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Exhibit 10.8
TERM LOAN AGREEMENT
AND
FIRST AMENDMENT TO REVOLVING CREDIT LOAN AGREEMENT
This Term Loan Agreement and First Amendment to Revolving Credit Loan
Agreement (the "Amendment"), effective as of April 18, 1997, is made and entered
into by and among Rocky Shoes & Boots, Inc., an Ohio corporation ("Rocky Inc."),
Five Star Enterprises Ltd., a Cayman Islands corporation ("Five Star"),
Lifestyle Footwear, Inc., a Delaware corporation ("Lifestyle") (the foregoing
parties being referred to herein individually as a "Borrower" and collectively
as the "Borrowers"), Bank One, Columbus, NA, a national banking association
("Bank One"), The Huntington National Bank, a national banking association
("HNB")(Bank One and HNB shall be referred to herein individually as a "Bank"
and collectively as the "Banks"), and Bank One, Columbus, NA, as Agent, acting
in the manner and to the extent described in Article IX of the Agreement
referred to herein (in such capacity, the "Agent").
BACKGROUND INFORMATION
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A. The Borrowers, Bank One, HNB and the Agent entered into a certain
Revolving Credit Loan Agreement, dated as of January 28, 1997 (the "Agreement"),
pursuant to which Bank One and HNB agreed to provide revolving credit loans to
the Borrowers, upon and subject to the terms and conditions as set forth in the
Agreement.
B. The Borrowers have requested that (i) the amount of the revolving
credit loans provided by the Banks to the Borrowers pursuant to the Agreement be
increased, and (ii) the Banks provide term loans to the Borrowers in the
aggregate amount of $3,000,000.
C. The Banks are willing to provide (i) the increase in the amount of
the revolving credit loans, and (ii) the term loans, upon and subject to the
terms and conditions as hereinafter set forth.
PROVISIONS
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NOW, THEREFORE, in consideration of the foregoing, the provision of the
agreements and covenants hereinafter contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Banks, the Agent and the Borrowers hereby agree as follows (capitalized terms
not defined herein shall have the meanings set forth in the Agreement):
SECTION 1. AMENDMENT OF THE AGREEMENT.
(a) The following definitions set forth in Section 1.1 of the
Agreement shall be amended in their entireties to provide as follows:
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"AGGREGATE COMMITMENT" shall mean the collective, but several,
Commitments of the Banks to make Revolving Credit Loans to the Borrowers and
issue, provide and fund Commercial L/Cs and Standby L/Cs on behalf of the
Borrowers up to the following maximum aggregate amounts, subject to the terms
and conditions of this Agreement:
(i) from April 18, 1997 through and including May 15, 1997, the
maximum aggregate amount of $25,000,000;
(ii) from May 16, 1997 through and including December 31,1997,
the maximum aggregate amount of $42,000,000;
(iii) from January 1, 1998 through and including May 15, 1998,
the maximum aggregate amount of $25,000,000;
(iv) from May 16, 1998 through and including December 31,1998,
the maximum aggregate amount of $42,000,000; and
(v) from January 1, 1999 through and including April 30, 1999,
the maximum aggregate amount of $25,000,000.
"BANK ONE NOTE" shall mean the Amended and Restated Master Business
Loan Note, dated April 18, 1997, executed by the Borrowers and payable to the
order of Bank One in the maximum principal amount of $25,200,000, as the same
may be amended, modified, supplemented, extended, restated or replaced from time
to time. This note amends and restates in its entirety the Master Business Loan
Note dated January 28, 1997, in the original principal amount of $21,000,000,
executed by the Borrower and payable to the order of Bank One.
"COMMITMENT" shall mean:
(a) with respect to Bank One, the commitment of Bank One to make
Revolving Credit Loans to the Borrowers and issue, provide and fund Commercial
L/Cs and Standby L/Cs on behalf of the Borrowers up to the following maximum
aggregate amounts, subject to the terms and conditions of this Agreement:
(i) from April 18, 1997 through and including May
15,1997, the maximum aggregate amount of $15,000,000;
(ii) from May 16, 1997 through and including December
31,1997, the maximum aggregate amount of $25,200,000;
(iii) from January 1, 1998 through and including May 15,
1998, the maximum aggregate amount of $15,000,000;
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(iv) from May 16, 1998 through and including December
31,1998, the maximum aggregate amount of $25,200,000; and
(v) from January 1, 1999 through and including April 30,
1999, the maximum aggregate amount of $15,000,000.
(b) with respect to HNB, the commitment of HNB to make Revolving
Credit Loans to the Borrowers and to purchase participations from Bank One
with respect to Commercial L/Cs and Standby L/Cs on behalf of the Borrowers
up to the following maximum aggregate amounts, subject to the terms and
conditions of this Agreement:
(i) from April 18, 1997 through and including May 15,1997,
the maximum aggregate amount of $10,000,000;
(ii) from May 16, 1997 through and including December 31,
1997, the maximum aggregate amount of $16,800,000;
(iii) from January 1, 1998 through and including May 15,
1998, the maximum aggregate amount of $10,000,000;
(iv) from May 16, 1998 through and including December 31,
1998, the maximum aggregate amount of $16,800,000; and
(v) from January 1, 1999 through and including April 30,
1999, the maximum aggregate amount of $10,000,000.
"COMMITMENT PERIOD" shall mean the period of time from April 18, 1997
through and including April 30, 1999, as such date may be extended as
provided in Section 2.4(b).
"HNB NOTE" shall mean the Amended and Restated Master Business Loan
Note, dated April 18, 1997, executed by the Borrowers and payable to the
order of HNB in the maximum principal amount of $16,800,000, as the same
may be amended, modified, supplemented, extended, restated or replaced from
time to time. This note amends and restates in its entirety the Master
Business Loan Note dated January 28, 1997, in the original principal amount
of $14,000,000, executed by the Borrower and payable to the order of HNB.
(b) Section 7.2(a) of the Agreement shall be amended in its
entirety to provide as follows:
(a) INDEBTEDNESS. Create, incur, assume or suffer to exist any
Indebtedness or liability for borrowed money, except for: (i) Indebtedness
to the Banks pursuant to this Agreement; (ii) term loans in the aggregate
amount of
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$3,000,000 by the Banks to the Borrowers pursuant to promissory notes
dated April 18, 1997; (iii) Indebtedness existing as of January 28,
1997; and (iv) accounts payable and other liabilities created in the
ordinary course of business, including but not limited to obligations
described in Sections 7.2(c) and (d), but not including any liability
or Indebtedness incurred in connection with the borrowing of money.
(c) The "and" at the end of Section 7.2(b)(v) of the Agreement shall
be deleted; the period at the end of Section 7.2(b)(vi) of the Agreement shall
be deleted and replace with "; and"; and a new Section 7.2(b)(vii) shall be
added to the Agreement as follows:
(vii) Liens in favor of the Banks and/or the Agent for the
benefit of the Banks.
(d) Section 7.2(l)(ii) of the Agreement shall be amended in its
entirety to provide as follows:
(ii) CONSOLIDATED TANGIBLE NET WORTH. Permit Consolidated
Tangible Net Worth to be less than (A) $25,906,000 as of December 31,
1996; (B) $24,250,000 as of March 31, 1997 through June 30, 1997; and
(C) $26,000,000 thereafter, which amount shall increase annually on
the last day of each Fiscal Year (commencing with the Fiscal Year
ending December 31, 1997) by an amount equal to (x) 50% of
Consolidated Earnings for such Fiscal Year (but not decreased by any
losses), plus (y) 75% of the net proceeds (after related costs and
expenses) from the sale of equity securities of Rocky Inc. pursuant to
a public offering of such securities which occurs during such Fiscal
Year.
(e) Section 7.2(l)(v) of the Agreement shall be amended in its
entirety to provide as follows:
(v) CAPITAL EXPENDITURES. Permit Capital Expenditures to
exceed (x) $2,750,000 in the Fiscal Year ending December 31, 1996,
(y) $3,000,000 in the Fiscal Year ending December 31, 1997, and (z)
$2,500,000 in each Fiscal Year thereafter.
SECTION 2. TERM LOANS.
(a) TERM LOANS. The Banks severally agree, subject to the
terms and conditions hereof, to make term loans (the "Term Loans") to the
Borrowers on the date of this Amendment in the aggregate principal sum of
$3,000,000, with the Term Loan from Bank One being in the principal amount of
$1,800,000, and the Term Loan from HNB being in the principal amount of
$1,200,000.
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(b) PROMISSORY NOTES. The Term Loans to the Borrowers pursuant
hereto shall be evidenced by the Term Loan Notes of the Borrowers of even date
herewith in the forms attached hereto as Exhibits C and D (the "Term Loan
Notes"), payable to the order of each respective Bank and evidencing the
obligation of the Borrowers to pay the aggregate unpaid principal amount of the
Term Loans made by the Banks, together with interest thereon. Among other terms,
the rate of interest, time for payment of principal and/or interest, right to
prepay, late charges and default rate of interest with respect to the Term Loans
shall be as set forth in the Term Loan Notes.
(c) USE OF PROCEEDS. The proceeds of the Term Loans shall be used
by the Borrowers to refinance certain Revolving Credit Loans, the proceeds of
which were used to purchase fixed assets, and as such will be used to reduce the
current outstanding balance of Revolving Credit Loans.
(d) TERM LOANS TO BE GOVERNED BY THE AGREEMENT. The Term Loans,
the Term Loan Notes and the Borrowers shall be subject to the terms and
conditions of the Agreement, as amended hereby and as may be hereafter amended,
modified, supplemented, extended, restated or replaced from time to time, which
shall remain in effect for the Term Loans regardless of termination of the
Agreement and/or the Revolving Credit Loans and any other credit facility
described in the Agreement. Without limiting the generality of the foregoing,
the Agent shall act as agent for the Banks in connection with the Term Loans, in
accordance with and subject to Article 9 of the Agreement.
SECTION 3. CONDITIONS TO BANKS' OBLIGATIONS. The obligations of the
Banks to enter into this Amendment and be bound by the terms hereof and to make
the Term Loans are subject to the satisfaction of the following conditions
precedent:
(a) DELIVERY OF DOCUMENTS. Contemporaneously with or before the
execution of this Amendment by the Banks, the Agent shall have received the
following, each in form and substance satisfactory to the Banks and their
counsel:
(i) AMENDED AND RESTATED PROMISSORY NOTES. The Amended and
Restated Master Business Loan Notes in the form of Exhibits A and B
attached hereto, duly executed by the Borrowers;
(ii) TERM LOAN NOTES. The Term Loan Notes in the form of
Exhibits C and D attached hereto, duly executed by the Borrowers;
(iii) AMENDMENT TO MORTGAGE. The First Amendment to Open-End
Mortgage, Security Agreement and Assignment of Rents and Leases in the
form of Exhibit E attached hereto, duly executed by Rocky Inc.;
(iv) UPDATED TITLE REPORT. Updated title report as to the
real property owned by Rocky Inc. showing no adverse changes in the
status or title thereto or additional Liens thereon;
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(v) CERTIFIED RESOLUTIONS. Certified copies of (i) the
corporate resolutions of each Borrower authorizing the execution and
delivery of this Amendment and all documents and instruments referred
to herein and the transactions contemplated hereby and thereby;
(vi) SECRETARY'S CERTIFICATE. Signed copy of (i) a
certificate of the Secretary or Assistant Secretary of each Borrower,
which shall certify the names of the officers of such Borrower
authorized to sign this Amendment and the other documents or
certificates of such Borrower to be executed and delivered pursuant
hereto; and
(vii) OTHER REQUIREMENTS. Such other certificates, documents
and other items as the Banks, in their reasonable discretion, deem
necessary or desirable.
