SECOND AMENDED AND RESTATED LOAN AGREEMENT
By and Among
WASHINGTON MUTUAL BANK doing business as WESTERN BANK
BANK OF AMERICA, N.A.
The Several Lenders from Time to Time Parties Hereto
as the Lenders
and
WASHINGTON MUTUAL BANK doing business as WESTERN BANK
as the Letter of Credit Issuer
and
CUTTER & BUCK INC.
as the Borrower
and
WASHINGTON MUTUAL BANK doing business as WESTERN BANK
as the Administrative Agent to the Lenders and the Letter of Credit Issuer
Dated as of July 28, 2000
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS.........................................................................2
Section 1.1 Certain Defined Terms...................................................................2
Section 1.2 Computation of Time Periods.............................................................10
Section 1.3 Accounting Terms........................................................................10
ARTICLE II AMOUNTS AND TERMS OF THE BORROWINGS.....................................................................10
Section 2.1 The Facilities..........................................................................10
Section 2.2 The Borrowings..........................................................................11
Section 2.3 Making the Borrowings...................................................................18
Section 2.4 Interest Rates; Late Charges............................................................19
Section 2.5 Repayment...............................................................................20
Section 2.6 Fees....................................................................................21
Section 2.7 Prepayments.............................................................................21
Section 2.8 Payments and Computations...............................................................21
Section 2.9 Increased Costs.........................................................................22
Section 2.10 Illegality..............................................................................23
Section 2.11 Prepayment Indemnity; Fee...............................................................23
Section 2.12 Evidence of Debt........................................................................25
Section 2.13 Collateral..............................................................................25
Section 2.14 Use of Proceeds finance the Borrower's equipment and leasehold improvements.............25
ARTICLE III CONDITIONS OF BORROWING................................................................................25
Section 3.1 Conditions Precedent to Effective Date..................................................25
Section 3.2 Conditions Precedent to Each Borrowing..................................................26
ARTICLE IV REPRESENTATIONS AND WARRANTIES..........................................................................27
Section 4.1 Organization............................................................................27
Section 4.2 Authorization...........................................................................27
Section 4.3 Financial Information...................................................................27
Section 4.4 Legal Effect............................................................................27
Section 4.5 Properties..............................................................................28
Section 4.6 Hazardous Substances....................................................................28
Section 4.7 Litigation and Claims...................................................................28
Section 4.8 Taxes...................................................................................28
Section 4.9 Lien Priority...........................................................................28
Section 4.10 Binding Effect..........................................................................28
Section 4.11 Commercial Purposes.....................................................................28
Section 4.12 Employee Benefit Plans..................................................................28
Section 4.13 Location of The Borrower's Offices and Records..........................................29
Section 4.14 Information.............................................................................29
Section 4.15 Survival of Representations and Warranties..............................................29
ARTICLE V COVENANTS OF THE BORROWER................................................................................29
Section 5.1 Affirmative Covenants...................................................................29
Section 5.2 Negative Covenants......................................................................32
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Section 5.3 Financial Covenants.....................................................................33
ARTICLE VI EVENTS OF DEFAULT.......................................................................................34
Section 6.1 Events of Default.......................................................................34
Section 6.2 Remedies................................................................................35
Section 6.3 Adjustments; Right of Set-Off...........................................................36
Section 6.4 Cumulative Remedies.....................................................................36
Section 6.5 Application of Payments.................................................................37
ARTICLE VII THE ADMINISTRATIVE AGENT...............................................................................37
Section 7.1 Appointment.............................................................................37
Section 7.2 Delegation of Duties....................................................................37
Section 7.3 Exculpatory Provisions..................................................................38
Section 7.4 Reliance by Administrative Agent........................................................38
Section 7.5 Notice of Default.......................................................................38
Section 7.6 Non-Reliance on Administrative Agent and Other Lenders..................................38
Section 7.7 Indemnification.........................................................................39
Section 7.8 Administrative Agent in Its Individual Capacity.........................................39
Section 7.9 Successor Administrative Agent..........................................................39
ARTICLE VIII MISCELLANEOUS.........................................................................................40
Section 8.1 Amendments..............................................................................40
Section 8.2 Notices.................................................................................40
Section 8.3 No Waiver; Remedies.....................................................................41
Section 8.4 Costs and Expenses; Indemnification.....................................................41
Section 8.5 Binding Effect; Successors and Assigns; Participations and Assignments..................42
Section 8.6 Execution in Counterparts...............................................................44
Section 8.7 Governing Law...........................................................................44
Section 8.8 Mediation/Arbitration Provisions........................................................44
Section 8.9 Severability............................................................................46
Section 8.10 Entire Agreement........................................................................46
Section 8.11 Descriptive Headings....................................................................46
Section 8.12 Gender and Number.......................................................................46
Section 8.13 Confirmation of Security Documents......................................................46
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EXHIBIT A-1 FORM OF REVOLVING FACILITY NOTE
EXHIBIT A-2 FORM OF TERM FACILITY NOTE
EXHIBIT B FORM OF NOTICE OF BORROWING
EXHIBIT C FORM OF ASSIGNMENT AND ACCEPTANCE
EXHIBIT D COMMITMENT AMOUNTS
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AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT (this "Agreement") dated as of
JULY 28, 2000 is made by and among CUTTER & BUCK INC., a Washington
corporation (the "Borrower"), WASHINGTON MUTUAL BANK doing business as
WESTERN BANK ("Western Bank"), BANK OF AMERICA, N.A. ("BofA"), the several
banks and other financial institutions from time to time parties to this
Agreement (including Western Bank and BofA in their respective capacities as
lenders, the "Lenders"), Western Bank, as issuer of letters of credit (the
"Letter of Credit Issuer") and as issuer of credit cards (the "Credit Card
Issuer"), and Western Bank, as administrative agent for the Lenders, the
Letter of Credit Issuer and the Credit Card Issuer (in such capacity, the
"Administrative Agent"), and amends and restates in its entirety the Amended
and Restated Loan Agreement dated as of April 28, 1999 among the Borrower,
Western Bank and BofA (then known as Bank of America National Trust and
Savings Association doing business as Seafirst Bank) (the "Original Loan
Agreement").
RECITALS
The Borrower, Western Bank and BofA are parties to the Original Loan
Agreement pursuant to which Western Bank and BofA agreed to provide certain
credit facilities to the Borrower. The Borrower, Western Bank and BofA have
agreed, among other things, to increase the amount of the commitment under
the Original Loan Agreement, to amend certain financial covenants and to
extend the termination date of the Original Loan Agreement. The Borrower,
Western Bank and BofA desire to amend and restate the Original Loan Agreement
to reflect the foregoing.
Accordingly, the parties agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.1 CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be
equally applicable to both the singular and plural forms of the terms
defined):
"ACCEPTANCE" means a Draft presented to the Letter of Credit Issuer and
accepted by the Letter of Credit Issuer in accordance with Section 2.2(d).
"ADVANCE" means an advance to the Borrower pursuant to Article II, and
refers to a Floating Rate Advance or a Fixed Rate Advance (each of which
shall be a "TYPE" of Advance). Revolving Facility Advances may be borrowed as
Floating Rate Advances or LIBOR Rate Advances. Term Facility Advances may be
borrowed as Floating Rate Advances, LIBOR Rate Advances or Term Rate Advances.
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"AFFILIATE" means, as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" of a Person
means the power, directly or indirectly, either to (a) vote 20% or more of
the voting interests of such Person or (b) direct or cause the direction of
the management and policies of such Person, whether by contract or otherwise.
"AUTHORIZED OFFICER" means the President, any Senior Vice-President or
the Chief Financial Officer or Controller of the Borrower.
"BORROWER" means Cutter & Buck Inc., a Washington corporation.
"BORROWING" means a borrowing consisting of (a) the making of an
Advance, (b) the issuance of a Letter of Credit, (c) the acceptance of Drafts
or (d) the funding of risk participations pursuant to Section 2.2(b)(iii) or
2.2(c)(ii).
"BORROWING REQUEST" means a request made by the Borrower to the
Administrative Agent for (a) a Borrowing or (b) the conversion or
continuation of an Advance pursuant to the terms of this Agreement and shall,
if requested by the Administrative Agent, be in the form of a Notice of
Borrowing attached as Exhibit B.
"BUSINESS DAY" means a day of the year on which banks are not required
or authorized to close in Seattle, Washington and, if the applicable Business
Day relates to any LIBOR Rate Advances, on which dealings are carried on in
the London interbank market.
"CAPITAL EXPENDITURES" means expenditures in respect of the purchase or
other acquisition of fixed or capital assets that are required to be
capitalized for financial reporting purposes in accordance with GAAP.
"COLLATERAL" means the collateral described in the Security Agreement or
any other Loan Document at any time now or hereafter in effect between the
Borrower and the Administrative Agent, acting on behalf and for the benefit
of each of the Lenders, the Letter of Credit Issuer and the Credit Card
Issuer, including all items of real and personal property in which the
Administrative Agent holds a Lien to secure the credit facilities provided in
this Agreement.
"COMMERCIAL LETTERS OF CREDIT" means irrevocable commercial letters of
credit issued pursuant to Section 2.2(b) from time to time by the Letter of
Credit Issuer or one of its correspondents for the account of the Borrower.
"COMMITMENT" means, with respect to each Lender, the dollar amount
constituting a portion of the Revolving Commitment set forth opposite such
Lender's name on Exhibit D hereof, including any recalculation thereof
resulting from an assignment of any portion of its rights and obligations
under this Agreement pursuant to Section 8.5(c).
"COMMITMENT PERCENTAGE" means, as to any Lender at any time, the
percentage which such Lender's Commitment then constitutes of the Revolving
Commitment.
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"CREDIT CARDS" means one or more Business Visa Cards issued pursuant to
Section 2.2(c) for the account of the Borrower.
"CREDIT CARD PARTICIPANT" means as to any Credit Card, each Lender other
than the Letter of Credit Issuer and BofA.
"CREDIT CARD ISSUER" means Washington Mutual Bank doing business as
Western Bank.
"DEBT SERVICE" means, as of the last day of any fiscal quarter, the sum
of (a) interest on Indebtedness paid during the fiscal quarter then ended and
the immediately preceding three fiscal quarters, (b) factoring commissions
paid during the fiscal quarter then ended and the immediately preceding three
fiscal quarters, (c) all amounts required to be paid or prepaid with respect
to Funded Indebtedness within one year of such date and (d) all amounts
required to be paid or prepaid with respect to capital leases or long term
operating leases within one year of such date.
"DEFAULT" has the meaning specified in the definition of "Event of
Default."
"DEFAULT RATE" has the meaning specified in Section 2.4(b).
"DOLLARS", "DOLLARS" or the symbol "$" means lawful money of the United
States of America denominated in United States dollars.
"DRAFT" has the meaning specified in Section 2.2(d).
"EBITDA" means, for any period, the net income or net loss of the
Borrower and its subsidiaries computed on a consolidated basis in accordance
with GAAP (but excluding extraordinary gains or losses), after restoring
amounts deducted for, without duplication, (a) interest expense, (b) taxes
based upon net income and (c) depreciation and amortization.
"EFFECTIVE DATE" means July 31, 2000.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EVENT OF DEFAULT" means any of the events specified in Section 6.1,
provided that there has been satisfied any requirement in connection with
such event for the giving of notice, or the lapse of time, or the happening
of any further condition, event or act, and "DEFAULT" shall mean any of such
events, whether or not any such requirement has been satisfied.
"FEDERAL FUNDS EFFECTIVE RATE" shall mean, 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 next succeeding Business Day by the Federal Reserve Bank of New York, or,
if such rate is not so published for any day which is a Business Day, the
average of the quotations for the day of such transactions received by the
Administrative Agent from three federal funds brokers of recognized standing
selected by it.
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"FIXED RATE" means a LIBOR Rate or a Term Rate.
"FIXED RATE ADVANCE" means a LIBOR Rate Advance or a Term Rate Advance.
"FLOATING RATE" means, with respect to any Floating Rate Advance, the
interest rate per annum reported as the Prime Rate in the Money Rates section
of the Wall Street Journal. If the Wall Street Journal ceases reporting the
Prime Rate as currently reported, the Floating Rate shall be another
reasonably comparable rate selected by the Lender.
"FLOATING RATE ADVANCE" means an Advance which bears interest at a rate
determined by reference to the Floating Rate as provided in Section 2.4(a)(i).
"FUNDED DEBT" means, as of any date of determination, (a) the
Indebtedness of the Borrower under this Agreement, plus (b) any other
Indebtedness of the Borrower or its subsidiaries that (i) has a stated
maturity date in excess of one year from the date of the creation of such
Indebtedness or (ii) has a stated maturity date of one year or less from the
date of creation of such Indebtedness but is renewable or extendable at the
option of the Borrower.
"GAAP" means generally accepted accounting principles in the United
States.
"INDEBTEDNESS" means, with respect to any Person: (i) all items of
indebtedness or liability which would be included in determining total
liabilities as shown on the liability side of a balance sheet as of the date
as of which indebtedness is determined; (ii) indebtedness secured by any Lien
on property carried on the asset side of the balance sheet of such Person
whether or not such indebtedness shall have been assumed; (iii) any other
indebtedness or liability for borrowed money or for the deferred purchase
price of property or services for which such Person is directly or
contingently liable as obligor, guarantor, or otherwise, or in respect of
which such Person otherwise assures a creditor against loss; and (iv) any
other obligations of such Person under leases which shall have been or,
pursuant to GAAP, should be recorded as capital leases.
"INTEREST PERIOD" means, for each Fixed Rate Advance, the period
beginning on the date of such Advance and ending on the last day of the
period selected by the Borrower pursuant to the provisions below. The
duration of each such Interest Period shall be (a) in the case of a LIBOR
Rate Advance, one, two, three or six months, and (b) in the case of a Term
Rate Advance, one, three, four or five years, in each case as selected by the
Borrower in its applicable Borrowing Request; provided, however, that:
(i) no Interest Period shall end after the Termination Date,
in the case of a Revolving Facility Advance, or after the Maturity Date, in
the case of a Term Facility Advance; and
(ii) if the last day of such Interest Period would otherwise
occur on a day which is not a Business Day, such last day shall be extended
to the next succeeding Business Day, EXCEPT if such Interest Period is for a
LIBOR Rate Advance and such extension would
5
cause such last day to occur in a new calendar month, then such last day
shall occur on the next preceding Business Day.
"LETTER OF CREDIT" means any letter of credit issued by the Letter of
Credit Issuer or one of its correspondents for the account of the Borrower in
accordance with the provisions of Section 2.2(b), which letter of credit
shall be: (i) in the case of a Commercial Letter of Credit, issued in
connection with the purchase of inventory by the Borrower and, in the case of
a Standby Letter of Credit, issued for such other purposes, if any, for which
the Borrower has historically obtained letters of credit or for such other
purposes as are acceptable to the Lender; (ii) denominated in United States
Dollars, and (iii) otherwise in such form as may be approved from time to
time by the Letter of Credit Issuer.
"LETTER OF CREDIT AGREEMENTS" means, collectively, the Continuing
Agreement for Commercial Letters of Credit dated as of January 29, 1997 from
the Borrower to the Letter of Credit Issuer and the Continuing Agreement for
Standby Letters of Credit dated as of January 29, 1997 from the Borrower to
the Letter of Credit Issuer.
"LETTER OF CREDIT ISSUER" means Washington Mutual Bank doing business as
Western Bank.
"LETTER OF CREDIT PARTICIPANT" means as to any Letter of Credit, each
Lender other than the Letter of Credit Issuer.
"LIBOR RATE" means, with respect to any LIBOR Rate Advance for any
Interest Period, an interest rate per annum (rounded upward to the next 1/100
of 1%) reported as the London Interbank Offered Rate in the Money Rates
section of the Wall Street Journal published on the Business Day next
preceding the date such LIBOR Rate Advance is made (which rate may be
reported as of an earlier date) for maturities equal to the requested
Interest Period. Unless and until the Wall Street Journal publishes such rate
for two-month periods, the LIBOR Rate for two-month Interest Periods shall be
the average of the one-month and the three-month London Interbank Offered
Rates as reported in the Wall Street Journal on the relevant day. If the Wall
Street Journal ceases reporting London Interbank Offered Rates comparable to
those currently reported, the LIBOR Rate shall be another reasonably
comparable rate selected by the Lender.
"LIBOR RATE ADVANCE" means an Advance which bears interest at a rate
determined by reference to the LIBOR Rate as provided in Section 2.4(a)(ii).
"LIEN" means any mortgage, pledge, security interest, encumbrance, lien
or charge of any kind (including any agreement to give any of the foregoing,
any conditional sale or other title retention agreement, any lease in the
nature thereof, and the filing of or agreement to give any financing
statement under the Uniform Commercial Code of any jurisdiction).
"LOAN DOCUMENTS" means this Agreement, the Notes, the Letter of Credit
Agreements, the Security Documents and all other documents, instruments and
agreements related thereto, including all documentation delivered pursuant to
Section 2.2(b)(ii).
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"MATURITY DATE" means, with respect to each Term Facility Advance,
August 1, 2005.
"NOTES" means the Revolving Facility Note and the Term Facility Note.
"NOTICE OF BORROWING" means a written notice in the form of Exhibit B.
"OUTSTANDING" means, as of any date of determination, (a) with respect
to Letters of Credit, all Letters of Credit issued pursuant to Section
2.2(b), with respect to which the full amount available to be drawn
thereunder has not been drawn and which have not expired at their stated
expiration dates or otherwise in accordance with their terms or been
surrendered to the Letter of Credit Issuer for cancellation, or (b) with
respect to Advances, the principal amount thereof remaining unpaid and owing
by the Borrower. As used in connection with Acceptances, the term
"Outstanding" shall have the meaning specified in Section 2.2(d)(v).
"PERMITTED LIENS" means (a) Liens securing Indebtedness owed by the
Borrower to the Lenders, (b) Liens for taxes, assessments or similar charges
either not yet due or being contested in good faith, (c) Liens of material
men, mechanics, warehousemen or carriers, or other like Liens arising in the
ordinary course of business and securing obligations which are not yet
delinquent, (d) purchase money Liens or purchase money security interests
upon or in any property acquired or held by the Borrower in the ordinary
course of business to secure Indebtedness outstanding on the Effective Date
or permitted to be incurred under Section 5.2(a), (e) Liens which, as of the
Effective Date, have been disclosed to and approved by the Lender in writing,
(f) Liens which in the aggregate constitute an immaterial and insignificant
monetary amount with respect to the net value of the Borrower's assets and
(g) Liens granted pursuant to capital leases.
"PERSON" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association,
joint venture or other entity, or any governmental authority or entity.
"REQUIRED LENDERS" means, at any date, the Lenders having an aggregate
Commitment Percentage equal to 100% of the Commitment.
"REVOLVING COMMITMENT" has the meaning specified in Section 2.1.
"REVOLVING FACILITY" has the meaning specified in Section 2.1(a).
"REVOLVING FACILITY ADVANCES" means Advances by the Lenders to the
Borrower under the Revolving Facility as Floating Rate Advances or LIBOR Rate
Advances.
"REVOLVING FACILITY NOTE" means the promissory note payable to the order
of each of the Lenders, in substantially the form of Exhibit A-1, in the
amount of such Lender's Commitment Percentage, evidencing the aggregate
Indebtedness of the Borrower to such Lender resulting from Borrowings under
the Revolving Facility.
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"SECURITY AGREEMENT" means the Amended and Restated Security Agreement
dated the Effective Date between the Borrower and the Administrative Agent,
as secured party on behalf of the Lenders, the Letter of Credit Issuer and
the Credit Card Issuer.
"SECURITY DOCUMENTS" means the Security Agreement and all other
documents, instruments and agreements (a) under which any Person grants a
security interest to the Administrative Agent on behalf and for the benefit
of the Lenders, the Letter of Credit Issuer and the Credit Card Issuer for
the purpose of securing the obligations of the Borrower contained in this
Agreement and the other Loan Documents, or (b) which relate to the perfection
of such a security interest.
"STANDBY LETTERS OF CREDIT" means irrevocable standby letters of credit
issued pursuant to Section 2.2(b) from time to time by the Letter of Credit
Issuer or one of its correspondents for the account of the Borrower.
"TANGIBLE NET WORTH" means the sum of common stock, additional paid in
capital and retained earnings of the Borrower and its subsidiaries calculated
on a consolidated basis in accordance with GAAP.
"TERM COMMITMENT" has the meaning specified in Section 2.1.
"TERM FACILITY" has the meaning specified in Section 2.1(b).
"TERM FACILITY ADVANCES" means Advances by the Term Lender to the
Borrower under the Term Facility as Floating Rate Advances, LIBOR Rate
Advances or Term Rate Advances.
"TERM FACILITY NOTE" means the promissory note payable to the order of
the Term Lender, in substantially the form of Exhibit A-2 evidencing the
aggregate Indebtedness of the Borrower to the Term Lender resulting from
Borrowings under the Term Facility.
"TERM LENDER" means Washington Mutual Bank doing business as Western
Bank.
"TERM RATE" means, with respect to any Term Rate Advance, for any
Interest Period, an interest rate per annum (rounded upward to the next 1/100
of 1%) equal to the yield adjusted to constant maturity on U.S. Treasury
securities as reported by the Federal Reserve Bank of San Francisco based on
composites of quotations by five leading U.S. government securities dealers
to the Federal Reserve Bank of New York for maturities equal to the requested
Interest Period. Unless and until the Federal Reserve Bank reports yields
adjusted to constant maturity on U.S. Treasury securities with maturities of
four years, the Term Rate applicable to any Interest Period of four years
shall be determined by straight-line interpolation between the yield on U.S.
Treasury securities with maturities of two years and three years. If the
Federal Reserve Bank ceases reporting the U.S. Treasury yields adjusted to
constant maturities, the Term Rate shall be another reasonably comparable
rate selected by the Lender.
"TERM RATE ADVANCE" means an Advance which bears interest at a rate
determined by reference to the Term Rate as provided in Section 2.4(a)(iii).
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"TERMINATION DATE" means August 1, 2002, unless earlier terminated
pursuant to Section 6.2.
"TYPE" has the meaning specified in the definition of "Advance".
"UCC" means the Uniform Commercial Code as enacted in the state of
Washington (presently Revised Code of Washington title 62A).
"UNUSED ACCEPTANCE SUBLIMIT" means, as of any date of determination, an
amount equal to $5,000,000 minus the sum of (a) the aggregate amount of all
Acceptances Outstanding and/or which have not been converted into a Floating
Rate Advance as provided in Section 2.2(d)(vii) and (b) the aggregate amount
of Acceptances for which a Borrowing Request has been made but for which
Drafts have not been accepted by the Letter of Credit Issuer.
