Exhibit 10.4
RESTRUCTURING AGREEMENT
THIS RESTRUCTURING AGREEMENT is made and entered into as of this 26th day of
January, 2000 by and among KEYBANK NATIONAL ASSOCIATION ("KeyBank"), BANK
ONE, N.A. ("Bank One"), BANK OF AMERICA, N.A. ("Bank of America"), FIFTH THIRD
BANK, WESTERN OHIO ("Fifth Third"), NATIONAL CITY BANK ("National City"), THE
PRUDENTIAL INSURANCE COMPANY OF AMERICA ("Prudential"; KeyBank, Bank One,
Bank of America, Fifth Third, National City and Prudential are herein severally and collectively
referred to as the "Existing Lenders"), ASSET HOLDINGS COMPANY VI, LLC ("Asset
Holdings"), SELCO SERVICE CORPORATION ("Selco") and HUFFY CORPORATION (the
"Company")
RECITALS:
A. The Company is indebted to the Existing Lenders, Asset Holdings and Selco on account
of loans, promissory notes, leases, credit agreements, reimbursement agreements, swap
agreements and other instruments and extensions of credit in principal amounts
aggregating in excess of $100,000,000. Events of default exist and remain uncured under
the agreements and instruments evidencing substantially all of such indebtedness. Some
of such indebtedness has become due by the passage of stated maturity dates.
B. The Company has determined that it requires $140,000,000 in new financing to partially
repay the existing indebtedness referred to in Recital A above and to provide working
capital to the Company and its subsidiaries.
C. The Company has concurrently herewith entered into a loan and security agreement with
Congress Financial Corporation (Central) ("Congress") in favor of the Company and
certain of its affiliates providing and subject to the terms therefore for a secured revolving
credit facility and letter of credit facility in the original principal amount of up to
$100,000,000 at any time outstanding and the Existing Lenders have contemporaneously
entered into a term loan agreement with the Company in the amount of $40,000,000, to
be funded through the restructuring of certain existing indebtedness owed to the Existing
Lenders.
D. In order to obtain this new financing and to avoid the adverse effects of enforcement
actions by the Existing Lenders in respect of the existing indebtedness, the Company has
requested that the Existing Lenders agree to waive any events of default that exist and
remain uncured under the agreements and instruments evidencing the existing
indebtedness and to forbear any enforcing of their respective rights to demand and/or
enforce payment of the existing indebtedness owed to them. The Existing Lenders have
agreed, for the period, to the extent and on and subject to the terms and conditions herein
set forth, to, among other things, waive defaults, forbear from demanding payment and
enforcing remedies and subordinate their rights to receive payment, in consideration of
the agreements of the Company herein provided to, among other things, provide security
for and alter the pricing of the existing indebtedness.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:
1. Definitions. In addition to the other definitions set forth or referred to herein, each of the
following terms shall have the respective meaning indicated:
1.1 "Accounts" shall mean, as to each Borrower, all present and future rights of such
Borrower to payment for goods sold or leased or for services rendered, whether or
not evidenced by instruments or chattel paper, and whether or not earned by
performance.
1.2 "Administrative Agent" means KeyBank as Administrative Agent as provided for
under the Agency Agreement.
1.3 "Affiliates" shall mean, with respect to a specified Person, a partnership, corporation or any other person which directly or indirectly, through one or more
intermediaries, controls or is controlled by or is under common control with such
Person, and without limiting the generality of the foregoing, includes (a) any
Person which beneficially owns or holds five (5%) percent or more of any class of
voting securities of such Person or other equity interests in such Person, (b) any
Person of which such Person beneficially owns or holds five (5%) percent or more
of any class of voting securities or in which such Person beneficially owns or
holds five (5%) percent or more of the equity interests and any director or officer
of such Person. For the purposes of this definition, the term "control" (including
with correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities or by
contract or otherwise.
1.4 "Agency Agreement" means that certain Agency Agreement dated on or about the
date hereof among the Existing Lenders, Asset Holdings, Selco, KeyBank as
Administrative Agent and KeyBank as Collateral Agent.
1.5 "Agent" has the meaning provided for under the Agency Agreement and includes,
without limitation, KeyBank in its capacity as Agent under the Term Loan
Agreement and the Security Documents.
1.6 "Asset Sale" shall mean, for any Person, (a) any direct or indirect sale, lease,
conveyance or other disposition (including, without limitation, by way of merger
or consolidation or by exchange of assets and whether by operation of law or
otherwise) made by such Person in one or series of transactions, of (or any other
sale, disposition or other realization upon) any property or assets of such Person
or any of its Subsidiaries (including, without limitation, any disposition pursuant
to sale and leaseback transactions and any sale or other disposition of outstanding
or newly issued shares of Capital Stock or other securities of any of the
Subsidiaries of such Person or by any Subsidiary of such Person) and (b) any
other sale, disposition or other realization upon any property or assets of such
person or any of its subsidiaries; except in each case for sales or other dispositions
in the ordinary course of business consistent with current practices of such Person
as of the date hereof.
1.7 "Bank One" shall mean, collectively, Bank One, N.A., a national banking
association, successor by merger to Bank One, Dayton, N.A. and Bank One
Michigan, N.A. as successor by merger to NBD Bank, N.A., and its successors
and assigns.
1.8 "Bank One Lease" means that certain Lease and Development Agreement
between Asset Holdings and the Company dated May 29, 1996.
1.9 "Bank One Letters of Credit" shall mean, collectively, the letters of credit
outstanding on the date hereof issued by Bank One for the account of Huffy and
listed on Schedule 1.9 hereto, as the same now exist or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.
1.10 [Reserved]
1.11 "Borrowers" shall mean, collectively, the following (together with their respective
successors and assigns): (a) Huffy Corporation, an Ohio corporation; (b) Royce
Union Bicycle Company, an Ohio corporation; (c) Huffy Service First, Inc., an
Ohio corporation, also known as Huffy Assembly Solutions; (d) American Sports
Design Company, an Ohio corporation, doing business as Airborne Direct; and (e)
Washington Inventory Service, a California corporation; sometimes being referred
to herein individually as a "Borrower."
1.12 "Borrowing Base" shall have, as to each Borrower, at any time the meaning
provided under the Congress Facility.
1.13 "Business Day" shall mean any day other than a Saturday, Sunday, or other day
on which commercial banks are authorized or required to close under the laws of
the State of New York, the State of Illinois or the State of North Carolina, and a
day on which Congress is open for the transaction of business.
1.14 "Business Unit Sale" shall mean an Asset Sale consisting of the sale of all or
substantially all of the assets of Huffy or any division of Huffy (including the
Huffy Sports Company Division of Huffy or the Huffy Bicycle Company
Division of Huffy), or the sale of all or substantially all of the assets of any other
Borrower or Guarantor, or any other Subsidiary of Huffy, or an Asset Sale
consisting of the sale of all or substantially all of the capital stock of any
Borrower or Guarantor, or any other Subsidiary of Huffy.
1.15 "Capital Expenditures" shall mean all expenditures for any fixed or capital assets
or improvements, or for replacements, substitutions or additions thereto, which
have a useful life of more than one (1) year, including, but not limited to, the
direct or indirect acquisition of such assets by way of increased product service
charges, offset items or otherwise and shall include payments in respect of Capital
Leases, provided, that, any such expenditure for an amount of less than $5,000
shall not be deemed a Capital Expenditure for purposes hereof.
1.16 "Capital Leases" shall mean, as applied to any Person, any lease of (or any
agreement conveying the right to use) any property (whether real, personal or
mixed) by such Person as lessee which in accordance with GAAP, is required to
be reflected as a liability on the balance sheet of such Person.
1.17 "Capital Stock" shall mean, with respect to any Person, any and all shares,
interests, participations, limited liability company interests or other equivalents
(however designated) of such Person's capital stock at any time outstanding, and
any and all rights, warrants or options exchangeable for or convertible into such
capital stock or interests (but excluding any debt security that is exchangeable for
or convertible into such capital stock).
1.18 "Cash Equivalents" shall have the meaning ascribed to such term in the Congress
Facility.
1.19 "Celina Property" shall mean the approximately fifty-five (55) acres located at
000 Xxxxx Xxxx Xxxx, Xxxxxx, Xxxx 00000 owned by Huffy.
1.20 "Change of Control" shall have the meaning ascribed to such term in the Congress
Facility.
1.21 "Code" shall mean the Internal Revenue Code of 1986, as the same now exists or
may from time to time hereafter be amended, modified, recodified or
supplemented, together with all rules, regulations and interpretations thereunder
or related thereto.
1.22 "Collateral" shall mean all property and interests therein of Borrowers and
Guarantors in which any of the Borrowers and/or Guarantors shall have granted
any lien or security interest to the Collateral Agent or any of the Existing Lenders,
Selco and/or Asset Holdings.
1.23 "Collateral Agent" means KeyBank as Collateral Agent as provided for under the
Agency Agreement.
1.24 "Congress" shall mean Congress Financial Corporation (Central), an Illinois
corporation, in its capacity as collateral agent and administrative agent acting for
and on behalf of the Congress Facility Lenders pursuant to the Congress Credit
Agreement, and its successors and assigns (including any replacement or
successor agent or additional agent acting for and on behalf of the Congress
Facility Lenders).
1.25 "Congress Credit Agreement" shall mean, collectively, the Loan and Security
Agreement, dated of even date herewith, by and among Congress Facility Lenders
and Borrowers and all agreements, documents and instruments at any time
executed and/or delivered by any Borrower or any other person to, with or in favor
of any Congress Facility Lenders in connection therewith or related thereto, as all
of the foregoing now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated, refinanced, replaced or restructured (in whole or in
part and including any agreements with, to or in favor of any other lender or group
of lenders that at any time refinances, replaces or succeeds to all or any portion of
the Congress Facility).
1.26 "Congress Facility" means the revolving credit facility established by Congress
and the Congress Facility Lenders for Borrowers providing, on and subject to the
terms thereof, for revolving credit loans and letters of credit by Congress to
Borrowers in the original principal amount of up to $100,000,000.
1.27 "Congress Facility Lenders" shall mean, collectively, Congress, in its individual
capacity and as agent, and any other financial institutions from time to time party
to the Congress Credit Agreement as a lender, and their respective successors and
assigns (and including any other lender or group of lenders that at any time
refinances, replaces or succeeds to all or any portion of the Congress Facility or is
otherwise party to the Congress Credit Agreement); sometimes being referred to
herein individually as a "Congress Facility Lender."
1.28 "Congress Facility Paydown" means partial payment of the principal balances of
the Pool Indebtedness resulting from the application by the Existing Lenders of
cash proceeds from borrowings by the Company under the Congress Facility in
the amount of not less than $29,862,401 that will be paid over to the Existing
Lenders for application to the principal balances of the Pool Indebtedness.
1.29 "Consolidated Net Income" shall mean, with respect to any Person for any period,
the aggregate of the net income (loss) of such Person and its Subsidiaries, on a
consolidated basis, for such period (excluding to the extent included therein any
extraordinary and/or unusual and non-recurring gains) after deducting all charges
which should be deducted before arriving at the net income (loss) for such period
and, without duplication, after deducting the Provision for Taxes for such period,
all as determined in accordance with GAAP; provided, that, (a) the net income of
any Person that is not a wholly-owned Subsidiary or that is accounted for by the
equity method of accounting shall be included only to the extent of the amount of
dividends or distributions paid or payable to such Person or a wholly-owned
Subsidiary of such Person; (b) except to the extent included pursuant to the
foregoing clause, the net income of any Person accrued prior to the date it
becomes a wholly-owned Subsidiary of such Person or is merged into or
consolidated with such Person or any of its wholly-owned Subsidiaries or that
Person's assets are acquired by such Person or by its wholly-owned Subsidiaries
shall be excluded; (c) and the net income (if positive) of any wholly-owned
Subsidiary to the extent that the declaration or payment of dividends or similar
distributions by such wholly-owned Subsidiary to such Person or to any other
wholly-owned Subsidiary of such Person is not at the time permitted by operation
of the terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to such wholly-owned
Subsidiary shall be excluded. For the purposes of this definition, (i) net income
excludes any gain together with any related Provision for Taxes for such gain
realized upon the sale or other disposition of any assets that are not sold in the
ordinary course of business (including, without limitation, dispositions pursuant
to sale and leaseback transactions) or of any Capital Stock of such Person or a
Subsidiary of such Person and any net income realized or loss incurred as a result
of changes in accounting principles or the application thereof to such Person, and
(ii) the term "Provision for Taxes" shall mean an amount equal to all taxes
imposed on or measured by net income, whether Federal, State, Provincial, county
or local, and whether foreign or domestic, that are paid or payable by any Person
in respect of any period in accordance with GAAP.
1.30 "Default" shall have the meaning specified in Section 7 hereof.
1.31 "EBITDA" shall mean, as to any Person, with respect to any period, an amount
equal to: (a) the Consolidated Net Income of such Person and its Subsidiaries for
such period determined in accordance with GAAP, plus (b) depreciation,
amortization and other non-cash charges (including, but not limited to, imputed
interest and deferred compensation) for such period (to the extent deducted in the
computation of Consolidated Net Income of such Person), all in accordance with
GAAP, plus (c) Interest Expense for such period (to the extent deducted in the
computation of Consolidated Net Income of such Person), plus (d) charges for
Federal, State, local and foreign income taxes for such period (to the extent
deducted in the computation of Consolidated Net Income of such Person),
provided, that, for purposes of Section 6.14 hereof, the following amounts shall
not be considered in the calculation of the EBITDA of Huffy: (i) all non-recurring
restructuring charges and reorganization charges related to the restructuring of the
Huffy Bicycle Company Division of Huffy (which amounts are included in the
earnings set forth in the projections constituting Schedule 5.12 hereto), together
with professional fees and expenses related thereto and (ii) refinancing charges
(including professional fees and expenses) incurred in connection with the
restructuring of the financing arrangements of Huffy with the Term Loan Lenders
and Congress and the financing arrangements of Borrowers hereunder, in each
case to the extent not amortized as prepaid interest expense.
1.32 "Environmental Laws" shall mean all foreign, Federal, State and local laws
(including common law), legislation, rules, codes, licenses, permits (including any
conditions imposed therein), authorizations, judicial or administrative decisions,
injunctions or agreements between any Borrower or Guarantor and any
Governmental Authority, (a) relating to pollution and the protection, preservation
or restoration of the environment (including air, water vapor, surface water,
ground water, drinking water, drinking water supply, surface land, subsurface
land, plant and animal life or any other natural resource), or to human health or
safety, (b) relating to the exposure to, or the use, storage, recycling, treatment,
generation, manufacture, processing, distribution, transportation, handling,
labeling, production, release or disposal, or threatened release, of Hazardous
Materials, or (c) relating to all laws with regard to recordkeeping, notification,
disclosure and reporting requirements respecting Hazardous Materials. The term
"Environmental Laws" includes (i) the Federal Comprehensive Environmental
Response, Compensation and Liability Act of 1980, the Federal Superfund
Amendments and Reauthorization Act, the Federal Water Pollution Control Act of
1972, the Federal Clean Water Act, the Federal Clean Air Act, the Federal
Resource Conservation and Recovery Act of 1976 (including the Hazardous and
Solid Waste Amendments thereto), the Federal Solid Waste Disposal and the
Federal Toxic Substances Control Act, the Federal Insecticide, Fungicide and
Rodenticide Act, and the Federal Safe Drinking Water Act of 1974, (ii) applicable
state counterparts to such laws, and (iii) any common law or equitable doctrine
that may impose liability or obligations for injuries or damages due to, or
threatened as a result of, the presence of or exposure to any Hazardous Materials.
1.33 "Equipment" shall mean, as to each Borrower, all of such Borrower's now owned
and hereafter acquired equipment, machinery, computers and computer hardware
and software (whether owned or licensed), vehicles, tools, furniture, fixtures, all
attachments, accessions and property now or hereafter affixed thereto or used in
connection therewith, and substitutions and replacements thereof, wherever
located.
1.34 "ERISA" shall mean the United States Employee Retirement Income Security Act
of 1974, as the same now exists or may hereafter from time to time be amended,
modified, recodified or supplemented, together with all rules, regulations and
interpretations thereunder or related thereto.
1.35 "ERISA Affiliate" shall mean any person required to be aggregated with Borrower
or any of its Subsidiaries under Sections 414(b), 414(c), 414(m) or 414(o) of the
Code.
1.36 "Excess Availability" shall mean the amount calculated in good faith by the
Revolving Loan Agent at any time pursuant to the terms of the Congress Credit
Agreement, equal to: (a) the sum of (i) the aggregate amount of the Borrowing
Base of Borrowers plus (ii) the aggregate amount of unrestricted cash of
Borrowers which is free and clear of any pledge, lien, claim or other encumbrance
(other than Liens in favor of Revolving Loan Agent or Collateral Agent) and is
immediately available to Borrowers for use for working capital without condition
or restriction, minus (b) the sum of: (i) the amount of all then outstanding and
unpaid Revolving Loan Debt (as defined in the Intercreditor Agreement), plus (ii)
the aggregate amount of all trade payables and other obligations of Borrowers
which are more than sixty (60) days past due as of such time (other than trade
payables or other obligations which are the subject of a then pending bona fide
dispute between a Borrower and the vendor or other obligee to whom such
payable or other obligation is owed to the extent Revolving Loan Agent has been
advised of such dispute).
1.37 "Excluded Property" shall mean (a) the following assets of Borrower and
Guarantors as to which Agent is being granted a security interest and lien pursuant
to the terms hereof but has not as of the date hereof necessarily taken all required
actions in order to perfect its security interests and liens: (i) the Real Property of
Washington at 0000-0000 Xx Xxxxx Xxxxxxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000,
(ii) motor vehicles, (iii) the Capital Stock of the existing Subsidiaries of Huffy as
of the date hereof which are not incorporated in any jurisdiction in the United
States of America, (iv) the Inventory and Equipment located in Mexico, provided,
that, in no event shall Inventory and Equipment having a value of more than
$8,000,000 be located at any time in Mexico, (v) certain portable scanning
equipment, personal computers, other hand-held or mobile personal equipment
and related accessories and tools to the extent used by employees of Huffy
Service and Washington in the ordinary course of business at customer's
locations, to the extent such locations are not in jurisdictions where a financing
statement has been filed by Agent, and (vi) Equipment consisting of equipment,
furniture and fixtures of Washington at leased locations to the extent such
locations are in jurisdictions where a financing statement has not been filed by
Agent and (b) the Celina Property and the Harrisburg Property. The foregoing
shall not be construed as a waiver of any claims or rights of Agent or any Lender
with respect to any of the assets described in this definition or to limit or affect the
rights of Agent to at any time take such action as Agent may require, or to require
any Borrower or Guarantor to take such action, so as to preserve, protect or
establish the security interest, lien, claim or other interest of Agent or any Lender
in such assets (whether pursuant to Section 6.22 hereof or otherwise).
1.38 "Existing Indebtedness" means all Indebtedness of the Company, both existing on
the date hereof and hereafter accruing or arising, to any one or more of the
Existing Lenders, Asset Holdings and/or Selco arising under or on account of (i)
the Credit Agreement among the Company, KeyBank as Agent, KeyBank, Bank
One and Bank of America (or predecessors in interest thereof) dated April 21,
1992, as amended, together with promissory notes issued pursuant thereto, (ii) a
Line of Credit Agreement dated April 30, 1999 between the Company and Fifth
Third and a $10,000,000 Note dated April 30, 1999 issued by the Company to
Fifth Third, (iii) a Promissory Note in the amount of $20,000,000 dated April 29,
1998 issued by the Company to National City, (iv) the Prudential Obligations, (v)
the Reimbursement Obligations, (vi) the KeyBank Lease, (vii) the Bank One
Lease and (viii) certain swap agreements; the amounts of the Existing
Indebtedness as of the date of this Agreement are set forth on Exhibit A hereto.
1.39 "Farmington Bond Agreements" shall mean, collectively, the following (as the
same now exist or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced): (a) the Farmington Lease; (b) the Farmington
Bond Guarantee; (c) the Bond Purchase Agreement, dated August 1, 1994,
between the City of Farmington, Missouri and Prudential; (d) the Farmington
Bonds; (e) the Assignment of Rental Payments, dated as of August 1, 1994, by the
City of Farmington, Missouri in favor of Prudential; (f) the Escrow Agreement,
dated as of August 1, 1994, between the City of Farmington, Missouri and
KeyBank National Association (successor by merger with Society National Bank),
as escrow agent; and (g) all agreements, documents and instruments at any time
executed and/or delivered by any Borrower or Guarantor in connection with any
of the foregoing.
