\n (vi) Notice of Default………………………………………………………………….. 44
\n (vii) Indemnification…………………………………………………………………… 45
\n (viii) Agent in its Individual Capacity…………………………………………………… 45
\n (ix) Delivery of Documents………………………………………………………………. 45
\n (x) Borrower’s Undertaking to Agent………………………………………………………. 45
\n26. Notice…………………………………………………………………………………….. 45
\n27. Governing Law and Waiver of Jury Trial………………………………………………………… 46
\n28. Indemnity………………………………………………………………………………….. 47
\n29. Limitation of Liability……………………………………………………………………… 47
\n30. Entire Understanding………………………………………………………………………… 47
\n31. Severability……………………………………………………………………………….. 48
\n32. Captions…………………………………………………………………………………… 48
\n33. Counterparts……………………………………………………………………………….. 48
\n34. Construction……………………………………………………………………………….. 48
\n35. Publicity………………………………………………………………………………….. 48
\n<\/c><\/s><\/table>\n -iii-<\/p>\n
REVOLVING CREDIT AND SECURITY AGREEMENT
\n —————————————<\/p>\n
Revolving Credit and Security Agreement (“Agreement”) dated December __,
\n1997 among TITAN SPORTS INC., a corporation organized under the laws of the
\nState of Delaware (“Borrower”), the financial institutions which are now or
\nhereafter become parties to the Agreement (collectively, the “Lenders” and
\nindividually, a “Lender”) and IBJ SCHRODER BUSINESS CREDIT CORPORATION, a
\ncorporation organized under the laws of the State of New York (“IBJS”), as agent
\nfor Lenders (IBJS, in such capacity, the “Agent”).<\/p>\n
IN CONSIDERATION of the mutual covenants and undertakings herein contained,
\neach of Borrower and Lenders hereby agree as follows:<\/p>\n
1. (A) General Definitions. When used in this Agreement, the following
\n ——————-
\nterms shall have the following meanings:<\/p>\n
“Advance Rate” shall mean the Receivables Advance Rate.
\n ———— <\/p>\n
“Affiliate” of any Person shall mean (a) any Person (other than a
\n ———
\nSubsidiary) which, directly or indirectly, is in control of, is controlled by,
\nor is under common control with such Person, or (b) any Person who is a director
\nor officer (i) of such Person, (ii) of any Subsidiary of such Person or (iii) of
\nany Person described in clause (a) above. For purposes of this definition,
\ncontrol of a Person shall mean the power, direct or indirect, (i) to vote 5% or
\nmore of the securities having ordinary voting power for the election of
\ndirectors of such Person, or (ii) to direct or cause the direction of the
\nmanagement and policies of such Person whether by contract or otherwise.<\/p>\n
“Agreement” shall have the meaning set forth in the preamble hereof.
\n ——— <\/p>\n
“Alternate Base Rate” shall mean, for any day, a rate per annum equal
\n ——————-
\nto the higher of (i) the Base Rate in effect on such day and (ii) the Federal
\nFunds Rate in effect on such day plus 1\/2 of 1%.<\/p>\n
“Ancillary Agreements” shall mean all agreements, instruments, and
\n ——————–
\ndocuments including, without limitation, mortgages, guaranties, pledges, powers
\nof attorney, consents, assignments, contracts, notices, security agreements,
\ntrust agreements whether heretofore, concurrently, or hereafter executed by or
\non behalf of any Borrower or delivered to Agent or any Lender, relating to this
\nAgreement or to the Transactions.<\/p>\n
“Authority” shall have the meaning set forth in Section 12(f)(iii)
\n ———
\nhereof.<\/p>\n
“Bank” shall mean IBJ Schroder Bank & Trust Company, together with its
\n —-
\nsuccessors and assigns.<\/p>\n
“Base Rate” shall mean the base commercial lending rate of Bank as
\n ———
\npublicly announced to be in effect from time to time, such rate to be adjusted
\nautomatically, without notice, on the effective date of any change in such rate.
\nThis rate of interest is determined from<\/p>\n
time to time by Bank as a means of pricing some loans to its customers and is
\nneither tied to any external rate of interest or index nor does it necessarily
\nreflect the lowest rate of interest actually charged by Bank to any particular
\nclass or category of customers of Bank.<\/p>\n
“Blocked Account” shall have the meaning set forth in Section 23
\n —————
\nhereof.<\/p>\n
“Borrower” shall have the meaning set forth in the preamble to this
\n ——–
\nAgreement and shall extend to all permitted successors and assigns of such
\nPersons.<\/p>\n
“Business Day” shall mean any day other than a day on which commercial
\n ————
\nbanks in New York are authorized or required by law to close.<\/p>\n
“CERCLA” shall mean the Comprehensive Environmental Response,
\n ——
\nCompensation and Liability Act of 1980, as amended, 42 U.S.C. (S)(S) 9601 et
\n —
\nseq.
\n— <\/p>\n
“Change of Ownership” shall mean (a) any transfer (whether in one or
\n ——————-
\nmore transactions) of ownership of more than 50% of the common stock of Borrower
\nheld by the Original Owner (including for the purposes of the calculation of
\npercentage ownership, any shares of common stock into which any capital stock of
\nBorrower held by the Original Owner is convertible or for which any such shares
\nof the capital stock of Borrower or of any other Person may be exchanged and any
\nshares of common stock issuable to the Original Owner upon exercise of any
\nwarrants, options or similar rights which may at the time of calculation be held
\nby the Original Owner) to a Person who is neither an Original Owner nor an
\nAffiliate of an Original Owner or (b) any merger, consolidation or sale of
\nsubstantially all of the property or assets of Borrower.<\/p>\n
“Closing Date” shall mean December __, 1997 or such other date as may
\n ————
\nbe agreed upon by the parties hereto.<\/p>\n
“Code” shall mean the Internal Revenue Code of 1986, as amended from
\n —-
\ntime to time and the regulations promulgated thereunder.<\/p>\n
“Collateral” shall mean and include:
\n ———- <\/p>\n
(a) all Receivables;<\/p>\n
(b) all General Intangibles;<\/p>\n
(c) all of Borrower’s right, title and interest in and to (i) all
\nmerchandise returned or rejected by Customers, relating to or securing any of
\nthe Receivables; (ii) all of Borrower’s rights as a consignor, a consignee, an
\nunpaid vendor, mechanic, artisan, or other lien or, including stoppage in
\ntransit, setoff, detinue, replevin, reclamation and repurchase; (iii) all
\nadditional amounts due to Borrower from any Customer relating to the
\nReceivables; (iv) all of Borrower’s contract rights, rights of payment which
\nhave been earned under a contract right, instruments, documents, chattel paper,
\nwarehouse receipts, deposit accounts and money;<\/p>\n
-2-<\/p>\n
(d) all of Borrower’s ledger sheets, ledger cards, files,
\ncorrespondence, records, books of account, business papers, computer software
\n(whether owned by Borrower or in which it has an interest), computer programs,
\ntapes, disks and documents relating to (a), (b) and (c) of this Section; and<\/p>\n
(e) all proceeds and products of (a), (b), (c) and (d) in whatever
\nform, including, but not limited to: cash, deposit accounts (whether or not
\ncomprised solely of proceeds), certificates of deposit, insurance proceeds
\n(including hazard, flood and credit insurance), negotiable instruments and other
\ninstruments for the payment of money, chattel paper, security agreements or
\ndocuments, eminent domain proceeds, condemnation proceeds and tort claim
\nproceeds.<\/p>\n
“Commitment Percentage” of any Lender shall mean the percentage set
\n ———————
\nforth below such Lender’s name on the signature page hereof as same may be
\nadjusted upon any assignment by a lender pursuant to Section 16 hereof.<\/p>\n
“Commitment Transfer Supplement” shall mean a document in the form of
\n ——————————
\nExhibit 1(a) hereto, properly completed and otherwise in form and substance
\n————
\nsatisfactory to Agent by which the Purchasing Lender purchases and assumes a
\nportion of the obligation of Lenders to make Revolving Advances under this
\nAgreement.<\/p>\n
“Consents” shall mean all filings and all licenses, permits, consents,
\n ——–
\napprovals, authorizations, qualifications and orders of governmental authorities
\nand other third parties, domestic or foreign, necessary to carry on Borrower’s
\nbusiness, including, without limitation, any Consents required under all
\napplicable federal, state or other applicable law.<\/p>\n
“Contract Year” shall mean the twelve-month period commencing on the
\n ————-
\nClosing Date and ending on the first anniversary date and each successive
\ntwelve-month period thereafter.<\/p>\n
“Customer” shall mean and include the account debtor with respect to
\n ——–
\nany Receivable and\/or the prospective purchaser of goods, services or both with
\nrespect to any contract or contract right, and\/or any party who enters into or
\nproposes to enter into any contract or other arrangement with any Borrower,
\npursuant to which Borrower is to deliver any personal property or perform any
\nservices.<\/p>\n
“Debt” of any Borrower at a particular date shall mean all amounts
\n —-
\nwhich would, in conformity with GAAP, be included under liabilities on a balance
\nsheet of Borrower at such date.<\/p>\n
“Default” shall mean an event which, with the giving of notice or
\n ——-
\npassage of time or both, would constitute an Event of Default.<\/p>\n
“Default Rate” shall have the meaning set forth in Section 5(a)
\n ————
\nhereof.<\/p>\n
“Depository Accounts” shall have the meaning set forth in Section 23
\n ——————-
\nhereof.<\/p>\n
-3-<\/p>\n
“Dollar” and the sign “$” shall mean lawful money of the United States
\n ——
\nof America.<\/p>\n
“Domestic Rate Loan” shall mean any Loan that bears interest based
\n ——————
\nupon the Alternate Base Rate.<\/p>\n
“Earnings Before Interest and Taxes” shall mean for Borrower and its
\n ———————————-
\nSubsidiaries on a consolidated basis for any period, the sum of (i) net income
\n(or loss) for such period (excluding extraordinary gains and losses, plus (ii)
\n —-
\nall interest expense for such period, plus (iii) all charges against income for
\n —-
\nsuch period for federal, state and local taxes actually paid.<\/p>\n
“EBITDA” shall mean for Borrower and its Subsidiaries on a
\n ——
\nconsolidated basis for any period, the sum of (i) Earnings Before Interest and
\nTaxes for such period plus (ii) depreciation expenses for such period, plus
\n —- —-
\n(iii) amortization expenses for such period.<\/p>\n
“Eligible Receivables” shall mean and include with respect to Borrower
\n ——————–
\neach Receivable of Borrower arising in the ordinary course of Borrower’s
\nbusiness which Agent, in its sole credit judgment, shall deem to be an Eligible
\nReceivable, based on such considerations as Agent may from time to time deem
\nappropriate. A Receivable shall not be deemed eligible unless such Receivable is
\nsubject to Agent’s perfected security interest and no other lien other than
\nPermitted Liens, and is evidenced by an invoice, bill of lading or other
\ndocumentary evidence satisfactory to Agent. In addition, no Receivable shall be
\nan Eligible Receivable if:<\/p>\n
(a) it arises out of a sale made by Borrower to an Affiliate of
\nBorrower or to a Person controlled by an Affiliate of Borrower;<\/p>\n
(b) it is due or unpaid more than ninety (90) days after the due date
\nnot to exceed one hundred twenty (120) days after the original event date;<\/p>\n
(c) fifty percent (50%) or more of the Receivables from the Customer
\nare not deemed Eligible Receivables hereunder. Such percentage may, in Agent’s
\nsole discretion, be increased or decreased from time to time;<\/p>\n
(d) any covenant, representation or warranty contained in this
\nAgreement with respect to such Receivable has been breached;<\/p>\n
(e) the Customer shall (i) apply for, suffer, or consent to the
\nappointment of, or the taking of possession by, a receiver, custodian, trustee
\nor liquidator of itself or of all or a substantial part of its property or call
\na meeting of its creditors, (ii) admit in writing its inability, or be generally
\nunable, to pay its debts as they become due or cease operations of its present
\nbusiness, (iii) make a general assignment for the benefit of creditors, (iv)
\ncommence a voluntary case under any state or federal bankruptcy laws (as now or
\nhereafter in effect), (v) be adjudicated a bankrupt or insolvent, (vi) file a
\npetition seeking to take advantage of any other law providing for the relief of
\ndebtors, (vii) acquiesce to, or fail to have dismissed, any petition which is
\nfiled<\/p>\n
-4-<\/p>\n
against it in any involuntary case under such bankruptcy laws, or (viii) take
\nany action for the purpose of effecting any of the foregoing;<\/p>\n
(f) the sale is to a Customer outside the continental United States
\nof America, unless the sale is on letter of credit, guaranty or acceptance
\nterms, in each case acceptable to Agent in its sole discretion;<\/p>\n
(g) the sale to the Customer is on a bill-and-hold, guaranteed sale,
\nsale-and-return, sale on approval, consignment or any other repurchase or return
\nbasis or is evidenced by chattel paper;<\/p>\n
(h) Agent believes, in its sole judgment, that collection of such
\nReceivable is insecure or that such Receivable may not be paid by reason of the
\nCustomer’s financial inability to pay;<\/p>\n
(i) the Customer is the United States of America, any state or any
\ndepartment, agency or instrumentality of any of them, unless the Borrower
\neffectuates an assignment of its right to payment of such Receivable to Agent
\npursuant to the Assignment of Claims Act of 1940, as amended (31 U.S.C. Sub-
\nSection 3727 and 41 U.S.C. Sub-Section 15 et seq.) or has otherwise complied
\n — —
\nwith other applicable statutes or ordinances;<\/p>\n
(j) the goods giving rise to such Receivable have not been shipped
\nand delivered to and accepted by the Customer or the services giving rise to
\nsuch Receivable have not been performed by Borrower and accepted by the Customer
\nor the Receivable otherwise does not represent a final sale;<\/p>\n
(k) such Receivable causes the aggregate amount of Receivables of the
\nCustomer to exceed a credit limit determined by Agent in its sole discretion;<\/p>\n
(l) the Receivable is subject to any offset, deduction, defense,
\ndispute, or counterclaim, the Customer is also a creditor or supplier of
\nBorrower or the Receivable is contingent in any respect or for any reason;<\/p>\n
(m) the Borrower has made any agreement with a Customer for any
\ndeduction therefrom, except for discounts or allowances made in the ordinary
\ncourse of business for prompt payment, all of which discounts or allowances are
\nreflected in the calculation of the face value of each respective invoice
\nrelated thereto;<\/p>\n
(n) shipment of the merchandise or the rendition of services has not
\nbeen completed;<\/p>\n
(o) any return, rejection or repossession of the merchandise has
\noccurred;<\/p>\n
(p) such Receivable is not payable to Borrower; or<\/p>\n
(q) such Receivable is not otherwise satisfactory to Agent as
\ndetermined in good faith by Agent in the exercise of its discretion in a
\nreasonable manner.<\/p>\n
-5-<\/p>\n
“Equipment” shall mean and include all of Borrower’s goods (excluding
\n ———
\nInventory) whether now owned or hereafter acquired and wherever located
\nincluding, without limitation, all equipment, machinery, apparatus, motor
\nvehicles, fittings, furniture, furnishings, fixtures, parts, accessories and all
\nreplacements and substitutions therefor or accessions thereto.<\/p>\n
“Eurodollar Rate Loan” shall mean any Loan at any time that bears
\n ——————–
\ninterest based on the Eurodollar Rate.<\/p>\n
“Eurodollar Rate” shall mean for any Eurodollar Rate Loan for the then
\n —————
\ncurrent Interest Period relating thereto the rate per annum (such Eurodollar
\nRate to be adjusted to the next higher 1\/100 of one (1%) percent ) equal to the
\nquotient of (a) LIBOR, divided by (b) a number equal to 1.00 minus the aggregate
\nof the rates (expressed as a decimal) of reserve requirements current on the day
\nthat is two Business Days prior to the beginning of the Interest Period
\n(including without limitation basic, supplemental, marginal and emergency
\nreserves) under any regulation promulgated by the Board of Governors of the
\nFederal Reserve System (or any other governmental authority having jurisdiction
\nover the Bank) as in effect from time to time, dealing with reserve requirements
\nprescribed for Eurocurrency funding including any reserve requirements with
\nrespect to “Eurocurrency liabilities” under Regulation D of the Board of
\nGovernors of the Federal Reserve System.<\/p>\n
“Event of Default” shall mean the occurrence of any of the events set
\n —————-
\nforth in Section 19.<\/p>\n
“Federal Funds Rate” shall mean, for any day, the weighted average of
\n ——————
\nthe rates on overnight Federal funds transactions with members of the Federal
\nReserve System arranged by Federal funds brokers, as published for such day (or
\nif such day is not a Business Day, for the next preceding Business Day) by the
\nFederal Reserve Bank of New York, or if such rate is not so published for any
\nday which is a Business Day, the average of quotations for such day on such
\ntransactions received by Bank from three Federal funds brokers of recognized
\nstanding selected by Bank.<\/p>\n
“Fixed Charge Coverage Ratio” shall mean and include, with respect to
\n —————————
\nany fiscal period, the ratio of (a) EBITDA plus capitalized lease payments made
\n —-
\nby Borrower and its Subsidiaries on a consolidated basis during such period,<\/p>\n
minus capital expenditures made by Borrower and its Subsidiaries on a
\n—–
\nconsolidated basis during such period to (b) all Senior Debt Payments during
\nsuch period.<\/p>\n
“Formula Amount” shall have the meaning set forth in paragraph 2(a).