"UNUSED REVOLVING FACILITY COMMITMENT" means, as of any date of
determination, an amount equal to the Revolving Commitment minus the sum of:
(a) the aggregate principal amount of all Revolving Facility Advances
Outstanding, (b) the aggregate amount available to be drawn under all Letters
of Credit Outstanding and the aggregate amount drawn under Letters of Credit
for which the Letter of Credit Issuer has not been reimbursed or which has
not been converted into a Floating Rate Advance, as provided in Section
2.2(b)(iii), (c) the aggregate amount of all Acceptances Outstanding which
have not been paid or converted into a Floating Rate Advance, as provided in
Section 2.2(d)(vii), (d) the aggregate principal, stated or face amounts of
Revolving Facility Advances, Letters of Credit and Acceptances for which a
Borrowing Request has been made pursuant to Section 2.3(a) but which have not
been disbursed or issued as of the date of determination and (e) the Credit
Card sublimit of $250,000.
"UNUSED SLC SUBLIMIT" means, as of any date of determination, an amount
equal to $8,000,000 minus the sum of (a) the aggregate amount available to be
drawn under all Standby Letters of Credit Outstanding and the aggregate
amount drawn under Standby Letters of Credit for which the Letter of Credit
Issuer has not been reimbursed or which has not been converted into a
Floating Rate Advance, as provided in Section 2.2(b)(iii) and (b) the
aggregate stated amounts of Standby Letters of Credit for which a Borrowing
Request has been made pursuant to Section 2.3(a) but which have not been
issued as of the date of determination.
"UNUSED TERM FACILITY COMMITMENT" means, as of any date of
determination, an amount equal to the Term Commitment minus the sum of (a)
the aggregate principal amount of all Term Facility Advances Outstanding and
(b) the aggregate principal amount of Term Facility Advances for which a
Borrowing Request has been made pursuant to Section 2.3(a) but which have not
been issued as of the date of determination.
"WORKING CAPITAL" means current consolidated assets of the Borrower and
its subsidiaries minus current consolidated liabilities of the Borrower and
its subsidiaries, as defined according to GAAP.
9
Section 1.2 COMPUTATION OF TIME PERIODS. In this Agreement, in the
computation of periods of time from a specified date to a later specified
date: (a) the word "from" means "from and including," (b) the words "to" and
"until" each means "to but excluding"; and (c) the word "through" means
"through and including."
Section 1.3 ACCOUNTING TERMS. All accounting terms not specifically
defined in this Agreement shall be construed, and all accounting procedures
shall be performed, in accordance with GAAP applicable as of the date of this
Agreement, consistently applied.
ARTICLE II
AMOUNTS AND TERMS OF THE BORROWINGS
Section 2.1 THE FACILITIES.
(a) Subject to the terms and conditions of this Agreement, each
Lender severally agrees to make available to the Borrower for working capital
and general corporate purposes its Commitment Percentage of a revolving
credit facility and (the "Revolving Facility") in the maximum amount of
$55,000,000, subject to increase as provided in Section 2.1(c) (the
"Revolving Commitment"), consisting of (i) Floating Rate Advances and LIBOR
Advances, (ii) Standby Letters of Credit, (iii) Commercial Letters of Credit,
(iv) Credit Cards and (v) Acceptances; provided, however, that:
(i) The aggregate stated amount of Standby Letters of
Credit at any time Outstanding may not exceed $8,000,000;
(ii) The aggregate credit limit of all Credit Cards issued
to the Borrower may not exceed $250,000;
(iii) The Letter of Credit Issuer shall be obligated to issue
Commercial Letters of Credit in an aggregate stated amount equal to, but not
to exceed, the full amount of the Unused Revolving Facility Commitment;
(iv) The Letter of Credit Issuer shall be obligated to issue
Standby Letters of Credit in an aggregate stated amount equal to, but not to
exceed, the full amount of the Unused SLC Sublimit; and
(v) The aggregate amount of Acceptances at any time
Outstanding may not exceed $5,000,000.
(b) Subject to the terms and conditions of this Agreement, the
Term Lender shall make available to the Borrower for financing equipment and
leasehold improvements a line of credit (the "Term Facility") in the maximum
amount of $5,000,000 (the "Term Commitment") consisting of Floating Rate
Advances, LIBOR Rate Advances and Term Rate Advances. The Term Facility and
the Revolving Facility are sometimes collectively referred to herein as the
"Facilities".
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(c) (i) Upon written notice from the Borrower to the Administrative
Agent, given within thirty (30) days following the delivery pursuant to
Section 5.1(c)(i) of the audited consolidated financial statements of the
Borrower for the fiscal year ended April 30, 2001, the Revolving Commitment
shall be increased by $10,000,000 TO $65,000,000, provided that the
following conditions are satisfied:
(A) EBITDA for the fiscal year ended April 30, 2001 is at least
$24,000,000; and
(B) the number of "inventory days on hand" as of April 30, 2001
(determined as provided below) does not exceed 185.
"Inventory days on hand" means (x) 365, divided by (y) the number
obtained by dividing (1) the cost of goods sold of the Borrower as reflected on
such financial statements by (2) inventory of the Borrower as reflected on such
financial statements.
(ii) In the event the Borrower elects to increase the Revolving
Commitment pursuant to clause (i) above, the Commitment of Western Bank shall
be increased by $10,000,000 to $40,000,000. The Administrative Agent shall
deliver to each Lender a new Exhibit D to this Agreement reflecting such
increase. In addition, the Borrower shall execute and deliver to Western Bank
a new Note in the principal amount of $40,000,000. Except for the foregoing
and the receipt of written notice from the Borrower pursuant to Section
2.1(c)(i) above, the increase in the Revolving Commitment provided in this
Section 2.1(c) shall take effect without any action on the part of any of
the parties hereto.
Section 2.2 THE BORROWINGS.
(a) ADVANCES UNDER THE FACILITIES.
(i) In the case of Revolving Facility Advances, each Lender agrees,
on the terms and conditions set forth below, to make its pro rata share of
Advances to the Borrower from time to time on any Business Day during the
period from the Effective Date to the Termination Date in an aggregate amount
not to exceed such Lender's Commitment Percentage of the Unused Revolving
Facility Commitment. Within the limits of the Unused Revolving Facility
Commitment, the Borrower may request an Advance under the Revolving Facility
on any Business Day and may prepay such Advance pursuant to Section 2.7 and
re-borrow under the Revolving Facility pursuant to this Section 2.2(a).
(ii) In the case of a Term Facility Advance, the Term Lender agrees,
on the terms and conditions set forth below, to make Advances to the Borrower
from time to time on any Business Day during the period from the Effective
Date to the Termination Date in an amount not to exceed the Unused Term
Facility Commitment. Any Borrowing under the Term Facility that is repaid
pursuant to Section 2.5(b) or prepaid pursuant to Section 2.7 may not be
reborrowed.
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(iii) Each request for an Advance shall be in an amount not less than
$500,000, or an integral multiple of $100,000 in excess thereof. At no time
may LIBOR Rate Advances bearing more than four different LIBOR Rates be
Outstanding.
(b) ISSUANCE OF LETTERS OF CREDIT UNDER THE REVOLVING FACILITY.
(i) The Letter of Credit Issuer agrees that it shall, on the terms
and conditions set forth below, provide Standby Letters of Credit for the
account of the Borrower; provided, however, that no Standby Letter of Credit
shall be issued if the stated amount thereof exceeds the lesser of the Unused
Revolving Facility Commitment or the Unused SLC Sublimit. No Standby Letter
of Credit shall have an expiration date that is more than ninety (90) days
after the Termination Date. A Standby Letter of Credit may provide for a
single draw or a number of partial draws, as specified by the Borrower.
(ii) The Letter of Credit Issuer agrees that it shall, on the terms
and conditions set forth below, provide Commercial Letters of Credit for the
account of the Borrower; provided, however, that no Commercial Letter of
Credit shall be issued if the stated amount thereof exceeds the Unused
Revolving Facility Commitment. No Commercial Letter of Credit shall have an
expiration date that is more than ninety (90) days after the Termination
Date. A Commercial Letter of Credit may provide for a single draw or a number
of partial draws, as specified by the Borrower.
(iii) The Letter of Credit Issuer hereby grants to each Letter of
Credit Participant, and, to induce the Letter of Credit Issuer to issue
Letters of Credit hereunder, each Letter of Credit Participant hereby accepts
and purchases from the Letter of Credit Issuer, on the terms and conditions
set forth below, for such Letter of Credit Participant's own account and
risk, an undivided interest equal to such Letter of Credit Participant's
Commitment Percentage in the Letter of Credit Issuer's obligations and rights
under each Letter of Credit issued by the Letter of Credit Issuer hereunder
and the amount of each draft paid by the Letter of Credit Issuer thereunder.
Each Letter of Credit Participant unconditionally agrees with the Letter of
Credit Issuer that, if a draft is paid under any Letter of Credit issued by
the Letter of Credit Issuer for which the Letter of Credit Issuer is not
reimbursed in full by the Borrower in accordance with the terms of this
Agreement, such Letter of Credit Participant shall, upon demand by the Letter
of Credit Issuer, pay to the Administrative Agent for the account of the
Letter of Credit Issuer an amount equal to such Letter of Credit
Participant's Commitment Percentage of the amount of such draft, or any part
thereof, which is not so reimbursed. Any amount so paid shall be a Borrowing
hereunder.
(iv) If any amount required to be paid by any Letter of Credit
Participant to the Letter of Credit Issuer pursuant to Section 2.2(b)(iii),
in respect of any unreimbursed portion of any payment made by the Letter of
Credit Issuer under any Letter of Credit, is paid to the Administrative Agent
for the account of the Letter of Credit Issuer within three Business Days
after the date such payment is due, such Letter of Credit Participant shall,
upon demand by the Letter of Credit Issuer, pay to the Administrative Agent
for the account of the Letter of Credit Issuer an amount equal to the product
of (a) such amount, times (b) the Federal Funds Effective Rate, during the
period from and including the date such payment is
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required to the date on which such payment is immediately available to the
Administrative Agent for the account of the Letter of Credit Issuer, times
(c) a fraction the numerator of which is the number of days that elapse
during such period and the denominator of which is 360. If any such amount
required to be paid by any Letter of Credit Participant pursuant to Section
2.2(b)(iii) is not in fact made available to the Administrative Agent for the
account of the Letter of Credit Issuer by such Letter of Credit Participant
within three Business Days after the date such payment is due, the Letter of
Credit Issuer shall be entitled to recover from such Letter of Credit
Participant, on demand, such amount with interest thereon calculated from
such due date at the rate per annum applicable to Floating Rate Advances
hereunder. A certificate of any Letter of Credit Issuer submitted to any
Letter of Credit Participant with respect to any amounts owing under this
Section 2.2(b) shall be conclusive in the absence of manifest error.
(v) Whenever, at any time after the Letter of Credit Issuer has made
payment under any Letter of Credit issued by the Letter of Credit Issuer and
has received from any Letter of Credit Participant its PRO RATA share of such
payment in accordance with Section 2.2(b)(iii), the Letter of Credit Issuer
receives any payment related to such Letter of Credit (whether directly from
the Borrower or otherwise), or any payment of interest on account thereof,
the Letter of Credit Issuer will distribute to such Letter of Credit
Participant its PRO RATA share thereof; PROVIDED, HOWEVER, that in the event
that any such payment received by the Letter of Credit Issuer shall be
required to be returned by the Letter of Credit Issuer, such Letter of Credit
Participant shall return to the Letter of Credit Issuer the portion thereof
previously distributed by the Letter of Credit Issuer to it.
(vi) No Letter of Credit shall be issued unless it is issued in
accordance with the Letter of Credit Issuer's customary requirements,
standards, fees and procedures and as set forth in the Letter of Credit
Agreements and the Letter of Credit Issuer's other customary letter of credit
documentation requirements, nor if it is for a purpose not described in the
definition of "Letter of Credit" in Section 1.1.
(vii) The Borrower shall reimburse the Letter of Credit Issuer for any
draw on any Letter of Credit by making payment thereof to the Lender by 3:00
P.M. (Seattle time) on the date on which such draw is paid or, if any draw is
to be made pursuant to a time draft, by 3:00 P.M. (Seattle time) at least one
Business Day prior to the maturity of such time draft. Unless reimbursement
is made by 3:00 P.M. (Seattle time) on any such date, the Borrower shall be
conclusively deemed to have made a Borrowing Request requesting a Floating
Rate Advance under the Facilities to be made on such date in an amount equal
to the amount of such draw. Such a deemed Borrowing Request will be honored
only if it would have been honored if actually made by the Borrower.
(viii) The obligations of the Borrower to reimburse the Letter of Credit
Issuer for drawings made under each Letter of Credit shall be unconditional
and irrevocable and shall be paid strictly in accordance with the terms of
this Agreement under all circumstances, including without limitation (it
being understood that any such payment by the Borrower shall be without
prejudice to, and shall not constitute a waiver of, any rights the Borrower
might have or might acquire against the beneficiary of the Letter of Credit
as a result of the payment by the Letter of Credit Issuer of any draft or the
reimbursement by the Borrower thereof): (A) the
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existence of any claim, setoff, defense or other right which the Borrower may
have at any time against a beneficiary of any Letter of Credit or against the
Letter of Credit Issuer, whether in connection with this Agreement, the
transactions contemplated herein or any unrelated transaction; (B) any lack
of validity or enforceability of any Letter of Credit or any other Loan
Document, (C) any draft, demand, certificate or other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect; (D) any interruption, error or delay in
transmission or delivery by facsimile or any other method, (E) payment by the
Letter of Credit Issuer of any Letter of Credit against presentation of a
demand, draft or certificate or other document which does not comply with the
terms of such Letter of Credit; (F) any other circumstances or happening
whatsoever, which is similar to any of the foregoing; or (G) the fact that
any Default or Event of Default shall have occurred and be continuing.
(ix) In connection with the Letters of Credit to be issued under the
Revolving Facility, the Borrower may submit communications (a "Faxed
Document") to Letter of Credit Issuer by facsimile transmission. With respect
to such facsimile transmission, the Borrower agrees as follows:
(A) Each such Faxed Document shall be deemed an original document
and shall be effective for all purposes as if it were an original. The
Borrower shall retain the original of any Faxed Document and shall deliver it
to the Letter of Credit Issuer on request.
(B) If the Borrower sends the Letter of Credit Issuer a manually
signed confirmation of a Faxed Document, the Letter of Credit Issuer shall
have no duty to compare it to the previously received Faxed Document nor
shall it have any liability or duty to act should the contents of the
confirmation differ therefrom. Any manually signed confirmation of a Faxed
Document must be conspicuously marked "previously transmitted by facsimile,"
and the Letter of Credit Issuer shall not be liable for the issuance of
duplicate Letters of Credit or amendments thereto that result from the Letter
of Credit Issuer's receipt of confirmations not so marked.
(C) The Borrower shall have sole responsibility for the security
of using facsimile transmissions and for any authorized or unauthorized Faxed
Document received by the Letter of Credit Issuer, purportedly on behalf of
the Borrower.
(D) The Borrower agrees to indemnify and hold harmless the Letter
of Credit Issuer from each and every claim, demand, liability, loss, cost or
expense (including attorneys' fees and expenses) which may arise or be
created by the Letter of Credit Issuer's acceptance of telecommunication
instructions in connection with any Letter of Credit, including facsimile
instructions in connection with any waiver of discrepancies.
(x) The Borrower will promptly examine each Letter of Credit issued
hereunder, any amendments thereto and all information, documents and
instruments delivered to the Borrower from time to time by the Letter of
Credit Issuer or any of its correspondents. The Borrower shall notify the
Letter of Credit Issuer within five Business Days after receipt of any of
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the foregoing if the Borrower claims that the Letter of Credit Issuer has
failed to comply with the Borrower's instructions or the Letter of Credit
Issuer's obligations with respect to such Letter of Credit or has wrongfully
honored or dishonored any presentation under the Letter of Credit or if the
Borrower claims any other irregularity. If the Borrower does not so notify
the Letter of Credit Issuer within such time period, the Borrower shall be
conclusively deemed to have waived, and therefore be precluded from
asserting, such claims.
(c) ISSUANCE OF CREDIT CARDS UNDER THE REVOLVING FACILITY.
(i) The Credit Card Issuer shall provide the Borrower with one or
more Credit Cards with an aggregate credit limit of $250,000 during the
period from the Effective Date through the Termination Date. The Borrower
agrees to execute the Credit Card Issuer's standard business card agreement
and any other documents the Credit Card Issuer may request in connection with
the provision of such Credit Cards.
(ii) The Credit Card Issuer hereby grants to each Credit Card
Participant, and, to induce the Credit Card Issuer to issue Credit Cards
hereunder, each Credit Card Participant hereby accepts and purchases for the
Credit Card Issuer, on the terms and conditions set forth below, for such
Credit Card Participant's own account and risk, an undivided interest equal
to such Credit Card Participant's Commitment Percentage in the Credit Card
Issuer's obligations and rights under each Credit Card issued by the Credit
Card Issuer hereunder and the amount of each draft paid by the Credit Card
Issuer thereunder. Each Credit Card Participant unconditionally agrees with
the Credit Card Issuer that, if any amounts are disbursed under any Credit
Card issued by the Credit Card Issuer for which the Credit Card Issuer is not
reimbursed in full by the Borrower in accordance with the terms of this
Agreement, such Credit Card Participant shall, upon demand by the Credit Card
Issuer, pay to the Administrative Agent for the account of the Credit Card
Issuer an amount equal to such Credit Card Participant's Commitment
Percentage of the amount of such disbursement, or any part thereof, which is
not so reimbursed.
(iii) If any amount required to be paid by any Credit Card Participant
to the Credit Card Issuer pursuant to Section 2.2(c)(ii), in respect of any
unreimbursed portion of any disbursement made by the Credit Card Issuer under
any Credit Card, is paid to the Administrative Agent for the account of the
Credit Card Issuer within three Business Days after the date such payment is
due, such Credit Card Participant shall, upon demand by the Credit Card
Issuer, pay to the Administrative Agent for the account of the Credit Card
Issuer an amount equal to the product of (a) such amount, times (b) the
Federal Funds Effective Rate, during the period from and including the date
such payment is required to the date on which such payment is immediately
available to the Administrative Agent for the account of the Credit Card
Issuer, times (c) a fraction the numerator of which is the number of days
that elapse during such period and the denominator of which is 360. If any
such amount required to be paid by any Credit Card Participant pursuant to
Section 2.2(c)(ii) is not in fact made available to the Administrative Agent
for the account of the Credit Card Issuer by such Credit Card Participant
within three Business Days after the date such payment is due, the Credit
Card Issuer shall be entitled to recover from such Credit Card Participant,
on demand, such amount with interest thereon calculated from such due date at
the rate per annum applicable to Floating Rate Advances
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hereunder. A certificate of any Credit Card Issuer submitted to any Credit
Card Participant with respect to any amounts owing under this Section 2.2(c)
shall be conclusive in the absence of manifest error.
(iv) Whenever, at any time after the Credit Card Issuer has made a
disbursement under any Credit Card issued by the Credit Card Issuer and has
received from any Credit Card Participant its PRO RATA share of such
disbursement in accordance with Section 2.2(c)(ii), the Credit Card Issuer
receives any payment related to such Credit Card (whether directly from the
Borrower or otherwise), or any payment of interest on account thereof, the
Credit Issuer will distribute to such Credit Card Participant its PRO RATA
share thereof; PROVIDED, HOWEVER, that in the event that any such payment
received by the Credit Card Issuer shall be required to be returned by the
Credit Card Issuer, such Credit Card Participant shall return to the Credit
Card Issuer the portion thereof previously distributed by the Credit Card
Issuer to it.
(v) If the balance owing on any Credit Card issued to the Borrower
under this Section 2.2(c) is more than 60 days past due, the Administrative
Agent may terminate such Credit Card.
(d) ISSUANCE OF ACCEPTANCES UNDER THE REVOLVING FACILITY.
(i) The Letter of Credit Issuer agrees that it shall, on the terms
and conditions hereinafter set forth, accept drafts (the "Drafts") drawn on
the Letter of Credit Issuer and submitted to it in connection with Commercial
Letters of Credit issued hereunder; provided, however, that no Draft will be
accepted if the face amount thereof exceeds the Unused Acceptance Sublimit.
(ii) Each Draft presented for acceptance shall mature not later than
90 days after the date of presentation to the Letter of Credit Issuer for
acceptance; provided, however, that no Draft shall have a maturity date later
than the Termination Date unless the Letter of Credit Issuer otherwise agrees
in its sole discretion. Notwithstanding the foregoing, if any Acceptance is
Outstanding as of the Termination Date, the Borrower shall, on or before the
Termination Date, deliver to the Letter of Credit Issuer, as collateral for
the Borrower's obligations with respect to such Acceptance, immediately
available funds in an amount equal to the face amount of each such Acceptance.
(iii) The Borrower represents and warrants that each Draft it presents
for acceptance is an eligible Draft as determined by the Federal Reserve Bank
and complies with the Federal Reserve Act and with applicable regulations of
the Board of Governors of the Federal Reserve System of the United States
governing banker's acceptances, or any successor thereto. Without limiting
the generality of the foregoing, The Borrower represents and warrants that
each Draft it presents for acceptance and discounting results from a bona
fide business transaction and (a) will grow out of one or more transactions
involving the importation or exportation of goods; (b) will grow out of one
or more transactions involving the domestic shipment of goods; or (c) will be
secured at the time of acceptance of the Draft by warehouse receipts or
similar documents conveying or securing title and covering readily marketable
goods. The Borrower represents and warrants that no other financing of the
transactions underlying any
16
requested Acceptance whether characterized as a loan, sale, or an account
receivable has been obtained or will be solicited or accepted and that no
lien or security interest in or rights to the subject matter under the
underlying transaction has been or will be granted to any other person
without the Letter of Credit Issuer's prior written consent. The Borrower
further represents and warrants that (x) completion of each transaction
related to a Draft is anticipated to occur on or before the maturity date of
such Draft, (y) that the maturity of each Draft will be consistent with the
period usually and reasonably necessary to finance transactions of such kind,
and (z) that no banker's acceptances other than the Acceptance requested
hereunder have been or will be outstanding with respect to the goods covered
by the Draft whose acceptance is requested hereunder.
(iv) Each accepted Draft shall be held to maturity by the Letter of
Credit Issuer unless otherwise agreed by the Letter of Credit Issuer in its
sole discretion.
