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LOAN AND SECURITY AGREEMENT
BY AND AMONG
THE 3DO COMPANY, A CALIFORNIA CORPORATION,
THE 3DO COMPANY, A DELAWARE CORPORATION
AND
3DO EUROPE, LTD.
AS THE OBLIGORS,
AND
THE LENDERS THAT ARE SIGNATORIES HERETO
AS THE LENDERS,
AND
FOOTHILL CAPITAL CORPORATION
AS THE ARRANGER AND ADMINISTRATIVE AGENT,
DATED AS OF APRIL 6, 2000
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<PAGE>
LOAN AND SECURITY AGREEMENT
THIS LOAN SECURITY AGREEMENT (this "AGREEMENT"), is entered
into as of April 6, 2000, by and among, on the one hand, the lenders
identified on the signature pages hereof (such lenders, together with their
respective successors and assigns, are referred to hereinafter each
individually as a "LENDER" and collectively as the "LENDERS"), FOOTHILL
CAPITAL CORPORATION, a California corporation, as the arranger and
administrative agent for the Lenders (in such capacity, together with its
successors, if any, "AGENT"), and, on the other hand, THE 3DO COMPANY, a
California corporation ("BORROWER") with its chief executive office located
at 600 Galveston Drive, Redwood City, California 94063, THE 3DO COMPANY, a
Delaware corporation ("PARENT") with its chief executive office located at
600 Galveston Drive, Redwood City, California 94063, and 3DO EUROPE, LTD., a
company incorporated under the laws of England ("UK SUB"), with its
registered office located at 21-23 Mossop Street, London, SW3 2LY, Great
Britain, and with its principal business office at 21-23 Mossop Street,
London, SW3 2LY, Great Britain.
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS.
As used in this Agreement, the following terms shall have
the following definitions:
"ACCOUNT DEBTOR" means any Person who is or who may become
obligated under, with respect to, or on account of, an Account, a UK Sub
Account, a General Intangible, a UK General Intangible, or chattel paper.
"ACCOUNTS" means all of Borrower's "accounts" (as that term is
defined in the Code), and any and all credit insurance, guaranties, or
security therefor.
"ACQUIRED INDEBTEDNESS" means, with respect to any Permitted
Acquisition, Indebtedness of a Person existing at the time such Person
becomes a Subsidiary of Borrower, and not incurred in connection with, or in
anticipation of, such Person becoming a Subsidiary.
"ACQUISITION" means any purchase or other acquisition by Borrower of
the Assets or Stock of any other Person (including the formation or
capitalization of a Subsidiary), other than the purchase of Inventory or
Equipment in the ordinary course of business.
"ADVANCES" has the meaning set forth in SECTION 2.1.
"AFFILIATE" means, as applied to any Person, any other Person who,
directly or indirectly, controls, is controlled by, or is under common
control with, such Person. For purposes of this definition, "control" means
the possession, directly or indirectly, of
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the power to direct the management and policies of a Person, whether through
the ownership of Stock, by contract, or otherwise; PROVIDED, HOWEVER, that,
in any event: (a) any Person which owns directly or indirectly ten percent
(10%) or more of the securities having ordinary voting power for the election
of directors or other members of the governing body of a Person or ten
percent (10%) or more of the partnership or other ownership interests of a
Person (other than as a limited partner of such Person) shall be deemed to
control such Person; (b) each director or officer of a Person shall be deemed
to be an Affiliate of such Person; and (c) each partnership or joint venture
in which a Person is a partner or joint venturer shall be deemed to be an
Affiliate of such Person.
"AGENT" means Foothill in its capacity as agent for the Lenders
hereunder, and any successor thereto.
"AGENT'S ACCOUNT" shall mean an account at a bank designated by
Agent from time to time as the account into which Borrower shall make all
payments to Agent for the benefit of the Lender Group and into which the
Lender Group shall make all payments to Agent under this Agreement and the
other Loan Documents. Initially, until Agent notifies Borrower and the Lender
Group to the contrary, the Agent's Account shall be that certain deposit
account bearing account number 323-266193 and maintained by Agent with The
Chase Manhattan Bank, N.A., 4 New York Plaza, 15th Floor, New York, New York
10004, ABA #021-000-021.
"AGENT ADVANCES" has the meaning set forth in SECTION 2.4(e)(i).
"AGENT-RELATED PERSONS" means Agent together with its Affiliates,
officers, directors, employees, counsel, and agents.
"AGREED CURRENCY" means (i) Dollars, (ii) so long as such currencies
remain Eligible Currencies, the lawful currency of each Specified State and
the Euro, and (iii) any other Eligible Currency which the Borrower requests
the Agent to include as an Agreed Currency hereunder and which is acceptable
to the Agent.
"AGREEMENT" has the meaning set forth in the preamble hereto.
"APPLICABLE BASE RATE MARGIN" means, subject to adjustment if and as
provided below, the following margin based upon Tangible Net Worth for the
applicable period ending with the most recently ended fiscal quarter (as
shown on the Compliance Certificate delivered pursuant to SECTION
6.3(a)(iii)) (for the fractional calendar commencing on the Closing Date and
ending on June 30, 2000, the Applicable Base Rate Margin shall be 0.75
percentage point):
<TABLE>
<CAPTION>
-------------------------------------- --------------------------------------
TANGIBLE NET WORTH FOR APPLICABLE BASE RATE MARGIN
PRIOR FISCAL QUARTER FOR CURRENT CALENDAR QUARTER
-------------------------------------- --------------------------------------
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<S> <C>
equal to or greater than $63,000,000 0.25 percentage point
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equal to or greater than $48,000,000 0.75 percentage point
and less than $63,000,000
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less than $48,000,000 1.25 percentage points
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</TABLE>
In the event of the delivery of a Compliance Certificate showing an increase
or decrease in Tangible Net Worth which requires a change in the Applicable
Base Rate Margin, the change in the Applicable Base Rate Margin shall be
effective from the first day of the calendar month immediately following
receipt of the Compliance Certificate (PROVIDED that the Compliance
Certificate is received by the Agent no later than 11:00 a.m., California
time, at least 1 Business Day prior to the first day of such calendar month)
until the next such date on which the Applicable Base Rate Margin is subject
to change following the delivery of (or failure to deliver) a Compliance
Certificate showing an increase or decrease in Tangible Net Worth which
requires a change in the Applicable Base Rate Margin. The failure to deliver
any Compliance Certificate by the date required hereunder (after giving
effect to any applicable grace period) shall automatically cause the
Applicable Base Rate Margin to be the maximum per annum rate described above,
effective as of the first day of the calendar month immediately following the
date on which the delivery of the Compliance Certificate was otherwise
required.
In the event that the annual audited financial statements delivered by
Borrower to Agent pursuant to SECTION 6.3(b)(i) reflect adjustments to the
financial statements delivered for prior periods, the effect of which
adjustments, had they been applied in the appropriate period, would have been
to decrease Tangible Net Worth for such period with a resulting increase in
the Applicable Base Rate Margin requiring a higher interest rate, Borrower
shall immediately pay to Agent for the benefit of the Lender Group an amount
equal to the difference between the amount of interest which would have been
payable had the appropriate Applicable Base Rate Margin been applied and the
amount of interest actually paid.
"APPLICABLE PREPAYMENT PREMIUM" means, as of any date of
determination, an amount equal to (a) during the period of time from and
after the date of the execution and delivery of this Agreement and up to and
including the first anniversary date of the Closing Date, 2.00% TIMES the
Maximum Amount, and (b) during the period of time from and after the first
anniversary date of the Closing Date up to and including the day prior to the
Maturity Date, 1.00%; PROVIDED that, if the Obligations are prepaid in full
and this Agreement is terminated concurrent with the consummation of a
refinancing of the Obligations provided by a commercial banking unit of Wells
Fargo, the Applicable Prepayment Premium shall be zero.
"ASSET" means any interest in any kind of property or asset, whether
real, personal, or mixed, and whether tangible or intangible.
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"ASSIGNEE" has the meaning set forth in SECTION 14.1.
"ASSIGNMENT AND ACCEPTANCE" means an Assignment and Acceptance in
the form of EXHIBIT A-1 attached hereto.
"AUTHORIZED PERSON" means any officer or other employee of Borrower.
"AVAILABILITY" means, as of any date of determination, the aggregate
amount of Advances that Borrower is then entitled to obtain hereunder (after
giving effect to all then outstanding Obligations and all sublimits and
reserves applicable hereunder) MINUS the aggregate amount, if any, of all
trade payables of the Obligors in excess of 45 days past due (or, if the data
relative to the age thereof is not readily available, in excess of their
historical turnover) and all book overdrafts in excess of the Obligors'
historical practices with respect thereto, in each case as determined by
Agent in its Permitted Discretion.
"BANKRUPTCY CODE" means the United States Bankruptcy Code, as
amended, and any successor statute.
"BASE RATE" means, as of any date of determination, the rate of
interest announced within Wells Fargo at its principal office in San
Francisco as its "prime rate", with the understanding that the "prime rate"
is one of Wells Fargo's base rates (not necessarily the lowest of such rates)
and serves as the basis upon which effective rates of interest are calculated
for those loans making reference thereto and is evidenced by the recording
thereof after its announcement in such internal publication or publications
as Wells Fargo may designate.
"BENEFIT PLAN" means a "defined benefit plan" (as defined in SECTION
3(35) of ERISA) for which any Borrower or any Subsidiary or ERISA Affiliate
of such Borrower has been an "employer" (as defined in Section 3(5) of ERISA)
within the past six years.
"BOARD OF DIRECTORS" means, as to any Person, the Board of Directors
of such Person.
"BORROWER" has the meaning set forth in the preamble to this
Agreement.
"BORROWER DILUTION RESERVE" means, as of any date of determination,
an amount sufficient to reduce the advance rate against Eligible Borrower's
Accounts by one percentage point for each percentage point by which Dilution
is in excess of 5%.
"BORROWER SEASONAL RESERVE" means, as of any date of determination,
an amount equal to 5% of the gross sales of Borrower for the 45 days
immediately preceding the date of determination (the percentage amount of the
Borrower Seasonal Reserve may be adjusted, at the election of the Agent in
its sole discretion, for the 2000/2001 season based upon the actual amount of
Borrower's Dilution during the 1999/2000 season).
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"BORROWER'S BOOKS" means all of Borrower's books and records
(including all of its records indicating, summarizing, or evidencing its
Assets (including the Borrower's Collateral) or liabilities, all of its
information relating to its business operations or financial condition, and
all of its computer programs, disks, files, printouts, runs, or other
computer prepared information).
"BORROWER'S COLLATERAL" means all of the Borrower's right, title,
and interest in and to each of the following:
(a) the Accounts,
(b) Borrower's Books,
(c) the Equipment,
(d) the General Intangibles,
(e) the Inventory,
(f) the Investment Property,
(g) the Negotiable Collateral,
(h) any money, or other Assets of Borrower that now or
hereafter come into the possession, custody, or control of any member of the
Lender Group, and
(i) the proceeds and products, whether tangible or intangible,
of any of the foregoing, including proceeds of insurance covering any or all
of the foregoing, and any and all Accounts, Borrower's Books, Equipment,
General Intangibles, Inventory, Investment Property, Negotiable Collateral,
Real Property, money, deposit accounts, or other tangible or intangible
property resulting from the sale, exchange, collection, or other disposition
of any of the foregoing, or any portion thereof or interest therein, and the
proceeds thereof.
The foregoing notwithstanding, the "Borrower's Collateral" shall not include
any General Intangibles that are now or hereafter held by Borrower as
licensee, solely in the event and to the extent that: (a) as the proximate
result of the grant of a security interest, Borrower's rights in or with
respect to such item of General Intangibles would be forfeited or would
become terminable, or if Borrower would be deemed to have breached the
underlying license or other agreement that governs such item of General
Intangibles; (b) any such restriction is effective and enforceable under
applicable law, including Section 9318(4) of the Code; and (c) any such
forfeiture, terminability, or breach cannot be either prevented or promptly
remedied by Borrower using its commercially reasonable efforts (but without
any obligation to make any material expenditures of money or to commence
legal proceedings); PROVIDED, HOWEVER, that the grant of security interest
hereunder shall extend to, and the term "Borrower's Collateral" shall
include, (1) any and all proceeds of such item of General
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Intangibles, and (2) upon any such licensor's consent with respect to any
otherwise excluded item of General Intangibles being obtained, such item of
General Intangibles.
"BORROWER STOCK PLEDGE AGREEMENT" means a Stock Pledge Agreement
executed and delivered by Borrower to Agent with respect to the pledge of the
capital Stock of Borrower's Subsidiaries, the form and substance of which is
satisfactory to Agent.