\n ————– <\/p>\n
“GAAP” shall mean generally accepted accounting principles, practices
\n —-
\nand procedures in the United States of America in effect from time to time.<\/p>\n
“General Intangibles” shall mean and include all of Borrower’s general
\n ——————-
\nintangibles other than Intellectual Property, whether now owned or hereafter
\nacquired including, without limitation, all choses in action, causes of action,
\ncorporate or other business records, franchises, licenses, customer lists, tax
\nrefunds, tax refund claims, computer programs, all claims <\/p>\n
-6-<\/p>\n
under guaranties, security interests or other security held by or granted to
\nBorrower to secure payment of any of the Receivables by a Customer.<\/p>\n
“Hazardous Substance” shall mean, without limitation, any flammable
\n ——————-
\nexplosives, radon, radioactive materials, asbestos, urea formaldehyde foam
\ninsulation, polychlorinated biphenyls, petroleum and petroleum products,
\nmethane, hazardous materials, hazardous wastes, hazardous or toxic substances or
\nrelated materials as defined in CERCLA, the Hazardous Materials Transportation
\nAct, as amended (49 U.S.C. Sections 1801, et seq.), RCRA or any other applicable
\n — —
\nenvironmental law and in the regulations adopted pursuant thereto.<\/p>\n
“IBJS” shall have the meaning set forth in the preamble hereof.
\n —- <\/p>\n
“Intellectual Property” means and includes all of Borrower’s patents,
\n ———————
\npatent applications, trademarks, trade names, service marks, trade secrets,
\ngoodwill, copyrights, design rights and copyright registrations.<\/p>\n
“Interest Period” shall mean the period provided for any Eurodollar
\n —————
\nRate Loan pursuant to Section 4(d) hereof.<\/p>\n
“Inventory” shall mean and include as to Borrower all of Borrower’s
\n ———
\nnow owned or hereafter acquired goods, merchandise and other personal property,
\nwherever located, to be furnished under any contract of service or held for sale
\nor lease, all raw materials, work in process, finished goods and materials and
\nsupplies of any kind, nature or description which are or might be used or
\nconsumed in Borrower’s business or used in selling or furnishing such goods,
\nmerchandise and other personal property, and all documents of title or other
\ndocuments representing them.<\/p>\n
“Issuer” shall mean any Person who issues a Letter of Credit.
\n —— <\/p>\n
“Lender” and “Lenders” shall have the meaning ascribed to such term in
\n ——————–
\nthe Preamble and shall include each person which is a transferee, successor or
\nassign of any Lender.<\/p>\n
“Letter of Agreement” shall mean that certain Letter of Credit and
\n ——————-
\nSecurity Agreement dated as of the Closing Date executed by Borrower to the
\nBank, as same may be amended from time to time.<\/p>\n
“Letter of Credit Fees” shall have the meaning set forth in Section
\n ———————
\n5(b)(vii) hereof.<\/p>\n
“Letters of Credit” shall have the meaning set forth in Section 2(j)
\n —————–
\nhereof.<\/p>\n
“LIBOR” shall mean for any Eurodollar Rate Loan for the then current
\n —–
\nInterest Period relating thereto, the rate per annum quoted by Agent to Borrower
\ntwo (2) Business Days prior to the first day of such Interest Period as the rate
\navailable to Bank in the interbank market for offshore Dollar deposits in
\nimmediately available funds for a period equal to such Interest Period and in an
\namount equal to the amount of such Eurodollar Rate Loan.<\/p>\n
-7-<\/p>\n
“Loans” means the Revolving Advances, Letters of Credit and all other
\n —–
\nextensions of credit hereunder.<\/p>\n
“Maximum Revolving Amount” means $10,000,000.
\n ———————— <\/p>\n
“Net Worth” shall mean, at a particular date, (a) the aggregate amount
\n ———
\nof all assets of Borrower on a consolidated basis as may be properly classified
\nas such in accordance with GAAP consistently applied and such other assets as
\nare properly classified as “intangible assets” under GAAP, less (b) the
\naggregate amount of all liabilities of Borrower on a consolidated basis.<\/p>\n
“Obligations” shall mean and include all Loans, all advances, debts,
\n ———–
\nliabilities, obligations, covenants and duties owing by Borrower to Agent or
\nLenders (or any corporation that directly or indirectly controls or is
\ncontrolled by or is under common control with Agent or Lenders) of every kind
\nand description (whether or not evidenced by any note or other instrument and
\nwhether or not for the payment of money or the performance or non-performance of
\nany act), direct or indirect, absolute or contingent, due or to become due,
\ncontractual or tortious, liquidated or unliquidated, whether existing by
\noperation of law or otherwise now existing or hereafter arising including,
\nwithout limitation, any debt, liability or obligation owing from Borrower to
\nothers which Agent or Lenders may have obtained by assignment or otherwise and
\nfurther including, without limitation, all interest, charges or any other
\npayments Borrower is required to make by law or otherwise arising under or as a
\nresult of this Agreement and the Ancillary Agreements, together with all
\nreasonable expenses and reasonable attorneys’ fees chargeable to Borrower’s
\naccount or incurred by Agent or Lenders in connection with Borrower’s account
\nwhether provided for herein or in any Ancillary Agreement and including, without
\nlimitation, all obligations of Borrower to Bank under the Letter of Credit
\nAgreement.<\/p>\n
“Original Owners” shall mean Vincent K. McMahon.
\n ————— <\/p>\n
“Payment Office” shall mean initially One State Street, New York, New
\n ————–
\nYork 10004; thereafter, such other office of Agent, if any, which it may
\ndesignate by notice to Borrower and to each Lender to be the Payment Office.<\/p>\n
“Permitted Liens” shall mean (i) liens of carriers, warehousemen,
\n —————
\nmechanics and materialmen incurred in the ordinary course of business securing
\nsums not overdue; (ii) liens incurred in the ordinary course of business in
\nconnection with worker’s compensation, unemployment insurance or other forms of
\ngovernmental insurance or benefits, relating to employees, securing sums (a) not
\noverdue or (b) being diligently contested in good faith provided that adequate
\nreserves with respect thereto are maintained on the books of Borrower in
\nconformity with GAAP, (iii) liens in favor of Agent or any Lender, (iv) liens
\nfor taxes (a) not yet due or (b) being diligently contested in good faith,
\nprovided that adequate reserves with respect thereto are maintained on the books
\nof Borrower in conformity with GAAP, (v) liens specified on Schedule 1(a)
\n ————-
\nhereto, (vi) liens for purchase money obligations, provided that (1) the
\n ——–
\nindebtedness secured by any such lien is permitted under Section 12(n) hereof
\nand (2) such lien encumbers only the asset so purchased and (vii) liens with
\nrespect to capitalized leases, provided, that indebtedness under such
\n ——–
\ncapitalized leases is permitted under Section 12(n) hereof.<\/p>\n
-8-<\/p>\n
“Person” shall mean any individual, sole proprietorship, partnership,
\n ——
\ncorporation, business trust, joint stock company, trust, unincorporated
\norganization, association, limited liability company, institution, public
\nbenefit corporation, joint venture, entity or government (whether Federal,
\nstate, county, city, municipal or otherwise, including any instrumentality,
\ndivision, agency, body or department thereof).<\/p>\n
“Purchasing Lender” shall have the meaning set forth in Section 16
\n —————–
\nhereof.<\/p>\n
“Realty” shall mean TSI Realty Company, a Delaware corporation.
\n —— <\/p>\n
“Receivables” shall mean and include as to Borrower all of Borrower’s
\n ———–
\naccounts, contract rights, instruments (including those evidencing indebtedness
\nowed to Debtor by its Affiliates), documents, chattel paper, general intangibles
\nrelating to accounts, drafts and acceptances, and all other forms of obligations
\nowing to Borrower arising out of or in connection with the sale or lease of
\nInventory or the rendition of services, all guarantees and other security
\ntherefor, whether secured or unsecured, now existing or hereafter created, and
\nwhether or not specifically sold or assigned to Agent hereunder.<\/p>\n
“Receivables Advance Rate” shall have the meaning set forth in the
\n ————————
\ndefinition of Receivables Availability.<\/p>\n
“Receivables Availability” means the amount of Revolving Advances
\n ————————
\nagainst Eligible Receivables Lenders may from time to time during the term of
\nthis Agreement make available to Borrower up to eighty-five percent (85%)
\n(“Receivables Advance Rate”) of the net face amount of Borrower’s Eligible
\nReceivables.<\/p>\n
“Register” shall have the meaning set forth in Section 16 hereof.
\n ——– <\/p>\n
“Required Lenders” shall mean Lenders holding at least sixty-six and
\n —————-
\ntwo-thirds percent (66.67%) of the Revolving Advances or if no Revolving
\nAdvances are outstanding, Lenders holding at least sixty-six and two-thirds
\npercent (66.67%) of the Commitment Percentages.<\/p>\n
“Revolving Advances” shall mean Loans other than Letters of Credit.
\n —————— <\/p>\n
“Revolving Credit Note” shall mean the $10,000,000 Revolving Credit
\n ———————
\nNote substantially in the form of Exhibit 1(b) dated the Closing Date executed
\n ————
\nby Borrower in favor of Agent, together with all replacements and substitutions
\nthereof.<\/p>\n
“Revolving Interest Rate” shall mean an interest rate per annum equal
\n ———————–
\nto (a) the sum of the Alternate Base Rate plus one-half of one percent (.50%)
\nwith respect to Domestic Rate Loans and (b) the sum of the Eurodollar Rate plus
\ntwo and one-half percent (2.50%) with respect to Eurodollar Rate Loans.<\/p>\n
“Senior Debt Payments” shall mean and include all cash actually
\n ——————–
\nexpended by Borrower on a consolidated basis to make (a) interest payments on
\nLoans hereunder, plus
\n —-<\/p>\n
-9-<\/p>\n
(b) payments for all fees, commissions and charges set forth herein and with
\nrespect to any Loans, plus (c) capitalized lease payments, plus (d) payments
\n —- —-
\nwith respect to any other indebtedness for borrowed money.<\/p>\n
“Settlement Date” shall mean the Closing Date and thereafter Wednesday
\n —————
\nof each week unless such day is not a Business Day in which case it shall be the
\nnext succeeding Business Day.<\/p>\n
“Subsidiary” shall mean a corporation or other entity of whose shares
\n ———-
\nof stock or other ownership interests having ordinary voting power (other than
\nstock or other ownership interests having such power only by reason of the
\nhappening of a contingency) to elect a majority of the directors of such
\ncorporation, or other Persons performing similar functions for such entity, are
\nowned, directly or indirectly, by such person.<\/p>\n
“Tax Distribution” shall mean in respect of any fiscal year or portion
\n —————-
\nthereof, distributions to enable the shareholders of Borrower to pay their
\nrespective federal, state and local income tax liability (including with respect
\nto estimated taxes) arising out of, measured solely by and limited in an
\naggregate amount to the net income of Borrower for such fiscal year or portion
\nthereof. For the purpose of the preceding sentence, “federal, state and local
\nincome tax liability” shall be computed at a uniform rate which shall be the sum
\nof (i) the maximum federal income tax rate then in effect under (S) 1 of the
\nCode, plus (ii) the maximum state and local income tax rate then in effect under
\napplicable law for any shareholder of Borrower; it being understood that the
\nfederal portion of the income tax liability shall be computed after taking into
\naccount offsetting deductions for the state and local portion of such income tax
\nliability. In the event that tax returns of Borrower in respect of a year shall
\nindicate that excess Tax Distributions have been made in respect of such year,
\nthen Borrower shall correspondingly reduce the next Tax Distributions scheduled
\nto be made to make up, as nearly as possible, such difference.<\/p>\n
“Term” shall mean the Closing Date through December __, 2000, subject
\n —-
\nto acceleration upon the occurrence of an Event of Default hereunder or other
\ntermination hereunder.<\/p>\n
“Transactions” shall mean the transactions contemplated by this
\n ————
\nAgreement and the Ancillary Agreements.<\/p>\n
“Transferee” shall have the meaning set forth in Section 16(ii)
\n ———-
\nhereof.<\/p>\n
“Undrawn Availability” at a particular date shall mean an amount equal
\n ——————–
\nto (a) the lesser of (i) the Formula Amount or (ii) the Maximum Revolving
\nAmount, minus (b) the sum of (i) the outstanding amount of Revolving Advances
\n —–
\nplus (ii) all amounts due and owing to Borrower’s trade creditors which are
\n—-
\noutstanding beyond normal trade terms.<\/p>\n
(B) Accounting Terms. As used in this Agreement, the Revolving
\n —————-
\nCredit Note, or any certificate, report or other document made or delivered
\npursuant to this Agreement, accounting terms not defined in Section 1 or
\nelsewhere in this Agreement and accounting terms <\/p>\n
-10-<\/p>\n
partly defined in Section 1 to the extent not defined, shall have the respective
\nmeanings given to them under GAAP.<\/p>\n
(C) Uniform Commercial Code Terms. All terms used herein and defined
\n —————————–
\nin the Uniform Commercial Code as adopted in the State of New York shall have
\nthe meaning given therein unless otherwise defined herein.<\/p>\n
(D) Certain Matters of Construction. The terms “herein”, “hereof” and
\n ——————————-
\n“hereunder” and other words of similar import refer to this Agreement as a whole
\nand not to any particular section, paragraph or subdivision. Any pronoun used
\nshall be deemed to cover all genders. Wherever appropriate in the context, terms
\nused herein in the singular also include the plural and vice versa. All
\n —- —–
\nreferences to statutes and related regulations shall include any amendments of
\nsame and any successor statutes and regulations. Unless otherwise provided, all
\nreferences to any instruments or agreements, including, without limitation,
\nreferences to any of the Ancillary Agreements shall include any and all
\nmodifications or amendments thereto and any and all extensions or renewals
\nthereof.<\/p>\n
2. Revolving Advances.
\n —————— <\/p>\n
(a) Subject to the terms and conditions set forth herein and in the
\nAncillary Agreements, each Lender, severally and not jointly, will make
\nRevolving Advances to Borrower from time to time during the Term which, in the
\naggregate at any time outstanding, will not exceed such Lender’s Commitment
\nPercentage of the lesser of (x) the Maximum Revolving Amount less the aggregate
\namount of outstanding Letters of Credit less the minimum Undrawn Availability
\nrequirement set forth in Section 12(q) hereof or (y) an amount equal to the sum
\nof:<\/p>\n
(i) Receivables Availability, minus
\n —–<\/p>\n
(ii) the aggregate amount of outstanding Letters of Credit,
\nminus
\n—–<\/p>\n
(iii) the minimum Undrawn Availability requirement set forth in
\nSection 12(q) hereof minus;
\n —– <\/p>\n
(iv) such reserves as Agent may reasonably deem proper and
\nnecessary from time to time.<\/p>\n
The sum of 2(a)(i) minus (iv) shall be referred to as the
\n —–
\n“Formula Amount.”<\/p>\n
(b) Notwithstanding the limitations set forth above, Lenders retain
\nthe right to lend Borrower from time to time such amounts in excess of such
\nlimitations as Lenders may determine in their sole discretion.<\/p>\n
(c) Borrower acknowledges that the exercise of Lenders’ discretionary
\nrights hereunder may result during the Term in one or more increases or
\ndecreases in the Advance Rate and Borrower hereby consents to any such increases
\nor decreases which may limit or restrict<\/p>\n
-11-<\/p>\n
advances requested by Borrower, provided, however, that to the extent any
\n ——– ——-
\ndecrease in the Advance Rate or the establishment by Agent of any reserves
\nresults in a decrease in the calculation of subsection 2(a)(y) by at least
\n$1,000,000, then Borrower may, at its option, upon three (3) Business Days’
\nnotice to Agent, have the ability to permanently reduce the Maximum Revolving
\nAmount by a like amount without incurring any early termination fee pursuant to
\nSection 18 hereof, provided, further, that concurrently with any such permanent
\nreduction, Borrower shall be obligated to prepay the outstanding balance of
\nRevolving Advances to the extent necessary to comply with Section 2(i) below
\nafter giving effect to such permanent reduction.<\/p>\n
(d) If Borrower does not pay any interest, fees, costs or charges to
\nLenders when due, Borrower shall thereby be deemed to have requested, and Agent,
\nfor the ratable benefit of Lenders is hereby authorized at its discretion to
\nmake and charge to Borrower’s account, a Revolving Advance to Borrower as of
\nsuch date in an amount equal to such unpaid interest, fees, costs or charges.<\/p>\n
(e) Any sums expended by Agent or Lenders due to Borrower’s failure
\nto perform or comply with its obligations under this Agreement, including but
\nnot limited to the payment of taxes, insurance premiums or leasehold
\nobligations, shall be charged to Borrower’s account as a Revolving Advance and
\nadded to the Obligations.<\/p>\n
(f) Agent will account to Borrower monthly with a statement of all
\nRevolving Advances and other advances, charges and payments made pursuant to
\nthis Agreement, and such account rendered by Agent shall be deemed final,
\nbinding and conclusive, absent manifest error, unless Agent is notified by
\nBorrower in writing to the contrary within sixty (60) days of the date each
\naccount was rendered specifying the item or items to which objection is made.<\/p>\n
(g) During the Term, Borrower may borrow, prepay and reborrow
\nRevolving Advances, all in accordance with the terms and conditions hereof.<\/p>\n
(h) Borrower shall apply the proceeds of the Loans to provide for its
\nworking capital needs.<\/p>\n
(i) The aggregate balance of Revolving Advances outstanding at any
\ntime shall not exceed the lesser of the Formula Amount or the Maximum Revolving
\nAmount, in each case less the minimum Undrawn Availability requirements set
\nforth in Section 12(q) hereof.<\/p>\n
(j) Letters of Credit. Subject to the terms and conditions hereof,
\n —————–
\nAgent shall issue or cause the issuance of standby Letters of Credit (“Letters
\nof Credit”) on behalf of Borrower, provided, however, that Agent will not be
\n ——– ——-
\nrequired to issue or cause to be issued any Letters of Credit to the extent that
\nthe face amount of such Letters of Credit would then cause the sum of (i) the
\noutstanding Revolving Advances plus (ii) outstanding Letters of Credit to exceed
\n —-
\nthe lesser of (x) the Maximum Revolving Amount or (y) the Formula Amount. The
\nmaximum amount of outstanding Letters of Credit shall not exceed $4,000,000 in
\nthe aggregate at any time. All disbursements or payments related to Letters of
\nCredit shall be deemed to be Domestic Rate Loans consisting of Revolving
\nAdvances and shall bear interest at the applicable Revolving<\/p>\n
-12-<\/p>\n
Interest Rate for Domestic Rate Loans; Letters of Credit that have not been
\ndrawn upon shall not bear interest.<\/p>\n
(k) Issuance of Letters of Credit.