(v) The Borrower shall pay to the Letter of Credit Issuer a fee for
the issuance of each Acceptance in an amount equal to the face amount of the
Acceptance multiplied by one and one-half percent (1.5%) per year (calculated
on the basis of a 360-day year and the actual number of days elapsed) for the
period of time from the acceptance of the Draft creating the Acceptance
through the date on which the Borrower pays such Draft in full to the Letter
of Credit Issuer and such Acceptance shall be deemed to be "Outstanding" for
that period of time. Such fee shall be paid upon acceptance of the Draft by
the Letter of Credit Issuer. In addition, the Borrower shall pay to the
Letter of Credit Issuer all of its normal and customary charges and fees for
the issuance and administration of banker's acceptances.
(vi) The Borrower agrees to pay to the Letter of Credit Issuer the
face amount of each Acceptance together with all unpaid charges of and
expenses paid or incurred by the Letter of Credit Issuer in connection
therewith on the maturity date of such Acceptance. All such payments to be
made by the Borrower shall be made not later than 11:00 a.m. Seattle time on
the due dates thereof (or, if earlier, on the Termination Date) in the manner
provided for repayment of Advances under the terms of this Agreement.
(vii) The Letter of Credit Issuer hereby grants to each Letter of
Credit Participant, and, to induce the Letter of Credit Issuer to accept
Drafts hereunder, each Letter of Credit Participant hereby accepts and
purchases from the Letter of Credit Issuer, on the terms and conditions set
forth below, for such Letter of Credit Participant's own account and risk, an
undivided interest equal to such Letter of Credit Participant's Commitment
Percentage in the Letter of Credit Issuer's obligations and rights under each
Draft accepted by the Letter of Credit Issuer hereunder. In the event that
the Borrower fails to pay any Acceptance in full on the maturity date
thereof, then each Letter of Credit Participant shall, upon demand by the
Letter of Credit Issuer, pay to the Letter of Credit Issuer an amount equal
to such Letter of Credit Participant's Commitment Percentage multiplied by
the amount of such Acceptance, or any part thereof which is not so
reimbursed. Such payments shall be made on the terms set forth in Section
2.2(b) applicable to payments to be made by the Letter of Credit Participants
to the Letter of Credit Issuer in respect of payments on Letters of Credit
which are not timely reimbursed by the Borrower.
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Section 2.3 MAKING THE BORROWINGS.
(a) PROCEDURE FOR BORROWINGS.
(i) BORROWING REQUESTS. Each Borrowing Request for an Advance shall
be made by the Borrower to the Administrative Agent (A) in the case of
Floating Rate Advances, not later than 9:00 A.M. (Seattle time) on the day of
the proposed Borrowing; and (B) in the case of Fixed Rate Advances, not later
than 9:00 A.M. on the third Business Day prior to the date of the proposed
Borrowing. Each Borrowing Request (A) for the issuance of a Letter of Credit
shall be made by the Borrower to the Letter of Credit Issuer not later than
9:00 A.M. (Seattle time) on the date of the proposed Borrowing, and (B) for
the issuance of a Credit Card shall be made by the Borrower to the Credit
Card Issuer not later than 9:00 A.M. on the date of the proposed issuance of
a Credit Card. Each Borrowing Request shall be made by an Authorized Officer
of the Borrower by telephone or, if requested by the Administrative Agent,
the Letter of Credit Issuer or the Credit Card Issuer, by telecopy or
personal delivery, in writing, in substantially the form of Exhibit B hereto,
fully and accurately specifying the information required therein. Upon
receipt by the Administrative Agent of a Borrowing Request from the Borrower
requesting either a Floating Rate Advance or a Fixed Rate Advance under the
Revolving Facility, the Administrative Agent shall promptly notify each
Lender thereof. Thereafter, each Lender shall make the amount of its pro rata
share of each Revolving Facility Advance available to the Administrative
Agent for the account of the Borrower at the office of the Administrative
Agent specified in Section 8.2 prior to 1:00 P.M. (Seattle time), on the date
of the proposed Borrowing in funds immediately available to the
Administrative Agent. Such Revolving Facility Advance shall then be made
available to the Borrower by the Administrative Agent.
(ii) AVAILABILITY OF BORROWINGS. The Administrative Agent shall make
Borrowings available to the Borrower as follows:
(A) In the case of a Borrowing consisting of Advances, the
Administrative Agent will make such funds available to the Borrower in
immediately available funds to the account of the Borrower at Washington
Mutual Bank doing business as Western Bank, Account No. 201-00000000, or such
other account of the Borrower as may be approved by the Lender.
(B) In the case of a Borrowing consisting of the issuance of a
Letter of Credit, the Letter of Credit Issuer shall deliver the Letter of
Credit to the beneficiary thereof on the date specified in the applicable
Borrowing Request.
(C) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a Borrowing of a Revolving Facility Advance
that such Lender will not make the amount that would constitute such Lender's
Commitment Percentage of such Revolving Facility Advance available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the
Administrative Agent may, in reliance upon such assumption, make available to
the Borrower a corresponding amount. If such amount is not made available to
the Administrative Agent by the required time on the date of the Borrowing,
such Lender shall pay to the
18
Administrative Agent, on demand, such amount with interest thereon at a rate
equal to the daily average Federal Funds Effective Rate for the period until
such Lender makes such amount immediately available to the Administrative
Agent. A certificate of the Administrative Agent submitted to any Lender with
respect to any amounts owing under this Section 2.3(a)(ii)(C) shall be
conclusive in the absence of manifest error. If such Lender's Commitment
Percentage of such Revolving Facility Advance is not made available to the
Administrative Agent by such Lender within three Business Days of the date of
such Borrowing, the Administrative Agent shall also be entitled to recover
such amount with interest thereon at the rate per annum applicable to
Floating Rate Advances hereunder, on demand, from the Borrower.
(b) CONVERSION AND CONTINUATION OF ADVANCES. The Borrower may, pursuant
to a Borrowing Request (A) received by the Administrative Agent not later
than 9:00 A.M. (Seattle time) on the last day of any applicable Interest
Period for a Fixed Rate Advance, elect to convert such Fixed Rate Advance to
a Floating Rate Advance; (B) received by the Administrative Agent not later
than 9:00 A.M. (Seattle time) on the third Business Day prior to the day the
conversion is to take effect, elect to convert any Floating Rate Advance to a
Fixed Rate Advance; and (C) received by the Administrative Agent not later
than 9:00 A.M. (Seattle time) on the third Business Day prior to the last day
of any applicable Interest Period for a Fixed Rate Advance, elect to convert
or continue such Fixed Rate Advance at the same or another Fixed Rate. Each
Borrowing Request shall be made by an Authorized Officer of the Borrower by
telephone or, if requested by the Administrative Agent, by telecopy or
personal delivery, in writing, in substantially the form of Exhibit B hereto,
fully and accurately specifying the information required therein.
(c) UNAVAILABILITY OF FIXED RATES. Notwithstanding any election of a
Fixed Rate Advance for an Interest Period pursuant to Section 2.3(a) or (b)
above, if:
(i) on or prior to the determination of the applicable interest rate
for such Advance, the Administrative Agent determines (which determination
shall be conclusive and binding) that quotations of interest rates are not
being provided in the relevant market in the relevant amount, for an Interest
Period; or
(ii) on or prior to the first day of an Interest Period, the
Administrative Agent determines (which determination shall be conclusive and
binding) that, as a result of conditions in or generally affecting the
relevant market, the rates of interest on the basis of which the applicable
Fixed Rate is to be computed do not accurately reflect the cost to the
Lenders of making or maintaining such Advance for such Interest Period;
then the Administrative Agent shall give the Borrower prompt notice thereof
by telephone and the election by the Borrower of a Fixed Rate Advance for
such Interest Period shall not be effective, and such Advance shall be made
as a Floating Rate Advance.
Section 2.4 INTEREST RATES; LATE CHARGES.
(a) ADVANCES. The Borrower shall pay interest on the unpaid principal
amount of each Advance from the date of such Advance until such principal
amount is paid in full, at the following rates:
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(i) FLOATING RATE ADVANCES. Except to the extent the Borrower has
made an effective election of a Fixed Rate with respect to such Advance
pursuant to Section 2.3(a) or (b), at a rate per annum equal at all times to
the Floating Rate in effect from time to time, payable monthly on the first
day of each month while such Advance is Outstanding.
(ii) LIBOR RATE ADVANCES. If the Borrower has made an effective
election of a LIBOR Rate with respect to such Advance, at a rate per annum
equal at all times during each Interest Period for such Advance to the sum of
the LIBOR Rate for the applicable Interest Period plus one and three-quarters
percent (1.75%) per annum, payable on the last day of each such Interest
Period; provided, that if the Interest Period is longer than three months,
interest shall be payable on the last day of each three-month period during
such Interest Period and on the last day of such Interest Period.
(iii) TERM RATE ADVANCES. If the Borrower has made an effective
election of a Term Rate with respect to such Advance, at a rate per annum
equal at all times during each Interest Period for such Advance to the sum of
the Term Rate for the applicable Interest Period plus two percent (2%) per
annum, payable on the first day of each month.
(b) DEFAULT RATE. Any amount owing by the Borrower under this
Agreement or any other Loan Document which is not paid when due (whether at
stated maturity, by acceleration or otherwise) shall bear interest, from the
date on which such amount is due until such amount is paid in full, payable
on demand, at a rate per year equal at all times to the greater of (i) the
Floating Rate plus three percent (3%) and (ii) with respect to any Fixed Rate
Advance, the Fixed Rate then in effect plus three percent (3%).
(c) LATE CHARGE. If any payment due hereunder in respect of any
Borrowing Outstanding is ten (10) days or more late, the Borrower shall be
charged two percent (2%) of such payment or $25.00, whichever is greater;
provided that no such amount shall be charged on or after the date on which
the Administrative Agent has declared all amounts owing hereunder to be due
and payable as provided in Section 6.2.
Section 2.5 REPAYMENT.
(a) BORROWINGS UNDER THE REVOLVING FACILITY. The Borrower shall repay
the outstanding principal amount of each Revolving Facility Advance made by
the Lenders on the Termination Date, together with all accrued and unpaid
interest thereon. The Borrower shall reimburse the Letter of Credit Issuer
for all draws on each Letter of Credit as provided in Section 2.2(b)(vii).
(b) BORROWINGS UNDER THE TERM FACILITY. The Borrower shall repay the
aggregate principal amount of all Term Facility Advances that are Outstanding
on August 1, 1999 (the "1999 Principal Amount") in installments equal to 1/7
of the 1999 Principal Amount on each August 1, 2000, August 1, 2001, August
1, 2002, August 1, 2003 and August 1, 2004 and in a final installment equal
to the unpaid balance of the 1999 Principal Amount on the Maturity Date,
together with all accrued and unpaid interest thereon.
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Section 2.6 FEES.
(a) REVOLVING FACILITY FEES.
(i) UPFRONT FACILITY FEE. On the Effective Date, the Borrower shall
pay to the Administrative Agent (A) for the account of the Lenders a facility
fee equal to 1/10 of one percent (.10%) of the Total Commitment and (B) for
the account of Western Bank a facility fee equal to $10,000 in consideration
of Western Bank's agreement to increase its Commitment on the terms and
subject to the conditions set forth in Section 2.1(c).
(ii) UNUSED COMMITMENT FEE. On each September 30, December 31, March
31 and June 30, commencing September 30, 2000, the Borrower shall pay to the
Administrative Agent for the benefit of the Lenders an unused commitment fee
equal to 15/100s of one percent (.15%) per annum of the amount equal to (A)
the Total Commitment minus (B) the average of the aggregate principal and
stated amounts of Advances and Letters of Credit Outstanding on the last day
of each month in the fiscal quarter then ended; provided, however, that the
amount of such fee payable on September 30, 2000 shall be calculated at the
rate of .1875% per annum for the period from June 30, 2000 through July 31,
2000 and at the rate of .15% per annum for the period from August 1, 2000
through September 30, 2000.
(b) TERM FACILITY FEES. On the date of each Term Facility Advance, the
Borrower shall pay to the Term Lender a facility fee equal to 1/2% of the
principal amount of such Term Facility Advance.
(c) LETTER OF CREDIT FEES. The fees and charges for the issuance,
payment and administration of Letters of Credit are set forth in the Letter
of Credit Agreements.
(d) ADMINISTRATIVE AGENT FEE. On the Effective Date, the Borrower shall
pay the Administrative Agent from its own account the "Agent Bank Fee" as set
forth in the letter dated June 28, 2000 from the Administrative Agent to the
Borrower.
Section 2.7 PREPAYMENTS. If the Borrower desires to prepay any Advances,
the Borrower shall give the Administrative Agent the same number of Business
Days' written notice required in Section 2.3(a) for a Borrowing Request given
with respect to Advances, specifying the proposed date and aggregate
principal amount of the prepayment and the Interest Period or Interest
Periods (if any) relating to such Advances. If notice of prepayment is given,
the Borrower shall prepay the Advances comprising the same Borrowing in whole
or in part with (A) accrued interest to the date of such prepayment on the
amount prepaid and (B) in the case of Fixed Rate Advances, any amounts
required to be paid pursuant to Section 2.11.
Section 2.8 PAYMENTS AND COMPUTATIONS.
(a) The Borrower shall make each payment hereunder and under the Note
not later than 11:00 A.M. (Seattle time) on the day when due in U.S. Dollars
to the Administrative Agent at 0000 Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxxxxxxx 00000, or at such other location
21
designated by notice from the Administrative Agent pursuant to the notice
provision of this Agreement, in immediately available funds.
(b) All computations of interest and all fees pursuant to Section 2.6
shall be made by the Administrative Agent on the basis of a year of 360 days,
in each case for the actual number of days (including the first day but
excluding the last day) occurring in the period for which such interest or
fees are payable. Each determination by the Administrative Agent of an
interest rate or an increased cost or of illegality hereunder shall be
presumptive evidence thereof and binding for all purposes if made reasonably
and in good faith.
(c) Whenever any payment hereunder or under the Notes shall be stated to
be due (or an Interest Period shall be stated to end) on a day other than a
Business Day, such payment shall be made (and such Interest Period shall end)
on the next succeeding Business Day, and such extension of time shall in such
case be included in the computation of payment of interest or fees, as the
case may be; provided, however, if such extension would cause payment of
interest based on a LIBOR Rate to be made (or an Interest Period for a Fixed
Rate Advance to end) in the next following calendar month, such payment shall
be made (and such Interest Period shall end) on the next preceding Business
Day.
Section 2.9 INCREASED COSTS.
(a) If, due to either (i) the introduction after the date of this
Agreement of or any change after the date of this Agreement (including any
change by way of imposition or increase of reserve requirements or
assessments other than those referred to in the definition of LIBOR Rate) in
or in the interpretation of any law or regulation or (ii) the compliance with
any guideline or request issued or made after the date of this Agreement from
or by any central bank or other governmental authority (whether or not having
the force of law), in each case above, other than those referred to in
Section 2.9(b), there shall be any increase in the cost to any Lender of
agreeing to make or maintain, or of making or maintaining, Fixed Rate
Advances or there shall be any increase in the cost to the Letter of Credit
Issuer of agreeing to issue or maintain, or of issuing or maintaining any
Letter of Credit, then the Borrower shall from time to time, upon demand by
such Lender or the Letter of Credit Issuer, as the case may be, pay to such
Lender or Letter of Credit Issuer additional amounts sufficient to reimburse
such Lender or the Letter of Credit Issuer for all such increased costs. A
certificate as to the amount of such increased cost, submitted to the
Borrower by such Lender or the Letter of Credit Issuer, as the case may be,
shall be presumptive evidence of such increased cost and binding for all
purposes, if made reasonably and in good faith.
(b) If either (i) the introduction after the date of this Agreement of,
or the application after the date of this Agreement as a result of phase-in
or transitional rules of, or any change after the date of this Agreement in
or in the interpretation of, any law or regulation or (ii) compliance by a
Lender, the Letter of Credit Issuer or the Credit Card Issuer with any
guideline or request issued or made after the date of this Agreement or
deemed applicable after the date hereof as a result of phase-in or
transitional rules from or by any central bank or other governmental
authority (whether or not having the force of law) affects or would affect
the amount of capital required or expected to be maintained by such Lender,
the Letter of Credit Issuer or the Credit Card Issuer and such Lender, Letter
of Credit Issuer or Credit Card Issuer
22
determine(s) that the amount of such capital is increased by or based upon
the existence of the Revolving Commitment or its Commitment Percentage of the
Revolving Commitment (or by or based upon the making of Fixed Rate Advances
or the issuance of or obligation to issue or purchase risk participations in
Letters of Credit or Credit Cards), then, upon demand by such Lender, the
Letter of Credit Issuer or the Credit Card Issuer, the Borrower shall
immediately pay to the Lender, the Letter of Credit Issuer or the Credit Card
Issuer, from time to time as specified by the Lender, the Letter of Credit
Issuer or the Credit Card Issuer, additional amounts sufficient to compensate
such Lender, the Letter of Credit Issuer or the Credit Card Issuer in the
light of such circumstances, to the extent that such Lender, the Letter of
Credit Issuer or the Credit Card Issuer reasonably determine(s) such increase
in capital to be allocable to the maintenance of the Revolving Commitment or
its Commitment Percentage of the Revolving Commitment (or the making of Fixed
Rate Advances or the issuance and maintenance of or obligation to issue
Letters of Credit or Credit Cards). A certificate as to such amounts
submitted to the Borrower by a Lender, the Letter of Credit Issuer or the
Credit Card Issuer, shall, if made reasonably and in good faith, be
presumptive evidence of such amounts and binding for all purposes.
Section 2.10 ILLEGALITY. Notwithstanding any other provision of this
Agreement, if the introduction of or any change in or in the interpretation
of any law or regulation shall make it unlawful, or any central bank or other
governmental authority shall assert that it is unlawful, for a Lender to
perform its obligations hereunder to make Fixed Rate Advances or to purchase
risk participations in any Letter of Credit or Credit Card, to continue to
fund or maintain such Advances hereunder, for the Letter of Credit Issuer to
issue or maintain Letters of Credit or for the Credit Card Issuer to issue or
maintain Credit Cards, such Lenders, the Letter of Credit Issuer or the
Credit Card Issuer may, by notice to the Borrower, suspend the right of the
Borrower to elect such Fixed Rate Advances or to request Letters of Credit to
be issued, as the case may be, and, if necessary in the reasonable opinion of
such Lender to comply with such law or regulation, Borrower shall prepay all
such Fixed Rate Advances at the latest time permitted by the applicable law
or regulation. The Borrower shall not be obligated to pay any amount pursuant
to Section 2.11 in respect of such prepayment.
Section 2.11 PREPAYMENT INDEMNITY; FEE. If (i) due to payments made by
the Borrower pursuant to Section 2.7 or due to acceleration of the maturity
of the Notes pursuant to Section 6.2 or due to any other reason attributable
to the Borrower (but not due to any prepayment pursuant to Section 2.10), a
Lender receives payments of principal of a Fixed Rate Advance other than on
the last day of an Interest Period relating to such Advance, or (ii) the
Borrower fails to prepay any Fixed Rate Advance pursuant to a notice of
prepayment given pursuant to Section 2.7, the Borrower shall, upon demand by
a Lender, pay to the Administrative Agent on behalf of such Lender the
following:
(a) LIBOR RATE ADVANCES. In the case of prepayment of LIBOR Rate
Advances, the Borrower shall pay any amounts required to compensate the
Lender for any additional losses, costs or expenses which it may reasonably
incur as a result of such payment or failure to prepay, including, without
limitation, any loss, cost or expense incurred by reason of the liquidation
or reemployment of deposits or other funds acquired by the Lender to fund or
maintain such Advances.
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(b) TERM RATE ADVANCES. In the case of prepayment of Term Rate Advances
(but subject to the provisions of paragraph (v) below), the Borrower shall
pay a prepayment fee calculated separately for each Prepaid Installment:
(i) The Term Lender shall first determine the amount of interest
which would have accrued each month on the Prepaid Installment had it
remained outstanding until the applicable Original Payment Date, using the
applicable Term Rate.
(ii) The Term Lender shall then subtract from each monthly interest
amount determined in paragraph (i) above, the amount of interest which would
accrue on that Prepaid Installment if the Prepaid Installment were reinvested
from the date of prepayment through the Original Payment Date at the Treasury
Rate.
(iii) If the remainder determined in paragraph (ii) with respect to
the Prepaid Installment is greater than zero, the Term Lender shall discount
the monthly differences to the date of prepayment by the Treasury Rate. The
sum of the discounted monthly differences for the Prepaid Installment shall
be the amount of the prepayment fee due hereunder with respect to the Prepaid
Installment.
(iv) The following definitions will apply to the calculation of the
prepayment fee for purposes of this Section 2.11(b):
(A) "ORIGINAL PAYMENT DATES" means the dates on which
principal of a Term Rate Advance would have been paid if there had been no
prepayment.
(B) "PREPAID INSTALLMENT" means the amount of the prepaid
principal of a Term Rate Advance which would have been paid on a single
Original Payment Date.
(C) "TREASURY RATE" means the interest rate yield for U.S.
Treasury securities which the Lender determines could be obtained by
reinvesting a specified Prepaid Installment in such securities from the date
of prepayment through the Original Payment Date. The Treasury Rate may be
based on information from either the Telerate or Reuters information
services, the Wall Street Journal or other information sources the Lender
deems appropriate.
Notwithstanding the foregoing provisions of this Section 2.11(b), the
Borrower may prepay the principal of Term Rate Advances, without liability for
any prepayment fee that would otherwise be payable under this Section 2.11(b),
in an amount of up to 10% of the aggregate principal amount of all Term Rate
Advances made by the Term Lender to the Borrower from time to time under the
Term Facility (including any Term Rate Advances that have previously been
prepaid or repaid pursuant to the terms of this Agreement). Any prepayment in
excess of such amount shall be subject to payment of a prepayment fee in
accordance with this Section 2.11(b).
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Section 2.12 EVIDENCE OF DEBT. The Advances made by the Lenders to
the Borrower, and the obligations of the Borrower to both reimburse the
Letter of Credit Issuer for draws on Letters of Credit and reimburse the
Credit Card Issuer for disbursements made under Credit Cards, shall be
evidenced by a Note payable to the order of each Lender in a principal amount
equal to such Lender's Commitment Percentage of the Revolving Commitment.
Each Lender may maintain in accordance with its usual practice an account or
accounts evidencing the Indebtedness of the Borrower resulting from Advances
and payments made from time to time hereunder. In any legal action or
proceeding in respect of this Agreement or the Notes, the entries made in
such account or accounts shall be presumptive evidence of the existence and
amounts of the obligations of the Borrower therein recorded, if made
reasonably and in good faith.
