Exhibit 10.11
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CREDIT AGREEMENT
Dated as of April 9, 2002
among
ICON HEALTH & FITNESS, INC.,
as Borrower,
THE OTHER CREDIT PARTIES SIGNATORY HERETO,
as Credit Parties,
THE LENDERS SIGNATORY HERETO
FROM TIME TO TIME,
as Lenders,
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender,
GECC CAPITAL MARKETS GROUP, INC.,
as Lead Arranger,
and
XX XXXXXX XXXXX BANK,
as Documentation Agent
TABLE OF CONTENTS
Page
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1. AMOUNT AND TERMS OF CREDIT.......................................................... 1
1.1 Credit Facilities............................................................ 1
1.2 Letters of Credit............................................................ 5
1.3 Prepayments.................................................................. 6
1.4 Use of Proceeds.............................................................. 8
1.5 Interest and Applicable Margins.............................................. 8
1.6 Eligible Accounts............................................................ 10
1.7 Eligible Inventory........................................................... 13
1.8 Cash Management Systems...................................................... 15
1.9 Fees......................................................................... 15
1.10 Receipt of Payments.......................................................... 15
1.11 Application and Allocation of Payments....................................... 16
1.12 Loan Account and Accounting.................................................. 16
1.13 Indemnity.................................................................... 17
1.14 Access....................................................................... 18
1.15 Taxes........................................................................ 18
1.16 Capital Adequacy; Increased Costs; Illegality................................ 19
1.17 Single Loan.................................................................. 21
2. CONDITIONS PRECEDENT................................................................ 21
2.1 Conditions to the Initial Loans.............................................. 21
2.2 Further Conditions to Each Loan.............................................. 22
2.3 Conditions to Permitted Acquisitions......................................... 23
3. REPRESENTATIONS AND WARRANTIES...................................................... 25
3.1 Corporate Existence; Compliance with Law..................................... 26
3.2 Executive Offices, Collateral Locations, FEIN................................ 26
3.3 Corporate Power, Authorization, Enforceable Obligations...................... 26
3.4 Financial Statements and Projections......................................... 26
3.5 Material Adverse Effect...................................................... 27
3.6 Ownership of Property; Liens................................................. 28
3.7 Labor Matters................................................................ 28
3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness.... 28
3.9 Government Regulation........................................................ 29
3.10 Margin Regulations........................................................... 29
3.11 Taxes........................................................................ 29
3.12 ERISA and Canadian Pension and Benefit Plans................................. 30
3.13 No Litigation................................................................ 31
3.14 Brokers...................................................................... 31
3.15 Intellectual Property........................................................ 31
3.16 Full Disclosure.............................................................. 31
3.17 Environmental Matters........................................................ 32
3.18 Insurance.................................................................... 32
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3.19 Deposit and Disbursement Accounts.................................... 32
3.20 Government Contracts................................................. 33
3.21 Customer and Trade Relations......................................... 33
3.22 Agreements and Other Documents....................................... 33
3.23 Solvency............................................................. 33
3.24 Status of Holdings................................................... 33
3.25 Subordinated Debt.................................................... 33
3.26 Old Holdcos.......................................................... 34
4. FINANCIAL STATEMENTS AND INFORMATION........................................ 34
4.1 Reports and Notices.................................................. 34
4.2 Communication with Accountants....................................... 34
5. AFFIRMATIVE COVENANTS....................................................... 34
5.1 Maintenance of Existence and Conduct of Business..................... 34
5.2 Payment of Charges................................................... 35
5.3 Books and Records.................................................... 35
5.4 Insurance; Damage to or Destruction of Collateral.................... 35
5.5 Compliance with Laws................................................. 37
5.6 Canadian Pension and Benefit Plans................................... 37
5.7 Supplemental Disclosure.............................................. 38
5.8 Intellectual Property................................................ 38
5.9 Environmental Matters................................................ 38
5.10 Landlords' Agreements, Mortgagee Agreements and Bailee Letters....... 39
5.11 Further Assurances................................................... 39
6. NEGATIVE COVENANTS.......................................................... 40
6.1 Mergers, Subsidiaries, Etc........................................... 40
6.2 Investments; Loans and Advances...................................... 40
6.3 Indebtedness......................................................... 40
6.4 Employee Loans and Affiliate Transactions............................ 41
6.5 Capital Structure and Business....................................... 42
6.6 Guaranteed Indebtedness.............................................. 42
6.7 Liens................................................................ 42
6.8 Sale of Stock and Assets............................................. 43
6.9 ERISA................................................................ 43
6.10 Financial Covenants.................................................. 43
6.11 Hazardous Materials.................................................. 44
6.12 Sale-Leasebacks...................................................... 44
6.13 Cancellation of Indebtedness......................................... 44
6.14 Restricted Payments.................................................. 44
6.15 Change of Corporate Name or Location; Change of Fiscal Year.......... 45
6.16 No Impairment of Intercompany Transfers.............................. 45
6.17 No Speculative Transactions.......................................... 45
6.18 Leases; Real Estate Purchases........................................ 45
6.19 Changes Relating to Subordinated Debt and Other Agreements........... 45
6.20 Credit Parties other than Borrower................................... 46
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7. TERM................................................................................ 46
7.1 Termination.................................................................. 46
7.2 Survival of Obligations Upon Termination of Financing Arrangements........... 46
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES.............................................. 46
8.1 Events of Default............................................................ 46
8.2 Remedies..................................................................... 48
8.3 Waivers by Credit Parties.................................................... 49
8.4 Receivership................................................................. 49
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT................................. 50
9.1 Assignment and Participations................................................ 50
9.2 Appointment of Agent......................................................... 52
9.3 Agent's Reliance, Etc........................................................ 53
9.4 Agent and Affiliates......................................................... 53
9.5 Lender Credit Decision....................................................... 53
9.6 Indemnification.............................................................. 54
9.7 Successor Agent.............................................................. 54
9.8 Setoff and Sharing of Payments............................................... 54
9.9 Advances; Payments; Non-Funding Lenders; Information; Actions in Concert..... 55
10. SUCCESSORS AND ASSIGNS.............................................................. 58
10.1 Successors and Assigns........................................................ 58
11. MISCELLANEOUS....................................................................... 58
11.1 Complete Agreement; Modification of Agreement................................ 58
11.2 Amendments and Waivers....................................................... 58
11.3 Fees and Expenses............................................................ 60
11.4 No Waiver.................................................................... 61
11.5 Remedies..................................................................... 62
11.6 Severability................................................................. 62
11.7 Conflict of Terms............................................................ 62
11.8 Confidentiality.............................................................. 62
11.9 GOVERNING LAW................................................................ 63
11.10 Notices...................................................................... 63
11.11 Section Titles............................................................... 64
11.12 Counterparts................................................................. 64
11.13 WAIVER OF JURY TRIAL......................................................... 64
11.14 Press Releases; Etc.......................................................... 64
11.15 Reinstatement................................................................ 65
11.16 Advice of Counsel............................................................ 65
11.17 No Drafting Presumptions..................................................... 65
11.18 License...................................................................... 65
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INDEX OF APPENDICES
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Annex A (Recitals) - Definitions
Annex B (Section 1.2) - Letters of Credit
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Annex C (Section 1.8) - Cash Management System
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Annex D (Section 2.1(a)) - Closing Checklist
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Annex E (Section 4.1(a)) - Financial Statements and Projections -- Reporting
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Annex F (Section 4.1(b)) - Collateral Reports
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Annex G (Section 6.10) - Financial Covenants
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Annex H (Section 9.9(a)) - Lenders' Wire Transfer Information
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Annex I (Section 11.10) - Notice Addresses
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Annex J (from Annex A) - Commitments as of Closing Date
Exhibit 1.1(a)(i) - Form of Notice of Revolving Credit Advance
Exhibit 1.1(a)(ii) - Form of Revolving Note
Exhibit 1.1(b) - Form of Term Note
Exhibit 1.1(c)(ii) - Form of Swing Line Note
Exhibit 1.5(e) - Form of Notice of Conversion/Continuation
Exhibit 4.1(b) - Form of Borrowing Base Certificate
Exhibit 9.1(a) - Form of Assignment Agreement
Disclosure Schedule 1.4 - Sources and Uses; Funds Flow Memorandum
Disclosure Schedule 3.2 - Executive Offices, Collateral Locations, FEIN
Disclosure Schedule 3.4(a) - Financial Statements
Disclosure Schedule 3.4(b) - Pro Forma
Disclosure Schedule 3.4(c) - Projections
Disclosure Schedule 3.5 Material Adverse Changes
Disclosure Schedule 3.6 - Real Estate and Leases
Disclosure Schedule 3.7 - Labor Matters
Disclosure Schedule 3.8 - Ventures, Subsidiaries and Affiliates; Outstanding Stock
Disclosure Schedule 3.11 - Tax Matters
Disclosure Schedule 3.12 - ERISA Plans
Disclosure Schedule 3.13 - Litigation
Disclosure Schedule 3.15 - Intellectual Property
Disclosure Schedule 3.17 - Hazardous Materials
Disclosure Schedule 3.18 - Insurance
Disclosure Schedule 3.19 - Deposit and Disbursement Accounts
Disclosure Schedule 3.20 - Government Contracts
Disclosure Schedule 3.21 - Relationships with Suppliers
Disclosure Schedule 3.22 - Material Agreements
Disclosure Schedule 5.1 - Trade Names
Disclosure Schedule 5.10 Landlord Waivers
Disclosure Schedule 6.3 - Indebtedness
Disclosure Schedule 6.4 - Transactions with Affiliates
Disclosure Schedule 6.7 - Existing Liens
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This CREDIT AGREEMENT (this "Agreement"), dated as of April 9,
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2002 among ICON HEALTH & FITNESS, INC., a Delaware corporation ("Borrower"); the
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other Credit Parties signatory hereto; GENERAL ELECTRIC CAPITAL CORPORATION, a
Delaware corporation (in its individual capacity, "GE Capital"), for itself, as
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Lender, and as Agent for Lenders, and the other Lenders signatory hereto from
time to time.
RECITALS
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WHEREAS, Borrower has requested that Lenders extend revolving and
term credit facilities to Borrower of up to Two Hundred Thirty Five Million
Dollars ($235,000,000) in the aggregate for the purpose of Refinancing and to
provide (a) working capital financing for Borrower, (b) financing for Capital
Expenditures otherwise permitted hereunder, (c) financing for Permitted
Acquisitions and (d) funds for other general corporate purposes of Borrower; and
for these purposes, Lenders are willing to make certain loans and other
extensions of credit to Borrower of up to such amount upon the terms and
conditions set forth herein; and
WHEREAS, Borrower has agreed to secure all of its obligations
under the Loan Documents by granting to Agent, for the benefit of Agent and
Lenders, a security interest in and lien upon all of its existing and
after-acquired personal and real property; and
WHEREAS, HF Holdings, Inc., a Delaware corporation ("Holdings")
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is willing to guarantee all of the obligations of Borrower to Agent and Lenders
under the Loan Documents and to pledge to Agent, for the benefit of Agent and
Lenders, all of the Stock of Borrower to secure such guaranty; and
WHEREAS, the Stock and assets of each direct and indirect
domestic and Canadian Subsidiary of Borrower will be pledged as Collateral for
the Loans and each such Subsidiary will guarantee payment thereof; and
WHEREAS, capitalized terms used in this Agreement shall have the
meanings ascribed to them in Annex A and, for purposes of this Agreement and the
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other Loan Documents, the rules of construction set forth in Annex A shall
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govern. All Annexes, Disclosure Schedules, Exhibits and other attachments
(collectively, "Appendices") hereto, or expressly identified to this Agreement,
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are incorporated herein by reference, and taken together with this Agreement,
shall constitute but a single agreement. These Recitals shall be construed as
part of the Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, and for other good and valuable consideration,
the parties hereto agree as follows:
1. AMOUNT AND TERMS OF CREDIT
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1.1 Credit Facilities.
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(a) Revolving Credit Facility.
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(i) Subject to the terms and conditions hereof, each
Revolving Lender agrees to make available to Borrower from time to time
until the
Commitment Termination Date its Pro Rata Share of advances (each, a
"Revolving Credit Advance"). The Pro Rata Share of the Revolving Loan of
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any Revolving Lender shall not at any time exceed its separate Revolving
Loan Commitment. The obligations of each Revolving Lender hereunder shall
be several and not joint. The aggregate amount of Revolving Credit
Advances outstanding shall not exceed at any time the lesser of (A) the
Maximum Amount and (B) the Borrowing Base, in each case less the sum of
the Letter of Credit Obligations and the Swing Line Loan outstanding at
such time ("Borrowing Availability"). Borrowing Availability may be
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further reduced by Reserves imposed by Agent in its reasonable credit
judgment. Until the Commitment Termination Date, Borrower may from time
to time borrow, repay and reborrow under this Section 1.1(a). Each
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Revolving Credit Advance shall be made on notice by Borrower to one of
the representatives of Agent identified in Schedule 1.1 at the address
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specified therein. Those notices must be given no later than (1) noon
(New York time) on the Business Day of the proposed Revolving Credit
Advance, in the case of an Index Rate Loan, or (2) noon (New York time)
on the date which is three (3) Business Days prior to the proposed
Revolving Credit Advance, in the case of a LIBOR Loan. Each such notice
(a "Notice of Revolving Credit Advance") must be given in writing (by
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telecopy or overnight courier) substantially in the form of Exhibit
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1.1(a)(i), and shall include the information required in such Exhibit and
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such other information as may be required by Agent. If Borrower desires
to have the Revolving Credit Advances bear interest by reference to a
LIBOR Rate, it must comply with Section 1.5(e).
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(ii) Except as provided in Section 1.12, Borrower shall execute
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and deliver to each Revolving Lender a note to evidence the Revolving
Loan Commitment of that Revolving Lender. Each note shall be in the
principal amount of the Revolving Loan Commitment of the applicable
Revolving Lender, dated the Closing Date and substantially in the form of
Exhibit 1.1(a)(ii) (each a "Revolving Note" and, collectively, the
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"Revolving Notes"). Each Revolving Note shall represent the obligation of
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Borrower to pay the amount of Revolving Lender's Revolving Loan
Commitment or, if less, such Revolving Lender's Pro Rata Share of the
aggregate unpaid principal amount of all Revolving Credit Advances to
Borrower together with interest thereon as prescribed in Section 1.5. The
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entire unpaid balance of the Revolving Loan and all other non-contingent
Obligations shall be immediately due and payable in full in immediately
available funds on the Commitment Termination Date.
(b) Term Loans.
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(i) Subject to the terms and conditions hereof, each Term
Lender agrees to make a term loan (the "Term Loan") on the Closing Date
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to Borrower in the original principal amount of its Term Loan Commitment.
The obligations of each Term Lender hereunder shall be several and not
joint with respect to the Term Loan. The Term Loan shall be evidenced by
promissory notes substantially in the form of Exhibit 1.1(b) (each a
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"Term Note" and collectively the "Term Notes"), and, except as provided
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in Section 1.12, Borrower
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shall execute and deliver each Term Note to the applicable Term Lender.
Each Term Note shall represent the obligation of Borrower to pay the
amount of the applicable Term Lender's Term Loan Commitment, together
with interest thereon as prescribed in Section 1.5.
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(ii) Borrower shall repay the principal amount of the Term Loan
in twenty (20) consecutive quarterly installments on the last day of
February, May, August and November of each year, commencing May 31, 2002,
as follows:
Payment Installment
Dates Amounts
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May 31, 2002 $1,250,000
August 3, 2002 $1,250,000
November 30, 2002 $1,250,000
February 28, 2003 $1,250,000
May 31, 2003 $1,250,000
August 31, 2003 $1,250,000
November 30, 2003 $1,250,000
February 28, 2004 $1,250,000
May 31, 2004 $1,250,000
August 31, 2004 $1,250,000
November 30, 2004 $1,250,000
February 28, 2005 $1,250,000
May 31, 2005 $1,250,000
August 31, 2005 $1,250,000
November 30, 2005 $1,250,000
February 28, 2006 $1,250,000
May 31, 2006 $1,250,000
August 31, 2006 $1,250,000
November 30, 2006 $1,250,000
The final installment due on February 28, 2007 shall be in the
amount of $1,250,000 or, if different, the remaining principal balance of
the Term Loan. If the Revolving Loan Commitment is terminated for any
reason, the entire principal balance of the Term Loan shall be
immediately due and payable.
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(c) Swing Line Facility.
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(i) Agent shall notify the Swing Line Lender upon Agent's
receipt of any Notice of Revolving Credit Advance. Subject to the terms
and conditions hereof, the Swing Line Lender may, in its discretion, make
available from time to time until the Commitment Termination Date
advances (each, a "Swing Line Advance") in accordance with any such
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notice. The aggregate amount of Swing Line Advances outstanding shall not
exceed at any time the lesser of (A) the Swing Line Commitment and (B)
the lesser of the Maximum Amount and the Borrowing Base, in each case,
less the outstanding balance of the Revolving Loan at such time ("Swing
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Line Availability"). Until the Commitment Termination Date, Borrower may
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from time to time borrow, repay and reborrow under this Section 1.1(c).
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Each Swing Line Advance shall be made pursuant to a Notice of Revolving
Credit advance delivered by Borrower to Agent in accordance with Section
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1.1(c). Notwithstanding any other provision of this Agreement or the
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other Loan Documents, the Swing Line Loan shall constitute an Index Rate
Loan. Unless the Swing Line Lender has received at least one (1) Business
Day's prior written notice from Requisite Revolving Lenders instructing
it not to make a Swing Line Advance, the Swing Line Lender shall,
notwithstanding the failure of any condition precedent set forth in
Sections 2.2(a)-(c), be entitled to fund that Swing Line Advance, and to
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have each Revolving Lender make Revolving Credit Advances in accordance
with Section 1.1(c)(iii) or purchase participating interests in
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accordance with Section 1.1(c)(iv). Those notices from Requisite
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Revolving Lenders must be given no later than noon (New York time) on the
Business Day preceding the proposed Swing Line Advance.
(ii) Borrower shall execute and deliver to the Swing Line Lender
a promissory note to evidence the Swing Line Commitment. Such note shall
be in the principal amount of the Swing Line Commitment of the Swing Line
Lender, dated the Closing Date and substantially in the form of Exhibit
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1.1(c)(ii) (the "Swing Line Note"). The Swing Line Note shall represent
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the obligation of Borrower to pay the amount of the Swing Line Commitment
or, if less, the aggregate unpaid principal amount of all Swing Line
Advances made to Borrower together with interest thereon as prescribed in
Section 1.5. The entire unpaid balance of the Swing Line Loan and all
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other noncontingent Obligations shall be immediately due and payable in
full in immediately available funds on the Commitment Termination Date if
not sooner paid in full.
(iii) The Swing Line Lender, at any time and from time to time in
its sole and absolute discretion but no less frequently than once weekly
shall on behalf of Borrower (and Borrower hereby irrevocably authorizes
the Swing Line Lender to so act on its behalf) request each Revolving
Lender (including the Swing Line Lender) to make a Revolving Credit
Advance to Borrower (which shall be an Index Rate Loan) in an amount
equal to that Revolving Lender's Pro Rata Share of the principal amount
of the Swing Line Loan (the "Refunded Swing Line Loan") outstanding on
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the date such notice is given. Unless any of the
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events described in Sections 8.1(h) or 8.1(i) has occurred (in which
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event the procedures of Section 1.1(c)(iv) shall apply) and regardless of
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whether the conditions precedent set forth in this Agreement to the
making of a Revolving Credit Advance are then satisfied, each Revolving
Lender shall disburse directly to Agent, its Pro Rata Share of a
Revolving Credit Advance on behalf of the Swing Line Lender, prior to
2:00 p.m. (New York time), in immediately available funds on the Business
Day next succeeding the date that notice is given. The proceeds of those
Revolving Credit Advances shall be immediately paid to the Swing Line
Lender and applied to repay the Refunded Swing Line Loan.
(iv) If, prior to refunding a Swing Line Loan with a Revolving
Credit Advance pursuant to Section 1.1(c)(iii), one of the events
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described in Sections 8.1(h) or 8.1(i) has occurred, then, subject to the
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provisions of Section 1.1(c)(v) below, each Revolving Lender shall, on
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the date such Revolving Credit Advance was to have been made for the
benefit of Borrower, purchase from the Swing Line Lender an undivided
participation interest in the Swing Line Loan in an amount equal to its
Pro Rata Share of such Swing Line Loan. Upon request, each Revolving
Lender shall promptly transfer to the Swing Line Lender, in immediately
available funds, the amount of its participation interest.
(v) Each Revolving Lender's obligation to make Revolving Credit
Advances in accordance with Section 1.1(c)(iii) and to purchase
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participation interests in accordance with Section 1.1(c)(iv) shall be
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absolute and unconditional and shall not be affected by any circumstance,
including (A) any setoff, counterclaim, recoupment, defense or other
right that such Revolving Lender may have against the Swing Line Lender,
Borrower or any other Person for any reason whatsoever; (B) the
occurrence or continuance of any Default or Event of Default; (C) any
inability of Borrower to satisfy the conditions precedent to borrowing
set forth in this Agreement on the date upon which such participation
interest is to be purchased or (D) any other circumstance, happening or
event whatsoever, whether or not similar to any of the foregoing. If any
Revolving Lender does not make available to Agent or the Swing Line
Lender, as applicable, the amount required pursuant to Sections
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1.1(c)(iii) or 1.1(c)(iv), as the case may be, the Swing Line Lender
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shall be entitled to recover such amount on demand from such Revolving
Lender, together with interest thereon for each day from the date of
non-payment until such amount is paid in full at the Federal Funds Rate
for the first two Business Days and at the Index Rate thereafter.
(d) Reliance on Notices. Agent shall be entitled to rely upon, and
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shall be fully protected in relying upon, any Notice of Revolving Credit
Advance, Notice of Conversion/Continuation or similar notice believed by Agent
to be genuine. Agent may assume that each Person executing and delivering any
notice in accordance herewith was duly authorized, unless the responsible
individual acting thereon for Agent has actual knowledge to the contrary.
1.2 Letters of Credit. Subject to and in accordance with the terms and
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conditions contained herein and in Annex B, Borrower shall have the right to
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request, and Revolving
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Lenders agree to incur, or purchase participations in, Letter of Credit
Obligations in respect of Borrower.
1.3 Prepayments.
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(a) Voluntary Prepayments; Reductions in Revolving Loan Commitments.
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Borrower may at any time on at least 5 days' prior written notice to Agent (i)
voluntarily prepay all or part of the Term Loan and/or (ii) permanently reduce
(but not terminate) the Revolving Loan Commitment, in each case, in increments
of $5,000,000; provided that (A) the Revolving Loan Commitment shall not be
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reduced to an amount less than $190,000,000, and (B) after giving effect to such
reductions, Borrower shall comply with Section 1.3(b)(i). Borrower may at any
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time on at least ten 10 days' prior written notice to Agent terminate the
Revolving Loan Commitment, provided that upon such termination all Loans and
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other Obligations shall be immediately due and payable in full and all Letter of
Credit Obligations shall be cash collateralized or otherwise satisfied in
accordance with Annex B hereto. Any voluntary prepayment and any reduction or
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termination of the Revolving Loan Commitment must be accompanied by the payment
of any LIBOR funding breakage costs in accordance with Section 1.13(b). Upon any
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such reduction or termination of the Revolving Loan Commitment, Borrower's right
to request Revolving Credit Advances, or request that Letter of Credit
Obligations be incurred on its behalf, or request Swing Line Advances, shall
simultaneously be permanently reduced or terminated, as the case may be;
provided that a permanent reduction of the Revolving Loan Commitment shall not
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require a corresponding pro rata reduction in the L/C Sublimit. Each notice of
partial prepayment shall designate the Loan or other Obligations to which such
prepayment is to be applied; provided that any partial prepayments of the Term
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Loan shall be applied to prepay the scheduled installments of the Term Loan in
inverse order of maturity.
(b) Mandatory Prepayments.
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(i) If at any time the outstanding balance of the Revolving
Loan exceeds the lesser of (A) the Maximum Amount and (B) the Borrowing
Base, in each case, less the outstanding Swing Line Loan at such time,
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Borrower shall immediately repay the aggregate outstanding Revolving Credit
Advances to the extent required to eliminate such excess. If any such
excess remains after repayment in full of the aggregate outstanding
Revolving Credit Advances, Borrower shall provide cash collateral for the
Letter of Credit Obligations in the manner set forth in Annex B to the
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extent required to eliminate such excess.
(ii) Immediately upon receipt by any Credit Party of proceeds of
any asset disposition, which, together with other asset dispositions in any
Fiscal Year results in proceeds in excess of $400,000 in the aggregate
during such Fiscal Year, (excluding proceeds of asset dispositions
permitted by Sections 6.8(a), 6.8(c) and 6.8(d)), but including proceeds of
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or any sale of Stock of any Subsidiary of any Credit Party), Borrower shall
prepay the Obligations in an amount equal to such proceeds, net of (A)
commissions and other reasonable and customary transaction costs, fees and
expenses properly attributable to such transaction and payable by Borrower
in connection therewith (in each case, paid
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to non-Affiliates), (B) transfer taxes payable by such Credit Party in
connection therewith, (C) amounts payable to holders of senior Liens
(to the extent such Liens constitute Permitted Encumbrances hereunder),
if any, and (D) an appropriate reserve for income taxes in accordance
with GAAP in connection therewith. Notwithstanding the foregoing, the
proceeds of asset dispositions which are reinvested in Capital
Expenditures within 180 days after the date of receipt thereof need not
be used to prepay the Obligations. Borrower shall report to Agent in
writing its' intention to reinvest such proceeds concurrently with each
asset disposition and shall also report the dates and amounts of such
reinvestments concurrently therewith. All prepayments made hereunder
shall be applied in accordance with Section 1.3(c).
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(iii) If Holdings or Borrower or any other Credit Party issues
Stock (other than issuances of Stock (i) to employees of Holdings and
its Subsidiaries and (ii) to stockholders of Holdings as of the Closing
Date, the proceeds of which are used to fund all or part of the
purchase price of a Permitted Acquisition), no later than the Business
Day following the date of receipt of the proceeds thereof, Borrower
shall prepay the Loans in an amount equal to all such proceeds, net of
underwriting discounts and commissions and other reasonable costs paid
to non-Affiliates in connection therewith. Any such prepayment shall be
applied in accordance with Section 1.3(c).
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(iv) So long as the Term Loan is outstanding, Borrower shall
prepay the Obligations on the date that is 10 days after the earlier of
(A) the date on which Borrower's annual audited Financial Statements
for the immediately preceding Fiscal Year are delivered pursuant to
Annex E, commencing with the Fiscal Year ending on or about March 31,
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2003, or (B) the date on which such annual audited Financial Statements
were required to be delivered pursuant to Annex E, in an amount equal
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to twenty-five percent (25%) of Excess Cash Flow for the immediately
preceding Fiscal Year. Any prepayments from Excess Cash Flow paid
pursuant to this clause (iv) shall be applied in accordance with
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Section 1.3(c). Each such prepayment shall be accompanied by a
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certificate signed by Borrower's chief financial officer certifying the
manner in which Excess Cash Flow and the resulting prepayment were
calculated, which certificate shall be in form and substance
satisfactory to Agent.
(c) Application of Certain Prepayments. Any prepayments made by
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Borrower pursuant to clauses (a)(i), (b)(ii), (b)(iii) and (b)(iv) above shall
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be applied as follows: first, to Fees and reimbursable expenses of Agent then
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due and payable pursuant to any of the Loan Documents; second, to interest then
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due and payable on the Term Loan; third, to prepay the principal installments of
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the Term Loan in inverse order of maturity, until the Term Loan shall have been
repaid in full; fourth, to interest then due and payable on the Swing Line Loan;
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fifth, to the principal balance of the Swing Line Loan until the same has been
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repaid in full; sixth, to interest then due and payable on the Revolving Credit
-----
Advances; seventh, to the outstanding principal balance of Revolving Credit
-------
Advances until the same has been paid in full; and eighth, to any Letter of
------
Credit Obligations, to provide cash collateral therefor in the manner set forth
in Annex B, until all such Letter of Credit Obligations have been fully cash
-------
collateralized in the
7
manner set forth in Annex B. Neither the Revolving Loan Commitment nor the Swing
-------
Line Commitment shall be permanently reduced by the amount of any such
prepayments, except to the extent that the failure to reduce such Commitments
would result in a contractual requirement that any portion of that prepayment
amount be applied to repurchase or prepay Subordinated Debt.
(d) Application of Prepayments from Insurance Proceeds.
--------------------------------------------------
Prepayments from insurance proceeds received by Agent in accordance with Section
-------
5.4(c) shall be applied as follows: insurance proceeds from casualties or losses
------
to cash or Inventory shall be applied first, to the Swing Line Loans and,
second, to the Revolving Credit Advances; and insurance proceeds from casualties
or losses to Equipment, Fixtures and Real Estate shall be applied to scheduled
principal installments of the Term Loan, in inverse order of maturity. Neither
the Revolving Loan Commitment nor the Swing Line Loan Commitment shall be
permanently reduced by the amount of any such prepayments, except to the extent
that the failure to reduce such Commitment would result in a contractual
requirement that any portion of that prepayment amount be applied to repurchase
or prepay Subordinated Debt. If the precise amount of insurance proceeds
allocable to Inventory as compared to Equipment, Fixtures and Real Estate are
not otherwise determined, the allocation and application of those proceeds shall
be as reasonably determined by Agent.
(e) No Implied Consent. Nothing in this Section 1.3 shall be
------------------ -----------
construed to constitute Agent's or any Lender's consent to any transaction that
is not permitted by other provisions of this Agreement or the other Loan
Documents.
(f) Ratable Reductions. Any reduction in the Revolving Loan
------------------
Commitments in accordance with this Section 1.3 or otherwise shall result in a
-----------
ratable reduction of each Lender's Revolving Loan Commitment.
1.4 Use of Proceeds. Borrower shall utilize the proceeds of the Term
---------------
Loan, the Revolving Loan and the Swing Line Loan solely for the Refinancing (and
to pay any related transaction expenses), and for the financing of Borrower's
ordinary working capital, financing of Capital Expenditures otherwise permitted
hereunder, financing of Permitted Acquisitions and general corporate purposes.
Disclosure Schedule (1.4) contains a description of Borrower's sources and uses
-------------------------
of funds received and disbursed on the Closing Date, including Loans and Letter
of Credit Obligations to be made or incurred on that date, and a funds flow
memorandum detailing how funds from each source are to be transferred to
particular uses.
1.5 Interest and Applicable Margins.
-------------------------------
(a) Borrower shall pay interest in cash to Agent, for the
ratable benefit of Lenders in accordance with the various Loans being made by
each Lender, in arrears on each applicable Interest Payment Date, at the
following rates: (A) with respect to the Revolving Credit Advances, the Index
Rate plus the Applicable Revolver Index Margin per annum or, at the election of
Borrower, the applicable LIBOR Rate plus the Applicable Revolver LIBOR Margin
per annum, based on the aggregate Revolving Credit Advances outstanding from
time to time; (B) with respect to the Term Loan, the Index Rate plus the
Applicable Term Loan Index Margin, or, at the election of Borrower, the
applicable LIBOR Rate plus the Applicable Term Loan
8
LIBOR Margin, per annum; and (C) with respect to the Swing Line Loan, the Index
Rate plus the Applicable Revolver Index Margin per annum.
The Applicable Margins are as follows:
Applicable Revolver Index Margin 1.250%
Applicable Revolver LIBOR Margin 2.625%
Applicable Term Loan Index Margin 1.750%
Applicable Term Loan LIBOR Margin 3.125%
Applicable L/C Margin 2.000%
Applicable Unused Line Fee Margin (subject to
adjustment in accordance with Section 1.9(b)) 0.500%
(b) If any payment on any Loan becomes due and payable on a day
other than a Business Day, the maturity thereof will be extended to the next
succeeding Business Day (except as set forth in the definition of LIBOR Period)
and, with respect to payments of principal, interest thereon shall be payable at
the then applicable rate during such extension.
(c) All computations of Fees calculated on a per annum basis and
interest shall be made by Agent on the basis of a 360-day year, in each case for
the actual number of days occurring in the period for which such interest and
Fees are payable. The Index Rate shall be determined each day based upon the
Index Rate as in effect each day. Each determination by Agent of an interest
rate and Fees hereunder shall be conclusive, absent manifest error.
(d) So long as an Event of Default has occurred and is
continuing under Section 8.1(a), (h) or (i), or so long as any other Event of
--------------------------
Default has occurred and is continuing and at the election of Agent (or upon the
written request of Requisite Lenders) confirmed by written notice from Agent to
Borrower, the interest rates applicable to the Loans and the Letter of Credit
Fees shall be increased by two percent (2%) per annum above the rates of
interest or the rate of such Fees otherwise applicable hereunder ("Default
-------
Rate"), and all outstanding Obligations shall bear interest at the Default Rate
----
applicable to such Obligations. Interest and Letter of Credit Fees at the
Default Rate shall accrue from the initial date of such Event of Default until
that Event of Default is cured or waived and shall be payable upon demand.
(e) Subject to the conditions precedent set forth in Section
-------
2.2, Borrower shall have the option to (i) request that any Revolving Credit
---
Advance be made as a LIBOR Loan, (ii) convert at any time all or any part of
outstanding Loans (other than the Swing Line Loan) from Index Rate Loans to
LIBOR Loans, (iii) convert any LIBOR Loan to an Index Rate Loan, subject to
payment of LIBOR breakage costs in accordance with Section 1.13(b) if such
---------------
conversion is made prior to the expiration of the LIBOR Period applicable
thereto, or (iv) continue all or any portion of any Loan (other than the Swing
Line Loan) as a LIBOR Loan upon the expiration of the applicable LIBOR Period
and the succeeding LIBOR Period of that continued Loan shall commence on the
last day of the LIBOR Period of the Loan to be continued. Any Loan or group of
Loans having the same proposed LIBOR Period to be made or continued as, or
converted into, a LIBOR Loan must be in a minimum amount of $5,000,000 and
integral multiples of $500,000 in excess of such amount. Any such election must
be made by noon (New York time) on the
9
third (3rd) Business Day prior to (1) the date of any proposed Advance which is
to bear interest at the LIBOR Rate, (2) the end of each LIBOR Period with
respect to any LIBOR Loans to be continued as such, or (3) the date on which
Borrower wishes to convert any Index Rate Loan to a LIBOR Loan for a LIBOR
Period designated by Borrower in such election. If no election is received with
respect to a LIBOR Loan by noon (New York time) on the third (3rd) Business Day
prior to the end of the LIBOR Period with respect thereto, that LIBOR Loan shall
be converted to an Index Rate Loan at the end of its LIBOR Period. Borrower must
make such election by notice to Agent in writing, by telecopy or overnight
courier. In the case of any conversion or continuation, such election must be
made pursuant to a written notice (a "Notice of Conversion/Continuation") in the
---------------------------------
form of Exhibit 1.5(e). No Loan may be made as or converted into a LIBOR Loan
--------------
until the earlier of (i) 45 days after the Closing Date or (ii) completion of
primary syndication as determined by Agent.
(f) Notwithstanding anything to the contrary set forth in this
Section 1.5, if a court of competent jurisdiction determines in a final order
-----------
that the rate of interest payable hereunder exceeds the highest rate of interest
permissible under law (the "Maximum Lawful Rate"), then so long as the Maximum
-------------------
Lawful Rate would be so exceeded, the rate of interest payable hereunder shall
be equal to the Maximum Lawful Rate; provided, however, that if at any time
-------- -------
thereafter the rate of interest payable hereunder is less than the Maximum
Lawful Rate, Borrower shall continue to pay interest hereunder at the Maximum
Lawful Rate until such time as the total interest received by Agent, on behalf
of Lenders, is equal to the total interest that would have been received had the
interest rate payable hereunder been (but for the operation of this paragraph)
the interest rate payable since the Closing Date as otherwise provided in this
Agreement. Thereafter, interest hereunder shall be paid at the rate(s) of
interest and in the manner provided in Sections 1.5(a) through (e), unless and
---------------------------
until the rate of interest again exceeds the Maximum Lawful Rate, and at that
time this paragraph shall again apply. In no event shall the total interest
received by any Lender pursuant to the terms hereof exceed the amount that such
Lender could lawfully have received had the interest due hereunder been
calculated for the full term hereof at the Maximum Lawful Rate. If the Maximum
Lawful Rate is calculated pursuant to this paragraph, such interest shall be
calculated at a daily rate equal to the Maximum Lawful Rate divided by the
number of days in the year in which such calculation is made. If,
notwithstanding the provisions of this Section 1.5(f), a court of competent
--------------
jurisdiction shall finally determine that a Lender has received interest
hereunder in excess of the Maximum Lawful Rate, Agent shall, to the extent
permitted by applicable law, promptly apply such excess in the order specified
in Section 1.11 and thereafter shall refund any excess to Borrower or as a court
------------
of competent jurisdiction may otherwise order.
1.6 Eligible Accounts. All of the Accounts owned by Borrower or its
-----------------
domestic or Canadian Subsidiaries and reflected in the most recent Borrowing
Base Certificate delivered by Borrower to Agent shall be "Eligible Accounts" for
-----------------
purposes of this Agreement, except any Account to which any of the exclusionary
criteria set forth below applies. Agent shall have the right to establish,
modify or eliminate Reserves against Eligible Accounts from time to time in its
reasonable credit judgment. In addition, Agent reserves the right, at any time
and from time to time after the Closing Date, to adjust any of the criteria set
forth below, to establish new criteria and to adjust advance rates with respect
to Eligible Accounts, in its reasonable credit judgment, subject to the approval
of Requisite Revolving Lenders in the case of adjustments or new criteria
10
or changes in advance rates which have the effect of making more credit
available. Eligible Accounts shall not include any Account of Borrower or its
domestic or Canadian Subsidiaries:
(a) that does not arise from the sale of goods or the performance of
services in the ordinary course of its business;
(b) (i) upon which the right to receive payment is not absolute or is
contingent upon the fulfillment of any condition whatsoever or (ii) as to which
Borrower or one of its domestic or Canadian Subsidiaries is not able to bring
suit or otherwise enforce their remedies against the Account Debtor through
judicial process, or (iii) if the Account represents a progress billing
consisting of an invoice for goods sold or used or services rendered pursuant to
a contract under which the Account Debtor's obligation to pay that invoice is
subject to Borrower's or one of its domestic or Canadian Subsidiary's completion
of further performance under such contract or is subject to the equitable lien
of a surety bond issuer;
(c) any Account against which any defense, counterclaim, setoff or
dispute is asserted, but such Account shall only be ineligible to the extent of
any such defense, counterclaim, setoff or dispute;
(d) that is not a true and correct statement of bona fide
indebtedness incurred in the amount of the Account for merchandise sold to or
services rendered and accepted by the applicable Account Debtor;
(e) with respect to which an invoice, acceptable to Agent in form and
substance, has not been sent to the applicable Account Debtor;
(f) that (i) is not owned by Borrower or one of its domestic or
Canadian Subsidiaries or (ii) is subject to any right, claim, security interest
or other interest of any other Person, other than first priority Liens in favor
of Agent, on behalf of itself and Lenders or in favor of Agent and Lenders, as
applicable, and Prior Claims that are unregistered and that secure amounts that
are not yet due and payable;
(g) that arises from a sale to any director, officer, other employee
or Affiliate of any Credit Party, or to any entity that has any common officer
or director with any Credit Party (other than a portfolio company of one of the
Xxxx Entities or CS First Boston or its Affiliates);
(h) that is the obligation of an Account Debtor that is the United
States government or a political subdivision thereof, or department, agency or
instrumentality thereof, or that is the Canadian government (Her Majesty in
Right of Canada) or a political subdivision thereof, or department, agency or
instrumentality thereof, unless Agent, in its sole discretion, has agreed to the
contrary in writing, the Account is assignable by way of security and Borrower,
if necessary or desirable, has complied with the Federal Assignment of Claims
Act of 1940, with respect to such obligation, or, the applicable Canadian
Subsidiary of Borrower, if necessary or desirable, has complied with the
Financial Administration Act (Canada) or any applicable provincial or
territorial statute or municipal ordinance of similar purpose and effect, with
respect to such obligation, as applicable;
11
(i) that is the obligation of an Account Debtor located in a foreign
country (other than Canada (excluding the province of Newfoundland, the
Northwest Territories and the territory of Nunavut) and in Agent's discretion,
Accounts owing by Regency in Australia and New Zealand, RFE International in the
United Kingdom and Sears Mexico in Mexico, if payable in Dollars, in an amount
not to exceed $2,000,000 in the aggregate, if notice and other perfection
requirements are met) unless payment thereof is assured by a letter of credit
assigned and delivered to Agent, satisfactory to Agent as to form, amount and
issuer;
(j) to the extent Borrower or any Subsidiary thereof is liable for
goods sold or services rendered by the applicable Account Debtor to Borrower or
any Subsidiary thereof but only to the extent of the potential offset;
(k) that arises with respect to goods that are delivered on a
xxxx-and-hold, cash-on-delivery basis or placed on consignment, guaranteed sale
or other terms by reason of which the payment by the Account Debtor is or may be
conditional;
(l) that is in default; provided, that, without limiting the
-------- ----
generality of the foregoing, an Account shall be deemed in default upon the
occurrence of any of the following:
(i) the Account is not paid within the earlier of: 60 days
following its due date or 120 days following its original invoice date
(provided that Agent may extend such 120 day limitation to 150 days as to
--------
Accounts owing by certain creditworthy Account Debtors as determined by
Agent in its reasonable credit judgment);
(ii) the Account Debtor obligated upon such Account suspends
business, makes a general assignment for the benefit of creditors or fails
to pay its debts generally as they come due; or
(iii) a petition is filed by or against any Account Debtor
obligated upon such Account under any bankruptcy law or any other federal,
state or foreign (including any provincial), receivership, insolvency
relief or other law or laws for the relief of debtors, except for Eligible
K-Mart Accounts; provided, that, Agent may, in its reasonable discretion
-------- ----
consent to the inclusion in Eligible Accounts of Accounts owing by
additional Account Debtors that are debtors-in-possession in Chapter 11
bankruptcy cases and that arise post-petition;
(m) that is the obligation of an Account Debtor if fifty percent
(50%) or more of the dollar amount of all Accounts owing by that Account Debtor
are ineligible under the other criteria set forth in this Section 1.6;
-----------
(n) as to which Agent's Lien thereon, on behalf of itself and
Lenders, or Agent's and Lenders' Liens thereon, as applicable, is not a first
priority perfected Lien;
(o) to the extent such Account is evidenced by a judgment, Instrument
or Chattel Paper;
12
(p) to the extent such Account exceeds any credit limit established
by Agent, in its reasonable credit judgment, following prior notice of such
limit by Agent to Borrower;
(q) that is payable in any currency other than Canadian Dollars or
Dollars or, if permitted, British pounds or New Zealand dollars;
(r) that is otherwise unacceptable to Agent in its reasonable credit
judgment;
(s) Accounts owing to Universal; or
(t) Accounts owing by consumers, if two or more payments with respect
thereto remain unpaid for more than thirty (30) days or to the extent that the
aggregate of those consumer Accounts exceed $10,000,000.