1.40 "Farmington Bonds" shall mean, collectively, the City of Farmington, Missouri
Industrial Development Revenue Bonds (Huffy Corporation Project) Series 1994
issued by the City of Farmington, Missouri in the original principal amount of
$20,000,000, as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
1.41 "Farmington Bond Guarantee" shall mean the Guarantee Agreement, dated
August 1, 1994, issued by Huffy in favor of Prudential, as the holder of the
Farmington Bonds, with respect to the obligations of the City of Farmington,
Missouri pursuant to the Farmington Bonds, as the same now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
1.42 "Farmington Lease" shall mean the Lease Agreement, dated as of August 1, 1994,
between the City of Farmington, Missouri, as lessor and Huffy, as lessee, as the
same now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
1.43 "Financing Agreements" shall mean, collectively, this Agreement, the Term Loan
Agreement, the Congress Facility, the Security Documents, and all notes,
guarantees, security agreements and other agreements, documents and instruments
now or at any time hereafter executed and/or delivered by any Borrower or
Obligor in connection with any of the foregoing, as the same now exist or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
1.44 "Funded Pool Indebtedness"shall mean the amounts of indebtedness set forth in
the column captioned "Stub" under "New Allocation" on Exhibit A, adjusted from
time to time to reflect payments made in respect of such indebtedness and
increases in the amounts thereof resulting from advances made in respect of the
letter of credit.
1.45 "GAAP" shall mean generally accepted accounting principles in the United States
of America as in effect from time to time as set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and the statements and pronouncements of the
Financial Accounting Standards Boards which are applicable to the circumstances
as of the date of determination consistently applied, except that, if any change in
generally accepted accounting principles after the date hereof affects the
calculation of compliance with the financial covenants in Section 6.14 hereof,
Huffy may by notice to Agent, or Agent may, by notice to Huffy require that such
covenants thereafter be calculated in accordance with generally accepted
accounting principles as in effect and applied by Guarantor immediately before
such change in generally accepted accounting principles occurred. If such notice
is given, the financial statements delivered pursuant to Section 6.7 hereof after
such change occurs shall be accompanied by reconciliations of the difference
between the calculation set forth therein and a calculation made in accordance
with generally accepted accounting principles as in effect from time to time after
such change occurs.
1.46 "Governmental Authority" shall mean any nation or government, any state,
province, or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining to
government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
1.47 "Guarantors" shall mean collectively, the following (together with their respective
successors and assigns): (a) Huffy Risk Management, Inc., an Ohio corporation;
(b) Huffy Brands Company, an Ohio corporation; (c) HCAC, Inc., an Ohio
corporation, formerly known as True Temper Hardware Company; (d) Hufco-Delaware Company, a Delaware corporation, formerly known as Xxxxx Baby
Products Company; and (e) Huffy Sports, Inc., a Wisconsin corporation, formerly
known as Xxxxx Xxxx Products Company.
1.48 "Harrisburg Property" shall mean the approximately 16.14 acres at 0000 Xxxxx
Xxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx 00000 owned by HCAC, Inc., a portion
of which is leased to TTHA Corp.
1.49 "Hazardous Materials" shall mean any hazardous, toxic or dangerous substances,
materials and wastes, including hydrocarbons, flammable explosives, friable
asbestos, urea formaldehyde insulation, radioactive materials, polychlorinated
biphenyls, pesticides, herbicides and any other kind and/or type of pollutants or
contaminants (including materials which include hazardous constituents) and
including any other substances, materials or wastes that are or become regulated
under any Environmental Law (including any that are or become classified as
hazardous or toxic under any Environmental Law).
1.50 "Hedging Obligations" shall mean, with respect to any Person, the obligations of
such Person under any of the following agreements or arrangements to the extent
that the primary purpose thereof is the reduction of risk for fluctuations in interest
rates or currency or commodity values relating to its customary business and not
for speculative purposes: (a) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (b) other agreements or
arrangements designed to protect such person against fluctuations in interest rates
or currency or commodity values.
1.51 "Huffy" shall mean Huffy Corporation, an Ohio corporation, and its successors
and assigns.
1.52 "Indebtedness" shall mean, with respect to any Person, any liability (a) in respect
of borrowed money (whether or not the recourse of the lender is to the whole of
the assets of such Person or only to a portion thereof) or evidenced by bonds,
notes, indentures or similar instruments; (b) representing the balance deferred and
unpaid of the purchase price of any property or services other than ordinary course
compensation to employees (except any such balance that constitutes an account
payable to a trade supplier in the ordinary course of business of such Person in
connection with obtaining goods, materials or services, to the extent such balance
is not more than ninety (90) days past due); (c) all Capital Leases; (d) any
contractual obligations, contingent or otherwise, of such Person to pay or be liable
for the payment of any indebtedness described in this definition of another Person,
including, without limitation, any such indebtedness, directly or indirectly
guaranteed, endorsed (other than for collection or deposit in the ordinary course of
business), co-made or discounted or sold with recourse by such Person, or in
respect of which such Person is otherwise directly or indirectly liable, including
contractual obligations (contingent or otherwise) arising through any agreement to
purchase, repurchase, or otherwise acquire such indebtedness, obligation or
liability or any security therefor, or to provide funds for the payment or discharge
thereof (whether in the form of loans, advances, stock purchases, capital
contributions or otherwise), or to maintain solvency, assets, level of income, or
other financial condition, or to make payment other than for value received; (e) all
obligations with respect to redeemable stock and redemption or repurchase
obligations under any Capital Stock or other equity securities issued by such
Person; (f) all reimbursement obligations and other liabilities, contingent or
otherwise, of such Person with respect to bonds, letters of credit, banker's
acceptances or similar documents or instruments issued for such Person's account;
(g) all indebtedness of such Person in respect of indebtedness of another Person
for borrowed money or indebtedness of another Person otherwise described in this
definition which is secured by any security interest in, or mortgage or lien upon
the interest in any asset of such Person, whether or not such obligations, liabilities
or indebtedness are assumed by or are a personal liability of such Person, all as of
such time; and (h) all obligations, liabilities and indebtedness of such Person
(marked to market) constituting Hedging Obligations.
1.53 "Intellectual Property" shall mean, as to each Borrower, such Borrower's now
owned and hereafter arising or acquired: patents, patent rights, patent
applications, copyrights, works which are the subject matter of copyrights,
copyright registrations, trademarks, trade names, trade styles, trademark and
service xxxx applications, and licenses and rights to use any of the foregoing; all
extensions, renewals, reissues, divisions, continuations, and continuations-in-part
of any of the foregoing; all rights to xxx for past, present and future infringement
of any of the foregoing; inventions, trade secrets, formulae, processes,
compounds, drawings, designs, blueprints, surveys, reports, manuals, and
operating standards; goodwill; customer and other lists in whatever form
maintained; and trade secret rights, copyright rights, rights in works of authorship,
and contract rights relating to computer software programs, in whatever form
created or maintained.
1.54 "Intercreditor Agreement" shall mean the Intercreditor and Subordination
Agreement, dated on or about the date hereof, by and among Congress, the
Existing Lenders, Selco and Asset Holdings, as acknowledged and agreed to by
Borrowers and Guarantors, as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.
1.55 "Inventory" shall mean, as to each Borrower, all of such Borrower's now owned
and hereafter existing or acquired raw materials, work in process, finished goods
and all other inventory of whatsoever kind or nature, wherever located.
1.56 "Interest Expense" shall mean, for any period, as to any Person and its
Subsidiaries, all of the following as determined in accordance with GAAP, total
interest expense, whether paid or accrued (including the interest component of
Capital Leases for such period), including, without limitation, all bank fees,
commissions, discounts and other fees and charges owed with respect to letters of
credit, banker's acceptances or similar instruments, but excluding (a) amortization
of discount and amortization of deferred financing fees and closing costs, (b)
interest paid in property other than cash and (c) any other interest expense not
payable in cash.
1.57 "KeyBank Lease" shall mean the lease between Selco and the Company dated
December 29, 1993.
1.58 "KeyBank Letters of Credit" shall mean, collectively, the following (as the same
now exist or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced): (a) Irrevocable Standby Letter of Credit No.
S98/95595, dated September 2, 1998, issued by KeyBank for the account of Huffy
in the face amount of $6,250,000 payable to Lumbermans Mutual Casualty
Company, American Motorists Insurance Company, American Manufacturers
Mutual Insurance Company, America Protection Insurance Company and National
Loss Control Service Corporation; (b) Irrevocable Standby Letter of Credit No.
S98/95594, dated as of August 25, 1998, issued by KeyBank for the account of
Huffy in the face amount of $8,500,000 payable to Travelers Indemnity Company;
and (c) Irrevocable Standby Letter of Credit No. S98/95593, dated as of August
19, 1998, issued by KeyBank for the account of Huffy in the face amount of
$1,280,000 payable to Insurance Company of North America.
1.59 "Lenders" shall mean the Existing Lenders, Selco, Asset Holdings and their
respective successors and assigns; sometimes being referred to herein individually
as a "Lender".
1.60 "Letter of Credit Accommodations" shall mean the letters of credit, merchandise
purchase or other guaranties which are from time to time either issued or opened
by KeyBank, Bank One or under the Congress Facility for the account of any
Borrower or with respect to which Congress has agreed to indemnify the issuer or
guaranteed to the issuer the performance by any Borrower of its obligations to
such issuer; sometimes being referred to herein individually as a "Letter of Credit
Accommodation."
1.61 "Loans" shall mean the loans made to or for the benefit of any Borrower under the
Congress Facility.
1.62 "Material Adverse Effect" shall mean a material adverse effect on (a) the financial
condition, business, performance, operations or properties of Borrowers and
Guarantors taken as a whole or the Huffy Bicycle Company Division of Huffy,
Royce and American, taken as a whole or any other Borrower or (b) the legality,
validity or enforceability of this Agreement, the Term Loan Agreement and/or any
of the Security Documents; (c) the legality, validity, enforceability, perfection or
priority of the security interests and liens of Agent or any Lender upon the
Collateral or any other property which is security for the Obligations; (d) the
Collateral of any Borrower (taken as a whole) or the value of the Collateral;
(e) the ability of Borrowers to repay the Obligations or of any Borrower to
perform its obligations under this Agreement, the Term Loan Agreement and/or
any of the Security Documents; or (f) the ability of Agent or any Lender to
enforce the Obligations enforceable by or owed to the Agent or such Lender or
realize upon the Collateral or otherwise with respect to the rights and remedies of
Agent or any Lender under this Agreement, the Term Loan Agreement and/or any
of the Security Documents.
1.63 "Miamisburg Headquarters Lease" shall mean the Lease Agreement, dated
December 29, 1993, by and between Huffy, as lessee, and Selco Service
Corporation, as lessor, with respect to the premises of Huffy at 000 Xxxxx Xxxx,
Xxxxxxxxxx, Xxxx 00000, as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.
1.64 "Net Available Proceeds" shall mean the aggregate cash proceeds received by any
Borrower, Guarantor or other Subsidiary of Huffy from any Asset Sale,
(a) net of the direct costs incurred specifically with respect to such Asset Sale
consisting of legal, accounting and investment banking fees, sales commissions,
title and recording tax expenses, and
(b) net of all payments required to be made by such Borrower, Guarantor or
Subsidiary, as the case may be, on any indebtedness (other than the Obligations
and the Term Loan Debt) secured by a valid and perfected security interest on the
assets subject to such Asset Sale which has priority over the Liens of Revolving
Loan Agent, Term Loan Agent or any Term Lender Lessor therein, and
(c) net of any portion of the proceeds from such Asset Sale required under the
terms of such sale to be held in escrow to be used to pay liabilities of such
Borrower, Guarantor or other Subsidiary, as the case may be, relating to the assets
subject to such Asset Sale; provided, that, immediately upon the release of any
funds from such escrow to any Borrower, Guarantor or other Subsidiary, as the
case may be, such amount so released shall constitute Net Available Proceeds, and
(d) net of all Federal, State, foreign and local taxes paid or payable as a result
thereof (after taking into account any available tax credits or deductions and any
tax arrangements), provided, that, in the case of a Business Unit Sale to the extent
such taxes are not payable upon the effectiveness of such Business Unit Sale,
(i) an amount equal to the good faith estimate thereof of independent certified
public accountants acceptable to Revolving Loan Agent and Term Loan Agent
shall be set aside from the proceeds and held in escrow to be used only to pay
such taxes, (ii) upon the request of Revolving Loan Agent or Term Loan Agent, at
the end of any tax year or upon any Business Unit Sale, the estimate of the
amount of such taxes shall be reviewed by the independent certified public
accountants) acceptable to Term Loan Agent and Revolving Loan Agent and the
amount held in escrow adjusted to reflect the estimate established pursuant to
such review, if necessary, (iii) upon the payment of such taxes (or as the Term
Loan Agent and Revolving Loan Agent may both agree) or any reduction in the
amount of the funds held in escrow, the amount remaining in such escrow, or the
amount of the reduction, as the case may be, shall constitute Net Available
Proceeds and shall be applied to the Obligations and the Term Loan Debt in
accordance with the terms of the Intercreditor Agreement, and (iv) on June 30,
2001 or such later date as Term Loan Agent and Revolving Loan Agent may both
agree, to the extent any amounts then remain in such escrow, (A) the amounts
then held in escrow shall be released, (B) the amounts then held in escrow shall
constitute Net Available Proceeds and (C) such amounts shall be applied to the
Obligations and the Term Loan Debt in accordance with the terms of the
Intercreditor Agreement, and
(e) net of severance obligations to non-senior management employees of the
Division or Borrower, Guarantor or other Subsidiary, as the case may be, whose
assets or Capital Stock are subject to such Asset Sale and amounts payable to
senior management employees of such Division, Borrower, Guarantor or other
Subsidiary, as the case may be, upon such sale under retention agreements with
such senior management employees; provided, that, (i) such retention
arrangements shall only be entered into with the persons included on a list
provided to Term Loan Agent and Revolving Loan Agent on or before the date
hereof, (ii) the terms of any such retention agreement severance obligations shall
be substantially consistent with the terms of similar agreements and severance
policies used by Huffy in connection with prior sales of business units and (iii) the
aggregate amount of such severance obligations and amounts payable under such
retention agreements shall not exceed the amount allowed for such obligations set
forth in Section 1.28(e) of the Intercreditor Agreement to be paid from the Net
Available Proceeds from such Asset Sale (including in such calculation the
amounts subject to this clause (e)).
(f) net of (i) customary contingent indemnification liabilities to the purchaser
in transactions of such type and (ii) premiums payable for insurance to cover
liabilities retained by such Borrower, Guarantor or other Subsidiary, as the case
may be, relating to the assets subject to such Business Unit Sale with respect to
environmental remediation liabilities and/or product liability claims (the liabilities
and premiums described in clauses (i) and (ii) above being referred to collectively
as the "Contingent Liabilities"), provided, that, the aggregate amount of
Contingent Liabilities of any borrower, Guarantor or other Subsidiary in
connection with any such Business Unit Sale shall not exceed the applicable
amount specified in Exhibit E of the Intercreditor Agreement.
Net Available Proceeds shall exclude any non-cash proceeds received from any
Asset Sale, but shall include such proceeds when and as converted to cash or other
immediately available funds. Any instruments issued to any Borrower, Guarantor
or other Subsidiary, as the case may be, as part of the consideration for such Asset
Sale shall be delivered to Revolving Loan Agent, Term Loan Agent or the
applicable Term Lender Lessor, as the case may be, who under the terms of the
Intercreditor Agreement would be entitled to first receive the payments on such
instrument under the terms of the Intercreditor Agreement.
1.65 "Obligations" shall mean any and all of the following: (a) the Existing
Indebtedness and the Indebtedness provided for under the Term Loan Agreement,
the Security Documents and this Agreement; and (b) Loans and Letter of Credit
Accommodations under the Congress Facility and all other obligations, liabilities
and indebtedness of every kind, nature and description owing by any or all of
Borrowers to any of the Congress Facility Lenders under the Congress Facility,
including principal, interest, charges, fees, costs and expenses, however
evidenced, whether as principal, surety, endorser, guarantor or otherwise, whether
now existing or hereafter arising, whether arising before, during or after the initial
or any renewal term of this Agreement or after the commencement of any case
with respect to any Borrower under the United States Bankruptcy Code or any
similar statute (including, without limitation, the payment of interest and other
amounts which would accrue and become due but for the commencement of such
case, whether or not such amounts are allowed or allowable in whole or in part in
such case), whether direct or indirect, absolute or contingent, joint or several, due
or not due, primary or secondary, liquidated or unliquidated, secured or
unsecured, and however acquired by Agent, any Lender or any of the Congress
Facility Lenders.
1.66 "Obligor" shall mean any guarantor, endorser, acceptor, surety or other person
liable on or with respect to the Obligations or who is the owner of any property
which is security for the Obligations (including, without limitation, Guarantor),
other than a Borrower.
1.67 "Permits" shall have the meaning set forth in Section 6 hereof.
1.68 "Person" or "person" shall mean any individual, sole proprietorship, partnership,
corporation (including, without limitation, any corporation which elects
subchapter S status under the Code), limited liability company, limited liability
partnership, business trust, unincorporated association, joint stock corporation,
trust, joint venture or other entity or any government or any agency or
instrumentality or political subdivision thereof.
1.69 "Pool Indebtedness" means the Existing Indebtedness, other than the KeyBank
Lease and the Bank One Lease, after giving effect to the Congress Facility
Paydown and the Term Loan Paydown.
1.70 "Prudential" shall mean The Prudential Insurance Company of America, a New
Jersey corporation, and its successors and assigns.
1.71 "Prudential Obligations" shall mean the indebtedness and obligations of the
Company under a Guarantee Agreement dated as of August 1, 1994 issued by the
Company and held by Prudential as the holder of the Bonds therein described.
1.72 "Real Property" shall mean, as to each Borrower, all now owned and hereafter
acquired real property of such Borrower, including leasehold interests, together
with all buildings, structures, and other improvements located thereon and all
licenses, easements and appurtenances relating thereto, wherever located.
1.73 "Receivables" shall mean: (a) all Accounts; (b) all amounts at any time payable to
any Borrower in respect of the sale or other disposition by any Borrower of any
Account or other obligation for the payment of money; (c) all interest, fees, late
charges, penalties, collection fees and other amounts due or to become due or
otherwise payable in connection with any Account; (d) all letters of credit,
indemnities, guarantees, security or other deposits and proceeds thereof issued
payable to any Borrower or otherwise in favor of or delivered to any Borrower in
connection with any Account; and (e) all other contract rights, chattel paper,
instruments, notes, general intangibles and other forms of obligations owing to
any Borrower, whether from the sale and lease of goods or other property,
licensing of any property (including Intellectual Property or other general
intangibles), rendition of services or from loans or advances by any Borrower or
to or for the benefit of any third person (including loans or advances to any
Affiliates or Subsidiaries) or otherwise associated with any Accounts, Inventory or
general intangibles of any Borrower (including, without limitation, choices in
action, causes of action, tax refunds, tax refund claims, any funds which may
become payable to any Borrower in connection with the termination of any
employee benefit plan and any other amounts payable to any Borrower from any
employee benefit plan, rights and claims against carriers and shippers, rights to
indemnification, business interruption insurance and proceeds thereof, casualty or
any similar types of insurance and any proceeds thereof and proceeds of insurance
covering the lives of employees on which any Borrower is beneficiary).
1.74 "Records" shall mean, as to each Borrower, all of such Borrower's present and
future books of account of every kind or nature, purchase and sale agreements,
invoices, ledger cards, bills of lading and other shipping evidence, statements,
correspondence, memoranda, credit files and other data relating to the Collateral
or any account debtor, together with the tapes, disks, diskettes and other data and
software storage media and devices, file cabinets or containers in or on which the
foregoing are stored (including any rights of such Borrower with respect to the
foregoing maintained with or by any other person).
1.75 "Reimbursement Obligations" shall mean the obligations of the Company to
KeyBank and Bank One under agreements entered into by the Company with such
banks to reimburse such banks for all drawings and other amounts paid and
liabilities incurred in respect of certain standby and documentary letters of credit
issued for the account of the Company
1.76 "Remaining Indebtedness" means the balance of the Existing Indebtedness that
remains outstanding after the Congress Facility Paydown and the Term Loan
Paydown are effected.
1.77 "Required Lenders" shall mean, at any time, Lenders to whom at least sixty-six
and two-thirds percent (66.67%) of the total of the following Indebtedness is
owed: (a) the then-outstanding Funded Pool Indebtedness, (b) all Reimbursement
Obligations relating to all undrawn portions of the Bank One Letters of Credit and
the KeyBank Letters of Credit, and (c) the then-outstanding aggregate amounts of
the Notes (as defined in the Term Loan Agreement). The portion of the
Indebtedness described in clauses (a) and (b) of the preceding sentence
attributable to drawn and undrawn amounts under the Bank One Letters of Credit
and the Key Bank Letters of Credit ("L/C Debt") allocated to each Lender for
purposes of determining the percentage of the total amount of all of the
Indebtedness described in clauses (a), (b) and (c) above held by the Lender shall
be the then-outstanding amount of the participations in the L/C Debt held by the
Lender and, in the cases of KeyBank and Bank One, the respective then-
outstanding amounts of the L/C Debt held by each of them after giving effect to
the participations held by the other Lenders. Each Lender holding a participation
shall be entitled to vote the Indebtedness attributable to such participation.
1.78 "Restructuring Agreement" shall mean this Agreement, including, as it may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
1.79 "Revolving Loan Agent" shall mean Congress, in its capacity as administrative
and collateral agent acting for and on behalf of the Congress Facility Lenders
pursuant to the Congress Credit Agreement and its successors and assigns
(including any replacement or successor agent or any additional agent acting for
and on behalf of Congress Facility Lenders).