(b) REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by the Borrowers in this Amendment shall be true and correct in
all material respects as of the date hereof.
SECTION 4. TRUTH OF REPRESENTATIONS AND WARRANTIES; NO DEFAULTS. The
Borrowers hereby represent and warrant that the following shall be true and
correct as of the date of this Amendment:
(a) The representations and warranties of the Borrower contained
in Article V of the Agreement are true and correct on and as of the date of this
Amendment as if made on and as of such date unless stated to relate to a
specific earlier date;
(b) No event or condition exists which constitutes a Default or
an Event of Default;
(c) All financial information heretofore provided to the Banks
and the Agent is true, accurate and complete in all material respects; and
(d) Neither this Amendment nor any other document, certificate or
written statement furnished to the Banks or to the Agent by or on behalf of the
Borrowers in connection with the transactions contemplated hereby contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained herein and therein not misleading.
SECTION 5. REAFFIRMATION OF LIABILITY. The Borrowers hereby reaffirm
their respective liability to the Banks and the Agent under the Agreement and
all other agreements and instruments executed by the Borrowers for the benefit
of the Banks and the Agent in connection with the Agreement (the "Bank
Documents"). In addition, the Borrowers agree that the Banks and the Agent have
performed all of their respective obligations under the Agreement and the Bank
Documents and that neither Bank nor the
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Agent is currently in default under any obligation any of them have or ever did
have to the Borrowers under the Agreement, the Bank Documents or any other
agreement.
SECTION 6. EFFECTIVENESS OF AGREEMENT. All of the terms, covenants and
conditions of, and the obligations of the Borrowers under, the Agreement and the
Bank Documents shall remain in full force and effect as amended hereby.
SECTION 7. PRESERVATION OF EXISTING SECURITY INTERESTS. Each mortgage,
security interest, pledge, assignment, lien or other conveyance or encumbrance
of any right, title, or interest in any Collateral or other property of any kind
delivered to the Banks and/or the Agent at any time by the Borrowers or any
Person in connection with the Agreement or the Bank Documents or to secure the
performance of the obligation of the Borrowers under the Agreement and the Bank
Documents shall remain in full force and effect following the execution of this
Amendment.
SECTION 8. RESERVATION OF RIGHTS; EFFECTIVE INSOLVENCY PROCEEDING.
Nothing herein shall be construed to release, waive, relinquish, discharge, or
in any other manner modify or affect the ability of any party hereto to contest
the discharge or dischargeability in bankruptcy of the obligation of any Person
or entity in connection with the Agreement and the Bank Documents.
SECTION 9. GOVERNING LAW. This Amendment is being delivered, and is
intended to be performed in, the State of Ohio and shall be construed and
enforced in accordance with, and governed by, the laws of the State of Ohio.
SECTION 10. SEVERABILITY. Any provision of this Amendment which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective only to the extent of such prohibition or unenforceability,
without invalidating the remaining provisions hereof or affecting the validity
or enforceability of such provision in any other jurisdiction.
SECTION 11. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 12. HEADINGS. The headings of the sections of this Amendment are
for convenience only and shall not affect the construction or interpretation of
this Amendment.
SECTION 13. INTERPRETATION. This Amendment is to be deemed to have been
prepared jointly by the parties hereto, and any uncertainty or ambiguity
existing herein shall not be interpreted against any party but shall be
interpreted according to the rules for the interpretation of arm's length
agreements.
SECTION 14. WAIVER OF JURY TRIAL. THE BANKS, THE AGENT AND EACH BORROWER,
AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO
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CONSULT WITH COUNSEL, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT
ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING
OUT OF THIS AMENDMENT, THE AGREEMENT, THE NOTES, THE OTHER FACILITY DOCUMENTS,
OR ANY RELATED INSTRUMENT OR AGREEMENT, OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREBY, OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS (WHETHER ORAL OR
WRITTEN), OR ACTIONS OF ANY OF THEM. THIS WAIVER SHALL NOT IN ANY WAY AFFECT THE
AGENT'S OR THE BANKS' ABILITY TO PURSUE REMEDIES PURSUANT TO ANY CONFESSION OF
JUDGMENT OR COGNOVIT PROVISION CONTAINED IN ANY FACILITY DOCUMENT. NEITHER THE
BANKS, THE AGENT NOR ANY BORROWER SHALL SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR
OTHERWISE, ANY ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER
ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THESE PROVISIONS
SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY THE
BANKS, THE AGENT OR THE BORROWERS EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY ALL
OF THEM.
SECTION 15. WAIVER OF SUBROGATION. Each Borrower expressly waives any and
all rights of subrogation, contribution, reimbursement, indemnity, exoneration,
implied contract, recourse to security or any other claim (including any claim,
as that term is defined in the federal Bankruptcy Code, and any amendments)
which such Borrower may now have or later acquire against any other Borrower,
any other entity directly or contingently liable for the obligations of the
Borrowers under this Amendment, the Agreement and the other Facility Documents
or against the Collateral, arising from the existence or performance of such
Borrower's obligations under this Amendment, the Agreement and the other
Facility Documents.
SECTION 16. CONFESSION OF JUDGMENT. Each Borrower irrevocably authorizes
any attorney-at-law, including any attorney-at-law employed or retained by the
Banks or the Agent, to appear for the Borrower in any court of record in
Franklin County, Ohio (which the Borrower acknowledges to be the place where the
Agreement and this Amendment was made) or any other state or jurisdiction
wherein the Borrower may then reside, to (i) waive the issuing and service of
process, (ii) confess judgment against the Borrower in favor of the holder of
this Agreement, as amended by this Amendment, for all amounts then due
thereunder, together with costs of suit, (iii) release all errors, and (iv)
waive all rights of appeal. Each Borrower consents to the jurisdiction and venue
of that court. Each Borrower waives any conflict of interest that any
attorney-at-law employed or retained by the Banks or the Agent may have in
confessing judgment under the Agreement as amended by this Amendment and
consents to payment of a legal fee to any attorney-at-law confessing judgment
thereunder. After judgment is entered against one or more of the Borrowers, the
power conferred may be exercised as to one or more of the other Borrowers.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their duly authorized officers as of the date first written above.
BORROWERS:
Rocky Shoes & Boots, Inc.,
an Ohio corporation
By: /s/ Xxxxx Xxxxxxxxx
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Title: Exec. V.P. & CFO
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WARNING -- BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT,
OR ANY OTHER CAUSE.
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FIVE STAR ENTERPRISES LTD., LIFESTYLE FOOTWEAR, INC.,
A CAYMAN ISLANDS CORPORATION A DELAWARE CORPORATION
By: /s/ Xxxxx Xxxxxxxxx By: /s/ Xxxxx Xxxxxxxxx
--------------------- ---------------------
TITLE: Exec. V.P. & CFO TITLE: Exec. V.P. & CFO
------------------ ------------------
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BANKS:
BANK ONE, COLUMBUS, NA,
A NATIONAL BANKING ASSOCIATION
BY: Xxxxxxxxx Xxxxxxxxxxx
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TITLE: Vice President
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THE HUNTINGTON NATIONAL BANK,
A NATIONAL BANKING ASSOCIATION
BY: Xxxxxxxx X. Moweuz
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TITLE: Vice President
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AGENT:
BANK ONE, COLUMBUS, NA, AS AGENT
A NATIONAL BANKING ASSOCIATION
BY: Xxxxxxxxx Xxxxxxxxxxx
----------------------
TITLE: Vice President
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EXHIBIT A
BANK ONE AMENDED AND RESTATED NOTE
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AMENDED AND RESTATED MASTER BUSINESS LOAN NOTE
Due: April 30, 1999 $25,200,000
No. ________________ Date: April 18, 1997
PROMISE TO PAY: On or before April 30, 1999 (or such later date as may be
provided in the Loan Agreement (defined below)), for value received, the
undersigned, Rocky Shoes & Boots, Inc., an Ohio corporation, Five Star
Enterprises Ltd., a Cayman Islands corporation, and Lifestyle Footwear, Inc., a
Delaware corporation (collectively referred to as the "Borrower"), promise to
pay, jointly and severally, to Bank One, Columbus, NA, a national banking
association (the "Bank"), or order, at the office of the Agent (defined below)
located at 000 Xxxx Xxxxx Xxxxxx, Xxxxxxxx, Xxxx 00000-0000, or at such other
address as the Agent may give notice of to the Borrower, the sum of $25,200,000
or such lesser sum as is indicated on the Bank's records, plus interest computed
on the basis of the actual number of days elapsed in a year of 360 days at the
rate per annum announced from time to time by the Bank as its "prime" rate
(which rate may not be the lowest rate charged by the Bank to any of its
customers) until maturity, whether by demand, acceleration or otherwise. Such
interest rate shall be referred to herein as the "Note Rate." Upon the
occurrence of an Event of Default (defined below) hereunder and during the
continuance of such, the interest rate per annum shall be 300 basis points above
the Note Rate then in effect. Each change in the "prime" rate will immediately
change the Note Rate, effective as of the opening of business on the date of the
change.
In no event shall the interest rate exceed the maximum rate allowed by law; any
interest payment which would for any reason be deemed unlawful under applicable
law shall be applied to principal.
Interest will be computed on the unpaid principal balance from the date of each
borrowing until paid.
Until maturity, whether by demand, acceleration or otherwise, the Borrower shall
pay consecutive monthly installments of interest only commencing May 1, 1997,
and continuing on the first day of each month thereafter.
The Borrower may at any time prepay this Note, in whole or in part, without
premium or penalty, together with accrued interest on the amount of any such
prepayment, in accordance with the terms of the Loan Agreement (defined below).
The Bank shall have the right to assess a late payment processing fee in the
amount of the greater of $50.00 or 5% of the scheduled payment in the event of a
default in payment that remains uncured for a period of five (5) days.
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MASTER NOTE: The Bank has authorized a committed credit facility to the Borrower
in a principal amount not to exceed the face amount of this Note. The credit
facility is in the form of loans made from time to time by the Bank to the
Borrower. This Note evidences the Borrower's obligation to repay those loans.
The aggregate principal amount of debt evidenced by this Note shall be the
amount reflected from time to time in the records of the Bank, but shall not
exceed the face amount of this Note. This Note amends and restates in its
entirety the Master Business Loan Note dated January 28, 1997, in the original
principal amount of $21,000,000, executed by the Borrower and payable to the
order of the Bank, and is the "Bank One Note" identified in the Loan Agreement.
This Note evidences the continuing indebtedness under the Loan Agreement and
such Bank One Note and is not to be construed as a satisfaction or refinancing
of such indebtedness.
CREDIT AGREEMENT: This Note evidences a certain debt under the terms of a
Revolving Credit Loan Agreement between the Bank, the Borrower, The Huntington
National Bank and Bank One, Columbus, NA, as Agent (the "Agent"), dated as of
January 28, 1997, as amended by a Term Loan Agreement and First Amendment to
Revolving Credit Loan Agreement, dated as of April 18, 1997 (such agreement, as
so amended and as the same may be further amended, modified, supplemented,
restated or replaced from time to time, the "Loan Agreement"). Reference is made
to the Loan Agreement for additional provisions relating to the debt evidenced
by this Note.