Section 2.13 COLLATERAL. As security for the obligation of the
Borrower to repay Advances, to pay the principal of and interest on the Notes
and the other Indebtedness of the Borrower under this Agreement and to
reimburse the Letter of Credit Issuer for draws on any Letter of Credit and
the Credit Card Issuer for disbursements made under any Credit Card, and for
the performance by the Borrower of its other obligations hereunder and under
all the other Loan Documents, the Borrower shall grant to the Administrative
Agent, on behalf and for the benefit of each Lender, the Letter of Credit
Issuer and the Credit Card Issuer, an attached, fully perfected,
first-priority security interest in the Collateral, subject to the terms of
the Security Agreement.
Section 2.14 USE OF PROCEEDS. Proceeds of the Revolving Facility
Advances and disbursements made under Credit Cards shall be used for general
corporate purposes of the Borrower, including, without limitation, for
repayment of any other Advances and reimbursement of draws under Letters of
Credit. Proceeds of the Term Facility Advances may be used to finance the
Borrower's equipment and leasehold improvements.
ARTICLE III
CONDITIONS OF BORROWING
Section 3.1 CONDITIONS PRECEDENT TO EFFECTIVE DATE. The occurrence
of the Effective Date is subject to the condition precedent that the
Administrative Agent shall have received in form and substance satisfactory
to the Administrative Agent and all duly executed by the parties thereto:
(a) The respective Revolving Facility Notes made payable to
each Lender.
(b) A copy of the Articles of Incorporation of the Borrower
certified by the Secretary of State of the state of its incorporation, and a
copy of the Bylaws of the Borrower certified by its secretary.
(c) Certified copies of the resolutions of the Board of
Directors of the Borrower approving the Borrowings contemplated hereby and
authorizing the execution of
25
the Loan Documents, and of all documents evidencing other necessary corporate
action and governmental approvals, if any, with respect to the Loan Documents.
(d) A certificate of the Secretary or an Assistant Secretary
of the Borrower certifying the names and true signatures of the officers of
the Borrower authorized to sign the Loan Documents and the other documents to
be delivered hereunder.
(e) Certificates of good standing of a recent date for the
Borrower from the Secretary of State of the state of its incorporation.
(f) The facility fee due pursuant to Section 2.6(a)(i) and the
Administrative Agent Fee due pursuant to Section 2.6(a)(iv).
(g) Such other documents or instruments as the Administrative
Agent may reasonably request.
Section 3.2 CONDITIONS PRECEDENT TO EACH BORROWING. The obligation
of the Lenders to make, continue or convert Revolving Facility Advances, or
the obligation of the Term Lender to continue or convert Term Facility
Advances, or the obligation of the Letter of Credit Issuer to issue Letters
of Credit or the Credit Card Issuer to issue Credit Cards, shall be subject
to the following further conditions precedent:
(a) On the date of a Borrowing pursuant to Section 2.3(a) or
the continuation or conversion of an Advance pursuant to Section 2.3(b),
before and immediately after giving effect thereto, the following statements
shall be true and correct, and the making by the Borrower of the applicable
Borrowing Request shall constitute its representation and warranty that on
and as of the date of such Borrowing, conversion or continuation, before and
immediately after giving effect thereto, the following statements are true
and correct:
(i) The representations and warranties contained in
Article IV of this Agreement are correct in all material respects as though
made on and as of such date, unless such representations and warranties are
expressly stated to be made as of an earlier date;
(ii) After giving effect to (A) a requested Borrowing,
conversion or continuation of a Revolving Facility Advance, the Unused
Revolving Facility Commitment is not less than zero; (B) a requested
Borrowing of a Letter of Credit, the Unused Revolving Facility Commitment is
not less than zero; (C) a requested Borrowing consisting of a Standby Letter
of Credit, neither the Unused Revolving Facility Commitment nor the Unused
SLC Sublimit is less than zero and (D) a requested Borrowing consisting of an
Acceptance, neither the Unused Revolving Facility Commitment nor the Unused
Acceptance Sublimit is less than zero;
(iii) No event has occurred and is continuing, or would
result from such Borrowing, conversion or continuation, which constitutes an
Event of Default or Default;
(iv) The most recent financial statements of the Borrower
delivered pursuant to Section 5.1(c)(i) present fairly the financial position
and results of operations of the
26
Borrower as of the date of, and for the periods presented in, such financial
statements, and since the date of such financial statements there has not
been any material adverse change in the financial condition or operations of
the Borrower; and
(v) The Borrower is in compliance with all covenants
contained in Article V of this Agreement.
(b) If requested by the Administrative Agent, the Borrower
shall have delivered to the Administrative Agent a Notice of Borrowing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants as follows:
Section 4.1 ORGANIZATION. The Borrower is a corporation which is
duly organized, validly existing, and in good standing under the laws of the
State of Washington. The Borrower has the full power and authority to own its
properties and to transact the businesses in which it is presently engaged or
presently proposes to engage. The Borrower also is duly qualified as a
foreign corporation and is in good standing in all states in which the
failure to so qualify would have a material adverse effect on its businesses
or financial condition.
Section 4.2 AUTHORIZATION. The execution, delivery, and performance
of this Agreement and all other Loan Documents by the Borrower, to the extent
to be executed, delivered or performed by the Borrower, have been duly
authorized by all necessary action by the Borrower; do not require the
consent or approval of any other person, regulatory authority or governmental
body; and do not conflict with, result in a violation of, or constitute a
default under (a) any provision of its articles of incorporation or bylaws,
or any agreement or other instrument binding upon the Borrower or (b) any
law, governmental regulation, court decree, or order applicable to the
Borrower.
Section 4.3 FINANCIAL INFORMATION. Each financial statement of the
Borrower supplied to the Administrative Agent truly and completely disclosed
the Borrower's financial condition as of the date of the statement, and there
has been no material adverse change in the Borrower's financial condition
subsequent to the date of the most recent financial statement supplied to the
Administrative Agent. The Borrower has no material contingent obligations
except as disclosed in such financial statements.
Section 4.4 LEGAL EFFECT. This Agreement constitutes, and any
instrument or agreement required hereunder to be given by the Borrower when
delivered will constitute, legal, valid and binding obligations of the
Borrower enforceable against the Borrower in accordance with their respective
terms, subject to applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and to general principles of equity (whether
considered in a proceeding at law or in equity).
27
Section 4.5 PROPERTIES. Except for Permitted Liens, capital leases
and real property leases, the Borrower owns and has good title to all of the
Borrower's properties free and clear of all Liens, and has not executed any
security documents or financing statements relating to such properties. All
of the Borrower's properties are titled in the Borrower's legal name, and the
Borrower has not used, or filed a financing statement under, any other name
for at least the last five (5) years.
Section 4.6 HAZARDOUS SUBSTANCES. The Borrower's use of its
properties comply in all material respects with all applicable laws and
regulations relating to the environment, including without limitation, all
laws and regulations relating to pollution and environmental control.
Section 4.7 LITIGATION AND CLAIMS. No litigation, claim,
investigation, administrative proceeding or similar action (including those
for unpaid taxes) against the Borrower is pending or threatened, and no other
event has occurred which may materially adversely affect the Borrower's
financial condition or properties, except for (a) litigation, claims, or
other events, if any, that have been disclosed to and acknowledged by each of
the Lenders in writing and (b) threatened or pending claims which, if
adversely determined against the Borrower, would not either individually or
in the aggregate exceed $150,000.
Section 4.8 TAXES. To the best of the Borrower's knowledge, all tax
returns and reports of the Borrower that are or were required to be filed,
have been filed, and all taxes, assessments and other governmental charges
have been paid in full, except those presently being or to be contested by
the Borrower in good faith in the ordinary course of business and for which
adequate reserves have been provided.
Section 4.9 LIEN PRIORITY. Unless otherwise previously disclosed to
each of the Lenders in writing and except for Permitted Liens, the Borrower
has not entered into or granted any Lien, or permitted the filing or
attachment of any Lien on or affecting any of the Collateral that would be
prior or that may in any way be superior to the Administrative Agent's Lien
and rights, on behalf of the Lenders, in and to such Collateral.
Section 4.10 BINDING EFFECT. This Agreement and all of the other
Loan Documents are binding upon the Borrower as well as upon the Borrower's
successors, representatives and assigns, and are legally enforceable in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally and to
general principles of equity (whether considered in a proceeding at law or in
equity).
Section 4.11 COMMERCIAL PURPOSES. The Borrower intends to use the
proceeds of all Advances solely for business or commercial related purposes,
and intends to use the proceeds of the Term Facility Advances for purposes of
financing equipment and leasehold improvements.
Section 4.12 EMPLOYEE BENEFIT PLANS. Each employee benefit plan as
to which the Borrower may have any liability complies in all material
respects with all applicable requirements of law and regulations, and (a) no
Reportable Event or Prohibited Transaction (as defined in ERISA) has occurred
with respect to any such plan, (b) the Borrower has not
28
withdrawn from any such plan or initiated steps to do so, (c) no steps have
been taken to terminate any such plan, and (d) there are no unfunded
liabilities other than those previously disclosed to the Lenders in writing.
Section 4.13 LOCATION OF THE BORROWER'S OFFICES AND RECORDS. The
Borrower's place of business, or the Borrower's chief executive office, if
the Borrower has more than one place of business, is located at 0000 Xxxxx
Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxxxx 00000. Unless the Borrower has
designated otherwise in writing, this location is also the office or offices
where the Borrower keeps its records concerning the Collateral.
Section 4.14 INFORMATION. All information furnished by the Borrower
to either the Administrative Agent or the Lenders for the purposes of or in
connection with this Agreement or any transaction contemplated hereby is, and
all information hereafter furnished by or on behalf of the Borrower to either
the Administrative Agent or the Lenders will be, true and accurate in every
material respect on the date as of which such information is dated or
certified; and none of such information is or will be incomplete by omitting
to state any material fact necessary to make such information not misleading.
Section 4.15 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
Borrower understands and agrees that the Lenders, without independent
investigation, are relying upon the above representations and warranties in
extending the Facilities to the Borrower. The Borrower further agrees that
the foregoing representations and warranties shall be continuing in nature
and shall remain in full force and effect until such time as the Borrower's
Indebtedness under this Agreement shall be paid in full, or until this
Agreement shall be terminated in the manner provided above, whichever is the
last to occur.
ARTICLE V
COVENANTS OF THE BORROWER
Section 5.1 AFFIRMATIVE COVENANTS. So long as the Notes or other
amounts payable by the Borrower hereunder shall remain unpaid, or the Lenders
shall have any Revolving Commitment hereunder, or the Term Lender shall have
any Term Commitments hereunder, or the Term Lender Shall have any Term
Commitment hereunder, or any Letter of Credit remains Outstanding, the
Borrower covenants and agrees that it will:
(a) LITIGATION. Promptly inform the Administrative Agent in
writing of (i) all material adverse changes in the Borrower's financial
condition, and (ii) all existing and all threatened litigation, claims,
investigations, administrative proceedings or similar actions affecting the
Borrower which could materially affect the financial condition of the
Borrower.
(b) FINANCIAL RECORDS. Maintain its books and records in
accordance with GAAP, applied on a consistent basis, and permit the
Administrative Agent or any Lender to examine and audit the Borrower's books
and records at all reasonable times upon reasonable prior notice from the
Administrative Agent or any such Lender to the Borrower.
29
(c) REPORTING REQUIREMENTS.
(i) FINANCIAL STATEMENTS. Furnish the
Administrative Agent with, as soon as available, but in no event later than
ninety (90) days after the end of each fiscal year, the consolidated balance
sheet and consolidated statement of income and retained earnings of the
Borrower and its subsidiaries for the year ended, audited by a certified
public accountant reasonably satisfactory to the Administrative Agent, and,
as soon as available, but in no event later than forty five (45) days after
the end of each fiscal quarter, the consolidated balance sheet and
consolidated statement of income and retained earnings of the Borrower and
its subsidiaries for the period ended, prepared and certified as correct to
the best knowledge and belief by the Borrower's chief financial officer or
other officer or person acceptable to the Administrative Agent. All financial
reports required to be provided under this Agreement (A) shall be prepared in
accordance with GAAP, applied on a consistent basis, (B) certified by the
Borrower as being true and correct and (C) accompanied by a certificate of
the Borrower's chief financial officer demonstrating compliance with the
financial covenants set forth in Section 5.3.
(ii) AGING AND LISTING OF ACCOUNTS RECEIVABLE.
Deliver to the Administrative Agent within thirty (30) days after the end of
each quarter, a summary of the Borrower's accounts and contracts receivable
aging as of the last day of the quarter, which shall be net of any
adjustments made at the end of that quarter, all in a form acceptable to the
Administrative Agent.
(iii) INVENTORY REPORT. Deliver to the
Administrative Agent within thirty (30) days after the end of each quarter
inventory reports detailing location, amounts of raw materials and finished
goods on a quarterly basis, prepared in form acceptable to the Administrative
Agent.
(iv) INSURANCE REPORTS. Furnish to the
Administrative Agent, upon request of the Administrative Agent, reports on
each existing insurance policy showing such information as the Administrative
Agent may reasonably request, including without limitation the following: (A)
the name of the insurer; (B) the risks insured; (C) the amount of the policy;
(D) the properties insured; (E) the then current property values on the basis
of which insurance has been obtained, and the manner of determining those
values; and (F) the expiration date of the policy.
(v) ADDITIONAL INFORMATION. Furnish such
additional information and statements, lists of assets and liabilities,
agings of receivables and payables, inventory schedules, budgets, forecasts,
tax returns, and other reports with respect to the Borrower's financial
condition and business operations as the Administrative Agent may reasonably
request from time to time.
(d) INSURANCE. Maintain fire and other risk insurance,
public liability insurance, and such other Insurance as the Administrative
Agent on behalf of the Lenders may require with respect to the Borrower's
properties and operations, in form, amounts, coverages and with insurance
companies reasonably acceptable to the Administrative Agent. The Borrower,
upon request of the Administrative Agent, will deliver to the Administrative
Agent
30
from time to time the policies or certificates of insurance in form
satisfactory to the Administrative Agent, including stipulations that
coverages will not be cancelled or diminished without at least ten (10) days'
prior written notice to the Administrative Agent. Each insurance policy also
shall include an endorsement providing that coverage in favor of the
Administrative Agent on behalf of the Lenders will not be impaired in any way
by any act, omission or default of the Borrower or any other Person. In
connection with all policies covering the Collateral, the Borrower will
provide the Administrative Agent with such loss payable or other endorsements
as the Administrative Agent may require.
(e) OTHER AGREEMENTS. Comply with all terms and conditions
of all other agreements, whether now or hereafter existing, between the
Borrower and any other party and notify the Administrative Agent immediately
in writing of any default in connection with any other such agreements that
would likely have a material adverse effect on the Borrower's business or
financial condition.
(f) LOAN PROCEEDS. Use all proceeds of the Advances solely
for the Borrower's business operations, unless specifically consented to the
contrary by the Required Lenders in writing.
(g) TAXES, CHARGES AND LIENS. Pay and discharge when due
all of its Indebtedness and obligations, including without limitation all
assessments, taxes, governmental charges, levies and liens, of every kind and
nature, imposed upon the Borrower or its properties, income, or profits,
prior to the date on which penalties, would attach, and all lawful claims
that, if unpaid, might become a lien or charge upon any of the Borrower's
properties, income, or profits; provided however, the Borrower will not be
required to pay and discharge any such assessment, tax, charge, xxxx, xxxx or
claim so long as (i) the legality of the same shall be contested in good
faith by appropriate proceedings, and (ii) the Borrower shall have
established on its books adequate reserves with respect to such contested
assessment, tax, charge, levy, lien, or claim in accordance with GAAP. The
Borrower, upon demand of the Administrative Agent, will furnish to the
Administrative Agent evidence of payment of the assessments, taxes, charges,
levies, liens and claims and will authorize the appropriate governmental
official to deliver to the Administrative Agent at any time a written
statement of any assessments, taxes, charges, levies, liens and claims
against the Borrower's properties, income, or profits.
(h) PERFORMANCE. Perform and comply with all terms,
conditions, and provisions set forth in this Agreement and in the other Loan
Documents in a timely manner, and promptly notify the Administrative Agent if
the Borrower learns of the occurrence of any event which constitutes an Event
of Default under this Agreement or under any of the other Loan Documents.
(i) OPERATIONS. Maintain executive and management personnel
with substantially the same qualifications and experience as the present
executive and management personnel; conduct its business affairs in a
reasonable and prudent manner and in material compliance with all applicable
federal, state and municipal laws, ordinances, rules and regulations
respecting its properties, charters, businesses and operations, including
without limitation, compliance with the Americans With Disabilities Act and
with all minimum funding
31
standards and other requirements of ERISA and other laws applicable to the
Borrower's employee benefit plans.
(j) INSPECTION. Permit employees or agents of the
Administrative Agent at any reasonable time to inspect any and all Collateral
and the Borrower's other properties and to examine or audit the Borrower's
books, accounts, and records (including detailed aging reports of accounts
and contracts receivable) and to make copies and memoranda of the Borrower's
books, accounts, and records. If the Borrower now or at any time hereafter
maintains any records (including without limitation computer generated
records and computer software programs for the generation of such records) in
the possession of a third party, the Borrower, upon request of the
Administrative Agent, shall notify such party to permit the Administrative
Agent free access to such records at all reasonable times and to provide the
Administrative Agent with copies of any records it may request, all at the
Borrower's expense.
(k) COMPLIANCE CERTIFICATE. Upon request of the
Administrative Agent, provide the Administrative Agent at least annually with
a certificate executed by the Borrower's chief financial officer, or other
officer or person acceptable to the Administrative Agent, certifying that the
representations and warranties set forth in this Agreement are true and
correct as of the date of the certificate and further certifying that, as of
the date of the certificate, no Event of Default exists under this Agreement.
(l) ENVIRONMENTAL COMPLIANCE AND REPORTS. Comply in all
respects with all environmental protection federal, state and local laws,
statutes, regulations and ordinances.
(m) ADDITIONAL ASSURANCES. Make, execute and deliver to the
Administrative Agent such promissory notes, mortgages, deeds of trust,
security agreements, financing statements, instruments, documents and other
agreements as the Administrative Agent or its attorneys may reasonably
request to evidence and secure the Borrowings and to perfect all Liens in the
Collateral.
Section 5.2 NEGATIVE COVENANTS. So long as the Notes or other
amount payable by the Borrower hereunder shall remain unpaid or the Lenders
shall have any Commitment hereunder or any Letter of Credit remains
Outstanding, the Borrower covenants and agrees that it will not:
(a) INDEBTEDNESS AND LIENS. (i) Except for trade debt
incurred in the normal course of business and Indebtedness to the Lenders,
the Letter of Credit Issuer and the Credit Card Issuer contemplated by this
Agreement, create, incur or assume Indebtedness, other than capital leases,
(ii) except for Permitted Liens, grant or permit to exist any Lien on any of
the Borrower's assets, or (iii) sell with recourse any of the Borrower's
accounts, except to the Lenders.
(b) CONTINUITY OF OPERATIONS. (i) Engage in any business
activities substantially different than those in which the Borrower is
presently engaged, (ii) cease operations, liquidate, merge, transfer, acquire
or consolidate with any other entity, other than mergers, transfers,
acquisitions or consolidations in which the consideration has a fair market
value of less than $3,500,000.00 and the Borrower is the acquiring or
surviving entity, or
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(iii) change its name, dissolve or transfer or sell Collateral or other
assets out of the ordinary course of business except (A) transfers, sales
or dispositions of Collateral that is obsolete or worn out property
disposed of in the ordinary course of business and (B) other asset
dispositions provided that such other asset dispositions do not exceed
$200,000.00 in the aggregate for any fiscal year.
(c) LOANS, ACQUISITIONS AND GUARANTIES. (i) Loan, invest in
or advance money or assets, or purchase, create or acquire any interest in
any other enterprise or entity, except (A) commercial bank demand deposits
and time deposits maturing within one year, (B) marketable general
obligations of the United States or a state or marketable obligations fully
guaranteed by the United States, (C) short-term commercial paper with the
highest rating of a generally recognized rating service, (D) loans and
advances to employees in the ordinary course of business related to expenses
incurred in the ordinary course of employment not to exceed $500,000
outstanding at any time, (E) bankers' acceptances, repurchase agreements, or
other investments reasonably acceptable to the Administrative Agent and (F)
loans or advances to, or investments in wholly owned subsidiaries in an
amount not to exceed $5,000,000.00 or (ii) incur any obligation as surety or
guarantor other than in the ordinary course of business.
Section 5.3 FINANCIAL COVENANTS. So long as the Notes or any other
amount payable by the Borrower hereunder shall remain unpaid, or the Lenders
shall have any Commitment hereunder, or the Term Lender shall have any Term
Commitment hereunder, or any Letter of Credit remains Outstanding, the
Borrower covenants and agrees that unless it receives the prior written
consent of the Required Lenders, it will:
(a) TANGIBLE NET WORTH. Not permit, as of the Effective
Date and the last day of each fiscal quarter thereafter, Tangible Net Worth
to be less than the sum of (i) $82,000,000, (ii) 50% of the cumulative
consolidated net income of the Borrower for all fiscal quarters of the
Borrower ending after the Effective Date in which the Borrower earned net
income (and excluding each fiscal quarter in which it incurred a net loss),
(iii) 100% of the cumulative net cash proceeds from the sale of capital stock
of the Borrower during any fiscal quarter ending after the Effective Date and
(iv) 100% of the cumulative amount of principal of any Indebtedness of the
Borrower converted into capital stock of the Borrower during any fiscal
quarter ending after the Effective Date.
(b) WORKING CAPITAL. Not permit Working Capital to be less
than $70,000,000.00, as of the Effective Date and the last day of each fiscal
quarter occurring prior to April 30, 2001, or less than $77,000,000.00 as of
April 30, 2001 and the last day of each fiscal quarter thereafter.
(c) NET WORTH RATIO. Not permit the ratio of (i)
consolidated liabilities of the Borrower and its subsidiaries (defined in
accordance with GAAP) plus consolidated liabilities in respect of outstanding
letters of credit (which include Outstanding Letters of Credit) and
Outstanding Acceptances to (ii) Tangible Net Worth to exceed 1.00 to 1.00 as
of the Effective Date and the last day of each fiscal quarter thereafter.
33
(d) CONSOLIDATED NET LOSSES. Not permit, as of the Effective Date and the
last day of each fiscal quarter thereafter, any consolidated net loss for the
fiscal quarter then ending and for the immediately preceding fiscal quarter.