\n —————————– <\/p>\n
(1) Borrower may request Agent to issue or cause the issuance of
\na Letter of Credit by delivering to Agent at the Payment Office, the applicable
\nIssuer’s form of Letter of Credit Application (the “Letter of Credit
\nApplication”) completed to the satisfaction of Agent and such Issuer; and, such
\nother certificates, documents and other papers and information as Agent or
\nIssuer may reasonably request.<\/p>\n
(2) Each Letter of Credit shall, among other things, (i) provide
\nfor the payment of sight drafts or acceptances of drafts when presented for
\nhonor thereunder in accordance with the terms thereof and when accompanied by
\nthe documents described therein and (ii) have an expiry date not later than six
\n(6) months after such Letter of Credit’s date of issuance and in no event later
\nthan the last day of the Term. Each Letter of Credit shall be subject to the
\nUniform Customs and Practice for Documentary Credits (1993 Revision),
\nInternational Chamber of Commerce Publication No. 500, and any amendments or
\nrevision thereof adhered to by the Issuer and, to the extent not inconsistent
\ntherewith, the laws of the State of New York.<\/p>\n
(3) Agent shall use its reasonable efforts to notify Lenders of
\nthe request by Borrower for a Letter of Credit hereunder.<\/p>\n
(l) Requirements for Issuance of Letters of Credit.
\n ———————————————- <\/p>\n
(1) In connection with the issuance of any Letter of Credit,
\nBorrower shall indemnify, save and hold Agent, each Lender and each Issuer
\nharmless from any loss, cost, expense or liability, including, without
\nlimitation, payments made by Agent, any Lender or any Issuer, and expenses and
\nreasonable attorneys’ fees incurred by Agent or any Lender arising out of, or in
\nconnection with, any Letter of Credit to be issued or created for Borrower.
\nBorrower shall be bound by Agent’s or any Issuer’s regulations and good faith
\ninterpretations of any Letter of Credit issued or created for Borrower’s
\nAccount, although this interpretation may be different from Borrower’s own; and,
\nneither Agent, nor any Lender, nor any Issuer, nor any of their correspondents
\nshall be liable for any error, negligence, or mistakes, whether of omission or
\ncommission, in following Borrower’s instructions or those contained in any
\nLetter of Credit or of any modifications, amendments or supplements thereto or
\nin issuing or paying any Letter of Credit, except for Agent’s, any Lender’s, any
\nIssuer’s or such correspondents’ gross (not mere) negligence.<\/p>\n
(2) Borrower shall authorize and direct Issuer to name Borrower
\nas the “Applicant” or “Account Party” therein and to deliver to Agent all
\ninstruments, documents, and other writings and property received by the Issuer
\npursuant to the Letter of Credit and to accept and rely upon Agent’s
\ninstructions and agreements with respect to all matters arising in connection
\nwith the Letter of Credit or the application therefor.<\/p>\n
-13-<\/p>\n
(3) In connection with all Letters of Credit issued or caused to
\nbe issued by Agent under this Agreement, Borrower hereby appoints Agent, or its
\ndesignee, as its attorney, with full power and authority, (i) to sign and\/or
\nendorse Borrower’s name upon any warehouse or other receipts, (ii) to sign
\nBorrower’s name on bills of lading; and (iii) to complete in Borrower’s name or
\nAgent’s, or in the name of Agent’s designee, any order, sale or transaction,
\nobtain the necessary documents in connection therewith, and collect the proceeds
\nthereof. Neither Agent nor its attorneys will be liable for any acts or
\nomissions nor for any error of judgment or mistakes of fact or law, except for
\nAgent’s or its attorney’s gross (not mere) negligence. This power, being coupled
\nwith an interest, is irrevocable as long as any Letters of Credit remain
\noutstanding.<\/p>\n
(4) Each Lender shall to the extent of the percentage amount
\nequal to the product of such Lender’s Commitment Percentage times the aggregate
\namount of all unreimbursed reimbursement obligations arising from disbursements
\nmade or obligations incurred with respect to the Letters of Credit be deemed to
\nhave irrevocably purchased an undivided participation in each such unreimbursed
\nreimbursement obligation. In the event that at the time a disbursement is made
\nthe unpaid balance of Revolving Advances exceeds or would exceed, with the
\nmaking of such disbursement, the lesser of the Maximum Revolving Amount or the
\nFormula Amount, and such disbursement is not reimbursed by Borrower within two
\n(2) Business Days, Agent shall promptly notify each Lender and upon Agent’s
\ndemand each Lender shall pay to Agent such Lender’s proportionate share of such
\nunreimbursed disbursement together with such Lender’s proportionate share of
\nAgent’s unreimbursed costs and expenses relating to such unreimbursed
\ndisbursement. Upon receipt by Agent of a repayment from Borrower of any amount
\ndisbursed by Agent for which Agent had already been reimbursed by Lenders, Agent
\nshall deliver to each Lender that Lender’s pro rata share of such repayment.
\nEach Lender’s participation commitment shall continue until the last to occur of
\nany of the following events: (A) Agent ceases to be obligated to issue or cause
\nto be issued Letters of Credit hereunder; (B) no Letter of Credit issued
\nhereunder remains outstanding and uncancelled or (C) all Persons (other than
\nBorrower) have been fully reimbursed for all payments made under or relating to
\nLetters of Credit.<\/p>\n
3. Repayment of Loans.
\n —————— <\/p>\n
(a) Borrower shall be required to (i) make a mandatory prepayment
\nhereunder at any time that the aggregate outstanding principal balance of the
\nLoans made by Lenders to Borrower hereunder is in excess of the lesser of the
\nMaximum Revolving Amount or the Formula Amount in an amount equal to such
\nexcess, and (ii) repay on the expiration of the Term (x) the then aggregate
\noutstanding principal balance of Revolving Advances made by Lenders to Borrower
\nhereunder together with accrued and unpaid interest, fees and charges and (y)
\ncash collateral to be maintained in an account with Bank in an amount equal to
\none hundred and five percent (105%) of the aggregate undrawn amount of all
\nLetters of Credit which remain outstanding after the expiration of the Term, and
\n(z) all other amounts owed Lenders under this Agreement and the Ancillary
\nAgreements.<\/p>\n
-14-<\/p>\n
(b) Borrower recognizes that the amounts evidenced by checks, notes,
\ndrafts or any other items of payment relating to and\/or proceeds of Collateral
\nmay not be collectible by Agent on the date received. In consideration of
\nAgent’s agreement to conditionally credit Borrower’s account as of the Business
\nDay on which Agent receives those items of payment, Borrower agrees that, in
\ncomputing the charges under this Agreement, all items of payment shall be deemed
\napplied by Agent on account of the Obligations one (1) Business Day following
\nthe Business Day Agent receives such remittances via wire transfer or electronic
\ndepository check. Agent is not, however, required to credit Borrower’s account
\nfor the amount of any item of payment which is unsatisfactory to Agent and Agent
\nmay charge Borrower’s account for the amount of any item of payment which is
\nreturned to Agent unpaid.<\/p>\n
4. Procedure for Revolving Advances.
\n ——————————– <\/p>\n
(a) Each borrowing of Revolving Advances shall be advanced according
\nto the applicable Commitment Percentage of each Lender.<\/p>\n
(b) In accordance with Section 26 hereof, Borrower may notify Agent
\nprior to 11:00 A.M. on a Business Day of its request to incur, on that day, a
\nRevolving Advance hereunder. All Revolving Advances shall be disbursed from
\nwhichever office or other place Agent may designate from time to time and,
\ntogether with any and all other Obligations of Borrower to Lenders, shall be
\ncharged to Borrower’s account on Agent’s books. The proceeds of each Revolving
\nAdvance made by Lenders shall be made available to Borrower on the day so
\nrequested by way of credit to Borrower’s operating account maintained with Bank.
\nAny and all Obligations due and owing hereunder may be charged to the Borrower’s
\naccount and shall constitute Revolving Advances.<\/p>\n
(c) Notwithstanding the provisions of clause (b) above, in the event
\nBorrower desires to obtain a Eurodollar Rate Loan, Borrower shall give Agent at
\nleast three (3) Business Days’ prior written notice, specifying (i) the date of
\nthe proposed borrowing (which shall be a Business Day), (ii) the type of
\nborrowing and the amount on the date of such Advance to be borrowed, which
\namount shall be a minimum amount of $500,000 and integral multiples of $100,000
\nthereafter, and (iii) the duration of the first Interest Period therefor.
\nInterest Periods for Eurodollar Rate Loans shall be for one, two or three
\nmonths. No Eurodollar Rate Loan shall be made available to Borrower during the
\ncontinuance of a Default or an Event of Default.<\/p>\n
(d) Each Interest Period of a Eurodollar Rate Loan shall commence on
\nthe date such Eurodollar Rate Loan is made and shall end on such date as
\nBorrower may elect as set forth in (c)(iii) above provided that the exact length
\nof each Interest Period shall be determined in accordance with the practice of
\nthe interbank market for offshore Dollar deposits and no Interest Period shall
\nend after the last day of the Term.<\/p>\n
Borrower shall elect the initial Interest Period applicable to a
\nEurodollar Rate Loan by its notice of borrowing given to Agent pursuant to
\nSection 4(c) or by its notice of conversion given to Agent pursuant to Section
\n4(e), as the case may be. Borrower shall elect the duration of each succeeding
\nInterest Period by giving irrevocable written notice to Agent of such duration
\nnot less than three (3) Business Days prior to the last day of the then current
\nInterest <\/p>\n
-15-<\/p>\n
Period applicable to such Eurodollar Rate Loan. If Agent does not receive timely
\nnotice of the Interest Period elected by Borrower, Borrower shall be deemed to
\nhave elected to convert to a Domestic Rate Loan subject to Section 4(e)
\nhereinbelow.<\/p>\n
(e) Provided that no Event of Default shall have occurred and be
\ncontinuing, Borrower may, on the last Business Day of the then current Interest
\nPeriod applicable to any outstanding Eurodollar Rate Loan, or on any Business
\nDay with respect to Domestic Rate Loans, convert any such loan into a loan of
\nanother type in the same aggregate principal amount provided that any conversion
\nof a Eurodollar Rate Loan shall be made only on the last Business Day of the
\nthen current Interest Period applicable to such Eurodollar Rate Loan. If
\nBorrower desires to convert a loan, it shall give Agent not less than three (3)
\nBusiness Days’ prior written notice to convert from a Domestic Rate Loan to a
\nEurodollar Rate Loan or one (1) Business Day’s prior written notice to convert
\nfrom a Eurodollar Rate Loan to a Domestic Rate Loan, specifying the date of such
\nconversion, the loans to be converted and if the conversion is from a Domestic
\nRate Loan to any other type of loan, the duration of the first Interest Period
\ntherefor. After giving effect to each such conversion, there shall not be
\noutstanding more than four (4) Eurodollar Rate Loans, in the aggregate.<\/p>\n
(f) At its option and upon three (3) Business Days’ prior written
\nnotice, Borrower may prepay the Eurodollar Rate Loans in whole at any time or in
\npart from time to time, without premium or penalty, but with accrued interest on
\nthe principal being prepaid to the date of such repayment. Borrower shall
\nspecify the date of prepayment of Revolving Advances which are Eurodollar Rate
\nLoans and the amount of such prepayment. In the event that any prepayment of a
\nEurodollar Rate Loan is required or permitted on a date other than the last
\nBusiness Day of the then current Interest Period with respect thereto, Borrower
\nshall indemnify Agent and Lenders therefor in accordance with Section 4(g)
\nhereof.<\/p>\n
(g) Borrower shall indemnify Agent and Lenders and hold Agent and
\nLenders harmless from and against any and all losses or expenses that Agent and
\nLenders may sustain or incur as a consequence of any prepayment, conversion of
\nor any default by Borrower in the payment of the principal of or interest on any
\nEurodollar Rate Loan or failure by Borrower to complete a borrowing of, a
\nprepayment of or conversion of or to a Eurodollar Rate Loan after notice thereof
\nhas been given, including, but not limited to, any interest payable by Agent or
\nLenders to lenders of funds obtained by it in order to make or maintain its
\nEurodollar Rate Loans hereunder. A certificate as to any additional amounts
\npayable pursuant to the foregoing sentence submitted by Agent or any Lender to
\nBorrower shall be conclusive absent manifest error.<\/p>\n
(h) Notwithstanding any other provision hereof, if any applicable
\nlaw, treaty, regulation or directive, or any change therein or in the
\ninterpretation or application thereof, shall make it unlawful for any Lender
\n(for purposes of this subsection (h), the term “Lender” shall include any Lender
\nand the office or branch where any Lender or any corporation or bank controlling
\nsuch Lender makes or maintains any Eurodollar Rate Loans) to make or maintain
\nits Eurodollar Rate Loans, the obligation of Lenders to make Eurodollar Rate
\nLoans hereunder shall forthwith be cancelled and Borrower shall, if any affected
\nEurodollar Rate Loans are then outstanding, promptly upon request from Agent,
\neither pay all such affected Eurodollar Rate<\/p>\n
-16-<\/p>\n
Loans or convert such affected Eurodollar Rate Loans into loans of another type.
\nIf any such payment or conversion of any Eurodollar Rate Loan is made on a day
\nthat is not the last day of the Interest Period applicable to such Eurodollar
\nRate Loan, Borrower shall pay Agent, upon Agent’s request, such amount or
\namounts as may be necessary to compensate lenders for any loss or expense
\nsustained or incurred by Lenders in respect of such Eurodollar Rate Loan as a
\nresult of such payment or conversion, including (but not limited to) any
\ninterest or other amounts payable by Lenders to lenders of funds obtained by
\nLenders in order to make or maintain such Eurodollar Rate Loan. A certificate as
\nto any additional amounts payable pursuant to the foregoing sentence submitted
\nby Lenders to Borrower shall be conclusive absent manifest error.<\/p>\n
(i) If any Lender or any Transferee (a “benefitted Lender”) shall at
\nany time receive any payment of all or part of its Revolving Advances, or
\ninterest thereon, or receive any Collateral in respect thereof (whether
\nvoluntarily or involuntarily or by set-off) in a greater proportion than any
\nsuch payment to and Collateral received by any other Lender, if any, in respect
\nof such other Lender’s Revolving Advances, or interest thereon, and such greater
\nproportionate payment or receipt of Collateral is not expressly permitted
\nhereunder, such benefitted Lender shall purchase for cash from the other Lenders
\nsuch portion of each such other Lenders’ Revolving Advances, or shall provide
\nsuch other Lenders with the benefits of any such Collateral, or the proceeds
\nthereof, as shall be necessary to cause such benefitted Lender to share the
\nexcess payment or benefits of such Collateral or proceeds ratably with each
\nLender; provided, however, that if all or any portion of such excess payment or
\n ——– ——-
\nbenefits is thereafter recovered from such benefitted Lender, such purchase
\nshall be rescinded, and the purchase price and benefits returned, to the extent
\nof such recovery, but without interest. Each Lender so purchasing a portion of
\nanother lender’s Revolving Advances may exercise all rights of payment
\n(including, without limitation, rights of set-off) with respect to such portion
\nas fully as if such Lender were the direct holder of such portion.<\/p>\n
(j) Unless Agent shall have been notified by telephone, confirmed in
\nwriting, by any Lender that such Lender will not make the amount which would
\nconstitute its applicable Commitment Percentage of the Revolving Advances
\navailable to Agent, Agent may (but shall not be obligated to) assume that such
\nLender shall make such amount available to Agent and, in reliance upon such
\nassumption, make available to Borrower a corresponding amount. Agent will
\npromptly notify Borrower of its receipt of any such notice from a Lender. If
\nsuch amount is made available to Agent on a date after a Settlement Date, such
\nLender shall pay to Agent on demand an amount equal to the product of (i) the
\ndaily average Federal Funds Rate (computed on the basis of a year of 360 days)
\nduring such period as quoted by Agent, times (ii) such amount, times (iii) the
\nnumber of days from and including such Settlement Date to the date on which such
\namount becomes immediately available to Agent. A certificate of Agent submitted
\nto any Lender with respect to any amounts owing under this Subsection (d) shall
\nbe conclusive, in the absence of manifest error. If such amount is not in fact
\nmade available to Agent by such Lender within three (3) Business Days after such
\nSettlement Date, Agent shall be entitled to recover such an amount, with
\ninterest thereon at the Revolving Interest Rate applicable to such Revolving
\nAdvances hereunder, on demand from Borrower; provided, however, that Agent’s
\n ——– ——-
\nright to such recovery shall not prejudice or otherwise adversely affect
\nBorrower’s rights (if any) against such Lender.<\/p>\n
-17-<\/p>\n
5. Interest and Fees.
\n —————– <\/p>\n
(a) Interest. Interest on Revolving Advances shall be payable to
\n ——–
\nAgent for its benefit and for the benefit of Lenders in arrears on the first day
\nof each month with respect to Domestic Rate Loans and, with respect to
\nEurodollar Rate Loans, at the end of each Interest Period or, for Eurodollar
\nRate Loans with an Interest Period in excess of three months, at the earlier of
\n(a) each three months on the anniversary date of the commencement of such
\nEurodollar Rate Loan or (b) the end of the Interest Period. Interest charges
\nshall be computed on the actual principal amount of Revolving Advances
\noutstanding during the month at a rate per annum equal to the applicable
\nRevolving Interest Rate. Whenever, subsequent to the date of this Agreement, the
\nAlternate Base Rate is increased or decreased, the applicable Revolving Interest
\nRate for Domestic Rate Loans shall be similarly changed without notice or demand
\nof any kind by an amount equal to the amount of such change in the Alternate
\nBase Rate during the time such change or changes remain in effect. Upon and
\nafter the occurrence of an Event of Default, and during the continuation
\nthereof, (i) the Obligations other than Eurodollar Rate Loans shall bear
\ninterest at the applicable Revolving Interest Rate for Domestic Loans plus two
\npercent (2%) per annum and (ii) Eurodollar Rate Loans shall bear interest at the
\napplicable Revolving Interest Rate for Eurodollar Dollar Loans plus two percent
\n(2%) per annum (as applicable, the “Default Rate”).<\/p>\n
(b) Fees.