Borrower agrees that Accounts as to which payments have been received
by Borrower are no longer Eligible Accounts regardless of whether such payments
have been applied to the Revolving Loan. Borrower agrees that the following
Reserves constitute an appropriate exercise of Agent's credit judgment (i) a
co-op advertising Reserve, (ii) a direct response Accounts Reserve, (iii) an
unearned financing charge Reserve; (iv) a dilution Reserve and (v) a credit memo
accrual Reserve and (vi) without duplication, a reserve for Prior Claims.
1.7 Eligible Inventory. All of the Inventory owned by Borrower and its
------------------
domestic or Canadian Subsidiaries and reflected in the most recent Borrowing
Base Certificate delivered by Borrower to Agent shall be "Eligible Inventory"
------------------
for purposes of this Agreement, except any Inventory to which any of the
exclusionary criteria set forth below applies. Agent shall have the right to
establish, modify, or eliminate Reserves against Eligible Inventory from time to
time in its reasonable credit judgment. In addition, Agent reserves the right,
at any time and from time to time after the Closing Date, to adjust any of the
criteria set forth below, to establish new criteria and to adjust advance rates
with respect to Eligible Inventory in its reasonable credit judgment, subject to
the approval of Requisite Revolving Lenders in the case of adjustments or new
criteria or changes in advance rates which have the effect of making more credit
available. Eligible Inventory shall not include any Inventory of Borrower or its
domestic or Canadian Subsidiaries that:
(a) is not owned by Borrower or one of its domestic or Canadian
Subsidiaries free and clear of all Liens and rights of any other Person
(including the rights of a purchaser that has made progress payments and the
rights of a surety that has issued a bond to assure Borrower's or one of its
domestic or Canadian Subsidiary's performance with respect to that Inventory and
the rights of unpaid suppliers (other than another Credit Party) under Section
81.1 of the Bankruptcy and Insolvency Act (Canada)), except the Liens in favor
of Agent, on behalf of itself and Lenders, or, in favor of Agent and Lenders, as
applicable, and Prior Claims (excluding the rights of unpaid suppliers (other
than another Credit Party) under Section 81.1 of the Bankruptcy and Insolvency
Act (Canada)), subject to Permitted Encumbrances described in clauses (a) and
(e) of the definition thereof;
(b) is (i) not located on premises owned, leased or rented by such
Borrower or a domestic or Canadian Subsidiary and set forth in Disclosure
----------
Schedule 3.2 or is (ii) stored at a leased location or with a bailee,
------------
warehouseman or similar Person, unless Agent has given its
13
prior consent thereto and unless (x) a satisfactory bailee letter or landlord
waiver has been delivered to Agent, or (y) Reserves satisfactory to Agent have
been established with respect thereto, or is (iii) located at any site if the
aggregate book value of Inventory at any such location is less than $50,000 or a
lesser minimum amount determined by Agent in its reasonable credit judgment;
(c) is placed on consignment (unless Agent's Liens are fully
perfected in its sole and absolute discretion) or is in transit except, in
Agent's discretion, Eligible In-Transit Inventory that has been shipped to the
United States that is "on the water";
(d) is covered by a negotiable document of title, unless such
document has been delivered to Agent with all necessary endorsements, free and
clear of all Liens except those in favor of Agent and Lenders;
(e) in Agent's reasonable determination, is discontinued Inventory,
excess, obsolete, unsalable, shopworn, seconds, damaged or unfit for sale;
(f) consists of display or other promotional items or packing or
shipping materials, manufacturing supplies, work-in-process Inventory or
replacement parts for Equipment;
(g) consists of goods which have been returned by the buyer unless
the same have been inspected by Borrower or its domestic or Canadian
Subsidiaries, as applicable, with satisfactory results and returned to finished
goods;
(h) is not of a type held for sale in the ordinary course of
Borrower's or its domestic or Canadian Subsidiaries' business;
(i) is not subject to a first priority Lien in favor of Agent on
behalf of itself and Lenders or in favor of Agent and Lenders, as applicable,
subject to Permitted Encumbrances in accordance with clauses (a) and (e) of the
definition thereof;
(j) consists of any costs associated with "freight-in" charges;
(k) consists of Hazardous Materials or goods that can be transported
or sold only with licenses that are not readily available;
(l) is not covered by casualty insurance acceptable to Agent;
(m) does not meet all standards imposed by Governmental Authorities;
(n) is subject to any agreement which restricts Agent's ability to
sell or dispose of such Inventory;
(o) bears a Reebok trademark unless Agent determines that such
Inventory can be quickly and cost-effectively converted to "Pro Form" or other
Borrower branded Inventory and sold by Agent without restrictions; or
14
(p) is otherwise unacceptable to Agent in its reasonable credit
judgment.
Borrower agrees that a reserve against Borrowing Availability attributable to
Eligible Inventory equal to sales, goods and services and harmonized sales taxes
payable upon the sale of such Inventory, a Reserve in the amount of intercompany
profit attributable to sales of Inventory among Borrower and its Subsidiaries, a
Reserve in the amount of warranty repair costs and, without duplication, a
Reserve in the amount of Prior Claims are reasonable exercises of Agent's credit
judgment.
1.8 Cash Management Systems. Borrower will maintain until the Termination
-----------------------
Date, the cash management systems described in Annex C (the "Cash Management
------- ---------------
Systems") with respect to itself and its domestic and Canadian Subsidiaries.
-------
1.9 Fees.
----
(a) Borrower shall pay to GE Capital, individually, the Fees
specified in that certain fee letter dated as of April 9, 2002 between Borrower
and GE Capital (the "Fee Letter"), at the times specified for payment therein.
----------
(b) As additional compensation for the Revolving Lenders, Borrower
shall pay to Agent, for the ratable benefit of such Lenders, in arrears, on the
first Business Day of each month prior to the Commitment Termination Date and on
the Commitment Termination Date, a fee for Borrower's non-use of available funds
in an amount equal to the Applicable Unused Line Fee Margin per annum
(calculated on the basis of a 360 day year for actual days elapsed) multiplied
by the "Average Unused Daily Balance," consisting of the difference between (x)
the Maximum Amount and (y) the average for the period of the daily closing
balances of the Revolving Loan and the Swing Line Loan outstanding during the
period for which the such Fee is due. If the Average Unused Daily Balance for
the eleven month period ending on March 31, 2003 or the twelve month period
ending on March 31st in any year thereafter is less than $105,000,000, then the
Applicable Unused Line Fee payable shall be increased retroactively to three
quarters of one percent (0.75%) per annum and the amount of that increased
Applicable Unused Line Fee Margin shall be payable in a single installment on or
before April 13th of each year.
(c) Borrower shall pay to Agent, for the ratable benefit of Revolving
Lenders, the Letter of Credit Fee as provided in Annex B.
-------
1.10 Receipt of Payments. Borrower shall make each payment under this
-------------------
Agreement not later than 1:00 p.m. (New York time) on the day when due in
immediately available funds in Dollars to the Collection Account. For purposes
of computing interest and Fees and determining Borrowing Availability or Net
Borrowing Availability as of any date, all payments shall be deemed received on
the Business Day of receipt of immediately available funds therefor in the
Collection Account prior to 1:00 p.m. New York time. Payments received after
1:00 p.m. New York time on any Business Day shall be deemed to have been
received on the following Business Day. If Agent receives any payment from or on
behalf of any Credit Party in a currency other than the currency in which an
Obligation payable is denominated, Agent may convert the payment (including the
monetary proceeds of realization upon any Collateral and any
15
funds then held in a cash collateral account) into the Equivalent Amount of the
currency of the relevant Obligation as determined on the Business Day
immediately preceding the date of actual payment. The Obligations shall be
satisfied only to the extent of the amount actually received by Agent upon such
conversion.
1.11 Application and Allocation of Payments.
--------------------------------------
(a) So long as no Event of Default under Section 8.1(a) has occurred
--------------
and is continuing, (i) payments consisting of proceeds of Accounts or other
Collateral received in the ordinary course of business shall be applied, first,
to the Swing Line Loan and, second, to the Revolving Loan; (ii) payments
matching specific scheduled payments then due shall be applied to those
scheduled payments; (iii) voluntary prepayments shall be applied as determined
by Borrower, subject to the provisions of Section 1.3(a); and (iv) mandatory
--------------
prepayments shall be applied as set forth in Sections 1.3(c) and 1.3(d). All
--------------------------
payments and prepayments applied to a particular Loan shall be applied ratably
to the portion thereof held by each Lender as determined by its Pro Rata Share.
As to all payments received at a time when an Event of Default under Section
-------
8.1(a) has occurred and is continuing or following the Commitment Termination
------
Date, Borrower hereby irrevocably waives the right to direct the application of
any and all payments received from or on behalf of Borrower, and Borrower hereby
irrevocably agrees that all such payments shall be applied against the
Obligations as set forth below notwithstanding any previous entry by Agent in
the Loan Account or any other books and records. In the absence of a specific
determination to the contrary by all Lenders, such payments shall be applied to
amounts then due and payable in the following order: (1) to Fees and Agent's
expenses reimbursable hereunder; (2) to interest on the Swing Line Loan; (3) to
principal payments on the Swing Line Loan; (4) to interest on the Revolving Loan
and Term Loan, ratably in proportion to the interest accrued as to each such
Loan; (5) to principal payments on the Revolving Loan and Term Loan (to
scheduled installments in inverse order of maturity) and to provide cash
collateral for Letter of Credit Obligations in the manner described in Annex B,
-------
ratably to the aggregate, combined principal balance of such Loans and
outstanding Letter of Credit Obligations; and (6) to all other Obligations,
including expenses of Lenders to the extent reimbursable under Section 11.3.
------------
(b) Agent is authorized to, and may in its discretion, charge to the
Revolving Loan balance on behalf of Borrower and cause to be paid all Fees,
expenses, Charges, costs (including insurance premiums in accordance with
Section 5.4(a)) and interest and principal, other than principal of the
---------------
Revolving Loan, owing by Borrower under this Agreement or any of the other Loan
Documents if and to the extent Borrower fails to pay promptly any such amounts
as and when due, even if such charges would cause the aggregate balance of the
Revolving Loan and the Swing Line Loan to exceed Borrowing Availability. At
Agent's option and to the extent permitted by law, any charges so made shall
constitute part of the Revolving Loan hereunder.
1.12 Loan Account and Accounting. Agent shall maintain a loan account
---------------------------
(the "Loan Account") on its books to record: all Advances and the Term Loan, all
------------
payments made by Borrower, and all other debits and credits as provided in this
Agreement with respect to the Loans or any other Obligations. All entries in the
Loan Account shall be made in accordance with Agent's customary accounting
practices as in effect from time to time. The balance in the Loan Account, as
recorded on Agent's most recent printout or other written statement, shall,
absent manifest error, be presumptive evidence of the amounts due and owing to
Agent and
16
Lenders by Borrower; provided that any failure to so record or any error in so
--------
recording shall not limit or otherwise affect Borrower's duty to pay the
Obligations. Agent shall render to Borrower a monthly accounting of transactions
with respect to the Loans setting forth the balance of the Loan Account. Unless
Borrower notifies Agent in writing of any objection to any such accounting
(specifically describing the basis for such objection), within thirty (30) days
after Borrower's receipt thereof, each and every such accounting shall, absent
manifest error, be deemed final, binding and conclusive on Borrower in all
respects as to all matters reflected therein. Only those items expressly
objected to in such notice shall be deemed to be disputed by Borrower.
Notwithstanding any provision herein contained to the contrary, any Lender may
elect (which election may be revoked) to dispense with the issuance of Notes to
that Lender and may rely on the Loan Account as evidence of the amount of
Obligations from time to time owing to it.
1.13 Indemnity.
---------
(a) Each Credit Party that is a signatory hereto shall jointly and
severally indemnify and hold harmless (except ICON of Canada which shall only
severally indemnify and hold harmless to the extent permitted by the corporate
statute under which it is incorporated) each of Agent, Lenders and their
respective Affiliates, and each such Person's respective officers, directors,
employees, attorneys, agents and representatives (each, an "Indemnified
-----------
Person"), from and against any and all suits, actions, proceedings, claims,
------
damages, losses, liabilities and expenses (including reasonable attorneys' fees
and disbursements and other costs of investigation or defense, including those
incurred upon any appeal) that may be instituted or asserted against or incurred
by any such Indemnified Person as the result of credit having been extended,
suspended or terminated under this Agreement and the other Loan Documents and
the administration of such credit, and in connection with or arising out of the
transactions contemplated hereunder and thereunder and any actions or failures
to act in connection therewith, including any and all Environmental Liabilities
and legal costs and expenses arising out of or incurred in connection with
disputes between or among any parties to any of the Loan Documents
--- -------
(collectively, "Indemnified Liabilities"); provided, that no such Credit Party
----------------------- --------
shall be liable for any indemnification to an Indemnified Person to the extent
that any such suit, action, proceeding, claim, damage, loss, liability or
expense results from that Indemnified Person's gross negligence or willful
misconduct. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER
PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY
OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH
PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE
ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED
UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED
HEREUNDER OR THEREUNDER.
(b) To induce Lenders to provide the LIBOR Rate option on the terms
provided herein, if (i) any LIBOR Loans are repaid in whole or in part prior to
the last day of any applicable LIBOR Period (whether that repayment is made
pursuant to any provision of this Agreement or any other Loan Document or occurs
as a result of acceleration, by operation of law or otherwise); (ii) Borrower
shall default in making any borrowing of, conversion into or continuation of
LIBOR Loans after Borrower has given notice requesting the same in accordance
17
herewith; or (iii) Borrower shall fail to make any prepayment of a LIBOR Loan
after Borrower has given a notice thereof in accordance herewith, then Borrower
shall indemnify and hold harmless each Lender from and against all losses, costs
and expenses resulting from or arising from any of the foregoing. Such
indemnification shall include any loss (including loss of margin) or expense
arising from the reemployment of funds obtained by it or from fees payable to
terminate deposits from which such funds were obtained. For the purpose of
calculating amounts payable to a Lender under this subsection, each Lender shall
be deemed to have actually funded its relevant LIBOR Loan through the purchase
of a deposit bearing interest at the LIBOR Rate in an amount equal to the amount
of that LIBOR Loan and having a maturity comparable to the relevant LIBOR
Period; provided, that each Lender may fund each of its LIBOR Loans in any
--------
manner it sees fit, and the foregoing assumption shall be utilized only for the
calculation of amounts payable under this subsection. This covenant shall
survive the termination of this Agreement and the payment of the Notes and all
other amounts payable hereunder. As promptly as practicable under the
circumstances, each Lender shall provide Borrower with its written calculation
of all amounts payable pursuant to this Section 1.13(b), and such calculation
---------------
shall be binding on the parties hereto unless Borrower shall object in writing
within ten (10) Business Days of receipt thereof, specifying the basis for such
objection in detail.
1.14 Access. Each Credit Party that is a party hereto shall, during normal
------
business hours, from time to time upon three (3) Business Days' prior notice as
frequently as Agent reasonably determines to be appropriate: (a) provide Agent
and any of its officers, employees and agents access to its properties,
facilities, advisors and employees (including officers) of each Credit Party and
to the Collateral, (b) permit Agent, and any of its officers, employees and
agents, to inspect, audit and make extracts from any Credit Party's books and
records, and (c) permit Agent, and its officers, employees and agents, to
inspect, review, evaluate and make test verifications and counts of the
Accounts, Inventory and other Collateral of any Credit Party. If a Default or
Event of Default has occurred and is continuing or if access is necessary to
preserve or protect the Collateral as determined by Agent, each such Credit
Party shall provide such access to Agent and to each Lender at all times and
without advance notice. Furthermore, so long as any Event of Default has
occurred and is continuing, each Credit Party shall provide Agent and each
Lender with access to its suppliers and customers. Each Credit Party shall make
available to Agent and its counsel, as promptly as is possible under the
circumstances, originals or copies of all books and records that Agent may
request. Each Credit Party shall deliver any document or instrument necessary
for Agent, as it may from time to time request, to obtain records from any
service bureau or other Person that maintains records for such Credit Party, and
shall maintain duplicate records or supporting documentation on media, including
computer tapes and discs owned by such Credit Party. Agent will give Lenders at
least ten (10) days' prior written notice of regularly scheduled audits.
Representatives of other Lenders may accompany Agent's representatives on
regularly scheduled audits at no charge to Borrower.
1.15 Taxes.
-----
(a) Any and all payments by Borrower hereunder or under the Notes
shall be made, in accordance with this Section 1.15, free and clear of and
------------
without deduction for any and all present or future Taxes. If Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under the Notes, (i) the sum payable shall be increased as much as
shall be necessary so that after making all required deductions (including
deductions
18
applicable to additional sums payable under this Section 1.15), Agent or
-------------
Lenders, as applicable, receive an amount equal to the sum they would have
received had no such deductions been made, (ii) Borrower shall make such
deductions, and (iii) Borrower shall pay the full amount deducted to the
relevant taxing or other authority in accordance with applicable law. Within
thirty (30) days after the date of any payment of Taxes, Borrower shall furnish
to Agent the original or a certified copy of a receipt evidencing payment
thereof; provided that should any Lender actually receive a tax credit or refund
--------
in the future with respect to (and as a result of) any Taxes paid by Borrower as
required by this Section 1.15, and Lender reasonably determines that such credit
------------
or refund relates to Borrower, then such Lender shall return the amount of such
credit or refund (net of any taxes thereon) to Borrower.
(b) Each Credit Party that is a signatory hereto shall indemnify and,
within ten (10) days of demand therefor, pay Agent and each Lender for the full
amount of Taxes (including any Taxes imposed by any jurisdiction on amounts
payable under this Section 1.15) paid by Agent or such Lender, as appropriate,
------------
and any liability (including penalties, interest and expenses) arising therefrom
or with respect thereto, whether or not such Taxes were correctly or legally
asserted; provided that should any Lender actually receive a tax credit or
--------
refund in the future with respect to (and as a result of) any Taxes paid by
Borrower as required by this Section 1.15, and Lender reasonably determines that
------------
such credit or refund relates to Borrower, then such Lender shall return the
amount of such credit or refund (net of any taxes thereon) to Borrower.
(c) Each Lender organized under the laws of a jurisdiction outside the
United States (a "Foreign Lender") as to which payments to be made under this
--------------
Agreement or under the Notes are exempt from United States withholding tax under
an applicable statute or tax treaty shall provide to Borrower and Agent a
properly completed and executed IRS Form W-8ECI or Form W-8BEN or other
applicable form, certificate or document prescribed by the IRS or the United
States certifying as to such Foreign Lender's entitlement to such exemption (a
"Certificate of Exemption"). Any foreign Person that seeks to become a Lender
------------------------
under this Agreement shall provide a Certificate of Exemption to Borrower and
Agent prior to becoming a Lender hereunder. No foreign Person may become a
Lender hereunder if such Person fails to deliver a Certificate of Exemption.
1.16 Capital Adequacy; Increased Costs; Illegality.
---------------------------------------------
(a) If any Lender shall have determined that any law, treaty,
governmental (or quasi-governmental) rule, regulation, guideline or order
regarding capital adequacy, reserve requirements or similar requirements or
compliance by any Lender with any request or directive regarding capital
adequacy, reserve requirements or similar requirements (whether or not having
the force of law), in each case, adopted after the Closing Date, from any
central bank or other Governmental Authority increases or would have the effect
of increasing the amount of capital, reserves or other funds required to be
maintained by such Lender and thereby reducing the rate of return on such
Lender's capital as a consequence of its obligations hereunder, then Borrower
shall from time to time upon demand by such Lender (with a copy of such demand
to Agent) pay to Agent, for the account of such Lender, additional amounts
sufficient to compensate such Lender for such reduction; provided, however, that
-------- -------
Borrower shall have no obligation to make any such payment if such Lender fails
to demand payment thereof within 180 days after such
19
Lender becomes aware of an event giving rise to such a payment. A certificate as
to the amount of that reduction and showing the basis of the computation thereof
submitted by such Lender to Borrower and to Agent shall, absent manifest error,
be final, conclusive and binding for all purposes.
(b) If, due to either (i) the introduction of or any change in any law
or regulation (or any change in the interpretation thereof) or (ii) the
compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), in each case
adopted after the Closing Date, there shall be any increase in the cost to any
Lender of agreeing to make or making, funding or maintaining any Loan, then
Borrower shall from time to time, upon demand by such Lender (with a copy of
such demand to Agent), pay to Agent for the account of such Lender additional
amounts sufficient to compensate such Lender for such increased cost; provided,
--------
however, that Borrower shall have no obligation to make any such payment if such
-------
Lender fails to demand payment thereof within 180 days after such Lender becomes
aware of an event giving rise to such payment. A certificate as to the amount of
such increased cost, submitted to Borrower and to Agent by such Lender, shall be
conclusive and binding on Borrower for all purposes, absent manifest error. Each
Lender agrees that, as promptly as practicable after it becomes aware of any
circumstances referred to above which would result in any such increased cost,
the affected Lender shall, to the extent not inconsistent with such Lender's
internal policies of general application, use reasonable commercial efforts to
minimize costs and expenses incurred by it and payable to it by Borrower
pursuant to this Section 1.16(b).
---------------
(c) Notwithstanding anything to the contrary contained herein, if the
introduction of or any change in any law or regulation (or any change in the
interpretation thereof) shall make it unlawful, or any central bank or other
Governmental Authority shall assert that it is unlawful, for any Lender to agree
to make or to make or to continue to fund or maintain any LIBOR Loan, then,
unless that Lender is able to make or to continue to fund or to maintain such
LIBOR Loan at another branch or office of that Lender without, in that Lender's
opinion, adversely affecting it or its Loans or the income obtained therefrom,
on notice thereof and demand therefor by such Lender to Borrower through Agent,
(i) the obligation of such Lender to agree to make or to make or to continue to
fund or maintain LIBOR Loans shall terminate and (ii) Borrower shall forthwith
prepay in full all outstanding LIBOR Loans owing to such Lender, together with
interest accrued thereon, unless Borrower, within five (5) Business Days after
------
the delivery of such notice and demand, converts all LIBOR Loans into Index Rate
Loans.
(d) Replacement of Lender in Respect of Increased Costs. Within
---------------------------------------------------
fifteen (15) days after receipt by Borrower of written notice and demand from
any Lender (an "Affected Lender") for payment of additional amounts or increased
---------------
costs as provided in Sections 1.15(a), 1.16(a) or 1.16(b), Borrower may, at its
------------------------------------
option, notify Agent and such Affected Lender of its intention to replace the
Affected Lender. So long as no Default or Event of Default has occurred and is
continuing, Borrower, with the consent of Agent, may obtain, at Borrower's
expense, a replacement Lender ("Replacement Lender") for the Affected Lender,
------------------
which Replacement Lender must be satisfactory to Agent. If Borrower obtains a
Replacement Lender within ninety (90) days following notice of its intention to
do so, the Affected Lender must sell and assign its Loans and Commitments to
such Replacement Lender for an amount equal to the principal balance of all
Loans held by the Affected Lender and all accrued interest and Fees with respect
20
thereto through the date of such sale, provided that Borrower shall have
--------
reimbursed such Affected Lender for the additional amounts or increased costs
that it is entitled to receive under this Agreement through the date of such
sale and assignment.
Notwithstanding the foregoing, Borrower shall not have the right to obtain a
Replacement Lender if the Affected Lender rescinds its demand for increased
costs or additional amounts within fifteen (15) days following its receipt of
Borrower's notice of intention to replace such Affected Lender. Furthermore, if
Borrower gives a notice of intention to replace and does not so replace such
Affected Lender within ninety (90) days thereafter, Borrower's rights under this
Section 1.16(d) shall terminate as to that Affected Lender and Borrower shall
---------------
promptly pay all increased costs or additional amounts demanded by such Affected
Lender pursuant to Sections 1.15(a), 1.16(a) and 1.16(b).
-------------------------------------
1.17 Single Loan. All Loans to Borrower and all of the other Obligations
-----------
of Borrower arising under this Agreement and the other Loan Documents shall
constitute one general obligation of Borrower secured, until the Termination
Date, by all of the Collateral.
2. CONDITIONS PRECEDENT
--------------------
2.1 Conditions to the Initial Loans. No Lender shall be obligated to
-------------------------------
make any Loan or incur any Letter of Credit Obligations on the Closing Date, or
to take, fulfill, or perform any other action hereunder, until the following
conditions have been satisfied or provided for in a manner satisfactory to
Agent, or waived in writing by Agent and Requisite Lenders:
(a) Credit Agreement; Loan Documents. This Agreement or
--------------------------------
counterparts hereof shall have been duly executed by, and delivered to,
Borrower, each other Credit Party, Agent and Lenders; and Agent shall have
received such documents, instruments, agreements and legal opinions as Agent
shall reasonably request in connection with the transactions contemplated by
this Agreement and the other Loan Documents, including all those listed in the
Closing Checklist attached hereto as Annex D, each in form and substance
-------
satisfactory to Agent.
(b) Repayment of Original Obligations; Satisfaction of Outstanding
--------------------------------------------------------------
L/C's. (i) Agents shall have received a fully executed original of a pay-off
-----
letter satisfactory to Agent confirming that all of the Original Obligations
will be repaid in full from the proceeds of the Term Loan, the initial Revolving
Credit Advance and the Subordinated Notes and all Liens upon any of the property
of Borrower or any of its Subsidiaries in favor of the Original Lenders shall be
terminated by Original Lenders, acting through Agent as their agent under the
Original Credit Agreement immediately upon such payment; and (ii) all letters of
credit issued or guaranteed by Original Lenders shall have been cash
collateralized, supported by a guaranty of Agent or supported by a Letter of
Credit issued pursuant to Annex B, as mutually agreed upon by Agent, Borrower
-------
and Original Lenders.
(c) Approvals. Agent shall have received (i) satisfactory evidence
---------
that the Credit Parties have obtained all required consents and approvals of all
Persons including all requisite Governmental Authorities, to the execution,
delivery and performance of this Agreement and the other Loan Documents and the
consummation of the Related Transactions or
21
(ii) an officer's certificate in form and substance satisfactory to Agent
affirming that no such consents or approvals are required.
(d) Opening Availability/Indebtedness. The Borrowing Base
---------------------------------
supporting the initial Revolving Credit Advance and the initial Letter of Credit
Obligations incurred and the amount of the Reserves to be established on the
Closing Date shall be sufficient in value, as determined by Agent, to provide
Borrower with Net Borrowing Availability, after giving effect to the initial
Revolving Credit Advance, the incurrence of any initial Letter of Credit
Obligations and the consummation of the Related Transactions (on a pro forma
basis, with trade payables, expenses and liabilities being paid in the ordinary
course of business and without acceleration of sales) of at least Sixty Five
Million Dollars ($65,000,000). Total Indebtedness of the Borrower on a
consolidated basis on the Closing Date, after giving effect to the Related
Transactions, shall not exceed Two Hundred Seventy Million Dollars
($270,000,000).
(e) Payment of Fees. Borrower shall have paid the Fees required to
---------------
be paid on the Closing Date in the respective amounts specified in Section 1.9
-----------
(including the Fees specified in the Fee Letter), and shall have reimbursed
Agent for all fees, costs and expenses of closing presented as of the Closing
Date.
(f) Capital Structure; Other Indebtedness. The capital structure of
-------------------------------------
each Credit Party and the terms and conditions of all Indebtedness shall be
acceptable to Agent in its sole discretion.
(g) Related Transactions Documents. Agent shall have received fully
------------------------------
executed copies of the Subordinated Debt Documents and each of the other Related
Transactions Documents, each of which shall be in form and substance
satisfactory to Agent and its counsel. The other Related Transactions shall have
been consummated in accordance with the terms of the Subordinated Debt Documents
and the other Related Transactions Documents. Borrower shall not have waived or
amended any provision of any Subordinated Debt Document delivered to Agent
without the consent of Agent and Requisite Lenders.
(h) Consummation of Related Transactions on Closing Date. Borrower
----------------------------------------------------
shall have received at least $152,812,950 in net cash proceeds from the issuance
of the Subordinated Debt (before deduction, among other things, of an amount not
in excess of $4,500,000 which was applied in payment of CS First Boston's
closing fees and expenses in respect of the Subordinated Notes).
2.2 Further Conditions to Each Loan. Except as otherwise expressly
-------------------------------
provided herein, no Lender shall be obligated to fund any Advance, convert or
continue any Loan as a LIBOR Loan or incur any Letter of Credit Obligation, if,
as of the date thereof:
(a) any representation or warranty by any Credit Party contained
herein or in any of the other Loan Document is untrue or incorrect as of such
date, except to the extent that such representation or warranty expressly
relates to an earlier date and except for changes therein expressly permitted or
expressly contemplated by this Agreement, and Agent or Requisite Revolving
Lenders have determined not to make such Advance, convert or continue any Loan
as
22
LIBOR Loan or incur such Letter of Credit Obligation as a result of the fact
that such warranty or representation is untrue or incorrect;
(b) any event or circumstance having a Material Adverse Effect has
occurred since the date hereof as determined by the Requisite Revolving Lenders,
and Agent or Requisite Revolving Lenders have determined not to make such
Advance, convert or continue any Loan as a LIBOR Loan or incur such Letter of
Credit Obligation as a result of the fact that such event or circumstance has
occurred;
(c) any Default or Event of Default has occurred and is continuing
or would result after giving effect to any Advance or the incurrence of any
Letter of Credit Obligation, and Agent or Requisite Revolving Lenders shall have
determined not to make any Advance, convert or continue any Loan as a LIBOR Loan
or incur any Letter of Credit Obligation as a result of that Default or Event of
Default; or
(d) after giving effect to any Advance (or the incurrence of any
Letter of Credit Obligations), the outstanding principal amount of the Revolving
Loan would exceed the lesser of the Borrowing Base and the Maximum Amount, in
each case, less the then outstanding principal amount of the Swing Line Loan.
The request and acceptance by Borrower of the proceeds of any Loan, the
incurrence of any Letter of Credit Obligations or the conversion or continuation
of any Loan into, or as, a LIBOR Loan, as the case may be, shall be deemed to
constitute, as of the date of such request, acceptance or incurrence, (i) a
representation and warranty by Borrower that the conditions in this Section 2.2
-----------
have been satisfied and (ii) a reaffirmation by Borrower of the granting and
continuance of Agent's Liens, on behalf of itself and Lenders, pursuant to the
Collateral Documents.
2.3 Conditions to Permitted Acquisitions. Borrower may not directly or
------------------------------------
indirectly use any proceeds of any Advance to acquire all or substantially all
of the assets or the Stock (by Stock purchase or merger) of any Person (the
"Target") (in each case an "Acquisition") until the following conditions have
------
been satisfied or provided for in a manner satisfactory to Agent, or waived in
writing by Agent and Requisite Lenders:
(a) Agent shall receive at least thirty (30) Business Days' prior
written notice of such proposed Acquisition, which notice shall include a
reasonably detailed description of such proposed Acquisition;
(b) such Acquisition shall involve assets at least 50% of which are
located in the United States or Canada and comprising a business, or those
assets of a business, of the type, or reasonably similar or related to the type,
engaged in by Borrower as of the Closing Date, and which business would not
subject Agent or any Lender to regulatory or third party approvals in connection
with the exercise of its rights and remedies under this Agreement or any other
Loan Documents other than approvals applicable to the exercise of such rights
and remedies with respect to Borrower prior to such Acquisition;
(c) such Acquisition shall be consensual and shall have been
approved by the Target's board of directors;
23
(d) no additional Indebtedness, Guaranteed Indebtedness or
contingent obligations or other liabilities shall be incurred, assumed or
otherwise be reflected on a consolidated balance sheet of Borrower and Target
after giving effect to such Acquisition, except (A) Loans made hereunder, (B)
ordinary course trade payables, accrued expenses and unsecured Indebtedness of
the Target to the extent no Default or Event of Default has occurred and is
continuing or would result after giving effect to such Acquisition, (C)
industrial revenue bonds or other similar Indebtedness of the Target not
incurred in anticipation of such Acquisition and otherwise in amounts, and
subject to terms, acceptable to Agent, (D) contingent liabilities, including
Environmental Liabilities, acceptable to Agent, and (E) Indebtedness of the type
permitted in Section 6.7(c) subject to the limitations set forth therein;
--------------
(e) the sum of Revolving Credit Advances incurred hereunder in
connection with all Acquisitions shall not exceed $25,000,000 in the aggregate;
(f) the business and assets acquired in such Permitted Acquisition
shall be free and clear of all Liens (other than Permitted Encumbrances) and
other Liens acceptable to Agent;
(g) at or prior to the closing of any Permitted Acquisition, Agent
will be granted a first priority perfected Lien (subject to Permitted
Encumbrances) in all assets acquired pursuant thereto or in the assets and Stock
of the Target, and Holdings, Borrower, Target and the other Credit Parties shall
have executed such documents and taken such actions as may be required by Agent
in connection therewith;
(h) concurrently with delivery of the notice referred to in clause
------
(a) above, Borrower shall have delivered to Agent, in form and substance
---
reasonably satisfactory to Agent:
(i) a pro forma consolidated balance sheet, income statement
and cash flow statement of Holdings and its Subsidiaries (the "Acquisition
-----------
Pro Forma"), based on recent financial statements, which shall be complete
---------
and shall fairly present in all material respects the assets, liabilities,
financial condition and results of operations of Holdings and its
Subsidiaries in accordance with GAAP consistently applied, but taking into
account such Permitted Acquisition and the funding of all Loans in
connection therewith, and such Acquisition Pro Forma shall reflect that,
on a pro forma basis, Holdings and its Subsidiaries would have had an (x)
average daily Borrowing Availability for the 90-day period preceding the
consummation of such Permitted Acquisition would have exceeded $20,000,000
(without deterioration of working capital) on a pro forma basis (after
giving effect to such Permitted Acquisition and all Loans funded in
connection therewith as if made on the first day of such period) and the
Acquisition Projections (as hereinafter defined) shall reflect that such
Borrowing Availability of $20,000,000 or greater (without deterioration of
working capital) shall continue for at least 90 days after the
consummation of such Permitted Acquisition; and (y) on a pro forma basis,
no Event of Default has occurred and is continuing or would result after
giving effect to such Permitted Acquisition and Borrower would have been
in compliance with the financial covenants set forth in Annex G for the
-------
four quarter period reflected in the Compliance Certificate most recently
24
delivered to Agent pursuant to Annex E prior to the consummation of such
-------
Permitted Acquisition (after giving effect to such Permitted Acquisition and all
Loans funded in connection therewith as if made on the first day of such
period);
(ii) updated versions of the most recently delivered
Projections covering the one (1) year period commencing on the date of
such Permitted Acquisition and otherwise prepared in accordance with
the Projections (the "Acquisition Projections") and based upon
-----------------------
historical financial data of a recent date reasonably satisfactory to
Agent, taking into account such Permitted Acquisition; and
(iii) a certificate of the chief financial officer of Holdings
and Borrower to the effect that: (w) Borrower (after taking into
consideration all rights of contribution and indemnity Borrower has
against Holdings and each other Subsidiary of Holdings) will be Solvent
upon the consummation of the Permitted Acquisition; (x) the Acquisition
Pro Forma fairly presents the financial condition of Holdings and
Borrower (on a consolidated basis) as of the date thereof after giving
effect to the Permitted Acquisition; (y) the Acquisition Projections
are reasonable estimates, based upon knowledge then available to
Borrower, of the future financial performance of Holdings and Borrower
subsequent to the date thereof based upon the historical performance of
Holdings, Borrower and the Target and show that Holdings and Borrower
shall continue to be in compliance with the financial covenants set
forth in Annex G for the one (1) year period thereafter; and (z)
-------
Holdings and Borrower have completed their due diligence investigation
with respect to the Target and such Permitted Acquisition;
(iv) on or prior to the date of such Permitted Acquisition,
Agent shall have received, in form and substance reasonably
satisfactory to Agent, copies of the acquisition agreement and related
agreements and instruments, and all opinions, certificates, lien search
results and other documents reasonably requested by Agent, including
those specified in the second to last sentence of Section 5.10; and
------------
(v) at the time of such Permitted Acquisition and after
giving effect thereto, no Default or Event of Default has occurred and
is continuing.
Notwithstanding the foregoing, the Accounts and Inventory of the
Target shall not be included in Eligible Accounts and Eligible Inventory without
the prior written consent of Agent following completion of a collateral audit.
3. REPRESENTATIONS AND WARRANTIES
------------------------------
To induce Lenders to make the Loans and to incur Letter of Credit
Obligations, the Credit Parties executing this Agreement, jointly and severally,
make the following representations and warranties to Agent and each Lender,
effective as of the Closing Date, with respect to all Credit Parties, each and
all of which shall survive the execution and delivery of this Agreement:
25
3.1 Corporate Existence; Compliance with Law. Each Credit Party (a) is a
----------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation; (b) is duly qualified to conduct business
and is in good standing in each other jurisdiction where its ownership or lease
of property or the conduct of its business requires such qualification, except
where effects of the failure to be so qualified would be immaterial; (c) has the
requisite corporate power and authority and the legal right to own, pledge,
mortgage or otherwise encumber and operate its properties, to lease the property
it operates under lease and to conduct its business as now, heretofore and
proposed to be conducted; (d) subject to specific representations regarding
Environmental Laws, has all material licenses, permits, consents or approvals
from or by, and has made all filings with, and has given all notices to, all
Governmental Authorities having jurisdiction, to the extent required for such
ownership, operation and conduct; (e) is in compliance with its charter and
bylaws; and (f) subject to specific representations set forth herein regarding
ERISA, Environmental Laws, tax and other laws, is in compliance with all
applicable provisions of law, except where the failure to comply, individually
or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
3.2 Executive Offices, Collateral Locations, FEIN. As of the Closing Date,
---------------------------------------------
the current location of each Credit Party's chief executive office, domicile
(within the meaning of the Quebec Civil Code) and the warehouses and premises at
which any Collateral is located are set forth in Disclosure Schedule (3.2). In
-------------------------
addition, Disclosure Schedule (3.2) lists the federal employer identification
-------------------------
number of each Credit Party.
3.3 Corporate Power, Authorization, Enforceable Obligations. The execution,
-------------------------------------------------------
delivery and performance by each Credit Party of the Loan Documents to which it
is a party and the creation of all Liens provided for therein: (a) are within
such Person's corporate power; (b) have been duly authorized by all necessary or
proper corporate and shareholder action; (c) do not contravene any provision of
such Person's charter or bylaws; (d) do not violate any law or regulation, or
any order or decree of any court or Governmental Authority; (e) do not conflict
with or result in the breach or termination of, constitute a default under or
accelerate or permit the acceleration of any performance required by, any
indenture, mortgage or deed of trust, or material lease, agreement or other
instrument to which such Person is a party or by which such Person or any of its
property is bound; (f) do not result in the creation or imposition of any Lien
upon any of the property of such Person other than those in favor of Agent, on
behalf of itself and Lenders, pursuant to the Loan Documents; and (g) do not
require the consent or approval of any Governmental Authority or any other
Person, except those referred to in Section 2.1(c), all of which will have been
--------------
duly obtained, made or complied with prior to the Closing Date. On or prior to
the Closing Date, each of the Loan Documents shall have been duly executed and
delivered by each Credit Party that is a party thereto and each such Loan
Document shall then constitute a legal, valid and binding obligation of such
Credit Party enforceable against it in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency or other similar laws
affecting the rights and remedies of creditors generally.
3.4 Financial Statements and Projections. Except for the Projections, all
------------------------------------
Financial Statements concerning Borrower and its Subsidiaries that are referred
to below have been prepared in accordance with GAAP consistently applied
throughout the periods covered (except as disclosed therein and except, with
respect to unaudited Financial Statements, for the absence
26
of footnotes and normal year-end audit adjustments) and present fairly in all
material respects the financial position of the Persons covered thereby as at
the dates thereof and the results of their operations and cash flows for the
periods then ended.
(a) The following Financial Statements attached hereto as Disclosure
----------
Schedule (3.4(a)) will have been delivered as of the Closing Date:
-----------------
(i) The audited consolidated and consolidating balance sheets at
May 31, 2001 and the related statements of income and cash flows of
Borrower and its Subsidiaries for the Fiscal Year then ended, certified by
PriceWaterhouseCoopers, LLP.
(ii) The unaudited balance sheet(s) and the related statement(s)
of income and cash flows of Borrower and its Subsidiaries for all interim
monthly periods ending up to and including March 2, 2002.
(b) Pro Forma. The Pro Forma attached hereto as Disclosure Schedule
--------- -------------------
(3.4(b)) was prepared by Borrower giving pro forma effect to the Related
-------- ---------
Transactions, was based on the unaudited consolidated and consolidating balance
sheets of Borrower and its Subsidiaries dated March 2, 2002 and was prepared in
accordance with GAAP, with only such adjustments thereto as would be required in
accordance with GAAP.