"BORROWING" means a borrowing hereunder consisting of Advances made
on the same day by the Lenders, or Agent on behalf thereof, or by Swing
Lender in the case of a Swing Loan, or by Agent in the case of an Agent
Advance, in each case to Borrower.
"BORROWING BASE" has the meaning set forth in SECTION 2.1.
"BORROWING BASE CERTIFICATE" means a certificate in the form of
EXHIBIT B-1.
"BUSINESS DAY" means any day that is not a Saturday, Sunday, or
other day on which national banks are authorized or required to close.
"CAPITAL LEASE" means a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
"CAPITAL STOCK" of any Person means any and all shares, interests,
participations, or other equivalents (however designated) of, or rights,
warrants, or options to purchase, corporate stock or any other equity
interest (however designated) of or in such Person.
"CAPITALIZED LEASE OBLIGATION" means any Indebtedness represented by
obligations under Capital Lease.
"CASH EQUIVALENTS" means and refers to: (a) marketable direct
obligations issued or unconditionally guaranteed by the United States
Government or issued by any agency thereof and backed by the full faith and
credit of the United States, in each case maturing within one (1) year from
the date of acquisition thereof; (b) marketable direct obligations issued by
any state of the United States of America or any political subdivision of any
such state or any public instrumentality thereof maturing within one (1) year
from the date of acquisition thereof and, at the time of acquisition, having
the highest rating obtainable from either S&P or Moody's; (c) commercial
paper maturing no more than one (1) year from the date of acquisition thereof
and, at the time of acquisition, having a rating of A-2 or P-2, or better,
from S&P or Moody's; (d) certificates of deposit or bankers' acceptances
maturing within one (1) year from the date of acquisition thereof either (i)
issued by any bank organized under the laws of the United States of America
or any state thereof or the District of Columbia which bank has a rating of A
or A2, or better, from S&P or Moody's, or (ii) certificates of deposit less
than or equal to $100,000 in the aggregate issued by any other bank insured
by the Federal Deposit Insurance Corporation.
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"CHANGE OF CONTROL" means and refers to the occurrence of one or
more of the following events: (a) any Person, other than Permitted Holders,
or related group for purposes of Section 13(d) of the Exchange Act (a
"GROUP"), together with any Affiliates thereof, shall become the beneficial
owner (within the meaning of Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of Parent representing more than 30% of the Voting
Stock of Parent, (b) the Permitted Institutional Investors, together with any
Affiliates thereof, shall become the beneficial owner (within the meaning of
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
Parent representing more than 49% of the Voting Stock of Parent, (c) a
majority of the members of the Board of Directors of Parent shall not
constitute continuing Directors, (d) Parent shall cease to hold beneficially
and of record 100% of the issued and outstanding Stock of Borrower, (e) a
majority of the members of the Board of Directors of Borrower shall not
constitute Continuing Directors, (f) Parent shall cease to hold, beneficially
and of record, 100% of the issued and outstanding Stock of UK Sub. For
purposes of this definition, "Board of Directors" does not include any
committee thereof.
"CLOSING DATE" means the date of the making of the initial Advance
(or other extension of credit) hereunder.
"CODE" means the California Uniform Commercial Code.
"COLLATERAL" means, individually and collectively, as the context
requires, the Borrower's Collateral or the UK Sub Collateral.
"COLLATERAL ACCESS AGREEMENT" means a landlord waiver, bailee
letter, or acknowledgement agreement of any lessor, warehouseman, processor,
consignee, or other Person in possession of, having a Lien upon, or having
rights or interests in the Borrower's Collateral or the UK Sub Collateral, in
each case, in form and substance reasonably satisfactory to Agent.
"COLLECTION ACCOUNT" has the meaning set forth in SECTION 2.8(b).
"COLLECTION ACCOUNT BANK" has the meaning set forth in
SECTION 2.8(b).
"COLLECTIONS" means ALL cash, checks, notes, instruments, and other
items of payment (including insurance proceeds, proceeds of cash sales,
rental proceeds, and tax refunds) of the Obligors.
"COMMITMENT" means, with respect to each Lender, its Commitment, and
with respect to all Lenders, their Commitments, in such Dollar amounts as are
set forth beside such Lender's name on SCHEDULE C-1 attached hereto or on the
signature page of the Assignment and Acceptance pursuant to which such Lender
became a Lender hereunder in accordance with the provisions of SECTION 14.1.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the
form of EXHIBIT C-1 delivered by the chief financial officer of Borrower to
Agent.
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"CONTINUING DIRECTOR" means and refers to (a) any member of the
Board of Directors who was a director of Borrower on the Closing Date, and
(b) any person who becomes a member of the Board of Directors after the
Closing Date if such person was appointed or nominated for election to the
Board of Directors by a majority of the Continuing Directors, but excluding
any such person originally proposed for election in opposition to the Board
of Directors in office at the Closing Date in an actual or threatened
election contest relating to the election of the directors of Borrower (as
such terms are used in Rule 14a-11 under the Exchange Act) and whose initial
assumption of office resulted from such contest or the settlement thereof.
"CONTROL AGREEMENT" means a control agreement, in form and substance
reasonably satisfactory to Agent, between Borrower, Agent, and the applicable
securities intermediary with respect to the applicable Securities Account and
related Investment Property.
"COPYRIGHT" shall have the meaning ascribed to such term in the
United States Copyright Act of 1976, as amended, and includes unregistered
copyrights.
"COPYRIGHT SECURITY AGREEMENT" means collectively, one or more
copyright security agreements executed and delivered by Borrower to Agent,
the form and substance of which is satisfactory to Agent.
"DAILY BALANCE" means, with respect to each day during the term of
this Agreement, the amount of an Obligation owed at the end of such day.
"DDA" means any checking or other demand deposit account maintained
by an Obligor.
"DEFAULT" means an event, condition, or default that, with the
giving of notice, the passage of time, or both, would be an Event of Default.
"DEFAULTING LENDER" means any Lender that fails to make any Advance
that it is required to make hereunder on any Funding Date and that has not
cured such failure by making such Advance within 1 Business Day after written
demand upon it by Agent to do so.
"DEFAULTING LENDER RATE" means the Base Rate for the first 3 days
from and after the date the relevant payment is due and, thereafter, at that
interest rate equal to the interest rate then applicable to Advances.
"DESIGNATED ACCOUNT" means account number 4518-094495 of Borrower
maintained with the Designated Account Bank, or such other deposit account of
Borrower (located within the United States) that has been designated as such,
in writing, by Borrower to Agent.
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"DESIGNATED ACCOUNT BANK" means Wells Fargo, the applicable branch
office of which is located at 464 California Street, San Francisco,
California 94063, and whose ABA number is 121000248.
"DILUTION" means, in each case based upon the experience of the
immediately prior 180 days, the result of dividing the Dollar amount (or the
Dollar equivalent amount valued in Dollars at the applicable Exchange Rate
with respect to any other currency in the case of the UK Sub) of (a) bad debt
write-downs, discounts, advertising credits, returns, promotional credits,
other credits against the Dollar amount of the Accounts or the UK Sub
Accounts, as applicable, or other dilution with respect to the Accounts or
the UK Sub Accounts, as applicable, by (b) the Borrower's or UK Sub's gross
sales, as applicable (excluding extraordinary items).
"DILUTION RESERVES" means the Borrower Dilution Reserve and the UK
Sub Dilution Reserve.
"DISBURSEMENT LETTER" means an instructional letter executed and
delivered by Borrower to Agent regarding the extensions of credit to be made
on the Closing Date, the form and substance of which shall be reasonably
satisfactory to Agent.
"DISCLOSURE LETTER" means the disclosure letter dated of even date
herewith delivered by Borrower to Agent and attached hereto as EXHIBIT D-1.
"DOLLARS" or "$" means United States dollars.
"DOMESTIC COLLECTIONS" means all Collections of the Obligors other
than Foreign Collections.
"ELIGIBLE ACCOUNTS" means Eligible Borrower Accounts or Eligible UK
Sub Accounts.
"ELIGIBLE BORROWER ACCOUNTS" means those Accounts created by
Borrower in the ordinary course of its business, that arise out of its sale
of goods or rendition of services, that comply with each and all of the
representations and warranties respecting Accounts made in the Loan
Documents, and that are not excluded as ineligible by virtue of one more of
the criteria set forth below. Eligible Accounts shall not include the
following:
(a) Accounts that are 60 days past due, PROVIDED that the due date
shall be within 30 days of original invoice date (60 days of original invoice
date with respect to invoices with original invoice dates occurring during
the months of November and December of each year),
(b) Accounts owed by an Account Debtor (or its Affiliates) where 50%
or more of all Accounts and UK Sub Accounts owed by that Account Debtor (or
its Affiliates) are deemed ineligible under clause (a) above or clause (a) of
the definition of Eligible UK Sub Accounts,
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(c) Accounts with respect to which the Account Debtor is an
employee, Affiliate, or agent of Borrower,
(d) Accounts arising in a transaction wherein goods were placed on
consignment or were sold pursuant to a guaranteed sale, a sale or return, a
sale on approval, a bill and hold, or on any other terms by reason of which
the payment by the Account Debtor may be conditional,
(e) Accounts that are not payable in Dollars,
(f) Accounts with respect to which the Account Debtor either (i)
does not maintain its chief executive office in the United States, (ii) is
not organized under the laws of the United States or any State thereof, or
(iii) is the government of any foreign country or sovereign state, or of any
state, province, municipality, or other political subdivision thereof, or of
any department, agency, public corporation, or other instrumentality thereof,
, unless (y) the Account is supported by an irrevocable letter of credit
reasonably satisfactory to Agent (as to form, substance, and issuer or
domestic confirming bank) that has been delivered to Agent and is directly
drawable by Agent, or (z) the Account is covered by credit insurance in form
and amount, and by an insurer, reasonably satisfactory to Agent,
(g) Accounts with respect to which the Account Debtor is either (i)
the United States or any department, agency, or instrumentality of the United
States (exclusive, however, of Accounts with respect to which the Borrower
has complied, to the reasonable satisfaction of Agent, with the Assignment of
Claims Act, 31 U.S.C. ss. 3727), or (ii) any State of the United States
(exclusive, however, of Accounts owed by any State that does not have a
statutory counterpart to the Assignment of Claims Act),
(h) Accounts with respect to which the Account Debtor is a creditor
of any Obligor, has or has asserted a right of setoff, has disputed its
liability, or has made any claim with respect to its obligation to pay the
Account, to the extent of such claim, right of offset, assertion, or dispute,
(i) Accounts with respect to an Account Debtor whose total
obligations owing to the Obligors exceed 20% of all Eligible Accounts (with
the exception of Walmart, for which the applicable concentration percentage
shall be 30%), to the extent of the obligations owing by such Account Debtor
in excess of such percentage,
(j) Accounts with respect to which the Account Debtor is subject to
an Insolvency Proceeding, is not Solvent, or goes out of business,
(k) Accounts, the collection of which, Agent, in its Permitted
Discretion, believes to be doubtful by reason of the Account Debtor's
financial condition,
(l) Accounts that represent the right to receive progress payments
or other advance billings that are due prior to the completion of performance
by the Borrower of the subject contract for goods or services, and
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(m) Accounts with respect to which (i) the goods giving rise to such
Account have not been shipped and billed to the Account Debtor, or (ii) the
services giving rise to such Account have not been performed and accepted by
the Account Debtor.
"ELIGIBLE CURRENCY" means any currency other than Dollars (i) that
is readily available, (ii) that is freely traded, (iii) in which deposits are
customarily offered to banks in an internationally recognized interbank
market such as London, (iv) which is convertible into Dollars in the
international interbank market, and (v) as to which an equivalent amount
valued in Dollars at the applicable Exchange Rate may be readily calculated.
If, after the designation by the Agent of any currency as an Agreed Currency,
(a) currency control or other exchange regulations are imposed in the country
in which such currency is issued with the result that different types of such
currency are introduced, (b) such currency is, in the determination of the
Agent, no longer readily available or freely traded or (c) in the
determination of the Agent, an equivalent amount of such currency valued in
Dollars at the applicable Exchange Rate is not readily calculable, Agent
shall promptly notify the Lenders and the Borrower, and such currency shall
no longer be an Agreed Currency until such time as the Agent agrees to
reinstate such currency as an Agreed Currency.
