EXHIBIT 10.1
EXECUTION VERSION
LOAN AND SECURITY AGREEMENT
DATED AS OF JANUARY 6, 2005
BETWEEN
ROCKY SHOES & BOOTS, INC.,
LIFESTYLE FOOTWEAR, INC.,
EJ FOOTWEAR LLC,
XX XXXXXX SAFETY SHOE CO. LLC,
GEORGIA BOOT LLC,
DURANGO BOOT COMPANY LLC,
NORTHLAKE BOOT COMPANY LLC,
LEHIGH SAFETY SHOE CO. LLC,
GEORGIA BOOT PROPERTIES LLC,
AND
LEHIGH SAFETY SHOE PROPERTIES LLC,
AS BORROWERS,
GMAC COMMERCIAL FINANCE LLC,
AS AGENT AND AS LENDER, AND
THE FINANCIAL INSTITUTION(S) LISTED
ON THE SIGNATURE PAGES HEREOF,
AS LENDERS
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS AND ACCOUNTING TERMS............................................................... 1
1.1. Certain Defined Terms.......................................................................... 2
1.2. UCC Defined Terms.............................................................................. 27
1.3. Accounting Terms............................................................................... 27
1.4. Other Definitional Provisions.................................................................. 27
SECTION 2. LOANS AND COLLATERAL........................................................................... 28
2.1. Loans.......................................................................................... 28
(A) Revolving Loan........................................................................ 28
(B) Term Loan A........................................................................... 28
(C) Borrowing Mechanics................................................................... 28
(D) Notes................................................................................. 29
(E) Letters of Credit..................................................................... 29
(1) Maximum Amount.................................................................. 29
(2) Reimbursement................................................................... 30
(3) Request for Letters of Credit................................................... 30
(F) Other Letter of Credit Provisions..................................................... 30
(1) Obligations Absolute............................................................ 30
(2) Nature of Lender's Duties....................................................... 31
(3) Liability....................................................................... 32
(G) Availability of a Lender's Pro Rata Share............................................. 32
(1) Lender's Amounts Available on a Funding Date.................................... 32
(2) Lender's Failure to Fund........................................................ 32
(3) Payments to a Defaulting Lender................................................. 32
(4) Defaulting Lender's Right to Vote............................................... 32
2.2. Interest....................................................................................... 33
(A) Rate of Interest...................................................................... 33
(B) Computation and Payment of Interest................................................... 33
(C) Interest Laws......................................................................... 34
(D) Conversion or Continuation............................................................ 34
2.3. Fees........................................................................................... 35
(A) Unused Line Fee....................................................................... 35
(B) Letter of Credit Fees................................................................. 35
(C) Audit Fees............................................................................ 35
(D) Other Fees and Expenses............................................................... 36
(E) Fee Letter............................................................................ 36
2.4. Payments and Prepayments....................................................................... 36
(A) Manner and Time of Payment............................................................ 36
(B) Mandatory Prepayments................................................................. 36
(1) Over Formula Advance............................................................ 36
(2) Prepayments from Proceeds of Asset Dispositions................................. 36
(3) Prepayments from Excess Cash Flow............................................... 37
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(4) Prepayments from Issuance of Securities......................................... 37
(5) Prepayments from Tax Refunds.................................................... 38
(6) Prepayments from Collateral Assignment.......................................... 38
(7) Change of Control............................................................... 38
(C) Voluntary Prepayments and Repayments.................................................. 38
(D) Payments on Business Days............................................................. 39
(E) Application of Prepayment Proceeds.................................................... 39
2.5. Term of this Agreement......................................................................... 39
2.6. Statements..................................................................................... 39
2.7. Grant of Security Interest..................................................................... 39
(A) Grant of Liens in the Collateral...................................................... 39
(B) Loan Parties Remain Liable............................................................ 40
2.8. Yield Protection............................................................................... 40
(A) Capital Adequacy and Other Adjustments................................................ 40
(B) Increased LIBOR Funding Costs......................................................... 41
2.9. Taxes.......................................................................................... 41
(A) No Deductions......................................................................... 41
(B) Changes in Tax Laws................................................................... 41
(C) Foreign Lenders....................................................................... 42
2.10. Required Termination and Prepayment............................................................ 42
2.11. Optional Prepayment/Replacement of Lenders..................................................... 43
(A) Replacement of an Affected Lender..................................................... 43
(B) Prepayment of an Affected Lender...................................................... 43
2.12. Compensation................................................................................... 43
2.13. Booking of LIBOR Loans......................................................................... 44
2.14. Assumptions Concerning Funding of LIBOR Loans.................................................. 44
2.15. Endorsement; Insurance Claims.................................................................. 44
SECTION 3. CONDITIONS TO LOANS............................................................................ 44
(A) Closing Deliveries.................................................................... 44
(B) Security Interests.................................................................... 45
(C) Closing Date Availability............................................................. 45
(D) Representations and Warranties........................................................ 45
(E) Fees.................................................................................. 45
(F) No Default............................................................................ 45
(G) Performance of Agreements............................................................. 45
(H) No Prohibition........................................................................ 45
(I) No Litigation......................................................................... 45
(J) Term Note B Investment................................................................ 45
(K) Acquisition........................................................................... 46
(L) Total Leverage Ratio.................................................................. 46
SECTION 4. REPRESENTATIONS, WARRANTIES OF THE LOAN PARTIES................................................ 46
4.1. Representations and Warranties of Loan Parties................................................. 46
(A) Organization and Power................................................................ 46
(B) Principal Business.................................................................... 47
(C) Financial Statements and Financial Projections........................................ 47
(D) Capitalization and Related Matters.................................................... 48
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(E) Subsidiaries.......................................................................... 49
(F) Authorization; No Breach.............................................................. 49
(G) Governmental Approvals................................................................ 49
(H) Enforceability........................................................................ 49
(M) No Material Adverse Change............................................................ 49
(J) Litigation............................................................................ 49
(K) Compliance with Laws.................................................................. 50
(P) Environmental Protection.............................................................. 50
(M) Legal Investments; Use of Proceeds.................................................... 51
(N) Taxes................................................................................. 51
(O) Labor and Employment.................................................................. 51
(P) Investment Company Act; Public Utility Holding Company Act............................ 52
(Q) Properties; Security Interests........................................................ 52
(R) Intellectual Property; Licenses....................................................... 52
(S) Solvency.............................................................................. 53
(T) Complete Disclosure................................................................... 53
(U) Side Agreements....................................................................... 53
(V) Broker's or Finder's Commissions...................................................... 54
(W) Material Contracts.................................................................... 54
(X) Foreign Assets Control Regulations, Etc............................................... 54
(Y) Parent SEC Reports.................................................................... 54
(Z) Current Business Practices............................................................ 55
4.2. Absolute Reliance on the Representations and Warranties........................................ 55
SECTION 5. COVENANTS...................................................................................... 56
5.1. Affirmative Covenants.......................................................................... 56
(A) Existence............................................................................. 56
(B) Businesses and Properties; Compliance with Laws....................................... 56
(C) Insurance............................................................................. 56
(D) Obligations and Taxes................................................................. 57
(E) Financial Statements; Reports......................................................... 57
(F) Litigation and Other Notices.......................................................... 60
(G) Environmental Matters................................................................. 61
(H) Default; Material Occurrences......................................................... 61
(I) ERISA................................................................................. 62
(J) Maintaining Records; Access to Premises and Inspections............................... 62
(K) Other Reports......................................................................... 62
(L) Patriot Act Compliance................................................................ 62
(M) SEC Filings; Press Release............................................................ 62
5.2. Negative Covenants............................................................................. 63
(A) Indebtedness.......................................................................... 63
(B) Negative Pledge; Liens................................................................ 64
(C) Contingent Liabilities................................................................ 66
(D) Intentionally Omitted................................................................. 66
(E) Mergers, etc.......................................................................... 66
(F) Affiliate Transactions................................................................ 66
(G) Dividends............................................................................. 67
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(H) Advances, Investments and Loans....................................................... 67
(I) Use of Proceeds....................................................................... 69
(J) Press Release; Public Offering Materials.............................................. 69
(K) Amendment of Charter Documents........................................................ 69
(L) Subsidiaries.......................................................................... 69
(M) Business.............................................................................. 70
(N) Fiscal Year; Accounting............................................................... 70
(O) Establishment of New or Changed Business Locations.................................... 70
(P) Business Practices.................................................................... 70
(Q) Sale or Discount of Receivables....................................................... 70
(R) Changes Relating to Note Purchase Documents; Prepayments.............................. 70
5.3. Financial Covenants............................................................................ 71
(A) Fixed Charge Coverage................................................................. 71
(B) Total Leverage........................................................................ 71
(C) Minimum EBITDA........................................................................ 72
(D) Senior Leverage Ratio................................................................. 72
(E) Capital Expenditures.................................................................. 73
(F) Undrawn Availability.................................................................. 73
SECTION 6. ADDITIONAL REPRESENTATIONS AND COVENANTS....................................................... 73
6.1. Representations................................................................................ 73
(A) Accounts Warranties and Covenants..................................................... 73
(B) Inventory Warranties and Covenants.................................................... 74
(C) Equipment Warranties and Covenants.................................................... 75
(D) Chattel Paper Warranties and Covenants................................................ 75
(E) Instruments Warranties and Covenants.................................................. 75
(F) Investment Property Warranties and Covenants.......................................... 75
(G) Letters of Credit Warranties and Covenants............................................ 75
(H) General Intangibles Warranties and Covenants.......................................... 76
(I) Intellectual Property Covenants....................................................... 76
(J) Commercial Tort Claims Warranties and Covenants....................................... 77
(K) Deposit Accounts; Bank Accounts Warranties and Covenants.............................. 77
(L) Bailees............................................................................... 77
(M) Collateral Description; Use of Collateral............................................. 77
(N) Collateral Filing Requirements; Collateral Records.................................... 78
(O) Federal Claims........................................................................ 78
(P) Agent Authorized...................................................................... 78
(Q) Names and Locations................................................................... 78
(R) Additional Mortgaged Property......................................................... 79
(S) Disclosure of Material Matters........................................................ 79
6.2. Access to Accountants and Management........................................................... 79
6.5. Amendment of Schedule.......................................................................... 79
6.4. Collection of Accounts and Payments............................................................ 79
6.6. Further Assurances............................................................................. 80
SECTION 7. DEFAULT, RIGHTS AND REMEDIES................................................................... 80
7.1. Event of Default............................................................................... 80
(A) Payment............................................................................... 80
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(B) Default in Other Agreements........................................................... 80
(C) Breach of Certain Provisions.......................................................... 81
(D) Breach of Warranty.................................................................... 81
(E) Other Defaults Under Loan Documents................................................... 81
(F) Change in Control..................................................................... 81
(G) Involuntary Bankruptcy; Appointment of Receiver, etc.................................. 81
(H) Voluntary Bankruptcy; Appointment of Receiver, etc.................................... 81
(I) Liens................................................................................. 82
(J) Judgment and Attachments.............................................................. 82
(K) Dissolution........................................................................... 82
(L) Solvency.............................................................................. 82
(M) Injunction............................................................................ 82
(N) Invalidity of Loan Documents.......................................................... 82
(O) Failure of Security................................................................... 82
(P) Damage, Strike, Casualty.............................................................. 82
(Q) Licenses and Permits.................................................................. 83
(R) Forfeiture............................................................................ 83
7.2. Suspension of Commitments...................................................................... 83
7.3. Acceleration................................................................................... 83
7.4. Remedies....................................................................................... 83
7.5. Appointment of Attorney-in-Fact................................................................ 84
7.6. Limitation on Duty of Agent and Lenders with Respect to Collateral............................. 85
7.7. Application of Proceeds........................................................................ 85
7.8. License of Intellectual Property............................................................... 85
7.9. Waivers; Non-Exclusive Remedies................................................................ 85
SECTION 8. GUARANTY....................................................................................... 86
SECTION 8A. BORROWING AGENCY............................................................................... 91
8A.1. Borrowing Agency Provisions.................................................................... 91
8A.2. Waiver of Subrogation.......................................................................... 92
SECTION 9. AGENT.......................................................................................... 92
9.1. Agent.......................................................................................... 92
(A) Appointment........................................................................... 92
(B) Nature of Duties...................................................................... 93
(C) Rights, Exculpation, Etc.............................................................. 93
(D) Reliance.............................................................................. 94
(E) Indemnification....................................................................... 94
(F) GMAC CF Individually.................................................................. 94
(G) Successor Agent....................................................................... 95
(1) Resignation..................................................................... 95
(2) Appointment of Successor........................................................ 95
(3) Successor Agent................................................................. 95
(H) Collateral Matters.................................................................... 95
(1) Release of Collateral........................................................... 95
(2) Confirmation of Authority; Execution of Releases................................ 96
(3) Absence of Duty................................................................. 96
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(I) Agency for Perfection................................................................. 96
(J) Exercise of Remedies.................................................................. 97
9.2. Notice of Default.............................................................................. 97
9.3. Action by Agent................................................................................ 97
9.4. Amendments, Waivers and Consents............................................................... 97
(A) Percentage of Lenders Required........................................................ 97
(B) Specific Purpose or Intent............................................................ 98
(C) Failure to Give Consent; Replacement of Non-Consenting Lender......................... 98
9.5. Assignments and Participations in Loans........................................................ 98
(A) Assignments........................................................................... 99
(B) Participations........................................................................ 99
(C) No Relief of Obligations; Cooperation; Ability to Make LIBOR Loans.................... 99
(D) Security Interests; Assignment to Affiliates.......................................... 100
(E) Recording of Assignments.............................................................. 100
9.6. Set Off and Sharing of Payments................................................................ 100
9.7. Disbursement of Funds.......................................................................... 101
9.8. Settlements, Payments and Information.......................................................... 101
(A) Revolving Advances and Payments; Fee Payments......................................... 101
(1) Fluctuation of Revolving Loan Balance........................................... 101
(2) Settlement Dates................................................................ 101
(3) Settlement Definitions.......................................................... 102
(4) Settlement Payments............................................................. 102
(B) Return of Payments.................................................................... 103
(1) Recovery after Non-Receipt of Expected Payment.................................. 103
(2) Recovery of Returned Payment.................................................... 103
9.9. Discretionary Advances......................................................................... 103
SECTION 10. MISCELLANEOUS.................................................................................. 103
10.1. Expenses and Attorneys' Fees................................................................... 103
10.2. Indemnity...................................................................................... 104
10.3. Notices........................................................................................ 104
10.4. Survival of Representations and Warranties and Certain Agreements.............................. 105
10.5. Indulgence Not Waiver.......................................................................... 106
10.6. Marshaling; Payments Set Aside................................................................. 106
10.7. Entire Agreement............................................................................... 106
10.8. Severability................................................................................... 106
10.9. Lenders' Obligations Several; Independent Nature of Lenders' Rights............................ 106
10.10. Headings....................................................................................... 106
10.11. APPLICABLE LAW................................................................................. 107
10.12. Successors and Assigns......................................................................... 107
10.13. No Fiduciary Relationship; No Duty; Limitation of Liabilities.................................. 107
(A) No Fiduciary Relationship............................................................. 107
(B) No Duty............................................................................... 107
(C) Limitation of Liabilities............................................................. 107
10.14. CONSENT TO JURISDICTION........................................................................ 107
10.15. WAIVER OF JURY TRIAL........................................................................... 108
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10.16. Construction................................................................................... 108
10.17. Counterparts; Effectiveness.................................................................... 108
10.18. Confidentiality................................................................................ 108
10.19. Publication.................................................................................... 109
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LOAN AND SECURITY AGREEMENT
This AGREEMENT is dated as of January 6, 2005 and entered into among ROCKY
SHOES & BOOTS, INC., a corporation organized and existing under the laws of the
State of Ohio ("Parent"), LIFESTYLE FOOTWEAR, INC., a corporation organized and
existing under the laws of the State of Delaware ("Lifestyle"), EJ FOOTWEAR LLC,
a limited liability company organized and existing under the laws of the State
of Delaware ("EJ Footwear"), XX XXXXXX SAFETY SHOE CO. LLC a limited liability
company organized and existing under the laws of the State of Delaware ("XX
Xxxxxx"), GEORGIA BOOT LLC, a limited liability company organized and existing
under the laws of the State of Delaware ("Georgia Boot"), DURANGO BOOT COMPANY
LLC, a limited liability company organized and existing under the laws of the
State of Delaware ("Durango"), NORTHLAKE BOOT COMPANY LLC, a limited liability
company organized and existing under the laws of the State of Delaware
("Northlake"), GEORGIA BOOT PROPERTIES LLC, a limited liability company
organized and existing under the laws of the State of Delaware ("Georgia
Properties"), LEHIGH SAFETY SHOE PROPERTIES LLC, a limited liability company
organized and existing under the laws of the State of Delaware ("Lehigh
Properties") and LEHIGH SAFETY SHOE CO. LLC, a limited liability company
organized and existing under the laws of the State of Delaware ("Lehigh", and,
together with Parent, Lifestyle, EJ Footwear, XX Xxxxxx, Georgia Boot, Durango,
Northlake, Georgia Properties and Lehigh Properties, jointly and severally, as
the context requires, "Borrower"), the financial institution(s) listed on the
signature pages hereof and their respective successors and Eligible Assignees
(each individually a "Lender" and collectively "Lenders") and GMAC COMMERCIAL
FINANCE LLC, a Delaware limited liability company (in its individual capacity,
"GMAC CF"), for itself and as a Lender and as Agent.
WHEREAS, Borrower desires that Lenders extend a credit facility to
finance, in part, the Acquisition (as hereafter defined), to provide working
capital financing, refinance certain existing indebtedness and to provide funds
for other general corporate purposes; and
WHEREAS, to secure Borrower`s obligations under the Loan Documents,
Borrower is granting to Agent, for the benefit of Agent and Lenders, a security
interest in and lien upon substantially all of Borrower's personal property and
certain real property; and
WHEREAS, Borrower may from time to time have Subsidiaries that benefit
from the credit facility described above (jointly and severally, as the context
requires, "Guarantor"), and in consideration of such benefits will guaranty all
of the obligations of Borrower to Agent and Lenders under the Loan Documents and
grant to Agent, for the benefit of Agent and Lenders, a security interest in
substantially all personal property and certain real property of Guarantor to
secure such guaranty;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Borrower, Agent and Lenders agree as
follows:
SECTION 1. DEFINITIONS AND ACCOUNTING TERMS
EXHIBIT 10.1
1.1. Certain Defined Terms. The capitalized terms not otherwise defined in
this Agreement shall have the meanings set forth below:
"ACFS" shall mean American Capital Financial Services, Inc., a Delaware
corporation, as agent for the purchasers under the Note Purchase Agreement.
"Acquisition" shall mean the acquisition on the date hereof of all of the
equity interests of EJ Footwear, Georgia Boot, XX Xxxxxx and their respective
Subsidiaries, by Parent pursuant to the Acquisition Agreement.
"Acquisition Agreement" shall mean that certain Purchase and Sale of
Equity Interests Agreement by and among Parent, SILLC Holdings, LLC, a Delaware
limited liability company and Strategic Industries, LLC, dated as of December 6,
2004.
"ACSL" shall mean American Capital Strategies, Ltd., a Delaware
corporation.
"Additional Mortgaged Property" means all real property owned by any Loan
Party which is unencumbered by a mortgage or deed of trust in favor of a Person
which provides financing (not in excess of the purchase price therefor) for the
acquisition thereof by such Loan Party, and in which after the Closing Date,
Agent requires a mortgage to secure the Obligations.
"Adjustment Date" has the meaning assigned to that term in the definition
of Applicable Margin.
"Advance" shall mean an advance under the Revolving Loan.
"Affected Lender" has the meaning assigned to that term in Section 2.11.
"Affiliate" means any Person (other than Agent or any Lender): (a)
directly or indirectly controlling, controlled by, or under common control with,
any Loan Party; (b) directly or indirectly owning or holding ten percent (10%)
or more of any equity interest in any Loan Party; (c) ten percent (10%) or more
of whose stock or other equity interest having ordinary voting power for the
election of directors or the power to direct or cause the direction of
management, is directly or indirectly owned or held by any Loan Party; or (d)
which has a senior officer who is also a senior officer of any Loan Party. For
purposes of this definition, "control" (including with correlative meanings, the
terms "controlling", "controlled by" and "under common control with") means the
possession directly or indirectly of the power to direct or cause the direction
of the management and policies of a Person, whether through the ownership of
voting securities or other equity interest, or by contract or otherwise.
"Agent" means GMAC CF in its capacity as agent for the Lenders under the
Loan Documents and any successor in such capacity appointed pursuant to Section
9.1(G).
"Agent's Account" means Bank One Michigan, Detroit Michigan
ABA No. 000000000
Account No. 0000000-84
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EXHIBIT 10.1
Reference: Rocky Shoes & Boots
"Agreement" means this Loan and Security Agreement as it may be amended,
restated, supplemented or otherwise modified from time to time.
"Applicable Margin" for each type of Loan shall mean, commencing as of the
Closing Date and continuing, until the First Adjustment Date (as hereafter
defined), the applicable percentage specified below:
APPLICABLE MARGIN FOR APPLICABLE MARGIN FOR
TYPE OF LOAN DOMESTIC RATE LOANS LIBOR RATE LOANS
------------ ------------------- ----------------
Revolving Advances 1.00% 2.50%
Term Loan 1.75% 3.25%
Thereafter on a quarterly basis, effective as of the first day following receipt
by Agent of the internal financial statements of Rocky on a Consolidated Basis
required under Section 5.1(E)(b) for the previous fiscal quarter (each day of
such delivery, an "Adjustment Date"), commencing with the first Business Day
following receipt by Agent of the internal financial statements of Rocky on a
Consolidated Basis for the fiscal quarter ending December 31, 2005 required
under Section 5.1(E)(b) (the "First Adjustment Date"), the Applicable Margin for
each type of Loan shall be adjusted, if necessary, to the applicable percent per
annum set forth in the pricing table set forth below corresponding to the Total
Leverage Ratio for the trailing twelve month period ending on the last day of
the most recently completed fiscal quarter prior to the applicable Adjustment
Date (each such period, a "Calculation Period"):
APPLICABLE MARGIN
FOR DOMESTIC RATE APPLICABLE MARGIN
LOANS FOR LIBOR RATE LOANS
TOTAL LEVERAGE RATIO REVOLVING ADVANCES TERM LOAN A REVOLVING ADVANCES TERM LOAN A
-------------------- ------------------ ----------- ------------------ -----------
Greater than or equal to 4.0 to 1.25% 2.00% 2.75% 3.50%
1.0
Greater than or equal to 3.0 to 1.00% 1.75% 2.50% 3.25%
1.0 but less than 4.0 to 1.0
Greater than or equal to 2.0 to 0.75% 1.50% 2.25% 3.00%
1.0 but less than 3.0 to 1.0
Less than 2.0 to 1.0 0.50% 1.25% 2.00% 2.75%
If Borrower shall fail to timely deliver the financial statements, certificates
and/or other information required under Section 5.1(E)(b), each Applicable
Margin shall be conclusively presumed to equal the highest Applicable Margin
specified in the pricing table set forth above
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EXHIBIT 10.1
for the period commencing on the required delivery date of such financial
statements, certificates and/or other information until the delivery thereof.
"Asset Disposition" means the disposition, whether by sale, lease,
transfer, loss, damage, destruction, condemnation or otherwise, of any or all of
the assets of any Loan Party other than the sale or other disposition of
Inventory, sale or transfer of property of any Loan Party to any other Loan
Party (to the extent not otherwise prohibited by this Agreement) and assignments
and licenses of Intellectual Property, all of the foregoing in the ordinary
course of business, and subleases of leases or leases of property not then being
utilized in the Business.
"Assignment and Acceptance Agreement" shall mean an Assignment and
Acceptance Agreement substantially in the form of Exhibit A.
"Bank Letter of Credit" means each Letter of Credit issued by a bank
acceptable to and approved by Agent for the account of a Borrower and supported
by guaranty or risk participation agreement issued by GMAC CF or Agent.
"Base Rate" means a variable rate of interest per annum equal to the
higher of (a) the rate of interest from time to time published by the Board of
Governors of the Federal Reserve System as the "Bank Prime Loan" rate in Federal
Reserve Statistical Release H.15(519) entitled "Selected Interest Rates" or any
successor publication of the Federal Reserve System reporting the Bank Prime
Loan rate or its equivalent, or (b) the Federal Funds Effective Rate plus fifty
(50) basis points. The statistical release generally sets forth a Bank Prime
Loan rate for each Business Day. The applicable Bank Prime Loan rate for any
date not set forth shall be the rate set forth for the last preceding date. In
the event the Board of Governors of the Federal Reserve System ceases to publish
a Bank Prime Loan rate or its equivalent, the term "Base Rate" shall mean a
variable rate of interest per annum equal to the highest of the "prime rate",
"reference rate", "base rate", or other similar rate announced from time to time
by any of the three largest banks (based on combined capital and surplus)
headquartered in New York, New York (with the understanding that any such rate
may merely be a reference rate and may not necessarily represent the lowest or
best rate actually charged to any customer by any such bank).
"Base Rate Loans" means Loans bearing interest at rates determined by
reference to the Base Rate.
"Blocked Account Agreement" has the meaning assigned to that term in
Section 6.4.
"Blocked Accounts" has the meaning assigned to that term in Section 6.4.
"Borrower" has the meaning assigned to that term in the introductory
paragraph of this Agreement.
"Borrower`s Accountants" means the independent certified public
accountants selected by Borrower and its Subsidiaries and reasonably acceptable
to Agent.
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EXHIBIT 10.1
"Borrowing Base" means, as of any date of determination, an amount equal
to the sum of (a) up to 85% of Eligible Accounts less the Dilution Reserve, plus
(b) the lesser of (i) $50,000,000, or (ii) the sum of (A) the lesser of (1) up
to 40% of Eligible Inventory consisting of raw materials or (2) 85% times the
Net Orderly Liquidation Percentage of such Eligible Inventory, plus (B) the
lesser of (1) up to 75% of Eligible Inventory consisting of finished goods or
(2) 85% times the Net Orderly Liquidation Percentage of such Eligible Inventory,
plus (C) the lesser of (1) up to 75% of Eligible Inventory consisting of
eligible retail Inventory or (2) 85% times the Net Orderly Liquidation
Percentage of such Eligible Inventory and less, in each case, such reserves as
Agent in its reasonable credit judgment may elect to establish; provided,
however, that Advances with respect to Eligible Inventory shall also not exceed,
at any time, (x) $8,000,000 with respect to Eligible In-Transit Inventory and
(y) $2,000,000 with respect to finished goods located in Puerto Rico. The
calculation of the initial advance rates, utilizing the formulae provided in
this definition of Borrowing Base, with respect to different categories of
Eligible Inventory, is set forth on Exhibit D.
"Borrowing Agent" means Parent.
"Borrowing Base Certificate" means a certificate and schedule duly
executed by an officer of Borrowing Agent appropriately completed and in
substantially the form of Exhibit B.
"Business" shall mean the principal business of the Loan Parties as set
forth in Section 4.1(B) herein and as such shall continue to be conducted
following the consummation of the Transactions.
"Business Day" means any day excluding Saturday, Sunday and any day which
is a legal holiday under the laws of the States of New York or Michigan or is a
day on which banking institutions located in any such state are closed, or for
the purposes of LIBOR Loans only, a London Banking Day.
"Capital Expenditures" means, with respect to any Person, all expenditures
for, or contracts for expenditures with respect to any fixed assets or
improvements, or for replacements, substitutions or additions thereto, that, in
accordance with GAAP, either would be required to be capitalized on the balance
sheet of such Person, or would be classified and accounted for as capital
expenditures on a statement of cash flows of such Person.
"Capital Lease" means any lease of any property (whether real, personal or
mixed) that, in conformity with GAAP, should be accounted for as a capital
lease.
"Cash Flow Prepayments" shall have the meaning assigned to such term in
Section 2.4(B)(3).
"Cash Interest Expense" means, without duplication, for any period, for
Rocky on a Consolidated Basis: interest expenses deducted in the determination
of net income (excluding (a) the amortization of fees and costs with respect to
the Transactions which have been capitalized as transaction costs in accordance
with the provisions of Section 1.3; and (b) interest paid in kind).
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EXHIBIT 10.1
"CERCLA" shall mean the Comprehensive Environmental Response, Compensation
and Liability Act (42 U.S.C. Section 9604, et seq.), as amended, and rules,
regulations and standards, promulgated thereunder.
"Certificate of Exemption" has the meaning assigned to that term in
Section 2.9(C).
"Change of Control" shall mean the occurrence of any of the following:
(a) any transaction or series of related transactions resulting in
the sale or issuance of securities or any rights to securities of Parent by
Parent representing in the aggregate more than fifty percent (50%) of its issued
and outstanding securities entitled to vote for the election of directors of
Parent, or any transaction or series of related transactions resulting in the
sale, transfer, assignment or other conveyance or disposition of any securities
or any rights to securities of Parent by any holder or holders thereof
representing in the aggregate more than fifty percent (50%) of the issued and
outstanding securities entitled to vote for the election of directors of Parent;
(b) a merger, consolidation, reorganization, recapitalization or
share exchange (whether or not Parent is the surviving and continuing
corporation) in which the stockholders of Parent immediately prior to such
transaction own, as a result of such transaction, less than fifty percent (50%)
of the securities entitled to vote for the election of directors of the
resulting corporation or less than fifty percent (50%) of the capital stock of
the resulting corporation;
(c) a sale, transfer or other disposition of all or substantially
all of the assets of Parent and its Subsidiaries, on a consolidated basis; and
(d) any sale or issuance or series of sales or issuances of the
Common Stock or any other voting security (or security convertible into,
exchangeable for, or exercisable for any other voting security) of Parent within
a twelve (12) month period that results in a transfer of more than fifty percent
(50%) of the issued and outstanding shares of voting stock of Parent or a
transfer of more than fifty percent (50%) of the voting power of Parent.
"Charges" shall mean all taxes, charges, fees, imposts, levies or other
assessments, including, without limitation, all net income, gross income, gross
receipts, sales, use, ad valorem, value added, transfer, franchise, profits,
inventory, capital stock, license, withholding, payroll, employment, social
security, unemployment, excise, severance, stamp, occupation and property taxes,
custom duties, fees, assessments, liens, claims and charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts, imposed by any taxing or other Governmental Authority,
domestic or foreign (including, without limitation, the PBGC or any
environmental agency or superfund), upon the Collateral, the Loan Parties or any
of their Affiliates.
"Charter Documents" shall mean, with respect to any Person, the Articles
of Incorporation, Certificate of Incorporation, certificate of limited
partnership, certificate of limited liability company, charter or analogous
organic instrument filed with the appropriate
6
EXHIBIT 10.1
Governmental Authorities of such Person, as applicable, including all amendments
and supplements thereto.
"Closing Date" means January 6, 2005.
"Collateral" has the meaning assigned to that term in Section 2.7(A).
"Collateral Assignment" means the agreement of Loan Parties, dated as of
the Closing Date, to grant a security interest in any post-closing adjustment or
other payment in favor of Loan Parties with respect to the Acquisition Agreement
paid directed to Agent by the applicable escrow agent or paying agent.
"Collecting Banks" has the meaning assigned to that term in Section 6.4.
"Commitment" or "Commitments" means the commitment or commitments of
Lenders to make Loans as set forth in Sections 2.1(A) and/or 2.1(B) and to
provide Lender Letters of Credit as set forth in Section 2.1(E).
"Common Stock" shall mean the common stock, without par value, of Parent.
"Compliance and Pricing Certificate" means a certificate duly executed by
the chief executive officer or chief financial officer of Borrower appropriately
completed and in substantially the form of Exhibit C.
"Condition" shall mean any condition that results in or otherwise relates
to any Environmental Liabilities.
"Conformed Bills of Lading" means original clean on-board negotiable bills
of lading with respect to any shipment of Inventory which (a) are issued by the
carrier of the Inventory described in such bills of lading or by a freight
forwarder acting on behalf of such carrier; (b) consign such Inventory to Agent
(either directly or by means of endorsement); (c) are accompanied by all
commercial invoices describing such Inventory and all necessary certificates of
inspection, origin and insurance; (d) adequately describe such Inventory; (e)
contain language expressly incorporating The International Convention for the
Unification of Certain Rules Relating to Bills of Lading for the Carriage of
Goods by Sea or The Carriage of Goods by Sea Act; (f) contain standard industry
or trade association delivery terms (along with a reference to the particular
publication in which said terms are defined); and (g) do not contain any
reservation of title clause.
"Control" means "control" as defined in the UCC with respect to a
particular item of Collateral.
"Controlled Group" shall mean the "controlled group of corporations" as
that term is defined in Section 1563 of the Internal Revenue Code of 1986, as
amended, of which the Loan Parties are a part from time to time.
7
EXHIBIT 10.1
"Copyright Security Agreement" means any Copyright Security Agreement
executed and delivered by a Loan Party to Agent, as the same may be amended and
in effect from time to time.
"Copyrights" means, collectively, all of the following (a) all copyrights,
rights and interests in copyrights, works protectable by copyright, copyright
registrations and copyright applications, including those listed in the
schedules to any Copyright Security Agreement; (b) all renewals of any of the
foregoing; (c) all income, royalties, damages and payments now or hereafter due
and/or payable under any of the foregoing or with respect to any of the
foregoing, including damages or payments for past, present or future
infringements of any of the foregoing; (d) the right to xxx for past, present
and future infringements of any of the foregoing; and (e) all rights
corresponding to any of the foregoing throughout the world.
"Daily Interest Amount" has the meaning assigned to that term in Section
9.8(A)(3).
"Daily Interest Rate" has the meaning assigned to that term in Section
9.8(A)(3).
"Daily Loan Balance" has the meaning assigned to that term in Section
9.8(A)(3).
"Default" means a condition, act or event that, after notice or lapse of
time or both, would constitute an Event of Default if that condition, act or
event were not cured or removed within any applicable grace or cure period.
"Default Rate" has the meaning assigned to that term in Section 2.2(A).
"Defaulted Amount" means, with respect to any Lender at any time, any
amount required to be paid hereunder or under any other Loan Document by such
Lender to the Agent or any other Lender which has not been so paid.
"Defaulting Lender" means, at any time, any Lender that owes a Defaulted
Amount.
"Dilution Reserve" means, as of any date of determination, a reserve for
the amount by which the total dilution of Accounts exceeds five percent (5%);
with dilution referring to all actual and reasonably anticipated offsets to
Accounts, including, without limitation, customer payment and/or volume
discounts, write-offs, credit memoranda, returns and allowances, and billing
errors. The Dilution Reserve shall be adjusted after each field examination
audit of the Collateral conducted by Agent or any authorized representative
designated by Agent.
"EBITDA" means, for any period, without duplication, the total of the
following for Rocky on a Consolidated Basis, each calculated for such period:
(a) net income determined in accordance with GAAP; plus, to the extent included
in the calculation of net income, (b) the sum of (i) income and franchise taxes
paid or accrued; (ii) interest expenses, net of interest income, paid or
accrued; (iii) amortization and depreciation, (iv) Non-Recurring Charges and (v)
other non-cash charges (excluding accruals for cash expenses made in the
ordinary course of business); less, to the extent included in the calculation of
net income, and (c) the sum of (i) the income of any Person (other than
wholly-owned Subsidiaries of Parent) in which Parent or a wholly-owned
Subsidiary of Parent has an ownership interest except to the extent such income
is
8
EXHIBIT 10.1
received by Parent or such wholly-owned Subsidiary in a cash distribution during
such period; (ii) gains or losses from sales or other dispositions of assets
(other than Inventory in the normal course of business); and (iii) extraordinary
gains. For purposes of Sections 5.3(B), 5.3(C) and 5.3(D), EBITDA for the fiscal
quarters ended prior to the Closing Date shall be deemed to have been (w)
$5,733,545 for the fiscal quarter ended March 31, 2004, (x) $7,898,460 for the
fiscal quarter ended June 30, 2004, (y) $13,845,283 for the fiscal quarter ended
September 30, 2004 and (z) $6,287,713 for the fiscal quarter ended December 31,
2004.
"EJ Financial Information" shall have the meaning assigned to such term in
Section 4.1(C)(ii).
"Eligible Accounts" means, as at any date of determination, the aggregate
of all Accounts that Agent, in its reasonable credit judgment, deems to be
eligible for borrowing purposes. Without limiting the generality of the
foregoing, the Agent may determine that the following of Borrower's Accounts are
not Eligible Accounts:
(1) Accounts which do not consist of accounts receivable or
contract receivables, each owed to and owned by any Borrower arising or
resulting from the sale of goods or the rendering of services by such Borrower;
(2) With respect to Accounts having payment terms of net
forty-five (45) days or less, any such Account which remains unpaid more than
ninety (90) days from the date on which the original invoice rendered in
connection with such Account was issued;
(3) With respect to Accounts having payment terms in excess of
forty-five (45) days, (a) any such Account which remains unpaid more than thirty
(30) days past due or (b) any such Account which remains unpaid more than one
hundred and eighty (180) days from the date on which the original invoice
rendered in connection with such Account was issued;
(4) Accounts which are otherwise eligible with respect to
which the Person obligated on such Account is owed a credit by Borrower, but
only to the extent of such credit;
(5) Accounts due from a Person whose principal place of
business is located outside the US unless such Account is backed by a Letter of
Credit, in form and substance acceptable to Agent and issued or confirmed by a
bank that is organized under the laws of the US or a State thereof, that is
acceptable to Agent; provided that such Letter of Credit has been delivered to
Agent as additional Collateral;
(6) Accounts due from a Person which Agent has notified
Borrower does not have a satisfactory credit standing;
(7) Accounts with respect to which the Account Debtor or the
Person obligated with respect thereto is the US, any state or any municipality,
or any department, agency or instrumentality thereof, unless Borrower has, with
respect to such Account, complied with the
9
EXHIBIT 10.1
Federal Assignment of Claims Act of 1940 as amended (31 U.S.C. Section 3727 et
seq.) or any applicable statute or municipal ordinance of similar purpose and
effect;
(8) Accounts with respect to which the Person obligated is an
Affiliate of Borrower or a director, officer, agent, stockholder, member or
employee of Borrower or any of its Affiliates;
(9) Accounts due from a Person if more than fifty percent
(50%) of the aggregate amount of Accounts of such Person are not eligible under
the criteria specified in clauses (2) or
(3) above;
(10) Accounts with respect to which there is any unresolved
dispute with the respective Account Debtor or the Person obligated on such
Account (but only to the extent of such dispute);
(11) Accounts evidenced by an Instrument or Chattel Paper not
in the possession of Agent, for the benefit of itself and Lenders;
(12) Accounts with respect to which Agent, on behalf of itself
and Lenders, does not have a valid, first priority and fully perfected security
interest;
(13) Accounts subject to any Lien except those in favor of
Agent, for the benefit of itself and Lenders, and ACFS;
(14) Accounts with respect to which the Account Debtor or the
Person obligated on the Account is the debtor under any bankruptcy or other
insolvency proceeding;
(15) Accounts due from a Person to the extent that such
Accounts exceed in the aggregate an amount equal to twenty percent (20%) of the
aggregate of all Accounts at said date;
(16) Accounts with respect to which the obligation to pay is
conditional or subject to a repurchase obligation or right to return or with
respect to which the goods or services giving rise to such Accounts have not
been delivered (or performed, as applicable) and accepted by the Account Debtor
or the Person obligated on such Account, including progress xxxxxxxx, xxxx and
hold sales, guarantied sales, sale or return transactions, sales on approval or
consignments;
(17) Accounts with respect to which the Account Debtor or the
Person obligated on the Account is located in New Jersey, or any other state
denying out of state creditors access to its courts in the absence of a Notice
of Business Activities Report or other similar filing, unless the respective
Borrower has either qualified as a foreign entity authorized to transact
business in such state or has filed a Notice of Business Activities Report or
similar filing with the applicable state agency for the then current year;
10
EXHIBIT 10.1
(18) Accounts with respect to which the Account Debtor or the
Person obligated on Account is a creditor of any Borrower; provided, however,
that any such Account shall only be ineligible as to that portion of such
Account which is less than or equal to the amount owed by such Borrower to such
Person.