(c) Projections. The Projections attached hereto as Disclosure
----------- ----------
Schedule (3.4(c)) have been prepared by Borrower in light of the past operations
-----------------
of its businesses, and reflect projections for the five year period beginning on
December 30, 2001 on a month-by-month basis for the first year and on a
year-by-year basis thereafter. The Projections are based upon estimates and
assumptions stated therein, all of which Borrower believes to be reasonable and
fair in light of current conditions and current facts known to Borrower and, as
of the Closing Date, reflect Borrower's good faith and reasonable estimates of
the future financial performance of Borrower and of the other information
projected therein for the period set forth therein (it being understood that
such Projections are not warranties of future performance).
3.5 Material Adverse Effect. Between May 31, 2001 and the Closing Date,
-----------------------
excluding defaults under credit arrangements refinanced pursuant to the Related
Transactions, (a) no Credit Party has incurred any obligations, contingent or
noncontingent liabilities, liabilities for Charges, long-term leases or unusual
forward or long-term commitments that are not reflected in the Pro Forma and
that, alone or in the aggregate, could reasonably be expected to have a Material
Adverse Effect, (b) no contract, lease or other agreement or instrument has been
entered into by any Credit Party or has become binding upon any Credit Party's
assets and no law or regulation applicable to any Credit Party has been adopted
that has had or could reasonably be expected to have a Material Adverse Effect,
and (c) no Credit Party is in default and to the best of Borrower's knowledge no
third party is in default under any material contract, lease or other agreement
or instrument, that alone or in the aggregate could reasonably be expected to
have a Material Adverse Effect. Excluding the effect of the write off of
Accounts owing by K-Mart, Inc. between May 31, 2001 and the Closing Date no
event has occurred, that alone or together with other events, could reasonably
be expected to have a Material Adverse Effect, except for matters set forth on
Disclosure Schedule (3.5).
-------------------------
27
3.6 Ownership of Property; Liens. As of the Closing Date, the real estate
----------------------------
("Real Estate") listed in Disclosure Schedule (3.6) constitutes all of the real
----------- -------------------------
property owned, leased, subleased, or used by any Credit Party. Each Credit
Party owns good and marketable fee simple title to all of its owned Real Estate,
and valid and marketable leasehold interests in all of its leased Real Estate,
all as described on Disclosure Schedule (3.6), and copies of all such leases or
-------------------------
a summary of terms thereof satisfactory to Agent have been delivered to Agent.
Disclosure Schedule (3.6) further describes any Real Estate with respect to
-------------------------
which any Credit Party is a lessor, sublessor or assignor as of the Closing
Date. Each Credit Party also has good and marketable title to, or valid
leasehold interests in, all of its personal property and assets. As of the
Closing Date, none of the properties and assets of any Credit Party are subject
to any Liens other than Permitted Encumbrances, and there are no facts,
circumstances or conditions known to any Credit Party that may result in any
Liens (including Liens arising under Environmental Laws) other than Permitted
Encumbrances. Each Credit Party has received all deeds, assignments, waivers,
consents, nondisturbance and attornment or similar agreements, bills of sale and
other documents, and has duly effected all recordings, filings and other actions
necessary to establish, protect and perfect such Credit Party's right, title and
interest in and to all such Real Estate and other properties and assets.
Disclosure Schedule (3.6) also describes as of the Closing Date any purchase
-------------------------
options, rights of first refusal or other similar contractual rights pertaining
to any Real Estate. As of the Closing Date, no portion of any Credit Party's
Real Estate has suffered any material damage by fire or other casualty loss that
has not heretofore been repaired and restored in all material respects to its
original condition or otherwise remedied. As of the Closing Date, all material
permits required to have been issued or appropriate to enable the Real Estate to
be lawfully occupied and used for all of the purposes for which it is currently
occupied and used have been lawfully issued and are in full force and effect.
3.7 Labor Matters. As of the Closing Date (a) no strikes or other material
-------------
labor disputes against any Credit Party are pending or, to any Credit Party's
knowledge, threatened; (b) hours worked by and payment made to employees of each
Credit Party comply with the Fair Labor Standards Act and each other federal,
state, local or foreign law applicable to such matters; (c) all payments due
from any Credit Party for employee health and welfare insurance have been paid
or accrued as a liability on the books of such Credit Party; (d) except as set
forth in Disclosure Schedule (3.7), no Credit Party is a party to or bound by
-------------------------
any collective bargaining agreement, management agreement, consulting agreement,
employment agreement, bonus, stock option, or stock appreciation plan or
agreement (and true and complete copies of any agreements described on
Disclosure Schedule (3.7) have been delivered to Agent); (e) there is no
-------------------------
organizing activity involving any Credit Party pending or, to any Credit Party's
knowledge, threatened by any labor union or group of employees; (f) there are no
representation proceedings pending or, to any Credit Party's knowledge,
threatened with the National Labor Relations Board or any other labor relations
board, and no labor organization or group of employees of any Credit Party has
made a pending demand for recognition; and (g) except as set forth in Disclosure
----------
Schedule (3.7), there are no complaints or charges against any Credit Party
--------------
pending or, to the knowledge of any Credit Party, threatened to be filed with
any Governmental Authority or arbitrator based on, arising out of, in connection
with, or otherwise relating to the employment or termination of employment by
any Credit Party of any individual.
3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and
------------------------------------------------------------
Indebtedness. Except as set forth in Disclosure Schedule (3.8), no Credit Party
------------ -------------------------
has any Subsidiaries, is engaged
28
in any joint venture or partnership with any other Person, or is an Affiliate of
any other Person. All of the issued and outstanding Stock of each Credit Party
is owned by each of the Stockholders and in the amounts set forth in Disclosure
----------
Schedule (3.8). There are no outstanding rights to purchase, options, warrants
--------------
or similar rights or agreements pursuant to which any Credit Party may be
required to repurchase or redeem any of its Stock or other equity securities or
any Stock or other equity securities of its Subsidiaries. No Subsidiary of
Holdings is subject to any agreement or arrangement obligating it to issue or
sell any of its Stock. All outstanding Indebtedness of each Credit Party as of
the Closing Date is described in Section 6.3 (including Disclosure Schedule
----------- -------------------
(6.3)). Holdings has no assets (except Stock of Borrower) and no Indebtedness or
------
Guaranteed Indebtedness (except the Obligations).
3.9 Government Regulation. No Credit Party is an "investment company" or
---------------------
an "affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act of
1940. No Credit Party is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, or any other domestic or foreign
federal, state or provincial statute that restricts or limits its ability to
incur Indebtedness or to perform its obligations hereunder. The making of the
Loans by Lenders to Borrower, the incurrence of the Letter of Credit Obligations
on behalf of Borrower, the application of the proceeds thereof and repayment
thereof and the consummation of the Related Transactions will not violate any
provision of any such statute or any rule, regulation or order issued by the
Securities and Exchange Commission.
3.10 Margin Regulations. No Credit Party is engaged, nor will it engage,
------------------
principally or as one of its important activities, in the business of extending
credit for the purpose of "purchasing" or "carrying" any "margin stock" as such
terms are defined in Regulation U of the Federal Reserve Board as now and from
time to time hereafter in effect (such securities being referred to herein as
"Margin Stock"). No Credit Party owns any Margin Stock, and none of the proceeds
------------
of the Loans or other extensions of credit under this Agreement will be used,
directly or indirectly, for the purpose of purchasing or carrying any Margin
Stock, for the purpose of reducing or retiring any Indebtedness that was
originally incurred to purchase or carry any Margin Stock or for any other
purpose that might cause any of the Loans or other extensions of credit under
this Agreement to be considered a "purpose credit" within the meaning of
Regulations T, U or X of the Federal Reserve Board. No Credit Party will take or
permit to be taken any action that might cause any Loan Document to violate any
regulation of the Federal Reserve Board.
3.11 Taxes. All tax returns, reports and statements, including information
-----
returns, required by any Governmental Authority to be filed by any Credit Party
have been filed with the appropriate Governmental Authority and all Charges have
been paid prior to the date on which any fine or penalty may be added thereto
for nonpayment thereof (or any such fine, penalty, interest, late charge or loss
has been paid), excluding Charges or other amounts being contested in accordance
with Section 5.2(b). Proper and accurate amounts have been withheld by each
--------------
Credit Party from its respective employees for all periods in full and complete
compliance with all applicable federal, state, local and foreign laws and such
withholdings have been timely paid to the respective Governmental Authorities.
Disclosure Schedule (3.11) sets forth as of the Closing Date those taxable years
--------------------------
for which any Credit Party's tax returns are currently being audited by the IRS
or any other applicable Governmental Authority and any assessments or
29
threatened assessments in connection with such audit, or otherwise currently
outstanding. Except as described in Disclosure Schedule (3.11), no Credit Party
--------------------------
has executed or filed with the IRS or any other Governmental Authority any
agreement or other document extending, or having the effect of extending, the
period for assessment or collection of any Charges. None of the Credit Parties
and their respective predecessors are liable for any Charges: (a) under any
agreement (including any tax sharing agreements) or (b) to each Credit Party's
knowledge, as a transferee. As of the Closing Date, no Credit Party has agreed
or been requested to make any adjustment under IRC Section 481(a), by reason of
a change in accounting method or otherwise, which would have a Material Adverse
Effect.
3.12 ERISA and Canadian Pension and Benefit Plans.
--------------------------------------------
(a) Disclosure Schedule (3.12) lists as of the Closing Date all Plans
--------------------------
and separately identifies all Pension Plans, including Title IV Plans,
Multiemployer Plans, ESOPs and Welfare Plans, including all Retiree Welfare
Plans. Copies of all such listed Plans, together with a copy of the latest form
5500 for each such Plan, have been delivered to Agent. Except with respect to
Multiemployer Plans, each Qualified Plan has been determined by the IRS to
qualify under Section 401 of the IRC, and the trusts created thereunder have
been determined to be exempt from tax under the provisions of Section 501 of the
IRC, and nothing has occurred that would cause the loss of such qualification or
tax-exempt status. Each Plan is in compliance in all material respects with the
applicable provisions of ERISA and the IRC, including the timely filing of
IRS/DOL 5500-series form reports required under the IRC or ERISA. No Credit
Party or ERISA Affiliate has failed to make any contribution or pay any amount
due as required by either Section 412 of the IRC or Section 302 of ERISA or the
terms of any such Plan. No Credit Party or ERISA Affiliate has engaged in a
"prohibited transaction," as defined in Section 4975 of the IRC, in connection
with any Plan, that would subject any Credit Party to a material tax on
prohibited transactions imposed by Section 4975 of the IRC.
(b) Except as set forth in Disclosure Schedule (3.12): (i) no Title IV
--------------------------
Plan has any Unfunded Pension Liability; (ii) no ERISA Event or event described
in Section 4062(e) of ERISA with respect to any Title IV Plan has occurred or is
reasonably expected to occur; (iii) there are no pending, or to the knowledge of
any Credit Party, threatened claims (other than claims for benefits in the
normal course), sanctions, actions or lawsuits, asserted or instituted against
any Plan or any Person as fiduciary or sponsor of any Plan; (iv) no Credit Party
or ERISA Affiliate has incurred or reasonably expects to incur any liability as
a result of a complete or partial withdrawal from a Multiemployer Plan; (v)
within the last five years no Title IV Plan of any Credit Party or ERISA
Affiliate has been terminated nor has any such Plan with Unfunded Pension
Liabilities been transferred outside of the "controlled group" (within the
meaning of Section 4001(a)(14) of ERISA) of any Credit Party or ERISA Affiliate;
(vi) except in the case of any ESOP, Stock of all Credit Parties and their ERISA
Affiliates makes up, in the aggregate, no more than 10% of fair market value of
the assets of any Plan; and (vii) no liability under any Title IV Plan has been
satisfied with the purchase of a contract from an insurance company that is not
rated AAA by the Standard & Poor's Corporation or the equivalent by another
nationally recognized rating agency.
(c) Disclosure Schedule (3.12) lists all Canadian Benefit Plans (other
--------------------------
than, for greater certainty, universal plans created by and to which any Credit
Party is obligated to
30
contribute by statute) and Canadian Pension Plans adopted by each Credit Party.
The Canadian Pension Plans are duly registered under the ITA and all other
applicable laws which require registration and no event has occurred which is
reasonably likely to cause the loss of such registered status. All material
obligations of each Credit Party (including fiduciary, funding, investment and
administration obligations) required to be performed in connection with the
Canadian Pension Plans and the funding agreements therefor have been performed
in a timely fashion. There have been no improper withdrawals or applications of
the assets of the Canadian Pension Plans or the Canadian Benefit Plans. There
are no outstanding disputes concerning the assets of the Canadian Pension Plans
or the Canadian Benefit Plans. Each of the Canadian Pension Plans is fully
funded on a solvency basis (using actuarial methods and assumptions which are
consistent with the valuations last filed with the applicable Governmental
Authorities and which are consistent with generally accepted actuarial
principles).
3.13 No Litigation. No action, claim, lawsuit, demand, investigation or
-------------
proceeding is now pending or, to the knowledge of any Credit Party, threatened
against any Credit Party, before any Governmental Authority or before any
arbitrator or panel of arbitrators (collectively, "Litigation"), (a) that
----------
challenges any Credit Party's right or power to enter into or perform any of its
obligations under the Loan Documents to which it is a party, or the validity or
enforceability of any Loan Document or any action taken thereunder, or (b) that
has a reasonable risk of being determined adversely to any Credit Party and
that, if so determined, could have a Material Adverse Effect. Except as set
forth on Disclosure Schedule (3.13), as of the Closing Date there is no
-------------------------
Litigation pending or threatened that seeks damages in excess of $100,000 or
injunctive relief against, or alleges criminal misconduct of any Credit Party.
3.14 Brokers. No broker or finder acting on behalf of any Credit Party
-------
or Affiliate thereof brought about the obtaining, making or closing of the Loans
or the Related Transactions, and no Credit Party or Affiliate thereof has any
obligation to any Person in respect of any finder's or brokerage fees in
connection therewith.
3.15 Intellectual Property. As of the Closing Date, each Credit Party
---------------------
owns or has rights to use all Intellectual Property necessary to continue to
conduct its business as now or heretofore conducted by it or proposed to be
conducted by it, and each Patent, Design, Trademark, Copyright and License is
listed, together with application or registration numbers, as applicable, in
Disclosure Schedule (3.15). To the best of its knowledge, each Credit Party
-------------------------
conducts its business and affairs without infringement of or interference with
any Intellectual Property of any other Person. Except as set forth in Disclosure
----------
Schedule (3.15), no Credit Party is aware of any infringement claim by any other
--------------
Person with respect to any Intellectual Property.
3.16 Full Disclosure. None of the information contained in this
---------------
Agreement, any of the other Loan Documents, any Projections, Financial
Statements or Collateral Reports or other reports from time to time delivered
hereunder or any written statement furnished by or on behalf of any Credit Party
to Agent or any Lender pursuant to the terms of this Agreement, when taken as a
whole, contains or will contain any untrue statement of a material fact or omits
or will omit to state a material fact necessary to make the statements contained
herein or therein not misleading in light of the circumstances under which they
were made. The Liens granted to Agent, on behalf of itself and Lenders, pursuant
to the Collateral Documents will at all times be
31
fully perfected first priority Liens in and to the Collateral described therein,
subject, as to priority, only to Permitted Encumbrances with respect to the
Collateral other than Accounts.
3.17 Environmental Matters.
---------------------
(a) Except as set forth in Disclosure Schedule (3.17), as of the
-------------------------
Closing Date: (i) the Real Estate is free of contamination from any Hazardous
Material except for such contamination that would not adversely impact the value
or marketability of such Real Estate and that would not result in Environmental
Liabilities that could reasonably be expected to exceed $100,000; (ii) no Credit
Party has caused or suffered to occur any Release of Hazardous Materials on, at,
in, under, above, to, from or about any of its Real Estate; (iii) the Credit
Parties are and have been in compliance with all Environmental Laws, except for
such noncompliance that would not result in Environmental Liabilities which
could reasonably be expected to exceed $100,000; (iv) the Credit Parties have
obtained, and are in compliance with, all Environmental Permits required by
Environmental Laws for the operations of their respective businesses as
presently conducted or as proposed to be conducted, except where the failure to
so obtain or comply with such Environmental Permits would not result in
Environmental Liabilities that could reasonably be expected to exceed $100,000,
and all such Environmental Permits are valid, uncontested and in good standing;
(v) no Credit Party is involved in operations or knows of any facts,
circumstances or conditions, including any Releases of Hazardous Materials, that
are likely to result in any Environmental Liabilities of such Credit Party which
could reasonably be expected to exceed $100,000, and no Credit Party has
permitted any current or former tenant or occupant of the Real Estate to engage
in any such operations; (vi) there is no Litigation arising under or related to
any Environmental Laws, Environmental Permits or Hazardous Material that seeks
damages, penalties, fines, costs or expenses in excess of $100,000 or injunctive
relief, or that alleges criminal misconduct by any Credit Party; (vii) no notice
has been received by any Credit Party identifying it as a "potentially
responsible party" or requesting information under CERCLA or analogous state
statutes, and to the knowledge of the Credit Parties, there are no facts,
circumstances or conditions that may result in any Credit Party being identified
as a "potentially responsible party" under CERCLA or analogous state statutes;
and (viii) the Credit Parties have provided to Agent copies of all existing
environmental reports, reviews and audits and all written information pertaining
to actual or potential Environmental Liabilities, in each case relating to any
Credit Party.
(b) Each Credit Party hereby acknowledges and agrees that Agent
(i) is not now, and has not ever been, in control of any of the Real Estate or
any Credit Party's affairs, and (ii) does not have the capacity through the
provisions of the Loan Documents or otherwise to influence any Credit Party's
conduct with respect to the ownership, operation or management of any of its
Real Estate or compliance with Environmental Laws or Environmental Permits.
3.18 Insurance. Disclosure Schedule (3.18) lists all insurance policies
--------- -------------------------
of any nature maintained, as of the Closing Date, for current occurrences by
each Credit Party, as well as a summary of the terms of each such policy.
3.19 Deposit and Disbursement Accounts. Disclosure Schedule (3.19) lists
--------------------------------- -------------------------
all banks and other financial institutions at which any Credit Party maintains
deposit or other accounts as of the Closing Date, including any Disbursement
Accounts, and such Schedule correctly
32
identifies the name, address and telephone number of each depository, the name
in which the account is held, a description of the purpose of the account, and
the complete account number therefor.
3.20 Government Contracts. Except as set forth in Disclosure Schedule
-------------------- -------------------
(3.20), as of the Closing Date, no Credit Party is a party to any contract or
-----
agreement with any Governmental Authority and no Credit Party's Accounts are
subject to the Federal Assignment of Claims Act (31 U.S.C. Section 3727), the
Financial Administration Act (Canada) or any similar state, provincial or local
law.
3.21 Customer and Trade Relations. As of the Closing Date, except as set
----------------------------
forth on Disclosure Schedule 3.21 attached hereto, there exists no actual or, to
------------------------
the knowledge of any Credit Party, threatened termination or cancellation of, or
any material adverse modification or change in, the business relationship of any
Credit Party with any customer or group of customers whose purchases during the
preceding twelve (12) months caused them to be ranked among the ten largest
customers of such Credit Party; or the business relationship of any Credit Party
with any supplier material to its operations.
3.22 Agreements and Other Documents. As of the Closing Date, each Credit
------------------------------
Party has provided to Agent or its counsel, on behalf of Lenders, accurate and
complete copies (or summaries) of all of the following agreements or documents
to which it is subject and each of which is listed in Disclosure Schedule
-------------------
(3.22): supply agreements and purchase agreements not terminable by such Credit
-----
Party within sixty (60) days following written notice issued by such Credit
Party and involving transactions in excess of $1,000,000 per annum; leases of
Equipment having a remaining term of one year or longer and requiring aggregate
rental and other payments in excess of $500,000 per annum; licenses and permits
held by the Credit Parties, the absence of which could be reasonably likely to
have a Material Adverse Effect; instruments and documents evidencing
Indebtedness of such Credit Party and any Lien granted by such Credit Party with
respect thereto; and instruments and agreements evidencing the issuance of any
equity securities, warrants, rights or options to purchase equity securities of
such Credit Party.
3.23 Solvency. Both before and after giving effect to (a) the Loans and
--------
Letter of Credit Obligations to be made or incurred on the Closing Date or such
other date as Loans and Letter of Credit Obligations requested hereunder are
made or incurred, (b) the disbursement of the proceeds of such Loans pursuant to
the instructions of Borrower, (c) the consummation of the other Related
Transactions and (d) the payment and accrual of all transaction costs in
connection with the foregoing, each Credit Party is and will be Solvent.
3.24 Status of Holdings. Prior to the Closing Date, Holdings will not
------------------
have engaged in any business or incurred any Indebtedness or any other
liabilities (except in connection with its corporate formation, the CS First
Boston Debt, the Related Transactions Documents and this Agreement).
3.25 Subordinated Debt. As of the Closing Date, Borrower has delivered
-----------------
to Agent a complete and correct copy of the Subordinated Debt Documents
(including all schedules, exhibits, amendments, supplements, modifications,
assignments and all other documents delivered pursuant thereto or in connection
therewith). Borrower has the corporate power and
33
authority to incur the Indebtedness evidenced by the Subordinated Notes. The
subordination provisions of the Subordinated Debt Documents are enforceable
against the holders of the Subordinated Notes by Agent and Lenders. All
Obligations, including the Letter of Credit Obligations, constitute senior
Indebtedness entitled to the benefits of the subordination provisions contained
in the Subordinated Debt Documents. The principal of and interest on the Notes,
all Letter of Credit Obligations and all other Obligations will constitute
"senior debt" as that or any similar term is or may be used in any other
instrument evidencing or applicable to any other Subordinated Debt. The
Subordinated Notes mature at least six (6) months after the fifth anniversary of
the Closing Date. Borrower acknowledges that Agent and each Lender are entering
into this Agreement and are extending the Commitments in reliance upon the
subordination provisions of the Subordinated Debt Documents and this Section
-------
3.25.
----
3.26 Old Holdcos. As of the Closing Date, the Old Holdcos shall have
-----------
repaid in full all Indebtedness incurred by the Old Holdcos prior to September
24, 1999 and Intermediate Holdings shall have repaid in full the $7,000,000 of
its 14% Senior Discount Notes due 2006.
4. FINANCIAL STATEMENTS AND INFORMATION
------------------------------------
4.1 Reports and Notices.
--------------------
(a) Each Credit Party executing this Agreement hereby agrees that
from and after the Closing Date and until the Termination Date, it shall deliver
to Agent or to Agent and Lenders, as required, the Financial Statements,
notices, Projections and other information at the times, to the Persons and in
the manner set forth in Annex E.
-------
(b) Each Credit Party executing this Agreement hereby agrees that
from and after the Closing Date and until the Termination Date, it shall deliver
to Agent or to Agent and Lenders, as required, the various Collateral Reports
(including Borrowing Base Certificates in the form of Exhibit 4.1(b)) at the
--------------
times, to the Persons and in the manner set forth in Annex F.
-------
4.2 Communication with Accountants. Each Credit Party executing this
------------------------------
Agreement authorizes Agent and, so long as a Default or Event of Default has
occurred and is continuing, each Lender, to communicate directly with its
independent certified public accountants, including PriceWaterhouseCoopers, LLP
and authorizes and at Agent's request shall instruct those accountants and
advisors to disclose and make available to Agent and each Lender any and all
Financial Statements and other supporting financial documents, schedules and
information relating to any Credit Party (including copies of any issued
management letters) with respect to the business, financial condition and other
affairs of any Credit Party.
5. AFFIRMATIVE COVENANTS
---------------------
Each Credit Party executing this Agreement jointly and severally
agrees as to all Credit Parties, except ICON of Canada, which severally agrees
only as to itself, that from and after the date hereof and until the Termination
Date:
5.1 Maintenance of Existence and Conduct of Business. Each Credit Party
------------------------------------------------
shall: do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence and its rights and franchises; continue
to conduct its business substantially as now
34
conducted or as otherwise permitted hereunder; at all times maintain, preserve
and protect all of its assets and properties used or useful in the conduct of
its business, and keep the same in good repair, working order and condition in
all material respects (taking into consideration ordinary wear and tear) and
from time to time make, or cause to be made, all necessary or appropriate
repairs, replacements and improvements thereto consistent with industry
practices; and transact business only in such corporate and trade names as are
set forth in Disclosure Schedule (5.1).
------------------------
5.2 Payment of Charges.
------------------
(a) Subject to Section 5.2(b), each Credit Party shall pay and
-------------
discharge or cause to be paid and discharged promptly all Charges payable by it,
including (i) Charges imposed upon it, its income and profits, or any of its
property (real, personal or mixed) and all Charges with respect to tax, social
security and unemployment withholding with respect to its employees, and (ii)
lawful claims for labor, materials, supplies and services or otherwise, and
(iii) all storage or rental charges payable to warehousemen and bailees, in each
case, before any thereof shall become past due.
(b) Each Credit Party may in good faith contest, by appropriate
proceedings, the validity or amount of any Charges or claims described in
Section 5.2(a); provided, that (i) adequate reserves with respect to such
------------- --------
Charges are maintained on the books of such Credit Party, in accordance with
GAAP; (ii) no Lien shall arise to secure payment of such Charges (other than
payments to bailees) that is superior to any of the Liens securing payment of
the Obligations and such contest is maintained and prosecuted with diligence and
operates to suspend collection or enforcement of such Charges, (iii) none of the
Collateral becomes subject to forfeiture or loss as a result of such contest,
(iv) such Credit Party shall promptly pay or discharge such contested Charges or
claims and all additional charges, interest, penalties and expenses, if any, and
shall deliver to Agent evidence acceptable to Agent of such compliance, payment
or discharge, if such contest is terminated or discontinued adversely to such
Credit Party or the conditions set forth in this Section 5.2(b) are no longer
-------------
met, and (v) Agent has not advised Borrower in writing that Agent reasonably
believes that nonpayment or nondischarge thereof could have or result in a
Material Adverse Effect.
5.3 Books and Records. Each Credit Party shall keep adequate books and
-----------------
records with respect to its business activities in which proper entries,
reflecting all financial transactions, are made in accordance with GAAP and on a
basis consistent with the Financial Statements attached as Disclosure Schedule
-------------------
(3.4(a)).
-------
5.4 Insurance; Damage to or Destruction of Collateral.
-------------------------------------------------
(a) The Credit Parties shall, at their sole cost and expense,
maintain the policies of insurance described on Disclosure Schedule (3.18) as in
-------------------------
effect on the date hereof or otherwise in form and amounts and with insurers
acceptable to Agent, including property insurance at replacement values and
flood insurance for all properties located in a flood plain (to the extent of
available coverage from the National Flood Insurance Program). If any Credit
Party at any time or times hereafter shall fail to obtain or maintain any of the
policies of insurance required above or to pay all premiums relating thereto,
Agent may at any time or times thereafter obtain and maintain such policies of
insurance and pay such premiums and take any
35
other action with respect thereto that Agent deems advisable. Agent shall have
no obligation to obtain insurance for any Credit Party or pay any premiums
therefor. By doing so, Agent shall not be deemed to have waived any Default or
Event of Default arising from any Credit Party's failure to maintain such
insurance or pay any premiums therefor. All sums so disbursed, including
attorneys' fees, court costs and other charges related thereto, shall be payable
on demand by Borrower to Agent and shall be additional Obligations hereunder
secured by the Collateral.
(b) Agent reserves the right at any time upon any change in any Credit
Party's risk profile (including any change in the product mix maintained by any
Credit Party or any laws affecting the potential liability of such Credit Party)
to require additional forms and limits of insurance to, in Agent's opinion,
adequately protect both Agent's and Lenders' interests in all or any portion of
the Collateral and to ensure that each Credit Party is protected by insurance in
amounts and with coverage customary for its industry. If requested by Agent,
each Credit Party shall deliver to Agent from time to time a report of a
reputable insurance broker, satisfactory to Agent, with respect to its insurance
policies.
(c) Borrower shall deliver to Agent, in form and substance
satisfactory to Agent, endorsements to (i) all "All Risk" and business
interruption insurance naming Agent, on behalf of itself and Lenders, as loss
payee, or, in the case of insurance covering assets located in the Province of
Quebec, naming Agent and Lenders as loss payees, and, in the case of "All Risk"
insurance covering Canada, containing the Canadian standard mortgage clause, and
(ii) all general liability and other liability policies naming Agent, on behalf
of itself and Lenders, as additional insured, or, in the case of insurance
covering assets located in the Province of Quebec, naming Agent and Lenders as
additional insureds. Borrower irrevocably makes, constitutes and appoints Agent
(and all officers, employees or agents designated by Agent), so long as any
Default or Event of Default has occurred and is continuing or the anticipated
insurance proceeds exceed $10,000,000, as Borrower's true and lawful agent and
attorney-in-fact for the purpose of making, settling and adjusting claims under
such "All Risk" policies of insurance, endorsing the name of Borrower on any
check or other item of payment for the proceeds of such "All Risk" policies of
insurance and for making all determinations and decisions with respect to such
"All Risk" policies of insurance. Agent shall have no duty to exercise any
rights or powers granted to it pursuant to the foregoing power-of-attorney.
Borrower shall promptly notify Agent of any loss, damage, or destruction to the
Collateral in the amount of $250,000 or more, whether or not covered by
insurance. After deducting from such proceeds the expenses, if any, incurred by
Agent in the collection or handling thereof, Agent shall, at its election,
either apply such proceeds to the reduction of the Obligations in accordance
with Section 1.3(d), or permit or require Borrower to use such money, or any
--------------
part thereof, to replace, repair, restore or rebuild the Collateral in a
diligent and expeditious manner with materials and workmanship of substantially
the same quality as existed before the loss, damage or destruction.
Notwithstanding the foregoing, if the casualty giving rise to such insurance
proceeds could not reasonably be expected to have a Material Adverse Effect,
such insurance proceeds do not exceed $10,000,000 in the aggregate and no
Default or Event of Default has occurred and is continuing, Agent shall permit
Borrower to replace, restore, repair or rebuild the property; provided that if
--------
Borrower has not completed or entered into binding agreements to complete such
replacement, restoration, repair or rebuilding within 180 days of such casualty,
Agent may elect to apply such insurance proceeds to prepay the Obligations in
accordance with Section 1.3(d). All insurance proceeds
-------------
36
that are to be made available to Borrower to replace, repair, restore or rebuild
the Collateral shall be applied by Agent to reduce the outstanding principal
balance of the Revolving Loan (which application shall not result in a permanent
reduction of the Revolving Loan Commitment) and upon such application, Agent
shall establish a Reserve against the Borrowing Base in an amount equal to the
amount of such proceeds so applied. All insurance proceeds made available to any
Credit Party that is not a Borrower to replace, repair, restore or rebuild
Collateral shall be deposited in a cash collateral account. Thereafter, such
funds shall be made available to Borrower to provide funds to replace, repair,
restore or rebuild the Collateral as follows: (i) Borrower shall request that a
Revolving Credit Advance or release from the cash collateral account be made to
Borrower in the amount requested to be released; (ii) so long as the conditions
set forth in Section 2.2 have been met, Revolving Lenders shall make such
-----------
Revolving Credit Advance or Agent shall release funds from the cash collateral
account; and (iii) in the case of insurance proceeds applied against the
Revolving Loan, the Reserve established with respect to such insurance proceeds
shall be reduced by the amount of such Revolving Credit Advance. To the extent
not used to replace, repair, restore or rebuild the Collateral, such insurance
proceeds shall be applied in accordance with Section 1.3(d).
--------------
5.5 Compliance with Laws. Each Credit Party shall comply with all federal,
--------------------
state, local and foreign laws and regulations applicable to it, including those
relating to ERISA and labor matters and Environmental Laws and Environmental
Permits, except to the extent that the failure to comply, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
5.6 Canadian Pension and Benefit Plans.
----------------------------------
(a) For each existing Canadian Pension Plan, each Credit Party shall
ensure that such plan retains its registered status under and is administered in
a timely manner in all material respects in accordance with the applicable
pension plan text, funding agreement, the ITA and all other applicable laws.
(b) For each Canadian Pension Plan hereafter adopted by any Credit
Party which is required to be registered under the ITA or any other applicable
laws, that Credit Party shall use its best efforts to seek and receive
confirmation in writing from the applicable Governmental Authorities to the
effect that such plan is unconditionally registered under the ITA and such other
applicable laws.
(c) For each existing and hereafter adopted Canadian Pension Plan and
Canadian Benefit Plan, each Credit Party shall in a timely fashion perform in
all material respects all obligations (including fiduciary, funding, investment
and administration obligations) required to be performed in connection with such
plan and the funding media therefor.
(d) Each Credit Party shall deliver to Agent if requested by Agent,
promptly after the filing thereof by any Credit Party with any applicable
Governmental Authority, copies of each annual and other return, report or
valuation with respect to each Canadian Pension Plan; promptly after receipt
thereof, a copy of any direction, order, notice, ruling or opinion that any
Credit Party may receive from any applicable Governmental Authority with respect
to any Canadian Pension Plan; and notification within 30 days of any increases
having a cost to such
37
Credit Party in excess of C$100,000 per annum, in the benefits of any existing
Canadian Pension Plan or Canadian Benefit Plan, or the establishment of any new
Canadian Pension Plan or Canadian Benefit Plan, or the commencement of
contributions to any such plan to which any Credit Party was not previously
contributing.
5.7 Supplemental Disclosure. From time to time as may be requested by
-----------------------
Agent (which request will not be made more frequently than once each year absent
the occurrence and continuance of a Default or an Event of Default), the Credit
Parties shall supplement each Disclosure Schedule hereto, or any representation
herein or in any other Loan Document, with respect to any matter hereafter
arising that, if existing or occurring at the date of this Agreement, would have
been required to be set forth or described in such Disclosure Schedule or as an
exception to such representation or that is necessary to correct any information
in such Disclosure Schedule or representation which has been rendered inaccurate
thereby (and, in the case of any supplements to any Disclosure Schedule, such
Disclosure Schedule shall be appropriately marked to show the changes made
therein); provided that (a) no such supplement to any such Disclosure Schedule
--------
or representation shall be or be deemed a waiver of any Default or Event of
Default resulting from the matters disclosed therein, except as consented to by
Agent and Requisite Lenders in writing; and (b) no supplement shall be required
or permitted as to representations and warranties that relate solely to the
Closing Date.
5.8 Intellectual Property. Each Credit Party will conduct its business
---------------------
and affairs without infringement of or interference with any Intellectual
Property of any other Person in any material respect.
5.9 Environmental Matters. Each Credit Party shall and shall cause
---------------------
each Person within its control to: (a) conduct its operations and keep and
maintain its Real Estate in compliance with all Environmental Laws and
Environmental Permits other than noncompliance that could not reasonably be
expected to have a Material Adverse Effect; (b) implement any and all
investigation, remediation, removal and response actions that are appropriate or
necessary to maintain the value and marketability of the Real Estate in all
material respects or to otherwise comply with Environmental Laws and
Environmental Permits pertaining to the presence, generation, treatment,
storage, use, disposal, transportation or Release of any Hazardous Material on,
at, in, under, above, to, from or about any of its Real Estate; (c) notify Agent
promptly after such Credit Party becomes aware of any violation of Environmental
Laws or Environmental Permits or any Release on, at, in, under, above, to, from
or about any Real Estate that is reasonably likely to result in Environmental
Liabilities in excess of $100,000; and (d) promptly forward to Agent a copy of
any order, notice, request for information or any communication or report
received by such Credit Party in connection with any such violation or Release
or any other matter relating to any Environmental Laws or Environmental Permits
that could reasonably be expected to result in Environmental Liabilities in
excess of $100,000, in each case whether or not the Environmental Protection
Agency or any Governmental Authority has taken or threatened any action in
connection with any such violation, Release or other matter. If Agent at any
time has a reasonable basis to believe that there may be a violation of any
Environmental Laws or Environmental Permits by any Credit Party or any
Environmental Liability arising thereunder, or a Release of Hazardous Materials
on, at, in, under, above, to, from or about any of its Real Estate, that, in
each case, could reasonably be expected to have a Material Adverse Effect, then
each Credit Party shall, upon Agent's written request (i) cause the performance
of
38
such environmental audits including subsurface sampling of soil and groundwater,
and preparation of such environmental reports, at Borrower's expense, as Agent
may from time to time reasonably request, which shall be conducted by reputable
environmental consulting firms reasonably acceptable to Agent and shall be in
form and substance acceptable to Agent, and (ii) permit Agent or its
representatives to have access to all Real Estate for the purpose of conducting
such environmental audits and testing as Agent deems appropriate, including
subsurface sampling of soil and groundwater. Borrower shall reimburse Agent for
the costs of such audits and tests and the same will constitute a part of the
Obligations secured hereunder.
5.10 Landlords' Agreements, Mortgagee Agreements and Bailee Letters.
--------------------------------------------------------------
Each Credit Party shall use reasonable commercial efforts to obtain a landlord's
agreement, mortgagee agreement or bailee letter, as applicable, from the lessor
of each leased property, mortgagee of owned property or bailee with respect to
any warehouse, processor or converter facility or other location where
Collateral is stored or located, which agreement or letter shall contain a
waiver or subordination of all Liens or claims that the landlord, mortgagee or
bailee may assert against the Collateral at that location, and shall otherwise
be satisfactory in form and substance to Agent. With respect to such locations
or warehouse space leased or owned as of the Closing Date and thereafter, if
Agent has not received a landlord or mortgagee agreement or bailee letter within
thirty (30) days following the Closing Date (or, if later, as of the date such
location is acquired or leased), Borrower's Eligible Inventory at that location
shall, in Agent's discretion, be excluded from the Borrowing Base or be subject
to such Reserves as may be established by Agent in its reasonable credit
judgment. After the Closing Date, no real property or warehouse space shall be
leased by any Credit Party and no Inventory shall be shipped to a processor,
converter or consignee under arrangements established after the Closing Date
without the prior written consent of Agent (which consent, in Agent's
discretion, may be conditioned upon the exclusion from the Borrowing Base of
Eligible Inventory at that location or the establishment of Reserves acceptable
to Agent) or, unless and until a satisfactory landlord agreement or bailee
letter, as appropriate, shall first have been obtained with respect to such
location. Each Credit Party shall timely and fully pay and perform its
obligations under all leases and other agreements with respect to each leased
location or public warehouse where any Collateral is or may be located. If any
Credit Party proposes to acquire a fee ownership interest in Real Estate after
the Closing Date, it shall first provide to Agent a mortgage or deed of trust,
environmental audits, mortgage title insurance commitment, survey, and if
required by Agent supplemental casualty insurance and flood insurance all in
form and substance, satisfactory to Agent. Attached as Disclosure Schedule
-------------------
(5.10) is a list of all of Borrower's and its domestic and Canadian
------
Subsidiaries' leased locations as to which landlord waivers have been obtained
and Reserves imposed as to leased locations for which all waivers have not been
obtained as of the Closing Date.
5.11 Further Assurances. Each Credit Party executing this Agreement
------------------
agrees that it shall and shall cause each other Credit Party to, at such Credit
Party's expense and upon request of Agent, duly execute and deliver, or cause to
be duly executed and delivered, to Agent such further instruments and do and
cause to be done such further acts as may be necessary or proper in the
reasonable opinion of Agent to carry out more effectively the provisions and
purposes of this Agreement or any other Loan Document.
39
6. NEGATIVE COVENANTS
------------------
Each Credit Party executing this Agreement jointly and
severally agrees as to all Credit Parties, except ICON of Canada, which
severally agrees only as to itself, that, without the prior written consent of
Agent and the Requisite Lenders, from and after the date hereof until the
Termination Date:
6.1 Mergers, Subsidiaries, Etc. No Credit Party shall directly or
--------------------------
indirectly, by operation of law or otherwise, (a) form or acquire any
Subsidiary, or (b) merge with, consolidate with, acquire all or substantially
all of the assets or Stock of, or otherwise combine with or acquire any Person,
except for Permitted Acquisitions, and except that any Subsidiary of Borrower
(other than Jumpking and International Holdings) may merge with Borrower.
6.2 Investments; Loans and Advances. No Credit Party shall make or
-------------------------------
permit to exist any investment in, or make, accrue or permit to exist loans or
advances of money to, any Person, through the direct or indirect lending of
money, holding of securities or otherwise, except that: (a) Credit Parties may
hold investments comprised of notes payable, or stock or other securities issued
by Account Debtors to such Credit Parties pursuant to negotiated agreements with
respect to settlement of such Account Debtor's Accounts in the ordinary course
of business; (b) each Credit Party may maintain its existing investments in its
Subsidiaries as of the Closing Date; (c) Borrower may make intercompany loans to
any Subsidiary Guarantor (provided, however, that in the case of ICON New
-------- -------
Brunswick, such intercompany loans may only be reloaned to ICON of Canada) in
accordance with Section 6.3; (d) after the Closing Date, Borrower may invest up
-----------
to $25,000 per year in International Holdings; and (e) so long as no Default or
Event of Default has occurred and is continuing and there is no outstanding
Revolving Loan balance, Borrower may make investments, subject to Control
Letters in favor of Agent for the benefit of Lenders, in (i) marketable direct
obligations issued or unconditionally guaranteed by the United States of America
or any agency thereof maturing within one year from the date of acquisition
thereof, (ii) commercial paper maturing no more than one year from the date of
creation thereof and currently having the highest rating obtainable from either
Standard & Poor's Ratings Group or Xxxxx'x Investors Service, Inc., (iii)
certificates of deposit maturing no more than one year from the date of creation
thereof issued by commercial banks incorporated under the laws of the United
States of America, each having combined capital, surplus and undivided profits
of not less than $300,000,000 and having a senior unsecured rating of "A" or
better by a nationally recognized rating agency (an "A Rated Bank"), (iv) time
------------
deposits maturing no more than 30 days from the date of creation thereof with A
Rated Banks and (v) mutual funds that invest solely in one or more of the
investments described in clauses (i) through (iv) above; (f) investments in
------------------------
European Subsidiaries permitted under Section 6.3; (g) Borrower may make loans
-----------
expressly permitted in this Section 6, and (h) loans or investments to Versalite
---------
not to exceed $200,000 in the aggregate.