(e) CAPITAL EXPENDITURES. Not permit Capital Expenditures made during
any one fiscal year to exceed the sum of $14,000,000.00.
(f) DEBT SERVICE COVERAGE RATIO. Maintain, as of the Effective Date
and the last day of each fiscal quarter thereafter, a ratio of (x) EBITDA
for the fiscal quarter then ended and the immediately preceding three fiscal
quarters to (y) Debt Service of at least 3:00 to 1:00.
ARTICLE VI
EVENTS OF DEFAULT
Section 6.1 EVENTS OF DEFAULT. The following events shall constitute
events of default hereunder ("Events of Default"):
(a) DEFAULT ON INDEBTEDNESS. Failure of the Borrower (i) to pay when due
any principal of or interest on the Advances, (ii) to reimburse the Letter of
Credit Issuer when due for any drawing on any Letter of Credit, (iii) to
reimburse the Credit Card Issuer when due for any disbursement under any
Credit Card or (iv) to pay when due any other amount due hereunder or under
any of the other Loan Documents and, in the case of a failure described in
the foregoing clause (iv), the continuance thereof for a period of five (5)
days.
(b) OTHER DEFAULTS. Failure of the Borrower to comply with or to perform
when due any other term, obligation, covenant or condition contained in this
Agreement or in any of the other Loan Documents, or failure of the Borrower
to comply with or to perform any other term, obligation, covenant or
condition contained in any other agreement between the Lenders and/or the
Administrative Agent and the Borrower and/or its subsidiaries.
(c) DEFAULT IN FAVOR OF THIRD PARTIES. Default of the Borrower under any
loan, extension of credit, security agreement, purchase or sales agreement,
or any other agreement, in favor of any other creditor or person that may
materially affect any of the Borrower's property or the Borrower's ability to
repay the Borrowings or perform its obligations under this Agreement or any
of the other Loan Documents.
(d) FALSE STATEMENTS. Any warranty, representation or statement made or
furnished to the Lenders, the Letter of Credit Issuer, the Credit Card Issuer
and/or the Administrative Agent by or on behalf of the Borrower under this
Agreement or the other Loan Documents is false or misleading in any material
respect at the time made or furnished, or becomes false or misleading at any
time thereafter.
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(e) DEFECTIVE COLLATERALIZATION. This Agreement or any of the other Loan
Documents ceases to be in full force and effect (including failure of the
Security Agreement or any other Loan Document to create a valid and perfected
Lien in the Collateral) at any time and for any reason.
(f) INSOLVENCY. The dissolution or termination of the Borrower's
existence as a going business, the insolvency of the Borrower, the
appointment of a receiver for any part of the Borrower's property, any
assignment for the benefit of creditors, any type of creditor workout, or the
commencement of any proceeding under any bankruptcy or insolvency laws by or
against the Borrower.
(g) CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of the Borrower or by any
governmental agency, including a garnishment, attachment, or levy on or of
any of the Borrower's deposit accounts, provided, however, that the foregoing
shall not constitute an Event of Default if there is a good faith dispute by
the Borrower as to the validity or reasonableness of the claim which is the
basis of the creditor or forfeiture proceeding (other than any such
proceeding instituted by the Administrative Agent), the Borrower gives the
Administrative Agent written notice of such creditor or forfeiture proceeding
and the Borrower establishes reserves or a surety bond for such creditor or
forfeiture proceeding reasonably satisfactory to the Administrative Agent.
(h) ADVERSE CHANGE. A material adverse change occurs in the Borrower's
financial condition.
Provided, however, that none of the foregoing events (other than those
referred to in paragraph (a)) shall constitute an Event of Default hereunder
if (i) it is curable and if the Borrower has not been given a notice of a
similar default within the preceding twelve (12) months and (ii) the
Borrower, after receiving written notice from the Administrative Agent
demanding cure of such default, (A) cures the default within fifteen (15)
days or (B) if the cure requires more than fifteen (15) days, immediately
initiates steps which the Required Lenders deem in their sole discretion to
be sufficient to cure the default and thereafter continues and completes all
reasonable and necessary steps sufficient to produce compliance as soon as
reasonably practical.
Section 6.2 REMEDIES. If an Event of Default shall have occurred and be
continuing, the Administrative Agent may, by notice to the Borrower, (a)
declare the obligation of the Lenders to make Advances, the obligation of the
Letter of Credit Issuer to issue Letters of Credit and the obligation of the
Credit Card Issuer to issue a Credit Card to be terminated, whereupon the
same shall forthwith terminate, and (b) declare (i) the Notes and all
interest thereon, (ii) an amount equal to the stated amount of each
Outstanding Letter of Credit (notwithstanding that the obligation of the
Borrower to reimburse any draws under any such Letter of Credit may be
contingent or not matured), (iii) and an amount equal to the aggregate amount
of disbursements made under any issued Credit Cards, and (iv) all other
amounts payable under this Agreement and the other Loan Documents to be
immediately due and payable, whereupon the Notes, all such interest, all such
amounts payable with respect to Outstanding Letters of Credit and issued
35
Credit Cards and all such other amounts shall become and be immediately due
and payable, without presentment, demand, protest or further notice of any
kind, all of which are hereby expressly waived by the Borrower; provided,
however, that if an Event of Default under Section 6.01(f) shall occur, (A)
the obligation of the Lenders to make Advances, the obligation of the Letter
of Credit Issuer to issue Letters of Credit and the obligation of the Credit
Card Issuer to issue Credit Cards shall automatically be terminated and (B)
the Notes, all interest thereon, an amount equal to the stated amount of each
Outstanding Letter of Credit (notwithstanding that the obligation of the
Borrower to reimburse any draws under any such Letter of Credit may be
contingent or not matured), an amount equal to the aggregate amount of
disbursements made under any issued Credit Cards and all other amounts
payable under this Agreement and the other Loan Documents shall automatically
become and be immediately due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived
by the Borrower.
Section 6.3 ADJUSTMENTS; RIGHT OF SET-OFF.
(a) If any Lender (a "Benefited Lender") shall at any time receive
any payment of all or part of its Revolving Facility Advance owing to it, or
interest thereon, or receive any collateral in respect thereof (whether
voluntarily or involuntarily, by set-off, pursuant to events or proceedings
of the nature referred to in Section 6.1(f) and (g), or otherwise), in a
greater proportion than any such payment to or Collateral received by any
other Lender, if any, in respect of each such other Lender's Revolving
Facility Advances owing to each such other Lender, or interest thereon, such
Benefited Lender shall purchase for cash from the other Lenders a
participating interest in such portion of each such other Lender's Revolving
Facility Advance owing to each such other Lender, or shall provide such other
Lenders with the benefits of any such Collateral, or the proceeds thereof, as
shall be necessary to cause such Benefited Lender to share the excess payment
or benefits of such Collateral or proceeds ratably with each of the Lenders;
provided, however, that if all or any portion of such excess payment or
benefits is thereafter recovered from such Benefited Lender, such purchase
shall be rescinded, and the purchase price and benefits returned, to the
extent of such recovery, but without interest.
(b) Upon the declaration of the Notes, or the obligations of the
Borrower with respect to reimbursement of drawings under Outstanding Letters
of Credit or to reimbursement of disbursements under issued Credit Cards, as
due and payable pursuant to the provisions of Section 6.2, each Lender is
hereby authorized on behalf of the Lenders at any time and from time to time,
to the fullest extent permitted by law, 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 said Lender to or for
the credit or the account of the Borrower against any and all of the
obligations of the Borrower now or hereafter existing under this Agreement
and the other Loan Documents irrespective of whether or not such Lender shall
have made any demand. The rights of the Lenders under this Section are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) which the Lenders may have.
Section 6.4 CUMULATIVE REMEDIES. If an Event of Default shall occur and
be continuing, the Administrative Agent on behalf of the Lenders may proceed
to enforce the Loan Documents by exercising such remedies as are available
thereunder or in respect thereof under applicable law, whether for specific
performance of any covenant or other agreement contained
36
in the Loan Documents or in aid of the exercise of any power granted in the
Loan Documents. No remedy conferred in this Agreement or the other Loan
Documents is intended to be exclusive of any other remedy, and each and every
such remedy shall be cumulative and shall be in addition to every other
remedy conferred herein or therein or now or hereafter existing at law, in
equity, by statute or otherwise.
Section 6.5 APPLICATION OF PAYMENTS. After the occurrence and during the
continuance of an Event of Default, the Administrative Agent on behalf of the
Lenders shall apply all funds received in respect of amounts owing under this
Agreement and the other Loan Documents in such order as the Required Lenders
may determine in their sole discretion notwithstanding any instruction from
the Borrower.
ARTICLE VII
THE ADMINISTRATIVE AGENT
Section 7.1 APPOINTMENT. Each Lender hereby irrevocably designates and
appoints the Administrative Agent as the agent of such Lender under this
Agreement and the other Loan Documents, and each such Lender irrevocably
authorizes the Administrative Agent, in such capacity, to take such action on
its behalf under the provisions of this Agreement and the other Loan
Documents and to exercise such powers and perform such duties as are
expressly delegated to the Administrative Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as
are reasonably incidental thereto. Notwithstanding any provision to the
contrary elsewhere in this Agreement, the Administrative Agent shall not have
any duties or responsibilities, except those expressly set forth herein, or
any fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist against the
Administrative Agent.
Section 7.2 DELEGATION OF DUTIES. The Administrative Agent may execute
any of its duties under this Agreement and the other Loan Documents by or
through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agents
or attorneys-in-fact selected by it with reasonable care.
Section 7.3 EXCULPATORY PROVISIONS. Neither the Administrative Agent nor
any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates shall be (i) liable to any of the Lenders for any action lawfully
taken or omitted to be taken by it or such Person under or in connection with
this Agreement or any other Loan Document (except for its or such Person's
own gross negligence or willful misconduct) or (ii) responsible in any manner
to any of the Lenders for any recitals, statements, representations or
warranties made by the Borrower or any representative thereof contained in
this Agreement or any other Loan Document or in any certificate, report,
statement or other document referred to or provided for in, or received by
the Administrative Agent under or in connection with, this Agreement or any
other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this
37
Agreement or any other Loan Document or for any failure of the Borrower to
perform its obligations hereunder or thereunder. The Administrative Agent
shall not be under any obligation to any Lender to ascertain or to inquire as
to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of the Borrower.
Section 7.4 RELIANCE BY ADMINISTRATIVE AGENT. The Administrative Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
writing, resolution, notice, consent, certificate, affidavit, letter
telecopy, telex or teletype message, statement, order or other document or
conversation believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to the
Borrower), independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent shall be fully justified in
taking any action or in failing or refusing to take any action under this
Agreement and the other Loan Documents in accordance with a request of the
Required Lenders, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and all future holders
of the obligations owing by the Borrower hereunder.
Section 7.5 NOTICE OF DEFAULT. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event
of Default hereunder unless the Administrative Agent has received notice from
a Lender or the Borrower referring to this Agreement, describing such Default
or Event of Default and stating that such notice is a "notice of default". In
the event that the Administrative Agent receives such a notice, the
Administrative Agent shall give notice thereof to the Lenders. The
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Lenders;
provided that unless and until the Administrative Agent shall have received
such directions, and the Administrative Agent may (but shall not be obligated
to) take such action, or refrain from taking such action, with respect to
such Default or Event of Default as it shall deem advisable in the best
interests of the Lenders.
Section 7.6 NON-RELIANCE ON ADMINISTRATIVE AGENT AND OTHER LENDERS. Each
Lender expressly acknowledges that neither the Administrative Agent nor any
of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates has made any representations or warranties to it and that no act
by the Administrative Agent hereinafter taken, including any review of the
affairs of the Borrower, shall be deemed to constitute any representation or
warranty by the Administrative Agent to any Lender. Each Lender represents to
the Administrative Agent that it has, independently and without reliance upon
the Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Borrower and made its own decision to
make Advances hereunder and enter into this Agreement. Each Lender also
represents that it will, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of
the
38
Borrower. Except for notices, reports and other documents expressly required
to be furnished to the Lenders by the Administrative Agent hereunder, the
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business,
operations, property, condition (financial or otherwise), prospects or
creditworthiness of the Borrower which may come into the possession of the
Administrative Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates.
Section 7.7 INDEMNIFICATION. The Lenders agree to indemnify the
Administrative Agent in its capacity as such (to the extent not reimbursed by
the Borrower and without limiting the obligation of the Borrower to do so),
ratably according to their respective Commitment Percentages in effect on the
date on which indemnification is sought (or, if indemnification is sought
after the date upon which the Commitments shall have terminated and the
aggregate Advances Outstanding shall have been reduced to zero, ratably in
accordance with their Commitment Percentages immediately prior to such date),
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever which may at any time (including, without limitation, at any
time following the payment of the amounts owing hereunder) be imposed on,
incurred by or asserted against the Administrative Agent in any way relating
to or arising out of, the Commitments, this Agreement, any of the other Loan
Documents or any documents contemplated by or referred to herein or therein
or the transactions contemplated hereby or thereby or any action taken or
omitted by the Administrative Agent under or in connection with any of the
foregoing; provided that no Lender shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting solely
from the Administrative Agent's gross negligence or willful misconduct. The
agreements in this Article VII shall survive the payment of the Loans and all
other amounts payable hereunder.
Section 7.8 ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY. The
Administrative Agent and its Affiliates may make loans to, accept deposits
from and generally engage in any kind of business with the Borrower as though
the Administrative Agent were not the Administrative Agent hereunder and
under the other Loan Documents. With respect to the Advances made by it, the
Administrative Agent shall have the same rights and powers under this
Agreement and the other Loan Documents as any Lender and may exercise the
same as though it were not the Administrative Agent, and the terms "Lender",
"Term Lender", and "Lenders" shall include the Administrative Agent in its
individual capacity.
Section 7.9 SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may
resign as Administrative Agent upon 30 days' notice to the Lenders. If the
Administrative Agent shall resign as Administrative Agent under this
Agreement and the other Loan Documents, then the Required Lenders shall
appoint from among the Lenders a successor agent for the Lenders, which
successor agent shall be approved by the Borrower, whereupon such successor
agent shall succeed to the rights, powers and duties of the Administrative
Agent, and the term "Administrative Agent" shall mean such successor agent
effective upon such appointment and approval, and the former Administrative
Agent's rights, powers and duties as Administrative Agent shall be
terminated, without any other or further act or deed on the part of such
former Administrative Agent or any of the parties to this Agreement. After
any retiring Administrative
39
Agent's resignation as Administrative Agent, the provisions of this Article
VII shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Administrative Agent under this Agreement and the other
Loan Documents.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 AMENDMENTS. An amendment, modification or waiver of any
provision of this Agreement or the other Loan Documents, or a consent to any
departure by the Borrower therefrom, including, without limitation, any
amendment, modification or waiver reducing the amount of principal of an
Outstanding Advance, extending the Termination Date or reducing the stated
amount of any interest, fee or other amount payable to any Lender under this
Agreement, or any amendment, modification or waiver of any provision of this
Section 8.1, or any amendment reducing the percentage specified in the
definition of "Required Lenders", or any consent to the assignment or
transfer by the Borrower of any of its rights and obligations under this
Agreement and the other Loan Documents, shall be effective against the
Lenders if, but only if, it shall be in writing and approved and signed by
the Required Lenders, and then such a waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given;
provided, however, that: (a) any amendment, modification or waiver of any
provision of Article VII must be approved by written consent of the
Administrative Agent and the Required Lenders; (b) any amendment,
modification or waiver of any provision of Section 2.2(b) must be approved by
written consent of the Letter of Credit Issuer and the Required Lenders; and
(c) any amendment, modification or waiver of any provision of Section 2.2(c)
must be approved by written consent of the Credit Card Issuer and the
Required Lenders.
Section 8.2 NOTICES. Except as otherwise specifically provided in this
Agreement, all notices and other communications provided for hereunder shall
be in writing (including telecopier) and mailed, telecopied or otherwise
transmitted or delivered, if to the Borrower, at:
Cutter & Buck Inc.
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx, Chief Financial Officer
Telecopy: (000) 000-0000
Telephone (000) 000-0000
if to a Lender, the Administrative Agent, the Letter of Credit Issuer or the
Credit Card Issuer, at the address as set forth under its name on the
signature page of this Agreement; or, as to any party, at such other address
as shall be designated by such party in a written notice to the other party
or parties. All such notices and communications shall, (i) if mailed, be
effective three (3) Business Days following deposit in the United States
mail, postage prepaid; (ii) if delivered by air courier, be effective the
first Business Day following transmittal to the air courier and (iii) if
telecopied, be effective when telecopied and electronic confirmation of
transmission is received, except that notices and communications to the
Administrative Agent, the Letter of Credit Issuer
40
or the Credit Card Issuer pursuant to Article II shall not be effective until
received by the Administrative Agent, the Letter of Credit Issuer or the
Credit Card Issuer, as the case may be. A notice received by the
Administrative Agent, the Letter of Credit Issuer or the Credit Card Issuer
by telephone pursuant to a provision of this Agreement providing for
telephone notice shall be effective if such party believes in good faith that
it was given by an Authorized Officer of the Borrower and acts pursuant
thereto, notwithstanding the absence of written confirmation.
Section 8.3 NO WAIVER; REMEDIES. No failure on the part of the
Administrative Agent to exercise, and no delay in exercising, on behalf of
the Lenders, any right hereunder or under any other Loan Document shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder or under any other Loan Document preclude any other or
further exercise thereof or the exercise of any other right. The remedies
provided herein and in the other Loan Documents are cumulative and not
exclusive of any remedies provided by law.
Section 8.4 COSTS AND EXPENSES; INDEMNIFICATION.
(a) COSTS OF PREPARATION AND ADMINISTRATION OF LOAN DOCUMENTS. The
Borrower agrees to pay on demand the reasonable fees and out-of-pocket
expenses of counsel for the Administrative Agent in connection with the
preparation, execution and delivery of this Agreement and the other Loan
Documents. In addition, the Borrower shall pay any and all stamp and other
taxes, recording fees, escrow fees, title insurance premiums, fees for
searches of public records, and all other out-of-pocket costs and expenses
payable in connection with the execution and delivery of this Agreement and
the other Loan Documents and the administration thereof, and shall save the
Administrative Agent and the Lenders harmless from and against any and all
liabilities with respect to or resulting from any delay in paying or omission
to pay such taxes, fees, costs and expenses.
(b) COSTS OF LITIGATION. In the event of any Default or Event of
Default under this Agreement, or in the event that any dispute arises
(whether or not such dispute is with the Borrower) relating to the
interpretation, enforcement or performance of this Agreement or any of the
other Loan Documents, the Administrative Agent, the Lenders, the Letter of
Credit Issuer and the Credit Card Issuer shall be entitled to collect from
the Borrower on demand all fees and expenses incurred in connection
therewith, including but not limited to fees of attorneys, accountants,
appraisers, environmental inspectors, consultants, expert witnesses,
arbitrators, mediators and court reporters, subject, in circumstances other
than a bankruptcy or insolvency proceeding, to applicable law providing that
the prevailing party is entitled to be awarded its reasonable costs and
attorneys' fees. Without limiting the generality of the foregoing, the
Borrower shall pay all such costs and expenses incurred in connection with:
(i) arbitration or other alternative dispute resolution proceedings, trial
court actions and appeals; (ii) bankruptcy or other insolvency proceedings of
the Borrower, any guarantor or other party liable for any of the obligations
under this Agreement or any of the other Loan Documents, or any party having
any interest in any security for any of those obligations; (iii) judicial or
nonjudicial foreclosure on, or appointment of a receiver for, any property
securing the obligations of the Borrower; (iv) post-judgment collection
proceedings; (v) all claims, counterclaims, cross-claims and defenses
asserted in any of the foregoing whether or not they arise out of or are
related to this
41
Agreement or any other Loan Document; (vi) all preparation for any of the
foregoing; and (vii) all settlement negotiations with respect to any of the
foregoing.
(c) INDEMNIFICATION. The Borrower agrees to indemnify and hold each
of the Administrative Agent, the Lenders, the Letter of Credit Issuer and the
Credit Card Issuer and their respective officers, directors, employees and
agents (collectively, "Indemnified Parties" and, individually, a "Indemnified
Party") free and harmless from and against any and all actions, causes of
action, suits, losses, costs, liabilities, damages and expenses (regardless
of whether such Indemnified Party is a party to the action for which
indemnification hereunder is sought), including without limitation reasonable
attorneys' fees and disbursements (the "Indemnified Liabilities") incurred by
any of the Indemnified Parties as a result of, or arising out of, or relating
to, any Letter of Credit or any transaction financed or to be financed in
whole or in part out of the proceeds of any thereof or otherwise involving
any thereof, except for any such Indemnified Liabilities arising on account
of the relevant Indemnified Party's negligence or misconduct.
Section 8.5 BINDING EFFECT; SUCCESSORS AND ASSIGNS; PARTICIPATIONS AND
ASSIGNMENTS.
(a) This Agreement shall be binding upon and inure to the benefit
of the Borrower, the Lenders, the Letter of Credit Issuer, the Credit Card
Issuer, the Administrative Agent and their respective successors and assigns,
except that the Borrower may not assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of each
Lender.
(b) Any Lender may, in the ordinary course of its business and in
accordance with applicable law, with the consent of the Borrower (such
consent not to be unreasonably withheld), at any time sell to one or more
banks or other entities ("Participants") participating interests in such
Lender's Commitment. In the event of any such sale by a Lender of a
participating interest to a Participant, such Lender's obligations under this
Agreement to the other parties to this Agreement shall remain unchanged, such
Lender shall remain solely responsible for the performance thereof, and the
Borrower, the Administrative Agent, the Letter of Credit Issuer and the
Credit Card Issuer shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement and the other Loan Documents. In no event shall any Participant
under any such participation have any right to approve any amendment or
waiver of any provision of any Loan Document, or any consent to any departure
by any party of this Agreement therefrom, except to the extent that such
amendment, waiver or consent would reduce the principal of, or interest on,
any Advance or any fees payable hereunder, or postpone the Termination Date,
in each case to the extent subject to such participation. The Borrower agrees
that each Participant shall be entitled to the benefits of Sections 2.9, 2.11
and 8.3(c) with respect to its participation in the Commitment and the
Advances Outstanding from time to time as if it was a Lender; provided that,
no Participant shall be entitled to receive any greater amount pursuant to
any such section than the transferor Lender would have been entitled to
receive in respect of the amount of the participation transferred by such
transferor Lender to such Participant had no such transfer occurred.
