during such month.
2.3.5. Reimbursement of Payment. At such time as a Letter of
Credit Issuer makes any payment on a draft properly presented or
accepted under a Letter of Credit, the amount of such payment shall be
considered a loan under Section 2.1.1 (regardless of whether the
conditions set forth in Section 5.2 are satisfied) and part of the
Revolving Loan as if the Company had paid in full the amount required
with respect to the Letter of Credit by borrowing such amount under
Section 2.1.1, except as provided below. In the event such amount would
cause the Loan to exceed the Maximum Amount of Revolving Credit, the
Company will on demand pay to the Agent in immediately available funds
the amount of such payment.
2.3.6. Uniform Customs and Practice. The Uniform Customs and
Practice for Documentary Credits (1993 Revision), International Chamber
of Commerce Publication No. 500, and any subsequent revisions thereof
approved by a Congress of the International Chamber of Commerce and
adhered to by the Letter of Credit Issuer (the "Uniform Customs and
Practice"), shall be binding on the Company and the Letter of Credit
Issuer except to the extent otherwise expressly provided herein, in any
Letter of Credit or in any other Credit Document. Anything in the
Uniform Customs and Practice to the contrary notwithstanding:
(a) Neither the Company nor any beneficiary of any Letter of
Credit shall be deemed an agent of any Letter of Credit Issuer.
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(b) With respect to each Letter of Credit, neither the Letter
of Credit Issuer nor its correspondents shall be responsible for or
shall have any duty to ascertain (unless the Letter of Credit Issuer or
such correspondent is grossly negligent or willful in failing so to
ascertain):
(i) the genuineness of any signature or the validity,
form, sufficiency, accuracy, genuineness or legal effect of
any endorsements;
(ii) delay in giving, or failure to give, notice of
arrival, notice of refusal of documents or of discrepancies in
respect of which any Letter of Credit Issuer refuses the
documents or any other notice, demand or protest;
(iii) the performance by any beneficiary under any
Letter of Credit of such beneficiary's obligations to the
Company;
(iv) inaccuracy in any notice received by the Letter
of Credit Issuer; or
(v) the validity, sufficiency, genuineness or legal
effect of any instrument, draft, certificate or other document
required by such Letter of Credit to be presented before
payment of a draft if such instrument, draft, certificate or
other document appears on its face to comply with the
requirements of the Letter of Credit, or the office held by or
the authority of any Person signing any of the same.
(c) Except insofar as a particular Letter of Credit contains
express, contrary instructions, the Letter of Credit Issuer may honor
as complying with the terms of any Letter of Credit and with this
Agreement any drafts or other documents otherwise in order signed or
issued by an administrator, executor, conservator, trustee in
bankruptcy, debtor in possession, assignee for benefit of creditors,
liquidator, receiver or other legal representative of the party
authorized under such Letter of Credit to draw or issue such drafts or
other documents.
(d) The occurrence of any of the events referred to in the
Uniform Customs and Practice or in the preceding clauses of this
Section 2.3.6 shall not affect or prevent the vesting of any of the
Letter of Credit Issuer's rights or powers hereunder or the Company's
obligation to make reimbursement of amounts paid under any Letter of
Credit or any draft accepted thereunder.
(e) The Company will promptly examine (i) each Letter of
Credit (and any amendments thereof) sent to it by the Letter of Credit
Issuer and (ii) all instruments and documents delivered to it from time
to time by the Letter of Credit Issuer. The Company will notify the
Letter of Credit Issuer of any claim of noncompliance by notice
actually received within two Banking Days after receipt of any of the
foregoing
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documents. The Letter of Credit Issuer shall have no obligation or
responsibility to send any such Letter of Credit or any such instrument
or document to the Company.
(f) In the event of any conflict between the provisions of
this Agreement and the Uniform Customs and Practice, the provisions of
this Agreement shall govern.
2.3.7. Subrogation. Upon any payment by a Letter of Credit
Issuer under any Letter of Credit and until the reimbursement of such
Letter of Credit Issuer by the Company with respect to such payment,
the Letter of Credit Issuer shall be entitled to be subrogated to, and
to acquire and retain, the rights (if any) which the Person to whom
such payment is made may have against the Company, all for the benefit
of the Lenders. The Company will take such action as the Letter of
Credit Issuer may reasonably request, including requiring the
beneficiary of any Letter of Credit to execute such documents as the
Letter of Credit Issuer may reasonably request, to assure and confirm
to the Letter of Credit Issuer such subrogation and such rights,
including the rights, if any, of the beneficiary to whom such payment
is made in accounts receivable, inventory and other properties and
assets of any Obligor.
2.3.8. Modification, Consent, etc. If the Company requests or
consents in writing to any modification or extension of any Letter of
Credit, or waives in writing any failure of any draft, certificate or
other document to comply with the terms of such Letter of Credit, and
if the Letter of Credit Issuer consents thereto, the Letter of Credit
Issuer shall be entitled to rely on such written request, consent or
waiver. This Agreement shall be binding upon the Company with respect
to such Letter of Credit as so modified or extended, and with respect
to any action taken or omitted by such Letter of Credit Issuer pursuant
to any such request, consent or waiver.
2.4. Application of Proceeds.
2.4.1. Revolving Loan. Subject to Section 2.4.4, the Company
will apply the proceeds of the Revolving Loan for working capital and
other lawful corporate purposes of the Company and its Subsidiaries.
2.4.2. English Loan. Subject to Section 2.4.4, the English
Borrower will apply the proceeds of the English Loan for working
capital and other lawful corporate purposes of the English Borrower.
2.4.3. Letters of Credit. Letters of Credit shall be issued
only for lawful corporate purposes.
2.4.4. Specifically Prohibited Applications. The Borrowers
will not, directly or indirectly, apply any part of the proceeds of any
extension of credit made pursuant to the Credit Documents to purchase
or to carry Margin Stock in a manner that would
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result in a violation of Regulation U of the Board of Governors of the
Federal Reserve System or to any transaction prohibited by the Credit
Documents or by Legal Requirements applicable to the Lenders.
2.5. Nature of Obligations of Lenders to Make Extensions of Credit. The
Lenders' obligations to extend credit under this Agreement are several and are
not joint or joint and several. If on any Closing Date any Lender shall fail to
perform its obligations under this Agreement, Lenders that have not failed to
perform their obligations to make the extensions of credit contemplated by
Section 2 may, if any such Lender so desires, assume, in such proportions as
such Lenders may agree, the obligations of any Lender who has so failed and the
Percentage Interests shall be appropriately adjusted. The provisions of this
Section 2.5 shall not affect the rights of the Company against any Lender
failing to perform its obligations hereunder.
3. Interest; Eurocurrency Pricing Options; Fees.
3.1. Interest on Revolving Loan. The Revolving Loan shall accrue and
bear interest at a rate per annum which shall at all times equal the Applicable
Rate. Prior to any stated or accelerated maturity of the Revolving Loan, the
Company will, on each Payment Date, pay the accrued and unpaid interest on the
portion of the Revolving Loan which was not subject to a Eurocurrency Pricing
Option. On the last day of each Eurocurrency Interest Period or on any earlier
termination of any Eurocurrency Pricing Option, the Company will pay the accrued
and unpaid interest on the portion of the Revolving Loan which was subject to
the Eurocurrency Pricing Option which expired or terminated on such date. In the
case of any Eurocurrency Interest Period longer than three months, the Company
will also pay the accrued and unpaid interest on the portion of the Revolving
Loan subject to the Eurocurrency Pricing Option having such Eurocurrency
Interest Period at three-month intervals, the first such payment to be made on
the last Banking Day of the three-month period which begins on the first day of
such Eurocurrency Interest Period. On the stated or any accelerated maturity of
the Revolving Loan, the Company will pay all accrued and unpaid interest on the
Revolving Loan, including any accrued and unpaid interest on any portion of the
Revolving Loan which is subject to a Eurocurrency Pricing Option. All payments
of interest hereunder shall be made to the Agent for the account of each Lender
in accordance with such Lender's Percentage Interest therein.
3.2. Interest On English Loan. The English Loan shall accrue and bear
interest at a rate per annum which shall at all times equal the Applicable Rate.
Prior to any stated or accelerated maturity of the English Loan, the English
Borrower will, on the last day of each Eurocurrency Interest Period or on any
earlier termination of any Eurocurrency Pricing Option, pay the accrued and
unpaid interest on the portion of the English Loan which was subject to the
Eurocurrency Pricing Option which expired or terminated on such date. In the
case of any Eurocurrency Interest Period longer than three months, the English
Borrower will also pay the accrued and unpaid interest on the portion of the
English Loan subject to the Eurocurrency Pricing Option having such Eurocurrency
Interest Period at three-month
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intervals, the first such payment to be made on the last Banking Day of the
three-month period which begins on the first day of such Eurocurrency Interest
Period. On the stated or any accelerated maturity of the English Loan, the
English Borrower will pay all accrued and unpaid interest on the English Loan.
All payments of interest hereunder shall be made to the Agent for the account of
each Lender in accordance with such Lender's Percentage Interest therein.
3.3. Eurocurrency Pricing Options.
3.3.1. Election of Eurocurrency Pricing Options. Subject to
all of the terms and conditions hereof and so long as no Default
exists, the Company or the English Borrower, as applicable, may from
time to time, by irrevocable notice to the Agent actually received by
noon (Boston time) not less than three Banking Days prior to the
commencement of the Eurocurrency Interest Period selected in such
notice, elect to have such portion of the Loan as the Company or the
English Borrower, as applicable, may specify in such notice accrue and
bear interest during the Eurocurrency Interest Period so selected at
the Applicable Rate computed on the basis of the Eurocurrency Rate. In
the event the Company or the English Borrower, as applicable, at any
time does not elect a Eurocurrency Pricing Option under this Section
3.3.1 for any portion of the Loan (upon termination of a Eurocurrency
Pricing Option or otherwise), then such portion of the Revolving Loan
will accrue and bear interest at the Applicable Rate based on the Base
Rate and such portion of the English Loan will accrue and bear interest
at the Applicable Rate based on the Eurocurrency Rate with a one month
Eurocurrency Interest Period. No election of a Eurocurrency Pricing
Option shall become effective:
(a) if, prior to the commencement of any such Eurocurrency
Interest Period, the Agent reasonably determines that (i) the electing
or granting of the Eurocurrency Pricing Option in question would
violate a Legal Requirement, (ii) Eurocurrency deposits in the
applicable currency, in an amount comparable to the amount of the Loan
as to which such Eurocurrency Pricing Option has been elected and which
have a term corresponding to the proposed Eurocurrency Interest Period
are not readily available in the inter-bank Eurocurrency market, (iii)
by reason of circumstances affecting the inter- bank Eurocurrency
market, adequate and reasonable methods do not exist for ascertaining
the interest rate applicable to such deposits for the proposed
Eurocurrency Interest Period or (iv) if the proposed portion of the
Loan is in a Foreign Currency, any change in national or international
financial, political or economic conditions or currency exchange rates
or exchange or currency controls would, in the good faith opinion of
the Agent, make it impracticable for the proposed portion of the Loan
to be made in such Foreign Currency; or
(b) if the Required Lenders shall have advised the Agent by
telephone or otherwise at or prior to noon (Boston time) on the second
Banking Day prior to the
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commencement of such proposed Eurocurrency Interest Period (and shall
have subsequently confirmed in writing) that, after reasonable efforts
to determine the availability of such Eurocurrency deposits, the
Required Lenders reasonably anticipate that Eurocurrency deposits in
the applicable currency, in an amount equal to the Percentage Interest
of the Required Lenders in the portion of the Loan as to which such
Eurocurrency Pricing Option has been elected and which have a term
corresponding to the Eurocurrency Interest Period in question will not
be offered in the Eurocurrency market to the Required Lenders at a rate
of interest that does not exceed the anticipated Eurocurrency Basic
Rate.
3.3.2. Notice to Lenders and Borrowers. The Agent will
promptly inform each Lender (by telephone or otherwise) of each notice
received by it from the Company or the English Borrower, as applicable,
pursuant to Section 3.3.1 and of the Eurocurrency Interest Period
specified in such notice. Upon determination by the Agent of the
Eurocurrency Rate for such Eurocurrency Interest Period or in the event
such election shall not become effective, the Agent will promptly
notify the Company or the English Borrower, as applicable, and each
Lender (by telephone or otherwise) of the Eurocurrency Rate so
determined or why such election did not become effective, as the case
may be.
3.3.3. Selection of Eurocurrency Interest Periods.
Eurocurrency Interest Periods shall be selected so that:
(a) the minimum portion of the Loan subject to any
Eurocurrency Pricing Option shall be $1,000,000 in an Equivalent Amount
of United States Funds and an integral multiple of $100,000 in an
Equivalent Amount of United States Funds;
(b) no more than six Eurocurrency Pricing Options with respect
to the Revolving Loan and no more than three Eurocurrency Pricing
Options with respect to the English Loan shall be outstanding at any
one time; and
(c) no Eurocurrency Interest Period shall expire later than
the Final Maturity Date.
3.3.4. Additional Interest. If any portion of the Loan subject
to a Eurocurrency Pricing Option is repaid, or any Eurocurrency Pricing
Option is terminated for any reason (including acceleration of
maturity), on a date which is prior to the last Banking Day of the
Eurocurrency Interest Period applicable to such Eurocurrency Pricing
Option, the Company or the English Borrower, as applicable, will pay to
the Agent for the account of each Lender in accordance with such
Lender's Percentage Interest, in addition to any amounts of interest
otherwise payable hereunder, an amount equal to the present value
(calculated in accordance with this Section 3.3.4) of interest for the
unexpired portion of such Eurocurrency Interest Period on the
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portion of the Loan so repaid, or as to which a Eurocurrency Pricing
Option was so terminated, at a per annum rate equal to the excess, if
any, of (a) the Eurocurrency Rate applicable to such Eurocurrency
Pricing Option minus (b) the rate of interest obtainable by the Agent
upon the purchase of debt securities customarily issued by the Treasury
of the United States of America which have a maturity date
approximating the last Banking Day of such Eurocurrency Interest
Period. The present value of such additional interest shall be
calculated by discounting the amount of such interest for each day in
the unexpired portion of such Eurocurrency Interest Period from such
day to the date of such repayment or termination at a per annum
interest rate equal to the interest rate determined pursuant to clause
(b) of the preceding sentence, and by adding all such amounts for all
such days during such period. The determination by the Agent of such
amount of interest shall, in the absence of demonstrable error, be
conclusive. For purposes of this Section 3.3.4, if any portion of the
Loan which was to have been subject to a Eurocurrency Pricing Option is
not outstanding on the first day of the Eurocurrency Interest Period
applicable to such Eurocurrency Pricing Option other than for reasons
described in Section 3.3.1 or as a result of the failure of any Lender
to perform its obligations under Section 2, the Company or the English
Borrower, as applicable, shall be deemed to have terminated such
Eurocurrency Pricing Option.
3.3.5. Violation of Legal Requirements. If any mandatory Legal
Requirement shall prevent any Lender from funding or maintaining
through the purchase of deposits in the interbank Eurocurrency market
any portion of the Loan subject to a Eurocurrency Pricing Option or
otherwise from giving effect to such Lender's obligations as
contemplated by Section 3.3, (a) the Agent may by notice to the Company
or the English Borrower, as applicable, terminate the affected
Eurocurrency Pricing Options of the affected Lender, (b) the portion of
the Loan subject to such terminated Eurocurrency Pricing Options shall
immediately bear interest thereafter at the Applicable Rate computed on
the basis of the Base Rate and (c) the Company or the English Borrower,
as applicable, shall make any payment required by Section 3.3.4.
3.3.6. Funding Procedure. The Lenders may fund any portion of
the Loan subject to a Eurocurrency Pricing Option out of any funds
available to the Lenders. Regardless of the source of the funds
actually used by any of the Lenders to fund any portion of the Loan
subject to a Eurocurrency Pricing Option, however, all amounts payable
hereunder, including the interest rate applicable to any such portion
of the Loan and the amounts payable under Sections 3.3.4 and 3.6, shall
be computed as if each Lender had actually funded such Lender's
Percentage Interest in such portion of the Loan through the purchase of
deposits in such amount of the type by which the Eurocurrency Basic
Rate was determined with a maturity the same as the applicable
Eurocurrency Interest Period relating thereto and through the transfer
of such deposits from an office of the Lender having the same location
as the applicable Eurocurrency Office to one of such Lender's offices
in the United States of America.
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3.4. Commitment Fees. In consideration of the Lenders' commitments to
make the extensions of credit provided for in Sections 2.1 and 2.2, while such
commitments are outstanding, the Company will pay to the Agent for the account
of the Lenders in accordance with the Lenders' respective Commitments in the
Loan, on each Payment Date, quarterly in arrears, an amount equal to interest
computed at the rate of 0.375% per annum on the amount by which (a) the daily
Maximum Amount of Revolving Credit during the three-month period or portion
thereof ending on such Payment Date exceeded (b) the sum of (i) the daily Loan
during such period or portion thereof plus (ii) the daily Letter of Credit
Exposure during such period or portion thereof.
3.5. Letter of Credit Fees. The Company will pay to the Agent for the
account of each of the Lenders, in accordance with the Lenders' respective
Percentage Interests, on each Payment Date, a Letter of Credit fee equal to
interest at a rate per annum equal to the Applicable Margin indicated for the
Eurocurrency Rate on the average daily Letter of Credit Exposure during the
three-month period or portion thereof ending on such Payment Date. The Company
will pay to the Letter of Credit Issuer customary service charges and expenses
for its services in connection with the Letters of Credit at the times and in
the amounts from time to time in effect in accordance with its general rate
structure, including reasonable fees and out-of-pocket expenses relating to
issuance, amendment, negotiation, cancellation and similar operations.