1.80 "Securities Exchange Act" shall mean the Securities Exchange Act of 1934, as the
same now exists or may hereafter from time to time be amended, modified,
recodified or supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
1.81 "Security Documents" means the agreements and instruments referred to in
Sections 4.2(iv) through (xiv) hereof, inclusive.
1.82 "Solvent" shall mean, at any time with respect to any Person, that at such time
such Person (a) is able to pay its debts as they mature and has (and has reason to
believe it will continue to have) sufficient capital (and not unreasonably small
capital) to carry on its business consistent with its practices as of the date hereof,
and (b) the assets and properties of such Person at a fair valuation (and including
as assets for this purpose all rights of subrogation, contribution or indemnification
arising pursuant to any guarantees given by such Person) are greater than the
Indebtedness of such Person, and including subordinated and contingent liabilities
computed at the amount which, to the best of such Person's knowledge, represents
an amount which can reasonably be expected to become an actual or matured
liability (and including as to contingent liabilities arising pursuant to any
guarantee the face amount of such liability as reduced to reflect the probability of
it becoming a matured liability).
1.83 "Subsidiary" shall mean, with respect to any Person, any corporation, limited or
general partnership, trust, association or other business entity of which an
aggregate of at least a majority of the outstanding Capital Stock or other interests
entitled to vote in the election of the board of directors of such corporation
(irrespective of whether, at the time, Capital 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), managers, trustees or other controlling persons, or
an equivalent controlling interest therein, of such Person is, at the time, directly or
indirectly, owned by such Person and/or one ore more Subsidiaries of such
Person.
1.84 "Sussex Lease" shall mean the Lease and Development Agreement, dated May 29,
1996, between Asset Holdings and Huffy, with respect to the premises of Huffy at
X00 X00000, X. Xxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxx 00000, as the same now
exists or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.
1.85 "Taxes" shall mean any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of any Lender, such taxes (including income taxes,
franchise taxes or capital taxes) as are imposed on or measured by such Lender's
net income or capital by any jurisdiction (or any political subdivision thereof).
1.86 "Term Lender Lease Debt" shall mean the Term Loan Debt owing to Selco or
KeyBank arising pursuant to the Miamisburg Headquarters Lease, the Term Loan
Debt owing to Asset Holdings or Bank One arising pursuant to the Sussex Lease
and the Term Loan Debt owing to Prudential (as assignee of the City of
Farmington, Missouri) arising pursuant to the Farmington Lease.
1.87 "Term Lender Lease Priority Collateral" shall mean Real Property of Borrower
and fixtures related thereto subject to the Farmington Lease, the Miamisburg
Headquarters Lease and the Sussex Lease.
1.88 "Term Loan" means the term loan in the amount of $40,000,000 by the Existing
Lenders to the Company and certain of its subsidiaries representing the
restructuring of a portion of the Pool Indebtedness.
1.89 "Term Loan Agent" shall mean KeyBank National Association, a national
banking association, in its capacity as collateral agent acting for and on behalf of
the Term Loan Lenders pursuant to the Term Loan Agreement, this Agreement,
the Security Documents and the other Term Loan Lender Agreements, and its
successors and assigns (including any replacement or successor agent or
additional agent acting for and on behalf of the Term Loan Lenders).
1.90 "Term Loan Agreement" means the Credit Agreement by and among the
Company and certain of its Subsidiaries, the Existing Lenders and the Agent dated
as of January 24, 2000.
1.91 "Term Loan Debt" shall mean all obligations, liabilities and indebtedness of every
kind, nature and description owing by any Borrower or Guarantor to any Term
Loan Lender, including principal, interest, charges, fees, premiums, indemnities
and expenses, however evidenced, whether as principal, surety, endorser,
guarantor or otherwise, arising under the Term Loan Lender Agreements to the
extent permitted under Section 6.10 hereof and consisting of the Term Lender
Lease Debt, the Term Loan Senior Debt and the Term Loan Subordinated Debt.
Without limiting the generality of the foregoing, the Term Loan Debt shall
include all existing and future obligations, liabilities and indebtedness of
Borrower, contingent or otherwise, (a) to KeyBank arising pursuant to or in
connection with the KeyBank Letters of Credit; (b) to KeyBank and/or Selco
arising pursuant to or in connection with the Miamisburg Headquarters Lease; (c)
to Bank One or Asset Holdings arising pursuant to or in connection with the
Sussex Lease; (d) to Bank One pursuant arising pursuant to or in connection with
the Bank One Letters of Credit; and (e) to Prudential arising pursuant to or in
connection with the Farmington Lease, the Farmington Bonds Guarantee or
otherwise with respect to the Farmington Bonds.
1.92 "Term Loan Intangibles" shall mean all of the following assets of Borrowers,
whether now owned or hereafter acquired: contracts, contract rights, leases,
licenses and general intangibles relating to the Intellectual Property, Equipment
and Real Property, including, without limitation, all service agreements (including
utility services and supply agreements), permits and licenses, operating
agreements, equipment and real property leases and contract rights, choses in
action or causes of action or claims with respect to Equipment or Real Property,
instruments or chattel paper which evidences a payment for Equipment or Real
Property sold by any Borrower, documents which evidence rights to Equipment or
Real Property, guaranty or warranty claims with respect to Equipment or Real
Property, and the proceeds of all of the foregoing.
1.93 "Term Loan Lender Agreements" shall mean, collectively, the following (as the
same now exist or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced): (a) the Term Loan Agreement; (b) the
Restructuring Agreement; (c) the Term Loan Senior Notes; (d) the Miamisburg
Headquarters Lease; (e) the Sussex Lease; (f) the Farmington Lease; (g) the
Farmington Bonds Guarantee; (h) the agreements of Huffy with KeyBank with
respect to the KeyBank Letters of Credit; (i) the agreements of Huffy with Bank
One with respect to the Bank One Letters of Credit; (j) the agreements, documents
and instruments set forth on Schedule 1.93 hereto; and (l) all other agreements,
documents and instruments at any time executed and/or delivered by any Debtor
with, to or in favor of any Term Loan Lender in connection therewith or related
thereto; sometimes being referred to herein individually as a "Term Loan Lender
Agreement".
1.93 "Term Loan Lenders" shall mean, collectively, the following and their respective;
successors and assigns (a) KeyBank in its individual capacity and as Term Loan
Collateral Agent; (b) Bank One; (c) Bank of America; (d) Fifth Third; (e)
National City; (f) Selco; (g) Asset Holdings and (h) Prudential; sometimes each
being referred to herein individually as a "Term Loan Lender".
1.94 "Term Lender Lessors" shall mean, collectively, the following (and their
respective successors and assigns): (a) Selco Service Corporation, an Ohio bank
service corporation; (b) Asset Holdings Company VI, LLC, a Massachusetts
limited liability company; and (c) The Prudential Insurance Company of America,
a New Jersey corporation; sometimes being referred to herein individually as a
"Term Lender Lessor".
1.95 "Term Loan Paydown" means the partial refinancing of the principal balances of
the Pool Indebtedness resulting from the Term Loan in the amount of $40,000,000
(it being specifically understood and agreed that (i) the acceptance of a Note (as
such term is defined in the Term Loan Agreement) by Prudential does not
constitute a payment for purposes of the Farmington Bonds, the Farmington
Bonds Guarantee or the Farmington Lease and (ii) to the extent Prudential
receives any cash payment from the Congress Facility Paydown and/or with
respect to the principal balance of the Note any such payment shall reduce on a
dollar-for-dollar basis the principal amount of the Farmington Bonds and
accordingly the Company's obligations under the Farmington Lease and
Farmington Bond Guarantee).
1.96 "Term Loan Priority Collateral" shall mean the Intellectual Property, the
Equipment, the Real Property and the Term Loan Intangibles; provided, that, the
Term Loan Priority Collateral shall not include the Term Lender Lease Priority
Collateral.
1.97 "Term Loan Senior Debt" shall mean the Term Loan Debt in the original
aggregate principal amount of $40,000,000 evidenced by or arising pursuant to
the Term Loan Senior Notes.
1.98 "Term Loan Senior Notes" shall mean, collectively, the Term Loan Senior Notes,
each dated of even date herewith, issued by Huffy payable to each Term Loan
Lender, in the aggregate original principal amount of $40,000,000, as the same
now exist or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
1.99 "Term Loan Subordinated Debt" shall mean the Term Loan Debt in the original
aggregate principal amount of $27,134,417 subject to the terms and conditions of
the Restructuring Agreement and including the Term Loan Debt arising pursuant
to the contingent reimbursement obligations of Huffy to (i)KeyBank in respect of
the KeyBank Letters of Credit and (ii) Bank One in respect of the Bank One
Letters of Credit.
1.100 "Value" shall mean, with respect to Inventory of each Borrower, the lower of cost
computed on a first-in-first-out cost basis in accordance with the historical
practices of such Borrower previously disclosed to Agent and in accordance with
GAAP or market value in accordance with GAAP, as determined by such
Borrower in its good faith judgment so long as the final determination is
acceptable to Agent.
Terms not defined herein that are defined in the Congress Facility shall have the
respective meaning therein ascribed to them.
2. The Existing Indebtedness.
2.1 Acknowledgment of Validity, Defaults, Amounts, etc.. The Company hereby
absolutely and unconditionally warrants and acknowledges that (i) all and each
portion of the Existing Indebtedness constitutes a valid and binding obligation of
the Company, (ii) certain portions of the Existing Indebtedness have become due
by the passage of the stated maturity dates applicable thereto, (iii) one or more
defaults or events of default exist and remain uncured under each of the
agreements and/or instruments evidencing the Existing Indebtedness, the Existing
Lenders have not, except as provided in this Agreement, waived any such defaults
or events of default and each of the Existing Lenders has, except as otherwise
herein provided, the right to demand and enforce payment in full of all of the
Existing Indebtedness held by such Existing Lender, (iv) the Company has no
defenses, setoffs, recoupments or other grounds of defense, subordination or
avoidance, in whole or in part, with respect to the obligations comprising the
Existing Indebtedness and (v) the principal balances of the Existing Indebtedness
set forth on Exhibit A are true and accurate as of the respective dates indicated
and all interest and other charges that have been accrued, billed and/or paid have
been properly charged and correctly computed.
2.2 Relationship to Agreements and Instruments Governing Existing Indebtedness.
This Agreement shall not affect or impair the validity of any Agreement or
instrument evidencing or relating to any Existing Indebtedness, and the Company
hereby ratifies and confirms all such agreements and instruments. All such
agreements and instruments are and shall remain in full force and effect and shall
be enforceable in accordance with their respective terms except only in the
manner and to the extent inconsistent with the provisions of this Agreement. (It is
expressly understood and agreed, however, that all commitments of the Existing
Lenders to make loans or extend credit provided for under the agreements and
instruments evidencing the Existing Indebtedness are hereby terminated). During
the period described in Section 3.2, the agreements, representations, warranties
and covenants set forth in this Agreement shall control over and supersede the
agreements, representations, warranties and covenants set forth in the agreements
and instruments evidencing the Existing Indebtedness, except that all provisions
of the Key Bank Lease, the Bank One Lease and the Farmington Bond
Agreements relating to consents of KeyBank, Selco, Asset Holdings and/or
Prudential, as the case may be, required for the sale, lease or other disposition of
the leased property subject to such agreements and the rights and interests of
KeyBank, Selco, Bank One, Asset Holdings and/or Prudential, as the case may be,
in such leased property shall not be altered or amended by this Agreement.
Thereafter, all provisions of this Agreement shall continue in full force and effect
and the rights and remedies of the Existing Lenders, Asset Holdings and Selco
hereunder shall be in addition to their respective rights and remedies under the
agreements and instruments evidencing the Existing Indebtedness. In all cases of
inconsistency between the provisions of the agreements and instruments
evidencing the Existing Indebtedness and the provisions of this Agreement, the
provisions of this Agreement shall control. This Agreement does not constitute a
novation of any Agreement or instrument evidencing any Existing Indebtedness.
The relationship between the Existing Lenders and the Company is and shall
remain solely that of creditors and debtor and neither this Agreement nor any of
the transactions herein provided for or described shall establish any form of joint
venture or other relationship between the Company and the Existing Lenders other
than that of debtor and creditor.
2.3 Releases. The Company hereby, absolutely and unconditionally releases and
forever discharges each and all of the Existing Lenders, Asset Holdings, Selco and
their respective predecessors, successors, shareholders, directors, assigns,
employees, agents, counsel and/or advisors, past and present ("Releasees"), from
any and all claims, demands, damages, causes of action, liabilities, losses, costs
and expenses known or unknown that the Company had or may have had on or
before the date hereof or may in the future claim to have had on or before the date
hereof against any one or more Releasees based on or arising out of the Existing
Indebtedness, any transactions and/or agreements relating thereto, any decision to
advance or refuse to advance funds, and/or any acts or omissions of any of the
Releasees relating in any way to any Existing Indebtedness, any such transactions
and/or agreements, and/or any other lending or banking relationship with the
Company.
3. The Remaining Indebtedness.
3.1 Consent to Congress Facility Paydown, Term Loan Paydown and Allocations and
Applications Thereof. The Company unconditionally and irrevocably consents
and agrees to the Congress Facility Paydown and the Term Loan Paydown and the
Company and the Existing Lenders agree to the following allocations and
applications of the proceeds of the Congress Facility Paydown and the Term Loan
Paydown: (i) the Congress Facility Paydown will be allocated among the Existing
Lenders in the manner set forth in column G of Exhibit A, (ii) that each Existing
Lender will apply the portion of the Congress Facility Paydown so received
exclusively to the portion of the Funded Pool Indebtedness specified in column B
of Exhibit A which is held by such Existing Lender, (iii) the Existing Lenders will
allocate the Term Loan in the manner set forth under the "New Allocation"
section of Exhibit A, and (iv) that each Existing Lender will apply the proceeds of
the portion of the Term Loan made by such Existing Lender to the funded portion
of the Pool Indebtedness held by such Existing Lender. The Company further
agrees that the Existing Lenders may purchase and sell participations in the
Reimbursement Obligations in the respective amounts set forth under the "New
Allocation" section of Exhibit A and otherwise on such terms as the Existing
Lenders may from time to time agree.
3.2 Waiver Period. The Existing Lenders, Asset Holdings and Selco agree, on and
subject to the terms hereof, to waive any and all defaults under any Agreement or
instrument evidencing or relating to any of the Existing Indebtedness (other than
this Agreement, the Term Loan Agreement and/or the Security Documents) and to
forbear from enforcing their respective rights to demand and/or enforce payment
of the Remaining Indebtedness for the period beginning on the date hereof and
ending on the earlier of (i) the occurrence of any one or more of the events
described in Section 1.57 (b) of the Intercreditor Agreement or (ii) June 30, 2001.
Notwithstanding the foregoing, or any other provision of this Agreement, in no
event shall any waiver or consent of the Existing Lenders with respect to the
Congress Credit Agreement and the other agreements, documents and instruments
contemplated by the Congress Facility be revocable or terminable at any time.
3.3 Letters of Credit for Workers' Compensation Obligations. The Existing Lenders
agree, notwithstanding any Default hereunder, to the extent of their respective pro
rata participations in the Reimbursement Obligations associated with such letters
of credit, to renew or extend letters of credit issued by KeyBank prior to the date
hereof to secure workers' compensation obligations of the Company for periods
ending on or before June 30, 2001 in aggregate amounts equal to the lesser of (i)
$16,030,000 and (ii) the aggregate amount of the Company's workers'
compensation exposure as determined at the time by the Company's insurers
based on standard, customary practices and actuarial assumptions used in
estimating such exposure. The Company agrees to make reasonable efforts to
reduce the amounts required for such letters of credit.
3.4 Pricing.
a. Certain Remaining Indebtedness. Notwithstanding contrary provisions of
the agreements governing the Remaining Indebtedness, the Company agrees that
all of the Remaining Indebtedness except (i) the portion of the Reimbursement
Obligations relating to undrawn amounts under the letters of credit to which such
Reimbursement Obligations relate, (ii) the Prudential Obligations, (iii) the
KeyBank Lease and (iv) the Bank One Lease, will bear interest from and after the
date hereof at a rate of twenty-four percent (24.00%) per annum, computed on the
basis of a 360 day year for the actual number of days elapsed and payable as
hereinafter set forth in Section 3.5, in lieu of the rate(s) applicable under the
agreements or instruments governing such Remaining Indebtedness, provided,
however, that if such Remaining Indebtedness has been finally and
unconditionally repaid in full in cash by any of the dates set forth below, then the
interest rate set forth above shall be adjusted to the rate set forth opposite such
date, effective from and after the date of this Agreement:
Repayment Date
Adjusted Interest Rate
June 30, 2000
12.00%
September 30, 2000
15.00%
December 31, 2000
18.00%
March 31, 2001
21.00%
b. The Reimbursement Obligations. Notwithstanding contrary provisions of the agreements governing the Reimbursement Obligations, the Company agrees
that all of the Reimbursement Obligations for all undrawn portions of the letters
of credit to which they relate will bear interest from and after the date hereof at the
rate of 1.50 percent (1.50%) per annum until September 30, 2000 and at a rate of
3.00 percent (3.00%) per annum thereafter, computed in all cases on the basis of a
360 day year for the actual number of days elapsed and payable as hereinafter set
forth in Section 3.5, in lieu of the rate(s) applicable under the agreements
governing the Reimbursement Obligations. In addition, administration fees of
.375 percent (0.375%) per annum (the "L/C Administration Fees") shall be
charged by KeyBank and Bank One in respect of the entire amounts of the letters
of credit to which the Reimbursement Obligations relate, computed on the basis of
a 360 day year for the actual number of days elapsed and payable as hereinafter set
forth in Section 3.5. If any drawings are made on the letters of credit, the amounts
so advanced by KeyBank and/or Bank One shall bear interest from and after the
date of the advance at the rates provided for in Section 3.4(a) above. It is
understood and agreed that all fees paid by the Company to KeyBank or Bank One
in respect of the KeyBank Letters of Credit or the Bank One Letters of Credit
prior to the date hereof shall be solely for the account of KeyBank or Bank One,
respectively, shall not be refundable and shall not reduce or be a credit against any
of the amounts required to be paid by the Company hereunder.
c. The Prudential Obligations. Notwithstanding contrary provisions of the
agreements governing the Prudential Obligations, the Company agrees to pay to
Prudential a fee in an amount equal to (i) the amount determined pursuant to the
next sentence less (ii) all interest, if any, paid to Prudential by or for the account
of the City of Farmington, Missouri, in respect of the "Bonds" as defined in the
Prudential Guaranty in respect of periods from and after the date hereof.
The amount referred to in subclause (i) of the preceding sentence shall equal the
amount obtained by applying to the principal amount of the Prudential Obligations
from time to time outstanding from and after the date hereof a rate of twenty-four
percent (24.00%) per annum, computed on the basis of a 360 day year for the
actual number of days elapsed and payable as hereinafter set forth in Section 3.5,
provided, however, that if all of the Remaining Indebtedness described in Section
3.4(a) and the Prudential Obligations have been finally and unconditionally repaid
in full in cash by any of the dates set forth below, then the rate set forth above
shall be adjusted to the rate set forth opposite such date, effective from and after
the date of this Agreement:
Repayment Date
Adjusted Interest Rate
June 30, 2000
September 30, 2000
December 31, 2000
March 31, 2001
|
| 12.00%
|
| 15.00%
|
| 18.00%
|
21.00%
d. The KeyBank Lease and the Bank One Lease. Notwithstanding contrary provisions of the KeyBank Lease and the Bank One Lease, the rental rates under
both such leases shall be adjusted to reflect a per annum interest rate equal to (i)
the prime rates of KeyBank and Bank One, respectively, from time to time in
effect plus 50 basis points through the period from the date hereof through June
30, 2001 and (ii) the prime rates of KeyBank and Bank One, respectively, from
time to time in effect plus 200 basis points for the period subsequent to June 30,
2001 until maturity, in each case computed on the basis of a 360 day year for the
actual number of days elapsed; provided, however, that the rental rates under
either lease will be adjusted, to the extent necessary, to reflect a per annum
interest rate equal to the prime rates of KeyBank and Bank One, respectively,
from time to time in effect plus 50 basis points in the event the interest of the
lessee under the lease is sold to a purchaser acceptable to the lessor. In all cases,
changes in the interest rate shall occur immediately upon any change in the prime
rate and the rental payments shall be adjusted to reflect each change in the prime
rate.
3.5 Payment of Interest and Fees. In addition to all other amounts required to be paid
by the Company, the Company agrees to pay the following:
Beginning February 1, 2000 and continuing on the first day of each month
thereafter until the Remaining Indebtedness has been paid in full or the waiver
period ends, whichever occurs first, the Company shall pay in cash to the
Administrative Agent for the benefit of the Existing Lenders
a. an aggregate amount on account of interest and fees on the Remaining
Indebtedness (other than the Reimbursement Obligations in respect of
undrawn portions of letters of credit, the KeyBank Lease and the Bank
One Lease) determined by applying to the total principal balances of such
Remaining Indebtedness from time to time outstanding a per annum rate
of 12.00 percent per annum, increased cumulatively by 25 basis points
effective on the first day of each successive calendar quarter commencing
with the quarter beginning July 1, 2000;
b. Interest on Reimbursement Obligations representing the undrawn
portions of letters of credit and the L/C Administration Fees relating to the
Reimbursement Obligations in the full amounts accruing thereon; and
c. All regularly scheduled payments required under the KeyBank Lease
and the Bank One Lease, as adjusted pursuant to Section 3.4(d) above and
including monthly principal amortization.