"Eligible Assignee" shall mean (a) a commercial bank organized under the
laws of the US, or any state thereof, and having a combined capital and surplus
of at least $250,000,000; (b) a commercial bank organized under the laws of any
other country which is a member of the Organization for Economic Cooperation and
Development (the "OECD"), or a political subdivision of any such country, and
having a combined capital and surplus of at least $250,000,000, provided that
such bank is acting through a branch or agency located in the US; (c) any other
entity which is an "accredited investor" (as defined in Regulation D under the
Securities Act) which extends credit or buys loans as one of its businesses,
including but not limited to, insurance companies, mutual funds and lease
financing companies, (d) a Related Fund, and (e) a Person that is primarily
engaged in the business of lending that is (i) a Subsidiary of a Lender, (ii) a
Subsidiary of a Person of which a Lender is a Subsidiary, or (iii) a Person of
which a Lender is a Subsidiary; provided, however, that no Affiliate of any Loan
Party shall be an Eligible Assignee.
"Eligible In-Transit Inventory" means, at any date of determination, the
value (determined at the lower of cost or market on a first-in, first-out basis)
of all Inventory owned by any Borrower that does not qualify as Eligible
Inventory solely because it is in transit to Borrower or an agent or contractor
of or for Borrower and that Agent, in its reasonable credit judgment, deems to
be eligible for borrowing purposes. Without limiting the generality of the
foregoing, Agent may determine that any of the following is not Eligible
In-Transit Inventory: (1) Inventory that is not in transit to a location
identified pursuant to Section 6.1(Q) or Section 5.2(O) or such location is not
a vendor or consignee location, or the location of a warehouseman, bailee,
processor or similar third party that has not executed a satisfactory waiver of
interest satisfactory to Agent); (2) title to such Inventory has not passed to
Borrower; (3) Inventory which is not insured against types of loss, damage,
hazards and risks, and in amounts, satisfactory to Agent; (4) such Inventory is
not subject to a Conformed Xxxx of Lading; (5) each original of the applicable
Conformed Xxxx of Lading is not in the possession of Agent or a Person acting as
Agent`s agent for purposes of perfecting Agent`s security interest, on behalf of
itself and Lenders, in such Conformed Xxxx of Lading; and (6) Inventory which is
not finished goods Inventory.
"Eligible Inventory" means, as at any date of determination, the value
(determined at the lower of cost or market on a first-in, first-out basis) of
all Inventory owned by Borrower and located in the US (including Puerto Rico)
that Agent, in its reasonable credit judgment, deems to be eligible for
borrowing purposes. Without limiting the generality of the foregoing, the Agent
may determine that any of the following is not Eligible Inventory: (1)
work-in-process that is not readily marketable in its current form; (2)
Inventory which Agent determines, is unacceptable for borrowing purposes due to
age, quality, type, category and/or quantity; (3) packaging, shipping materials
or supplies consumed in Borrower`s business; (4) Inventory with respect to which
Agent, on behalf of itself and Lenders, does not have a valid, first priority
and fully perfected security interest; (5) Inventory with respect to which there
exists any Lien in favor of any Person
11
EXHIBIT 10.1
other than Agent, on behalf of itself and Lenders and ACFS; (6) Inventory
produced in violation of the Fair Labor Standards Act and subject to the
so-called "hot goods" provisions contained in Title 29 U.S.C. Section 215 (a)(i)
or any replacement statute; (7) Inventory located at any location other than
those identified pursuant to Section 6.1(Q) or Section 5.2(O); (8) Inventory
located at a vendor's location or with a consignee which is not subject to a
bailee's waiver or other agreement satisfactory to Agent; (9) Inventory located
with a warehouseman, bailee, processor or similar third party, unless such
Person has executed a waiver of interest satisfactory to Agent; and (10) unless
otherwise agreed to by Agent, Inventory in any location leased by Borrower for
which Agent has not received a Landlord Waiver.
"Environmental Laws" shall mean any Laws that address, are related to or
are otherwise concerned with environmental, health or safety issues, including
any Laws relating to any emissions, releases or discharges of Pollutants into
ambient air, surface water, ground water or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, handling, clean-up or control of Pollutants or any exposure or impact
on worker health and safety.
"Environmental Liabilities" shall mean any obligations or Liabilities
(including any claims, suits or other assertions of obligations or Liabilities)
that are:
(a) related to environmental, health or safety issues (including
on-site or off-site contamination by Pollutants of surface or subsurface soil or
water, and occupational safety and health); and
(b) based upon or related to (i) any provision of past, present or
future US or foreign Environmental Law (including CERCLA and RCRA), common law
or treaty of which the US is a signatory, or (ii) any judgment, order, writ,
decree, permit or injunction imposed by any court, administrative agency,
tribunal or otherwise.
The term "Environmental Liabilities" includes: (i) fines, penalties, judgments,
awards, settlements, losses, damages (including foreseeable and unforeseeable
consequential damages), costs, fees (including reasonable attorneys' and
consultants' fees), expenses and disbursements; (ii) defense and other responses
to any administrative or judicial action (including claims, notice letters,
complaints, and other assertions of liability); and (iii) financial
responsibility for (1) cleanup costs and injunctive relief, including any
Removal, Remedial or other Response actions, and natural resource damages, and
(2) any other compliance or remedial measures.
"EPA" shall mean the United States Environmental Protection Agency and any
governmental body or agency succeeding to the functions thereof.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
the same may from time to time be amended, and the rules and regulations of any
Governmental Agency or authority, as from time to time in effect, promulgated
thereunder.
12
EXHIBIT 10.1
"ERISA Affiliate" means any Loan Party and any Person who is a member of a
group which is under common control with any Loan Party, who together with any
Loan Party is treated as a single employer within the meaning of Section 414 of
the IRC.
"Event of Default" has the meaning assigned to that term in Section 7.1.
"Excess Cash Flow" means, for any period, the greater of (a) zero (0); or
(b) without duplication, the total of the following for Rocky on a Consolidated
Basis, each calculated for such period: (i) EBITDA; plus (ii) tax refunds
actually received; less (iii) Capital Expenditures (to the extent actually made
in cash and/or due to be made in cash within such period, excluding any Capital
Expenditures under or with respect to Capital Leases to the extent of the amount
financed thereby, but in no event more than the amount permitted in Section
5.3(E); less (iv) income and franchise taxes paid or accrued excluding any
provision for deferred taxes included in the determination of net income; less
(v) decreases in deferred income taxes resulting from payments of deferred taxes
accrued in prior periods; less (vi) Cash Interest Expense; less (vii) voluntary
prepayments made under Section 2.4(C); less (viii) mandatory prepayments from
Proceeds of Asset Dispositions made under Section 2.4(B)(2), but only to the
extent that the transaction that precipitated the mandatory prepayment increased
net income of Borrower, as determined in accordance with GAAP; less (ix)
payments of principal paid in cash with respect to all long-term Indebtedness
(other than Revolving Loans) and Capital Leases.
"Excess Interest" has the meaning assigned to that term in Section 2.2(C).
"Excluded Property" means any of the following:
(a) any lease (including any fixtures or improvements on the
property subject to the lease), license, contract, property right or agreement
to which any Loan Party is a party or any of its rights or interests thereunder
if and only for so long as the grant of a security interest under this Agreement
therein shall constitute or result in a breach, termination or default under any
such lease, license, contract, property right or agreement (other than to the
extent that any such term would be rendered ineffective pursuant to the UCC of
any relevant jurisdiction (including, without limitation, under Sections 9-406,
9-407, 9-408 or 9-409 thereof) or any other applicable law or principles of
equity); provided that notwithstanding the foregoing (i) no personal property
lease, license, contract, property right or agreement or any right or interest
thereunder, in each instance, existing on the Closing Date shall constitute
Excluded Property unless described on Schedule 1.1, (ii) no Account or money or
other amounts due or to become due to any Loan Party under or with respect to
any such lease, license, contract, property right or agreement or right or
interest thereunder (other than (A) any such property subject to an assignment
of rents containing a restriction of the type described above or (B) property
described in clauses (d) or (e) of this definition) shall constitute Excluded
Property, (iii) no item of tangible property owned by any Loan Party shall
constitute Excluded Property unless such item is described in clauses (b), (c)
or (f) of this definition, (iv) such lease, license, contract, property right or
agreement or right or interest thereunder shall be Excluded Property only to the
extent and for so long as the consequences specified above shall result and
shall cease to be Excluded Property and shall become subject to the security
interest granted under this Agreement, immediately and automatically, at such
time as such consequences shall no longer result
13
EXHIBIT 10.1
(including, without limitation and in any event, in the case of any item of
tangible property which is the subject of purchase money Indebtedness or other
financing permitted hereunder when such financing has been paid in full) and (v)
Lenders will be deemed to have, and at all times from and after the date hereof
to have had, a security interest in the proceeds of any such Excluded Property
to the extent that proceeds of such Excluded Property have come into the
possession of any Lender or otherwise constitute a portion of the Collateral;
(b) any Equipment that is subject to a purchase money security
interest or Capital Lease, as described on Schedule 1.1, if and only for so long
as the grant of a security interest under this Agreement therein shall
constitute or result in a breach, termination or default under any applicable
purchase money security agreement or Capital Lease agreement (other than to the
extent that any such term would be rendered ineffective pursuant to the UCC of
any relevant jurisdiction (including, without limitation, under Sections 9-406,
9-407, 9-408 or 9-409 thereof) or any other applicable law or principles of
equity);
(c) any real estate owned or leased by the Borrower or its
Subsidiaries other than any and all Additional Mortgaged Property;
(d) any life insurance or life insurance policy in which the
Borrower or a Subsidiary has an interest;
(e) loans or advances to any officer, director, employee or agent
permitted by this Agreement; and
(f) Inventory not located in the US, Canada or Puerto Rico, and
Intellectual Property issued under the Laws of a country other than the US or
any state thereof.
"Federal Funds Effective Rate" means, for any day, the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the
immediately following Business Day by the Board of Governors of the Federal
Reserve System as the Federal Funds Rate or Federal Reserve Statistical Release
H.15(519) entitled "Selected Interest Rates" or any successor publication of the
Federal Reserve System reporting the Federal Funds Effective Rate or its
equivalent or, if such rate is not published for any Business Day, the average
of the quotations for the day of the requested Loan received by Agent from three
Federal funds brokers of recognized standing selected by Agent.
"Financial Projections" shall have the meaning assigned to such term in
Section 4.1(C)(iv).
"Financial Statements" shall have the meaning assigned to such term in
Section 4.1(C)(i).
"Fiscal Year" means each twelve (12) month period ending on the last day
of December in each year, as modified in accordance with Section 5.2(N).
14
EXHIBIT 10.1
"Fixed Charge Coverage Ratio" shall mean, for any period, the ratio of
EBITDA less Capital Expenditures of Rocky on a Consolidated Basis during such
period to Fixed Charges during such period.
"Fixed Charges" shall mean, for any period, and each calculated for such
period (without duplication) with respect to Rocky on a Consolidated Basis, the
sum of (a) cash interest expense; (b) scheduled payments of principal with
respect to all Indebtedness; (c) any cash payment of income or franchise taxes
included in the determination of net income, excluding any provision for
deferred taxes; and (d) payment of deferred taxes relating to income and
franchise taxes accrued in any prior period.
"Foreign Lender" has the meaning assigned to that term in Section 2.9(C).
"Foreign Subsidiary" means, with respect to any Person, a Subsidiary of
such Person, which Subsidiary is not incorporated or otherwise organized under
the laws of a State of the US.
"Funding Date" means the date of each funding of a Loan or issuance of a
Lender Letter of Credit.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board that are applicable to the
circumstances as of the date of determination.
"GMAC CF" has the meaning assigned to that term in the third WHEREAS
clause of this Agreement.
"GMAC Transactions" shall mean the incurrence of the Obligations by the
Loan Parties and the advancing of the Loans and issuance of Lender Letters of
Credit, all as contemplated by this Agreement and the Loan Documents.
"Governmental Authorities" shall mean any federal, state or municipal
court or other governmental department, commission, board, bureau, agency or
instrumentality, governmental or quasi-governmental, domestic or foreign.
"Guarantor" has the meaning assigned to that term in the third WHEREAS
clause of this Agreement.
"Guaranty" shall mean any guaranty of the payment or performance of any
Indebtedness or other obligation and any other arrangement whereby credit is
extended to one obligor on the basis of any promise of another Person, whether
that promise is expressed in terms of an obligation to pay the Indebtedness of
such obligor, or to purchase an obligation owed by such obligor, or to purchase
goods and services from such obligor pursuant to a take-or-pay contract, or to
maintain the capital, working capital, solvency or general financial condition
of such obligor, whether or not any such arrangement is reflected on the balance
sheet of such other Person, firm or corporation, or referred to in a footnote
thereto, but shall not include (i)
15
EXHIBIT 10.1
endorsements of items for collection in the ordinary course of business and (ii)
obligations, warranties and indemnities incurred in the ordinary course of
Business in connection with the sale of Inventory and not in respect of
Indebtedness of any Person. For the purpose of all computations made under this
Agreement, the amount of a Guaranty in respect of any obligation shall be deemed
to be equal to the maximum aggregate amount of such obligation or, if the
Guaranty is limited to less than the full amount of such obligation, the maximum
aggregate potential liability under the terms of the Guaranty.
"Indebtedness" shall mean, for any Person at the time of any
determination, without duplication, all obligations, contingent or otherwise, of
such Person that, in accordance with GAAP, should be classified upon the balance
sheet of such Person as indebtedness, but in any event including: (i) all
obligations for borrowed money, (ii) all obligations arising from installment
purchases of property or representing the deferred purchase price of property or
services in respect of which such Person is liable, contingently or otherwise,
as obligor or otherwise (other than trade payables and other current Liabilities
incurred in the ordinary course of business on terms customary in the trade),
(iii) all obligations evidenced by notes, bonds, debentures, acceptances or
instruments, or arising out of letters of credit or bankers' acceptances issued
for such Person's account, (iv) all obligations, whether or not assumed, secured
by any Lien or payable out of the proceeds or production from any property or
assets now or hereafter owned or acquired by such Person, (v) all obligations
for which such Person is obligated pursuant to a Guaranty which are classified
under GAAP as indebtedness, (vi) the capitalized portion of lease obligations
under Capitalized Leases, (vii) all obligations for which such Person is
obligated pursuant to any Interest Rate Protection Agreements or derivative
agreements or arrangements, (viii) all factoring arrangements and (ix) all
obligations of such Person upon which interest charges are customarily paid or
accrued.
"Indemnified Liabilities" has the meaning assigned to that term in Section
10.2.
"Indemnities" has the meaning assigned to that term in Section 10.2.
"Intangible Assets" means all intangible assets (determined in conformity
with GAAP) including, without limitation, goodwill, Intellectual Property,
Software, licenses, organizational costs, deferred amounts, covenants not to
compete, unearned income and restricted funds.
"Intellectual Property" means, collectively, all: Copyrights, Patents and
Trademarks.
"Intercreditor Agreement" means that certain Intercreditor Agreement dated
as of the Closing Date to be executed by ACFS, in a form acceptable to Agent.
"Interest Period" means, in connection with each LIBOR Loan, an interest
period which Borrowing Agent shall elect to be applicable to such Loan, which
Interest Period shall be either a one (1), two (2), three (3), or six (6) month
period; provided that:
(1) the initial Interest Period for any LIBOR Loan shall commence on
the Funding Date of such Loan;
16
EXHIBIT 10.1
(2) in the case of successive Interest Periods, each successive
Interest Period shall commence on the day on which the immediately preceding
Interest Period expires;
(3) if an Interest Period expiration date is not a Business Day,
such Interest Period shall expire on the next succeeding Business Day; provided
that if any Interest Period expiration date is not a Business Day but is a day
of the month after which no further Business Day occurs in such month, such
Interest Period shall expire on the immediately preceding Business Day;
(4) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall, subject to part
(5) below, end on the last Business Day of a calendar month;
(5) no Interest Period shall extend beyond the Termination Date;
(6) no Interest Period for any portion of Term Loan A shall extend
beyond the date of the final Scheduled Installment thereof;
(7) no Interest Period may extend beyond a scheduled principal
payment date of any Loan, unless the aggregate principal amount of such Loan
that is a Base Rate Loan or that has Interest Periods expiring on or before such
scheduled principal payment date equals or exceeds the principal amount required
to be paid on such Loan on such scheduled principal payment date; and
(8) there shall be no more than five (5) Interest Periods relating
to LIBOR Loans outstanding at any time.
"Interest Rate" has the meaning assigned to that term in Section 2.2(A).
"Interest Rate Protection Agreement" means any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or
similar agreement or arrangement designed to protect Loan Parties against
fluctuations in interest rates.
"Interest Ratio" has the meaning assigned to that term in Section
9.8(A)(3)(d).
"Interest Settlement Date" has the meaning assigned to that term in
Section 9.8(A)(4).
"Investment" as applied to any Person shall mean the amount paid or agreed
to be paid or loaned, advanced or contributed to other Persons, and in any event
shall include, without limitation, (i) any direct or indirect purchase or other
acquisition of any notes, obligations, instruments, stock, securities or
ownership interest (including partnership interests and joint venture interests)
and (ii) any capital contribution to any other Person
"IRC" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute and all rules and regulations promulgated
thereunder.
17
EXHIBIT 10.1
"Issuing Lender" has the meaning assigned to that term in Section
2.1(F)(2).
"Landlord Waiver" shall mean a letter in form and substance acceptable to
the Agent and executed by a landlord in respect of Personal Property of the Loan
Parties located at any leased premises of the Loan Parties pursuant to which
such landlord, among other things, waives or subordinates to Agent any Lien such
landlord may have in respect of such Personal Property, acknowledges the Liens
of the Agent, and permits the Agent access to and use of such premises.
"Laws" shall mean all US and foreign federal, state or local statutes,
laws, rules, regulations, ordinances, codes, policies, rules of common law, and
the like, now or hereafter in effect, including any judicial or administrative
interpretations thereof, and any judicial or administrative orders, consents,
decrees or judgments
"Lender" or "Lenders" has the meaning assigned to that term in the
Recitals section of this agreement.
"Lender Letter of Credit" has the meaning assigned to that term in Section
2.1(E).
"Letter of Credit Liability" means, all reimbursement and other
liabilities of Loan Parties or any of their respective Subsidiaries with respect
to each Lender Letter of Credit, whether contingent or otherwise, including: (a)
the amount available to be drawn or which may become available to be drawn; (b)
all amounts which have been paid or made available by any Lender issuing a
Lender Letter of Credit or any bank issuing a Bank Letter of Credit to the
extent not reimbursed; and (c) all unpaid interest, fees and expenses related
thereto.
"Letter of Credit Reserve" means, at any time, an amount equal to (a) the
aggregate amount of Letter of Credit Liability with respect to all Lender
Letters of Credit outstanding at such time plus, without duplication, (b) the
aggregate amount theretofore paid by Agent or any Lender under Lender Letters of
Credit and not debited to the Revolving Loan pursuant to Section 2.1(E)(2) or
otherwise reimbursed by Borrowers.
"Letter of Non-Exemption" has the meaning assigned to that term in Section
2.9(C).
"Liabilities" shall have the meaning given that term in accordance with
GAAP and shall include, without limitation, Indebtedness.
"LIBOR" means, for each Interest Period, a rate per annum equal to:
(1) the offered rate for deposits in U.S. dollars in an amount
comparable to the amount of the applicable Loan in the London interbank market
for the relevant Interest Period which is published by the British Bankers'
Association and currently appears on the Dow Xxxxx Telerate Page 3750 as of
11:00 a.m. (London time) on the day which is two (2) Business Days prior to the
first day of such Interest Period for a term comparable to such Interest Period;
provided, however, that if such a rate ceases to be available to Agent on that
or any other source from the British Bankers' Association, LIBOR shall be equal
to a rate per annum equal to the
18
EXHIBIT 10.1
average rate (rounded upwards, if necessary, to the nearest 1/100 of 1%) at
which Agent determines that U.S. dollars in an amount comparable to the amount
of the applicable Loans are being offered to prime banks at approximately 11:00
a.m. (London time) on the day which is two (2) Business Days prior to the first
day of such Interest Period for a term comparable to such Interest Period for
settlement in immediately available funds by leading banks in the London
interbank market selected by Agent; divided by
(2) a number equal to one (1.0) minus the maximum reserve
percentages (expressed as a decimal fraction) (including, without limitation,
basic, supplemental, marginal and emergency reserves under any regulations of
the Board of Governors of the Federal Reserve System or other governmental
authority having jurisdiction with respect thereto, as now and from time to time
in effect) for Eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of such Board) which are required to be maintained
by any Lender by the Board of Governors of the Federal Reserve System; such rate
to be rounded upwards, if necessary, to the nearest 1/100 of 1%. LIBOR shall be
adjusted automatically on and as of the effective date of any change in any such
reserve percentage.
"LIBOR Loans" means at any time that portion of the Loans bearing interest
at rates determined by reference to LIBOR.
"Lien" means any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind, whether voluntary or involuntary (including any
conditional sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any security interest.
"Loan" or "Loans" means an advance or advances under the Term Loan A
Commitment or the Revolving Loan Commitment.
"Loan Documents" means this Agreement and all other documents, instruments
and agreements executed by or on behalf of any Loan Party and delivered
concurrently herewith or at any time hereafter to or for Agent or any Lender in
connection with the Loans, any Lender Letter of Credit, and any other
transaction contemplated by this Agreement, all as amended, restated,
supplemented or modified from time to time.
"Loan Party" means each of Borrower and Guarantor and each Subsidiary of
Borrower which is or becomes a Borrower or Guarantor pursuant to the terms of
this Agreement or pursuant to any Loan Document.
"Loan Year" means each period of twelve (12) consecutive months commencing
on the Closing Date and on each anniversary thereof.
"London Banking Day" means any day on which dealings in deposits in U.S.
dollars are transacted in the London Interbank market.
"Manage" and "Management" shall mean generation, production, handling,
distribution, processing, use, storage, treatment, operation, transportation,
recycling, reuse and/or disposal, as those terms are defined in CERCLA, RCRA and
other Environmental Laws (including as those
19
EXHIBIT 10.1
terms are further defined, construed, or otherwise used in rules, regulations,
standards, guidelines and publications issued pursuant to, or otherwise in
implementation of, such Environmental Laws).
"Material Adverse Change" shall mean any change that has a Material
Adverse Effect.
"Material Adverse Effect" means a material adverse effect upon (a) the
business, operations, prospects, properties, assets or condition (financial or
otherwise) of the Loan Parties taken as a whole or (b) the ability of Parent or
EJ Footwear, or the Loan Parties taken as a whole, to perform its (or their)
obligations under any Loan Document to which it is (or they are) a party or (c)
the ability of Agent or any Lender to enforce or collect any of the Obligations.
"Material Contracts" shall have the meaning assigned to such term in
Section 4.1(Y).
"Material License Agreements" shall mean and include each of the
following: (a) Trademark License Agreement between Georgia Boot, as Licensee and
X.X Xxxx & Associates ("Gore"), X.X. Xxxx & Associates Gmbh, and Japan Xxxx-Tex,
Inc., collectively as Licensor, dated May 20, 2002, (b) Trademark License
Agreement between Rocky, as Licensee and Gore, as Licensor, dated July 11, 2001
and (c) Certified Manufacturer Agreement between Rocky and Xxxx dated July 11,
2001.
"Maximum Rate" has the meaning assigned to that term in Section 2.2(C).
"Maximum Revolving Loan Amount" means, as of any date of determination,
the lesser of (a) the aggregate of the Revolving Loan Commitments of all Lenders
less the sum of the Letter of Credit Reserve and (b) the Borrowing Base less the
sum of the Letter of Credit Reserve.
"Mortgage" means each of the mortgages, deeds of trust, leasehold
mortgages, leasehold deeds of trust, collateral assignments of leases or other
real estate security documents delivered by any Loan Party to Agent, on behalf
of Agent and Lenders, with respect to Additional Mortgaged Property, all in form
and substance satisfactory to Agent.
"Multiemployer Plan" shall mean a multiemployer plan (within the meaning
of Section 3(37) of ERISA) that is maintained for the benefit of the employees
of the Loan Parties or any member of the Controlled Group or an ERISA Affiliate.
"Nelsonville Office" shall mean the real property and improvements
consisting of approximately 5000 square feet of office space, owned by Parent at
premises having the address 000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxx.
"Nelsonville Warehouse" shall mean the real property and improvements
constituting Parent's former distribution facility, having the address 000 Xxxxx
Xxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxx.
"Net Cash Proceeds" shall mean the proceeds, received in cash or cash
equivalents, of any applicable Asset Disposition, minus (i) commissions and
other reasonable and customary
20
EXHIBIT 10.1
transaction costs, fees and expenses properly attributable to such transaction
and payable by such obligated party in connection therewith (in each such case,
paid to non-Affiliates), (ii) transfer taxes, (iii) amounts payable to holders
of Liens (to the extent such Liens constitute Permitted Liens hereunder and such
Liens are senior to the Liens of Agent and the Lenders), if any, on the property
subject to the Asset Disposition to the extent the documentation governing such
senior Liens required such payment to such holders upon such Asset Disposition
and (iv) an appropriate reserve for income taxes in accordance with GAAP in
connection therewith.
"Net Orderly Liquidation Percentage" means, with respect to any class of
Inventory of a Borrower at any time, the ratio (expressed as a percentage)
computed by dividing (i) (x) if such percentage is being determined on the
Closing Date or on any date prior to the first delivery of an appraisal of such
Borrower's Inventory (containing such class of Inventory) conducted pursuant to
Section 2.3(C), the net recovery value of such class of Inventory of such
Borrower (which in any event shall give effect to all costs and expenses of
liquidation), as set forth in such appraisal of such Borrower's Inventory
(containing such class of Inventory) delivered to Agent prior to the Closing
Date and (y) if such percentage is being determined on or after the date of the
first delivery of an appraisal of such Borrower's Inventory (containing such
class of Inventory) conducted pursuant to Section 2.3(C), the net recovery value
of such class of Inventory of such Borrower (which in any event shall give
effect to all costs and expenses of liquidation), as set forth in the appraisal
of such Borrower's Inventory (containing such class of Inventory) most recently
delivered to Agent pursuant to Section 2.3(C) by (ii) the value of such class of
Inventory of such Borrower, valued at net book value, as set forth in the
corresponding appraisal.
"Non-Recurring Charges" shall mean the sum of the aggregate amount of
fees, expenses, financing costs and other expenses incurred in connection with
the Transactions, to the extent paid substantially contemporaneously with, on or
about the Closing Date.
"Note" or "Notes" means the Revolving Notes and the Term A Notes, each
appropriately completed and in the form of Exhibit E.
"Note Purchase Agreement" means the Note Purchase Agreement dated as of
January 6, 2005 by and among Loan Parties, ACFS and certain Purchasers named
therein pursuant to which each Term Note B shall have been issued, as amended,
restated, supplemented or otherwise modified from time to time in accordance
with the provisions of this Agreement and the Intercreditor Agreement.
"Note Purchase Documents" means the Note Purchase Agreement, the Security
Documents (as defined therein) and each Term Note B.
"Notice of Borrowing" means a notice duly executed by an authorized
representative of Borrower appropriately completed and in the form of Exhibit F.
"Obligations" means all Liabilities and other obligations of every nature
of each Loan Party from time to time owed to Agent or to any Lender under the
Loan Documents (whether incurred before or after the Termination Date)
including, without limitation, the principal amount of all debts, claims and
indebtedness, accrued and unpaid interest and all fees, costs and
21
EXHIBIT 10.1
expenses, whether primary, secondary, direct, contingent, fixed or otherwise,
heretofore, now and/or from time to time hereafter owing pursuant to any Loan
Document, due or payable including, without limitation, all interest, fees, cost
and expenses accrued or incurred after the filing of any petition under any
bankruptcy or insolvency law.
"Organizational Schedule" has the meaning assigned to that term in Section
4.1(A).
"Parent" has the meaning assigned to that term in the introductory
paragraph of this Agreement.
"Parent SEC Reports" has the meaning assigned to that term in Section
4.1(Z).
"Patent Security Agreement" means any Patent Security Agreement executed
and delivered by each Loan Party to Agent, as the same may be amended and in
effect from time to time.
"Patents" means collectively all of the following: (a) all patents and
patent applications including, without limitation, those listed on any schedule
to any Patent Security Agreement and the inventions and improvements described
and claimed therein, and patentable inventions; (b) the reissues, divisions,
continuations, renewals, extensions and continuations-in-part of any of the
foregoing; (c) all income, royalties, damages and payments now or hereafter due
and/or payable under any of the foregoing or with respect to any of the
foregoing, including, without limitation, damages and payments for past, present
and future infringements of any of the foregoing; (d) the right to xxx for past,
present and future infringements of any of the foregoing; and (e) all rights
corresponding to any of the foregoing throughout the world.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Title IV of ERISA, or any other Governmental Authority succeeding to
the functions thereof.
"Permitted Investment" shall have the meaning assigned to such term in
Section 5.2(H).
"Permitted Liens" shall have the meaning assigned to such term in Section
5.2(B).
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments and agencies and
political subdivisions thereof.
"Personal Property" shall mean, with respect to any Loan Party, now owned
or hereafter acquired goods, merchandise, machinery, Equipment, furniture,
fixtures, Inventory and other personal property, wherever located, of any kind,
nature or description, and all documents of title or other documents
representing them.
"Plan" shall mean any employee benefit plan (within the meaning of Section
3(3) of ERISA) established or maintained by any of the Loan Parties or any
member of the Controlled
22
EXHIBIT 10.1
Group or any ERISA Affiliate or any such Plan to which any Loan Party or any
ERISA Affiliate or member of the Controlled Group is required to contribute on
behalf of any of its employees.
"Pollutant" shall include any "hazardous substance" and any "pollutant or
contaminant" as those terms are defined in CERCLA; any "hazardous waste" as that
term is defined in RCRA; and any "hazardous material" as that term is defined in
the Hazardous Materials Transportation Act (49 U.S.C. Section 1801 et seq.), as
amended (including as those terms are further defined, construed, or otherwise
adopted in rules, regulations or standards, promulgated pursuant to, or
otherwise in implementation of, said Environmental Laws); and including without
limitation any petroleum product or byproduct, solvent, flammable or explosive
material, radioactive material, asbestos, polychlorinated biphenyls ("PCBs"),
dioxins, dibenzofurans, heavy metals, and radon gas; and including any other
substance or material that is reasonably determined to present a threat, hazard
or risk to human health or the environment.
"Pro Forma Balance Sheet" shall have the meaning assigned to such term in
Section 4.1(C)(iii).
"Pro Rata Share" means (a) with respect to matters relating to a
particular Commitment of a Lender, the percentage obtained by dividing (i) such
Commitment of that Lender by (ii) all such Commitments of all Lenders and (b)
with respect to all other matters, the percentage obtained by dividing (i) the
Total Loan Commitment of a Lender by (ii) the Total Loan Commitments of all
Lenders, in either (a) or (b), as such percentage may be adjusted by assignments
permitted pursuant to Section 9.5; provided, however, if any Commitment is
terminated pursuant to the terms hereof, then "Pro Rata Share" means the
percentage obtained by dividing (x) the aggregate amount of such Lender's
outstanding Loans related to such Commitment by (y) the aggregate amount of all
outstanding Loans related to such Commitment.
"Properties and Facilities" shall have the meaning assigned to such term
in Section 4.1(Q).
"Proprietary Rights" shall mean all right, title, and interest in the
following intellectual property, including both statutory and common law rights:
(i) copyrights in published and unpublished works, and all applications,
registrations and renewals relating thereto; (ii) registered or unregistered
trademarks, service marks, domain names, logos, trade dress and other source or
business identifiers, and the goodwill associated therewith; (iii) patents,
patent applications, and other patent or industrial property rights in any
country; and (iv) trade secrets, confidential or proprietary information,
inventions, ideas, designs, concepts, compilations of information, methods,
techniques, procedures, processes, and know-how, whether or not patentable
patents, trademarks, trade names, service marks, copyrights, inventions,
production methods, licenses, formulas, know-how and trade secrets, regardless
of whether such are registered with any Governmental Authorities, including
applications therefor.
"RCRA" shall mean the Resource Conservation and Recovery Act (42 U.S.C.
Section 6901 et seq.), as amended, and all rules, regulations, standards,
guidelines, and publications issued thereunder.
23
EXHIBIT 10.1
"Register" has the meaning assigned to that term in Section 9.5(E).
"Related Fund" shall mean, with respect to any Lender, a fund or other
investment vehicle that invests in commercial loans and is managed by such
Lender or by the same investment advisor that manages such Lender or by an
Affiliate of such investment advisor.
"Release" shall mean any releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping,
depositing, or disposing into the indoor or outdoor environment, or into or out
of any property, including the abandonment or discarding of barrels, containers,
and other closed receptacles containing any Pollutant.
"Removal," "Remedial" and "Response" actions shall include the types of
activities "covered" by CERCLA, RCRA, and other comparable Environmental Laws,
and whether the activities are those that might be taken by a government entity
or those that a government entity or any other person might seek to require of
waste generators, handlers, distributors, processors, users, storers, treaters,
owners, operators, transporters, recyclers, reusers, disposers, or other persons
under "removal," "remedial," or other "response" actions.
"Reportable Event" shall mean any of the events that are reportable under
Section 4043 of ERISA and the regulations promulgated thereunder, other than an
occurrence for which the thirty (30) day notice contained in 29 C.F.R. Section
2615.3(a) is waived.
"Replacement Lender" has the meaning assigned to that term in Section
2.11(A).
"Requisite Lenders" means Lenders, (other than a Defaulting Lender),
holding or being responsible for more than 50% of the sum of the (a) outstanding
Loans, (b) Letter of Credit Reserve and (c) unutilized Commitments of all
Lenders which are not Defaulting Lenders.
"Revolving Advance" means each advance made by Lender(s) under the
Revolving Loan Commitment pursuant to Section 2.1 (A).
"Revolving Loan" means the outstanding balance of all Revolving Advances
and any amounts added to the principal balance of the Revolving Loan pursuant to
this Agreement.
"Revolving Loan Commitment" means (a) as to any Lender, the commitment of
such Lender to make Revolving Advances pursuant to Section 2.1 (A), and to
purchase participations in Lender Letters of Credit pursuant to Section 2.1(E)
in the aggregate amount set forth on the signature page of this Agreement
opposite such Lender`s signature or in the most recent Assignment and Acceptance
Agreement, if any, executed by such Lender and (b) as to all Lenders, the
aggregate commitment of all Lenders to make Revolving Advances and to purchase
participations in Lender Letters of Credit. Any reduction of the aggregate
Revolving Loan Commitment pursuant to Section 2.4(C) shall reduce each Lender's
respective Revolving Loan Commitment on a Pro Rata Basis.
"Revolving Note" means each promissory note of Borrower in form and
substance reasonably acceptable to Agent, issued to evidence the Revolving Loan
Commitments.
24
EXHIBIT 10.1
"Rocky on a Consolidated Basis" means the consolidation, in accordance
with GAAP, of the financial accounts of Parent and its Subsidiaries.
"Scheduled Installment" has the meaning assigned to that term in Section
2.1(B).
"S&P" shall have the meaning assigned to such term in Section 5.2(H)(ii).
"SEC" shall mean the Securities and Exchange Commission and any
governmental body or agency succeeding to the functions thereof.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Senior Debt" means all Indebtedness of Rocky on a Consolidated Basis
other than (a) Indebtedness under Term Loan B and (b) any unsecured Indebtedness
of Rocky on a Consolidated Basis.
"Senior Leverage Ratio" shall mean, for any period, the ratio of (x)
Senior Debt as of the end of such period to (y) EBITDA for such period.
"Senior Term Loans" means Term Loan A and Term Loan B.
"Settlement Date" has the meaning assigned to that term in Section
9.8(A)(2).
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than fifty percent (50%) of
the total voting power of shares of stock (or equivalent ownership or
controlling interest) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by that Person or
one or more of the other subsidiaries of that Person or a combination thereof.
"Tax Liabilities" has the meaning assigned to that term in Section 2.9(A).
"Term Loan A" means the Advances made pursuant to Section 2.1(B).
"Term Loan A Commitment" means (a) as to any Lender, the commitment of
such Lender to make its Pro Rata share of Term Loan A in the maximum aggregate
amount set forth on the signature page of this Agreement opposite such Lender`s
signature or in the most recent Assignment and Acceptance Agreements, if any,
executed by such Lender and (b) as to all Lenders, the aggregate commitment of
all Lenders to make Term Loan A.
"Term Loan B" means the advances made by ACSL to Borrower in the original
principal sum of $30,000,000 pursuant to the Note Purchase Agreement.
"Term Note" means each promissory note of Borrower in form and substance
acceptable to Agent, issued to evidence the Term Loan A Commitment.
25
EXHIBIT 10.1
"Termination Date" has the meaning assigned to that term in Section 2.5.
"Total Leverage Ratio" shall mean, for any period, the ratio of (x) total
Indebtedness of Rocky on a Consolidated Basis as of the end of such period to
(y) EBITDA for such period.
"Total Loan Commitment" means as to any Lender the aggregate commitments
of such Lender with respect to its Revolving Loan Commitment and Term Loan A
Commitment.
"Trademark Security Agreement" means each Trademark Security Agreement
executed and delivered by a Loan Party to Agent, as the same may be amended and
in effect from time to time.
"Trademarks" means collectively all of the following: (a) all trademarks,
trade names, corporate names, company names, business names, fictitious business
names, trade styles, service marks, logos, other business identifiers, prints
and labels on which any of the foregoing have appeared or appear, all
registrations and recordings thereof, and all applications in connection
therewith including, without limitation, those listed on any schedule to any
Trademark Security Agreement; (b) all renewals thereof; (c) all income,
royalties, damages and payments now or hereafter due and/or payable under any of
the foregoing or with respect to any of the foregoing including damages and
payments for past, present and future infringements of any of the foregoing; (d)
the right to xxx for past, present and future infringements of any of the
foregoing; (e) all rights corresponding to any of the foregoing throughout the
world; and (f) all goodwill associated with and symbolized by any of the
foregoing.
"Transactions" shall mean, in the aggregate, the GMAC Transactions, the
incurrence of the obligations by the Loan Parties of Term Loan B and the
consummation of the Acquisition, all as contemplated by this Agreement, the Note
Purchase Documents and the Acquisition Agreement and related documents.
"UCC" means the Uniform Commercial Code as in effect from time to time in
the State of New York; provided, however, to the extent the law of any other
state or other jurisdiction applies to the attachment, perfection, priority or
enforcement of any Lien granted to Agent in any of the Collateral, "UCC" means
the Uniform Commercial Code as in effect in such other state or jurisdiction for
purposes of the provisions hereof relating to such attachment, perfection,
priority or enforcement of a Lien in such Collateral. To the extent this
Agreement defines the term "Collateral" by reference to terms used in the UCC,
each of such terms shall have the broadest meaning given to such terms under the
UCC as in effect in any state or other jurisdiction.