(c) Any Lender may, in the ordinary course of its business and in
accordance with applicable law, with the consent of the Borrower (such
consent not to be unreasonably
42
withheld), at any time and from time to time assign to any Lender or any
Affiliate thereof or, with the consent of the Borrower, the Letter of Credit
Issuer, the Credit Card Issuer and the Administrative Agent (which in each
case shall not be unreasonably withheld), to any other Person (collectively,
"Purchasing Lenders") all or any part of its rights and obligations under
this Agreement and the other Loan Documents pursuant to an Assignment and
Acceptance, substantially in the form of Exhibit C, executed by such
Purchasing Lender that is not then a Lender or an Affiliate thereof, by the
Borrower, the Administrative Agent, the Letter of Credit Issuer and the
Credit Card Issuer) and delivered to the Administrative Agent for its
acceptance and recording in the Register (as defined below); provided, that,
except in the case of an assignment of all of a Lender's rights and
obligations under this Agreement, (x) the amount of the Commitment of the
assigning Lender being assigned pursuant to each such assignment shall equal
at least $5,000,000 and (y) after giving effect to each such assignment, the
amount of the remaining Commitment of the assigning Lender shall equal at
least $2,000,000 (or, in each case, such lesser amount as the Borrower may
consent to). Upon such execution, delivery, acceptance and recording, from
and after the effective date determined pursuant to such Assignment and
Acceptance, (x) the Purchasing Lender thereunder shall be a party hereto and,
to the extent provided in such Assignment and Acceptance, have the rights and
obligations of a Lender hereunder with a Commitment Percentage as set forth
therein, and (y) the transferor Lender thereunder shall to the extent
provided in such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance
covering all or the remaining portion of an transferor Lender's rights and
obligations under this Agreement, such transferor Lender shall cease to be a
party hereto). Such Assignment and Acceptance shall be deemed to amend this
Agreement to the extent, and only to the extent, necessary to reflect the
addition of such Purchasing Lender and the resulting adjustment of Commitment
Percentages arising from the purchase by such Purchasing Lender of all or a
portion of the rights and obligations of such transferor Lender.
(d) The Administrative Agent, on behalf of the Borrower, shall
maintain at the address of the Administrative Agent referred to in Section
8.2 a copy of each Assignment and Acceptance delivered to it and a register
(the "Register") for the recordation of the names and addresses of the
Lenders and the Commitment Percentage of, and principal amount of the
Advances owing to, and risk participations in Letters of Credit or Credit
Cards purchased by, each Lender from time to time. The entries in the
Register shall be conclusive, in the absence of manifest error, and the
Borrower, the Administrative Agent and the Lenders shall treat each Person
whose name is recorded in the Register as the percentage owner of an Advance,
risk participation or other obligation hereunder as the owner thereof for all
purposes of this Agreement and the other Loan Documents, notwithstanding any
notice to the contrary. The Register shall be available for inspection by the
Borrower, the Letter of Credit Issuer, the Credit Card Issuer or any Lender
at any reasonable time and from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by a
transferor Lender and a Purchasing Lender (and, in the case of a Purchasing
Lender that is not then a Lender or an Affiliate thereof, by the Borrower,
the Administrative Agent, the Letter of Credit Issuer and the Credit Card
Issuer), the Administrative Agent shall (i) promptly accept such Assignment
and Acceptance and (ii) on the effective date determined pursuant thereto
43
record the information contained therein in the Register and give notice of
such acceptance and recordation to the Lenders, the Letter of Credit Issuer,
the Credit Card Issuer and the Borrower.
(f) The Borrower authorizes each Lender to disclose to any
Participant or Purchasing Lender (each, a "Transferee") and any prospective
Transferee any and all financial information in such Lender's possession
concerning the Borrower and its Affiliates which has been delivered to such
Lender by or on behalf of the Borrower pursuant to this Agreement or which
has been delivered to such Lender by or on behalf of the Borrower in
connection with such Lender's credit evaluation of the Borrower and its
Affiliates prior to becoming a party to this Agreement.
(g) Nothing herein shall prohibit any Lender from pledging or
assigning all or any portion of its Advance and its risk participation in any
Letter of Credit or Credit Card to any Federal Reserve Bank in accordance
with applicable law.
Section 8.6 EXECUTION IN COUNTERPARTS. This Agreement may be executed in
any number of counterparts and by different parties hereto on separate
counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
Section 8.7 GOVERNING LAW. All of the Loan Documents shall be governed
by and construed in accordance with the laws of the state of Washington,
without regard to the choice of law provisions or principles of Washington
law, except to the extent that the Uniform Commercial Code as enacted in the
state of Washington provides that the validity or perfection of any security
interests in, or remedies in respect of, any particular Collateral are
governed by the laws of a jurisdiction other than the state of Washington
(the "Governing Laws"). Except as otherwise provided in this Agreement or any
of the other Loan Documents and unless inconsistent with any provision of the
Governing Laws that cannot be waived, the Uniform Customs and Practice for
Documentary Credits of the International Chamber of Commerce ("UCP") as in
effect from time to time are fully incorporated herein and shall apply to all
Letters of Credit issued hereunder.
Section 8.8 MEDIATION/ARBITRATION PROVISIONS.
(a) POLICY -- MEDIATION. The parties hope there will be no disputes
arising out of their relationship. To that end, each commits to cooperate in
good faith and to deal fairly in performing its duties under this Agreement
in order to accomplish their mutual objectives and avoid disputes. But, if a
dispute arises, the parties agree to resolve all disputes by the following
alternate dispute resolution process: (i) the parties will seek a fair and
prompt negotiated resolution but if this is not successful, (ii) all disputes
shall be resolved by binding arbitration, provided that during this process,
(iii) at the request of either party made not later than seventy-five (75)
days after the initial arbitration demand, the parties will attempt to
resolve any dispute by nonbinding mediation (but without delaying the
arbitration hearing date). The parties recognize that negotiation or
mediation may not be appropriate to resolve some disputes and agree that
either party may proceed with arbitration without negotiating or mediating.
The
44
parties confirm that by agreeing to this alternate dispute resolution
process, they intend to give up their right to have any dispute decided in
court by a judge or jury.
(b) BINDING ARBITRATION. Any claim between the parties arising out
of or relating to this Agreement shall be determined by arbitration in
Seattle commenced in accordance with RCW 7.04.060; provided that the total
award by a single arbitrator (as opposed to a majority of three arbitrators)
shall not exceed $250,000, including interest, attorneys' fees and costs. If
either party demands a total award greater than $250,000, there shall be
three (3) neutral arbitrators. If the parties cannot agree on the identity of
the arbitrator(s) within ten (10) days of the arbitration demand, the
arbitrator(s) shall be selected by the American Arbitration Association (AAA)
office in Seattle FROM ITS LARGE, COMPLEX CASE PANEL (OR HAVE SIMILAR
PROFESSIONAL CREDENTIALS). Each arbitrator shall be an attorney with at least
fifteen (15) years' experience in banking or commercial law and shall reside
in the Seattle metropolitan area. Whether a claim is covered by this
Agreement shall be determined by the arbitrator(s). All statutes of
limitations which would otherwise be applicable shall apply to any
arbitration hereunder.
(c) PROCEDURES. The arbitration shall be conducted in accordance
with the AAA Commercial Arbitration Rules, in effect on the date hereof, as
modified by this Agreement. Submission of dispositive motions shall be at the
discretion of arbitrator(s). As may be shown to be necessary to ensure a fair
hearing, the arbitrator(s) may authorize appropriate discovery; and may enter
pre-hearing orders regarding (without limitation) scheduling,
interrogatories, document exchange, depositions, witness and exhibit
disclosure and issues to be heard. The arbitrator(s) shall not be bound by
the rules of evidence or of civil procedure, but may consider such writings
and oral presentations as reasonable business people would use in the conduct
of their day-to-day affairs, and may require the parties to submit some or
all of their case by written declaration or such other manner of
presentations as the arbitrator(s) may determine to be appropriate.
(d) HEARING -- LAW -- APPEAL LIMITED. The arbitrator(s) shall take
such steps as may be necessary to hold a private hearing within one hundred
twenty (120) days of the initial demand for arbitration and to conclude the
hearing within three (3) days; and the arbitrator(s)' written decision shall
be made not later than fourteen (14) calendar days after the hearing. The
parties have included these time limits in order to expedite the proceeding,
but they are not jurisdictional, and the arbitrator(s) may for good cause
afford or permit reasonable extensions or delays, which shall not affect the
validity of the award. The written decision shall contain a brief statement
of the claim(s) determined and the award made on each claim. In making the
decision and award, the arbitrator(s) shall apply applicable substantive law.
Absent fraud, collusion or willful misconduct by an arbitrator, the award
shall be final, and judgment may be entered in any court having jurisdiction
thereof. The arbitrator(s) may award injunctive relief or any other remedy
available from a judge, including the joinder of parties or consolidation of
this arbitration with any other involving common issues of law or fact or
which may promote judicial economy, and may award attorneys' fees and costs
to the prevailing party but shall not have the power to award punitive or
exemplary damages. The decision and award of the arbitrators need not be
unanimous; rather, the decision and award of two arbitrators shall be final.
45
(e) PROVISIONAL REMEDIES, SELF-HELP AND FORECLOSURE. In addition
to any actions taken under the preceding subparagraphs: (i) the
Administrative Agent on behalf of the Lenders may exercise all rights and
remedies available under law with respect to any collateral, deposits and
accounts, including but not limited to: offset, self-help, sale or other
disposition of collateral, attachment, injunction, appointment of a receiver,
judicial foreclosure and deficiency judgment or foreclosure by power of sale;
(ii) by exercising any such rights and remedies under (i) the Administrative
Agent shall not waive the provisions of paragraphs (a) through (d) above;
(iii) any issues of law or fact which arise in connection with the exercise
by the Administrative Agent on behalf of the Lenders of any rights and
remedies available to the Lenders may at the Administrative Agent's election
be determined by arbitration in accordance with paragraphs (a) through (d)
above; and (iv) notwithstanding any other provision of this Agreement, so
long as an arbitration demand has not been filed or served with respect to a
claim, either party may elect to assert such claim in the small claims
department of the appropriate district court under RCW Ch. 12.40.
Section 8.9 SEVERABILITY. Any provision of the Loan Documents that is
prohibited or unenforceable in any jurisdiction shall be ineffective to the
extent of such prohibition or unenforceability in such jurisdiction without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction. To the extent
permitted by applicable law, the parties waive any provision of law which
renders any provision of any other Loan Documents prohibited or unenforceable
in any respect.
Section 8.10 ENTIRE AGREEMENT. This Agreement and the other Loan
Documents constitute the final and complete expression of the parties with
respect to the transactions contemplated by this Agreement and replace and
supersede all prior discussions, negotiations and understandings with respect
thereto. Neither this Agreement nor any term hereof nor of the other Loan
Documents may be changed, waived, discharged or terminated except as provided
herein.
Section 8.11 DESCRIPTIVE HEADINGS. The descriptive headings of the
various provisions of this Agreement are for convenience of reference only,
do not constitute a part hereof, and shall not affect the meaning or
construction of any provision hereof.
Section 8.12 GENDER AND NUMBER. Whenever appropriate to the meaning of
this Agreement or the other Loan Documents, use of the singular shall be
deemed to refer to the plural, the use of the plural to the singular, and
pronouns of certain gender to either or both the other genders.
Section 8.13 CONFIRMATION OF SECURITY DOCUMENTS. The Borrower
acknowledges and agrees that each of the Security Documents continues, and
will continue, in full force and effect to secure all of the obligations of
the Borrower under this Agreement and any other Loan Documents, including any
and all obligations arising from any increase in the Revolving Commitment as
of the Effective Date and pursuant to Section 2.1(c).
[SIGNATURE PAGES FOLLOW]
46
The parties have duly executed and delivered this Agreement as of the
date first written above.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LEND MONEY, EXTEND CREDIT OR TO
FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER
WASHINGTON LAW.
BORROWER: CUTTER & BUCK INC.
By:
-----------------------
Its:
-------------------
ADMINISTRATIVE
AGENT, LETTER OF
CREDIT ISSUER AND
CREDIT CARD ISSUER: WASHINGTON MUTUAL BANK
doing business as WESTERN BANK
By:
-----------------------
Its:
-------------------
Address for Notices:
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxx
Telecopy: (000) 000-0000
LENDERS: WASHINGTON MUTUAL BANK doing business as
WESTERN BANK
By:
-----------------------
Its:
-------------------
BANK OF AMERICA, N.A.
By:
-----------------------
Its:
-------------------
47
TERM LENDER: WASHINGTON MUTUAL BANK doing business as
WESTERN BANK
By:
-----------------------
Its:
-------------------
48
EXHIBIT A-1
SECOND AMENDED AND RESTATED REVOLVING CREDIT FACILITY NOTE
Seattle, Washington
__________, 2000
For value received, CUTTER & BUCK INC. (the "Borrower") promises to
pay to the order of [NAME OF LENDER] (the "Lender") the unpaid principal
amount of all Borrowings made by the Lender to the Borrower under the
Revolving Facility pursuant to that certain Second Amended and Restated Loan
Agreement dated as of July ___, 2000 (as the same may be amended and modified
from time to time, the "Loan Agreement") by and among the Borrower, the
Lender, the several lenders also party thereto (the "Lenders"), WASHINGTON
MUTUAL BANK doing business as WESTERN BANK, as letter of credit issuer and as
credit card issuer, and WASHINGTON MUTUAL BANK doing business as WESTERN
BANK, as administrative agent to the Lenders (in such capacity, the
"Administrative Agent"), on the dates and in the amounts provided in the Loan
Agreement. The Borrower promises to pay interest on the unpaid principal
amount of all Borrowings under the Revolving Facility on the dates and at the
rate or rates provided for in the Loan Agreement. Interest on any overdue
principal of and, to the extent permitted by law, overdue interest on the
principal amount hereof shall bear interest at the Default Rate, as provided
for in the Loan Agreement. All such payments of principal of and interest on
any Borrowing shall be made as provided in the Loan Agreement.
All Borrowings and the Interest Periods and the interest rates from
time to time applicable thereto, and all payments of the principal thereof
shall be recorded by the Lender in accordance with its usual practices;
provided, that the failure of the Lender to make any such recordation shall
not affect the obligations of the Borrower hereunder or under the Loan
Agreement.
The Borrower hereby waives diligence, presentment, demand, protest
and, except for notices required to be given pursuant to the Loan Agreement,
notice of any kind whatsoever. The non-exercise by the holder of any of its
rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance.
This Note amends and restates in its entirety and, as so amended and
restated, continues the Amended and Restated Revolving Credit Facility Note
dated April 28, 1999, made by the Borrower to the order of the Lender. This
Note is one of the Notes referred to in the Loan Agreement. Capitalized terms
used in this Note without definition have the meanings assigned to them in
the Loan Agreement. Reference is made to the Loan Agreement for provisions
for the optional prepayment and the repayment hereof and the acceleration of
the maturity hereof. This Note is governed by the laws of the State of
Washington.
The Loan Agreement, among other things, amends and restates in its
entirety and, as so amended and restated, continues the Amended and Restated
Loan Agreement dated as of April 28, 1999, between the Borrower, the
Administrative Agent, WASHINGTON MUTUAL BANK
A-1 - 1
doing business as WESTERN BANK and BANK OF AMERICA, N.A. (formerly known as
Bank of America National Trust and Savings Association doing business as
Seafirst) (the "Original Loan Agreement"). The indebtedness of the Borrower
evidenced by this Note includes the indebtedness of the Borrower resulting
from Borrowings made by the Lender to the Borrower from time to time pursuant
to the Loan Agreement and the indebtedness of the Borrower resulting from
loans previously made by the Lender to the Borrower under the Original Loan
Agreement.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LEND MONEY, EXTEND CREDIT, OR TO
FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER
WASHINGTON LAW.
CUTTER & BUCK INC.
By
-----------------------
Its
-------------------
X-0 - 0
XXXXXXX X-0
AMENDED AND RESTATED TERM CREDIT FACILITY NOTE
Seattle, Washington
_________, 1999
For value received, CUTTER & BUCK INC. (the "Borrower") promises to
pay to the order of WASHINGTON MUTUAL BANK doing business as WESTERN BANK
(the "Term Lender") the unpaid principal amount of all Borrowings made by the
Term Lender to the Borrower under the Term Facility pursuant to that certain
Amended and Restated Loan Agreement dated as of April 28, 1999 (as the same
may be amended and modified from time to time, the "Loan Agreement") by and
among the Borrower, the Lender, the several lenders also party thereto (the
"Lenders"), WASHINGTON MUTUAL BANK doing business as WESTERN BANK, as letter
of credit issuer and as credit card issuer, and WASHINGTON MUTUAL BANK doing
business as WESTERN BANK, as administrative agent to the Lenders (in such
capacity, the "Administrative Agent"), on the dates and in the amounts
provided in the Loan Agreement. The Borrower promises to pay interest on the
unpaid principal amount of all Borrowings under the Term Facility on the
dates and at the rate or rates provided for in the Loan Agreement. Interest
on any overdue principal of and, to the extent permitted by law, overdue
interest on the principal amount hereof shall bear interest at the Default
Rate, as provided for in the Loan Agreement. All such payments of principal
of and interest on any Borrowing shall be made as provided in the Loan
Agreement.
All Borrowings and the Interest Periods and the interest rates from
time to time applicable thereto, and all payments of the principal thereof
shall be recorded by the Term Lender in accordance with its usual practices;
provided, that the failure of the Term Lender to make any such recordation
shall not affect the obligations of the Borrower hereunder or under the Loan
Agreement.
The Borrower hereby waives diligence, presentment, demand, protest
and, except for notices required to be given pursuant to the Loan Agreement,
notice of any kind whatsoever. The nonexercise by the holder of any of its
rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance.
This Note amends and restates in its entirety and, as so amended and
restated, continues the Facility B Promissory Note dated July 31, 1998 made
by the Borrower to the order of WASHINGTON MUTUAL BANK doing business as
WESTERN BANK. This Note is one of the Notes referred to in the Loan
Agreement. Capitalized terms used in this Note without definition have the
meanings assigned to them in the Loan Agreement. Reference is made to the
Loan Agreement for provisions for the optional prepayment and the repayment
hereof and the acceleration of the maturity hereof. This Note is governed by
the laws of the State of Washington.
A-2 - 1
The Loan Agreement, among other things, amends and restates in their
entirety and, as so amended and restated, continues (a) the Loan Agreement
dated as of July 31, 1998 between the Borrower and WASHINGTON MUTUAL BANK
doing business as WESTERN BANK and (b) the Promissory Note dated July 31,
1998 made by the Borrower to the order of WASHINGTON MUTUAL BANK doing
business as WESTERN BANK (the "Original Loan Agreements"). The indebtedness
of the Borrower evidenced by this Note includes the indebtedness of the
Borrower resulting from Borrowings made by the Lender to the Borrower from
time to time pursuant to the Loan Agreement and the indebtedness of the
Borrower resulting from loans previously made by WASHINGTON MUTUAL BANK doing
business as WESTERN BANK to the Borrower under the Original Loan Agreements.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LEND MONEY, EXTEND CREDIT, OR
TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER
WASHINGTON LAW.
CUTTER & BUCK INC.
By
-----------------------
Its
-------------------
A-2 - 2
EXHIBIT B
NOTICE OF BORROWING
Washington Mutual Bank doing business as
Western Bank, as Administrative Agent
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
Attention:____________________________________ ______________, 20__
The undersigned CUTTER & BUCK INC. (the Borrower") refers to the
Second Amended and Restated Loan Agreement dated as of July ___, 2000 (the
"Loan Agreement") (capitalized terms used herein and not otherwise defined
have the meanings given to them in the Loan Agreement), by and among the
Borrower, WASHINGTON MUTUAL BANK doing business as WESTERN BANK, BANK OF
AMERICA, N.A., and the several banks and other financial institutions from
time to time parties thereto (collectively, the "Lenders"), WASHINGTON MUTUAL
BANK doing business as WESTERN BANK, as letter of credit issuer and credit
card issuer, and WASHINGTON MUTUAL BANK doing business as WESTERN BANK, as
administrative agent to the Lenders. The Borrower hereby gives you notice,
irrevocably, pursuant to Section 2.3(a) or (b) of the Loan Agreement, as the
case may be, that the undersigned hereby requests an Advance, the issuance of
a Letter of Credit, the issuance of an Acceptance or the issuance of a Credit
Card, or the continuation or conversion of an Advance Outstanding under the
Loan Agreement, and in that connection sets forth below the information
relating to such Borrowing (the "Proposed Borrowing") or conversion or
continuation as required by Section 2.3(a) or (b) of the Loan Agreement, as
the case may be:
ADVANCES. If the Proposed Borrowing consists of an Advance:
1. The Business Day of the Proposed Borrowing is __________ 20__.
2. The Proposed Borrowing is a [Revolving Facility Advance]
[Term Facility Advance].*
3. The Type of Advance comprising the Proposed Borrowing is a [Floating
Rate Advance] [LIBOR Rate Advance] [Term Rate Advance].
4. The amount of the Proposed Borrowing is $_______________.
5. The Interest Period for the Proposed Borrowing is _________________.
LETTER OF CREDIT. If the Proposed Borrowing consists of the
issuance of a Letter of Credit:
-------------------
* Only available for Term Facility Advances.
B-1
1. The Business Day on which the Letter of Credit is to be issued is
_________, 20__.
2. The Letter of Credit is a [Commercial Letter of Credit]
[Standby Letter of Credit].
3. The stated amount and expiration date of the Letter of Credit are
$___________, and 19__.
4. The name and address of the beneficiary of the Letter of Credit
are:
------------------------------------------
------------------------------------------
------------------------------------------
5. Other terms of the Letter of Credit will be as set forth in the
Application relating thereto.
ACCEPTANCE. If the Proposed Borrowing consists of the issuance of
an Acceptance:
1. The Business Day on which the related Draft is to be accepted is
_____________, 20__.
2. The amount of the Draft is $_________________.
CONVERSION/CONTINUATION. If the Borrower elects to continue or
convert an Advance:
1. The Business Day of the proposed conversion/continuation is
__________, 20__.
2. The Advance being converted or continued is a
[Revolving Facility Advance] [Term Facility Advance].
3. The Advance being converted or continued currently is a
[Floating Rate Advance] [LIBOR Rate Advance] [Term Rate Advance].*
4. The Advance will be converted to or continued as a
[Floating Rate Advance] [Fixed Rate Advance].
5. The amount of the Advance being converted or continued is
$______________.
6. The Interest Period for the continued or converted Advance is
__________________.
-------------------
* Only available for Term Facility Advances.