"ELIGIBLE TRANSFEREE" means (a) a commercial bank organized under
the laws of the United States, or any state thereof, and having total assets
in excess of $250,000,000, (b) a commercial bank organized under the laws of
any other country which is a member of the Organization for Economic
Cooperation and Development or a political subdivision of any such country
and which has total assets in excess of $250,000,000, provided that such bank
is acting through a branch or agency located in the United States, (c) a
finance company, insurance company, or other financial institution or fund
that is engaged in making, purchasing, or otherwise investing in commercial
loans in the ordinary course of its business and having (together with its
Affiliates) total assets in excess of $250,000,000, (d) any Affiliate (other
than individuals) of a pre-existing Lender, (e) so long as no Event of
Default has occurred and is continuing, any other Person approved by Agent
and Borrower (such approval by Borrower not to be unreasonably withheld,
conditioned or delayed), and (f) during the continuation of an Event of
Default, any other Person approved by Agent.
"ELIGIBLE UK SUB ACCOUNTS" means those Accounts created by UK Sub in
the ordinary course of its business, that arise out of its sale of goods or
rendition of services, that comply with each and all of the representations
and warranties respecting Accounts made in the Loan Documents, and that are
not excluded as ineligible by virtue of one more of the criteria set forth
below. Eligible Accounts shall not include the following:
(a) UK Sub Accounts that are 60 days past due, PROVIDED that the due
date shall be within 30 days of original invoice date (60 days of original
invoice date with respect to invoices with original invoice dates occurring
during the months of November and December of each year),
(b) UK Sub Accounts owed by an Account Debtor (or its
Affiliates) where 50% or more of all Accounts and UK Sub Accounts owed by that
Account Debtor (or its
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Affiliates) are deemed ineligible under clause (a) above or clause (a) of the
definition of Eligible Borrower Accounts,
(c) UK Sub Accounts with respect to which the Account Debtor is an
employee, Affiliate, or agent of UK Sub,
(d) UK Sub Accounts arising in a transaction wherein goods were
placed on consignment or were sold pursuant to a guaranteed sale, a sale or
return, a sale on approval, a bill and hold, or on any other terms by reason
of which the payment by the Account Debtor may be conditional,
(e) UK Sub Accounts that are not payable in an Agreed Currency or
with respect to which the Account Debtor: (i) does not maintain its chief
executive office in a Specified State, or (ii) is not organized under the
laws of a Specified State, or (iii) is the government of any country or
sovereign state, or of any state, province, municipality, or other political
subdivision thereof, or of any department, agency, public corporation, or
other instrumentality thereof,
(f) UK Sub Accounts with respect to which the Account Debtor is a
creditor of any Obligor, has or has asserted a right of setoff, has disputed
its liability, or has made any claim with respect to its obligation to pay
the Account, to the extent of such claim, right of offset, assertion, or
dispute,
(i) UK Sub Accounts with respect to an Account Debtor whose total
obligations owing to the Obligors exceed 20% of all Eligible Accounts (with
the exception of Walmart, for which the applicable concentration percentage
shall be 30%), to the extent of the obligations owing by such Account Debtor
in excess of such percentage,
(j) UK Sub Accounts with respect to which the Account Debtor is
subject to an Insolvency Proceeding, is not Solvent, or goes out of business,
(k) UK Sub Accounts, the collection of which, Agent, in its
Permitted Discretion, believes to be doubtful by reason of the Account
Debtor's financial condition,
(l) UK Sub Accounts that represent the right to receive progress
payments or other advance billings that are due prior to the completion of
performance by the UK Sub of the subject contract for goods or services, and
(m) UK Sub Accounts with respect to which (i) the goods giving rise
to such Account have not been shipped and billed to the Account Debtor, or
(ii) the services giving rise to such Account have not been performed and
accepted by the Account Debtor.
"ENVIRONMENTAL LAW" means any applicable federal, state,
provincial, foreign or local statute, law, rule, regulation, ordinance, code,
binding and enforceable guideline, binding and enforceable written policy or
rule of common law now or hereafter in effect and in each case as amended, or
any judicial or administrative interpretation thereof, including
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any judicial or administrative order, consent decree or judgment, to the
extent binding on the Obligors, relating to the environment, employee health
and safety or Hazardous Materials, including CERCLA; RCRA; the Federal Water
Pollution Control Act, 33 USC ss. 1251 ET SEQ; the Toxic Substances Control
Act, 15 USC, ss. 2601 ET SEQ; the Clean Air Act, 42 USC ss. 7401 ET SEQ.; the
Safe Drinking Water Act, 42 USC. ss. 3803 ET SEQ.; the Oil Pollution Act of
1990, 33 USC. ss. 2701 ET SEQ.; the Emergency Planning and the Community
Right-to-Know Act of 1986, 42 USC. ss. 11001 ET SEQ.; the Hazardous Material
Transportation Act, 49 USC ss. 1801 ET SEQ.; and the Occupational Safety and
Health Act, 29 USC. ss. 651 ET SEQ. (to the extent it regulates occupational
exposure to Hazardous Materials); any state and local or foreign counterparts
or equivalents, in each case as amended from time to time.
"EQUIPMENT" means all of Borrower's present and hereafter acquired
machinery, machine tools, motors, equipment, furniture, furnishings,
fixtures, vehicles (including motor vehicles and trailers), tools, parts,
goods (other than consumer goods, farm products, or Inventory), wherever
located, including all attachments, accessories, accessions, replacements,
substitutions, additions, and improvements to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and any successor statute thereto.
"ERISA AFFILIATE" means (a) any corporation subject to ERISA whose
employees are treated as employed by the same employer as the employees of an
Obligor under IRC Section 414(b), (b) any trade or business subject to ERISA
whose employees are treated as employed by the same employer as the employees
of an Obligor under IRC Section 414(c), (c) solely for purposes of Section
302 of ERISA and Section 412 of the IRC, any organization subject to ERISA
that is a member of an affiliated service group of which an Obligor is a
member under IRC Section 414(m), or (d) solely for purposes of Section 302 of
ERISA and Section 412 of the IRC, any party subject to ERISA that is a party
to an arrangement with an Obligor and whose employees are aggregated with the
employees of an Obligor under IRC Section 414(o).
"EURO" means the euro referred to in Council Regulation (EC) No.
1103/97 dated June 17, 1997 passed by the Council of the European Union, or,
if different, the then lawful currency of the member states of the European
Union that participate in the third stage of Economic and Monetary Union.
"EVENT OF DEFAULT" has the meaning set forth in SECTION 8.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and any successor statute.
"EXCHANGE RATE" means and refers to the nominal rate of exchange
(vis-a-vis Dollars) for a currency other than Dollars published in the Wall
Street Journal (Western Edition) on the date of determination (which shall be
a Business Day on which the Wall Street Journal (Western Edition) is
published), expressed as the number of units of such other currency per one
Dollar.
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"EXEMPT COPYRIGHT" means any Incipient Copyright or any Obsolete
Copyright.
"EXEMPT PATENTS" means any Incipient Patent or any Obsolete Patent.
"EXISTING LENDER" means Coast Business Credit, a Division of
Southern Pacific Bank.
"FAMILY MEMBER" means, with respect to any individual, any other
individual having a relationship by blood (to the second degree of
consanguinity), marriage, or adoption to such individual.
"FAMILY TRUSTS" means, with respect to any individual, trusts or
other estate planning vehicles established for the benefit of Family Members
of such individual and in respect of which such individual serves as trustee
or in a similar capacity.
"FEE LETTER" means that certain fee letter, dated as of the date
hereof, between Agent and Borrower, in form and substance satisfactory to
Agent.
"FEIN" means Federal Employer Identification Number.
"FOOTHILL" means Foothill Capital Corporation, a California
corporation.
"FOREIGN COLLECTIONS" means all Collections of the Obligors paid by
any Person that (i) does not maintain its chief executive office in the
United States, (ii) is not organized under the laws of the United States or
any State thereof, or (iii) is the government of any foreign country or
sovereign state, or of any state, province, municipality, or other political
subdivision thereof, or of any department, agency, public corporation, or
other instrumentality thereof.
"FOREIGN CONCENTRATION ACCOUNT" has the meaning set forth in
SECTION 2.8(b).
"FOREIGN CONCENTRATION ACCOUNT AGREEMENTS" means, individually and
collectively, those certain concentration account agreements, each in form
and substance (including with respect to blocked account arrangements (if
any)) satisfactory to Agent, among Agent, UK Sub, and the applicable Foreign
Concentration Account Bank.
"FOREIGN CONCENTRATION ACCOUNT BANK" means, with respect to UK Sub,
as proposed by UK Sub and as agreed to by Agent in its Permitted Discretion.
"FOREIGN EXCHANGE RESERVE" means, as of any date of date of
determination, a reserve for foreign currency exchange rate risk with respect
to the UK Sub Collateral in such amount as shall be determined by Agent in
its Permitted Discretion from time to time on or after the Closing Date.
"FUNDING DATE" means the date on which a Borrowing occurs.
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"FUNDING LOSSES" has the meaning set forth in SECTION 2.15(b)(ii).
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States, consistently applied.
"GENERAL INTANGIBLES" means all of Borrower's general intangibles
and other personal property (including contract rights, rights to payment,
rights arising under common law, statutes, or regulations, choses or things
in action, goodwill, patents, trade names, trademarks, servicemarks,
copyrights, blueprints, drawings, purchase orders, customer lists, monies due
or recoverable from pension funds, route lists, rights to payment and other
rights under any royalty or licensing agreements, infringement claims,
computer programs, information contained on computer disks or tapes,
literature, reports, catalogs, money, deposit accounts, insurance premium
rebates, tax refunds, and tax refund claims), other than goods, Accounts,
Investment Property, and Negotiable Collateral.
"GOVERNING DOCUMENTS" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.
"GOVERNMENTAL AUTHORITY" shall mean any federal, state, local, or
other governmental or administrative body, instrumentality, department, or
agency or any court, tribunal, administrative hearing body, arbitration
panel, commission, or other similar dispute-resolving panel or body.
"GUARANTORS" means, individually and collectively, jointly and
severally, Parent and UK Sub; "GUARANTOR" means any one of them.
"HAZARDOUS MATERIALS" means (a) substances that are defined or
listed in, or otherwise classified pursuant to, any applicable laws or
regulations as "hazardous substances," "hazardous materials," "hazardous
wastes," "toxic substances," or any other formulation intended to define,
list, or classify substances by reason of deleterious properties such as
ignitability, corrosivity, reactivity, carcinogenicity, reproductive
toxicity, or "EP toxicity", (b) oil, petroleum, or petroleum derived
substances, natural gas, natural gas liquids, synthetic gas, drilling fluids,
produced waters, and other wastes associated with the exploration,
development, or production of crude oil, natural gas, or geothermal
resources, (c) any flammable substances or explosives or any radioactive
materials, and (d) asbestos in any form or electrical equipment that contains
any oil or dielectric fluid containing levels of polychlorinated biphenyls in
excess of 50 parts per million.
"INCIPIENT COPYRIGHT" means any copyright that: (a) relates to
software of a Person under development (whether in the form of a new product,
a new version of a pre-existing product, an upgrade, add-on, or modification
to a pre-existing product, or otherwise) that has not yet become a completed
product, version, upgrade, add-on, or modification which is ready to be
marketed by or on behalf of such Person or which in fact is being marketed by
or on behalf of such Person; or (b) is not the subject of licenses thereof or
other dispositions by such Person giving rise to accounts, contract rights,
or other form of obligation.
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"INCIPIENT PATENT" means any patent that: (a) relates to a
patentable invention of a Person under development (whether in the form of a
new invention, a new version of a pre-existing invention, an upgrade, add-on,
or modification to a pre-existing invention, or otherwise) that has not yet
become a completed invention, upgrade, improvement, add-on, or modification
which is ready to be marketed by or on behalf of such Person or which in fact
is being marketed by or on behalf of such Person; or (b) is not the subject
of licenses thereof or other dispositions by such Person giving rise to
accounts, contract rights, or other form of obligation.
"INDEBTEDNESS" means (a) all obligations of an Obligor for borrowed
money, (b) all obligations of an Obligor evidenced by bonds, debentures,
notes, or other similar instruments and all reimbursement or other
obligations of an Obligor in respect of letters of credit, bankers
acceptances, interest rate swaps, or other financial products, (c) all
obligations of an Obligor under Capital Leases, (d) all obligations or
liabilities of others secured by a Lien on any Asset of an Obligor,
irrespective of whether such obligation or liability is assumed, and (e) any
obligation of an Obligor or its Subsidiaries guaranteeing or intended to
guarantee (whether guaranteed, endorsed, co-made, discounted, or sold with
recourse to an Obligor) any obligation of any other Person.
"INDEMNIFIED LIABILITIES" has the meaning set forth in SECTION 11.3.
"INDEMNIFIED PERSON" has the meaning set forth in SECTION 11.3.
"INSOLVENCY PROCEEDING" means any proceeding commenced by or
against any Person under any provision of the Bankruptcy Code or under any
other bankruptcy or insolvency law, assignments for the benefit of creditors,
formal or informal moratoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization, arrangement, or other
similar relief.