6.3 Indebtedness.
------------
(a) No Credit Party shall create, incur, assume or permit to
exist any Indebtedness, except (without duplication) (i) Indebtedness secured by
purchase money security interests and Capital Leases permitted in Section
-------
6.7(c), (ii) the Loans and the other Obligations, (iii) existing Indebtedness as
------
of the Closing Date described in Disclosure Schedule (6.3) and
-------------------------
40
refinancings thereof or amendments or modifications thereof that do not have the
effect of increasing the principal amount thereof or changing the amortization
thereof (other than to extend the same) and that are otherwise on terms and
conditions no less favorable to any Credit Party, Agent or any Lender, as
determined by Agent in its reasonable discretion, than the terms of the
Indebtedness being refinanced, amended or modified, (iv) Indebtedness
specifically permitted under Section 6.17, (v) loans by third parties to
------------
Borrower's European Subsidiaries after the Closing Date in an amount not to
exceed $20,000,000 outstanding in the aggregate at any time; provided, that the
--------
proceeds of such loans are used solely to permanently repay loans made by
Borrower to such European Subsidiaries pursuant to clause (vi) of this Section
-------
6.3(a) and/or for such European Subsidiaries' working capital purposes, (vi)
------
loans by Borrower to Borrower's European Subsidiaries (including the transfer of
Inventory for which Borrower is not paid) in an aggregate amount not to exceed
$25,000,000 at any time outstanding and accrued interest on such (including such
advances in the amount of $21,000,000 outstanding on the Closing Date), (vii)
the Subordinated Notes, (viii) other unsecured Indebtedness not to exceed
$100,000 in the aggregate; (ix) Indebtedness consisting of intercompany loans
and advances made by Borrower to Subsidiary Guarantors (provided, however, that
-------- -------
in the case of ICON New Brunswick, such intercompany loans are for the sole
purpose of reloaning the proceeds thereof to ICON of Canada)in an amount not to
exceed $20,000,000 in the aggregate; provided, that: such Subsidiary Guarantor
--------
shall have executed and delivered to Borrower, on the Closing Date, demand notes
(the "Intercompany Notes") to evidence any such intercompany Indebtedness owing
------------------
by such Subsidiary Guarantor to Borrower, which Intercompany Notes shall be in
form and substance satisfactory to Agent and shall be pledged and delivered to
Agent pursuant to the applicable Pledge Agreement or Security Agreement as
additional collateral security for the Obligations; (B) Borrower shall record
all intercompany transactions on its books and records in a manner reasonably
satisfactory to Agent; and (C) the obligations of such Subsidiary Guarantor
under such Intercompany Notes shall be subordinated to the Obligations of such
Subsidiary Guarantor as a Guarantor in a manner satisfactory to Agent; and (D)
with the exception of an amount not to exceed $50,000 in each Fiscal Year, the
amount of any royalty or license fee received by ICON IP from Borrower or any
Subsidiary of Borrower shall promptly be loaned back to Borrower or such
Subsidiary of Borrower, which intercompany loan shall be evidenced by
Intercompany Notes and shall be subordinated to the Obligations of Borrower or
such Subsidiary of Borrower as a Guarantor in a manner satisfactory to Agent and
(x) the CS First Boston Debt incurred by Holdings.
(b) No Credit Party shall, directly or indirectly, voluntarily
purchase, redeem, defease or prepay any principal of, premium, if any, interest
or other amount payable in respect of any Indebtedness prior to its due date or
maturity, other than (i) the Obligations, (ii) Indebtedness secured by a
Permitted Encumbrance if the asset securing such Indebtedness has been sold or
otherwise disposed of in accordance with Section 6.8(b) and (iii) the
-------------
Subordinated Notes.
6.4 Employee Loans and Affiliate Transactions.
-----------------------------------------
(a) Except as otherwise expressly permitted in this Section 6 with
---------
respect to Affiliates, no Credit Party shall enter into or be a party to any
transaction with any other Credit Party or any Affiliate thereof except in the
ordinary course of and pursuant to the reasonable requirements of such Credit
Party's business and upon fair and reasonable terms that are no less
41
favorable to such Credit Party than would be obtained in a comparable arm's
length transaction with a Person not an Affiliate of such Credit Party and in
compliance with the restrictions on granting financial assistance under
applicable laws. In addition, if any such transaction or series of related
transactions involves payments by a Credit Party in excess of $250,000 in the
aggregate, the terms of these transactions must be disclosed in advance to Agent
and Lenders. All such transactions existing as of the Closing Date are described
in Disclosure Schedule 6.4.
-----------------------
(b) No Credit Party shall enter into any lending or borrowing
transaction with any employees of any Credit Party, except (i) loans to its
respective employees on an arm's-length basis in the ordinary course of business
consistent with past practices for travel expenses, relocation costs and similar
purposes up to a maximum of $1,200,000 in the aggregate at any one time
outstanding and (ii) loans to management employees described in Disclosure
----------
Schedule 6.4.
------------
(c) The Credit Parties shall not pay compensation as salaries or
otherwise in excess of $1,200,000 in the aggregate per year to Xxxxx Xxxxxxxxx
and Xxxx Xxxxxxxxx, subject to annual increases approved by a disinterested
majority of Borrower's Board of Directors, plus such bonuses as may be approved
by a disinterested majority of Borrower's Board of Directors in its reasonable
discretion, plus, subject to Section 6.14, management fees to Xxxxx Xxxxxxxxx
---- ------------
and Xxxx Xxxxxxxxx of $67,000 in the aggregate per year.
6.5 Capital Structure and Business. No Credit Party shall (a) make any
------------------------------
changes in any of its business objectives, purposes or operations that could in
any way adversely affect the repayment of the Loans or any of the other
Obligations or could reasonably be expected to have or result in a Material
Adverse Effect, (b) make any change in its capital structure as described in
Disclosure Schedule (3.8), including the issuance of any shares of Stock,
-------------------------
warrants or other securities convertible into Stock or any revision of the terms
of its outstanding Stock; provided that Holdings may make a Public Offering of
--------
its common Stock so long as (i) the proceeds thereof are applied in prepayment
of the Obligations as required by Section 1.3(b)(iii), and (ii) no Change of
-------------------
Control occurs after giving effect thereto, or (c) amend its charter or bylaws
in a manner that would adversely affect Agent or Lenders or such Credit Party's
duty or ability to repay the Obligations. No Credit Party shall engage in any
business other than the businesses currently engaged in by it.
6.6 Guaranteed Indebtedness. No Credit Party shall create, incur, assume
-----------------------
or permit to exist any Guaranteed Indebtedness except (a) by endorsement of
instruments or items of payment for deposit to the general account of any Credit
Party, (b) for Guaranteed Indebtedness incurred by any Credit Party if the
primary obligation is expressly permitted to be incurred by Borrower or any of
its domestic or Canadian Subsidiaries by this Agreement, (c) a guaranty by
Borrower of the obligations of F.G. Aviation, Inc. in an amount not to exceed
$4,500,000, (d) an unsecured guaranty of Indebtedness advanced to Borrower's
European Subsidiaries in an aggregate amount not to exceed $20,000,000 and (e) a
guarantee of the Subordinated Notes (directly or indirectly) by the Borrower's
domestic and Canadian Subsidiaries.
6.7 Liens. No Credit Party shall create, incur, assume or permit to exist
-----
any Lien on or with respect to its Accounts or any of its other properties or
assets (whether now owned or hereafter acquired) except for (a) Permitted
Encumbrances; (b) Liens in existence on the date
42
hereof and listed on Disclosure Schedule (6.7); (c) Liens created after the date
-------------------------
hereof by conditional sale or other title retention agreements (including
Capital Leases) or in connection with purchase money Indebtedness with respect
to Equipment and Fixtures acquired by any Credit Party in the ordinary course of
business, involving the incurrence of an aggregate amount of purchase money
Indebtedness and Capital Lease Obligations of not more than $6,000,000
outstanding at any one time for all such Liens (provided that such Liens attach
--------
only to the assets subject to such purchase money debt and such Indebtedness is
incurred within twenty (20) days following such purchase and does not exceed
100% of the purchase price of the subject assets); and (d) other Liens securing
other Indebtedness not exceeding $250,000 in the aggregate at any time
outstanding, so long as such Liens do not attach to any Accounts or Inventory.
In addition, no Credit Party shall become a party to any agreement, note,
indenture or instrument, or take any other action, that would prohibit the
creation of a Lien on any of its properties or other assets in favor of Agent,
on behalf of itself and Lenders, as additional collateral for the Obligations,
except operating leases, purchase money installment contracts, Capital Leases or
Licenses which prohibit Liens upon the assets that are subject thereto.
6.8 Sale of Stock and Assets. No Credit Party shall sell, transfer,
------------------------
convey, assign or otherwise dispose of any of its properties or other assets,
including the Stock of any of its Subsidiaries (whether in a public or a private
offering or otherwise) or any of its Accounts, other than (a) the sale of
Inventory in the ordinary course of business, (b) the sale, transfer, conveyance
or other disposition for cash by a Credit Party of (i) Equipment or Fixtures
that are obsolete or no longer used or useful in such Credit Party's business
and having a value not exceeding $500,000 in the aggregate in any Fiscal Year
and (ii) other Equipment and Fixtures having a value not exceeding $1,000,000 in
the aggregate in any Fiscal Year, (c) non-recourse sales of consumer Accounts on
terms approved in advance in writing by Agent , (d) non-recourse sales (or
limited recourse sales on terms satisfactory to Agent) not to exceed $10,000,000
in any 12-month period of Accounts owing by Account Debtors that are in
bankruptcy, or whose Accounts are excluded from Eligible Accounts for reasons
related to the Account Debtor's creditworthiness, on terms approved in advance
in writing by Agent and (e) sale-leasebacks permitted under Section 6.12.
------------
Without limiting the generality of the foregoing, no Credit Party will sell any
of its Patents or Trademarks or license any of its Patents or Trademarks to
third parties under licenses that (i) restrict the ability of the Credit Party
(or Agent) to sell the subject Patent or Trademark or (ii) diminish or impair
the value of the subject Patent or Trademark as a salable asset of the
applicable Credit Party. With respect to any disposition of assets or other
properties permitted pursuant to clause (b) above, Agent agrees on reasonable
----------
prior written notice to release its Lien on such assets or other properties in
order to permit the applicable Credit Party to effect such disposition and shall
execute and deliver to Borrower, at Borrower's expense, appropriate UCC-3
termination statements and other releases as reasonably requested by Borrower.
6.9 ERISA. No Credit Party shall, or shall cause or permit any ERISA
-----
Affiliate to, cause or permit to occur an event that could result in the
imposition of a Lien under Section 412 of the IRC or Section 302 or 4068 of
ERISA or cause or permit to occur an ERISA Event to the extent such ERISA Event
could reasonably be expected to have a Material Adverse Effect.
6.10 Financial Covenants. Borrower shall not breach or fail to comply with
-------------------
any of the Financial Covenants.
43
6.11 Hazardous Materials. No Credit Party shall cause or permit a Release
-------------------
of any Hazardous Material on, at, in, under, above, to, from or about any of the
Real Estate where such Release would (a) violate in any respect, or form the
basis for any Environmental Liabilities under, any Environmental Laws or
Environmental Permits or (b) otherwise adversely impact the value or
marketability of any of the Real Estate or any of the Collateral, other than
such violations or Environmental Liabilities that could not reasonably be
expected to have a Material Adverse Effect.
6.12 Sale-Leasebacks. No Credit Party shall engage in any sale-leaseback,
---------------
synthetic lease or similar transaction involving any of its assets, except
sale-leaseback transactions with respect to items of Equipment (other than
computer equipment and software) on terms reasonably satisfactory to Agent in
amounts not to exceed $2,000,000 in the aggregate in any Fiscal Year.
6.13 Cancellation of Indebtedness. No Credit Party shall cancel any claim
----------------------------
or debt owing to it, except for reasonable consideration negotiated on an
arm's-length basis and in the ordinary course of its business consistent with
past practices.
6.14 Restricted Payments. No Credit Party shall make any Restricted
-------------------
Payment, except (a) the making of intercompany loans and advances between
Borrower and Jumpking, ICON New Brunswick, ICON of Canada, NordicTrack, Free
Motion or ICON IP, as the case may be, to the extent permitted by Section 6.3,
-----------
(b) dividends and distributions by Subsidiaries of Borrower paid directly or
indirectly to Borrower, (c) employee loans permitted under Section 6.4(b) above,
--------------
(d) payments of principal and interest of Intercompany Notes issued in
accordance with Section 6.3; (e) scheduled payments of interest with respect to
-----------
Subordinated Notes, provided, that no Event of Default under Sections 8.1(a),
----------------
8.1(h) or 8.1(i) has occurred and is continuing and no Payment Blockage Period
----------------
(as defined in the Subordinated Notes Documents) is in effect at the time any
payment otherwise permitted under clause (e) is to be made; (f) payments of
------
management fees pursuant to the Management Agreements, not to exceed $800,000 in
the aggregate in any Fiscal Year to all of Xxxx Capital, Inc., CS First Boston,
Xxxxx Xxxxxxxxx, Xxxx Xxxxxxxxx and the Affiliates of any of the foregoing and
any expenses associated therewith; provided, however, that (1) no such
-------- -------
management fees shall be paid so long as any Event of Default has occurred and
is continuing (payments accrued during such period may be paid when the subject
Events of Default have been cured or waived) and (2) management fees shall be
payable in four equal quarterly installments sixty (60) days after the end of
each Fiscal Quarter (g) payments to Holdings necessary to enable Holdings: (1)
to satisfy its federal, state and local income tax obligations that are the
result of net consolidated income of Borrower and its Subsidiaries being
attributed to Holdings; (2) to pay the fees and expenses necessary to maintain
Holdings' corporate existence and good standing; (3) to pay accounting fees
attributable to Borrower and its Subsidiaries; and (4) payments to buy back the
Holdings' stock of any employee who has died or whose employment with Borrower
or its Subsidiaries has otherwise terminated, such repurchase payments not to
exceed $500,000 in the aggregate in any Fiscal Year in cash payments or
otherwise by the issuance of Subordinated Debt, and (h) bonuses and other
payments (including the forgiveness of Indebtedness) to Affiliates of Borrower
as set forth on Disclosure Schedule (6.4) hereto.
-------------------------
44
6.15 Change of Corporate Name or Location; Change of Fiscal Year. No Credit
-----------------------------------------------------------
Party shall (a) change its name as it appears in official filings in the
jurisdiction of its incorporation or other organization (b) change its chief
executive office, domicile (within the meaning of the Quebec Civil Code),
principal place of business, corporate offices or warehouses or locations at
which Collateral is held or stored, or the location of its records concerning
the Collateral, (c) change the type of entity that it is, (d) change its
organization identification number, if any, issued by its jurisdiction of
incorporation or other organization, or (e) change its jurisdiction of
incorporation or organization, in each case without at least thirty (30) days
prior written notice to Agent and after Agent's written acknowledgment that any
reasonable action requested by Agent in connection therewith, including to
continue the perfection of any Liens in favor of Agent, on behalf of Agent and
Lenders, or, in favor of Agent and Lenders, as applicable in any Collateral, has
been completed or taken, and provided that any such new location shall be in the
--------
continental United States of America or Canada. Without limiting the foregoing,
no Credit Party shall change its name, identity or corporate structure in any
manner that might make any financing or continuation statement filed in
connection herewith seriously misleading as such term is defined in and/or used
in the Code or any other then applicable provision of the Code, or materially
misleading within the meaning of any other applicable law except upon prior
written notice to Agent and Lenders and after Agent's written acknowledgment
that any reasonable action requested by Agent in connection therewith, including
to continue the perfection of any Liens in favor of Agent, on behalf of Agent
and Lenders, in any Collateral, has been completed or taken. No Credit Party
shall change its Fiscal Year.
6.16 No Impairment of Intercompany Transfers. No Credit Party shall
---------------------------------------
directly or indirectly enter into or become bound by any agreement, instrument,
indenture or other obligation (other than this Agreement and the other Loan
Documents) that could directly or indirectly restrict, prohibit or require the
consent of any Person with respect to the payment of dividends or distributions
or the making or repayment of intercompany loans by a Subsidiary of Borrower to
Borrower.
6.17 No Speculative Transactions. No Credit Party shall engage in any
---------------------------
transaction involving commodity options, futures contracts or similar
transactions, except solely to hedge against fluctuations in the prices of
commodities owned or purchased by it and the values of foreign currencies
receivable or payable by it and interest swaps, caps or collars.
6.18 Leases; Real Estate Purchases. No Credit Party shall enter into any
-----------------------------
operating lease for Equipment, if the aggregate of all such operating lease
payments payable in any year for all Credit Parties on a consolidated basis
would exceed $6,000,000. No Credit Party shall purchase fee simple ownership
interest in Real Estate.
6.19 Changes Relating to Subordinated Debt and Other Agreements. No Credit
----------------------------------------------------------
Party shall change or amend the terms of the Subordinated Debt Documents or any
other Subordinated Debt (or any indenture or agreement in connection therewith),
the Management Agreements, the Employment Agreements or the Stockholders
Agreement, except changes or amendments that do not adversely affect the rights
or interests of Lenders, as determined by Agent in advance in writing.
45
6.20 Credit Parties other than Borrower. Holdings shall not engage in any
----------------------------------
trade or business, or own any assets (other than Stock of Borrower) or incur any
Indebtedness or Guaranteed Indebtedness (other than the Obligations and the CS
First Boston Debt). ICON New Brunswick shall not engage in any trade or
business, or own any assets (other than a Borrower Account) or incur any
Indebtedness or Guaranteed Indebtedness (other than a guaranty of the
Obligations and the Subordinated Notes). International Holdings shall not engage
in any trade or business or incur any Indebtedness or Guaranteed Indebtedness
(other than a guaranty of the Obligations and the Subordinated Notes) or own any
assets (other than the Stock of ICON Health & Fitness, Ltd., ICON OS, Inc., ICON
of Canada and ICON New Brunswick).
7. TERM
----
7.1 Termination. The financing arrangements contemplated hereby shall be
-----------
in effect until the Commitment Termination Date, and the Loans and all other
Obligations shall be automatically due and payable in full on such date.
7.2 Survival of Obligations Upon Termination of Financing Arrangements.
------------------------------------------------------------------
Except as otherwise expressly provided for in the Loan Documents, no termination
or cancellation (regardless of cause or procedure) of any financing arrangement
under this Agreement shall in any way affect or impair the obligations, duties
and liabilities of the Credit Parties or the rights of Agent and Lenders
relating to any unpaid portion of the Loans or any other Obligations, due or not
due, liquidated, contingent or unliquidated or any transaction or event
occurring prior to such termination, or any transaction or event, the
performance of which is required after the Commitment Termination Date. Except
as otherwise expressly provided herein or in any other Loan Document, all
undertakings, agreements, covenants, warranties and representations of or
binding upon the Credit Parties, and all rights of Agent and each Lender, all as
contained in the Loan Documents, shall not terminate or expire, but rather shall
survive any such termination or cancellation and shall continue in full force
and effect until the Termination Date; provided, that the provisions of Section
-------- -------
11, the payment obligations under Sections 1.15 and 1.16, and the indemnities
-- ----------------------
contained in the Loan Documents shall survive the Termination Date.
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
--------------------------------------
8.1 Events of Default. The occurrence of any one or more of the following
-----------------
events (regardless of the reason therefor) shall constitute an "Event of
--------
Default" hereunder:
-------
(a) Borrower (i) fails to make any payment of principal of, or
interest on, or Fees owing in respect of, the Loans or any of the other
Obligations when due and payable, or (ii) fails to pay or reimburse Agent or
Lenders for any expense reimbursable hereunder or under any other Loan Document
within ten (10) days following Agent's demand for such reimbursement or payment
of expenses.
(b) Any Credit Party fails or neglects to perform, keep or observe
any of the provisions of Sections 1.4, 1.8, 1.14, 5.4(a), 5.4(c), 5.6 or 6, or
-------------------------------------------------
any of the provisions set forth in Annexes C or G, respectively.
--------------
46
(c) Borrower fails or neglects to perform, keep or observe any of the
provisions of Section 4 or any provisions set forth in Annexes E or F,
--------- --------------
respectively, and the same shall remain unremedied for three (3) Business Days
or more.
(d) Any Credit Party fails or neglects to perform, keep or observe any
other provision of this Agreement or of any of the other Loan Documents (other
than any provision embodied in or covered by any other clause of this Section
-------
8.1) and the same shall remain unremedied for thirty (30) days or more.
---
(e) A default or breach occurs under any other agreement, document or
instrument to which any Credit Party is a party that is not cured within any
applicable grace period therefor, and such default or breach (i) involves the
failure to make any payment when due in respect of any Indebtedness (other than
the Obligations) of any Credit Party in excess of $500,000 in the aggregate, or
(ii) causes, or permits any holder of such Indebtedness or a trustee to cause,
Indebtedness or a portion thereof in excess of $500,000 in the aggregate to
become due prior to its stated maturity or prior to its regularly scheduled
dates of payment, regardless of whether such default is waived, or such right is
exercised, by such holder or trustee.
(f) Any information contained in any Borrowing Base Certificate is
untrue or incorrect in any respect (other than inadvertent, immaterial errors
not exceeding $750,000 in the aggregate in any Borrowing Base Certificate and
errors that have the effect of understating the Borrowing Base), or any
representation or warranty herein or in any Loan Document or in any written
statement, report, financial statement or certificate (other than a Borrowing
Base Certificate) made or delivered to Agent or any Lender by any Credit Party
is untrue or incorrect in any material respect as of the date when made or
deemed made.
(g) Assets of any Credit Party with a fair market value of $250,000 or
more are attached, seized, levied upon or subjected to a writ or distress
warrant, or come within the possession of any receiver, trustee, custodian or
assignee for the benefit of creditors of any Credit Party and such condition
continues for thirty (30) days or more.
(h) A case or proceeding is commenced against any Credit Party seeking
a decree or order in respect of such Credit Party (i) under the Insolvency Laws,
as now constituted or hereafter amended or any other applicable federal, state
or foreign bankruptcy or other similar law, (ii) appointing a custodian,
receiver, liquidator, assignee, trustee or sequestrator (or similar official)
for such Credit Party or for any substantial part of any such Credit Party's
assets, or (iii) ordering the winding-up or liquidation of the affairs of such
Credit Party, and such case or proceeding shall remain undismissed or unstayed
for sixty (60) days or more or a decree or order granting the relief sought in
such case or proceeding by a court of competent jurisdiction.
(i) Any Credit Party (i) files a petition seeking relief under the
Insolvency Laws, as now constituted or hereafter amended, or any other
applicable federal, state or foreign bankruptcy or other similar law, (ii)
consents or fails to contest in a timely and appropriate manner to the
institution of proceedings thereunder or to the filing of any such petition or
to the appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee or sequestrator (or similar official) for such Credit Party or
for any substantial part of any such Credit Party's assets, (iii) makes an
assignment for the benefit of creditors, (iv) files a proposal
47
or notice of intention to file a proposal under any Insolvency Laws, (v) takes
any corporate action in furtherance of any of the foregoing, (vi) admits in
writing its inability to, or is generally unable to, pay its debts as such debts
become due, or (vii) is not Solvent.
(j) A final judgment or judgments for the payment of money in excess
of $1,000,000 in the aggregate at any time are outstanding against one or more
of the Credit Parties (which are not covered by insurance policies as to which
coverage has been accepted) and the same are not, within thirty (30) days after
the entry thereof, discharged or execution thereof stayed or bonded pending
appeal, or such judgments are not discharged prior to the expiration of any such
stay.
(k) Any material provision of any Loan Document for any reason ceases
to be valid, binding and enforceable in accordance with its terms (or any Credit
Party shall challenge the enforceability of any Loan Document or shall assert in
writing, or engage in any action or inaction based on any such assertion, that
any provision of any of the Loan Documents has ceased to be or otherwise is not
valid, binding and enforceable in accordance with its terms), or any Lien
created under any Loan Document shall cease to be a valid and perfected first
priority Lien (except as otherwise permitted herein or therein) in any of the
Collateral purported to be covered thereby.
(l) Any Change of Control occurs.
8.2 Remedies.
--------
(a) If any Default or Event of Default has occurred and is continuing,
Agent may (and at the written request of the Requisite Revolving Lenders shall),
without notice, suspend the Revolving Loan facility with respect to additional
Advances and/or the incurrence of additional Letter of Credit Obligations,
whereupon any additional Advances and the incurrence of additional Letter of
Credit Obligations shall be made or extended in Agent's sole discretion (or in
the sole discretion of the Requisite Revolving Lenders, if such suspension
occurred at their direction) so long as such Default or Event of Default is
continuing. If any Event of Default has occurred and is continuing, Agent may
(and at the written request of Requisite Lenders shall), without notice except
as otherwise expressly provided herein, increase the rate of interest applicable
to the Loans and the Letter of Credit Fees to the Default Rate.
(b) If any Event of Default has occurred and is continuing, Agent may
(and at the written request of the Requisite Lenders shall), without notice, (i)
terminate the Revolving Loan facility with respect to further Advances or the
incurrence of further Letter of Credit Obligations; (ii) from time to time
reduce the Revolving Loan Commitments; (iii) declare all or any portion of the
Obligations, including all or any portion of any Loan to be forthwith due and
payable, and require that the Letter of Credit Obligations be cash
collateralized as provided in Annex B, all without presentment, demand, protest
-------
or further notice of any kind, all of which are expressly waived by Borrower and
each other Credit Party; or (iv) exercise any rights and remedies provided to
Agent under the Loan Documents or at law or equity, including all remedies
provided under the Code; provided, that upon the occurrence of an Event of
--------
Default specified in Sections 8.1(h) or (i), the Revolving Loan facility shall
----------------------
be immediately terminated
48
and all of the Obligations, including the Revolving Loan, shall become
immediately due and payable without declaration, notice or demand by any Person.
8.3 Waivers by Credit Parties. Except as otherwise provided for in
-------------------------
this Agreement or by applicable law, each Credit Party waives: (a) presentment,
demand and protest and notice of presentment, dishonor, notice of intent to
accelerate, notice of acceleration, protest, default, nonpayment, maturity,
release, compromise, settlement, extension or renewal of any or all commercial
paper, accounts, contract rights, documents, instruments, chattel paper and
guaranties at any time held by Agent on which any Credit Party may in any way be
liable, and hereby ratifies and confirms whatever Agent may do in this regard,
(b) all rights to notice and a hearing prior to Agent's taking possession or
control of, or to Agent's replevy, attachment or levy upon, the Collateral or
any bond or security that might be required by any court prior to allowing Agent
to exercise any of its remedies, and (c) the benefit of all valuation,
appraisal, marshaling and exemption laws.
8.4 Receivership. Without limiting the generality of the foregoing or
------------
limiting in any way the rights of Agent or the Lenders under the Collateral
Documents or otherwise under applicable law, at any time after (i) the entire
principal balance of any Loan shall have become due and payable (whether at
maturity, by acceleration or otherwise) and (ii) the Agent shall have provided
to the Credit Parties not less than ten (10) days' prior written notice of its
intention to apply for a receiver, the Agent shall be entitled to apply for and
have a receiver appointed under state or federal law by a court of competent
jurisdiction in any action taken by the Agent to enforce the Lenders' and
Agent's rights and remedies hereunder and under the Collateral Documents in
order to manage, protect, preserve, sell and otherwise dispose of all or any
portion of the Collateral and continue the operation of the business of the
Credit Parties, and to collect all revenues and profits thereof and apply the
same to the payment of all expenses and other charges of such receivership,
including the compensation of the receiver, and to the payment of the Loans and
other fees and expenses due hereunder and under the Collateral Documents as
aforesaid until a sale or other disposition of such Collateral shall be finally
made and consummated. THE CREDIT PARTIES HEREBY IRREVOCABLY CONSENT TO AND WAIVE
ANY RIGHT TO OBJECT TO OR OTHERWISE CONTEST THE APPOINTMENT OF A RECEIVER AS
PROVIDED ABOVE. THE CREDIT PARTIES (I) GRANT SUCH WAIVER AND CONSENT KNOWINGLY
AFTER HAVING DISCUSSED THE IMPLICATIONS THEREOF WITH COUNSEL, (II) ACKNOWLEDGE
THAT (A) THE UNCONTESTED RIGHT TO HAVE A RECEIVER APPOINTED FOR THE FOREGOING
PURPOSES IS CONSIDERED ESSENTIAL BY THE LENDERS IN CONNECTION WITH THE
ENFORCEMENT OF THE LENDERS' AND AGENT'S RIGHTS AND REMEDIES HEREUNDER AND UNDER
THE COLLATERAL DOCUMENTS, AND (B) THE AVAILABILITY OF SUCH APPOINTMENT AS A
REMEDY UNDER THE FOREGOING CIRCUMSTANCES WAS A MATERIAL FACTOR IN INDUCING THE
LENDERS TO MAKE THE LOANS TO THE BORROWER; AND (III) AGREE TO ENTER INTO ANY AND
ALL STIPULATIONS IN ANY LEGAL ACTIONS, OR AGREEMENTS OR OTHER INSTRUMENTS IN
CONNECTION WITH THE FOREGOING AND TO COOPERATE FULLY WITH THE AGENT AND THE
LENDERS IN CONNECTION WITH THE ASSUMPTION AND EXERCISE OF CONTROL BY THE
RECEIVER OVER ALL OR ANY PORTION OF THE COLLATERAL. THE LENDERS AND THE AGENT
ACKNOWLEDGE AND AGREE THAT NOTHING IN THIS SECTION SHALL BE DEEMED TO
49
CONSTITUTE A WAIVER OF THE CREDIT PARTIES' RIGHT TO FILE FOR PROTECTION UNDER
TITLE 11 OF THE UNITED STATES CODE AT ANY TIME PRIOR TO THE APPOINTMENT OF A
RECEIVER.
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT
---------------------------------------------------
9.1 Assignment and Participations.
-----------------------------
(a) The Credit Parties signatory hereto consent to the sale of
participations in, at any time or times, the Loan Documents, Loans, Letter of
Credit Obligations and any Commitment or of any portion thereof or interest
therein, including any Lender's rights, title, interests, remedies, powers or
duties thereunder. Any assignment by a Lender shall: (i) require the consent of
Agent (which consent shall not be unreasonably withheld or delayed with respect
to a Qualified Assignee) and the execution of an assignment agreement (an
"Assignment Agreement") substantially in the form attached hereto as Exhibit
-------------------- -------
9.1(a) and otherwise in form and substance satisfactory to, and acknowledged by,
------
Agent; (ii) be conditioned on such assignee Lender representing to the assigning
Lender and Agent that it is purchasing the applicable Loans to be assigned to it
for its own account, for investment purposes and not with a view to the
distribution thereof; (iii) if a partial assignment, be in an amount at least
equal to $5,000,000 and, after giving effect to any such partial assignment, the
assigning Lender shall have retained Commitments in an amount at least equal to
$5,000,000; and (iv) include a payment to Agent of an assignment fee of $3,500.
In the case of an assignment by a Lender under this Section 9.1, the assignee
-----------
shall have, to the extent of such assignment, the same rights, benefits and
obligations as all other Lenders hereunder. Notwithstanding the foregoing, an
assignment by a Lender to a Qualified Assignee under common ownership and
control with such Lender does not require Agent's consent and is not subject to
the $3,500 assignment fee. The assigning Lender shall be relieved of its
obligations hereunder with respect to its Commitments or assigned portion
thereof from and after the date of such assignment. Borrower hereby acknowledges
and agrees that any assignment shall give rise to a direct obligation of
Borrower to the assignee and that the assignee shall be considered to be a
"Lender." In all instances, each Lender's liability to make Loans hereunder
shall be several and not joint and shall be limited to such Lender's Pro Rata
Share of the applicable Commitment. In the event Agent or any Lender assigns or
otherwise transfers all or any part of the Obligations, Agent or any such Lender
shall so notify Borrower and Borrower shall, upon the request of Agent or such
Lender, execute new Notes in exchange for the Notes, if any, being assigned.
Notwithstanding the foregoing provisions of this Section 9.1(a), any Lender may
--------------
at any time pledge the Obligations held by it and such Lender's rights under
this Agreement and the other Loan Documents to a Federal Reserve Bank, and any
lender that is an investment fund may assign the Obligations held by it and such
Lender's rights under this Agreement and the other Loan Documents to another
investment fund managed by the same investment advisor; provided, that no such
--------
pledge to a Federal Reserve Bank shall release such Lender from such Lender's
obligations hereunder or under any other Loan Document. Credit Parties' consent
to an assignment of Commitments is not required (i) if the assignee is a
Qualified Assignee or (ii) if the assignee is not a Qualified Assignee, but an
Event of Default has occurred and is continuing. Agent's consent to an
assignment of Commitments is not required if the assignment is made by a Lender
to one or more Qualified Assignees and such sale is made in connection with a
sale of all or substantially all of that Lender's loan portfolio.
50
(b) Any participation by a Lender of all or any part of its
Commitments shall be made with the understanding that all amounts payable by
Borrower hereunder shall be determined as if that Lender had not sold such
participation, and that the holder of any such participation (other than a
participant that is a majority-owned Subsidiary of the parent of such Lender)
shall not be entitled to require such Lender to take or omit to take any action
hereunder except actions directly affecting (i) any reduction in the principal
amount of, or interest rate or Fees payable with respect to, any Loan in which
such holder participates, (ii) any extension of the scheduled amortization of
the principal amount of any Loan in which such holder participates or the final
maturity date thereof, and (iii) any release of all or substantially all of the
Collateral (other than in accordance with the terms of this Agreement, the
Collateral Documents or the other Loan Documents). Solely for purposes of
Sections 1.13, 1.15, 1.16(a) and (b) and 9.8, Borrower acknowledges and agrees
---------------------------- --- ---
that a participation shall give rise to a direct obligation of Borrower to the
participant and the participant shall be considered to be a "Lender." Except as
set forth in the preceding sentence neither Borrower nor any other Credit Party
shall have any obligation or duty to any participant. Neither Agent nor any
Lender (other than the Lender selling a participation) shall have any duty to
any participant and may continue to deal solely with the Lender selling a
participation as if no such sale had occurred.
(c) Except as expressly provided in this Section 9.1, no Lender
-----------
shall, as between Borrower and that Lender, or Agent and that Lender, be
relieved of any of its obligations hereunder as a result of any sale,
assignment, transfer or negotiation of, or granting of participation in, all or
any part of the Loans, the Notes or other Obligations owed to such Lender.
(d) Each Credit Party executing this Agreement shall assist any
Lender permitted to sell assignments or participations under this Section 9.1 as
-----------
reasonably required to enable the assigning or selling Lender to effect any such
assignment or participation, including the execution and delivery of any and all
agreements, notes and other documents and instruments as shall be requested and
the preparation of informational materials for, and the participation of
management in meetings with, potential assignees or participants. Each Credit
Party executing this Agreement shall certify the correctness, completeness and
accuracy of all descriptions of the Credit Parties and their respective affairs
contained in any selling materials provided by it and all other information
provided by it and included in such materials, except that any Projections
delivered by Borrower shall only be certified by Borrower as having been
prepared by Borrower in compliance with the representations contained in Section
-------
3.4(c).
------
(e) A Lender may furnish any information concerning Credit Parties in
the possession of such Lender from time to time to assignees and participants
(including prospective assignees and participants). Each Lender shall obtain
from assignees or participants confidentiality covenants substantially
equivalent to those contained in Section 11.8.
------------
(f) So long as no Event of Default has occurred and is continuing, no
Lender shall assign or sell participations in any portion of its Loans or
Commitments to a potential Lender or participant, if, as of the date of the
proposed assignment or sale, the assignee Lender or participant would be subject
to capital adequacy or similar requirements under Section 1.16(a), increased
---------------
costs under Section 1.16(b), an inability to fund LIBOR Loans under Section
--------------- -------
1.16(c), or withholding taxes in accordance with Section 1.15(a).
------- ---------------
51
9.2 Appointment of Agent. GE Capital is hereby appointed to act on behalf
--------------------
of all Lenders as Agent under this Agreement and the other Loan Documents. The
provisions of this Section 9.2 are solely for the benefit of Agent and Lenders
-----------
and no Credit Party nor any other Person shall have any rights as a third party
beneficiary of any of the provisions hereof. In performing its functions and
duties under this Agreement and the other Loan Documents, Agent shall act solely
as an agent of Lenders and does not assume and shall not be deemed to have
assumed any obligation toward or relationship of agency or trust with or for any
Credit Party or any other Person. Agent shall have no duties or responsibilities
except for those expressly set forth in this Agreement and the other Loan
Documents. The duties of Agent shall be mechanical and administrative in nature
and Agent shall not have, or be deemed to have, by reason of this Agreement, any
other Loan Document or otherwise a fiduciary relationship in respect of any
Lender. Except as expressly set forth in this Agreement and the other Loan
Documents, Agent shall not have any duty to disclose, and shall not be liable
for failure to disclose, any information relating to any Credit Party or any of
their respective Subsidiaries or any Account Debtor that is communicated to or
obtained by GE Capital or any of its Affiliates in any capacity. Neither Agent
nor any of its Affiliates nor any of their respective officers, directors,
employees, agents or representatives shall be liable to any Lender for any
action taken or omitted to be taken by it hereunder or under any other Loan
Document, or in connection herewith or therewith, except for damages caused by
its or their own gross negligence or willful misconduct. Agent shall not be
deemed to have knowledge of any Default or Event of Default unless and until
written notice thereof is given to Agent by the Borrower or a Lender, and Agent
shall not be responsible for or have any duty to ascertain or inquire into (i)
any statement, warranty or representation made in, or in connection with, this
Agreement or the other Loan Documents, (ii) the contents of any certificate,
report or other document delivered hereunder or under any of the other Loan
Documents or in connection herewith of therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein or in any other Loan Document, (iv) the validity, enforceability,
effectiveness or genuineness of this Agreement, the other Loan Documents or any
other agreement, instrument or document, or (v) the satisfaction of any
condition set forth in Section 2 or elsewhere herein, other than to confirm
---------
receipt of items expressly required to be delivered to Agent.
If Agent shall request instructions from Requisite Lenders, Requisite
Revolving Lenders or all affected Lenders with respect to any act or action
(including failure to act) in connection with this Agreement or any other Loan
Document, then Agent shall be entitled to refrain from such act or taking such
action unless and until Agent shall have received instructions from Requisite
Lenders, Requisite Revolving Lenders or all affected Lenders, as the case may
be, and Agent shall not incur liability to any Person by reason of so
refraining. Agent shall be fully justified in failing or refusing to take any
action hereunder or under any other Loan Document (a) if such action would, in
the opinion of Agent, be contrary to law or the terms of this Agreement or any
other Loan Document, (b) if such action would, in the opinion of Agent, expose
Agent to Environmental Liabilities or (c) if Agent shall not first be
indemnified to its satisfaction against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
Without limiting the foregoing, no Lender shall have any right of action
whatsoever against Agent as a result of Agent acting or refraining from acting
hereunder or under any other Loan Document in accordance with the instructions
of Requisite Lenders, Requisite Revolving Lenders or all affected Lenders, as
applicable.
52
9.3 Agent's Reliance, Etc. Neither Agent nor any of its Affiliates nor any
---------------------
of their respective directors, officers, agents or employees shall be liable for
any action taken or omitted to be taken by it or them under or in connection
with this Agreement or the other Loan Documents, except for damages caused by
its or their own gross negligence or willful misconduct. Without limiting the
generality of the foregoing, Agent: (a) may treat the payee of any Note as the
holder thereof until Agent receives written notice of the assignment or transfer
thereof signed by such payee and in form reasonably satisfactory to Agent; (b)
may consult with legal counsel, independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken by it in good faith in accordance with the advice of such counsel,
accountants or experts; (c) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, warranties or
representations made in or in connection with this Agreement or the other Loan
Documents; (d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement or the other Loan Documents on the part of any Credit Party or to
inspect the Collateral (including the books and records) of any Credit Party;
(e) shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
the other Loan Documents or any other instrument or document furnished pursuant
hereto or thereto; and (f) shall incur no liability under or in respect of this
Agreement or the other Loan Documents by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telecopy, telegram,
cable or telex) believed by it to be genuine and signed or sent by the proper
party or parties.
9.4 Agent and Affiliates. With respect to its Commitments hereunder, GE
--------------------
Capital shall have the same rights and powers under this Agreement and the other
Loan Documents as any other Lender and may exercise the same as though it were
not Agent; and the term "Lender" or "Lenders" shall, unless otherwise expressly
indicated, include GE Capital in its individual capacity. GE Capital and its
Affiliates may lend money to, invest in, and generally engage in any kind of
business with, any Credit Party, any of their Affiliates and any Person who may
do business with or own securities of any Credit Party or any such Affiliate,
all as if GE Capital were not Agent and without any duty to account therefor to
Lenders. GE Capital and its Affiliates may accept fees and other consideration
from any Credit Party for services in connection with this Agreement or
otherwise without having to account for the same to Lenders. Each Lender
acknowledges the potential conflict of interest between GE Capital as a Lender
holding disproportionate interests in the Loans and GE Capital as Agent. No
Lender designated as documentation agent, syndication agent or co-agent shall
have any duties or liabilities hereunder whatsoever, except solely in its
capacity as a Lender.