B-2
CERTIFICATIONS. The undersigned hereby certifies that the following
statements are true on the date hereof, and will be true on the date of the
Proposed Borrowing or on the date of the proposed conversion or continuation,
as the case may be, before and immediately after giving effect thereto:
(A) The representations and warranties contained in Article IV of
the Loan Agreement are correct as though made on and as of such dates, unless
such representations and warranties are expressly stated to be made as of an
earlier date;
(B) The most recent financial statements of the Borrower delivered
pursuant to Section 5.1(c)(i) of the Loan Agreement present fairly the
financial position and results of operations of the Borrower as of the date
of and for the periods presented in such financial statements, and since the
date of such financial statements delivered by the Borrower pursuant to
Section 5.1(c)(i) there has not been any material adverse change in the
financial condition or operations of the Borrower;
(C) The Borrower is in full compliance with all covenants contained
in Article V of the Loan Agreement.
(D) No event has occurred and is continuing, or would result from
such Proposed Borrowing or proposed conversion or continuation, which
constitutes an Event of Default or a Default under the Loan Agreement; and
(E) After giving effect to the Proposed Borrowing or the proposed
continuation or conversion of an Advance, none of the Unused Revolving
Facility Commitment, the Unused Term Facility Commitment, the Unused
Acceptance Sublimit or the Unused SLC Sublimit will be less than zero.
Very truly yours,
CUTTER & BUCK INC.
By:
-------------------------------------
Its:
---------------------------------
B-3
EXHIBIT C
FORM OF ASSIGNMENT AND ACCEPTANCE
Reference is made to the Amended and Restated Loan Agreement dated
as of April 28, 1999 (as the same may be further amended, supplemented or
otherwise modified from time to time, the "Loan Agreement"), by and among
Cutter & Buck Inc. (the "BORROWER"), WASHINGTON MUTUAL BANK doing business as
WESTERN BANK, BANK OF AMERICA, N.A., and the several banks and other
financial institutions from time to time parties thereto (collectively, the
"Lenders"), WASHINGTON MUTUAL BANK doing business as WESTERN BANK, as letter
of credit issuer and credit card issuer, and WASHINGTON MUTUAL BANK doing
business as WESTERN BANK, as administrative agent to the Lenders (in such
capacity, the "ADMINISTRATIVE AGENT"). Unless otherwise defined herein, terms
defined in the Loan Agreement and used herein shall have the meanings given
to them in the Loan Agreement.
__________ (the "ASSIGNOR") and __________ (the "ASSIGNEE") agree as
follows:
1. The Assignor hereby irrevocably sells and assigns to
the Assignee without recourse to the Assignor, and
the Assignee hereby irrevocably purchases and assumes
from the Assignor without recourse to the Assignor,
as of the Effective Date (as defined below), an
interest (the "ASSIGNED INTEREST"), as specified on
SCHEDULE 1, in and to the Assignor's rights and
obligations under the Loan Agreement with respect to
the revolving facility contained in the Loan
Agreement as are set forth on SCHEDULE 1
(individually, an "ASSIGNED FACILITY"; collectively,
the "ASSIGNED FACILITIES"), in a principal amount for
each Assigned Facility as set forth on SCHEDULE 1.
2. The Assignor (a) makes no representation or warranty and
assumes no responsibility with respect to any statements,
warranties or representations made in or in connection
with the Loan Agreement or with respect to the execution,
legality, validity, enforceability, genuineness, sufficiency
or value of the Loan Agreement, the other Loan Documents or
any other instrument or document furnished pursuant thereto,
other than that the Assignor has not created any adverse claim
upon the interest being assigned by it hereunder and that such
interest is free and clear of any such adverse claim; and (b)
makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the
Borrower, any of its Affiliates or any other obligor or the
performance or observance by the Borrower, any of its Affiliates
or any other obligor of any of their respective obligations
under the Loan Agreement or any of the other Loan Documents or
any other instrument or document furnished pursuant hereto or
thereto.
3. The Assignee (a) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (b)
confirms that it has received a
C-1
copy of the Loan Agreement, together with copies of the
financial statements delivered pursuant to Section 5.1(c)
thereof and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision
to enter into this Assignment and Acceptance; (c) agrees that it
will, independently and without reliance upon the Assignor, the
Administrative Agent, the Letter of Credit Issuer or the Credit
Card Issuer, or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue
to make its own credit decisions in taking or not taking action
under the Loan Agreement, the other Loan Documents or any other
instrument or document furnished pursuant hereto or thereto; (d)
appoints and authorizes the Administrative Agent to take such
action as agent on its behalf and to exercise such powers and
discretion under the Loan Agreement, the other Loan Documents or
any other instrument or document furnished pursuant hereto or
thereto as are delegated to the Administrative Agent by the
terms thereof, together with such powers as are incidental
thereto; and (e) agrees that it will be bound by the provisions
of the Loan Agreement and will perform in accordance with its
terms all the obligations which by the terms of the Loan
Agreement are required to be performed by it as a Lender.
4. The effective date of this Assignment and Acceptance
shall be __________ _____, ________ (the "EFFECTIVE
DATE"). Following the execution of this Assignment
and Acceptance, it will be delivered to the
Administrative Agent for acceptance by it and
recording by the Administrative Agent pursuant to the
Loan Agreement, effective as of the Effective Date
(which shall not, unless otherwise agreed to by the
Administrative Agent, be earlier than five Business
Days after the date of such acceptance and recording
by the Administrative Agent).
5. Upon such acceptance and recording, from and after
the Effective Date, the Administrative Agent shall
make all payments in respect of the Assigned Interest
(including payments of principal, interest, fees and
other amounts) to the Assignee whether such amounts
have accrued prior to the Effective Date or accrue
subsequent to the Effective Date. The Assignor and
the Assignee shall make all appropriate adjustments
in payments by the Administrative Agent for periods
prior to the Effective Date or with respect to the
making of this assignment directly between
themselves.
6. From and after the Effective Date, (a) the Assignee
shall be a party to the Loan Agreement and, to the
extent provided in this Assignment and Acceptance,
have the rights and obligations of a Lender
thereunder and under the other Loan Documents and
shall be bound by the provisions thereof and (b) the
Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and
be released from its obligations under the Loan
Agreement.
7. This Assignment and Acceptance shall be governed by
and construed in accordance with the laws of the
State of Washington.
C-2
8. This Assignment and Acceptance may be executed by one
or more of the parties to this Assignment and
Acceptance on any number of separate counterparts
(including by facsimile transmission), and all of
said counterparts taken together shall be deemed to
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Acceptance to be executed as of the date first
above written by their respective duly authorized officers on
Schedule 1 hereto.
C-3
SCHEDULE I
TO ASSIGNMENT AND ACCEPTANCE
RELATING TO THE SECOND AMENDED AND RESTATED LOAN AGREEMENT,
DATED AS OF JULY ___, 2000
AMONG
CUTTER & BUCK INC.,
THE LENDERS NAMED THEREIN
AND
WASHINGTON MUTUAL BANK DOING BUSINESS AS WESTERN BANK,
AS AGENT FOR THE LENDERS
(IN SUCH CAPACITY, THE "ADMINISTRATIVE AGENT")
-------------------------------------------------------------------------------
Name of Assignor:
Name of Assignee:
Effective Date of Assignment:
Credit Principal
Facility Assigned Amount Assigned Commitment Percentage Assigned
----------------- --------------- ------------------------------
$ ---------- ---.-----------%
[NAME OF ASSIGNEE] [NAME OF ASSIGNOR]
By By
----------------------- -----------------------------
Name: Name:
Title: Title:
--------------------
(1) Calculate the Commitment Percentage that is assigned to at least 15
decimal places and show as a percentage of the aggregate commitments of all
Lenders.
Schedule I-1
Accepted for Recordation in the Register: Consented To:(2)
Washington Mutual Bank doing business Cutter & Buck
as Western Bank, as Administrative Agent
By By
----------------------- -------------------------
Name: Name:
Title: Title:
Washington Mutual Bank
doing business as Western
Bank, as Administrative
Agent, Letter of Credit
Issuer and Credit Card
Issuer
By
-------------------------
Name:
Title:
-------------------
(2) If required.
Schedule I-2
EXHIBIT D
COMMITMENTS
LENDER COMMITMENT
Washington Mutual Bank $30,000,000.00
doing business as Western
Bank
Bank of America, N.A. $25,000,000.00
D-1
SECOND AMENDED AND RESTATED REVOLVING CREDIT FACILITY NOTE
Seattle, Washington
July 28, 2000
For value received, CUTTER & BUCK INC. (the "Borrower") promises to pay
to the order of BANK OF AMERICA, N.A. (the "Lender") the unpaid principal amount
of all Borrowings made by the Lender to the Borrower under the Revolving
Facility pursuant to that certain Second Amended and Restated Loan Agreement
dated as of July 28, 2000 (as the same may be amended and modified from time to
time, the "Loan Agreement") by and among the Borrower, the Lender, the several
lenders also party thereto (the "Lenders"), WASHINGTON MUTUAL BANK doing
business as WESTERN BANK, as letter of credit issuer and as credit card issuer,
and WASHINGTON MUTUAL BANK doing business as WESTERN BANK, as administrative
agent to the Lenders (in such capacity, the "Administrative Agent"), on the
dates and in the amounts provided in the Loan Agreement. The Borrower promises
to pay interest on the unpaid principal amount of all Borrowings under the
Revolving Facility on the dates and at the rate or rates provided for in the
Loan Agreement. Interest on any overdue principal of and, to the extent
permitted by law, overdue interest on the principal amount hereof shall bear
interest at the Default Rate, as provided for in the Loan Agreement. All such
payments of principal of and interest on any Borrowing shall be made as provided
in the Loan Agreement.
All Borrowings and the Interest Periods and the interest rates from
time to time applicable thereto, and all payments of the principal thereof shall
be recorded by the Lender in accordance with its usual practices; provided, that
the failure of the Lender to make any such recordation shall not affect the
obligations of the Borrower hereunder or under the Loan Agreement.
The Borrower hereby waives diligence, presentment, demand, protest and,
except for notices required to be given pursuant to the Loan Agreement, notice
of any kind whatsoever. The non-exercise by the holder of any of its rights
hereunder in any particular instance shall not constitute a waiver thereof in
that or any subsequent instance.
This Note amends and restates in its entirety and, as so amended and
restated, continues the Amended and Restated Revolving Credit Facility Note
dated April 28, 1999, made by the Borrower to the order of the Lender. This Note
is one of the Notes referred to in the Loan Agreement. Capitalized terms used in
this Note without definition have the meanings assigned to them in the Loan
Agreement. Reference is made to the Loan Agreement for provisions for the
optional prepayment and the repayment hereof and the acceleration of the
maturity hereof. This Note is governed by the laws of the State of Washington.
The Loan Agreement, among other things, amends and restates in its
entirety and, as so amended and restated, continues the Amended and Restated
Loan Agreement dated as of April 28, 1999, between the Borrower, the
Administrative Agent, WASHINGTON MUTUAL BANK doing business as WESTERN BANK and
BANK OF AMERICA, N.A. (formerly known as Bank of America National Trust and
Savings Association doing business as Seafirst) (the "Original Loan Agreement").
The indebtedness of the Borrower evidenced by this Note includes the
indebtedness
of the Borrower resulting from Borrowings made by the Lender to the
Borrower from time to time pursuant to the Loan Agreement and the indebtedness
of the Borrower resulting from loans previously made by the Lender to the
Borrower under the Original Loan Agreement.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LEND MONEY, EXTEND CREDIT, OR TO FORBEAR
FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.
CUTTER & BUCK INC.
By ____________________________________
Its ____________________________________
2
SECOND AMENDED AND RESTATED SECURITY AGREEMENT
This SECOND AMENDED AND RESTATED SECURITY AGREEMENT (the "Agreement")
is entered into as of July 28, 2000, by and among CUTTER & BUCK INC., a
Washington corporation ("Grantor"), WASHINGTON MUTUAL BANK doing business as
WESTERN BANK ("Western Bank"), BANK OF AMERICA, N.A. ("BofA"), the several banks
and other financial institutions from time to time parties to this Agreement
(including Western Bank and BofA in their respective capacities as lenders, the
"Lenders"), Western Bank, as issuer of letters of credit (the "Letter of Credit
Issuer") and as issuer of credit cards (the "Credit Card Issuer"), and Western
Bank, as administrative agent for the Lenders, the Letter of Credit Issuer and
the Credit Card Issuer (in such capacity, the "Administrative Agent"), and
amends and restates in its entirety the Amended and Restated Security Agreement
dated as of April 28, 1999 among Grantor, Western Bank, BofA (then known as Bank
of America National Trust and Savings Association doing business as Seafirst
Bank), the Letter of Credit Issuer, the Credit Card Issuer and the
Administrative Agent (the "Original Security Agreement").
RECITALS
Concurrently with the execution and delivery of this Agreement,
Grantor, the Lenders, the Letter of Credit Issuer, the Credit Card Issuer and
the Administrative Agent are entering into the Second Amended and Restated Loan
Agreement dated as of July 28, 2000 (the "Loan Agreement") which amends and
restates in its entirety the Amended and Restated Loan Agreement dated as of
April 28, 1999 among the Grantor, Western Bank, BofA (then known as Bank of
America National Trust and Savings Association doing business as Seafirst Bank),
the Letter of Credit Issuer, the Credit Card Issuer and the Administrative Agent
(the "Original Loan Agreement"). The Original Loan Agreement was secured by
the Original Security Agreement.
It is a condition precedent to the execution and delivery of the Loan
Agreement that the Original Security Agreement be amended and restated as
provided in this Agreement.
Accordingly, Grantor and the Administrative Agent, acting on behalf of
the Lenders, the Letter of Credit Issuer and the Credit Card Issuer (in such
capacity, the "Secured Party") hereby agree as follows:
AGREEMENT
1. DEFINITIONS. As used in this Agreement:
"COLLATERAL" means all items of the types described in Exhibit A to
this Agreement.
"OBLIGATIONS" means any and all present and future indebtedness,
liabilities and obligations of Grantor to the Lenders, the Letter of Credit
Issuer and the Credit Card Issuer under the Loan Agreement and the other Loan
Documents, and all renewals and extensions thereof, and includes all such
indebtedness, liabilities and obligations regardless of whether or not they
are or were (i) direct or indirect, (ii) matured or not matured or (iii)
absolute or contingent.
-1-
Capitalized terms used in this Agreement and not otherwise defined have
the meanings given to them in the Loan Agreement.
2. SECURITY FOR OBLIGATIONS. As collateral security for the prompt and
unconditional payment and performance of the Obligations, Grantor hereby grants
to the Secured Party a security interest in all of Grantor's right, title and
interest in and to the Collateral.
3. REPRESENTATIONS AND WARRANTIES. Grantor represents and warrants to
the Secured Party as follows:
(a) NO VIOLATION. The execution and delivery of this Agreement will
not violate any law or agreement governing Grantor or to which Grantor is a
party, and its articles of incorporation and bylaws do not prohibit any term or
condition of this Agreement.
(b) ENFORCEABILITY OF COLLATERAL. To the extent the Collateral
consists of accounts, chattel paper, or general intangibles, the Collateral is
enforceable in accordance with its terms, is genuine, and complies with
applicable laws concerning form, content and manner of preparation and
execution, and all Persons appearing to be obligated on the Collateral have
authority and capacity to contract and are in fact obligated as they appear to
be on the Collateral. At the time any account becomes subject to a security
interest in favor of the Secured Party, the account will be a good and valid
account representing an undisputed, bona fide indebtedness incurred by the
account debtor, for merchandise held subject to delivery instructions or
theretofore shipped or delivered pursuant to a contract of sale, or for services
theretofore performed by Grantor with or for the account debtor, or for advances
made to employees; and there shall be no setoffs or counterclaims against any
such account.
(c) TITLE. Grantor represents and warrants to the Secured Party that
it holds good and marketable title to the Collateral, free and clear of all
Liens, except for the Lien of this Agreement and Permitted Liens. No financing
statement covering any of the Collateral is on file in any public office other
than those which reflect the Liens created by this Agreement and Permitted Liens
or to which the Secured Party has specifically consented. Grantor will defend
the Secured Party's rights in the Collateral against the claims and demands of
all other persons.
(d) HAZARDOUS SUBSTANCES. Grantor represents and warrants that the
Collateral never has been, and never will be so long as this Agreement remains
a Lien on the Collateral, used for the generation, manufacture, storage,
transportation, treatment, disposal, release or threatened release of any
hazardous waste or substance, as those terms are defined in the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended, 42
U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986, Pub. L. No. 99-499 ("XXXX"), the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or other
applicable state or Federal laws, rules, or regulations adopted pursuant to any
of the foregoing. The terms "hazardous waste" and "hazardous substance" shall
also include, without limitation, petroleum and petroleum by-products or any
fraction thereof and asbestos. The representations and warranties contained
herein are based on Grantor's due diligence in investigating the Collateral for
hazardous wastes and substances. Grantor hereby (i) releases and
-2-
waives any future claims against the Secured Party for indemnity or contribution
in the event Grantor becomes liable for cleanup or other costs under any such
laws, and (ii) agrees to indemnify and hold harmless the Secured Party against
any and all claims and losses resulting from a breach of this provision of this
Agreement. This obligation to indemnify shall survive the payment of the
Obligations and the satisfaction of this Agreement.
(e) TRADE NAMES. Grantor has not, during the past five years,
operated under any trade name different from its true legal name.
(f) CHIEF EXECUTIVE OFFICE. The chief executive office of Grantor is
located at 0000 xxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxxxx 00000.
(g) LOCATION OF COLLATERAL. All the Collateral consisting of
tangible personal property (other than display fixtures and samples held by
sales representatives) is located in the states of Washington, Oregon, New York
and Texas.
4. GRANTOR'S COVENANTS.
(a) PERFECTION OF SECURITY INTEREST. Grantor will execute such
financing statements and take whatever other actions are requested by the
Secured Party to perfect and continue the Secured Party's security interest in
the Collateral. Upon request of the Secured Party, Grantor will deliver to the
Secured Party any and all of the documents evidencing or constituting the
Collateral, and Grantor will note the Secured Party's interest upon any and all
chattel paper if not delivered to the Secured Party for possession by the
Secured Party. Grantor hereby appoints the Secured Party as its irrevocable
attorney-in-fact for the purpose of executing any documents necessary to perfect
or to continue the security interest granted in this Agreement. The Secured
Party may at any time, and without further authorization from Grantor, file a
carbon, photographic or other reproduction of any financing statement or of this
Agreement for use as a financing statement. Grantor will reimburse the Secured
Party for all expenses for the perfection and the continuation of the perfection
of the Secured Party's security interest in the Collateral. Grantor promptly
will notify the Secured Party before any change in Grantor's name including any
change to the assumed business names of Grantor. This Agreement will continue in
effect even though all or any part of the Obligations are paid in full and even
though for a period of time Grantor may not be indebted to the Secured Party.
(b) LOCATION OF THE COLLATERAL. Grantor, upon request of the Secured
Party, will deliver to the Secured Party in form satisfactory to the Secured
Party a schedule of real properties and Collateral locations relating to
Grantor's operations, including without limitation the following: (i) all real
property owned or being purchased by Grantor; (ii) all real property being
rented or leased by Grantor; (iii) all storage facilities owned, rented, leased,
or being used by Grantor; and (iv) all other properties where Collateral is or
may be located. Except in the ordinary course of its business, Grantor will not
remove the Collateral from its existing locations without the prior written
consent of the Secured Party.
(c) REMOVAL OF COLLATERAL. Grantor will keep the Collateral (other
than inventory-in-transit, inventory in the possession of contractors for
embroidery work and
-3-
Collateral consisting of intangible property) at Grantor's address shown above,
at Grantor's warehouse, at Inner City Warehouse, or at such other locations as
are acceptable to the Secured Party. Except in the ordinary course of its
business, including the sales of inventory, Grantor will not remove the
Collateral from its existing locations without the prior written consent of the
Secured Party. To the extent that the Collateral consists of vehicles, or other
titled property, Grantor will not take or permit any action which would require
application for certificates of title for the vehicles outside the State of
Washington, without the prior written consent of the Secured Party.
(d) TRANSACTIONS INVOLVING COLLATERAL. Except for inventory sold or
accounts collected in the ordinary course of Grantor's business, Grantor will
not sell, offer to sell, or otherwise transfer or dispose of the Collateral,
except (i) transfers, sales or dispositions of Collateral that is obsolete or
worn out property disposed of in the ordinary course of business and (ii) other
asset dispositions provided that such other asset dispositions do not exceed
$200,000.00 in the aggregate for any fiscal year. So long as no Event of Default
has occurred, Grantor may sell inventory, but only in the ordinary course of its
business and only to buyers who qualify as a buyer in the ordinary course of
business. A sale in the ordinary course of Grantor's business does not include a
transfer in partial or total satisfaction of a debt or any bulk sale. Grantor
will not, without the prior written consent of the Secured Party, pledge,
mortgage, encumber or otherwise permit the Collateral to be subject to any Lien,
other than the Liens provided for in this Agreement and Permitted Liens. This
includes Liens even if junior in right to the Liens granted under this
Agreement. Unless waived by the Secured Party, all proceeds from any disposition
of the Collateral (for whatever reason) shall be held in trust for the Secured
Party and shall not be commingled with any other funds; provided, however, this
requirement shall not constitute consent by the Secured Party to any sale or
other disposition. Upon receipt Grantor will immediately deliver any such
proceeds to the Secured Party.
(e) COLLATERAL SCHEDULES AND LOCATIONS. As often as the Secured
Party shall require, and insofar as the Collateral consists of accounts and
general intangibles, Grantor will deliver to the Secured Party schedules of such
Collateral, containing such information as the Secured Party may require,
including without limitation names and addresses of account debtors and agings
of accounts and general intangibles. Insofar as the Collateral consists of
inventory, Grantor will deliver to the Secured Party, as often as the Secured
Party shall require, such lists, descriptions, and designations of such
Collateral as the Secured Party may require to identify the nature, extent, and
location of such Collateral.
(f) MAINTENANCE AND INSPECTION OF COLLATERAL. Grantor will maintain
all tangible Collateral in good condition and repair. Grantor will not commit or
permit damage to or destruction of the Collateral or any part of the Collateral.
The Secured Party and its designated representatives and agents shall have the
right at all reasonable times to examine, inspect, and audit the Collateral
wherever located. Grantor will immediately notify the Secured Party of all cases
involving the return, rejection, repossession, loss or damage of or to any
Collateral outside the ordinary course of business; of any request for credit or
adjustment or of any other dispute arising with respect to the Collateral
outside the ordinary course of business; and generally of all material
happenings and events affecting the Collateral or the value or the amount of the
Collateral outside the ordinary course of business.