3.6. Changes in Circumstances; Yield Protection.
3.6.1. Reserve Requirements, etc. If any Legal Requirement
shall (a) impose, modify, increase or deem applicable any applicable
insurance assessment, reserve, special deposit or similar requirement
against any Funding Liability or the Letters of Credit (which is not
already included in the calculation of the Applicable Rate), (b)
impose, modify, increase or deem applicable any other requirement or
condition with respect to any Funding Liability or the Letters of
Credit, or (c) change the basis of taxation of Funding Liabilities or
payments in respect of any Letter of Credit (other than changes in the
rate of taxes measured by the overall net income of such Lender and
applicable franchise taxes) and the effect of any of the foregoing
shall be to increase the cost to any Lender of issuing, making, funding
or maintaining its respective Percentage Interest in any portion of the
Loan subject to a Eurocurrency Pricing Option or any Letter of Credit
or to require such Lender to make any payment or forego any amounts
otherwise payable to such Lender under this Agreement (other than any
Tax or any reserves that are included in computing the Eurocurrency
Reserve Rate), then such Lender may claim compensation from the Company
under Section 3.6.5.
3.6.2. Taxes. All payments of the Credit Obligations shall be
made without set-off or counterclaim and free and clear of any
deductions, including deductions for Taxes, unless the Company is
required by law to make such deductions. If (a) any
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Lender shall be subject to any withholding or other Tax with respect to
any payment of the Credit Obligations or its obligations hereunder or
(b) the Company shall be required to withhold or deduct any Tax on any
payment on the Credit Obligations, then such Lender may claim
compensation from the Company under Section 3.6.5 to the extent such
Lender is then in compliance with any applicable requirements of
Section 13. Whenever Taxes must be withheld by the Company with respect
to any payments of the Credit Obligations, the Company shall promptly
furnish to the Agent for the account of the applicable Lender official
receipts (to the extent that the relevant governmental authority
delivers such receipts) evidencing payment of any such Taxes so
withheld. If the Company fails to pay any such Taxes when due or fails
to remit to the Agent for the account of the applicable Lender the
required receipts evidencing payment of any such Taxes so withheld or
deducted, the Company shall indemnify the affected Lender for any
incremental Taxes and interest or penalties that may become payable by
such Lender as a result of any such failure. In the event any Lender
receives a refund of any Taxes for which it has received payment from
the Company under this Section 3.6.2, such Lender shall promptly pay
the amount of such refund to the Company, together with any interest
thereon actually earned by such Lender.
3.6.3. Capital Adequacy. If any Lender shall determine that
compliance by such Lender with any Legal Requirement regarding capital
adequacy of banks or bank holding companies has or would have the
effect of reducing the rate of return on the capital of such Lender and
its Affiliates as a consequence of such Lender's commitment to make the
extensions of credit contemplated hereby, or such Lender's maintenance
of the extensions of credit contemplated hereby, to a level below that
which such Lender could have achieved but for such compliance (taking
into consideration the policies of such Lender and its Affiliates with
respect to capital adequacy immediately before such compliance) by an
amount reasonably deemed by such Lender to be material, then such
Lender may claim compensation from the Company under Section 3.6.5.
3.6.4. Regulatory Changes. If any Lender shall determine that
(a) any change in any Legal Requirement (including any new Legal
Requirement) after the date hereof shall directly or indirectly (i)
reduce the amount of any sum received or receivable by such Lender with
respect to the Loan or the Letters of Credit or the return to be earned
by such Lender on the Loan or the Letters of Credit, (ii) impose a cost
on such Lender or any Affiliate of such Lender that is attributable to
the making or maintaining of, or such Lender's commitment to make, its
portion of the Loan or the Letters of Credit, or (iii) require such
Lender or any Affiliate of such Lender to make any payment on, or
calculated by reference to, the gross amount of any amount received by
such Lender under any Credit Document (other than Taxes or income or
franchise taxes), and (b) such reduction, increased cost or payment
shall not be fully compensated for by an adjustment in the Applicable
Rate or the Letter of Credit fees, then such Lender may claim
compensation from the Company under Section 3.6.5.
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3.6.5. Compensation Claims. Within 30 days after the receipt
by the Company of a certificate from any Lender setting forth why it is
claiming compensation under this Section 3.6 and computations (in
reasonable detail) of the amount thereof, the Company shall pay to such
Lender such additional amounts as such Lender sets forth in such
certificate as sufficient fully to compensate it on account of the
foregoing provisions of this Section 3.6, together with interest on
such amount from the 30th day after receipt of such certificate until
payment in full thereof at the Overdue Reimbursement Rate. The
determination by such Lender of the amount to be paid to it and the
basis for computation thereof hereunder shall be conclusive so long as
(a) such determination is made in good faith, (b) no demonstrable error
appears therein and (c) the Lender uses reasonable averaging and
attribution methods. The Company shall be entitled to replace any such
Lender in accordance with Section 11.3.
3.6.6. Mitigation. Each Lender shall take such commercially
reasonable steps as it may determine are not disadvantageous to it,
including changing lending offices to the extent feasible, in order to
reduce amounts otherwise payable by the Company to such Lender pursuant
to Sections 3.3.4 and 3.6 or to make Eurocurrency Pricing Options
available under Sections 3.3.1 and 3.3.5. In addition, the Company
shall not be responsible for costs (a) under Section 3.6 arising more
than 90 days prior to receipt by the Company of the certificate from
the affected Lender pursuant to such Section 3.6 or (b) under Section
3.3.4 arising from the termination of Eurocurrency Pricing Options more
than 90 days prior to the demand by the Agent for payment under Section
3.3.4.
3.7. Computations of Interest and Fees. For purposes of this Agreement,
interest, commitment fees and Letter of Credit fees (and any other amount
expressed as interest or such fees) shall be computed on the basis of a
365/366-day year; provided, however, that interest on any portion of the Loan
subject to a Eurocurrency Pricing Option shall be computed on the basis of a
360-day year for actual days elapsed. If any payment required by this Agreement
becomes due on any day that is not a Banking Day, such payment shall, except as
otherwise provided in the definition of "Eurocurrency Interest Period", be made
on the next succeeding Banking Day. If the due date for any payment of principal
is extended as a result of the immediately preceding sentence, interest shall be
payable for the time during which payment is extended at the Applicable Rate.
4. Payment.
4.1. Payment at Maturity. On the Final Maturity Date or any accelerated
maturity of the Loan in accordance with Section 8, the Company or the English
Borrower, as applicable, will pay to the Agent an amount equal to the Loan then
due, together with all accrued and unpaid interest and fees with respect thereto
and all other Credit Obligations then outstanding.
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4.2. Contingent Required Prepayments.
4.2.1. Excess Credit Exposure. If at any time the Revolving
Loan exceeds the limits set forth in Section 2.1, the Company shall
within one Banking Day pay the amount of such excess to the Agent as a
prepayment of the Revolving Loan. If at any time the English Loan
exceeds the limits set forth in Section 2.2, the English Borrower shall
within one Banking Day pay the amount of such excess to the Agent as a
prepayment of the English Loan. If at any time the Letter of Credit
Exposure exceeds the limits set forth in Section 2.3, the Company shall
within one Banking Day pay the amount of such excess to the Agent to be
applied as provided in Section 4.4.
4.2.2. Net Asset Sale Proceeds. Upon receipt of Net Asset Sale
Proceeds by the Company or any of its Subsidiaries, the Borrowers shall
within three Banking Days pay to the Agent as a prepayment of the Loan
to be applied as provided in Section 4.5.2 the lesser of (a) the amount
of such Net Asset Sale Proceeds or (b) the amount of the Loan.
4.2.3. Net Debt Proceeds. Upon receipt of Net Debt Proceeds by
the Company or any of its Subsidiaries, the Borrowers shall within one
Banking Day pay to the Agent as a prepayment of the Loan to be applied
as provided in Section 4.5.2 the lesser of (a) the amount of such Net
Debt Proceeds or (b) the amount of the Loan.
4.2.4. Net Equity Proceeds. Upon receipt of Net Equity
Proceeds by the Company or any of its Subsidiaries, the Borrowers shall
within one Banking Day pay to the Agent as a prepayment of the Loan to
be applied as provided in Section 4.5.2 the lesser of (a) the amount of
such Net Equity Proceeds or (b) the amount of the Loan.
4.3. Voluntary Prepayments. In addition to the prepayments required by
Section 4.2, (a) the Company may from time to time prepay all or any portion of
the Revolving Loan (in a minimum amount of $500,000 and an integral multiple of
$100,000, or such lesser amount as is then outstanding), without premium or
penalty of any type (except as provided in Section 3.3.4 with respect to the
early termination of Eurocurrency Pricing Options), and (b) the English Borrower
may from time to time prepay all or any portion of the English Loan (in a
minimum amount of $500,000 in an Equivalent Amount of United States Funds (or a
similar integral multiple with respect to a Foreign Currency) and an integral
multiple of $100,000 in an Equivalent Amount of United States Funds (or a
similar integral multiple with respect to a Foreign Currency), or such lesser
amount as is then outstanding), without premium or penalty of any type (except
as provided in Section 3.3.4 with respect to the early termination of
Eurocurrency Pricing Options). The Company shall give the Agent at least one
Banking Day prior notice of its intention to prepay the Revolving Loan under
this Section 4.3, specifying the date of payment and the total amount of the
Revolving Loan to be paid on such date. The English Borrower shall give the
Agent at least one Banking Day prior
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notice of its intention to prepay the English Loan under this Section 4.3,
specifying the date of payment and the total amount of the English Loan to be
paid on such date.
4.4. Letters of Credit. If on the Final Maturity Date or any
accelerated maturity of the Credit Obligations in accordance with Section 8 the
Lenders shall be obligated in respect of a Letter of Credit or a draft accepted
under a Letter of Credit, the Company will either:
(a) prepay such obligation by depositing cash with the Agent,
or
(b) deliver to the Agent a standby letter of credit
(designating the Letter of Credit Issuer as beneficiary and issued by a
bank and on terms reasonably acceptable to the Letter of Credit
Issuer),
in each case in an amount equal to the portion of the then Letter of Credit
Exposure issued for the account of the Company. Any such cash so deposited and
the cash proceeds of any draw under any standby Letter of Credit so furnished,
including any interest thereon, shall be returned by the Agent to the Company
only when, and to the extent that, the amount of such cash held by the Agent
exceeds the Letter of Credit Exposure at such time and no Default then exists;
provided, however, that if an Event of Default occurs and the Credit Obligations
become or are declared immediately due and payable, the Agent may apply such
cash, including any interest thereon, to the payment of any of the Credit
Obligations as provided in section 3.5.6 of the Guarantee and Security
Agreement.
4.5. Reborrowing; Application of Payments, etc.
4.5.1. Reborrowing. The amounts of the Loan prepaid pursuant
to Section 4.3 may be reborrowed from time to time prior to the Final
Maturity Date in accordance with Section 2.1, subject to the limits set
forth therein.
4.5.2. Order of Application. Prepayments of the Loan under
Section 4.2 shall be applied first to the Revolving Loan, then to the
English Loan. Any prepayment of the Loan shall be applied first to the
portion of the Loan not then subject to Eurocurrency Pricing Options,
then the balance of any such prepayment shall be applied to the portion
of the Loan then subject to Eurocurrency Pricing Options, in the
chronological order of the respective maturities thereof (or as the
Company or the English Borrower, as applicable, may otherwise specify
in writing), together with any payments required by Section 3.3.4.
4.5.3. Prepayment Account. Any amounts applied to any portion
of the Loan subject to a Eurocurrency Pricing Option shall, at the
option of the Borrowers, be applied to prepay any portion of the Loan
subject to a Eurocurrency Pricing Option immediately or shall be
deposited in the Prepayment Account (as defined below). The Agent shall
apply any cash deposited in the Prepayment Account to prepay any
portion
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of the Loan subject to a Eurocurrency Pricing Option on the last day of
the Eurocurrency Interest Period therefor (or, at the direction of the
Borrowers, on any earlier date) until any outstanding portion of the
Loan subject to a Eurocurrency Pricing Option has been prepaid or until
all cash on deposit in the Prepayment Account (including interest
earned thereon) with respect to the Loan has been exhausted. For
purposes of this Agreement, the term "Prepayment Account" shall mean an
account established by the Borrowers with the Agent and over which the
Agent shall have exclusive dominion and control, including the right of
withdrawal for application in accordance with this Section 4.5.3. The
Agent shall, at the request of the Borrowers, invest amounts on deposit
in the Prepayment Account in Cash Equivalents that mature prior to the
last day of the applicable Eurocurrency Interest Periods of the portion
of the Loan subject to the Eurocurrency Pricing Option to be prepaid;
provided, however, that (a) the Agent shall not be required to make any
investment that, in its sole judgment, would require or cause the Agent
to be in, or would result in any, violation of any Legal Requirement
and (b) the Agent shall have no obligation to invest amounts on deposit
in the Prepayment Account if an Event of Default shall have occurred
and be continuing. The Borrowers shall indemnify the Agent for any
losses relating to the investments so that the amount available to
prepay any portion of the Loan subject to a Eurocurrency Pricing Option
on the last day of the applicable Eurocurrency Interest Periods
therefor is not less than the amount that would have been available had
no investments been made, except to the extent such losses result from
gross negligence or willful misconduct on the part of the Agent. Other
than any interest earned on such investments, the Prepayment Account
shall not bear interest. Interest or profits, if any, on such
investments shall be deposited and reinvested and disbursed as
described above. If the maturity of the Loan has been accelerated
pursuant to Section 8, the Agent shall first apply all amounts on
deposit in the Prepayment Account to prepay the outstanding Revolving
Loan and, then, to prepay the outstanding English Loan. The Borrowers
hereby grant to the Agent, for its benefit and the benefit of the
Lenders, a security interest in the Prepayment Account to secure the
Credit Obligations.
4.5.4. Payments for Lenders. All payments of principal
hereunder shall be made to the Agent for the account of the Lenders in
accordance with the Lenders' respective Percentage Interests in the
Credit Obligations so repaid.
4.6. Currency of Payments. Any payment of principal of or interest on
any portion of the Credit Obligations shall be made in the currency in which
such portion of the Credit Obligations is denominated. All payments of fees,
indemnities, expenses and other amounts owing hereunder shall be made in United
States Funds.
5. Conditions to Extending Credit.
5.1. Conditions on Initial Closing Date. The obligations of the Lenders
to make the initial extension of credit pursuant to Section 2 shall be subject
to the satisfaction, on or before
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the Initial Closing Date, of the conditions set forth in this Section 5.1 as
well as the further conditions in Section 5.2. If the conditions set forth in
this Section 5.1 are not met on or prior to the Initial Closing Date, the
Lenders shall have no obligation to make any extensions of credit hereunder.
5.1.1. Revolving Notes. The Company shall have duly executed
and delivered to the Agent a Revolving Note for each Lender having a
Commitment with respect thereto who has requested delivery of a
Revolving Note prior to the Initial Closing Date.
5.1.2. Payment of Fees. The Company shall have paid to the
Agent and the Syndication Agent the fees contemplated by the separate
agreement among the Agent, the Syndication Agent and the Company dated
on or prior to the date hereof.
5.1.3. Legal Opinions. On the Initial Closing Date, the
Lenders shall have received from the following counsel their respective
opinions with respect to the transactions contemplated by the Credit
Documents, which opinions shall be in form and substance reasonably
satisfactory to the Required Lenders:
(a) Parker, Chapin, Flattau & Klimpl, LLP, special counsel for
the Company and its Subsidiaries.
(b) Ropes & Gray, special counsel for the Agent.
The Company authorizes and directs its special counsel to
furnish the foregoing opinions.
5.1.4. Guarantee and Security Agreement. Each of the Company
and the Guarantors shall have duly authorized, executed and delivered
to the Agent a Guarantee and Security Agreement in substantially the
form of Exhibit 5.1.4 (the "Guarantee and Security Agreement"), as well
as any patent and trademark security agreements and copyright security
agreements contemplated therein.
5.1.5. Perfection of Security. Each Obligor (other than the
English Borrower) shall have duly authorized, executed, acknowledged,
delivered, filed, registered and recorded such security agreements,
notices, financing statements and other instruments as the Agent may
have reasonably requested in order to perfect the Liens in the Credit
Security granted to the Agent for the benefit of the Lenders pursuant
to the Credit Documents and shall have paid all filing or recording
fees or taxes required to be paid in connection therewith.
5.1.6. Cash Flow Statements. The Company shall have furnished
to the Lenders the unaudited Consolidated statements of revenues and
operating expenses of
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the Company and its Subsidiaries for the twelve consecutive months
ending March 31, 1998 demonstrating Consolidated EBITDA for such period
of not less than $8,000,000.
5.1.7. Proper Proceedings. This Agreement, each other Credit
Document and the transactions contemplated hereby and thereby shall
have been authorized by all necessary corporate or other proceedings.
All necessary consents, approvals and authorizations of any
governmental or administrative agency or any other Person of any of the
transactions contemplated hereby or by any other Credit Document shall
have been obtained and shall be in full force and effect.
5.1.8. General. All legal and corporate proceedings in
connection with the transactions contemplated by this Agreement shall
be reasonably satisfactory in form and substance to the Agent and the
Agent shall have received copies of all documents, including certified
copies of the Charter and By-Laws of the Company and the other Obligors
(other than the English Borrower), records of corporate proceedings,
certificates as to signatures and incumbency of officers and opinions
of counsel, which the Agent may have reasonably requested in connection
therewith, such documents where appropriate to be certified by proper
corporate or governmental authorities.