"INTANGIBLE ASSETS" means, with respect to any Person, that portion
of the book value of all of such Person's Assets that would be treated as
intangibles under GAAP.
"INTELLECTUAL PROPERTY" means all patents, patent applications,
trademarks, trademark applications, tradenames, tradedress, copyrights,
copyright registrations, technology, know-how and processes used in or
necessary for the conduct of the business of the Obligors as currently
conducted that are material to the condition (financial or otherwise),
business or operations of an Obligor.
"INTERCOMPANY SUBORDINATION AGREEMENT" means a Subordination
Agreement, dated as of even date herewith, between each Obligor and Agent, in
form and substance satisfactory to Agent.
"INTERNET GAMING PATENT" means that certain United States patent,
No. 6009458, issued to Borrower on December 28, 1999.
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"INVENTORY" means all inventory in which Borrower has any interest,
including goods held for sale or lease or to be furnished under a contract of
service and all of Borrower's raw materials, work in process, finished goods,
and packing and shipping materials, wherever located.
"INVESTMENT" means, with respect to any Person, any investment by
such Person in any other Person in the form of loans, guarantees, advances,
or capital contributions (excluding (a) commission, travel, and similar
advances to officers and employees of such Person made in the ordinary course
of business, and (b) bona fide accounts receivable arising from the sale of
goods or services in the ordinary course of business consistent with past
practice), purchases or other acquisitions for consideration of Indebtedness
or Stock, and any other items that are or would be classified as investments
on a balance sheet prepared in accordance with GAAP.
"INVESTMENT PROPERTY" means all of the Borrower's investment
property as defined in the Code.
"IRC" means the Internal Revenue Code of 1986, as amended, and any
successor statute.
"ISSUING LENDER" means Agent or any other Lender that, at the
request of Borrower and with the consent of Agent agrees, in such Lender's
sole discretion, to become an Issuing Lender for the purpose of issuing L/Cs
or LC Undertakings pursuant to SECTION 2.2.
"L/C DISBURSEMENT" means a payment made by the Issuing Lender
pursuant to a Letter of Credit.
"L/C" has the meaning set forth in SECTION 2.2(a).
"L/C UNDERTAKING" has the meaning set forth in SECTION 2.2(a).
"LENDER" and "LENDERS" have the respective meanings set forth in
the preamble to this Agreement and shall include any other Person made a
party to this Agreement in accordance with the provisions of SECTION 14.1
hereof.
"LENDER GROUP" means, individually and collectively, each of the
Lenders and Agent.
"LENDER GROUP EXPENSES" means all (a) costs or expenses (including
taxes, and insurance premiums) required to be paid by an Obligor under any of
the Loan Documents that are paid or incurred by the Lender Group, (b) prior
to the occurrence and continuance of an Event of Default, fees or charges
paid or incurred by the Agent in connection with the Agent's transactions
with Obligors, and after the occurrence and during the continuance of an
Event of Default, fees or charges paid or incurred by the Lender Group in
connection with the Lender Group's transactions with Obligors, in each case
including,
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fees or charges for photocopying, notarization, couriers and messengers,
telecommunication, public record searches (including tax lien, litigation,
and UCC searches and including searches with the patent and trademark office,
the copyright office, or the department of motor vehicles), filing,
recording, publication, appraisal (including Collateral appraisals in
accordance with the provisions of this Agreement), and real estate title
policies and endorsements, (c) costs and expenses incurred by Agent in the
disbursement of funds to Borrower (by wire transfer or otherwise), (d)
charges paid or incurred by Agent resulting from the dishonor of checks, (e)
reasonable costs and expenses paid or incurred by the Lender Group to correct
any default or enforce any provision of the Loan Documents, or in gaining
possession of, maintaining, handling, preserving, storing, shipping, selling,
preparing for sale, or advertising to sell the Collateral, or any portion
thereof, irrespective of whether a sale is consummated, (f) reasonable costs
and expenses paid or incurred by the Lender Group in examining the Borrower's
Books, or the UK Sub's Books, (g) reasonable costs and expenses of third
party claims or any other suit paid or incurred by the Lender Group in
enforcing or defending the Loan Documents or in connection with the
transactions contemplated by the Loan Documents or the Lender Group's
relationship with any Obligor, except to the extent resulting from any
Lender's or the Agent's gross negligence or willful misconduct, and (h) prior
to the occurrence and continuance of an Event of Default, the Agent's, and
after the occurrence and during the continuance of an Event of Default, the
Lender Group's, reasonable fees and expenses (including attorneys fees)
incurred in advising, structuring, drafting, reviewing, administering,
amending, terminating, enforcing (including attorneys fees and expenses
incurred in connection with a "workout," a "restructuring," or an Insolvency
Proceeding concerning any Obligor), defending, or concerning the Loan
Documents, irrespective of whether suit is brought.
"LENDER-RELATED PERSON" means, with respect to any Lender, such
Lender, together with such Lender's Affiliates, and the officers, directors,
employees, counsel, and agents of such Lender.
"LETTER OF CREDIT" means an L/C or an L/C Undertaking, as the
context requires.
"LETTER OF CREDIT USAGE" means, as of any date of determination,
the aggregate undrawn amount of all outstanding Letters of Credit.
"LIEN" means any interest in property securing an obligation owed
to, or a claim by, any Person other than the owner of the property, whether
such interest shall be based on the common law, statute, or contract, whether
such interest shall be recorded or perfected, and whether such interest shall
be contingent upon the occurrence of some future event or events or the
existence of some future circumstance or circumstances, including the lien or
security interest arising from a mortgage, deed of trust, encumbrance,
pledge, hypothecation, assignment, deposit arrangement, security agreement,
conditional sale or trust receipt, or from a lease, consignment, or bailment
for security purposes and also including reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases, and other title exceptions and encumbrances affecting Real Property.
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"LOAN ACCOUNT" has the meaning set forth in SECTION 2.11.
"LOAN DOCUMENTS" means this Agreement, any Control Agreement, the
Copyright Security Agreement, the Patent Security Agreement, the Trademark
Security Agreement, the Disbursement Letter, the Fee Letter, the Parent
Guaranty, the UK Sub Guaranty, the Parent Security Agreement, the UK Sub
Security Agreement, the Letters of Credit, the Lockbox Agreements, the
Intercompany Subordination Agreement, the Parent Stock Pledge Agreement, the
Borrower Stock Pledge Agreement, and any other agreement entered into, now or
in the future, by any Obligor and the Lender Group in connection with this
Agreement.
"LOCKBOX" has the meaning set forth in SECTION 2.8(a).
"LOCKBOX ACCOUNT" shall mean a depository account established
pursuant to one of the Lockbox Agreements.
"LOCKBOX AGREEMENTS" means those certain lockbox agreements and
those certain depository agreements, in form and substance reasonably
satisfactory to Agent, each of which is among Borrower, Agent, and one of the
Lockbox Banks.
"LOCKBOX BANKS" means Wells Fargo (or such other banks as may be
agreed to by Agent and Borrower from time to time).
"MANAGEMENT LETTER" means the narrative report prepared by a
Person's certified public accountants describing the operations of such
Person and its Subsidiaries in the form prepared for presentation to senior
management with respect to a given fiscal year.
"MATERIAL ADVERSE CHANGE" means (a) a material adverse change in
the business, prospects, operations, results of operations, Assets,
liabilities or condition (financial or otherwise) of Borrower or Parent and
its Subsidiaries taken as a whole, (b) the material impairment of the ability
of Borrower or any other Obligor to perform their obligations under the Loan
Documents or of the Lender Group's ability to enforce the Obligations or
realize upon a material portion of the Collateral, or (c) a material
impairment of the priority of Agent's Liens with respect to a material
portion of the Collateral as a result of an action or failure to act on the
part of any Obligor.
"MATURITY DATE" has the meaning set forth in SECTION 3.5.
"MAXIMUM AMOUNT" means $50,000,000.
"NEGOTIABLE COLLATERAL" means all of Borrower's letters of credit,
notes, drafts, instruments, certificated securities, documents, and chattel
paper.
"NORWEST" means Norwest Bank Minnesota, N.A.
"OBLIGATIONS" means all loans, Advances, debts, principal, interest
(including any interest that, but for the provisions of the Bankruptcy Code,
would have accrued),
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contingent reimbursement obligations with respect to Letters of Credit,
premiums, liabilities (including all amounts charged to the Borrower's Loan
Account pursuant hereto), obligations, fees, charges, costs, or Lender Group
Expenses (including any fees or expenses that, but for the provisions of the
Bankruptcy Code, would have accrued), guaranties, covenants, and duties owing
by Obligors to the Lender Group of any kind and description pursuant to or
evidenced by the Loan Documents, irrespective of whether for the payment of
money, whether direct or indirect, absolute or contingent, due or to become
due, now existing or hereafter arising, and including all interest not paid
when due and all Lender Group Expenses that Obligors are required to pay or
reimburse by the Loan Documents, by law, or otherwise.
"OBLIGORS" means, individually and collectively, jointly and
severally, Borrower, Parent and the UK Sub, and "OBLIGOR" means any one of
them. For all purposes of this Agreement, UK Sub shall be deemed an Obligor,
but its accounts, contract rights and other forms of obligations shall not be
deemed Eligible Accounts until such time as it complies with the requirements
for accounts, contract rights and other forms of obligations to be deemed
Eligible UK Sub Accounts and the UK Sub has executed such UK Sub Security
Documents as Agent shall require in its Permitted Discretion.
"OBSOLETE COPYRIGHT" means any copyright that relates to software
of a Person that, in such Person's good faith determination: (a) is no longer
sold or marketed by such Person; (b) is not generating any material amount of
Accounts or revenues of such Person; or (c) does not have a material fair
market value.
"OBSOLETE PATENT" means any copyright that relates to an invention
of a Person that, in such Person's good faith determination: (a) is no longer
sold or marketed by such Person; (b) is not generating any material amount of
Accounts or revenues of such Person; or (c) does not have a material fair
market value.
"ORIGINATING LENDER" has the meaning set forth in SECTION 14.1(g).
"OVERADVANCE" has the meaning set forth in SECTION 2.6.
"PARTICIPANT" has the meaning set forth in SECTION 14.1(g).
"PARENT" has the meaning set forth in the preamble to this Agreement.
"PARENT GUARANTY" means that certain General Continuing Guaranty,
dated as of even date herewith, by Parent in favor of Agent, in form and
content satisfactory to Agent.
"PARENT SECURITY AGREEMENT" means a Security Agreement executed and
delivered by the Parent to Agent, the form and substance of which is
satisfactory to Agent.
"PARENT STOCK PLEDGE AGREEMENT" means a Stock Pledge Agreement
executed and delivered by Parent to Agent with respect to the pledge of the
capital Stock of Borrower, the form and substance of which is satisfactory to
Agent.
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"PATENT" shall have the meaning ascribed to such term in Title
35 of the United States Code, and includes unregistered patents.
"PATENT SECURITY AGREEMENT" means a Patent Security Agreement
executed and delivered by Borrower and Agent, the form and substance of which
is satisfactory to Agent.
"PAY-OFF LETTER" means a letter, in form and substance reasonably
satisfactory to Agent, from Existing Lender to Agent respecting the amount
necessary to repay in full all of the obligations of the Obligors owing to
Existing Lender and obtain a release of all of the Liens existing in favor of
Existing Lender in and to the Assets of the Obligors.
"PERMITTED ACQUISITION" means an Acquisition made by Borrower so
long as (a) no Default or Event of Default shall have occurred and be
continuing or would result from the consummation of the proposed Acquisition,
(b) the Assets being acquired, or the Person whose Stock is being acquired
(including the Stock of any Subsidiary), are useful in or engaged in, as
applicable, the business of Borrower as such business exists on the Closing
Date, (c) (i) with respect to any such Acquisition proposed to be consummated
during Borrower's fiscal year ending March 31, 2001, the aggregate
consideration, other than that which is payable in common Stock of Borrower
or Permitted Preferred Stock, paid or payable for such proposed Acquisition
and all other Permitted Acquisitions consummated during such fiscal year
(after giving effect to such proposed Acquisition), shall not exceed
$10,000,000, and (ii) with respect to any such Acquisition proposed to be
consummated during any fiscal year of Borrower thereafter, the aggregate
consideration, other than that which is payable in common Stock of Borrower
or Permitted Preferred Stock, paid or payable for such proposed Acquisition
and all other Permitted Acquisitions consummated during such fiscal year
(after giving effect to such proposed Acquisition) shall not to exceed such
Dollar amount as is established for such fiscal year by Agent in its
Permitted Discretion, with the consent of the Required Lenders, based upon
Agent's review of the annual financial projections for such fiscal year
delivered by Borrower to Agent in compliance with SECTION 6.3(c), (d) after
giving effect to the proposed Acquisition, Borrower shall have Availability
of not less than $10,000,000, and (e) Borrower shall have complied with
SECTION 6.21. Without determining whether or not an Acquisition shall
constitute a Permitted Acquisition, in the event that Borrower requests of
Agent that the Accounts being acquired through a Permitted Acquisition be
included in the Borrowing Base as Eligible Accounts, Agent shall have
completed its audit, appraisal, and standard due diligence review with
respect to the Assets or Person that is to be the subject of the proposed
Permitted Acquisition and the results thereof shall be satisfactory to Agent
in the exercise of its Permitted Discretion before such Accounts shall be
included in the Borrowing Base.