-4-
(g) TAXES, ASSESSMENTS AND LIENS. Grantor will pay when due all
taxes, assessments and liens upon the Collateral, its use or operation, upon
this Agreement or upon any of the other Loan Documents. Grantor may withhold any
such payment or may elect to contest any Lien if Grantor is in good faith
conducting an appropriate proceeding to contest the obligation to pay and so
long as the Secured Party's interest in the Collateral is not jeopardized in the
Secured Party's sole opinion. If the Collateral is subjected to a Lien which is
not discharged within fifteen (15) days, Grantor will deposit with the Secured
Party cash, a sufficient corporate surety bond or other security satisfactory to
the Secured Party in an amount adequate to provide for the discharge of the lien
plus any interest, costs, attorneys' fees or other charges that could accrue as
a result of foreclosure or sale of the Collateral. In any contest Grantor will
defend itself and the Secured Party and will satisfy any final adverse judgment
before enforcement against the Collateral. Grantor will name the Secured Party
as an additional obligee under any surety bond furnished in the contest
proceedings.
(h) COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. Grantor will comply
promptly with all laws, ordinances, rules and regulations of all governmental
authorities, now or hereafter in effect, applicable to the ownership,
production, disposition, or use of the Collateral. Grantor may contest in good
faith any such law, ordinance or regulation and withhold compliance during any
proceeding. including appropriate appeals, so long as the Secured Party's
interest in the Collateral, in the Secured Party's opinion, is not jeopardized.
(i) MAINTENANCE OF CASUALTY INSURANCE. Grantor will procure and
maintain all risks insurance, including without limitation fire, theft and
liability coverage together with such other insurance as the Secured Party may
require with respect to the Collateral, in form, amounts, coverages and basis
reasonably acceptable to the Secured Party and issued by a company or companies
reasonably acceptable to the Secured Party. Grantor, upon request of the Secured
Party, will deliver to the Secured Party from time to time the policies or
certificates of insurance in form satisfactory to the Secured Party, including
stipulations that coverages will not be canceled or diminished without at least
ten (10) days' prior written notice to the Secured Party and not including any
disclaimer of the insurer's liability for failure to give such a notice. Each
insurance policy also shall include an endorsement providing that coverage in
favor of the Secured Party will not be impaired in any way by any act, omission
or default of Grantor or any other person. In connection with all policies
covering assets in which the Secured Party holds or is offered a security
interest, Grantor will provide the Secured Party with such loss payable or other
endorsements as the Secured Party may require. If Grantor at any time falls to
obtain or maintain any insurance as required under this Agreement, the Secured
Party may (but shall not be obligated to) obtain such insurance as the Secured
Party deems appropriate, including if it so chooses "single interest insurance,"
which will cover only the Secured Party's interest in the Collateral.
(j) APPLICATION OF INSURANCE PROCEEDS. Grantor will promptly notify
the Secured Party of any loss or damage to the Collateral. The Secured Party may
make proof of loss if Grantor fails to do so within fifteen (15) days of the
casualty. All proceeds of any insurance on the Collateral, including accrued
proceeds thereon, shall be held by the Secured Party as part of the Collateral.
If the Secured Party consents to repair or replacement of the
-5-
damaged or destroyed Collateral, the Secured Party shall, upon satisfactory
proof of expenditure, pay or reimburse Grantor from the proceeds for the
reasonable cost of repair or restoration. If the Secured Party does not consent
to repair or replacement of the Collateral, the Secured Party shall retain a
sufficient amount of the proceeds to pay all of the Obligations, and shall pay
the balance to Grantor. Any proceeds which have not been disbursed within six
(6) months after their receipt and which Grantor has not committed to the repair
or restoration of the Collateral shall be used to prepay the Obligations.
(k) INSURANCE REPORTS. Grantor, upon request of the Secured Party,
will furnish to the Secured Party reports on each existing policy of insurance
showing such information as the Secured Party may reasonably request including
the following: (i) the name of the insurer; (ii) the risks insured; (iii) the
amount of the policy; (iv) the property insured; (v) the then current value on
the basis of which insurance has been obtained and the manner of determining
that value; and (vi) the expiration date of the policy.
(l) CHANGES TO CHIEF EXECUTIVE OFFICE; TRADE NAMES. Without giving
the Secured Party at least thirty (30) days prior written notice, Grantor will
not change the location of its chief executive office and will not use any trade
name different that its legal name.
5. EXPENDITURES BY THE SECURED PARTY. If not discharged or paid when due,
the Secured Party may (but shall not be obligated to) discharge or pay any
amounts required to be discharged or paid by Grantor under this Agreement,
including without limitation all taxes, liens, security interests, encumbrances,
and other claims, at any time levied or placed on the Collateral. The Secured
Party also may (but shall not be obligated to) pay all costs for insuring,
maintaining and preserving the Collateral. All such expenditures incurred or
paid by the Secured Party for such purposes will then bear interest at the
Floating Rate from the date incurred or paid by the Secured Party to the date of
repayment by Grantor. All such expenses shall become a part of the Obligations
and, at the Secured Party's option, will (a) be payable on demand, (b) be added
to the balance of either of the Notes and be apportioned among and be payable
with any installment payments to become due during either (i) the term of any
applicable insurance policy or (ii) the remaining term of the Notes, or (c) be
treated as a balloon payment which will be due and payable at the maturity of
such Note or Notes. This Agreement also will secure payment of these amounts.
Such right shall be in addition to all other rights and remedies to which the
Secured Party may be entitled.
6. RIGHTS AND REMEDIES OF THE SECURED PARTY. If an Event of Default
occurs under this Agreement, at any time thereafter, the Secured Party shall
have, subject to the provisions of Section 8, all the rights of a secured party
under the Washington Uniform Commercial Code. In addition and without
limitation, but subject to the provisions of Section 8, the Secured Party may
exercise any one or more of the following rights and remedies:
(a) ACCELERATE OBLIGATIONS. The Secured Party may declare the entire
Obligations, including any prepayment penalty which Grantor would be required to
pay, immediately due and payable, without notice.
-6-
(b) ASSEMBLE COLLATERAL. The Secured Party may require Grantor to
deliver to the Secured Party all or any portion of the Collateral and any and
all certificates of title and other documents relating to the Collateral. The
Secured Party may require Grantor to assemble the Collateral and make it
available to the Secured Party at a place to be designated by the Secured Party.
The Secured Party also shall have full power to enter upon the property of
Grantor to take possession of and remove the Collateral. If the Collateral
contains other goods not covered by this Agreement at the time of repossession,
Grantor agrees the Secured Party may take such other goods, provided that the
Secured Party makes reasonable efforts to return them to Grantor after
repossession.
(c) SELL THE COLLATERAL. The Secured Party shall have full power to
sell, lease, transfer, or otherwise deal with the Collateral or proceeds thereof
in its own name or that of Grantor. The Secured Party may sell the Collateral at
public auction or private sale. Unless the Collateral threatens to decline
speedily in value or is of a type customarily sold on a recognized market, the
Secured Party will give Grantor reasonable notice of the time after which any
private sale or any other intended disposition of the Collateral is to be made.
The requirements of reasonable notice shall be met if such notice is given at
least ten (10) days before the time of the sale or disposition. All expenses
relating to the disposition of the Collateral, including without limitation the
expenses of retaking, holding, insuring, preparing for sale and selling the
Collateral, shall become a part of the Obligations secured by this Agreement and
shall be payable on demand, with interest at the Floating Rate from date of
expenditure until repaid.
(d) APPOINT RECEIVER. To the extent permitted by applicable law, the
Secured Party shall have the following rights and remedies regarding the
appointment of a receiver: (i) the Secured Party may have a receiver appointed
as a matter of right, (ii) the receiver may be an employee of the Secured Party
and may serve without bond, and (iii) all fees of the receiver and his or her
attorney shall become part of the Obligations secured by this Agreement and
shall be payable on demand, with interest at the Floating Rate from the date of
expenditure until repaid.
(e) COLLECT REVENUES, APPLY ACCOUNTS. The Secured Party, either
itself or through a receiver, may collect the payments, rents, income, and
revenues from the Collateral. The Secured Party may at any time in its
discretion transfer any Collateral into its own name or that of its nominee and
receive the payments, rents, income, and revenues therefrom and hold the same as
security for the Obligations or apply it to payment of the Obligations in such
order of preference as the Secured Party may determine. Insofar as the
Collateral consists of accounts, general intangibles, insurance policies,
instruments, chattel paper, choses in action, or similar property, the Secured
Party may demand, collect, receipt for, settle, compromise, adjust, xxx for,
foreclose, or realize on the Collateral as the Secured Party may determine,
whether or not such Collateral is then due. For these purposes, the Secured
Party may, on behalf of and in the name of Grantor, receive, open and dispose of
mail addressed to Grantor; change any address to which mail and payments are to
be sent; and endorse notes, checks, drafts, money orders, documents of title,
instruments and items pertaining to payment, shipment, or storage of any
Collateral. To facilitate collection, the Secured Party may notify account
debtors and obligors on any Collateral to make payments directly to the Secured
Party.
-7-
(f) OBTAIN DEFICIENCY. To the extent permitted by applicable law, if
the Secured Party chooses to sell any or all of the Collateral, the Secured
Party may obtain a judgment against Grantor for any deficiency remaining on the
Obligations after application of all amounts received from the exercise of the
rights provided in this Agreement. Grantor shall be liable for a deficiency even
if the transaction described in this paragraph is a sale of accounts or chattel
paper.
(g) OTHER RIGHTS AND REMEDIES. The Secured Party shall have all the
rights and remedies of a secured creditor under the provisions of the Uniform
Commercial Code, as may be amended from time to time. In addition, the Secured
Party shall have and may exercise any or all other rights and remedies it may
have available at law, in equity, or otherwise.
7. GRANTOR'S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS. Until an Event
of Default has occurred and except as otherwise provided below with respect to
accounts, Grantor may have possession of the tangible personal property and
beneficial use of all the Collateral and may use it in any lawful manner not
inconsistent with this Agreement or the other Loan Documents, provided that
Grantor's right to possession and beneficial use shall not apply to any
Collateral where possession of the Collateral by the Secured Party is required
by law to perfect the Secured Party's security interest in such Collateral.
Until an Event of Default has occurred and until otherwise notified by the
Secured Party, Grantor may collect any of the Collateral consisting of accounts.
At any time while an Event of Default exists, subject to the provisions of
Section 8, the Secured Party may exercise its rights to collect the accounts and
to notify account debtors to make payments directly to the Secured Party for
application to the Obligations. If the Secured Party at any time has possession
of any Collateral, whether before or after an Event of Default, the Secured
Party shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral if the Secured Party takes such action for that
purpose as Grantor shall request or as the Secured Party, in the Secured Party's
sole discretion, shall deem appropriate under the circumstances, but failure to
honor any request by Grantor shall not of itself be deemed to be a failure to
exercise reasonable care. The Secured Party shall not be required to take any
steps necessary to preserve any rights in the Collateral against prior parties,
nor to protect, preserve or maintain any security interest given to secure the
Obligations.
8. CUMULATIVE REMEDIES. All of the Secured Party's rights and remedies,
whether evidenced by this Agreement or the other Loan Documents or by any other
writing, shall be cumulative and may be exercised singularly or concurrently.
Election by the Secured Party to pursue any remedy shall not exclude pursuit of
any other remedy, and an election to make expenditures or to take action to
perform an obligation of Grantor under this Agreement, after Grantor's failure
to perform, shall not affect the Secured Party's right to declare a default and
to exercise its remedies.
9. RETENTION. Under no circumstances shall the Secured Party be deemed
to have elected to retain possession of all or any part of the Collateral in
satisfaction of the Obligations unless the Secured Party has given Grantor
written notice of a proposal to do so pursuant to Revised Code of Washington
62A.9-505(2), regardless of the length of time the Collateral remains in the
Secured Party's possession after an Event of Default. Under no circumstances
-8-
shall the Secured Party have any liability as a result of a decline in the
market value of the Collateral while the Secured Party holds it.
10. REVIVAL OF SECURITY INTEREST. To the extent Grantor makes a payment
to the Secured Party or the Secured Party receives any payment of proceeds of
Collateral, which is later invalidated, declared to be a fraudulent transfer or
preference, set aside or required to be repaid under any bankruptcy law, other
law or equitable principle, the Secured Party's interest in the Collateral shall
be revived and continue as if the payment or proceeds had never been received by
the Secured Party.
11. MISCELLANEOUS.
(a) AMENDMENT. This Agreement and the other written documents,
instruments and agreements entered into in connection with the Loan and the
Obligations contain the complete and final expression of the entire agreement of
the parties. No provision of this Agreement may be amended, modified, waived or
supplemented, except by a writing signed by the party sought to be charged with
the amendment, modification, waiver or supplementation. No waiver by the Secured
Party of any Default or Event of Default shall be a waiver of any other Default
or Event of Default.
(b) EFFECTIVENESS. This Agreement shall remain in full force and
effect until (i) all of the Obligations shall have been indefeasibly paid in
full in cash; (ii) the Secured Party shall have no further obligation to advance
funds, or provide other financial accommodations, to or for the benefit of
Grantor; and (iii) this Agreement shall have been terminated in writing by the
Secured Party. This is a continuing security agreement and will continue in
effect even though Grantor may, for a period of time, pay the Obligations in
full and not be indebted to the Secured Party.
(c) LEGAL EXPENSES. In the event of any default under this Agreement
or any of the Obligations, or in the event that any dispute arises relating to
the interpretation, enforcement or performance of any of the foregoing, the
Secured Party shall be entitled to collect from Grantor on demand all fees and
expenses incurred in connection therewith, including but not limited to fees of
attorneys, accountants, appraisers, environmental inspectors, consultants,
expert witnesses, arbitrators, mediators and court reporters, subject, in
circumstances other than a bankruptcy or insolvency proceeding, to applicable
law providing that the prevailing party is entitled to be awarded its reasonable
costs and attorneys' fees. Without limiting the generality of the foregoing,
Grantor shall pay all such costs and expenses incurred in connection with: (i)
arbitration or other alternative dispute resolution proceedings, trial court
actions and appeals; (ii) bankruptcy or other insolvency proceedings of Grantor
or other party liable for any of the Obligations or any party having any
interest in any Collateral; (iii) judicial or nonjudicial foreclosure on any
Collateral; (iv) post-judgment collection proceedings; (v) all claims,
counterclaims, cross-claims and defenses asserted in any of the foregoing
whether or not they arise out of or are related to this Agreement; (vi) all
preparation for any of the foregoing; and (vii) all settlement negotiations with
respect to any of the foregoing.
-9-
(d) NOTICES. Any notice under this Agreement shall be in writing and
shall be given as provided in the Loan Agreement.
(e) GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with the laws of the state of Washington without giving effect to
their principles or provisions regarding conflicts of laws or choice of law,
except to the extent that the Uniform Commercial Code as enacted in the state of
Washington provides that the validity or perfection of any security interests
in, or remedies in respect of, any particular Collateral are governed by the
laws of a jurisdiction other than the state of Washington (the "Governing
Laws"). Except as otherwise provided in this Agreement or any of the other Loan
Documents and unless inconsistent with any provision of the Governing Laws that
cannot be waived, the Uniform Customs and Practice for Documentary Credits of
the International Chamber of Commerce ("UCP") as in effect from time to time are
fully incorporated herein and shall apply to all Letters of Credit issued under
the Loan Agreement.
(f) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by each party on a separate counterpart, each of which when so
executed and delivered shall be deemed an original and all of which taken
together shall constitute but one and the same instrument.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR
TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE
UNDER WASHINGTON LAW.
IN WITNESS WHEREOF the parties have duly executed and delivered this
Agreement as of the date first written above.
GRANTOR: CUTTER & BUCK INC.
By _____________________________________
Its____________________________________
THE SECURED PARTY: WASHINGTON MUTUAL BANK doing business
as WESTERN BANK, for itself and as agent
By _____________________________________
Its____________________________________
-10-
EXHIBIT A
DESCRIPTION OF COLLATERAL
GRANTOR: CUTTER & BUCK INC.
THE SECURED PARTY: WASHINGTON MUTUAL BANK doing business as WESTERN
BANK, as Administrative Agent
As collateral security for all present and future obligations of Grantor
to the Secured Party under the Second Amended and Restated Loan Agreement dated
as of July 28, 2000 (the "Loan Agreement") by and among Grantor, WASHINGTON
MUTUAL BANK doing business as WESTERN BANK ("Western Bank"), BANK OF AMERICA,
N.A. ("BofA"), the several banks and other financial institutions from time to
time parties to this Agreement (including Western Bank and BofA in their
respective capacities as lenders, the "Lenders"), Western Bank, as issuer of
letters of credit (the "Letter of Credit Issuer") and as issuer of credit cards
(the "Credit Card Issuer"), and Western Bank, as administrative agent for the
Lenders, the Letter of Credit Issuer and the Credit Card Issuer (in such
capacity, the "Administrative Agent"), and the other Loan Documents, Grantor
hereby grants to the Administrative Agent acting on behalf of the Lenders, the
Letter of Credit Issuer and the Credit Card Issuer (in such capacity, the
"Secured Party") a security interest in all the following types of property of
Grantor, wherever located, now owned or hereafter acquired:
(a) All accounts, accounts receivable, contract rights, interests in
leaseholds, general intangibles, trademarks and trade names, goodwill, rights in
patents and copyrights, instruments, investment property, financial assets,
chattel paper, documents, documents of title, tax refunds, deposits of any and
every kind, claims, causes of action against any person or entity, and rights to
payment (in cash or in kind) of any and every kind, including without limitation
any and all purchase orders, instruments and other documents evidencing
obligations for goods sold or leased and/or services rendered by Grantor.
(b) All inventory of every nature and description and including
without limitation all raw materials and supplies used or consumed in Grantor's
business, work in process, finished goods, and all returns and refunds and the
right to collect the same.
(c) All leasehold improvements, machinery, equipment, furniture,
fixtures, tools, attachments and vehicles, and all additions and accessions
thereto, substitutions therefor and replacements thereof.
(d) All money and other property of Grantor which is now or hereafter
actually or constructively held or received by the Secured Party or in the
possession of the Secured Party.
(e) All bills of lading, other documents of title, policies or
certificates of insurance, chattel paper and general intangibles accompanying or
relating to any Commercial Letter of Credit (as such term is defined in the Loan
Agreement) or any drafts drawn thereunder, and any and all inventory, goods and
other property shipped under, in connection with, or relating to any such
Commercial Letter of Credit or any drafts drawn thereunder.
(f) All Investment Property.
(g) All proceeds, products (either in their unmanufactured state or
after manufacture), rents and profits of any of the foregoing, including but not
limited to insurance proceeds.
(h) All books, records, customer lists, trade secrets, formulae and
other recorded information, whether in the form of a writing, photograph,
microfilm, microfiche, electronic medium, or otherwise, together with all the
Grantor's right, title and interest in and to all computer software used to
create, maintain
or process any such records or data.
To the extent terms used in this Exhibit are defined in the Uniform
Commercial Code, they have the meanings assigned to them in the Uniform
Commercial Code as the same may be amended or modified from time to time.
SECOND AMENDED AND RESTATED REVOLVING CREDIT FACILITY NOTE
Seattle, Washington
July 28, 2000
For value received, CUTTER & BUCK INC. (the "Borrower") promises to pay to
the order of WASHINGTON MUTUAL BANK doing business as WESTERN BANK (the
"Lender") the unpaid principal amount of all Borrowings made by the Lender to
the Borrower under the Revolving Facility pursuant to that certain Second
Amended and Restated Loan Agreement dated as of July 28, 2000 (as the same may
be amended and modified from time to time, the "Loan Agreement") by and among
the Borrower, the Lender, the several lenders also party thereto (the
"Lenders"), WASHINGTON MUTUAL BANK doing business as WESTERN BANK, as letter of
credit issuer and as credit card issuer, and WASHINGTON MUTUAL BANK doing
business as WESTERN BANK, as administrative agent to the Lenders (in such
capacity, the "Administrative Agent"), on the dates and in the amounts provided
in the Loan Agreement. The Borrower promises to pay interest on the unpaid
principal amount of all Borrowings under the Revolving Facility on the dates and
at the rate or rates provided for in the Loan Agreement. Interest on any overdue
principal of and, to the extent permitted by law, overdue interest on the
principal amount hereof shall bear interest at the Default Rate, as provided for
in the Loan Agreement. All such payments of principal of and interest on any
Borrowing shall be made as provided in the Loan Agreement.
All Borrowings and the Interest Periods and the interest rates from time
to time applicable thereto, and all payments of the principal thereof shall be
recorded by the Lender in accordance with its usual practices; provided, that
the failure of the Lender to make any such recordation shall not affect the
obligations of the Borrower hereunder or under the Loan Agreement.
The Borrower hereby waives diligence, presentment, demand, protest and,
except for notices required to be given pursuant to the Loan Agreement, notice
of any kind whatsoever. The non-exercise by the holder of any of its rights
hereunder in any particular instance shall not constitute a waiver thereof in
that or any subsequent instance.
This Note amends and restates in its entirety and, as so amended and
restated, continues the Amended and Restated Revolving Credit Facility Note
dated April 28, 1999, made by the Borrower to the order of the Lender. This Note
is one of the Notes referred to in the Loan Agreement. Capitalized terms used in
this Note without definition have the meanings assigned to them in the Loan
Agreement. Reference is made to the Loan Agreement for provisions for the
optional prepayment and the repayment hereof and the acceleration of the
maturity hereof. This Note is governed by the laws of the State of Washington.
The Loan Agreement, among other things, amends and restates in its entirety
and, as so amended and restated, continues the Amended and Restated Loan
Agreement dated as of April 28, 1999, between the Borrower, the Administrative
Agent, WASHINGTON MUTUAL BANK doing business as WESTERN BANK and BANK OF
AMERICA, N.A. (formerly known as Bank of America National Trust and Savings
Association doing business as Seafirst) (the "Original Loan
Agreement"). The indebtedness of the Borrower evidenced by this Note includes
the indebtedness of the Borrower resulting from Borrowings made by the Lender to
the Borrower from time to time pursuant to the Loan Agreement and the
indebtedness of the Borrower resulting from loans previously made by the Lender
to the Borrower under the Original Loan Agreement.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LEND MONEY, EXTEND CREDIT, OR TO FORBEAR
FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.
CUTTER & BUCK INC.
By _____________________________________
Its_____________________________________
2
