Exhibit 10.5
CREDIT AGREEMENT
DATED AS OF October 15, 2002
by and among
GOLFSMITH INTERNATIONAL, L.P.,
GOLFSMITH NU, L.L.C., and
GOLFSMITH USA, L.L.C.
as Borrowers
and
THE OTHER PERSONS PARTY HERETO THAT ARE
DESIGNATED AS CREDIT PARTIES
and
GENERAL ELECTRIC CAPITAL CORPORATION
as Agent, L/C Issuer and a Lender
and
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
TABLE OF CONTENTS
PAGE
Section 1. AMOUNTS AND TERMS OF LOANS.................................................. 1
1.1. Loans....................................................................... 1
1.2. Interest and Applicable Margins............................................. 5
1.3. Fees........................................................................ 7
1.4. Payments.................................................................... 8
1.5. Prepayments................................................................. 8
1.6. Maturity.................................................................... 9
1.7. Eligible Accounts........................................................... 9
1.8. Eligible Inventory.......................................................... 11
1.9. Loan Accounts............................................................... 12
1.10. Yield Protection; Illegality................................................ 13
1.11. Taxes....................................................................... 13
1.12. (Intentionally Omitted)..................................................... 15
1.13. Borrower Representative..................................................... 15
1.14. Credit Card Collections..................................................... 15
Section 2. AFFIRMATIVE COVENANTS....................................................... 15
2.1. Compliance With Laws and Contractual Obligations............................ 15
2.2. Insurance; Damage to or Destruction of Collateral........................... 16
2.3. Inspection; Lender Meeting.................................................. 17
2.4. Organizational Existence.................................................... 18
2.5. Environmental Matters....................................................... 18
2.6. Landlords' Agreements, Mortgagee Agreements, Bailee Letters and
Real Estate Purchases....................................................... 18
2.7. Conduct of Business......................................................... 19
2.8. Further Assurances.......................................................... 19
2.9. (Intentionally Omitted)..................................................... 19
2.10. Cash Management Systems..................................................... 19
Section 3. NEGATIVE COVENANTS.......................................................... 20
3.1. Indebtedness................................................................ 20
3.2. Liens and Related Matters................................................... 21
3.3. Investments................................................................. 21
3.4. Contingent Obligations...................................................... 22
3.5. Restricted Payments......................................................... 22
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TABLE OF CONTENTS
(CONTINUED)
PAGE
3.6. Restriction on Fundamental Changes.......................................... 23
3.7. Disposal of Assets or Subsidiary Stock...................................... 23
3.8. Transactions with Affiliates................................................ 23
3.9. Conduct of Business......................................................... 24
3.10. Changes Relating to Indebtedness............................................ 24
3.11. Fiscal Year................................................................. 24
3.12. Press Release; Public Offering Materials.................................... 24
3.13. Subsidiaries................................................................ 24
3.14. Bank Accounts............................................................... 24
3.15. Hazardous Materials......................................................... 25
3.16. ERISA....................................................................... 25
3.17. (Intentionally Omitted)..................................................... 25
3.18. Prepayments of Other Indebtedness........................................... 25
3.19. Changes to Material Contracts............................................... 25
Section 4. FINANCIAL COVENANTS/REPORTING............................................... 25
4.1. Capital Expenditure Limits.................................................. 25
4.2. (Intentionally Omitted)..................................................... 26
4.3. Minimum EBITDA.............................................................. 26
4.4. (Intentionally Omitted)..................................................... 26
4.5. Minimum Interest Coverage Ratio............................................. 27
4.6. (Intentionally Omitted)..................................................... 27
4.7. (Intentionally Omitted)..................................................... 27
4.8. (Intentionally Omitted)..................................................... 27
4.9. Financial Statements and Other Reports...................................... 28
4.10. Accounting Terms; Utilization of GAAP for Purposes of Calculations
Under Agreement............................................................. 31
Section 5. REPRESENTATIONS AND WARRANTIES.............................................. 32
5.1. Disclosure.................................................................. 32
5.2. No Material Adverse Effect.................................................. 32
5.3. No Conflict................................................................. 32
5.4. Organization, Powers, Capitalization and Good Standing...................... 32