\n —- <\/p>\n
(i) Closing Fee. Upon the execution of this Agreement,
\n ———–
\nBorrower shall pay to Agent for its benefit and for the ratable benefit of
\nLenders (who were Lenders on the Closing Date) a closing fee in an amount equal
\nto $50,000, which amount shall be reduced by the commitment fee in the sum of
\n$25,000 and the balance of the deposit fee in the sum of $25,000 remaining after
\ndeducting all fees and expenses (including, without limitation, reasonable fees
\nand disbursements of in-house and outside legal counsel) incurred by Agent in
\nconnection with the consummation of the Transactions. All amounts due with
\nrespect to the closing fee shall be charged to Borrower’s account on the Closing
\nDate.<\/p>\n
(ii) Unused Line Fee. In the event the average closing daily
\n —————
\nunpaid balances of all Revolving Advances hereunder during any calendar month is
\nless than the Maximum Revolving Amount minus the minimum Undrawn Availability
\nrequirement set forth in Section 12(q) hereof, Borrower shall pay to Agent for
\nthe ratable benefit of Lenders a fee at a rate per annum equal to one half of
\none percent (.50%) on the amount by which the Maximum Revolving Amount exceeds
\nsuch average daily unpaid balance. Such fee shall be calculated on the basis of
\na year of 360 days and actual days elapsed, and shall be charged to Borrower’s
\naccount on the first day of each calendar quarter with respect to the prior
\nquarter.<\/p>\n
(iii) Collateral Evaluation Fee. Borrower shall pay Agent a
\n ————————-
\ncollateral evaluation fee equal to $1,500.00 per month commencing on the first
\nday of the month following the Closing Date and on the first day of each month
\nthereafter during the Term. The collateral evaluation fee shall be deemed earned
\nin full on the date when same is due and payable<\/p>\n
-18-<\/p>\n
hereunder and shall not be subject to rebate or proration upon termination of
\nthis Agreement for any reason.<\/p>\n
(iv) Collateral Monitoring Fee. Upon Agent’s performance of any
\n ————————-
\ncollateral monitoring – namely any field examination, collateral analysis or
\nother business analysis performed by any field examiner or auditor conducting
\nsuch collateral monitoring, the need for which is to be determined by Agent and
\nwhich monitoring is undertaken by Agent or for Agent’s benefit, an amount equal
\nto $700.00 per day, per person, for each person employed to perform such
\nmonitoring together with all costs, disbursements and expenses incurred by Agent
\nand the person performing such collateral monitoring shall be charged to the
\napplicable Borrower’s account.<\/p>\n
(v) Annual Facility Fee. Borrower shall pay to Agent for its
\n ——————-
\nown account, on each anniversary date of the Closing Date, an annual facility
\nfee of $50,000 which shall be deemed earned in full on the date when same is due
\nand payable hereunder and shall not be subject to rebate or proration upon
\ntermination of this Agreement for any reason. The Facility Fee shall be subject
\nto reduction by an amount equal to $16,666.00 for each $1,000,000 in average
\noutstanding Revolving Advances in excess of $2,500,000 for the preceding
\nContract Year.<\/p>\n
(vi) Minimum Loan Fee. If for any Contract Year, the average
\n —————-
\ndaily unpaid balance of the Revolving Advances is less than $2,500,000 then as
\nof the first Business Day of the next succeeding Contract Year or the last day
\nof the third Contract Year, Borrower shall pay to Agent for its benefit and for
\nthe ratable benefit of the Lenders a fee equal to the product of (a) 2.5% times
\n(b) such difference.<\/p>\n
(vii) Letter of Credit Fees. Borrower shall pay to Agent, for
\n ———————
\nthe benefit of Lenders, fees for each Letter of Credit for the period from and
\nexcluding the date of issuance of same to and including the date of expiration
\nor termination, equal to the average daily face amount of each outstanding
\nLetter of Credit multiplied by two percent (2.00%) per annum, such fees to be
\ncalculated on the basis of a 360-day year for the actual number of days elapsed
\nand to be payable monthly in arrears on the first day of each month and on the
\nlast day of the Term and (y) to the Issuer, any and all fees and expenses as
\nagreed upon by the Issuer and Borrower in connection with any Letter of Credit,
\nincluding, without limitation, in connection with the opening, amendment or
\nrenewal of any such Letter of Credit and shall reimburse Agent for any and all
\nfees and expenses, if any, paid by Agent to the Issuer (all of the foregoing
\nfees, the “Letter of Credit Fees”). All such charges shall be deemed earned in
\nfull on the date when the same are due and payable hereunder and shall not be
\nsubject to rebate or proration upon the termination of this Agreement for any
\nreason. Any such charge in effect at the time of a particular transaction shall
\nbe the charge for that transaction, notwithstanding any subsequent change in the
\nIssuer’s prevailing charges for that type of transaction. All Letter of Credit
\nFees payable hereunder shall be deemed earned in full on the date when the same
\nare due and payable hereunder and shall not be subject to rebate or proration
\nupon the termination of this Agreement for any reason.<\/p>\n
-19-<\/p>\n
(c) Computation of Interest and Fees. Interest and fees hereunder
\n ——————————–
\nshall be computed on the basis of a year of 360 days and for the actual number
\nof days elapsed. If any payment to be made hereunder becomes due and payable on
\na day other than a Business Day, the due date thereof shall be extended to the
\nnext succeeding Business Day and interest thereon shall be payable at the
\napplicable Revolving Interest Rate for Domestic Rate Loans during such
\nextension.<\/p>\n
(d) Maximum Charges. In no event whatsoever shall interest and other
\n —————
\ncharges charged hereunder exceed the highest rate permissible under law. In the
\nevent interest and other charges as computed hereunder would otherwise exceed
\nthe highest rate permitted under law, such excess amount shall be first applied
\nto any unpaid principal balance owed by Borrower, and if the then remaining
\nexcess amount is greater than the previously unpaid principal balance, Lenders
\nshall promptly refund such excess amount to Borrower and the provisions hereof
\nshall be deemed amended to provide for such permissible rate.<\/p>\n
(e) Increased Costs. In the event that any applicable law, treaty or
\n —————
\ngovernmental regulation, or any change therein or in the interpretation or
\napplication thereof, or compliance by Agent or Lenders (for purposes of this
\nSection 5(c), the term “Lender” shall include Agent or any Lender and any
\ncorporation or bank controlling Agent or any Lender) with any request or
\ndirective (whether or not having the force of law) from any central bank or
\nother financial, monetary or other authority, shall:<\/p>\n
(i) subject Agent or any Lender to any tax of any kind
\nwhatsoever with respect to this Agreement or change the basis of taxation of
\npayments to Agent or any Lender of principal, fees, interest or any other amount
\npayable hereunder or under any Ancillary Agreements (except for changes in the
\nrate of tax on the overall net income of Agent or any Lender by the jurisdiction
\nin which it maintains its principal office);<\/p>\n
(ii) impose, modify or hold applicable any reserve, special
\ndeposit, assessment or similar requirement against assets held by, or deposits
\nin or for the account of, advances or loans by, or other credit extended by, any
\noffice of Agent or any Lender, including (without limitation) pursuant to
\nRegulation D of the Board of Governors of the Federal Reserve System; or<\/p>\n
(iii) impose on Agent or any Lender any other condition with
\nrespect to this Agreement or any Ancillary Agreements;<\/p>\n
and the result of any of the foregoing is to increase the cost to Agent or any
\nLender of making, renewing or maintaining its Revolving Advances hereunder by an
\namount that Agent or any Lender deems to be material or to reduce the amount of
\nany payment (whether of principal, interest or otherwise) in respect of any of
\nthe Revolving Advances by an amount that Agent or any Lender deems to be
\nmaterial, then, in any case Borrower shall promptly pay Agent, upon its demand,
\nsuch additional amount as will compensate Agent and Agent or any Lenders for
\nsuch additional cost or such reduction, as the case may be. Agent shall certify
\nthe amount of such additional cost or reduced amount to Borrower, and such
\ncertification shall be conclusive absent manifest error.<\/p>\n
-20-<\/p>\n
(f) Capital Adequacy.
\n —————- <\/p>\n
(i) In the event that Agent or any Lender shall have determined
\nthat any applicable law, rule, regulation or guideline regarding capital
\nadequacy, or any change therein, or any change in the interpretation or
\nadministration thereof by any governmental authority, central bank or comparable
\nagency charged with the interpretation or administration thereof, or compliance
\nby Agent or any Lender (for purposes of this Section 5(d), the term “Lender”
\nshall include Agent or any Lender and any corporation or bank controlling Agent
\nor any Lender) with any request or directive regarding capital adequacy (whether
\nor not having the force of law) of any such authority, central bank or
\ncomparable agency, has or would have the effect of reducing the rate of return
\non Agent’s or any lender’s capital as a consequence of its obligations hereunder
\nto a level below that which Agent or such Lender could have achieved but for
\nsuch adoption, change or compliance (taking into consideration Agent’s and such
\nlender’s policies with respect to capital adequacy) by an amount deemed by Agent
\nor such lender to be material, then, from time to time, Borrower shall pay upon
\ndemand to Agent such additional amount or amounts as will compensate Agent and
\nLenders for such reduction. In determining such amount or amounts, Agent may use
\nany reasonable averaging or attribution methods. The protection of this Section
\nshall be available to Agent or any Lender regardless of any possible contention
\nof invalidity or inapplicability with respect to the applicable law, regulation
\nor condition.<\/p>\n
(ii) A certificate of Agent setting forth such amount or amounts
\nas shall be necessary to compensate Agent or any Lender with respect to Section
\n5(d)(i) hereof when delivered to Borrower shall be conclusive absent manifest
\nerror.<\/p>\n
(g) Basis for Determining Interest Rate Inadequate or Unfair. In the
\n ——————————————————–
\nevent that Agent or any Lender shall have determined that:<\/p>\n
(i) reasonable means do not exist for ascertaining the
\nEurodollar Rate for any Interest Period; or<\/p>\n
(ii) Dollar deposits in the relevant amount and for the relevant
\nmaturity are not available in the London interbank Eurodollar market, with
\nrespect to an outstanding Eurodollar Rate Loan, a proposed Eurodollar Rate Loan,
\nor a proposed conversion of a Domestic Rate Loan into a Eurodollar Rate Loan,<\/p>\n
then Agent shall give Borrower prompt written, telephonic or telegraphic notice
\nof such determination. If such notice is given, (i) any such requested
\nEurodollar Rate Loan shall be made as a Domestic Rate Loan, unless Borrower
\nshall notify Agent no later than 10:00 a.m. (New York City time) two (2)
\nBusiness Days prior to the date of such proposed borrowing, that its request for
\nsuch borrowing shall be cancelled or made as an unaffected type of Eurodollar
\nRate Loan, (ii) any Domestic Rate Loan or Eurodollar Rate Loan which was to have
\nbeen converted to an affected type of Eurodollar Rate Loan shall be continued as
\nor converted into a Domestic Rate Loan, or, if Borrower shall notify Agent, no
\nlater than 10:00 a.m. (New York City time) two (2) Business Days prior to the
\nproposed conversion, shall be maintained as an<\/p>\n
-21-<\/p>\n
unaffected type of Eurodollar Rate Loan, and (iii) any outstanding affected
\nEurodollar Rate Loans shall be converted into a Domestic Rate Loan, or, if
\nBorrower shall notify Agent, no later than 10:00 a.m. (New York City time) two
\n(2) Business Days prior to the last Business Day of the then current Interest
\nPeriod applicable to such affected Eurodollar Rate Loan, shall be converted into
\nan unaffected type of Eurodollar Rate Loan, on the last Business Day of the then
\ncurrent Interest Period for such affected Eurodollar Rate Loans. Until such
\nnotice has been withdrawn, Lenders shall have no obligation to make an affected
\ntype of Eurodollar Rate Loan or maintain outstanding affected Eurodollar Rate
\nLoans and no Borrower shall have the right to convert a Domestic Rate Loan or an
\nunaffected type of Eurodollar Rate Loan into an affected type of Eurodollar Rate
\nLoan.<\/p>\n
6. Security Interest.
\n —————– <\/p>\n
(a) To secure the prompt payment to Agent and Lenders of the
\nObligations, Borrower hereby assigns, pledges and grants to Agent for its
\nbenefit and for the ratable benefit of each Lender a continuing security
\ninterest in and to its Collateral, whether now owned or existing or hereafter
\nacquired or arising and wheresoever located (whether or not the same is subject
\nto Article 9 of the Uniform Commercial Code). All of Borrower’s ledger sheets,
\nfiles, records, books of account, business papers and documents relating to its
\nCollateral shall, until delivered to or removed by Agent, be kept by Borrower in
\ntrust for Agent until all Obligations have been paid in full. Each confirmatory
\nassignment schedule or other form of assignment hereafter executed by Borrower
\nshall be deemed to include the foregoing grant, whether or not the same appears
\ntherein. Agent hereby acknowledges that it has not been granted a security
\ninterest in and to any Intellectual Property, provided, however, that it is
\n ——– ——-
\nagreed and understood that television, cable, pay per view, advertising and
\n“live event” contract rights are part of the Collateral.<\/p>\n
(b) Agent may file one or more financing statements disclosing
\nAgent’s security interest in the Collateral without Borrower’s signature
\nappearing thereon or Agent may sign on Borrower’s behalf as provided in Section
\n14 hereof. The parties agree that a carbon, photographic or other reproduction
\nof this Agreement shall be sufficient as a financing statement. If any
\nReceivable becomes evidenced by a promissory note or any other instrument for
\nthe payment of money, Borrower will immediately deliver such instrument to Agent
\nappropriately endorsed.<\/p>\n
7. Representations Concerning the Collateral. Borrower represents and
\n —————————————–
\nwarrants (each of which such representations and warranties shall be deemed
\nrepeated upon the making of each request for a Revolving Advance and made as of
\nthe time of each and every Revolving Advance hereunder):<\/p>\n
(a) all the Collateral (i) is owned by Borrower free and clear of all
\nclaims, liens, security interests and encumbrances (including without limitation
\nany claims of infringement) except (A) those in Agent’s and any Lender’s favor
\nand (B) Permitted Liens and (ii) is not subject to any agreement prohibiting the
\ngranting of a security interest or requiring notice of or consent to the
\ngranting of a security interest;<\/p>\n
-22-<\/p>\n
(b) all Receivables (i) represent complete bona fide transactions
\nwhich require no further act under any circumstances o Borrower’s part to make
\nsuch Receivables payable by the Customers, (ii) to the best of Borrower’s
\nknowledge, are not subject to any present, future or contingent offsets or
\ncounterclaims, and (iii) do not represent bill and hold sales, consignment
\nsales, guaranteed sales, sale or return or other similar understandings or
\nobligations of any Affiliate or Subsidiary of Borrower.<\/p>\n
8. Covenants Concerning the Collateral. During the Term, Borrower
\n ———————————–
\ncovenants that it shall:<\/p>\n
(a) not dispose of any of the Collateral whether by sale, lease or
\notherwise;<\/p>\n
(b) not encumber, mortgage, pledge, assign or grant any security
\ninterest in any Collateral or any of Borrower’s other assets to anyone other
\nthan Agent or any Lender except for Permitted Liens;<\/p>\n
(c) place notations upon its books of account and any financial
\nstatement prepared by it to disclose Agent’s and each Lender’s security interest
\nin the Collateral;<\/p>\n
(d) defend the Collateral against the claims and demands of all
\nparties;<\/p>\n
(e) Intentionally Omitted;<\/p>\n
(f) not extend the payment terms of any Receivable without prompt
\nnotice thereof to Agent; and<\/p>\n
(g) perform all other steps requested by Agent to create and maintain
\nin Agent’s and each Lender’s favor a valid perfected first security interest in
\nall Collateral.<\/p>\n
9. Collection and Maintenance of Collateral and Records. Agent may at
\n —————————————————-
\nany time verify Borrower’s Receivables utilizing an audit control company or any
\nother agent of Agent. Agent or Agent’s designee may notify Customers, at any
\ntime after the occurrence of an Event of Default at Agent’s sole discretion, of
\nAgent’s security interest in Receivables, collect them directly and charge the
\ncollection costs and expenses to Borrower’s account, but, unless and until Agent
\ndoes so or gives any Borrower other instructions, Borrower shall collect all
\nReceivables for Agent, receive all payments thereon for Agent’s benefit in trust
\nas Agent’s trustee and immediately deliver them to Agent in their original form
\nwith all necessary endorsements or, as directed by Agent, deposit such payments
\nas directed by Agent pursuant to Section 23 hereof. Borrower shall furnish, at
\nAgent’s request, copies of contracts, invoices or the equivalent, and any
\noriginal shipping and delivery receipts for all merchandise sold or services
\nrendered and such other documents and information as Agent may require. Borrower
\nshall also provide Agent on a monthly (within ten (10) days after the end of
\neach month) or more frequent basis, as requested by Agent, a detailed or aged
\ntrial balance of all of Borrower’s existing Receivables specifying the names and
\nbalances due for each Customer and such other information pertaining to the
\nReceivables as Agent may request together with confirmatory written assignments
\nof such Receivables, but Borrower’s failure to execute and deliver such written
\nconfirmatory<\/p>\n
-23-<\/p>\n
assignments of such Receivables shall not affect or limit Agent’s security
\ninterest or other rights in and to the Receivables. Borrower shall provide Agent
\non a monthly (within ten (10) days after the end of each month), or more
\nfrequent basis, as requested by Agent an aged trial balance of Borrower’s
\nexisting accounts payable. Borrower shall provide Agent, as requested by Agent,
\nsuch other schedules, documents and\/or information regarding the Collateral as
\nAgent may require.<\/p>\n
10. Inspections. At all times during normal business hours, Agent shall
\n ———–
\nhave the right to (a) visit and inspect Borrower’s properties and the
\nCollateral, (b) inspect, audit and make extracts from Borrower’s relevant books
\nand records, including, but not limited to, management letters prepared by
\nindependent accountants, and (c) discuss with Borrower’s principal officers, and