SECURITY: To secure the payment of this Note and other present and future
liabilities of the Borrower to the Bank, the Borrower has pledged and granted to
the Agent, for the ratable benefit of the Bank and The Huntington National Bank,
among other things, a continuing security interest in certain assets of the
Borrower pursuant to a Continuing Security Agreement dated as of January 28,
1997, as the same may be amended, modified, supplemented, restated or replaced
from time to time. The Bank shall have the right at any time to apply its own
debt or liability to the Borrower or to any other party liable on this Note in
whole or partial payment of this Note or other present or future liabilities,
without any requirement for mutual maturity.
RELATED DOCUMENTS: The terms of any other documents executed as part of the loan
evidenced by this Note are incorporated herein by reference.
REPRESENTATIONS BY BORROWER: Each Borrower represents that it is a corporation
duly organized and existing under the laws of its jurisdiction of formation, and
that the execution and delivery of this Note and the performance of the
obligations it imposes are within its corporate powers, have been duly
authorized by all necessary action of its directors and do not contravene the
terms of its articles (certificate) of incorporation and code of regulations
(by-laws). Each Borrower represents that the execution and delivery of this Note
and the performance of the obligations it imposes do not violate any law, do not
conflict with any agreement by which it is bound, do not require the consent or
approval of any governmental authority or any third party, and that this Note is
a valid and binding agreement, enforceable according to its terms, except as
enforcement of such terms may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium, fraudulent
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conveyance, or similar laws affecting creditors' rights generally, provided,
however, that each Borrower represents and warrants that no such limitations
currently exist as of the date of this Note, or (ii) equitable principles which
may limit the availability of the remedy of specific performance or other
equitable remedies. Each Borrower also represents that this Note evidences a
business loan exempt from the Federal Truth In Lending Act (15 USC ss.1601, et
seq.), and the Board of Governors of the Federal Reserve System's Regulation Z
(12 CFR ss.226, et seq.).
ADDITIONAL TERMS AND CONDITIONS
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EVENTS OF DEFAULT: If any of the following events (each an "Event of Default")
occurs:
1. Any Borrower fails to pay when due any amount payable under this
Note, and such failure continues for more than five (5) days after such payment
became due;
2. Any Borrower (a) fails to observe or perform any other term of this
Note, and such failure to observe or perform continues for more than fifteen
(15) days after such failure shall first become known to any officer of any
Borrower, provided, however, that such fifteen (15) day cure period shall not
apply to (i) any such failure which in the Bank's good faith opinion is
incapable of cure; and (ii) any such failure which has previously occurred; (b)
makes any materially incorrect or misleading representation, warranty, or
certificate to the Agent or the Bank; (c) makes any materially incorrect or
misleading representation in any financial statement or other information
delivered to the Agent or the Bank; or (d) defaults under the terms of any
agreement or instrument relating to any debt for borrowed money (other than the
debt evidenced by this Note) such that the creditor declares the debt due before
its maturity;
3. Any other default occurs under the terms of any loan agreement,
mortgage, security agreement, or any other document, including the Loan
Agreement, executed as part of the loan evidenced by this Note or any other
obligation or indebtedness of any Borrower owed to the Bank at any time, and
such default continues for more than fifteen (15) days after such default shall
first become known to any officer of any Borrower, provided, however that such
fifteen (15) day cure period shall not apply to (a) any default which in the
Bank's good faith opinion is incapable of cure; (b) any default which has
previously occurred; (c) any failure to maintain and keep in effect any
insurance required under the Loan Agreement; or (d) any failure to provide to
the Bank the financial statements, documents and information required to be
provided pursuant to Sections 7.1(a), (b), and (c) of the Loan Agreement;
4. A "reportable event" (as defined in the Employee Retirement Income
Security Act of 1974, as amended) occurs that would permit the Pension Benefit
Guaranty Corporation to terminate any employee benefit plan of any Borrower or
any affiliate of any Borrower, or the occurrence of an "ERISA Event" (as defined
in the Loan Agreement) which shall not have been cured within thirty (30) days
after any officer of any Borrower has knowledge thereof;
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5. Any Borrower becomes insolvent or unable to pay its debts as they
become due;
6. Any Borrower (a) makes an assignment for the benefit of creditors;
(b) consents to the appointment of a custodian, receiver, or trustee for itself
or for a substantial part of its assets; or (c) commences or consents to any
proceeding under any bankruptcy, reorganization, liquidation, insolvency or
similar laws of any jurisdiction;
7. A custodian, receiver or trustee is appointed for any Borrower or
for a substantial part of its assets without its consent and is not removed
within sixty (60) days after such appointment;
8. Proceedings are commenced against any Borrower under any bankruptcy,
reorganization, liquidation, or similar laws of any jurisdiction, and such
proceedings remain undismissed for sixty (60) days after commencement;
9. Any judgment is entered against any Borrower, or any attachment,
levy or garnishment is issued against any property of any Borrower, in excess of
$250,000.00, and which judgment, attachment, levy or garnishment has not been
discharged or stayed within thirty (30) days after issuance, or for such longer
period as the Bank may agree to in writing;
10. Any Borrower, without the Bank's written consent, (a) is dissolved,
(b) merges or consolidates with any third party, (c) sells a material part of
its assets or business outside the ordinary course of its business, or (d)
agrees to do any of the foregoing;
11. There is a substantial change (other than with respect to changes
in the normal course of any Borrower's business, such as seasonal fluctuations)
in the existing or prospective financial condition of any Borrower which the
Bank in good faith determines to be materially adverse; or
12. The Bank in good xxxxx xxxxx itself insecure: then this Note shall
become due immediately, without notice, at the Bank's option.
REMEDIES: If this Note is not paid at maturity, whether by demand, acceleration
or otherwise, the Agent and the Bank shall have all of the rights and remedies
provided by any law or agreement. Any requirement of reasonable notice shall be
met if the Agent or the Bank sends the notice to the Borrower at least seven (7)
days prior to the date of public or private sale, disposition or other event
giving rise to the required notice. Upon default, the Agent and the Bank are
authorized to cause all or any part of any collateral securing this Note to be
transferred to or registered in its (their) name(s) or in the name of any other
person, firm or corporation, with or without designation of the capacity of such
nominee. The Borrower shall be liable for any deficiency remaining after
disposition of any collateral securing this Note. The Borrower is liable to the
Agent and the Bank for all reasonable
-4-
16
costs and expenses of every kind incurred in the making or collection of this
Note, including, without limitation, reasonable attorneys' fees and court costs.
These costs and expenses shall include, without limitation, any reasonable costs
or expenses incurred by the Agent and the Bank in any bankruptcy,
reorganization, insolvency or other similar proceeding.
WAIVER: Each endorser and any other party liable on this Note severally waives
demand, presentment, notice of dishonor and protest, and consents to any
extension or postponement of time of its payment without limit as to the number
or period, to any substitution, exchange or release of all or part of the
collateral securing this Note, to the addition of any party, and to the release
or discharge of, or suspension of any rights and remedies against, any person
who may be liable for the payment of this Note. No delay on the part of the Bank
in the exercise of any right or remedy shall operate as a waiver. No single or
partial exercise by the Bank of any right or remedy shall preclude any other
future exercise of it or the exercise of any other right or remedy. No waiver or
indulgence by the Bank of any default shall be effective unless in writing and
signed by the Bank, nor shall a waiver on one occasion be construed as a bar to
or waiver of that right on any future occasion.
MISCELLANEOUS: Each Borrower shall be jointly and severally liable under this
Note. This Note shall be binding on each Borrower and its successors, and shall
inure to the benefit of the Bank, its successors and assigns. Any reference to
the Bank shall include any holder of this Note. This Note is delivered in the
State of Ohio and governed by Ohio law. Section headings are for convenience of
reference only and shall not affect the interpretation of this Note. This Note
and all related loan documents embody the entire agreement between the Borrower
and the Bank regarding the terms of the loan evidenced by this Note, and
supersede all oral statements and prior writings relating to that loan.
WAIVER OF JURY TRIAL. EACH BORROWER, THE AGENT AND THE BANK, AFTER CONSULTING OR
HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN ANY
LITIGATION BASED UPON OR ARISING OUT OF THIS NOTE, THE LOAN AGREEMENT, OR ANY
RELATED INSTRUMENT OR AGREEMENT, OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREBY, OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS (WHETHER ORAL OR
WRITTEN), OR ACTIONS OF ANY OF THEM. THIS WAIVER SHALL NOT IN ANY WAY AFFECT THE
BANK'S OR THE AGENT'S ABILITY TO PURSUE REMEDIES PURSUANT TO ANY CONFESSION OF
JUDGMENT OR COGNOVIT PROVISION CONTAINED HEREIN, IN THE LOAN AGREEMENT OR ANY
RELATED INSTRUMENT OR AGREEMENT. NO BORROWER NOR THE BANK AND THE AGENT SHALL
SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY ACTION IN WHICH A JURY
TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR
HAS NOT BEEN WAIVED. THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED
IN ANY RESPECT OR RELINQUISHED BY THE
-5-
17
BORROWER, THE AGENT OR THE BANK EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY ALL
OF THEM.
Each Borrower irrevocably authorizes any attorney-at-law, including any
attorney-at-law employed or retained by the Bank or the Agent, to appear for the
Borrower in any court of record in Franklin County, Ohio (which the Borrower
acknowledges to be the place where this Note was made) or any other state or
jurisdiction wherein the Borrower may then reside, to (i) waive the issuing and
service of process, (ii) confess judgment against the Borrower in favor of the
holder of this Note for the amount then due, together with costs of suit, (iii)
release all errors, and (iv) waive all rights of appeal. Each Borrower consents
to the jurisdiction and venue of that court. Each Borrower waives any conflict
of interest that any attorney-at-law employed or retained by the Bank or the
Agent may have in confessing judgment under this Note and consents to payment of
a legal fee to any attorney-at-law confessing judgment under the Note. After
judgment is entered against one or more of the Borrowers, the power conferred
may be exercised as to one or more of the other Borrowers.
-6-
18
The undersigned have executed this Note in Columbus, Ohio, as of the date and
year first above written.
Rocky Shoes & Boots, Inc.,
an Ohio corporation
By:
--------------------------------
Title:
----------------------------
------------------------------------------------------------------------------
WARNING -- BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT,
OR ANY OTHER CAUSE.