From and after the end of the waiver period, all interest and fees shall be due and
payable in full to the Administrative Agent, without demand.
Borrowers shall not make or be required to make any payments in respect of the
Farmington Lease or otherwise in respect of the Farmington Bonds, except (a) to
the extent that any payments in respect of the Term Loan Senior Debt or the Term
Loan Subordinated Debt which are permitted to be made hereunder are allocated
to the obligations of Huffy in respect thereof, (b) for payments required to be
made under the terms of such Farmington Lease as in effect on the date hereof
directly to the City of Farmington, Missouri, for its own account (and not for the
benefit of Prudential) in an amount up to $36,000 in any year, and (c) for
payments in respect of real estate and personal property taxes with the real
property and Equipment subject to the Farmington Lease.
3.6 Payment of Principal.
a. Quarterly Amortization. Subject to satisfaction of the conditions with
respect thereto set forth in the Intercreditor Agreement, the Company
agrees to pay to the Administrative Agent for the benefit of each of the
Existing Lenders on June 30, 2000 and on the last day of each September,
December and March thereafter to and including March 31, 2001 an
amount equal to (i) $1,000,000 times (ii) the Existing Lender's pro rata
share of the Funded Pool Indebtedness then outstanding, provided,
however, that if any such payment cannot be made in whole or in part
because applicable minimum Excess Availability requirements described
below are not satisfied, the obligation to make such payment shall be
deferred until, but only until the earliest time thereafter that the payment
may be made in compliance with Section 3.2 (b)(ii) of the Intercreditor
Agreement. Any partial payment that can be made shall be made and shall
be allocated among the Existing Lenders as provided above.
The minimum Excess Availability required to be maintained by the
Company under the Congress Facility during a given quarter shall be no
greater than the following:
Quarter Ending
Minimum Availability
March 31
June 30
September 30
December 31
|
| $20,000,000
| | 25,000,000
| | 15,000,000
| 25,000,000
b. Asset Sale Proceeds. Subject to satisfaction of any applicable terms of the
Congress Facility requiring that the Company maintain Excess Availability
in amounts not less than those set forth in Section 3.6(a) above, the
Company shall make mandatory prepayments on the Remaining
Indebtedness to the Administrative Agent for the benefit of each of the
Existing Lenders whenever the Company or any Subsidiary consummates
an Asset Sale (including in the case of the Farmington facility, any
proceeds received by Prudential exceeding the balance of the Company's
direct or indirect indebtedness to Prudential) that produces Net Available
Proceeds in amounts, if any, that are subject to application pursuant to
section 2.6(e)(i) of the Intercreditor Agreement in the full amount of the
proceeds so applied, provided, however, that if any such payment cannot
be made in whole or in part because applicable minimum availability
requirements under the Congress Facility as set forth in subsection a above
are not satisfied, the obligation to make such payment shall be deferred
until, but only until, the earliest time thereafter that the payment may be
made in compliance with Section 3.2 (b)(ii) of the Intercreditor
Agreement. Any partial payment that can be made shall be made and shall
be allocated among the Existing Lenders as provided in subsection 3.6(c)
below.
c. Allocation and Application of Payments. Each of the Existing Lenders
agrees that all payments of principal made to the Administrative Agent
pursuant to subsections 3.6(a) and/or 3.6(b) above shall be allocated
among and applied by the Existing Lenders as follows: (i) first, such
payments shall be allocated among the Existing Lenders pro rata based on
the portion of the total amount of Funded Pool Indebtedness held by each
Existing Lender at the time the payment is made and each Existing Lender
shall apply payments received by it first to payment of the Funded Pool
Indebtedness held by such Existing Lender, (ii) after all outstanding
Funded Pool Indebtedness has been paid, payments will be allocated pro
rata among the Existing Lenders based on the portion of the outstanding
Reimbursement Obligations or participations therein, as the case may be,
held by each Existing Lender and held as cash collateral to secure payment
of such Reimbursement Obligations, (iii) thereafter, payments will be
allocated pro rata based on the then unsatisfied portions of the Remaining
Indebtedness held by each Existing Lender and will be applied by each
Existing Lender to payment thereof. Prudential agrees to apply payments
received by it in cash for application to its portion of the Funded Pool
Indebtedness to retire or redeem the Bonds as promptly as possible under
the terms, conditions and procedures applicable thereto.
d. End of Waiver Period. All Existing Indebtedness, other than that
represented by the Bank One Lease and the KeyBank Lease, not previously
paid shall be due and payable in full, without demand, on June 30, 2001 or
earlier pursuant to Section 7 hereof.
3.7 Collateral; Priorities of Entitlement to Proceeds. The Company and certain of its
Subsidiaries will grant to the Collateral Agent for the Existing Lenders (both in
their respective capacities as holders of the Existing Indebtedness and the lenders
of the Term Loan) perfected security interests and liens in substantially all of their
respective real and personal property to secure payment of the Term Loan and the
Existing Indebtedness. The proceeds of all such collateral shall be allocated and
applied as follows:
a. Proceeds constituting Net Available Proceeds shall be allocated and
applied in the order and manner specified in the second sentence of
Section 3.6(b) above;
b. Proceeds constituting Net Available Proceeds remaining after satisfaction
of the requirements of the second sentence of Section 3.6(b) above and all
other proceeds of collateral received by the Existing Lenders shall be
allocated and applied by the Existing Lenders as follows:
First, to payment of the expenses of the Collateral Agent and the
Existing Lenders in realizing on the collateral;
Second, to payment of the Funded Pool Indebtedness, pro rata
based on the respective amounts of Funded Pool Indebtedness held
at the time by each of the Existing Lenders;
Third, to be held as cash collateral for the Reimbursement
Obligations, pro rata based on the respective amounts of the
participations in the Reimbursement Obligations held at the time
be each of the Existing Lenders;
Fourth, after all Reimbursement Obligations and all Funded Pool
Indebtedness have been fully and finally satisfied and discharged,
to the KeyBank Lease and the Bank One Lease, pro rata based on
the respective total remaining amounts of the obligations of the
Company thereunder; and
Fifth, to the Company or as otherwise authorized or required by
law.
3.8 Cash Collateral. If any Reimbursement Obligations are satisfied and discharged
without application of any cash collateral held by the Existing Lenders in respect
thereof, the cash collateral shall then be held to collateralize other Reimbursement
Obligations. Any cash collateral remaining unapplied after all Reimbursement
Obligations are finally satisfied shall collateralize any Remaining Indebtedness
and any other secured obligations. Any cash collateral remaining after the
obligations described in the preceding sentence are paid and satisfied in full shall
be paid to the Company or as otherwise authorized or required by law.
3.9 Intercreditor Agreement. In connection with the establishment of the Congress
Facility and the making of the Term Loan, the Existing Lenders and Congress will
enter into an Intercreditor and Subordination Agreement providing, among other
things, for subordination in right to payment of the Remaining Indebtedness and
standstill agreements on the part of the Existing Lenders with respect to the
exercise of rights and remedies in respect of the Remaining Indebtedness. No
inability or delay in exercising any rights and remedies by the Existing Lenders
based on any provision of the Intercreditor Agreement, or otherwise, shall be a
waiver of any rights or remedies by any Existing Lender and the Company shall
not acquire any rights, defenses or grounds of avoidance of any obligations due to
the Existing Lenders or any of them by virtue of the Intercreditor Agreement or
any failure to exercise, or delay in exercising any rights or remedies.
3.10 Certain Amendments to KeyBank Lease. It is agreed that Selco and the Company
will amend the KeyBank Lease to provide (i) for an extension of the Company's
purchase option thereunder through the scheduled expiration date of the term
thereof and (ii) that the appraisal of the leased property to be made in connection
with the exercise of the purchase option be made by an appraiser acceptable to
both the lessor and the lessee.
4. Conditions to Effectiveness. The agreements of the Existing Lenders herein shall be
subject to the satisfaction of the following conditions:
4.1 Closing of Congress Facility and Term Loan. The Existing Lenders shall have
received copies of the documents entered into to establish the Congress Facility,
including all agreements regarding fees payable by the Company in connection
therewith, the Congress Facility shall have been entered into on terms acceptable
to the Existing Lenders in their respective sole discretion, the Congress Facility
shall have been closed, all conditions to the availability of borrowings thereunder
by the Company shall have been satisfied, the Congress Paydown shall be
effected and the Term Loan shall have been closed.
4.2 Execution and Delivery of Documents. Each of the following documents and/or
instruments shall have been executed and delivered by the Company and each of
the other parties thereto, if any, in all cases satisfactory in form and substance to
each of the Existing Lenders and its counsel:
(i) this Agreement;
(ii) the agreements evidencing the Congress Facility and the Term Loan;
(iii) the Intercreditor Agreement;
(iv) one or more security agreements and mortgages or deeds of trust granting
security interests and liens in all of the assets of the Company and the Subsidiaries
as security for repayment of the Remaining Indebtedness;
(v) a pledge agreement with respect to all of the capital stock of all of the
Subsidiaries of the Company;
(vi) a patent security agreement, in form sufficient for recording in the United
States Patent and Trademark Office, and related powers of attorney with respect to
all of the patents and patent applications of the Company and the Subsidiaries in
form and substance satisfactory to Agent and its counsel;
(vii) a trademark security agreement, in form sufficient for recording in the
United States Patent and Trademark Office, and related powers of attorney with
respect to all of the trademarks and applications for trademarks of the Company
and the Subsidiaries in form and substance satisfactory to Agent and its counsel;
(viii) a copyright security agreement in form sufficient for recording in the
United States Copyright Office, and related powers of attorney with respect to all
of the copyrights and copyright applications of each Borrower and Guarantor in
form and substance satisfactory to Agent and its counsel;
(ix) [Reserved];
(x) Uniform Commercial Code financing statements;
(xi) [reserved];
(xii) Guarantees;
(xiii) [reserved];
(xiv) [reserved];
(xv) a leasehold mortgage by the Company of its interest under the Farmington
Lease to Prudential; and
(xvi) an Amendment to the KeyBank Lease in form and substance satisfactory
to KeyBank.
4.3 No Defaults. There shall exist no condition or event constituting a Default.
4.4 Representations and Warranties. The representations and warranties contained in
Section 5 shall be true in all material respects on and as of the date of this
Agreement.
4.5 Opinion of Counsel for the Company. The Existing Lenders shall have received
the favorable opinion of counsel for the Company in form and substance
satisfactory to each of the Existing Lenders and its counsel covering, among other
things, the authority of the Company to execute and deliver this Agreement, the
authority of the Company and each of the Subsidiaries to execute and deliver all
of the other related documentation, the validity and enforceability of this
Agreement and related loan documentation and the validity and perfection of each
of the security interests granted to the Collateral Agent as security for the
Remaining Indebtedness.
4.6 Corporate Proceedings. The Company shall have delivered to each of the
Existing Lenders:
(i) a copy of the certificate of incorporation of Company and each of its
Subsidiaries certified by the Secretary of State of Ohio or of the state of
incorporation if other than Ohio;
(ii) certificate of good standing for Company and each of its
Subsidiaries from the State of Ohio or the state of incorporation if other
than Ohio;
(iii) a copy of the code of regulations of Company and each of its
Subsidiaries certified by its Secretary or Assistant Secretary;
(iv) resolutions of the Board of Directors of Company and each of
its Subsidiaries authorizing the execution, delivery and performance of
this Agreement and all related documents or such thereof as pertain to the
Subsidiary and the consummation of the transactions contemplated
thereby, certified by its Secretary or Assistant Secretary; and
(v) an incumbency certificate of Company and each of its
Subsidiaries certifying the names of each of its officers and their
signatures, certified by its Secretary or Assistant Secretary.
4.7 Payment of Interest, Lease Obligations and Expenses. The Company shall have
paid to the Administrative Agent all of the following: (a) all interest accrued on
the Existing Indebtedness through the date hereof, (b) all scheduled payments on
the KeyBank Lease and the Bank One Lease due on or before the date hereof, (c)
actual or estimated amounts on account of all expenses, including, without
limitation, all legal, consulting and professional fees, filing and search charges,
recording taxes and field examination charges and expenses, incurred by each of
the Existing Lenders and/or the Agent in connection with this Agreement, the
transactions referred to herein, the Existing Lenders' review and consideration of
the Company's and its Subsidiaries financial situation and their request for
financing, and (d) $150,000 to be held in escrow by the Administrative Agent to
pay additional expenses for the kinds described in subsection (c) above incurred
before or after the date hereof.
4.8 Recordation of Instruments. All UCC financing statements, mortgages and deeds
of trust covering property in which the Collateral Agent has been granted a
security interest or lien as security for the Remaining Indebtedness shall have
been duly filed and recorded.
4.9 Other Documents. The Existing Lenders shall have received such other
certificates, agreements and documents as any of them shall reasonably request
relating to the properties, operations and conditions and existence of Company
and each of its Subsidiaries, the corporate authority for and the validity of this
Agreement and related documents and any other matters relevant hereto and
thereto.
5. Representations and Warranties. The Company represents and warrants to each of the
Existing Lenders, Selco and Asset Holdings (which representations and warranties shall
survive the execution of this Agreement) that, on and as of the date of this Agreement:
5.1 Corporate Existence, Power and Authority; Subsidiaries. Each Borrower,
Guarantor and their Subsidiaries is a corporation duly organized and in good
standing under the laws of its state of incorporation and is duly qualified as a
foreign corporation and in good standing in all states or other jurisdictions where
the nature and extent of the business transacted by it or the ownership of assets
makes such qualification necessary, where the failure to so qualify would have a
Material Adverse Effect. The execution, delivery and performance of this
Agreement, the other Financing Agreements and the transactions contemplated
hereunder and thereunder are all within the corporate powers of each Borrower
and Guarantor, have been duly authorized and are not in contravention of law or
the terms of the certificate or article of incorporation, regulations, by-laws, or
other organizational documentation of each Borrower or Guarantor, or any
material indenture, agreement or undertaking to which any Borrower or Guarantor
is a party or by which any Borrower or Guarantor or its property are bound. This
Agreement and the other Financing Agreements to which it is a party constitute
legal, valid and binding obligations of each Borrower and Guarantor enforceable
in accordance with their respective terms, except as such enforceability may be
limited by any applicable bankruptcy, insolvency, reorganization, moratorium, or
similar law affecting creditors' rights generally and by general principles of
equity. Borrowers and Guarantors do not have any Subsidiaries except as set
forth on Schedule 5.1 hereof.
5.2 Financial Statements; No Material Adverse Change. All consolidated financial
statements relating to Borrowers and Guarantor which have been or may hereafter
be delivered by any Borrower or Guarantor to Agent or Lenders have been
prepared in accordance with GAAP and fairly present the consolidated financial
condition and the consolidated results of operation of Borrowers and Guarantors
as at the dates and for the periods set forth therein (provided, that, monthly or
quarterly statements are subject to normal year end adjustments and may not
contain footnotes required by GAAP). Except as disclosed in Schedule 5.2
hereto, there has been no act, condition or event which has had or is reasonably
likely to have a Material Adverse Effect, since the date of the most recent audited
financial statements of Borrowers and Guarantor, furnished by any Borrower or
Guarantor to Agent prior to the date of this Agreement.
5.3 Chief Executive Office; Collateral Locations. The chief executive office of each
Borrower and Guarantor and each Borrower's and Guarantor's Records
concerning Accounts and Inventory are located only at the address set forth in the
Security Documents and its only other places of business and the only other
locations of Collateral, if any, are the addresses set forth in Schedule 5.3 hereto or
as to Inventory, the locations permitted under Section 6.4(d) hereof and as to
Equipment, the locations permitted under Section 6.4(e) hereof, subject to the
right of each Borrower and Guarantor to establish new locations in accordance
with Section 6.3 hereof. Schedule 5.3 hereto correctly identifies any of such
locations which are not owned by Borrowers and Guarantors and sets forth the
owners and/or operators thereof.
5.4 Priority of Liens; Title to Properties. The security interests and liens granted to
Agent, for itself and the ratable benefit of Lenders, under this Agreement and the
other Financing Agreements constitute valid and perfected liens and security
interests in and upon the Collateral and are of first priority except as to the
Revolving Loan Priority Collateral (as defined in the Intercreditor Agreement),
Inventory and Instruments as to which security interests granted in the Congress
Facility are of first priority (other than as to specific items of Collateral as to
which the security interest of Agent is not required as of the date hereof to be
perfected consisting of the Excluded Property), and subject to the liens indicated
on Schedule 5.4 hereto and the other liens permitted under Section 6.9 hereof.
Each Borrower and Guarantor has good and marketable title to all of its properties
and assets subject to no liens, mortgages, pledges, security interests,
encumbrances or charges of any kind, except those granted to Agent, for itself and
the ratable benefit of Lenders, and such others as are specifically listed on
Schedule 5.4 hereto or permitted under Section 6.9 hereof.
5.5 Tax Returns. Each Borrower and Guarantor has filed, or caused to be filed, in a
timely manner all material tax returns, reports and declarations which are required
to be filed by it. All information in such tax returns, reports and declarations is
complete and accurate in all material respects. Except as set forth on Schedule 5.5
hereto, each Borrower or Guarantor, as the case may be, has paid or caused to be
paid all taxes due and payable or claimed due and payable in any assessment
received by it, and has collected, deposited and remitted in accordance with all
applicable laws, all excise taxes and all sales and/or use taxes applicable to the
conduct of its business, except taxes the validity of which are being contested in
good faith by appropriate proceedings diligently pursued and available to such
Borrower or Guarantor, as the case may be, and with respect to which adequate
reserves have been set aside on its books. Adequate provision has been made for
the payment of all accrued and unpaid Federal, State, county, local, foreign and
other taxes whether or not yet due and payable and whether or not disputed. Each
Borrower and Guarantor has collected and remitted to the appropriate tax
authority all excise taxes and sales and/or use taxes applicable to its business
required to be collected and remitted under the laws of the United States and each
possession or territory thereof, and each State or political subdivision thereof,
including any State in which such Borrower or Guarantor owns any Inventory or
owns or leases any other property.
5.6 Litigation. Except as set forth on Schedule 5.6 hereto, there is no present
investigation by any Governmental Authority pending, or to the best of the
knowledge of any Borrower or Guarantor threatened, against or affecting any
Borrower or Guarantor or its assets or business and there is no action, suit,
proceeding or claim by any Person pending, or to the best of the knowledge of any
Borrower or Guarantor threatened, against any Borrower or Guarantor or its assets
or will, or against or affecting any transactions contemplated by this Agreement,
which if adversely determined against a Borrower or Guarantor would have a
Material Adverse Effect.
5.7 Compliance with Other Agreements and Applicable Laws.
a. Except as set forth in Schedule 5.7 hereto, each Borrower, Guarantor and
their Subsidiaries is not in default in any respect under, or in violation in
any respect of any of the terms of, any agreement, contract, instrument,
lease or other commitment to which it is a party or by which it or any of its
assets are bound with respect to which the default or violation of which
would have a Material Adverse Effect. Each Borrower, Guarantor and
their Subsidiaries is in compliance with the requirements of all applicable
laws, rules, regulations and orders of any Governmental Authority relating
to its business, including, without limitation, those set forth in or
promulgated pursuant to the Occupational Safety and Health Act of 1970,
as amended, the Fair Labor Standards Act of 1938, as amended, ERISA,
the Code, as amended, and the rules and regulations thereunder, and all
Environmental Laws with respect to which the failure to comply would
have a Material Adverse Effect.
b. Each Borrower, Guarantor and their Subsidiaries has obtained all permits,
licenses, approvals, consents, certificates, orders or authorizations of any
Governmental Authority (the "Permits") required for the lawful conduct of
its business where the failure to obtain such Permit would have a Material
Adverse Effect. The Permits constitute all permits, licenses, approvals,
consents, certificates, orders or authorizations necessary for each
Borrower, Guarantor and their Subsidiaries to own and operate its business
as presently conducted or proposed to be conducted where the failure to
have such Permits would have a Material Adverse Effect. All of the
Permits are valid and subsisting and in full force and effect. There are no
actions, claims or proceedings pending or to the best of each Borrower's
knowledge, threatened that seek the revocation, cancellation, suspension
or modification of any of the Permits which would have a Material
Adverse Effect.