\nindependent accountants, Borrower’s business, assets, liabilities, financial
\ncondition, results of operations and business prospects. Borrower will deliver
\nto Agent any instrument necessary for Agent to obtain records from any service
\nbureau maintaining records for Borrower.<\/p>\n
11. Financial Information.
\n ——————— <\/p>\n
(a) Audited Annual Financial Statements. Borrower shall provide Agent
\n ———————————–
\nas soon as available, but in any event within (1) thirty (30) days after the
\nClosing Date for fiscal year 1997 and (2) one hundred twenty (120) days after
\nthe end of each fiscal year of Borrower thereafter, the balance sheet of
\nBorrower and its Subsidiaries on a consolidated basis as at the end of such
\nfiscal year and the related statements of income, retained earnings and changes
\nin cash flow of Borrower and its Subsidiaries on a consolidated basis for such
\nfiscal year, setting forth in comparative form the figures as at the end of and
\nfor the previous fiscal year, which shall have been reported on by independent
\ncertified public accountants who shall be satisfactory to Agent and shall be
\naccompanied by an audit report issued by such independent certified public
\naccountants.<\/p>\n
(b) Internal Annual Financial Statements. Borrower shall provide
\n ————————————
\nAgent as soon as available, drafts of the balance sheet of Borrower and its
\nSubsidiaries on a consolidated basis as at the end of each fiscal year of
\nBorrower and the related statements of income, retained earnings and changes in
\ncash flow of Borrower and its Subsidiaries on a consolidated basis for such
\nfiscal year, which have been internally prepared by Borrower.<\/p>\n
(c) Monthly and Quarterly Financial Statements. Borrower shall
\n ——————————————
\nprovide Agent as soon as available, but in any event within thirty (30) days
\nafter the close of each month and quarter, the balance sheet of Borrower and its
\nSubsidiaries on a consolidated basis as at the end of such month and quarter and
\nthe related statements of income, retained earnings and changes in cash flow of
\nBorrower and its Subsidiaries on a consolidated basis for such month and
\nquarter, which have been internally prepared by Borrower, provided, that solely
\n ——–
\nfor the month of December, 1997, the financial statements required to be
\ndelivered pursuant to this Section shall be for Borrower on a combined basis
\nwith certain of its Affiliates.<\/p>\n
(d) Accountant’s Report. Together with the financial statements
\n ——————-
\nfurnished pursuant to (a) above, Borrower shall deliver a report in accordance
\nwith the Statement of Auditing Standards of Borrower’s certified public
\naccountants addressed to Borrower stating that<\/p>\n
-24-<\/p>\n
in making the examination necessary for the issuance of their report on
\nBorrower’s financial statements, nothing has come to their attention to lead
\nthem to believe that any Event of Default exists or, if such is not the case,
\nspecifying such Event of Default and its nature, when it occurred and whether it
\nis continuing.<\/p>\n
(e) Certificate. At the times the financial statements are furnished
\n ———–
\npursuant to (a), (b) and (c) above, a certificate of Borrower’s President or
\nChief Financial Officer shall be delivered to Agent stating that, based on an
\nexamination sufficient to enable him to make an informed statement, no Event of
\nDefault exists, or, if such is not the case, specifying such Event of Default
\nand its nature, when it occurred, whether it is continuing and the steps being
\ntaken by Borrower with respect to such event.<\/p>\n
(f) GAAP and Other Requirements. All financial statements required
\n —————————
\nunder (a), (b) and (c) above shall be prepared in accordance with GAAP, subject
\nto normal, recurring year-end adjustments in the case of monthly and quarterly
\nstatements. If any internally prepared financial information, including that
\nrequired under this Section 11, is unsatisfactory in any manner to Agent, Agent
\nmay require, at its discretion, that Borrower obtain an independent certified
\npublic accountant to review same.<\/p>\n
(g) Projections. Borrower shall furnish Agent no less than thirty
\n ———–
\n(30) days prior to the beginning of each fiscal year commencing with fiscal year
\n1998, a month-by-month projected operating budget and cash flow of Borrower and
\nits Subsidiaries on a consolidated basis for such fiscal year (including an
\nincome statement for each month and a balance sheet as at the end of the last
\nmonth in each fiscal quarter), such projections to be accompanied by a
\ncertificate signed by Borrower’s President or Chief Financial Officer to the
\neffect that such projections have been prepared on the basis of sound financial
\nplanning practice consistent with past budgets and financial statements and that
\nsuch officer has no reason to question the reasonableness of any material
\nassumptions on which such projections were prepared.<\/p>\n
12. Additional Representations, Warranties and Covenants. Borrower
\n —————————————————-
\nrepresents and warrants (each of which such representations and warranties shall
\nbe deemed repeated upon the making of a request for a Revolving Advance and made
\nas of the time of each Revolving Advance made hereunder), and covenants that:<\/p>\n
(a) Borrower is duly incorporated and in good standing under the laws
\nof the State of Delaware and is qualified to do business and is in good standing
\nin the states listed on Schedule 12(a)(ii) which constitute all states in which
\n ——————
\nqualification and good standing are necessary for Borrower to conduct its
\nbusiness and own its property and where the failure to so qualify would have a
\nmaterial adverse effect on Borrower or its business. Borrower has delivered to
\nAgent true and complete copies of its certificate of incorporation and by-laws
\nand will promptly notify Agent of any amendment or changes thereto;<\/p>\n
(b) the only Subsidiaries of Borrower are listed on Schedule 12(b);
\n ————– <\/p>\n
(c) the execution, delivery and performance of this Agreement and the
\nAncillary Agreements (i) have been duly authorized, (ii) are not in
\ncontravention of Borrower’s <\/p>\n
-25-<\/p>\n
certificate of incorporation, by-laws or of any indenture, agreement or
\nundertaking to which Borrower is a party or by which Borrower is bound and (iii)
\nare within Borrower’s corporate powers;<\/p>\n
(d) this Agreement and the Ancillary Agreements executed and
\ndelivered by Borrower are Borrower’s legal, valid and binding obligations,
\nenforceable in accordance with their terms;<\/p>\n
(e) Borrower keeps and will continue to keep all of its books and
\nrecords concerning the Collateral at Borrower’s executive offices located at the
\naddresses set forth on Schedule 12(e) and will not move such books and records
\n ————–
\nwithout giving Agent at least thirty (30) days prior written notice;<\/p>\n
(f) (i) the operation of Borrower’s business is and will continue
\nto be in compliance in all material respects with all applicable federal, state
\nand local laws, including but not limited to all applicable environmental laws
\nand regulations;<\/p>\n
(ii) Borrower will establish and maintain a system to assure and
\nmonitor continued compliance with all applicable environmental laws, which
\nsystem shall include periodic reviews of such compliance.<\/p>\n
(iii) In the event Borrower obtains, gives or receives notice of
\nany release or threat of release of a reportable quantity of any Hazardous
\nSubstances on its property (any such event being hereinafter referred to as a
\n“Hazardous Discharge”) or receives any notice of violation, request for
\ninformation or notification that it is potentially responsible for investigation
\nor cleanup of environmental conditions on its property, demand letter or
\ncomplaint, order, citation, or other written notice with regard to any Hazardous
\nDischarge or violation of any environmental laws affecting its property or
\nBorrower’s interest therein (any of the foregoing is referred to herein as an
\n“Environmental Complaint”) from any Person or entity, including any state agency
\nresponsible in whole or in part for environmental matters in the state in which
\nsuch property is located or the United States Environmental Protection Agency
\n(any such person or entity hereinafter the “Authority”), then Borrower shall,
\nwithin five (5) Business Days, give written notice of same to Agent detailing
\nfacts and circumstances of which Borrower is aware giving rise to the Hazardous
\nDischarge or Environmental Complaint and periodically inform Agent of the status
\nof the matter. Such information is to be provided to allow Agent to protect its
\nsecurity interest in the Collateral and is not intended to create nor shall it
\ncreate any obligation upon Agent or Lenders with respect thereto.<\/p>\n
(iv) Borrower shall respond promptly to any Hazardous Discharge
\nor Environmental Complaint and take all necessary action in order to safeguard
\nthe health of any Person and to avoid subjecting the Collateral to any lien,
\ncharge, claim or encumbrance. If Borrower shall fail to respond promptly to any
\nHazardous Discharge or Environmental Complaint or Borrower shall fail to comply
\nwith any of the requirements of any environmental laws, Agent may, but without
\nthe obligation to do so, for the sole purpose of protecting Agent’s interest in
\nCollateral: (A) give such notices or (B) enter onto Borrower’s property (or
\nauthorize third parties to enter onto such property) and take such actions as
\nAgent (or such third parties as<\/p>\n
-26-<\/p>\n
directed by Agent) deem reasonably necessary or advisable, to clean up, remove,
\nmitigate or otherwise deal with any such Hazardous Discharge or Environmental
\nComplaint. All reasonable costs and expenses incurred by Agent (or such third
\nparties) in the exercise of any such rights, including any sums paid in
\nconnection with any judicial or administrative investigation or proceedings,
\nfines and penalties, together with interest thereon from the date expended at
\nthe Default Rate for Revolving Advances shall be paid upon demand by Borrower,
\nand until paid shall be added to and become a part of the Obligations secured by
\nthe liens created by the terms of this Agreement or any other agreement between
\nAgent and Borrower.<\/p>\n
(v) Borrower shall defend and indemnify Agent and Lenders and
\nhold Agent and Lenders harmless from and against all loss, liability, damage and
\nexpense, claims, costs, fines and penalties, including attorney’s fees, suffered
\nor incurred Agent or any Lender under or on account of any environmental laws,
\nincluding, without limitation, the assertion of any lien thereunder, with
\nrespect to any Hazardous Discharge, the presence of any hazardous substances
\naffecting Borrower’s property, whether or not the same originates or emerges
\nfrom Borrower’s property or any contiguous real estate, including any loss of
\nvalue of the Collateral as a result of the foregoing except to the extent such
\nloss, liability, damage and expense is attributable to any Hazardous Discharge
\nresulting from actions on the part of Agent or any Lender. Borrower’s
\nobligations under this Section 12(f) shall arise upon the discovery of the
\npresence of any Hazardous Substances on the Borrower’s property, whether or not
\nany federal, state, or local environmental agency has taken or threatened any
\naction in connection with the presence of any hazardous substances. Borrower’s
\nobligation and the indemnifications hereunder shall survive the termination of
\nthis Agreement.<\/p>\n
(vi) For purposes of this Section 12(f) all references to
\nBorrower’s property shall be deemed to include all of Borrower’s right, title
\nand interest in and to all owned and\/or leased premises.<\/p>\n
(g) based upon the Employee Retirement Income Security Act of 1974
\n(“ERISA”), and the regulations and published interpretations thereunder: (i)
\nBorrower does not maintain or contribute to any plan other than those listed on
\nSchedule 12(g) hereto; (ii) Borrower has not engaged in any Prohibited
\n————–
\nTransactions as defined in paragraph 406 of ERISA and paragraph 4975 of the
\nCode; (iii) Borrower has met all applicable minimum funding requirements under
\nparagraph 302 of ERISA in respect of its plans; (iv) Borrower has no knowledge
\nof any event or occurrence which would cause the Pension Benefit Guaranty
\nCorporation to institute proceedings under Title IV of ERISA to terminate any
\nemployee benefit plan(s); (v) Borrower has no fiduciary responsibility for
\ninvestments with respect to any plan existing for the benefit of persons other
\nthan Borrower’s employees; and (vi) Borrower has not withdrawn, completely or
\npartially, from any multi-employer pension plan so as to incur liability under
\nthe Multiemployer Pension Plan Amendments Act of 1980;<\/p>\n
(h) Borrower is solvent, able to pay its debts as they mature, has
\ncapital sufficient to carry on its business and all businesses in which it is
\nabout to engage and the fair saleable value of its assets (calculated on a going
\nconcern basis) is in excess of the amount of its liabilities;<\/p>\n
-27-<\/p>\n
(i) there is no pending or threatened litigation, actions or
\nproceeding which involve the possibility of materially and adversely affecting
\nBorrower’s business, assets, operations, condition or prospects, financial or
\notherwise, or the Collateral or the ability of Borrower to perform this
\nAgreement except as disclosed on Schedule 12(i);
\n ————– <\/p>\n
(j) all balance sheets and income statements which have been
\ndelivered to Agent and Lenders fairly, accurately and properly state Borrower’s
\nfinancial condition on a basis consistent with that of previous financial
\nstatements and there has been no material adverse change in Borrower’s financial
\ncondition as reflected in such statements since the date thereof and such
\nstatements do not fail to disclose any fact or facts which might materially and
\nadversely affect Borrower’s financial condition;<\/p>\n
(k) (x) it possesses all of the licenses, patents, copyrights,
\ntrademarks, tradenames and permits necessary to conduct its business and (y)
\nthere has been no assertion or claim of violation or infringement with respect
\nthereof;<\/p>\n
(l) Borrower’s federal tax identification number is set forth on
\nSchedule 12(1). Borrower has filed all federal, state and local tax returns and
\n————–
\nother reports each is required by law to file and has paid all taxes,
\nassessments, fees and other governmental charges that are due and payable.
\nFederal income tax returns of Borrower have been examined and reported upon by
\nthe appropriate taxing authority or closed by applicable statute and satisfied
\nfor all fiscal years prior to and including the fiscal year ending April 30,
\n1996. All state and local tax returns have been timely filed and Borrower is not
\naware of and does not reasonably expect that any material issues will arise
\nafter such returns have been examined by the appropriate taxing authorities. The
\nprovision for taxes on the books of Borrower is adequate for all years not
\nclosed by applicable statutes, and for the current fiscal year, and Borrower has
\nno knowledge of any deficiency or additional assessment in connection therewith
\nnot provided for on its books. Borrower will pay or discharge when due all
\ntaxes, assessments and governmental charges or levies imposed upon it;<\/p>\n
(m) it will promptly inform Agent in writing of: (i) the commencement
\nof all proceedings and investigations by or before and\/or the receipt of any
\nnotices from, any governmental or nongovernmental body and all actions and
\nproceedings in any court or before any arbitrator against or in any way
\nconcerning any of Borrower’s properties, assets or business, which might singly
\nor in the aggregate, have a materially adverse effect on Borrower; (ii) any
\namendment of any Borrower’s certificate of incorporation or by-laws; (iii) any
\nchange in Borrower’s business, assets, liabilities, condition (financial or
\notherwise), result of operations or business prospects which has had or might
\nhave a materially adverse effect on Borrower; (iv) any Event of Default; (v) any
\ndefault or any event which with the passage of time or giving of notice or both
\nwould constitute a default under any agreement for the payment of money to which
\nBorrower is a party or by which Borrower or any of Borrower’s properties may be
\nbound which would have a material adverse effect on Borrower’s business,
\noperations, property or condition (financial or otherwise) or the Collateral;
\n(vi) any change in the location of Borrower’s executive offices; (vii) any
\nchange in Borrower’s corporate name; (viii) any material delay in Borrower’s
\nperformance of any of its obligations to any Customer and of any assertion of
\nany material<\/p>\n
-28-<\/p>\n
claims, offsets or counterclaims by any Customer and of any allowances, credits
\nand\/or other monies granted by it to any Customer; (ix) furnish to and inform
\nAgent of all material adverse information relating to the financial condition of
\nany Customer; and (x) any material return of goods;<\/p>\n
(n) it will not (i) create, incur, assume or suffer to exist any
\nindebtedness (exclusive of trade debt) whether secured or unsecured other than
\n(1) Borrower’s indebtedness to Agent and Lenders, (2) indebtedness secured by
\npurchase money liens and indebtedness under capitalized leases not to exceed
\n$100,000 in the aggregate outstanding in any fiscal year and (3) as set forth on
\nSchedule 12(n) attached hereto and made a part hereof; (ii) declare, pay or make
\n————–
\nany dividend or distribution on any shares of the common stock or preferred
\nstock of Borrower other than $3,000,000 in the aggregate to Vincent and Linda
\nMcMahon in any fiscal year, which amount shall include any salary and other
\nbenefits given to Vincent and Linda McMahon in such fiscal year provided,
\n ——–
\nfurther, that during any fiscal year that Borrower is a Subchapter S
\n——-
\ncorporation, Borrower shall be permitted to make Tax Distributions so long as
\nthe aggregate amounts distributed by Borrower to its shareholders in any fiscal
\nyear shall not exceed the amount of income tax liability that Borrower would
\nhave incurred for such fiscal year had Borrower been a C corporation during such
\nfiscal year, or apply any of its funds, property or assets to the purchase,
\nredemption or other retirement of any common or preferred stock of Borrower;
\n(iii) directly or indirectly, prepay any indebtedness (other than to agent and
\nLenders), or repurchase, redeem, retire or otherwise acquire any indebtedness of
\nBorrower; (iv) make advances, loans or extensions of credit to any Person; (v)
\nbecome either directly or contingently liable upon the obligations of any Person
\nby assumption, endorsement or guaranty thereof or otherwise; (vi) enter into any
\nmerger, consolidation or other reorganization with or into any other Person or
\nacquire all or a portion of the assets or stock of any Person or permit any
\nother person to consolidate with or merge with it; (vii) form any Subsidiary or
\nenter into any partnership, joint venture or similar arrangement; (viii)
\nmaterially change the nature of the business in which it is presently engaged;
\n(ix) change its fiscal year or make any changes in accounting treatment and
\nreporting practices except as required by GAAP or in the tax reporting treatment
\nor except as required by law and upon written notice to Agent; (x) enter into
\nany transaction with any affiliate, except in ordinary course on arms-length
\nterms; or (xi) bill Receivables under any name except the present name of
\nBorrower;<\/p>\n
(o) it shall not at any time permit Net Worth to be less than
\n$16,000,000;<\/p>\n
(p) it shall maintain (a) Fixed Charge Coverage Ratio of not less
\nthan 1.0 to 1.0 (1) for the nine months ending January 31, 1998 and (2) as at
\nthe end of each fiscal quarter thereafter calculated on a rolling four (4)
\nquarter basis with respect to the four (4) fiscal quarters then ended;<\/p>\n
(q) it shall at all times maintain Undrawn Availability of not less
\nthan $2,000,000;<\/p>\n
(r) all financial projections of Borrower’s performance prepared by
\nBorrower or at Borrower’s direction and delivered to Agent or Lenders will
\nrepresent, at the time of<\/p>\n
-29-<\/p>\n
delivery to Agent or Lenders, as the case may be, Borrower’s best estimate of
\nBorrower’s future financial performance and will be based upon assumptions which
\nare reasonable in light of Borrower’s past performance and then current business
\nconditions;<\/p>\n
(s) none of the proceeds of the Revolving Advances hereunder will be
\nused directly or indirectly to “purchase” or “carry” “margin stock” or to repay
\nindebtedness incurred to “purchase” or “carry” “margin stock” within the
\nrespective meanings of each of the quoted terms under Regulation G of the Board
\nof Governors of the Federal Reserve System as now and from time to time
\nhereafter in effect; and<\/p>\n
(t) it will bear the full risk of loss from any loss of any nature
\nwhatsoever with respect to the Collateral. At it’s own cost and expense in
\namounts and with carriers acceptable to Agent, it shall (i) keep all its
\ninsurable properties and properties in which it has an interest insured against
\nthe hazards of fire, flood, sprinkler leakage, those hazards covered by extended
\ncoverage insurance and such other hazards, and for such amounts, as is customary
\nin the case of companies engaged in businesses similar to Borrower’s including,
\nwithout limitation, business interruption insurance, provided, however, that the
\n ——– ——-
\nmortgagee of the Stamford facility owned by Realty shall have superior rights
\nthan Agent to the first $1,500,000 of Borrowers business interruption insurance
\nto the extent that there are any obligations owed by Realty to such mortgagee;
\n(ii) maintain a bond in such amounts as is customary in the case of companies
\nengaged in businesses similar to Borrower’s insuring against larceny,
\nembezzlement or other criminal misappropriation of insured’s officers and
\nemployees who may either singly or jointly with others at any time have access
\nto the assets or funds of Borrower either directly or through authority to draw
\nupon such funds or to direct generally the disposition of such assets; (iii)
\nmaintain liability insurance against claims for personal injury, death or
\nproperty damage suffered by others; (iv) maintain all such worker’s compensation
\nor similar insurance as may be required under the laws of any state of
\njurisdiction in which Borrower is engaged in business; (v) furnish Agent with
\n(x) evidence of the renewal of all policies at least thirty (30) days before any
\nexpiration date and copies of such policies within ninety (90) days after the
\nrenewal thereof, and (y) appropriate loss payable endorsements in form and
\nsubstance satisfactory to Agent, naming Agent as loss payee and providing that
\nas to Agent the insurance coverage shall not be impaired or invalidated by any
\nact or neglect of Borrower and the insurer will provide Agent with at least
\nthirty (30) days notice prior to cancellation. Borrower shall instruct the
\ninsurance carriers that in the event of any loss thereunder, the carriers shall
\nmake payment for such loss to Agent and not to Borrower and Agent jointly. If
\nany insurance losses are paid by check, draft or other instrument payable to
\nBorrower and Agent jointly, Agent may endorse Borrower’s name thereon and do
\nsuch other things as Agent may deem advisable to reduce the same to cash. Agent
\nis hereby authorized to adjust and compromise claims. All loss recoveries
\nreceived by Agent upon any such insurance may be applied to the Obligations, in
\nsuch order as Agent in its sole discretion shall determine. Any surplus shall be
\npaid by Agent to the applicable Borrower or applied as may be otherwise required
\nby law. Any deficiency thereon shall be paid by Borrower to Agent, on demand.