"Undrawn Availability" means an amount at any particular date equal to (a)
the Maximum Revolving Loan Amount less (b) the sum of (i) the Revolving Loan,
plus (ii) all amounts due Borrower's trade creditors with respect to accounts
payable outstanding beyond customary trade terms, in accordance with the
historical practices of Borrower.
"US" shall mean the United States of America.
26
EXHIBIT 10.1
1.2. UCC Defined Terms. The following terms used in this Agreement shall
have the respective meanings provided for in the UCC: "Accounts", "Account
Debtor", "Buyer in Ordinary Course of Business", "Chattel Paper", "Commercial
Tort Claim", "Deposit Account", "Documents", "Electronic Chattel Paper",
"Equipment", "Farm Products", "Fixtures", "General Intangibles", "Goods",
"Instruments", "Inventory", "Investment Property", "Letter of Credit",
"Letter-of-Credit Rights", "Licensee in Ordinary Course of Business", "Payment
Intangibles", "Proceeds", "Record", "Software", "Supporting Obligations" and
"Tangible Chattel Paper".
1.3. Accounting Terms. For purposes of this Agreement, all accounting
terms not otherwise defined herein shall have the meanings assigned to such
terms in conformity with GAAP. Financial statements and other information
furnished to Agent or any Lender pursuant to Section 5.1(E) shall be prepared in
accordance with GAAP (as in effect at the time of such preparation) on a
consistent basis. In the event any "Accounting Changes" (as defined below) shall
occur and such changes affect financial covenants, standards or terms in this
Agreement, then Loan Parties and Agent agree to enter into negotiations in order
to amend such provisions of this Agreement so as to equitably reflect such
Accounting Changes with the desired result that the criteria for evaluating the
financial condition of the Loan Parties shall be the same after such Accounting
Changes as if such Accounting Changes had not been made, and until such time as
such an amendment shall have been executed and delivered by Loan Parties and
Requisite Lenders, (A) all financial covenants, standards and terms in this
Agreement shall be calculated and/or construed as if such Accounting Changes had
not been made, and (B) the Loan Parties shall prepare footnotes to each
Compliance Certificate and the financial statements required to be delivered
hereunder that show the differences between the financial statements delivered
(which reflect such Accounting Changes) and the basis for calculating financial
covenant compliance (without reflecting such Accounting Changes). "Accounting
Changes" means: (a) changes in accounting principles required by GAAP and
implemented by Loan Parties; (b) changes in accounting principles recommended by
Loan Parties' Accountants; and (c) changes in carrying value of any Loan Party's
assets, Liabilities or equity accounts resulting from (i) the application of
purchase accounting principles (FASB 141) to the Transactions or (ii) any other
adjustments that, in each case, were applicable to, but not included in, the Pro
Forma Balance Sheet. All such adjustments resulting from expenditures made
subsequent to the Closing Date (including, but not limited to, capitalization of
costs and expenses or payment of pre-Closing Date Liabilities) shall be treated
as expenses in the period the expenditures are made and deducted as part of the
calculation of EBITDA in such period.
1.4. Other Definitional Provisions. References to "Sections",
"subsections", "Riders", "Exhibits", "Schedules" and "Addenda" shall be to
Sections, subsections, Riders, Exhibits, Schedules and Addenda, respectively, of
this Agreement unless otherwise specifically provided. Any of the terms defined
in subsection 1.1 or otherwise in this Agreement may, unless the context
otherwise requires, be used in the singular or the plural depending on the
reference. In this Agreement, words importing any gender include the other
genders; the words "including," "includes" and "include" shall be deemed to be
followed by the words "without limitation"; references to agreements and other
contractual instruments shall be deemed to include subsequent amendments,
assignments, and other modifications thereto, but only to the extent such
amendments, assignments and other modifications are not prohibited by the terms
of this Agreement or any other Loan Document; references to Persons include
their respective permitted
27
EXHIBIT 10.1
successors and assigns or, in the case of governmental Persons, Persons
succeeding to the relevant functions of such Persons; and all references to
statutes and related regulations shall include any amendments of same and any
successor statutes and regulations.
SECTION 2. LOANS AND COLLATERAL
2.1. Loans.
(A) Revolving Loan. Each Lender, severally, agrees to lend to
Borrower from time to time its Pro Rata Share of each advance under the
Revolving Loan Commitment. The aggregate amount of the Revolving Loan Commitment
shall not exceed at any time $100,000,000, as reduced by Section 2.4(C). Amounts
borrowed under this Section 2.1(A) may be repaid and reborrowed at any time
prior to the earlier of (1) the termination of the Revolving Loan Commitment
pursuant to Section 7.3 or (2) the Termination Date. Except as otherwise
provided herein, no Lender shall have any obligation to make a Revolving Advance
to the extent such Revolving Advance would cause the Revolving Loan (after
giving effect to any immediate application of the proceeds thereof) to exceed
the Maximum Revolving Loan Amount.
(B) Term Loan A. Each Lender, severally, agrees to lend to Borrower,
on the Closing Date, its Pro Rata Share of the Term Loan A Commitment which is
in the aggregate amount of $18,000,000. Term Loan A shall be funded in one
drawing. Amounts borrowed under this Section 2.1(B) and repaid may not be
reborrowed. Borrower shall make principal payments in the amount of the
applicable Scheduled Installment of Term Loan A (or such lesser principal amount
as shall then be outstanding) on the dates set forth below:
"Scheduled Installment" of Term Loan A means, for each date set
forth below, the amount set forth opposite such date.
Date Scheduled Installment
April 1, 2005 $1,500,000
July 1, 2005 $1,500,000
October 1, 2005 $1,500,000
January 1, 2006 $1,500,000
April 1, 2006 $1,500,000
July 1, 2006 $1,500,000
October 1, 2006 $1,500,000
January 1, 2007 $1,500,000
April 1, 2007 $1,500,000
July 1, 2007 $1,500,000
October 1, 2007 $1,500,000
January 1, 2008 $1,500,000
(C) Borrowing Mechanics. (1) LIBOR Loans made on any Funding Date
shall be in an aggregate minimum amount of $500,000 and integral multiples of
$100,000 in excess of
28
EXHIBIT 10.1
such amount. (2) On any day when a Borrower desires a Revolving Advance under
this Section 2.1, Borrowing Agent shall give Agent written or telephonic notice
of the proposed borrowing by 11:00 a.m. New York time on the Funding Date of a
Base Rate Loan and three (3) Business Days in advance of the Funding Date of a
LIBOR Loan, which notice shall specify the proposed Funding Date (which shall be
a Business Day), whether such Loans shall consist of Base Rate Loans or LIBOR
Loans, and, for LIBOR Loans, the Interest Period applicable thereto. Any such
telephonic notice shall be confirmed with a Notice of Borrowing on the same day
as such request. Neither Agent nor Lender shall incur any liability to any
Borrower for acting upon any telephonic notice or a Notice of Borrowing which
Agent believes in good faith to have been given by a duly authorized officer or
other person authorized to borrow on behalf of any Borrower or for otherwise
acting in good faith under this Section 2.1(C). Neither Agent nor Lender will be
required to make any advance pursuant to any telephonic or written notice or a
Notice of Borrowing, unless all of the terms and conditions set forth in Section
3 have been satisfied and Agent has also received the most recent Borrowing Base
Certificate and all other documents, to the extent required under Section
5.1(E), by 11:00 a.m. New York time on the date of such funding request. Each
Advance shall be deposited by wire transfer in immediately available funds in
such account as Borrowing Agent may from time to time designate to Agent in
writing. The becoming due of any amount required to be paid under this Agreement
or any of the other Loan Documents as principal, Lender Letter of Credit
reimbursement obligation, accrued interest, fees, compensation or any other
amounts shall be deemed irrevocably to be an automatic request by Borrowing
Agent on behalf of the Borrowers for a Revolving Advance, which shall be a Base
Rate Loan on the due date of, and in the amount required to pay (as set forth on
Agent's books and records), such principal, Lender Letter of Credit
reimbursement obligation, accrued interest, fees, compensation or any other
amounts.
(D) Notes. The Borrowers shall execute and deliver to each Lender
with appropriate insertions a Note to evidence such Lender's Commitments. In the
event of an assignment under Section 9.5, the Borrowers shall, upon surrender of
the assigning Lender's Note, issue new Notes to reflect the interest held by the
assigning Lender and its Eligible Assignee.
(E) Letters of Credit. The Revolving Loan Commitments may, in
addition to Revolving Advances, be utilized, upon the request of Borrowing
Agent, for (1) the issuance of letters of credit by Agent; or with Agent's
consent any Lender, or (2) the issuance by GMAC CF or Agent of guaranties or
risk participations to banks to induce such banks to issue Bank Letters of
Credit for the account of Borrowers (each of (1) and (2) above a "Lender Letter
of Credit"). Each Lender shall be deemed to have purchased a participation in
each Lender Letter of Credit issued on behalf of Borrowers in an amount equal to
its Pro Rata Share thereof. In no event shall any Lender Letter of Credit be
issued to the extent that the issuance of such Lender Letter of Credit would
cause the sum of the Letter of Credit Reserve (after giving effect to such
issuance), plus the Revolving Loan to exceed the lesser of (1) the Borrowing
Base and (2) the Revolving Loan Commitments.
(1) Maximum Amount. The aggregate amount of Letter of Credit
Liability with respect to all Lender Letters of Credit outstanding at any time
shall not exceed $7,500,000.
29
EXHIBIT 10.1
(2) Reimbursement. The Borrowers shall be irrevocably and
unconditionally obligated forthwith without presentment, demand, protest or
other formalities of any kind, to reimburse Agent or the issuer for any amounts
paid with respect to a Lender Letter of Credit including all fees, costs and
expenses paid to any bank that issues a Bank Letter of Credit. Each Borrower
hereby authorizes and directs Agent, at Agent's option, to debit Borrowers'
account (by increasing the Revolving Loan) in the amount of any payment made
with respect to any Lender Letter of Credit. In the event that Agent elects not
to debit Borrowers' account and the Borrowers fail to reimburse Agent in full on
the date of any payment under a Lender Letter of Credit, Agent shall promptly
notify each Lender of the unreimbursed amount of such payment together with
accrued interest thereon and each Lender, on the next Business Day, shall
deliver to Agent an amount equal to its respective participation in same day
funds. The obligation of each Lender to deliver to Agent an amount equal to its
respective participation pursuant to the foregoing sentence shall be absolute
and unconditional and such remittance shall be made notwithstanding the
occurrence or continuation of an Event of Default or Default or the failure to
satisfy any condition set forth in Section 3. In the event any Lender fails to
make available to Agent the amount of such Lender's participation in such Lender
Letter of Credit, Agent shall be entitled to recover such amount on demand from
such Lender together with interest on such amount calculated at the Federal
Funds Effective Rate.
(3) Request for Letters of Credit. Borrowing Agent shall give
Agent at least three (3) Business Days prior notice specifying the date a Lender
Letter of Credit is to be issued, identifying the beneficiary and describing the
nature of the transactions proposed to be supported thereby. The notice shall be
accompanied by the form of the Letter of Credit being requested. Any Letter of
Credit which Borrowing Agent requests must be in such form, be for such amount,
contain such terms and support such transactions as are reasonably satisfactory
to Agent. The expiration date of each Lender Letter of Credit shall be on a date
which is at least thirty (30) days prior to the Termination Date, unless
otherwise agreed to by Agent.
(F) Other Letter of Credit Provisions.
(1) Obligations Absolute. The obligation of the Borrowers to
reimburse Agent or any Lender for payments made under, and other amounts payable
in connection with, any Lender Letter of Credit shall be unconditional and
irrevocable and shall be paid under all circumstances strictly in accordance
with the terms of this Agreement including, without limitation, the following
circumstances:
(a) any lack of validity or enforceability of any Lender
Letter of Credit, or any other agreement;
(b) the existence of any claim, set-off, defense or
other right which any Borrower, any of its Subsidiaries or Affiliates or any
other Person may at any time have against any beneficiary or transferee of any
Lender Letter of Credit (or any Persons for whom any such transferee may be
acting), Agent, any Lender, any bank issuing a Bank Letter of Credit, or any
other Person, whether in connection with this Agreement, any other Loan
Document, or any other related or unrelated agreements or transactions;
30
EXHIBIT 10.1
(c) any draft, demand, certificate or any other document
presented under any Lender Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(d) any adverse change in the business, operations,
properties, assets, condition (financial or otherwise) or prospects of Loan
Parties or any of their Subsidiaries;
(e) any breach of this Agreement or any other Loan
Document by any party thereto;
(f) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing;
(g) the fact that a Default or an Event of Default shall
have occurred and be continuing; or
(h) payment under any Lender Letter of Credit against
presentation of a demand, draft or certificate or other document which does not
comply with the terms of such Lender Letter of Credit; provided that, in the
case of any payment by Agent or a Lender under any Lender Letter of Credit,
Agent or such Lender has not acted with gross negligence or willful misconduct
(as determined by a final non-appealable order by a court of competent
jurisdiction) in determining that the demand for payment under such Lender
Letter of Credit complies on its face with any applicable requirements for a
demand for payment under such Lender Letter of Credit.
(2) Nature of Lender's Duties. As between any Lender that
issues a Lender Letter of Credit (an "Issuing Lender"), on the one hand, and all
Lenders on the other hand, all Lenders assume all risks of the acts and
omissions of, or misuse of any Lender Letter of Credit by the beneficiary
thereof. In furtherance and not in limitation of the foregoing, neither Agent
nor any Issuing Lender shall be responsible: (a) for the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document by any party
in connection with the application for and issuance of any Lender Letter of
Credit, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (b) for the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any Lender Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (c) for failure of the beneficiary of any
Lender Letter of Credit to comply fully with conditions required in order to
demand payment thereunder; provided that, in the case of any payment under any
such Lender Letter of Credit, any Issuing Lender has not acted with gross
negligence or willful misconduct (as determined by a final non-appealable order
by a court of competent jurisdiction) in determining that the demand for payment
under any such Lender Letter of Credit complies on its face with any applicable
requirements for a demand for payment thereunder; (d) for errors, omissions,
interruptions or delays in transmission or delivery of any messages, by mail,
cable, telegraph, telex or otherwise, whether or not they be in cipher; (e) for
errors in interpretation of
31
EXHIBIT 10.1
technical terms; (f) for any loss or delay in the transmission or otherwise of
any document required in order to make a payment under any such Lender Letter of
Credit; (g) for the credit of the proceeds of any drawing under any such Lender
Letter of Credit; and (h) for any consequences arising from causes beyond the
control of Agent or any Lender as the case may be.
(3) Liability. In furtherance and extension of and not in
limitation of, the specific provisions herein above set forth, any action taken
or omitted by Agent or any Lender under or in connection with any Lender Letter
of Credit, if taken or omitted in good faith, shall not put Agent or any Lender
under any resulting liability to any Borrower or any other Lender.
(G) Availability of a Lender's Pro Rata Share.
(1) Lender's Amounts Available on a Funding Date. Unless Agent
receives written notice from a Lender on or prior to any Funding Date that such
Lender will not make available to Agent as and when required such Lender's Pro
Rata Share of any requested Loan or Advance, Agent may assume that each Lender
will make such amount available to Agent in immediately available funds on the
Funding Date and Agent may (but shall not be so required), in reliance upon such
assumption, make available to Borrowers on such date a corresponding amount.
(2) Lender's Failure to Fund. A Defaulting Lender shall pay
interest to Agent at the Federal Funds Effective Rate on the Defaulted Amount
from the Business Day following the applicable Funding Date of such Defaulted
Amount until the date such Defaulted Amount is paid to Agent. A notice of Agent
submitted to any Lender with respect to amounts owing under this subsection
shall be conclusive, absent manifest error. If such amount is not paid when due
to Agent, Agent, at its option, may notify Borrowing Agent of such failure to
fund and, upon demand by Agent, the Borrowers shall pay the unpaid amount to
Agent for Agent's account, together with interest thereon (without duplication
and to the extent not paid in connection with such applicable Loan) for each day
elapsed since the date of such borrowing, at a rate per annum equal to the
interest rate applicable at the time to the Loan made by the other Lenders on
such Funding Date. The failure of any Lender to make available any portion of
its Commitment on any Funding Date or to fund its participation in a Lender
Letter of Credit shall not relieve any other Lender of any obligation hereunder
to fund such Lender's Commitment on such Funding Date or to fund any such
participation, but no Lender shall be responsible for the failure of any other
Lender to honor its Commitment on any Funding Date or to fund any participation
to be funded by any other Lender.
(3) Payments to a Defaulting Lender. Notwithstanding any
provision to the contrary contained in this Agreement or the other Loan
Documents, Agent shall not be obligated to transfer to a Defaulting Lender any
payment made by the Borrowers to Agent or any amount otherwise received by Agent
for application to the Obligations nor shall a Defaulting Lender be entitled to
the sharing of any interest, fees or payments hereunder.
(4) Defaulting Lender's Right to Vote. Notwithstanding any
provision to the contrary contained in this Agreement or the other Loan
Documents for purposes of voting
32
EXHIBIT 10.1
or consenting to matters with respect to (a) the Loan Documents or (b) any other
matter concerning the Loans, a Defaulting Lender shall be deemed not to be a
"Lender" and such Lender's Commitments and outstanding Loans and Advances shall
be deemed to be zero.
2.2. Interest.
(A) Rate of Interest. The Loans and all other Obligations shall bear
interest from the date such Loans are made or such other Obligations become due
to the date paid at a rate per annum equal to (1) in the case of Base Rate Loans
and Obligations for which no interest rate basis is specified, the Base Rate
plus the Applicable Margin and (2) in the case of LIBOR Loans, LIBOR plus the
Applicable Margin (collectively the "Interest Rate"). All Loans made on the
Closing Date shall be either (x) Base Rate Loans or (y) LIBOR Loans having an
Interest Period of one month, and, in each case, shall remain so until ninety
(90) days after the Closing Date or such earlier date as Agent notifies Borrower
that it has completed the primary syndication of the Loans. Such designation by
Borrowing Agent may be changed from time to time pursuant to Section 2.2(D). If
on any day a Loan or a portion of any Loan is outstanding with respect to which
notice has not been delivered to Agent in accordance with the terms of this
Agreement specifying the basis for determining the rate of interest or if LIBOR
has been specified and no LIBOR quote is available, then for that day that Loan
or portion thereof shall bear interest determined by reference to the Base Rate.
After the occurrence and during the continuance of an Event of
Default (1) the Loans and all other Obligations shall, at the election of Agent
or Requisite Lenders, bear interest at a rate per annum equal to two percent
(2%) plus the applicable Interest Rate (the "Default Rate"), (2) each LIBOR Loan
shall automatically convert to a Base Rate Loan at the end of any applicable
Interest Period and (3) no Loans may be converted to LIBOR Loans. If an Event of
Default has occurred and is continuing on an Adjustment Date, the Applicable
Margin shall be set at its highest level.
(B) Computation and Payment of Interest. Interest on the Loans and
all other Obligations shall be computed on the daily principal balance on the
basis of a three hundred sixty (360) day year for the actual number of days
elapsed. In computing interest on any Loan, the date of funding of the Loan or
the first day of an Interest Period applicable to such Loan or, with respect to
a Base Rate Loan being converted from a LIBOR Loan, the date of conversion of
such LIBOR Loan to such Base Rate Loan, shall be included; and the date of
payment of such Loan or the expiration date of an Interest Period applicable to
such Loan, or with respect to a Base Rate Loan being converted to a LIBOR Loan,
the date of conversion of such Base Rate Loan to such LIBOR Loan, shall be
excluded; provided that if a Loan is repaid on the same day on which it is made,
one (1) day's interest shall be paid on that Loan. Interest on Base Rate Loans
and all other Obligations other than LIBOR Loans shall be payable to Agent for
the benefit of Lenders monthly in arrears on the first day of each month, on the
date of any prepayment of Loans, and at maturity, whether by acceleration or
otherwise. Interest on LIBOR Loans shall be payable to Agent for the benefit of
Lenders on the last day of the applicable Interest Period for such Loan, on the
date of any prepayment of the Loans, and at maturity, whether by acceleration or
otherwise. In addition, for each LIBOR Loan having an Interest Period longer
than three (3)
33
EXHIBIT 10.1
months, interest accrued on such Loan shall also be payable on the last day of
each three (3) month interval during such Interest Period.
(C) Interest Laws. Notwithstanding any provision to the contrary
contained in this Agreement or any other Loan Document, the Borrowers shall not
be required to pay, and neither Agent nor any Lender shall be permitted to
collect, any amount of interest in excess of the maximum amount of interest
permitted by applicable law ("Excess Interest"). If any Excess Interest is
provided for or determined by a court of competent jurisdiction to have been
provided for in this Agreement or in any other Loan Document, then in such
event: (1) the provisions of this subsection shall govern and control; (2)
neither any Borrower nor any other Loan Party shall be obligated to pay any
Excess Interest; (3) any Excess Interest that Agent or any Lender may have
received hereunder shall be, at such Lender's option, (a) applied as a credit
against the outstanding principal balance of the Obligations or accrued and
unpaid interest (not to exceed the maximum amount permitted by law), (b)
refunded to the payor thereof, or (c) any combination of the foregoing; (4) the
interest rate(s) provided for herein shall be automatically reduced to the
maximum lawful rate allowed from time to time under applicable law (the "Maximum
Rate"), and this Agreement and the other Loan Documents shall be deemed to have
been and shall be, reformed and modified to reflect such reduction; and (5)
neither any Borrower nor any Loan Party shall have any action against Agent or
any Lender for any damages arising out of the payment or collection of any
Excess Interest. Notwithstanding the foregoing, if for any period of time
interest on any Obligations is calculated at the Maximum Rate rather than the
applicable rate under this Agreement, and thereafter such applicable rate
becomes less than the Maximum Rate, the rate of interest payable on such
Obligations shall remain at the Maximum Rate until each Lender shall have
received the amount of interest which such Lender would have received during
such period on such Obligations had the rate of interest not been limited to the
Maximum Rate during such period.
(D) Conversion or Continuation. Subject to the other provisions of
this Agreement, including, without limitation, satisfying the conditions set
forth in Section 3, Borrowing Agent shall have the option to (1) convert at any
time all or any part of outstanding Loans equal to $500,000 and integral
multiples of $100,000 in excess of that amount from Base Rate Loans to LIBOR
Loans or (2) upon the expiration of any Interest Period applicable to a LIBOR
Loan, to (a) continue all or any portion of such LIBOR Loan equal to $500,000
and integral multiples of $100,000 in excess of that amount as a LIBOR Loan or
(b) convert all or any portion of such LIBOR Loan to a Base Rate Loan. The
succeeding Interest Period(s) of such continued or converted Loan commence on
the last day of the Interest Period of the Loan to be continued or converted;
provided that no outstanding Loan may be continued as, or be converted into, a
LIBOR Loan, when any Event of Default or Default has occurred and is continuing.
Borrowing Agent shall deliver a Notice of Borrowing with
respect to any such conversion/continuation to Agent no later than 11:00 a.m.
(New York time) at least three (3) Business Days in advance of the proposed
conversion/continuation date. The Notice of Borrowing with respect to such
conversion/continuation shall certify: (1) the proposed conversion/continuation
date (which shall be a Business Day); (2) the amount of the Loan to be
converted/continued; (3) the nature of the proposed conversion/continuation; (4)
in the case of conversion to, or a continuation of, a LIBOR Loan, the requested
Interest Period; (5) that no
34
EXHIBIT 10.1
Default or Event of Default has occurred and is continuing or would result from
the proposed conversion/continuation; and (6) that all conditions to make Loans
as set forth in Section 3 have been satisfied.
In lieu of delivering a Notice of Borrowing with respect to
any such conversion/continuation, Borrowing Agent may give Agent telephonic
notice by the required time of any proposed conversion/continuation under this
subsection 2.2(D) (in such telephonic notice Borrowing Agent shall certify to
the items set forth above with respect to the Notice of Borrowing); provided
that such telephonic notice shall be promptly confirmed in writing by delivery
of a Notice of Borrowing (in form and substance described herein) with respect
to such conversion/continuation to Agent on or before the proposed
conversion/continuation date. Once given, the Borrowers shall be bound by such
telephonic notice. Upon the expiration of an Interest Period for a LIBOR Loan,
in the absence of a new Notice of Borrowing or a telephonic notice submitted to
Agent not less than three (3) Business Days prior to the end of such Interest
Period, the LIBOR Loan then maturing shall be automatically converted to a Base
Rate Loan.
Neither Agent nor any Lender shall incur any liability to any
Borrower or any other Loan Party in acting upon any telephonic notice or a
Notice of Borrowing referred to above that Agent believes in good faith to have
been given by an officer or other person authorized to act on behalf of
Borrowers or for otherwise acting in good faith under this Section 2.2(D).
2.3. Fees.
(A) Unused Line Fee. The Borrowers shall pay to Agent, for the
benefit of Lenders, a fee in an amount equal to the Revolving Loan Commitment
less the sum of (1) the average daily balance of each of the Revolving Loan
plus, (2) the average daily face amount of the Letter of Credit Reserve during
the preceding month, multiplied by (3) 3/8th of 1% (0.375%) per annum. Such fee
to be calculated on the basis of a three hundred sixty (360) day year for the
actual number of days elapsed and to be payable monthly in arrears on the first
day of each month following the Closing Date.
(B) Letter of Credit Fees. The Borrowers shall pay to Agent a fee
with respect to the Lender Letters of Credit for the benefit of all Lenders with
a Revolving Loan Commitment (based on their respective Pro Rata Share) in the
amount of the average daily amount of Letter of Credit Liability outstanding
during such month multiplied by 2.50% per annum until the first Adjustment Date
and thereafter by the applicable percentage specified as the Applicable Margin
for LIBOR Rate Loans consisting of Revolving Advances. Such fees will be
calculated on the basis of a three hundred sixty (360) day year for the actual
number of days elapsed and will be payable monthly in arrears on the first day
of each month. The Borrowers shall also reimburse Agent for any and all fees and
expenses, if any, paid by Agent or any Lender to the issuer of any Bank Letter
of Credit.
(C) Audit Fees. The Borrowers agree to pay all fees and expenses of
the firm or individual(s) engaged by Agent to perform audits and/or appraisals
of Loan Parties' assets and/or operations. Notwithstanding the foregoing, if
Agent uses its internal auditors to perform
35
EXHIBIT 10.1
any audit, the Borrowers agree to pay to Agent, for its own account, an audit
fee with respect to each such audit equal to $1,000 per internal auditor per day
or any portion thereof together with all out of pocket expenses; provided,
however, that prior to a Default, the Borrowers will not have to pay for more
than two (2) audits per year.
(D) Other Fees and Expenses. The Borrowers shall pay to Agent, for
its own account, all charges for returned items and all other bank charges
incurred by Agent, as well as Agent's standard wire transfer charges for each
wire transfer made under this Agreement.
(E) Fee Letter. The Borrowers shall pay to GMAC CF, individually,
the fees specified in that certain letter agreement dated December 13, 2004
between the Borrowers and GMAC CF.
2.4. Payments and Prepayments.
(A) Manner and Time of Payment. In its sole discretion, Agent may
elect to honor the automatic requests by Borrowing Agent for Revolving Advances,
for all principal, Lender Letter of Credit reimbursement obligations, interest,
fees, compensation and any other amounts due hereunder or under any of the other
Loan Documents on their applicable due dates pursuant to the terms of this
Agreement, and the proceeds of each such Revolving Advance, if made, shall be
applied as a direct payment of the relevant Obligation. To the extent such
amounts exceed the Revolving Loan Commitment of all Revolving Loan Lenders, or
if Agent elects to xxxx Borrowers for any amount due hereunder or under any of
the other Loan Documents, such amount shall be immediately due and payable with
interest thereon accruing from the applicable due date. All payments made by
Borrowers with respect to the Obligations shall be made without deduction,
defense, setoff or counterclaim. All payments to Agent hereunder shall, unless
otherwise directed by Agent, be made to Agent's Account or in accordance with
Section 6.4. All proceeds remitted to Agent's Account via wire transfer shall be
credited to the Obligations (including for the purpose of calculating interest
payable by the Borrowers on the Obligations) on the same Business Day as such
proceeds were received.
(B) Mandatory Prepayments.
(1) Over Formula Advance. At any time that the Revolving Loan
exceeds the Maximum Revolving Loan Amount (an "Over Formula Advance"), the
Borrowers shall, immediately repay the Revolving Loan to the extent necessary to
eliminate the Over Formula Advance.
(2) Prepayments from Proceeds of Asset Dispositions.
Immediately upon receipt by any Loan Party or any of their respective
Subsidiaries of Net Cash Proceeds of any Asset Disposition, which Net Cash
Proceeds (together with all other Net Cash Proceeds of Asset Dispositions
theretofore consummated by the Loan Parties or any of their respective
Subsidiaries during any Fiscal Year) exceed $50,000 in the aggregate in any
Fiscal Year (it being understood that if the Net Cash Proceeds of any Asset
Disposition exceed $50,000, the entire amount and not just the portion above
$50,000 shall be subject to this Section 2.4(B)(2)), the Borrowers shall prepay
the Obligations in an amount equal to such proceeds. All such
36
EXHIBIT 10.1
prepayments shall be applied to the Loans in accordance with Section 2.4(E);
provided, however, (x) if the Borrowers reasonably expect the proceeds of any
Asset Disposition (other than as described in clauses (y) and (z) below) to be
reinvested within one hundred eighty (180) days to repair or replace such assets
with like assets, the Borrowers shall deliver the proceeds to Agent to be
applied to the Revolving Loan and Agent shall establish a reserve against
available funds for borrowing purposes under the Revolving Loan for such amount,
until such time as such proceeds have been re-borrowed or applied to other
Obligations as set forth herein, (y) if Parent sells the Nelsonville Office
within twelve (12) months of the Closing Date and, at the time of such sale, no
Default or Event of Default has occurred which is then continuing, the first
$500,000 in Net Cash Proceeds of such sale shall be applied to reduce the
outstanding principal balance of the Revolving Loans, but not as a permanent
reduction of the Revolving Loan Commitment, and any excess Net Cash Proceeds
shall be applied as set forth in Section 2.4(E), and (z) if Parent sells the
Nelsonville Warehouse within twelve (12) months of the Closing Date and, at the
time of such sale, no Default or Event of Default has occurred which is then
continuing, the first $1,500,000 in Net Cash Proceeds of such sale shall be
applied to reduce the outstanding principal balance of the Revolving Loans, but
not as a permanent reduction of the Revolving Loan Commitment, and any excess
Net Cash Proceeds shall be applied as set forth in Section 2.4(E). If any
Borrower elects, under clause (x) of this Section 2.4(B)(2), to deliver such
proceeds to Agent, the Borrowers may, so long as no Default or Event of Default
shall have occurred and be continuing, reborrow such proceeds only for such
repair or replacement. If the Borrowers fail to reinvest such Net Cash Proceeds
within one hundred eighty (180) days, the Borrowers hereby authorize Agent and
Lenders to make a Revolving Advance in the amount of the remaining reserve to
repay the Loans in the manner set forth in Section 2.4(E).
(3) Prepayments from Excess Cash Flow. Until repayment in full
of Term Loan A, within thirty (30) days after the date that the annual financial
statement of Rocky on a Consolidated Basis is required to be delivered to Agent,
the Borrowers shall prepay the Obligations in an amount equal to 50% of Excess
Cash Flow for such prior Fiscal Year ("Cash Flow Prepayments") calculated on the
basis of the audited financial statements for such Fiscal Year delivered to
Agent pursuant to Section 5.1(E)(a). All Cash Flow Prepayments shall be applied
to the Loans in accordance with Section 2.4(E). Concurrently with the making of
any such payment, Parent shall deliver to Agent and Lenders a certificate of
Parent`s chief executive officer or chief financial officer demonstrating its
calculation of the amount required to be paid. In the event that any such
financial statement is not so delivered, then a calculation based upon estimated
amounts shall be made by Agent upon which calculation the Borrowers shall make
the prepayment required by this Section 2.4(B)(3), subject to adjustment when
the financial statement is delivered to Agent as required hereby. The
calculation made by Agent shall not be deemed a waiver of any rights Agent or
Lenders may have as a result of the failure by Loan Parties to deliver such
financial statement.
(4) Prepayments from Issuance of Securities. Immediately upon
the receipt by any Loan Party or any of their respective Subsidiaries of the
proceeds of the issuance of equity securities (other than proceeds of the
issuance of equity securities (i) received on or before the Closing Date, (ii)
as a result of the exercise of stock options under equity incentive plans of
Parent and (iii) any proceeds received from another Loan Party), the Borrowers
shall prepay the Loans in an amount equal to such proceeds, net of underwriting
discounts and
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EXHIBIT 10.1
commissions and other reasonable costs associated therewith. All such
prepayments shall be applied to the Loans in accordance with Section 2.4(E).
(5) Prepayments from Tax Refunds. Immediately upon the receipt
by any Loan Party or any of their respective Subsidiaries of the proceeds of any
tax refund, the Borrowers shall prepay the Loans in an amount equal to such
proceeds. All such prepayments shall be applied to the Loans in accordance with
Section 2.4(E).
(6) Prepayments from Collateral Assignment. Immediately upon
the receipt by any Loan Party of any post-closing adjustment to the purchase
price under the Acquisition Agreement attributable to a working capital
adjustment, Borrower shall prepay the Revolving Loans in an amount equal to such
proceeds. Immediately upon the receipt by any Loan Party of any other
post-closing adjustment under the Acquisition Agreement, Borrower shall prepay
the Loans for application in accordance with Section 2.4(E).
(7) Change of Control. Immediately upon the occurrence of any
Change of Control, Borrower shall prepay the Loans, together with all other then
outstanding Obligations, in full, and the Commitments shall be deemed
terminated. All such prepayments shall be applied to the Loans in accordance
with Section 2.4(E).
(C) Voluntary Prepayments and Repayments. Borrower may prepay the
outstanding principal amount of the Term Loan A in whole or in part in multiples
of (x) $100,000 or (y) such lesser amount as is then outstanding, at any time
without any premium or prepayment penalty together with the accrued interest, if
any, on such principal amount prepaid to the date set for prepayment. Borrower
may, at any time upon not less than three (3) Business Days prior notice to
Agent, (a) reduce the Revolving Loan Commitment in minimum reductions of
$1,000,000 and in integral multiples of $500,000 in excess thereof (but in no
event to a Revolving Loan Commitment of less than $25,000,000) and/or (b)
terminate the Revolving Loan Commitment in full; provided, however, the
Revolving Loan Commitment may not be terminated by Borrower until all other
Obligations (including, without limitation, Term Loan A) are paid in full. Any
reduction or termination of the Revolving Loan Commitment permitted in this
Section 2.4(C) shall be subject to the payment of all fees set forth in
subsection 2.3, including, without limitation, the fees set forth in the Fee
Letter and the payment of any amounts owing pursuant to Section 2.12 resulting
from such prepayment. In the event any Lender Letters of Credit are outstanding
at the time that Borrowers prepays the Obligations and desires to terminate the
Revolving Loan Commitment, the Borrowers shall cause Agent and each Lender to be
released from all liability under any Lender Letters of Credit or, at Agent's
option, the Borrowers shall (1) deposit with Agent for the benefit of all
Lenders with a Revolving Loan Commitment cash in an amount equal to one hundred
and five percent (105%) of the aggregate outstanding Letter of Credit Reserve to
be available to Agent to reimburse payments of drafts drawn under such Lender
Letters of Credit and pay any fees and expenses related thereto and (2) prepay
the fees payable under Section 2.3(B) with respect to such Lender Letters of
Credit for the full remaining terms of such Lender Letters of Credit. Upon
termination of any such Lender Letter of Credit, the unearned portion of such
prepaid fee attributable to such Lender Letter of Credit shall be refunded to
the Borrowers.
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EXHIBIT 10.1
(D) Payments on Business Days. Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business Day, the
payment may be made on the next succeeding Business Day and such extension of
time shall be included in the computation of the amount of interest or fees due
hereunder.
(E) Application of Prepayment Proceeds. Except as otherwise provided
therein, all prepayments described in Sections 2.4(B)(2) through 2.4(B)7 shall
first be applied in payment of Scheduled Installments of Term Loan A, in the
inverse order of maturity, and at any time after Term Loan A shall have been
repaid in full, such payments shall be applied to reduce the outstanding
principal balance of the Revolving Loans but not as a permanent reduction of the
Revolving Loan Commitment. Considering each type of Loan being prepaid
separately, any such prepayment shall be applied first to Base Rate Loans of the
type required to be prepaid before application to LIBOR Loans of the type
required to be prepaid.
2.5. Term of this Agreement. This Agreement shall be effective until the
earlier of (a) January 5, 2010 and (b) the acceleration of all Obligations
pursuant to Section 7.3 (the "Termination Date"). The Commitments shall
terminate (unless earlier terminated pursuant to the terms hereof) upon the
Termination Date and all Obligations shall become immediately due and payable
without notice or demand. Notwithstanding any termination, until all Obligations
have been fully paid and satisfied, Agent, on behalf of itself and Lenders,
shall be entitled to retain security interests in and liens upon all Collateral;
provided, however, that in the event that all Revolving Loans and Term Loan A
are repaid in full, and all other due and owing Obligations and all reasonably
anticipated future Obligations (including reasonably anticipated contingent
Obligations) are satisfied in full in a manner reasonably satisfactory to Agent,
Agent shall, at the request of Borrower, terminate its Liens upon all
Collateral. Even after payment of all Obligations hereunder, each Loan Party's
obligation to indemnify Agent and each Lender in accordance with the terms
hereof shall continue.
2.6. Statements. Agent shall render a monthly statement of account to
Borrowing Agent within twenty (20) days after the end of each month. Such
statement of account shall constitute an account stated unless any Borrower
makes written objection thereto within thirty (30) days from the date such
statement is mailed to Borrowing Agent. Agent shall record in its books and
records, including computer records, (a) all Loans, interest charges and
payments thereof, (b) all Letter of Credit Liability, (c) the charging and
payment of all fees, costs and expenses and (d) all other debits and credits
pursuant to this Agreement. The balance in the loan accounts shall constitute
presumptive evidence, absent manifest error, of the accuracy of the information
contained therein; provided, however, that any failure by Agent to so record
shall not limit or affect the any Borrower's obligation to pay.
2.7. Grant of Security Interest.
(A) Grant of Liens in the Collateral.. To secure the payment and
performance of the Obligations, including all renewals, extensions,
restructurings and refinancings of any or all of the Obligations, each Loan
Party hereby grants to Agent, for the benefit of Agent and Lenders, a continuing
security interest in, lien and mortgage in and to, right of setoff against and
collateral assignment of all of such Loan Party's Personal Property and real
property and all
39
EXHIBIT 10.1
rights to such personal and real property, other than Excluded Property, in each
case, whether now owned or existing or hereafter acquired or arising and
regardless of where located (all being collectively referred to as the
"Collateral") including, without limitation, all: (1) Accounts; (2) Chattel
Paper; (3) Commercial Tort Claims, including those specified on Schedule 2.7(A);
(4) Deposit Accounts and cash and other monies and property of such Loan Party
in the possession or under the control of Agent, any Lender or any participant
of any Lender in the Loans; (5) Documents; (6) Equipment; (7) Fixtures; (8)
General Intangibles (including Intellectual Property); (9) Goods; (10)
Instruments; (11) Inventory; (12) Investment Property; (13) Letter-of-Credit
Rights and Supporting Obligations; (14) other Personal Property whether or not
subject to the UCC; and (15) Additional Mortgaged Property; together with all
books, records, ledger cards, files, correspondence, computer programs, tapes,
disks and related data processing software that at any time evidence or contain
information relating to any of the property described above or are otherwise
necessary or helpful in the collection thereof or realization thereon; and
Proceeds and products of all or any of the property described above.