5.8 Environmental Compliance.
a. Except as set forth on Schedule 5.8 hereto, no Borrower, Guarantor or any
of their Subsidiaries has generated, used, stored, treated, transported,
manufactured, handled, produced or disposed of any Hazardous Materials,
on or off its premises (whether or not owned by it) in any manner which at
any time violates any applicable Environmental Law where the violation
would have a Material Adverse Effect, or violates any license, permit,
certificate, approval or similar authorization issued to any Borrower,
Guarantor or such Subsidiary thereunder where the violation thereof
would have a Material Adverse Effect. Except as set forth on Schedule
5.8 hereto, the operations of each Borrower, Guarantor and their
Subsidiaries comply in all respects with all applicable Environmental
Laws and all licenses, permits, certificates, approvals and similar
authorizations thereunder where the failure to comply therewith or the
violation thereof would have a Material Adverse Effect.
b. Except as set forth on Schedule 5.8 hereto, (i) there is no investigation,
proceeding, complaint, order, directive, claim, citation or notice by any
Governmental Authority or any other person pending or, to the best of the
knowledge of any Borrower and Guarantor threatened, with respect to any
non-compliance with or violation of the requirements of any applicable
Environmental Law by any Borrower, Guarantor and their Subsidiaries
which would have a Material Adverse Effect, (ii) there has not been any
release, spill or discharge of any Hazardous Material on any properties of
any Borrower, Guarantor or such Subsidiary, or to the best of the
knowledge of any Borrower and Guarantor, releases, spills or discharges
from any properties at which any Borrower, Guarantor or such Subsidiary
has transported, stored or disposed of any Hazardous Materials which
would have a Material Adverse Effect, and (iii) there has not been any
generation, use, storage, treatment, transportation, manufacture, handling,
production or disposal of any Hazardous Materials or any other
environmental matter which affects any Borrower or Guarantor or its
business, operations or assets in any manner which would have a Material
Adverse Effect.
c. Except as set forth on Schedule 5.8 hereto, no Borrower, Guarantor or any
of their Subsidiaries has any liability (contingent or otherwise) in
connection with a release, spill or discharge, threatened or actual, of any
Hazardous Materials or the generation, use, storage, treatment,
transportation, manufacture, handling, production or disposal of any
Hazardous Materials which would have a Material Adverse Effect.
d. Except as set forth on Schedule 5.8 hereto, each Borrower, Guarantor and
their Subsidiaries has all licenses, certificates, approvals, similar
authorizations and other Permits required to be obtained or filed in
connection with the operations of such Borrower, Guarantor and
Subsidiary under any Environmental Law and all of such licenses, permits,
certificates, approvals or similar authorizations and other Permits are valid
and in full force and effect in each case where the failure to obtain or
maintain such licenses, permits, certificates, approvals or similar
authorizations would have a Material Adverse Effect.
5.9 Employee Benefits.
a. No Borrower or Guarantor has engaged in any transaction in connection
with which any Borrower or Guarantor or any of its ERISA Affiliates
could be subject to either a civil penalty assessed pursuant to ERISA or a
tax imposed by the Code, including any accumulated funding deficiency
described in Section 5.9(c) hereof and any deficiency with respect to
vested accrued benefits described in Section 5.9(d) hereof.
b. Except for the payment of premium obligations in the ordinary course of
business consistent with the current practices of Borrowers and
Guarantors, no liability to the Pension Benefit Guaranty Corporation has
been or is expected by any Borrower or Guarantor to be incurred with
respect to any employee benefit plan of any Borrower or Guarantor or any
of its ERISA Affiliates. Except as set forth on Schedule 5.9 hereto, there
has been no reportable event (within the meaning of ERISA) or any other
event or condition with respect to any employee benefit plan of any
Borrower or Guarantor or any of its ERISA Affiliates which presents a
risk of termination of any such plan by the Pension Benefit Guaranty
Corporation, provided, that, as to the reportable events described on
Schedule 5.9 hereto, each of such event referred to therein have been
waived or cured pursuant to this Agreement.
c. Full payment has been made of all amounts which any Borrower or
Guarantor or any of its ERISA Affiliates is required under ERISA and the
Code to have paid under the terms of each employee benefit plan as
contributions to such plan as of the last day of the most recent fiscal year
of such plan ended prior to the date hereof, and no accumulated funding
deficiency (as defined in ERISA and the Code), whether or not waived,
exists with respect to any employee pension benefit plan, including any
penalty or tax described in Section 5.9(a) hereof and any deficiency with
respect to vested accrued benefits described in Section 5.9(d) hereof.
d. Except as set forth in Schedule 5.9 hereto, the current value of all vested
accrued benefits under all employee pension benefit plans maintained by
any Borrower or Guarantor that are subject to Title IV of ERISA does not
exceed the current value of the assets of such plans allocable to such
vested accrued benefits, including any penalty or tax described in Section
5.9(a) hereof and any accumulated funding deficiency described in Section
5.9(c) hereof. The terms "current value" and "accrued benefit" have the
meanings specified in ERISA.
e. Except as set forth on Schedule 5.9 hereto, no Borrower, Guarantor or any
of its ERISA Affiliates is or has ever been obligated to contribute to any
"multiemployer plan" (as such term is defined in ERISA) that is subject to
Title IV of ERISA.
5.10 Bank Accounts. All of the deposit accounts, investment accounts or other
accounts in the name of or used by any Borrower or Guarantor maintained at any
bank or other financial institution are set forth on Schedule 5.10 hereto, subject to
the right of each Borrower and Guarantor to establish new accounts in accordance
with Section 6.18 below.
5.11 Intellectual Property. Except as set forth in Schedule 5.11 hereto, each Borrower
and Guarantor owns or licenses or otherwise has the right to use all Intellectual
Property necessary for the operation of its business as presently conducted or
proposed to be conducted. As of the date hereof, each Borrower does not have
any Intellectual Property registered, or subject to pending applications, in the
United States Patent and Trademark Office or any similar office or agency in the
United States, any State thereof, any political subdivision thereof or in any other
country, other than those described in Schedule 5.11 hereto and has not granted
any licenses with respect thereto other than as set forth in Schedule 5.11 hereto.
No event has occurred which permits or would permit after notice or passage of
time or both, the revocation, suspension or termination of such rights. To the best
of the knowledge of each Borrower and Guarantor, no slogan or other advertising
device, product, process, method, substance or other Intellectual Property or
goods bearing or using any Intellectual Property presently contemplated to be sold
by or employed by any Borrower infringes any patent, trademark, servicemark,
tradename, copyright, license or other Intellectual Property owned by any other
Person presently and no claim or litigation is pending or threatened against or
affecting any Borrower contesting its right to sell or use any such Intellectual
Property. Schedule 5.11 lists all of the agreements or other arrangements of each
Borrower pursuant to which such Borrower has a license or other right to use any
trademarks, logos, designs, representations or other Intellectual Property owned
by another person as in effect on the date hereof and the dates of the expiration of
such agreements or other arrangements of each Borrower as in effect on the date
hereof. As of the date hereof, such material license and other material rights are
in full force and effect, no default or event of default exists with respect thereto
and the Borrower party thereto is in compliance with the terms thereof in all
material respects and no party thereto has sent any notice of termination or of its
intention to terminate such license or rights, except as set forth on Schedule 5.11
hereto. No trademark, servicemark or other Intellectual Property at any time used
by any Borrower which is owned by another person, or owned by any Borrower
subject to any security interest, lien, collateral assignment, pledge or other
encumbrance in favor of any person other than Agent, is affixed to any Eligible
Inventory, except to the extent permitted under the term of the license agreements
listed on Schedule 5.11 hereto.
5.12 Financial Statements.
a. None of the financial statements, reports and other information furnished
or to be furnished by any Borrower or Guarantor to Agent or any Lender
with respect to Huffy and its Subsidiaries contain, as of their respective
dates, any untrue statement of material fact or omit to state any material
fact necessary to make the information therein not misleading. Such
financial statements and reports were and will be prepared in accordance
with GAAP consistently applied (other than those unaudited financial
statements and reports and other than consolidating financial statements
provided to Agent which will be prepared consistent with current practices
of Huffy), and all financial statements shall fairly present the consolidated
and consolidating financial condition and results of operations of the
applicable Persons, as of the dates and for the periods indicated thereon.
b. The pro forma balance sheets and future cash flow projections attached as
Schedule 5.12 for Huffy and its Subsidiaries (together with the summaries
of assumptions and projected assumptions, based on historical
performance with respect thereto) furnished by any Borrower or Guarantor
to Agent or any Lender prior to the date of this Agreement represent the
reasonable, good faith opinion of Borrowers and their management as to
the subject matter thereof, provided, that, such projections exclude (1)
certain non-recurring reorganization and restructuring charges as described
therein, including refinancing charges and professional fees incurred in
connection with the transactions contemplated hereunder to the extent not
amortized as prepaid interest expenses and (2) certain intercompany
accounting entries affecting the intercompany balances and shareholders'
equity of Washington, Huffy Service and Huffy, but not Huffy's
shareholders' equity on a consolidated basis.
5.13 Disclosure.
a. The information contained in the representations and warranties of each
Borrower and Guarantor set forth in this Agreement, the other Financing
Agreements, or in any other instrument, document, list, certificate,
statement, schedule or exhibit heretofore delivered or to be delivered to
Agent or any Lender, as contemplated in this Agreement or in the other
Financing Agreements, does not contain and will not contain any untrue
statement of a material fact and does not omit and will not omit to state a
material fact necessary in order to make the information contained herein
or therein not misleading.
b. After giving effect to the transactions contemplated by this Agreement, the
other Financing Agreements, and the other instruments or documents
delivered in connection herewith and therewith, there does not exist and
there has not occurred any act, condition or event which constitutes a
Default or which, with notice or passage of time or both would constitute a
Default.
5.14 Government Authority. No consent, approval or other action of, or filing with, or
notice to any Governmental Authority is required in connection with the
execution, delivery and performance of this Agreement, the other Financing
Agreements or any of the instruments or documents to be delivered pursuant
hereto or thereto, except for those consents or approvals already obtained by
Borrowers and Guarantors which are in full force and effect as of the date hereof,
the filing of UCC financing statements and the disclosures and filing required
under applicable securities laws and by securities exchanges (which disclosures
and filing have been done or shall be done in accordance with such laws).
5.15 Capitalization. All of the issued and outstanding shares of Capital Stock of Huffy
Brands, Hufco-Delaware, Huffy Sports, Royce and American are directly and
beneficially owned and held by Huffy and all of such shares have been duly
authorized and are fully paid and non-assessable, free and clear of all claims,
liens, pledges and encumbrances of any kind, except in favor of Congress or the
Agent and as permitted hereunder. All of the issued and outstanding shares of
Capital Stock of Huffy Service, HCAC and Washington are beneficially owned,
directly or indirectly, and held by Huffy Brands and all of such shares have been
duly authorized and are fully paid and non-assessable, free and clear of all claims,
liens, pledges and encumbrances of any kind except in favor of Congress or the
Agent, and as permitted herein. Ninety-nine and one-half (99 1/2%) percent of all
of the issued and outstanding shares of Class A common stock of Huffy Risk
Management, Inc. are owned by Huffy Service, one-half (1/2%) percent of all of
the issued and outstanding shares of the Class A common stock of Huffy Risk
Management, Inc. are owned by Huffy and one hundred (100%) percent of all of
the issued and outstanding shares of the Class B common stock of Huffy Risk
Management, Inc. are owned by X.X. Xxxxx and XxXxxxxxx.
5.16 Labor Disputes. Set forth on Schedule 5.16 hereto is a list (including dates of
termination) of all collective bargaining or similar agreements between or
applicable to any Borrower or Guarantor and any union, labor organization or
other bargaining agent in respect of the employees of any Borrower or Guarantor
on the date hereof.
5.17 Corporate Name; Prior Transactions. Each Borrower and Guarantor has not,
during the past five (5) years, been known by or used any other corporate or
fictitious name or been a party to any merger or consolidation, or acquired all or
substantially all of the assets of any Person, or acquired any of its property or
assets out of the ordinary course of business, except as set forth on Schedule 5.17
hereto.
5.18 Restrictions on Subsidiaries. Except for restrictions contained in this Agreement
or any other agreement with respect to Indebtedness of any Borrower or Guarantor
permitted hereunder as in effect on the date hereof, there are no contractual or
consensual restrictions on any Borrower or Guarantor or any of its respective
Subsidiaries which prohibit or otherwise restrict (i) the transfer of cash or other
assets (a) between any Borrower or Guarantor and any of its respective
Subsidiaries or (b) between any Subsidiaries of any Borrower or Guarantor or (ii)
the ability of any Borrower or Guarantor or any of its respective Subsidiaries to
incur Indebtedness or grant security interests to Agent or any Lender in the
Collateral.
5.19 Accuracy and Completeness of Information. All information furnished by or on
behalf of any Borrower or Guarantor in writing to Agent or Lenders in connection
with this Agreement or any of the other Financing Agreements or any transaction
contemplated hereby or thereby, is true and correct in all material respects on the
date as of which such information is dated or certified and does not omit any
material fact necessary in order to make such information not misleading. No
event or circumstance has occurred which has had or could reasonably be
expected to have a Material Adverse Effect, which has not been fully and
accurately disclosed to Agent or Lenders in writing.
5.20 Survival of Warranties; Cumulative. All representations and warranties contained
in this Agreement or any of the other Financing Agreements shall survive the
execution and delivery of this Agreement and shall be deemed to have been made
again to Agent and Lenders on the date of each additional borrowing or other
credit accommodation hereunder and shall be conclusively presumed to have been
relied on by Agent and Lenders regardless of any investigation made or
information possessed by Agent and Lenders. The representations and warranties
set forth herein shall be cumulative and in addition to any other representations or
warranties which any Borrower or Guarantor shall now or hereafter give, or cause
to be given, to Agent and Lenders.
6. Affirmative and Negative Covenants. The Company agrees to observe, perform and
comply with the following covenants until the Remaining Indebtedness has been fully
and finally paid:
6.1 Certain Advisors. The Company shall continue to retain DSI and Xxxxx Xxxxxx.
6.2 Maintenance of Existence. Each Borrower and Guarantor shall, and shall cause
any Subsidiary to, at all times preserve, renew and keep in full force and effect its
corporate existence and rights and franchises with respect thereto and maintain in
full force and effect all licenses, trademarks, tradenames, approvals,
authorizations, leases, contracts and Permits necessary to carry on the business as
presently or proposed to be conducted, where the failure to preserve, renew, or
keep in full force and effect any of the foregoing would have a Material Adverse
Effect. Each Borrower and Guarantor shall, and shall cause any Subsidiary to,
give Agent thirty (30) days prior written notice of any proposed change in its
corporate name, which notice shall set forth the new name and each Borrower and
Guarantor shall deliver to Agent a copy of the amendment to the Certificate of
Incorporation of such Borrower, Guarantor or such Subsidiary providing for the
name change certified by the Secretary of State of the jurisdiction of incorporation
of such Borrower, Guarantor or such Subsidiary as soon as it is available.
6.3 New Collateral Locations. Each Borrower and Guarantor may open any new
location within the continental United States provided such Borrower or
Guarantor gives Agent ten (10) days prior written notice of the intended opening
of any such new location and executes and delivers, or causes to be executed and
delivered, to Agent such agreements, documents, and instruments as Agent may
deem reasonably necessary or desirable to protect the interest of Agent, for itself
and the ratable benefit of Lenders, in the Collateral at such location, including
UCC financing statements with respect to the Collateral.
6.4 Compliance with Laws, Regulations, Etc.
a. Each Borrower and Guarantor shall, and shall cause any Subsidiary to, at
all times, to comply in all respects with all laws, rules, regulations,
licenses, approvals, orders and Permits applicable to it and duly observe
all requirements of any Federal, State or local Governmental Authority
(including the Occupational Safety and Health Act of 1970, as amended,
the Fair Labor Standards Act of 1938, as amended, ERISA, the Code and
all statutes, rules, regulations, orders, permits and stipulations relating to
environmental pollution and employee health and safety, including all of
the Environmental Laws) in each case where the failure to so comply has
or would have a Material Adverse Effect.
b. Each Borrower and Guarantor shall give both oral and written notice to
Agent promptly after the receipt by any Borrower or Guarantor of any
notice of, or any Borrower's or Guarantor's otherwise obtaining knowledge
of, (i) the occurrence of any event involving the release, spill or discharge,
threatened or actual, of any Hazardous Material in violation of any
Environmental Law where such violation has or would have a Material
Adverse Effect or (ii) any investigation, proceeding, complaint, order,
directive, claims, citation or notice with respect to: (a) any non-compliance
with or violation of any Environmental Law by any Borrower or
Guarantor where such non-compliance or violation has or would have a
Material Adverse Effect or (b) the release, spill or discharge, threatened or
actual, of any Hazardous Material where the release, spill or discharge
thereof has or would have a Material Adverse Effect or (c) any other
environmental, health or safety matter involving a violation of any
Environmental Law where such violation has or would have a Material
Adverse Effect.
c. Without limiting the generality of the foregoing, whenever Agent
reasonably determines that there is any non-compliance, or any condition
which requires any action by or on behalf of Borrower or Guarantor in
order to avoid any non-compliance with any Environmental Law where
such non-compliance has or would have a Material Adverse Effect,
Borrowers and Guarantor shall, at Agent's reasonable request and
Borrowers' expense: (i) cause an independent environmental engineer
reasonably acceptable to such Agent to conduct such tests of the site where
such Borrower's or Guarantor's non-compliance or alleged non-compliance
with such Environmental Laws has occurred as to such non-compliance
and prepare and deliver to Agent a report as to such non-compliance
setting forth the results of such tests, a proposed plan for responding to
any environmental problems described therein, and an estimate of the
costs thereof and (ii) provide to Agent a supplemental report of such
engineer whenever the scope of such non-compliance, or such Borrower's
or Guarantor's response thereto or the estimated costs thereof, shall change
in any material respect.
d. Each Borrower and Guarantor shall indemnify and hold harmless Agent,
Lenders, their directors, officers, employees, agents, invitees, representatives, successors and assigns, from and against any and all losses, claims,
damages, liabilities, costs, and expenses (including reasonable attorneys'
fees and legal expenses) arising out of or attributable to the use,
generation, manufacture, reproduction, storage, release, threatened release,
spill, discharge, disposal or presence of a Hazardous Material on any of
the Real Property, including the costs of any repair, cleanup or other
remedial work required under any Environmental Law or by any
governmental authority with respect to such property of such Borrower or
Guarantor and the preparation and implementation of any closure,
remedial or other required plans except for such losses, claims, damages,
liabilities, costs or expenses as a result of the gross negligence or wilful
misconduct of Agent or such Lender as determined pursuant to a final non-appealable order of a court of competent jurisdiction. All representations,
warranties, covenants and indemnifications in this Section 6.4 shall
survive the payment of the Obligations and the termination of this
Agreement.
6.5 Payment of Taxes and Claims. Each Borrower and Guarantor shall, and shall
cause any Subsidiary to, duly pay and discharge all taxes, assessments,
contributions and governmental charges upon or against it or its properties or
assets, except for taxes the validity of which are being contested in good faith by
appropriate proceedings diligently pursued and available to such Borrower,
Guarantor or such Subsidiary, as the case may be, and with respect to which
adequate reserves have been set aside on its books. Each Borrower and Guarantor
shall be liable for any tax or penalties imposed on Agent or any Lender as a result
of the financing arrangements provided for herein and each Borrower and
Guarantor agrees to indemnify and hold Agent and Lenders harmless with respect
to the foregoing, and to repay to Agent and Lenders on demand the amount
thereof, and until paid by Borrowers such amount shall be added and deemed part
of the Loans. The foregoing indemnity shall survive the payment of the
Obligations and the termination of this Agreement.
6.6 Insurance. Each Borrower and Guarantor shall, and shall cause any Subsidiary to,
at all times, maintain with financially sound and reputable insurers insurance with
respect to the Collateral against loss or damage and all other insurance of the
kinds and in the amounts customarily insured against or carried by corporations of
established reputation engaged in the same or similar businesses and similarly
situated. Such policies of insurance shall be reasonably satisfactory to Agent as to
form, amount and insurer. Agent and Lenders acknowledge that the policies of
insurance maintained by Borrowers and Guarantors as disclosed to Agent are
satisfactory as of the date hereof based on the circumstances of Borrowers and
Guarantors as of the date hereof. If such policies are cancelled or expire,
Borrowers and Guarantors may obtain new policies from different insurance
companies so long as such policies and insurance company are comparable to the
insurance policies and insurance company existing on the date hereof regarding
form, amount and insurer. Borrowers shall furnish certificates, policies or
endorsements to Agent as Agent shall reasonably require as proof of such
insurance, and, if any Borrower fails to do so, Agent is authorized, but not
required after notice to Huffy, to obtain such insurance at the expense of
Borrowers. All policies shall provide for at least thirty (30) days prior written
notice to Agent of any cancellation or reduction of coverage (other than as a result
of the failure to pay premiums, and ten (10) days prior written notice to Agent of
any cancellation or reduction of coverage as the result of the failure to pay
premiums) and that Agent may act as attorney for each Borrower, Guarantors or
such Subsidiary in obtaining, and at any time an Event of Default exists or has
occurred and is continuing, adjusting, settling, amending and canceling such
insurance. Borrowers and Guarantors shall cause Agent to be named as a loss
payee and an additional insured (but without any liability for any premiums)
under such insurance policies and Borrowers and Guarantor shall obtain
non-contributory lender's loss payable endorsements to all insurance policies in
form and substance satisfactory to Agent. Such lender's loss payable
endorsements shall specify that the proceeds of such insurance shall be payable to
Agent, for the benefit of Lenders, as its interests may appear and further specify
that Agent shall be paid regardless of any act or omission by any Borrower,
Guarantor or any of its Affiliates. At its option, Agent may apply any insurance
proceeds received by Agent at any time to the cost of repairs or replacement of
Collateral and/or to payment of the Obligations, whether or not then due, in any
order and in such manner as Agent may determine or hold such proceeds as cash
collateral for the Obligations.