"PERMITTED DISCRETION" with respect to any determination by a
member of the Lender Group, means a determination made in good faith and in
the exercise of reasonable (from the perspective of a secured asset-based
lender) business judgment.
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"PERMITTED DISPOSITIONS" means (a) sales, exchanges, trade-ins, or
other dispositions of Equipment or UK Sub Equipment that is substantially
worn, damaged, or obsolete in the ordinary course of Borrower's or UK Sub's,
as applicable, business, as determined in good faith by Borrower or UK Sub,
as applicable, (b) sales of Inventory or UK Sub's Inventory to buyers in the
ordinary course of Borrower's or UK Sub's, as applicable, business, (c) the
use or transfer of money, or Cash Equivalents by the Obligors in a manner
that is not prohibited by the terms of this Agreement or the other Loan
Documents, (d) the sale, license, lease, exchange, transfer, or other
disposition for fair value of any or all of Borrower's right, title, or
interest in the Internet Gaming Patent, and (e ) the licensing by the
Obligors, on a non-exclusive basis, of patents, trademarks, copyrights, and
other intellectual property rights in the ordinary course of the Obligors'
business.
"PERMITTED HOLDERS" means W. M. (Trip) Hawkins, William Jessee,
William Hall, Hugh Martin, the Family Members and Family Trusts of any of the
foregoing, and the Permitted Institutional Holders.
"PERMITTED INSTITUTIONAL HOLDERS" means J. & W. Seligman & Co.,
Inc., JDS Capital Management, J. P. Morgan Investment Mgmt., Inc., Rice,
Hall, James & Associates, Axe-Houghton Associates, Inc. and Scudder Kemper
Investments, Inc.
"PERMITTED INVESTMENTS" means (a) Investments in Cash Equivalents,
(b) loans and advances to officers and employees of Borrower in the ordinary
course of business, other than as provided for in clause (c), in an aggregate
amount at any one time outstanding not to exceed $500,000, (c) loans and
advances to officers and employees of Borrower in the ordinary course of
business to facilitate the purchase by such officers or employees of the
Stock of Borrower and the repayment of any such loans or advances is secured
by a first priority Lien on the Stock purchased thereby, in an aggregate
amount outstanding at any one time not to exceed $500,000, (d) Investments in
negotiable instruments for collection, (e) advances made in connection with
purchases of goods or services in the ordinary course of business, (f)
Permitted Acquisitions, (g) a Permitted Disposition of the Internet Gaming
Patent to the extent constituting an Investment, (h) Investments by Borrower
in UK Sub (i) from and after the date on which all of the conditions set
forth in SECTION 3.2(a), (b), (c), (d), and (e) have been satisfied or waived
by Agent in its sole discretion, in an aggregate amount not to exceed
$20,000,000 outstanding at any one time during Borrower's fiscal year ending
March 31, 2001, and for each succeeding fiscal year not to exceed such Dollar
amount outstanding at any one time as is established for such fiscal year by
Agent in its Permitted Discretion, with the consent of the Required Lenders,
based upon Agent's review of the annual financial projections for such fiscal
year delivered by Borrower to Agent in compliance with SECTION 6.3(c), and
(ii) from and after the date on which all of the conditions set forth in
SECTION 3.2, with the exception of clauses (f), (j), and (k) thereof, have
been satisfied or waived by Agent in its sole discretion, in an aggregate
amount not to exceed $30,000,000 outstanding at any one time during
Borrower's fiscal year ending March 31, 2001, and for each succeeding fiscal
year not to exceed such Dollar amount outstanding at any one time as is
established for such fiscal
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year by Agent in its Permitted Discretion, with the consent of the Required
Lenders, based upon Agent's review of the annual financial projections for
such fiscal year delivered by Borrower to Agent in compliance with SECTION
6.3(c), and (i) other Investments not constituting an Acquisition in an
aggregate amount not to exceed $4,000,000 outstanding at any one time during
Borrower's fiscal year ending March 31, 2001, and for each succeeding fiscal
year not to exceed such Dollar amount outstanding at any one time as is
established for such fiscal year by Agent in its Permitted Discretion, with
the consent of the Required Lenders, based upon Agent's review of the annual
financial projections for such fiscal year delivered by Borrower to Agent in
compliance with SECTION 6.3(c), PROVIDED, that after giving effect to the
proposed Investment, Borrower shall have Availability of not less than
$10,000,000.
"PERMITTED LIENS" means (a) Liens held by Agent for the benefit of
Agent and the Lenders, (b) Liens for unpaid taxes that either (i) are not yet
delinquent, or (ii) do not constitute an Event of Default hereunder and are
the subject of Permitted Protests, (c) Liens set forth on SCHEDULE P-1 to the
Disclosure Letter, (d) the interests of lessors under operating leases, (e)
purchase money Liens or the interests of lessors under Capital Leases to the
extent that such Liens or interests secure Permitted Purchase Money
Indebtedness and so long as the Lien attaches only to the Asset purchased or
acquired and the proceeds thereof, (f) Liens arising by operation of law in
favor of warehousemen, landlords, carriers, mechanics, materialmen, laborers,
or suppliers, incurred in the ordinary course of business of the Obligors and
not in connection with the borrowing of money, and which Liens either (i) are
for sums not yet delinquent, or (ii) are the subject of Permitted Protests,
(g) Liens arising from deposits made in connection with obtaining worker's
compensation or other unemployment insurance, (h) Liens or deposits to secure
performance of bids, tenders, or leases incurred in the ordinary course of
business of the Obligors and not in connection with the borrowing of money,
(i) Liens granted as security for surety or appeal bonds in connection with
obtaining such bonds in the ordinary course of business of the Obligors, (j)
Liens resulting from any judgment or award that is not an Event of Default
hereunder, (k) with respect to any Real Property, easements, rights of way,
or zoning that do not materially interfere with or impair the use or
operation of the Real Property by the Obligors, and (l) Liens on specific
goods securing Acquired Indebtedness.
"PERMITTED PREFERRED STOCK" means and refers to Preferred Stock
issued by Borrower (and not by one or more of its Subsidiaries) that is not
Prohibited Preferred Stock.
"PERMITTED PROTEST" means the right of Obligors to protest any Lien
(other than any such Lien that secures the Obligations), tax (other than
taxes that are the subject of a United States federal tax lien), or rental
payment, provided that (a) a reserve with respect to such obligation is
established on the Books in such amount as is required under GAAP, (b) any
such protest is instituted and diligently prosecuted by the applicable
Obligor in good faith, and (c) Agent is satisfied that, while any such
protest is pending, there will be no impairment of the enforceability,
validity, or priority of any of the Liens granted to Agent under the Loan
Documents.
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"PERMITTED PURCHASE MONEY INDEBTEDNESS" means, as of any date of
determination, Purchase Money Indebtedness incurred after the Closing Date in
an aggregate amount not to exceed $25,000,000 outstanding at any one time
during Borrower's fiscal year ending March 31, 2001, and for each succeeding
fiscal year not to exceed such Dollar amount outstanding at any one time as
is established for such fiscal year by Agent in its Permitted Discretion,
with the consent of the Required Lenders, based upon Agent's review of the
annual financial projections for such fiscal year delivered by Borrower to
Agent in compliance with SECTION 6.3(c).
"PERSON" means natural persons, corporations, limited liability
companies, limited partnerships, general partnerships, limited liability
partnerships, joint ventures, trusts, land trusts, business trusts, or other
organizations, irrespective of whether they are legal entities, and
governments and agencies and political subdivisions thereof.
"PREFERRED STOCK" means, as applied to the capital Stock of any
Person that is a corporation, the capital Stock of any class or classes
(however designated) that is preferred as to the payment of dividends, or as
to the distribution of Assets upon any voluntary or involuntary liquidation
or dissolution of such Person, over shares of capital Stock of any other
class of such Person.
"PROHIBITED PREFERRED STOCK" means and refers to any Preferred
Stock that by its terms is mandatorily redeemable or subject to any other
payment obligation (including any obligation to pay dividends, other than
dividends of shares of Preferred Stock of the same class and series payable
in kind or dividends of shares of common Stock), or is redeemable at the
option of the holder thereof for cash or Assets or securities (other than
distributions in kind of shares of Preferred Stock of the same class and
series or of shares of common Stock).
"PROJECTIONS" means Borrower's forecasted (a) balance sheets, (b)
profit and loss statements, and (c) cash flow statements, all prepared on a
consistent basis with Borrower's historical financial statements, together
with appropriate supporting details and a statement of underlying assumptions.
"PRO RATA SHARE" means:
(a) with respect to a Lender's obligation to make Advances and
receive payments of principal, interest, fees, costs, and expenses with
respect thereto, the percentage obtained by dividing (i) such Lender's
Commitment, by (ii) the aggregate Commitments of all Lenders; and
(b) with respect to all other matters (including the
indemnification obligations arising under SECTION 17.7), the percentage
obtained by dividing (i) such Lender's Commitments, by (ii) the aggregate
Commitments of all Lenders; PROVIDED, HOWEVER, that, in each case, in the
event all Commitments have been terminated, Pro Rata Share shall be
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determined according to the Commitments in effect immediately prior to such
termination and otherwise as set forth above.
"PURCHASE MONEY INDEBTEDNESS" means Indebtedness (other than the
Obligations, but including Capitalized Lease Obligations), incurred at the
time of, or within 90 days after, the acquisition of any fixed Assets for the
purpose of financing all or any part of the acquisition cost thereof.
"PURCHASE MONEY LIEN" means a Lien upon fixed Assets that secures
Purchase Money Indebtedness, but only if such Lien shall at all times be
confined solely to the fixed Assets the purchase price of which was financed
through the incurrence of the Purchase Money Indebtedness secured by such
Lien.
"REAL PROPERTY" means any estates or interests in real property now
owned or hereafter acquired by an Obligor, and the improvements related
thereto.
"RECORD" means information that is inscribed on a tangible medium
or which is stored in an electronic or other medium and is retrievable in
perceivable form.
"REQUIRED AVAILABILITY" means Availability and unrestricted
cash and Cash Equivalents in an amount of not less than $20,000,000.
"REQUIRED LENDERS" means, at any time, (a) Agent, and (b) Lenders
whose Pro Rata Shares aggregate 66-2/3% of the Total Commitments, or if the
Total Commitments have been terminated irrevocably, 66-2/3% of the
Obligations then outstanding.
"RESERVES" means all Foreign Exchange Reserves, Dilution Reserves
(if any), Seasonal Reserves, and any other reserves that may be established
under this Agreement.
"REVOLVER FACILITY" means the credit facility provided for under
SECTIONS 2.1 AND 2.2 hereof.
"REVOLVER USAGE" means, as of any date of determination, the sum of
(a) the then extant amount of outstanding Advances, PLUS (b) the then extant
amount of the Letter of Credit Usage.
"RISK PARTICIPATION LIABILITY" means, as to each Letter of Credit,
all reimbursement obligations of Borrower to the issuer of an L/C or to the
issuer of a letter of credit with respect to the transaction for which an L/C
Undertaking was executed and delivered (to the extent such reimbursement
obligations are subject to such L/C Undertaking), consisting of (a) the
amount available to be drawn or which may become available to be drawn under
the Letter of Credit, (b) all amounts that have been paid and made available
by the issuing bank to the extent not reimbursed by Borrower, whether by the
making of an Advance or otherwise, and (c) all accrued and unpaid interest,
fees, and expenses payable with respect thereto, to the extent they are
payable or reimbursable by Borrower hereunder.
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"SEASONAL RESERVES" means the Borrower Seasonal Reserve and the UK
Sub Seasonal Reserve.
"SEC" means the United States Securities and Exchange Commission
and any successor thereto.
"SECURITIES ACCOUNT" means a "securities account" as that term is
defined in Section 8-501 of the Code.
"SETTLEMENT" has the meaning set forth in SECTION 2.4(f)(i).