(B) Loan Parties Remain Liable. Anything herein to the contrary
notwithstanding: (a) each Loan Parties shall remain liable under the contracts
and agreements included in the Collateral to the extent set forth therein to
perform all of their respective duties and obligations thereunder to the same
extent as if this Agreement or the other Loan Documents had not been executed;
(b) the exercise by Agent of any of the rights under this Agreement or the other
Loan Documents shall not release any Loan Party from any of their respective
duties or obligations to the parties under the contracts and agreements included
in the Collateral; (c) neither Agent nor any Lender shall have any obligation or
liability under the contracts and agreements included in the Collateral by
reason of this Agreement or the other Loan Documents, nor shall Agent nor any
Lender be obligated to perform any of the obligations or duties of any Loan
Party thereunder or to take any action to collect or enforce any claim for
payment assigned under this Agreement or the other Loan Documents; and (d)
neither Agent nor any Lender shall have any liability in contract or tort for
any Loan Party's acts or omissions.
2.8. Yield Protection.
(A) Capital Adequacy and Other Adjustments. In the event any Lender
shall have determined that the adoption after the date hereof of any Law,
treaty, governmental (or quasi-governmental) rule, regulation, guideline or
order regarding capital adequacy, reserve requirements or similar requirements
or compliance by such Lender or any corporation controlling such Lender with any
request or directive regarding capital adequacy, reserve requirements or similar
requirements (whether or not having the force of law and whether or not failure
to comply therewith would be unlawful) from any central bank or Governmental
Authority or body having jurisdiction does or shall have the effect of
increasing the amount of capital, reserves or other funds required to be
maintained by such Lender or any corporation controlling such Lender and thereby
reducing the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder, then the Borrowers shall within
fifteen (15) days after notice and demand from such Lender (together with the
certificate referred to in the next sentence and with a copy to Agent) pay to
Agent, for the account of such Lender, additional amounts sufficient to
compensate such Lender for such reduction. A certificate as to the amount of
such cost and showing the basis of the computation of such cost
40
EXHIBIT 10.1
submitted by such Lender to Borrowing Agent shall, absent manifest error, be
conclusive and binding for all purposes.
(B) Increased LIBOR Funding Costs. If, after the date hereof, the
introduction of, change in or interpretation of any law, rule, regulation,
treaty or directive would impose or increase reserve requirements (other than as
taken into account in the definition of LIBOR) or otherwise increase the cost to
any Lender of making or maintaining a LIBOR Loan, then Borrowers shall from time
to time within fifteen (15) days after notice and demand from such affected
Lenders (together with the certificate referred to in the next sentence and with
a copy to Agent) pay to Agent, for the account of such affected Lenders,
additional amounts sufficient to compensate such Lenders for such increased
cost. A certificate as to the amount of such cost and showing the basis of the
computation of such cost submitted by such affected Lenders to Borrowing Agent
and Agent shall, absent manifest error, be conclusive and binding on Borrower
for all purposes.
2.9. Taxes.
(A) No Deductions. Any and all payments or reimbursements made
hereunder shall be made free and clear of and without deduction for any and all
Charges and all Liabilities with respect thereto (all such Charges and all
Liabilities with respect thereto referred to herein as "Tax Liabilities";
excluding, however, taxes imposed on the net income of any Lender or Agent by
the jurisdiction under the laws of which Agent or such Lender is organized or
doing business or any political subdivision thereof and taxes imposed on its net
income by the jurisdiction of Agent's or such Lender's applicable lending office
or any political subdivision). If any Loan Party shall be required by law to
deduct any such Tax Liabilities from or in respect of any sum payable hereunder
to Agent or any Lender, then the sum payable hereunder shall be increased as may
be necessary so that, after making all required deductions, Agent or such Lender
receives an amount equal to the sum it would have received had no such
deductions been made.
(B) Changes in Tax Laws. In the event that, subsequent to the
Closing Date, (1) any changes in any existing law, regulation, treaty or
directive or in the interpretation or application thereof, (2) any new law,
regulation, treaty or directive enacted or any interpretation or application
thereof, or (3) compliance by Lender with any request or directive (whether or
not having the force of law) from any Governmental Authority;
(a) does or shall subject Agent or any Lender to any tax of
any kind whatsoever with respect to this Agreement, the other Loan Documents or
any Loans made or Lender Letters of Credit issued hereunder, or change the basis
of taxation of payments to Agent or such Lender of principal, fees, interest or
any other amount payable hereunder (except for net income taxes, or franchise
taxes imposed in lieu of net income taxes, imposed generally by federal, state
or local taxing authorities with respect to interest or commitment or other fees
payable hereunder or changes in the rate of tax on the overall net income of
Agent or such Lender); or
(b) does or shall impose on Agent or any Lender any other
condition or increased cost in connection with the transactions contemplated
hereby or participations
41
EXHIBIT 10.1
herein; and the result of any of the foregoing is to increase the cost to Agent
or such Lender of issuing any Lender Letter of Credit or making or continuing
any Loan hereunder, as the case may be, or to reduce any amount receivable
hereunder;
then, in any such case, the Borrowers shall pay, within fifteen (15) days after
notice and demand from Agent or the affected Lender, to Agent or such Lender,
upon its notice and demand, any additional amounts necessary to compensate Agent
or such Lender, on an after-tax basis, for such additional cost or reduced
amount receivable, as determined by Agent or such Lender with respect to this
Agreement or the other Loan Documents. If Agent or any Lender becomes entitled
to claim any additional amounts pursuant to this subsection, it shall promptly
notify Borrowing Agent of the event by reason of which Agent or such Lender has
become so entitled (with any such Lender concurrently notifying Agent). A
certificate as to any additional amounts payable pursuant to the foregoing
sentence submitted by Agent or any Lender to Borrowing Agent shall, absent
manifest error, be conclusive and binding on Borrower for all purposes.
(C) Foreign Lenders. Each Lender organized under the laws of a
jurisdiction outside the US (a "Foreign Lender") as to which payments to be made
under this Agreement are exempt from US withholding tax or are subject to US
withholding tax at a reduced rate under an applicable statute or tax treaty
shall provide to Borrowing Agent and Agent (1) a properly completed and executed
Internal Revenue Service Form W-8BEN or Form W-8ECI or other applicable form,
certificate or document prescribed by the Internal Revenue Service of the US
certifying as to such Foreign Lender's entitlement to such exemption or reduced
rate of withholding with respect to payments to be made to such Foreign Lender
under this Agreement, (a "Certificate of Exemption"), or (2) a letter from any
such Foreign Lender stating that it is not entitled to any such exemption or
reduced rate of withholding (a "Letter of Non-Exemption"). Prior to becoming a
Lender under this Agreement and within fifteen (15) days after a reasonable
written request of Borrowing Agent or Agent from time to time thereafter, each
Foreign Lender that becomes a Lender under this Agreement shall provide a
Certificate of Exemption or a Letter of Non-Exemption to Borrowing Agent and
Agent.
If a Foreign Lender is entitled to an exemption with respect to
payments to be made to such Foreign Lender under this Agreement (or to a reduced
rate of withholding) and does not provide a Certificate of Exemption to
Borrowing Agent and Agent within the time periods set forth in the preceding
paragraph, the Borrowers shall withhold taxes from payments to such Foreign
Lender at the applicable statutory rates and no Borrower shall be required to
pay any additional amounts as a result of such withholding; provided, however,
that all such withholding shall cease upon delivery by such Foreign Lender of a
Certificate of Exemption to Borrowing Agent and Agent.
2.10. Required Termination and Prepayment. If on any date any Lender shall
have reasonably determined (which determination shall be conclusive and binding
upon all parties) that the making or continuation of its LIBOR Loans has become
unlawful or impossible by compliance by such Lender in good faith with any law,
governmental rule, regulation or order (whether or not having the force of law
and whether or not failure to comply therewith would be unlawful), then, and in
any such event, that Lender shall promptly give notice (by telephone confirmed
in writing) to Borrowing Agent and Agent of that determination. Subject to prior
42
EXHIBIT 10.1
withdrawal of a Notice of Borrowing or prepayment of LIBOR Loans as contemplated
by Section 2.12, the obligation of such Lender to make or maintain its LIBOR
Loans during any such period shall be terminated at the earlier of the
termination of the Interest Period then in effect or when required by law and
the Borrowers shall no later than the termination of the Interest Period in
effect at the time any such determination pursuant to this Section 2.10 is made
or, earlier (without any breakage fee) when required by Law, repay or prepay
LIBOR Loans together with all interest accrued thereon or convert LIBOR Loans to
Base Rate Loans.
2.11. Optional Prepayment/Replacement of Lenders. Within fifteen (15) days
after receipt by Borrowing Agent of: (a) written notice and demand from any
Lender for payment or reimbursement of additional costs as provided in Section
2.8 or section 2.9, or (b) written notice of any Lender's inability to make
LIBOR Loans as provided in Section 2.10, or information that such Lender is a
Defaulting Lender (any such Lender demanding such payment or having such
inability or being a Defaulting Lender being referred to herein as an "Affected
Lender"), Parent may, at its option notify Agent and such Affected Lender of its
intention to take one of the actions set forth herein in subparagraphs (A) or
(B) below.
(A) Replacement of an Affected Lender. The Borrowers may obtain, at
Borrowers' expense, a replacement Lender ("Replacement Lender") for an Affected
Lender, which Replacement Lender shall be reasonably satisfactory to Agent. In
the event the Borrowers obtain a Replacement Lender that will purchase all
outstanding Obligations owed to such Affected Lender and assume its Commitments
hereunder within ninety (90) days following notice of Borrowers' intention to do
so, the Affected Lender shall sell and assign its Loans and Commitments to such
Replacement Lender in accordance with the provisions of Section 9.5; provided,
however, the Borrowers have (1) reimbursed such Affected Lender for any
administrative fee payable by such Affected Lender to Agent pursuant to Section
9.5 and, (2) in any case where such replacement occurs as the result of a demand
for payment of certain costs pursuant to Section 2.8 or Section 2.9, paid all
increased costs for which such Affected Lender is entitled to under Section 2.8
or Section 2.9 through the date of such sale and assignment; or
(B) Prepayment of an Affected Lender. Borrowers may prepay in full
all outstanding Obligations owed to an Affected Lender and terminate such
Affected Lender's Commitments. The Borrowers shall, within ninety (90) days
following notice of its intention to do so, prepay in full all outstanding
Obligations owed to such Affected Lender, including such Affected Lender's
increased costs for which it is entitled to reimbursement under this Agreement
through the date of such prepayment, and terminate such Affected Lender's
Commitments.
2.12. Compensation. The Borrowers shall promptly compensate Agent for the
benefit of Lenders (Agent's calculation of such amounts shall, absent manifest
error, be conclusive and binding upon all parties hereto), for any losses,
expenses and Liabilities including, without limitation, any loss (including
interest paid) sustained by such Lender in connection with the re-employment of
funds: (a) if for any reason (other than a default by any Lender) a borrowing of
any LIBOR Loan does not occur on a date specified therefor in a Notice of
Borrowing or a telephonic request of borrowing by Borrowing Agent; (b) if any
prepayment of any of its LIBOR Loans occurs on a date that is not the last day
of an Interest Period applicable to that Loan (regardless of the source of such
prepayment and whether voluntary, by acceleration or
43
EXHIBIT 10.1
otherwise); (c) if any prepayment of any of its LIBOR Loans is not made on any
date specified in a notice of prepayment given by the Borrowers; or (d) as a
consequence of any other default by the Borrowers to repay its LIBOR Loans when
required by the terms of this Agreement; provided, however, during the period
while any such amounts have not been paid, Agent may, in its sole discretion,
(i) in accordance with Section 2.4(B), elect to honor the automatic request by
Borrowing Agent for a Revolving Advance for such amount pursuant to Section
2.1(A) or (ii) reserve an equal amount from amounts otherwise available to be
borrowed under the Revolving Loan.
2.13. Booking of LIBOR Loans. Each Lender may make, carry or transfer
LIBOR Loans at, to, or for the account of, any of its branch offices or the
office of an affiliate of such Lender.
2.14. Assumptions Concerning Funding of LIBOR Loans. Calculation of all
amounts payable to each Lender under subsection 2.12 shall be made as though
each Lender had actually funded its relevant LIBOR Loan through the purchase of
a LIBOR deposit bearing interest at LIBOR in an amount equal to the amount of
that LIBOR Loan and having maturity comparable to the relevant Interest Period
and through the transfer of such LIBOR deposit from an offshore office to a
domestic office in the US; provided, however, each Lender may fund each of its
LIBOR Loans in any manner it sees fit and the foregoing assumption shall be
utilized only for the calculation of amounts payable under Section 2.12.
2.15. Endorsement; Insurance Claims. Each Borrower hereby constitutes and
appoints Agent and all Persons designated by Agent for that purpose as such
Borrower's true and lawful attorney-in-fact, with power in the place and stead
of such Borrower and in the name of such Borrower (a) to endorse such Borrower's
name to any of the items of payment or proceeds described in Section 6.4 below
and all proceeds of Collateral that come into Agent's possession or under
Agent's control, including without limitation, with respect to any drafts,
Instruments, Documents and Chattel Paper, and (b) after consultation with Parent
(unless an Event of Default has occurred which is then continuing) to obtain,
adjust and settle insurance claims, which are required to be paid to Agent. Each
Borrower hereby ratifies and approves all acts of Agent made or taken pursuant
to this Section 2.15. Both the appointment of Agent as each Borrower's attorney
and Agent's rights and powers are coupled with an interest and are irrevocable,
so long as any of the Commitments hereunder shall be in effect and until
indefeasible payment in full, in cash, of all Obligations and termination of all
Lender Letters of Credit.
SECTION 3. CONDITIONS TO LOANS
The obligations of Agent and each Lender to make Loans and the obligation
of Agent or any Lender to issue Lender Letters of Credit on the Closing Date and
on each Funding Date are subject to satisfaction of all of the terms and
conditions set forth below and the accuracy of all the representations and
warranties of the Borrowers and the other Loan Parties set forth herein and in
the other Loan Documents:
(A) Closing Deliveries. Agent shall have received, in form and
substance satisfactory to Agent, all documents, instruments and information
identified on Schedule 3 hereto
44
EXHIBIT 10.1
and all other agreements, notes, certificates, orders, authorizations, financing
statements, mortgages and other documents which Agent may at any time reasonably
request.
(B) Security Interests. Agent shall have received satisfactory
evidence that all security interests and liens granted to Agent for the benefit
of Agent and Lenders pursuant to this Agreement or the other Loan Documents have
been duly perfected and constitute first priority liens on the Collateral,
subject only to Permitted Liens.
(C) Closing Date Availability. After giving effect to the
consummation of the Transactions, and the payment by the Borrowers of all costs,
fees and expenses relating to the Transactions, Undrawn Availability shall not
be less than $20,000,000.
(D) Representations and Warranties. The representations and
warranties contained herein and in the Loan Documents shall be true, correct and
complete in all material respects on and as of that Funding Date to the same
extent as though made on and as of that date, except for any representation or
warranty limited by its terms to a specific date and taking into account any
amendments to the Schedules or Exhibits as a result of any disclosures made by
the Borrowers to Agent after the Closing Date and approved in writing by Agent.
(E) Fees. With respect to Loans or Lender Letters of Credit to be
made or issued on the Closing Date, the Borrowers shall have paid all fees due
to Agent or any Lender and payable on the Closing Date.
(F) No Default. No event shall have occurred and be continuing or
would result from funding a Loan or issuing a Lender Letter of Credit requested
by Borrowing Agent that would constitute an Event of Default or a Default.
(G) Performance of Agreements. Each Loan Party shall have performed
in all material respects all agreements and satisfied all conditions which any
Loan Document provides shall be performed by it on or before that Funding Date.
(H) No Prohibition. No order, judgment or decree of any court,
arbitrator or Governmental Authority shall purport to enjoin or restrain Agent
or any Lender from making any Loans or issuing any Lender Letters of Credit.
(I) No Litigation. There shall not be pending or, to the knowledge
of any Loan Party, threatened, any action, charge, claim, demand, suit,
proceeding, petition, governmental investigation or arbitration by, against or
affecting any Loan Party or any property of any Loan Party that has not been
disclosed to Agent by a Loan Party in writing, and there shall have occurred no
development in any such action, charge, claim, demand, suit, proceeding,
petition, governmental investigation or arbitration that, in the opinion of
Agent, would reasonably be expected to have a Material Adverse Effect.
(J) Term Note B Investment. Agent has received or will receive on
the Closing Date complete copies of the Note Purchase Documents (including all
exhibits, schedules and disclosure letters referred to therein or delivered
pursuant thereto, if any) and all
45
EXHIBIT 10.1
amendments thereto, waivers relating thereto and other side letters or
agreements affecting the terms thereof. None of such documents and agreements
has been amended or supplemented, nor have any of the provisions thereof been
waived, except pursuant to a written agreement or instrument which has
heretofore been delivered to Agent. The transactions contemplated by the Note
Purchase Documents shall have been consummated in accordance with the terms
thereof including, without limitation, the issuance by Borrower, issued at par,
of Term Note B and, in consideration thereof, the receipt by Borrower from ACSL
of cash proceeds of not less than $30,000,000 (including fees and expenses of
AFCS and ACSL paid from such sum on or about the Closing Date in the aggregate
not to exceed $1,000,000), which shall be repayable not earlier than six (6)
years from the Closing Date, except as otherwise agreed to by Agent, and ACSL
shall have entered into the Intercreditor Agreement with Agent.
(K) Acquisition. Agent has received or will receive on the Closing
Date complete copies of the Acquisition Agreement (including all exhibits,
schedules and disclosure letters referred to therein or delivered pursuant
thereto, if any) and all amendments thereto, waivers relating thereto and other
side letters or agreements affecting the terms thereof. None of such documents
and agreements has been amended or supplemented, nor have any of the provisions
thereof been waived, except pursuant to a written agreement or instrument which
has heretofore been delivered to Agent. The transactions contemplated by the
Acquisition Agreement shall have been consummated in accordance with the terms
thereof, not less than $10,000,000 of the purchase price due thereunder shall
have been paid by Parent in the form of Common Stock and the Collateral
Assignment shall have been executed and delivered to Agent.
(L) Total Leverage Ratio. As of the Closing Date, the Total Leverage
Ratio of Borrower for the twelve (12) months ended November 30, 2004 (on a
combined pro forma basis after giving effect to the consummation of the
Acquisition) shall not exceed 4.00 to 1.00, nor shall EBITDA for such twelve
(12) month period (also on a combined pro forma basis after giving effect to the
consummation of the Acquisition) be less than $32,000,000) provided, however,
that such EBITDA may contain adjustments for non-recurring expenses, and certain
other pro forma adjustments, which have been reviewed by and deemed acceptable
to Agent, in its sole discretion.
SECTION 4. REPRESENTATIONS, WARRANTIES OF THE LOAN PARTIES
3.1. Representations and Warranties of Loan Parties. As a material
inducement to Agent and each Lender to enter into the Loan Documents, to make
and to continue to make Loans and to issue and continue to issue Lender Letters
of Credit or risk participations to the banks that issue Bank Letters of Credit,
each Loan Party as to itself (and Parent as to itself and the other Loan
Parties) represents, warrants to Agent and each Lender as follows:
(A) Organization and Power. Each of the Loan Parties is a legal
entity duly organized, validly existing and in good standing under the laws of
its state of formation. Each of the Loan Parties has all requisite corporate or
other organizational power and authority and all material licenses, permits,
approvals and authorizations necessary to own and operate its properties, to
carry on its businesses as now conducted and presently proposed to be conducted
and to carry out the Transactions, and is qualified to do business in the
jurisdictions listed on the
46
EXHIBIT 10.1
"Organizational Schedule" attached hereto as Schedule 4.1(A), which includes
every jurisdiction where the failure to so qualify might reasonably be expected
to have a Material Adverse Effect (other than Lifestyle, which is not in good
standing in Puerto Rico as of the Closing Date but will be restored to good
standing in such jurisdiction as soon as reasonably practicable thereafter and
in no event no later than July 1, 2005). Each of the Loan Parties has its
principal place of business as set forth on the Organizational Schedule. The
copies of the Charter Documents and By-Laws of the Loan Parties that have been
furnished to Agent reflect all amendments made thereto at any time prior to the
date of this Agreement and are correct and complete.
(B) Principal Business. The Loan Parties are primarily engaged in
the business of assembling and selling specialty footwear and related apparel
and accessories (the "Business").
(C) Financial Statements and Financial Projections.
(i) Financial Statements; Historical Statements. Parent has
delivered to Agent copies of its audited consolidated year-end financial
statements for and as of the end of the three (3) Fiscal Years ended
December 31, 2003 together, and unaudited balance sheet, income statements
and cash flow statements for the nine (9) month period ended September 30,
2004 (together, the "Financial Statements"). The Financial Statements were
compiled from the books and records maintained by Parent's management are
correct and complete and fairly represent the consolidated financial
condition of Parent as of their dates and the results of operations for
the fiscal periods then ended and have been prepared in accordance with
GAAP consistently applied.
(ii) EJ Financial Statements. Parent has delivered to Agent
the audited, combined balance sheet, income statement, statements of cash
flows and owner's equity of EJ Footwear and their Subsidiaries for the
fiscal year ended September 30, 2004 (the "EJ Financial Information"). To
the knowledge of Parent, the EJ Financial Information was derived from the
internal books and records of EJ Footwear and has been prepared in a
manner consistent with GAAP, and fairly presents, in all material
respects, the financial position of EJ Footwear and its Subsidiaries as of
such dates and the results of operations of EJ Footwear and its
Subsidiaries for the periods covered thereby, in each case on a combined
basis, and subject to the absence of footnotes and other presentation
items. The EJ Financial Information was prepared for the purpose of the
Acquisition Agreement and for the internal management purposes of EJ
Footwear. None of the companies that EJ Footwear is comprised of was
conducted on a stand-alone basis as a separate entity during the periods
indicated in the EJ Financial Information and the allocations and
estimates included in the EJ Financial Information are not necessarily
indicative of the costs that would have resulted if each of the companies
of EJ Footwear had been operated and conducted on a stand-alone basis as a
separate entity during such periods.
(iii) Pro Forma Balance Sheet. The unaudited pro forma balance
sheet of the Rocky on a Consolidated Basis as of December 31, 2004, a copy
of which has heretofore been delivered to Agent, gives pro forma effect to
the consummation of the
47
EXHIBIT 10.1
Transactions, all as if such events had occurred on such date (the "Pro
Forma Balance Sheet"). The Pro Forma Balance Sheet has been prepared in a
manner consistent with customary accounting practices and the financial
statements described in Section 4.1(c)(i) (subject to the absence of
footnotes required by GAAP and subject to normal year-end adjustments)
and, subject to stated assumptions made in good faith and having a
reasonable basis set forth therein, presents fairly the financial
condition of the Loan Parties on an unaudited pro forma basis as of the
date set forth therein after giving effect to the consummation of the
Transactions.
(iv) Financial Projections. The Loan Parties have delivered to
Agent financial projections of Rocky on a Consolidated Basis for the
period January 1, 2005 through December 31, 2008 derived from various
assumptions of the Loan Parties' management (the "Financial Projections").
The Financial Projections were prepared consistent with GAAP and customary
accounting procedures and reflect all information available to the
management of the Loan Parties at the time the Financial Projections were
produced. The Financial Projections in good faith project the Liabilities
of the Loan Parties upon consummation of the Transactions as of the
Closing Date
(v) Accuracy of Financial Statements. As of the dates of such
Financial Statements, Rocky on a Consolidated Basis did not have any
Liabilities, contingent or otherwise, or forward or long-term commitments
that are not disclosed in the Financial Statements or in the notes
thereto, and except as disclosed therein, as of such dates and as
disclosed on the Pro-Forma Balance Sheet as of the date hereof, there are
no unrealized or anticipated losses from any commitments that are
reasonably likely to have a Material Adverse Effect.
(D) Capitalization and Related Matters. As of the Closing Date and
immediately thereafter, the authorized capital stock of Parent is as set forth
on the "Capitalization Schedule" attached hereto as Schedule 4.1(D). As of the
Closing Date, the authorized capital stock or other equity interests of each of
the Subsidiaries of Parent and the number and ownership of all outstanding
capital stock or equity interests of each of the Loan Parties (other than
Parent) is set forth on Schedule 4.1(D). Except as set forth on the Schedule
4.1(D), as of the Closing Date, none of the Loan Parties will have outstanding
any stock or securities convertible into or exchangeable for any shares of its
capital stock and none will have outstanding any rights or options to subscribe
for or to purchase its capital stock (or other equity interests) or any stock or
securities convertible into or exchangeable for its capital stock (or other
equity interests). As of the Closing Date, none of the Loan Parties will be
subject to any obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire any shares of its capital stock or other equity interests. As
of the Closing, all of the outstanding shares and capital stock or other equity
interests of the Loan Parties will be validly issued, fully paid and
nonassessable. None of the Loan Parties have violated any applicable federal or
state securities Laws, in any material respect, in connection with the offer,
sale or issuance of any of its capital stock or other equity interests, and the
offer, sale and issuance of the Notes hereunder or of Term Note B do not require
registration under the Securities Act or any applicable state securities laws.
48
EXHIBIT 10.1
(E) Subsidiaries. The Loan Parties do not own, or hold any rights to
acquire, any shares of stock or any other security or interest in any other
Person, and the Loan Parties have no Subsidiaries, except in each case as set
forth on the Organizational Schedule.
(F) Authorization; No Breach. Except as set forth on Schedule
4.1(F), the execution, delivery and performance of this Agreement and the other
Loan Documents to which any of the Loan Parties is a party, and the consummation
of the Transactions have been duly authorized by each of the Loan Parties. The
execution and delivery by each of the Loan Parties of the Loan Documents and the
consummation of the Transactions do not and will not (i) conflict with or result
in a breach of the terms, conditions or provisions of, (ii) constitute a default
under, (iii) except as created pursuant to the Loan Documents and the Note
Purchase Documents result in the creation of any Lien upon any of the Loan
Parties' capital stock or assets pursuant to, (iv) give any third party the
right to accelerate any obligation under, or (v) result in a violation of, or
(vi) require any authorization, consent, approval, exemption or other action by
or notice to any Governmental Authority pursuant to, the Charter Documents or
By-laws of any of the Loan Parties, or any Law to which any of the Loan Parties
is subject, or any material contract or material instrument, or any order,
judgment or decree, to which any of the Loan Parties is a party or to which they
or their assets are subject.
(G) Governmental Approvals. Except as set forth on Schedule 4.1(G),
no registration with or consent or approval of, or other action by, any
Governmental Authority is or will be required in connection with the
consummation of the GMAC Transactions. Except as specifically provided by the
Acquisition Agreement, no registration with or consent or approval of, or other
action by, any Governmental Authority was required in connection with the
consummation of the Acquisition.
(H) Enforceability. This Agreement constitutes, and each of the
other Loan Documents when duly executed and delivered by each of the Loan
Parties who are parties thereto will constitute, legal, valid and binding
obligations of each of the Loan Parties enforceable in accordance with their
respective terms except as enforceability may be limited by applicable
bankruptcy, insolvency, moratorium or other laws affecting the enforcement of
creditors' rights generally and by general principles of equity.
(I) No Material Adverse Change. Since September 30, 2004, there has
been no Material Adverse Change with respect to either (a) Rocky and its
Subsidiaries, taken as a whole, prior to giving effect to the Acquisition, or
(b) EJ Footwear, Georgia Boot, XX Xxxxxx and their respective Subsidiaries,
taken as a whole, prior to giving effect to the Acquisition; provided, that the
consummation of any of the Transactions shall not, in and of itself, be deemed
to be a Material Adverse Change with respect to either or both of (a) or (b) of
this Section 4.1(I).
(J) Litigation. Except as described in the "Litigation Schedule"
attached hereto as Schedule 4.1(J), as of and after the Closing Date, there are
no actions, suits or proceedings at law or in equity or by or before any
arbitrator or any Governmental Authority now pending or, to the best knowledge
of the Loan Parties' management after reasonable inquiry, threatened against or
filed by or affecting Company, any of the Loan Parties or any of
49
EXHIBIT 10.1
their directors or officers or the businesses, assets or rights of any of the
Loan Parties which are reasonably likely to have a Material Adverse Effect.
(K) Compliance with Laws. The Loan Parties are not in violation in
any material respect of any applicable Law which any such violation (or such
violations, if any, in the aggregate) is reasonably likely to have a Material
Adverse Effect. The Loan Parties are not in, and the consummation of the
Transactions will not cause any, default concerning any judgment, order, writ,
injunction or decree of any Governmental Authority. As of and after the Closing
Date, there is no investigation, enforcement action or regulatory action pending
or, to the knowledge of the Loan Parties, threatened against or affecting any of
the Loan Parties by any Governmental Authority, except as set forth on the
Litigation Schedule, which is reasonably likely to have a Material Adverse
Effect. Except as set forth in the Litigation Schedule, as of and after the
Closing Date, there is no remedial or other corrective action that any of the
Loan Parties is required to take to remain in compliance with any judgment,
order, writ, injunction or decree of any Governmental Authority or to maintain
any material permits, approvals or licenses granted by any Governmental
Authority in full force and effect which is reasonably likely to have a Material
Adverse Effect. To the knowledge of Parent, during the past ten (10) years, none
of the executive officers, directors or management of Parent or any of its
Subsidiaries before giving effect to the Acquisition have been arrested or
convicted of any material crime nor have any of them been bankrupt or an officer
or director of a bankrupt corporation or other entity.
(L) Environmental Protection. Except as specified in "Environmental
Schedule" attached hereto as Schedule 4.1(L) and after giving effect to the GMAC
Transactions and the Acquisition, except for materials, conditions, operations
and noncompliance which is not reasonably likely to have a Material Adverse
Effect: (i) the business of the Loan Parties and each of their Subsidiaries, the
methods and means employed by the Loan Parties (and their Subsidiaries) in the
operation thereof (including all operations and conditions at or in the
properties of the Loan Parties or any of their Subsidiaries), the assets owned,
leased, managed, used, controlled, held or operated by the Loan Parties and/or
their Subsidiaries comply in all material respects with all applicable
Environmental Laws; (ii) with respect to the Properties and Facilities, and
except as disclosed in the Environmental Schedule, the Loan Parties (and their
Subsidiaries) have obtained, possess, and are in compliance in all material
respects with all permits, licenses, reviews, certifications, approvals,
registrations, consents, and any other authorizations required of a Loan Party
(or any Subsidiary thereof) or other party under any Environmental Laws; (iii)
the Loan Parties or any of their Subsidiaries have not received (x) any claim or
notice of violation, lien, complaint, suit, order or other claim or notice to
the effect that the Loan Parties (or any of their Subsidiaries) are or may be
liable to any Person as a result of (A) the environmental condition of any of
their Properties and Facilities or any other property, or (B) the release or
threatened release of any Pollutant, or (y) any letter or request for
information under Section 104 of the CERCLA, or comparable state Laws, and to
the best of the any of Loan Parties' knowledge, none of the operations of the
Loan Parties or any of their Subsidiaries is the subject of any investigation by
a Governmental Authority evaluating whether any remedial action is needed to
respond to a release or threatened release of any Pollutant at the Properties
and Facilities or at any other location, including any location to which the
Loan Parties or any of their Subsidiaries have transported, or arranged for the
transportation of, any Pollutants with respect to the Properties and Facilities;
(iv) except as disclosed in the Environmental Schedule,
50
EXHIBIT 10.1
neither the Loan Parties, nor any of their Subsidiaries nor, to the knowledge of
the Loan Parties, any prior owner or operator has incurred in the past, or is
now subject to, any Environmental Liabilities; (v) except as disclosed in the
Environmental Schedule, to the knowledge of the Loan Parties, there are no
Liens, covenants, deed restrictions, notice or registration requirements, or
other limitations applicable to the Properties and Facilities, based upon any
Environmental Laws or other legal obligations; (vi) to the knowledge of the Loan
Parties, there are no USTs located in, at, on, or under the Properties and
Facilities or other than the USTs identified in the Environmental Schedule as
USTs; and, to the knowledge of the Loan Parties, each of those USTs is in
compliance in all material respects with all Environmental Laws and other legal
obligations; and (vii) except as disclosed in the Environmental Schedule, to the
knowledge of the Loan Parties, there are no PCBs, lead paint, asbestos (of any
type or form), or materials, articles or products containing PCBs, lead paint or
asbestos, located in, at, on, under, a part of, or otherwise related to the
Properties and Facilities, and, to the knowledge of the Loan Parties, all of the
PCBs, lead paint, asbestos, and materials, articles and products containing
PCBs, lead paint or asbestos identified in the Environmental Schedule are in
compliance in all material respects with all Environmental Laws and other legal
obligations.
(M) Legal Investments; Use of Proceeds. The Loan Parties will use
the proceeds from the Loans to finance, in part, the Acquisition, repay debt of
the Loan Parties and provide for the ongoing working capital and general
corporate requirements of the Loan Parties. The Loan Parties are not engaged in
the business of extending credit for the purpose of purchasing or carrying any
"margin stock" or "margin security" (within the meaning of Regulations T, U or X
issued by the Board of Governors of the Federal Reserve System), and no proceeds
of the Loans will be used to purchase or carry any margin stock or margin
security or to extend credit to others for the purpose of purchasing or carrying
any margin stock or margin security.
(N) Taxes. The Loan Parties have filed or caused to be filed all
federal, state and local tax returns that are required to be filed by it and
their Subsidiaries, and have paid or caused to be paid all taxes shown to be due
and payable on such returns or on any assessments received by it, including
payroll taxes, other than such Charges (i) which are being contested in good
faith by such Person, as the case may be, by appropriate proceedings diligently
instituted and conducted and without the risk of the imposition of a Lien with
respect to a material portion of the Collateral and (ii) with respect to which a
reserve or other appropriate provision, if any, as is required in conformity
with GAAP shall have been made. Parent has no knowledge of any proposed tax
assessment against Parent or any of its Subsidiaries that is reasonably likely
to have a Material Adverse Effect.
(O) Labor and Employment. Except where noncompliance is not
reasonably likely to have a Material Adverse Effect, each Loan Party, ERISA
Affiliate and each Plan is in compliance in all material respects with those
provisions of ERISA, the Code, the Age Discrimination in Employment Act, and the
regulations and published interpretations thereunder that are applicable to the
Loan Party, or ERISA Affiliate or any such Plan. As of the date hereof, no
Reportable Event has occurred with respect to any Plan maintained by any Loan
Party or ERISA Affiliate as to which said Loan Party or ERISA Affiliate is or
was required to file a report with the PBGC. No Plan has any amount of unfunded
benefit liabilities (within the
51
EXHIBIT 10.1
meaning of Section 4001(a)(18) of ERISA) or any accumulated funding deficiency
(within the meaning of Section 302(a)(2) of ERISA), whether or not waived, and
none of the Loan Parties, nor any ERISA Affiliate or any member of the
Controlled Group has incurred or expects to incur any withdrawal liability under
Subtitle E of Title IV of ERISA to a Multiemployer Plan. Except where
noncompliance is not reasonably likely to have a Material Adverse Effect, the
Loan Parties and ERISA Affiliates are in compliance in all material respects
with all labor and employment laws, rules, regulations and requirements of all
applicable domestic and foreign jurisdictions. There are no pending or
threatened labor disputes, work stoppages or strikes either (x) as of the
Closing Date or (y) thereafter that are reasonably likely to have a Material
Adverse Effect.
(P) Investment Company Act; Public Utility Holding Company Act. None
of the Loan Parties are (i) an "investment company" or "controlled" by an
investment company within the meaning of the Investment Company Act of 1940, as
amended, or (ii) a "holding company" or a "subsidiary company" of a "holding
company" or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
(Q) Properties; Security Interests. The Loan Parties have good (and,
solely as to real estate, marketable) title to, or valid leasehold interests in,
or valid licenses to use, all of the material assets and properties used or
useful by the Loan Parties in the Business (collectively, the "Properties and
Facilities"), subject to no Liens except for Permitted Liens. On and after the
Closing Date, Agent has a valid, perfected and, except for Liens set forth in
clauses (c), (e), (g) or (h) of the definition of Permitted Liens, first
priority Liens in the Properties and Facilities, all of which constitutes
Collateral (except to the extent any of the same constitutes Excluded Property),
securing the payment of the Obligations, and such Liens are entitled to all of
the rights, priorities and benefits afforded by the UCC or other applicable Law
as enacted in any relevant jurisdiction which relates to perfected Liens. All of
the Properties and Facilities are in good repair, working order and condition.
As of the Closing Date, all real estate owned or leased by the Loan Parties is
listed on the "Properties Schedule," attached hereto as Schedule 4.1(Q).
(R) Intellectual Property; Licenses. Each of the Loan Parties
possesses or licenses all Proprietary Rights necessary to conduct the Business
as heretofore conducted or as proposed to be conducted by it. All Proprietary
Rights registered in the name of the Loan Parties and applications therefor
filed by the Loan Parties are listed on the "Intellectual Property Schedule,"
attached hereto as Schedule 4.1(R). No event has occurred that permits, or after
notice or lapse of time or both would permit, the revocation or termination of
any of the foregoing, which taken in isolation or when considered with all other
such revocations or terminations could have a Material Adverse Effect. None of
the Proprietary Rights owned by or used under license by the Loan Parties
infringes, misappropriates or conflicts with any Proprietary Rights or other
rights of any other Person; no products or services sold by any of the Loan
Parties in connection with the Business is infringing on, misappropriating or
making any unlawful or unauthorized use of any Proprietary Rights or other
rights of another Person; and no other Person is infringing upon,
misappropriating or making any unlawful or unauthorized use of any Proprietary
Rights of any of the Loan Parties; except, in each case, to the extent any such
infringement, misappropriation, conflict or unlawful or unauthorized use could
not reasonably be
52
EXHIBIT 10.1
expected to have a Material Adverse Effect. None of the Loan Parties has notice
or knowledge of any facts or any past, present or threatened occurrence that
could preclude or impair the Loan Parties' ability to retain or obtain any
authorization necessary for the operation of the Business.
(S) Solvency. After giving effect to the Transactions, (i) the fair
value of the assets of the Loan Parties, at a fair valuation, will exceed their
debts and Liabilities, subordinated, contingent or otherwise, (ii) the present
fair saleable value of the property of the Loan Parties will be greater than the
amount that will be required to pay the probable liability of their debts and
other Liabilities, subordinated, contingent or otherwise, as such debts and
other Liabilities become absolute and matured, (iii) the Loan Parties will be
able to pay their debts and Liabilities, subordinated, contingent or otherwise,
as such debts and Liabilities become absolute and matured, and (iv) the Loan
Parties will not have unreasonably small capital with which to conduct the
business in which they are engaged as such business is now conducted and is
proposed to be conducted following the Closing Date. The determination of
whether a Person is solvent shall take into account all such Person's properties
and liabilities regardless of whether, or the amount at which, any such property
or liability is included on a balance sheet of such Person prepared in
accordance with GAAP, including properties such as contingent contribution or
subrogation rights, business prospects, distribution channels and goodwill. The
determination of the sum of a Person's properties at a fair valuation or the
present fair saleable value of a Person's properties shall be made on a going
concern basis, unless at the time of such determination the liquidation of the
business in which such properties are used or useful is in process or is
reasonably anticipated. In computing the amount of contingent or unrealized
properties or contingent or unliquidated liabilities at any time, such
properties and liabilities will be computed at the amounts which, in light of
all the facts and circumstances existing at such time, represent the amount that
reasonably can be expected to become realized properties or matured liabilities,
as the case may be. In computing the amount that would be required to pay a
Person's probable liability on its existing debts as they become absolute and
matured, reasonable valuation techniques, including a present value analysis,
shall be applied using such rates over such periods as are appropriate under the
circumstances, and it is understood that, in appropriate circumstances, the
present value of contingent liabilities or obligations under Guaranties may be
zero.