5.2. Conditions to Each Extension of Credit. The obligations of the
Lenders to make any extension of credit pursuant to Section 2 shall be subject
to the satisfaction, on or before the Closing Date for such extension of credit,
of the following conditions:
5.2.1. Officer's Certificate. The representations and
warranties contained in Section 7 shall be true and correct on and as
of such Closing Date with the same force and effect as though made on
and as of such date (except as to any representation or warranty which
refers to a specific earlier date); no Default shall exist on such
Closing Date prior to or immediately after giving effect to the
requested extension of credit; no Material Adverse Change shall have
occurred since the most recent financial statements furnished to the
Lenders in accordance with Sections 6.4.1 and 6.4.2, as applicable; and
the Company shall have furnished to the Agent in connection with the
requested extension of credit a certificate to these effects, in
substantially the form of Exhibit 5.2.1, signed by a Financial Officer.
5.2.2. Legality, etc. The making of the requested extension of
credit shall not (a) subject any Lender to any penalty or special tax
(other than a Tax for which the Company is required to reimburse the
Lenders under Section 3.6) or (b) be prohibited by any Legal
Requirement (and the Lenders shall provide prompt notice to the
Borrowers of any such penalty, special tax or Legal Requirement).
5.3. Conditions on Initial English Closing Date. The obligations of the
Lenders to make any extension of credit pursuant to Section 2.2 shall be subject
to the satisfaction, on or before the Initial English Closing Date, of the
conditions set forth in this Section 5.3 as well as
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the conditions set forth in Section 5.2. If the conditions set forth in this
Section 5.3 are not met on or prior to the Initial English Closing Date, the
Lenders shall have no obligation to make any extensions of credit to the English
Borrower.
5.3.1. English Note. The English Borrower shall have duly
executed and delivered to the Agent an English Note for each Lender
having a Commitment with respect thereto who has requested delivery of
an English Note prior to the Initial English Closing Date.
5.3.2. Joinder Agreement. The English Borrower shall have duly
executed and delivered to the Agent a joinder agreement in form and
substance reasonably satisfactory to the Agent pursuant to which the
English Borrower agrees to become a party to and be bound by this
Agreement.
5.3.3. English Guarantee and Security Agreement. The English
Borrower shall have duly authorized, executed and delivered to the
Agent an agreement under English law, in form and substance reasonably
satisfactory to the Agent, with terms comparable to the terms of the
Guarantee and Security Agreement.
5.3.4. Legal Opinion. On the Initial English Closing Date, the
Lenders shall have received from counsel for the English Borrower an
opinion with respect to the English Borrower in substantially the form
delivered pursuant to Section 5.1.3.
5.3.5. Perfection of Security. The English Borrower shall have
duly authorized, executed, acknowledged, delivered, filed, registered
and recorded such security agreements, notices, financing statements
and other instruments as the Agent may have reasonably requested in
order to perfect the Liens in the Credit Security granted to the Agent
for the benefit of the Lenders pursuant to the Credit Documents and
shall have paid all filing or recording fees or taxes required to be
paid in connection therewith.
5.3.6. Proper Proceedings. The agreements contemplated by this
Section 5.3, each other Credit Document to which the English Borrower
becomes a party and the transactions contemplated hereby and thereby
shall have been authorized by all necessary corporate or other
proceedings. All necessary consents, approvals and authorizations of
any governmental or administrative agency or any other Person of any of
the transactions contemplated hereby or by any other Credit Document to
which the English Borrower becomes a party shall have been obtained and
shall be in full force and effect.
5.3.7. General. All legal and corporate proceedings in
connection with the English Borrower with respect to the transactions
contemplated by this Agreement shall be reasonably satisfactory in form
and substance to the Agent and the Agent shall have
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received copies of all documents which the Agent may have reasonably
requested in connection therewith, such documents where appropriate to
be certified by proper corporate or governmental authorities.
6. General Covenants. Each of the Borrowers and the Guarantors covenants that,
until all of the Credit Obligations shall have been paid in full and until the
Lenders' commitments to extend credit under this Agreement and any other Credit
Document shall have terminated, the Company and its Subsidiaries will comply
with the following provisions:
6.1. Taxes and Other Charges; Accounts Payable.
6.1.1. Taxes and Other Charges. Each of the Company and its
Subsidiaries shall duly pay and discharge, or cause to be paid and
discharged, before the same becomes in arrears, all taxes, assessments
and other governmental charges imposed upon such Person and its
properties, sales or activities, or upon the income or profits
therefrom, as well as all claims for labor, materials or supplies which
if unpaid might by law become a Lien upon any of its property;
provided, however, that any such tax, assessment, charge or claim need
not be paid if the validity or amount thereof shall at the time be
contested in good faith by appropriate proceedings and if such Person
shall, in accordance with GAAP and to the extent required thereby, if
applicable, have set aside on its books adequate reserves with respect
thereto.
6.1.2. Accounts Payable. Each of the Company and its
Subsidiaries shall pay when due, or in conformity with customary trade
terms, all accounts payable incident to the operations of such Person
not referred to in Section 6.1.1; provided, however, that any such
accounts payable need not be paid if the validity or amount thereof
shall at the time be contested in good faith and if such Person shall,
in accordance with GAAP and to the extent required thereby, if
applicable, have set aside on its books adequate reserves with respect
thereto.
6.2. Conduct of Business, etc.
6.2.1. Types of Business. The Company and its Subsidiaries
shall engage only in the business of (a) providing services to the
sports, news, music and other entertainment industries and (b) other
activities related or reasonably incidental to such business as
presently conducted.
6.2.2. Maintenance of Properties. Each of the Company and its
Subsidiaries:
(a) shall keep its material properties in such repair, working
order and condition, and shall from time to time make such repairs,
replacements, additions and improvements thereto, as are necessary for
the efficient operation of its businesses and shall comply at all times
in all material respects with all material franchises, licenses
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and leases to which it is party so as to prevent any loss or forfeiture
thereof or thereunder, except where failure to comply with the
provisions being contested has not resulted, and does not create a
material risk of resulting, in the aggregate in any Material Adverse
Change; and
(b) shall do all things necessary to preserve, renew and keep
in full force and effect and in good standing its legal existence and
authority necessary to continue its business substantially as presently
conducted; provided, however, that this Section 6.2.2(b) shall not
prevent the merger, consolidation or liquidation of Subsidiaries
permitted by Section 6.11.
6.2.3. Statutory Compliance. Each of the Company and its
Subsidiaries shall comply in all material respects with all valid Legal
Requirements applicable to it, except where failure so to comply has
not resulted, and does not create a material risk of resulting, in the
aggregate, in any Material Adverse Change.
6.2.4. Compliance with Material Agreements. Each of the
Company and its Subsidiaries shall comply in all material respects with
the Material Agreements (to the extent not in violation of the other
provisions of this Agreement or any other Credit Document), except
where failure so to comply with the provisions being contested has not
resulted, and does not create a material risk of resulting, in the
aggregate, in any Material Adverse Change. Without the prior written
consent of the Required Lenders, no Material Agreement shall be
amended, modified, waived or terminated in any manner that would have
in any material respect an adverse effect on the interests of the
Lenders.
6.3. Insurance.
6.3.1. Business Interruption Insurance. Each of the Company
and its Subsidiaries shall maintain with financially sound and
reputable insurers insurance related to interruption of business,
either for loss of revenues or for extra expense, in the manner
comparable to the policies now in place as previously furnished to the
Agent; provided, however, that each of the Company and its Subsidiaries
may alter the manner in which it maintains such insurance policies with
the prior written consent of the Agent, such consent not to be
unreasonably withheld.
6.3.2. Property Insurance. Each of the Company and its
Subsidiaries shall keep its assets which are of an insurable character
insured by financially sound and reputable insurers against theft and
fraud and against loss or damage by fire, explosion and hazards insured
against by extended coverage to the extent, in amounts and with
deductibles at least as favorable as those comparable to the policies
now in place as previously furnished to the Agent; provided, however,
that each of the Company and
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its Subsidiaries may alter the manner in which it maintains such
insurance policies with the prior written consent of the Agent, such
consent not to be unreasonably withheld.
6.3.3. Liability Insurance. Each of the Company and its
Subsidiaries shall maintain with financially sound and reputable
insurers insurance against liability for hazards, risks and liability
to persons and property, including errors and omissions liability
insurance, to the extent, in amounts and with deductibles at least as
favorable as those comparable to the policies now in place as
previously furnished to the Agent; provided, however, that each of the
Company and its Subsidiaries may alter the manner in which it maintains
such insurance policies with the prior written consent of the Agent,
such consent not to be unreasonably withheld; provided, further,
however, that it may effect workers' compensation insurance or similar
coverage with respect to operations in any particular state or other
jurisdiction through an insurance fund operated by such state or
jurisdiction or by meeting the self-insurance requirements of such
state or jurisdiction.
6.3.4. Key Executive Life Insurance. The Company shall
maintain with financially sound and reputable insurers life insurance
policies on Robert M. Gutkowski in an amount of at least $2,000,000 in
form reasonably satisfactory to the Agent.
6.4. Financial Statements and Reports. The fiscal year of the Company
and its Subsidiaries shall end on December 31 in each year and the fiscal
quarters of the Company and its Subsidiaries shall end on March 31, June 30,
September 30 and December 31 in each year.
6.4.1. Annual Reports. The Company shall furnish to the Agent
as soon as available, and in any event within 90 days after the end of
each fiscal year, the Consolidated balance sheets of the Company and
its Subsidiaries as at the end of such fiscal year, the Consolidated
and Consolidating (by lines of business) statements of income and
Consolidated statements of changes in shareholders' equity and of cash
flows of the Company and its Subsidiaries for such fiscal year (all in
reasonable detail) and, in the case of Consolidated financial
statements, comparative figures for the immediately preceding fiscal
year, all accompanied by:
(a) Reports of Ernst & Young, LLP (or, if they cease to be
auditors of the Company and its Subsidiaries, other independent
certified public accountants of recognized national standing reasonably
satisfactory to the Required Lenders), containing no material
qualification, to the effect that they have audited the foregoing
Consolidated financial statements in accordance with generally accepted
auditing standards and that such Consolidated financial statements
present fairly, in all material respects, the financial position of the
Company and its Subsidiaries at the dates thereof and the results of
their operations for the periods covered thereby in conformity with
GAAP.
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(b) The statement of such accountants that they have caused
this Agreement to be reviewed and that in the course of their audit of
the Company and its Subsidiaries no facts have come to their attention
that cause them to believe that any Default exists and in particular
that they have no knowledge of any Default relating to Section 6.5 or,
if such is not the case, specifying such Default and the nature
thereof. This statement is furnished by such accountants with the
understanding that the examination of such accountants cannot be relied
upon to give such accountants knowledge of any such Default except as
it relates to accounting or auditing matters within the scope of their
audit.
(c) A certificate of the Company signed by a Financial Officer
to the effect that such officer has caused this Agreement to be
reviewed and has no actual knowledge of any Default, or if such officer
has such knowledge, specifying such Default and the nature thereof, and
what action the Company has taken, is taking or proposes to take with
respect thereto.
(d) Computations by the Company in substantially the form of
Exhibit 6.4 demonstrating, as of the end of such fiscal year,
compliance with the Computation Covenants, signed by a Financial
Officer.
(e) Supplements to Exhibits 7.1, 7.3 and 7.14 showing any
changes in the information set forth in such exhibits not previously
furnished to the Lenders in writing, as well as any changes in the
Charter, Bylaws or incumbency of officers of the Obligors from those
previously certified to the Agent.
(f) In the event of a change in GAAP after December 31, 1997,
computations by the Company, signed by a Financial Officer, reconciling
the financial statements referred to above with financial statements
prepared in accordance with GAAP as applied to the other covenants in
Section 6 and related definitions.
6.4.2. Quarterly Reports. The Company shall furnish to the
Agent as soon as available and, in any event, within 45 days after the
end of each of the first three fiscal quarters of the Company, the
internally prepared Consolidated balance sheet of the Company and its
Subsidiaries as of the end of such fiscal quarter, the Consolidated
statements of income, of changes in shareholders' equity and of cash
flows of the Company and its Subsidiaries for such fiscal quarter and
for the portion of the fiscal year then ended (all in reasonable
detail) and comparative figures for the same period in the preceding
fiscal year, all accompanied by:
(a) A certificate of the Company signed by a Financial Officer
to the effect that such financial statements have been prepared in
accordance with GAAP and present fairly, in all material respects, the
financial position of the Company and its Subsidiaries covered thereby
at the dates thereof and the results of their operations for
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the periods covered thereby, subject only to normal year-end audit
adjustments and the addition of footnotes.
(b) A certificate of the Company signed by a Financial Officer
to the effect that such officer has caused this Agreement to be
reviewed and has no actual knowledge of any Default, or if such officer
has such knowledge, specifying such Default and the nature thereof and
what action the Company has taken, is taking or proposes to take with
respect thereto.
(c) Computations by the Company in substantially the form of
Exhibit 6.4 demonstrating, as of the end of such quarter, compliance
with the Computation Covenants, signed by a Financial Officer.
(d) Supplements to Exhibits 7.1, 7.3 and 7.14 showing any
changes in the information set forth in such exhibits not previously
furnished to the Lenders in writing, as well as any changes in the
Charter, Bylaws or incumbency of officers of the Obligors from those
previously certified to the Agent.
6.4.3. Other Reports. The Company shall promptly furnish to
the Lenders:
(a) As soon as prepared and in any event before the beginning
of each fiscal year, an annual budget and operating projections (in a
format comparable to the reports provided in accordance with Sections
6.4.1 and 6.4.2) for such fiscal year of the Company and its
Subsidiaries, prepared in a manner consistent with the manner in which
the financial projections described in Section 7.2.1 were prepared.
(b) Any material updates of such budget and projections.
(c) Any management letters furnished to the Company or any of
its Subsidiaries by the Company's auditors.
(d) All budgets, projections, statements of operations and
other reports furnished generally to the shareholders of the Company.
(e) Such registration statements, proxy statements and
reports, including Forms S-1, S-2, S-3, S-4, 10-KSB, 10-Q and 8-K, as
are filed by the Company or any of its Subsidiaries with the Securities
and Exchange Commission.
(f) Any 90-day letter or 30-day letter from the federal
Internal Revenue Service (or the equivalent notice received from state
or other taxing authorities) asserting tax deficiencies against the
Company or any of its Subsidiaries.
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6.4.4. Notice of Litigation, Defaults, etc. The Company shall
promptly furnish to the Agent notice of the commencement of any
litigation or any administrative or arbitration proceeding (a) which
creates a material risk of resulting, after giving effect to any
applicable insurance, in the payment by the Company and its
Subsidiaries of more than $500,000 or (b) which results, or creates a
material risk of resulting, in a Material Adverse Change. Promptly upon
acquiring actual knowledge thereof, the Company shall notify the Agent
of the existence of any Default or Material Adverse Change, specifying
the nature thereof and what action the Company or any of its
Subsidiaries has taken, is taking or proposes to take with respect
thereto.
6.4.5. Other Information. From time to time at reasonable
intervals upon request of the Agent, each of the Company and its
Subsidiaries shall furnish to the Agent such other information
regarding the business, assets, financial condition or income of the
Company and its Subsidiaries as the Agent may reasonably request,
including copies of all material tax returns, material licenses,
material agreements, material leases and material instruments to which
any of the Company or its Subsidiaries is party. Each Lender's
authorized officers and representatives shall have the right during
normal business hours upon two Banking Days' notice and at reasonable
intervals to examine the books and records of the Company and its
Subsidiaries, to make copies (at the Lender's expense) and notes
therefrom for the purpose of ascertaining compliance with or obtaining
enforcement of this Agreement or any other Credit Document; provided,
however, that such examination shall be conducted in a manner that is
not disruptive to the Company's business.
6.5. Certain Financial Tests.
6.5.1. Consolidated Total Debt to Consolidated EBITDA. As of
the end of any fiscal quarter of the Company, Consolidated Total Debt
shall not exceed the percentage set forth in the table below of
Consolidated EBITDA for the period of four consecutive fiscal quarters
ending with such fiscal quarter.
Period Ending Percentage
------------- ----------
Initial Closing Date through
June 30, 1999 425%
July 1, 1999 through
Final Maturity Date 350%
6.5.2. Consolidated EBITDA to Consolidated Interest Expense.
For each period of four consecutive fiscal quarters of the Company,
Consolidated EBITDA shall equal or exceed 200% of Consolidated Interest
Expense.
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6.5.3. Consolidated EBITDA to Consolidated Fixed Charges. For
each period of four consecutive fiscal quarters of the Company,
Consolidated EBITDA shall equal or exceed 110% of Consolidated Fixed
Charges.
6.6. Indebtedness. Neither the Company nor any of its Subsidiaries
shall create, incur, assume or otherwise become or remain liable with respect to
any Indebtedness (or become contractually committed to do so), except for any of
the following:
6.6.1. Indebtedness in respect of the Credit Obligations.
6.6.2. Guarantees permitted by Section 6.7.
6.6.3. Current liabilities, other than Financing Debt,
incurred in the ordinary course of business.
6.6.4. To the extent that payment thereof shall not at the
time be required by Section 6.1, Indebtedness in respect of taxes,
assessments, governmental charges and claims for labor, materials and
supplies.
6.6.5. Indebtedness secured by Liens of carriers, warehouses,
mechanics, landlords and other Persons permitted by Sections 6.8.5 and
6.8.6.
6.6.6. Indebtedness in respect of judgments or awards against
the Company or any Subsidiaries (a) which have been in force for less
than the applicable appeal period or (b) in respect of which the
Company or any Subsidiary shall at the time in good faith be
prosecuting an appeal or proceedings for review and, in the case of
each of clauses (a) and (b), the Company or such Subsidiary shall have
taken appropriate reserves therefor in accordance with GAAP and
execution of such judgment or award shall not be levied.
6.6.7. To the extent permitted by Section 6.8.7, Indebtedness
in respect of Capitalized Lease Obligations or secured by purchase
money security interests; provided, however, that the aggregate
principal amount of all Indebtedness permitted by this Section 6.6.7 at
any one time outstanding shall not exceed $2,000,000.