"SETTLEMENT DATE" has the meaning set forth in SECTION 2.4(f)(i).
"SOLVENT" means, with respect to any Person on a particular date,
that such Person is not insolvent (as such term is defined in the Uniform
Fraudulent Transfer Act).
"SPECIFIED STATE" means, England, Scotland, Wales, Ireland,
Australia, France, Germany, Italy, New Zealand, Canada, Norway, Finland,
Switzerland, Sweden, Belgium, Japan, Singapore, the Netherlands, or any other
State approved by Agent.
"STOCK" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in
a Person, whether voting or nonvoting, including common stock, preferred
stock, or any other "equity security" (as such term is defined in Rule 3a11-1
of the General Rules and Regulations promulgated by the SEC under the
Exchange Act).
"SUBORDINATED INDEBTEDNESS" means any Indebtedness of Borrower that
contains terms and conditions (including subordination terms) acceptable to
Agent in the exercise of its Permitted Discretion.
"SUBSIDIARY" of a Person means a corporation, partnership, limited
liability company, or other entity in which that Person directly or
indirectly owns or controls the shares of Stock having ordinary voting power
to elect a majority of the board of directors (or appoint other comparable
managers) of such corporation, partnership, limited liability company, or
other entity.
"SWING LENDER" means any Lender appointed by Agent in writing, and
which appointment has been accepted by such Lender in writing, as the "Swing
Lender".
"SWING LOAN" has the meaning set forth in SECTION 2.4(d)(i).
"TANGIBLE NET WORTH" means, as of any date of determination, the
difference of (a) Parent's total consolidated stockholder's equity, MINUS (b)
the sum of: (i) all Intangible Assets of Parent and its Subsidiaries, (ii)
all prepaid expenses of Parent and its Subsidiaries, and (iii) all amounts
due to Parent and its Subsidiaries from Affiliates except to the extent
already deducted in consolidation. The foregoing to the contrary
notwithstanding, if the condition set forth in SECTION 3.3(d) shall not be
fulfilled within the time period set
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forth therein, then from and after the last day of such time period, Tangible
Net Worth shall be determined without regard to UK Sub or Parent's interest
in UK Sub.
"TRADEMARK SECURITY AGREEMENT" means a Trademark Security Agreement
executed and delivered by Borrower to Agent, the form and substance of which
is satisfactory to Agent.
"UK SUB" has the meaning set forth in the preamble to this Agreement.
"UK SUB ACCOUNTS" means all currently existing and hereafter
arising accounts, contract rights, and all other forms of obligations owing
to UK Sub arising out of the sale or lease of goods or the rendition of
services by UK Sub, irrespective of whether earned by performance, and any
and all credit insurance, guaranties, or security therefor.
"UK SUB CLOSING DATE" means the date of the satisfaction, in full,
of each of the conditions precedent set forth in SECTION 3.2 hereof.
"UK SUB COLLATERAL" means the UK Sub Accounts, the UK Sub
Equipment, the UK Sub General Intangibles, the UK Sub Inventory, the UK Sub
Negotiable Collateral, the UK Sub's Books and all of the other items of
collateral in which a Lien is granted by UK Sub to Agent for the benefit of
the Lender Group pursuant to the UK Sub Security Documents.
The foregoing notwithstanding, the "UK Sub Collateral" shall not include any
UK Sub General Intangibles that are now or hereafter held by UK Sub as
licensee, solely in the event and to the extent that: (a) as the proximate
result of the grant of a security interest, UK Sub's rights in or with
respect to such item of UK Sub General Intangibles would be forfeited or
would become terminable or if UK Sub would be deemed to have breached the
underlying license or other agreement that governs such item of UK Sub
General Intangibles; (b) any such restriction is effective and enforceable
under applicable law, including Section 9318(4) of the Code; and (c) any such
forfeiture, terminability, or breach cannot be remedied by UK Sub using its
best efforts (but without any obligation to make any material expenditures of
money or to commence legal proceedings); PROVIDED, HOWEVER, that the grant of
security interest hereunder shall extend to, and the term "UK Sub's
Collateral" shall include, (1) any and all proceeds of such item of UK Sub
General Intangibles, and (2) upon any such licensor's consent with respect to
any otherwise excluded item of UK Sub General Intangibles being obtained,
such item of UK Sub General Intangibles.
"UK SUB DILUTION RESERVE" means, as of any date of determination,
an amount sufficient to reduce the advance rate against Eligible UK Sub's
Accounts by one percentage point for each percentage point by which Dilution
is in excess of 5%.
"UK SUB EQUIPMENT" means all of UK Sub's present and hereafter
acquired machinery, machine tools, motors, equipment, furniture, furnishings,
fixtures, vehicles (including motor vehicles and trailers), tools, parts,
goods (other than consumer goods, farm
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products, or UK Sub Inventory), wherever located, including all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing.
"UK SUB GENERAL INTANGIBLES" means all of UK Sub's present and
future general intangibles and other personal property (including contract
rights, rights arising under common law, statutes, or regulations, choses or
things in action, goodwill, patents, trade names, trademarks, servicemarks,
copyrights, blueprints, drawings, purchase orders, customer lists, monies due
or recoverable from pension funds, route lists, rights to payment and other
rights under any royalty or licensing agreements, infringement claims,
computer programs, information contained on computer disks or tapes,
literature, reports, catalogs, deposit accounts, insurance premium rebates,
tax refunds, and tax refund claims), other than goods, UK Sub Accounts, and
UK Sub Negotiable Collateral.
"UK SUB GUARANTY" means that certain General Continuing Guaranty,
dated as of even date herewith, by UK Sub in favor of Agent, in form and
content satisfactory to Agent.
"UK SUB INVENTORY" means all present and future inventory in which
UK Sub has any interest, including goods held for sale or lease or to be
furnished under a contract of service and all of UK Sub's present and future
raw materials, work in process, finished goods, and packing and shipping
materials, wherever located.
"UK SUB NEGOTIABLE COLLATERAL" means all of UK Sub's present and
future letters of credit, notes, drafts, instruments, Investment Property,
documents, personal property leases, and chattel paper.
"UK SUB SEASONAL RESERVE" means, as of any date of determination,
an amount equal to 5% of the gross sales of the UK Sub for the 45 days
immediately preceding the date of determination (the percentage amount of the
UK Sub Seasonal Reserve may be adjusted, at the election of the Agent, for
the 2000/2001 season based upon the actual amount of the UK Sub's Dilution
during the 1999/2000 season).
"UK SUB SECURITY AGREEMENT" means a Security Agreement executed and
delivered by the UK Sub to Agent, the form and substance of which is
satisfactory to Agent.
"UK SUB SECURITY DOCUMENTS" means certain security and guaranty
documents that by their respective terms provide that they are governed by
the laws of England, including a debenture between UK Sub and Agent, in each
case in form and substance satisfactory to Agent.
"UK SUB'S BOOKS" means all of UK Sub's books and records including:
ledgers; records indicating, summarizing, or evidencing UK Sub's Assets
(including the UK Sub Collateral) or liabilities; all information relating to
UK Sub's business operations or financial condition; and all computer
programs, disk or tape files, printouts, runs, or other computer prepared
information.
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"VOIDABLE TRANSFER" has the meaning set forth in SECTION 17.7.
"VOTING STOCK" means, with respect to any Person, Capital Stock of
any class or classes if the holders of such Capital Stock are ordinarily, in
the absence of contingencies, entitled to vote for the election of the
directors (or other persons performing similar functions) of such Person even
if the right to so vote has been suspended by the happening of such a
contingency.
"WELLS FARGO" means Wells Fargo Bank, National Association, a
national banking association.
1.2 ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto.
Whenever the term "Borrower" is used in respect of a financial covenant or a
related definition, it shall be understood to mean Borrower on a consolidated
basis unless the context clearly requires otherwise.
1.3 CODE. Any terms used in this Agreement that are defined in the Code
shall be construed and defined as set forth in the Code unless otherwise
defined herein.
1.4 CONSTRUCTION. Unless the context of this Agreement or any other Loan
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the term "including"
is not limiting, and the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this Agreement or any
other Loan Document refer to this Agreement or such other Loan Document, as
the case may be, as a whole and not to any particular provision of this
Agreement or such other Loan Document, as the case may be. Section,
subsection, clause, schedule, and exhibit references herein are to this
Agreement unless otherwise specified. Any reference in this Agreement or in
the Loan Documents to any agreement, instrument, or document shall include
all alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof,
as applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). Any reference herein to any
Person shall be construed to include such Person's successors and assigns.
Any requirement of a writing contained herein or in the other Loan Documents
shall be satisfied by the transmission of a Record and any Record transmitted
shall constitute a representation and warranty as to the accuracy and
completeness of the information contained therein.
1.5 SCHEDULES AND EXHIBITS. All of the schedules and exhibits attached
to this Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 ADVANCES.
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(a) Subject to the terms and conditions of this Agreement, and
during the term of this Agreement, each Lender agrees (severally, not jointly
or jointly and severally) to make advances ("ADVANCES") to Borrower in an
amount at any one time outstanding not to exceed such Lender's Pro Rata Share
of an amount equal to THE LESSER OF (i) the Maximum Amount LESS the then
extant Letter of Credit Usage, and (ii) the Borrowing Base LESS the then
extant Letter of Credit Usage. For purposes of this Agreement, "BORROWING
BASE," as of any date of determination, shall mean the result of:
(x) the result of 85% of Eligible Borrower Accounts, MINUS the
amount, if any, of the Borrower Dilution Reserve, MINUS, during the
periods from November 15 to December 31 and February 15 to March 31, the
amount, if any, of the Borrower Seasonal Reserve, PLUS
(y) on and after the UK Sub Closing Date, THE LEAST OF
(i) the result of 75% of the amount of Eligible UK Sub
Accounts, MINUS the amount, if any, of the UK Sub Dilution
Reserve, MINUS, during the periods from November 15 to
December 31 and February 15 to March 31, the amount, if any,
of the UK Sub Seasonal Reserve, and
(ii) an amount equal to 20% of the Availability provided by
SUBSECTION (x) above, and
(iii) $10,000,000, MINUS
(z) the aggregate amount of reserves, if any, established by
Agent pursuant to SECTION 2.1(b) or SECTION 10.
For purposes of determining the Borrowing Base, any amount that is
denominated in a currency other than Dollars shall be valued in Dollars based
on the applicable Exchange Rate for such other currency as of the date of
determination.
(b) Anything to the contrary in this SECTION 2.1 notwithstanding,
Agent shall have the right to establish reserves in such amounts, and with
respect to such matters, as Agent in its Permitted Discretion shall deem
necessary or appropriate, against the Borrowing Base, including reserves with
respect to (i) sums that the Obligors are required to pay (such as taxes,
assessments, insurance premiums, or, in the case of leased assets, rents or
other amounts payable under such leases) and have failed to pay under any
Section of this Agreement or any other Loan Document, (ii) the Foreign
Exchange Reserve, and (iii) amounts owing by an Obligor to any Person to the
extent secured by a Lien (other than Liens securing Permitted Purchase Money
Indebtedness or any existing Permitted Lien set forth on SCHEDULE P-1 to the
Disclosure Letter which is specifically identified thereon as entitled to
have priority over the Liens granted to Agent under the Loan Documents) on,
or trust over, any of the Collateral, which Lien or trust, in the Permitted
Discretion of Agent, would be
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likely to have a priority superior to the Liens of Agent, for the benefit of
the Lender Group (such as landlord liens, ad valorem taxes, property taxes,
or sales taxes where given priority under applicable law) in and to such item
of the Collateral.
(c) The Lenders shall have no obligation to make additional
Advances hereunder to the extent such additional Advances would cause the
Revolver Usage to exceed the Maximum Amount.
(d) Amounts borrowed pursuant to this Section may be repaid and,
subject to the terms and conditions of this Agreement, reborrowed at any time
during the term of this Agreement.