(T) Complete Disclosure. All factual information furnished by or on
behalf of the Loan Parties to Agent for purposes of or in connection with the
GMAC Transactions, or any of the other Transactions, is, to Parent's knowledge,
and all other such factual information hereafter furnished by or on behalf of
the Loan Parties, except to the extent any of the same relates expressly to any
earlier date, will be, true and accurate in all material respects on the date as
of which such information is furnished and not incomplete by omitting to state
any fact necessary to make such information not misleading at such time in light
of the circumstances under which such information was provided.
(U) Side Agreements. Except as set forth in Schedule 4.1(U), as of
the Closing Date, none of the Loan Parties nor any Affiliate of the Loan Parties
nor any director, officer or employee of the Loan Parties or any of their
Affiliates, respectively, has entered into, as of the date hereof, any side
agreement, either oral or written, with any individual or business, pursuant to
which the director, officer, employee, Loan Party or Affiliate agreed to do
anything
53
EXHIBIT 10.1
beyond the requirements of the formal, written contracts executed by the Loan
Parties and disclosed to the Lenders and Agent herein.
(V) Broker's or Finder's Commissions. No broker's or finder's or
placement fee or commission will be payable to any broker or agent engaged by
the Loan Parties or any of their officers, directors or agents with respect to
the GMAC Transactions, except for fees payable to Agent. The Loan Parties agree
to indemnify Agent and Lenders and to hold them harmless from and against any
claim, demand or liability for broker's or finder's or placement fees or similar
commissions, whether or not payable by the Loan Parties, alleged to have been
incurred in connection with the GMAC Transactions, other than any broker's or
finder's fees payable to Persons engaged by Agent or Lenders without the
knowledge of the Loan Parties.
(W) Material Contracts. Schedule 4.1(W) lists, as of the Closing
Date, each material contract to which the Loan Parties are a party, by which any
of them or their respective properties is bound or to which any of them is
subject (collectively, "Material Contracts"), and also indicates the parties,
subject matter and term thereof. As of the Closing Date, (i) each Material
Contract is in full force and effect and is enforceable by the Loan Party that
is a party thereto in accordance with its terms, and (ii) none of the Loan
Parties (nor, to the knowledge of the Loan Parties, any other party thereto) is
in breach of or default under any Material Contract in any material respect or
has given notice of termination or cancellation of any Material Contract.
(X) Foreign Assets Control Regulations, Etc. None of the Loan
Parties are an "enemy" or an "ally of the enemy" within the meaning of Section 2
of the Trading with the Enemy Act of the United States of America (50 U.S.C.
App. Sections 1 et seq.), as amended. None of the Loan Parties are in violation
of (a) the Trading with the Enemy Act, as amended, (b) any of the foreign assets
control regulations of the United States Treasury Department (31 CFR, Subtitle
B, Chapter V, as amended) or any enabling legislation or executive order
relating thereto or (c) the USA Patriot Act, Title III of Pub. L. 107-56, signed
into law October 26, 2001 (the "Patriot Act"). No Loan Party (i) is a blocked
person described in section 1 of the Anti-Terrorism Order or (ii) to the best of
its knowledge, engages in any dealings or transactions, or is otherwise
associated, with any such blocked person.
(Y) Parent SEC Reports.
(i) Parent has filed all required material forms, reports,
schedules, statements and other documents (including exhibits and other
information incorporated therein) with the SEC since December 31, 2001
(collectively, the "Parent SEC Reports"). As of their respective dates,
or, if amended, as of the date of the last such amendment, each Parent SEC
Report, (a) complied in all material respects with the applicable
requirements of the Securities Act, the Securities Exchange Act, and the
rules and regulations thereunder applicable to such Parent SEC Reports and
(b) did not, and in the case of such forms, reports, schedules, statements
and other documents filed after the date hereof will not as of the time
they are filed, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements made therein, in the light of the circumstances under which
they were made,
54
EXHIBIT 10.1
not misleading. Each of the consolidated financial statements included in
or incorporated by reference into the Parent SEC Reports (including the
related notes and schedules) were, and in the case of such consolidated
financial statements filed after the date hereof will be, prepared
materially in accordance with the published rules and regulations of the
SEC, and fairly presents (as to such previously filed items) in all
material respects the consolidated financial position of Parent and its
Subsidiaries as of its date, and each of the consolidated statements of
operations, stockholders' equity and cash flows included in or
incorporated by reference into the Parent SEC Reports (including any
related notes and schedules) fairly presents (as to such previously filed
items) in all material respects the financial position, results of
operations and cash flows, as the case may be, of Parent and its
Subsidiaries for the periods set forth therein, in each case in accordance
with GAAP consistently applied during the periods involved, except as may
be noted therein (and subject, in the case of unaudited statements, to
normal year-end audit adjustments and the absence of footnotes).
(ii) As of the Closing Date, (x) there is no investigation by
the SEC pending or threatened with respect to any Parent SEC Report, (y)
none of the Parent SEC Reports are the subject of open, unresolved
comments from the SEC and (z) to the knowledge of Parent, there is no
material unresolved violation of the Securities Exchange Act or the
published rules and regulations of the SEC asserted by the SEC with
respect to the Parent SEC Reports.
(Z) Current Business Practices. None of the Loan Parties, nor, to
the knowledge of the Loan Parties, any of their respective directors, officers,
agents, employees or representatives in their capacities as such has knowingly
(or unknowingly, in the case where such conduct is reasonably likely to have had
a Material Adverse Effect): (i) used any funds for unlawful contributions,
unlawful gifts, unlawful entertainment or other unlawful expenses relating to
political activity; (ii) directly or indirectly paid or delivered any fee,
commission or other sum of money or item of property, however characterized, to
any finder, agent or other party acting on behalf of or under the auspices of a
governmental official or Governmental Authority, in the US or any other country,
which is in any manner related to the Business that was illegal under federal,
state or local laws of the US or any other country having jurisdiction; (iii)
made any payment to any customer or subcontractor of the Business or to any
officer, director, partner, employee or agent of any such customer or
subcontractor, for the unlawful influence of any such customer or subcontractor
or any such officer, director, partner, employee or agent; (iv) engaged in any
other unlawful reciprocal practice, or made any other unlawful payment or given
any other unlawful consideration to any such customer or subcontractor or any
such officer, director, partner, employee or agent, in respect of the Business;
or (v) except as set forth on Schedule 4.1(Z), violated any federal, state or
local campaign finance, election or similar laws.
3.2. Absolute Reliance on the Representations and Warranties. All
representations and warranties contained in this Agreement and any financial
statements, instruments, certificates, schedules or other documents delivered in
connection herewith, shall survive the execution and delivery of this Agreement,
regardless of any investigation made by Agent or Lenders or on Agent's or
Lenders' behalf.
55
EXHIBIT 10.1
SECTION 5. COVENANTS
4.1. Affirmative Covenants. Each Loan Party (unless otherwise specified)
covenants that, so long as any of the Commitments hereunder shall be in effect
and until indefeasible payment in full, in cash, of all Obligations and
termination of all Lender Letters of Credit, each of the Loan Parties shall:
(A) Existence. Do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its legal existence.
(B) Businesses and Properties; Compliance with Laws. At all times
(i) do or cause to be done all things necessary to preserve, renew and keep in
full force and effect the rights, licenses, registrations, permits,
certifications, approvals, consents, franchises, Patents, Copyrights, Trademarks
and trade names, and any other trade names that are material to the conduct of
its businesses; (ii) comply in all material respects with all Laws applicable to
the operation of such business, including but not limited to, all Environmental
Laws, whether now in effect or hereafter enacted, (iii) take all action that may
be required to obtain, preserve, renew and extend all rights, Patents,
Copyrights, Trademarks, tradenames, franchises, registrations, certifications,
approvals, consents, licenses, permits and any other authorizations that are
material to the operation of such business, (iv) maintain, preserve and protect
all property material to the conduct of such business, and (v) except for
obsolete, worn-out equipment or equipment no longer useful in the operation of
the Business and ordinary wear and tear, keep its property in good repair,
working order and condition and from time to time make, or cause to be made, all
needful and proper repairs, renewals, additions, improvements and replacements
thereto deemed necessary by Parent or such Loan Party in order that the Business
may be properly conducted at all times.
(C) Insurance. Maintain insurance required by the Loan Documents and
any and all contracts entered into by the Loan Parties, including but not
limited to: (i) coverage on their insurable properties (including all Inventory,
Equipment and real property) against the perils of fire, theft, hazard and
burglary; (ii) public liability; (iii) workers' compensation; (iv) business
interruption; (v) product liability; and (vi) such other risks as are customary
with companies similarly situated and in the same or similar business as that of
the Loan Parties under policies issued by financially sound and reputable
insurers in such amounts as are customary with companies similarly situated and
in the same or similar business. Each of the Loan Parties shall pay or shall
cause to be paid all insurance premiums payable by it or its Subsidiaries and,
upon Agent's request, shall deliver a copy of the policy or policies of such
insurance (or certificates of insurance with copies of such policies) to Agent.
All insurance policies of the Loan Parties shall contain endorsements, in form
and substance reasonably satisfactory to Agent, providing that the insurance
shall not be cancelable except upon prior written notice to Agent given within a
period satisfactory to Agent. Agent, on behalf of Lenders, shall be shown as a
loss payee and an additional named insured party under all such insurance
policies (as well as under all business interruption insurance of Loan Parties),
in each case pursuant to appropriate endorsements in form and substance
satisfactory to Agent. No notice of cancellation has been
56
EXHIBIT 10.1
received with respect to such policies and each Loan Party, and each of its
Subsidiaries, is in material compliance with all conditions contained in such
policies. Loan Parties shall provide Agent evidence of the insurance coverage
and of the assignments and endorsements required by this Agreement immediately
upon request by Agent and upon renewal of any existing policy. If Borrower
elects to change insurance carriers, policies or coverage amounts, Borrower
shall notify Agent and provide Agent with evidence of the updated insurance
coverage and of the assignments and endorsements required by this Agreement. In
the event Borrower fails to provide Agent with evidence of the insurance
coverage required by this Agreement, Agent may, but is not required to, purchase
insurance at Loan Parties' expense to protect Agent's and the Lender's interests
in the Collateral. This insurance may, but need not, protect any Loan Party's
interests. The coverage purchased by Agent may not pay any claim made by any
Loan Party or any claim that is made against any Loan Party in connection with
the Collateral. Loan Parties may later cancel any insurance purchased by Agent,
but only after providing Agent with evidence that the applicable Loan Party has
obtained insurance as required by this Agreement. If Agent purchases insurance
for the Collateral, Loan Parties will be responsible for the costs of that
insurance, including interest thereon and other charges imposed on Agent in
connection with the placement of the insurance, until the effective date of the
cancellation or expiration of the insurance, and such costs may be added to the
Obligations. The costs of the insurance may be more than the cost of insurance
Loan Parties are able to obtain on their own. Any proceeds received from any
policies of insurance relating to Collateral shall be applied to the Obligations
in accordance with Section 2.4(E); provided, however, if Borrower reasonably
expects the proceeds of any insurance to be reinvested within one hundred eighty
(180) days to repair or replace such assets with like assets, to the extent not
paid directly to Agent by the applicable insurance company, Borrower shall
deliver such insurance proceeds to Agent to be applied to the Revolving Loan and
Agent shall establish a reserve against available funds for borrowing purposes
under the Revolving Loan for such amount, until such time as such proceeds have
been re-borrowed or applied to other Obligations as set forth herein and
Borrower may, so long as no Default or Event of Default shall have occurred and
be continuing, reborrow such proceeds only for such repair or replacement. If
Borrower fails to reinvest such insurance proceeds within one hundred eighty
(180) days, Borrower hereby authorizes Agent and Lenders to make a Revolving
Advance in the amount of the remaining reserve to repay the Loans in the manner
set forth in Section 2.4(E).
(D) Obligations and Taxes. Pay and discharge promptly when due all
taxes, assessments and governmental charges or levies imposed upon them or upon
their income or profits or in respect of their properties before the same shall
become delinquent or in default, as well as all lawful claims for labor,
materials and supplies or otherwise, which, if unpaid, might give rise to Liens
or charges upon such properties or any part thereof; provided, however, that the
Loan Parties shall not be required to pay and discharge or to cause to be paid
and discharged any such tax, assessment, charge, levy or claim so long as (i)
the validity or amount thereof shall be contested in good faith by appropriate
proceedings and (ii) the Loan Parties shall have set aside on their books
adequate reserves with respect thereto in accordance with GAAP.
(E) Financial Statements; Reports. Parent will furnish to Agent:
57
EXHIBIT 10.1
(a) Annual Financial Statements. Within ninety (90) days after
the end of each Fiscal Year of Rocky on a Consolidated Basis, financial
statements of Rocky on a Consolidated Basis including, but not limited to,
statements of income and stockholders' equity and cash flow from the beginning
of the current Fiscal Year to the end of such Fiscal Year and the balance sheet
as at the end of such Fiscal Year, all prepared in accordance with GAAP applied
on a basis consistent with prior practices, and in reasonable detail and
reported upon without qualification by an independent certified public
accounting firm selected by Parent and satisfactory to Agent (the
"Accountants"). The report of the Accountants shall be accompanied by a
statement of the Accountants certifying that (i) they have caused the Loan
Agreement to be reviewed, (ii) in making the examination upon which such report
was based either no information came to their attention which to their knowledge
constituted an Event of Default under this Agreement or any related agreement
or, if such information came to their attention, specifying any such Event of
Default, its nature, when it occurred and whether it is continuing, and such
report shall contain or have appended thereto calculations which set forth Loan
Parties' compliance with each covenant set forth in Section 5.3. In addition,
the reports shall be accompanied by a certificate of Parent's Chief Financial
Officer which shall state that, based on an examination sufficient to permit him
to make an informed statement, no Default or Event of Default exists, or, if
such is not the case, specifying such Default or Event of Default, its nature,
when it occurred, whether it is continuing and the steps being taken by Loan
Parties with respect to such event, and such certificate shall have appended
thereto calculations which set forth Loan Parties' compliance with the covenant
set forth. The foregoing certificate of Parent's Chief Financial Officer shall
also set forth a calculation of the Total Leverage Ratio for purposes of
determining the Applicable Margin with respect to the then current Calculation
Period.
(b) Quarterly Financial Statements. Within forty-five (45)
days after the end of each fiscal quarter, other than the fourth fiscal quarter
of each Fiscal Year, an unaudited balance sheet of Rocky on a Consolidated Basis
and unaudited statements of income and stockholders' equity and cash flow of
Rocky on a Consolidated Basis reflecting results of operations from the
beginning of the Fiscal Year to the end of such quarter and for such quarter,
prepared on a basis consistent with prior practices and complete and correct in
all material respects, subject to normal and recurring year end adjustments that
individually and in the aggregate are not material to the business of Rocky on a
Consolidated Basis. Each such balance sheet, statement of income and
stockholders' equity and statement of cash flow shall set forth a comparison of
the figures for (w) the current fiscal period and (x) the current year-to-date
with the figures for (y) the same fiscal period and year-to-date period of the
immediately preceding Fiscal Year and (z) the projections for such fiscal period
and year-to-date period delivered pursuant to Section 5.1(E)(e). The financial
statements shall be accompanied by a certificate signed by the Chief Financial
Officer of Parent, which shall state that, based on an examination sufficient to
permit him to make an informed statement, no Default or Event of Default exists,
or, if such is not the case, specifying such Default or Event of Default, its
nature, when it occurred, whether it is continuing and the steps being taken by
Loan Parties with respect to such default and, such certificate shall have
appended thereto calculations which set forth Loan Parties' compliance with the
covenant set forth in Section 5.3. The foregoing certificate of Parent's Chief
Financial Officer shall also set forth a calculation of the Total Leverage Ratio
for purposes of determining the Applicable Margin with respect to the then
current Calculation Period.
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EXHIBIT 10.1
(c) Monthly Financial Statements. Within thirty (30) days
after the end of each month, an unaudited balance sheet of Rocky on a
Consolidated Basis and unaudited statements of income and stockholders' equity
of Rocky on a Consolidated Basis reflecting results of operations from the
beginning of the Fiscal Year to the end of such month and for such month,
prepared on a basis consistent with prior practices and complete and correct in
all material respects, subject to normal and recurring year end adjustments that
individually and in the aggregate are not material to the business of Loan
Parties. Each such balance sheet, statement of income and stockholders' equity
shall set forth a comparison of the figures for (w) the current fiscal period
and (x) the current year-to-date with the figures for (y) the same fiscal period
and year-to-date period of the immediately preceding Fiscal Year and (z) the
projections for such fiscal period and year-to-date period delivered pursuant to
Section 5.1(E)(e). The financial statements shall be accompanied by a
certificate of Parent's Chief Financial Officer, which shall state that, based
on an examination sufficient to permit him to make an informed statement, no
Default or Event of Default exists, or, if such is not the case, specifying such
Default or Event of Default, its nature, when it occurred, whether it is
continuing and the steps being taken by Loan Parties with respect to such event
and, such certificate shall have appended thereto calculations which set forth
Loan Parties' compliance with the covenants set forth in Section 5.3.
(d) Accountant Reports. Promptly upon the receipt thereof,
copies of all reports, if any, submitted to the Loan Parties by independent
certified public accountants in connection with each annual, interim or special
audit or review of the financial statements of the Loan Parties made by such
accountants, including but not limited to, any comment letter submitted by such
accountants to management in connection with any annual review.
(e) Projections. As soon as available, but in no event later
than December 31 of each Fiscal Year, a projection of the balance sheets, and
income, retained earnings and cash flow statements, respectively, for the then
current Fiscal Year (which shall be provided in monthly format) and comparable
actual and budgeted figures for the current year, each of the foregoing for
Rocky on a Consolidated Basis, and within ten (10) days after any material
update or amendment of any such plan or forecast, a copy of such update or
amendment, including a description of and reasons for such update or amendment.
Each such projection, update or amendment shall be accompanied by a written
certificate signed by Parent's Chief Financial Officer to the effect that it has
been prepared on the basis of the Loan Parties' historical financial statements
and records, together with the assumptions set forth in such projection and that
it reflects expectations, after reasonable analysis, of the Loan Parties'
management as to the matters set forth therein.
(f) Variances From Operating Budget. Upon request of Agent,
concurrently with the delivery of the financial statements referred to in
Sections 5.1(E)(a), (b), and (c), a written report summarizing all material
variances from budgets submitted by Loan Parties pursuant to Section 5.1(E)(e)
and a discussion and analysis by Parent's management with respect to such
variances.
(g) Borrowing Base Certificate. (A) on the Tuesday immediately
after the second Saturday following the Closing Date, a Borrowing Base
Certificate calculated as of the last day of the second immediately preceding
week and (B) weekly thereafter (or more
59
EXHIBIT 10.1
frequently if required by Agent), a Borrowing Base Certificate calculated as of
the last day of the immediately preceding week.
(h) Collateral Reports. On or before the thirtieth (30th) day
of each month as and for the prior month (a) accounts receivable agings (which
shall be in summary form unless a more detailed format is requested by the
Agent), (b) accounts payable agings, and (c) Inventory reports. In addition,
each Loan Party shall deliver to Agent at such intervals as Agent may require:
(i) confirmatory assignment schedules, (ii) copies of Customer's invoices, (iii)
evidence of shipment or delivery, and (iv) such further schedules, documents
and/or information regarding the Collateral as Agent may require including,
without limitation, trial balances and test verifications. Agent shall have the
right to confirm and verify all Accounts by any manner and through any medium it
considers advisable and do whatever it may deem reasonably necessary to protect
its interests hereunder. The items to be provided under Section 5.1(E)(g) and
(h) are to be in form satisfactory to Agent and delivered to Agent from time to
time solely for Agent's convenience in maintaining records of the Collateral,
and any Loan Party's failure to deliver any of such items to Agent shall not
affect, terminate, modify or otherwise limit Agent's Lien with respect to the
Collateral.
(i) Additional Information. Promptly, from time to time, such
other information regarding the compliance by the Loan Parties with the terms of
this Agreement and the other Loan Documents or the affairs, operations or
condition (financial or otherwise) of the Loan Parties, and any tax returns
filed by the Loan Parties, all as Agent may reasonably request and that is
capable of being obtained, produced or generated by the Loan Parties or of which
the Loan Parties have knowledge.
(j) Reconciliation Statements. If, as a result of any change
in accounting principles and policies from those used in the preparation of the
audited financial statements referred to in Section 5.1(E) hereof (other than an
immaterial change in GAAP), the consolidated financial statements of the Loan
Parties delivered pursuant to Section 5.1(E) (a), (b) or (e) hereof will differ
in any material respect from the consolidated financial statements that would
have been delivered pursuant to such Sections had no such change in accounting
principles and policies been made, then (A) together with the first delivery of
financial statements pursuant to Section 5.1(E) (a), (b) or (e) hereof following
such change, consolidated financial statements of the Loan Parties for (y) the
current Fiscal Year to the effective date of such change and (z) the two full
Fiscal Years immediately preceding the Fiscal Year in which such change is made,
in each case prepared on a pro forma basis as if such change had been in effect
during such periods, and (B) together with each delivery of financial statements
pursuant to Section 5.1(E) (a), (b) or (e) hereof following such change, a
written statement of the chief financial officer of each Loan Party setting
forth the differences (including any differences that would affect any
calculations relating to the financial covenants set forth in Section 5.3) which
would have resulted if such financial statements had been prepared without
giving effect to such change.
(F) Litigation and Other Notices. Give Agent written notice (and
copies, as applicable) of the following promptly after any Loan Party has or
receives notice or knowledge of the following:
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EXHIBIT 10.1
(a) Orders; Injunctions. The issuance by any court or
Governmental Authority of any injunction, order, decision or other restraint
prohibiting, or having the effect of prohibiting, the making of any loan or the
initiation of any litigation or similar proceeding seeking any such injunction,
order or other restraint.
(b) Litigation. The notice, filing or commencement of any
action, suit or proceeding against any of the Loan Parties whether at law or in
equity or by or before any court or any Federal, state, municipal or other
Governmental Authority and that, if adversely determined against any of the Loan
Parties, could result in uninsured liability in excess of $750,000 in the
aggregate and notice of any material development in such matter.
(G) Environmental Matters. Promptly notify Agent in writing upon the
occurrence of (A) Any Release or threatened Release of any Pollutant required to
be reported by a Loan Party or any of its Subsidiaries to any Governmental
Authority under any applicable Environmental Laws with respect to the Properties
and Facilities or any other property, (B) any Removal, Remedial or Response
action taken by any of the Loan Parties or any of their Subsidiaries or any
other Person in response to any Pollutant in, at, on or under, a part of or
about any of the Properties and Facilities or any other property, (C) any
violation by any of the Loan Parties of any Environmental Law, in each case, is
reasonably likely to have a Material Adverse Effect, or (D) any notice, claim or
other information received by, or knowledge of which is possessed by, a Loan
Party that any of the Loan Parties or any of their Subsidiaries might be subject
to an Environmental Liability that could result in uninsured Liability in excess
of $500,000.
(H) Default; Material Occurrences. Promptly notify Agent in writing
upon the occurrence of (a) any Event of Default or Default, specifying the
nature and extent thereof and the action (if any) that is proposed to be taken
with respect thereto; (b) any event of default under the Note Purchase
Agreement; (c) any event which with the giving of notice or lapse of time, or
both, would constitute an event of default under the Note Purchase Agreement;
(d) any event, development or circumstance whereby any financial statements or
other reports furnished to Agent fail in any material respect to present fairly,
in accordance with GAAP consistently applied, the financial condition or
operating results of any Loan Party as of the date of such statements; (e) any
accumulated retirement plan funding deficiency which, if such deficiency
continued for two plan years and was not corrected as provided in Section 4971
of the IRC, could subject any Loan Party to a tax imposed by Section 4971 of the
IRC; (f) each and every default by any Loan Party which might result in the
acceleration of the maturity of any Indebtedness with an outstanding balance in
excess of $500,000, including the names and addresses of the holders of such
Indebtedness with respect to which there is a default existing or with respect
to which the maturity has been or could be accelerated, and the amount of such
Indebtedness; (g) termination of any of the Material License Agreements which
such termination is reasonably likely to have a Material Adverse Effect and (h)
any other development in the business or affairs of any Loan Party which is
reasonably likely to have a Material Adverse Effect; in each case describing the
nature thereof and the action Loan Parties propose to take with respect thereto.
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EXHIBIT 10.1
(I) ERISA. Comply in all material respects with the applicable
provisions of ERISA and the provisions of the Code relating thereto and furnish
to Agent, and if requested by them in writing, furnish to Lenders, (i) as soon
as possible, and in any event within thirty (30) days after the Loan Parties
know or have reason to know thereof, notice of (A) the establishment by the Loan
Parties or ERISA Affiliate of any Plan, (B) the commencement by the Loan Parties
or ERISA Affiliate of contributions to a Multiemployer Plan, (C) any failure by
the Loan Parties or any of their ERISA Affiliates to make contributions required
by Section 302 of ERISA (whether or not such requirement is waived pursuant to
Section 303 of ERISA), or (D) the occurrence of any Reportable Event with
respect to any Plan or Multiemployer Plan for which the reporting requirement is
not waived, together with a statement of an officer setting forth details as to
such Reportable Event and the action that the Loan Parties propose to take with
respect thereto, together with a copy of the notice of such Reportable Event
given to the PBGC if any such notice was provided by the Loan Parties, and (ii)
promptly after receipt thereof, a copy of any notice a Loan Party or ERISA
Affiliate may receive from the PBGC relating to the intention of the PBGC to
terminate any Plan or Multiemployer Plan, or to appoint a trustee to administer
any Plan or Multiemployer Plan, and (iii) promptly after receipt thereof, a copy
of any notice of withdrawal liability from any Multiemployer Plan.
(J) Maintaining Records; Access to Premises and Inspections.
Maintain financial records in accordance with generally accepted practices and,
upon reasonable notice, at all reasonable times and as often as Agent may
reasonably request (and at any time after the occurrence and during the
continuation of a Default or Event of Default), permit any authorized
representative designated by Agent, subject to the same confidentiality
provisions for Agent and Lenders as set forth in this Agreement, to visit and
inspect the properties and financial records of the Loan Parties and to make
extracts from such financial records, all at the Loan Parties' reasonable
expense, and permit any authorized representative designated by Agent to discuss
the affairs, finances and condition of the Loan Parties with the Loan Parties'
chief financial officers and such other officers as the Loan Parties shall deem
appropriate, and the Loan Parties' independent public accountants.
(K) Other Reports. Furnish Agent as soon as available, but in any
event within ten (10) days after the issuance thereof, (i) with copies of such
financial statements, reports and returns as each Loan Party shall send to its
stockholders and (ii) copies of all notices sent pursuant to the Note Purchase
Agreement.
(L) Patriot Act Compliance. Loan Parties shall provide such
information and take such actions as are reasonably requested by the Agent or
any Lender in order to assist the Agent and the Lenders in maintaining
compliance with the Patriot Act.
(M) SEC Filings; Press Release. Promptly after the sending or filing
thereof, Parent shall (x) send to Agent (either in writing or by e-mail) copies
of all press releases and all statements concerning material changes or
developments in the business of the Loan Parties made available by the Loan
Parties to the public or any other creditor and (y) use reasonable efforts to
send to Agent (either in writing or by e-mail) copies of all reports sent to the
holders of the Common Stock of Parent generally and all reports and registration
statements filed with the
62
EXHIBIT 10.1
SEC or any national or foreign securities exchange or the National Association
of Securities Dealers, Inc .
4.2. Negative Covenants. The Loan Parties, jointly and severally, covenant
that, so long as any of the Commitments hereunder shall be in effect and until
indefeasible payment in full, in cash, of all Obligations and termination of all
Lender Letters of Credit:
(A) Indebtedness. None of the Loan Parties shall create, incur,
assume guarantee or be or remain liable for, contingently or otherwise, or
suffer to exist any Indebtedness, except:
(a) Indebtedness under this Agreement;
(b) Indebtedness of Borrower incurred in the ordinary course
of business with respect to customer deposits, trade payables and other
unsecured current Liabilities not the result of borrowing and not evidenced by
any note or other evidence of Indebtedness;
(c) Indebtedness under the Note Purchase Agreement;
(d) Purchase money Indebtedness of Borrower and Indebtedness
consisting of Capital Leases, in the aggregate, not to exceed $2,500,000 at any
time outstanding;
(e) Intercompany Indebtedness between the Loan Parties,
including between Parent and its Subsidiaries (which, for the sake of
clarification, do not include trade payables incurred in the ordinary course of
business), provided that the aggregate outstanding amount of Intercompany
Indebtedness owing at any time by Subsidiaries that are not Loan Parties to Loan
Parties shall not exceed $7,500,000;
(f) Indebtedness to shareholders of Parent from share
repurchases and redemptions under the Stockholders Agreement not to exceed
$250,000 in the aggregate in any Fiscal Year;
(g) Other Indebtedness of Loan Parties in the aggregate at any
time outstanding of $1,000,000; provided that such Indebtedness is unsecured
and/or subordinated to the Indebtedness under this Agreement on terms reasonably
satisfactory to Agent;
(h) Indebtedness of Borrower listed on the Permitted
Indebtedness Schedule attached hereto as Schedule 5.2(A);
(i) Indebtedness incurred in connection with the financing of
Loan Parties' insurance premiums;
(j) Indebtedness incurred in connection with Interest Rate
Protection Agreements, in all cases not for speculative purposes, not to exceed
in the aggregate a maximum potential Liability for the termination of such any
and all such agreements, of $7,500,000 at any time outstanding;
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EXHIBIT 10.1
(k) Indebtedness incurred in connection with the purchase,
financing or refinancing of real property, not to exceed the sum of $5,000,000
in the aggregate at any time outstanding; and
(l) obligations under any lease which is accounted for by the
lessee as an operating lease and under which the lessee is intended to be the
"owner" of the leased property for Federal income tax purposes.
(B) Negative Pledge; Liens. The Loan Parties shall not create,
incur, assume or suffer to exist any Lien of any kind on any of their properties
or assets of any kind, except the following (collectively, "Permitted Liens"):
(a) Liens created in connection with the Loan Documents;
(b) Liens created in connection with the Note Purchase
Documents which are subordinate and junior to the Liens of Agent and the Lenders
and are subject to the terms of the Intercreditor Agreement;
(c) Liens for or priority claims imposed by law that are
incidental to the conduct of business or the ownership of properties and assets
(including mechanic's, warehousemen's, attorneys' and statutory landlords'
Liens) and deposits and pledges incurred in the ordinary course of business and
not in connection with the borrowing of money; provided, however, that in each
case, the obligation secured is not overdue, or, if overdue, is being contested
in good faith and adequate reserves have been set up by the Loan Parties as the
case may be; and provided, further, that the Lien and security interest provided
in the Loan Documents or any portion thereof created or intended to be created
thereby is not, in the opinion of Agent, unreasonably jeopardized thereby;
(d) Liens securing the payments of Charges incurred in the
ordinary course of business that either (A) are not delinquent, or (B) are being
contested in good faith by appropriate legal or administrative proceedings and
as to which adequate reserves have been set aside on their books, and so long as
during the period of any such contest, the Loan Parties shall suffer no loss of
any privilege of doing business or any other right, power or privilege necessary
or material to the operation of the Business; provided, however, that a stay of
enforcement of any such Lien is in effect and the first priority status of the
Lien of Agent under the Loan Documents shall not be affected thereby;
(e) Liens securing Capital Leases and purchase money
Indebtedness permitted under Section 5.2(A)(d) which attach solely to the assets
being leased or purchased;
(f) Liens securing Indebtedness permitted under Section
5.2(A)(i) which attach solely to the applicable insurance policies and proceeds
thereof;
(g) Liens securing Indebtedness permitted under Section
5.2(A)(k) which attach solely to the relevant real property and improvements;
64
EXHIBIT 10.1
(h) Liens listed on the "Permitted Liens Schedule" attached
hereto as Schedule 5.2(B); and
(i) Extensions, renewals and replacements of Liens referred to
in clauses (a), (b), (e), (g) or (j) of this Section 5.2(B); provided, however,
that any such extension, renewal or replacement Lien shall be limited to the
property or assets covered by the Lien extended, renewed or replaced and that
the obligations secured by any such extension, renewal or replacement Lien shall
be in an amount not greater than the amount of the obligations secured by the
Lien extended, renewed or replaced at the time of such extension, renewal or
replacement;
(j) Liens of any licensor or licensee in connection with
license agreements entered into in the ordinary course of business, which such
Liens do not constitute security interests in any assets of any Loan Party;
(k) any Lien or encumbrance, UCC financing statement, interest
or title of a lessor under any operating lease entered into in the ordinary
course of business, or any interest or title of any lessee under any leases or
subleases of real property, with respect solely to the leased property and not
to any other Collateral;
(l) with respect solely to real property, defects and
irregularities in title, survey exceptions, encumbrances, licenses, covenants,
restrictions, easements or reservations of others for rights-of-way, roads,
pipelines, railroad crossings, services, utilities or other similar purposes;
outstanding mineral rights or reservations (including rights with respect to the
removal of material resources) which do not materially diminish the value of the
surface estate, assuming usage of such surface estate similar to that being
carried on by any Person as of the effective date, and Liens arising with
respect to zoning restrictions, licenses, covenants, building restrictions and
other similar charges or encumbrances on the use of real property of such Person
which do not materially interfere with the ordinary conduct of such Person's
business;
(m) Liens on any interest in life insurance on any officer,
director or employee;
(n) Liens incurred or pledges and deposits made in the
ordinary course of business in connection with worker's compensation,
unemployment insurance, pensions or other types of social security benefits, or
to secure the performance of statutory obligations or to secure the performance
of bids, tenders, sales and contracts (other than for the repayment of borrowed
money) and Liens incurred to secure any surety bonds, appeal bonds, supersedeas
bonds or other instruments serving a similar purpose in connection with the
appeal of any judgment or defense of any claim relating to a prejudgment Lien;
(o) Liens consisting of financing statements or similar
notices filed by a Person of a type listed in Section 9-505 of the UCC solely in
such capacity; and
65
EXHIBIT 10.1
(p) Liens consisting of judgments or attachments that would
not constitute an Event of Default under Section 7.1(J).
(C) Contingent Liabilities. The Loan Parties shall not become liable
for any Guaranties, except for (i) the endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of
business, (ii) guaranties by a Loan Party with respect to Indebtedness of
Borrower permitted under Section 5.2(A), (iii) Guaranties of Borrower with
respect to a maximum potential liability of $1,000,000 at any time outstanding,
(iv) Guaranties, obligations, warranties and indemnities, not with respect to
senior or funded Indebtedness of any Person, which have been or are undertaken
or made in the ordinary course of business, in connection with the Transactions
or in connection with the issuance of securities of the Parent, and (v)
Guaranties of any Loan Party on behalf of such Loan Party's Subsidiary which is
not a Loan Party, not to exceed in the aggregate at any time outstanding,
guaranteed Indebtedness in the sum of $1,000,000.
(D) Intentionally Omitted.
(E) Mergers, etc. Except for the Acquisition permitted by this
Agreement and a merger or consolidation of any Subsidiary or Loan Party into
another Loan Party (except for mergers or consolidations of Borrowers into
Guarantors unless consented to in writing by Agent in its sole reasonable
discretion), Loan Parties shall not alter the corporate, capital or legal
structure of the Loan Parties, or merge into or consolidate or combine with any
other Person, or liquidate, wind-up or dissolve itself (or suffer any
liquidation or dissolution) or purchase, lease or otherwise acquire (in one
transaction or a series of related transactions) all or any substantial part of
the property or assets of any Person in excess of the aggregate sum of
$2,000,000 during the term hereof, subject to such terms and conditions as Agent
shall prescribe in its sole reasonable discretion. The Loan Parties shall not
sell, transfer or otherwise dispose of any of its assets, including without
limitation the Collateral, other than (i) sales, leases, assignments, transfers,
conveyances or other dispositions of Inventory in the ordinary course of
business; (ii) the sale of the Nelsonville Office, the Nelsonville Warehouse,
and sales, assignments, transfers, conveyances or other dispositions (other than
leases or subleases of leases) of properties outside of the ordinary course of
business not to exceed in the aggregate more than $50,000 in any Fiscal Year
(exclusive of any sales or other dispositions of Parent's former warehouse
property); (iii) in addition to dispositions permitted under clauses (i) and
(ii) above, the disposition of Equipment of any Loan Party if such Equipment is
obsolete or no longer useful in the ordinary course of such Loan Party's
business; (iv) assignments and licenses of intellectual property in the ordinary
course of business; (v) the sale or transfer of property of any Loan Party to
any other Loan Party (except for sales or transfers by Borrowers to Guarantors
unless consented to in writing by Agent in its sole reasonable discretion); and
(vi) subleases of leases or leases of property which, at the time of such
sublease or lease, is then not currently being utilized in the Business.
(F) Affiliate Transactions. Other than by and between, or among,
Parent, the Loan Parties and their respective Subsidiaries, in each case in a
manner that is not materially economically detrimental to any Borrower, the Loan
Parties shall not make any loan or advance to any director, officer or employee
of the Loan Parties or any Affiliate, or enter into or be a
66
EXHIBIT 10.1
party to any transaction or arrangement with any Affiliate of the Loan Parties,
including, without limitation, the purchase from, sale to or exchange of
property with, or the rendering of any service by or for, any Affiliate, except
pursuant to the reasonable requirements of the Loan Parties' business and upon
fair and reasonable terms no less favorable to the Loan Parties than would be
obtained in a comparable arm's-length transaction with a Person other than an
Affiliate.
(G) Dividends. The Loan Parties shall not, directly or indirectly,
declare or pay any dividends or make any distribution of any kind on their
outstanding capital stock or any other payment of any kind to any of their
stockholders or its Affiliates (including any redemption, purchase or
acquisition of, whether in cash or in property, securities or a combination
thereof, any partnership interests or capital accounts or warrants, options or
any of their other securities), or set aside any sum for any such purpose other
than for such dividends, distributions or payments paid solely to other Loan
Parties and for any other purpose up to $500,000 in the aggregate in any Fiscal
Year.