9.5 Lender Credit Decision. Each Lender acknowledges that it has,
----------------------
independently and without reliance upon Agent or any other Lender and based on
the Financial Statements referred to in Section 3.4(a) and such other documents
--------------
and information as it has deemed appropriate, made its own credit and financial
analysis of the Credit Parties and its own decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement. Each
Lender acknowledges the potential conflict of interest of each other Lender as a
result of Lenders holding disproportionate interests in the Loans, and expressly
consents to, and waives any claim based upon, such conflict of interest.
53
9.6 Indemnification. Lenders agree to indemnify Agent (to the extent not
---------------
reimbursed by Credit Parties and without limiting the obligations of Borrower
hereunder), ratably according to their respective Pro Rata Shares, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever that may be imposed on, incurred by, or asserted against Agent
in any way relating to or arising out of this Agreement or any other Loan
Document or any action taken or omitted to be taken by Agent in connection
therewith; provided, that no Lender shall be liable for any portion of such
--------
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from Agent's gross negligence or
willful misconduct. Without limiting the foregoing, each Lender agrees to
reimburse Agent promptly upon demand for its ratable share of any out-of-pocket
expenses (including reasonable counsel fees) incurred by Agent in connection
with the preparation, execution, delivery, administration, modification,
amendment or enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities under,
this Agreement and each other Loan Document, to the extent that Agent is not
reimbursed for such expenses by Credit Parties.
9.7 Successor Agent. Agent may resign at any time by giving not less than
---------------
30 days' prior written notice thereof to Lenders and Borrower. Upon any such
resignation, the Requisite Lenders shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed by the Requisite
Lenders and shall have accepted such appointment within 30 days after the
resigning Agent's giving notice of resignation, then the resigning Agent may, on
behalf of Lenders, appoint a successor Agent, which shall be a Lender, if a
Lender is willing to accept such appointment, or otherwise shall be a commercial
bank or financial institution or a subsidiary of a commercial bank or financial
institution if such commercial bank or financial institution is organized under
the laws of the United States of America or of any State thereof and has a
combined capital and surplus of at least $300,000,000. If no successor Agent has
been appointed pursuant to the foregoing, within thirty (30) days after the date
such notice of resignation was given by the resigning Agent, such resignation
shall become effective and the Requisite Lenders shall thereafter perform all
the duties of Agent hereunder until such time, if any, as the Requisite Lenders
appoint a successor Agent as provided above. Any successor Agent appointed by
Requisite Lenders hereunder shall be subject to the approval of Borrower, such
approval not to be unreasonably withheld or delayed; provided that such approval
--------
shall not be required if a Default or an Event of Default has occurred and is
continuing. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall succeed to and become vested with
all the rights, powers, privileges and duties of the resigning Agent. Upon the
earlier of the acceptance of any appointment as Agent hereunder by a successor
Agent or the effective date of the resigning Agent's resignation, the resigning
Agent shall be discharged from its duties and obligations under this Agreement
and the other Loan Documents, except that any indemnity rights or other rights
in favor of such resigning Agent shall continue. After any resigning Agent's
resignation hereunder, the provisions of this Section 9 shall inure to its
---------
benefit as to any actions taken or omitted to be taken by it while it was acting
as Agent under this Agreement and the other Loan Documents.
9.8 Setoff and Sharing of Payments. In addition to any rights now or
------------------------------
hereafter granted under applicable law and not by way of limitation of any such
rights, upon the occurrence and during the continuance of any Event of Default
and subject to Section 9.9(f), each Lender is hereby authorized at any time or
--------------
from time to time, without notice to any Credit
54
Party or to any other Person, any such notice being hereby expressly waived, to
offset and to appropriate and to apply any and all balances held by it at any of
its offices for the account of Borrower or any Guarantor (regardless of whether
such balances are then due to Borrower or any Guarantor) and any other
properties or assets at any time held or owing by that Lender or that holder to
or for the credit or for the account of Borrower or any Guarantor against and on
account of any of the Obligations that are not paid when due. Any Lender
exercising a right of setoff or otherwise receiving any payment on account of
the Obligations in excess of its Pro Rata Share thereof shall purchase for cash
(and the other Lenders or holders shall sell) such participations in each such
other Lender's or holder's Pro Rata Share of the Obligations as would be
necessary to cause such Lender to share the amount so offset or otherwise
received with each other Lender or holder in accordance with their respective
Pro Rata Shares, (other than offset rights exercised by any Lender with respect
to Sections 1.13, 1.15 or 1.16). Each Lender's obligation under this Section 9.8
--------------------------- -----------
shall be in addition to and not in limitation of its obligations to purchase a
participation in an amount equal to its Pro Rata Share of the Swing Line Loans
under Section 1.1. Borrower and each Guarantor agree, to the fullest extent
-----------
permitted by law, that (a) any Lender may exercise its right to offset with
respect to amounts in excess of its Pro Rata Share of the Obligations and may
sell participations in such amounts so offset to other Lenders and holders and
(b) any Lender so purchasing a participation in the Loans made or other
Obligations held by other Lenders or holders may exercise all rights of offset,
bankers' lien, counterclaim or similar rights with respect to such participation
as fully as if such Lender or holder were a direct holder of the Loans and the
other Obligations in the amount of such participation. Notwithstanding the
foregoing, if all or any portion of the offset amount or payment otherwise
received is thereafter recovered from the Lender that has exercised the right of
offset, the purchase of participations by that Lender shall be rescinded and the
purchase price restored without interest.
9.9 Advances; Payments; Non-Funding Lenders; Information; Actions in
----------------------------------------------------------------
Concert.
-------
(a) Advances; Payments.
------------------
(i) Revolving Lenders shall refund or participate in the Swing
Line Loan in accordance with clauses (iii) and (iv) of Section 1.1(c). If
---------------------- --------------
the Swing Line Lender declines to make a Swing Line Loan or if Swing Line
Availability is zero, Agent shall notify Revolving Lenders, promptly after
receipt of a Notice of Revolving Advance and in any event prior to 1:00
p.m. (New York time) on the date such Notice of Revolving Advance is
received, by telecopy, telephone or other similar form of transmission.
Each Revolving Lender shall make the amount of such Lender's Pro Rata Share
of such Revolving Credit Advance available to Agent in same day funds by
wire transfer to Agent's account as set forth in Annex H not later than
-------
3:00 p.m. (New York time) on the requested funding date, in the case of an
Index Rate Loan and not later than 11:00 a.m. (New York time) on the
requested funding date in the case of a LIBOR Loan. After receipt of such
wire transfers (or, in the Agent's sole discretion, before receipt of such
wire transfers), subject to the terms hereof, Agent shall make the
requested Revolving Credit Advance to Borrower. All payments by each
Revolving Lender shall be made without setoff, counterclaim or deduction of
any kind.
55
(ii) On the second (2nd) Business Day of each calendar week or
more frequently as aggregate cumulative payments in excess of
$2,000,000 are received with respect to the Loans (other than the Swing
Line Loan) (each, a "Settlement Date"), Agent shall advise each Lender
---------------
by telephone, or telecopy of the amount of such Lender's Pro Rata Share
of principal, interest and Fees paid for the benefit of Lenders with
respect to each applicable Loan. Provided that each Lender has funded
all payments and Advances required to be made by it and purchased all
participations required to be purchased by it under this Agreement and
the other Loan Documents as of such Settlement Date, Agent shall pay to
each Lender such Lender's Pro Rata Share of principal, interest and
Fees paid by Borrower since the previous Settlement Date for the
benefit of such Lender on the Loans held by it. To the extent that any
Lender (a "Non-Funding Lender") has failed to fund all such payments
------------------
and Advances or failed to fund the purchase of all such participations,
Agent shall be entitled to set off the funding short-fall against that
Non-Funding Lender's Pro Rata Share of all payments received from
Borrower. Such payments shall be made by wire transfer to such Lender's
account (as specified by such Lender in Annex H or the applicable
-------
Assignment Agreement) not later than 2:00 p.m. (Chicago time) on the
next Business Day following each Settlement Date.
(b) Availability of Lender's Pro Rata Share. Agent may assume
---------------------------------------
that each Revolving Lender will make its Pro Rata Share of each Revolving Credit
Advance available to Agent on each funding date. If such Pro Rata Share is not,
in fact, paid to Agent by such Revolving Lender when due, Agent will be entitled
to recover such amount on demand from such Revolving Lender without setoff,
counterclaim or deduction of any kind. If any Revolving Lender fails to pay the
amount of its Pro Rata Share forthwith upon Agent's demand, Agent shall promptly
notify Borrower and Borrower shall immediately repay such amount to Agent.
Nothing in this Section 9.9(b) or elsewhere in this Agreement or the other Loan
--------------
Documents shall be deemed to require Agent to advance funds on behalf of any
Revolving Lender or to relieve any Revolving Lender from its obligation to
fulfill its Commitments hereunder or to prejudice any rights that Borrower may
have against any Revolving Lender as a result of any default by such Revolving
Lender hereunder. To the extent that Agent advances funds to Borrower on behalf
of any Revolving Lender and is not reimbursed therefor on the same Business Day
as such Advance is made, Agent shall be entitled to retain for its account all
interest accrued on such Advance until reimbursed by the applicable Revolving
Lender.
(c) Return of Payments.
------------------
(i) If Agent pays an amount to a Lender under this Agreement
in the belief or expectation that a related payment has been or will be
received by Agent from Borrower and such related payment is not
received by Agent, then Agent will be entitled to recover such amount
from such Lender on demand without setoff, counterclaim or deduction of
any kind.
(ii) If Agent determines at any time that any amount received
by Agent under this Agreement must be returned to Borrower or paid to
any other Person pursuant to any Insolvency Law or otherwise, then,
notwithstanding any
56
other term or condition of this Agreement or any other Loan Document,
Agent will not be required to distribute any portion thereof to any
Lender. In addition, each Lender will repay to Agent on demand any
portion of such amount that Agent has distributed to such Lender,
together with interest at such rate, if any, as Agent is required to
pay to Borrower or such other Person, without setoff, counterclaim or
deduction of any kind.
(d) Non-Funding Lenders. The failure of any Non-Funding Lender
-------------------
to make any Revolving Credit Advance or any payment required by it hereunder, or
to purchase any participation in any Swing Line Loan to be made or purchased by
it on the date specified therefor shall not relieve any other Lender (each such
other Revolving Lender, an "Other Lender") of its obligations to make such
------------
Advance or purchase such participation on such date, but neither any Other
Lender nor Agent shall be responsible for the failure of any Non-Funding Lender
to make an Advance, purchase a participation or make any other payment required
hereunder. Notwithstanding anything set forth herein to the contrary, a
Non-Funding Lender shall not have any voting or consent rights under or with
respect to any Loan Document or constitute a "Lender" or a "Revolving Lender"
(or be included in the calculation of "Requisite Lenders," or "Requisite
Revolving Lenders" hereunder) for any voting or consent rights under or with
respect to any Loan Document. At Borrower's request, Agent or a Person
acceptable to Agent shall have the right with Agent's consent and in Agent's
sole discretion (but shall have no obligation) to purchase from any Non-Funding
Lender, and each Non-Funding Lender agrees that it shall, at Agent's request,
sell and assign to Agent or such Person, all of the Commitments of that
Non-Funding Lender for an amount equal to the principal balance of all Loans
held by such Non-Funding Lender and all accrued interest and fees with respect
thereto through the date of sale, such purchase and sale to be consummated
pursuant to an executed Assignment Agreement.
(e) Dissemination of Information. Agent shall use reasonable
----------------------------
efforts to provide Lenders with any notice of Default or Event of Default
received by Agent from, or delivered by Agent to, any Credit Party, with notice
of any Event of Default of which Agent has actually become aware and with notice
of any action taken by Agent following any Event of Default; provided, that
Agent shall not be liable to any Lender for any failure to do so, except to the
extent that such failure is attributable to Agent's gross negligence or willful
misconduct. Lenders acknowledge that Borrower is required to provide Financial
Statements and Collateral Reports to Lenders in accordance with Annexes E and F
--------- -
hereto and agree that Agent shall have no duty to provide the same to Lenders.
(f) Actions in Concert. Anything in this Agreement to the
------------------
contrary notwithstanding, each Lender hereby agrees with each other Lender that
no Lender shall take any action to protect or enforce its rights arising out of
this Agreement or the Notes (including exercising any rights of setoff) without
first obtaining the prior written consent of Agent and Requisite Lenders, it
being the intent of Lenders that any such action to protect or enforce rights
under this Agreement and the Notes shall be taken in concert and at the
direction or with the consent of Agent.
9.10 Power of Attorney in Quebec. Without limiting any of the
-----------------------------------
foregoing provisions in favor of Agent, for the purposes of holding any security
granted by any Credit Party pursuant to the laws of the Province of Quebec,
including any deed of hypothec, debenture, bond or other
57
title of indebtedness and debenture or bond pledge agreements, Agent is hereby
appointed to act as the Person holding the power of attorney (fonde de pouvoir)
pursuant to article 2692 of the Civil Code of Quebec to act on behalf of each
present and future Lender. Each party hereto agrees that, notwithstanding
Section 32 of an Act respecting the Special Powers of Legal Persons (Quebec),
Agent may, as the Person holding the power of attorney of the Lenders, acquire
and/or be the pledgee of any debentures, bonds or other titles of indebtedness
secured by any hypothec granted by any Credit Party to Agent pursuant to the
laws of the Province of Quebec.
10. SUCCESSORS AND ASSIGNS
----------------------
10.1 Successors and Assigns. This Agreement and the other Loan
----------------------
Documents shall be binding on and shall inure to the benefit of each Credit
Party, Agent, Lenders and their respective successors and assigns (including, in
the case of any Credit Party, a debtor-in-possession on behalf of such Credit
Party), except as otherwise provided herein or therein. No Credit Party may
assign, transfer, hypothecate or otherwise convey its rights, benefits,
obligations or duties hereunder or under any of the other Loan Documents without
the prior express written consent of Agent and Lenders. Any such purported
assignment, transfer, hypothecation or other conveyance by any Credit Party
without the prior express written consent of Agent and Lenders shall be void.
The terms and provisions of this Agreement are for the purpose of defining the
relative rights and obligations of each Credit Party, Agent and Lenders with
respect to the transactions contemplated hereby and no Person shall be a third
party beneficiary of any of the terms and provisions of this Agreement or any of
the other Loan Documents.
11. MISCELLANEOUS
-------------
11.1 Complete Agreement; Modification of Agreement. The Loan Documents
---------------------------------------------
constitute the complete agreement between the parties with respect to the
subject matter thereof and may not be modified, altered or amended except as set
forth in Section 11.2. Any letter of interest, commitment letter, or fee letter
------------
(other than the Fee Letter and the syndication provisions of the Commitment
Letter) between any Credit Party and Agent or any Lender or any of their
respective Affiliates, predating this Agreement and relating to a financing of
substantially similar form, purpose or effect shall be superseded by this
Agreement.
11.2 Amendments and Waivers.
----------------------
(a) Except for actions expressly permitted to be taken by Agent,
no amendment, modification, termination or waiver of any provision of this
Agreement or any other Loan Document, or any consent to any departure by any
Credit Party therefrom, shall in any event be effective unless the same shall be
in writing and signed by Agent and Borrower, and by Requisite Lenders, Requisite
Revolving Lenders or all affected Lenders, as applicable. Except as set forth in
clauses (b) and (c) below, all such amendments, modifications, terminations or
-------------------
waivers requiring the consent of any Lenders shall require the written consent
of Requisite Lenders.
(b) No amendment, modification, termination or waiver of or
consent with respect to any provision of this Agreement that increases the
percentage advance rates set forth in the definition of the Borrowing Base, or
that makes less restrictive the criteria for exclusion
58
from Eligible Accounts and Eligible Inventory set forth in Sections 1.6 and 1.7,
--------------------
shall be effective (except to the extent reserved to Agent's discretion) unless
the same shall be in writing and signed by Agent, Requisite Revolving Lenders
and Borrower. No amendment, modification, termination or waiver of or consent
with respect to any provision of this Agreement that waives compliance with the
conditions precedent set forth in Section 2.2 to the making of any Loan or the
-----------
incurrence of any Letter of Credit Obligations shall be effective unless the
same shall be in writing and signed by Agent, Requisite Revolving Lenders and
Borrower. Notwithstanding anything contained in this Agreement to the contrary,
no waiver or consent with respect to any Default or any Event of Default shall
be effective for purposes of the conditions precedent to the making of Loans or
the incurrence of Letter of Credit Obligations set forth in Section 2.2 unless
-----------
the same shall be in writing and signed by Agent, Requisite Revolving Lenders
and Borrower.
(c) No amendment, modification, termination or waiver shall,
unless in writing and signed by Agent and each Lender directly affected thereby:
(i) increase the aggregate principal amount of the Commitments or increase the
principal amount of any Lender's Term Loan Commitment or Revolving Loan
Commitment (which action shall be deemed to directly affect all Lenders); (ii)
reduce the principal of, rate of interest on or Fees payable with respect to any
Loan or Letter of Credit Obligations of any affected Lender; (iii) extend or
waive any payment date or final maturity date of the principal amount of any
Loan of any affected Lender; (iv) waive, forgive, defer, extend or postpone any
payment of interest or Fees as to any affected Lender; (v) release any Guaranty
or, except as otherwise permitted herein or in the other Loan Documents,
release, or subordinate Agent's Liens in, or permit any Credit Party to sell or
otherwise dispose of, any Collateral with a value exceeding $5,000,000 in the
aggregate so long as the Obligations remain outstanding (which action shall be
deemed to directly affect all Lenders); (vi) change the percentage of the
Commitments or of the aggregate unpaid principal amount of the Loans that shall
be required for Lenders or any of them to take any action hereunder; (vii) amend
or waive this Section 11.2 or the definitions of the terms "Requisite Lenders"
------------
or "Requisite Revolving Lenders" insofar as such definitions affect the
substance of this Section 11.2; and (viii) amend or waive Sections 1.3(b),
------------ ---------------
1.3(c), 1.11 or 8.3. Furthermore, no amendment, modification, termination or
------------ ---
waiver affecting the rights or duties of Agent under this Agreement or any other
Loan Document shall be effective unless in writing and signed by Agent, in
addition to Lenders required hereinabove to take such action. Each amendment,
modification, termination or waiver shall be effective only in the specific
instance and for the specific purpose for which it was given. No amendment,
modification, termination or waiver shall be required for Agent to take
additional Collateral pursuant to any Loan Document. No amendment, modification,
termination or waiver of any provision of any Note shall be effective without
the written concurrence of the holder of that Note. No notice to or demand on
any Credit Party in any case shall entitle such Credit Party or any other Credit
Party to any other or further notice or demand in similar or other
circumstances. Any amendment, modification, termination, waiver or consent
effected in accordance with this Section 11.2 shall be binding upon each holder
------------
of the Notes at the time outstanding and each future holder of the Notes.
(d) If, in connection with any proposed amendment, modification,
waiver or termination (a "Proposed Change"):
---------------
(i) requiring the consent of all affected Lenders, the consent
of Requisite Lenders is obtained, but the consent of other Lenders whose
consent is
59
required is not obtained (any such Lender whose consent is not obtained
as described in this clause (i) and in clauses (ii) and (iii) below
---------- ----------------------
being referred to as a "Non-Consenting Lender"),
---------------------
(ii) requiring the consent of Requisite Revolving Lenders,
the consent of Revolving Lenders holding 51% or more of the aggregate
Revolving Loan Commitments is obtained, but the consent of Requisite
Revolving Lenders is not obtained, or
(iii) requiring the consent of Requisite Lenders, the consent
of Lenders holding 51% or more of the aggregate Commitments is
obtained, but the consent of Requisite Lenders is not obtained,
then, so long as Agent is not a Non-Consenting Lender, at Borrower's request
Agent, or a Person acceptable to Agent, shall have the right with Agent's
consent and in Agent's sole discretion (but shall have no obligation) to
purchase from such Non-Consenting Lenders, and such Non-Consenting Lenders agree
that they shall, upon Agent's request, sell and assign to Agent or such Person,
all of the Commitments of such Non-Consenting Lenders for an amount equal to the
principal balance of all Loans held by the Non-Consenting Lenders and all
accrued interest and Fees with respect thereto through the date of sale, such
purchase and sale to be consummated pursuant to an executed Assignment
Agreement.
(e) Upon payment in full in cash and performance of all of the
Obligations (other than indemnification Obligations), termination of the
Commitments and a release of all claims against Agent and Lenders, and so long
as no suits, actions proceedings, or claims are pending or threatened against
any Indemnified Person asserting any damages, losses or liabilities that are
Indemnified Liabilities, Agent shall deliver to Borrower termination statements,
mortgage releases and other documents necessary or appropriate to evidence the
termination of the Liens securing payment of the Obligations.
(f) In order to complete syndication of the Loans, Agent
specifically reserves its rights as to amendments related to syndication as
provided in the Commitment Letter.
(g) Notwithstanding any provision herein contained to the
contrary, the percentage advance rates for Eligible Accounts and Eligible
Inventory set forth in the definition of Borrowing Base may not be increased
without the prior written consent of the holders of at least eighty percent
(80%) of the Revolving Loan Commitment.
11.3 Fees and Expenses. Borrower shall reimburse (i) Agent for all
-----------------
fees, costs and expenses (including the reasonable fees and expenses of all of
its special counsel, advisors, consultants and auditors) and (ii) Agent (and,
with respect to clauses (c) and (d) below, all Lenders) for all fees, costs and
-------------------
expenses, including the reasonable fees, costs and expenses of counsel or other
advisors (including environmental and management consultants and appraisers)
incurred in connection with the negotiation and preparation of the Loan
Documents and for advice, assistance, or other representation in connection
with:
(a) the forwarding to Borrower or any other Person on behalf of
Borrower by Agent of the proceeds of the Loans;
60
(b) any amendment, modification or waiver of, or consent with respect
to, or termination of, any of the Loan Documents or Related Transactions
Documents or advice in connection with the administration of the Loans made
pursuant hereto or its rights hereunder or thereunder;
(c) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by Agent, any Lender, Borrower or any other Person and
whether as a party, witness or otherwise) in any way relating to the Collateral,
any of the Loan Documents or any other agreement to be executed or delivered in
connection herewith or therewith, including any litigation, contest, dispute,
suit, case, proceeding or action, and any appeal or review thereof, in
connection with a case commenced by or against Borrower or any other Person that
may be obligated to Agent by virtue of the Loan Documents, including any such
litigation, contest, dispute, suit, proceeding or action arising in connection
with any work-out or restructuring of the Loans during the pendency of one or
more Events of Default; provided, that in the case of reimbursement of counsel
--------
for Lenders other than Agent, such reimbursement shall be limited to one counsel
for all such Lenders;
(d) any attempt to enforce any remedies of Agent or any Lender
against any or all of the Credit Parties or any other Person that may be
obligated to Agent or any Lender by virtue of any of the Loan Documents,
including any such attempt to enforce any such remedies in the course of any
work-out or restructuring of the Loans during the pendency of one or more Events
of Default; provided, that in the case of reimbursement of counsel for Lenders
--------
other than Agent, such reimbursement shall be limited to one counsel for all
such Lenders;
(e) any workout or restructuring of the Loans during the pendency of
one or more Events of Default; and
(f) efforts to (i) monitor the Loans or any of the other Obligations,
(ii) evaluate, observe or assess any of the Credit Parties or their respective
affairs, and (iii) verify, protect, evaluate, assess, appraise, collect, sell,
liquidate or otherwise dispose of any of the Collateral;
including, as to each of clauses (a) through (f) above, all attorneys' and other
-----------------------
professional and service providers' fees arising from such services, including
those in connection with any appellate proceedings, and all expenses, costs,
charges and other fees incurred by such counsel and others in connection with or
relating to any of the events or actions described in this Section 11.3, all of
------------
which shall be payable, on demand, by Borrower to Agent. Without limiting the
generality of the foregoing, such expenses, costs, charges and fees may include:
fees, costs and expenses of accountants, environmental advisors, appraisers,
investment bankers, management and other consultants and paralegals; court costs
and expenses; photocopying and duplication expenses; court reporter fees, costs
and expenses; long distance telephone charges; air express charges; telegram or
telecopy charges; secretarial overtime charges; and expenses for travel, lodging
and food paid or incurred in connection with the performance of such legal or
other advisory services.
11.4 No Waiver. Agent's or any Lender's failure, at any time or times, to
---------
require strict performance by the Credit Parties of any provision of this
Agreement or any other Loan
61
Document shall not waive, affect or diminish any right of Agent or such Lender
thereafter to demand strict compliance and performance herewith or therewith.
Any suspension or waiver of an Event of Default shall not suspend, waive or
affect any other Event of Default whether the same is prior or subsequent
thereto and whether the same or of a different type. Subject to the provisions
of Section 11.2, none of the undertakings, agreements, warranties, covenants and
------------
representations of any Credit Party contained in this Agreement or any of the
other Loan Documents and no Default or Event of Default by any Credit Party
shall be deemed to have been suspended or waived by Agent or any Lender, unless
such waiver or suspension is by an instrument in writing signed by an officer of
or other authorized employee of Agent and the applicable required Lenders and
directed to Borrower specifying such suspension or waiver.
11.5 Remedies. Agent's and Lenders' rights and remedies under this
--------
Agreement shall be cumulative and nonexclusive of any other rights and remedies
that Agent or any Lender may have under any other agreement, including the other
Loan Documents, by operation of law or otherwise. Recourse to the Collateral
shall not be required.
11.6 Severability. Wherever possible, each provision of this Agreement and
------------
the other Loan Documents shall be interpreted in such a manner as to be
effective and valid under applicable law, but if any provision of this Agreement
or any other Loan Document shall be prohibited by or invalid under applicable
law, such provision shall be ineffective only to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
11.7 Conflict of Terms. Except as otherwise provided in this Agreement or
-----------------
any of the other Loan Documents by specific reference to the applicable
provisions of this Agreement, if any provision contained in this Agreement
conflicts with any provision in any of the other Loan Documents, the provision
contained in this Agreement shall govern and control.
11.8 Confidentiality. Agent and each Lender agree to use commercially
---------------
reasonable efforts (equivalent to the efforts Agent or such Lender applies to
maintain the confidentiality of its own confidential information) to maintain as
confidential all confidential information provided to them by the Credit Parties
for a period of one (1) year following the Termination Date, except that Agent
and each Lender may disclose such information (a) to Persons employed or engaged
by Agent or such Lender in evaluating, approving, structuring or administering
the Loans and the Commitments; (b) to any bona fide assignee or participant or
potential assignee or participant that has agreed to comply with the covenant
contained in this Section 11.8 (and any such bona fide assignee or participant
------------
or potential assignee or participant may disclose such information to Persons
employed or engaged by them as described in clause (a) above); (c) as required
or requested by any Governmental Authority (including the Securities Valuation
Office of the National Association of Insurance Commissioners) or reasonably
believed by Agent or such Lender to be compelled by any court decree, subpoena
or legal or administrative order or process; (d) as, on the advise of Agent's or
such Lender's counsel, is required by law; (e) in connection with the exercise
of any right or remedy under the Loan Documents or in connection with any
Litigation to which Agent or such Lender is a party; or (f) that ceases to be
confidential through no fault of Agent or any Lender.
62
11.9 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE
-------------
LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY
AND PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS SHALL BE GOVERNED BY,
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
ILLINOIS APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE AND ANY
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. EACH CREDIT PARTY HEREBY
CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN XXXX COUNTY,
CITY OF CHICAGO, ILLINOIS SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE CREDIT PARTIES, AGENT AND LENDERS
PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS;
PROVIDED, THAT AGENT, LENDERS AND THE CREDIT PARTIES ACKNOWLEDGE THAT ANY
--------
APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF
XXXX COUNTY, CITY OF CHICAGO, ILLINOIS AND; PROVIDED, FURTHER THAT NOTHING IN
-------- -------
THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT
OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE
COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT
OR OTHER COURT ORDER IN FAVOR OF AGENT. EACH CREDIT PARTY EXPRESSLY SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY
SUCH COURT, AND EACH CREDIT PARTY HEREBY WAIVES ANY OBJECTION THAT SUCH CREDIT
PARTY MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM
-----
NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE
--------------
RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH CREDIT PARTY HEREBY WAIVES
PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH
ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER
PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH CREDIT
PARTY AT THE ADDRESS SET FORTH IN ANNEX I OF THIS AGREEMENT AND THAT SERVICE SO
-------
MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF SUCH CREDIT PARTY'S ACTUAL
RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE UNITED STATES MAILS,
PROPER POSTAGE PREPAID.
11.10 Notices. Except as otherwise provided herein, whenever it is
-------
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the
parties by any other parties, or whenever any of the parties desires to give or
serve upon any other parties any communication with respect to this Agreement,
each such notice, demand, request, consent, approval, declaration or other
communication shall be in writing and shall be deemed to have been validly
served, given or delivered (a) upon the earlier of actual receipt and three (3)
Business Days after deposit in the United States Mail, registered or certified
mail, return receipt requested, with proper postage
63
prepaid, (b) upon transmission, when sent by telecopy or other similar facsimile
transmission (with such telecopy or facsimile promptly confirmed by delivery of
a copy by personal delivery or United States Mail as otherwise provided in this
Section 11.10); (c) one (1) Business Day after deposit with a reputable
-------------
overnight courier with all charges prepaid or (d) when delivered, if
hand-delivered by messenger, all of which shall be addressed to the party to be
notified and sent to the address or facsimile number indicated in Annex I or to
-------
such other address (or facsimile number) as may be substituted by notice given
as herein provided. The giving of any notice required hereunder may be waived in
writing by the party entitled to receive such notice. Failure or delay in
delivering copies of any notice, demand, request, consent, approval, declaration
or other communication to any Person (other than Borrower or Agent) designated
in Annex I to receive copies shall in no way adversely affect the effectiveness
-------
of such notice, demand, request, consent, approval, declaration or other
communication.
11.11 Section Titles. The Section titles and Table of Contents contained
--------------
in this Agreement are and shall be without substantive meaning or content of any
kind whatsoever and are not a part of the agreement between the parties hereto.
11.12 Counterparts. This Agreement may be executed in any number of
------------
separate counterparts, each of which shall collectively and separately
constitute one agreement.
11.13 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH
--------------------
COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL
LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR
DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO
ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, AMONG AGENT, LENDERS AND ANY CREDIT PARTY ARISING
OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
11.14 Press Releases; Etc. Each Credit Party executing this Agreement
-------------------
agrees that neither it nor its Affiliates will in the future issue any press
releases or other public disclosure using the name of GE Capital or its
affiliates or referring to this Agreement, the other Loan Documents or the
Related Transactions Documents without at least two (2) Business Days' prior
notice to GE Capital and without the prior written consent of GE Capital unless
(and only to the extent that) such Credit Party or Affiliate is required to do
so under law and then, in any event, such Credit Party or Affiliate will consult
with GE Capital before issuing such press release or other public disclosure.
Each Credit Party consents to the publication by Agent or any Lender of a
tombstone or similar advertising material relating to the financing transactions
contemplated by this Agreement. Agent or such Lender shall provide a draft of
any such tombstone or similar advertising material to each Credit Party for
review and comment prior to the publication
64
thereof. Agent and Lenders reserve the right to provide to industry trade
organizations information necessary and customary for inclusion in league table
measurements with Borrower's consent which shall not be unreasonably withheld or
delayed.
11.15 Reinstatement. This Agreement shall remain in full force and effect
-------------
and continue to be effective should any petition be filed by or against Borrower
for liquidation or reorganization, should Borrower become insolvent or make an
assignment for the benefit of any creditor or creditors or should a receiver or
trustee be appointed for all or any significant part of Borrower's assets, and
shall continue to be effective or to be reinstated, as the case may be, if at
any time payment and performance of the Obligations, or any part thereof, is,
pursuant to applicable law, rescinded or reduced in amount, or must otherwise be
restored or returned by any obligee of the Obligations, whether as a "voidable
preference," "fraudulent conveyance," or otherwise, all as though such payment
or performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Obligations shall be
reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.
11.16 Advice of Counsel. Each of the parties represents to each other
-----------------
party hereto that it has discussed this Agreement and, specifically, the
provisions of Sections 11.9 and 11.13, with its counsel.
-----------------------
11.17 No Drafting Presumptions. The parties hereto have participated
------------------------
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.
11.18 License. Each Credit Party hereby grants to Agent for the benefit of
-------
all of the Lenders a world-wide, royalty-free license to use all of its Patents
and Trademarks after the occurrence of an Event of Default to complete, the
manufacture of, and to sell or otherwise dispose of, all of each Credit Party's
Inventory. Such royalty-free license shall extend to any person or persons
purchasing Inventory from the Lenders.
65
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first written above.
BORROWER
ICON HEALTH & FITNESS, INC.
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
GENERAL ELECTRIC CAPITAL
CORPORATION, as Agent and Lender
By: ______________________________________
Duly Authorized Signatory
THE CIT GROUP/BUSINESS CREDIT, INC.,
as a Lender
__________________________________________
By: ______________________________________
Duly Authorized Signatory
JPMORGAN CHASE BANK,
as a Lender
__________________________________________
By: ______________________________________
Duly Authorized Signatory
FLEET CAPITAL CORPORATION,
as a Lender
__________________________________________
By: ______________________________________
Duly Authorized Signatory
S-1
COMERICA BUSINESS CREDIT,
as a Lender
__________________________________________
By: ______________________________________
Duly Authorized Signatory
S-2
The following Persons are signatories to this Agreement in their
capacity as Credit Parties and not as Borrowers.
HF HOLDINGS, INC.
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
JUMPKING, INC.
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
ICON INTERNATIONAL HOLDINGS, INC.
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
UNIVERSAL TECHNICAL SERVICES
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
ICON DU CANADA INC./ICON OF CANADA INC.
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
S-3
510152 N.B. LTD.
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
NORDICTRACK, INC.
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
ICON IP., INC.
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
FREE MOTION FITNESS, INC.
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
S-4
ANNEX A (Recitals)
--------
to
CREDIT AGREEMENT
----------------
DEFINITIONS
-----------
Capitalized terms used in the Loan Documents shall have (unless
otherwise provided elsewhere in the Loan Documents) the following respective
meanings and all references to Sections, Exhibits, Schedules or Annexes in the
following definitions shall refer to Sections, Exhibits, Schedules or Annexes of
or to the Agreement:
"A Rated Bank" has the meaning ascribed to it in Section 6.2.
------------ -----------
"Account Debtor" means any Person who may become obligated to any
--------------
Credit Party under, with respect to, or on account of, an Account.
"Accounting Changes" has the meaning ascribed thereto in Annex G.
------------------ -------
"Accounts" means all "accounts," as such term is defined in the Code,
--------
and all "claims," as such term is defined in the Quebec Civil Code, now owned or
hereafter acquired by any Credit Party and, in any event, including (a) all
accounts receivable, other receivables, book debts and other forms of
obligations (other than forms of obligations evidenced by Chattel Paper,
Documents or Instruments), whether arising out of goods sold or services
rendered by it or from any other transaction (including any such obligations
that may be characterized as an account or contract right under the Code), (b)
all of each Credit Party's rights in, to and under all purchase orders or
receipts for goods or services, (c) all of each Credit Party's rights to any
goods represented by any of the foregoing (including unpaid sellers' rights of
rescission, replevin, reclamation and stoppage in transit and rights to
returned, reclaimed or repossessed goods), (d) all monies due or to become due
to any Credit Party, under all purchase orders and contracts for the sale of
goods or the performance of services or both by such Credit Party or in
connection with any other transaction (whether or not yet earned by performance
on the part of such Credit Party), including the right to receive the proceeds
of said purchase orders and contracts, and (e) all collateral security and
guaranties of any kind, now or hereafter in existence, given by any Person with
respect to any of the foregoing.
"Acquisition Pro Forma" has the meaning ascribed to it in Section
--------------------- -------
2.3(i).
-------
"Advance" means any Revolving Credit Advance or Swing Line Advance, as
-------
the context may require.
"Affected Lender" has the meaning ascribed to it in Section 1.16(d).
--------------- ----------------
"Affiliate" means, with respect to any Person, (a) each Person that,
---------
directly or indirectly, owns or controls, whether beneficially, or as a trustee,
guardian or other fiduciary, five percent (5%) or more of the Stock having
ordinary voting power in the election of directors of such Person, (b) each
Person that controls, is controlled by or is under common control with such
Person, (c) each of such Person's officers, directors, joint venturers and
partners and (d) in
A-1
the case of Borrower, the immediate family members, spouses and lineal
descendants of individuals who are Affiliates of Borrower. For the purposes of
this definition, "control" of a Person shall mean the possession, directly or
-------
indirectly, of the power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by contract or
otherwise; provided, however, that the term "Affiliate" shall specifically
-------- ------- ---------
exclude Agent and each Lender.
"Agent" means GE Capital in its capacity as Agent for Lenders or its
-----
successor appointed pursuant to Section 9.7.
-----------
"Agreement" means the Credit Agreement by and among Borrower, the
---------
other Credit Parties party thereto, GE Capital, as Agent and Lender, and the
other Lenders from time to time party thereto, as the same may be amended,
supplemented, restated or otherwise modified from time to time.
"Appendices" has the meaning ascribed to it in the recitals to the
----------
Agreement.
"Applicable L/C Margin" means the per annum fee, from time to time in
---------------------
effect, payable with respect to outstanding Letter of Credit Obligations as
determined by reference to Section 1.5(a).
--------------
"Applicable Margins" means collectively the Applicable L/C Margin, the
------------------
Applicable Unused Line Fee Margin, the Applicable Revolver Index Margin and the
Applicable Revolver LIBOR Margin.
"Applicable Percentage" has the meaning ascribed to it in Section
--------------------- -------
1.9(c).
------
"Applicable Revolver Index Margin" means the per annum interest rate
--------------------------------
margin from time to time in effect and payable in addition to the Index Rate
applicable to the Revolving Loan, as determined by reference to Section 1.5(a).
--------------
"Applicable Revolver LIBOR Margin" means the per annum interest rate
--------------------------------
from time to time in effect and payable in addition to the LIBOR Rate applicable
to the Revolving Loan, as determined by reference to Section 1.5(a).
-------------
"Applicable Term Loan Index Margin" means the per annum interest rate
---------------------------------
from time to time in effect and payable in addition to the Index Rate applicable
to the Term Loan, as determined by reference to Section 1.5(a).
-------------
"Applicable Term Loan LIBOR Margin" means the per annum interest rate
---------------------------------
from time to time in effect and payable in addition to the LIBOR Rate applicable
to the Term Loan, as determined by reference to Section 1.5(a).
-------------
"Applicable Unused Line Fee Margin" means the per annum fee, from time
---------------------------------
to time in effect, payable in respect of Borrower's non-use of committed funds
pursuant to Section 1.9(b), which fee is determined by reference to Section
-------------- -------
1.5(a).
------
"Assignment Agreement" has the meaning ascribed to it in Section
-------------------- -------
9.1(a).
------
A-2
"Bain Entities" shall mean, collectively, Xxxx Capital Fund IV, L.P.,
-------------
Xxxx Capital Fund IV B, L.P., Bain Associates and BCIP Trust Associates, L.P.,
and funds or trusts managed or controlled by Xxxx Capital, Inc.
"Bankruptcy Code" means the provisions of Title 11 of the United
---------------
States Code, 11 X.X.X.xx.xx. 101 et seq.
"Borrower" has the meaning ascribed thereto in the recitals to the
--------
Agreement.
"Borrower Accounts" has the meaning ascribed to it in Annex C.
----------------- -------
"Borrower Pledge Agreement" means the Pledge Agreement of even date
-------------------------
herewith executed by Borrower in favor of Agent, on behalf of itself and
Lenders, pledging all Stock of its domestic and Canadian Subsidiaries and all
Intercompany Notes owing to or held by it.
"Borrowing Availability" has the meaning ascribed to it in Section
---------------------- -------
1.1(a).
------
"Borrowing Base" means, as of any date of determination by Agent, from
--------------
time to time, an amount equal to the sum at such time of:
(a) up to eighty-five percent (85%) of the book value of Borrower's
and its domestic and Canadian Subsidiaries' Eligible Accounts, less any
Reserves established by Agent at such time;
(b) up to the lesser of (i) sixty percent (60%) (seventy percent
(70%) during the period of July 1 to November 30 of each year) of the book
value of Borrower's and its domestic and Canadian Subsidiaries' Eligible
Inventory valued on a first-in, first-out basis (at the lower of cost or
market), less any Reserves established by Agent at such time or (ii)
eighty-five percent (85%) (ninety-five percent (95%) during the period of
July 1 to November 30 of each year) of the appraised net orderly
liquidation value (less liquidation costs in an amount determined by Agent
in its reasonable discretion) of Inventory based on an appraisal, such
appraisal to be conducted by an appraiser acceptable to Agent and in form
and substance satisfactory to Agent; and
(c) in the sole and absolute discretion of Agent, up to 50% of the
book value of Eligible In-Transit Inventory valued at the lower of cost
(determined on a first-in, first-out basis) or market, excluding individual
shipments (per vessel) with an aggregate book value of less than $250,000;
For the purpose of valuing the Collateral of each of Borrower's
Canadian Subsidiaries that is denominated in Canadian Dollars or Borrower's
Accounts that are denominated in pounds sterling or Australian dollars, such
Collateral shall be converted into the Equivalent Amount thereof in Dollars, in
each case, as determined as of the last day of each Fiscal Month unless Agent
has notified Borrower that, in light of recent or expected currency
fluctuations, the conversion shall be made on a more current basis.
A-3
"Borrowing Base Certificate" means a certificate to be executed and
--------------------------
delivered from time to time by Borrower in the form attached to the Agreement as
Exhibit 4.1(b).
--------------
"Business Day" means any day that is not a Saturday, a Sunday or a day
------------
on which banks are required or permitted to be closed in the States of Illinois
or New York and in reference to LIBOR Loans shall mean any such day that is also
a LIBOR Business Day.
"Canadian Benefit Plans" means all material employee benefit plans of
----------------------
any nature or kind whatsoever that are not Canadian Pension Plans and are
maintained or contributed to by any Credit Party having employees in Canada.