2.2 LETTERS OF CREDIT.
(a) Subject to the terms and conditions of this Agreement, the
Issuing Lender agrees to issue letters of credit for the account of Borrower
(each, an "L/C") or to purchase participations or execute indemnities or
reimbursement obligations (each such undertaking, an "L/C UNDERTAKING") with
respect to letters of credit issued by an issuing bank (as of the Closing
Date, such issuing bank to be Norwest) for the account of Borrower. To
request the issuance of an L/C or an L/C Undertaking (or the amendment,
renewal, or extension of an outstanding L/C or L/C Undertaking), Borrower
shall hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the Issuing Lender) to the
Issuing Lender and Agent (reasonably in advance of the requested date of
issuance, amendment, renewal, or extension) a notice requesting the issuance
of an L/C or L/C Undertaking, or identifying the L/C or L/C Undertaking to be
amended, renewed, or extended, the date of issuance, amendment, renewal, or
extension, the date on which such L/C or L/C Undertaking is to expire, the
amount of such L/C or L/C Undertaking, the name and address of the
beneficiary thereof, and such other information as shall be necessary to
prepare, amend, renew, or extend such L/C or L/C Undertaking. If requested by
the Issuing Lender, the Borrower also shall be an applicant under the letter
of credit application of any letter of credit that is to be the subject of an
L/C Undertaking. The Issuing Bank shall have no obligation to issue a Letter
of Credit if any of the following would result after giving effect to the
requested Letter of Credit:
(i) the Letter of Credit Usage would exceed the Borrowing Base
LESS the amount of outstanding Advances, LESS the aggregate amount of
reserves established hereunder (including under SECTION 2.1(b)); or
(ii) the Letter of Credit Usage would exceed the Maximum Amount
LESS the amount of outstanding Advances, LESS the aggregate amount of
reserves established hereunder (including under SECTION 2.1(b)); or
(iii) the Letter of Credit Usage would exceed $7,500,000; or
(iv) the outstanding Obligations would exceed the Maximum Amount.
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Borrower and Agent acknowledge and agree that certain of the letters of
credit that are to be the subject of Letters of Credit may be outstanding on
the Closing Date. Each Letter of Credit shall have an expiry date no later
than 30 days prior to the Maturity Date and all such Letters of Credit shall
be in form and substance acceptable to the Issuing Lender (in the exercise of
its Permitted Discretion), including the requirement that the amounts payable
thereunder must be payable in Dollars. If Issuing Lender is obligated to
advance funds under a Letter of Credit, Borrower immediately shall reimburse
such L/C Disbursement to Issuing Lender by paying to Agent an amount equal to
such L/C Disbursement not later than 11:00 a.m., California time, on the date
that such L/C Disbursement is made, if Borrower shall have received written
or telephonic notice of such L/C Disbursement prior to 10:00 a.m., California
time, on such date, or, if such notice has not been received by Borrower
prior to such time on such date, then not later than 11:00 a.m., California
time, on (i) the Business Day that Borrower receives such notice, if such
notice is received prior to 10:00 a.m., California time, on the date of
receipt, and, in the absence of such reimbursement, the L/C Disbursement
immediately and automatically shall be deemed to be an Advance hereunder and,
thereafter, shall bear interest at the rate then applicable to Advances under
SECTION 2.7. To the extent an L/C Disbursement is deemed to be an Advance
hereunder, Borrower's obligation to reimburse such L/C Disbursement shall be
discharged and replaced by the resulting Advance. Promptly following receipt
by Agent of any payment from Borrower pursuant to this paragraph, Agent shall
distribute such payment to the Issuing Lender or, to the extent that Lenders
have made payments pursuant to SECTION 2.2(c) to reimburse the Issuing
Lender, then to such Lenders and the Issuing Lender as their interest may
appear.
(b) Promptly following receipt of a notice of L/C Disbursement
pursuant to SECTION 2.2(a), each Lender with a Commitment agrees to fund its
Pro Rata Share of any Advance deemed made pursuant to the foregoing
subsection on the same terms and conditions as if Borrower had requested such
Advance and Agent shall promptly pay to Issuing Lender the amounts so
received by it from the Lenders. By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without
any further action on the part of the Issuing Lender or the Lenders, the
Issuing Lender shall be deemed to have granted to each Lender, and each
Lender shall be deemed to have purchased, a participation in each Letter of
Credit, in an amount equal to its Pro Rata Share of the Risk Participation
Liability of such Letter of Credit, and each such Lender agrees to pay to
Agent such Lender's Pro Rata Share of any payments made by Agent under such
Letter of Credit. In consideration and in furtherance of the foregoing, each
Lender hereby absolutely and unconditionally agrees to pay to Agent, for the
account of the Agent, such Lender's Pro Rata Share of each L/C Disbursement
made by the Issuing Lender and not reimbursed by Borrower on the date due as
provided in paragraph (a) of this Section, or of any reimbursement payment
required to be refunded to the Borrower for any reason. Each Lender
acknowledges and agrees that its obligation to deliver to Agent an amount
equal to its respective Pro Rata Share pursuant to this SECTION 2.2(b) shall
be absolute and unconditional and such remittance shall be made
notwithstanding the occurrence or continuation of an Event of Default or
Default or the failure to satisfy any condition set forth in SECTION 3
hereof. If any such Lender fails to make available to Agent the amount of
such Lender's Pro Rata Share of any payments made by Agent in respect of such
Letter of Credit as provided in
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this Section, Agent shall be entitled to recover such amount on demand from
such Lender together with interest thereon at the Defaulting Lender Rate
until paid in full.
(c) Borrower hereby agrees to indemnify, save, defend, and hold
the Lender Group harmless from any loss, cost, expense, or liability, and
reasonable attorneys fees incurred by the Lender Group arising out of or in
connection with any Letter of Credit; PROVIDED, HOWEVER, that Borrower shall
not be obligated hereunder to indemnify for any loss, cost, expense, or
liability that is caused by the gross negligence or willful misconduct of the
Issuing Lender or any member of the Lender Group. Borrower agrees to be bound
by the issuing bank's regulations and interpretations of any letter of credit
that is the subject of an L/C Undertaking and opened to or for Borrower's
account or by Agent's interpretations of any L/C issued by Agent to or for
Borrower's account, even though this interpretation may be different from
Borrower's own, and Borrower understands and agrees that the Lender Group
shall not be liable for any error, negligence, or mistake, whether of
omission or commission, in following Borrower's instructions or those
contained in the Letter of Credit or any modifications, amendments, or
supplements thereto. Borrower understands that the L/C Undertakings may
require Agent to indemnify the issuing bank for certain costs or liabilities
arising out of claims by Borrower against such issuing bank. Borrower hereby
agrees to indemnify, save, defend, and hold the Lender Group harmless with
respect to any loss, cost, expense (including reasonable attorneys fees), or
liability incurred by the Lender Group under any L/C Undertaking as a result
of the Lender Group's indemnification of any such issuing bank; PROVIDED,
HOWEVER, that Borrower shall not be obligated hereunder to indemnify for any
loss, cost, expense, or liability that is caused by the gross negligence or
willful misconduct of the Issuing Lender or any member of the Lender Group.
(d) Borrower hereby authorizes and directs any bank that issues a
letter of credit that is the subject of an L/C Undertaking to deliver to
Agent all instruments, documents, and other writings and property received by
the issuing bank pursuant to such letter of credit, and to accept and rely
upon Agent's instructions with respect to all matters arising in connection
with such letter of credit and the related application.
(e) Any and all charges, commissions, fees, and costs incurred by
Agent relating to the letters of credit that are the subject of an L/C
Undertaking shall be considered Lender Group Expenses for purposes of this
Agreement and immediately shall be reimbursable by Borrower to Agent.
(f) If by reason of (i) any change in any applicable law, treaty,
rule, or regulation or any change in the interpretation or application
thereof by any Governmental Authority, or (ii) compliance by the issuing bank
or the Lender Group with any direction, request, or requirement (irrespective
of whether having the force of law) of any Governmental Authority or monetary
authority including, Regulation D of the Federal Reserve Board as from time
to time in effect (and any successor thereto):
(i) any reserve, deposit, or similar requirement is or shall be
imposed or modified in respect of any Letters of Credit issued
hereunder, or
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(ii) there shall be imposed on the issuing bank or the Lender
Group any other condition regarding any Letter of Credit issued pursuant
hereto;
and the result of the foregoing is to increase, directly or indirectly,
the cost to the Lender Group of issuing, making, guaranteeing, or maintaining
any Letter of Credit or to reduce the amount receivable in respect thereof by
the Lender Group, then, and in any such case, Agent may, at any time within a
reasonable period after the additional cost is incurred or the amount
received is reduced, notify Borrower, and Borrower shall pay on demand such
amounts Agent may specify to be necessary to compensate the Lender Group for
such additional cost or reduced receipt, together with interest on such
amount from the date of such demand until payment in full thereof at the rate
then applicable to Advances hereunder. The determination by Agent of any
amount due pursuant to this Section shall treat Borrower the same as all
similarly situated borrowers from Agent, as determined by Agent in its
Permitted Discretion, and, as set forth in a certificate setting forth the
calculation thereof in reasonable detail, shall, in the absence of manifest
or demonstrable error, be final and conclusive and binding on all of the
parties hereto.
2.3 [INTENTIONALLY OMITTED].
2.4 BORROWING PROCEDURES AND SETTLEMENTS
(a) PROCEDURE FOR BORROWING. Each Borrowing shall be made by an
irrevocable written request by an Authorized Person delivered to Agent (which
notice must be received by Agent no later than 10:00 a.m. (California time)
on the Business Day prior to the date that is the requested Funding Date in
the case of a request for an Advance specifying (i) the amount of such
Borrowing, and (ii) the requested Funding Date, which shall be a Business
Day; PROVIDED, HOWEVER, that in the case of a request for Swing Loan in an
amount of $5,000,000, or less, such notice will be timely received if it is
received by Agent no later than 10:00 a.m. (California time) on the Business
Day that is the requested Funding Date) specifying (i) the amount of such
Borrowing, and (ii) the requested Funding Date, which shall be a Business
Day. At Agent's election, in lieu of delivering the above-described written
request, any Authorized Person may give Agent telephonic notice of such
request by the required time, with such telephonic notice to be confirmed in
writing within 24 hours of the giving of such notice.
(b) AGENT'S ELECTION. Promptly after receipt of a request for a
Borrowing pursuant to SECTION 2.4(a), Agent shall (i) for so long as Foothill
is the sole Lender hereunder, request Swing Lender to make a Swing Loan
pursuant to the terms of SECTION 2.4(d) in the amount of the requested
Borrowing and the Swing Lender shall make a Swing Loan pursuant to SECTION
2.4(d), or (ii) from and after such date as Foothill ceases to be the sole
Lender hereunder, elect, in its discretion, (A) to have the terms of SECTION
2.4(c) apply to such requested Borrowing, or (B) to request Swing Lender to
make a Swing Loan pursuant to the terms of SECTION 2.4(d) in the amount of
the requested Borrowing; PROVIDED, HOWEVER, that if Swing Lender declines in
its sole discretion to make a Swing Loan pursuant
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to SECTION 2.4(d), Agent shall elect to have the terms of SECTION 2.4(c)
apply to such requested Borrowing.
(c) MAKING OF ADVANCES.
(i) In the event that Agent shall elect to have the terms of this
SECTION 2.4(c) apply to a requested Borrowing as described in SECTION
2.4(b), then promptly after receipt of a request for a Borrowing
pursuant to SECTION 2.4(a), Agent shall notify the Lenders, not later
than 1:00 p.m. (California time) on the Business Day immediately
preceding the Funding Date applicable thereto, by telecopy, telephone,
or other similar form of transmission, of the requested Borrowing. Each
Lender shall make the amount of such Lender's Pro Rata Share of the
requested Borrowing available to Agent in immediately available funds,
to such account of Agent as Agent may designate, not later than 10:00
a.m. (California time) on the Funding Date applicable thereto. After
Agent's receipt of the proceeds of such Advances, upon satisfaction of
the applicable conditions precedent set forth in SECTION 3 hereof, Agent
shall make the proceeds of such Advances available to Borrower on the
applicable Funding Date by transferring same day funds equal to the
proceeds of such Advances received by Agent to Borrower's Designated
Account; PROVIDED, HOWEVER, that, subject to the provisions of SECTION
2.4(i), Agent shall not request any Lender to make, and no Lender shall
have the obligation to make, any Advance if Agent shall have received
written notice from any Lender, or otherwise has actual knowledge, that
(1) one or more of the applicable conditions precedent set forth in
SECTION 3 will not be satisfied on the requested Funding Date for the
applicable Borrowing unless such condition has been waived, or (2) the
requested Borrowing would exceed the Availability on such Funding Date.