(H) Advances, Investments and Loans. The Loan Parties shall not
purchase, or hold beneficially any stock, other securities or evidences of
Indebtedness of, or make or permit to exist any loan, Guaranty or advance to, or
make any Investment or acquire any interest whatsoever in, any other Person
(including, but not limited to, the formation or acquisition of any
Subsidiaries), except, prior to the occurrence and continuance of any Default or
Event of Default, and subject to the substantially contemporaneous delivery to
Agent of such agreements, documents or instruments reasonably requested by Agent
to obtain a first priority perfected security interest in any such Investment
(other than those described in clauses (x), (xii) and (xiv) below, which would
not constitute Collateral), any of the following (each, a "Permitted
Investment"):
(i) securities issued or directly and fully guaranteed or
insured by the US or any agency or instrumentality thereof having
maturities of not more than six (6) months from the date of
acquisition;
(ii) US dollar-denominated time deposits, certificates of
deposit and bankers acceptances of any bank whose short-term debt
rating from Standard & Poor's Ratings Group, a division of The
XxXxxx-Xxxx Companies, Inc. ("S&P"), is at least A-1 or the
equivalent or whose short-term debt rating from Xxxxx'x Investors
Service, Inc. ("Xxxxx'x") is at least P-1 or the equivalent with
maturities of not more than six months from the date of acquisition;
(iii) commercial paper with a rating of at least A-1 or the
equivalent by S&P or at least P-1 or the equivalent by Moody's
maturing within six months after the date of acquisition;
(iv) marketable direct obligations issued by any state of the
US or any political subdivision of any such state or any public
instrumentality thereof maturing within six months from the date of
acquisition thereof and, at the time of
67
EXHIBIT 10.1
acquisition, having one of the two highest ratings obtainable from
either S&P or Moody's;
(v) Investments in money market funds substantially all the
assets of which are comprised of securities of the types described
in clauses (i) through (iv) above;
(vi) Deposit Accounts maintained in accordance with the
Blocked Account Agreements;
(vii) Investments (including debt obligations) received in
connection with the bankruptcy or reorganization of suppliers and
customers and in settlement of delinquent obligations of, and other
disputes with, customers and suppliers arising in the ordinary
course of business;
(viii) Accounts owing to the Loan Parties, prepaid expenses
and accrued expenses created or acquired in the ordinary course of
Business and payable on customary trade terms of the Loan Parties;
(ix) deposits made in the ordinary course of Business
consistent with past practices to secure the performance of leases
or in connection with bidding on government contracts;
(x) loans to employees in an aggregate amount not in excess of
$100,000 at any one time per such employee (not to exceed in the
aggregate at any time outstanding the sum of $1,000,000 with respect
to all employees of the Loan Parties), for the purpose of assisting
such employees in the purchase of Common Stock;
(xi) Investments or intercompany loans and advances of (A)
Parent or a Subsidiary in or to any other Subsidiary (subject to a
maximum amount of such loans and advances (which, for the sake of
clarification, do not include trade payables incurred in the
ordinary course of business) by Parent and any other Borrower to any
and all such Subsidiaries of $7,500,000 in the aggregate at any one
time outstanding and provided that each such loan and advance is
evidenced by a promissory note in form and substance satisfactory to
Agent which is pledged by the payee as additional security for the
Obligations), (B) any Subsidiary in or to the Parent or (C) any
Guarantor in or to any other Loan Party;
(xii) advances to sales representatives of Parent or any of
its Subsidiaries in the ordinary course of Business and consistent
with past practices;
(xiii) additional Investments not otherwise permitted in this
Section not to exceed $1,000,000 in the aggregate at any one time
outstanding;
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EXHIBIT 10.1
(xiv) Investments in certificates of deposit and bank deposits
with financial institutions located in Puerto Rico and the Dominican
Republic, solely to the extent necessary to maintain preferred tax
treatment or country of origin status in such locations, not to
exceed $5,000,000 in the aggregate at any time outstanding;
(xv) Investments made pursuant to acquisitions permitted by
this Agreement;
(xvi) Investments in Interest Rate Protection Agreements,
derivative agreements, materials future contracts or other
arrangements in connection with Indebtedness, in all cases not for
speculative purposes, not to exceed in the aggregate a notional
amount of $60,000,000 at any time outstanding; and
(xvii) Deposit Accounts with financial institutions available
for withdrawal on demand, subject to the provisions of Sections
6.1(K) and 6.4.
(I) Use of Proceeds. The Loan Parties shall not use any proceeds
from the Loans advanced hereunder, directly or indirectly, for the purposes of
purchasing or carrying any "margin securities" within the meaning of Regulations
T, U or X promulgated by the Board of Governors of the Federal Reserve Board or
for the purpose of arranging for the extension of credit secured, directly or
indirectly, in whole or in part by collateral that includes any "margin
securities."
(J) Press Release; Public Offering Materials. After the Closing
Date, the Loan Parties shall not disclose the name of Agent or any Lender in any
press release or in any prospectus, proxy statement or other materials filed
with any governmental entity relating to a public offering of the capital stock
of any Loan Party except as may be required by Law and then only (x) to the
extent required by Law and (y) after providing Agent with prior written notice
of such disclosure.
(K) Amendment of Charter Documents. The Loan Parties shall not
amend, terminate, modify or waive or agree to the amendment, modification or
waiver of any material term or provision of their Charter Documents, or By-laws,
other than any amendment, modification or other change to any Charter Document
or By-laws that does not adversely affect the rights and privileges of Parent or
any Loan Party under the Loan Documents, or the interests of Agent or the
Lenders under the Loan Documents or in the Collateral.
(L) Subsidiaries. The Loan Parties shall not establish nor acquire
any new Subsidiary except (i) Foreign Subsidiaries, with the prior written
consent of Agent not to be unreasonably withheld or (ii) domestic Subsidiaries,
in connection with any acquisition permitted by this Agreement and/or where such
Subsidiary becomes a Borrower or obligated pursuant to a Guaranty and grants
Agent a first priority perfected security interest in substantially all of its
assets, subject only to Permitted Liens.
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EXHIBIT 10.1
(M) Business. The Loan Parties shall not engage, directly or
indirectly, in any business other than the Business, and any business reasonably
incidental thereto.
(N) Fiscal Year; Accounting. The Loan Parties shall not change their
Fiscal Year from ending on December 31, or method of accounting (other than
immaterial changes in methods), except as permitted or required by GAAP, in
which case Agent shall be provided with not less than thirty (30) days advance
written notice of any such change.
(O) Establishment of New or Changed Business Locations. The Loan
Parties shall not relocate their principal executive offices or other facilities
or establish new business locations or store any Inventory or other assets at a
location not identified to Agent on or before the date hereof, without providing
not less than thirty (30) days advance written notice to Agent.
(P) Business Practices. The Loan Parties shall not engage in, or
permit any of their respective directors, officers, agents, employees or
representatives in their capacities to engage in, any of the following: (i) use
any funds for unlawful contributions, unlawful gifts, unlawful entertainment or
other unlawful expenses relating to political activity; (ii) directly or
indirectly pay or deliver any fee, commission or other sum of money or item of
property, however characterized, to any finder, agent or other party acting on
behalf of or under the auspices of a governmental official or Governmental
Authority, in the US or any other country, which is in any manner related to the
Business that was illegal under federal, state or local laws of the US or any
other country having jurisdiction; (iii) make any payment to any customer or
subcontractor of the Business or to any officer, director, partner, employee or
agent of any such customer or subcontractor, for the unlawful influence of any
such customer or subcontractor or any such officer, director, partner, employee
or agent; (iv) engage in any other unlawful reciprocal practice, or make any
other unlawful payment or give any other unlawful consideration to any such
customer or subcontractor or any such officer, director, partner, employee or
agent, in respect of the Business; or (v) violate any federal, state or local
campaign finance, election or similar Laws, where any such conduct is either (x)
done knowingly or (y) reasonably likely to have a Material Adverse Effect.
(Q) Sale or Discount of Accounts. The Loan Parties shall not,
directly or indirectly, sell with recourse, or discount or otherwise sell for
less than the face value thereof, any of its Accounts, except without recourse
in the ordinary course of business in connection with the compromise or
collection thereof and not as part of any financing transactions.
(R) Changes Relating to Note Purchase Documents; Prepayments. The
Loan Parties shall not change or amend the terms of the Note Purchase Agreement
or any Term Note B, if such amendment shall not be permitted in accordance with
the terms of the Intercreditor Agreement, nor shall Loan Parties make any
prepayments in any Fiscal Year in respect of Term Note B except, (x) subsequent
to the making of Cash Flow Prepayments to Agent in accordance with Section
2.4(B)(3), and (y) in aggregate amounts equal to not more than 25% of Excess
Cash Flow for the applicable prior Fiscal Year.
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EXHIBIT 10.1
4.3. Financial Covenants. Parent covenants that, so long as any of the
Commitments hereunder shall be in effect and until indefeasible payment in full,
in cash of all Obligations and termination of all Lender Letters of Credit, it
shall maintain, on a consolidated basis, the following:
(A) Fixed Charge Coverage. A minimum Fixed Charge Coverage Ratio as
of the end of each period set forth below of not less than the respective ratio
set forth below:
Period Fixed Charge Coverage Ratio
------ ---------------------------
Closing Date through March 31, 2005 0.81 to 1.00
Closing Date through June 30, 2005 0.92 to 1.00
Closing Date through September 30, 2005 1.11 to 1.00
Closing Date through December 31, 2005 1.05 to 1.00
Four Quarters ending March 31, 2006 1.05 to 1.00
Four Quarters ending June 30, 2006 1.05 to 1.00
Four Quarters ending September 30, 2006 1.05 to 1.00
Four Quarters ending December 31, 2006 1.15 to 1.00
Four Quarters ending March 31, 2007 1.15 to 1.00
Four Quarters ending June 30, 2007 1.15 to 1.00
Four Quarters ending September 30, 2007 1.15 to 1.00
Four Quarters ending December 31, 2007 1.13 to 1.00
Four Quarters ending March 31, 2008 1.13 to 1.00
Four Quarters ending June 30, 2008 1.13 to 1.00
Four Quarters ending September 30, 2008 1.13 to 1.00
Four Quarters ending December 31, 2008 1.14 to 1.00
Each four Quarter period ending thereafter 1.14 to 1.00
(B) Total Leverage. A Total Leverage Ratio as of the end of each
period set forth below in a ratio not greater than the respective ratio set
forth below:
Period Total Leverage Ratio
------ --------------------
Four Quarters ending March 31, 2005 3.92 to 1.00
Four Quarters ending June 30, 2005 4.30 to 1.00
Four Quarters ending September 30, 2005 4.71 to 1.00
Four Quarters ending December 31, 2005 3.24 to 1.00
Four Quarters ending March 31, 2006 3.15 to 1.00
Four Quarters ending June 30, 2006 3.15 to 1.00
Four Quarters ending September 30, 2006 3.15 to 1.00
Four Quarters ending December 31, 2006 2.49 to 1.00
Four Quarters ending March 31, 2007 2.49 to 1.00
Four Quarters ending June 30, 2007 2.49 to 1.00
Four Quarters ending September 30, 2007 2.49 to 1.00
Four Quarters ending December 31, 2007 2.04 to 1.00
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EXHIBIT 10.1
Four Quarters ending March 31, 2008 2.04 to 1.00
Four Quarters ending June 30, 2008 2.04 to 1.00
Four Quarters ending September 30, 2008 2.04 to 1.00
Four Quarters ending December 31, 2008 1.31 to 1.00
Each four Quarter period ending thereafter 1.31 to 1.00
(C) Minimum EBITDA. EBITDA as of the end of each period set forth
below in an amount not less than the respective amount set forth below:
Period Minimum EBITDA
------ --------------
Four Quarters ending March 31, 2005 $27,575,000
Four Quarters ending June 30, 2005 $28,330,000
Four Quarters ending September 30, 2005 $29,665,000
Four Quarters ending December 31, 2005 $30,270,000
Four Quarters ending March 31, 2006 $30,270,000
Four Quarters ending June 30, 2006 $30,270,000
Four Quarters ending September 30, 2006 $30,270,000
Four Quarters ending December 31, 2006 $33,080,000
Four Quarters ending March 31, 2007 $33,080,000
Four Quarters ending June 30, 2007 $33,080,000
Four Quarters ending September 30, 2007 $33,080,000
Four Quarters ending December 31, 2007 $34,000,000
Four Quarters ending March 31, 2008 $34,000,000
Four Quarters ending June 30, 2008 $34,000,000
Four Quarters ending September 30, 2008 $34,000,000
Four Quarters ending December 31, 2008 $40,000,000
Each four Quarter period ending thereafter $40,000,000
(D) Senior Leverage Ratio. A Senior Leverage Ratio as of the end of
each period set forth below in a ratio not greater than the respective ratio set
forth below:
Period Senior Leverage Ratio
------ ---------------------
Four Quarters ending March 31, 2005 2.83 to 1.00
Four Quarters ending June 30, 2005 3.24 to 1.00
Four Quarters ending September 30, 2005 3.70 to 1.00
Four Quarters ending December 31, 2005 2.25 to 1.00
Four Quarters ending March 31, 2006 2.16 to 1.00
Four Quarters ending June 30, 2006 2.16 to 1.00
Four Quarters ending September 30, 2006 2.16 to 1.00
Four Quarters ending December 31, 2006 1.58 to 1.00
Four Quarters ending March 31, 2007 1.58 to 1.00
Four Quarters ending June 30, 2007 1.58 to 1.00
Four Quarters ending September 30, 2007 1.58 to 1.00
Four Quarters ending December 31, 2007 1.16 to 1.00
Four Quarters ending March 31, 2008 1.16 to 1.00
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EXHIBIT 10.1
Four Quarters ending June 30, 2008 1.16 to 1.00
Four Quarters ending September 30, 2008 1.16 to 1.00
Four Quarters ending December 31, 2008 0.81 to 1.00
Each four Quarter period ending thereafter 0.81 to 1.00
(E) Capital Expenditures. Capital Expenditures made by Rocky on a
Consolidated Basis during any Fiscal Year set forth below, in the aggregate
together with all expenditures in respect of Capital Leases, that would exceed
the amount set forth opposite each Fiscal Year below; provided, that any unused
portion of any such annual amount in each Fiscal Year, up to twenty-five percent
(25%) of such maximum amount set forth below may be carried over solely to the
immediately succeeding Fiscal Year:
Period Maximum Capital Expenditures
------ ----------------------------
Fiscal Year ending December 31, 2005 $6,000,000
Fiscal Year ending December 31, 2006 $6,000,000
Fiscal Year ending December 31, 2007 $6,000,000
Fiscal Year ending December 31, 2008 $6,000,000
(F) Undrawn Availability. At all times Undrawn Availability shall
not be less than $5,000,000.
SECTION 6. ADDITIONAL REPRESENTATIONS AND COVENANTS
5.1. Representations. As a material inducement to Agent and each Lender to
enter into the Loan Documents, to make and to continue to make Loans and to
issue and to continue to issue Lender Letters of Credit or risk participations
to the banks that issue Bank Letters of Credit, each of the Loan Parties
represents, warrants and covenants as to itself (and Parent as to all Loan
Parties) to Agent and each Lender that the following statements are and will be
true, correct and complete and, unless specifically limited, shall remain so for
so long as any of the Commitments hereunder shall be in effect and until
indefeasible payment in full, in cash, of all Obligations and termination of all
Lender Letters of Credit:
(A) Accounts Warranties and Covenants. Except as otherwise disclosed
to Agent in writing, as to each Loan Party's existing Accounts and each of its
hereafter arising Accounts that: at the time of its creation, such Account is a
valid, bona fide obligation, representing an undisputed indebtedness incurred by
the Account Debtor (and any other Person obligated on such Account) for property
actually sold and delivered or for services rendered; there are no defenses,
setoffs, offsets, claims, or counterclaims, genuine or otherwise, against such
Account; such Account does not represent a sale or provision of services to a
Subsidiary or an Affiliate, or a consignment, sale or return or a xxxx and hold
transaction; the amount represented by Loan Parties to Agent as owing by each
Account Debtor (and by each of the other Persons obligated on such Account) is,
or will be, the correct amount actually and unconditionally owing, no agreement
exists permitting any other deduction or discount except in the ordinary course
of business; the respective Loan Party is the lawful owner of such Account and
has the right to assign the same to Agent, for the benefit of Agent and Lenders;
such
73
EXHIBIT 10.1
Account is free of all Liens, other than Permitted Liens and those in favor of
Agent, on behalf of itself and Lenders, such Account constitutes, the legally
valid and binding obligation of the applicable Account Debtor (and any other
Person obligated on such Account) and is due and payable in accordance with its
terms.
Each Loan Party shall, at its own expense: (i) cause all invoices
evidencing such Loan Party's Accounts and all copies thereof to bear a notice
that such invoices are payable to the lockboxes established in accordance with
Section 6.4 and (ii) use its reasonable efforts to assure prompt payment of all
amounts due or to become due under Accounts. No discounts, credits or allowances
will be issued, granted or allowed by any Loan Party to customers and no returns
will be accepted without Agent's prior written consent; provided, however, so
long as such discounts, credits, allowances or returns are customarily issued or
accepted in the ordinary course of business and are in amounts which are not
material to any Loan Party, or until Agent notifies Borrower to the contrary,
each Loan Party may presume consent. Borrower will promptly notify Agent in the
event that any Account Debtor (or any other Person obligated on such Account)
alleges any dispute or claim with respect to any Account in excess of an invoice
amount of $250,000 or of any other circumstances known to any Loan Party that
may impair the validity or collectibility of any such Account. Agent, or its
designee, shall have the right, at any time or times hereafter, to verify the
validity, amount or any other matter relating to any Account, by mail, telephone
or in person. After the occurrence of an Event of Default and upon the written
request of Agent: (i) no Loan Party shall, without the prior consent of Agent,
adjust, settle or compromise the amount or payment of any Account, or release
wholly or partly any Account Debtor (or any other Person obligated on such
Account), or allow any credit or discount thereon, and (ii) Agent shall have the
right at any such time (A) to exercise the rights of any Loan Party, with
respect to the obligation of the Account Debtor (or any other Person obligated
on such Account) to make payment or otherwise render performance to the
applicable Loan Party, and with respect to any property that secures the
obligations of the Account Debtor or of any such other Person obligated on such
Account; and (B) to adjust, settle or compromise the amount or payment of any
such Account or release wholly or partly any Account Debtor or obligor
thereunder or allow any credit or discount thereon.
(B) Inventory Warranties and Covenants. Except as otherwise
disclosed to Agent in writing, all of each Loan Party's Inventory is of good and
merchantable quality, free from any defects, such Inventory is not subject to
any licensing, patent, trademark, trade name or copyright agreement with any
Person that restricts such Loan Party's ability to manufacture and/or sell the
Inventory. The completion and manufacturing process of such Inventory by a
Person other than a Loan Party would be permitted under any contract to which a
Loan Party is a party or to which the Inventory is subject. None of any Loan
party's Inventory has been or will be produced in violation of the Fair Labor
Standards Act and subject to the so-called "hot goods" provisions contained in
Title 29 U.S.C. Section 215 or in violation of any other law. All inventory and
products owned by Persons other than Loan Parties and located on any premises
owned, leased or controlled by a Loan Party, shall be separately and
conspicuously identified as such and shall be segregated from Loan Parties' own
Inventory located at such premises. In the event Inventory of Loan Party valued
at more than $500,000 is located on the premises of a consignee, the applicable
Loan Party shall perfect a security interest in such Inventory and, at the
request of Agent, shall assign of record such security interest to Agent
pursuant to
74
EXHIBIT 10.1
documentation in form and substance satisfactory to Agent. In the event
Inventory of Loan Party valued at more than $250,000 is located on the premises
of a bailee, the applicable Loan Party shall use reasonable efforts to obtain
and deliver to Agent a bailee waiver in form and substance satisfactory to
Agent.
(C) Equipment Warranties and Covenants. Each Loan Party has
maintained and shall cause all of its material Equipment used in the Business to
be maintained and preserved in the same condition, repair and working order as
when new, ordinary wear and tear excepted, and in accordance with any
manufacturer's manual, and shall promptly make or cause to be made all repairs,
replacements, and other improvements in connection therewith that Borrower deems
necessary or desirable.
(D) Chattel Paper Warranties and Covenants. As of the Closing Date,
Borrower does not hold any Chattel Paper and does not anticipate holding any
Chattel Paper in the ordinary course of its business in excess of $50,000. To
the extent Borrower holds or obtains any such Chattel Paper, Borrower will
promptly (i) deliver to Agent all such Tangible Chattel Paper duly endorsed and
accompanied by duly executed instruments of transfer or assignment, all in form
and substance satisfactory to Agent and (ii) provide Agent with Control of all
such Electronic Chattel Paper, by having Agent identified as the assignee of the
Records(s) pertaining to the single authoritative copy thereof and otherwise
complying with the applicable elements of Control set forth in the UCC. Borrower
will also deliver to Agent all security agreements securing any Chattel Paper
and execute an authorization to file UCC financing statement amendments
assigning to Agent any UCC financing statements filed by Borrower in connection
with such security agreements. Borrower will xxxx conspicuously all such Chattel
Paper with a legend, in form and substance satisfactory to Agent, indicating
that such Chattel Paper is subject to the Lien of Agent.
(E) Instruments Warranties and Covenants. Upon the request of Agent,
each Loan Party will deliver to Agent all Instruments in excess of $50,000 which
constitute Collateral it holds or obtains duly endorsed and accompanied by duly
executed instruments of transfer or assignment, all in form and substance
satisfactory to Agent. Each Loan Party will also deliver to Agent all security
agreements securing any Instruments and execute an authorization to file UCC
financing statement amendments assigning to Agent any UCC financing statements
filed by any Loan Party in connection with such security agreements.
(F) Investment Property Warranties and Covenants. Upon the request
of Agent, each Loan Party will take any and all actions necessary (or required
or requested by Agent), from time to time, to (i) cause Agent to obtain
exclusive Control of any Investment Property in excess of $50,000 which
constitutes Collateral owned by any Loan Party in a manner acceptable to Agent
and (ii) obtain from any issuers of such Investment Property and such other
Persons, for the benefit of Agent, written confirmation of Agent's Control over
such Investment Property upon terms and conditions acceptable to Agent.
(G) Letters of Credit Warranties and Covenants. If requested by
Agent, at all times after the occurrence of an Event of Default and during the
continuance thereof, each Loan Party will deliver to Agent (i) all Letters of
Credit under which it is the beneficiary or is
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EXHIBIT 10.1
otherwise entitled to receive proceeds duly endorsed and accompanied by duly
executed instruments of transfer or assignment, all in form and substance
satisfactory to Agent and (ii) all security agreements securing any such Letters
of Credit and execute UCC financing statement amendments assigning to Agent any
UCC financing statements filed by any Loan Party in connection with such
security agreements. Each Loan Party will take any and all actions reasonably
necessary (or required or requested by Agent), from time to time, to cause Agent
to obtain exclusive Control of any Letter-of-Credit Rights owned by any Loan
Party in a manner acceptable to Agent.
(H) General Intangibles Warranties and Covenants. Each Loan Party
shall use its reasonable efforts to obtain any consents, waivers or agreements
necessary to enable Agent to exercise remedies hereunder and under the other
Loan Documents with respect to any of such Loan Party's rights under any General
Intangibles, including Loan Parties' rights as a licensee of computer software.
(I) Intellectual Property Covenants. Each Loan Party shall
concurrently herewith deliver to Agent each Copyright Security Agreement, Patent
Security Agreement and Trademark Security Agreement and all other documents,
instruments and other items as may be necessary for Agent to file such
agreements with the U.S. Copyright Office and the U.S. Patent and Trademark
Office. The Copyrights, Patents and Trademarks listed on the respective
schedules to each of the Copyright Security Agreement, Patent Security Agreement
and Trademark Security Agreement constitute all of the US Patents, Trademarks
and government registered Copyrights owned by Loan Parties and their respective
Subsidiaries. If, before the Obligations are indefeasibly paid in full, in cash,
any Loan Party acquires or becomes entitled to any new or additional US Patents,
Trademarks or federally registered Copyrights, or rights thereto, such Loan
Party shall give to Agent prompt written notice thereof, and shall amend the
schedules to the respective security agreements or enter into new or additional
security agreements to include any such new Patents, Trademarks or government
registered Copyrights. Each Loan Party shall: (a) prosecute diligently any
copyright, patent or trademark application at any time pending, except to the
extent the failure to do so is not reasonably likely to have a Material Adverse
Effect; (b) make application for registration or issuance of all new copyrights,
patents and trademarks as reasonably deemed appropriate by such Loan Party,
except to the extent the failure to do so is not reasonably likely to have a
Material Adverse Effect; (c) preserve and maintain all rights in the
Intellectual Property, except to the extent the failure to do so is not
reasonably likely to have a Material Adverse Effect; and (d) use its reasonable
efforts to obtain any consents, waivers or agreements necessary to enable Agent
to exercise its remedies with respect to the Intellectual Property. Except to
the extent the failure to do so is not reasonably likely to have a Material
Adverse Effect, no Loan Party shall abandon any material right to file a
copyright, patent or trademark application nor shall any Loan Party abandon any
material pending copyright, patent or trademark application, or Copyright,
Patent or Trademark without the prior written consent of Agent. All government
registered Intellectual Property owned by any Loan Party and their respective
Subsidiaries is valid, subsisting and enforceable and all filings necessary to
maintain the effectiveness of such registrations have been made, except to the
extent the failure to do so is not reasonably likely to have a Material Adverse
Effect. The execution, delivery and performance of this Agreement by each Loan
Party will not violate or
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EXHIBIT 10.1
cause a default under any material item of Intellectual Property or any
agreement in connection therewith.
(J) Commercial Tort Claims Warranties and Covenants. Except for
matters disclosed on Schedule 2.7(A), as of the Closing Date, no Loan Party owns
any Commercial Tort Claims. Each Loan Party shall advise Agent promptly upon any
Loan Party becoming aware that it owns any additional Commercial Tort Claims in
excess of the sum of $500,000. With respect to any such new Commercial Tort
Claim, each Loan Party will execute and deliver such documents as Agent deems
necessary to create, perfect and protect Agent's security interest in such
Commercial Tort Claim.
(K) Deposit Accounts; Bank Accounts Warranties and Covenants.
Schedule 6.1(K) sets forth the account numbers and locations of all Deposit
Accounts or other bank accounts of each Loan Party. No Loan Party shall
establish any new Deposit Account or other bank accounts (including any term
deposit, certificate of deposit or money market account with any Person) or
amend or terminate any Blocked Account Agreement or lockbox agreement without
Agent's prior written consent. Notwithstanding the foregoing, or any provision
of Section 6.4 to the contrary, each retail and Lehigh shoe center location of
Borrower may open and maintain a Deposit Account in which a monthly average
balance of not more than $25,000 is maintained.
(L) Bailees. Except as disclosed on Schedule 6.1(L) and Inventory in
transit from time to time, as of the Closing Date none of the Collateral is in
the possession of any consignee, bailee, warehouseman, agent or processor, and
no Collateral shall at any time be in the possession or control of any
warehouse, bailee or any of Loan Parties' agents or processors without Agent's
prior written consent and unless Agent, if Agent has so requested, has received
warehouse receipts or bailee lien waivers satisfactory to Agent prior to the
commencement of such possession or control. If any Collateral is at any time in
the possession or control of any warehouse, bailee or any of Loan Parties'
agents or processors, the applicable Loan Party shall, upon the request of
Agent, notify such warehouse, bailee, agent or processor of the Liens in favor
of Agent, for the benefit of Agent and Lenders, created hereby, shall instruct
such Person to hold all such Collateral for Agent's account subject to Agent's
instructions, and shall obtain such Person's acknowledgement that it is holding
the Collateral for Agent's benefit. Parent shall deliver to Agent an updated
Schedule 6.1(L) on or prior to December 31 in each year, in a form similar to
the Schedule 6.1(L) delivered on or about the Closing Date, indicating all
locations where Inventory valued in excess of $50,000 (based upon cost) is then
in the possession of any consignee, bailee, warehouseman, agent or processor.
(M) Collateral Description; Use of Collateral. Each Loan Party will
furnish to Agent, from time to time upon request, statements and schedules
further identifying, updating, and describing the Collateral and such other
information, reports and evidence concerning the Collateral, as Agent may
reasonably request, all in reasonable detail. No Loan Party will use or permit
any Collateral to be used unlawfully or in violation of any provision of
applicable law, or any policy of insurance covering any of the Collateral.
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EXHIBIT 10.1
(N) Collateral Filing Requirements; Collateral Records. None of the
Collateral is of a type in which Liens may be registered, recorded or filed
under, or notice thereof given under, any federal statute or regulation except
for Collateral described on the schedules to the Copyright Security Agreement,
the Patent Security Agreement and the Trademark Security Agreement. Each Loan
Party shall promptly notify Agent in writing upon acquiring any interest
hereafter in Collateral that is of a type where a Lien may be registered,
recorded or filed under, or notice thereof given under, any federal statute or
regulation. Each Loan Party shall keep full and accurate books and records
relating to the Collateral and shall stamp or otherwise xxxx such books and
records in such manner as Agent may reasonably request to indicate Agent's Liens
in the Collateral, for the benefit of Agent and Lenders.
(O) Federal Claims. None of the Collateral constitutes a claim
against the US, or any State or municipal government or any department,
instrumentality or agency thereof, the assignment of which claim is restricted
by law. Each Loan Party shall notify Agent of any Collateral in excess of the
sum of $100,000 which constitutes a claim against the US, or any State or
municipal government or any department, instrumentality or agency thereof, the
assignment of which claim is restricted by law. Upon the request of Agent, the
applicable Loan Party shall take such steps as may be necessary to comply with
any applicable federal assignment of claims laws and other comparable laws.
(P) Agent Authorized. Each Loan Party hereby authorizes and, until
such time as the Obligations are indefeasibly paid in full, in cash, shall
continue to authorize Agent to file one or more financing or continuation
statements, and amendments thereto (or similar documents required by any laws of
any applicable jurisdiction), relating to all or any part of the Collateral
without the signature of such Loan Party and hereby specifically ratifies all
such actions previously taken by Agent.
(Q) Names and Locations. As of the Closing Date, Schedule 6.1(Q)
sets forth (a) all legal names and all other names (including trade names,
fictitious names and business names) under which each Loan Party currently
conducts business, or has at any time conducted business (x) during the past
five years, in the case of Parent and its Subsidiaries prior to giving effect to
the Acquisition, and (y) since March 24, 2000, in the case of EJ Footwear,
Georgia Boot, XX Xxxxxx and their respective Subsidiaries, (b) the name of any
entity which any Loan Party has acquired in whole or in part or from whom any
Loan Party has acquired a significant amount of assets (x) during the past five
years, in the case of Parent and its Subsidiaries prior to giving effect to the
Acquisition, and (y) since March 24, 2000, in the case of EJ Footwear, Georgia
Boot, XX Xxxxxx and their respective Subsidiaries, (c) the location of each Loan
Party's principal place of business, (d) the state or other jurisdiction of
organization for each Loan Party and sets forth each Loan Party's organizational
identification number or specifically designates that one does not exist, (e)
the location of each Loan Party's books and records, (f) the location of all
other offices of each Loan Party, and (g) all Collateral locations (designating
Inventory and Equipment locations and indicating between owned, leased,
warehouse, storage, and processor locations. The locations designated on
Schedule 6.1(Q) are Loan Parties' sole locations for their respective businesses
and the Collateral. Each Loan Party will give Agent at least thirty (30) days
advance written notice of any: (a) change of name or of any new trade name or
fictitious business name of such Loan Party, (b) change of principal place of
business of such Loan Party,
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EXHIBIT 10.1
(c) change in the location of such Loan Party's books and records or the
Collateral, (d) new location for such Loan Party's books and records or the
Collateral, or (e) changes in any Loan Party's state or other jurisdiction of
organization or its organizational identification number.
(R) Additional Mortgaged Property Borrower shall as promptly as
possible (and in any event within sixty (60) days after such designation)
deliver to Agent a fully executed Mortgage, in form and substance satisfactory
to Agent together with title insurance policies and surveys on any Additional
Mortgaged Property designated by Agent.
(S) Disclosure of Material Matters. Immediately upon learning
thereof, report to Agent all matters materially affecting the value,
enforceability or collectibility of any material portion of the Collateral
including, without limitation, any Loan Party's reclamation or repossession of,
or the return to any Loan Party of, a material amount of goods or claims or
disputes asserted by any Customer or other obligor.
5.2. Access to Accountants and Management. Each Loan Party authorizes
Agent and Lenders to discuss the financial condition and financial statements of
such Loan Party with its Accountants upon reasonable prior notice to Borrower of
its intention to do so, and authorizes such Accountants to respond to all of
Agent's inquiries. Agent may from time to time (except, during the continuance
of an Event of Default, as may be reasonably requested and during normal
business hours) confer with each Loan Party's management directly regarding such
Loan Party's business, operations and financial condition.
5.3. Amendment of Schedules. Borrower may amend any one or more of the
Schedules referred in this Section 6 (subject to prior notice to Agent, as
applicable) and any representation, warranty, or covenant contained herein which
refers to any such Schedule shall from and after the date of any such amendment
refer to such Schedule as so amended; provided however, that in no event shall
the amendment of any such Schedule constitute a waiver by Agent and Lenders of
any Default or Event of Default that exists notwithstanding the amendment of
such Schedule.
5.4. Collection of Accounts and Payments. Loan Parties shall establish
lockboxes and blocked accounts (collectively, "Blocked Accounts") in the name of
such Loan Party with such banks ("Collecting Banks") as are reasonably
acceptable to Agent (subject to irrevocable instructions reasonably acceptable
to Agent as hereinafter set forth) to which all Account Debtors or other payment
obligors shall directly remit all payments on such Loan Party's Accounts and in
which each Collecting Bank or Loan Party will immediately deposit all such
payments constituting proceeds of Collateral received by such Loan Party in the
identical form in which such payment was made, whether by cash or check
(excluding proceeds deposited in local accounts in connection with retail and
Lehigh shoe center locations to the extent permitted under Section 6.1(K)). Each
Collecting Bank shall acknowledge and agree, in a manner reasonably satisfactory
to Agent, and with the written consent of the respective Loan Party, to an
agreement (each such agreement, a "Blocked Account Agreement") which provides,
to the extent required by Agent in each instance, that (a) all payments made to
the Blocked Accounts are the sole and exclusive property of Agent, for its
benefit and for the benefit of Lenders, (b) except with respect to making
account adjustments related only to the Blocked Accounts, charging fees and
expenses
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EXHIBIT 10.1
associated with this Blocked Accounts and returned unpaid deposit items
associated with the Blocked Accounts, the Collecting Banks have no right to
setoff against the Blocked Accounts, (c) the Collecting Banks will not take any
Lien in the Blocked Accounts, (d) the Collecting Banks will comply with
instructions originated by Agent directing disposition of the funds in the
Blocked Accounts without the further consent of any Loan Party and (e) all such
payments received will be promptly transferred to Agent's Account. Each Loan
Party hereby agrees that all payments made to such Blocked Accounts or otherwise
received by Agent and whether on the Accounts or as proceeds of other Collateral
or otherwise, after delivery of a notice of exclusive control, will be under the
sole dominion and control of Agent, for the benefit of itself and Lenders. Each
Loan Party shall irrevocably instruct each Collecting Bank to, after delivery of
a notice of exclusive control, promptly transfer all payments or deposits to the
Blocked Accounts into Agent's Account to be applied to the Obligations in
accordance with the terms of this Agreement. Other than as set forth above, if
any Loan Party, or its Affiliates, employees, agents or any other Persons acting
for or in concert with any Loan Party, shall receive any monies, checks, notes,
drafts or any other payments relating to and/or proceeds of such Loan Party's
Accounts or other Collateral, the respective Loan Party or such Person shall
hold such instrument or funds in trust for Agent, and shall, immediately upon
receipt thereof, remit the same or cause the same to be remitted, in kind, to
the Blocked Accounts or to Agent at its address set forth in Section 10.3 below.
5.5. Further Assurances. Each Loan Party shall, from time to time, execute
such guaranties, financing or continuation statements, documents, security
agreements, reports and other documents or deliver to Agent such instruments,
certificates of title, mortgages, deeds of trust, or other documents as Agent at
any time may reasonably request to evidence, perfect or otherwise implement the
guaranties and security for repayment of the Obligations provided for in the
Loan Documents. In the event any Loan Party acquires an ownership interest in
real property with a value greater than $500,000 after the Closing Date which is
unencumbered by a mortgage or deed of trust in favor of an entity which provides
financing for the acquisition thereof by such Loan Party, if then requested by
Agent, such Loan Party shall deliver to Agent a fully executed mortgage or deed
of trust over such real property in form and substance reasonably satisfactory
to Agent, together with such title insurance policies, surveys, appraisals,
evidence of insurance, legal opinions, environmental assessments and other
documents and certificates as shall be reasonably required by Agent.