"Canadian Dollars" and "C$" each mean lawful money of Canada.
---------------- --
"Canadian Pension Plans" means each plan which is considered to be a
----------------------
pension plan for the purposes of any applicable pension benefits standards
statute and/or regulation in Canada established, maintained or contributed to by
any Credit Party for its employees or former employees.
"Canadian Security Agreements" means each of the Security Agreements
-----------------------------
entered into by and between Agent, on behalf of itself and Lenders, and ICON of
Canada and ICON New Brunswick.
"Capital Expenditures" means, with respect to any Person, all
--------------------
expenditures (by the expenditure of cash or the incurrence of Indebtedness) by
such Person during any measuring period for any fixed assets or improvements or
for replacements, substitutions or additions thereto, that have a useful life of
more than one year and that are required to be capitalized under GAAP.
"Capital Lease" means, with respect to any Person, any lease of any
-------------
property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, would be required to be classified and accounted for as a
capital lease on a balance sheet of such Person.
"Capital Lease Obligation" means, with respect to any Capital Lease of
------------------------
any Person, the amount of the obligation of the lessee thereunder that, in
accordance with GAAP, would appear on a balance sheet of such lessee in respect
of such Capital Lease.
"Carry Over Amount" has the meaning ascribed to it in Annex G.
----------------- -------
"Cash Collateral Account" has the meaning ascribed to it in Annex B.
----------------------- -------
"Cash Equivalents" has the meaning ascribed to it in Annex B.
---------------- -------
"Cash Management Systems" has the meaning ascribed to it in Section
----------------------- -------
1.8.
---
"Certificate of Exemption" has the meaning ascribed to it in Section
------------------------ -------
1.15(c).
-------
A-4
"Change of Control" means any event, transaction or occurrence as a
-----------------
result of which (a) the Xxxx Entities shall cease to constitute a Voting
Majority of HF Investment so long as the Xxxx Entities hold their investment in
Holdings through HF Investment, (b) the Xxxx Entities shall cease to have or
exercise the right, directly or indirectly, to designate at least 5 of the 9
members of the Board of Directors of Holdings, (c) the Xxxx Entities and CS
First Boston and their Affiliates cease to own (directly or indirectly) and
control all of the economic and voting rights associated with ownership of at
least fifty-one percent (51%) of all classes of the outstanding capital Stock of
all classes of Holdings on a fully diluted basis, (d) Holdings ceases to own and
control all of the economic and voting rights associated with all of the
outstanding capital Stock of Borrower, (e) Borrower ceases to own and control
all of the economic and voting rights associated with all of the outstanding
capital Stock of each of its Subsidiaries or (f) any "Change of Control" (as
such term is defined in the Subordinated Notes Documents) shall occur.
"Charges" means all federal, state, county, city, municipal, local,
-------
foreign or other governmental taxes (including taxes owed to the PBGC at the
time due and payable), levies, assessments, charges, liens, claims or
encumbrances upon or relating to (a) the Collateral, (b) the Obligations, (c)
the employees, payroll, income or gross receipts of any Credit Party, (d) any
Credit Party's ownership or use of any properties or other assets, or (e) any
other aspect of any Credit Party's business.
"Chattel Paper" means any "chattel paper," as such term is defined in
-------------
the Code, now owned or hereafter acquired by any Credit Party, wherever located.
"Closing Date" means April 9, 2002.
------------
"Closing Checklist" means the schedule, including all appendices,
-----------------
exhibits or schedules thereto, listing certain documents and information to be
delivered in connection with the Agreement, the other Loan Documents and the
transactions contemplated thereunder, substantially in the form attached hereto
as Annex D.
-------
"Code" means the Uniform Commercial Code as the same may, from time to
----
time, be enacted and in effect in the State of Illinois; provided, that in the
--------
event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of, or remedies with respect to, Agent's or
any Lender's Lien on any Collateral is governed by the Uniform Commercial Code
as enacted and in effect in a jurisdiction other than the State of Illinois or
by foreign personal property security laws as enacted and in effect in a foreign
jurisdiction, the term "Code" shall mean the Uniform Commercial Code or such
----
foreign personal property security laws as enacted and in effect in such other
jurisdiction solely for purposes of the provisions thereof relating to such
attachment, perfection, priority or remedies and for purposes of definitions
related to such provisions; and, provided further, that if such foreign personal
-------- -------
property security laws do not contain a definition that is used in another Loan
Document, the definition that is used in such other Loan Document shall have the
meaning given to it in the Uniform Commercial Code as the same may, from time to
time, be enacted and in effect in the State of Illinois.
A-5
"Collateral" means the property covered by the Security Agreement, the
----------
Mortgages and the other Collateral Documents and any other property, real or
personal, tangible or intangible, now existing or hereafter acquired, that may
at any time be or become subject to a Lien granted by a Credit Party in favor of
Agent, on behalf of itself and Lenders, to secure the Obligations.
"Collateral Documents" means the Security Agreement, the Pledge
--------------------
Agreements, the Holdings Guaranty, the Mortgages, the Patent Security Agreement,
the Trademark Security Agreement, the Copyright Security Agreement, the Canadian
Security Agreements, the ICON of Canada Hypothec, the ICON of Canada Debenture,
the ICON of Canada Pledge Agreement, and all similar agreements entered into
guaranteeing payment of, or granting a Lien upon property as security for
payment of, the Obligations.
"Collateral Reports" means the reports with respect to the Collateral
------------------
referred to in Annex F.
-------
"Collection Account" means that certain account of Agent, account
------------------
number 000-000-00 in the name of Agent at Bankers Trust Company in New York, New
York ABA No. 021 001 033, or such other account as may be specified in writing
by Agent as the "Collection Account."
"Commitment Letter" means that certain commitment letter dated as of
-----------------
April __, 2002 between Borrower and GE Capital.
"Commitment Termination Date" means the earliest of (a) the fifth
---------------------------
anniversary of the Closing Date, (b) the date of termination of Lenders'
obligations to make Advances and to incur Letter of Credit Obligations or permit
existing Loans to remain outstanding pursuant to Section 8.2(b), and (c) the
--------------
date of indefeasible prepayment in full by Borrower of the Loans and the
cancellation and return (or stand-by guarantee) of all Letters of Credit or the
cash collateralization of all Letter of Credit Obligations pursuant to Annex B,
-------
and the permanent reduction of the Revolving Loan Commitment and the Swing Line
Commitment to zero dollars ($0).
"Commitments" means (a) as to any Lender, the aggregate of such
-----------
Lender's Revolving Loan Commitment (including without duplication the Swing Line
Lender's Swing Line Commitment as a subset of its Revolving Loan Commitment) and
Term Loan Commitment as set forth on Annex J to the Agreement or in the most
-------
recent Assignment Agreement executed by such Lender and (b) as to all Lenders,
the aggregate of all Lenders' Revolving Loan Commitments (including without
duplication the Swing Line Lender's Swing Line Commitment as a subset of its
Revolving Loan Commitment) and Term Loan Commitment, which aggregate commitment
shall be Two Hundred Thirty-Five Million Dollars ($235,000,000) on the Closing
Date, as to each of clauses (a) and (b), as such Commitments may be reduced,
-------------------
amortized or adjusted from time to time in accordance with the Agreement.
"Compliance Certificate" has the meaning ascribed to it in Annex E.
----------------------
"Concentration Account" has the meaning ascribed to it in Annex C.
---------------------
A-6
"Concentration Account Bank" has the meaning ascribed to it in Annex
-------------------------- -----
C.
-
"Contracts" means all "contracts," as such term is defined in the
---------
Code, now owned or hereafter acquired by any Credit Party, in any event,
including all contracts, undertakings, or agreements (other than rights
evidenced by Chattel Paper, Documents or Instruments) in or under which any
Credit Party may now or hereafter have any right, title or interest, including
any agreement relating to the terms of payment or the terms of performance of
any Account.
"Control Letter" means a letter agreement between Agent and (i) the
--------------
issuer of uncertificated securities with respect to uncertificated securities in
the name of any Credit Party, (ii) a securities intermediary with respect to
securities, whether certificated or uncertificated, securities entitlements and
other financial assets held in a securities account in the name of any Credit
Party, (iii) a futures commission merchant, as applicable, or clearing house
with respect to commodity accounts and commodity contracts held by any Credit
Party, whereby, among other things, the issuer, securities intermediary or
futures commission merchant disclaims any security interest in the applicable
financial assets, acknowledges the Lien of Agent, on behalf of itself and
Lenders, on such financial assets, and agrees to follow the instructions or
entitlement orders of Agent without further consent by the affected Credit
Party.
"Copyright License" means any and all rights now owned or hereafter
-----------------
acquired by any Credit Party under any written agreement granting any right to
use any Copyright or Copyright registration.
"Copyright Security Agreements" means the Copyright Security
-----------------------------
Agreements made in favor of Agent, on behalf of itself and Lenders, by each
applicable Credit Party.
"Copyrights" means all of the following now owned or hereafter adopted
----------
or acquired by any Credit Party: (a) all copyrights and General Intangibles of
like nature (whether registered or unregistered), all registrations and
recordings thereof, and all applications in connection therewith, including all
registrations, recordings and applications in the United States Copyright Office
or in any similar office or agency of the United States, any state or territory
thereof, or any other country or any political subdivision thereof, and (b) all
reissues, extensions or renewals thereof.
"Credit Parties" means Holdings, Borrower and each of their respective
--------------
Subsidiaries.
"CS First Boston" means Credit Suisse First Boston Corporation, a
---------------
Delaware corporation.
"CS First Boston Debt" means Indebtedness of Holdings issued to CS
--------------------
First Boston in the amount of $7,500,000 pursuant to a Note Agreement dated as
of September 27, 1999.
A-7
"Current Assets" means, with respect to any Person, all current assets
--------------
of such Person as of any date of determination calculated in accordance with
GAAP, but excluding cash, cash equivalents and debts due from Affiliates.
"Current Liabilities" means, with respect to any Person, all
-------------------
liabilities that should, in accordance with GAAP, be classified as current
liabilities, and in any event shall include all Indebtedness payable on demand
or within one year from any date of determination without any option on the part
of the obligor to extend or renew beyond such year, all accruals for federal or
other taxes based on or measured by income and payable within such year, but
excluding long term deferred taxes and the current portion of long-term debt
required to be paid within one year and the aggregate outstanding principal
balances of the Revolving Loan and the Swing Line Loan.
"Default" means any event that, with the passage of time or notice or
-------
both, would, unless cured or waived, become an Event of Default.
"Default Rate" has the meaning ascribed to it in Section 1.5(d).
------------ --------------
"Deposit Accounts" means all "deposit accounts" as such term is
----------------
defined in the "Code", now or hereafter held in the name of any Credit Party.
"Design" means the following now owned or hereafter acquired by any
------
Credit Party: (a) all industrial designs, design patents and other designs now
owned or existing or hereafter adopted or acquired, all registrations and
recordings thereof and all applications in connection therewith, including all
registrations, recordings and applications in the Canadian Industrial Designs
Office or any similar office in any country and all records thereof and (b) all
reissues, extensions or renewals thereof.
"Design License" means rights under any written agreement now owned or
--------------
hereafter acquired by any Credit Party granting any right to use any Design.
"Disbursement Accounts" has the meaning ascribed to it in Annex C.
--------------------- -------
"Disclosure Schedules" means the Schedules prepared by Borrower and
--------------------
denominated as Disclosure Schedules (1.4) through (6.7) in the Index to the
----------------------------------------
Agreement.
"Documents" means any "documents," as such term is defined in the
---------
Code, now owned or hereafter acquired by any Credit Party, wherever located.
"Dollars" or "$" means lawful currency of the United States of
------- -
America.
"EBITDA" means, with respect to any Person for any fiscal period,
------
without duplication, an amount equal to (a) consolidated net income of such
Person for such period, minus (b) the sum of (i) income tax credits, (ii)
-----
interest income, (iii) gain from extraordinary items for such period, (iv) any
aggregate net gain (but not any aggregate net loss) during such period arising
from the sale, exchange or other disposition of capital assets by such Person
(including any fixed assets, whether tangible or intangible, all inventory sold
in conjunction with the disposition of fixed assets and all securities), and (v)
any other non-cash gains that have been
A-8
added in determining consolidated net income, in each case to the extent
included in the calculation of consolidated net income of such Person for such
period in accordance with GAAP, but without duplication, plus (c) the sum of (i)
any provision for income taxes, (ii) Interest Expense, (iii) loss from
extraordinary items for such period, (iv) the amount of non-cash charges
(including depreciation and amortization) for such period, (v) amortized debt
discount for such period, and (vi) the amount of any deduction to consolidated
net income as the result of any grant to any members of the management of such
Person of any Stock, in each case to the extent included in the calculation of
consolidated net income of such Person for such period in accordance with GAAP,
but without duplication. For purposes of this definition, the following items
shall be excluded in determining consolidated net income of a Person: (1) the
income (or deficit) of any other Person accrued prior to the date it became a
Subsidiary of, or was merged or consolidated into, such Person or any of such
Person's Subsidiaries; (2) the income (or deficit) of any other Person (other
than a Subsidiary) in which such Person has an ownership interest, except to the
extent any such income has actually been received by such Person in the form of
cash dividends or distributions; (3) the undistributed earnings of any
Subsidiary of such Person to the extent that the declaration or payment of
dividends or similar distributions by such Subsidiary is not at the time
permitted by the terms of any contractual obligation or requirement of law
applicable to such Subsidiary; (4) any restoration to income of any
extraordinary or contingency reserve, except to the extent that such restoration
is deemed to have occurred in the same Fiscal Quarter during which the subject
reserve was established; (5) any write-up of any asset; (6) any net gain from
the collection of the proceeds of life insurance policies; (7) any net gain (but
not any aggregate loss) arising from the acquisition of any securities, or the
extinguishment, under GAAP, of any Indebtedness, of such Person; (8) in the case
of a successor to such Person by consolidation or merger or as a transferee of
its assets, any earnings of such successor prior to such consolidation, merger
or transfer of assets; and (9) any deferred credit representing the excess of
equity in any Subsidiary of such Person at the date of acquisition of such
Subsidiary over the cost to such Person of the investment in such Subsidiary.
"Eligible Accounts" has the meaning ascribed to it in Section 1.6 of
----------------- -----------
the Agreement.
"Eligible Inventory" has the meaning ascribed to it in Section 1.7 of
------------------ -----------
the Agreement.
"Eligible In-Transit Inventory" means all finished goods inventory
-----------------------------
owned by Borrower and not covered by Letters of Credit, and which finished goods
Inventory is in transit from China, Hong Kong or Taiwan to Borrower's facilities
in North America with a freight carrier or shipping company which is not an
Affiliate of either the Borrower or the supplier and which finished goods
Inventory (a) has been the subject of a transfer of title to Borrower, (b) is
fully insured, (c) is subject to a first priority security interest in and lien
upon such goods in favor of Agent (except for any possessory lien upon such
goods in the possession of a freight carrier or shipping company securing only
the freight charges for the transportation of such goods to Borrower), (d) is
evidenced or deliverable pursuant to documents, notices, instruments, statements
and bills of lading that have been delivered to Agent or an agent acting on its
behalf, (e) with respect to which Agent has been designated as consignee on any
xxxx of lading or document of title and (f) is otherwise deemed to be "Eligible
Inventory" hereunder.
A-9
"Eligible K-Mart Accounts" means post-petition Accounts owing by
------------------------
K-Mart, Inc., as debtor-in-possession, with an aggregate book value not to
exceed $5,000,000 in the aggregate; provided that (i) no such Account shall
--------
remain unpaid more than thirty (30) days after the receipt of goods by the
Account Debtor, (ii) the debtor-in-possession credit facility provided to
K-Mart, Inc. shall not have been terminated or suspended or credit availability
thereunder restricted and (iii) the Chapter 11 proceeding in which K-Mart, Inc.
is the debtor shall not have been converted to a liquidating Chapter 11 case or
a Chapter 7 bankruptcy proceeding.
"Employment Agreements" means the Employment Agreement dated as of
---------------------
September 24, 1999 among Holdings, Borrower and Xxxxx Xxxxxxxxx and the
Employment Agreement dated as of September 24, 1999 among Holdings, Borrower and
Xxxx Xxxxxxxxx.
"Environmental Laws" means all applicable federal, state, local and
------------------
foreign laws, statutes, ordinances, codes, rules, standards, orders-in-council
and regulations, now or hereafter in effect, and any applicable judicial or
administrative interpretation thereof, including any applicable judicial or
administrative order, consent decree, order or judgment, imposing liability or
standards of conduct for or relating to the regulation and protection of human
health, safety, the environment and natural resources (including ambient air,
surface water, groundwater, wetlands, land surface or subsurface strata,
wildlife, aquatic species and vegetation). Environmental Laws include the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980
(42 U.S.C. (S)(S)9601 et seq.) ("CERCLA"); the Hazardous Materials
------ ------
Transportation Authorization Act of 1994 (49 U.S.C( S)(S) 5101 et seq.); the
------
Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C (S)(S) 136
et seq.); the Solid Waste Disposal Act (42 U.S.C. (S)(S) 6901 et seq.); the
------ ------
Toxic Substance Control Act (15 U.S.C (S)(S) 2601 et seq.); the Clean Air Act
-------
(42 X.X.X (X)(X)0000 et seq.); the Federal Water Pollution Control Act (33
------
X.X.X (X)(X)0000 et seq.); the Occupational Safety and Health Act (29
------
U.S.C(S)(S)651 et seq.); and the Safe Drinking Water Act (42 U.S.C (S)(S) 300(f)
------
et seq.), and any and all regulations promulgated thereunder, and all
------
analogous state, local and foreign counterparts or equivalents and any transfer
of ownership notification or approval statutes.
"Environmental Liabilities" means, with respect to any Person, all
-------------------------
liabilities, obligations, responsibilities, response, remedial and removal
costs, investigation and feasibility study costs, capital costs, operation and
maintenance costs, losses, damages, punitive damages, property damages, natural
resource damages, consequential damages, treble damages, costs and expenses
(including all fees, disbursements and expenses of counsel, experts and
consultants), fines, penalties, sanctions and interest incurred as a result of
or related to any claim, suit, action, investigation, proceeding or demand by
any Person, whether based in contract, tort, implied or express warranty, strict
liability, criminal or civil statute or common law, including any arising under
or related to any Environmental Laws, Environmental Permits, or in connection
with any Release or threatened Release or presence of a Hazardous Material
whether on, at, in, under, from or about or in the vicinity of any real or
personal property.
"Environmental Permits" means all permits, licenses, authorizations,
---------------------
certificates, approvals or registrations required by any Governmental Authority
under any Environmental Laws.
A-10
"Equipment" means all "equipment," as such term is defined in the
---------
Code, now owned or hereafter acquired by any Credit Party, wherever located and,
in any event, including all such Credit Party's machinery and equipment,
including processing equipment, conveyors, machine tools, data processing and
computer equipment with software and peripheral equipment and all engineering,
processing and manufacturing equipment, office machinery, furniture, materials
handling equipment, tools, attachments, accessories, automotive equipment,
trailers, trucks, forklifts, molds, dies, stamps, motor vehicles, rolling stock
and other equipment of every kind and nature, trade fixtures and fixtures not
forming a part of real property, together with all additions and accessions
thereto, replacements therefor, all parts therefor, all substitutes for any of
the foregoing, fuel therefor, and all manuals, drawings, instructions,
warranties and rights with respect thereto, and all products and proceeds
thereof and condemnation awards and insurance proceeds with respect thereto.
"Equivalent Amount" means, on any date of determination, with respect
-----------------
to obligations or valuations denominated in one currency (the "first currency"),
--------------
the amount of another currency (the "second currency") which would result from
---------------
the conversion of the relevant amount of the first currency into the second
currency at the 12:00 noon rate quoted on the Reuters Monitor Screen (Page BOFC
or such other Page as may replace such Page for the purpose of displaying such
exchange rates) on such date or, if such date is not a Business Day, on the
Business Day immediately preceding such date of determination, or at such other
rate as may have been agreed in writing between Borrower and Agent.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, and any regulations promulgated thereunder.
"ERISA Affiliate" means, with respect to any Credit Party, any trade
---------------
or business (whether or not incorporated) that, together with such Credit Party,
are treated as a single employer within the meaning of Sections 414(b), (c), (m)
or (o) of the IRC.
"ERISA Event" means, with respect to any Credit Party or any ERISA
-----------
Affiliate, (a) any event described in Section 4043(c) of ERISA with respect to a
Title IV Plan; (b) the withdrawal of any Credit Party or ERISA Affiliate from a
Title IV Plan subject to Section 4063 of ERISA during a plan year in which it
was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (c) the
complete or partial withdrawal of any Credit Party or any ERISA Affiliate from
any Multiemployer Plan; (d) the filing of a notice of intent to terminate a
Title IV Plan or the treatment of a plan amendment as a termination under
Section 4041 of ERISA; (e) the institution of proceedings to terminate a Title
IV Plan or Multiemployer Plan by the PBGC; (f) the failure by any Credit Party
or ERISA Affiliate to make when due required contributions to a Multiemployer
Plan or Title IV Plan unless such failure is cured within 30 days; (g) any other
event or condition that might reasonably be expected to constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Title IV Plan or Multiemployer Plan or for the imposition of
liability under Section 4069 or 4212(c) of ERISA; (h) the termination of a
Multiemployer Plan under Section 4041A of ERISA or the reorganization or
insolvency of a Multiemployer Plan under Section 4241 of ERISA; (i) the loss of
a Qualified Plan's qualification or tax exempt status; or (j) the termination of
a Plan described in Section 4064 of ERISA.
A-11
"ESOP" means a Plan that is intended to satisfy the requirements
----
of Section 4975(e)(7) of the IRC.
"European Subsidiaries" means ICON Health & Fitness (Holdings)
---------------------
Ltd., ICON Health & Fitness Italia SRL, ICON Fitness Lifestyle Limited, ICON
Health & Fitness France SA, Weider Health & Fitness France SA.
"Event of Default" has the meaning ascribed to it in Section 8.1.
---------------- -----------
"Excess Cash Flow" means, without duplication, with respect to
----------------
any Fiscal Year of Borrower and its Subsidiaries, consolidated net income plus
----
(a) depreciation, amortization and Interest Expense to the extent deducted in
determining consolidated net income, plus decreases or minus increases (as the
-----
case may be) (b) in Working Capital, minus (c) Capital Expenditures during such
-----
Fiscal Year (excluding the financed portion thereof and excluding any Capital
Expenditures in such Fiscal Year to the extent in excess of the amount permitted
to be made in such Fiscal Year pursuant to clause (a) of Annex G), minus (d)
---------- ------- -----
Interest Expense paid or accrued (excluding any original issue discount,
interest paid in kind or amortized debt discount, to the extent included in
determining Interest Expense) and scheduled principal payments paid or payable
in respect of Funded Debt, plus or minus (as the case may be), (e) extraordinary
---- -----
gains or losses which are cash items not included in the calculation of net
income, minus (f) mandatory prepayments paid in cash pursuant to Section 1.3
----- -----------
other than mandatory prepayments made pursuant to Sections 1.3(b)(i),
-------------------
1.3(b)(ii), 1.3(b)(iv) or 1.3(d), minus (g) voluntary prepayments made pursuant
-------------------------------- -----
to Section 1.3(a), plus (h) taxes paid in cash during such period and not
-------------- ----
deducted in determining consolidated net income for that period.
"Fair Labor Standards Act" means the Fair Labor Standards Act, 29
------------------------
U.S.C.ss.201 et seq.
"Federal Funds Rate" means, for any day, a floating rate equal to
------------------
the weighted average of the rates on overnight federal funds transactions among
members of the Federal Reserve System, as determined by Agent.
"Federal Reserve Board" means the Board of Governors of the
---------------------
Federal Reserve System.
"Fee Letter" has the meaning ascribed to it in Section 1.9.
---------- -----------
"Fees" means any and all fees payable to Agent or any Lender
----
pursuant to the Agreement or any of the other Loan Documents.
"Financial Covenants" means the financial covenants set forth in
-------------------
Annex G.
-------
"Financial Statements" means the consolidated and consolidating
--------------------
income statements, statements of cash flows and balance sheets of Borrower
delivered in accordance with Section 3.4 and Annex E.
----------- -------
"Fiscal Month" means any of the monthly accounting periods of
------------
Borrower.
A-12
"Fiscal Quarter" means any of the quarterly accounting periods of
--------------
Borrower, ending on or about August 31, November 30, February 28 and May 31 of
each year; provided, however, that the first three Fiscal Quarters of each
-------- -------
Fiscal Year end on the Saturday nearest the dates set forth in this definition.
"Fiscal Year" means any of the annual accounting periods of
-----------
Borrower ending on May 31 of each year.
"Fixed Charges" means, with respect to Borrower on a consolidated
-------------
basis for any fiscal period, (a) the aggregate of all Interest Expense paid or
accrued during such period, plus (b) scheduled payments of principal with
respect to Indebtedness during such period.
"Fixed Charge Coverage Ratio" means, with respect to Borrower on
---------------------------
a consolidated basis for any fiscal period, the ratio of (x) EBITDA minus the
-----
sum of Capital Expenditures during such period (excluding Capital Expenditures
financed by third parties) and income taxes with respect to such period paid or
payable in cash to (y) Fixed Charges. For purposes of calculating the Fixed
Charge Coverage Ratio, EBITDA and Capital Expenditures shall be measured on a
trailing four (4) quarters basis in all instances, and Fixed Charges for the
first Fiscal Quarter ending after the Closing Date shall be multiplied by four
(4), for the two (2) Fiscal Quarters ending on the last day of the second Fiscal
Quarter following the Closing Date, multiplied by two (2) and for the three (3)
Fiscal Quarters ending on the last day of the third Fiscal Quarter following the
Closing Date, multiplied by 1.333. For the four (4) Fiscal Quarters ending on
the last day of the fourth Fiscal Quarter following the Closing Date and the
last day of each Fiscal Quarter thereafter, Fixed Charges shall be measured on a
trailing four (4) quarters basis.
"Fixtures" means all "fixtures" as such term is defined in the
--------
Code, now owned or hereafter acquired by any Credit Party.
"Foreign Lender" has the meaning ascribed to it in Section 1.15.
-------------- ------------
"Free Motion" means Free Motion Fitness, Inc., a Utah
-----------
corporation.
"Funded Debt" means, with respect to any Person, without
-----------
duplication, all Indebtedness for borrowed money evidenced by notes, bonds,
debentures, or similar evidences of Indebtedness and that by its terms matures
more than one year from, or is directly or indirectly renewable or extendible at
such Person's option under a revolving credit or similar agreement obligating
the lender or lenders to extend credit over a period of more than one year from
the date of creation thereof, and specifically including Capital Lease
Obligations, current maturities of long-term debt, revolving credit and
short-term debt extendible beyond one year at the option of the debtor, and also
including, in the case of Borrower, the Obligations and, without duplication,
Guaranteed Indebtedness consisting of guaranties of Funded Debt of other
Persons.
"GAAP" means generally accepted accounting principles in the
----
United States of America, consistently applied, as such term is further defined
in Annex G to the Agreement.
-------
A-13
"GE Capital" means General Electric Capital Corporation, a
----------
Delaware corporation.
"General Intangibles" means "general intangibles," as such term
-------------------
is defined in the Code, now owned or hereafter acquired by any Credit Party,
and, in any event, including all right, title and interest that such Credit
Party may now or hereafter have in or under any Contract, all customer lists,
Licenses, Copyrights, Trademarks, Patents, and all applications therefor and
reissues, extensions or renewals thereof, rights in Intellectual Property,
interests in partnerships, joint ventures and other business associations,
licenses, permits, copyrights, trade secrets, proprietary or confidential
information, inventions (whether or not patented or patentable), technical
information, procedures, designs, knowledge, know-how, software, data bases,
data, skill, expertise, experience, processes, models, drawings, materials and
records, goodwill (including the goodwill associated with any Trademark or
Trademark License), all rights and claims in or under insurance policies
(including insurance for fire, damage, loss and casualty, whether covering
personal property, real property, tangible rights or intangible rights, all
liability, life, key man and business interruption insurance, and all unearned
premiums), uncertificated securities, choses in action, deposit, checking and
other bank accounts, rights to receive tax refunds and other payments, rights of
indemnification, all books and records, correspondence, credit files, invoices
and other papers, including without limitation all tapes, cards, computer runs
and other papers and documents in the possession or under the control of such
Credit Party or any computer bureau or service company from time to time acting
for such Credit Party.
"Goods" means any "goods" as defined in the Code, now owned or
-----
hereafter acquired by any Person.
"Governmental Authority" means any nation or government, any
----------------------
state, province or other political subdivision thereof, and any agency,
department or other entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
"Guaranteed Indebtedness" shall mean, as to any Person, any
-----------------------
obligation of such Person guaranteeing any indebtedness, lease, dividend, or
other obligation ("primary obligation") of any other Person (the "primary
------------------ -------
obligor") in any manner, including any obligation or arrangement of such Person
-------
to (a) purchase or repurchase any such primary obligation, (b) advance or supply
funds (i) for the purchase or payment of any such primary obligation or (ii) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency or any balance sheet condition of the
primary obligor, (c) purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation, or (d) indemnify
the owner of such primary obligation against loss in respect thereof. The amount
of any Guaranteed Indebtedness at any time shall be deemed to be an amount equal
to the lesser at such time of (x) the stated or determinable amount of the
primary obligation in respect of which such Guaranteed Indebtedness is incurred
and (y) the maximum amount for which such Person may be liable pursuant to the
terms of the instrument embodying such Guaranteed Indebtedness, or, if not
stated or determinable, the maximum reasonably anticipated liability (assuming
full performance) in respect thereof.
A-14
"Guaranties" means, collectively, the Holdings Guaranty, the
----------
Subsidiary Guaranty and any other guaranty executed by any Guarantor in favor of
Agent and Lenders in respect of the Obligations.
"Guarantors" means Holdings, ICON of Canada, ICON New Brunswick,
----------
International Holdings, Universal, Free Motion, ICON IP, NordicTrack and
Jumpking and each other Person, if any, that executes a guaranty or other
similar agreement in favor of Agent in connection with the transactions
contemplated by the Agreement and the other Loan Documents.
"Hazardous Material" means any substance, material or waste that
------------------
is regulated by, or forms the basis of liability now or hereafter under, any
Environmental Laws, including any material or substance that is (a) defined as a
"hazardous waste," "hazardous material," "hazardous substance," "dangerous
good," "extremely hazardous waste," "restricted hazardous waste," "pollutant,"
"contaminant," "hazardous constituent," "special waste," "toxic substance" or
other similar term or phrase under any Environmental Laws, or (b) petroleum or
any fraction or by-product thereof, asbestos, polychlorinated biphenyls (PCB's),
or any radioactive substance.
"Holdings" has the meaning ascribed to it in the recitals to the
--------
Agreement.
"Holdings Guaranty" means the guaranty of even date herewith
-----------------
executed by Holdings in favor of Agent and Lenders.
"Holdings Pledge Agreement" means the Pledge Agreement of even
-------------------------
date herewith executed by Holdings in favor of Agent, on behalf of itself and
Lenders, pledging all of the Stock of Borrower.
"ICON IP" means ICON IP, Inc., a Delaware corporation.
-------
"ICON New Brunswick" means 510152 N.B. Ltd., a New Brunswick
------------------
corporation.
"ICON of Canada" means ICON of Canada Inc./ICON du Canada Inc., a
--------------
Quebec company.
"ICON of Canada Debenture" means the Debenture in the principal
------------------------
amount of C $600,000,000 issued by ICON of Canada to Agent pursuant to the ICON
of Canada Hypothec.
"ICON of Canada Hypothec" means the Deed of Hypothec entered into
-----------------------
by and between Agent and ICON of Canada.
"ICON of Canada Pledge Agreement" means the Pledge Agreement
-------------------------------
between ICON of Canada and Agent pursuant to which ICON of Canada pledges the
ICON of Canada Debenture to Agent and Lenders.
"Indebtedness" means, with respect to any Person, without
------------
duplication (a) all indebtedness of such Person for borrowed money or for the
deferred purchase price of property payment for which is deferred six (6) months
or more, but excluding obligations to trade creditors incurred in the ordinary
course of business that are not overdue by more than six (6) months unless being
contested in good faith, (b) all reimbursement and other obligations with
A-15
respect to letters of credit, bankers' acceptances and surety bonds, whether or
not matured, (c) all obligations evidenced by notes, bonds, debentures or
similar instruments, (d) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (e) all Capital Lease Obligations and the present
value (discounted at the Index Rate as in effect on the Closing Date) of future
rental payments under all synthetic leases, (f) all obligations of such Person
under commodity purchase or option agreements or other commodity price hedging
arrangements, in each case whether contingent or matured, (g) all net
obligations of such Person under any foreign exchange contract, currency swap
agreement, interest rate swap, cap or collar agreement or other similar
agreement or arrangement designed to alter the risks of that Person arising from
fluctuations in currency values or interest rates, in each case whether
contingent or matured, (h) all Indebtedness referred to above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon or in property or other assets
(including accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness,
and (i) the Obligations.
"Indemnified Liabilities" has the meaning ascribed to it in
-----------------------
Section 1.13.
------------
"Indemnified Person" has the meaning ascribed to it in Section
------------------ -------
1.13.
----
"Index Rate" means, for any day, a floating rate equal to the
----------
higher of (i) the rate publicly quoted from time to time by The Wall Street
---------------
Journal as the "base rate on corporate loans at large U.S. money center
-------
commercial banks" (or, if The Wall Street Journal ceases quoting a base rate of
-----------------------
the type described, the highest per annum rate of interest published by the
Federal Reserve Board in Federal Reserve statistical release H.15 (519) entitled
"Selected Interest Rates" as the Bank prime loan rate or its equivalent), and
(ii) the Federal Funds Rate plus fifty (50) basis points per annum. Each change
in any interest rate provided for in the Agreement based upon the Index Rate
shall take effect at the time of such change in the Index Rate.
"Index Rate Loan" means a Loan or portion thereof bearing
---------------
interest by reference to the Index Rate.
"Insolvency Laws" means any of the Bankruptcy Code, the
---------------
Bankruptcy and Insolvency Act (Canada) and the Companies' Creditors Arrangement
Act (Canada), each as now and hereafter in effect, any successors to such
statutes and any other applicable insolvency or other similar law of any
jurisdiction including, without limitation, any law of any jurisdiction
permitting a debtor to obtain a stay or a compromise of the claims of its
creditors against it.
"Instruments" means any "instrument," as such term is defined in
-----------
the Code, now owned or hereafter acquired by any Credit Party, wherever located,
and, in any event, including all certificated securities, all certificates of
deposit, and all notes and other, without limitation, evidences of indebtedness,
other than instruments that constitute, or are a part of a group of writings
that constitute, Chattel Paper.
A-16
"Intellectual Property" means any and all Licenses, Patents,
---------------------
Designs, Copyrights, Trademarks, and the goodwill associated with such
Trademarks.
"Intercompany Notes" has the meaning ascribed to it in Section
------------------ -------
6.3.
---
"International Holdings" means ICON International Holdings, Inc.,
----------------------
a Delaware corporation.
"International Pledge Agreement" means a Pledge Agreement dated
------------------------------
as of the Closing Date, pledging to the Agent for the benefit of the Lenders
100% of the stock of ICON of Canada and ICON New Brunswick and 65% of the stock
of all other Subsidiaries of International Holdings.
"Interest Expense" means, with respect to any Person for any
----------------
fiscal period, interest expense (whether cash or non-cash) of such Person
determined in accordance with GAAP for the relevant period ended on such date,
including interest expense with respect to any Funded Debt of such Person and
interest expense for the relevant period that has been capitalized on the
balance sheet of such Person.
"Interest Payment Date" means (a) as to any Index Rate Loan the
---------------------
first Business Day of each month to occur while such Loan is outstanding, and
(b) as to any LIBOR Loan, the last day of the applicable LIBOR Period; provided,
--------
that in the case of any LIBOR Period greater than three months in duration,
interest shall be payable at three month intervals and on the last day of such
LIBOR Period; and provided further that, in addition to the foregoing, each of
-------- -------
(x) the date upon which all of the Commitments have been terminated and the
Loans have been paid in full and (y) the Commitment Termination Date shall be
deemed to be an "Interest Payment Date" with respect to any interest that has
---------------------
then accrued under the Agreement.
"Intermediate Holdings" means ICON Fitness Corporation, a
---------------------
Delaware corporation.
"Inventory" means any "inventory," as such term is defined in the
---------
Code, now owned or hereafter acquired by any Credit Party, wherever located, and
in any event including inventory, merchandise, goods and other personal property
that are held by or on behalf of any Credit Party for sale or lease or are
furnished or are to be furnished under a contract of service, or that constitute
raw materials, work in process or materials used or consumed or to be used or
consumed in such Credit Party's business or in the processing, production,
packaging, promotion, delivery or shipping of the same, including other
supplies.
"Investment Property" means all "investment property" as such
-------------------
term is defined in Section 9-115 of the Code in those jurisdictions in which
such definition has been adopted now owned or hereafter acquired by any Credit
Party, wherever located, including (i) all securities, whether certificated or
uncertificated, including stocks, bonds, interests in limited liability
companies, partnership interests, treasuries, certificates of deposit, and
mutual fund shares; (ii) all securities entitlements of any Credit Party,
including the rights of such Credit Party to any securities account and the
financial assets held by a securities intermediary in such securities account
and any free credit balance or other money owing by any securities intermediary
with
A-17
respect to that account; (iii) all securities accounts of any Credit Party; (iv)
all commodity contracts of any Credit Party; and (v) all commodity accounts held
by any Credit Party.
"IRC" means the Internal Revenue Code of 1986, as amended, and
---
all regulations promulgated thereunder.
"IRS" means the Internal Revenue Service.
---
"ITA" means the Income Tax Act (Canada) as the same may, from
---
time to time, be in effect.
"Jumpking" means Jumpking, Inc., a Utah corporation.
--------
"L/C Issuer" has the meaning ascribed to it in Annex B.
---------- -------
"L/C Sublimit" has the meaning ascribed to in it Annex B.
------------ -------
"Lenders" means GE Capital and other Lenders named on the
-------
signature pages of the Agreement, and, if any such Lender shall decide to assign
all or any portion of the Obligations, such term shall include any assignee of
such Lender.
"Letter of Credit Fee" has the meaning ascribed to it in Annex B.
-------------------- -------
"Letter of Credit Obligations" means all outstanding obligations
----------------------------
incurred by Agent and Lenders at the request of Borrower, whether direct or
indirect, contingent or otherwise, due or not due, in connection with the
issuance of a reimbursement agreement or guaranty by Agent or purchase of a
participation as set forth in Annex B with respect to any Letter of Credit. The
-------
amount of such Letter of Credit Obligations shall equal the maximum amount that
may be payable by Agent or Lenders thereupon or pursuant thereto.
"Letter-of-Credit Rights" means letter-of-credit rights as such
-----------------------
term is defined in the Code, now owned or hereafter acquired by any Credit
Party, including rights to payment or performance under a letter of credit,
whether or not such Credit Party, as beneficiary, has demanded or is entitled to
demand payment or performance.
"Letters of Credit" means commercial or standby letters of credit
-----------------
issued for the account of Borrower by any L/C Issuer, and bankers' acceptances
issued by Borrower, for which Agent and Lenders have incurred Letter of Credit
Obligations.
"LIBOR Business Day" means a Business Day on which banks in the
------------------
City of London are generally open for interbank or foreign exchange
transactions.
"LIBOR Loan" means a Loan or any portion thereof bearing interest
----------
by reference to the LIBOR Rate.
"LIBOR Period" means, with respect to any LIBOR Loan, each period
------------
commencing on a LIBOR Business Day selected by Borrower pursuant to the
Agreement and ending one, two, three or six months thereafter, as selected by
Borrower's irrevocable notice to
A-18
Agent as set forth in Section 1.5(e); provided, that the foregoing provision
-------------- --------
relating to LIBOR Periods is subject to the following:
(a) if any LIBOR Period would otherwise end on a day that is not
a LIBOR Business Day, such LIBOR Period shall be extended to the next
succeeding LIBOR Business Day unless the result of such extension
would be to carry such LIBOR Period into another calendar month in
which event such LIBOR Period shall end on the immediately preceding
LIBOR Business Day;
(b) any LIBOR Period that would otherwise extend beyond the
Commitment Termination Date shall end two (2) LIBOR Business Days
prior to such date;
(c) any LIBOR Period that begins on the last LIBOR Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such LIBOR
Period) shall end on the last LIBOR Business Day of a calendar month;
(d) Borrower shall select LIBOR Periods so as not to require a
payment or prepayment of any LIBOR Loan during a LIBOR Period for such
Loan; and
(e) Borrower shall select LIBOR Periods so that there shall be
no more than seven (7) separate LIBOR Loans in existence at any one
time.
"LIBOR Rate" means for each LIBOR Period, a rate of interest
----------
determined by Agent equal to:
(a) the offered rate for deposits in United States Dollars for
the applicable LIBOR Period that appears on Telerate Page 3750 as of
11:00 a.m. (London time), on the second full LIBOR Business Day next
preceding the first day of such LIBOR Period (unless such date is not
a Business Day, in which event the next succeeding Business Day will
be used); divided by
(b) a number equal to 1.0 minus the aggregate (but without
-----
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day that is two (2) LIBOR Business Days
prior to the beginning of such LIBOR Period (including basic,
supplemental, marginal and emergency reserves under any regulations of
the Federal Reserve Board or other Governmental Authority having
jurisdiction with respect thereto, as now and from time to time in
effect) for Eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of such Board which are
required to be maintained by a member bank of the Federal Reserve
System.
If such interest rates shall cease to be available from Telerate
News Service, the LIBOR Rate shall be determined from such financial
reporting service or other information as shall be mutually acceptable
to Agent and Borrower.