------------------------------------------------------------------------------
Five Star Enterprises Ltd., Lifestyle Footwear, Inc.,
a Cayman Islands corporation a Delaware corporation
By: By:
--------------------------------- -------------------------------
Title: Title:
------------------------------ -----------------------------
-7-
19
EXHIBIT B
HNB AMENDED AND RESTATED NOTE
-----------------------------
20
AMENDED AND RESTATED MASTER BUSINESS LOAN NOTE
Due: April 30, 1999 $16,800,000
No. ________________ Date: April 18, 1997
PROMISE TO PAY: On or before April 30, 1999 (or such later date as may be
provided in the Loan Agreement (defined below)), for value received, the
undersigned, Rocky Shoes & Boots, Inc., an Ohio corporation, Five Star
Enterprises Ltd., a Cayman Islands corporation, and Lifestyle Footwear, Inc., a
Delaware corporation (collectively referred to as the "Borrower"), promise to
pay, jointly and severally, to The Huntington National Bank, a national banking
association (the "Bank"), or order, at the office of the Agent (defined below)
located at 000 Xxxx Xxxxx Xxxxxx, Xxxxxxxx, Xxxx 00000-0000, or at such other
address as the Agent may give notice of to the Borrower, the sum of $16,800,000
or such lesser sum as is indicated on the Bank's records, plus interest computed
on the basis of the actual number of days elapsed in a year of 360 days at the
rate per annum announced from time to time by the Agent as its "prime" rate
(which rate may not be the lowest rate charged by the Agent to any of its
customers) until maturity, whether by demand, acceleration or otherwise. Such
interest rate shall be referred to herein as the "Note Rate." Upon the
occurrence of an Event of Default (defined below) hereunder and during the
continuance of such, the interest rate per annum shall be 300 basis points above
the Note Rate then in effect. Each change in the "prime" rate will immediately
change the Note Rate, effective as of the opening of business on the date of the
change.
In no event shall the interest rate exceed the maximum rate allowed by law; any
interest payment which would for any reason be deemed unlawful under applicable
law shall be applied to principal.
Interest will be computed on the unpaid principal balance from the date of each
borrowing until paid.
Until maturity, whether by demand, acceleration or otherwise, the Borrower shall
pay consecutive monthly installments of interest only commencing May 1, 1997,
and continuing on the first day of each month thereafter.
The Borrower may at any time prepay this Note, in whole or in part, without
premium or penalty, together with accrued interest on the amount of any such
prepayment, in accordance with the terms of the Loan Agreement (defined below).
The Bank shall have the right to assess a late payment processing fee in the
amount of the greater of $50.00 or 5% of the scheduled payment in the event of a
default in payment that remains uncured for a period of five (5) days.
MASTER NOTE: The Bank has authorized a committed credit facility to the Borrower
in a principal amount not to exceed the face amount of this Note. The credit
facility is in the
-1-
21
form of loans made from time to time by the Bank to the Borrower. This Note
evidences the Borrower's obligation to repay those loans. The aggregate
principal amount of debt evidenced by this Note shall be the amount reflected
from time to time in the records of the Bank, but shall not exceed the face
amount of this Note. This Note amends and restates in its entirety the Master
Business Loan Note dated January 28, 1997, in the original principal amount of
$14,000,000, executed by the Borrower and payable to the order of the Bank, and
is the "HNB Note" identified in the Loan Agreement. This Note evidences the
continuing indebtedness under the Loan Agreement and such HNB Note and is not to
be construed as a satisfaction or refinancing of such indebtedness.
CREDIT AGREEMENT: This Note evidences a certain debt under the terms of a
Revolving Credit Loan Agreement between the Bank, the Borrower, Bank One,
Columbus, NA and Bank One, Columbus, NA, as Agent (the "Agent"), dated as of
January 28, 1997, as amended by a Term Loan Agreement and First Amendment to
Revolving Credit Loan Agreement, dated as of April 18, 1997 (such agreement, as
so amended and as the same may be further amended, modified, supplemented,
restated or replaced from time to time, the "Loan Agreement"). Reference is made
to the Loan Agreement for additional provisions relating to the debt evidenced
by this Note.
SECURITY: To secure the payment of this Note and other present and future
liabilities of the Borrower to the Bank, the Borrower has pledged and granted to
the Agent, for the ratable benefit of the Bank and Bank One, Columbus, NA, among
other things, a continuing security interest in certain assets of the Borrower
pursuant to a Continuing Security Agreement dated as of January 28, 1997, as the
same may be amended, modified, supplemented, restated or replaced from time to
time. The Bank shall have the right at any time to apply its own debt or
liability to the Borrower or to any other party liable on this Note in whole or
partial payment of this Note or other present or future liabilities, without any
requirement for mutual maturity.
RELATED DOCUMENTS: The terms of any other documents executed as part of the loan
evidenced by this Note are incorporated herein by reference.
REPRESENTATIONS BY BORROWER: Each Borrower represents that it is a corporation
duly organized and existing under the laws of its jurisdiction of formation, and
that the execution and delivery of this Note and the performance of the
obligations it imposes are within its corporate powers, have been duly
authorized by all necessary action of its directors and do not contravene the
terms of its articles (certificate) of incorporation and code of regulations
(by-laws). Each Borrower represents that the execution and delivery of this Note
and the performance of the obligations it imposes do not violate any law, do not
conflict with any agreement by which it is bound, do not require the consent or
approval of any governmental authority or any third party, and that this Note is
a valid and binding agreement, enforceable according to its terms, except as
enforcement of such terms may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, or similar laws affecting
creditors' rights generally, provided, however, that each Borrower represents
and warrants that no such limitations currently exist as of the
-2-
22
date of this Note, or (ii) equitable principles which may limit the availability
of the remedy of specific performance or other equitable remedies. Each Borrower
also represents that this Note evidences a business loan exempt from the Federal
Truth In Lending Act (15 USC ss.1601, et seq.), and the Board of Governors of
the Federal Reserve System's Regulation Z (12 CFR ss.226, et seq.).
ADDITIONAL TERMS AND CONDITIONS
-------------------------------
EVENTS OF DEFAULT: If any of the following events (each an "Event of Default")
occurs:
1. Any Borrower fails to pay when due any amount payable under this
Note, and such failure continues for more than five (5) days after such payment
became due;
2. Any Borrower (a) fails to observe or perform any other term of this
Note, and such failure to observe or perform continues for more than fifteen
(15) days after such failure shall first become known to any officer of any
Borrower, provided, however, that such fifteen (15) day cure period shall not
apply to (i) any such failure which in the Bank's good faith opinion is
incapable of cure; and (ii) any such failure which has previously occurred; (b)
makes any materially incorrect or misleading representation, warranty, or
certificate to the Agent or the Bank; (c) makes any materially incorrect or
misleading representation in any financial statement or other information
delivered to the Agent or the Bank; or (d) defaults under the terms of any
agreement or instrument relating to any debt for borrowed money (other than the
debt evidenced by this Note) such that the creditor declares the debt due before
its maturity;
3. Any other default occurs under the terms of any loan agreement,
mortgage, security agreement, or any other document, including the Loan
Agreement, executed as part of the loan evidenced by this Note or any other
obligation or indebtedness of any Borrower owed to the Bank at any time, and
such default continues for more than fifteen (15) days after such default shall
first become known to any officer of any Borrower, provided, however that such
fifteen (15) day cure period shall not apply to (a) any default which in the
Bank's good faith opinion is incapable of cure; (b) any default which has
previously occurred; (c) any failure to maintain and keep in effect any
insurance required under the Loan Agreement; or (d) any failure to provide to
the Bank the financial statements, documents and information required to be
provided pursuant to Sections 7.1(a), (b), and (c) of the Loan Agreement;
4. A "reportable event" (as defined in the Employee Retirement Income
Security Act of 1974, as amended) occurs that would permit the Pension Benefit
Guaranty Corporation to terminate any employee benefit plan of any Borrower or
any affiliate of any Borrower, or the occurrence of an "ERISA Event" (as defined
in the Loan Agreement) which shall not have been cured within thirty (30) days
after any officer of any Borrower has knowledge thereof;
-3-
23
5. Any Borrower becomes insolvent or unable to pay its debts as they
become due;
6. Any Borrower (a) makes an assignment for the benefit of creditors;
(b) consents to the appointment of a custodian, receiver, or trustee for itself
or for a substantial part of its assets; or (c) commences or consents to any
proceeding under any bankruptcy, reorganization, liquidation, insolvency or
similar laws of any jurisdiction;
7. A custodian, receiver or trustee is appointed for any Borrower or
for a substantial part of its assets without its consent and is not removed
within sixty (60) days after such appointment;
8. Proceedings are commenced against any Borrower under any bankruptcy,
reorganization, liquidation, or similar laws of any jurisdiction, and such
proceedings remain undismissed for sixty (60) days after commencement;
9. Any judgment is entered against any Borrower, or any attachment,
levy or garnishment is issued against any property of any Borrower, in excess of
$250,000.00, and which judgment, attachment, levy or garnishment has not been
discharged or stayed within thirty (30) days after issuance, or for such longer
period as the Bank may agree to in writing;
10. Any Borrower, without the Bank's written consent, (a) is dissolved,
(b) merges or consolidates with any third party, (c) sells a material part of
its assets or business outside the ordinary course of its business, or (d)
agrees to do any of the foregoing;
11. There is a substantial change (other than with respect to changes
in the normal course of any Borrower's business, such as seasonal fluctuations)
in the existing or prospective financial condition of any Borrower which the
Bank in good faith determines to be materially adverse; or
12. The Bank in good xxxxx xxxxx itself insecure: then this Note shall
become due immediately, without notice, at the Bank's option.
REMEDIES: If this Note is not paid at maturity, whether by demand, acceleration
or otherwise, the Agent and the Bank shall have all of the rights and remedies
provided by any law or agreement. Any requirement of reasonable notice shall be
met if the Agent or the Bank sends the notice to the Borrower at least seven (7)
days prior to the date of public or private sale, disposition or other event
giving rise to the required notice. Upon default, the Agent and the Bank are
authorized to cause all or any part of any collateral securing this Note to be
transferred to or registered in its (their) name(s) or in the name of any other
person, firm or corporation, with or without designation of the capacity of such
nominee. The Borrower shall be liable for any deficiency remaining after
disposition of any collateral securing this Note. The Borrower is liable to the
Agent and the Bank for all reasonable
-4-
24
costs and expenses of every kind incurred in the making or collection of this
Note, including, without limitation, reasonable attorneys' fees and court costs.
These costs and expenses shall include, without limitation, any reasonable costs
or expenses incurred by the Agent and the Bank in any bankruptcy,
reorganization, insolvency or other similar proceeding.
WAIVER: Each endorser and any other party liable on this Note severally waives
demand, presentment, notice of dishonor and protest, and consents to any
extension or postponement of time of its payment without limit as to the number
or period, to any substitution, exchange or release of all or part of the
collateral securing this Note, to the addition of any party, and to the release
or discharge of, or suspension of any rights and remedies against, any person
who may be liable for the payment of this Note. No delay on the part of the Bank
in the exercise of any right or remedy shall operate as a waiver. No single or
partial exercise by the Bank of any right or remedy shall preclude any other
future exercise of it or the exercise of any other right or remedy. No waiver or
indulgence by the Bank of any default shall be effective unless in writing and
signed by the Bank, nor shall a waiver on one occasion be construed as a bar to
or waiver of that right on any future occasion.
MISCELLANEOUS: Each Borrower shall be jointly and severally liable under this
Note. This Note shall be binding on each Borrower and its successors, and shall
inure to the benefit of the Bank, its successors and assigns. Any reference to
the Bank shall include any holder of this Note. This Note is delivered in the
State of Ohio and governed by Ohio law. Section headings are for convenience of
reference only and shall not affect the interpretation of this Note. This Note
and all related loan documents embody the entire agreement between the Borrower
and the Bank regarding the terms of the loan evidenced by this Note, and
supersede all oral statements and prior writings relating to that loan.