\nBorrower shall, within thirty (30) days of the Closing Date provide Agent with
\nan acknowledgement from the mortgagee of the Stamford facility owned by Realty
\nthat it only has an interest in $1,500,000 of Borrower’s business interruption
\ninsurance, which acknowledgement shall be acceptable to Agent in all respects;<\/p>\n
-30-<\/p>\n
(u) it shall provide Agent, within thirty (30) days of the Closing
\nDate, a mortgagee waiver with respect to the Stamford premises owned by Realty
\nduly executed by the mortgagee of such premises, in form and substance
\nacceptable to Agent.<\/p>\n
13. Conditions Precedent.
\n ——————– <\/p>\n
(a) Conditions to Initial Advances. The agreement of Lenders to make
\n ——————————
\nthe initial Revolving Advances requested to be made on the Closing Date is
\nsubject to the satisfaction, or waiver by Lenders, immediately prior to or
\nconcurrently with the making of such Revolving Advances, of the following
\nconditions precedent:<\/p>\n
(i) Revolving Credit Note. Agent shall have received the
\n ———————
\nRevolving Credit Note duly executed and delivered by an authorized officer of
\nBorrower;<\/p>\n
(ii) Filings, Registrations and Recordings. Each document
\n ————————————-
\n(including, without limitation, any Uniform Commercial Code financing statement)
\nrequired by this Agreement, any related agreement or under law or reasonably
\nrequested by Agent to be filed, registered or recorded in order to create, in
\nfavor of Agent, a perfected security interest in or lien upon the Collateral
\nshall have been properly filed, registered or recorded in each jurisdiction in
\nwhich the filing, registration or recordation thereof is so required or
\nrequested, and Agent shall have received an acknowledgment copy, or other
\nevidence satisfactory to it, of each such filing, registration or recordation
\nand satisfactory evidence of the payment of any necessary fee, tax or expense
\nrelating thereto;<\/p>\n
(iii) Corporate Proceedings of Borrower. Agent shall have
\n ———————————
\nreceived copy of the resolutions in form and substance reasonably satisfactory
\nto Agent, of the Board of Directors of Borrower authorizing (i) the execution,
\ndelivery and performance of this Agreement and the Ancillary Agreements and (ii)
\nthe granting by Borrower of the security interests in and liens upon the
\nCollateral in each case certified by the Secretary or an Assistant Secretary of
\nBorrower as of the Closing Date; and, such certificate shall state that the
\nresolutions thereby certified have not been amended, modified, revoked or
\nrescinded as of the date of such certificate;<\/p>\n
(iv) Incumbency Certificates of Borrower. Agent shall have
\n ———————————–
\nreceived a certificate of the Secretary or an Assistant Secretary of Borrower,
\ndated the Closing Date, as to the incumbency and signature of the officers of
\nBorrower executing this Agreement, any certificate or other documents to be
\ndelivered by it pursuant hereto, together with evidence of the incumbency of
\nsuch Secretary or Assistant Secretary;<\/p>\n
(v) Certificates. Agent shall have received a copy of the
\n ————
\nArticles or Certificate of Incorporation of Borrower, and all amendments
\nthereto, certified by the Secretary of State or other appropriate official of
\nits jurisdiction of incorporation together with copies of the By-Laws of
\nBorrower and all agreements of Borrower’s shareholders certified as accurate and
\ncomplete by the Secretary of Borrower;<\/p>\n
-31-<\/p>\n
(vi) Good Standing Certificates. Agent shall have received good
\n ————————–
\nstanding certificates for Borrower dated not more than thirty days prior to the
\nClosing Date, issued by the Secretary of State or other appropriate official of
\nBorrower’s jurisdiction of incorporation and the jurisdiction where Borrower
\nmaintains its principal place of business;<\/p>\n
(vii) Legal Opinion. Agent shall have received the executed
\n ————-
\nlegal opinion of Robinson & Cole in form and substance satisfactory to Agent
\nwhich shall cover such matters incident to the Transactions as Agent may
\nreasonably require and Borrower hereby authorizes and directs such counsel to
\ndeliver such opinions to Agent and Lenders;<\/p>\n
(viii) No Litigation. (x) No litigation, investigation or
\n ————-
\nproceeding before or by any arbitrator or governmental authority shall be
\ncontinuing or threatened against Borrower or against the officers or directors
\nof Borrower (A) in connection with this Agreement or the Ancillary Agreements or
\nany of the transactions contemplated thereby and which, in the reasonable
\nopinion of Agent, is deemed material or (B) which if adversely determined,
\nwould, in the reasonable opinion of Agent, have a material adverse effect on the
\nbusiness, assets, operations or condition (financial or otherwise) of Borrower;
\nand (y) no injunction, writ, restraining order or other order of any nature
\nmaterially adverse to Borrower or the conduct of its business or inconsistent
\nwith the due consummation of the Transactions shall have been issued by any
\ngovernmental authority;<\/p>\n
(ix) Financial Condition Certificate. Agent shall have received
\n ——————————-
\nan executed Financial Condition Certificate in the form of Exhibit 13.1 (ix);
\n —————– <\/p>\n
(x) Collateral Examination. Agent shall have completed
\n ———————-
\nCollateral examinations and received appraisals, the results of which shall be
\nsatisfactory in form and substance to Agent, of the Receivables of Borrower and
\nall books and records in connection therewith;<\/p>\n
(xi) Fees. Agent shall have received all fees payable to Agent
\n —-
\nand Lenders on or prior to the Closing Date pursuant to Section 5(b) hereof;<\/p>\n
(xii) Ancillary Agreements. Agent shall have received executed
\n ——————–
\ncopies of all Ancillary Agreements, each in form and substance satisfactory to
\nAgent;<\/p>\n
(xiii) Insurance. Agent shall have received in form and substance
\n ———
\nsatisfactory to Agent, certified copies of Borrower’s casualty insurance
\npolicies, together with loss payable endorsements on Agent’s standard form of
\nloss payee endorsement naming Agent as loss payee, and certified copies of
\nBorrower’s liability insurance policies, together with endorsements naming Agent
\nas a co-insured;<\/p>\n
(xiv) Payment Instructions. Agent shall have received written
\n ——————–
\ninstructions from Borrower directing the application of proceeds of the initial
\nRevolving Advances made pursuant to this Agreement and stating that Borrower has
\nEligible Receivables in amounts sufficient in value and amount to support
\nRevolving Advances in the amount by or on behalf of Borrower on the date of such
\ncertificate;<\/p>\n
-32-<\/p>\n
(xv) Blocked Accounts. Agent shall have received duly executed
\n —————-
\nagreements establishing the Blocked Accounts or Depository Accounts with the
\nBank for the collection or servicing of the Receivables and proceeds of the
\nCollateral;<\/p>\n
(xvi) Consents. Agent shall have received any and all Consents
\n ——–
\nnecessary to permit the effectuation of the Transactions; and, Agent shall have
\nreceived such Consents and waivers of such third parties as might assert claims
\nwith respect to the Collateral, as Agent and its counsel shall deem necessary;<\/p>\n
(xvii) No Adverse Material Change. (i) Since November 21, 1997,
\n ————————–
\nthere shall not have occurred (x) any material adverse change in the condition,
\nfinancial or otherwise, operations, properties or prospects of Borrower, (y) any
\nmaterial damage or destruction to any of the Collateral nor any material
\ndepreciation in the value thereof and (z) any event, condition or state of facts
\nwhich would reasonably be expected materially and adversely to affect the
\nbusiness, financial condition or results of operations of Borrower and (ii) no
\nrepresentations made or information supplied to Agent shall have been proven to
\nbe inaccurate or misleading in any material respect;<\/p>\n
(xviii) Undrawn Availability. After giving effect to the initial
\n ——————–
\nRevolving Advances hereunder, Borrower shall have aggregate Undrawn Availability
\nof at least $5,000,000.<\/p>\n
(xix) Contract Review. Agent shall have reviewed all material
\n —————
\ncontracts of Borrower including, without limitation, leases, union contracts,
\nlabor contracts, vendor supply contracts, license agreements and distributorship
\nagreements and such contracts and agreements shall be satisfactory in all
\nrespects to Agent;<\/p>\n
(xx) Closing Certificate. Agent shall have received a closing
\n ——————-
\ncertificate signed by the Chief Financial Officer of Borrower dated as of the
\ndate hereof, stating that (i) to the best of his knowledge, all representations
\nand warranties set forth in this Agreement and the other Documents are true and
\ncorrect on and as of such date, (ii) Borrower is on such date in compliance with
\nall the terms and provisions set forth in this Agreement and the other Documents
\nand (iii) on such date no Default or Event of Default has occurred or is
\ncontinuing;<\/p>\n
(xxi) Audited Financial Statements. Agent shall have received a
\n —————————-
\ncopy of the audited financial statements of Borrower for fiscal year 1996
\naudited by Deloitte & Touche LLP which shall be satisfactory in all respects to
\nAgent;<\/p>\n
(xxii) Balance Sheet. Agent shall have received the balance
\n ————-
\nsheet of Borrower on a combined basis for the seven months ending November 21,
\n1997 together with an executed Financial Condition Statement;<\/p>\n
(xxiii) Debt. Agent shall have reviewed the terms and conditions
\n —-
\nof all of Borrower’s and Realty’s debt (including, without limitation, the
\n$12,000,000 principal amount of indebtedness due to GMAC or other financial
\ninstitution acceptable to Agent) which terms and conditions shall be
\nsatisfactory to Agent;<\/p>\n
-33-<\/p>\n
(xxiv) Compliance with Laws. Agent shall have received evidence
\n ——————–
\nthat Borrower is in compliance with all relevant federal, state and local
\nregulations;<\/p>\n
(xxv) Mortgage. Realty shall have obtained a loan in the
\n ——–
\nprincipal amount of $12,000,000 from GMAC, which loan shall be secured by a
\nmortgage on its corporate headquarters and television facility located in
\nStamford, Connecticut; and<\/p>\n
(xxvi) Other. All corporate and other proceedings, and all
\n —–
\ndocuments, instruments and other legal matters in connection with the
\nTransactions shall be satisfactory in form and substance to Agent, Lenders and
\ntheir counsel.<\/p>\n
(b) Conditions to Each Revolving Advance. The agreement of Lenders to
\n ————————————
\nmake any Revolving Advance requested to be made on any date (including, without
\nlimitation, its initial Revolving Advance), is subject to the satisfaction of
\nthe following conditions precedent as of the date such Revolving Advance is
\nmade:<\/p>\n
(i) Representations and Warranties. Each of the representations
\n ——————————
\nand warranties made by Borrower in or pursuant to this Agreement and any related
\nagreements to which it is a party, and each of the representations and
\nwarranties contained in any certificate, document or financial or other
\nstatement furnished at any time under or in connection with this Agreement or
\nany related agreement shall be true and correct in all material respects on and
\nas of such date as if made on and as of such date;<\/p>\n
(ii) No Default. No Event of Default or Default shall have
\n ———-
\noccurred and be continuing on such date, or would exist after giving effect to
\nthe Revolving Advances requested to be made, on such date; provided, however
\n ——– ——-
\nthat Agent on behalf of Lenders in their sole discretion, may continue to make
\nRevolving Advances notwithstanding the existence of an Event of Default or
\nDefault upon the written consent of Required Lenders and that any Revolving
\nAdvances so made shall not be deemed a waiver of any such Event of Default or
\nDefault; and<\/p>\n
(iii) Maximum Revolving Advances. In the case of any Revolving
\n ————————–
\nAdvances requested to be made, after giving effect thereto, the aggregate
\nRevolving Advances shall not exceed the lesser of (x) the Maximum Revolving
\nAmount and (y) the Formula Amount.<\/p>\n
Each request for a Revolving Advance by Borrower hereunder shall constitute a
\nrepresentation and warranty by Borrower as of the date of such Revolving Advance
\nthat the conditions contained in this subsection shall have been satisfied.<\/p>\n
14. Power of Attorney. Borrower hereby appoints Agent or any other Person
\n —————–
\nwhom Agent may designate as Borrower’s attorney, with power to: (i) endorse
\nBorrower’s name on any checks, notes, acceptances, money orders, drafts or other
\nforms of payment or security that may come into Agent’s possession; (ii) sign
\nBorrower’s name on any invoice or bill of lading relating to any Receivables,
\ndrafts against customers, schedules and assignments of Receivables, notices of
\nassignment, financing statements and other public records, verifications of
\naccount and notices to or from customers; (iii) verify the validity, amount or
\nany other matter relating to any<\/p>\n
-34-<\/p>\n
Receivable by mail, telephone, telegraph or otherwise with Customers; (iv) do
\nall things necessary to carry out this Agreement and any Ancillary Agreement;
\nand (v) on or after the occurrence and continuation of an Event of Default,
\nnotify the post office authorities to change the address for delivery of
\nBorrower’s mail to an address designated by Agent, and to receive, open and
\ndispose of all mail addressed to Borrower. Borrower hereby ratifies and approves
\nall acts of the attorney. Neither Agent nor the attorney will be liable for any
\nacts or omissions or for any error of judgment or mistake of fact or law. This
\npower, being coupled with an interest, is irrevocable so long as any Receivable
\nwhich is assigned to Agent or in which Agent has a security interest remains
\nunpaid and until the Obligations have been fully satisfied.<\/p>\n
15. Expenses. Borrower shall pay all of Agent’s and each Lender’s out-of-
\n ——–
\npocket costs and expenses, including without limitation reasonable fees and
\ndisbursements of counsel and appraisers, in connection with the preparation,
\nexecution and delivery of this Agreement and the Ancillary Agreements, and in
\nconnection with the prosecution or defense of any action, contest, dispute, suit
\nor proceeding concerning any matter in any way arising out of, related to or
\nconnected with this Agreement or any Ancillary Agreement. Borrower shall also
\npay Agent’s and each Lender’s out-of-pocket costs and expenses, including
\nwithout limitation reasonable fees and disbursements of counsel, in connection
\nwith (a) the preparation, execution and delivery of any waiver, any amendment
\nthereto or consent proposed or executed in connection with the Transactions, (b)
\nAgent’s obtaining performance of the Obligations under this Agreement and any
\nAncillary Agreements, including, but not limited to, the enforcement or defense
\nof Agent’s security interests, assignments of rights and liens hereunder as
\nvalid perfected security interests, (c) any attempt to inspect, verify, protect,
\ncollect, sell, liquidate or otherwise dispose of any Collateral, and (d) any
\nconsultations in connection with any of the foregoing. Borrower shall also pay
\nAgent’s customary bank charges for all bank services performed or caused to be
\nperformed by Agent for Borrower at Borrower’s request or on Borrower’s behalf.