"License" means any Copyright License, Patent License, Trademark
-------
License, Design License or other license of rights or interests now held or
hereafter acquired by any Credit Party.
A-19
"Lien" means any mortgage or deed of trust, pledge,
----
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, easement or encumbrance, or preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including any lease or title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement perfecting a security interest
under the Code or comparable law of any jurisdiction).
"Litigation" has the meaning ascribed to it in Section 3.13.
---------- ------------
"Loan Account" has the meaning ascribed to it in Section 1.12.
------------ ------------
"Loan Documents" means the Agreement, the Notes, the Collateral
--------------
Documents and all other agreements, instruments, documents and certificates
identified in the Closing Checklist executed and delivered to, or in favor of,
Agent or any Lenders and including all other pledges, powers of attorney,
consents, assignments, contracts, notices, and all other written matter whether
heretofore, now or hereafter executed by or on behalf of any Credit Party, or
any employee of any Credit Party, and delivered to Agent or any Lender in
connection with the Agreement or the transactions contemplated thereby. Any
reference in the Agreement or any other Loan Document to a Loan Document shall
include all appendices, exhibits or schedules thereto, and all amendments,
restatements, supplements or other modifications thereto, and shall refer to the
Agreement or such Loan Document as the same may be in effect at any and all
times such reference becomes operative.
"Loans" means the Revolving Loan, the Swing Line Loan, and the
-----
Term Loan.
"Lock Boxes" has the meaning ascribed to it in Annex C.
---------- -------
"Management Agreements" means each of the Management Agreements
---------------------
dated as of the September 24, 1999 among Borrower, Holdings, and each of Xxxxx
Xxxxxxxxx and Xxxx Xxxxxxxxx, the Management Agreement dated as of the September
24, 1999 among Borrower, Holdings and Xxxx Capital, Inc. and Section 7.1(b) of
Securities Purchase Agreement dated as of the September 24, 1999 between
Holdings and CS First Boston.
"Margin Stock" has the meaning ascribed to it in Section 3.10.
------------ ------------
"Material Adverse Effect" means a material adverse effect on (a)
-----------------------
the business, assets, operations or financial or other condition of the Credit
Parties considered as a whole, (b) Borrower's ability to pay any of the Loans or
any of the other Obligations in accordance with the terms of the Agreement, (c)
the Collateral or Agent's Liens, on behalf of itself and Lenders, on the
Collateral or the priority of such Liens, or (d) Agent's or any Lender's rights
and remedies under the Agreement and the other Loan Documents. Without limiting
the generality of the foregoing, any event or occurrence adverse to one or more
Credit Parties which results or could reasonably be expected to result in costs
and/or liabilities in excess of $5,000,000 shall constitute a Material Adverse
Effect.
A-20
"Maximum Amount" means, as of any date of determination, an
--------------
amount equal to the Revolving Loan Commitment of all Lenders as of that date.
"Maximum Lawful Rate" has the meaning ascribed to it in Section
------------------- -------
1.5(f).
------
"Mortgaged Properties" has the meaning assigned to it in Annex D.
-------------------- -------
"Mortgages" means each of the mortgages, deeds of trust,
---------
leasehold mortgages, leasehold deeds of trust, collateral assignments of leases
or other real estate security documents delivered by any Credit Party to Agent
on behalf of itself and Lenders with respect to the Mortgaged Properties, all in
form and substance satisfactory to Agent.
"Multiemployer Plan" means a "multiemployer plan" as defined in
------------------
Section 4001(a)(3) of ERISA, and to which any Credit Party or ERISA Affiliate is
making, is obligated to make or has made or been obligated to make,
contributions on behalf of participants who are or were employed by any of them.
"Net Borrowing Availability" means as of any date of
--------------------------
determination, the lesser of (i) the Maximum Amount and (ii) the Borrowing Base,
in each case less the sum of the Revolving Loan and Swing Line Loan then
----
outstanding.
"Non-Consenting Lender" has the meaning ascribed to it in Section
--------------------- -------
11.2(d).
-------
"Non-Funding Lender" has the meaning ascribed to it in Section
----------------- -------
9.9(a).
------
"NordicTrack" means NordicTrack, Inc., a Utah corporation.
-----------
"Notes" means the Revolving Notes and the Swing Line Note.
-----
"Notice of Conversion/Continuation" has the meaning ascribed to
---------------------------------
it in Section 1.5(e).
--------------
"Notice of Revolving Credit Advance" has the meaning ascribed to
----------------------------------
it in Section 1.1(a).
--------------
"Obligations" means all loans, advances, debts, liabilities and
-----------
obligations, for the performance of covenants, tasks or duties or for payment of
monetary amounts (whether or not such performance is then required or
contingent, or such amounts are liquidated or determinable) owing by any Credit
Party to Agent or any Lender, and all covenants and duties regarding such
amounts, of any kind or nature, present or future, whether or not evidenced by
any note, agreement or other instrument, arising under the Agreement or any of
the other Loan Documents. This term includes all principal, interest, hedging
obligations, cash management account obligations (including all interest that
accrues after the commencement of any case or proceeding by or against any
Credit Party in bankruptcy, whether or not allowed in such case of proceeding),
Fees, Charges, expenses, attorneys' fees and any other sum chargeable to any
Credit Party under the Agreement or any of the other Loan Documents.
A-21
"Old Holdcos" shall mean collectively IHF Capital, Inc., IHF Holdings,
-----------
Inc. and ICON Fitness Corporation, a Delaware corporation
"Original Credit Agreement" means that certain Credit Agreement dated
-------------------------
as of September 24, 1999 among Borrower, the other Credit Parties signatory
thereto, Agent, Fleet National Bank as a Lender and as Syndication Agent and the
other Lenders signatory thereto.
"Original Lenders" means collectively GE Capital and the lenders under
----------------
the Original Credit Agreement.
"Original Obligations" means the "Obligations" as defined in the
--------------------
Original Credit Agreement.
"Other Lender" has the meaning ascribed to it in Section 9.9(d).
------------ --------------
"Patent Security Agreements" means the Patent Security Agreements made
--------------------------
in favor of Agent, on behalf of itself and Lenders, by each applicable Credit
Party.
"Patent License" means rights under any written agreement now owned or
--------------
hereafter acquired by any Credit Party granting any right with respect to any
invention on which a Patent is in existence.
"Patents" means all of the following in which any Credit Party now
-------
holds or hereafter acquires any interest: (a) all letters patent of the United
States or any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or of any other country,
including registrations, recordings and applications in the United States Patent
and Trademark Office or in any similar office or agency of the United States,
any State or any other country, and (b) all reissues, continuations,
continuations-in-part or extensions thereof.
"PBGC" means the Pension Benefit Guaranty Corporation.
----
"Pension Plan" means a Plan described in Section 3(2) of ERISA.
------------
"Permitted Acquisition" means each Acquisition which satisfies the
---------------------
conditions set forth in Section 2.3.
-----------
"Permitted Encumbrances" means the following encumbrances: (a) Liens
----------------------
for taxes or assessments or other governmental Charges not yet due and payable
or which are being contested in accordance with Section 5.2(b); (b) pledges or
--------------
deposits of money securing statutory obligations under workmen's compensation,
unemployment insurance, social security or public liability laws or similar
legislation (excluding Liens under ERISA); (c) pledges or deposits of money
securing bids, tenders, contracts (other than contracts for the payment of
money) or leases to which any Credit Party is a party as lessee made in the
ordinary course of business; (d) inchoate and unperfected workers', mechanics'
or similar liens arising in the ordinary course of business, so long as such
Liens attach only to Equipment, Fixtures and/or Real Estate; (e) carriers',
warehousemen's or other similar possessory liens arising in the ordinary course
of business and securing liabilities in an outstanding aggregate amount not in
excess of $1,000,000 at any time, so long as such Liens attach only to
Inventory; (f) deposits securing, or in lieu of,
A-22
surety, appeal or customs bonds in proceedings to which any Credit Party is a
party; (g) any attachment or judgment lien not constituting an Event of Default
under Section 8.1(j); (h) zoning restrictions, easements, licenses, or other
--------------
restrictions on the use of any Real Estate or other minor irregularities in
title (including leasehold title) thereto, so long as the same do not materially
impair the use, value, or marketability of such Real Estate; (i) presently
existing or hereafter created Liens in favor of Agent, on behalf of Agent and
Lenders or in favor of Agent and Lenders, as applicable; (j) Liens expressly
permitted under clauses (b), (c) and (d) of Section 6.7 of the Agreement; and
------------------------ -----------
(k) to the extent not included in clauses (a), (d) or (e) of this definition,
-----------------------
Prior Claims that are unregistered and that secure amounts that are not yet due
and payable.
"Person" means any individual, sole proprietorship, partnership, joint
------
venture, trust, unincorporated organization, association, corporation, limited
liability company, institution, public benefit corporation, other entity or
government (whether federal, state, county, city, municipal, local, foreign, or
otherwise, including any instrumentality, division, agency, body or department
thereof).
"Plan" means, at any time, an "employee benefit plan," as defined in
----
Section 3(3) of ERISA, that any Credit Party or ERISA Affiliate maintains,
contributes to or has an obligation to contribute to on behalf of participants
who are or were employed by any Credit Party.
"Pledge Agreements" means the Borrower Pledge Agreement, the Holdings
-----------------
Pledge Agreement, International Pledge Agreement and any other pledge agreement
entered into after the Closing Date by any Credit Party (as required by the
Agreement or any other Loan Document).
"Prior Claims" means all Liens created by applicable law (in contrast
------------
with Liens voluntarily granted) which rank or are capable of ranking prior or
pari passu with Agent's security interests or Agent's and Lenders' hypothecs (or
the applicable equivalent of such Liens), as applicable, against all or part of
the Collateral, including for amounts owing for wages, employee deductions,
goods and services taxes, sales taxes, income taxes, employer health taxes,
municipal taxes, workers' compensation, pension fund obligations and overdue
rents.
"Proceeds" means "proceeds," as such term is defined in the Code and,
--------
in any event, shall include (a) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to any Credit Party from time to time
with respect to any of the Collateral, (b) any and all payments (in any form
whatsoever) made or due and payable to any Credit Party from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any Governmental Authority
(or any Person acting under color of governmental authority), (c) any claim of
any Credit Party against third parties (i) for past, present or future
infringement of any Patent or Patent License, or (ii) for past, present or
future infringement or dilution of any Copyright, Copyright License, Trademark
or Trademark License, or for injury to the goodwill associated with any
Trademark or Trademark License, (d) any recoveries by any Credit Party against
third parties with respect to any litigation or dispute concerning any of the
Collateral, (e) dividends, interest and distributions with respect to Investment
Property, and (f) any and all other amounts from time to time paid or payable
under or in connection with any of the Collateral, upon disposition or
otherwise.
A-23
"Pro Forma" means the unaudited consolidated and consolidating balance
---------
sheet of Borrower and its Subsidiaries as of March 2, 2002 after giving pro
forma effect to the Related Transactions.
"Pro Rata Share" means with respect to all matters relating to any
--------------
Lender (a) with respect to the Revolving Loan (including the Swing Line Loan as
a subset of the Swing Line Lender's Revolving Loan), the percentage obtained by
dividing (i) the Revolving Loan Commitment (including the Swing Line Commitment
as a subset of the Swing Line Lender's Revolving Loan Commitment) of that Lender
by (ii) the aggregate Revolving Loan Commitments of all Lenders, (b) with
respect to the Term Loan, the percentage obtained by dividing (i) the Term Loan
Commitment of each Term Lender by (ii) the aggregate Term Loan Commitment of all
Term Lenders, as any such percentages may be adjusted by assignments permitted
by Section 9.1.
-----------
"Projections" means Borrower's forecasted consolidated and
-----------
consolidating: (a) balance sheets; (b) profit and loss statements; and (c) cash
flow statements, all prepared on a Subsidiary by Subsidiary or
division-by-division basis, if applicable, and otherwise consistent with the
historical Financial Statements of Borrower, together with appropriate
supporting details and a statement of underlying assumptions.
"Proposed Change" has the meaning ascribed to it in Section 11.2(d).
--------------- ---------------
"Public Offering" means a firm underwritten public offering of common
---------------
stock registered on form X-0, X-0 or S-3 under the Securities Act of 1933, as
amended, by a nationally recognized investment banking firm and after giving
effect to which the issuer shall be qualified for listing on the NASDAQ National
Market, the American Stock Exchange or the New York Stock Exchange.
"Qualified Assignee" means (i) (a) any Lender, any Affiliate of any
------------------
Lender and, with respect to any Lender that is an investment fund that invests
in commercial loans, any other investment fund that invests in commercial loans
and that is managed or advised by the same investment advisor as such Lender or
by an Affiliate of such investment advisor, and (b) any commercial bank, savings
and loan association or savings bank or any other entity which is an "accredited
investor" (as defined in Regulation D under the Securities Act) which extends
credit or buys loans as one of its businesses, including insurance companies,
mutual funds, lease financing companies and commercial finance companies; and
(ii) in addition to the criteria set forth in the foregoing clause (i), any such
----------
Assignee shall be a Person which has and maintains a rating of BBB or higher
from S&P and a rating of Baa2 or higher from Xxxxx'x and which, through its
applicable lending office, is capable of lending to Borrower without the
imposition of any withholding or similar taxes; provided that (a) no Affiliate
--------
of any Credit Party, (b) no Person determined by Agent to be acting in the
capacity of a vulture fund and (c) no Person who holds Subordinated Debt or is
an Affiliate of a holder of Subordinated Debt shall be a Qualified Assignee.
"Qualified Plan" means a Pension Plan that is intended to be
--------------
tax-qualified under Section 401(a) of the IRC.
A-24
"Real Estate" has the meaning ascribed to it in Section 3.6.
-----------
"Refinancing" means the repayment in full of the Original Obligations.
-----------
"Refunded Swing Line Loan" has the meaning ascribed to it in Section
------------------------v -------
1.1(c).
------
"Related Person" has the meaning ascribed to it in Annex C.
-------------- -------
"Related Transactions" means the initial borrowing under the Revolving
--------------------
Loan and the Term Loan on the Closing Date, the Refinancing, the issuance of the
Subordinated Debt and the payment of all fees, costs and expenses associated
with all of the foregoing and the execution and delivery of all of the Related
Transactions Documents.
"Related Transactions Documents" means the Loan Documents and the
------------------------------
Subordinated Debt Documents.
"Relationship Bank" has the meaning ascribed to it in Annex C.
----------------- -------
"Release" means any release, threatened release, spill, emission,
-------
leaking, pumping, pouring, emitting, emptying, escape, injection, deposit,
disposal, discharge, dispersal, dumping, leaching or migration of Hazardous
Material in the indoor or outdoor environment, including the movement of
Hazardous Material through or in the air, soil, surface water, ground water or
property.
"Replacement Lender" has the meaning ascribed to it in Section
------------------ -------
1.16(d).
-------
"Requisite Lenders" means Lenders having (a) more than sixty-six and
-----------------
two-thirds percent (66 2/3%) of the Commitments of all Lenders, or (b) if the
Commitments have been terminated, more than sixty-six and two-thirds percent (66
2/3%) of the aggregate outstanding amount of the Loans.
"Requisite Revolving Lenders" means Lenders having (a) more than
---------------------------
sixty-six and two-thirds percent (66 2/3%) of the Revolving Loan Commitments of
all Lenders, or (b) if the Revolving Loan Commitments have been terminated, more
than sixty-six and two-thirds percent (66 2/3%) of the aggregate outstanding
amount of the Revolving Loan.
"Reserves" means, with respect to the Borrowing Base (a) reserves
--------
established by Agent from time to time against Eligible Inventory pursuant to
Section 5.10, (b) reserves established pursuant to Section 5.4(c), and (c) such
------------ --------------
other reserves (including in respect of Prior Claims) against Eligible Accounts,
Eligible Inventory or Borrowing Availability that Agent may, in its reasonable
credit judgment, establish from time to time. Without limiting the generality of
the foregoing, Reserves established to ensure the payment of accrued Interest
Expenses, Indebtedness or Prior Claims shall be deemed to be a reasonable
exercise of Agent's credit judgment.
"Restricted Payment" means, with respect to any Credit Party (a) the
------------------
declaration or payment of any dividend or the incurrence of any liability to
make any other payment or distribution of cash or other property or assets in
respect of Stock; (b) any payment on account of
A-25
the purchase, redemption, defeasance, sinking fund or other retirement of such
Credit Party's Stock or any other payment or distribution made in respect
thereof, either directly or indirectly; (c) any payment or prepayment of
principal of, premium, if any, or interest, fees or other charges on or with
respect to, and any redemption, purchase, retirement, defeasance, sinking fund
or similar payment and any claim for rescission with respect to, any
Subordinated Debt; (d) any payment made to redeem, purchase, repurchase or
retire, or to obtain the surrender of, any outstanding warrants, options or
other rights to acquire Stock of such Credit Party now or hereafter outstanding;
(e) any payment of a claim for the rescission of the purchase or sale of, or for
material damages arising from the purchase or sale of, any shares of such Credit
Party's Stock or of a claim for reimbursement, indemnification or contribution
arising out of or related to any such claim for damages or rescission; (f) any
payment, loan, contribution, or other transfer of funds or other property to any
Stockholder of such Credit Party other than payment of compensation in the
ordinary course to stockholders who are employees of such Credit Party; and (g)
any payment of management fees (or other fees of a similar nature) by such
Credit Party to any Stockholder of such Credit Party or its Affiliates.
"Retiree Welfare Plan" means, at any time, a Welfare Plan that
--------------------
provides for continuing coverage or benefits for any participant or any
beneficiary of a participant after such participant's termination of employment,
other than continuation coverage provided pursuant to Section 4980B of the IRC
and at the sole expense of the participant or the beneficiary of the
participant.
"Revolving Credit Advance" has the meaning ascribed to it in Section
------------------------
1.1(a).
"Revolving Lenders" means, as of any date of determination, Lenders
-----------------
having a Revolving Loan Commitment.
"Revolving Loan" means, at any time, the sum of (i) the aggregate
--------------
amount of Revolving Credit Advances outstanding to Borrower plus (ii) the
----
aggregate Letter of Credit Obligations incurred on behalf of Borrower. Unless
the context otherwise requires, references to the outstanding principal balance
of the Revolving Loan shall include the outstanding balance of Letter of Credit
Obligations.
"Revolving Loan Commitment" means (a) as to any Revolving Lender, the
-------------------------
aggregate commitment of such Revolving Lender to make Revolving Credit Advances
(including without duplication Swing Line Advances as a subset of the Swing Line
Lender's Revolving Loan Commitment) or incur Letter of Credit Obligations as set
forth on Annex J to the Agreement or in the most recent Assignment Agreement
-------
executed by such Revolving Lender and (b) as to all Revolving Lenders, the
aggregate commitment of all Revolving Lenders to make Revolving Credit Advances
(including without duplication Swing Line Advances as a subset of the Swing Line
Lender's Revolving Loan Commitment) or incur Letter of Credit Obligations, which
aggregate commitment shall be Two Hundred Ten Million Dollars ($210,000,000) on
the Closing Date, as such amount may be adjusted, if at all, from time to time
in accordance with the Agreement.
"Revolving Note" has the meaning ascribed to it in Section 1.1(a).
-------------- --------------
A-26
"Security Agreement" means the Security Agreement of even date
------------------
herewith entered into by and among Agent, on behalf of itself and Lenders, and
each Credit Party that is a signatory thereto.
"Settlement Date" has the meaning ascribed to it in Section 9.9(a).
--------------- --------------
"Software" means all "software" as such term is defined in the Code,
--------
now owned or hereafter acquired by any Credit Party, other than software
embedded in any category of goods, including all computer programs and all
supporting information provided in connection with a transaction related to any
program.
"Solvent" means (i) with respect to any Person on a particular date
-------
that is subject to Insolvency Laws of the United States of America, that on such
date (a) the fair value of the property of such Person is greater than the total
amount of liabilities, including contingent liabilities, of such Person; (b) the
present fair salable value of the assets of such Person is not less than the
amount that will be required to pay the probable liability of such Person on its
debts as they become absolute and matured; (c) such Person does not intend to,
and does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature; and (d) such
Person is not engaged in a business or transaction, and is not about to engage
in a business or transaction, for which such Person's property would constitute
an unreasonably small capital and (ii) with respect to any Person on a
particular date that is subject to Insolvency Laws of Canada, that on such date
(a) the property of such Person is sufficient, if disposed of at a fairly
conducted sale under legal process, to enable payment of all its obligations,
due and accruing due, (b) the property of such Person is, at a fair valuation,
greater than the total amount of liabilities, including contingent liabilities,
of such Person; (c) such Person has not ceased paying its current obligations in
the ordinary course of business as they generally become due. The amount of
contingent liabilities (such as litigation, guaranties and pension plan
liabilities) at any time shall be computed as the amount that, in light of all
the facts and circumstances existing at the time, represents the amount that can
be reasonably be expected to become an actual or matured liability.
"Stock" means all shares, options, warrants, general or limited
-----
partnership interests, membership interests or other equivalents (regardless of
how designated) of or in a corporation, partnership, limited liability company
or equivalent entity whether voting or nonvoting, including common stock,
preferred stock or any other "equity security" (as such term is defined in Rule
3a11-1 of the General Rules and Regulations promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934).
"Stockholder" means, with respect to any Person, each holder of Stock
-----------
of such Person.
"Stockholders Agreement" means the certain Stockholders Agreement
----------------------
among the stockholders of Holdings dated as of September 24, 1999.
"Subordinated Debt" means the Indebtedness of Borrower evidenced by
-----------------
the Subordinated Notes and any other Indebtedness of any Credit Party
subordinated to the
A-27
Obligations in a manner and form satisfactory to Agent and Lenders in their sole
discretion, as to right and time of payment and as to any other rights and
remedies thereunder.
"Subordinated Debt Documents" means the Subordinated Notes and the
---------------------------
Indenture between Borrower and The Bank of New York dated as of April 9, 2002,
as from time to time amended.
"Subordinated Notes" means those certain 11.25% unsecured Subordinated
------------------
Notes due 2012 issued by Borrower in an aggregate original principal amount of
$155,000,000.
"Subsidiary" means, with respect to any Person, (a) any corporation of
----------
which an aggregate of more than fifty percent (50%) of the outstanding Stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, Stock of any other class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time, directly or indirectly,
owned legally or beneficially by such Person or one or more Subsidiaries of such
Person, or with respect to which any such Person has the right to vote or
designate the vote of fifty percent (50%) or more of such Stock whether by
proxy, agreement, operation of law or otherwise, and (b) any partnership or
limited liability company in which such Person and/or one or more Subsidiaries
of such Person shall have an interest (whether in the form of voting or
participation in profits or capital contribution) of more than fifty percent
(50%) or of which any such Person is a general partner or may exercise the
powers of a general partner. Unless the context otherwise requires, each
reference to a Subsidiary shall be a reference to a Subsidiary of the Borrower.
"Subsidiary Guarantor" means a domestic or Canadian Subsidiary of
--------------------
Borrower (a) that is a Guarantor under this Agreement, (b) that has granted
Agent for the benefit of Lenders a security interest in all or substantially all
of its assets and (c) 100% of the issued and outstanding Stock of which has been
pledged to Agent for the benefit of Lenders.
"Subsidiary Guaranty" the guaranty of even date herewith executed by
-------------------
International Holdings, Universal, Free Motion, ICON IP, NordicTrack and
Jumpking in favor of Agent and Lenders.
"Supporting Obligations" means all supporting obligations as such term
----------------------
is defined in the Code, including letters of credit and guaranties issued in
support of Accounts, Chattel Paper, Documents, General Intangibles, Instruments,
or Investment Property.
"Swing Line Advance" has the meaning ascribed to it in Section 1.1(c).
------------------ --------------
"Swing Line Availability" has the meaning ascribed to it in Section
----------------------- -------
1.1(c).
------
"Swing Line Commitment" means, as to the Swing Line Lender, the
---------------------
commitment of the Swing Line Lender to make Swing Line Advances as set forth on
Annex J to the Agreement, which commitment constitutes a subfacility of the
-------
Revolving Loan Commitment of the Swing Line Lender.
"Swing Line Lender" means GE Capital.
-----------------
A-28
"Swing Line Loan" means at any time, the aggregate amount of Swing
---------------
Line Advances outstanding to Borrower.
"Swing Line Note" has the meaning ascribed to it in Section 1.1(c).
--------------- --------------
"Target" has the meaning ascribed to it in Section 2.3.
------ -----------
"Taxes" means taxes, levies, imposts, deductions, Charges and
-----
withholdings, and all liabilities with respect thereto, excluding taxes imposed
on or measured by the net income of Agent or a Lender by the jurisdictions under
the laws of which Agent and Lenders are organized or any political subdivision
thereof.
"Term Lenders" means those Lenders having a Term Loan Commitment.
------------
"Term Loan" shall have the meaning assigned to it in Section
--------- -------
1.1(b)(i).
---------
"Term Loan Commitment" means (a) as to any Lender with a Term Loan
--------------------
Commitment, the commitment of such Lender to make its Pro Rata Share of the Term
Loan as set forth on Annex J to the Agreement or in the most recent Assignment
-------
Agreement executed by such Lender, and (b) as to all Lenders with a Term Loan
Commitment, the aggregate commitment of all Lenders to make the Term Loan, which
aggregate commitment shall be Twenty-Five Million Dollars ($25,000,000) on the
Closing Date. After advancing the Term Loan, each reference to a Lender's Term
Loan Commitment shall refer to that Lender's Pro Rata Share of the outstanding
Term Loan.
"Term Note" has the meaning assigned to it in Section 1.1(b)(i).
--------- -----------------
"Termination Date" means the date on which (a) the Loans have been
----------------
indefeasibly repaid in full, (b) all other Obligations under the Agreement and
the other Loan Documents have been completely discharged, (c) all Letter of
Credit Obligations have been cash collateralized, cancelled or backed by
stand-by letters of credit in accordance with Annex B, and (d) Borrower shall
-------
not have any further right to borrow any monies under the Agreement.
"Title IV Plan" means a Pension Plan (other than a Multiemployer
-------------
Plan), that is covered by Title IV of ERISA, and that any Credit Party or ERISA
Affiliate maintains, contributes to or has an obligation to contribute to on
behalf of participants who are or were employed by any of them.
"Trademark Security Agreements" means the Trademark Security
-----------------------------
Agreements made in favor of Agent, on behalf of Lenders, by each applicable
Credit Party.
"Trademark License" means rights under any written agreement now owned
-----------------
or hereafter acquired by any Credit Party granting any right to use any
Trademark.
"Trademarks" means all of the following now owned or hereafter adopted
----------
or acquired by any Credit Party: (a) all trademarks, trade names, corporate
names, business names, trade styles, service marks, logos, other source or
business identifiers, prints and labels on which any of the foregoing have
appeared or appear, designs and general intangibles of like nature
A-29
(whether registered or unregistered), all registrations and recordings thereof,
and all applications in connection therewith, including registrations,
recordings and applications in the United States Patent and Trademark Office or
in any similar office or agency of the United States, any state or territory
thereof, or any other country or any political subdivision thereof; (b) all
reissues, extensions or renewals thereof; and (c) all goodwill associated with
or symbolized by any of the foregoing.
"Unfunded Pension Liability" means, at any time, the aggregate amount,
--------------------------
if any, of the sum of (a) the amount by which the present value of all accrued
benefits under each Title IV Plan exceeds the fair market value of all assets of
such Title IV Plan allocable to such benefits in accordance with Title IV of
ERISA, all determined as of the most recent valuation date for each such Title
IV Plan using the actuarial assumptions for funding purposes in effect under
such Title IV Plan, and (b) for a period of five (5) years following a
transaction which might reasonably be expected to be covered by Section 4069 of
ERISA, the liabilities (whether or not accrued) that could be avoided by any
Credit Party or any ERISA Affiliate as a result of such transaction.
"Uniform Commercial Code jurisdiction" means any jurisdiction that had
------------------------------------
adopted all or substantially all of Article 9 as contained in the 2000 Official
Text of the Uniform Commercial Code, as recommended by the National Conference
of Commissioners on Uniform State Laws and the American Law Institute, together
with any subsequent amendments or modifications to the Official Text.
"Universal" means Universal Technical Services, a Utah corporation.
---------
"Versalite" means Versalite Systems Co., Ltd., a British Virgin
---------
Islands company.
"Welfare Plan" means a Plan described in Section 3(i) of ERISA.
------------
"Working Capital" means the average of Borrower's Current Assets less
---------------
Current Liabilities for the first three months of each Fiscal Year compared to
the average of Borrower's Current Assets less Current Liabilities for the last
----
three months of such Fiscal Year.
Rules of construction with respect to accounting terms used in the
Agreement or the other Loan Documents shall be as set forth in Annex G. All
other undefined terms contained in any of the Loan Documents shall, unless the
context indicates otherwise, have the meanings provided for by the Code as in
effect in the State of Illinois to the extent the same are used or defined
therein. Unless otherwise specified, references in the Agreement or any of the
Appendices to a Section, subsection or clause refer to such Section, subsection
or clause as contained in the Agreement. The words "herein," "hereof" and
"hereunder" and other words of similar import refer to the Agreement as a whole,
including all Annexes, Exhibits and Schedules, as the same may from time to time
be amended, restated, modified or supplemented, and not to any particular
section, subsection or clause contained in the Agreement or any such Annex,
Exhibit or Schedule.
Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, feminine and neuter genders. The words
A-30
"including," "includes" and "include" shall be deemed to be followed by the
words "without limitation"; the word "or" is not exclusive; references to
Persons include their respective successors and assigns (to the extent and only
to the extent permitted by the Loan Documents) or, in the case of governmental
Persons, Persons succeeding to the relevant functions of such Persons; and all
references to statutes and related regulations shall include any amendments of
the same and any successor statutes and regulations. Whenever any provision in
any Loan Document refers to the knowledge (or an analogous phrase) of any Credit
Party, such words are intended to signify that such Credit Party has actual
knowledge or awareness of a particular fact or circumstance or that such Credit
Party, if it had exercised reasonable diligence, would have known or been aware
of such fact or circumstance.
A-31
ANNEX B (Section 1.2)
-----------
to
CREDIT AGREEMENT
----------------
LETTERS OF CREDIT
-----------------
(a) Issuance. Subject to the terms and conditions of the Agreement,
--------
Agent and Revolving Lenders agree to incur, from time to time prior to the
Commitment Termination Date, upon the request of Borrower and for Borrower's
account, Letter of Credit Obligations by causing Letters of Credit to be issued
(by a bank or other legally authorized Person selected by or acceptable to Agent
in its sole discretion (each, an "L/C Issuer")) for Borrower's account and
----------
guaranteed by Agent; provided, that if the L/C Issuer is a Revolving Lender,
--------
then such Letters of Credit shall not be guaranteed by Agent but rather each
Revolving Lender shall, subject to the terms and conditions hereinafter set
forth, purchase (or be deemed to have purchased) risk participations in all such
Letters of Credit issued with the written consent of Agent, as more fully
described in paragraph (b)(ii) below. The aggregate amount of all such Letter of
Credit Obligations shall not at any time exceed the least of (i) Ten Million
Dollars ($10,000,000) (the "L/C Sublimit"), (ii) the Maximum Amount less the
------------ ----
aggregate outstanding principal balance of the Revolving Credit Advances and the
Swing Line Loan, and (iii) the Borrowing Base less the aggregate outstanding
----
principal balance of the Revolving Credit Advances and the Swing Line Loan. No
such Letter of Credit shall have an expiry date that is more than one year
following the date of issuance thereof, and neither Agent nor Revolving Lenders
shall be under any obligation to incur Letter of Credit Obligations in respect
of, or purchase risk participations in, any Letter of Credit having an expiry
date that is later than the Commitment Termination Date.
(b) (i) Advances Automatic; Participations. In the event that Agent
----------------------------------
or any Revolving Lender shall make any payment on or pursuant to any Letter of
Credit Obligation, such payment shall then be deemed automatically to constitute
a Revolving Credit Advance under Section 1.1(a) of the Agreement regardless of
--------------
whether a Default or Event of Default has occurred and is continuing and
notwithstanding Borrower's failure to satisfy the conditions precedent set forth
in Section 2, and each Revolving Lender shall be obligated to pay its Pro Rata
---------
Share thereof in accordance with the Agreement. The failure of any Revolving
Lender to make available to Agent for Agent's own account its Pro Rata Share of
any such Revolving Credit Advance or payment by Agent under or in respect of a
Letter of Credit shall not relieve any other Revolving Lender of its obligation
hereunder to make available to Agent its Pro Rata Share thereof, but no
Revolving Lender shall be responsible for the failure of any other Revolving
Lender to make available such other Revolving Lender's Pro Rata Share of any
such payment.
(ii) If it shall be illegal or unlawful for Borrower to incur
Revolving Credit Advances as contemplated by paragraph (b)(i) above because of
an Event of Default described in Sections 8.1(h) or (i) or otherwise or if it
---------------
shall be illegal or unlawful for any Revolving Lender to be deemed to have
assumed a ratable share of the reimbursement obligations owed to an L/C Issuer,
or if the L/C Issuer is a Revolving Lender, then (i) immediately and without
further action whatsoever, each Revolving Lender shall be deemed to have
irrevocably and unconditionally purchased from Agent (or such L/C Issuer, as the
case may be) an undivided interest and participation equal to such Revolving
Lender's Pro Rata Share
B-1
(based on the Revolving Loan Commitments) of the Letter of Credit Obligations in
respect of all Letters of Credit then outstanding and (ii) thereafter,
immediately upon issuance of any Letter of Credit, each Revolving Lender shall
be deemed to have irrevocably and unconditionally purchased from Agent (or such
L/C Issuer, as the case may be) an undivided interest and participation in such
Revolving Lender's Pro Rata Share (based on the Revolving Loan Commitments) of
the Letter of Credit Obligations with respect to such Letter of Credit on the
date of such issuance. Each Revolving Lender shall fund its participation in all
payments or disbursements made under the Letters of Credit in the same manner as
provided in the Agreement with respect to Revolving Credit Advances.
(c) Cash Collateral. (i) If Borrower is required to provide cash
---------------
collateral for any Letter of Credit Obligations pursuant to the Agreement prior
to the Commitment Termination Date, Borrower will pay to Agent for the ratable
benefit of itself and Revolving Lenders cash or cash equivalents acceptable to
Agent ("Cash Equivalents") in an amount equal to 105% of the maximum amount then
----------------
available to be drawn under each applicable Letter of Credit outstanding. Such
funds or Cash Equivalents shall be held by Agent in a cash collateral account
(the "Cash Collateral Account") maintained at a bank or financial institution
-----------------------
acceptable to Agent. The Cash Collateral Account shall be in the name of
Borrower and shall be pledged to, and subject to the control of, Agent, for the
benefit of Agent and Lenders, in a manner satisfactory to Agent. Borrower hereby
pledges and grants to Agent, on behalf of itself and Lenders, a security
interest in all such funds and Cash Equivalents held in the Cash Collateral
Account from time to time and all proceeds thereof, as security for the payment
of all amounts due in respect of the Letter of Credit Obligations and other
Obligations, whether or not then due. The Agreement, including this Annex B,
-------
shall constitute a security agreement under applicable law.
(ii) If any Letter of Credit Obligations, whether or not then due and
payable, shall for any reason be outstanding on the Commitment Termination Date,
Borrower shall either (A) provide cash collateral therefor in the manner
described above, or (B) cause all such Letters of Credit and guaranties thereof
to be canceled and returned, or (C) deliver a stand-by letter (or letters) of
credit in guarantee of such Letter of Credit Obligations, which stand-by letter
(or letters) of credit shall be of like tenor and duration (plus thirty (30)
additional days) as, and in an amount equal to 105% of the aggregate maximum
amount then available to be drawn under, the Letters of Credit to which such
outstanding Letter of Credit Obligations relate and shall be issued by a Person,
and shall be subject to such terms and conditions, as are satisfactory to Agent
in its sole discretion.
(iii) From time to time after funds are deposited in the Cash
Collateral Account by Borrower, whether before or after the Commitment
Termination Date, Agent may apply such funds or Cash Equivalents then held in
the Cash Collateral Account to the payment of any amounts, and in such order as
Agent may elect, as shall be or shall become due and payable by Borrower to
Agent and Lenders with respect to such Letter of Credit Obligations of Borrower
and, upon the satisfaction in full of all Letter of Credit Obligations of
Borrower, to any other Obligations then due and payable.
Neither Borrower nor any Person claiming on behalf of or through
Borrower shall have any right to withdraw any of the funds or Cash Equivalents
held in the Cash Collateral
B-2
Account, except that upon the termination of all Letter of Credit Obligations
and the payment of all amounts payable by Borrower to Agent and Lenders in
respect thereof, any funds remaining in the Cash Collateral Account shall be
applied to other Obligations then due and owing and upon payment in full of such
Obligations, any remaining amount shall be paid to Borrower or as otherwise
required by law.
(d) Fees and Expenses. Borrower agrees to pay to Agent for the
-----------------
benefit of Revolving Lenders, as compensation to such Lenders for Letter of
Credit Obligations incurred hereunder, (x) all costs and expenses incurred by
Agent or any Lender on account of such Letter of Credit Obligations, and (y) for
each month during which any Letter of Credit Obligation shall remain
outstanding, a fee (the "Letter of Credit Fee") in an amount equal to the
--------------------
Applicable L/C Margin from time to time in effect multiplied by the maximum
amount available from time to time to be drawn under the applicable Letter of
Credit. Such fee shall be paid to Agent for the benefit of the Revolving Lenders
in arrears, on the first day of each month and on the Commitment Termination
Date. In addition, Borrower shall pay to any L/C Issuer, on demand, such fees
(including all per annum fees), charges and expenses of such L/C Issuer in
respect of the issuance, negotiation, acceptance, amendment, transfer and
payment of such Letter of Credit or otherwise payable pursuant to the
application and related documentation under which such Letter of Credit is
issued.
(e) Request for Incurrence of Letter of Credit Obligations. Borrower
------------------------------------------------------
shall give Agent at least two (2) Business Days' prior written notice requesting
the incurrence of any Letter of Credit Obligation, specifying the date such
Letter of Credit Obligation is to be incurred, identifying the beneficiary to
which such Letter of Credit Obligation relates and describing the nature of the
transactions proposed to be supported thereby. The notice shall be accompanied
by the form of the Letter of Credit (which shall be acceptable to the L/C
Issuer) to be guaranteed and, to the extent not previously delivered to Agent,
copies of all agreements between Borrower and the L/C Issuer pertaining to the
issuance of Letters of Credit. Notwithstanding anything contained herein to the
contrary, Letter of Credit applications by Borrower and approvals by Agent and
the L/C Issuer may be made and transmitted pursuant to electronic codes and
security measures mutually agreed upon and established by and among Borrower,
Agent and the L/C Issuer.
(f) Obligation Absolute. The obligation of Borrower to reimburse
-------------------
Agent and Revolving Lenders for payments made with respect to any Letter of
Credit Obligation shall be absolute, unconditional and irrevocable, without
necessity of presentment, demand, protest or other formalities, and the
obligations of each Revolving Lender to make payments to Agent with respect to
Letters of Credit shall be unconditional and irrevocable. Such obligations of
Borrower and Revolving Lenders shall be paid strictly in accordance with the
terms hereof under all circumstances including the following:
(i) any lack of validity or enforceability of any Letter of Credit or
the Agreement or the other Loan Documents or any other agreement;
(ii) the existence of any claim, setoff, defense or other right that
Borrower or any of its Affiliates or any Lender may at any time have
against a beneficiary or any transferee of any Letter of Credit (or any
Persons or entities for whom any such
B-3
transferee may be acting), Agent, any Lender, or any other Person, whether
in connection with the Agreement, the Letter of Credit, the transactions
contemplated herein or therein or any unrelated transaction (including any
underlying transaction between Borrower or any of its Affiliates and the
beneficiary for which the Letter of Credit was procured);
(iii) any draft, demand, certificate or any other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) payment by Agent (except as otherwise expressly provided in
paragraph (g)(ii)(C) below) or any L/C Issuer under any Letter of Credit or
guaranty thereof against presentation of a demand, draft or certificate or
other document that does not comply with the terms of such Letter of Credit
or such guaranty;
(v) any other circumstance or event whatsoever, that is similar to
any of the foregoing; or
(vi) the fact that a Default or an Event of Default has occurred and
is continuing.
(g) Indemnification; Nature of Lenders' Duties. (i) In addition to
------------------------------------------
amounts payable as elsewhere provided in the Agreement, Borrower hereby agrees
to pay and to protect, indemnify, and save harmless Agent and each Lender from
and against any and all claims, demands, liabilities, damages, losses, costs,
charges and expenses (including attorneys' fees and allocated costs of internal
counsel) that Agent or any Lender may incur or be subject to as a consequence,
direct or indirect, of (A) the issuance of any Letter of Credit or guaranty
thereof, or (B) the failure of Agent or any Lender seeking indemnification or of
any L/C Issuer to honor a demand for payment under any Letter of Credit or
guaranty thereof as a result of any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto government or
Governmental Authority, in each case other than to the extent solely as a result
of the gross negligence or willful misconduct of Agent or such Lender (as
finally determined by a court of competent jurisdiction).