SECTION 7. DEFAULT, RIGHTS AND REMEDIES
6.1. Event of Default. "Event of Default" shall mean the occurrence or
existence of any one or more of the following (for each subsection a different
grace or cure period may be specified, if no grace or cure period is specified,
such occurrence or existence constitutes an immediate Event of Default):
(A) Payment. Failure to make payment of any of the Obligations when
due; or
(B) Default in Other Agreements. (1) Failure of any Loan Party to
pay when due any principal or interest on any Indebtedness (other than the
Obligations) or (2) breach or default of any Loan Party with respect to any
Indebtedness (other than the Obligations); if such
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EXHIBIT 10.1
failure to pay, breach or default entitles the holder to cause such Indebtedness
having an individual principal amount in excess of $750,000 or having an
aggregate principal amount in excess of $1,500,000 to become or be declared due
prior to its stated maturity; or
(C) Breach of Certain Provisions. Failure of any Loan Party to
perform or comply with any term or condition (i) contained in Section 5.1(A), or
(ii) contained in Section 5.1 (C), (E) or (J) and the failure to comply or
perform is not remedied or waived within five (5) days after notice from Agent
or Requisite Lenders to Borrowing Agent of such default or (iii) contained in
Section 5.2, 5.3 or Section 6 (exclusive of any representation contained in
Section 6 which shall be subject to clause (D) below); or
(D) Breach of Warranty. Any representation, warranty, certification
or other statement made by any Loan Party in any Loan Document or in any
statement or certificate at any time given by such Person in writing pursuant or
in connection with any Loan Document is false in any material respect on the
date made; or
(E) Other Defaults Under Loan Documents. Any Loan Party defaults in
the performance of or compliance with any term contained in this Agreement other
than those otherwise set forth in this Section 7.1, or defaults in the
performance of or compliance with any term contained in the other Loan Documents
and such default is not remedied or waived within fifteen (15) days after notice
from Agent, or Requisite Lenders, to Borrowing Agent of such default; or
(F) Change in Control. A Change of Control shall have occurred;
(G) Involuntary Bankruptcy; Appointment of Receiver, etc. (1) A
court enters a decree or order for relief with respect to any Borrower, or other
Loan Party having assets in excess of $1,000,000, in an involuntary case under
any applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, which decree or order is not stayed or other similar relief is not
granted under any applicable federal or state law; or (2) the continuance of any
of the following events for sixty (60) days unless dismissed, bonded or
discharged: (a) an involuntary case is commenced against any Borrower, or
against any other Loan Party having assets in excess of $1,000,000, under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect; or (b) a receiver, liquidator, sequestrator, trustee, custodian or other
fiduciary having similar powers over any Loan Party, or over all or a
substantial part of their respective property, is appointed; or
(H) Voluntary Bankruptcy; Appointment of Receiver, etc. (1) Any Loan
Party commences a voluntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or consents to the entry of an
order for relief in an involuntary case or to the conversion of an involuntary
case to a voluntary case under any such law or consents to the appointment of or
taking possession by a receiver, trustee or other custodian for all or a
substantial part of its property; or (2) any Borrower, or other Loan Party
having assets in excess of $1,000,000, makes any assignment for the benefit of
creditors; or (3) the board of directors of any such Loan Party adopts any
resolution or otherwise authorizes action to approve any of the actions referred
to in this Section 7.1(H); or
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EXHIBIT 10.1
(I) Liens. Any Lien, levy or assessment, in the aggregate in excess
of the sum of $500,000, is filed or recorded with respect to or otherwise
imposed upon all or any part of the Collateral or the assets of any Loan Party
by the US or any department or instrumentality thereof or by any state, county,
municipality or other governmental agency (other than Permitted Liens) and such
lien, levy or assessment is not stayed, vacated, paid or discharged within ten
(10) days; or
(J) Judgment and Attachments. Any money judgment, writ or warrant of
attachment, or similar process involving (1) an amount in any individual case in
excess of $500,000 or (2) an amount in the aggregate at any time in excess of
$750,000 (in either case not adequately covered by insurance as to which the
insurance company has acknowledged coverage) is entered or filed against any
Loan Party or any of their respective assets and remains undischarged,
unvacated, unbonded or unstayed for a period of forty (40) days, but in any
event not later than five (5) days prior to the date of any proposed sale
thereunder; or
(K) Dissolution. Any order, judgment or decree is entered against
any Borrower, or any Loan Party having assets in excess of $1,000,000, decreeing
the dissolution or split up of such Borrower or any such other Loan Party and
such order remains undischarged or unstayed for a period in excess of twenty
(20) days, but in any event not later than five (5) days prior to the date of
any proposed dissolution or split up; or
(L) Solvency. Any Borrower, or other Loan Party having assets in
excess of $1,000,000, ceases to be solvent (as represented by Loan Parties in
Section 4.1(S)) or admits in writing its present or prospective inability to pay
its debts as they become due; or
(M) Injunction. Any Loan Party is enjoined, restrained or in any way
prevented by the order of any court or any administrative or regulatory agency
from conducting all or any material part of its business and such order
continues for thirty (30) days or more; or
(N) Invalidity of Loan Documents. Any of the Loan Documents for any
reason, other than a partial or full release in accordance with the terms
thereof, ceases to be in full force and effect or is declared to be null and
void, or any Loan Party denies that it has any further liability under any Loan
Documents to which it is party, or gives notice to such effect; or
(O) Failure of Security. Agent, on behalf of itself and Lenders,
does not have or ceases to have a valid and perfected first priority security
interest in the Collateral (except as otherwise permitted pursuant to this
Agreement), in each case, for any reason other than the failure of Agent or any
Lender to take any action within its control; or
(P) Damage, Strike, Casualty. Any material damage to, or loss, theft
or destruction of, any Collateral, if not adequately insured, or any strike,
lockout, labor dispute, embargo, condemnation, act of God or public enemy, or
other casualty which causes, for more than thirty (30) consecutive days, the
cessation or substantial curtailment of revenue producing activities at any
facility of any Loan Party if any such event or circumstance is reasonably
likely to have a Material Adverse Effect; or
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EXHIBIT 10.1
(Q) Licenses and Permits. The loss, suspension or revocation of, or
failure to renew, any license or permit now held or hereafter acquired by any
Loan Party, if such loss, suspension, revocation or failure to renew is
reasonably likely to have a Material Adverse Effect; or
(R) Forfeiture. There is filed against any Loan Party any civil or
criminal action, suit or proceeding under any federal or state racketeering
statute (including, without limitation, the Racketeer Influenced and Corrupt
Organization Act of 1970), which action, suit or proceeding (1) is not dismissed
within one hundred twenty (120) days; and (2) could reasonably be expected to
result in the confiscation or forfeiture of any material portion of the
Collateral; or
6.2. Suspension of Commitments. Upon the occurrence of any Default or
Event of Default, notwithstanding any grace period or right to cure, Agent may
or upon demand by Requisite Lenders shall, without notice or demand, immediately
cease making additional Loans and the Commitments shall be suspended; provided
that, in the case of a Default, if the subject condition or event is waived or
cured within any applicable grace or cure period, the Commitments shall be
reinstated.
6.3. Acceleration. Upon the occurrence of any Event of Default described
in the foregoing Sections 7.1(G) or 7.1(H), all Obligations shall automatically
become immediately due and payable, without presentment, demand, protest or
other requirements of any kind, all of which are hereby expressly waived by each
Loan Party, and the Commitments shall thereupon terminate. Upon the occurrence
and during the continuance of any other Event of Default, Agent may, and upon
demand by Requisite Lenders shall, by written notice to Borrowing Agent, (a)
declare all or any portion of the Obligations to be, and the same shall
forthwith become, immediately due and payable and the Commitments shall
thereupon terminate and (b) demand that Loan Parties immediately deposit with
Agent an amount equal to one hundred five percent (105%) of the Letter of Credit
Reserve and deposit the prepayment of fees payable under Section 2.3(B) with
respect to such Lender Letters of Credit for the full remaining terms of such
Lender Letters of Credit; provided, however, if any of such Lender Letters of
Credit are terminated, the unearned portion of such prepaid fee attributable to
such Lender Letter of Credit shall be refunded to Borrower.
6.4. Remedies. If any Event of Default shall have occurred and be
continuing, in addition to and not in limitation of any other rights or remedies
available to Agent and Lenders at law or in equity, Agent may, and shall upon
the request of Requisite Lenders, exercise in respect of the Collateral, in
addition to all other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on default under
the UCC (whether or not the UCC applies to the affected Collateral) and may also
(a) require Loan Parties to, and each Loan Party hereby agrees that it will, at
its expense and upon request of Agent forthwith, assemble all or part of the
Collateral as directed by Agent and make it available to Agent at a place to be
designated by Agent which is reasonably convenient to both parties; (b) withdraw
all cash in the Blocked Accounts and apply such monies in payment of the
Obligations in the manner provided in Section 7.7; and (c) without notice or
demand or legal process, enter upon any premises of Loan Parties and take
possession of the Collateral. Each Loan Party agrees that,
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EXHIBIT 10.1
to the extent notice of sale of the Collateral or any part thereof shall be
required by law, at least ten (10) days notice to Borrowing Agent of the time
and place of any public disposition or the time after which any private
disposition (which notice shall include any other information required by law)
is to be made shall constitute reasonable notification. At any disposition of
the Collateral (whether public or private), if permitted by law, Agent or any
Lender may bid (which bid may be, in whole or in part, in the form of
cancellation of indebtedness) for the purchase, lease, or licensing of the
Collateral or any portion thereof for the account of Agent or such Lender. Agent
shall not be obligated to make any disposition of Collateral regardless of
notice of disposition having been given. Each Loan Party shall remain liable for
any deficiency. Agent may adjourn any public or private disposition from time to
time by announcement at the time and place fixed therefor, and such disposition
may, without further notice, be made at the time and place to which it was so
adjourned. Agent is not obligated to make any representations or warranties in
connection with any disposition of the Collateral. To the extent permitted by
law, each Loan Party hereby specifically waives all rights of redemption, stay
or appraisal, which it has or may have under any law now existing or hereafter,
enacted. Agent shall not be required to proceed against any Collateral but may
proceed against one or more Loan Parties directly.
6.5. Appointment of Attorney-in-Fact. Each Loan Party hereby constitutes
and appoints Agent as such Loan Party's attorney-in-fact with full authority in
the place and stead of such Loan Party and in the name of such Loan Party, Agent
or otherwise, from time to time in Agent's discretion while an Event of Default
is continuing to take any action and to execute any instrument that Agent may
deem necessary or advisable to accomplish the purposes of this Agreement,
including: (a) to ask, demand, collect, xxx for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral; (b) to enforce the obligations of any Account
Debtor or other Person obligated on the Collateral and enforce the rights of any
Loan Party with respect to such obligations and to any property that secures
such obligations; (c) to file any claims or take any action or institute any
proceedings that Agent may deem necessary or desirable for the collection of or
to preserve the value of any of the Collateral or otherwise to enforce the
rights of Agent and Lenders with respect to any of the Collateral; (d) to pay or
discharge taxes or Liens levied or placed upon or threatened against the
Collateral, the legality or validity thereof and the amounts necessary to
discharge the same to be determined by Agent in its sole discretion, and such
payments made by Agent to become Obligations, due and payable immediately
without demand; (e) to sign and endorse any invoices, freight or express bills,
bills of lading, storage or warehouse receipts, assignments, verifications and
notices in connection with Accounts, Chattel Paper or General Intangibles and
other Documents relating to the Collateral; and (f) generally to take any act
required of any Loan Party under Section 4 or Section 5 of this Agreement, and
to sell, transfer, pledge, make any agreement with respect to or otherwise deal
with any of the Collateral as fully and completely as though Agent were the
absolute owner thereof for all purposes, and to do, at Agent's option and Loan
Parties' expense, at any time or from time to time, all acts and things that
Agent deems necessary Loan Parties' protect, preserve or realize upon the
Collateral. Each Loan Party hereby ratifies and approves all acts of Agent made
or taken pursuant to this Section 7.5. The appointment of Agent as each Loan
Party's attorney and Agent's rights and powers are coupled with an interest and
are irrevocable, so long as any of the Commitments hereunder shall be in effect
and until indefeasible payment in full, in cash, of all Obligations and
termination of all Lender Letters of Credit.
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EXHIBIT 10.1
6.6. Limitation on Duty of Agent and Lenders with Respect to Collateral.
Beyond the safe custody thereof, Agent and each Lender shall have no duty with
respect to any Collateral in its possession (or in the possession of any agent
or bailee) or with respect to any income thereon or the preservation of rights
against prior parties or any other rights pertaining thereto. Agent shall be
deemed to have exercised reasonable care in the custody and preservation of the
Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which Agent accords its own property. Neither Agent
nor any Lender shall be liable or responsible for any loss or damage to any of
the Collateral, or for any diminution in the value thereof, by reason of the act
or omission of any warehouse, carrier, forwarding agency, consignee, broker or
other agent or bailee selected by Loan Parties or selected by Agent in good
faith.
6.7. Application of Proceeds. Notwithstanding anything to the contrary
contained in this Agreement, upon the occurrence and during the continuance of
an Event of Default, (a) each Loan Party irrevocably waives the right to direct
the application of any and all payments at any time or times thereafter received
by Agent from or on behalf of any Loan Party, and Agent shall have the
continuing and exclusive right to apply and to reapply any and all payments
received at any time or times after the occurrence and during the continuance of
an Event of Default against the Obligations in such manner as Agent may deem
advisable notwithstanding any previous application by Agent and (b) in the
absence of a specific determination by Agent with respect thereto, the proceeds
of any sale of, or other realization upon, all or any part of the Collateral
shall be applied: first, to all fees, costs and expenses incurred by or owing to
Agent and then any Lender with respect to this Agreement, the other Loan
Documents or the Collateral; second, to accrued and unpaid interest on the
Obligations (including any interest which but for the provisions of any
bankruptcy or insolvency law would have accrued on such amounts); third, to the
principal amounts of the Obligations outstanding and fourth, to any other
Obligations or other obligations or indebtedness of any Loan Party owing to
Agent or any Lender under the Loan Documents. Any balance remaining shall be
delivered to Borrowing Agent or to whomever may be lawfully entitled to receive
such balance or as a court of competent jurisdiction may direct.
6.8. License of Intellectual Property. Each Loan Party hereby assigns,
transfers and conveys to Agent, for the benefit of Agent and Lenders, effective
upon the occurrence and during the continuance of any Event of Default
hereunder, the non-exclusive right and license to use all Intellectual Property
owned or used by any Loan Party together with any goodwill associated therewith,
all to the extent necessary to enable Agent to realize on the Collateral and any
successor or assign to enjoy the benefits of the Collateral. This right and
license shall inure to the benefit of all successors, assigns and transferees of
Agent and its successors, assigns and transferees, whether by voluntary
conveyance, operation of law, assignment, transfer, foreclosure, deed in lieu of
foreclosure or otherwise. Such right and license is granted free of charge and
does not require the consent of any other person.
6.9. Waivers; Non-Exclusive Remedies. No failure on the part of Agent or
any Lender to exercise, and no delay in exercising and no course of dealing with
respect to, any right under this Agreement or the other Loan Documents shall
operate as a waiver thereof; nor shall
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EXHIBIT 10.1
any single or partial exercise by Agent or any Lender of any right under this
Agreement or any other Loan Document preclude any other or further exercise
thereof or the exercise of any other right. The rights in this Agreement and the
other Loan Documents are cumulative and shall in no way limit any other remedies
provided by law.
SECTION 8. GUARANTY
7.1. Each Guarantor hereby unconditionally guarantees, as a primary
obligor and not merely as a surety, jointly and severally with each other
Guarantor when and as due, whether at maturity, by acceleration, by notice of
prepayment or otherwise, the due and punctual performance of all Obligations of
each other party hereto. Each payment made by any Guarantor pursuant to this
Guaranty shall be made in lawful money of the US in immediately available funds,
(a) without set-off or counterclaim and (b) free and clear of and without
deduction or withholding for or on account of any present and future Charges and
any conditions or restrictions resulting in Charges and all penalties, interest
and other payments on or in respect thereof (except for Charges based on the
overall net income of Agent or a Lender) ("TAX" or "TAXES") unless Guarantor is
compelled by law to make payment subject to such Taxes.
7.2. All Taxes in respect of this Guaranty or any amounts payable or paid
under this Guaranty shall be paid by Guarantor when due and in any event prior
to the date on which penalties attach thereto. Each Guarantor will indemnify
Agent and each of the Lenders against and in respect of all such Taxes. Without
limiting the generality of the foregoing, if any Taxes or amounts in respect
thereof must be deducted or withheld from any amounts payable or paid by any
Guarantor hereunder, such Guarantor shall pay such additional amounts as may be
necessary to ensure that the Agent and each of the Lenders receives a net amount
equal to the full amount which it would have received had payment (including of
any additional amounts payable under this Section 8.2) not been made subject to
such Taxes. Within thirty (30) days of each payment by any Guarantor hereunder
of Taxes or in respect of Taxes, such Guarantor shall deliver to Agent
satisfactory evidence (including originals, or certified copies, of all relevant
receipts) that such Taxes have been duly remitted to the appropriate authority
or authorities.
7.3. Each Guarantor hereby absolutely, unconditionally and irrevocably
waives (i) promptness, diligence, notice of acceptance, notice of presentment of
payment and any other notice hereunder, (ii) demand of payment, protest, notice
of dishonor or nonpayment, notice of the present and future amount of the
Obligations and any other notice with respect to the Obligations, (iii) any
requirement that the Agent or any Lender protect, secure, perfect or insure any
security interest or Lien or any property subject thereto or exhaust any right
or take any action against any other Loan Party, or any Person or any
Collateral, (iv) any other action, event or precondition to the enforcement
hereof or the performance by each such Guarantor of the Obligations, and (v) any
defense arising by any lack of capacity or authority or any other defense of any
Loan Party or any notice, demand or defense by reason of cessation from any
cause of Obligations other than payment and performance in full of the
Obligations by the Loan Parties and any defense that any other guarantee or
security was or was to be obtained by Agent.
7.4. No invalidity, irregularity, voidableness, voidness or
unenforceability of this Agreement or any Loan Document or any other agreement
or instrument relating thereto, or of
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EXHIBIT 10.1
all or any part of the Obligations or of any collateral security therefor shall
affect, impair or be a defense hereunder.
7.5. The Guaranty hereunder is one of payment and performance, not
collection, and the obligations of each Guarantor hereunder are independent of
the Obligations of the other Loan Parties, and a separate action or actions may
be brought and prosecuted against any Guarantor to enforce the terms and
conditions of this Section 8.5, irrespective of whether any action is brought
against any other Loan Party or other Persons or whether any other Loan Party or
other Persons are joined in any such action or actions. Each Guarantor waives
any right to require that any resort be had by Agent or any Lender to any
security held for payment of the Obligations or to any balance of any deposit
account or credit on the books of any Agent or any Lender in favor of any Loan
Party or any other Person. No election to proceed in one form of action or
proceedings, or against any Person, or on any Obligations, shall constitute a
waiver of Agent's right to proceed in any other form of action or proceeding or
against any other Person unless Agent has expressed any such waiver in writing.
Without limiting the generality of the foregoing, no action or proceeding by
Agent against any Loan Party under any document evidencing or securing
indebtedness of any Loan Party to Agent shall diminish the liability of any
Guarantor hereunder, except to the extent Agent receives actual payment on
account of Obligations by such action or proceeding, notwithstanding the effect
of any such election, action or proceeding upon the right of subrogation of any
Guarantor in respect of any Loan Party.
7.6. As an original and independent obligation under this Guaranty, each
Guarantor shall (a) indemnify the Agent and each of the Lenders and keep the
Agent and each of the Lenders indemnified against all costs, losses, expenses
and liabilities of whatever kind resulting from the failure by any party to make
due and punctual payment of any of the Obligations or resulting from any of the
Obligations being or becoming void, voidable, unenforceable or ineffective
against Borrowers (including, but without limitation, all legal and other costs,
Charges and expenses incurred by the Agent and each of the Lenders, or any of
them in connection with preserving or enforcing, or attempting to preserve or
enforce, its rights under this Guaranty), except to the extent that any of the
same results from the gross negligence or wilful misconduct by Agent or any
Lender; and (b) pay on demand the amount of such costs, losses, expenses and
liabilities whether or not Agent or any of the Lenders have attempted to enforce
any rights against any Borrower or any other Person or otherwise.
7.7. The liability of each Guarantor hereunder shall be absolute,
unlimited and unconditional and shall not be subject to any reduction,
limitation, impairment, discharge or termination for any reason, including,
without limitation, any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to any claim, defense or setoff,
counterclaim, recoupment or termination whatsoever by reason of the invalidity,
illegality or unenforceability of any other Obligation or otherwise. Without
limiting the generality of the foregoing, the obligations of each Guarantor
shall not be discharged or impaired, released, limited or otherwise affected by:
(i) any change in the manner, place or terms of payment or
performance, and/or any change or extension of the time of payment or
performance of, release, renewal or alteration of, or any new agreements
relating to any Obligation, any security
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EXHIBIT 10.1
therefor, or any liability incurred directly or indirectly in respect
thereof, or any rescission of, or amendment, waiver or other modification
of, or any consent to departure from, this Agreement or any Loan Document,
including any increase in the Obligations resulting from the extension of
additional credit to any Borrower or otherwise;
(ii) any sale, exchange, release, surrender, loss, abandonment,
realization upon any property by whomsoever at any time pledged or
mortgaged to secure, or howsoever securing, all or any of the Obligations,
and/or any offset there against, or failure to perfect, or continue the
perfection of, any Lien in any such property, or delay in the perfection
of any such Lien, or any amendment or waiver of or consent to departure
from any other guaranty for all or any of the Obligations;
(iii) the failure of the Agent or any Lender to assert any claim or
demand or to enforce any right or remedy against any Borrower or any other
Loan Party or any other Person under the provisions of this Agreement or
any Loan Document or any other document or instrument executed an
delivered in connection herewith or therewith;
(iv) any settlement or compromise of any Obligation, any security
therefor or any liability (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and any subordination
of the payment of all or any part thereof to the payment of any obligation
(whether due or not) of any Loan Party to creditors of any Loan Party
other than any other Loan Party;
(v) any manner of application of Collateral, or proceeds thereof, to
all or any of the Obligations, or any manner of sale or other disposition
of any Collateral for all or any of the Obligations or any other assets of
any Loan Party; and
(vi) any other agreements or circumstance of any nature whatsoever
that may or might in any manner or to any extent vary the risk of any
Guarantor, or that might otherwise at law or in equity constitute a
defense available to, or a discharge of, the Guaranty hereunder and/or the
obligations of any Guarantor, or a defense to, or discharge of, any Loan
Party or any other Person or party hereto or the Obligations or otherwise
with respect to the Advances, Letters of Credit or other financial
accommodations to any Borrower pursuant to this Agreement and/or the Loan
Documents.
7.8. The Agent shall have the right to take any action set forth in
Section 8.7 without notice to or the consent of any Guarantor and each Guarantor
expressly waives any right to notice of, consent to, knowledge of and
participation in any agreements relating to any of the above or any other
present or future event relating to Obligations whether under this Agreement or
otherwise or any right to challenge or question any of the above and waives any
defenses of such Guarantor which might arise as a result of such actions.
7.9. Agent may at any time and from time to time (whether prior to or
after the revocation or termination of this Agreement) without the consent of,
or notice to, any Guarantor, and without incurring responsibility to any
Guarantor or impairing or releasing the Obligations,
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EXHIBIT 10.1
apply any sums by whomsoever paid or howsoever realized to any Obligations
regardless of what Obligations remain unpaid.
7.10. (a) The Guaranty provisions herein contained shall continue to be
effective or be reinstated, as the case may be, if claim is ever made upon the
Agent or any Lender for repayment or recovery of any amount or amounts received
by such Person in payment or on account of any of the Obligations and such
Person repays all or part of said amount for any reason whatsoever, including,
without limitation, by reason of any judgment, decree or order of any court or
administrative body having jurisdiction over such Person or the respective
property of each, or any settlement or compromise of any claim effected by such
Person with any such claimant (including any Loan Party); and in such event each
Guarantor hereby agrees that any such judgment, decree, order, settlement or
compromise or other circumstances shall be binding upon such Guarantor,
notwithstanding any revocation hereof or the cancellation of any note or other
instrument evidencing any Obligation, and each Guarantor shall be and remain
liable to the Agent and/or the Lenders for the amount so repaid or recovered to
the same extent as if such amount had never originally been received by such
Person(s).
(b) Agent shall not be required to marshal any assets in favor of
any Guarantor, or against or in payment of Obligations.
(c) No Guarantor shall be entitled to claim against any present or
future security held by Agent from any Person for Obligations in priority to or
equally with any claim of Agent, or assert any claim for any liability of any
Loan Party to any Guarantor in priority to or equally with claims of Agent for
Obligations, and no Guarantor shall be entitled to compete with Agent with
respect to, or to advance any equal or prior claim to any security held by Agent
for Obligations.
(d) If any Loan Party makes any payment to Agent, which payment is
wholly or partly subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to any Person under any federal
or provincial statute or at common law or under equitable principles, then to
the extent of such payment, the Obligation intended to be paid shall be revived
and continued in full force and effect as if the payment had not been made, and
the resulting revived Obligation shall continue to be guaranteed, uninterrupted,
by each Guarantor hereunder.
(e) All present and future monies payable by any Loan Party to any
Guarantor, whether arising out of a right of subrogation or otherwise, are
assigned to Agent for its benefit and for the ratable benefit of the Lenders as
security for such Guarantor's liability to Agent and the Lenders hereunder and
are postponed and subordinated to Agent's prior right to payment in full of
Obligations. Except to the extent prohibited otherwise by this Agreement, all
monies received by any Guarantor from any Loan Party shall be held by such
Guarantor as agent and trustee for Agent. This assignment, postponement and
subordination shall only terminate when the Obligations are paid in full in cash
and this Agreement is irrevocably terminated.
(f) Each Loan Party acknowledges this assignment, postponement and
subordination and, except as otherwise set forth herein, agrees to make no
payments to any
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EXHIBIT 10.1
Guarantor without the prior written consent of Agent. Each Loan Party agrees to
give full effect to the provisions hereof.
7.11. Upon the occurrence and during the continuance of any Event of
Default, the Agent may and upon written request of the Requisite Lenders shall,
without notice to or demand upon any Loan Party or any other Person, declare any
obligations of such Guarantor hereunder immediately due and payable, and shall
be entitled to enforce the obligations of each Guarantor. Upon such declaration
by the Agent, the Agent and the Lenders are hereby authorized at any time and
from time to time to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by the Agent or the Lenders to or for the credit or the account
of any Guarantor against any and all of the obligations of each Guarantor now or
hereafter existing hereunder, whether or not the Agent or the Lenders shall have
made any demand hereunder against any other Loan Party and although such
obligations may be contingent and unmatured. The rights of the Agent and the
Lenders hereunder are in addition to other rights and remedies (including other
rights of set-off) which the Agent and the Lenders may have. Upon such
declaration by the Agent, with respect to any claims (other than those claims
referred to in the immediately preceding paragraph) of any Guarantor against any
Loan Party (the "Claims"), the Agent shall have the full right on the part of
the Agent in its own name or in the name of such Guarantor to collect and
enforce such Claims by legal action, proof of debt in bankruptcy or other
liquidation proceedings, vote in any proceeding for the arrangement of debts at
any time proposed, or otherwise, the Agent and each of its officers being hereby
irrevocably constituted attorneys-in-fact for each Guarantor for the purpose of
such enforcement and for the purpose of endorsing in the name of each Guarantor
any instrument for the payment of money. Each Guarantor will receive as trustee
for the Agent and will pay to the Agent forthwith upon receipt thereof any
amounts which such Guarantor may receive from any Loan Party on account of the
Claims. Each Guarantor agrees that at no time hereafter will any of the Claims
be represented by any notes, other negotiable instruments or writings, except
and in such event they shall either be made payable to the Agent, or if payable
to any Guarantor, shall forthwith be endorsed by such Guarantor to the Agent.
Each Guarantor agrees that no payment on account of the Claims or any security
interest therein shall be created, received, accepted or retained during the
continuance of any Event of Default nor shall any financing statement be filed
with respect thereto by any Guarantor.
7.12. Any acknowledgment or new promise, whether by payment of principal
or interest or otherwise and whether by any Loan Party or others with respect to
any of the Obligations shall, if the statute of limitations in favor of any
Guarantor against the Agent or the Lenders shall have commenced to run, toll the
running of such statute of limitations and, if the period of such statute of
limitations shall have expired, prevent the operation of such statute of
limitations.
7.13. All amounts due, owing and unpaid from time to time by any Guarantor
hereunder shall bear interest at the interest rate per annum then chargeable
with respect to Base Rate Loans constituting Revolving Advances (without
duplication of interest on the underlying Obligation).
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EXHIBIT 10.1
7.14. For purposes of the Interest Act (Canada), where in this Guaranty a
rate of interest is to be calculated on the basis of a year of 360 or 365 days,
the yearly rate of interest to which the rate is equivalent is the rate
multiplied by the number of days in the year for which the calculation is made
and divided by 360 or 365, as applicable.
7.15. Without limiting any other rights in this Agreement, if for the
purposes of obtaining judgment in any court in any jurisdiction with respect to
this Guaranty or any other Loan Document it becomes necessary to convert into
the currency of such jurisdiction (herein called the "JUDGMENT CURRENCY") any
amount due hereunder in any currency other than the Judgment Currency, then
conversion shall be made at the rate of exchange prevailing on the Business Day
before the day on which judgment is given. For this purpose, "rate of exchange"
means the rate at which Agent would, on the relevant date at or about 12:00 noon
(New York time), be prepared to sell a similar amount of such currency in New
York, New York against the Judgment Currency. In the event that there is a
change in the rate of exchange prevailing between the Business Day before the
day on which the judgment is given and the date of payment of the amount due,
Guarantor will, on the date of payment, pay such additional amounts (if any) as
may be necessary to ensure that the amount paid on such date is the amount in
the Judgment Currency which when converted at the rate of exchange prevailing on
the date of payment is the amount then due under this Guaranty or any other Loan
Document in such other currency. Any additional amount due from Guarantor under
this Section 8.15 will be due as a separate debt and shall not be affected by
judgment being obtained for any other sums due under or in respect of this
Agreement or any of the other Loan Documents.
7.16. Each Guarantor acknowledges receipt of a copy of each of this
Agreement and the other Loan Documents. Each Guarantor has made an independent
investigation of the Loan Parties and of the financial condition of the Loan
Parties. Neither Agent nor any Lender has made and neither Agent nor any Lender
does make any representations or warranties as to the income, expense,
operation, finances or any other matter or thing affecting any Loan Party nor
has Agent or any Lender made any representations or warranties as to the amount
or nature of the Obligations of any Loan Party to which this Section 8 applies
as specifically herein set forth, nor has Agent or any Lender or any officer,
agent or employee of Agent or any Lender or any representative thereof, made any
other oral representations, agreements or commitments of any kind or nature, and
each Guarantor hereby expressly acknowledges that no such representations or
warranties have been made and such Guarantor expressly disclaims reliance on any
such representations or warranties.
7.17. The provisions of this Section 8 shall remain in effect until the
indefeasible payment in full in cash of all Obligations and irrevocable
termination of this Agreement. Payments received from Guarantors pursuant to
this Section 8 shall be applied in accordance with Section 7.7 of this
Agreement.
SECTION 8A. BORROWING AGENCY.
8A.1. Borrowing Agency Provisions.
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EXHIBIT 10.1
(a) Each Borrower hereby irrevocably designates Borrowing Agent to
be its attorney and agent and in such capacity to borrow, sign and endorse
notes, and execute and deliver all instruments, documents, writings and further
assurances now or hereafter required hereunder, on behalf of such Borrower or
Borrowers, and hereby authorizes Agent to pay over or credit all loan proceeds
hereunder in accordance with the request of Borrowing Agent.
(b) The handling of this credit facility as a co-borrowing facility
with a Borrowing Agent in the manner set forth in this Agreement is solely as an
accommodation to Borrowers and at their request. None of Agent, any Issuing
Lender or any Lender shall incur liability to Borrowers as a result thereof. To
induce Agent and the Lenders to do so and in consideration thereof, each
Borrower hereby indemnifies Agent, each Issuer and each Lender and holds Agent,
each Issuer and each Lender harmless from and against any and all liabilities,
expenses, losses, damages and claims of damage or injury asserted against Agent,
any Issuer or any Lender by any Person arising from or incurred by reason of the
handling of the financing arrangements of Borrowers as provided herein, reliance
by Agent or any Lender on any request or instruction from Borrowing Agent or any
other action taken by Agent or any Lender with respect to this Section 8A.1
except due to willful misconduct or gross (not mere) negligence by the
indemnified party.
(c) All Obligations shall be joint and several, and each Borrower
shall make payment upon the maturity of the Obligations by acceleration or
otherwise, and such obligation and liability on the part of each Borrower shall
in no way be affected by any extensions, renewals and forbearance granted by
Agent or any Lender to any Loan Party, failure of Agent or any Lender to give
any Borrower notice of borrowing or any other notice, any failure of Agent or
any Lender to pursue or preserve its rights against any Loan Party, the release
by Agent or any Lender of any Collateral now or thereafter acquired from any
Loan Party, and such agreement by each Loan Party to pay upon any notice issued
pursuant thereto is unconditional and unaffected by prior recourse by Agent or
any Lender to the other Loan Parties or any Collateral for such Loan Party's
Obligations or the lack thereof.
8A.2. Waiver of Subrogation. Each Loan Party expressly waives any and all
rights of subrogation, reimbursement, indemnity, exoneration, contribution of
any other claim which such Loan Party may now or hereafter have against the
other Loan Parties or other Person directly or contingently liable for the
Obligations hereunder, or against or with respect to the other Loan Parties'
property (including, without limitation, any property which is Collateral for
the Obligations), arising from the existence or performance of this Agreement,
until termination of this Agreement and repayment in full of the Obligations.
SECTION 9. AGENT
8.1. Agent.
(A) Appointment. Each Lender hereto and, upon obtaining an interest
in any Loan, any participant, transferee or other assignee of any Lender
irrevocably appoints, designates and authorizes GMAC CF as Agent to take such
actions or refrain from taking such action as its agent on its behalf and to
exercise such powers hereunder and under the other Loan Documents
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EXHIBIT 10.1
as are delegated by the terms hereof and thereof, together with such powers as
are reasonably incidental thereto. Neither the Agent nor any of its directors,
officers, employees or agents shall be liable for any action so taken. The
provisions of this subsection 9.1 are solely for the benefit of Agent and
Lenders and no Loan Party shall have any rights as a third party beneficiary of
any of the provisions hereof. In performing its functions and duties under this
Agreement and the other Loan Documents, Agent shall act solely as agent of
Lenders and does not assume and shall not be deemed to have assumed any
obligation toward or relationship of agency or trust with or for any Loan Party.
Agent may perform any of its duties hereunder, or under the Loan Documents, by
or through its agents or employees.
(B) Nature of Duties. Agent shall have no duties, obligations or
responsibilities except those expressly set forth in this Agreement or in the
Loan Documents. The duties of Agent shall be mechanical and administrative in
nature. Agent shall not have by reason of this Agreement a fiduciary, trust or
agency relationship with or in respect of any Lender or any Loan Party. Nothing
in this Agreement or any of the Loan Documents, express or implied, is intended
to or shall be construed to impose upon Agent any obligations in respect of this
Agreement or any of the Loan Documents except as expressly set forth herein or
therein. Each Lender shall make its own appraisal of the credit worthiness of
each Loan Party, and shall have independently taken whatever steps it considers
necessary to evaluate the financial condition and affairs of Loan Parties, and
Agent shall have no duty or responsibility, either initially or on a continuing
basis, to provide any Lender with any credit or other information with respect
thereto (other than as expressly required herein), whether coming into its
possession before the Closing Date or at any time or times thereafter. If Agent
seeks the consent or approval of any Lenders to the taking or refraining from
taking any action hereunder, then Agent shall send notice thereof to each
Lender. Agent shall promptly notify each Lender any time that the Requisite
Lenders have instructed Agent to act or refrain from acting pursuant hereto.
(C) Rights, Exculpation, Etc. Neither Agent nor any of its officers,
directors, employees or agents shall be liable to any Lender for any action
taken or omitted by them hereunder or under any of the Loan Documents, or in
connection herewith or therewith, except that Agent shall be liable to the
extent of its own gross negligence or willful misconduct as determined by a
court of competent jurisdiction. Agent shall not be liable for any apportionment
or distribution of payments made by it in good faith and if any such
apportionment or distribution is subsequently determined to have been made in
error, the sole recourse of any Lender to whom payment was due but not made,
shall be to recover from other Lenders any payment in excess of the amount to
which they are determined to be entitled (and such other Lenders hereby agree to
return to such Lender any such erroneous payments received by them). Neither
Agent nor any of its agents or representatives shall be responsible to any
Lender for any recitals, statements, representations or warranties herein or for
the execution, effectiveness, genuineness, validity, enforceability,
collectibility, or sufficiency of this Agreement or any of the Loan Documents or
the transactions contemplated thereby, or for the financial condition of any
Loan Party. Agent shall not be required to make any inquiry concerning either
the performance or observance of any of the terms, provisions or conditions of
this Agreement or any of the Loan Documents or the financial condition of any
Loan Party, or the existence or possible existence of any Default or Event of
Default. Agent may at any time request instructions from Lenders with respect to
any actions or approvals which by the terms of this Agreement or of any of the
Loan
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Exhibit 10.1
Documents Agent is permitted or required to take or to grant, and if such
instructions are promptly requested, Agent shall be absolutely entitled to
refrain from taking any action or to withhold any approval and shall not be
under any liability whatsoever to any Person for refraining from any action or
withholding any approval under any of the Loan Documents until it shall have
received such instructions from Requisite Lenders or all or such other portion
of the Lenders as shall be prescribed by this Agreement. Without limiting the
foregoing, no Lender shall have any right of action whatsoever against Agent as
a result of Agent acting or refraining from acting under this Agreement or any
of the other Loan Documents in accordance with the instructions of Requisite
Lenders in the absence of an express requirement for a greater percentage of
Lender approval hereunder for such action.
(D) Reliance. Agent shall be under no duty to examine, inquire into,
or pass upon the validity, effectiveness or genuineness of this Agreement, any
other Loan Document, or any instrument, document or communication furnished
pursuant hereto or in connection herewith. Agent shall be entitled to rely, and
shall be fully protected in relying, upon any written or oral notices,
statements, certificates, orders or other documents or any telephone message or
other communication (including any writing, fax, telecopy or telegram) believed
by it in good faith to be genuine and correct and to have been signed, sent or
made by the proper Person, and with respect to all matters pertaining to this
Agreement or any of the Loan Documents and its duties hereunder or thereunder.
Agent shall be entitled to rely upon the advice of legal counsel, independent
accountants, and other experts selected by Agent in its sole discretion.
(E) Indemnification. Lenders will reimburse and indemnify Agent for
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including, without limitation,
attorneys' fees and expenses), advances or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by, or asserted against Agent in
any way relating to or arising out of this Agreement or any of the Loan
Documents or any action taken or omitted by Agent under this Agreement or any of
the Loan Documents, in proportion to each Lender's Pro Rata Share, but only to
the extent that any of the foregoing is not promptly reimbursed by Loan Parties;
provided, however, no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses, advances or disbursements resulting from Agent's gross
negligence or willful misconduct as determined by a final non-appealable
judgment by a court of competent jurisdiction. If any indemnity furnished to
Agent for any purpose shall, in the opinion of Agent, be insufficient or become
impaired, Agent may call for additional indemnity and cease, or not commence, to
do the acts indemnified against, even if so directed by Lenders or Requisite
Lenders, until such additional indemnity is furnished. The obligations of
Lenders under this subsection 9.1(E) shall survive the payment in full of the
Obligations and the termination of this Agreement.
(F) GMAC CF Individually. With respect to its Commitments and the
Loans made by it, GMAC CF shall have and may exercise the same rights and powers
hereunder and is subject to the same obligations and liabilities as and to the
extent set forth herein for any other Lender. The terms "Lenders" or "Requisite
Lenders" or any similar terms shall, unless the context clearly otherwise
indicates, include GMAC CF in its individual capacity as a Lender or
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EXHIBIT 10.1
one of the Requisite Lenders. GMAC CF, either directly or through strategic
affiliations, may lend money to, acquire equity or other ownership interests in,
provide advisory services to and generally engage in any kind of banking, trust
or other business with any Loan Party as if it were not acting as Agent pursuant
hereto and without any duty to account therefor to Lenders. GMAC CF, either
directly or through strategic affiliations, may accept fees and other
consideration from any Loan Party for services in connection with this Agreement
or otherwise without having to account for the same to Lenders.
(G) Successor Agent.
(1) Resignation. Agent may resign from the performance of all
its agency functions and duties hereunder at any time by giving at least thirty
(30) Business Days' prior written notice to Borrowing Agent and the Lenders.
Such resignation shall take effect upon the acceptance by a successor Agent of
appointment as provided below.
(2) Appointment of Successor. Upon any such notice of
resignation pursuant to subsection 9.1(G)(1) above, Requisite Lenders shall
appoint a successor Agent which, unless an Event of Default has occurred and is
continuing, shall be reasonably acceptable to Borrowing Agent. If a successor
Agent shall not have been so appointed within said thirty (30) Business Day
period, the retiring Agent, upon notice to Borrowing Agent, shall then appoint a
successor Agent who shall serve as Agent until such time, if any, as Requisite
Lenders appoint a successor Agent as provided above.
(3) Successor Agent. Upon the acceptance of any appointment as
Agent under the Loan Documents by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations under the Loan Documents. After any retiring
Agent's resignation as Agent, the provisions of this Section 9 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent.
(H) Collateral Matters.
(1) Release of Collateral. Lenders hereby irrevocably
authorize Agent, at its option and in its discretion, to release any Lien
granted to or held by Agent upon any Collateral (a) upon termination of the
Commitments and upon payment and satisfaction of all Obligations (other than
contingent indemnification obligations to the extent no claims giving rise
thereto have been asserted); or (b) constituting property being sold or disposed
of if a Loan Party certifies to Agent that the sale or disposition is made in
compliance with the provisions of this Agreement (and Agent may rely in good
faith conclusively on any such certificate, without further inquiry). In
addition, with the consent of Requisite Lenders, Agent may release Liens granted
to or held by Agent upon any Collateral having a book value of not greater than
ten percent (10%) of the total book value of all Collateral, as determined by
Agent, either in a single transaction or in a series of related transactions;
provided, however, in no event will Agent, acting under the authority granted to
it pursuant to this sentence, release during any calendar year Liens granted to
or held by Agent upon any Collateral having a total book value in excess of
twenty percent (20%) of the total book value of all Collateral, as determined by
Agent.