\nAll such costs and expenses together with all filing, recording and search fees,
\ntaxes and interest payable by Borrower to Agent shall be payable on demand and
\nshall be secured by the Collateral. If any tax by any governmental authority is
\nor may be imposed on or as a result of any transaction between Borrower and
\nAgent which Agent is or may be required to withhold or pay, Borrower agrees to
\nindemnify and hold Agent harmless in respect of such taxes, and Borrower will
\nrepay to Agent the amount of any such taxes which shall be charged to Borrower’s
\naccount; and until Borrower shall furnish Agent with indemnity therefor (or
\nsupply Agent with evidence satisfactory to it that due provision for the payment
\nthereof has been made), Agent may hold without interest any balance standing to
\nBorrower’s credit and Agent shall retain its security interests in any and all
\nCollateral.<\/p>\n
16. Successors and Assigns; Participations; New Lenders. (i) This
\n —————————————————
\nAgreement shall be binding upon and inure to the benefit of Borrower, Agent,
\neach Lender, all future holders of the Revolving Credit Note and their
\nrespective successors and assigns, except that Borrower may not assign or
\ntransfer any of its rights or obligations under this Agreement without the prior
\nwritten consent of Agent and each Lender.<\/p>\n
(ii) Borrower acknowledges that in the regular course of its
\ncommercial banking business one or more Lenders may at any time and from time to
\ntime sell<\/p>\n
-35-<\/p>\n
participating interests in the Revolving Advances to other financial
\ninstitutions (each such purchaser of a participating interest, a “Transferee”).
\nEach Transferee may exercise all rights of payment (including without limitation
\nrights of set-off with respect to the portion of such Revolving Advances held by
\nit or other Obligations payable hereunder as fully as if such Transferee were
\nthe direct holder thereof provided that Borrower shall not be required to pay to
\nany Transferee more than the amount which it would have been required to pay to
\nLenders which granted an interest in its Revolving Advances or other Obligations
\npayable hereunder to such Transferee had such Lender retained such interest in
\nthe Revolving Advances hereunder or other Obligations payable hereunder and in
\nno event shall Borrower be required to pay any such amount arising from the same
\ncircumstances and with respect to the same Revolving Advances or other
\nObligations payable hereunder to both such Lender and such Transferee. Borrower
\nhereby grants to any Transferee a continuing security interest in any deposits,
\nmoneys or other property actually or constructively held by such Transferee as
\nsecurity for the Transferee’s interest in the Revolving Advances.<\/p>\n
(iii) Any Lender may sell, assign or transfer all or any part of
\nits rights under this Agreement and the Ancillary Agreements to one or more
\nadditional banks or financial institutions and one or more additional banks or
\nfinancial institutions may commit to make Revolving Advances hereunder (each a
\n“Purchasing Lender”), in minimum amounts of not less than $3,000,000, pursuant
\nto a Commitment Transfer Supplement, executed by a Purchasing Lender, the
\ntransferor Lender, and Agent and delivered to Agent for recording. Upon such
\nexecution, delivery, acceptance and recording, from and after the transfer
\neffective date determined pursuant to such Commitment Transfer Supplement, (i)
\nPurchasing Lender thereunder shall be a party hereto and, to the extent provided
\nin such Commitment Transfer Supplement, have the rights and obligations of a
\nLender thereunder with a Commitment Percentage as set forth therein, and (ii)
\nthe transferor Lender thereunder shall, to the extent provided in such
\nCommitment Transfer Supplement, be released from its obligations under this
\nAgreement, the Commitment Transfer Supplement creating a novation for that
\npurpose. Such Commitment Transfer Supplement shall be deemed to amend this
\nAgreement to the extent, and only to the extent, necessary to reflect the
\naddition of such Purchasing Lender and the resulting adjustment of the
\nCommitment Percentages arising from the purchase by such Purchasing Lender of
\nall or a portion of the rights and obligations of such transferor Lender under
\nthis Agreement and the Ancillary Agreements. Borrower hereby consents to the
\naddition of such Purchasing Lender and the resulting adjustment of the
\nCommitment Percentages arising from the purchase by such Purchasing Lender of
\nall or a portion of the rights and obligations of such transferor Lender under
\nthis Agreement and the Ancillary Agreements. Borrower shall execute and deliver
\nsuch further documents and do such further acts and things in order to
\neffectuate the foregoing.<\/p>\n
(iv) Agent shall maintain at its address a copy of each
\nCommitment Transfer Supplement delivered to it and a register (the “Register”)
\nfor the recordation of the names and addresses of the Revolving Advances owing
\nto each Lender from time to time. The entries in the Register shall be
\nconclusive, in the absence of manifest error, and Borrower, Agent and Lenders
\nmay treat each Person whose name is recorded in the Register as the owner of the
\nRevolving Advance recorded therein for the purposes of this Agreement. The
\nRegister shall be available for inspection by Borrower or any Lender at any
\nreasonable time and from time to time<\/p>\n
-36-<\/p>\n
upon reasonable prior notice. Agent shall receive a fee in the amount of $3,000
\npayable by the applicable Purchasing Lender upon the effective date of each
\ntransfer or assignment to such Purchasing Lender.<\/p>\n
(v) Borrower authorizes each Lender to disclose to any
\nTransferee or Purchasing Lender and any prospective Transferee or Purchasing
\nLender any and all financial information in such Lender’s possession concerning
\nBorrower which has been delivered to such Lender by or on behalf of Borrower
\npursuant to this Agreement or in connection with such Lender’s credit evaluation
\nof Borrower.<\/p>\n
17. Waivers. Borrower waives presentment and protest of any instrument and
\n ——-
\nnotice thereof, notice of default and all other notices to which Borrower might
\notherwise be entitled.<\/p>\n
18. Term of Agreement. This Agreement shall continue in full force and
\n —————–
\neffect until the expiration of the Term. Borrower may terminate this Agreement
\nat any time upon ninety (90) days’ prior written notice upon payment in full of
\nthe Obligations. In the event that the Obligations are prepaid in full prior to
\neighteen months from the Closing Date (the “Prepayment Period”), Borrower shall
\npay an early termination fee in an amount equal to three percent (3%) of the
\nMaximum Revolving Amount. Notwithstanding the foregoing, in the event that the
\nObligations are prepaid in full prior to the expiration of the Prepayment Period
\nsolely as a result of the occurrence and declaration of an Event of Default
\nunder Section 19(vii) or (xiv) and the acceleration of the Obligations in
\nconnection therewith, Borrower shall not be obligated to pay an early
\ntermination fee hereunder.<\/p>\n
19. Events of Default. The occurrence of any of the following shall
\n —————–
\nconstitute an Event of Default:<\/p>\n
(i) failure to make payment of any of the Obligations when
\nrequired hereunder;<\/p>\n
(ii) failure to pay any taxes when due unless such taxes are
\nbeing contested in good faith by appropriate proceedings and with respect to
\nwhich adequate reserves have been provided on Borrower’s books;<\/p>\n
(iii) (a) failure of Borrower to perform, keep or observe any
\nterm, provision, condition or covenant contained in Sections 11, 12(f)(i) or
\n12(m)(i) hereof which is not cured within fifteen (15) days from the occurrence
\nof such failure or (b) failure of Borrower to perform under and\/or committing
\nany breach of any other term, provision, condition or covenant contained in this
\nAgreement or any Ancillary Agreement or any other agreement between Borrower,
\nAgent and any Lender.<\/p>\n
(iv) occurrence of a default under any agreement to which
\nBorrower or Realty is a party with third parties which has a material adverse
\naffect upon Borrower’s or Realty’s business, operations, property or condition
\n(financial or otherwise) all leases for any premises where Borrower’s books and
\nrecords are located;<\/p>\n
-37-<\/p>\n
(v) any representation, warranty or statement made by Borrower
\nhereunder, in any Ancillary Agreement, any certificate, statement or document
\ndelivered pursuant to the terms hereof, or in connection with the Transactions
\nshould at any time be false or misleading in any material respect;<\/p>\n
(vi) an attachment or levy is made upon Borrower’s assets
\nhaving an aggregate value in excess of $100,000, or a judgment is rendered
\nagainst Borrower or any of Borrower’s property involving a liability of more
\nthan $100,000, which shall not have been vacated, discharged, stayed or bonded
\npending appeal within thirty (30) days from the entry thereof;<\/p>\n
(vii) any change in Borrower’s condition or affairs (financial
\nor otherwise) which in Agent’s opinion impairs the Collateral or the ability of
\nany Borrower to perform its Obligations;<\/p>\n
(viii) any lien created hereunder or under any Ancillary
\nAgreement for any reason ceases to be or is not a valid and perfected lien
\nhaving a first priority interest;<\/p>\n
(ix) if Borrower shall (i) apply for or consent to the
\nappointment of, or the taking of possession by, a receiver, custodian, trustee
\nor liquidator of itself or of all or a substantial part of its property, (ii)
\nmake a general assignment for the benefit of creditors, (iii) commence a
\nvoluntary case under the federal bankruptcy laws (as now or hereafter in
\neffect), (iv) be adjudicated a bankrupt or insolvent, (v) file a petition
\nseeking to take advantage of any other law providing for the relief of debtors,
\n(vi) acquiesce to, or fail to have dismissed, within thirty (30) days, (x) any
\npetition filed against it in any involuntary case under such bankruptcy laws, or
\n(y) any proceeding or petition seeking the appointment of a receiver, custodian,
\ntrustee or liquidator of itself or all or a substantial part of its property, or
\n(vii) take any action for the purpose of effecting any of the foregoing;<\/p>\n
(x) Borrower shall admit in writing its inability, or be
\ngenerally unable to pay its debts as they become due or cease operations of its
\npresent business;<\/p>\n
(xi) any Affiliate or any Subsidiary shall (i) apply for or
\nconsent to the appointment of, or the taking possession by, a receiver,
\ncustodian, trustee or liquidator of itself or of all or a substantial part of
\nits property, (ii) admit in writing its inability, or be generally unable, to
\npay its debts as they become due or cease operations of its present business,
\n(iii) make a general assignment for the benefit of creditors, (iv) commence a
\nvoluntary case under the federal bankruptcy laws (as now or hereafter in
\neffect), (v) be adjudicated a bankrupt or insolvent, (vi) file a petition
\nseeking to take advantage of any other law providing for the relief of debtors,
\n(vii) acquiesce to, or fail to have dismissed, within thirty (30) days, (x) any
\npetition filed against it in any involuntary case under such bankruptcy laws, or
\n(y) any proceeding or petition seeking the appointment of a receiver, custodian,
\ntrustee or liquidator of itself or all or a substantial part of its property or
\n(viii) take any action for the purpose of effecting any of the foregoing;<\/p>\n
(xii) Borrower directly or indirectly sells, assigns, transfers,
\nconveys, or suffers or permits to occur any sale, assignment, transfer or
\nconveyance of any assets of<\/p>\n
-38-<\/p>\n
Borrower or any interest therein, except for the sale of Equipment provided,
\n ——–
\nthat such sale could not reasonably be expected to have a material adverse
\naffect upon Borrower’s business operations, property or condition (financial or
\notherwise);<\/p>\n
(xiii) Borrower fails to operate in the ordinary course of
\nbusiness;<\/p>\n
(xiv) Agent or any Lender shall in good faith deem itself
\ninsecure or unsafe or shall fear diminution in value, removal or waste of the
\nCollateral;<\/p>\n
(xv) a default by Borrower or Realty in the payment, when due,
\nof any principal of or interest on any indebtedness for money borrowed in excess
\nof $100,000 if such default results in the acceleration of such indebtedness; or<\/p>\n
(xvi) any Change of Ownership.<\/p>\n
20. Remedies. Upon the occurrence of an Event of Default pursuant to
\n ——–
\nSection l9(ix) herein, all Obligations shall be immediately due and payable and
\nthis Agreement shall be deemed terminated; upon the occurrence and continuation
\nof any other of the Events of Default, Agent shall have the right to demand
\nrepayment in full of all Obligations, whether or not otherwise due. Until all
\nObligations have been fully satisfied, Agent shall retain its security interest
\nin all Collateral. Agent shall have, in addition to all other rights provided
\nherein, the rights and remedies of a secured party under the Uniform Commercial
\nCode, and under other applicable law, all other legal and equitable rights to
\nwhich Agent may be entitled, including without limitation, the right to take
\nimmediate possession of the Collateral, to require Borrower to assemble the
\nCollateral, at Borrower’s expense, and to make it available to Agent at a place
\ndesignated by Agent which is reasonably convenient to both parties and to enter
\nany of the premises of Borrower or wherever the Collateral shall be located,
\nwith or without force or process of law, and to keep and store the same on said
\npremises until sold (and if said premises be the property of Borrower, Borrower
\nagrees not to charge Agent or Lenders for storage thereof for a period up to at
\nleast sixty (60) days after sale or disposition of said Collateral). Further,
\nAgent may, at any time or times after default by Borrower, sell and deliver all
\nCollateral held by or for Agent at public or private sale for cash, upon credit
\nor otherwise, at such prices and upon such terms as Agent, in Agent’s sole
\ndiscretion, deems advisable or Agent may otherwise recover upon the Collateral
\nin any commercially reasonable manner as Agent, in its sole discretion, deems
\nadvisable. Except as to that part of the Collateral which is perishable or
\nthreatens to decline speedily in nature or is of a type customarily sold on a
\nrecognized market, the requirement of reasonable notice shall be met if such
\nnotice is mailed postage prepaid to Borrower at Borrower’s address as shown in
\nAgent’s records, at least ten (10) days before the time of the event of which
\nnotice is being given. Agent may be the purchaser at any sale, if it is public.
\nIn connection with the exercise of the foregoing remedies, Agent is granted
\npermission to use all of Borrower’s trademarks, tradenames, tradestyles,
\npatents, patent applications, licenses, franchises and other proprietary rights
\nwhich are used in connection with Inventory for the purpose of disposing of such
\nInventory. The proceeds of sale shall be applied first to all costs and expenses
\nof sale, including reasonable attorneys’ fees, and second to the payment (in
\nwhatever order Agent elects) of all Obligations. Agent and Lenders will return
\nany excess to<\/p>\n
-39-<\/p>\n
Borrower or as otherwise required by law and Borrower shall remain liable to
\nAgent and Lenders for any deficiency.<\/p>\n
21. Waiver; Cumulative Remedies. Failure by Agent or Lenders to exercise
\n —————————
\nany right, remedy or option under this Agreement or any supplement hereto or any
\nother agreement between Borrower, Agent and any Lender or delay by Agent or any
\nLender in exercising the same, will not operate as a waiver; no waiver by Agent
\nor Lenders will be effective unless it is in writing and then only to the extent
\nspecifically stated. Agent and Lenders’ rights and remedies under this Agreement
\nwill be cumulative and not exclusive of any other right or remedy which Agent or
\nLenders may have.<\/p>\n
22. Application of Payments. Borrower irrevocably waives the right to
\n ———————–
\ndirect the application of any and all payments at any time or times hereafter
\nreceived by Agent or Lenders from or on Borrower’s behalf and Borrower hereby
\nirrevocably agrees that Agent shall have the continuing exclusive right to apply
\nand reapply any and all payments received at any time or times hereafter against
\nBorrower’s Obligations hereunder in such manner as Agent may deem advisable
\nnotwithstanding any entry by Agent upon any of Agent’s books and records.<\/p>\n
23. Establishment of a Lockbox Account, Dominion Account. All proceeds of
\n —————————————————-
\nCollateral shall, at the direction of Agent, be deposited by Borrower into a
\nlockbox account, dominion account or such other “blocked account” (“Blocked
\nAccounts”) as Agent may require pursuant to an arrangement with the Bank.