WAIVER OF JURY TRIAL. EACH BORROWER, THE AGENT AND THE BANK, AFTER CONSULTING OR
HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN ANY
LITIGATION BASED UPON OR ARISING OUT OF THIS NOTE, THE LOAN AGREEMENT, OR ANY
RELATED INSTRUMENT OR AGREEMENT, OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREBY, OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS (WHETHER ORAL OR
WRITTEN), OR ACTIONS OF ANY OF THEM. THIS WAIVER SHALL NOT IN ANY WAY AFFECT THE
BANK'S OR THE AGENT'S ABILITY TO PURSUE REMEDIES PURSUANT TO ANY CONFESSION OF
JUDGMENT OR COGNOVIT PROVISION CONTAINED HEREIN, IN THE LOAN AGREEMENT OR ANY
RELATED INSTRUMENT OR AGREEMENT. NO BORROWER NOR THE BANK AND THE AGENT SHALL
SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY ACTION IN WHICH A JURY
TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR
HAS NOT BEEN WAIVED. THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED
IN ANY RESPECT OR RELINQUISHED BY THE
-5-
25
BORROWER, THE AGENT OR THE BANK EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY ALL
OF THEM.
Each Borrower irrevocably authorizes any attorney-at-law, including any
attorney-at-law employed or retained by the Bank or the Agent, to appear for the
Borrower in any court of record in Franklin County, Ohio (which the Borrower
acknowledges to be the place where this Note was made) or any other state or
jurisdiction wherein the Borrower may then reside, to (i) waive the issuing and
service of process, (ii) confess judgment against the Borrower in favor of the
holder of this Note for the amount then due, together with costs of suit, (iii)
release all errors, and (iv) waive all rights of appeal. Each Borrower consents
to the jurisdiction and venue of that court. Each Borrower waives any conflict
of interest that any attorney-at-law employed or retained by the Bank or the
Agent may have in confessing judgment under this Note and consents to payment of
a legal fee to any attorney-at-law confessing judgment under the Note. After
judgment is entered against one or more of the Borrowers, the power conferred
may be exercised as to one or more of the other Borrowers.
-6-
26
The undersigned have executed this Note in Columbus, Ohio, as of the date and
year first above written.
Rocky Shoes & Boots, Inc.,
an Ohio corporation
By:
--------------------------------
Title:
-----------------------------
-------------------------------------------------------------------------------
WARNING -- BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT,
OR ANY OTHER CAUSE.
-------------------------------------------------------------------------------
Five Star Enterprises Ltd., Lifestyle Footwear, Inc.,
a Cayman Islands corporation a Delaware corporation
By: By:
--------------------------- ----------------------------
Title: Title:
------------------------- --------------------------
-7-
27
EXHIBIT C
BANK ONE TERM NOTE
------------------
28
TERM LOAN NOTE
Due: May 1, 2000 $1,800,000
No. ________________ Date: April 18, 1997
PROMISE TO PAY: For value received, the undersigned, Rocky Shoes & Boots, Inc.,
an Ohio corporation, Five Star Enterprises Ltd., a Cayman Islands corporation,
and Lifestyle Footwear, Inc., a Delaware corporation (collectively referred to
as the "Borrower"), promise to pay, jointly and severally, to Bank One,
Columbus, NA, a national banking association (the "Bank"), or order, at the
office of the Agent (defined below) located at 000 Xxxx Xxxxx Xxxxxx, Xxxxxxxx,
Xxxx 00000-0000, or at such other address as the Agent may give notice of to the
Borrower, the sum of $1,800,000, plus interest computed on the basis of the
actual number of days elapsed in a year of 360 days at one of the following
rates, at the option of the Borrower: (i) a variable rate ("Variable Rate") per
annum equal to the sum of 0.25% plus the rate per annum announced from time to
time by the Agent as its "prime" rate (which rate may not be the lowest rate
charged by the Agent to any of its customers), until maturity, whether by
demand, acceleration or otherwise; or (ii) a fixed rate ("Fixed Rate") per annum
equal to the sum of (y) the yield on United States Treasury issues (as published
in The Wall Street Journal, as determined by the Agent) having a comparable term
to the remaining term of this Note, plus (z) 275 basis points, until maturity,
whether by demand, acceleration or otherwise. Such interest rate in effect at
any time shall be referred to herein as the "Note Rate." Upon the occurrence of
an Event of Default (defined below) hereunder and during the continuance of
such, the interest rate per annum shall be 300 basis points above the Note Rate
then in effect. During the period interest is calculated as a floating interest
rate under subpart (i) above, each change in the "prime" rate will immediately
change the Note Rate, effective as of the opening of business on the date of the
change. The interest in effect hereunder shall be the Variable Rate unless and
until the Borrower shall give written notice to the Agent of its election to
convert to the Fixed Rate. Such conversion from the Variable Rate to the Fixed
Rate shall be effective as of the fifth "Business Day" (as defined in the Loan
Agreement) after receipt of such notice by the Agent. If the interest rate is so
converted from the Variable Rate to the Fixed Rate, the Borrower shall not
thereafter have the option to convert the interest rate back to the Variable
Rate.
In no event shall the interest rate exceed the maximum rate allowed by law; any
interest payment which would for any reason be deemed unlawful under applicable
law shall be applied to principal.
The Borrower shall pay this principal sum in consecutive monthly installments of
$30,000 each, plus accrued interest, commencing on June 1, 1997 and continuing
on the same day of each month thereafter until May 1, 2000, at which time the
entire balance of unpaid principal, plus accrued interest and other fees,
charges and premiums, shall be due and payable immediately. Each payment will be
applied first to costs, then to accrued interest, then to principal.
-1-
29
The Bank shall have the right to assess a late payment processing fee in the
amount of the greater of $50.00 or 5% of the scheduled payment in the event of a
default in payment that remains uncured for a period of five (5) days.
PREPAYMENT: The Borrower may prepay all or any part of the principal balance of
this Note on one business day's notice to the Agent provided that, in addition
to all principal, interest and costs owing at the time of prepayment, if at the
time of any such prepayment the Note Rate in effect is the Fixed Rate, the
Borrower, if requested by the Bank, pays a prepayment premium equal to the
Current Value of (i) the interest that would have accrued on the amount prepaid
at the Fixed Rate, minus (ii) the interest that could accrue on the amount
prepaid at the Treasury Rate. In both cases, interest will be calculated from
the prepayment date to the maturity dates of the installments being prepaid.
Such maturity dates shall be determined by applying the prepayment to the
scheduled installments of principal in their inverse order of maturity.
"Treasury Rate" means the yield, as of the date of prepayment, on United States
Treasury issues, selected by the Bank in its discretion, having maturities
comparable to the scheduled maturities of the installments being prepaid.
"Current Value" means the net present value of the dollar amount of the interest
to be earned, discounted at the Treasury Rate. In no event shall the prepayment
premium be less than zero. The Borrower's notice of its intent to prepay shall
be irrevocable. If the balance of this Note is accelerated in accordance with
the terms of this Note, the resulting balance due shall be considered a
prepayment due and payable as of the date of acceleration. The Borrower agrees
that the prepayment premium is a reasonable estimate of loss and not a penalty.
The prepayment premium is payable as liquidated damages for the loss of bargain,
and its payment shall not in any way reduce, affect or impair any other
obligation of the Borrower under this Note.
CREDIT AGREEMENT: This Note and the Borrower shall be subject to the terms of a
Revolving Credit Loan Agreement between the Bank, the Borrower, The Huntington
National Bank and Bank One, Columbus, NA, as Agent (the "Agent"), dated as of
January 28, 1997, as amended by a Term Loan Agreement and First Amendment to
Revolving Credit Loan Agreement, dated as of April 18, 1997 (such agreement, as
so amended and as the same may be further amended, modified, supplemented,
restated or replaced from time to time, the "Loan Agreement"), which shall
remain in effect for the loan evidenced by this Note regardless of termination
of any credit facility described in the Loan Agreement or termination or
expiration of the Loan Agreement.
SECURITY: To secure the payment of this Note and other present and future
liabilities of the Borrower to the Bank, the Borrower has pledged and granted to
the Agent, for the ratable benefit of the Bank and The Huntington National Bank,
among other things, a continuing security interest in certain assets of the
Borrower pursuant to a Continuing Security Agreement dated as of January 28,
1997, as the same may be amended, modified, supplemented, restated or replaced
from time to time. The Bank shall have the right at any time to apply its own
debt or liability to the Borrower or to any other party liable on this Note in
whole or partial payment of this Note or other present or future liabilities,
without any requirement for mutual maturity.
-2-
30
RELATED DOCUMENTS: The terms of any other documents executed as part of the loan
evidenced by this Note are incorporated herein by reference.
REPRESENTATIONS BY BORROWER: Each Borrower represents that it is a corporation
duly organized and existing under the laws of its jurisdiction of formation, and
that the execution and delivery of this Note and the performance of the
obligations it imposes are within its corporate powers, have been duly
authorized by all necessary action of its directors and do not contravene the
terms of its articles (certificate) of incorporation and code of regulations
(by-laws). Each Borrower represents that the execution and delivery of this Note
and the performance of the obligations it imposes do not violate any law, do not
conflict with any agreement by which it is bound, do not require the consent or
approval of any governmental authority or any third party, and that this Note is
a valid and binding agreement, enforceable according to its terms, except as
enforcement of such terms may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, or similar laws affecting
creditors' rights generally, provided, however, that each Borrower represents
and warrants that no such limitations currently exist as of the date of this
Note, or (ii) equitable principles which may limit the availability of the
remedy of specific performance or other equitable remedies. Each Borrower also
represents that this Note evidences a business loan exempt from the Federal
Truth In Lending Act (15 USC ss.1601, et seq.), and the Board of Governors of
the Federal Reserve System's Regulation Z (12 CFR ss.226, et seq.).