6.7 Financial Statements and Other Information.
a. Each Borrower and Guarantor shall, and shall cause its Subsidiaries to,
keep proper books and records in which true and complete entries shall be
made of all dealings or transactions of or in relation to the Collateral and
the businesses of Borrowers, Guarantors and their Subsidiaries (if any) in
accordance with GAAP and Borrowers and Guarantors shall furnish or
cause to be furnished to Agent: (i) within thirty (30) days after the end of
each fiscal month, monthly unaudited consolidated financial statements of
Huffy and its Subsidiaries (including in each case balance sheets,
statements of income and loss, and statements of cash flow) and monthly
unaudited consolidating financial statements of Huffy and its Subsidiaries
(including in each case, balance sheets, statements of income and loss, and
statements of cash flow), in each case, all in reasonable detail, fairly
presenting the financial position and the results of the operations of Huffy
and its Subsidiaries as of the end of and through such fiscal month,
certified to be correct by the chief financial officer of Huffy, subject to
normal year-end adjustments, and accompanied by a compliance certificate
substantially in the form of Exhibit B hereto, along with a schedule in
form reasonably satisfactory to Agent of the calculations used in
determining, as of the end of such month, whether Borrowers were in
compliance with the covenants set forth in Section 6.14 of this Agreement
for such month, (provided, that, such monthly unaudited consolidating
financial statements may not be prepared in accordance with GAAP, but
shall in each case be prepared consistent with the current practices of
Huffy and its Subsidiaries as of the date hereof), (ii) within forty-five (45)
days after the end of each fiscal quarter, quarterly unaudited consolidated
financial statements of Huffy and its Subsidiaries (including in each case,
balance sheets, statements of income and loss and statements of cash flow)
and unaudited consolidating financial statements (not in accordance with
GAAP with regard to the treatment of intercompany liabilities) of Huffy
and its Subsidiaries (including in each case, balance sheets, statements of
income and loss and statements of cash flow), in each case all in
reasonable detail, fairly presenting the financial position and the results of
operations of Huffy and its Subsidiaries as of the end of and through such
fiscal quarter (provided, that, such quarterly unaudited consolidating
financial statements may not be prepared in accordance with GAAP, but
shall in each case be prepared consistent with the current practices of
Huffy and its subsidiaries as of the date hereof), and (iii) within one
hundred twenty (120) days after the end of each fiscal year, audited
consolidated financial statements of Huffy and its Subsidiaries (including
in each case balance sheets, statements of income and loss, statements of
cash flow and statements of shareholders' equity), and the accompanying
notes thereto, and unaudited consolidating financial statements of Huffy
and its Subsidiaries, (including in each case, balance sheets, statements of
income and loss and statements of cash flow), in each case all in
reasonable detail, fairly presenting the financial position and the results of
the operations of Huffy and its Subsidiaries as of the end of and for such
fiscal year (provided, that, such annual unaudited consolidating financial
statements may not be prepared in accordance with GAAP, but shall in
each case be prepared consistent with the current practices of Huffy and its
subsidiaries as of the date hereof), together with, as to the consolidated
financial statements, the unqualified opinion of independent certified
public accountants, which accountants shall be an independent accounting
firm selected by Huffy and reasonably acceptable to Agent, that such
financial statements have been prepared in accordance with GAAP, and
present fairly the results of operations and financial condition of Huffy and
its Subsidiaries as of the end of and for the fiscal year then ended. Agent
acknowledges that as of the date hereof KPMG Peat Marwick is an
independent accounting firm acceptable to Agent for this purpose.
b. Borrowers and Guarantors shall promptly notify Agent in writing of the
details of (i) any loss, damage, investigation, action, suit, proceeding or
claim relating to the Collateral having a value of $150,000 in any one case
or $250,000 in the aggregate or which would have a Material Adverse
Effect and (ii) the occurrence of any Default or act, condition or event
which, with the passage of time or giving of notice or both, would
constitute a Default.
c. Borrowers and Guarantors shall promptly after the sending or filing
thereof furnish or cause to be furnished to Agent copies of all reports
which any Borrower or Guarantor sends to its stockholders generally and
copies of all reports and registration statements which any Borrower or
Guarantor files with the Securities and Exchange Commission, any
national securities exchange or the National Association of Securities
Dealers, Inc.
d. Borrowers and Guarantors shall furnish or cause to be furnished to Agent
such budgets, forecasts, projections and other information respecting the
Collateral and the business of any Borrower or Guarantor, as Agent may,
from time to time, reasonably request. Agent and Lenders are hereby
authorized to deliver a copy of any financial statement or any other
information relating to the business of any Borrower or Guarantor to any
court or other Governmental Authority requiring a copy. In the event that
Borrowers or Guarantors shall fail to promptly deliver any copies of
financial statements or any reports or management letters prepared by
accountants and auditors on behalf of any Borrower, Agent may request
such items directly from such accountants and auditors. Each Borrower
and Guarantor hereby irrevocably authorizes and directs all accountants or
auditors to deliver to Agent, at Borrowers' expense, copies of the financial
statements of Borrowers and Guarantor and any reports or management
letters prepared by such accountants or auditors on behalf of any
Borrower. Any documents, schedules, invoices or other papers delivered
to Agent may be destroyed or otherwise disposed of by such Agent one (1)
year after the same are delivered to such Agent, except as otherwise
designated by Borrower to such Agent in writing.
e. Borrower and Guarantors shall deliver to the Administrative Agent copies
of all reports and analyses delivered to Revolving Loan Agent, in all cases
simultaneously with delivery thereof to Revolving Loan Agent.
6.8 Sale of Assets, Consolidation, Merger, Dissolution, Etc. Each Borrower and
Guarantor shall not, and shall not permit any Subsidiary to, directly or indirectly:
a. merge into or with or consolidate with any other Person or permit any
other Person to merge into or with or consolidate with it, or
b. sell, assign, lease, transfer, abandon or otherwise dispose of any Capital
Stock or Indebtedness to any other Person or any of its assets to any other
Person, except for:
i. sales of Inventory in the ordinary course of business;
ii. the disposition of worn-out or obsolete Equipment so long as such
sales do not involve Equipment having an aggregate fair market
value in excess of $500,000 for all such Equipment disposed of in
any fiscal year and all proceeds are paid to Agent for application to
the Obligations in such order and manner as Agent may determine;
iii. Asset Sales, to the extent not otherwise provided herein, by any
Borrower or Guarantor after the date hereof to the extent consented
to in writing by Agent and Lenders;
iv. sales or other dispositions by Huffy of the Equipment and Real
Property of Huffy currently located at the premises of Huffy at
0000 Xxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, the Equipment
and Real Property of Huffy currently located at 0000 Xxxxxx Xxxxx
Xxxxx, Xxxxxxxxxx, Xxxxxxxxxxx 00000, the Celina Property, the
Real Property subject to the Farmington Lease, the Real Property
subject to the Miamisburg Headquarters Lease, or the sale by
Washington of the Equipment and Real Property of Washington
currently located at the premises of Washington at 7130-7150 el
Xxxxx Xxxxxxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000 for aggregate,
cumulative sale prices not exceeding $250,000, provided, that, as
to each and all such sales;
A. Agent shall have received not less than ten (10) Business
Days prior written notice of such sale, which notice shall
set forth in reasonable detail satisfactory to Agent, the
parties to such sale or other disposition, the assets to be
sold or otherwise disposed of, the purchase price and the
manner of payment thereof and such other information with
respect thereto as Agent may request;
B. Agent, the Required Lenders and, if applicable, the lessor
of any leasehold interest being sold shall have consented
thereto;
C. as of the date of such sale or other disposition and after
giving effect thereto, no Default, or act, condition or event
which with notice or passage of time would constitute a
Default, shall exist or have occurred;
D. such sale shall be on commercially reasonable prices and
terms in a bona fide arm's length transaction; and
E. any and all Net Available Proceeds payable or delivered to
any Borrower or Guarantor in respect of such sale or other
disposition shall be paid or delivered, or caused to be paid
or delivered, to Agent, except to the extent otherwise
provided in the Intercreditor Agreement, and to such extent,
such amounts shall be paid to Congress.
v. the issuance and sale by any Borrower or Guarantor of Capital
Stock of such Borrower or Guarantor after the date hereof;
provided, that, (A) Agent shall have received not less than three (3)
Business Days prior written notice of such issuance and sale,
which notice shall specify the party selling such Capital Stock, the
parties to whom such shares are to be sold, the terms of such sale,
the total amount which it is anticipated will be realized from the
issuance and sale of such stock and the net cash proceeds which it
is anticipated will be received by such Borrower or Guarantor from
such sale, (B) such Borrower or Guarantor shall not be required to
pay any cash dividends or repurchase or redeem such Capital Stock
or make any other payments in respect thereof, except that such
Borrower or Guarantor may pay cash dividends in respect of such
Capital Stock on terms and conditions and in amounts acceptable
to Agent so long as Agent shall have received, in form and
substance satisfactory to Agent, an agreement in writing from the
holders of such shares of Capital Stock with respect to the rights to
payment and other rights of the holder of such shares, (C) the terms
of such Capital Stock, and the terms and conditions of the purchase
and sale thereof, shall not include any terms that include any
limitation on the right of any Borrower or Guarantor to request or
receive Loans or Letter of Credit Accommodations or the right of
any Borrower or Guarantor to amend or modify any of the terms
and conditions of this Agreement or any of the other Financing
Agreements or otherwise in any way relate to or affect the
arrangements of any Borrower or Guarantor with Agent and
Lenders or are more restrictive or burdensome to any Borrower or
Guarantor than the terms of any Capital Stock of such Borrower or
Guarantor in effect on the date hereof, and (D) as of the date of
such issuance and sale and after giving effect thereto, no Default or
act, condition or event which with notice or passage of time or both
would constitute a Default shall exist or have occurred;
vi. the licensing by Huffy Brands of Intellectual Property owned by it
to any Borrower, provided, that, as to any such license: (A) any
rights of such Borrower shall be subject to the rights of Agent and
Lenders in such Intellectual Property (including the rights of Agent
and Lenders to use such Intellectual Property as provided in the
Security Documents), (B) such license shall not impair, hinder or
otherwise adversely affect the rights of Agent and Lenders with
respect to such Intellectual Property, (C) such license as to any
Borrower shall be consistent with the reasonable requirements of
such Borrower in the ordinary course of its business and on terms
no less favorable to such Borrower then such Borrower would
otherwise be able to obtain from any person which is not an
Affiliate (assuming for this purpose that such other person were the
owner of the Intellectual Property subject to such license), (D) no
Borrower shall make or be required to make any payments in cash
or other immediately available funds or other property to Huffy
Brands pursuant to such license arrangements and (E) all
Indebtedness and other obligations of any Borrower to Huffy
Brands arising in connection with such licensing arrangements
shall be subject and subordinate in right of payment to the prior
indefeasible payment and satisfaction in full of the Obligation;
vii. the issuance of Capital Stock of any Borrower or Guarantor
consisting of common stock pursuant to a stock option plan
(including, without limitation, the Amended and Restated 1989
Employee Stock Option Purchase Plan which became effective as
of January 1, 1999) or 401(k) plans of such Borrower or Guarantor
for the benefit of its employees, directors and consultants,
provided, that, in no event shall such Borrower or Guarantor be
required to issue, or shall such Borrower or Guarantor issue,
Capital Stock pursuant to such stock option plans or 401(k) plans
which would result in a Change of Control or other Event of
Default;
viii. The transfer by Huffy Brands of the Intellectual Property owned by
Huffy Brands to the Borrower that licenses such Intellectual
Property as of the date hereof from Huffy Brands on or about the
date of a Business Unit Sale of the assets of such Borrower, so
long as such Business Unit Sale has been consented to by Agent
and the Intellectual Property so transferred shall remain subject to
the security interest and lien of Agent (such that the security
interest and lien of Agent shall continue in the Intellectual Property
as so transferred and owned by such Borrower until such security
interest and lien may be released pursuant to such Business Unit
Sale subject to such terms and conditions as Agent may agree);
c. wind up, liquidate or dissolve; or
d. agree to do any of the foregoing.
6.9 Encumbrances. Each Borrower and Guarantor shall not, and shall not permit any
Subsidiary to, create, incur, assume or suffer to exist any security interest,
mortgage, pledge, lien, charge or other encumbrance of any nature whatsoever on
any of its assets or properties, including, without limitation, the Collateral, except:
a. liens and security interests of Congress for itself and the benefit of the
lenders under the Congress Facility;
b. liens securing the payment of taxes, either not yet overdue or the validity
of which are being contested in good faith by appropriate proceedings
diligently pursued and available to any Borrower, Guarantor or such
Subsidiary, as the case may be, and with respect to which adequate
reserves have been set aside on its books;
c. non-consensual statutory liens (other than liens securing the payment of
taxes) arising in the ordinary course of the business of any Borrower,
Guarantor or such Subsidiary, as the case may be, to the extent: (i) such
liens secure Indebtedness which is not overdue or (ii) such liens secure
Indebtedness relating to claims or liabilities which are fully insured and
being defended at the sole cost and expense and at the sole risk of the
insurer or being contested in good faith by appropriate proceedings
diligently pursued and available to such Borrower, Guarantor or such
Subsidiary, as the case may be, in each case prior to the commencement of
foreclosure or other similar proceedings and with respect to which
adequate reserves have been set aside on its books;
d. liens arising from (i) operating leases and the precautionary UCC
financing statement filings in respect thereof and (ii) equipment or other
materials which are not owned by a Borrower located on the premises of
such Borrower (but not in connection with, or as part of, the financing
thereof) from time to time in the ordinary course of business and
consistent with current practices of Borrowers and the precautionary UCC
financing statement filings in respect thereof;
e. zoning restrictions, easements, licenses, covenants and other restrictions
affecting the use of Real Property which do not interfere in any material
respect with the use of such Real Property or ordinary conduct of the
business of any Borrower, Guarantor or such Subsidiary, as the case may
be, as presently conducted thereon or materially impair the value of the
Real Property which may be subject thereto;
f. purchase money security interests in Equipment (including Capital Leases)
and purchase money mortgages on Real Property arising after the date
hereof to secure Indebtedness of any Borrower permitted under Section
6.10 hereof so long as such security interests and mortgages do not apply
to any property of such Borrower other than the Equipment or Real
Property so acquired, and the Indebtedness secured thereby does not
exceed the cost of the Equipment or Real Property so acquired, as the case
may be;
g. deposits of cash with the owner or lessor of premises leased and operated
by any Borrower in the ordinary course of the business of such Borrower
to secure the performance by such Borrower of its obligations under the
terms of the lease for such premises; and
h. liens and security interests of Term Loan Agent for itself and the benefit of
Term Loan Lenders on the Collateral to secure the Indebtedness of
Borrowers to the Term Loan Lenders which liens and security interests
are, in all respects, subject and subordinate in priority to the liens and
security interests of Congress in the Revolving Loan Priority pursuant to
the Intercreditor Agreement;
i. liens and mortgages of Bank of America National Trust and Savings
Association on the Real Property and Fixtures related thereto of
Washington located at 0000-0000 Xx Xxxxx Xxxxxxxxx, Xxx Xxxxx,
Xxxxxxxxxx 00000 to secure the Indebtedness of Washington permitted
under Section 6.10(d)hereof;
j. the liens and security interests set forth on Schedule 5.4 hereto.