6.6.8. Indebtedness in respect of deferred taxes arising in
the ordinary course of business.
6.6.9. Indebtedness in respect of intercompany loans and
advances among the Company and its Subsidiaries which are not
prohibited by Section 6.9.
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6.6.10. Indebtedness of the Company in respect of deferred
payment obligations (a) owing to sellers of businesses acquired by the
Company and its Subsidiaries in accordance with Section 6.9 in an
aggregate amount not exceeding $5,000,000 at any one time outstanding
and (b) consisting of stock put rights accruing after October 1999.
6.6.11. Unfunded pension liabilities and obligations with
respect to Plans so long as the Company and all other ERISA Group
Persons are in compliance with Section 6.16.
6.6.12. Indebtedness outstanding on the date hereof in
connection with the subleasing of leases and with Statement No. 13 of
the Financial Accounting Standards Board, as amended, in an aggregate
principal amount not exceeding $1,000,000.
6.6.13. Other Indebtedness outstanding on the date hereof and
described in Exhibit 7.3 and all renewals and extensions thereof not in
excess of the amount thereof outstanding immediately prior to such
renewal or extension, including stock put obligations due October 1999
and stock call rights outstanding until December 1999.
6.6.14. Prior to the Initial English Closing Date,
Indebtedness of Foreign Subsidiaries in an aggregate principal amount
not exceeding $1,000,000 at any one time outstanding in an Equivalent
Amount of United States Funds, and, subsequent to the Initial English
Closing Date, Indebtedness of Foreign Subsidiaries in an aggregate
principal amount not exceeding $100,000 at any one time outstanding in
an Equivalent Amount of United States Funds.
6.6.15. Earn-out obligations owing to sellers of businesses
acquired by the Company and its Subsidiaries in accordance with Section
6.9 and agreed to by the Agent.
6.6.16. Indebtedness in an amount not exceeding $10,000,000
subordinated to the Credit Obligations on substantially the terms set
forth in Exhibit 6.6.16.
6.6.17. Indebtedness in addition to the foregoing; provided,
however, that the aggregate amount of all such Indebtedness at any one
time outstanding shall not exceed $1,000,000.
6.7. Guarantees; Letters of Credit. Neither the Company nor any of its
Subsidiaries shall become or remain liable with respect to any Guarantee,
including reimbursement obligations, whether contingent or matured, under
letters of credit or other financial guarantees by third parties (or become
contractually committed do to so), except for any of the following:
6.7.1. Letters of Credit and Guarantees of the Credit
Obligations.
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6.7.2. Guarantees of Indebtedness and other obligations
incurred by the Company and its Subsidiaries and permitted by Section
6.6.
6.7.3. Contingent obligations in respect of earn-out payments
and stock put obligations permitted by Sections 6.6.10 and 6.6.14
arising from acquisitions permitted by Section 6.9.
6.8. Liens. Neither the Company nor any of its Subsidiaries shall
create, incur or enter into, or suffer to be created or incurred or to exist,
any Lien (or become contractually committed to do so), except for any of the
following:
6.8.1. Liens on the Credit Security that secure the Credit
Obligations.
6.8.2. Liens to secure taxes, assessments and other
governmental charges, to the extent that payment thereof shall not at
the time be required by Section 6.1.
6.8.3. Deposits or pledges made (a) in connection with, or to
secure payment of, workers' compensation, unemployment insurance, old
age pensions or other social security, (b) in connection with casualty
insurance maintained in accordance with Section 6.3, (c) to secure the
performance of bids, tenders, contracts (other than contracts relating
to Financing Debt) or leases, (d) to secure statutory obligations or
surety or appeal bonds, (e) to secure indemnity, performance or other
similar bonds in the ordinary course of business or (f) in connection
with contested amounts to the extent that payment thereof shall not at
that time be required by Section 6.1.
6.8.4. Liens in respect of judgments or awards, to the extent
that such judgments or awards are permitted by Section 6.6.6 but only
to the extent that such Liens are junior to the Liens on the Credit
Security granted to secure the Credit Obligations.
6.8.5. Liens of carriers, warehouses, mechanics and similar
Liens, in each case (a) in existence less than 90 days from the date of
creation thereof or (b) being contested in good faith by the Company or
any Subsidiary in appropriate proceedings (so long as the Company or
such Subsidiary shall, in accordance with GAAP, have set aside on its
books adequate reserves with respect thereto).
6.8.6. Encumbrances in the nature of (a) zoning restrictions,
(b) easements, (c) restrictions of record on the use of real property,
(d) landlords' and lessors' Liens on rented premises and (e)
restrictions on transfers or assignment of leases, which in each case
do not materially detract from the value of the encumbered property or
materially impair the use thereof in the business of the Company or any
Subsidiary.
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6.8.7. Liens constituting (a) purchase money security
interests (including mortgages, conditional sales, Capitalized Leases
and any other title retention or deferred purchase devices) in real
property, interests in leases or tangible personal property (other than
inventory) existing or created on the date on which such property is
acquired or within 60 days thereafter, separately, or in connection
with an acquisition of a business by the Company and (b) the renewal,
extension or refunding of any security interest referred to in the
foregoing clause (a) in an amount not to exceed the amount thereof
remaining unpaid immediately prior to such renewal, extension or
refunding; provided, however, that (i) each such security interest
shall attach solely to the particular item of property so acquired, and
the principal amount of Indebtedness (including Indebtedness in respect
of Capitalized Lease Obligations) secured thereby shall not exceed the
cost (including all such Indebtedness secured thereby, whether or not
assumed) of such item of property; and (ii) the aggregate principal
amount of all Indebtedness secured by Liens permitted by this Section
6.8.7 shall not exceed the amount permitted by Section 6.6.7.
6.8.8. Restrictions under federal and state securities laws on
the transfer of securities.
6.8.9. The sale of doubtful accounts receivable for collection
in the ordinary course of business.
6.8.10. Liens as in effect on the date hereof described in
Exhibit 7.3 (and renewals and replacements thereof) and securing
Indebtedness permitted by Section 6.6.12.
6.8.11. Escrowed shares of Company stock and cash resulting
from acquisitions permitted by Section 6.9.
6.9. Investments and Acquisitions. Neither the Company nor any of its
Subsidiaries shall have outstanding, acquire or hold any Investment (including
any Investment consisting of the acquisition of any business) (or become
contractually committed to do so), except for any of the following:
6.9.1. Investments of the Company and its Subsidiaries in (a)
Wholly Owned Subsidiaries which are Guarantors as of the date hereof or
(b) Persons that have become Wholly Owned Subsidiaries and Guarantors
after the date hereof in accordance with Section 6.9.6.
6.9.2. Intercompany loans and advances from any Subsidiary to
the Company, from the Company to any Subsidiary or from any Subsidiary
to another Subsidiary, but in each case only to the extent reasonably
necessary for Consolidated tax planning, increase of capitalization and
working capital management; provided, however, that
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loans and advances from a Foreign Subsidiary that is not a Guarantor to
the Company or a Domestic Subsidiary must be subordinated to the Credit
Obligations pursuant to a subordination agreement in substantially the
form of Exhibit 6.9.2.
6.9.3. Investments in Cash Equivalents.
6.9.4. Guarantees permitted by Section 6.7.
6.9.5. So long as immediately before and after giving effect
thereto no Default exists, Investments of the Company and its
Subsidiaries in Foreign Subsidiaries; provided, however, that
Investments of the Company and its Domestic Subsidiaries in Foreign
Subsidiaries made pursuant to this Section shall not exceed $1,000,000
at any one time outstanding.
6.9.6. So long as immediately before and after giving effect
thereto no Default exists, the Company and its Subsidiaries may make
Investments consisting of acquisitions of businesses (including assets
comprising part of a business) permitted by Section 6.2.1, and loans to
such businesses after a binding purchase agreement has been entered
into but prior to the consummation of the acquisition of such business;
provided, however, that:
(a) such acquired business (other than the Designated
Acquisitions) shall demonstrate a positive cash flow for the most
recent twelve-month period ending nearest the acquisition date;
(b) any such acquisition (other than the Designated
Acquisitions) with total consideration exceeding $2,500,000 (including
fixed deferred payment obligations, but excluding Contingent
Acquisition Obligations) shall require the Company to submit to the
Agent at least five Banking Days prior to the acquisition a due
diligence report in form and substance reasonably satisfactory to the
Agent; and
(c) any such acquisition (other than the Designated
Acquisitions) exceeding $5,000,000 (including fixed deferred payment
obligations, but excluding Contingent Acquisition Obligations) shall
require the written consent of the Required Lenders.
6.9.7. The Company may enter into an agreement to be acquired,
through merger or otherwise, by SFX Entertainment, Inc. and its
subsidiaries.
6.10. Distributions. Neither the Company nor any of its Subsidiaries
shall make any Distribution (or become contractually committed to do so), except
for any of the following:
6.10.1. So long as immediately before and after giving effect
thereto no Default exists, Subsidiaries of the Company may make
Distributions to the Company or
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any Subsidiary of the Company, and the Company and its Subsidiaries may
make Investments permitted by Sections 6.9.1 and 6.9.2.
6.10.2. So long as immediately before and after giving effect
thereto no Default exists, the Company may make Distributions up to
$5,875,000 in connection with the stock put obligations and stock call
rights permitted by Section 6.6.13 per year to repurchase Company stock
and options and to acquire such stock owned by employees whose
employment with the Company and its Subsidiaries has then terminated.
6.10.3. Distributions consisting of deferred payment
obligations and stock put obligations permitted by Section 6.6.10.
6.11. Asset Dispositions and Mergers. Neither the Company nor any of
its Subsidiaries shall merge or enter into a consolidation or sell, lease,
exchange, sell and lease back, sublease or otherwise dispose of any of its
assets, and no Subsidiary shall issue shares of its capital stock to any Person
other than an Obligor (or become contractually committed to do so), except for
any of the following:
6.11.1. The Company and any of its Subsidiaries may sell or
otherwise dispose of (a) inventory and Cash Equivalents in the ordinary
course of business, (b) assets (i) that will be replaced in the
ordinary course of business within 12 months by other assets of equal
or greater value or (ii) that are no longer used or useful in the
business of the Company or such Subsidiary; provided, however, that the
aggregate fair market value (book value, if greater) of all assets sold
under this clause (b) in any fiscal year shall not be material and (c)
doubtful accounts receivable in the ordinary course of business.
6.11.2. Any Subsidiary of the Company may merge, consolidate
or be liquidated into the Company or any other Subsidiary of the
Company so long as after giving effect to any such merger to which the
Company is a party the Company shall be the surviving or resulting
Person.
6.11.3. So long as immediately before and after giving effect
thereto no Default exists and the Net Asset Sale Proceeds thereof are
applied to repay the Loan as required by Section 4.2.2, the Company and
its Subsidiaries may sell for relatively fair value assets during any
fiscal year contributing not more than 15% of Consolidated EBITDA for
the Company's most recently completed fiscal year; provided, however,
that the sum of the foregoing percentages of Consolidated EBITDA for
all assets sold pursuant to this Section 6.11.3 since the date hereof
shall not exceed 25%.
6.11.4. Leasing of assets in the ordinary course of business.
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6.11.5. The Company may enter into an agreement to be
acquired, through merger or otherwise, by SFX Entertainment, Inc. and
its subsidiaries.
6.12. No Restrictions on Subsidiary Distributions. Except for this
Agreement and the Credit Documents or as required by applicable law, neither the
Company nor any Subsidiary shall enter into or be bound by any agreement
(including covenants requiring the maintenance of specified amounts of net worth
or working capital) restricting the right of any Subsidiary to make
Distributions or extensions of credit to the Company (directly or indirectly
through another Subsidiary).
6.13. Voluntary Prepayments of Other Indebtedness. Neither the Company
nor any of its Subsidiaries shall make any voluntary prepayment of principal of
or interest on any Indebtedness permitted by Section 6.6.16.
6.14. Derivative Contracts. Neither the Company nor any of its
Subsidiaries shall enter into any Interest Rate Protection Agreement, foreign
currency exchange contract or other financial or commodity derivative contracts
except to provide hedge protection for an underlying economic transaction in the
ordinary course of business.
6.15. Negative Pledge Clauses. Neither the Company nor any of its
Subsidiaries shall enter into any agreement, instrument, deed or lease which
prohibits or limits the ability of the Company or any of its Subsidiaries to
create, incur, assume or suffer to exist any Lien upon any of their respective
properties, assets or revenues, whether now owned or hereafter acquired, or
which requires the grant of any collateral for such obligation if collateral is
granted for another obligation, except the following:
6.15.1. This Agreement and the other Credit Documents.
6.15.2. Covenants in documents creating Liens permitted by
Section 6.8 prohibiting further Liens on the assets encumbered thereby.
6.16. ERISA, etc. Each of the Company and its Subsidiaries shall
comply, and shall cause all ERISA Group Persons to comply, in all material
respects, with the provisions of ERISA and the Code applicable to each Plan,
except where the failure to comply would not be reasonably likely to result in a
Material Adverse Change. Each of the Company and its Subsidiaries shall meet,
and shall cause all ERISA Group Persons to meet, all minimum funding
requirements applicable to them with respect to any Plan pursuant to section 302
of ERISA or section 412 of the Code, without giving effect to any waivers of
such requirements or extensions of the related amortization periods which may be
granted. At no time shall the Accumulated Benefit Obligations under any Plan
that is not a Multiemployer Plan exceed the fair market value of the assets of
such Plan allocable to such benefits by more than $500,000. The Company and its
Subsidiaries shall not withdraw, and shall cause all other ERISA Group Persons
not to withdraw, in whole or in part, from any Multiemployer Plan so as to give
rise
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to withdrawal liability exceeding $500,000 in the aggregate. At no time shall
the actuarial present value of unfunded liabilities for post-employment health
care benefits (other than COBRA continuation coverage benefits), whether or not
provided under a Plan, calculated in a manner consistent with Statement No. 106
of the Financial Accounting Standards Board, exceed $500,000.
6.17. Transactions with Affiliates. Neither the Company nor any of its
Subsidiaries shall effect any transaction (other than employment agreements
described in Form 10-KSB referred to in Section 7.2.1(c) or approved by the
Company's independent directors) with any of their respective Affiliates (except
for the Company and its Subsidiaries) other than on an arms-length basis.
6.18. Interest Rate Protection. Within one year after the Initial
Closing Date, the Company shall obtain and thereafter keep in effect one or more
Interest Rate Protection Agreements conforming to International Securities
Dealers Association standards, each in form and substance reasonably
satisfactory to the Agent, covering a notional amount of at least $12,000,000 in
each case for an aggregate period extending to the Final Maturity Date.
7. Representations and Warranties. In order to induce the Lenders to extend
credit to the Borrowers hereunder, each of the Borrowers and the Guarantors
jointly and severally represents and warrants as follows:
7.1. Organization and Business.
7.1.1. The Company. The Company is a duly organized and
validly existing corporation, in good standing under the laws of
Delaware, with all power and authority, corporate or otherwise,
necessary to (a) enter into and perform this Agreement and each other
Credit Document to which it is party, (b) incur the Credit Obligations,
(c) grant the Agent for the benefit of the Lenders the security
interests in the Credit Security owned by it to secure the Credit
Obligations and (d) own its properties and carry on the business now
conducted. Certified copies of the Charter and By-laws of the Company
have been previously delivered to the Agent and are correct and
complete. Exhibit 7.1, as from time to time hereafter supplemented in
accordance with Sections 6.4.1 and 6.4.2, sets forth, as of the later
of the date hereof or the end of the most recent fiscal quarter for
which financial statements are required to be furnished in accordance
with such Sections, (i) the jurisdiction of incorporation of the
Company, (ii) the address of the Company's principal executive office
and chief place of business, (iii) each name, including any trade name,
under which the Company conducts its business and (iv) the
jurisdictions in which the Company owns tangible personal or real
property.
7.1.2. Subsidiaries. Each Subsidiary of the Company is duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is
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organized, with all power and authority, corporate or otherwise,
necessary to (a) enter into and perform this Agreement and each other
Credit Document to which it is party, (b) guarantee the Credit
Obligations, (c) grant the Agent for the benefit of the Lenders the
security interest in the Credit Security owned by such Subsidiary to
secure the Credit Obligations and (d) own its properties and carry on
the business now conducted. Certified copies of the Charter and By-laws
of each Subsidiary of the Company have been previously delivered to the
Agent and are correct and complete. Exhibit 7.1, as from time to time
hereafter supplemented in accordance with Sections 6.4.1 and 6.4.2,
sets forth, as of the later of the date hereof or the end of the most
recent fiscal quarter for which financial statements are required to be
furnished in accordance with such Sections, (i) the name and
jurisdiction of organization of each Subsidiary of the Company, (ii)
the address of the chief executive office and principal place of
business of each such Subsidiary, (iii) each name under which each such
Subsidiary conducts its business, (iv) each jurisdiction in which each
such Subsidiary owns tangible personal or real property, and (v) the
number of authorized and issued shares and ownership of each such
Subsidiary.
7.1.3. Qualification. Each of the Company and its Subsidiaries
is duly and legally qualified to do business as a foreign corporation
or other entity and is in good standing in each state or jurisdiction
in which such qualification is required and is duly authorized,
qualified and licensed under all laws, regulations, ordinances or
orders of public authorities, or otherwise, to carry on its business in
the places and in the manner in which it is conducted, except for
failures to be so qualified, authorized or licensed which would not in
the aggregate result, or create a material risk of resulting, in any
Material Adverse Change.
7.1.4. Capitalization. Except as set forth in Exhibit 7.1.4,
no options, warrants, conversion rights, preemptive rights or other
statutory or contractual rights to purchase shares of capital stock or
other securities of any Subsidiary now exist, nor has any Subsidiary
authorized any such right, nor is any Subsidiary obligated in any other
manner to issue shares of its capital stock or other securities.
