TERMS AND CONDITIONS
WORLDWIDE SPORTS & RECREATION, INC.
SENIOR CREDIT FACILITIES
Except as otherwise set forth herein, the terms and conditions of the
financing committed to herein shall be on the same terms and conditions as is
set forth in the Amended and Restated Credit Agreement dated February 8,
2000, among Worldwide Sports & Recreation, Inc., as Borrower, Antares Capital
Corporation, as Agent, and the lenders party thereto (the "Existing Credit
Agreement") and other Loan Documents and shall contain the same
representations and warranties (any representation and warranty which is made
as of a specific date shall be required to be brought down to the effective
date, all relevant representations and warranties shall be expanded to
include appropriate references to the Purchase (as hereinafter defined) and
all schedules contained in Article III of the Existing Credit Agreement
shall be updated), affirmative, negative and financial covenants, conditions
and defaults. The transaction will be documented as an amendment to, or as an
amendment and restatement of, the Existing Credit Agreement. All dates are
calculated from the effective date of the closing of the amendment or
amendment and restatement (the "Effective Date"). Capitalized terms used but
not defined herein shall have the meaning set forth in the Existing Credit
Agreement:
LENDERS: A syndicate of financial institutions (including Antares)
arranged by Antares Capital Corporation.
AGENT: Antares Capital Corporation
FACILITIES: $160,000,000; comprised of a $50,000,000 Revolving Credit
Facility, a $50,000,000 Term Loan A, and a $60,000,000
Term Loan B (collectively, the "Facilities"). The
Revolving Credit Facility will also include a letter of
credit subfacility in an amount to be determined and
shall no longer be subject to a "clean down" provision.
USE OF PROCEEDS: To provide a portion of the funds for the purchase (the
"Purchase") of the capital stock of Serengeti Eyewear,
Inc. ("Serengeti") by a wholly-owned subsidiary of
Borrower ("Newco"), refinance indebtedness of Serengeti,
to amend and restate existing indebtedness to Lenders, to
provide for working capital and for general corporate
purposes, and to fund certain fees and expenses
associated with the closing of the Facilities and the
Purchase.
TERM: Revolver: 6 years
Term Loan A: 6 years
Term Loan B: 6 1/2 years
TERM LOAN
AMORTIZATION: Term Loan A and Term Loan B will be payable in equal
quarterly installments of principal due on the last day
of each March, June, September and December, commencing
September 30, 2000, according to the amortization
schedule set forth below:
LOAN YEAR TERM LOAN A TERM LOAN B
--------- ----------- -----------
1 $5,000,000 $600,000
2 $7,000,000 $600,000
3 $8,500,000 $600,000
4 $9,500,000 $600,000
5 $10,000,000 $600,000
6 $10,000,000 $600,000
7 $56,400,000 (2 installments)
----------- ------------
$50,000,000 $60,000,000
INTEREST RATES: For the first year following the Effective Date, the
outstanding principal balance under the Revolving Credit
Facility and the Term Loan A would bear interest at
Borrower's option at a fluctuating rate equal to (a) the
Base Rate plus one and three quarters percent (1.75%) per
annum, or (b) the LIBOR Rate plus three percent (3.00%)
per annum. The Term Loan B would bear interest at
Borrower's option at a fluctuating rate equal to (a) the
Base Rate plus two and one quarter percent (2.25%) per
annum, or (b) the LIBOR Rate plus three and one half
percent (3.50%) per annum. After the first year following
the effective date, the outstanding balance under our
Revolving Credit Facility and Term Loans would bear
interest at the Base Rate or LIBOR Rate plus the
Applicable Margins determined in accordance with the
pricing grids and methodology set forth in the existing
Credit Agreement.
The Base Rate equals the greater of (a) Prime Rate
appearing in the "Money Rates" section of THE WALL STREET
JOURNAL or another national publication selected by
Agent and (b) the Federal Funds Rate plus one half of one
percent. All interest based on the Prime Rate shall be
calculated using a 365-366 day year and actual days
elapsed.
SECURITY: The Agent, for the benefit of the Agent and Lenders,
would receive the liens, security interest and guaranties
contemplated by the Existing Credit Agreement except
there shall not be pledged to Agent, directly or
indirectly, any equity security which is registered on a
national securities exchange.
FEES: In addition to the fees set forth in the Existing Credit
Agreement, Borrower will pay to Agent, individually, the
fees in the amounts and at the times set forth in the fee
letter of even date herewith between Agent and Borrower.