ADDITIONAL TERMS AND CONDITIONS
-------------------------------
EVENTS OF DEFAULT: If any of the following events (each an "Event of Default")
occurs:
1. Any Borrower fails to pay when due any amount payable under this
Note, and such failure continues for more than five (5) days after such payment
became due;
2. Any Borrower (a) fails to observe or perform any other term of this
Note, and such failure to observe or perform continues for more than fifteen
(15) days after such failure shall first become known to any officer of any
Borrower, provided, however, that such fifteen (15) day cure period shall not
apply to (i) any such failure which in the Bank's good faith opinion is
incapable of cure; and (ii) any such failure which has previously occurred; (b)
makes any materially incorrect or misleading representation, warranty, or
certificate to the Agent or the Bank; (c) makes any materially incorrect or
misleading representation in any financial statement or other information
delivered to the Agent or the Bank; or (d) defaults under the terms of any
agreement or instrument relating to any debt for borrowed money (other than the
debt evidenced by this Note) such that the creditor declares the debt due before
its maturity;
3. Any other default occurs under the terms of any loan agreement,
mortgage, security agreement, or any other document, including the Loan
Agreement, executed as part of the loan evidenced by this Note or any other
obligation or indebtedness of any Borrower owed to the Bank at any time, and
such default continues for more than fifteen
-3-
31
(15) days after such default shall first become known to any officer of any
Borrower, provided, however that such fifteen (15) day cure period shall not
apply to (a) any default which in the Bank's good faith opinion is incapable of
cure; (b) any default which has previously occurred; (c) any failure to maintain
and keep in effect any insurance required under the Loan Agreement; or (d) any
failure to provide to the Bank the financial statements, documents and
information required to be provided pursuant to Sections 7.1(a), (b), and (c) of
the Loan Agreement;
4. A "reportable event" (as defined in the Employee Retirement Income
Security Act of 1974, as amended) occurs that would permit the Pension Benefit
Guaranty Corporation to terminate any employee benefit plan of any Borrower or
any affiliate of any Borrower, or the occurrence of an "ERISA Event" (as defined
in the Loan Agreement) which shall not have been cured within thirty (30) days
after any officer of any Borrower has knowledge thereof;
5. Any Borrower becomes insolvent or unable to pay its debts as they
become due;
6. Any Borrower (a) makes an assignment for the benefit of creditors;
(b) consents to the appointment of a custodian, receiver, or trustee for itself
or for a substantial part of its assets; or (c) commences or consents to any
proceeding under any bankruptcy, reorganization, liquidation, insolvency or
similar laws of any jurisdiction;
7. A custodian, receiver or trustee is appointed for any Borrower or
for a substantial part of its assets without its consent and is not removed
within sixty (60) days after such appointment;
8. Proceedings are commenced against any Borrower under any bankruptcy,
reorganization, liquidation, or similar laws of any jurisdiction, and such
proceedings remain undismissed for sixty (60) days after commencement;
9. Any judgment is entered against any Borrower, or any attachment,
levy or garnishment is issued against any property of any Borrower, in excess of
$250,000.00, and which judgment, attachment, levy or garnishment has not been
discharged or stayed within thirty (30) days after issuance, or for such longer
period as the Bank may agree to in writing;
10. Any Borrower, without the Bank's written consent, (a) is dissolved,
(b) merges or consolidates with any third party, (c) sells a material part of
its assets or business outside the ordinary course of its business, or (d)
agrees to do any of the foregoing;
11. There is a substantial change (other than with respect to changes
in the normal course of any Borrower's business, such as seasonal fluctuations)
in the existing or prospective financial condition of any Borrower which the
Bank in good faith determines to be materially adverse; or
-4-
32
12. The Bank in good xxxxx xxxxx itself insecure: then this Note shall
become due immediately, without notice, at the Bank's option.
REMEDIES: If this Note is not paid at maturity, whether by demand, acceleration
or otherwise, the Agent and the Bank shall have all of the rights and remedies
provided by any law or agreement. Any requirement of reasonable notice shall be
met if the Agent or the Bank sends the notice to the Borrower at least seven (7)
days prior to the date of public or private sale, disposition or other event
giving rise to the required notice. Upon default, the Agent and the Bank are
authorized to cause all or any part of any collateral securing this Note to be
transferred to or registered in its (their) name(s) or in the name of any other
person, firm or corporation, with or without designation of the capacity of such
nominee. The Borrower shall be liable for any deficiency remaining after
disposition of any collateral securing this Note. The Borrower is liable to the
Agent and the Bank for all reasonable costs and expenses of every kind incurred
in the making or collection of this Note, including, without limitation,
reasonable attorneys' fees and court costs. These costs and expenses shall
include, without limitation, any reasonable costs or expenses incurred by the
Agent and the Bank in any bankruptcy, reorganization, insolvency or other
similar proceeding.
WAIVER: Each endorser and any other party liable on this Note severally waives
demand, presentment, notice of dishonor and protest, and consents to any
extension or postponement of time of its payment without limit as to the number
or period, to any substitution, exchange or release of all or part of the
collateral securing this Note, to the addition of any party, and to the release
or discharge of, or suspension of any rights and remedies against, any person
who may be liable for the payment of this Note. No delay on the part of the Bank
in the exercise of any right or remedy shall operate as a waiver. No single or
partial exercise by the Bank of any right or remedy shall preclude any other
future exercise of it or the exercise of any other right or remedy. No waiver or
indulgence by the Bank of any default shall be effective unless in writing and
signed by the Bank, nor shall a waiver on one occasion be construed as a bar to
or waiver of that right on any future occasion.
MISCELLANEOUS: Each Borrower shall be jointly and severally liable under this
Note. This Note shall be binding on each Borrower and its successors, and shall
inure to the benefit of the Bank, its successors and assigns. Any reference to
the Bank shall include any holder of this Note. This Note is delivered in the
State of Ohio and governed by Ohio law. Section headings are for convenience of
reference only and shall not affect the interpretation of this Note. This Note
and all related loan documents embody the entire agreement between the Borrower
and the Bank regarding the terms of the loan evidenced by this Note, and
supersede all oral statements and prior writings relating to that loan.
WAIVER OF JURY TRIAL. EACH BORROWER, THE AGENT AND THE BANK, AFTER CONSULTING OR
HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT ANY OF THEM
-5-
33
MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS
NOTE, THE LOAN AGREEMENT, OR ANY RELATED INSTRUMENT OR AGREEMENT, OR ANY OF THE
TRANSACTIONS CONTEMPLATED THEREBY, OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN), OR ACTIONS OF ANY OF THEM. THIS WAIVER SHALL NOT IN
ANY WAY AFFECT THE BANK'S OR THE AGENT'S ABILITY TO PURSUE REMEDIES PURSUANT TO
ANY CONFESSION OF JUDGMENT OR COGNOVIT PROVISION CONTAINED HEREIN, IN THE LOAN
AGREEMENT OR ANY RELATED INSTRUMENT OR AGREEMENT. NO BORROWER NOR THE BANK AND
THE AGENT SHALL SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY ACTION IN
WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL
CANNOT BE OR HAS NOT BEEN WAIVED. THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE
BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY THE BORROWER, THE AGENT OR THE
BANK EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY ALL OF THEM.
Each Borrower irrevocably authorizes any attorney-at-law, including any
attorney-at-law employed or retained by the Bank or the Agent, to appear for the
Borrower in any court of record in Franklin County, Ohio (which the Borrower
acknowledges to be the place where this Note was made) or any other state or
jurisdiction wherein the Borrower may then reside, to (i) waive the issuing and
service of process, (ii) confess judgment against the Borrower in favor of the
holder of this Note for the amount then due, together with costs of suit, (iii)
release all errors, and (iv) waive all rights of appeal. Each Borrower consents
to the jurisdiction and venue of that court. Each Borrower waives any conflict
of interest that any attorney-at-law employed or retained by the Bank or the
Agent may have in confessing judgment under this Note and consents to payment of
a legal fee to any attorney-at-law confessing judgment under the Note. After
judgment is entered against one or more of the Borrowers, the power conferred
may be exercised as to one or more of the other Borrowers.
-6-
34
The undersigned have executed this Note in Columbus, Ohio, as of the date and
year first above written.
Rocky Shoes & Boots, Inc.,
an Ohio corporation
By:
--------------------------------
Title:
----------------------------
-------------------------------------------------------------------------------
WARNING -- BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT,
OR ANY OTHER CAUSE.
-------------------------------------------------------------------------------
Five Star Enterprises Ltd., Lifestyle Footwear, Inc.,
a Cayman Islands corporation a Delaware corporation
By: By:
--------------------------- ----------------------------
Title: Title:
------------------------- --------------------------
-7-
35
EXHIBIT D
HNB TERM NOTE
-------------
36
TERM LOAN NOTE
Due: May 1, 2000 $1,200,000
No. ________________ Date: April 18, 1997
PROMISE TO PAY: For value received, the undersigned, Rocky Shoes & Boots, Inc.,
an Ohio corporation, Five Star Enterprises Ltd., a Cayman Islands corporation,
and Lifestyle Footwear, Inc., a Delaware corporation (collectively referred to
as the "Borrower"), promise to pay, jointly and severally, to The Huntington
National Bank, a national banking association (the "Bank"), or order, at the
office of the Agent (defined below) located at 000 Xxxx Xxxxx Xxxxxx, Xxxxxxxx,
Xxxx 00000-0000, or at such other address as the Agent may give notice of to the
Borrower, the sum of $1,200,000, plus interest computed on the basis of the
actual number of days elapsed in a year of 360 days at one of the following
rates, at the option of the Borrower: (i) a variable rate ("Variable Rate") per
annum equal to the sum of 0.25% plus the rate per annum announced from time to
time by the Agent as its "prime" rate (which rate may not be the lowest rate
charged by the Agent to any of its customers), until maturity, whether by
demand, acceleration or otherwise; or (ii) a fixed rate ("Fixed Rate") per annum
equal to the sum of (y) the yield on United States Treasury issues (as published
in The Wall Street Journal, as determined by the Agent) having a comparable term
to the remaining term of this Note, plus (z) 275 basis points, until maturity,
whether by demand, acceleration or otherwise. Such interest rate in effect at
any time shall be referred to herein as the "Note Rate." Upon the occurrence of
an Event of Default (defined below) hereunder and during the continuance of
such, the interest rate per annum shall be 300 basis points above the Note Rate
then in effect. During the period interest is calculated as a floating interest
rate under subpart (i) above, each change in the "prime" rate will immediately
change the Note Rate, effective as of the opening of business on the date of the
change. The interest in effect hereunder shall be the Variable Rate unless and
until the Borrower shall give written notice to the Agent of its election to
convert to the Fixed Rate. Such conversion from the Variable Rate to the Fixed
Rate shall be effective as of the fifth "Business Day" (as defined in the Loan
Agreement) after receipt of such notice by the Agent. If the interest rate is so
converted from the Variable Rate to the Fixed Rate, the Borrower shall not
thereafter have the option to convert the interest rate back to the Variable
Rate.
In no event shall the interest rate exceed the maximum rate allowed by law; any
interest payment which would for any reason be deemed unlawful under applicable
law shall be applied to principal.
The Borrower shall pay this principal sum in consecutive monthly installments of
$20,000 each, plus accrued interest, commencing on June 1, 1997 and continuing
on the same day of each month thereafter until May 1, 2000, at which time the
entire balance of unpaid principal, plus accrued interest and other fees,
charges and premiums, shall be due and payable immediately. Each payment will be
applied first to costs, then to accrued interest, then to principal.
37
The Bank shall have the right to assess a late payment processing fee in the
amount of the greater of $50.00 or 5% of the scheduled payment in the event of a
default in payment that remains uncured for a period of five days.
PREPAYMENT: The Borrower may prepay all or any part of the principal balance of
this Note on one business day's notice to the Agent provided that, in addition
to all principal, interest and costs owing at the time of prepayment, if at the
time of any such prepayment the Note Rate in effect is the Fixed Rate, the
Borrower, if requested by the Bank, pays a prepayment premium equal to the
Current Value of (i) the interest that would have accrued on the amount prepaid
at the Fixed Rate, minus (ii) the interest that could accrue on the amount
prepaid at the Treasury Rate. In both cases, interest will be calculated from
the prepayment date to the maturity dates of the installments being prepaid.
Such maturity dates shall be determined by applying the prepayment to the
scheduled installments of principal in their inverse order of maturity.
"Treasury Rate" means the yield, as of the date of prepayment, on United States
Treasury issues, selected by the Bank in its discretion, having maturities
comparable to the scheduled maturities of the installments being prepaid.
"Current Value" means the net present value of the dollar amount of the interest
to be earned, discounted at the Treasury Rate. In no event shall the prepayment
premium be less than zero. The Borrower's notice of its intent to prepay shall
be irrevocable. If the balance of this Note is accelerated in accordance with
the terms of this Note, the resulting balance due shall be considered a
prepayment due and payable as of the date of acceleration. The Borrower agrees
that the prepayment premium is a reasonable estimate of loss and not a penalty.