7.2. Financial Statements and Other Information; Material Agreements.
7.2.1. Financial Statements and Other Information. The Company
has previously furnished to the Lenders copies of the following:
(a) The audited Consolidated balance sheets of the Company and
its Subsidiaries as at December 31 in each of 1997 and 1996 and the
audited Consolidated and unaudited Consolidating statements of income
and the audited Consolidated statements of changes in shareholders'
equity and of cash flows of the Company and its Subsidiaries for the
fiscal years of the Company then ended.
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(b) The unaudited Consolidated balance sheet of the Company
and its Subsidiaries as at March 31, 1998 and the unaudited
Consolidated statements of income, of changes in shareholders' equity
and of cash flows of the Company and its Subsidiaries for the portion
of the fiscal year then ended.
(c) The Company's report on Form 10-KSB, as amended, for its
fiscal year ended December 31, 1997, as filed with the Securities and
Exchange Commission.
(d) The five-year financial and operational projections for
the Company and its Subsidiaries dated July 9, 1998.
(e) Calculations with respect to the Computation Covenants as
of March 31, 1998 on a pro forma basis giving effect to the incurrence
of the Credit Obligations.
The audited Consolidated financial statements (including the
notes thereto) referred to in clause (a) above were prepared in
accordance with GAAP and fairly present in all material respects the
financial position of the Company and its Subsidiaries on a
Consolidated basis at the respective dates thereof and the results of
their operations for the periods covered thereby. The unaudited
Consolidated financial statements referred to in clause (b) above were
prepared in accordance with GAAP and fairly present in all material
respects the financial position of the Company and its Subsidiaries at
the respective dates thereof and the results of their operations for
the periods covered thereby, subject to normal year-end audit
adjustments and the addition of footnotes in the case of interim
financial statements. Neither the Company nor any of its Subsidiaries
has any known contingent liability material to the Company and its
Subsidiaries on a Consolidated basis which is not reflected in the
balance sheets referred to in clauses (a) or (b) above (or delivered
pursuant to Sections 6.4.1 or 6.4.2) or in the notes thereto and which
in accordance with GAAP would be required to be reflected therein.
The Form 10-KSB referred to in clause (c) above contained all
information required to be contained therein and otherwise complied in
all material respects with the Exchange Act. Such Form 10-KSB did not
contain any untrue statement of material fact or omit to state a
material fact necessary in order to make the statements contained
therein not misleading in the light of the circumstances under which
they were made.
7.2.2. Material Agreements. The Company has previously
furnished to the Lenders correct and complete copies, including all
exhibits, schedules and amendments thereto, of the agreements and
instruments, each as in effect on the date hereof, listed in Exhibit
7.2.2, which constitute all agreements and instruments material to the
Company and its Subsidiaries on a Consolidated basis (the "Material
Agreements").
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7.3. Agreements Relating to Financing Debt, Investments, etc. Exhibit
7.3, as from time to time hereafter supplemented in accordance with Sections
6.4.1 and 6.4.2, sets forth (to the extent not already included in Exhibit
7.2.2):
7.3.1. The amounts (as of the dates indicated in Exhibit 7.3,
as so supplemented) of all Financing Debt of the Company and its
Subsidiaries and all agreements which relate to such Financing Debt.
7.3.2. All Liens and Guarantees with respect to such Financing
Debt.
7.3.3. All agreements which directly or indirectly require the
Company or any Subsidiary to make any Investment.
7.3.4. Material license agreements with respect to the Company
and its Subsidiaries, including the parties thereto and the expiration
dates thereof.
7.3.5. All trademarks, trade names, service marks, service
names and patents owned by the Company and its Subsidiaries that are
registered with the federal Patent and Trademark Office (or with
respect to which applications for such registration have been filed).
7.3.6. All copyrights owned by the Company and its
Subsidiaries that are registered with the federal Copyright Office.
7.3.7. All bank and deposit accounts owned by the Company and
its Subsidiaries.
The Company has furnished the Lenders correct and complete copies of any
agreements described above in this Section 7.3 requested by the Required
Lenders.
7.4. Changes in Condition. Except as set forth in Exhibit 7.4, no
Material Adverse Change has occurred and since the date hereof, neither the
Company nor any Subsidiary of the Company has entered into any material
transaction outside the ordinary course of business except for the transactions
contemplated by this Agreement and the Material Agreements.
7.5. Title to Assets. The Company and its Subsidiaries have valid and
transferable title to all material assets necessary for or used in the
operations of their business as now conducted by them and reflected in the most
recent balance sheet referred to in Section 7.2.1 (or the balance sheet most
recently furnished to the Lenders pursuant to Sections 6.4.1 or 6.4.2), subject
to no Liens except for Liens permitted by Section 6.8 and except for assets of
Subsidiaries acquired after the date hereof in accordance with the provisions
hereof or disposed of as permitted by Section 6.11.
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7.6. Operations in Conformity With Law, etc. Except as set forth in
Exhibit 7.6, the operations of the Company and its Subsidiaries as now conducted
are not in violation of, nor is the Company or its Subsidiaries in default
under, any Legal Requirement presently in effect, except for such violations and
defaults as do not and will not, in the aggregate, result, or create a material
risk of resulting, in any Material Adverse Change. The Company has not received
written notice of any such violation or default and has no knowledge of any
basis on which the operations of the Company or its Subsidiaries, as now
conducted and as currently proposed to be conducted after the date hereof, would
be held so as to violate or to give rise to any such violation or default,
except where such violation or default would not be reasonably likely to result
in a Material Adverse Change.
7.7. Litigation. Except as set forth in Exhibit 7.7, no litigation, at
law or in equity, or any proceeding before any court, board or other
governmental or administrative agency or any arbitrator is pending or, to the
knowledge of the Borrowers or any Guarantor, threatened in writing, which
involves any material risk of any final judgment, order or liability which,
after giving effect to any applicable insurance, has resulted, or creates a
material risk of resulting, in any Material Adverse Change or which seeks to
enjoin the consummation, or which questions the validity, of any of the
transactions contemplated by this Agreement or any other Credit Document. No
judgment, decree or order of any court, board or other governmental or
administrative agency or any arbitrator has been issued against or binds the
Company or any of its Subsidiaries which has resulted, or creates a material
risk of resulting, in any Material Adverse Change.
7.8. Authorization and Enforceability. Each of the Company and each of
its Subsidiaries has taken all corporate action required to execute, deliver and
perform this Agreement and each other Credit Document to which it is party. No
consent of stockholders of the Company is necessary in order to authorize the
execution, delivery or performance of this Agreement or any other Credit
Document to which the Company is party. Each of this Agreement and each other
Credit Document constitutes the legal, valid and binding obligation of each
Obligor party thereto and is enforceable against such Obligor in accordance with
its terms, except as any of the rights, powers, privileges, remedies and
interests of the Company and its Subsidiaries thereunder may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance or transfer,
reorganization or other laws affecting any rights, powers, privileges, remedies
and interests of creditors generally and by equitable principles.
7.9. No Legal Obstacle to Agreements. Neither the execution, delivery
or performance of this Agreement or any other Credit Document, nor the making of
any borrowings hereunder, nor the guaranteeing of the Credit Obligations, nor
the securing of the Credit Obligations with the Credit Security, has constituted
or resulted in or will constitute or result in:
(a) any breach or termination of the provisions of any
agreement, instrument, deed or lease to which the Company, any of its
Subsidiaries or any other Obligor is a
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party or by which it is bound, or of the Charter or By-laws of the
Company or any of its Subsidiaries;
(b) the violation of any law, statute, judgment, decree or
governmental order, rule or regulation applicable to the Company or any
of its Subsidiaries;
(c) the creation under any agreement, instrument, deed or
lease to which any of them is a party of any Lien (other than Liens on
the Credit Security which secure the Credit Obligations or other Liens
permitted by this Agreement) upon any of the assets of the Company or
any of its Subsidiaries; or
(d) any redemption, retirement or other repurchase obligation
of the Company, any of its Subsidiaries or any other Obligor under any
Charter, By-law, agreement, instrument, deed or lease.
No approval, authorization or other action by, or declaration to or filing with,
any governmental or administrative authority or any other Person is required to
be obtained or made by the Company or any of its Subsidiaries in connection with
the execution, delivery and performance of this Agreement or any other Credit
Document, the transactions contemplated hereby or thereby, the making of any
borrowing hereunder, the guaranteeing of the Credit Obligations or the securing
of the Credit Obligations with the Credit Security in each case by the Company
and its Subsidiaries (other than filings necessary to perfect the Agent's
security interest in the Credit Security).
7.10. Defaults. Neither the Company nor any of its Subsidiaries is in
default under any provision of its Charter or By-laws or of this Agreement or
any other Credit Document. Neither the Company nor any of its Subsidiaries is in
default under any provision of any agreement, instrument, deed or lease to which
it is party or by which it or its property is bound so as to result, or create a
material risk of resulting, in any Material Adverse Change.
7.11. Licenses, etc. The Company and its Subsidiaries own certain
patents, patent applications, patent licenses, patent rights, trademarks,
trademark rights, trade names, trade name rights, copyrights, licenses,
franchises, permits and other intellectual property rights as are reasonably
necessary for the conduct of the business of the Company and its Subsidiaries as
now conducted by them. All of the foregoing are in full force and effect in all
material respects, and each of the Company and its Subsidiaries is in
substantial compliance with the foregoing without any known conflict with the
valid rights of others which has resulted, or creates a material risk of
resulting, in any Material Adverse Change. The Company and its Subsidiaries
license certain patents, patent applications, patent licenses, patent rights,
trademarks, trademark rights, trade names, trade name rights, licenses,
franchises, permits and other intellectual property rights as are reasonably
necessary for the conduct of the business of the Company and its Subsidiaries as
now conducted by them. To the knowledge of the Company and its Subsidiaries, no
event has occurred which permits, or after notice or lapse of
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time or both would permit, the revocation or termination of any such license,
franchise or other right or which affects the rights of any of the Company and
its Subsidiaries thereunder so as to result, or to create a material risk of
resulting, in any Material Adverse Change, except as set forth in Exhibit 7.11.
7.12. Tax Returns. Except as set forth in Exhibit 7.12, each of the
Company and its Subsidiaries has filed all material tax and information returns
which are required to be filed by it (whether pursuant to extensions or
otherwise) and has paid, or made adequate provision for the payment of, all
taxes which are shown on such returns to be due or to any tax assessment
received by it, other than taxes and assessments being contested by the Company
and its Subsidiaries in good faith by appropriate proceedings and for which
adequate reserves have been taken in accordance with GAAP. Neither the Company
nor any of its Subsidiaries knows of any material additional assessments or any
basis therefor. The Company reasonably believes that the charges, accruals and
reserves on the books of the Company and its Subsidiaries in respect of taxes or
other governmental charges are adequate.
7.13. Year 2000 Issues. To the Company's knowledge, based on a review
of the operations of the Company and its Subsidiaries as they relate to the
processing, storage and retrieval of data, the Company does not believe that a
Material Adverse Change is reasonably likely to occur as a result of computer
software and hardware that will not function with respect to periods commencing
January 1, 2000 at least as effectively as with respect to periods ending on or
prior to December 31, 1999.
7.14. Pension Plans. Each Plan (other than a Multiemployer Plan) and,
to the knowledge of the Company and its Subsidiaries, each Multiemployer Plan is
in material compliance with the applicable provisions of ERISA and the Code,
except where such failure to comply would not be reasonably likely to result in
a Material Adverse Change. Each Multiemployer Plan and each Plan that
constitutes a "defined benefit plan" (as defined in ERISA) are set forth in
Exhibit 7.14. Each ERISA Group Person has met all of the funding standards
applicable to all Plans that are not Multiemployer Plans, and, to the knowledge
of the Company and its Subsidiaries, no condition exists which would permit the
institution of proceedings to terminate any Plan that is not a Multiemployer
Plan under section 4042 of ERISA. To the knowledge of the Company and its
Subsidiaries, no Plan that is a Multiemployer Plan is currently insolvent or in
reorganization or has been terminated within the meaning of ERISA.
7.15. Government Regulation; Margin Stock.
7.15.1. Government Regulation. Neither the Company nor any of
its Subsidiaries, nor any Person controlling the Company or any of its
Subsidiaries or under common control with the Company or any of its
Subsidiaries, is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Investment Company Act,
the Interstate Commerce Act or any statute or
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regulation which regulates the incurring by the Company or any of its
Subsidiaries of Financing Debt as contemplated by this Agreement and
the other Credit Documents.
7.15.2. Margin Stock. Except as set forth on Schedule 7.15.2,
neither the Company nor any of its Subsidiaries owns any Margin Stock.
7.16. Disclosure. Neither this Agreement nor any other Credit Document
nor any financial statement, report, notice or certificate with respect to the
Company or its Subsidiaries furnished or to be furnished to the Lenders or the
Agent by or on behalf of the Company or any of its Subsidiaries in connection
with the transactions contemplated hereby or by such Credit Document contains
any untrue statement of material fact or omits to state a material fact
necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances under which they were made.
8. Defaults.
8.1. Events of Default. The following events are referred to as "Events
of Default":
8.1.1. Payment. The Borrowers shall fail to make any payment
in respect of: (a) interest or any commitment fee or Letter of Credit
fee owed by the Borrowers hereunder as the same shall become due and
payable, and such failure shall continue for a period of three Banking
Days, or (b) any Credit Obligation with respect to payments made by any
Letter of Credit Issuer under any Letter of Credit or any draft drawn
thereunder within three Banking Days after demand therefor by such
Letter of Credit Issuer or (c) principal of any of the Credit
Obligations owed by the Borrowers as the same shall become due, whether
at maturity or by acceleration or otherwise.
8.1.2. Specified Covenants. The Company or any of its
Subsidiaries shall fail to perform or observe any of the provisions of
Sections 6.5 through 6.18.
8.1.3. Other Covenants. The Company, any of its Subsidiaries
or any other Obligor shall fail to perform or observe any other
covenant, agreement or provision to be performed or observed by it
under this Agreement or any other Credit Document, and such failure
shall not be rectified or cured within 30 days after the earlier of (a)
notice thereof by the Agent to the Company or (b) a Financial Officer
shall have actual knowledge thereof.
8.1.4. Representations and Warranties. Any representation or
warranty of or made by the Company or any of its Subsidiaries to the
Lenders or the Agent in or pursuant to this Agreement or any other
Credit Document, or in any financial statement, report, notice,
mortgage, assignment or certificate delivered to the Agent or any of
the Lenders by the Company, any of its Subsidiaries or any other
Obligor
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pursuant hereto or thereto, shall be false in any material respect on
the date as of which it was made.
8.1.5. Material Financing Debt Cross Default, etc.
(a) The Company or any of its Subsidiaries shall fail to make
any payment when due (after giving effect to any applicable grace
periods) in respect of any Material Financing Debt;
(b) the Company or any of its Subsidiaries shall fail to
perform or observe the terms of any agreement or instrument relating to
any Material Financing Debt, and such failure shall continue, without
having been duly cured, waived or consented to, beyond the period of
notice or grace, if any, specified in such agreement or instrument, and
such failure shall permit the acceleration of such Material Financing
Debt;
(c) all or any part of any Material Financing Debt of the
Company or any of its Subsidiaries shall be accelerated or shall become
due or payable prior to its stated maturity (except with respect to
voluntary prepayments thereof) for any reason whatsoever;
(d) any Lien on any property of the Company or any of its
Subsidiaries securing any Material Financing Debt shall be enforced by
foreclosure or similar action; or
(e) any holder of any Material Financing Debt shall exercise
any right of rescission with respect to the issuance thereof or put,
mandatory prepayment or repurchase rights against any Obligor with
respect to such Material Financing Debt (other than any such rights
that may be satisfied with "payment in kind" notes, perpetual capital
stock or other similar securities).
8.1.6. Ownership; Liquidation; etc. Except as permitted by
Section 6.11:
(a) the Company shall cease to own, directly or indirectly,
all the capital stock of its Subsidiaries, except to the extent
permitted by Section 6.12.1; or
(b) each of Robert M. Gutkowski and Robert F. X. Sillerman
shall cease to be actively involved in the executive management of the
Company and a replacement reasonably satisfactory to the Required
Lenders shall not have been selected within 180 days; or
(c) any Person, together with "affiliates" and "associates" of
such Person within the meaning of Rule 12b-2 of the Exchange Act, or
any "group" including such Person under sections 13(d) and 14(d) of the
Exchange Act, other than the individual
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Persons described in paragraph (b) above, but not the Affiliates of
such individual Persons, shall acquire after the date hereof beneficial
ownership within the meaning of Rule 13d-3 of the Exchange Act of 50%
or more of either the voting stock or total equity capital of the
Company; or
(d) the Company or any of its Subsidiaries or any other
Obligor shall initiate any action to dissolve, liquidate or otherwise
terminate its existence.
8.1.7. Enforceability, etc. Any Credit Document shall cease
for any reason (other than the scheduled termination thereof in
accordance with its terms or as a result of actions taken solely by the
Agent or the Lenders) to be enforceable in accordance with its terms;
or any party to any Credit Document shall so assert in a judicial or
similar proceeding; or the security interests created by this Agreement
or any other Credit Documents shall cease to be enforceable and of the
same effect and priority purported to be created hereby.
8.1.8. Judgments. A final, non-appealable judgment (a) which,
with other outstanding final judgments against the Company and its
Subsidiaries, exceeds an aggregate of $500,000 in excess of applicable
insurance coverage shall be rendered against the Company or any of its
Subsidiaries, or (b) which grants injunctive relief that results, or
creates a material risk of resulting, in a Material Adverse Change and
in either case if (i) within 30 days after entry thereof, such judgment
shall not have been discharged or execution thereof stayed pending
appeal or (ii) within 30 days after the expiration of any such stay,
such judgment shall not have been discharged.