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EXHIBIT 10.1
(2) Confirmation of Authority; Execution of Releases. Without
in any manner limiting Agent's authority to act without any specific or further
authorization or consent by Lenders (as set forth in subsection 9.1(H)(1)
above), each Lender agrees to confirm in writing, upon request by Agent or
Borrowing Agent, the authority to release any Collateral conferred upon Agent
under clauses (a) and (b) of subsection 9.1(H)(1). To the extent Agent agrees to
release any Lien granted to or held by Agent as authorized under subsection
9.1(H)(1), (a) Agent is hereby irrevocably authorized by Lenders to, execute
such documents as may be necessary to evidence the release of the Liens granted
to Agent, for the benefit of Agent and Lenders, upon such Collateral; provided,
however, that Agent shall not be required to execute any such document on terms
which, in Agent's opinion, would expose Agent to liability or create upon Agent
any obligation or entail any consequence other than the release of such Liens
without recourse or warranty, and (b) Loan Parties shall provide at least ten
(10) Business Days prior written notice of any request for any document
evidencing such release of the Liens and Loan Parties agree that any such
release shall not in any manner discharge, affect or impair the Obligations or
any Liens granted to Agent on behalf of Agent and Lenders upon (or obligations
of any Loan Party, in respect of) all interests retained by any Loan Party,
including, without limitation, the proceeds of any sale, all of which shall
continue to constitute part of the property covered by this Agreement or the
Loan Documents.
(3) Absence of Duty. Agent shall have no obligation whatsoever
to any Lender or any other Person to assure that the property covered by this
Agreement or the Loan Documents exists or is owned by any Loan Party or is cared
for, protected or insured or has been encumbered or that the Liens granted to
Agent on behalf of Agent and Lenders herein or pursuant hereto have been
properly or sufficiently or lawfully created, perfected, protected or enforced
or are entitled to any particular priority, or to exercise at all or in any
particular manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to Agent in this Agreement or in any of the Loan Documents, it being
understood and agreed that in respect of the property covered by this Agreement
or the Loan Documents or any act, omission or event related thereto, Agent may
act in any manner it may deem appropriate, in its discretion, given Agent's own
interest in property covered by this Agreement or the Loan Documents as one of
the Lenders and that Agent shall have no duty or liability whatsoever to any of
the other Lenders; provided, however, that Agent shall exercise the same care
which it would in dealing with loans for its own account.
(I) Agency for Perfection. Agent and each Lender hereby appoint each
other Lender as agent for the purpose of perfecting Agent's security interest in
assets which, in accordance with the Uniform Commercial Code in any applicable
jurisdiction, can be perfected by possession or Control. Should any Lender
(other than Agent) obtain possession of any such assets, such Lender shall
notify Agent thereof, and, promptly upon Agent's request therefor, shall deliver
such assets to Agent or in accordance with Agent's instructions. The Agent may
file such proofs of claim or documents as may be necessary or advisable in order
to have the claims of the Agent and the Lenders (including any claim for the
reasonable compensation, expenses, disbursements and advances of the Agent and
the Lenders, their respective agents, financial advisors and counsel), allowed
in any judicial proceedings relative to any Loan Party, or any of their
respective creditors or property, and shall be entitled and empowered to
collect,
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EXHIBIT 10.1
receive and distribute any monies, securities or other property payable or
deliverable on any such claims. Any custodian in any judicial proceedings
relative to any Loan Party is hereby authorized by each Lender to make payments
to the Agent and, in the event that the Agent shall consent to the making of
such payments directly to the Lenders, to pay to the Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of the Agent,
its agents, financial advisors and counsel, and any other amounts due the Agent.
Nothing contained in this Agreement or the other Loan Documents shall be deemed
to authorize the Agent to authorize or consent to or accept or adopt on behalf
of any Lender any plan of reorganization, arrangement, adjustment or composition
affecting the Loans, or the rights of any holder thereof, or to authorize the
Agent to vote in respect of the claim of any Lender in any such proceeding,
except as specifically permitted herein.
(J) Exercise of Remedies. Each Lender agrees that it will not have
any right individually to enforce or seek to enforce this Agreement or any Loan
Document or to realize upon any collateral security for the Obligations, unless
instructed to do so by Agent, it being understood and agreed that such rights
and remedies may be exercised only by Agent.
8.2. Notice of Default.
Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default except with respect to defaults in
the payment of principal, interest and fees required to be paid to Agent for the
account of Lenders, unless Agent shall have received written notice from a
Lender or Borrowing Agent referring to this Agreement, describing such Default
or Event of Default and stating that such notice is a "notice of default". Agent
will notify each Lender of its receipt of any such notice.
8.3. Action by Agent.
Agent shall take such action with respect to any Default or Event of
Default as may be requested by Requisite Lenders in accordance with Section 7.
Unless and until Agent has received any such request, Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to any Default or Event of Default as it shall deem advisable or in the
best interests of Lenders.
8.4. Amendments, Waivers and Consents.
(A) Percentage of Lenders Required. Except as otherwise provided
herein or in any of the other Loan Documents, no amendment, modification,
termination or waiver of any provision of this Agreement or any other Loan
Document, or consent to any departure by any Loan Party therefrom, shall in any
event be effective unless the same shall be in writing and signed by Requisite
Lenders (or, Agent, if expressly set forth herein or in any of the other Loan
Documents) and the applicable Loan Party; provided however, no amendment,
modification, termination, waiver or consent shall be effective, unless in
writing and signed by all Lenders, to do any of the following: (1) increase any
of the Commitments; (2) reduce the principal of or the rate of interest on any
Loan or reduce the fees payable with respect to any Loan or Lender Letter of
Credit other than in accordance with the terms of this Agreement; (3) extend the
Termination
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EXHIBIT 10.1
Date or the scheduled due date for all or any portion of principal of the Loans
or any interest or fees due hereunder; (4) amend the definition of the term
"Requisite Lenders" or the percentage of Lenders which shall be required for
Lenders to take any action hereunder; (5) amend or waive this Section 9.4 or the
definitions of the terms used in this Section 9.4 insofar as the definitions
affect the substance of this Section 9.4; (6) increase by more than five percent
(5%) each of the percentages contained in the definition of Borrowing Base; (7)
release Collateral in excess of Collateral having a value of $750,000 in any
Fiscal Year (except if the sale, disposition or release of such Collateral is
permitted under Section 5.2(E), Section 9.1(H)(1) or under any other Loan
Document); or (8) consent to the assignment, delegation or other transfer by any
Loan Party of any of its rights and obligations under any Loan Document;
provided, further, that no amendment, modification, termination, waiver or
consent affecting the rights or duties of Agent under this Section 9 or under
any Loan Document shall in any event be effective, unless in writing and signed
by Agent, in addition to the Lenders required to take such action. Any
amendment, modification, termination, waiver or consent effected in accordance
with this Section 9 shall be binding upon each Lender or future Lender and, if
signed by a Loan Party, on such Loan Party. Notwithstanding the foregoing, any
waiver or consent which permits any prepayment of the Loans required hereunder
in an amount not greater than $100,000 to be applied to the Revolving Loan
rather than Term Loan A, shall only require the consent of Agent.
(B) Specific Purpose or Intent. Each amendment, modification,
termination, waiver or consent shall be effective only in the specific instance
and for the specific purpose for which it was given. No amendment, modification,
termination, waiver or consent shall be required for Agent to take additional
Collateral.
(C) Failure to Give Consent; Replacement of Non-Consenting Lender.
In the event Agent requests the consent of a Lender and does not receive a
written consent or denial thereof within ten (10) Business Days after such
Lender's receipt of such request, then such Lender will be deemed to have denied
the giving of such consent. If, in connection with any proposed amendment,
modification, termination or waiver of any of the provisions of this Agreement
requiring the consent or approval of all Lenders under this subsection 9.4, the
consent of Requisite Lenders is obtained but the consent of one or more other
Lenders whose consent is required is not obtained, then Borrowers shall have the
right, so long as all such non-consenting Lenders are either replaced or prepaid
as described in clauses (1) or (2) below, to either (1) replace the
non-consenting Lenders with one or more Replacement Lenders pursuant to
subsection 2.11(A), as if such Lender were an Affected Lender thereunder, but
only so long as each such Replacement Lender consents to the proposed amendment,
modification, termination or waiver, or (2) prepay in full the Obligations of
the non-consenting Lenders and terminate the non-consenting Lenders' Commitments
pursuant to subsection 2.11(B), as if such Lender were an Affected Lender
thereunder.
Notwithstanding anything in this subsection 9.4, Agent and Loan
Parties, without the consent of either Requisite Lenders or all Lenders, may
execute amendments to this Agreement and the Loan Documents, which consist
solely of the making of typographical corrections.
8.5. Assignments and Participations in Loans.
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EXHIBIT 10.1
(A) Assignments. Each Lender may assign its rights and delegate its
obligations under this Agreement to an Eligible Assignee; provided, however, (1)
such Lender (other than GMAC CF) shall first obtain the written consent of
Agent, and, provided that no Event of Default shall then exist and be
continuing, Borrowing Agent, neither of which shall not be unreasonably
withheld, (2) the amount of Commitments and Loans of the assigning Lender being
assigned shall in no event be less than the lesser of (a) $5,000,000 or (b) the
entire amount of the Commitments and Loans of such assigning Lender and (3)(a)
each such assignment shall be of a pro rata portion of all such assigning
Lender's Loans and Commitments hereunder, and (b) the parties to such assignment
shall execute and deliver to Agent for acceptance and recording a Assignment and
Acceptance Agreement together with (i) a processing and recording fee of $3,500
payable by the assigning Lender to Agent and (ii) the Note originally delivered
to the assigning Lender. The administrative fee referred to in clause (3) of the
preceding sentence shall not apply to an assignment of a security interest in
all or any portion of a Lender's rights under this Agreement or the other Loan
Documents, as described in clause (1) of subsection 9.5(D) below. Upon receipt
of all of the foregoing, Agent shall notify Borrowing Agent of such assignment
and the Borrowers shall comply with its obligations under the last sentence of
subsection 2.1(D). In the case of an assignment authorized under this subsection
9.5, the assignee shall be considered to be a "Lender" hereunder and Loan
Parties hereby acknowledge and agree that any assignment will give rise to a
direct obligation of Loan Parties to the assignee. The assigning Lender shall be
relieved of its obligations to make Loans hereunder with respect to the assigned
portion of its Commitment.
(B) Participations. Each Lender may sell participations in all or
any part of any Loans or Commitments made by it to another Person; provided,
however, such Lender shall first obtain the prior written consent of Agent,
which consent shall not be unreasonably withheld. All amounts payable by Loan
Parties hereunder shall be determined as if that Lender had not sold such
participation and the holder of any such participation shall not be entitled to
require such Lender to take or omit to take any action hereunder except action
directly effecting (1) any reduction in the principal amount or an interest rate
on any Loan in which such holder participates; (2) any extension of the
Termination Date or the date fixed for any payment of interest or principal
(other than any mandatory prepayment) payable with respect to any Loan in which
such holder participates; and (3) any release of substantially all of the
Collateral. Loan Parties hereby acknowledge and agree that the participant under
each participation shall for purposes of subsections 2.8, 2.9, 2.10, 9.6 and
10.2 be considered to be a "Lender".
(C) No Relief of Obligations; Cooperation; Ability to Make LIBOR
Loans. Except as otherwise provided in subsection 9.5(A) no Lender shall, as
between Borrower and that Lender, be relieved of any of its obligations
hereunder as a result of any sale, assignment, transfer or negotiation of, or
granting of participation in, all or any part of the Loans or other Obligations
owed to such Lender. Each Lender may furnish any information concerning Loan
Parties in the possession of that Lender from time to time to Eligible Assignees
and participants (including prospective assignees and participants). Loan
Parties agree that they will use their reasonable efforts to assist and
cooperate with Agent and any Lender in any manner reasonably requested by Agent
or such Lender to effect the sale of a participation or an assignment described
above, including without limitation assistance in the preparation of appropriate
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EXHIBIT 10.1
disclosure documents or placement memoranda. Notwithstanding anything contained
in this Agreement to the contrary, so long as the Requisite Lenders shall remain
capable of making LIBOR Loans, no Person shall become a Lender hereunder unless
such Person shall also be capable of making LIBOR Loans.
(D) Security Interests; Assignment to Affiliates. Notwithstanding
any other provision set forth in this Agreement, any Lender may at any time
following written notice to Agent (1) pledge the Obligations held by it or
create a security interest in all or any portion of its rights under this
Agreement or the other Loan Documents in favor of any Person; provided, however
(a) no such pledge or grant of security interest to any Person shall release
such Lender from its obligations hereunder or under any other Loan Document and
(b) the acquisition of title to such Lender's Obligations pursuant to any
foreclosure or other exercise of remedies by such Person shall be subject to the
provisions of this Agreement and the other Loan Documents in all respects
including, without limitation, any consent required by subsection 9.5; and (2)
subject to complying with the provisions of subsection 9.5(A), assign all or any
portion of its funded loans to an Eligible Assignee which is a Subsidiary of
such Lender or its parent company, to one or more other Lenders, or to a Related
Fund.
(E) Recording of Assignments. Agent shall maintain at its office in
New York, New York a copy of each Assignment and Acceptance Agreement delivered
to it and a register for the recordation of the names and addresses of Lenders,
and the commitments of, and principal amount of the Loans owing to each Lender
pursuant to the terms hereof from time to time (the "Register"). The entries in
the Register shall be presumptive evidence of the amounts due and owing to
Lender in the absence of manifest error. Loan Parties, Agent and each Lender may
treat each Person whose name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement. The Register
shall be available for inspection by Borrowing Agent and any Lender, at any
reasonable time upon reasonable prior notice.
At the request of Agent from time to time both before and after the
Closing Date, the Loan Parties will assist Agent in the syndication of the
credit facility provided pursuant to this Agreement and the other Loan
Documents. Such assistance shall include, but not be limited to (i) prompt
assistance in the preparation of an information memorandum and the verification
of the completeness and accuracy of the information and the reasonableness of
the projections contained therein, (ii) preparation of offering materials and
financial projections by Loan Parties and their advisors, (iii) providing Agent
with all information reasonably deemed necessary by Agent to successfully
complete the syndication, (iv) confirmation as to the accuracy and completeness
of such offering materials and information and confirmation that management's
projections are based on assumptions believed by the Loan Parties to be
reasonable at the time made, and (v) participation of the Loan Parties' senior
management in meetings and conference calls with potential lenders at such times
and places as Agent may reasonably request.
8.6. Set Off and Sharing of Payments. In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such
rights, upon the occurrence and during the continuance of any Event of Default,
each Lender is hereby authorized by each Loan Party at any time or from time to
time, with reasonably prompt subsequent notice
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EXHIBIT 10.1
to Borrowing Agent (any prior or contemporaneous notice being hereby expressly
waived) to set off and to appropriate and to apply any and all (a) balances held
by such Lender at any of its offices for the account of Loan Parties (regardless
of whether such balances are then due to Loan Parties), and (b) other property
at any time held or owing by such Lender to or for the credit or for the account
of any Loan Party, against and on account of any of the Obligations; except that
no Lender shall exercise any such right without the prior written consent of
Agent. Any Lender exercising its right to set off shall purchase for cash (and
the other Lenders shall sell) interests in each of such other Lender's Pro Rata
Share of the Obligations as would be necessary to cause all Lenders to share the
amount so set off with each other Lender in accordance with their respective Pro
Rata Shares. Each Loan Party agrees, to the fullest extent permitted by law,
that any Lender may exercise its right to set off with respect to amounts in
excess of its Pro Rata Share of the Obligations and upon doing so shall deliver
such amount so set off to Agent for the benefit of Agent and of all Lenders in
accordance with their Pro Rata Shares.
8.7. Disbursement of Funds. Agent may, on behalf of Lenders, disburse
funds to Borrowers for Loans requested. Each Lender shall reimburse Agent on
demand for all funds disbursed on its behalf by Agent, or if Agent so requests,
each Lender will remit to Agent its Pro Rata Share of any Loan or Advance before
Agent disburses same to Borrowers. If Agent elects to require that each Lender
make funds available to Agent prior to a disbursement by Agent to Borrower,
Agent shall advise each Lender by telephone, telex, fax or telecopy of the
amount of such Lender's Pro Rata Share of the Loan requested by Borrowing Agent
no later than 1:00 p.m. New York time on the Funding Date applicable thereto,
and each such Lender shall pay Agent such Lender's Pro Rata Share of such
requested Loan, in same day funds, by wire transfer to Agent's account on such
Funding Date.
8.8. Settlements, Payments and Information.
(A) Revolving Advances and Payments; Fee Payments.
(1) Fluctuation of Revolving Loan Balance. The Revolving Loan
balance may fluctuate from day to day through Agent's disbursement of funds to,
and receipt of funds from, Loan Parties. In order to minimize the frequency of
transfers of funds between Agent and each Lender notwithstanding terms to the
contrary set forth in Section 2 and subsection 9.7, Revolving Advances and
repayments, except as set forth in subsection 2.1(A), will be settled according
to the procedures described in this subsection 9.8. Notwithstanding these
procedures, each Lender's obligation to fund its portion of any advances made by
Agent to Borrowers will commence on the date such advances are made by Agent.
Such payments will be made by such Lender without set-off, counterclaim or
reduction of any kind.
(2) Settlement Dates. Once each week for the Revolving Loan or
more frequently (including daily), if Agent so elects (each such day being a
"Settlement Date"), Agent will advise each Lender by telephone, fax or telecopy
of the amount of each such Lender's Pro Rata Share of the Revolving Loan. In the
event payments are necessary to adjust the amount of such Lender's required Pro
Rata Share of the Revolving Loan balance to such Lender's actual Pro Rata Share
of the Revolving Loan balance as of any Settlement Date, the party from which
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EXHIBIT 10.1
such payment is due will pay the other, in same day funds, by wire transfer to
the other's account not later than 3:00 p.m. New York time on the Business Day
following the Settlement Date.
(3) Settlement Definitions. For purposes of this subsection
9.8(A), the following terms and conditions will have the meanings indicated:
(a) "Daily Loan Balance" means an amount calculated as
of the end of each calendar day by subtracting (i) the cumulative principal
amount paid by Agent to a Lender on a Loan from the Closing Date through and
including such calendar day, from (ii) the cumulative principal amount on a Loan
advanced by such Lender to Agent on that Loan from the Closing Date through and
including such calendar day.
(b) "Daily Interest Rate" means an amount calculated by
dividing the interest rate payable to a Lender on a Loan (as set forth in
subsection 2.2) as of each calendar day by three hundred sixty (360).
(c) "Daily Interest Amount" means an amount calculated
by multiplying the Daily Loan Balance of a Loan by the associated Daily Interest
Rate on that Loan.
(d) "Interest Ratio" means a number calculated by
dividing the total amount of the interest on a Loan received by Agent with
respect to the immediately preceding by the total amount of interest on that
Loan due from Borrower during the immediately preceding month.
(4) Settlement Payments. On the first Business Day of each
month ("Interest Settlement Date"), Agent will advise each Lender by telephone,
fax or telecopy of the amount of such Lender's share of interest and fees on
each of the Loans as of the end of the last day of the immediately preceding
month. Provided that such Lender has made all payments required to be made by it
under this Agreement, Agent will pay to such Lender, by wire transfer to such
Lender's account (as specified by such Lender on the signature page of this
Agreement or the applicable Assignment and Acceptance Agreement, as amended by
such Lender from time to time after the date hereof or in the applicable
Assignment and Acceptance Agreement) not later than 3:00 p.m. New York time on
the next Business Day following the Interest Settlement Date, such Lender's
share of interest and fees on each of the Loans. Such Lender's share of interest
on each Loan will be calculated for that Loan by adding together the Daily
Interest Amounts for each calendar day of the prior month for that Loan and
multiplying the total thereof by the Interest Ratio for that Loan. Such Lender's
share of the unused line fee described in Section 2.3(A) shall be an amount
equal to (a)(i) such Lender's average Revolving Loan Commitment during such
month, less (ii) the sum of (x) such Lender's average Daily Loan Balance of the
Revolving Loans, plus (y) such Lender's Pro Rata Share of the average daily
aggregate amount of Letter of Credit Reserve, in each case for the preceding
month, multiplied by (b) the percentage required by Section 2.3(A). Such
Lender's share of all other fees paid to Agent for the benefit of Lenders
hereunder shall be paid and calculated based on such Lender's Commitment with
respect to the Loans on which such fees are associated. To the extent Agent does
not receive the total amount of any fee owing by Borrowers under this Agreement,
each amount payable by Agent to a Lender under this subsection 9.8(A)(4) with
respect to such fee
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EXHIBIT 10.1
shall be reduced on a pro rata basis. Any funds disbursed or received by Agent
pursuant to this Agreement, including, without limitation, under Sections 9.7,
9.8(A)(1), and 9.9, prior to the Settlement Date for such disbursement or
payment shall be deemed advances or remittances by GMAC CF, in its capacity as a
Lender, for purposes of calculating interest and fees pursuant to this
subsection 9.8(A)(4).
(B) Return of Payments.
(1) Recovery after Non-Receipt of Expected Payment. If Agent
pays an amount to a Lender under this Agreement in the belief or expectation
that a related payment has been or will be received by Agent from any Loan Party
and such related payment is not received by Agent, then Agent will be entitled
to recover such amount from such Lender without set-off, counterclaim or
deduction of any kind together with interest thereon, for each day from and
including the date such amount is made available by Agent to such Lender to but
excluding the date of repayment to Agent, at the greater of the Federal Funds
Effective Rate and a rate determined by Agent in accordance with banking
industry rules on interbank compensation.
(2) Recovery of Returned Payment. If Agent determines at any
time that any amount received by Agent under this Agreement must be returned to
any Loan Party or paid to any other Person pursuant to any requirement of law,
court order or otherwise, then, notwithstanding any other term or condition of
this Agreement, Agent will not be required to distribute any portion thereof to
any Lender. In addition, each Lender will repay to Agent on demand any portion
of such amount that Agent has distributed to such Lender, together with interest
at such rate, if any, as Agent is required to pay to any Loan Party or such
other Person, without set-off, counterclaim or deduction of any kind.
8.9. Discretionary Advances. Notwithstanding anything contained herein to
the contrary, Agent may, in its sole discretion, for a period of not more than
thirty (30) consecutive days make Revolving Advances in an aggregate amount of
not more than $2,500,000 in excess of the limitations set forth in the Borrowing
Base but not in excess of the Revolving Loan Commitment for the purpose of
preserving or protecting the Collateral or for incurring any costs associated
with collection or enforcing rights or remedies against the Collateral, or
incurred in any action to enforce this Agreement or any other Loan Document.
SECTION 10. MISCELLANEOUS
9.1. Expenses and Attorneys' Fees. Whether or not any of the Transactions
shall be consummated, each Loan Party agrees to promptly pay all reasonable
fees, costs and expenses of Agent incurred in connection with any matters
contemplated by or arising out of this Agreement or the other Loan Documents
including the following, and all such fees, costs and expenses shall be part of
the Obligations, payable on demand and secured by the Collateral: (a) reasonable
fees, costs and expenses incurred by Agent (including attorneys' fees and
expenses, the allocated costs of Agent's internal legal staff and fees of
environmental consultants, accountants and other professionals retained by
Agent) incurred in connection with the examination, review, due diligence
investigation, documentation and closing of the financing arrangements evidenced
by
103
EXHIBIT 10.1
the Loan Documents; (b) reasonable fees, costs and expenses incurred by Agent
(including attorneys' fees and expenses, the allocated reasonable costs of
Agent's internal legal staff and fees of environmental consultants, accountants
and other professionals retained by Agent) incurred in connection with the
review, negotiation, preparation, documentation, execution, syndication and
administration of the Loan Documents, the Loans, and any amendments, waivers,
consents, forbearances and other modifications relating thereto or any
subordination or intercreditor agreements, including reasonable documentation
charges assessed by Agent for amendments, waivers, consents and any other
documentation prepared by Agent's internal legal staff; (c) reasonable fees,
costs and expenses (including attorneys' fees and allocated costs of internal
legal staff) incurred by Agent in creating, perfecting and maintaining
perfection of Liens in favor of Agent, on behalf of Agent and Lenders; (d)
reasonable fees, costs and expenses incurred by Agent in connection with
forwarding to Borrowers the proceeds of Loans including Agent's or any Lenders'
standard wire transfer fee; (e) reasonable fees, costs, expenses and bank
charges, including bank charges for returned checks, incurred by Agent or any
Lender in establishing, maintaining and handling lock box accounts, Blocked
Accounts or other accounts for collection of the Collateral; (f) reasonable
fees, costs, expenses (including attorneys' fees and allocated costs of internal
legal staff) of Agent or any Lender and costs of settlement incurred in
collecting upon or enforcing rights against the Collateral or incurred in any
action to enforce this Agreement or the other Loan Documents or to collect any
payments due from any Loan Party under this Agreement or any other Loan Document
or incurred in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement, whether in the nature of a "workout"
or in connection with any insolvency or bankruptcy proceedings or otherwise.
9.2. Indemnity. In addition (and without duplication of) to the payment of
expenses pursuant to subsection 10.1, whether or not any of the Transactions
shall be consummated, each Loan Party agrees to indemnify, pay and hold Agent
and each Lender, and the officers, directors, employees, agents, consultants,
auditors, persons engaged by Agent or any Lender, to evaluate or monitor the
Collateral, affiliates and attorneys of Agent, Lender and such holders
(collectively called the "Indemnities") harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or nature whatsoever
(including the reasonable fees and disbursements of counsel for such Indemnities
in connection with any investigative, administrative or judicial proceeding
commenced or threatened, whether or not such Indemnity shall be designated a
party thereto) that may be imposed on, incurred by, or asserted against that
Indemnity, in any manner relating to or arising out of this Agreement or the
other Loan Documents, the consummation of the GMAC Transactions, the statements
contained in the commitment letters, if any, delivered by Agent or any Lender,
Agent's and each Lender's agreement to make the Loans hereunder, the use or
intended use of the proceeds of any of the Loans or the exercise of any right or
remedy hereunder or under the other Loan Documents (the "Indemnified
Liabilities"); provided that no Loan Party shall have any obligation to an
Indemnity hereunder with respect to Indemnified Liabilities arising from the
gross negligence or willful misconduct of that Indemnity as determined by a
final non-appealable judgment by a court of competent jurisdiction.
9.3. Notices. Unless otherwise specifically provided herein, all notices
shall be in writing addressed to the respective party as set forth below and may
be personally served, faxed,
104
EXHIBIT 10.1
telecopied or sent by overnight courier service or US mail and shall be deemed
to have been given: (a) if delivered in person, when delivered; (b) if delivered
by fax or telecopy, on the date of transmission if transmitted on a Business Day
before 4:00 p.m. New York time or, if not, on the next succeeding Business Day;
(c) if delivered by overnight courier, two (2) days after delivery to such
courier properly addressed; or (d) if by U.S. Mail, four (4) Business Days after
depositing in the US mail, with postage prepaid and properly addressed.
If to any Loan Party: Rocky Shoes & Boots, Inc.
00 Xxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxx 00000
Attn: Xxxxx X. XxXxxxxx
Chief Financial Officer
Fax/Telecopy No.: (000) 000-0000
With a copy to: Porter, Wright, Xxxxxx & Xxxxxx LLP
00 Xxxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
Fax/Telecopy No.: (000) 000-0000
If to Agent or to GMACCF: GMAC COMMERCIAL FINANCE LLC
1290 Avenue of the Xxxxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Rocky Portfolio Manager
Fax/Telecopy No.: (000) 000-0000
With copies to: GMAC COMMERCIAL FINANCE LLC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Legal Services/SFD
Fax/Telecopy No.: (000) 000-0000
XXXX & HESSEN LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Fax/Telecopy No.: (000) 000-0000
If to any Lender: Its address indicated on the signature page
hereto, in an Assignment and Acceptance Agreement or in a notice to Agent and
Borrowing Agent or to such other address as the party addressed shall have
previously designated by written notice to the serving party, given in
accordance with this subsection 10.3.
9.4. Survival of Representations and Warranties and Certain Agreements.
All agreements, representations and warranties made herein shall survive the
execution and delivery of this Agreement and the making of the Loans hereunder.
Notwithstanding anything in this
105
EXHIBIT 10.1
Agreement or implied by law to the contrary, the agreements of each Loan Party,
Agent, and Lenders set forth in subsections 9.1(E), 10.1, 10.2, 10.6, 10.11,
10.14, and 10.15 shall survive the payment of the Loans and the termination of
this Agreement.
9.5. Indulgence Not Waiver. No failure or delay on the part of Agent, any
Lender or any holder of any Note in the exercise of any power, right or
privilege hereunder or under any Note shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other right, power or
privilege.
9.6. Marshaling; Payments Set Aside. Neither Agent nor any Lender shall be
under any obligation to marshal any assets in favor of any Loan Party or any
other party or against or in payment of any or all of the Obligations. To the
extent that any Loan Party makes a payment or payments to Agent and/or any
Lender or Agent and/or any Lender enforces its security interests or exercises
its rights of setoff, and such payment or payments or the proceeds of such
enforcement or setoff or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside and/or required to be repaid to a
trustee, receiver or any other party under any bankruptcy law, state or federal
law, common law or equitable cause, then to the extent of such recovery, the
Obligations or part thereof originally intended to be satisfied, and all Liens,
rights and remedies therefor, shall be revived and continued in full force and
effect as if such payment had not been made or such enforcement or setoff had
not occurred.
9.7. Entire Agreement. This Agreement and the other Loan Documents embody
the entire agreement among the parties hereto and supersede all prior
commitments, agreements, representations, and understandings, whether written or
oral, relating to the subject matter hereof, and may not be contradicted or
varied by evidence of prior, contemporaneous, or subsequent oral agreements or
discussions of the parties hereto.
9.8. Severability. The invalidity, illegality or unenforceability in any
jurisdiction of any provision in or obligation under this Agreement or the other
Loan Documents shall not affect or impair the validity, legality or
enforceability of the remaining provisions or obligations under this Agreement,
or the other Loan Documents.
9.9. Lenders' Obligations Several; Independent Nature of Lenders' Rights.
The obligation of each Lender hereunder is several and not joint and neither
Agent nor any Lender shall be responsible for the obligation or Commitment of
any other Lender hereunder. In the event that any Lender at any time should fail
to make a Loan as herein provided, the Lenders, or any of them, at their sole
option, may make the Loan that was to have been made by the Lender so failing to
make such Loan. Nothing contained in any Loan Document and no action taken by
Agent or any Lender pursuant hereto or thereto shall be deemed to constitute
Lenders to be a partnership, an association, a joint venture or any other kind
of entity. The amounts payable at any time hereunder to each Lender shall be a
separate and independent debt.
9.10. Headings. Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.
106
EXHIBIT 10.1
9.11. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
9.12. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, provided, however, no Loan Party may assign its rights or obligations
hereunder without the written consent of Lenders.
9.13. No Fiduciary Relationship; No Duty; Limitation of Liabilities.
(A) No Fiduciary Relationship. No provision in this Agreement or in
any of the other Loan Documents and no course of dealing between the parties
shall be deemed to create any fiduciary duty by Agent or any Lender to any Loan
Party.
(B) No Duty. All attorneys, accountants, appraisers, and other
professional Persons and consultants retained by Agent or any Lender shall have
the right to act exclusively in the interest of Agent or such Lender and shall
have no duty of disclosure, duty of loyalty, duty of care, or other duty or
obligation of any type or nature whatsoever to any Loan Party or any of any Loan
Party's shareholders or any other Person.
(C) Limitation of Liabilities. Neither Agent nor any Lender, nor any
affiliate, officer, director, shareholder, employee, attorney, or agent of Agent
or any Lender shall have any liability with respect to, and each Loan Party
hereby waives, releases, and agrees not to xxx any of them upon, any claim for
any special, indirect, incidental, or consequential damages suffered or incurred
by any Loan Party in connection with, arising out of, or in any way related to,
this Agreement or any of the other Loan Documents, any of the GMAC Transactions
or any of the other Transactions. Each Loan Party hereby waives, releases, and
agrees not to xxx Agent or any Lender or any of Agent's or any Lender's
affiliates, officers, directors, employees, attorneys, or agents for punitive
damages in respect of any claim in connection with, arising out of, or in any
way related to, this Agreement or any of the other Loan Documents, any of the
GMAC Transactions or any of the other Transactions.
9.14. CONSENT TO JURISDICTION. EACH LOAN PARTY HEREBY CONSENTS TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF NEW
YORK, STATE OF NEW YORK AND IRREVOCABLY AGREES THAT, SUBJECT TO AGENT'S
ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE OTHER LOAN DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS. EACH
LOAN PARTY EXPRESSLY SUBMITS AND CONSENTS TO THE JURISDICTION OF THE AFORESAID
COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS. EACH LOAN PARTY HEREBY
WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE
OF PROCESS MAY BE MADE UPON BORROWING AGENT BY CERTIFIED OR REGISTERED MAIL,
RETURN RECEIPT REQUESTED, ADDRESSED TO BORROWING AGENT, AT THE ADDRESS SET FORTH
IN THIS AGREEMENT AND
107
EXHIBIT 10.1
SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED.
EACH LOAN PARTY IN ANY EVENT WILL USE ALL COMMERCIALLY REASONABLE EFFORTS TO
PRODUCE IN ANY SUCH DISPUTE RESOLUTION PROCEEDING, AT THE TIME AND IN THE MANNER
REQUESTED BY AGENT OR ANY LENDER, ALL PERSONS, DOCUMENTS (WHETHER IN TANGIBLE,
ELECTRONIC OR OTHER FORM) OR OTHER THINGS UNDER ITS CONTROL AND RELATING TO THE
DISPUTE.
9.15. WAIVER OF JURY TRIAL EACH LOAN PARTY, AGENT AND EACH LENDER HEREBY
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. EACH
LOAN PARTY, AGENT AND EACH LENDER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL
INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON THE
WAIVER IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THAT
EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH
LOAN PARTY, AGENT AND EACH LENDER WARRANT AND REPRESENT THAT EACH HAS HAD THE
OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT EACH
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.
9.16. Construction. Each Loan Party, Agent and each Lender each
acknowledge that it has had the benefit of legal counsel of its own choice and
has been afforded an opportunity to review this Agreement and the other Loan
Documents with its legal counsel. This Agreement and the other Loan Documents
shall be construed as if jointly drafted by Loan Parties, Agent and each Lender.
9.17. Counterparts; Effectiveness. This Agreement and any amendments,
waivers, consents, or supplements may be executed via telecopier or facsimile
transmission in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all of which counterparts together shall constitute one
and the same instrument. This Agreement shall become effective upon the
execution of a counterpart hereof by each of the parties hereto.
9.18. Confidentiality. Agent and each Lender agree to exercise their best
efforts to keep confidential any non-public information delivered pursuant to
the Loan Documents and identified as such by Borrowing Agent and not to disclose
such information to Persons other than to: its respective affiliates, officers,
directors and employees; or its potential assignees or participants; or Persons
employed by or engaged by Agent, a Lender or a Lender's assignees or
participants including, without limitation, attorneys, auditors, professional
consultants, rating agencies and portfolio management services. The
confidentiality provisions contained in this subsection shall not apply to
disclosures (a) required to be made by Agent or any Lender to any regulatory or
governmental agency or pursuant to legal process or (b) consisting of general
portfolio information that does not identify any Loan Party. The obligations of
Agent and Lenders under this subsection 10.18 shall supersede and replace the
obligations of Agent and Lenders under any confidentiality agreement in respect
of this financing executed and delivered
108
EXHIBIT 10.1
by Agent or any Lender prior to the date hereof. In no event shall Agent or any
Lender be obligated or required to return any materials furnished by Loan
Parties ;provided, however, each potential assignee or participant shall be
required to agree that if it does not become an assignee (or participant) it
shall return all materials furnished to it by Loan Parties in connection
herewith.
Notwithstanding the foregoing, and notwithstanding any other express
or implied agreement or understanding to the contrary, each of the parties
hereto and their respective employees, representatives, and other agents are
authorized to disclose the tax treatment and tax structure of the Transactions
to any and all persons, without limitation of any kind. Each of the parties
hereto may disclose all materials of any kind (including opinions or other tax
analyses) insofar as they relate to the tax treatment and tax structure of the
Transactions. This authorization does not extend to disclosure of any other
information including (without limitation) (a) the identities of participants or
potential participants in the GMAC Transactions (b) the existence or status of
any negotiations, (c) any pricing or other financial information or (d) any
other term or detail not related to the tax treatment and tax structure of the
GMAC Transactions.
9.19. Publication. Each Loan Party consents to the publication by Agent of
a tombstone or similar advertising material relating to the GMAC Transactions;
provided, however, Agent shall provide a draft of any such tombstone or similar
advertising material to Borrowing Agent for review prior to the publication
thereof. Agent and Lenders reserve the right to provide industry trade
organizations information necessary and customary for inclusion in league table
measurements.
[SIGNATURE PAGES FOLLOWS]
109
EXHIBIT 10.1
Witness the due execution of this Loan and Security Agreement by the
respective duly authorized officers of the undersigned as of the date first
written above.
ROCKY SHOES & BOOTS, INC.
[FEIN: 00-0000000]
LIFESTYLE FOOTWEAR, INC.
[FEIN: 00-0000000]
EJ FOOTWEAR LLC
[FEIN: 00-0000000]
XX XXXXXX SAFETY SHOE CO. LLC
[FEIN: 00-0000000]
GEORGIA BOOT LLC
[FEIN: 00-0000000]
GEORGIA BOOT PROPERTIES LLC
[FEIN: 00-0000000]
DURANGO BOOT COMPANY LLC
[FEIN: 00-0000000]
NORTHLAKE BOOT COMPANY LLC
[FEIN: 00-0000000]
LEHIGH SAFETY SHOE CO. LLC
[FEIN: 00-0000000]
LEHIGH SAFETY SHOE PROPERTIES LLC
[FEIN: 00-0000000]
By: /s/ Xxxxx X. XxXxxxxx
--------------------------------
Name: Xxxxx X. XxXxxxxx
Title: Chief Financial Officer of
each of the foregoing Borrowers
GMAC COMMERCIAL FINANCE LLC
By: /s/ Xxxxxxx Xxxxxxxxxx
--------------------------------
Name: Xxxxxxx Xxxxxxxxxx
Title: Vice President
Revolving Loan Commitment:
$100,000,000
Term Loan A Commitment:
$18,000,000
EXHIBIT 10.1
EXHIBITS
A. Assignment and Acceptance Agreement
B. Borrowing Base Certificate
C. Compliance and Pricing Certificate
D. Calculation of initial Advance Rates for Eligible Inventory
E. Form of Notes
F. Notice of Borrowing
A-1
EXHIBIT 10.1
SCHEDULES
Schedule 1.1 Excluded Property
Schedule 2.7(A) Commercial Tort Claims
Schedule 3 List of Closing Documents
Schedule 4.1(A) Organizational Schedule
Schedule 4.1(D) Capitalization Schedule
Schedule 4.1(F) Authorization; No Breach
Schedule 4.1(G) Governmental Approvals
Schedule 4.1(J) Litigation Schedule
Schedule 4.1(L) Environmental Schedule
Schedule 4.1(R) Intellectual Property Schedule
Schedule 4.1(W) Material Contracts
Schedule 4.1(Q) Properties Schedule
Schedule 4.1(U) Side Agreements
Schedule 4.1(Z) Current Business Practices
Schedule 5.2(A) Permitted Indebtedness Schedule
Schedule 5.2(B) Permitted Liens Schedule
Schedule 6.1(K) Deposit Accounts
Schedule 6.1(L) Bailees
Schedule 6.1(Q) Names and Locations
A-2