(ii) As between Agent and any Lender and Borrower, Borrower assumes
all risks of the acts and omissions of, or misuse of any Letter of Credit by
beneficiaries of any Letter of Credit. In furtherance and not in limitation of
the foregoing, to the fullest extent permitted by law neither Agent nor any
Lender shall be responsible for: (A) the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document issued by any party in connection
with the application for and issuance of any Letter of Credit, even if it should
in fact prove to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged; (B) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any Letter of
Credit or the rights or benefits thereunder or proceeds thereof, in whole or in
part, that may prove to be invalid or ineffective for any reason; (C) failure of
the beneficiary of any Letter of Credit to comply fully with conditions required
in order to demand payment under such Letter of Credit; provided, that in the
--------
case of any payment by L/C Issuer under any Letter of Credit or guaranty
thereof, L/C Issuer shall be liable to the extent such payment was made
primarily as a result of its gross negligence or willful misconduct in
determining that the demand for payment under
B-4
such Letter of Credit or guaranty thereof complies on its face with any
applicable requirements for a demand for payment under such Letter of Credit or
guaranty thereof; (D) errors, omissions, interruptions or delays in transmission
or delivery of any messages, by mail, cable, telegraph, telex or otherwise,
whether or not they may be in cipher; (E) errors in interpretation of technical
terms; (F) any loss or delay in the transmission or otherwise of any document
required in order to make a payment under any Letter of Credit or guaranty
thereof or of the proceeds thereof; (G) the credit of the proceeds of any
drawing under any Letter of Credit or guaranty thereof; and (H) any consequences
arising from causes beyond the control of Agent or any Lender. None of the above
shall affect, impair, or prevent the vesting of any of Agent's or any Lender's
rights or powers hereunder or under the Agreement.
(iii) Nothing contained herein shall be deemed to limit or to expand
any waivers, covenants or indemnities made by Borrower in favor of any L/C
Issuer in any letter of credit application, reimbursement agreement or similar
document, instrument or agreement between Borrower and such L/C Issuer.
B-5
ANNEX C (Section 1.8)
-----------
to
CREDIT AGREEMENT
----------------
CASH MANAGEMENT SYSTEM
----------------------
Borrower shall, and shall cause its Subsidiaries to, establish and
maintain the Cash Management Systems described below:
(a) On or before the Closing Date and until the Termination Date,
Borrower shall (i) establish lock boxes ("Lock Boxes") at one or more of the
----------
banks set forth in Disclosure Schedule (3.19), and shall request in writing and
-------------------------
otherwise take such reasonable steps to ensure that all Account Debtors forward
payment directly to such Lock Boxes, and (ii) deposit and cause its Subsidiaries
to deposit or cause to be deposited promptly, and in any event no later than the
first Business Day after the date of receipt thereof, all cash, checks, drafts
or other similar items of payment relating to or constituting payments made in
respect of any and all Collateral (whether or not otherwise delivered to a Lock
Box) into one or more bank accounts in Borrower's name or any such Subsidiary's
name (each a "Borrower Account" and collectively, the "Borrower Accounts") at a
---------------- -----------------
bank identified in Disclosure Schedule (3.19) (each, a "Relationship Bank"). On
------------------------- -----------------
or before the date that is ninety (90) days following the Closing Date, Borrower
shall have established a concentration account in its name (the "Concentration
-------------
Account") at the bank that shall be designated as the Concentration Account bank
-------
for Borrower in Disclosure Schedule (3.19) (the "Concentration Account Bank")
------------------------- --------------------------
which bank shall be satisfactory to Agent.
(b) Borrower may maintain, in its name, an account (each a
"Disbursement Account" and collectively, the "Disbursement Accounts") at a bank
-------------------- ---------------------
acceptable to Agent into which Agent shall, from time to time, deposit proceeds
of Revolving Credit Advances and Swing Line Advances made to Borrower pursuant
to Section 1.1 for use by Borrower solely in accordance with the provisions of
-----------
Section 1.4.
-----------
(c) On or before the date that is ninety (90) days following the
Closing Date (or such later date as Agent shall consent to in writing), the
Concentration Account Bank, each bank where a Disbursement Account is maintained
and all other Relationship Banks, shall have entered into tri-party blocked
account agreements with Agent, for the benefit of itself and Lenders, and
Borrower and Subsidiaries thereof, as applicable, in form and substance
acceptable to Agent, which shall become operative on or prior to the date that
is ninety (90) days following the Closing Date. Each such blocked account
agreement shall provide, among other things, that (i) all items of payment
deposited in such account and proceeds thereof deposited in the Concentration
Account are held by such bank as agent or bailee-in-possession for Agent, on
behalf of itself and Lenders, (ii) the bank executing such agreement has no
rights of setoff or recoupment or any other claim against such account, as the
case may be, other than for payment of its service fees and other charges
directly related to the administration of such account, for returned checks or
other items of payment and for any required adjustments due to clerical errors
or calculation errors relating to such account and in accordance with any court
order, notice of garnishment binding on such bank or any other applicable law
binding on such bank, and (iii)
C-1
from and after the date that is ninety (90) days following the Closing Date (A)
with respect to banks at which a Borrower Account is maintained, such bank
agrees to forward immediately all amounts in each Borrower Account to the
Concentration Account Bank and to commence the process of daily sweeps from such
Borrower Account into the Concentration Account and (B) with respect to the
Concentration Account Bank, such bank agrees to immediately forward all amounts
received in the Concentration Account to the Collection Account through daily
sweeps from such Concentration Account into the Collection Account. Borrower
shall not, and shall not cause or permit any Subsidiary thereof to, accumulate
or maintain cash in Disbursement Accounts or payroll accounts as of any date of
determination in excess of checks outstanding against such accounts as of that
date and amounts necessary to meet minimum balance requirements.
(d) So long as no Default or Event of Default has occurred and is
continuing, Borrower may amend Disclosure Schedule (3.19) to add or replace a
-------------------------
Relationship Bank, Lock Box or Borrower Account or to replace any Concentration
Account or any Disbursement Account; provided, that (i) Agent shall have
--------
consented in writing in advance to the opening of such account or Lock Box with
the relevant bank and (ii) prior to the time of the opening of such account or
Lock Box, Borrower or its Subsidiaries, as applicable, and such bank shall have
executed and delivered to Agent a tri-party blocked account agreement, in form
and substance satisfactory to Agent. Borrower shall close any of its accounts
(and establish replacement accounts in accordance with the foregoing sentence)
promptly and in any event within thirty (30) days following notice from Agent
that the creditworthiness of any bank holding an account is no longer acceptable
in Agent's reasonable judgment, or as promptly as practicable and in any event
within sixty (60) days following notice from Agent that the operating
performance, funds transfer or availability procedures or performance with
respect to accounts or Lock Boxes of the bank holding such accounts or Agent's
liability under any tri-party blocked account agreement with such bank is no
longer acceptable in Agent's reasonable judgment.
(e) The Lock Boxes, Borrower Accounts, Disbursement Accounts and the
Concentration Account shall be cash collateral accounts, with all cash, checks
and other similar items of payment in such accounts securing payment of the
Loans and all other Obligations, and in which Borrower and each Subsidiary
thereof shall have granted a Lien to Agent, on behalf of itself and Lenders,
pursuant to the Security Agreement.
(f) All amounts deposited in the Collection Account shall be deemed
received by Agent in accordance with Section 1.10 and shall be applied (and
------------
allocated) by Agent in accordance with Section 1.11 or 8.3 as applicable. In no
------------ ---
event shall any amount be so applied unless and until such amount shall have
been credited in immediately available funds to the Collection Account.
(g) Borrower shall and shall cause its Affiliates, officers,
employees, agents, directors or other Persons acting for or in concert with
Borrower (each a "Related Person") to (i) hold in trust for Agent, for the
--------------
benefit of itself and Lenders, all checks, cash and other items of payment
received by Borrower or any such Related Person, and (ii) within one (1)
Business Day after receipt by Borrower or any such Related Person of any checks,
cash or other items of payment, deposit the same into a Borrower Account.
Borrower and each Related Person thereof acknowledges and agrees that all cash,
checks or other items of payment constituting proceeds of
C-2
Collateral are the property of Agent and Lenders. All proceeds of the sale or
other disposition of any Collateral, shall be deposited directly into Borrower
Accounts.
C-3
ANNEX D (Section 2.1(a))
--------------
to
CREDIT AGREEMENT
----------------
CLOSING CHECKLIST
-----------------
In addition to, and not in limitation of, the conditions described in
Section 2.1 of the Agreement, pursuant to Section 2.1(a), the following items
----------- --------------
must be received by Agent in form and substance satisfactory to Agent on or
prior to the Closing Date (each capitalized term used but not otherwise defined
herein shall have the meaning ascribed thereto in Annex A to the Agreement):
-------
A. Appendices. All Appendices to the Agreement, in form and
----------
substance satisfactory to Agent.
B. Revolving Notes, Swing Line Note and Term Note. Duly executed
----------------------------------------------
originals of the Revolving Notes, Swing Line Note and Term Note for each
applicable Lender, dated the Closing Date.
C. Security Agreement. Duly executed originals of the Security
------------------
Agreement, dated as of the date hereof, and all instruments, documents and
agreements executed pursuant thereto.
D. Insurance. Satisfactory evidence that the insurance policies
---------
required by Section 5.4 are in full force and effect, together with appropriate
-----------
evidence showing loss payable and/or additional insured clauses or endorsements,
as requested by Agent, in favor of Agent, on behalf of Lenders.
E. Security Interests, Hypothecs and Code Filings. (a) Evidence
----------------------------------------------
satisfactory to Agents that Agent (for the benefit of itself and Lenders) has a
valid and perfected first priority security interest in the Collateral and that
Agent and Lenders have valid and registered first ranking hypothecs on the
Collateral, including (i) such documents duly executed by each Credit Party
(including financing statements under the Code and other applicable documents
under the laws of any jurisdiction with respect to the perfection of Liens) as
Agents may request in order to perfect the Agent's security interests in and
Agent's and Lenders' hypothecs on the Collateral and (ii) copies of Code search
reports listing all effective financing statements (or other applicable
equivalent) that name any Credit Party as debtor, together with copies of such
financing statements (or other applicable equivalent), none of which shall cover
the Collateral, except for those relating to the Prior Lenders' Obligations (all
of which shall be terminated on the Closing Date).
(b) Evidence satisfactory to Agents, including copies, of all
UCC-1 and other financing statements (or other applicable equivalent) filed in
favor of any Credit Party with respect to each location, if any, at which
Inventory may be consigned.
(c) Control Letters from (i) all issuers of uncertificated
securities and financial assets held by Borrower, (ii) all securities
intermediaries with respect to all securities
accounts and securities entitlements of Borrower, and (iii) all futures
commission agents and clearing houses with respect to all commodities contracts
and commodities accounts held by Borrower.
F. Payoff Letter; Termination Statements. Copies of a duly executed
-------------------------------------
payoff letter, in form and substance satisfactory to Agents, by and between all
parties to the Original Lenders loan documents evidencing repayment in full of
all the Original Lenders' Obligations, together with (a) UCC-3 or other
appropriate termination statements, in form and substance satisfactory to
Agents, manually signed by the Original Lenders releasing all liens of Original
Lenders upon any of the personal property and real property of each Credit
Party, and (b) termination of all blocked account agreements, bank agency
agreements or other similar agreements or arrangements or arrangements in favor
of the Original Lenders or relating to the Original Lenders' Obligations.
G. Intellectual Property Security Agreements. Duly executed
-----------------------------------------
originals of Trademark Security Agreements, Copyright Security Agreements and
Patent Security Agreements, each dated as of the date hereof and signed by each
Credit Party which owns Trademarks, Copyrights and/or Patents, as applicable,
all in form and substance satisfactory to Agent, together with all instruments,
documents and agreements executed pursuant thereto.
H. Holdings Guaranty. Duly executed originals of the Holdings
-----------------
Guaranty, dated as of the date hereof, and all documents, instruments and
agreements executed pursuant thereto.
I. Initial Borrowing Base Certificate. Duly executed originals of an
----------------------------------
initial Borrowing Base Certificate from Borrower, dated as of the date hereof,
reflecting information concerning Eligible Accounts and Eligible Inventory of
Borrower as of a date not more than seven (7) days prior to the date hereof.
J. Initial Notice of Revolving Credit Advance. Duly executed
------------------------------------------
originals of a Notice of Revolving Credit Advance, dated April 9, 2002, with
respect to the initial Revolving Credit Advance to be requested by Borrower on
the Closing Date.
K. Letter of Direction. Duly executed originals of a letter of
-------------------
direction from Borrower addressed to Agent, on behalf of itself and Lenders,
with respect to the disbursement on the Closing Date of the proceeds of the Term
Loan and the initial Revolving Credit Advance.
L. Charter and Good Standing. For each Credit Party, such Person's
-------------------------
(a) charter and all amendments thereto, (b) good standing certificates
(including verification of tax status) (or applicable equivalent) in its state
(or province) of incorporation and (c) good standing certificates (including
verification of tax status) and certificates of qualification (or applicable
equivalents) to conduct business in each jurisdiction where its ownership or
lease of property or the conduct of its business requires such qualification,
each dated a recent date prior to the date hereof and certified by the
applicable Secretary of State or other authorized Governmental Authority.
D-2
M. Bylaws and Resolutions. For each Credit Party, (a) such Person's
----------------------
bylaws, together with all amendments thereto and (b) resolutions of such
Person's Board of Directors and stockholders, approving and authorizing the
execution, delivery and performance of the Loan Documents to which such Person
is a party and the transactions to be consummated in connection therewith, each
certified as of the date hereof by such Person's corporate secretary or an
assistant secretary as being in full force and effect without any modification
or amendment.
N. Incumbency Certificates. For each Credit Party, signature and
-----------------------
incumbency certificates of the officers of each such Person executing any of the
Loan Documents, certified as of the date hereof by such Person's corporate
secretary or an assistant secretary as being true, accurate, correct and
complete.
O. Opinions of Counsel. Duly executed originals of opinions of
-------------------
Xxxxxxxx, Xxxxxxx & Xxxxxxx, counsel for the Credit Parties, together with any
local counsel opinions requested by Agent from counsel in Utah, Quebec, Ontario
and New Brunswick, each in form and substance satisfactory to Agent and its
counsel, dated as of the date hereof.
P. Pledge Agreements. Duly executed originals of each of the Pledge
-----------------
Agreements accompanied by (as applicable) (a) (i) share certificates
representing all of the outstanding Stock of Borrower and each domestic and
Canadian Subsidiary of Borrower (registered in Agent's name in the case of each
such Canadian Subsidiary in order to better perfect Agent's security therein)
and 65% of the outstanding Stock of each other Subsidiary of Borrower and stock
powers for such share certificates executed in blank (except when such Stock
certificates are registered in Agent's name) and (ii) a photocopy of the share
register of each Canadian Subsidiary showing Agent as the registered owner of
all of the outstanding Stock of each Canadian Subsidiary certified to be true
and complete by the Secretary or Assistant Secretary of each such Canadian
Subsidiary and (b) the original Intercompany Note and other instruments
evidencing Indebtedness being pledged pursuant to such Pledge Agreement, duly
endorsed in blank.
Q. Accountants' Letters. A letter from the Credit Parties to their
--------------------
independent auditors authorizing the independent certified public accountants of
the Credit Parties to communicate with Agent and Lenders in accordance with
Section 4.2, and a letter from such auditors acknowledging Lenders' reliance on
-----------
the auditor's certification of past and future Financial Statements.
R. Appointment of Agent for Service. An appointment of CT
--------------------------------
Corporation as each Credit Party's agent for service of process.
S. Solvency Certificate. The Credit Parties shall deliver to Agent
--------------------
for the benefit of Lenders a solvency certificate signed by the Chief Financial
Officer of Borrower in form and substance satisfactory to Agent.
T. Fee Letter. Duly executed originals of the Fee Letter.
----------
U. Officer's Certificate. Agent shall have received duly executed
---------------------
originals of a certificate of the Chief Operating Officer of Borrower, dated as
of the date hereof, stating that,
D-3
except as set forth in the Credit Agreement, since May 31, 2002 (a) no event or
condition has occurred or is existing which could reasonably be expected to have
a Material Adverse Effect; (b) there has been no material adverse change in the
industry in which Borrower operates; (c) no Litigation has been commenced which,
if successful, would have a Material Adverse Effect or could challenge any of
the transactions contemplated by the Agreement and the other Loan Documents; (d)
there have been no Restricted Payments made by any Credit Party; and (e) there
has been no material increase in liabilities, liquidated or contingent, and no
material decrease in assets of Borrower or any of its Subsidiaries.
V. Waivers. Agent, on behalf of Lenders, shall have received
-------
landlord waivers and consents, bailee letters and mortgagee agreements in form
and substance satisfactory to Agent, in each case as required pursuant to
Section 5.9.
-----------
W. Mortgages. Mortgages or, in the case of Real Estate located in
---------
the Province of Quebec, the ICON of Canada Hypothec, covering all of the Real
Estate (the "Mortgaged Properties") together with: (a) title insurance policies,
--------------------
flood insurance policies (if applicable), current as-built surveys, zoning
letters, certificates of location, and certificates of occupancy, in each case
satisfactory in form and substance to Agent, in its sole discretion; (b)
evidence that counterparts of the Mortgages have been recorded in all places to
the extent necessary or desirable, in the judgment of Agent, to create a valid
and enforceable first priority lien (subject to Permitted Encumbrances) on each
Mortgaged Property in favor of Agent for the benefit of itself and Lenders (or
in favor of such other trustee as may be required or desired under local law);
and (c) an opinion of counsel in each state in which any Mortgaged Property is
located in form and substance and from counsel satisfactory to Agents.
X. Subordination and Intercreditor Agreements. Agent and Lenders
------------------------------------------
shall have received any and all subordination and/or intercreditor agreements,
all in form and substance reasonably satisfactory to Agent, in its sole
discretion, as Agent shall have deemed necessary or appropriate with respect to
any Indebtedness of any Credit Party.
Y. Audited Financials; Financial Condition. Agent shall have
---------------------------------------
received Borrower's final Financial Statements for its Fiscal Year ended May 31,
2001, audited by PriceWaterhouseCoopers. Borrower shall have provided Agent with
its current operating statements, a consolidated and consolidating balance sheet
and statement of cash flows, the Pro Forma, Projections and a Borrowing Base
Certificate with respect to Borrower certified by its Chief Financial Officer,
in each case in form and substance satisfactory to Agent, and Agent shall be
satisfied, in its sole discretion, with all of the foregoing. Agent shall have
further received a certificate of the Chief Executive Officer and/or the Chief
Financial Officer of Borrower, based on such Pro Forma and Projections, to the
effect that (a) Borrower will be Solvent upon the consummation of the
transactions contemplated herein; (b) the Pro Forma fairly presents the
financial condition of Borrower as of the date thereof after giving effect to
the transactions contemplated by the Loan Documents; (c) the Projections are
based upon estimates and assumptions stated therein, all of which Borrower
believes to be reasonable and fair in light of current conditions and current
facts known to Borrower and, as of the date hereof, reflect Borrower's good
faith and reasonable estimates of its future financial performance and of the
other information projected therein for the period set forth therein; and (d)
containing such other
D-4
statements with respect to the solvency of Borrower and matters related thereto
as Agent shall request.
Z. Subsidiary Guaranties. Guaranties executed by the domestic and
---------------------
Canadian Subsidiaries of Borrower.
AA. Canadian Security Documents.
---------------------------
(i) ICON of Canada Hypothec. Duly executed original of the ICON
-----------------------
of Canada Hypothec, dated prior to the Closing Date, and all instruments,
documents and agreements executed pursuant thereto, including the ICON of Canada
Debenture and the ICON of Canada Pledge Agreement.
(ii) Canadian Security Agreements. Duly executed originals of the
----------------------------
Canadian Security Agreements, dated as of the date hereof, and all instruments,
documents and agreements executed pursuant thereto.
BB. Subordinated Debt. Certificate from Borrower certifying as of the
-----------------
Closing Date that the issuance of the Subordinated Notes has been completed and
that Borrower has received not less than $152,812,950 (before deduction, among
other things, of an amount not in excess of $4,500,000 which was applied in
payment of CS First Boston's closing fees and expenses in respect of the
Subordinated Notes).
CC. Other Documents. Such other certificates, documents and
---------------
agreements respecting any Credit Party as Agent may, in its sole discretion,
request.
D-5
ANNEX E (Section 4.1(a))
--------------
to
CREDIT AGREEMENT
----------------
FINANCIAL STATEMENTS AND PROJECTIONS -- REPORTING
-------------------------------------------------
Borrower shall deliver or cause to be delivered to Agent or to Agent
and Lenders, as indicated, the following:
(a) Monthly Financials. To Agent and Lenders, within forty-five (45)
------------------
days after the end of each Fiscal Month, financial information regarding
Borrower and its Subsidiaries, certified by the Chief Financial Officer of
Borrower, consisting of consolidated and consolidating (i) unaudited balance
sheets as of the close of such Fiscal Month and the related statements of income
and cash flows for that portion of the Fiscal Year ending as of the close of
such Fiscal Month; (ii) unaudited statements of income and cash flows for such
Fiscal Month, setting forth in comparative form the figures for the
corresponding period in the prior year and the figures contained in the
Projections for such Fiscal Year, all prepared in accordance with GAAP (subject
to normal year-end adjustments); and (iii) a summary of the outstanding balance
of all Intercompany Note as of the last day of that Fiscal Month. Such financial
information shall be accompanied by the certification of the Chief Financial
Officer of Borrower that (i) such financial information presents fairly in
accordance with GAAP (subject to normal year-end adjustments) the financial
position and results of operations of Borrower and its Subsidiaries, on a
consolidated and consolidating basis, in each case as at the end of such Fiscal
Month and for that portion of the Fiscal Year then ended and (ii) any other
information presented is true, correct and complete in all material respects and
that there was no Default or Event of Default in existence as of such time or,
if a Default or Event of Default shall have occurred and be continuing,
describing the nature thereof and all efforts undertaken to cure such Default or
Event of Default.
(b) Quarterly Financials. To Agent and Lenders, within forty-five
--------------------
(45) days after the end of each Fiscal Quarter, consolidated and consolidating
financial information regarding Borrower and its Subsidiaries, certified by the
Chief Financial Officer of Borrower, including (i) unaudited balance sheets as
of the close of such Fiscal Quarter and the related statements of income and
cash flow for that portion of the Fiscal Year ending as of the close of such
Fiscal Quarter and (ii) unaudited statements of income and cash flows for such
Fiscal Quarter, in each case setting forth in comparative form the figures for
the corresponding period in the prior year and the figures contained in the
Projections for such Fiscal Year, all prepared in accordance with GAAP (subject
to normal year-end adjustments). Such financial information shall be accompanied
by (A) a statement in reasonable detail (each, a "Compliance Certificate")
----------------------
showing the calculations used in determining compliance with each of the
Financial Covenants that is tested on a quarterly basis and (B) the
certification of the Chief Financial Officer of Borrower that (i) such financial
information presents fairly in accordance with GAAP (subject to normal year-end
adjustments) the financial position, results of operations and statements of
cash flows of Borrower and its Subsidiaries, on both a consolidated and
consolidating basis, as at the end of such Fiscal Quarter and for that portion
of the Fiscal Year then ended, (ii) any other information presented is true,
correct and complete in all material respects and that there was no
E-1
Default or Event of Default in existence as of such time or, if a Default or
Event of Default has occurred and is continuing, describing the nature thereof
and all efforts undertaken to cure such Default or Event of Default. In
addition, Borrower shall deliver to Agent and Lenders, within forty-five (45)
days after the end of each Fiscal Quarter, a management discussion and analysis
that includes a comparison to budget for that Fiscal Quarter and a comparison of
performance for that Fiscal Quarter to the corresponding period in the prior
year.
(c) Operating Plan. To Agent and Lenders, as soon as available, but
--------------
not later than sixty (60) days after the end of each Fiscal Year, an annual
operating plan for Borrower, approved by the Board of Directors of Borrower, for
the following Fiscal Year, which will (i)include a statement of all of the
material assumptions on which such plan is based, (ii) include monthly balance
sheets and a monthly budget for the following year and (iii) integrate sales,
gross profits, operating expenses, operating profit, cash flow projections and
Borrowing Availability projections, all prepared on the same basis and in
similar detail as that on which operating results are reported (and in the case
of cash flow projections, representing management's good faith estimates of
future financial performance based on historical performance), and including
plans for personnel, Capital Expenditures and facilities.
(d) Annual Audited Financials. To Agent and Lenders, within ninety
-------------------------
(90) days after the end of each Fiscal Year, audited Financial Statements for
Borrower and its Subsidiaries on a consolidated and (unaudited) consolidating
basis, consisting of balance sheets and statements of income and retained
earnings and cash flows, setting forth in comparative form in each case the
figures for the previous Fiscal Year, which Financial Statements shall be
prepared in accordance with GAAP and certified without qualification, by an
independent certified public accounting firm of national standing or otherwise
acceptable to Agent. Such Financial Statements shall be accompanied by (i) a
statement prepared in reasonable detail showing the calculations used in
determining compliance with each of the Financial Covenants, (ii) a report from
such accounting firm to the effect that, in connection with their audit
examination, nothing has come to their attention to cause them to believe that a
Default or Event of Default has occurred (or specifying those Defaults and
Events of Default that they became aware of), it being understood that such
audit examination extended only to accounting matters and that no special
investigation was made with respect to the existence of Defaults or Events of
Default, (iii) a letter addressed to Agent, on behalf of itself and Lenders, in
form and substance reasonably satisfactory to Agent and subject to standard
qualifications required by nationally recognized accounting firms, signed by
such accounting firm acknowledging that Agent and Lenders are entitled to rely
upon such accounting firm's certification of such audited Financial Statements,
(iv) the annual letters to such accountants in connection with their audit
examination detailing contingent liabilities and material litigation matters,
and (v) the certification of the Chief Executive Officer or Chief Financial
Officer of Borrower that all such Financial Statements present fairly in
accordance with GAAP the financial position, results of operations and
statements of cash flows of Borrower and its Subsidiaries on a consolidated and
consolidating basis, as at the end of such Fiscal Year and for the period then
ended, and that there was no Default or Event of Default in existence as of such
time or, if a Default or Event of Default has occurred and is continuing,
describing the nature thereof and all efforts undertaken to cure such Default or
Event of Default.
E-2
(e) Management Letters. To Agent and Lenders, within five (5)
------------------
Business Days after receipt thereof by any Credit Party, copies of all
management letters, exception reports or similar letters or reports received by
such Credit Party from its independent certified public accountants.
(f) Default Notices. To Agent and Lenders, as soon as practicable,
---------------
and in any event within five (5) Business Days after an executive officer of
Borrower has actual knowledge of the existence of any Default, Event of Default
or other event that has had a Material Adverse Effect, telephonic or telecopied
notice specifying the nature of such Default or Event of Default or other event,
including the anticipated effect thereof, which notice, if given telephonically,
shall be promptly confirmed in writing on the next Business Day.
(g) SEC Filings and Press Releases. To Agent and Lenders, promptly
------------------------------
upon their becoming available, copies of: (i) all Financial Statements, reports,
notices and proxy statements made publicly available by any Credit Party to its
security holders; (ii) all regular and periodic reports and all registration
statements and prospectuses, if any, filed by any Credit Party with any
securities exchange or with the Securities and Exchange Commission or any
governmental or private regulatory authority; and (iii) all press releases and
other statements made available by any Credit Party to the public concerning
material changes or developments in the business of any such Person.
(h) Subordinated Debt and Equity Notices. To Agent, as soon as
------------------------------------
practicable, copies of all material written notices given or received by any
Credit Party with respect to any Subordinated Debt or Stock of such Person, and,
within two (2) Business Days after any Credit Party obtains knowledge of any
matured or unmatured event of default with respect to any Subordinated Debt,
notice of such event of default.
(i) Supplemental Schedules. To Agent, supplemental disclosures, if
----------------------
any, required by Section 5.6.
-----------
(j) Litigation. To Agent in writing, promptly upon learning thereof,
----------
notice of any Litigation commenced or threatened against any Credit Party that
(i) seeks damages in excess of $500,000, (ii) seeks injunctive relief, (iii) is
asserted or instituted against any Plan, its fiduciaries or its assets or
against any Credit Party or ERISA Affiliate in connection with any Plan, (iv)
alleges criminal misconduct by any Credit Party, (v) alleges the violation of
any law regarding, or seeks remedies in connection with, any Environmental
Liabilities; or (vi) involves any product recall; provided, however, that
-------- -------
Borrower shall give Agent written notice of any litigation commenced or
threatened against any Credit Party that seeks damages in excess of $100,000 on
a quarterly basis;
(k) Insurance Notices. To Agent, disclosure of losses or casualties
-----------------
required by Section 5.4.
-----------
(l) Lease Default Notices. To Agent, copies of (i) any and all
---------------------
default notices received under or with respect to any leased location or public
warehouse where Collateral is located, and (ii) such other notices or documents
as Agent may request in its reasonable discretion.
E-3
(m) Product Recall. To Agent, prompt written notice of any product
--------------
recall whether voluntary or otherwise.
(n) Other Documents. To Agent and Lenders, such other financial and
---------------
other information respecting any Credit Party's business or financial condition
as Agent or any Lender shall, from time to time, request.
E-4
ANNEX F (Section 4.1(b))
--------------
to
CREDIT AGREEMENT
----------------
COLLATERAL REPORTS
------------------
Borrower shall deliver or cause to be delivered the following:
(a) To Agent, upon Agent's request, and in any event no less
frequently than five (5) Business Days after the end of each Fiscal Month
(together with a copy of all or any part of the following reports requested by
any Lender in writing after the Closing Date), each of the following reports,
each of which shall be prepared by the Borrower as of the last day of the
immediately preceding Fiscal Month:
(i) a summary of Inventory by location and type with a supporting
perpetual Inventory report, in each case accompanied by such supporting
detail and documentation as shall be requested by Agent in its reasonable
discretion; and
(ii) a monthly trial balance showing Accounts outstanding aged from
invoice due date as follows: 1 to 30 days, 31 to 60 days, 61 to 90 days and
91 days or more, accompanied by such supporting detail and documentation as
shall be requested by Agent in its reasonable discretion.
(b) To Lenders, upon Agent's request, and in any event no less
frequently than three (3) Business Days after the end of each month (as of the
last Business Day of each month), a Borrowing Base Certificate, accompanied by
such supporting detail and documentation as shall be requested by Agent in its
reasonable discretion; provided that, so long as Borrowing Availability is less
--------
than $15,000,000, the Borrowing Base and accompanying information will be
provided no less frequently than three (3) Business Days after the end of each
week.
(c) As requested by Agent, on a weekly basis or at such more frequent
intervals as Agent may request from time to time (together with a copy of all or
any part of such delivery requested by any Lender in writing after the Closing
Date), collateral reports with respect to Borrower, including all additions and
reductions (cash and non-cash) with respect to Accounts of Borrower, in each
case accompanied by such supporting detail and documentation as shall be
requested by Agent in their reasonable discretion each of which shall be
prepared by Borrower as of the last day of the immediately preceding week;
(d) As requested by Agent, at the time of delivery of each of the
monthly Financial Statements delivered pursuant to Annex E, a reconciliation of
-------
the Accounts trial balance and month-end Inventory reports of Borrower to
Borrower's general ledger and monthly Financial Statements delivered pursuant to
such Annex E, in each case accompanied by such supporting detail and
-------
documentation as shall be requested by Agent in its reasonable discretion;
(e) To Agent, at the time of delivery of each of the annual Financial
Statements delivered pursuant to Annex E, (i) a listing of government contracts
-------
of Borrower
F-1
subject to the Federal Assignment of Claims Act of 1940, the Financial
Administrators Act (Canada) or any applicable state, provincial or territorial
statute or municipal ordinance of similar purpose and effect; and (ii) a list of
any applications for the registration of any Patent, Trademark or Copyright
filed by any Credit Party with the United States Patent and Trademark Office,
the United States Copyright Office or any similar office or agency (including in
any foreign jurisdiction) in the prior Fiscal Quarter;
(f) Borrower, at its own expense, shall deliver to Agent the results
of each physical verification, if any, that Borrower or any of its Subsidiaries
may in their discretion have made, or caused any other Person to have made on
their behalf, of all or any portion of their Inventory (and, if a Default or an
Event of Default has occurred and be continuing, Borrower shall, upon the
request of Agent, conduct, and deliver the results of, such physical
verifications as Agent may require);
(g) Borrower, at its own expense, shall deliver to Agent (i)
appraisals of its Inventory no more frequently than one (1) time per year and
(ii) such appraisals of its inventory and other assets as Agent may request at
any time after the occurrence and during the continuance of a Default or an
Event of Default, such appraisals to be conducted by an appraiser, and in form
and substance, satisfactory to Agent;
(h) Borrower shall cause to be delivered to Agent on the two (2) year
anniversary of the Closing Date and the anniversary of the Closing Date each
year thereafter until the Termination Date, a guaranty renewal in the form of
Schedule II to that certain Guaranty dated as of the Closing Date between ICON
of Canada and Agent and shall deliver to Agent a legal opinion from counsel and
in form and substance satisfactory to Agent as to the due authorization,
execution, delivery and enforceability of such documents and as to such other
matters relating to Guarantor and such documents as Agent may reasonably
request;
(i)
(j) Such other reports, statements and reconciliations with respect
to the Borrowing Base or Collateral of any or all Credit Parties as Agent shall
from time to time request in its reasonable discretion.
F-2
ANNEX G (Section 6.10)
------------
to
CREDIT AGREEMENT
----------------
FINANCIAL COVENANTS
-------------------
Borrower shall not breach or fail to comply with any of the following
financial covenants, each of which shall be calculated in accordance with GAAP
consistently applied:
(a) Maximum Capital Expenditures. Borrower and its Subsidiaries on a
----------------------------
consolidated basis shall not make Capital Expenditures in excess of $15,000,000
in the aggregate during any Fiscal Year; provided, however, that the amount of
-------- -------
permitted Capital Expenditures for each Fiscal Year after Fiscal Year 2002 may
be increased by an amount equal to the lesser of the unspent amount of Capital
Expenditures in any Fiscal Year or $7,500,000 (the "Carry Over Amount"). For
-----------------
purposes of determining compliance with this covenant, the Carry Over Amount
shall be deemed to be the last amount spent on Capital Expenditures in the
succeeding Fiscal Year.
(b) Minimum Fixed Charge Coverage Ratio. Borrower and its Subsidiaries
-----------------------------------
shall have on a consolidated basis at the end of each Fiscal Quarter, commencing
with the Fiscal Quarter ending on or about August 31, 2002, a Fixed Charge
Coverage Ratio of not less than 1.25%.
(c) Minimum EBITDA. Borrower and its Subsidiaries on a consolidated basis
--------------
shall have, at the end of each Fiscal Quarter set forth below, EBITDA for the
12-month period then ended of not less than the following:
$62,250,000 for the Fiscal Quarter ending on or about August 31, 2002;
$63,250,000 for the Fiscal Quarter ending on or about November 30, 2002;
$63,250,000 for the Fiscal Quarter ending on or about February 28, 2003;
$64,250,000 for the Fiscal Quarter ending on or about May 31, 2003;
$64,250,000 for the Fiscal Quarter ending on or about August 31, 2003;
$65,250,000 for the Fiscal Quarter ending on or about November 30, 2003;
$65,250,000 for the Fiscal Quarter ending on or about February 28, 2004;
$66,250,000 for the Fiscal Quarter ending on or about May 31, 2004;
$66,250,000 for the Fiscal Quarter ending on or about August 31, 2004;
$67,500,000 for the Fiscal Quarter ending on or about November 30, 2004;
$67,500,000 for the Fiscal Quarter ending on or about February 28, 2005;
$68,500,000 for the Fiscal Quarter ending on or about May 31, 2005;
$68,500,000 for the Fiscal Quarter ending on or about August 31, 2005;
$69,500,000 for the Fiscal Quarter ending on or about November 30, 2005;
$69,500,000 for the Fiscal Quarter ending on or about February 28, 2006;
$70,750,000 for the Fiscal Quarter ending on or about May 31, 2006;
$70,750,000 for the Fiscal Quarter ending on or about August 31, 2006;
and
$71,750,000 for each Fiscal Quarter ending thereafter.
G-1
References to the Fiscal Quarters ending August 31, November 30, and
February 28/29 shall be deemed to refer to the Fiscal Quarters ending on the
Saturday closest to those dates. Unless otherwise specifically provided herein,
any accounting term used in the Agreement shall have the meaning customarily
given such term in accordance with GAAP, and all financial computations
hereunder shall be computed in accordance with GAAP consistently applied. That
certain items or computations are explicitly modified by the phrase "in
accordance with GAAP" shall in no way be construed to limit the foregoing. If
any "Accounting Changes" (as defined below) occur and such changes result in a
change in the calculation of the financial covenants, standards or terms used in
the Agreement or any other Loan Document, then Borrower, Agent and Lenders agree
to enter into negotiations in order to amend such provisions of the Agreement so
as to equitably reflect such Accounting Changes with the desired result that the
criteria for evaluating Borrower's and its Subsidiaries' financial condition
shall be the same after such Accounting Changes as if such Accounting Changes
had not been made; provided, however, that the agreement of Requisite Lenders to
-------- -------
any required amendments of such provisions shall be sufficient to bind all
Lenders. "Accounting Changes" means (i) changes in accounting principles
------------------
required by the promulgation of any rule, regulation, pronouncement or opinion
by the Financial Accounting Standards Board of the American Institute of
Certified Public Accountants (or successor thereto or any agency with similar
functions), (ii) changes in accounting principles concurred in by Borrower's
certified public accountants; (iii) purchase accounting adjustments under A.P.B.
16 or 17 and EITF 88-16, and the application of the accounting principles set
forth in FASB 109, including the establishment of reserves pursuant thereto and
any subsequent reversal (in whole or in part) of such reserves; and (iv) the
reversal of any reserves established as a result of purchase accounting
adjustments. All such adjustments resulting from expenditures made subsequent to
the Closing Date (including capitalization of costs and expenses or payment of
pre-Closing Date liabilities) shall be treated as expenses in the period the
expenditures are made and deducted as part of the calculation of EBITDA in such
period. If Agent, Borrower and Requisite Lenders agree upon the required
amendments, then after appropriate amendments have been executed and the
underlying Accounting Change with respect thereto has been implemented, any
reference to GAAP contained in the Agreement or in any other Loan Document
shall, only to the extent of such Accounting Change, refer to GAAP, consistently
applied after giving effect to the implementation of such Accounting Change. If
Agent, Borrower and Requisite Lenders cannot agree upon the required amendments
within thirty (30) days following the date of implementation of any Accounting
Change, then all Financial Statements delivered and all calculations of
financial covenants and other standards and terms in accordance with the
Agreement and the other Loan Documents shall be prepared, delivered and made
without regard to the underlying Accounting Change. For purposes of Section 8.1,
-----------
a breach of a Financial Covenant contained in this Annex G shall be deemed to
-------
have occurred as of any date of determination by Agent or as of the last day of
any specified measurement period, regardless of when the Financial Statements
reflecting such breach are delivered to Agent.
G-2
ANNEX H (Section 9.9(a))
to
CREDIT AGREEMENT
----------------
LENDERS' WIRE TRANSFER INFORMATION
General Electric Capital Corporation: Bankers Trust
00 Xxxxxx Xxxxxx., 0XX Xxxxx
Xxxxxx Xxxx, XX 00000
ABA #000000000
Account #00000000
Account Name: GECC/CAF Depository
Reference: ICON
Comerica Bank: Comerica Bank
00000 X. Xxx Xxxx Xxxx
Xxxxxxx, XX 00000
Commercial Loan Department
ABA Number 000000000
Account Name: Commercial Loan Department
Account Number: 4094920030
Account Reference: ICON Health & Fitness
JPMorgan Chase Bank: JPMorgan Chase Bank
Asset Based Region
000 Xxxxx Xxxxxxx Xxxx, 0/xx/ Xxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx
ABA Number: 000-000-000
Account Name: ICON Health & Fitness
Account Number: 801-903211
Fleet Capital Corporation: Fleet National Bank
Hartford, CT
ABA Number: 000-000-000
Account Name: Fleet Capital Corp.
Account Number: 9401743041
Account Reference: ICON Health & Fitness
The CIT Group/Business Credit, Inc.:
[To come]
H-1
ANNEX I (Section 11.10)
to
CREDIT AGREEMENT
----------------
NOTICE ADDRESSES
----------------
(A) If to Agent or GE Capital, at
General Electric Capital Corporation
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: ICON Health & Fitness, Account Manager
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
with copies to:
Xxxxxx & Xxxxxxx
Sears Tower, Suite 5800
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
and
---
General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Corporate Counsel-Commercial Finance
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
(B) If to Borrower, at
ICON Health & Fitness, Inc.
1500 South, 0000 Xxxx
Xxxxx, Xxxx 00000
Attention: S. Xxxx Xxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
I-1
with copies to:
ICON Health & Fitness, Inc.
0000 Xxxxx 0000 Xxxx
Xxxxx, Xxxx 00000
Attention: Xxxx Xxxxxxxx, General Counsel
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
and
---
Xxxxxxxx, Xxxxxxx & Xxxxxxx
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
(C) If to Lenders, at
Comerica Bank
0000 Xxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
JPMorgan Chase Bank
0000 Xxxx Xxxxxx, 0/xx/ Xxxxx
Xxxxxx, XX 00000
Attention: Xxxx Xxxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Fleet Xxxxxxx Xxxxxxxxxxx
XX XX 00000X, Xxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
The CIT Group/Business Credit, Inc.
[To come]
I-2
ANNEX J (from Annex A - Commitments definition)
to
CREDIT AGREEMENT
----------------
Lenders:
General Electric Capital Corporation
------------------------------------
Revolving Loan Commitment
(including a Swing Line Commitment
of $10,000,000): $111,702,127.00
Term Loan Commitment $ 13,297,873.00
Comerica Business Credit
------------------------
Revolving Loan Commitment: $ 13,404,255.00
Term Loan Commitment $ 1,595,745.00
Fleet Capital Corporation
-------------------------
Revolving Loan Commitment: $ 31,276,596.00
Term Loan Commitment $ 3,723,404.00
JPMorgan Chase Bank
-------------------
Revolving Loan Commitment: $ 31,276,596.00
Term Loan Commitment $ 3,723,404.00
The CIT Group/Business Credit, Inc.
-----------------------------------
Revolving Loan Commitment: $ 22,340,426.00
Term Loan Commitment $ 2,659,574.00
J-1