The prepayment premium is payable as liquidated damages for the loss of bargain,
and its payment shall not in any way reduce, affect or impair any other
obligation of the Borrower under this Note.
CREDIT AGREEMENT: This Note and the Borrower shall be subject to the terms of a
Revolving Credit Loan Agreement between the Bank, the Borrower, Bank One,
Columbus, NA and Bank One, Columbus, NA, as Agent (the "Agent"), dated as of
January 28, 1997, as amended by a Term Loan Agreement and First Amendment to
Revolving Credit Loan Agreement, dated as of April 18, 1997 (such agreement, as
so amended and as the same may be further amended, modified, supplemented,
restated or replaced from time to time, the "Loan Agreement"), which shall
remain in effect for the loan evidenced by this Note regardless of termination
of any credit facility described in the Loan Agreement or termination or
expiration of the Loan Agreement.
SECURITY: To secure the payment of this Note and other present and future
liabilities of the Borrower to the Bank, the Borrower has pledged and granted to
the Agent, for the ratable benefit of the Bank and Bank One, Columbus, NA, among
other things, a continuing security interest in certain assets of the Borrower
pursuant to a Continuing Security Agreement dated as of January 28, 1997, as the
same may be amended, modified, supplemented, restated or replaced from time to
time. The Bank shall have the right at any time to apply its own debt or
liability to the Borrower or to any other party liable on this Note in whole or
partial payment of this Note or other present or future liabilities, without any
requirement for mutual maturity.
-2-
38
RELATED DOCUMENTS: The terms of any other documents executed as part of the loan
evidenced by this Note are incorporated herein by reference.
REPRESENTATIONS BY BORROWER: Each Borrower represents that it is a corporation
duly organized and existing under the laws of its jurisdiction of formation, and
that the execution and delivery of this Note and the performance of the
obligations it imposes are within its corporate powers, have been duly
authorized by all necessary action of its directors and do not contravene the
terms of its articles (certificate) of incorporation and code of regulations
(by-laws). Each Borrower represents that the execution and delivery of this Note
and the performance of the obligations it imposes do not violate any law, do not
conflict with any agreement by which it is bound, do not require the consent or
approval of any governmental authority or any third party, and that this Note is
a valid and binding agreement, enforceable according to its terms, except as
enforcement of such terms may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, or similar laws affecting
creditors' rights generally, provided, however, that each Borrower represents
and warrants that no such limitations currently exist as of the date of this
Note, or (ii) equitable principles which may limit the availability of the
remedy of specific performance or other equitable remedies. Each Borrower also
represents that this Note evidences a business loan exempt from the Federal
Truth In Lending Act (15 USC ss.1601, et seq.), and the Board of Governors of
the Federal Reserve System's Regulation Z (12 CFR ss.226, et seq.).
ADDITIONAL TERMS AND CONDITIONS
-------------------------------
EVENTS OF DEFAULT: If any of the following events (each an "Event of Default")
occurs:
1. Any Borrower fails to pay when due any amount payable under this
Note, and such failure continues for more than five (5) days after such payment
became due;
2. Any Borrower (a) fails to observe or perform any other term of this
Note, and such failure to observe or perform continues for more than fifteen
(15) days after such failure shall first become known to any officer of any
Borrower, provided, however, that such fifteen (15) day cure period shall not
apply to (i) any such failure which in the Bank's good faith opinion is
incapable of cure; and (ii) any such failure which has previously occurred; (b)
makes any materially incorrect or misleading representation, warranty, or
certificate to the Agent or the Bank; (c) makes any materially incorrect or
misleading representation in any financial statement or other information
delivered to the Agent or the Bank; or (d) defaults under the terms of any
agreement or instrument relating to any debt for borrowed money (other than the
debt evidenced by this Note) such that the creditor declares the debt due before
its maturity;
3. Any other default occurs under the terms of any loan agreement,
mortgage, security agreement, or any other document, including the Loan
Agreement, executed as part of the loan evidenced by this Note or any other
obligation or indebtedness of any Borrower owed to the Bank at any time, and
such default continues for more than fifteen
-3-
39
(15) days after such default shall first become known to any officer of any
Borrower, provided, however that such fifteen (15) day cure period shall not
apply to (a) any default which in the Bank's good faith opinion is incapable of
cure; (b) any default which has previously occurred; (c) any failure to maintain
and keep in effect any insurance required under the Loan Agreement; or (d) any
failure to provide to the Bank the financial statements, documents and
information required to be provided pursuant to Sections 7.1(a), (b), and (c) of
the Loan Agreement;
4. A "reportable event" (as defined in the Employee Retirement Income
Security Act of 1974, as amended) occurs that would permit the Pension Benefit
Guaranty Corporation to terminate any employee benefit plan of any Borrower or
any affiliate of any Borrower, or the occurrence of an "ERISA Event" (as defined
in the Loan Agreement) which shall not have been cured within thirty (30) days
after any officer of any Borrower has knowledge thereof;
5. Any Borrower becomes insolvent or unable to pay its debts as they
become due;
6. Any Borrower (a) makes an assignment for the benefit of creditors;
(b) consents to the appointment of a custodian, receiver, or trustee for itself
or for a substantial part of its assets; or (c) commences or consents to any
proceeding under any bankruptcy, reorganization, liquidation, insolvency or
similar laws of any jurisdiction;
7. A custodian, receiver or trustee is appointed for any Borrower or
for a substantial part of its assets without its consent and is not removed
within sixty (60) days after such appointment;
8. Proceedings are commenced against any Borrower under any bankruptcy,
reorganization, liquidation, or similar laws of any jurisdiction, and such
proceedings remain undismissed for sixty (60) days after commencement;
9. Any judgment is entered against any Borrower, or any attachment,
levy or garnishment is issued against any property of any Borrower, in excess of
$250,000.00, and which judgment, attachment, levy or garnishment has not been
discharged or stayed within thirty (30) days after issuance, or for such longer
period as the Bank may agree to in writing;
10. Any Borrower, without the Bank's written consent, (a) is dissolved,
(b) merges or consolidates with any third party, (c) sells a material part of
its assets or business outside the ordinary course of its business, or (d)
agrees to do any of the foregoing;
11. There is a substantial change (other than with respect to changes
in the normal course of any Borrower's business, such as seasonal fluctuations)
in the existing or prospective financial condition of any Borrower which the
Bank in good faith determines to be materially adverse; or
-4-
40
12. The Bank in good xxxxx xxxxx itself insecure: then this Note shall
become due immediately, without notice, at the Bank's option.
REMEDIES: If this Note is not paid at maturity, whether by demand, acceleration
or otherwise, the Agent and the Bank shall have all of the rights and remedies
provided by any law or agreement. Any requirement of reasonable notice shall be
met if the Agent or the Bank sends the notice to the Borrower at least seven (7)
days prior to the date of public or private sale, disposition or other event
giving rise to the required notice. Upon default, the Agent and the Bank are
authorized to cause all or any part of any collateral securing this Note to be
transferred to or registered in its (their) name(s) or in the name of any other
person, firm or corporation, with or without designation of the capacity of such
nominee. The Borrower shall be liable for any deficiency remaining after
disposition of any collateral securing this Note. The Borrower is liable to the
Agent and the Bank for all reasonable costs and expenses of every kind incurred
in the making or collection of this Note, including, without limitation,
reasonable attorneys' fees and court costs. These costs and expenses shall
include, without limitation, any reasonable costs or expenses incurred by the
Agent and the Bank in any bankruptcy, reorganization, insolvency or other
similar proceeding.
WAIVER: Each endorser and any other party liable on this Note severally waives
demand, presentment, notice of dishonor and protest, and consents to any
extension or postponement of time of its payment without limit as to the number
or period, to any substitution, exchange or release of all or part of the
collateral securing this Note, to the addition of any party, and to the release
or discharge of, or suspension of any rights and remedies against, any person
who may be liable for the payment of this Note. No delay on the part of the Bank
in the exercise of any right or remedy shall operate as a waiver. No single or
partial exercise by the Bank of any right or remedy shall preclude any other
future exercise of it or the exercise of any other right or remedy. No waiver or
indulgence by the Bank of any default shall be effective unless in writing and
signed by the Bank, nor shall a waiver on one occasion be construed as a bar to
or waiver of that right on any future occasion.
MISCELLANEOUS: Each Borrower shall be jointly and severally liable under this
Note. This Note shall be binding on each Borrower and its successors, and shall
inure to the benefit of the Bank, its successors and assigns. Any reference to
the Bank shall include any holder of this Note. This Note is delivered in the
State of Ohio and governed by Ohio law. Section headings are for convenience of
reference only and shall not affect the interpretation of this Note. This Note
and all related loan documents embody the entire agreement between the Borrower
and the Bank regarding the terms of the loan evidenced by this Note, and
supersede all oral statements and prior writings relating to that loan.
WAIVER OF JURY TRIAL. EACH BORROWER, THE AGENT AND THE BANK, AFTER CONSULTING OR
HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL,
-5-
41
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO
A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS NOTE, THE
LOAN AGREEMENT, OR ANY RELATED INSTRUMENT OR AGREEMENT, OR ANY OF THE
TRANSACTIONS CONTEMPLATED THEREBY, OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN), OR ACTIONS OF ANY OF THEM. THIS WAIVER SHALL NOT IN
ANY WAY AFFECT THE BANK'S OR THE AGENT'S ABILITY TO PURSUE REMEDIES PURSUANT TO
ANY CONFESSION OF JUDGMENT OR COGNOVIT PROVISION CONTAINED HEREIN, IN THE LOAN
AGREEMENT OR ANY RELATED INSTRUMENT OR AGREEMENT. NO BORROWER NOR THE BANK AND
THE AGENT SHALL SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY ACTION IN
WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL
CANNOT BE OR HAS NOT BEEN WAIVED. THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE
BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY THE BORROWER, THE AGENT OR THE
BANK EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY ALL OF THEM.
Each Borrower irrevocably authorizes any attorney-at-law, including any
attorney-at-law employed or retained by the Bank or the Agent, to appear for the
Borrower in any court of record in Franklin County, Ohio (which the Borrower
acknowledges to be the place where this Note was made) or any other state or
jurisdiction wherein the Borrower may then reside, to (i) waive the issuing and
service of process, (ii) confess judgment against the Borrower in favor of the
holder of this Note for the amount then due, together with costs of suit, (iii)
release all errors, and (iv) waive all rights of appeal. Each Borrower consents
to the jurisdiction and venue of that court. Each Borrower waives any conflict
of interest that any attorney-at-law employed or retained by the Bank or the
Agent may have in confessing judgment under this Note and consents to payment of
a legal fee to any attorney-at-law confessing judgment under the Note. After
judgment is entered against one or more of the Borrowers, the power conferred
may be exercised as to one or more of the other Borrowers.
-6-
42
The undersigned have executed this Note in Columbus, Ohio, as of the date and
year first above written.
Rocky Shoes & Boots, Inc.,
an Ohio corporation
By:
--------------------------------
Title:
----------------------------
-------------------------------------------------------------------------------
WARNING -- BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT,
OR ANY OTHER CAUSE.