FINANCIAL
COVENANTS: Financial covenants will include: Minimum Fixed Charge
Coverage, Minimum EBITDA, Maximum Total Debt to EBITDA,
Minimum Total Interest Coverage, and Maximum Capital
Expenditures, in each instance, financial covenant
levels to be set forth in the definitive loan
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documentation. It is further understood that the Maximum
Total Debt to EBITDA covenant will be calculated using an
average revolver balance. The average revolver will be
calculated using actual (to the extent reported) and
projected monthly revolver balances for the first twelve
months following the Effective Date and a trailing twelve
month revolver average thereafter.
OTHER TERMS AND
CONDITIONS: Other terms and conditions include, but are not limited
to, the following:
(a) Both before and after giving effect to the amendment,
or amendment and restatement, the Purchase and funding of
additional subordinated indebtedness, no Default or Event
of Default shall exist.
(b) The amount of business interruption insurance shall
be increased to an amount to be determined and all
insurance shall be reasonably satisfactory to Agent.
(c) WPP Group, management, and other investors shall be
required to invest a minimum of $15,000,000 of "new" cash
equity into the capital stock of Borrower to complete the
Purchase and no mandatory prepayment shall be required in
connection therewith. In addition to the subordinated
debt referred to in clause (h) below, Borrower shall have
issued Junior Subordinated Debt of $12,200,000 on terms
and conditions acceptable to Agent.
(d) Agent's satisfactory review of the remaining due
diligence items including without limitation, the legal
due diligence, all of which must be in form and substance
satisfactory to Antares.
(e) Receipt by Antares, in form and substance satisfactory
to Antares, of such organization and authority materials,
opinions of counsel, evidence of insurance, pay-off
letters and termination statements as Antares may
reasonably require.
(f) The "ownership" Event of Default shall be amended to
require WPP to maintain a cash equity investment in
Borrower of not less than $43,500,000 and shall require
Borrower to continue to maintain not less than the
percentage equity interest in each subsidiary which it owns
after giving effect to the Purchase.
(g) Newco shall have acquired, or shall simultaneously
acquire, not less than 90% of the issued and outstanding
capital stock of Serengeti. Borrower shall cause Newco to
merge with and into Serengeti and to delist Serengeti as
soon as reasonably possible.
(h) Subordinated Noteholders (which may include
Metropolitan Life Insurance Company or other Persons)
shall have (i) consented to the Purchase, (ii) consented
to the amendment to, or amendment and restatement of, the
Existing Credit Agreement, (iii) reaffirmed the
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continuing subordination of the Subordinated
Indebtedness to the Obligations, (iv) amended or amended
and restated the Subordinated Note Agreement and related
documents, on terms and conditions, including
subordination terms, acceptable to Antares, which
amendment, or amendment and restatement, shall, among
other things, (x) increase the Maximum Senior Principal
Amount (as defined therein) to $184,000,000, and (y)
Subordinated Noteholders shall have purchased for cash at
par, and Borrower will have issued, additional
subordinated notes of $13,300,000. The terms and
conditions of the Subordinated Loan Documents as in
effect on the date hereof are acceptable.
(i) Agent shall have received all of the agreements
(including an amended and restated credit agreement),
documents, instruments and opinions set forth on
the Closing Agenda prepared by Agent's counsel, all of
which must be in form and substance reasonably
satisfactory to Agent and duly executed where
applicable. Agent shall use documents substantially
similar to those used for the February, 2000 transaction.
(j) Not more than $20,000,000 (subject to increases or
decreases in working capital levels which have occurred
in the normal course of business) in Revolving Loans shall
be outstanding after giving effect to the Purchase and
payment of all costs and expenses in connection therewith.
(k) Within 90 days after the Effective Date, Borrower
shall have entered into Rate Contracts with respect to at
least 50% of the aggregate Term Loans on the Effective
Date after giving effect to the Purchase.
(l) There has been no material adverse change in the
operations, business, properties, financial condition or
prospects of (i) Borrower or Borrower and its
Subsidiaries taken as a whole since April 30, 2000, or
(ii) Serengeti and its Subsidiaries taken as a whole
since April 30, 2000. A material adverse change in the
financial condition of Serengeti and its Subsidiaries
shall not be deemed to have occurred due solely to
Serengeti's EBITDA for June, July or August of 2000 being
less than Serengeti's EBITDA projections for those months
which were previously provided in writing to Agent by
Borrower; provided Serengeti's actual reported EBITDA
(without regard to adjustments) for: (A) June, 2000 is
not less than $500,000, (B) July, 2000 is not less than
$0, or (C) August, 2000 is not less than negative
$200,000.
(m) Any new disclosures set forth on the updated
schedules not expressly permitted under the terms of the
Existing Credit Agreement shall be acceptable to Agent
and Lenders.
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