(ii) Unless Agent receives notice from a Lender on or prior to the
Closing Date or, with respect to any Borrowing after the Closing Date,
at least 1 Business Day prior to the date of such Borrowing, that such
Lender will not make available as and when required hereunder to Agent
for the account of Borrower the amount of that Lender's Pro Rata Share
of the Borrowing, Agent may assume that each Lender has made or will
make such amount available to Agent in immediately available funds on
the Funding Date and Agent may (but shall not be so required), in
reliance upon such assumption, make available to Borrower on such date a
corresponding amount. If and to the extent any Lender shall not have
made its full amount available to Agent in immediately available funds
and Agent in such circumstances has made available to Borrower such
amount, that Lender shall on the Business Day following such Funding
Date make such amount available to Agent, together with interest at the
Defaulting Lender Rate for each day during such period. A notice
submitted by Agent to any Lender with respect to amounts owing under
this subsection shall be conclusive, absent manifest error. If such
amount is so
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made available, such payment to Agent shall constitute such Lender's
Advance on the date of Borrowing for all purposes of this Agreement. If
such amount is not made available to Agent on the Business Day following
the Funding Date, Agent will notify Borrower of such failure to fund
and, upon demand by Agent, Borrower shall pay such amount to Agent for
Agent's account, together with interest thereon for each day elapsed
since the date of such Borrowing, at a rate per annum equal to the
interest rate applicable at the time to the Advances composing such
Borrowing. The failure of any Lender to make any Advance on any Funding
Date shall not relieve any other Lender of any obligation hereunder to
make an Advance on such Funding Date, but no Lender shall be responsible
for the failure of any other Lender to make the Advance to be made by
such other Lender on any Funding Date.
(iii) Agent shall not be obligated to transfer to, and without
Borrower's prior written consent shall not, transfer to a Defaulting
Lender any payments made by Borrower to Agent for the Defaulting
Lender's benefit, and in the absence of such consent Agent shall
transfer any such payments to each other non-Defaulting Lender member of
the Lender Group ratably in accordance with their Commitments (but only
to the extent that such Defaulting Lenders Advance was funded by the
other members of the Lender Group) or, if so directed by Borrower and if
no Default or Event of Default has occurred and is continuing (and to
the extent such Defaulting Lender's Advance was not funded by the Lender
Group), retain same to be re-advanced to Borrower as if such Defaulting
Lender had made Advances to Borrower. Subject to the foregoing, Agent
may hold and, in its Permitted Discretion, re-lend to Borrower for the
account of such Defaulting Lender the amount of all such payments
received and retained by it for the account of such Defaulting Lender.
Solely for the purposes of voting or consenting to matters with respect
to the Loan Documents, such Defaulting Lender shall be deemed not to be
a "Lender" and such Lender's Commitment shall be deemed to be zero. This
section shall remain effective with respect to such Lender until (x) the
Obligations under this Agreement shall have been declared or shall have
become immediately due and payable, (y) the non-Defaulting Lenders,
Agent, and Borrower shall have waived such Lender's default in writing,
or (z) the Defaulting Lender makes its Pro Rata Share of the applicable
Advance and pays to Agent all amounts owing by Defaulting Lender in
respect thereof. The operation of this Section shall not be construed to
increase or otherwise affect the Commitment of any Lender, to relieve or
excuse the performance by such Defaulting Lender or any other Lender of
its duties and obligations hereunder or to relieve or excuse the
performance by Borrower of its duties and obligations hereunder to Agent
or to Lenders other than such Defaulting Lender. Any such failure to
fund by any Defaulting Lender shall constitute a material breach by such
Defaulting Lender of this Agreement and shall entitle Borrower at its
option, upon written notice to Agent, to arrange for a substitute Lender
to assume the Commitment of such Defaulting Lender, such substitute
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Lender to be acceptable to Agent. In connection with the arrangement of
such a substitute Lender, the Defaulting Lender shall have no right to
refuse to be replaced hereunder, and agrees to execute and deliver a
completed form of Assignment and Acceptance Agreement in favor of the
substitute Lender (and agrees that it shall be deemed to have executed
and delivered such document if it fails to do so) subject only to being
repaid its share of the outstanding Obligations (including an assumption
of its Pro Rata Share of the Risk Participation Liability) without any
premium or penalty of any kind whatsoever; PROVIDED FURTHER, HOWEVER,
that any such assumption of the Commitment of such Defaulting Lender
shall not be deemed to constitute a waiver of any of the Lender Groups'
or Borrower's rights or remedies against any such Defaulting Lender's
arising out of or in relation to such failure to fund.
(d) MAKING OF SWING LOANS.
(i) In the event of either (a) Agent's and Swing Lender's
agreement to provide Swing Loans for so long as Foothill is the sole
Lender hereunder, or (b) Agent's election, with the consent of Swing
Lender, as a Lender, to have the terms of this SECTION 2.4(d) apply to a
requested Borrowing as described in SECTION 2.4(b), Swing Lender as a
Lender shall make such Advance in the amount of such Borrowing (any such
Advance made solely by Swing Lender as a Lender pursuant to this SECTION
2.4(d) being referred to as a "SWING LOAN" and such Advances being
referred to collectively as "SWING LOANS") available to Borrower on the
Funding Date applicable thereto by transferring same day funds to
Borrower's Designated Account. Each Swing Loan is an Advance hereunder
and shall be subject to all the terms and conditions applicable to other
Advances, except that all payments thereon shall be payable to Swing
Lender as a Lender solely for its own account (and for the account of
the holder of any participation interest with respect to such Advance).
Subject to the provisions of SECTION 2.4(i), Agent shall not request
Swing Lender as a Lender to make, and Swing Lender as a Lender shall not
make, any Swing Loan if Agent shall have received written notice from
any Lender, or otherwise has actual knowledge, that (1) one or more of
the applicable conditions precedent set forth in SECTION 3 will not be
satisfied on the requested Funding Date for the applicable Borrowing
unless such condition has been waived, or (2) the requested Borrowing
would exceed the Availability on such Funding Date. Swing Lender as a
Lender shall not otherwise be required to determine whether the
applicable conditions precedent set forth in SECTION 3 have been
satisfied on the Funding Date applicable thereto prior to making, in its
sole discretion, any Swing Loan.
(ii) The Swing Loans shall be secured by the Liens granted to Agent
under the Loan Documents and shall constitute Advances and Obligations
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hereunder, and shall bear interest at the rate applicable from time to
time to Advances.
(e) AGENT ADVANCES.
(i) Agent hereby is authorized by Borrower and the Lenders, from
time to time in Agent's sole discretion, (1) after the occurrence and
during the continuance of a Default or an Event of Default, or (2) at
any time that any of the other applicable conditions precedent set forth
in SECTION 3 have not been satisfied, to make Advances to Borrower on
behalf of the Lenders that Agent, in its reasonable business judgment,
deems necessary or desirable (a) to preserve or protect the Collateral,
or any portion thereof, (b) to enhance the likelihood of repayment of
the Obligations, or (c) to pay any other amount chargeable to Borrower
pursuant to the terms of this Agreement, including Lender Group Expenses
and the costs, fees, and expenses described in SECTION 10 (any of the
Advances described in this SECTION 2.4(e) shall be deemed to be Advances
hereunder and shall be referred to as "AGENT ADVANCES").
(ii) Agent Advances shall be repayable on demand and secured by the
Liens granted to Agent under the Loan Documents, shall constitute
Advances and Obligations hereunder, and shall bear interest at the rate
applicable from time to time to Advances.
(f) SETTLEMENT. It is agreed that each Lender's funded portion of
the Advances is intended by the Lenders to equal, at all times, such Lender's
Pro Rata Share of the outstanding Advances. Such agreement notwithstanding,
Agent, Swing Lender, and the other Lenders agree (which agreement shall not
be for the benefit of or enforceable by Borrower) that in order to facilitate
the administration of this Agreement and the other Loan Documents, settlement
among them as to the Advances, the Swing Loans, and the Agent Advances shall
take place on a periodic basis in accordance with the following provisions:
(i) Agent shall request settlement ("SETTLEMENT") with the Lenders
on a weekly basis, or on a more frequent basis if so determined by
Agent, (1) on behalf of Swing Lender, with respect to each outstanding
Swing Loan, (2) for itself, with respect to each Agent Advance, and (3)
with respect to Collections received, as to each by notifying the
Lenders by telecopy, telephone, or other similar form of transmission,
of such requested Settlement, no later than 2:00 p.m. (California time)
on the Business Day immediately prior to the date of such requested
Settlement (the date of such requested Settlement being the "SETTLEMENT
DATE"). Such notice of a Settlement Date shall include a summary
statement of the amount of outstanding Advances, Swing Loans, and Agent
Advances for the period since the prior Settlement Date, the amount of
repayments received in such period, and the amounts allocated to each
Lender of the interest, fees, and other charges for such period. Subject
to the terms and conditions contained herein (including
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SECTION 2.4(c)(iii)): (y) if a Lender's balance of the Advances, Swing
Loans, and Agent Advances exceeds such Lender's Pro Rata Share of the
Advances, Swing Loans, and Agent Advances as of a Settlement Date, then
Agent shall by no later than 12:00 p.m. (California time) on the
Settlement Date transfer in immediately available funds to the account
of such Lender as such Lender may designate, an amount such that each
such Lender shall, upon receipt of such amount, have as of the
Settlement Date, its Pro Rata Share of the Advances, Swing Loans, and
Agent Advances; and (z) if a Lender's balance of the Advances, Swing
Loans, and Agent Advances is less than such Lender's Pro Rata Share of
the Advances, Swing Loans, and Agent Advances as of a Settlement Date,
such Lender shall no later than 12:00 p.m. (California time) on the
Settlement Date transfer in immediately available funds to such account
of Agent as Agent may designate, an amount such that each such Lender
shall, upon transfer of such amount, have as of the Settlement Date, its
Pro Rata Share of the Advances, Swing Loans, and Agent Advances. Such
amounts made available to Agent under clause (z) of the immediately
preceding sentence shall be applied against the amounts of the
applicable Swing Loan or Agent Advance and, together with the portion of
such Swing Loan or Agent Advance representing Swing Lender's Pro Rata
Share thereof, shall constitute Advances of such Lenders. If any such
amount is not made available to Agent by any Lender on the Settlement
Date applicable thereto to the extent required by the terms hereof,
Agent shall be entitled to recover for its account such amount on demand
from such Lender together with interest thereon at the Defaulting
Lenders Rate.
(ii) In determining whether a Lender's balance of the Advances,
Swing Loans, and Agent Advances is less than, equal to, or greater than
such Lender's Pro Rata Share of the Advances, Swing Loans, and Agent
Advances as of a Settlement Date, Agent shall, as part of the relevant
Settlement, apply to such balance the portion of payments actually
received in good funds by Agent or Swing Lender with respect to
principal, interest, fees payable by Borrower and allocable to the
Lenders hereunder, and proceeds of Collateral. To the extent that a net
amount is owed to any such Lender after such application, such net
amount shall be distributed by Agent or Swing Lender to that Lender as
part of such next Settlement.
(iii) Between Settlement Dates, Agent, to the extent no Agent
Advances or Swing Loans are outstanding, may pay over to Swing Lender
any payments received by Agent, that in accordance with the terms of
this Agreement would be applied to the reduction of the Advances, for
application to Swing Lender's Pro Rata Share of the Advances. If, as of
any Settlement Date, Collections received since the then immediately
preceding Settlement Date have been applied to Swing Lender's Pro Rata
Share of the Advances other than to Swing Loans or Agent Advances, as
provided for in the previous sentence, Swing Lender shall pay to Agent
for the accounts of the Lenders,
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and Agent shall pay to the Lenders, to be applied to the outstanding
Advances of such Lenders, an amount such that each Lender shall, upon
receipt of such amount, have, as of such Settlement Date, its Pro Rata
Share of the Advances. During the period between Settlement Dates, Swing
Lender with respect to Swing Loans, Agent with respect to Agent
Advances, and each Lender with respect to the Advances other than Swing
Loans and Agent Advances, shall be entitled to interest at the
applicable rate or rates payable under this Agreement on the daily
amount of funds employed by Swing Lender, Agent, or the Lenders, as
applicable.
(g) NOTATION. Agent shall record on its books the principal amount
of the Advances owing to each Lender, including the Swing Loans owing to
Swing Lender, and Agent Advances owing to Agent, and the interests therein of
each Lender, from time to time. In addition, each Lender is authorized, at
such Lender's option, to note the date and amount of each payment or
prepayment of principal of such Lender's Advances in its books and records,
including computer records, such books and records constituting conclusive
evidence, absent manifest error, of the accuracy of the information contained
therein.
(h) LENDERS' FAILURE TO PERFORM. All Advances (other than Swing
Loans and Agent Advances) shall be made by the Lenders simultaneously and in
accordance with their Pro Rata Shares. It is understood that (i) no Lender
shall be responsible for any failure by any other Lender to perform its
obligation to make any Advances hereunder, nor shall any Commitment of any
Lender be increased or decreased as a result of any failure by any other
Lender to perform its obligation to make any Advances hereunder, and (ii) no
failure by any Lender to perform its obligation to make any Advances
hereunder shall excuse any other Lender from its obligation to make any
Advances hereunder.
(i) OPTIONAL OVERADVANCES. Any contrary provision of this Agre |
