EXHIBIT 10.48
FIFTH SUPPLEMENT TO NOTE PURCHASE AGREEMENTS
This FIFTH SUPPLEMENT TO NOTE PURCHASE AGREEMENTS (the "FIFTH SUPPLEMENTAL
AGREEMENT") is made and dated as of January 22, 2001, by and among Converse,
Inc. (the "COMPANY"), and US Bancorp Libra, a division of Bancorp Investments,
Inc. ("LIBRA"), Foothill Partners III, L.P. ("FOOTHILL"), DDJ Canadian High
Yield Fund ("DDJ CANADIAN"), and B III Capital Partners, L.P. ("DDJ CAPITAL")
(Libra, Foothill, DDJ Canadian, and DDJ Capital collectively the "PURCHASERS" or
individually a "PURCHASER").
WITNESSETH:
WHEREAS, the Company and the Purchasers are parties to several
substantially identical Note Purchase Agreement, dated as of September 16, 1998
(collectively the "NOTE PURCHASE AGREEMENTS" or individually a "NOTE PURCHASE
AGREEMENT"), pursuant to which the Company issued and sold its 15% senior
secured notes, in two series, in the aggregate principal amount of $28,642,687,
as more fully set forth herein (the "SECURED NOTES"); and
WHEREAS, the Note Purchase Agreements were supplemented in a Supplement to
Note Purchase Agreements dated as of November 15, 1999 (the "SUPPLEMENTAL
AGREEMENT"), pursuant to which the parties (i) acknowledged the consent of the
Purchasers to the sale of certain Proprietary Rights by the Company, (ii) waived
certain provisions under the Note Purchase Agreements, and (iii) amended certain
provisions of the Note Purchase Agreements, as more fully set forth therein;
WHEREAS, the Note Purchase Agreements were further supplemented in a Second
Supplement to Note Purchase Agreements dated as of May 16, 2000 (the "SECOND
SUPPLEMENTAL AGREEMENT"), pursuant to which the Purchasers waived certain
provisions under the Supplemented Note Purchase Agreements and the parties
amended and confirmed certain provisions of the Supplemented Note Purchase
Agreements, as more fully set forth therein;
WHEREAS, the Note Purchase Agreements were further supplemented in a Third
Supplement to Note Purchase Agreements dated as of June 30, 2000 (the "THIRD
SUPPLEMENTAL AGREEMENT") pursuant to which the Purchasers agreed to forbear from
exercising their rights and remedies after an Event of Default through the
Forbearance Termination Date and the parties amended and confirmed certain
provisions of the Supplemented Note Purchase Agreements, as more fully set forth
therein; and
WHEREAS, the Note Purchase Agreements were further supplemented in a Fourth
Supplement to Note Purchase Agreements dated as of October 26, 2000 (the "FOURTH
SUPPLEMENTAL AGREEMENT") pursuant to which the Purchasers agreed to forbear from
exercising their rights and remedies through the Forbearance Termination Date
and the parties amended and confirmed certain provisions of the Supplemented
Note Purchase Agreements, as more fully set forth therein; and
WHEREAS, on January 22, 2001, the Company filed a voluntary petition for
relief under chapter 11 of Title 11 of the United States Code in the United
States Bankruptcy Court for the District of Delaware, Case No. 01-00223; and
WHEREAS, on January 22, 2001, the Company entered into a Post Petition
Credit Agreement, by and among the Company, the lenders from time to time party
thereto and Bankers Trust Company, as agent (the "DIP Agreement"); and
WHEREAS, the Purchasers have consented to the entry of an interim order on
January 22, 2001, authorizing and approving, inter alia, the Post Petition
Credit Agreement (the "DIP Order"), in connection with which the Company has
agreed to supplement further the Note Purchase Agreements, as supplemented by
the Supplemental Agreement, the Second Supplemental Agreement, the Third
Supplemental Agreement and the Fourth Supplemental Agreement (collectively the
"SUPPLEMENTED NOTE PURCHASE AGREEMENTS" or individually a "SUPPLEMENTED NOTE
PURCHASE AGREEMENT") in order to confirm the Company's obligations under the
Supplemented Note Purchase Agreements and in order to amend and confirm certain
provisions of the Supplemented Note Purchase Agreements, as more fully set forth
herein.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained and other good and valuable consideration, the adequacy of
which is hereby acknowledged, and on and subject to the terms and conditions
hereof, the parties agree as follows:
SECTION 1. DEFINITIONS. Unless otherwise defined herein, all capitalized
terms shall have the respective meanings given to them in the Supplemented Note
Purchase Agreements.
SECTION 2. CERTIFICATIONS OF PURCHASERS. The Purchasers severally
represent and warrant as follows:
(a) Libra. Libra is (i) the purchaser and remains the holder of
that Series A Secured Note in the principal amount of $4,142,931 and (ii)
the party in interest as "Purchaser" under the related Supplemented Note
Purchase Agreement, and in such capacity Libra is authorized to extend
consents, waivers, and amendments with respect to its Supplemented Note
Purchaser Agreement as set forth herein.
(b) Foothill. Foothill is (i) the purchasers and remainder the
holder of that Series A Secured Note in the principal amount of $10,357,328
and (ii) the party in interest as "Purchaser" under the related
Supplemented Note Purchase Agreement, and in such capacity Foothill is
authorized to extend consents, waivers, and amendments with respect to its
Supplemented Note Purchase Agreement as set forth herein.