6.10 Indebtedness. Each Borrower shall not, and shall not permit any Guarantor or
Subsidiary to, incur, create, assume, become or be liable in any manner with
respect to, or permit to exist, any Indebtedness, except:
a. the Obligations;
b. Indebtedness arising in the ordinary course of the business of such
Borrower, Guarantor or Subsidiary in connection with worker's
compensation, unemployment insurance or other types of social security
benefits in each case consistent with the current practices of such
Borrower, Guarantor or Subsidiary as of the date hereof;
c. Indebtedness of Borrowers under the Congress Facility under the Term
Lender Lease Debt as evidenced by the Miamisburg Headquarters Lease
or Sussex Lease Agreement, and under the Pool Indebtedness as evidenced
by the Restructuring Agreement, provided, that the principal amount of the
Indebtedness shall not exceed $100,000,000 as to the Congress Facility,
$27,134,417 as to the Pool Indebtedness and $8,422,017.74 as to the Term
Lender Lease Debt, less the aggregate amount of all repayments,
repurchases or redemptions thereof, whether optional or mandatory, plus
interest thereon at the rate provided in the Congress Facility and the
documents evidencing the Pool Indebtedness and Term Lender Lease Debt
as in effect on the date hereof;
d. Indebtedness of WIS arising pursuant to the Construction Loan
Agreement, dated June 1, 1984, between WIS and Bank of America and
the variable interest real estate note, dated June 1, 1984, issued by WIS
payable to Bank of America to evidence such Indebtedness as each in
effect on the date hereof; provided, that the principal amount of such
Indebtedness shall not exceed $705,000, less the aggregate amount of all
repayments, repurchases or redemptions, whether optional or mandatory in
respect thereof, plus interest thereon at the rate provided for in such
variable interest real estate note as in effect on the date hereof;
e. Indebtedness of Huffy evidenced by or arising under the Farmington Lease
as in effect on the date hereof; provided, that the aggregate amount
required to be paid by Huffy pursuant to such Lease Agreement shall not
exceed the amounts permitted to be paid pursuant to Section 9.9(e) of the
Congress Facility;
f. Hedging Obligations of Borrower consisting of interest rate protection
obligations entered into by Borrower in the ordinary course of the business
of Borrower consistent with the current practices of Borrower as of the
date hereof; provided, that, such arrangements are with banks or other
financial institutions that have combined capital and surplus and undivided
profits of not less than $250,000,000, are not for speculative purposes and
such Indebtedness shall be unsecured;
g. unsecured Indebtedness of any Borrower to any other Borrower on or
arising after the date hereof pursuant to loans or advances by such
Borrower to such other Borrower, provided, that, as to any such loan, (i)
each month Borrowers shall provide to Agent a report in form and
substance satisfactory to Agent of any change in the outstanding amount
of such loans from the amount set forth in the most recent report thereof
previously provided to Agent under this clause (g)(i), (ii) the Indebtedness
arising pursuant to any such loan shall not be evidenced by a promissory
note or other instrument, unless the single original of such note or other
instrument is delivered to Agent to hold as part of the Collateral, with such
endorsement and/or assignment by the payee of such note or other
instrument as Agent may require, (iii) as of the date of the making of such
loan and after giving effect thereto, the Borrower making such loan shall
be Solvent; (iv) as of the date of each such loan and after giving effect
thereto, no Event of Default, or act, condition or event which with notice
or passage of time or both would constitute an Event of Default shall exist
or have occurred, and (v) as of the date of any such loan and after giving
effect thereto, the Excess Availability of the Borrower making such loan
shall be not less than $15,000,000 as to loans or advances made by Huffy,
$1,500,000 as to loans or advances made by Royce, $1,000,000 as to loans
or advances made by Huffy Service, $100,000 as to loans or advances
made by American Sports Design Company or $2,000,000 as to loans or
advances made by Washington;
h. unsecured Indebtedness of any Borrower to any Guarantor or any
Subsidiary of any Borrower or Guarantor (other than Borrowers) arising
on or after the date hereof pursuant to loans by such Guarantor or
Subsidiary thereof to such Borrower, provided, that, as to any such loan (i)
the Indebtedness arising pursuant to such loan is subject to, and
subordinate in right of payment to, the right of Agent and Lenders to
receive the prior final payment and satisfaction in full of all of the
Obligations on terms and conditions acceptable to Agent, (ii) Agent shall
have received, in form and substance satisfactory to Agent, a
subordination agreement providing for the terms of the subordination in
right of payment of such Indebtedness of such Borrower to the prior final
payment and satisfaction in full of all of the Obligations, duly authorized,
executed and delivered by such Guarantor or Subsidiary (as the case may
be) and Borrower, (iii) such Borrower shall not, directly or indirectly
make, or be required to make, any payments in respect of such
Indebtedness, (iv) each month Borrowers shall provide to Agent a report in
form and substance satisfactory to Agent of any change in the outstanding
amount of such loans from the amount set forth in the most recent report
thereof previously provided to Agent under this clause (h)(iv), and
(v) such Indebtedness shall not be evidenced by a promissory note or other
instrument, unless the single original of such note or other instrument is
delivered to Agent to hold as part of the Collateral, with such endorsement
and/or assignment by the payee of such note or other instrument as Agent
may require;
i. unsecured Indebtedness of any Guarantor to any other Guarantor arising
on or after the date hereof pursuant to loans by such Guarantor to such
other Guarantor, provided, that, as to any such loan, (i) each month
Borrowers shall provide to Agent a report in form and substance
satisfactory to Agent of any change in the outstanding amount of such
loans from the amount set forth in the most recent report thereof
previously provided to Agent, (ii) the Indebtedness arising pursuant to
any such loan shall not be evidenced by a promissory note or other
instrument, unless the single original of such note or other instrument is
delivered to Agent to hold as part of the Collateral, with such endorsement
and/or assignment by the payee of such note or other instrument as Agent
may require, and (iii) as of the date of the making of such loan and after
giving effect thereto, the Guarantor making such loan shall be Solvent;
j. Indebtedness of any Subsidiary of Huffy, other than Borrowers and
Guarantors, provided, that, (i) as to any such Indebtedness Borrowers and
Guarantors shall not be directly or indirectly liable (by virtue of such
Borrower or Guarantor being the primary obligor on, guarantor of, or
otherwise liable in any respect of such Indebtedness), (ii) the occurrence of
a default with respect thereto shall not result in, or permit any holder of
any Indebtedness of any Borrower or Guarantor to declare a default on
Indebtedness of any Borrower or Guarantor or cause the payment thereof
to be accelerated or payable prior to its stated maturity, and (iii) the
aggregate amount of all of such Indebtedness shall not exceed $250,000 at
any time outstanding;
k. unsecured Indebtedness of any Borrower or Guarantor arising after the
date hereof owing to any Person (other than any other Borrower or
Guarantor); provided, that, as to any such Indebtedness, each of the
following conditions is satisfied as determined by Agent: (i) Agent shall
have received not less than ten (10) Business Days prior written notice of
the intention to incur such Indebtedness, which notice shall set forth in
reasonable detail satisfactory to Agent, the amount of such Indebtedness,
the person to whom such Indebtedness will be owed, the interest rate and
fees, the schedule of repayments and maturity date with respect thereto
and such other information with respect thereto as Agent may request, (ii)
Agent shall have received true, correct and complete copies of all
agreements, documents and instruments evidencing or otherwise related to
such Indebtedness, as duly authorized, executed and delivered by the
parties thereof, (iii) such Indebtedness shall be incurred by such Borrower
or Guarantor at commercially reasonable rates and terms in a bona fide
arm's length transaction, (iv) such Indebtedness shall not be owed to any
shareholder, officer, director, agent, employee or other Affiliate of any
Borrower or Guarantor, unless such Indebtedness is subordinated in right
of payment to the indefeasible payment and satisfaction in full of the
Obligations and Agent shall have received a subordination agreement, in
form and substance satisfactory to Agent, providing for such subordination
and related matters, duly authorized, executed and delivered by the person
to whom such Indebtedness is owed, such Borrower and Guarantor, (v) as
of the date of incurring such Indebtedness, and after giving effect thereto,
no Event of Default or act, condition or event which with notice or passage
of time or both would constitute an Event of Default, shall exist or have
occurred, (vi) the aggregate principal amount of all such Indebtedness
outstanding at any time shall not exceed $5,000,000, (vii) such
Indebtedness shall not at any time include terms and conditions which in
any manner adversely affect Agent or Lenders or any rights of Agent or
Lenders as determined in good faith by Agent or which are more
restrictive or burdensome than the terms or conditions of any other
Indebtedness of any Borrower (taken as a whole) as in effect on the date
hereof, (viii) Borrowers shall be in compliance with Section 6.09 hereof
after giving effect to such Indebtedness on a pro forma basis, (ix) such
Borrower or Guarantor may only make regularly scheduled payments of
principal and interest in respect of such Indebtedness, except as consented
to in writing by Agent, (x) such Borrower or Guarantor shall not, directly
or indirectly, (A) amend, modify, alter or change the terms of the
agreements with respect to such Indebtedness, or (B) redeem, retire,
defease, purchase or otherwise acquire such Indebtedness, or set aside or
otherwise deposit or invest any sums for such purpose, and (xi) Borrowers
and Guarantor shall furnish to Agent all notices or demands in connection
with such Indebtedness either received by any Borrower or Guarantor or
on its behalf promptly after the receipt thereof, or sent by any Borrower
and Guarantor or on its behalf, concurrently with the sending thereof, as
the case may be;
l. unsecured Indebtedness of any Borrower to any senior management
employees of such Borrower and unsecured Indebtedness of any Borrower
to any non-senior management of such Borrower arising pursuant to the
severance policies of such Borrower, in each case in connection with a
proposed Business Unit Sale with respect to the Borrower by whom such
employees are employed, provided, that, (i) promptly upon Agent's
request, Borrowers shall provide to Agent a copy of such severance
policies and retention agreements and the terms of such arrangements and
other information with respect thereto as may be requested by Agent,
(ii) the amounts which such Borrower is obligated to pay pursuant to such
severance obligations and retention agreements shall only be payable to
the employees upon the effectiveness of the Business Unit Sale with
respect to the Borrower by whom the employees are employed, and
(iii) the aggregate amount that Borrowers and Guarantors shall be required
to pay (contingent or otherwise) pursuant to all such arrangements in
connection with any Business Unit Sale, together with the amount of all
loans made to such employees permitted under Section 7.04(n) hereof,
shall not exceed the amount allowed for such obligations set forth in
Section 1.28(e) of the Intercreditor Agreement to be paid from the Net
Available Proceeds from such Business Unit Sale;
m. Indebtedness existing as of the date hereof set forth on Schedule 6.10
hereto, provided, that, (i) the Borrower obligated in respect of such
Indebtedness or Guarantor (as the case may be) may only make regularly
scheduled payments or mandatory prepayments of principal and interest in
respect of such Indebtedness in accordance with the terms of the
agreement or instrument evidencing or giving rise to such Indebtedness as
in effect on the date hereof, (ii) such Borrower or Guarantor shall not,
directly or indirectly, amend, modify, alter or change the terms of the
agreements, documents and instruments entered into in connection
therewith, except, that, such Borrower or Guarantor may, after prior
written notice to Agent, amend, modify, alter or change the terms thereof
so as to extend the maturity thereof or defer the timing of any payments in
respect thereof, or to forgive or cancel any portion of such Indebtedness
(other than pursuant to payments thereof), or to reduce the interest rate or
any fees in connection therewith, (iii) such Borrower or Guarantor shall
not, directly or indirectly redeem, retire, defease, purchase or otherwise
acquire such Indebtedness, or set aside or otherwise deposit or invest any
sums for such purpose and (iv) such Borrowers and Guarantor shall
furnish to Agent all notices or demands in connection with such
Indebtedness either received by any Borrower or Guarantor or on its
behalf, promptly after the receipt thereof, or sent by any Borrower or
Guarantor or on its behalf, concurrently with the sending thereof, as the
case may be.
6.11 Loans, Investments, Guarantees, Etc. Each Borrower and Guarantor shall not, and
shall not permit any Subsidiary to, directly or indirectly, make any loans or
advance money or property to any Person, or invest in (by capital contribution,
dividend or otherwise) or purchase or repurchase the Capital Stock or
Indebtedness or all or a substantial part of the assets or property of any Person, or
guarantee, assume, endorse, or otherwise become responsible for (directly or
indirectly) the Indebtedness, performance, obligations or dividends of any Person
or hold any cash or Cash Equivalents. or form or acquire any Subsidiaries, or
agree to do any of the foregoing, except:
a. guarantees by any Borrower or Guarantor of the Obligations in favor of
Agent and Lenders;
b. the endorsement of instruments for collection or deposit in the ordinary
course of business;
c. investments in cash or Cash Equivalents so long as there are no Loans
outstanding and such investments are pledged and delivered to Agent upon
Agent's request;
d. the existing equity investments of each Borrower and Guarantor as of the
date hereof in its respective Subsidiaries as of the date hereof;
e. stock or obligations issued to a Borrower by any Person (or the
representative of such Person) in respect of Indebtedness of such Person
owing to such Borrower in connection with the insolvency, bankruptcy,
receivership or reorganization of such Person or a composition or
readjustment of the debts of such Person; provided, that, the original of
any such stock or instrument evidencing such obligations shall be
promptly delivered to Agent, upon Agent's request, together with such
stock power, assignment or endorsement by such Borrower as Agent may
request;
f. obligations or account debtors to a Borrower arising from Accounts which
are past due evidenced by a promissory note made by such account debtor
payable to such Borrower; provided, that, promptly upon the receipt of the
original of any such promissory note by such Borrower, such promissory
note shall be endorsed to the order of Agent, for itself and the ratable
benefit of Lenders, by such Borrower and promptly delivered to Agent as
so endorsed;
g. loans and advances by any Borrower, Guarantor or any Subsidiary to
employees of such Borrower, Guarantor or Subsidiary not to exceed the
principal amount of $1,000,000 in the aggregate at any time outstanding
for: (i) reasonably and necessary work-related travel or other ordinary
business expenses to be incurred by such employee in connection with
their work for such Borrower, Guarantor or Subsidiary and (ii) reasonable
and necessary relocation expenses of such employees (including home
mortgage financing for relocated employees);
h. the existing equity investment of Washington in WIS Brasil Boucinhas
Xxxxxx Inventory Service Ltda., a Brazilian corporation based in Sao
Paulo, Brazil, of which Washington owns fifty-one (51%) percent of all of
the issued and outstanding shares of Capital Stock and the existing equity
investment of Washington in Japan Asset Inventory Co. Ltd., a Japanese
corporation, of which Washington owns twenty (20%) percent of all of the
issued and outstanding shares of Capital Stock, provided, that, in no event
shall any Borrower or Guarantor have any obligation or liability, direct or
indirect, to make any further capital or other contributions or payments in
respect of such corporations or have any obligation or liability in
connection with such corporations;
i. the Farmington Bond Guarantee by Huffy in favor of Prudential with
respect to the obligations of the City of Farmington, Missouri evidenced
by the Farmington Bonds as in effect on the date hereof;
j. loans by any Borrower to any other Borrower to the extent the
Indebtedness of such Borrower arising pursuant to such loans are
permitted under Section 6.10(g) hereof;
k. loans by any Guarantor or any Subsidiary of any Guarantor to any
Borrower to the extent the Indebtedness of such Borrower to such
Guarantor (or Subsidiary) arising pursuant to such loans is permitted under
Section 6.10(h) hereof;
l. loans by any Guarantor to any other Guarantor to the extent the
Indebtedness of such Guarantor to such Borrower arising pursuant to such
loans is permitted under Section 6.10(i) hereof;
m. unsecured guarantees by any Borrower, Guarantor or any of their
respective Subsidiaries of the obligations of any Borrower, Guarantor or
other Subsidiary of any Borrower or Guarantor to any third party with
respect to leases of real property or personal property in the ordinary
course of business and other such unsecured guarantees, provided, that,
(i) the aggregate amount of the liability of all Borrowers pursuant to such
other unsecured guarantees shall not exceed $250,000 in the aggregate and
(ii) as to all such guarantees, no Borrower shall guarantee any obligations
of any Subsidiary of any Borrower or Guarantor which is not a Borrower
or Guarantor;
n. loans by any Borrower to senior management employees of such Borrower
in connection with a proposed Business Unit Sale of the assets or Capital
Stock of such Borrower, provided, that, (i) promptly upon Agent's request,
Borrowers shall provide to Agent a copy or the original of all agreements
evidencing or relating to such arrangements, including the original of any
note evidencing the Indebtedness arising pursuant to such loans, and such
other information with respect thereto as Agent may request, and (ii) the
aggregate amount of such loans, together with the amounts which
Borrowers may be required to pay (whether contingent upon a Business
Unit Sale or otherwise) pursuant to the severance arrangements and
retention agreements permitted under Section 6.10(l) hereof, shall not
exceed the amount allowed for such obligations set forth in Section
1.28(e) of the Intercreditor Agreement to be paid for from the Net
Available Proceeds from such Business Unit Sale;
o. the existing loans, advances and guarantees by any Borrower and
Guarantor outstanding as of the date hereof as set forth on Schedule 6.11
hereto; provided, that, as to such loans, advances and guarantees, (i) such
Borrower and Guarantor shall not, directly or indirectly, (A) amend,
modify, alter or change the terms of such loans, advances or guarantees or
any agreement, document or instrument related thereto, or (B) as to such
guarantees, redeem, retire, defease, purchase or otherwise acquire such
guarantee or set aside or otherwise deposit or invest any sums for such
purpose and (ii) Borrowers and Guarantor shall furnish to Agent all
notices or demands in connection with such loans, advances or guarantees
either received by any Borrower or Guarantor or on its behalf, promptly
after the receipt thereof, or sent by any Borrower or Guarantor or on its
behalf, concurrently with the sending thereof, as the case may be.
6.12 Dividends and Redemptions. Each Borrower and Guarantor shall not, directly or
indirectly, declare or pay any dividends on account of any shares of class of any
Capital Stock of such Borrower or Guarantor now or hereafter outstanding, or set
aside or otherwise deposit or invest any sums for such purpose, or redeem, retire,
defease, purchase or otherwise acquire any shares of any class of Capital Stock (or
set aside or otherwise deposit or invest any sums for such purpose) for any
consideration other than common stock or apply or set apart any sum, or make any
other distribution (by reduction of capital or otherwise) in respect of any such
shares or agree to do any of the foregoing except that (a) any Subsidiary of a
Borrower may pay dividends to such Borrower; (b) any Borrower or Guarantor
may pay dividends to the extent permitted in Section 6.13 below; (c) any
Borrower, Guarantor or any of their respective Subsidiaries may repurchase
Capital Stock consisting of common stock held by employees pursuant to any
employee stock ownership plan thereof upon the termination, retirement or death
of any such employee in accordance with the provisions of such plan, provided,
that, as to any such repurchase, each of the following conditions is satisfied: (i) as
of the date of the payment for such repurchase and after giving effect thereto, no
Event of Default shall exist or have occurred and be continuing, (ii) such
repurchase shall be paid with funds legally available therefor, (iii) such repurchase
shall not violate any law or regulation or the terms of any indenture, agreement or
undertaking to which any Borrower or Guarantor is a party or by which any
Borrower or Guarantor or its property are bound, and (iv) the aggregate amount of
all payments for such repurchases in any calendar year shall not exceed $250,000;
and (d) Huffy may, on the date hereof, fund a dividend, in respect of common
stock of Huffy which had been declared but not paid as of July, 1999, provided,
that, (i) such dividend shall be funded on the date hereof and (ii) the aggregate
amount of all payments in respect of such dividend shall not exceed $860,000.
6.13 Transactions with Affiliates. Each Borrower and Guarantor shall not, and shall
not permit any Subsidiary to, directly or indirectly:
a. purchase, acquire or lease any property from, or sell, transfer or lease any
property to, or render or obtain any services to or from, any officer,
employee, shareholder, director, agent or any other Affiliate, except in the
ordinary course of and pursuant to the reasonable requirements of such
Borrower's, Guarantor's or Subsidiary's (as the case may be) business and
upon fair and reasonable terms no less favorable to such Borrower,
Guarantor or Subsidiary than it would obtain in a comparable arm's length
transaction with a person who is not an Affiliate; or
b. make any payments of management, consulting or other fees for
management or similar services, or of any Indebtedness owing to any
officer, employee, shareholder, director or any other Affiliate of any
Borrower or Guarantor except (i) reasonable compensation to officers,
employees and directors for services rendered to such Borrower, Guarantor
or Subsidiary, as the case may be, in the ordinary course of business, (ii)
payments by a Borrower to any other Borrower in respect of Indebtedness
arising pursuant to loans made by such Borrower or Guarantor to the
extent such Indebtedness permitted under Section 6.10 hereof, and
(iii) payments by a Borrower or Guarantor to Huffy for actual and
necessary reasonable out-of-pocket legal and accounting, insurance,
marketing, payroll and similar types of services paid for by Huffy on
behalf of the other Borrowers or Guarantor in the ordinary course of their
respective businesses or as the same may be directly attributable to the
other Borrowers or Guarantors and (iv) payments by a Borrower in respect
of severance arrangements and retention agreements with senior
management employees permitted under Section 6.9 hereof in connection
with a proposed Business Unit Sale upon the effectiveness of the transfer
of assets to such Business Unit Sale, subject to the limitation on the
amount of such payments set forth in Section 6.9 hereof.
6.14 Minimum EBITDA.
(a) The EBITDA of Huffy for each fiscal month in the year 2000 shall be not less
than the amount for such month calculated as follows: (i) the sum of the EBITDA of the business
units of Huffy for such month set forth on Schedule 6.14 hereof (including for this purpose the
EBITDA only of those business units which have not been sold as of the last day of such month)
minus (ii) the greater of (A) the amount equal to forty (40%) percent multiplied by the sum of the
EBITDA of the business units of Huffy for such month set forth on Schedule 6.14 hereof
(including for this purpose the EBITDA only of those business units which have not been sold as
of the last day of such month) or (B) $750,000. The EBITDA used for the purpose of the
foregoing calculations shall be the amount designated on Schedule 6.14 as the line item
"EBITDA per November 17, 1999 Projections" for each of the Huffy business units.
(b) The EBITDA of Huffy for each fiscal quarter in the year 2000 shall be not less
than the amount for such quarter calculated as follows: (i) the sum of the EBITDA of the
business units of Huffy for each month as set forth on Schedule 6.14 hereto (including for this
purpose the EBITDA only of those business units which have not been sold as of the last day of
such month) of the three (3) months in such fiscal quarter multiplied by (ii) eighty (80%) percent.
(c) Huffy shall deliver to Agent not later than December 1, 2000 detailed projections
in form substantially consistent with the projections set forth on Schedule 6.7 hereto (and
otherwise in a manner consistent with such projections except as Agent may otherwise
specifically agree) and containing such information with respect thereto as Agent may reasonably
require. Such projections are referred to herein as the "2001 Projections." The 2001 Projections,
together with the summaries of assumptions and projections based on historical performance
with respect thereto, furnished by Huffy to Agent shall represent the reasonable, good faith
opinion of Huffy and its management as to the subject matter thereof and shall be based on
assumptions which are reasonable under the circumstances at the time.
(d) The EBITDA of Huffy for each fiscal month in the year 2001 shall be not less
than the greater of: (i) the amount equal to the EBITDA of Huffy required to be maintained in the
corresponding month in the year 2000 calculated as provided in Section 6.14(a) above or (ii) the
amount for such month calculated as follows: (A) the sum of the EBITDA of the business units
of Huffy for such month set forth in the 2001 Projections (including for this purpose the
EBITDA only of those business units which have not been sold as of the last day of such month)
minus (B) the greater of (1) the amount equal to forty (40%) percent multiplied by the sum of the
EBITDA of the business units of Huffy for such month set forth in the 2001 Projections
(including for this purpose the EBITDA only of those business units which have not been sold as
of the last day of such month) or (2) $750,000.
(e) The EBITDA of Huffy for each fiscal quarter in the year 2001 shall be not less
than the greater of: (i) the amount equal to the EBITDA of Huffy required to be maintained in the
corresponding quarter in the year 2000 calculated as provided in Section 6.14(b) above or (ii) the
amount for such quarter calculated as follows: (A) the sum of EBITDA of the business units of
Huffy for each month as set forth in the 2001 Projections (including for this purpose the
EBITDA only of those business units which have not been sold as of the last day of such month)
for the three (3) months in such fiscal quarter multiplied by (B) eighty (80%) percent.
6.15 Changes in Business. Each Borrower, Guarantor and their Subsidiaries shall not
engage in any business other than the businesses of such Borrower, Guarantor or
Subsidiary on the date hereof and any businesses reasonably related, ancillary or
complimentary to the businesses in which such Borrower, Guarantor or Subsidiary
are engaged on the date hereof.
6.16 Sale and Leasebacks. Each Borrower and Guarantor shall not, and shall not
permit any Subsidiary to, enter into any arrangement, directly or indirectly, with
any Person whereby such Borrower, Guarantor or Subsidiary, as the case may be,
shall sell or transfer any property, real or personal, used or useful in its business,
whether now owned or hereafter acquired, and thereafter rent or lease such
property which it intends to use for substantially the same purpose or purposes as
the property being sold or transferred (except to the extent of capital leases
permitted under Section 6.10 hereof).
6.17 Compliance with ERISA.
a. Each Borrower and Guarantor shall not, and shall not permit any
Subsidiary to, with respect to any "employee benefit plans" maintained by
any Borrower or Guarantor or any of its ERISA Affiliates: (i) terminate
any of such employee pension plans so as to incur any liability to the
Pension Benefit Guaranty Corporation established pursuant to ERISA, (ii)
allow or suffer to exist any prohibited transaction involving any of such
employee benefit plans or any trust created thereunder which would
subject any Borrower, Guarantor or such ERISA Affiliate to a tax or
penalty or other liability on prohibited transactions imposed under the
Code or ERISA, (iii) fail to pay to any such employee benefit plan any
contribution which it is obligated to pay under ERISA, the Code or the
terms of such plan, (iv) allow or suffer to exist any accumulated funding
deficiency, whether or not waived, with respect to any such employee
benefit plan, (v) allow or suffer to exist any occurrence of a reportable
event (except as disclosed in Schedule 5.9 hereof, but subject to the
representation with respect thereto set forth in Section 5.9 hereof) or any
other event or condition which presents a material risk of termination by
the Pension Benefit Guaranty Corporation of any such employee benefit
plan that is a single employer plan, which termination could result in any
liability to the Pension Benefit Guaranty Corporation or (vi) incur any
withdrawal liability with respect to any multiemployer pension plan.
b. As used in this Section 6.17, the term "employee pension benefit plans,"
"employee benefit plans", "accumulated funding deficiency" and
"reportable event" shall have the respective meanings assigned to them in
ERISA, and the term "prohibited transaction" shall have the meaning
assigned to it in the Code and ERISA.