8.1.9. ERISA. Any "reportable event" (as defined in section
4043 of ERISA) shall have occurred that reasonably could result in
termination of a Plan or the appointment by the appropriate United
States District Court of a trustee to administer any Plan or the
imposition of a Lien in favor of a Plan so as to result, or be
reasonably likely to result, in a Material Adverse Change; or any ERISA
Group Person shall fail to pay when due amounts aggregating in excess
of $500,000 which it shall have become liable to pay to the PBGC or to
a Plan under Title IV of ERISA; or notice of intent to terminate a Plan
shall be filed under Title IV of ERISA by any ERISA Group Person or
administrator; or the PBGC shall institute proceedings under Title IV
of ERISA to terminate or to cause a trustee to be appointed to
administer any Plan or a proceeding shall be instituted by a fiduciary
of any Plan against any ERISA Group Person to enforce section 515 or
4219(c)(5) of ERISA and such proceeding shall not have been dismissed
within 30 days thereafter; or a condition shall exist by reason of
which the PBGC would be entitled to obtain a decree adjudicating that
any Plan must be terminated so as to result, or be reasonably likely to
result, in a Material Adverse Change.
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8.1.10. Bankruptcy, etc. The Company, any of its Subsidiaries
or any other Obligor shall:
(a) commence a voluntary case under the Bankruptcy Code or
authorize, by appropriate proceedings of its board of directors or
other governing body, the commencement of such a voluntary case;
(b) (i) have filed against it a petition commencing an
involuntary case under the Bankruptcy Code that shall not have been
dismissed within 90 days after the date on which such petition is
filed, or (ii) file an answer or other pleading within such 90-day
period admitting or failing to deny the material allegations of such a
petition or seeking, consenting to or acquiescing in the relief therein
provided, or (iii) have entered against it an order for relief in any
involuntary case commenced under the Bankruptcy Code;
(c) seek relief as a debtor under any applicable law, other
than the Bankruptcy Code, of any jurisdiction relating to the
liquidation or reorganization of debtors or to the modification or
alteration of the rights of creditors, or consent in writing to such
relief;
(d) have entered against it an order by a court of competent
jurisdiction (i) finding it to be bankrupt or insolvent, (ii) ordering
or approving its total liquidation or reorganization as a debtor or
(iii) assuming custody of, or appointing a receiver or other custodian
for, all or a substantial portion of its properties and assets; or
(e) make a general assignment for the benefit of, or enter
into a composition with, all its creditors, or appoint, or consent to
the appointment of, or suffer to exist a receiver or other custodian
for, all or a substantial portion of its properties and assets.
8.2. Certain Actions Following an Event of Default. If any one or more
Events of Default shall occur and be continuing, then in each and every such
case:
8.2.1. Terminate Obligation to Extend Credit. Upon written
request of the Required Lenders, the Agent shall terminate the
obligations of the Lenders to make any further extensions of credit
under the Credit Documents by furnishing written notice of such
termination to the Company; provided, however, that if a Bankruptcy
Default shall have occurred, the obligations of the Lenders to make any
further extensions of credit under the Credit Documents shall
automatically terminate.
8.2.2. Specific Performance; Exercise of Rights. Upon written
request of the Required Lenders, the Agent shall proceed to protect and
enforce the Lenders' rights by suit in equity, action at law and/or
other appropriate proceeding, either for specific performance of any
covenant or condition contained in this Agreement or any other
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Credit Document (other than Interest Rate Protection Agreements), or in
aid of the exercise of any power granted in this Agreement or any other
Credit Document (other than Interest Rate Protection Agreements).
8.2.3. Acceleration. Upon written request of the Required
Lenders, the Agent shall by notice in writing to the Borrowers (a)
declare all or any part of the unpaid balance of the Credit Obligations
(other than amounts under Interest Rate Protection Agreements) then
outstanding to be immediately due and payable, and (b) require the
Company immediately to deposit with the Agent in cash an amount equal
to the then Letter of Credit Exposure (which cash shall be held and
applied as provided in Section 4.5), and thereupon such unpaid balance
or part thereof and such amount equal to the Letter of Credit Exposure
shall become so due and payable without presentation, protest or
further demand or notice of any kind, all of which are hereby expressly
waived; provided, however, that if a Bankruptcy Default shall have
occurred, the unpaid balance of the Credit Obligations (other than
amounts under Interest Rate Protection Agreements) shall automatically
become immediately due and payable.
8.2.4. Enforcement of Payment; Credit Security; Setoff. Upon
written request of the Required Lenders, the Agent shall proceed to
enforce payment of the Credit Obligations in such manner as it may
elect to cancel, or instruct other Letter of Credit Issuers to cancel,
any outstanding Letters of Credit which permit the cancellation thereof
and to realize upon any and all rights in the Credit Security. The
Lenders may offset and apply toward the payment of the Credit
Obligations (and/or toward the curing of any Event of Default) any
Indebtedness from the Lenders to the respective Obligors, including any
Indebtedness represented by deposits in any account maintained with the
Lenders, regardless of the adequacy of any security for the Credit
Obligations. The Lenders shall have no duty to determine the adequacy
of any such security in connection with any such offset.
8.2.5. Cumulative Remedies. To the extent not prohibited by
applicable law which cannot be waived, all of the Lenders' rights
hereunder and under each other Credit Document shall be cumulative.
8.3. Annulment of Defaults. Once an Event of Default has occurred, such
Event of Default shall be deemed to exist and be continuing for all purposes of
the Credit Documents (other than Interest Rate Protection Agreements) until the
Required Lenders or the Agent (with the consent of the Required Lenders) shall
have waived such Event of Default in writing, stated in writing that the same
has been cured to such Lenders' reasonable satisfaction or entered into an
amendment to this Agreement which by its express terms cures such Event of
Default, at which time such Event of Default shall no longer be deemed to exist
or to have continued. No such action by the Lenders or the Agent shall extend to
or affect any subsequent Event of Default or impair any rights of the Lenders
upon the occurrence thereof.
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The making of any extension of credit during the existence of any Default or
Event of Default shall not constitute a waiver thereof.
8.4. Waivers. To the extent that such waiver is not prohibited by the
provisions of applicable law that cannot be waived, each of the Company and the
other Obligors waives:
(a) all presentments, demands for performance, notices of
nonperformance (except to the extent required by this Agreement or any
other Credit Document), protests, notices of protest and notices of
dishonor;
(b) any requirement of diligence or promptness on the part of
the Agent or any Lender in the enforcement of its rights under this
Agreement or any other Credit Document;
(c) any and all notices of every kind and description which
may be required to be given by any statute or rule of law, except for
those expressly set forth herein; and
(d) any defense (other than indefeasible payment in full)
which it may now or hereafter have with respect to its liability under
this Agreement or any other Credit Document or with respect to the
Credit Obligations.
9. Expenses; Indemnity.
9.1. Expenses. Whether or not the transactions contemplated hereby
shall be consummated, the Company will pay:
(a) all reasonable out-of-pocket expenses of the Agent and the
Syndication Agent (including reasonable fees and disbursements of the
counsel to the Agent and the Syndication Agent) in connection with the
negotiation, preparation and duplication of this Agreement and each
other Credit Document, examinations by, and reports of, the Agent's
commercial financial examiners, the transactions contemplated hereby
and thereby and amendments, waivers, consents and other operations
hereunder and thereunder;
(b) all recording and filing fees and transfer and documentary
stamp and similar taxes at any time payable pursuant to this Agreement,
any other Credit Document, any Credit Security or the incurrence of the
Credit Obligations; and
(c) all other reasonable out-of-pocket expenses incurred by
the Agent or the Lenders in connection with the enforcement of any
rights hereunder or under any other Credit Document or any work-out
negotiations relating to the Credit Obligations, including costs of
collection and reasonable attorneys' fees and expenses.
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9.2. General Indemnity. The Borrowers shall indemnify the Lenders and
the Agent and hold them harmless from any liability, loss or damage resulting
from the violation by the Company of Section 2.4. In addition, the Borrowers
shall indemnify each Lender, the Agent, the Syndication Agent, each of the
Lenders' or the Agent's or the Syndication Agent's directors, officers,
employees, agents, attorneys, accountants, consultants and each Person, if any,
who controls any Lender or the Agent (each Lender, the Agent and each of such
directors, officers, employees, agents, attorneys, accountants, consultants and
control Persons is referred to as an "Indemnified Party") and hold each of them
harmless from and against any and all claims, damages, liabilities and
reasonable out-of-pocket expenses (including reasonable fees and disbursements
of counsel with whom any Indemnified Party may consult in connection therewith
and all reasonable expenses of litigation or preparation therefor) which any
Indemnified Party may incur or which may be asserted against any Indemnified
Party in connection with (a) the Indemnified Party's compliance with or contest
of any subpoena or other process issued against it in any proceeding involving
the Company or any of its Subsidiaries or their Affiliates, (b) any litigation
or investigation involving the Company, any of its Subsidiaries or their
Affiliates, or any officer, director or employee thereof, (c) the existence or
exercise of any security rights with respect to the Credit Security in
accordance with the Credit Documents, or (d) this Agreement, any other Credit
Document or any transaction contemplated hereby or thereby; provided, however,
that the foregoing indemnity shall not apply (i) to litigation commenced by the
Borrowers against the Lenders or the Agent or the Syndication Agent which seeks
enforcement of any of the rights of the Borrowers hereunder or under any other
Credit Document and is determined adversely to the Lenders or the Agent or the
Syndication Agent in a final nonappealable judgment or (ii) to the extent such
claims, damages, liabilities and expenses result from the Indemnified Party's
own gross negligence or willful misconduct.
9.3. Indemnity With Respect to Foreign Currency Transactions. Each of
the Borrowers waives, to the extent it may lawfully do so, any right it may have
in any jurisdiction to pay any Credit Obligation in a currency other than the
currency in which such Credit Obligation is expressed to be payable under the
Credit Documents. If a judgment or order is rendered by a court or tribunal of
competent jurisdiction for the payment of any amounts owing to the Lenders under
any Credit Document, or under a judgment or order of a court of any other
jurisdiction in respect thereof, and any such judgment or order is expressed in
a currency (the "Payment Currency") other than the currency agreed to be payable
under the Credit Documents (the "Agreed Currency"), or in the event of any
payment being made in any currency other than the Agreed Currency whether
pursuant to the enforcement of any security interest in the Credit Security, the
liquidation of the Company or the English Borrower or otherwise, the Company or
the English Borrower, as applicable, shall, to the extent permitted by
applicable law, indemnify and hold the Lenders harmless against any deficiency
arising or resulting from any variation in rates of exchange between (a) the
rate at which any amount expressed in any Agreed Currency for purposes of any
Credit Document is converted for the purpose of any such judgment, order or
payment into an equivalent amount in the Payment Currency, and (b) the rate at
which at the time of payment of such amount pursuant to any
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Credit Document such Agreed Currency could be purchased by the Agent with the
Payment Currency in the spot market in the place at which such payment was to
have been made.
9.4. Indemnity With Respect to Letters of Credit. The Company shall
indemnify each Letter of Credit Issuer and its correspondents and hold each of
them harmless from and against any and all claims, losses, liabilities, damages
and reasonable out-of-pocket expenses (including reasonable attorneys' fees)
arising from or in connection with any Letter of Credit, including any such
claim, loss, liability, damage or reasonable out-of-pocket expense arising out
of any transfer, sale, delivery, surrender or endorsement of any invoice, bill
of lading, warehouse receipt or other document at any time held by the Agent,
such Letter of Credit Issuer or held for their respective accounts by any of
their correspondents, in connection with any Letter of Credit, except to the
extent such claims, losses, liabilities, damages and expenses result from gross
negligence or willful misconduct on the part of the Agent or any other Letter of
Credit Issuer.
10. Operations; Agent.
10.1. Interests in Credits. The Percentage Interest of each Lender in
the respective portions of the Loan and the related Commitments, shall be
computed based on the maximum principal amount for each Lender as set forth in
the Register, as from time to time in effect. The current Percentage Interests
are set forth in Exhibit 10.1, which may be updated by the Agent from time to
time to conform to the Register. The Agent shall promptly furnish to the Company
copies of any such updates.
10.2. Agent's Authority to Act, etc. Each of the Lenders appoints and
authorizes BankBoston to act for the Lenders as the Lenders' Agent in connection
with the transactions contemplated by this Agreement and the other Credit
Documents (other than Interest Rate Protection Agreements) on the terms set
forth herein. All action in connection with the enforcement of, or the exercise
of any remedies (other than the Lenders' rights of set-off as provided in
Section 8.2.4 or in any Credit Document) in respect of the Credit Obligations
and Credit Documents shall be taken by the Agent.
10.3. Company to Pay Agent, etc. The Borrowers and each Guarantor shall
be fully protected in making all payments in respect of the Credit Obligations
(other than payments under Interest Rate Protection Agreements) to the Agent, in
relying upon consents, modifications and amendments executed by the Agent
purportedly on the Lenders' behalf, and in dealing with the Agent as herein
provided. The Agent may charge the accounts of the Borrowers, on the dates when
the amounts thereof become due and payable, with the amounts of the principal of
and interest on the Loan, and may charge the Company with any amounts paid by
the Letter of Credit Issuers to third parties under Letters of Credit or drafts
presented thereunder, commitment fees and Letter of Credit fees, and the Agent
shall provide prompt telephonic or other notice thereof to the Company.
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10.4. Lender Operations for Advances, Letters of Credit, etc.
10.4.1. Advances. On each Closing Date, each Lender shall
advance to the Agent in immediately available funds such Lender's
Percentage Interest in the portion of the Loan advanced on such Closing
Date prior to 12:00 noon (Boston time). If such funds are not received
at such time, but all applicable conditions set forth in Section 5 have
been satisfied, each Lender authorizes and requests the Agent to
advance for the Lender's account, pursuant to the terms hereof, the
Lender's respective Percentage Interest in such portion of the Loan and
agrees to reimburse the Agent in immediately available funds for the
amount thereof prior to 2:00 p.m. (Boston time) on the day any portion
of the Loan is advanced hereunder; provided, however, that the Agent is
not authorized to make any such advance for the account of any Lender
who has previously notified the Agent in writing that such Lender will
not be performing its obligations to make further advances hereunder;
and provided, further, that the Agent shall be under no obligation to
make any such advance.
10.4.2. Letters of Credit. Each of the Lenders authorizes and
requests each Letter of Credit Issuer to issue the Letters of Credit
provided for in Section 2.3 and to grant each Lender a participation in
each of such Letters of Credit in an amount equal to its Percentage
Interest in the amount of each such Letter of Credit. Promptly upon the
request of the Letter of Credit Issuer, each Lender shall reimburse the
Letter of Credit Issuer in immediately available funds for such
Lender's Percentage Interest in the amount of all obligations to third
parties incurred by the Letter of Credit Issuer in respect of each
Letter of Credit and each draft accepted under a Letter of Credit to
the extent not reimbursed by the Company by 2:00 p.m. (Boston time) on
the Banking Day when due. The Letter of Credit Issuer will notify each
Lender of the issuance of any Letter of Credit, the amount and date of
payment of any draft drawn or accepted under a Letter of Credit and
whether in connection with the payment of any such draft the amount
thereof was added to the Revolving Loan or was reimbursed by the
Company.
10.4.3. Agent to Allocate Payments, etc. All payments of
principal and interest in respect of the extensions of credit made
pursuant to this Agreement, reimbursement of amounts paid by any Letter
of Credit Issuer to third parties under Letters of Credit or drafts
presented thereunder, commitment fees and Letter of Credit fees shall,
as a matter of convenience, be made by the Company to the Agent in
immediately available funds by 1:00 p.m. (Boston time) on any Banking
Day. The share of each Lender shall be credited to such Lender by the
Agent in immediately available funds by 3:00 p.m. (Boston time) on such
Banking Day in such manner that the principal amount of the Credit
Obligations to be paid shall be paid proportionately in accordance with
the Lenders' respective Percentage Interests in such Credit
Obligations, except as otherwise provided in this Agreement. Under no
circumstances shall any Lender be required to produce or present its
Notes as evidence of its interests in the Credit Obligations in any
action or proceeding relating to the Credit Obligations.
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10.4.4. Delinquent Lenders; Nonperforming Lenders. In the
event that any Lender fails to reimburse the Agent pursuant to Sections
10.4.1 or 10.4.2 for the Percentage Interest of such lender (a
"Delinquent Lender") in any credit advanced by the Agent pursuant
hereto, overdue amounts (the "Delinquent Payment") due from the
Delinquent Lender to the Agent shall bear interest, payable by the
Delinquent Lender on demand, at a per annum rate equal to (a) the
Federal Funds Rate for the first three days overdue and (b) the sum of
2% plus the Federal Funds Rate for any longer period. Such interest
shall be payable to the Agent for its own account for the period
commencing on the date of the Delinquent Payment and ending on the date
the Delinquent Lender reimburses the Agent on account of the Delinquent
Payment (to the extent not paid by any Obligor as provided below) and
the accrued interest thereon (the "Delinquency Period"), whether
pursuant to the assignments referred to below or otherwise. Upon notice
by the Agent during a Delinquency Period, the Company will pay to the
Agent the principal (but not the interest) portion of the Delinquent
Payment. During the Delinquency Period, in order to make reimbursements
for the Delinquent Payment and accrued interest thereon, the Delinquent
Lender shall be deemed to have assigned to the Agent all interest,
commitment fees and other payments made by the Company under Section 3
that would have thereafter otherwise been payable under the Credit
Documents to the Delinquent Lender. During any other period in which
any Lender is not performing its obligations to extend credit under
Section 2 (a "Nonperforming Lender"), the Nonperforming Lender shall be
deemed to have assigned to each Lender that is not a Nonperforming
Lender (a "Performing Lender") all principal and other payments made by
the Company under Section 4 that would have thereafter otherwise been
payable under the Credit Documents to the Nonperforming Lender. The
Agent shall credit a portion of such payments to each Performing Lender
in an amount equal to the Percentage Interest of such Performing Lender
in an amount equal to the Percentage Interest of such Performing Lender
divided by one minus the Percentage Interest of the Nonperforming
Lender until the respective portions of the Loan owed to all the
Lenders are the same as the Percentage Interests of the Lenders
immediately prior to the failure of the Nonperforming Lender to perform
its obligations hereunder. The foregoing provisions shall be in
addition to any other remedies the Agent, the Performing Lenders or the
Company may have under law or equity against the Delinquent Lender as a
result of the Delinquent Payment or against the Nonperforming Lender as
a result of its failure to perform its obligations hereunder.