\nBorrower shall issue to the Bank, an irrevocable letter of instruction directing
\nsaid bank to transfer such funds so deposited to Agent, either to any account
\nmaintained by Agent at said bank or by wire transfer to appropriate account(s)
\nof Agent. All funds deposited in such Blocked Account shall immediately become
\nthe property of Agent and Borrower shall obtain the agreement by the Bank to
\nwaive any offset rights against the funds so deposited. Agent assumes no
\nresponsibility for such Blocked Account arrangement, including without
\nlimitation, any claim of accord and satisfaction or release with respect to
\ndeposits accepted by any bank thereunder. Alternatively, Agent may establish
\ndepository accounts (“Depository Accounts”) in the name of Agent at a bank or
\nbanks for the deposit of such funds and Borrower shall deposit all proceeds of
\nCollateral or cause same to be deposited, in kind, in such Depository Accounts
\nof Agent in lieu of depositing same to the Blocked Accounts.<\/p>\n
24. Revival. Borrower further agrees that to the extent Borrower makes a
\n ——-
\npayment or payments to Agent, which payment or payments or any part thereof are
\nsubsequently invalidated, declared to be fraudulent or preferential, set aside
\nand\/or required to be repaid to a trustee, receiver or any other party under any
\nbankruptcy act, state or federal law, common law or equitable cause, then, to
\nthe extent of such payment or repayment, the obligation or part thereof intended
\nto be satisfied shall be revived and continued in full force and effect as if
\nsaid payment had not been made.<\/p>\n
25. Regarding Agent.
\n ————— <\/p>\n
(i) Appointment. Each Lender hereby designates IBJS to act as
\n ———–
\nAgent for such Lender under this Agreement and the Ancillary Agreements. Each
\nLender hereby irrevocably authorizes Agent to take such action on its behalf
\nunder the provisions of this<\/p>\n
-40-<\/p>\n
Agreement and the Ancillary Agreements and to exercise such powers and to
\nperform such duties hereunder and thereunder as are specifically delegated to or
\nrequired of Agent by the terms hereof and thereof and such other powers as are
\nreasonably incidental thereto and Agent shall hold all Collateral, payments of
\nprincipal and interest, fees (except the fees set forth in Sections 5(b)(iii),
\n5(b)(iv) and 5(b)(v), charges and collections (without giving effect to any
\ncollection days) received pursuant to this Agreement, for the ratable benefit of
\nLenders. Agent may perform any of its duties hereunder by or through its agents
\nor employees. As to any matters not expressly provided for by this Agreement
\n(including without limitation, collection of the Note) Agent shall not be
\nrequired to exercise any discretion or take any action, but shall be required to
\nact or to refrain from acting (and shall be fully protected in so acting or
\nrefraining from acting) upon the instructions of the Required Lenders, and such
\ninstructions shall be binding; provided, however, that Agent shall not be
\n ——– ——-
\nrequired to take any action which exposes Agent to liability or which is
\ncontrary to this Agreement or the Ancillary Agreements or applicable law unless
\nAgent is furnished with an indemnification reasonably satisfactory to Agent with
\nrespect thereto.<\/p>\n
(ii) Nature of Duties. Agent shall have no duties or
\n —————-
\nresponsibilities except those expressly set forth in this Agreement and the
\nAncillary Agreements. Neither Agent nor any of its officers, directors,
\nemployees or agents shall be (i) liable for any action taken or omitted by them
\nas such hereunder or in connection herewith, unless caused by their gross
\nnegligence (but not mere negligence) or willful misconduct, or (ii) responsible
\nin any manner for any recitals, statements, representations or warranties made
\nby Borrower or any officer thereof contained in this Agreement, or in any of the
\nAncillary Agreements or in any certificate, report, statement or other document
\nreferred to or provided for in, or received by Agent under or in connection
\nwith, this Agreement or any of the Ancillary Agreements or for the value,
\nvalidity, effectiveness, genuineness, enforceability or sufficiency of this
\nAgreement, or any of the Ancillary Agreements or for any failure of Borrower to
\nperform its obligations hereunder. Agent shall not be under any obligation to
\nany Lender to ascertain or to inquire as to the observance or performance of any
\nof the agreements contained in, or conditions of, this Agreement or any of the
\nAncillary Agreements, or to inspect the properties, books or records of
\nBorrower. The duties of Agent as respects the Revolving Advances to Borrower
\nshall be mechanical and administrative in nature; Agent shall not have by reason
\nof this Agreement a fiduciary relationship in respect of any Lender; and nothing
\nin this Agreement, expressed or implied, is intended to or shall be so construed
\nas to impose upon Agent any obligations in respect of this Agreement except as
\nexpressly set forth herein.<\/p>\n
(iii) Lack of Reliance on Agent and Resignation. Independently
\n —————————————–
\nand without reliance upon Agent or any other Lender, each Lender has made and
\nshall continue to make (i) its own independent investigation of the financial
\ncondition and affairs of Borrower in connection with the making and the
\ncontinuance of the Revolving Advances hereunder and the taking or not taking of
\nany action in connection herewith, and (ii) its own appraisal of the
\ncreditworthiness of Borrower. Agent shall have no duty or responsibility, either
\ninitially or on a continuing basis, to provide any Lender with any credit or
\nother information with respect thereto, whether coming into its possession
\nbefore making of the Revolving Advances or at any time or times thereafter
\nexcept as shall be provided by Borrower pursuant to the terms hereof. Agent<\/p>\n
-41-<\/p>\n
shall not be responsible to any Lender for any recitals, statements,
\ninformation, representations or warranties herein or in any agreement, document,
\ncertificate or a statement delivered in connection with or for the execution,
\neffectiveness, genuineness, validity, enforceability, collectability or
\nsufficiency of this Agreement or any Ancillary Agreement, or of the financial
\ncondition of Borrower, or be required to make any inquiry concerning either the
\nperformance of observance of any of the terms, provisions or conditions of this
\nAgreement, the Revolving Credit Note, the Ancillary Agreements or the financial
\ncondition of any Borrower, or the existence of any Event of Default or any
\nDefault.<\/p>\n
Agent may resign on sixty (60) days’ written notice to each of Lenders and
\nBorrower and upon such resignation, the Required Lenders will promptly designate
\na successor Agent reasonably satisfactory to Borrower.<\/p>\n
Any such successor Agent shall succeed to the rights, powers and duties of
\nAgent, and the term “Agent” shall mean such successor agent effective upon its
\nappointment, and the former Agent’s rights, powers and duties as Agent shall be
\nterminated, without any other or further act or deed on the part of such former
\nAgent. After any Agent’s resignation as Agent, the provisions of this Section 25
\nshall inure to its benefit as to any actions taken or omitted to be taken by it
\nwhile it was Agent under this Agreement.<\/p>\n
(iv) Certain Rights of Agent. If Agent shall request
\n ———————–
\ninstructions from Lenders with respect to any act or action (including failure
\nto act) in connection with this Agreement or any Ancillary Agreement, Agent
\nshall be entitled to refrain from such act or taking such action unless and
\nuntil Agent shall have received instructions from the Required Lenders; and
\nAgent shall not incur liability to any Person by reason of so refraining.
\nWithout limiting the foregoing, Lenders shall not have any right of action
\nwhatsoever against Agent as a result of its acting or refraining from acting
\nhereunder in accordance with the instructions of the Required Lenders.<\/p>\n
(v) Reliance. Agent shall be entitled to rely, and shall be
\n ——–
\nfully protected in relying, upon any note, writing, resolution, notice,
\nstatement, certificate, telex, teletype or telecopier message, cablegram, order
\nor other document or telephone message believed by it to be genuine and correct
\nand to have been signed, sent or made by the proper person or entity, and, with
\nrespect to all legal matters pertaining to this Agreement and the Ancillary
\nAgreements and its duties hereunder, upon advice of counsel selected by it.
\nAgent may employ agents and attorneys-in-fact and shall not be liable for the
\ndefault or misconduct of any such agents or attorneys-in-fact selected by Agent
\nwith reasonable care.<\/p>\n
(vi) Notice of Default. Agent shall not be deemed to have
\n —————–
\nknowledge or notice of the occurrence of any Default or Event of Default
\nhereunder or under the Ancillary Agreements, unless Agent has received notice
\nfrom a Lender or Borrower referring to this Agreement or the Ancillary
\nAgreements, describing such Default or Event of Default and stating that such
\nnotice is a “notice of default”. In the event that Agent receives such a notice,
\nAgent shall give notice thereof to Lenders. Agent shall take such action with
\nrespect to such Default or Event of Default as shall be reasonably directed by
\nthe Required Lenders; provided, that, unless
\n ——– —- <\/p>\n
-42-<\/p>\n
and until Agent shall have received such directions, Agent may (but shall not be
\nobligated to) take such action, or refrain from taking such action, with respect
\nto such Default or Event of Default as it shall deem advisable in the best
\ninterests of Lenders.<\/p>\n
(vii) Indemnification. To the extent Agent is not reimbursed and
\n —————
\nindemnified by Borrower, each Lender will reimburse and indemnify Agent in
\nproportion to its respective portion of the Revolving Advances (or, if no
\nRevolving Advances are outstanding, according to its Commitment Percentage),
\nfrom and against any and all liabilities, obligations, losses, damages,
\npenalties, actions, judgments, suits, costs, expenses or disbursements of any
\nkind or nature whatsoever which may be imposed on, incurred by or asserted
\nagainst Agent in performing its duties hereunder, or in any way relating to or
\narising out of this Agreement or any Ancillary Agreement; provided that, Lenders
\n ——– —-
\nshall not be liable for any portion of such liabilities, obligations, losses,
\ndamages, penalties, actions, judgments, suits, costs, expenses or disbursements
\nresulting from Agent’s gross negligence (but not mere negligence) or willful
\nmisconduct.<\/p>\n
(viii) Agent in its Individual Capacity. With respect to the
\n ——————————–
\nobligation of Agent to lend under this Agreement, the Revolving Advances made by
\nit shall have the same rights and powers hereunder as any other Lender and as if
\nit were not performing the duties as Agent specified herein; and the term
\n“Lender” or any similar term shall, unless the context clearly otherwise
\nindicates, include Agent in its individual capacity as a Lender. Agent may
\nengage in business with Borrower as if it were not performing the duties
\nspecified herein, and may accept fees and other consideration from Borrower for
\nservices in connection with this Agreement or otherwise without having to
\naccount for the same to Lenders.<\/p>\n
(ix) Delivery of Documents. To the extent Agent receives
\n ———————
\nfinancial statements from Borrower pursuant to the terms of this Agreement,
\nAgent will promptly furnish such financial statements to Lenders.<\/p>\n
(x) Borrower’s Undertaking to Agent. Without prejudice to its
\n ——————————-
\nobligations to Agent or Lenders under the other provisions of this Agreement,
\nBorrower hereby undertakes with Agent to pay to Agent from time to time on
\ndemand all amounts from time to time due and payable by it for the account of
\nAgent or Lenders or any of them pursuant to this Agreement to the extent not
\nalready paid. Any payment made pursuant to any such demand shall pro tanto
\n — —–
\nsatisfy the Borrower’s obligations to make payments for the account of Lenders
\nor the relevant one or more of them pursuant to this Agreement.<\/p>\n
26. Notice. Any notice or request hereunder may be given to Borrower or to
\n ——
\nAgent or any Lender at their respective addresses set forth below or at such
\nother address as may hereafter be specified in a notice designated as a notice
\nof change of address under this Section. Any notice or request hereunder shall
\nbe given by (a) hand delivery, (b) overnight courier, (c) registered or
\ncertified mail, return receipt requested, (d) telex or telegram, subsequently
\nconfirmed by registered or certified mail, or (e) telecopy to the number set out
\nbelow (or such other number as may hereafter specified in a notice designated as
\na notice of change of address) with telephone communication to a duly authorized
\nofficer of the recipient confirming its receipt<\/p>\n
-43-<\/p>\n
as subsequently confirmed by registered or certified mail. Any notice or other
\ncommunication required or permitted pursuant to this Agreement shall be deemed
\ngiven (a) when personally delivered to any officer of the party to whom it is
\naddressed, (b) on the earlier of actual receipt thereof or three (3) days
\nfollowing posting thereof by certified or registered mail, postage prepaid, or
\n(c) upon actual receipt thereof when sent by a recognized overnight delivery
\nservice or (d) upon actual receipt thereof when sent by telecopier to the number
\nset forth below, in each case addressed to each party at its address set forth
\nbelow or at such other address as has been furnished in writing by a party to
\nthe other by like notice:<\/p>\n
(A) If to Agent or IBJS at IBJ Schroder Business Credit Corporation
\n One State Street
\n New York, New York 10004
\n Attention: Wing Louie
\n Telephone: (212) 858-
\n Telecopier: (212) 858-2768<\/p>\n
with a copy to: Hahn & Hessen LLP
\n 350 Fifth Avenue
\n New York, New York 10118
\n Attention: Daniel J. Krauss, Esq.
\n Telephone: (212) 736-1000
\n Telecopier: (212) 594-7167<\/p>\n
(B) If to a Lender other than Agent, as specified on the signature pages
\nhereof.<\/p>\n
(C) If to Borrower, at: 1241 East Main Street
\n P.O. Box 3857
\n Stamford, Connecticut 06902
\n Attention: Douglas G. Sages, Executive Vice
\n President and CFO
\n Telephone: (203) 352-8615
\n Telecopier: (203) 359-5115<\/p>\n
with a copy to: Robinson & Cole
\n 1 Commercial Plaza
\n Hartford, Connecticut 06103
\n Attention: John Lynch, Esq.
\n Telephone: (860)275-8242
\n Telecopier: (860) 275-8299<\/p>\n
27. Governing Law and Waiver of Jury Trial. THIS AGREEMENT SHALL BE
\n ————————————–
\nGOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE
\nOF NEW YORK. AGENT AND EACH LENDER SHALL HAVE THE RIGHTS AND REMEDIES OF A
\nSECURED PARTY UNDER APPLICABLE LAW INCLUDING, BUT NOT LIMITED TO, THE UNIFORM
\nCOMMERCIAL CODE OF NEW<\/p>\n
-44-<\/p>\n
YORK. BORROWER AGREES THAT ALL ACTIONS AND RELATING DIRECTLY OR INDIRECTLY TO
\nTHIS AGREEMENT OR ANY ANCILLARY AGREEMENT OR ANY OTHER OBLIGATIONS SHALL BE
\nLITIGATED IN THE FEDERAL DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK OR,
\nAT AGENT’S OPTION, IN ANY OTHER COURTS LOCATED IN NEW YORK STATE OR ELSEWHERE AS
\nAGENT MAY SELECT AND THAT SUCH COURTS ARE CONVENIENT FORUMS AND BORROWER SUBMITS
\nTO THE PERSONAL JURISDICTION OF SUCH COURTS. BORROWER WAIVES PERSONAL SERVICE OF
\nPROCESS AND CONSENTS THAT SERVICE OF PROCESS UPON BORROWER MAY BE MADE BY
\nCERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO BORROWER AT
\nBORROWER’S ADDRESS APPEARING ON AGENT’S RECORDS, AND SERVICE SO MADE SHALL BE
\nDEEMED COMPLETED TWO (2) DAYS AFTER THE SAME SHALL HAVE BEEN SO MAILED. EACH
\nPARTY HERETO WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
\nBETWEEN BORROWER, AGENT AND ANY LENDER AND BORROWER WAIVES THE RIGHT TO ASSERT
\nIN ANY ACTION OR PROCEEDING INSTITUTED BY AGENT OR ANY LENDER WITH REGARD TO
\nTHIS AGREEMENT OR ANY OF THE OBLIGATIONS ANY OFFSETS OR COUNTERCLAIMS WHICH IT
\nMAY HAVE.<\/p>\n
28. Indemnity. Borrower shall indemnify Agent, any Issuer and each Lender
\n ———
\nand each of their respective officers, directors, employees, and agents from and
\nagainst any and all liabilities, obligations, losses, damages, penalties,
\nactions, judgments, suits, costs, expenses and disbursements of any kind or
\nnature whatsoever (including, without limitation, fees and disbursements of
\ncounsel) which may be imposed on, incurred by, or asserted against Agent or any
\nLender in any litigation, proceeding or investigation instituted or conducted by
\nany governmental agency or instrumentality or any other Person with respect to
\nany aspect of, or any transaction contemplated by, or referred to in, or any
\nmatter related to, this Agreement, whether or not Agent or any Lender is a party
\nthereto, except to the extent that any of the foregoing arises out of the
\nwillful misconduct of the party being indemnified.<\/p>\n
29. Limitation of Liability. Borrower acknowledges and understands that in
\n ———————–
\norder to assure repayment of the Obligations hereunder Agent and Lenders may be
\nrequired to exercise any and all of Agent’s and Lenders’ rights and remedies
\nhereunder and agrees that neither Agent nor any Lender nor any of Agent’s or any
\nLender’s agents shall be liable for acts taken or omissions made in connection
\nherewith or therewith except for actual bad faith.<\/p>\n
30. Entire Understanding. This Agreement and the Ancillary Agreements
\n ——————–
\ncontain the entire understanding between Borrower, Agent and Lenders and any
\npromises, representations, warranties or guarantees not herein contained shall
\nhave no force and effect unless in writing, signed by Borrower’s, Agent’s and
\neach Lender’s respective officers. Neither this Agreement, the Ancillary
\nAgreements, nor any portion or provisions thereof may be changed, modified,
\namended, waived, supplemented, discharged, cancelled or terminated orally or by
\nany course of dealing, or in any manner other than by an agreement in writing,
\nsigned by the party to be charged.<\/p>\n
-45-<\/p>\n
31. Severability. Wherever possible each provision of this Agreement or
\n ————
\nthe Ancillary Agreements shall be interpreted in such manner as to be effective
\nand valid under applicable law, but if any provision of this Agreement or the
\nAncillary Agreements shall be prohibited by or invalid under applicable law such
\nprovision shall be ineffective to the extent of such prohibition or invalidity,
\nwithout invalidating the remainder of such provision or the remaining provisions
\nthereof.<\/p>\n
32. Captions. All captions are and shall be without substantive meaning or
\n ——–
\ncontent of any kind whatsoever.<\/p>\n
33. Counterparts. This Agreement may be executed in one or more
\n ————
\ncounterparts, all of which when taken together shall constitute one and the same
\nagreement.<\/p>\n
34. Construction. The parties acknowledge that each party and its counsel
\n ————
\nhave reviewed this Agreement and that the normal rule of construction to the
\neffect that any ambiguities are to be resolved against the drafting party shall
\nnot be employed in the interpretation of this Agreement or any amendments,
\nschedules or exhibits thereto.<\/p>\n
35. Publicity. Borrower hereby authorizes Agent and Lenders to make
\n ———
\nappropriate announcements of the financial arrangement entered into among
\nBorrower, Agent and Lenders, including, without limitation, announcements which
\nare commonly known as tombstones, in such publications and to such selected
\nparties as Agent or Lenders shall in their sole and absolute discretion deem
\nappropriate.<\/p>\n
-46-<\/p>\n
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and
\nyear first above written.<\/p>\n
TITAN SPORTS INC.<\/p>\n
By:_________________________________
\n Name: Douglas G. Sages
\n Title: Executive Vice President – Finance
\n Chief Financial Officer<\/p>\n
IBJ SCHRODER BUSINESS CREDIT
\n CORPORATION, as a Lender and as Agent<\/p>\n
By:_________________________________
\n Name:
\n Title:<\/p>\n
Commitment Percentage: 100%<\/p>\n
OMITTED EXHIBITS, SHEET AND SCHEDULES<\/p>\n
\n\n
\nEXHIBIT 1(a): Commitment Transfer Supplement<\/p>\nEXHIBIT 1(b): Revolving Credit Note<\/p>\n
EXHIBIT 13(ix): Financial Condition Certificate<\/p>\n
SHEET E: Titan Sports Combined Financial
\n Statements Balance Sheet as of
\n November 21, 1997<\/p>\n
SCHEDULE 1(a): Permitted Liens<\/p>\n
SCHEDULE 12(a): Qualification<\/p>\n
SCHEDULE 12(b): Subsidiaries<\/p>\n
SCHEDULE 12(e): Books and Records<\/p>\n
SCHEDULE 12(g): Plans<\/p>\n
SCHEDULE 12(i): Litigation<\/p>\n
SCHEDULE 12(l): Federal Tax Identification Number<\/p>\n
SCHEDULE 12(n): Permitted Indebtedness<\/p>\n
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