-------------------------------------------------------------------------------
Five Star Enterprises Ltd., Lifestyle Footwear, Inc.,
a Cayman Islands corporation a Delaware corporation
By: By:
--------------------------- ----------------------------
Title: Title:
------------------------- --------------------------
-7-
43
EXHIBIT E
FIRST AMENDMENT TO MORTGAGE
---------------------------
44
FIRST AMENDMENT TO OPEN-END MORTGAGE,
SECURITY AGREEMENT AND ASSIGNMENT OF RENTS AND LEASES
(MAXIMUM INDEBTEDNESS NOT TO EXCEED $46,000,000)
THIS FIRST AMENDMENT TO OPEN-END MORTGAGE, SECURITY AGREEMENT AND
ASSIGNMENT OF RENTS AND LEASES (the "Amendment") is made and entered into as of
the 18th day of April, 1997, by the Mortgagor/Grantor, Rocky Shoes & Boots,
Inc., an Ohio corporation, successor by merger to Rocky Shoes & Boots Co. (aka
Rocky Shoes and Boots Co.), an Ohio corporation, with its principal place of
business located at 00 Xxxxx Xxxxxx, Xxxxxxxxxxx, Xxxx 00000 (the "Borrower"),
and the Mortgagee/Grantee, Bank One, Columbus, NA, a national banking
association, individually and as Agent, with its principal place of business
located at 000 Xxxx Xxxxx Xxxxxx, Xxxxxxxx, Xxxx 00000-0000 ("Bank One").
BACKGROUND INFORMATION
----------------------
A. The payment and performance of certain liabilities and obligations
(collectively, the "Obligations") of the Borrower owed to Bank One and The
Huntington National Bank ("HNB") are secured by an Open-End Mortgage, Security
Agreement and Assignment of Rents and Leases dated as of March 30, 1995 executed
by the Borrower, as mortgagor, recorded with the Athens County, Ohio Recorder in
Official Record Volume 195, Page 475, on April 7, 1995, as assigned by NBD Bank
("NBD") to Bank One, individually and as Agent (in such capacity as the Agent,
the "Agent"), pursuant to an Assignment of Mortgage by NBD to Bank One dated as
of February 2, 1996 and recorded with the Athens County, Ohio Recorder in
Official Record Volume 217, Page 494 (such mortgage, as so assigned, the
"Mortgage"). The Mortgage encumbers the "Property" as defined in the Mortgage,
which includes all of the Borrower's estate, right, title and interest in
certain real property situated in Athens County, Ohio, as described in the
Mortgage.
B. The Borrower, among other obligors, has requested that Bank One and
HNB (collectively referred to the "Banks" and individually as a "Bank") increase
the amount of
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the Obligations, to which the Banks have agreed, provided such increased
Obligations will be secured by the Mortgage, which requires that the Mortgage be
amended.
PROVISIONS
----------
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Agent, on behalf of the Banks, and the Borrower agree as
follows:
1. AMENDMENT OF THE MORTGAGE.
(a) The indebtedness of the Borrower owed to the Banks which is secured
by the Mortgage includes the indebtedness described therein as evidenced by the
"Loan Documents" (as defined in the Mortgage), as such Loan Documents have been
and may hereafter be amended, modified, supplemented, extended, restated or
replaced from time to time.
(b) Because such Loan Documents have been amended, modified,
supplemented, extended, restated or replaced and in order to more specifically
describe and define such indebtedness evidenced by the Loan Documents as such
indebtedness currently exists, and to provide for the requested increase in the
amount of the Obligations which are required by the Banks to be secured by the
Mortgage, the Mortgage shall be amended as follows:
(i) All references to the "Banks" in the Mortgage shall be
deemed to be a reference to Bank One and HNB, and the "Mortgagee" under the
Mortgage shall continue to be the Agent, for the ratable benefit of Bank One and
HNB.
(ii) Sections (i)(a) through (i)(h) on page 1 of the Mortgage
shall be amended in their entireties to provide as follows:
"(i) the repayment of the indebtedness of Borrower
owed to the Banks evidenced by the following promissory notes,
agreements and documents (all of which shall collectively be referred
to as the "Loan Documents"):
(a) Amended and Restated Master Business
Loan Note dated April 18,1997, executed by, among other obligors,
Borrower and payable to the order of Bank One in the maximum principal
amount of $25,200,000, which amount or portions thereof may be
advanced, repaid and readvanced, maturing on April 30, 1999, which
amends and restates the Master Business Loan Note dated January 28,
1997, executed by, among other obligors, Borrower and payable to the
order of Bank One in the maximum principal amount of $21,000,000, as
the same may be further
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amended, modified, supplemented, extended, restated or replaced from
time to time;
(b) Installment Business Loan Note dated May
11, 1994, executed by, among other obligors, Borrower and payable to
the order of Bank One in the principal amount of $815,000, maturing on
May 11, 1999, as the same may be amended, modified, supplemented,
extended, restated or replaced from time to time;
(c) Amended and Restated Master Business
Loan Note dated April 18,1997, executed by, among other obligors,
Borrower and payable to the order of HNB in the maximum principal
amount of $16,800,000, which amount or portions thereof may be
advanced, repaid and readvanced, maturing on April 30, 1999, which
amends and restates the Master Business Loan Note dated January
28,1997, executed by, among other obligors, Borrower and payable to the
order of HNB in the maximum principal amount of $14,000,000, as the
same may be further amended, modified, supplemented, extended, restated
or replaced from time to time;
(d) Term Loan Note dated April 18, 1997,
executed by, among other obligors, Borrower and payable to the order of
Bank One in the principal amount of $1,800,000, maturing on May 1,
2000, as the same may be amended, modified, supplemented, extended,
restated or replaced from time to time;
(e) Term Loan Note dated April 18, 1997,
executed by, among other obligors, Borrower and payable to the order of
HNB in the principal amount of $1,200,000, maturing on May 1, 2000, as
the same may be amended, modified, supplemented, extended, restated or
replaced from time to time (the promissory notes described in the
foregoing subparagraphs (a), (b), (c), (d) and this subparagraph (e)
shall collectively be referred to as the "Notes");
(f) Revolving Credit Loan Agreement dated as
of January 28, 1997, entered into by and among Borrower, other
obligors, Mortgagee and the Banks, as amended by a Term Loan Agreement
and First Amendment to Revolving Credit Loan Agreement dated as of
April 18, 1997, entered into by and among Borrower, other obligors,
Mortgagee and the Banks, maturing on April 30, 1999, as the same may be
further amended, modified, supplemented, extended, restated or replaced
from time to time (the "Credit Agreement"); and
(g) "Letter of Credit Documents", which
shall mean, collectively, "Commercial L/Cs", "Commercial L/C
Applications", "Standby
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L/Cs" and "Standby L/C Applications", as such terms are defined in the
Credit Agreement;
together with interest thereon, and all renewals, extensions, replacements and
modifications of the foregoing;".
(c) The reference to "Thirty-eight Million Dollars ($38,000,000.00)" in
the last sentence of the second full paragraph on page 3 of the Mortgage shall
be amended in its entirety to provide "$46,000,000".
2. REPRESENTATIONS AND WARRANTIES. The Borrower represents and confirms
that all representations and warranties made by it in the Mortgage continue to
be true, accurate and complete as of the date hereof.
3. CONTINUING EFFECT. Except as modified herein, all covenants,
conditions and agreements of the Borrower contained in the Mortgage shall remain
in full force and effect.
4. GOVERNING LAW. The Mortgage, as amended by this Amendment, and this
Amendment shall be construed in accordance with and be governed by the law of
the State of Ohio.
5. PRESERVATION OF EXISTING LIENS AND SECURITY INTERESTS. Each
mortgage, security interest, pledge, hypothecation, lien, assignment or other
conveyance of any right, title or interest in any property of any kind delivered
to the Agent on behalf of the Banks or to the Banks at any time, including the
Mortgage as amended by this Amendment, by any person or entity in connection
with the Obligations secured thereby shall remain in full force and effect
following the execution of this Amendment.
6. EXECUTION OF AMENDMENT. The Borrower has freely and voluntarily
executed this Amendment with full advice of legal counsel of its own choosing,
and is not under coercion or duress in connection with the execution or
performance of this Amendment.
7. AUTHORIZATION. The Borrower covenants and warrants to the Banks and
the Agent that the execution and delivery of this Amendment has been duly
authorized by all necessary and appropriate action on the part of the Borrower.
8. INTERPRETATION. This Amendment is deemed to have been prepared
jointly by the parties hereto, and any uncertainty or ambiguity shall not be
interpreted against any party, but shall be interpreted according to the rules
for the interpretation of an arm's length agreement.
9. HEADINGS. The headings of the sections of this Amendment are for
convenience only and shall not affect the construction of this Amendment.
10. RESERVATION OF RIGHTS; EFFECT ON INSOLVENCY PROCEEDING. Nothing
herein shall be construed to release, waive, relinquish, discharge or in any
other manner modify or
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affect the ability of any party hereto to contest to the discharge or
dischargeability in bankruptcy of the obligation of any person or entity in
connection with the Mortgage or the Loan Documents (as defined in the Mortgage).
11. WAIVER OF JURY TRIAL. BORROWER, THE BANKS AND AGENT, AFTER
CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY
JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THE NOTES, THIS AMENDMENT,
THE MORTGAGE OR ANY RELATED INSTRUMENT OR AGREEMENT, OR ANY OF THE TRANSACTIONS
CONTEMPLATED THEREBY, OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS (WHETHER
ORAL OR WRITTEN), OR ACTIONS OF ANY OF THEM. THIS WAIVER SHALL NOT IN ANY WAY
AFFECT AGENT'S OR THE BANKS' ABILITY TO PURSUE REMEDIES PURSUANT TO ANY
CONFESSION OF JUDGMENT OR COGNOVIT PROVISION CONTAINED IN THE NOTES OR ANY
RELATED INSTRUMENT OR AGREEMENT. NEITHER BORROWER, THE BANKS NOR AGENT SHALL
SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY ACTION IN WHICH A JURY
TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR
HAS NOT BEEN WAIVED. THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED
IN ANY RESPECT OR RELINQUISHED BY ANY OF BORROWER, THE BANKS OR AGENT EXCEPT BY
A WRITTEN INSTRUMENT EXECUTED BY ALL OF THEM.
[Balance of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties have duly executed this Amendment as of
the day and year first above written.
Signed and acknowledged
in the presence of:
Bank One, Columbus, NA,
------------------------------ a national banking association,
Print Name: individually and as Agent
-------------------
By:
------------------------------ ----------------------------
Print Name: Title:
------------------- -------------------------
------------------------------ Rocky Shoes & Boots, Inc.
Print Name: an Ohio corporation
-------------------
By:
------------------------------ ----------------------------
Print Name: Title:
------------------- -------------------------
STATE OF OHIO :
: ss
COUNTY OF ATHENS :
The foregoing instrument was acknowledged before me this 18th day of
April, 1997, by _________________________, _________________________ of Bank
One, Columbus, NA, a national banking association, for and on behalf of said
national banking association, individually and as Agent.
-------------------------------
Notary Public
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STATE OF OHIO :
: ss
COUNTY OF ATHENS :
The foregoing instrument was acknowledged before me this 18th day of
April, 1997, by ___________________________, ______________________ of Rocky
Shoes & Boots, Inc., an Ohio corporation, for and on behalf of said corporation.
-------------------------------
Notary Public
This instrument prepared by:
Xxxx X. Xxxxxxxx, Esq.
Xxxxxxxxxxxxx, Zox & Xxxx Co., L.P.A.
00 Xxxxx Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxx 00000