10.5. Sharing of Payments, etc. Each Lender agrees that (a) if by
exercising any right of set-off or counterclaim or otherwise, it shall receive
payment of (i) a proportion of the aggregate amount due with respect to its
Percentage Interest in the Loan and Letter of Credit Exposure which is greater
than (ii) the proportion received by any other Lender in respect of the
aggregate amount due with respect to such other Lender's Percentage Interest in
the Loan and Letter of Credit Exposure and (b) if such inequality shall continue
for more than 10 days,
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the Lender receiving such proportionately greater payment shall purchase
participations in the Percentage Interests in the Loan and Letter of Credit
Exposure held by the other Lenders, and such other adjustments shall be made
from time to time (including rescission of such purchases of participations in
the event the unequal payment originally received is recovered from such Lender
through bankruptcy proceedings or otherwise), as may be required so that all
such payments of principal and interest with respect to the Loan and Letter of
Credit Exposure held by the Lenders shall be shared by the Lenders pro rata in
accordance with their respective Percentage Interests; provided, however, that
this Section 10.5 shall not impair the right of any Lender to exercise any right
of set-off or counterclaim it may have and to apply the amount subject to such
exercise to the payment of Indebtedness of any Obligor other than such Obligor's
Indebtedness with respect to the Loan and Letter of Credit Exposure. Each Lender
that grants a participation in the Credit Obligations to a Credit Participant
shall require as a condition to the granting of such participation that such
Credit Participant agree to share payments received in respect of the Credit
Obligations as provided in this Section 10.5. The provisions of this Section
10.5 are for the sole and exclusive benefit of the Lenders and no failure of any
Lender to comply with the terms hereof shall be available to any Obligor as a
defense to the payment of the Credit Obligations.
10.6. Agent's Resignation. The Agent may resign at any time by giving
at least 60 days' prior written notice of its intention to do so to each of the
Lenders and the Company and upon the appointment by the Required Lenders of a
successor Agent reasonably satisfactory to the Company. If no successor Agent
shall have been so appointed and shall have accepted such appointment within 45
days after the retiring Agent's giving of such notice of resignation, then the
retiring Agent may appoint a successor Agent which shall be a bank or a trust
company organized under the laws of the United States of America or any state
thereof and having a combined capital, surplus and undivided profit of at least
$500,000,000 (so long as no Default exists) with the consent of the Company,
which shall not be unreasonably withheld; provided, however, that any successor
Agent appointed under this sentence may be removed upon the written request of
the Required Lenders, which request shall also appoint a successor Agent (so
long as no Default exists) reasonably satisfactory to the Company. Upon the
appointment of a new Agent hereunder, the term "Agent" shall for all purposes of
this Agreement thereafter mean such successor. After any retiring Agent's
resignation hereunder as Agent, or the removal hereunder of any successor Agent,
the provisions of this Agreement shall continue to inure to the benefit of and
be binding upon such retiring or removed Agent as to any actions taken or
omitted to be taken by it while it was Agent under this Agreement.
10.7. Concerning the Agent.
10.7.1. Action in Good Faith, etc. The Agent and its officers,
directors, employees and agents shall be under no liability to any of
the Lenders or to any future holder of any interest in the Credit
Obligations for any action or failure to act taken or suffered in good
faith, and any action or failure to act in accordance with an opinion
of its counsel shall conclusively be deemed to be in good faith. The
Agent shall, as
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between the Lenders, in all cases be entitled to rely, and shall be
fully protected in relying, on instructions given to the Agent by the
Required Lenders.
10.7.2. No Implied Duties, etc. The Agent shall have and may
exercise such powers as are specifically delegated to the Agent under
this Agreement or any other Credit Document together with all other
powers incidental thereto. The Agent shall have no implied duties to
any Lender or any obligation to take any action under this Agreement or
any other Credit Document except for action specifically provided for
in this Agreement or any other Credit Document to be taken by the
Agent.
10.7.3. Validity, etc. The Agent shall not be responsible to
any Lender or any future holder of any interest in the Credit
Obligations (a) for the legality, validity, enforceability or
effectiveness of this Agreement or any other Credit Document, (b) for
any recitals, reports, representations, warranties or statements
contained in or made in connection with this Agreement or any other
Credit Document, (c) for the existence or value of any assets included
in any security for the Credit Obligations, (d) for the effectiveness
of any Lien purported to be included in the Credit Security, (e) for
the specification or failure to specify any particular assets to be
included in the Credit Security, or (f) unless the Agent shall have
failed to comply with Section 10.7.1, for the perfection of the
security interests in the Credit Security.
10.7.4. Compliance. The Agent shall not be obligated to
ascertain or inquire as to the performance or observance of any of the
terms of this Agreement or any other Credit Document; and in connection
with any extension of credit under this Agreement or any other Credit
Document, the Agent shall be fully protected in relying on a
certificate of any Borrower as to the fulfillment by such Borrower of
any conditions to such extension of credit.
10.7.5. Employment of Agents and Counsel. The Agent may
execute any of its duties as Agent under this Agreement or any other
Credit Document by or through employees, agents and attorneys-in-fact
and shall not be responsible to any of the Lenders for the default or
misconduct of any such agents or attorneys-in-fact selected by the
Agent acting in good faith. The Agent shall be entitled to advice of
counsel concerning all matters pertaining to the agency hereby created
and its duties hereunder or under any other Credit Document.
10.7.6. Reliance on Documents and Counsel. The Agent shall be
entitled to rely, and shall be fully protected in relying, upon any
affidavit, certificate, cablegram, consent, instrument, letter, notice,
order, document, statement, telecopy, telegram, telex or teletype
message or writing reasonably believed in good faith by the Agent to be
genuine and correct and to have been signed, sent or made by the Person
in question, including any telephonic or oral statement made by such
Person, and, as
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between the Agent and the other Lenders, with respect to legal matters,
upon an opinion or the advice of counsel selected by the Agent.
10.7.7. Agent's Reimbursement. Each of the Lenders severally
agrees to reimburse the Agent, pro rata in accordance with such
Lender's Percentage Interest, for any reasonable expenses not
reimbursed by the Borrowers or the Guarantors (without limiting or
expanding the obligation of the Borrowers or the Guarantors to make
such reimbursement): (a) for which the Agent is entitled to
reimbursement by the Borrowers or the Guarantors under this Agreement
or any other Credit Document, and (b) after the occurrence of a
Default, for any other reasonable expenses incurred by the Agent on the
Lenders' behalf in connection with the enforcement of the Lenders'
rights under this Agreement or any other Credit Document; provided,
however, that the Agent shall not be reimbursed for any such expenses
arising as a result of its gross negligence or willful misconduct.
10.8. Rights as a Lender. With respect to any credit extended by it
hereunder, BankBoston shall have the same rights, obligations and powers
hereunder as any other Lender and may exercise such rights and powers as though
it were not the Agent, and unless the context otherwise specifies, BankBoston
shall be treated in its individual capacity as though it were not the Agent
hereunder. Without limiting the generality of the foregoing, the Percentage
Interest of BankBoston shall be included in any computations of Percentage
Interests. BankBoston and its Affiliates may accept deposits from, lend money
to, act as trustee for and generally engage in any kind of banking or trust
business with the Company, any of its Subsidiaries or any Affiliate of any of
them and any Person who may do business with or own an equity interest in the
Company, any of its Subsidiaries or any Affiliate of any of them, all as if
BankBoston were not the Agent and without any duty to account therefor to the
other Lenders.
10.9. Independent Credit Decision. Each of the Lenders acknowledges
that it has independently and without reliance upon the Agent, based on the
financial statements and other documents referred to in Section 7.2, on the
other representations and warranties contained herein and on such other
information with respect to the Company and its Subsidiaries as such Lender
deemed appropriate, made such Lender's own credit analysis and decision to enter
into this Agreement and to make the extensions of credit provided for hereunder.
Each Lender represents to the Agent that such Lender will continue to make its
own independent credit and other decisions in taking or not taking action under
this Agreement or any other Credit Document. Each Lender expressly acknowledges
that neither the Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates has made any representations or warranties to
such Lender, and no act by the Agent taken under this Agreement or any other
Credit Document, including any review of the affairs of the Company and its
Subsidiaries, shall be deemed to constitute any representation or warranty by
the Agent. Except for notices, reports and other documents expressly required to
be furnished to each Lender by the Agent under this Agreement or any other
Credit Document, the Agent shall not have any duty or
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responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition, financial or
otherwise, or creditworthiness of the Company or any Subsidiary which may come
into the possession of the Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates.
10.10. Indemnification. The Lenders shall severally indemnify the Agent
and its officers, directors, employees, agents, attorneys, accountants,
consultants and controlling Persons (to the extent not reimbursed by the
Obligors and without limiting or expanding the obligation of any of the Obligors
to do so), pro rata in accordance with their respective Percentage Interests,
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever which may at any time be imposed on, incurred by or asserted
against the Agent or such Persons relating to or arising out of this Agreement,
any other Credit Document, the transactions contemplated hereby or thereby, or
any action taken or omitted by the Agent in connection with any of the
foregoing; provided, however, that the foregoing shall not extend to actions or
omissions which are taken by the Agent with gross negligence or willful
misconduct.
11. Successors and Assigns; Lender Assignments and Participations. Any reference
in this Agreement or any other Credit Document to any of the parties hereto
shall be deemed to include the successors and assigns of such party, and all
covenants and agreements by or on behalf of the Company, the other Obligors, the
Agent or the Lenders that are contained in this Agreement or any other Credit
Document shall bind and inure to the benefit of their respective successors and
assigns; provided, however, that (a) the Company and its Subsidiaries may not
assign their rights or obligations under this Agreement or any other Credit
Document except for mergers or liquidations permitted by Section 6.11, and (b)
the Lenders shall be not entitled to assign their respective Percentage
Interests in the credits extended hereunder or their Commitments except as set
forth below in this Section 11.
11.1. Assignments by Lenders.
11.1.1. Assignees and Assignment Procedures. Each Lender may
(a) without the consent of the Agent or the Borrowers if the proposed
assignee is already a Lender hereunder, a Related Fund or a Wholly
Owned Subsidiary of the same corporate parent of which the assigning
Lender or any other Lender is a Subsidiary, or (b) otherwise with the
consents of the Agent and (so long as no Event of Default exists) the
Company (which consents will not be unreasonably withheld), in
compliance with applicable laws in connection with such assignment,
assign to one or more commercial banks, investment companies, other
financial institutions or mutual funds in the business of making or
purchasing loans similar to the Credit Obligations (each, an
"Assignee") all or a portion of its interests, rights and obligations
under this Agreement and the other Credit Documents, including all or a
portion, which need not be pro rata between the Revolving Loan, the
English Loan and the Letter of Credit Exposure, of its
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Commitment, the portion of the Revolving Loan, the English Loan and
Letter of Credit Exposure at the time owing to it and any Note held by
it, but excluding its rights and obligations as a Letter of Credit
Issuer; provided, however, that:
(i) the aggregate amount of the Commitment of the
assigning Lender subject to each such assignment to any
Assignee other than another Lender, a Related Fund or a Wholly
Owned Subsidiary of the same corporate parent of which the
assigning Lender or any other Lender is a Subsidiary
(determined as of the date the Assignment and Acceptance with
respect to such assignment is delivered to the Agent) shall be
not less than $3,500,000 and in increments of $500,000 (or, if
less, the entire remaining amount of the assigning Lender's
Commitment);
(ii) the parties to each such assignment shall
execute and deliver to the Agent an Assignment and Acceptance
(the "Assignment and Acceptance") substantially in the form of
Exhibit 11.1.1, together with the Note subject to such
assignment and, except in the event of a transfer pursuant to
Section 11.3, a processing and recordation fee of $3,000
payable to the Agent by the assigning Lender (or as the
assigning Lender and the Assignee may otherwise agree between
themselves); and
(iii) in the case of an assignment to which the
Borrowers have not provided consent, the Borrowers are not
subject to any increase in its tax liability.
Upon acceptance and recording pursuant to Section 11.1.4, from and
after the effective date specified in each Assignment and Acceptance
(which effective date shall be at least five Banking Days after the
execution thereof unless waived by the Agent):
(A) the Assignee shall be a party hereto and, to the extent
provided in such Assignment and Acceptance, have the rights
and obligations of a Lender under this Agreement and
(B) the assigning Lender shall, to the extent provided in such
assignment, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance
covering all or the remaining portion of an assigning Lender's
rights and obligations under this Agreement, such Lender shall
cease to be a party hereto but shall continue to be entitled
to the benefits of Sections 3.3.4, 3.6 and 9, as well as to
any fees accrued for its account hereunder and not yet paid).
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11.1.2. Terms of Assignment and Acceptance. By executing and
delivering an Assignment and Acceptance, the assigning Lender and
Assignee shall be deemed to confirm to and agree with each other and
the other parties hereto as follows:
(a) other than the representation and warranty that it is the
legal and beneficial owner of the interest being assigned thereby free
and clear of any adverse claim, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in
connection with this Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement,
any other Credit Document or any other instrument or document furnished
pursuant hereto;
(b) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition
of the Company and its Subsidiaries or the performance or observance by
the Company or any of its Subsidiaries of any of its obligations under
this Agreement, any other Credit Document or any other instrument or
document furnished pursuant hereto;
(c) such Assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial statements
delivered pursuant to Section 7.2 or Section 6.4 and such other
documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and
Acceptance;
(d) such Assignee will independently and without reliance upon
the Agent, such assigning Lender or any other Lender, and based on such
documents and information as such Assignee shall deem appropriate at
the time, continue to make its own credit decisions in taking or not
taking action under this Agreement;
(e) such Assignee appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under
this Agreement as are delegated to the Agent by the terms hereof,
together with such powers as are reasonably incidental thereto; and
(f) such Assignee agrees that it will perform in accordance
with the terms of this Agreement all the obligations which are required
to be performed by it as a Lender.
11.1.3. Register. The Agent shall maintain at the Boston
Office a register (the "Register") for the recordation of (a) the names
and addresses of the Lenders and the Assignees which assume rights and
obligations pursuant to an assignment under Section 11.1.1, (b) the
Percentage Interest of each such Lender as set forth in Exhibit 10.1
and (c) the amount of the Loan and Letter of Credit Exposure owing to
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each Lender from time to time. The entries in the Register shall be
conclusive, in the absence of demonstrable error, and the Borrowers,
the Agent and the Lenders may treat each Person whose name is
registered therein for all purposes as a party to this Agreement. The
Register shall be available for inspection by the Borrowers or any
Lender at any reasonable time and from time to time upon reasonable
prior notice.
11.1.4. Acceptance of Assignment and Assumption. Upon its
receipt of a completed Assignment and Acceptance executed by an
assigning Lender and an Assignee (and any necessary consent of the
Agent and the Borrowers) together with the processing and recordation
fee referred to in Section 11.1.1 and, to the extent necessary, the
Note being assigned, the Agent shall (a) accept such Assignment and
Acceptance, (b) record the information contained therein in the
Register and (c) give prompt notice thereof to the Borrowers. Within
five Banking Days after receipt of notice, the Borrowers, at their own
expense, shall execute and deliver to the Agent (in exchange for the
surrendered Note if such Note must be surrendered or reissued as a
result of such assignment) a new Note to the order of such Assignee in
a principal amount equal to the applicable Commitment and Loan assumed
by it pursuant to such Assignment and Acceptance. If the assigning
Lender has retained a Commitment and Loan, its Note shall be deemed to
be then outstanding in a principal amount equal to the applicable
Commitment and Loan retained by it.
11.1.5. Federal Reserve Bank. Notwithstanding the foregoing
provisions of this Section 11 (without the consent of or notice to the
Agent or the Borrowers), any Lender may at any time pledge all or any
portion of such Lender's rights under this Agreement and the other
Credit Documents to a Federal Reserve Bank or, in the case of any
Lender that is a fund, to the trustee of such fund to support the
fund's obligations to such trustee; provided, however, that no such
pledge or assignment shall release such Lender from such Lender's
obligations hereunder or under any other Credit Document.
11.1.6. Further Assurances. The Company and its Subsidiaries
shall sign such documents and take such other actions from time to time
reasonably requested by an Assignee to enable it to share in the
benefits of the rights created by the Credit Documents.
11.2. Credit Participants. Each Lender may, without the consent of the
Borrowers or the Agent, in compliance with applicable laws in connection with
such participation, sell to one or more commercial banks, other financial
institutions or funds in the business of making or purchasing loans similar to
the Credit Obligations (each a "Credit Participant") participations in all or a
portion of its interests, rights and obligations under this Agreement and the
other Credit Documents (including all or a portion of its Commitment, the Loan
and Letter of Credit Exposure owing to it and the Note held by it); provided,
however, that:
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(a) such Lender's obligations under this Agreement shall
remain unchanged;
(b) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations;
(c) the Credit Participant shall be entitled to the benefit of
the cost protection provisions contained in Sections 3.3.4, 3.6 and 9
(without duplication of any payments made under such Sections to the
selling Lender), but shall not be entitled to receive any greater
payment thereunder than the selling Lender would have been entitled to
receive with respect to the interest so sold if such interest had not
been sold; and
(d) the Borrowers, the Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection
with such Lender's rights and obligations under this Agreement and,
under any agreements between such Lender and such Credit Participant,
such Lender shall retain the sole right as one of the Lenders to vote
(and to determine how to vote) with respect to the enforcement of the
obligations of the Obligors relating to the Loan and Letter of Credit
Exposure and the approval of any amendment, modification or waiver of
any provision of this Agreement (other than amendments, modifications,
consents or waivers described in clause (b) of the proviso to Section
15.1, with respect to which the Credit Participant may determine how to
vote).