(c) DDJ Canadian. DDJ Canadian is (i) the purchaser and remains
the holder of that Series A Secured Note in the principal amount
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of $4,045,408 and that Series B Secured Note in the aggregate principal
amount of $1,478,400 and (ii) the party in interest as "Purchaser" under
the related Supplemented Note Purchase Agreement, and in such capacity DDJ
Canadian is authorized to extend consents, waivers and amendments with
respect to its Supplemented Note Purchase Agreement as set forth herein.
(d) DDJ Capital. DDJ Capital is (i) the purchaser and remains
the holder of that Series A Secured Note in the principal amount of
$6,311,920 and that Series B Secured Note in the aggregate principal amount
of $2,306,700 and (ii) the party in interest as "Purchaser" under the
related Supplemented Note Purchaser Agreement, and in such capacity DDJ
Capital is authorized to extend consents, waivers and amendments with
respect to its Supplemented Note Purchase Agreements as set forth herein.
SECTION 3. ACKNOWLEDGMENT OF COMPANY. The Company acknowledges that (a)
on the date of this Fifth Supplemental Agreement, the principal amount
outstanding under the Secured Notes, together with accrued but unpaid interest,
is due and payable, and (b) from and after the date of this Fifth Supplemental
Agreement, interest shall accrue on the unpaid principal amount of the Secured
Notes at the rate of 18% per annum, and such interest shall be payable as
follows: (i) interest accruing at the rate of 15% per annum shall be paid by
the Company in arrears, monthly, on the last day of each calendar month and at
the time of the final payment of the principal balance outstanding under the
Secured Notes, in accordance with the terms and conditions of the DIP Order, and
(ii) interest accruing at the rate of 3% per annum shall be paid by the Company
at the time of final payment of the principal balance outstanding under the
Secured Notes.
SECTION 4. ACKNOWLEDGMENT OF THE PURCHASERS. The Purchasers hereby
acknowledge that each of them (i) has consented to, and reaffirms approval of,
the Company entering into the DIP Agreement and (ii) has consented to, and
reaffirms approval of, the entry of the DIP Order by the Bankruptcy Court.
SECTION 5. TRANSACTION PAYMENTS; IN CASH AND IN KIND. The Company agrees
to pay the Purchasers, as transaction fees, the following in cash or in kind
payments:
(a) The Purchasers shall receive from the Company, as a payment in
kind, in lieu of cash, to accrue to the Purchasers as the holders of
the Secured Notes on a pro rata basis, on the date of this Fifth
Supplemental Agreement, a sum equal to 3% of the principal amount
outstanding under the Secured Notes, which payment in kind shall be
made by increasing the principal amount outstanding under the Secured
Notes by such sum on a pro rata basis on such date; and
(b) The Purchasers shall receive from the Company, as a payment or
payments in cash, to be distributed to the Purchasers as the holders
of the Secured Notes on a pro rata basis, (i) on February 28, 2001, a
sum equal to .5% of the aggregate principal
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amount outstanding under the Secured Notes on February 28, 2001 if the
Fixed Asset Reserve (as defined in the Post-Petition Credit Agreement)
on such date shall not equal or exceed $8,895,000 and (ii) on April
15, 2001, a sum equal to .5% of the aggregate principal amount
outstanding under the Secured Notes on April 15, 2001 if the Fixed
Asset Reserve on such date shall not equal or exceed $8,895,000.
SECTION 6. CONDITIONS. The effectiveness of this Fifth Supplemental
Agreement is expressly conditioned upon the effectiveness of the DIP Order, and
the acknowledgments and agreements of the Company in this Fifth Supplemental
Agreement are expressly subject to the terms and conditions of the DIP Order,
including without limitation those terms and conditions relating to the
termination of cash payments and cost and expense reimbursements as set forth in
the last sentence of Section 9 of the DIP Order.
SECTION 7. EXPENSES. The Company agrees to pay Purchasers (i) any and all
reasonable out-of-pocket costs or expenses (including reasonable legal fees and
disbursements of counsel and financial advisors to the Purchasers) incurred as a
result of the negotiation and documentation of this Fifth Supplemental Agreement
and (ii) from time to time any and all reasonable out-of-pocket costs or
expenses (including reasonable fees and disbursements of counsel and financial
advisors to the Purchasers) incurred in connection with the enforcement and
protection of the rights of the Purchasers in the Company's chapter 11 case.
SECTION 8. OBLIGATIONS IN FULL FORCE AND EFFECT. Except as herein amended
and modified, the Note Purchase Agreements, as supplemented, and the Ancillary
Documents shall remain in full force and effect.
SECTION 9. COUNTERPARTS. This Fifth Supplemental Agreement may be
executed in counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same document.
IN WITNESS WHEREOF, the parties have executed this Fifth Supplemental
Agreement as of the date and year first written above.
CONVERSE, INC.
By: /s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
Title: Senior Vice President and CFO
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FOOTHILL PARTNERS III, L.P.
By:
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Name:
------------------------
Title:
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US BANCORP LIBRA, a division of BANCORP
INVESTMENTS, INC.
By:
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Name:
------------------------
Title:
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DDJ CANADIAN HIGH YIELD FUND
By: DDJ Capital Management, LLC, its
attorney-in-fact
By:
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Name:
------------------------
Title:
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B III CAPITAL PARTNERS, L.P.
By: DDJ Capital III, LLC, its General
Partner
By: DDJ Capital Management, LLC, Manager
By:
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Name:
------------------------
Title:
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