6.18 Identification of Bank Accounts. Each Borrower and Guarantor shall identify
promptly, in writing to the Administrative Agent, all deposit accounts, investment
accounts or any other accounts with any bank or financial institution in addition to
those accounts set forth in Schedule 5.10 hereof.
6.19 End of Fiscal Years; Fiscal Quarters. Huffy shall, for financial reporting
purposes, cause its, and each of its Subsidiaries' (a) fiscal years to end on
December 31 of each year and (b) fiscal quarters to end on or around March 31,
June 30, September 30 and December 31 of each year.
6.20 Capital Expenditures. Huffy and its Subsidiaries shall not, directly or indirectly,
make any Capital Expenditures in excess of $7,500,000 in any fiscal year.
6.21 Year 2000 Compliance. Each Borrower and Guarantor shall take all action which
may be required so that its computer-based information systems, including,
without limitation, all of its proprietary computer hardware and software (and
whether supplied by others or with which Borrowers' or Guarantors' systems
interface) are able to operate effectively and correctly process data using dates on
or after January 1, 2000. Compliance with the foregoing shall mean that the
systems will operate and correctly process data without human intervention such
that (a) there is correct century recognition, (b) calculations properly
accommodate same century and multi-century formulas and date values, and (c)
all leap years shall be calculated correctly. Upon Agent's request, Borrowers and
Guarantors shall certify to Agent in writing that its information systems have been
modified, updated and programmed as required by this Section, provided, that,
Borrowers and Guarantors have received any certification from Agent and
Lenders required in order for Borrowers and Guarantors to provide such
certification to Agent. On and after January 1, 2000, the computer-based
information systems of Borrowers and Guarantors shall be, and with ordinary
course upgrading and maintenance, will continue to be sufficient to permit
Borrowers and Guarantors to conduct their businesses without any adverse effect
as a result of the year 2000.
6.22 Costs and Expenses. Each Borrower and Guarantor shall pay to Agent, for itself
and the benefit of Lenders, all costs, expenses, filing fees and taxes paid or
payable in connection with the preparation, negotiation, execution, delivery,
recording, administration, collection, liquidation, enforcement and defense of the
Obligations, the rights of Agent and Lenders, in the Collateral, this Agreement,
the other Financing Agreements and all other documents related hereto or thereto,
including any amendments, supplements or consents which may hereafter be
contemplated (whether or not executed) or entered into in respect hereof and
thereof, including: (a) all costs and expenses of filing or recording (including
Uniform Commercial Code financing statement filing taxes and fees,
documentary taxes and intangibles taxes, if applicable); (b) all insurance
premiums, appraisal fees and search fees; (c) costs and expenses of remitting loan
proceeds, collecting checks and other items of payment, and establishing and
maintaining the Blocked Accounts, together with Agent's customary charges and
fees with respect thereto; (d) charges, fees or expenses charged by any bank or
issuer in connection with the Letter of Credit Accommodations; (e) costs and
expenses of preserving and protecting the Collateral; (f) costs and expenses paid
or incurred in connection with obtaining payment of the Obligations, enforcing
the security interests and liens of Agent, for the ratable benefit of Lenders, selling
or otherwise realizing upon the Collateral, and otherwise enforcing the provisions
of this Agreement and the other Financing Agreements or defending any claims
made or threatened against Agent and/or Lenders arising out of the transactions
contemplated hereby and thereby (including preparations for and consultations
concerning any such matters); (g) all out-of-pocket expenses and costs heretofore
and from time to time hereafter incurred by Agent or any Lender during the course
of periodic field examinations of the Collateral and any Borrower's or Guarantor's
operations, plus a per diem charge at the rate of $800 per person per day for
Agent's or any Lender's examiners in the field and office; and (h) the fees and
disbursements of counsel (including legal assistants) to Agent and Lenders in
connection with any of the foregoing.
6.23 Further Assurances. At the request of Agent or any Lender at any time and from
time to time, each Borrower and Guarantor shall, at its expense, duly execute and
deliver, or cause to be duly executed and delivered, such further agreements,
documents and instruments, and do or cause to be done such further acts as may
be necessary or proper to evidence, perfect, maintain and enforce the security
interests and the priority thereof in the Collateral and to otherwise effectuate the
provisions or purposes of this Agreement or any of the other Financing
Agreements. Agent may at any time and from time to time request a certificate
from an officer of Huffy representing that all conditions precedent to the making
of Loans and providing Letter of Credit Accommodations contained herein are
satisfied. In the event of such a request, Agent and Lenders may, at the option of
Agent, cease to make any further Loans or provide any further Letter of Credit
Accommodations until Agent has received such certificate. Where permitted by
law, each Borrower hereby authorizes Agent to execute and file one or more UCC
financing statements signed only by Agent.
7. Defaults and Remedies. Each of the following events shall constitute a "Default" under
this Agreement:
7.1 Principal Default. Default shall be made in the payment of any principal of the
Remaining Indebtedness required to be made by the terms of this Agreement
when and as the same shall become due and payable; or
7.2 Interest or Lease Payment Default. Default shall be made in the payment of any
interest on or with respect to the Remaining Indebtedness required to be made by
the terms of this Agreement or in the payment of any scheduled payment under
the KeyBank Lease or the Bank One Lease, in all cases when the same shall
become due and payable; or
7.3 Other Defaults. Default shall be made in the payment by Company of any other
amount when and as the same shall become due and payable under the terms of
this Agreement or any agreement relating to the Term Loan or the Company shall
fail to observe, perform and comply with any agreement or covenant on the part
of the Company set forth herein or in any related document (except Section 6.14
hereof) and such default shall continue for five (5) consecutive calendar days; in
the case of Section 6.14, a Default shall occur at the end of the tenth Business Day
after the due date of the first financial statements required to be delivered under
Section 6.7(a) with respect to any month or quarter for which the requirements of
Section 6.14 are not satisfied; or
7.4 Representation and Warranty. Any representation or warranty made by Company
under this Agreement, any related document, or in any certificate, report,
instrument, financial statement or other document furnished pursuant to this
Agreement or any other such document shall prove to have been false or incorrect
in any material respect as of the date on which made; or
7.5 Cross Default; Cross Acceleration. Any default or event of default shall have
occurred and be continuing under any agreement evidencing the Congress Facility
and/or the Term Loan Agreement and/or Congress shall have terminated or
reduced its commitment (other than as a result of a Business Unit Sale as provided
under Section 1.35 of the Intercreditor Agreement) under the Congress Facility
and/or accelerated the indebtedness outstanding under the Congress Facility
and/or the Existing Lenders shall have accelerated the maturity of the Term Loan.
7.6 Loss of Material Customers. Any customer of the Huffy Bicycle Company
Division of Huffy, Royce and American (taken as a whole), the Huffy Sports
Company Division of Huffy, Huffy Service or Washington which accounts for
more than ten (10%) percent or more of the revenues of the Huffy Bicycle
Company Division of Huffy, Huffy Service or Washington, as the case may be, as
set forth in the November 17, 1999 projections provided by Huffy to Agent prior
to the date hereof for its fiscal year ending December 31, 2000 shall terminate its
arrangements with such Borrower or shall cease purchasing Inventory or
obtaining services from such Borrower or shall terminate or cancel all or any
substantial portion of its orders or contracts and ten (10) Business Days shall have
passed after such event.
7.7 Financial Difficulties. Any of the following events evidencing the financial
difficulties of Company or any of its Subsidiaries shall occur:
(i) any admission in writing of inability to pay debts as they become due
or the failure to pay debts generally as such debts become due; or
(ii) the entry of an order for relief in the name of Company or any
Subsidiary under Xxxxx 00, Xxxxxx Xxxxxx Code (the "Bankruptcy Code") or similar
provisions of foreign law; or
(iii) Company or any Subsidiary shall make an assignment for the benefit
of creditors; or
(iv) Company or any Subsidiary shall consent to the appointment
of a trustee or receiver for all or a major part of its property; or
(v) the commencement of a case by Company or any Subsidiary
under the Bankruptcy Code or similar provisions of foreign law; or
(vi) the commencement of a case under the Bankruptcy Code or similar
provisions of foreign law against Company or any Subsidiary, which case shall
not be dismissed within 60 days from the date of commencement; or
(vii) the entry of a court order appointing a receiver or a trustee for all or
a major part of Company's or any Subsidiary's property without consent, which
order shall not be vacated, denied, set aside, or stayed within 60 calendar days
from the date of entry; or
(viii) Any material asset(s) of Company or any Subsidiary are the subject
of any levy, execution, seizure, impoundment, attachment or other judicial or
governmental process relating to the enforcement of any judgment or court order
for the payment of money or any assets that are necessary to the operation of the
business of Company or any Subsidiary are seized, expropriated, condemned,
impounded or subject to any governmental order or process that prevents the use
and operation thereof by Company or any Subsidiary or impairs the rights of
Company or any Subsidiary therein, and any one or more such events cause at any
time a Material Adverse Effect on Company or any Subsidiary.
7.8 Judgments. Entry of a final judgment (a final judgment being one from which all
available appeals have been exhausted or the time for taking such appeal has
lapsed or enforcement of which is not at any time subject to a stay) against
Company and/or any Subsidiary in excess of $1,000,000 in any one case or in
excess of $2,000,000 in the aggregate (to the extent not covered by insurance
where the insurer has assumed responsibility in writing for such judgment) and
shall remain undischarged or unvacated for a period in excess of thirty (30) days
or execution shall at any time not be effectively stayed, or any judgment other
than for the payment of money, or injunction, attachment, garnishment or
execution is rendered against any Borrower or Obligor or any of the Collateral
having a value in excess of $1,000,000; or
7.9 Restraint on Business. Any court or administrative or regulatory agency shall
have issued an injunction or order that materially restricts or enjoins Company
and/or any of its Subsidiaries from conducting any material part of its business as
now conducted and that has or would cause a material adverse effect in, on or
relating to the business, properties, results of operations or condition (financial or
otherwise) of Company and its Subsidiaries taken as a whole that results in a
material impairment of the ability of Company to perform any of its obligations
under this Agreement or any document or agreement referred to herein to which it
is a party.
7.10 Material Adverse Effect. There shall be an act, condition or event which has a
Material Adverse Effect after the date hereof; or
7.11 Change of Control. Any Change of Control shall occur.
Subject to the terms of the Intercreditor Agreement, if there shall occur any Default set
forth above, any Existing Lender(s) then holding 66.67 percent or more of the Pool Indebtedness,
by written notice to Company, may declare the unpaid principal of and accrued interest on all
Remaining Indebtedness to be immediately due and payable, whereupon the Remaining
Indebtedness shall become due and payable without any further notice, presentment, or demand
of any kind, all of which are hereby expressly waived by Company. If there shall occur any
Default set forth in Sections 7.7(ii), (vi) or (vii) above, all Remaining Indebtedness shall
automatically become and be immediately due and payable, without notice, presentment, or
demand of any kind, all of which are hereby expressly waived by Company.
Upon the expiration or termination of the waiver period provided for in Section 3.2 and at
all times thereafter, the Existing Lenders and/or their Collateral Agent shall have all the rights
and remedies provided for in the agreements and instruments evidencing the Existing
Indebtedness, in this Agreement and/or any of the collateral documents executed in connection
with this Agreement and/or as secured parties at law and/or in equity.
Subject to the terms of the Intercreditor Agreement, upon the occurrence of a Default and
at all times thereafter, Asset Holdings and Selco shall have the respective rights and remedies
provided for under the Bank One Lease and the KeyBank Lease, respectively, this Agreement, at
law and/or in equity.
The rights and remedies of the Existing Lenders, Asset Holdings and Selco shall be
cumulative and not exclusive and the Existing Lenders, Asset Holdings and Selco shall have the
right to exercise any one or more of such remedies and/or such other rights and remedies as may
be available to them at law or in equity at any time and from time to time without prejudice to the
rights of the Existing Lenders, Asset Holdings and Selco to exercise any other rights and/or
remedies at any time. Notwithstanding anything contained herein to the contrary, Agent and
Lender will not seek a cognovit judgment any earlier than ten (10) days after notice of
acceleration is given by Agent to Borrower under this Section.
8. Miscellaneous.
8.1 Payment of Expenses. Company will reimburse each of the Existing Lenders for
any out-of-pocket expenses incurred by any or all of them in connection with the
preparation, review, closing, administration, interpretation or enforcement of this
Agreement and the other documents executed in connection herewith, and the
transactions contemplated thereby, including, without limitation, all field
examination charges and expenses and all legal (including the allocated costs of
in-house counsel), consulting and professional fees. Company shall at all times
protect, indemnify, defend and save harmless the Existing Lenders, their officers,
directors, employees and agents from and against any and all claims, actions, suits
and other legal proceedings and liabilities, damages, costs, interest, charges, taxes,
counsel fees and other expenses and penalties which the Existing Lenders may, at
any time, sustain or incur by reason of or in consequence of or arising out of the
execution and delivery of this Agreement, the consummation of the transactions
contemplated hereby (including, without limitation, in respect of any claim for
brokerage or other fees or commissions relating to the transactions provided for in
this Agreement), except by reason of the gross negligence or willful misconduct
of the Existing Lenders. The obligations imposed upon Company by this Section
8.1 shall survive the payment of the Remaining Indebtedness for a period of three
years.
8.2 Survival of Representations and Warranties. All representations and warranties
contained herein shall survive the execution and delivery of this Agreement, and
shall continue in full force and effect so long as any of the Remaining
Indebtedness is outstanding and unpaid.
8.3 Entire Agreement; Amendment. This Agreement, including all exhibits hereto,
embodies the entire agreement and understanding among the Company and the
Existing Lenders regarding its subject matter and supersedes all other prior
proposals, negotiations, agreements and understandings relating to the subject
matter hereof. The Company and the Existing Lenders may enter into further and
additional written agreements to amend or supplement this Agreement and the
terms and provisions of such further and additional written agreements shall be
deemed a part of this Agreement as though incorporated herein. The agreement of
Company and Existing Lenders holding at the time at least 66.67 percent of the
outstanding amount of the Remaining Indebtedness shall be sufficient to authorize
and make effective any amendments to this Agreement, except for amendments to
any provisions relating to collateral, interest on and the amounts and timing of
repayment of the Remaining Indebtedness, the order of application or division of
proceeds or payments and/or any of the provisions of this Section 8.3, which shall
require the agreement of Company and all of the Existing Lenders. Any
amendment fees shall be shared by the Existing Lenders pro rata based on the
respective portions of the total amount of the Remaining Indebtedness held by
each Existing Lender at the time of any such amendment. Company hereby agree
that it shall have no rights of any kind in respect of any agreements, documents, or
instrument governing matters between or among the Existing Lenders and any
other creditors.
8.4 Parties in Interest. All the terms and provisions of this Agreement shall inure to
the benefit of and be binding upon and be enforceable by the respective successors
and assigns of the parties hereto, whether so expressed or not and, in particular,
shall inure to the benefit of and be enforceable by any holder of the Remaining
Indebtedness. Company shall not assign its rights under this Agreement without
the prior written consent of the Existing Lenders. The Existing Lenders, without
the prior written consent of Company, may assign, or sell participations in the
Remaining Indebtedness and their respective related rights under this Agreement.
No person or entity not a party to this Agreement shall be a third-party beneficiary
or have any rights hereunder in respect hereof.
8.5 Set-off Provisions. As security for the due payment and performance of all the
Remaining Indebtedness, Company hereby grants to the Existing Lenders, Asset
Holdings and Selco a lien on and security interest in any and all deposits or other
sums at any time credited by or due from such party to Company, whether in
regular or special depository accounts or otherwise, and any and all monies,
securities and other property of Company, and the proceeds thereof, now or
hereinafter held or received by or in transit to the Existing Lenders, Asset
Holdings and Selco from or for Company, whether for safekeeping, custody,
pledge, transmission, collection or otherwise, and any such deposits, sums,
monies, securities and other property, may at any time after the occurrence and
during the continuance of any Default be set-off, appropriated and applied by the
Existing Lenders, Asset Holdings and Selco against any of the Remaining
Indebtedness, whether or not any of such Remaining Indebtedness is then due or is
secured by any collateral, or, if it is so secured, whether or not the collateral held
by the Existing Lenders, Asset Holdings and Selco is considered to be adequate.
In the event any Existing Lender, Asset Holdings and Selco realizes any amount
of money or property as a result of exercising the rights provided for in this
Section 8.5, such money or property shall be treated as proceeds of collateral and
shall be shared with the other Existing Lenders in the same proportions as
proceeds of collateral are distributed between or among the Existing Lenders and
any Existing Lender receiving any such money or property shall promptly pay
over to the other Existing Lender or Existing Lenders such amount of money or
grant such interest(s) in such property as shall be necessary to give effect to the
foregoing.
8.6 Headings. Article and Section headings used in this Agreement are for
convenience of reference only and are not a part of this Agreement for any other
purpose.
8.7 Consent to Jurisdiction. Company agrees that any action or proceeding to enforce
or arising out of this Agreement, may be commenced in the Court of Common
Pleas for either Cuyahoga County, Ohio or in the District Court of the United
States for the Northern District of Ohio, and Company waives personal service of
process and agrees that a summons and complaint commencing an action or
proceeding in any such court shall be properly served and shall confer personal
jurisdiction over Company if served to Company at Company's Location or as
otherwise provided by the laws of the State of Ohio or the United States.
8.8 Severability of Provisions. If any provision, term, or portion, of this Agreement,
(including, without limitation, (a) any indebtedness, obligation, liability, contract,
agreement, indenture, warranty, covenant, guaranty, representation, or condition
of this Agreement made, assumed, or entered into, (b) any act of action taken
under this Agreement, or (c) any application of this Agreement) is for any reason
held to be illegal or invalid, such illegality or invalidity shall not affect any other
such provision, term, or portion of this Agreement, each of which shall be
construed and enforced as if such illegal or invalid provision, term, or portion
were not contained in this Agreement. Any illegality or invalidity of any
application of this Agreement shall not affect any legal and valid application of
this Agreement, and each provision, term, and portion of this Agreement shall be
deemed to be effective, operative, made, entered into, or taken in the manner and
to the full extent permitted by law. In the event any of the provisions herein
relating to interest and/or fees violate any usury law applicable to any one or more
Existing Lenders, any such Existing Lender(s) shall refund to the Company all
amounts received by such Existing Lender(s) in excess of the applicable usury
limit and the provisions hereof shall be deemed modified as to such Existing
Lender(s) only so as to adjust the interest and fees payable to such Existing
Lender(s) to the maximum rates or amounts that may lawfully be contracted for or
paid by the Company to such Existing Lender(s).
8.9 Waiver of Counterclaims. Each and every right granted to the Existing Lenders
hereunder or under any other document delivered hereunder or in connection
herewith, or allowed it by law or equity, shall be cumulative and may be exercised
from time to time. No failure on the part of any of the Existing Lenders to
exercise, and no delay in exercising, any right shall operate as a waiver thereof,
nor shall any single or partial exercise of any right preclude any other or future
exercise thereof or the exercise of any other right. The due payment and
performance of Company's indebtedness shall be without regard to any
counterclaim or right of offset which Company may have against the Existing
Lenders and without regard to any other obligation of any nature whatsoever
which the Existing Lenders may have to Company, and no such counterclaim
(other than compulsory counterclaims) or offset shall be asserted by Company in
any action, suit or proceeding instituted by the Existing Lenders for payment or
performance of Company's indebtedness.
8.10 Governing Law. This Agreement is a contract made under the laws of the State of
Ohio and shall be construed and enforced in accordance with and governed by
Ohio law, without giving effect to the principles of conflicts of law in effect under
Ohio law.
9. JURY TRIAL WAIVER
THE COMPANY, THE EXISTING LENDERS, ASSET HOLDINGS AND SELCO
EACH WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY
DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG
THE COMPANY, AND ANY OF THE EXISTING LENDERS, ASSET HOLDINGS AND/OR
SELCO ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO
THIS AGREEMENT, ANY RELATIONSHIP ESTABLISHED BETWEEN THEM IN
CONNECTION WITH ANY DOCUMENTS OR OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE
TRANSACTIONS RELATED THERETO.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
on the day and year first above written.
KEYBANK NATIONAL ASSOCIATION
By: /s/Xxxxxx X. Xxxxxx
Title: Vice President
BANK OF AMERICA, N.A.
By: /s/X. X. Xxxxxxxx
Title: Managing Director
NATIONAL CITY BANK
By: /s/Xxxx X. Xxxxxxx
Title: Vice President
ASSET HOLDINGS COMPANY VI, LLC
By: /s/J. Xxxxx Xxxxxx
Title: Vice President
HUFFY CORPORATION
By: /s/Xxxxxx X. Xxxxxxxx
Title: Chief Financial Officer
BANK ONE, N.A.
By: /s/J. Xxxxx Xxxxxx
Title: Vice President
FIFTH THIRD BANK, WESTERN OHIO
By: /s/Xxx Xxxxxx
Title: Vice President
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By: /s/Xxxxxxxxx X. Xxxxxx
Title: Vice President
SELCO SERVICE CORPORATION
By: /s/Xxxxxx X. Xxxxxx
Title: Authorized Signatory
| |