Each Obligor agrees, to the fullest extent permitted by applicable law, that any
Credit Participant and any Lender purchasing a participation from another Lender
pursuant to Section 10.5 may exercise all rights (including the right of
set-off) with respect to its participation as fully as if such Credit
Participant or such Lender were the direct creditor of the Obligors and a Lender
hereunder in the amount of such participation so long as such participant
provides written notice to the Company about its participation at the time of
such participation.
11.3. Replacement of Lender. In the event that any Lender or, to the
extent applicable, any Credit Participant (the "Affected Lender"):
(a) fails to perform its obligations to fund any portion of
the Loan or to issue any Letter of Credit on any Closing Date when
required to do so by the terms of the Credit Documents, or fails to
provide its portion of any Eurocurrency Pricing Option pursuant to
Section 3.3.1 or on account of a Legal Requirement as contemplated by
Section 3.3.5;
(b) demands payment under the provisions of Section 3.6 in an
amount materially in excess of the amounts with respect thereto
demanded by the other Lenders; or
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(c) refuses to consent to a proposed amendment, modification,
waiver or other action requiring consent of the holders of 100% of the
Percentage Interests under Section 15.1 that is consented to by Lenders
owning at least 90% of the Percentage Interests;
then, so long as no Event of Default exists, the Borrowers shall have the right
to seek a replacement lender which is reasonably satisfactory to the Agent (the
"Replacement Lender"). The Replacement Lender shall purchase the interests of
the Affected Lender in the Loan and its Commitment and shall assume the
obligations of the Affected Lender hereunder and under the other Credit
Documents upon execution by the Replacement Lender of an Assignment and
Acceptance and the tender by it to the Affected Lender of a purchase price
agreed between it and the Affected Lender (or, if they are unable to agree, a
purchase price in the amount of the Affected Lender's Percentage Interest in the
Loan and Letter of Credit Exposure, or appropriate credit support for contingent
amounts included therein, and all other outstanding Credit Obligations then owed
to the Affected Lender). No assignment fee pursuant to Section 11.1.1(ii) shall
be required in connection with such assignment. Such assignment by any Affected
Lender who has performed its obligations hereunder shall be deemed an early
termination of any Eurocurrency Pricing Option to the extent of such Affected
Lender's portion thereof, and the Company will pay to such Affected Lender any
resulting amounts due under Section 3.3.4. Upon consummation of such assignment,
the Replacement Lender shall become party to this Agreement as a signatory
hereto and shall have all the rights and obligations of the Affected Lender
under this Agreement and the other Credit Documents with a Percentage Interest
equal to the Percentage Interest of the Affected Lender, the Affected Lender
shall be released from its obligations hereunder (but not from its accrued
liabilities hereunder) and under the other Credit Documents, and no further
consent or action by any party shall be required. Upon the consummation of such
assignment, the Company, the Agent and the Affected Lender shall make
appropriate arrangements so that a new Note is issued to the Replacement Lender
if it has acquired a portion of the Loan. The Borrowers and the Guarantors shall
sign such documents and take such other actions reasonably requested by the
Replacement Lender to enable it to share in the benefits of the rights created
by the Credit Documents. Until the consummation of an assignment in accordance
with the foregoing provisions of this Section 11.3, the Borrowers shall continue
to pay to the Affected Lender any Credit Obligations as they become due and
payable.
12. Confidentiality. Each Lender will make no disclosure of confidential
information furnished to it by the Company or any of its Subsidiaries or any
other Obligor unless such information shall have become known to the public
generally (other than as a result of a breach of this Section 12), except:
(a) in connection with the enforcement of this Agreement or
any other Credit Document to Persons who have a reasonable need to be
furnished such confidential information and who agree in writing to
comply with the restrictions contained in this Section 12 with respect
to such information;
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(b) pursuant to any statutory or regulatory requirement or any
mandatory court order, subpoena or other legal process, provided that
the Lenders shall endeavor to provide prior notice to the Company of
such required disclosure and the Company and its Subsidiaries shall
have the right to file a protective order to prohibit such information
from being disclosed;
(c) to any other Lender or any parent or corporate Affiliate
of such Lender or to any Credit Participant, proposed Credit
Participant or proposed Assignee; provided, however, that any such
Person shall agree to comply with the restrictions set forth in this
Section 12 with respect to such information;
(d) to its independent counsel, auditors and other
professional advisors with an instruction to such Person to keep such
information confidential; and
(e) with the prior written consent of the Company, to any
other Person.
13. Foreign Lenders. If any Lender is not created or organized in, or under the
laws of, the United States of America or any state thereof, such Lender shall
deliver to the Borrowers and the Agent the forms described in one of the
following two clauses:
(a) Two fully completed and duly executed United States
Internal Revenue Service Form 1001 or 4224 or any successor form, as
the case may be, certifying that such Lender is entitled to receive
payments of the Credit Obligations payable to it without deduction or
withholding of any United States federal income taxes; or
(b) A statement, executed by such Lender under penalty of
perjury, certifying that such Lender is not a "bank" within the meaning
of section 881(c)(3)(A) of the Code and two fully completed and duly
executed United States Internal Revenue Service Forms W-8 or any
successor form, certifying that such Lender is not a "United States
person" within the meaning of section 7701(a)(30) of the Code.
Each Lender that delivers any form or statement pursuant to this Section 13
further undertakes to renew such forms and statements by delivering to the
Borrowers and the Agent any updated form, successor form or other certification,
as the case may be, on or before the date that any form or statement previously
delivered pursuant to this Section 13 expires or becomes obsolete or after the
occurrence of any event requiring a change in such most recent form or
statement. If at any time the Borrowers and the Agent have not received all
forms and statements (including any renewals thereof) required to be provided by
any Lender pursuant to this Section 13, Section 3.6 shall not apply with respect
to any amount of United States federal income taxes required to be withheld from
payments of the Credit Obligations to such Lender.
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14. Notices. Except as otherwise specified in this Agreement or any other Credit
Document, any notice required to be given pursuant to this Agreement or any
other Credit Document shall be given in writing. Any notice, consent, approval,
demand or other communication in connection with this Agreement or any other
Credit Document shall be deemed to be given if given in writing prior to 5:00
p.m. on a Banking Day (including telecopy or similar teletransmission) addressed
as provided below (or to the addressee at such other address as the addressee
shall have specified by notice actually received by the addressor), and if
either (a) actually delivered in fully legible form to such address (evidenced
in the case of a telecopy by receipt of a confirmation) or (b) in the case of a
letter, unless actual receipt of the notice is required by any Credit Document
five days shall have elapsed after the same shall have been deposited in the
United States mails, with first-class postage prepaid and registered or
certified.
If to the Company or any of its Subsidiaries, to it at its address set
forth in Exhibit 7.1 (as supplemented pursuant to Sections 6.4.1 and 6.4.2), to
the attention of the chief financial officer.
If to any Lender or the Agent, to it at its address set forth on the
signature pages of this Agreement or in the Register, with a copy to the Agent.
15. Amendments, Consents, Waivers, etc.
15.1. Lender Consents for Amendments. Except as otherwise set forth
herein, the Agent may (and upon the written request of the Required Lenders the
Agent shall) take or refrain from taking any action under this Agreement or any
other Credit Document, including giving its written consent to any modification
of or amendment to and waiving in writing compliance with any covenant or
condition in this Agreement or any other Credit Document (other than an Interest
Rate Protection Agreement) or any Default or Event of Default, all of which
actions shall be binding upon all of the Lenders; provided, however, that:
(a) Except as provided below, without the written consent of
the Lenders owning at least two-thirds of the Percentage Interests
(disregarding the Percentage Interest of any Delinquent Lender during
the existence of a Delinquency Period or of any Nonperforming Lender so
long as such Lender is treated equally with the other Lenders with
respect to any actions enumerated below), no written modification of,
amendment to, consent with respect to, waiver of compliance with or
waiver of a Default under, any of the Credit Documents (other than an
Interest Rate Protection Agreement) shall be made.
(b) Without the written consent of such Lenders as own 100% of
the Percentage Interests (disregarding the Percentage Interest of any
Delinquent Lender during the existence of a Delinquency Period or of
any Nonperforming Lender so long
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as such Lender is treated equally with the other Lenders with respect
to any actions enumerated below):
(i) None of the conditions specified in Section 5
shall be amended, waived or modified.
(ii) No release of all or substantially all of the
Credit Security or release of the Company or any material
Guarantor shall be made (in any event, without the written
consent of the Lenders, the Agent may release particular items
of Credit Security or particular Guarantors in dispositions
permitted by Section 6.11, as modified by amendments thereto
approved by the Required Lenders, and may release all Credit
Security pursuant to Section 16.1 upon payment in full of the
Credit Obligations and termination of the Commitments).
(iii) No incurrence or existence of any Lien on all
or substantially all of the Credit Security shall be permitted
(other than Liens securing the Credit Obligations or Liens
permitted by Section 7.8).
(iv) No alteration shall be made of the Lenders'
rights of set-off contained in Section 8.2.4.
(v) No amendment to or modification of this Section
15.1 or the definition of "Required Lenders" shall be made.
(vi) No reduction shall be made in (A) the amount of
principal of the Loan or reimbursement obligations for
payments made under Letters of Credit, (B) the interest rate
on the Loan or (C) the Letter of Credit Fees or commitment
fees owing with respect to the credit facility provided herein
(other than amendments and waivers approved by the Required
Lenders that waive an increase in the Applicable Rate as a
result of an Event of Default).
(vii) No change shall be made in the stated,
scheduled time of payment of any portion of the Loan or
interest thereon or reimbursement of payments made under
Letters of Credit or fees relating to any of the foregoing and
no waiver shall be made of any Default under Section 8.1.1.
(viii) No increase shall be made in the amount, or
extension of the term, of the stated Commitments beyond that
provided for under Section 2.
(c) Without the written consent of the Agent, no amendment or
modification of any Credit Document shall affect the rights or duties
of the Agent under the Credit Documents.
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(d) Without the written consent of a Letter of Credit Issuer,
no amendment or modification of any Credit Document shall affect the
rights or duties of such Letter of Credit Issuer under the Credit
Documents.
15.2. Course of Dealing; No Implied Waivers. No course of dealing
between any Lender or the Agent, on one hand, and the Company or any other
Obligor, on the other hand, shall operate as a waiver of any party's rights
under this Agreement or any other Credit Document or with respect to the Credit
Obligations. In particular, no delay or omission on the part of any Lender or
the Agent in exercising any right under this Agreement or any other Credit
Document or with respect to the Credit Obligations shall operate as a waiver of
such right or any other right hereunder or thereunder. A waiver on any one
occasion shall not be construed as a bar to or waiver of any right or remedy on
any future occasion. No waiver, consent or amendment with respect to this
Agreement or any other Credit Document shall be binding unless it is in writing
and signed by the Borrowers, the Agent or the Required Lenders.
16. General Provisions.
16.1. Defeasance. When all Credit Obligations (other than unmatured
indemnities) have been paid, performed and reasonably determined by the Agent to
have been indefeasibly discharged in full, and if at the time no Lender
continues to be committed to extend any credit to the Company hereunder or under
any other Credit Document, this Agreement and the other Credit Documents shall
terminate and, at the Company's written request, the Credit Security shall
revert to the Obligors and the right, title and interest of the Agent and the
Lenders therein shall terminate. Thereupon, on the Obligors' demand and at their
cost and expense, the Agent shall execute proper instruments, acknowledging
satisfaction of and discharging this Agreement and the other Credit Documents,
and file such other documents as the Obligors shall reasonably request for
purposes of terminating the Credit Obligations, and shall redeliver to the
Obligors any Credit Security then in its possession; provided, however, that
Sections 3.3.4, 3.6, 9, 10.7.7, 10.10, 12 and 16 shall survive the termination
of this Agreement.
16.2. No Strict Construction. The parties have participated jointly in
the negotiation and drafting of this Agreement and the other Credit Documents
with counsel sophisticated in financing transactions. In the event an ambiguity
or question of intent or interpretation arises, this Agreement and the other
Credit Documents shall be construed as if drafted jointly by the parties and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement and the other
Credit Documents.
16.3. Certain Obligor Acknowledgments. Each of the Company and the
other Obligors acknowledges that:
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(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Credit
Documents;
(b) neither the Agent nor any Lender has any fiduciary
relationship with or duty to the Obligors arising out of or in
connection with this Agreement or any other Credit Document, and the
relationship between the Agent and Lenders, on one hand, and the
Obligors, on the other hand, in connection herewith or therewith is
solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Credit
Documents or otherwise exists by virtue of the transactions
contemplated hereby or thereby among the Obligors and the Lenders.
16.4. Venue; Service of Process; Certain Waivers. Each of the Company,
the other Obligors, the Agent and the Lenders:
(a) Irrevocably submits to the nonexclusive jurisdiction of
the state courts of The Commonwealth of Massachusetts and to the
nonexclusive jurisdiction of the United States District Court for the
District of Massachusetts for the purpose of any suit, action or other
proceeding arising out of or based upon this Agreement or any other
Credit Document or the subject matter hereof or thereof;
(b) Waives to the extent not prohibited by applicable law that
cannot be waived, and agrees not to assert, by way of motion, as a
defense or otherwise, in any such proceeding brought in any of the
above-named courts, any claim that it is not subject personally to the
jurisdiction of such court, that its property is exempt or immune from
attachment or execution, that such proceeding is brought in an
inconvenient forum, that the venue of such proceeding is improper, or
that this Agreement or any other Credit Document, or the subject matter
hereof or thereof, may not be enforced in or by such court; and
(c) Consents to service of process in any such proceeding in
any manner at the time permitted by Chapter 223A of the General Laws of
The Commonwealth of Massachusetts and agrees that service of process by
registered or certified mail, return receipt requested, at its address
specified in or pursuant to Section 14 is reasonably calculated to give
actual notice.
16.5. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE
LAW THAT CANNOT BE WAIVED, EACH OF THE COMPANY, THE OTHER OBLIGORS, THE AGENT
AND THE LENDERS WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS
PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN
RESPECT OF ANY ISSUE, CLAIM OR PROCEEDING ARISING OUT OF THIS AGREEMENT OR
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ANY OTHER CREDIT DOCUMENT OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY CREDIT
OBLIGATION OR IN ANY WAY CONNECTED WITH THE DEALINGS OF THE LENDERS, THE AGENT,
THE COMPANY OR ANY OTHER OBLIGOR IN CONNECTION WITH ANY OF THE ABOVE, IN EACH
CASE WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER IN CONTRACT, TORT OR
OTHERWISE. Each of the Company and the other Obligors acknowledges that it has
informed by the Agent that the foregoing sentence constitutes a material
inducement upon which each of the Lenders has relied and will rely in entering
into this Agreement and any other Credit Document. Any Lender, the Agent, the
Company or any other Obligor may file an original counterpart or a copy of this
Agreement with any court as written evidence of the consent of the Company, the
other Obligors, the Agent and the Lenders to the waiver of their rights to trial
by jury.
16.6. Interpretation; Governing Law; etc. Time is (and shall be) of the
essence in this Agreement and the other Credit Documents. All covenants,
agreements, representations and warranties made in this Agreement or any other
Credit Document or in certificates delivered pursuant hereto or thereto shall be
deemed to have been relied on by each Lender, notwithstanding any investigation
made by any Lender on its behalf, and shall survive the execution and delivery
to the Lenders hereof and thereof. The invalidity or unenforceability of any
provision hereof shall not affect the validity or enforceability of any other
provision hereof, and any invalid or unenforceable provision shall be modified
so as to be enforced to the maximum extent of its validity or enforceability.
The headings in this Agreement are for convenience of reference only and shall
not limit or otherwise affect the meaning hereof. This Agreement and the other
Credit Documents constitute the entire understanding of the parties with respect
to the subject matter hereof and thereof and supersede all prior and
contemporaneous understandings and agreements, whether written or oral. This
Agreement may be executed in any number of counterparts which together shall
constitute one instrument. This Agreement shall be governed by and construed in
accordance with the laws (other than the conflict of laws rules) of The
Commonwealth of Massachusetts.
[THE REST OF THIS PAGE IS INTENTIONALLY BLANK.]
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Each of the undersigned has caused this Agreement to be executed and
delivered by its duly authorized officer as an agreement under seal as of the
date first above written.
THE MARQUEE GROUP, INC.
By /s/ Jan R. Chason
--------------------------------------
Name: Jan R. Chason
Title: Chief Financial Officer
ATHLETES AND ARTISTS, INC.
SPORTS MARKETING AND TELEVISION
INTERNATIONAL, INC.
QBQ ENTERTAINMENT, INC.
PROSERV, INC.
PROSERV UK, INC.
MARQUEE RECORDS, INC.
By Jan R. Chason
---------------------------------------
As Chief Financial Officer of each of
the foregoing corporations
BANKBOSTON, N.A.,
as Agent and as a Lender
By /s/ Daniel M. Kortick
----------------------------------------
Name: Daniel M. Kortick
Title: Director
BANKBOSTON, N.A.
Media and Communications Division
100 Federal Street
Boston, Massachusetts 02110
Telecopy: (617) 434-3401
Telex: 940581
CREDIT AGREEMENT