5.5. Financial Statements and Projections........................................ 33
5.6. Intellectual Property....................................................... 33
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TABLE OF CONTENTS
(CONTINUED)
PAGE
5.7. Investigations, Audits, Etc................................................. 33
5.8. Employee Matters............................................................ 33
5.9. Solvency.................................................................... 34
5.10. Litigation; Adverse Facts................................................... 34
5.11. Use of Proceeds; Margin Regulations......................................... 34
5.12. Ownership of Property; Liens................................................ 34
5.13. Environmental Matters....................................................... 34
5.14. ERISA....................................................................... 35
5.15. Brokers..................................................................... 36
5.16. Deposit and Disbursement Accounts........................................... 36
5.17. Agreements and Other Documents.............................................. 36
5.18. Insurance................................................................... 36
5.19. Acquisition Agreement....................................................... 36
Section 6. DEFAULT, RIGHTS AND REMEDIES................................................ 37
6.1. Event of Default............................................................ 37
6.2. Suspension or Termination of Commitments.................................... 39
6.3. Acceleration and other Remedies............................................. 39
6.4. Performance by Agent........................................................ 39
6.5. Application of Proceeds..................................................... 40
Section 7. CONDITIONS TO LOANS......................................................... 40
7.1. Conditions to Initial Loans................................................. 40
7.2. Conditions to All Loans..................................................... 40
Section 8. ASSIGNMENT AND PARTICIPATION................................................ 41
8.1. Assignment and Participations............................................... 41
8.2. Agent....................................................................... 43
8.3. Set Off and Sharing of Payments............................................. 47
8.4. Disbursement of Funds....................................................... 47
8.5. Disbursements of Advances; Payment.......................................... 47
Section 9. MISCELLANEOUS............................................................... 49
9.1. Indemnities................................................................. 49
9.2. Amendments and Waivers...................................................... 49
9.3. Notices..................................................................... 50
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TABLE OF CONTENTS
(CONTINUED)
PAGE
9.4. Failure or Indulgence Not Waiver; Remedies Cumulative....................... 51
9.5. Marshaling; Payments Set Aside.............................................. 51
9.6. Severability................................................................ 52
9.7. Lenders' Obligations Several; Independent Nature of Lenders' Rights......... 52
9.8. Headings.................................................................... 52
9.9. Applicable Law.............................................................. 52
9.10. Successors and Assigns...................................................... 52
9.11. No Fiduciary Relationship; Limited Liability................................ 52
9.12. Construction................................................................ 52
9.13. Confidentiality............................................................. 53
9.14. CONSENT TO JURISDICTION..................................................... 53
9.15. WAIVER OF JURY TRIAL........................................................ 53
9.16. Survival of Warranties and Certain Agreements............................... 54
9.17. Entire Agreement............................................................ 54
9.18. Counterparts; Effectiveness................................................. 54
9.19. Replacement of Lenders...................................................... 54
9.20. Delivery of Termination Statements.......................................... 55
9.21. Default Purchase Option..................................................... 55
Section 10. CROSS-GUARANTY.............................................................. 57
10.1. Cross-Guaranty.............................................................. 57
10.2. Waivers by Borrowers........................................................ 57
10.3. Benefit of Guaranty......................................................... 57
10.4. Waiver of Subrogation, Etc.................................................. 57
10.5. Election of Remedies........................................................ 58
10.6. Limitation.................................................................. 58
10.7. Contribution with Respect to Guaranty Obligations........................... 58
10.8. Liability Cumulative........................................................ 59
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INDEX OF APPENDICES
Annexes
Annex A - Definitions
Annex B - Pro Rata Shares and Commitment Amounts
Annex C - Closing Checklist
Annex D - Pro Forma
Annex E - Lenders' Wire Transfer Information
Annex F - Cash Management Systems
Exhibits
Exhibit 1.1(a)(i) - Revolving Note
Exhibit 1.1(a)(ii) - Notice of Revolving Credit Advance
Exhibit 1.2(e) - Notice of Continuation/Conversion
Exhibit 3.5(c) - Management Services Agreement
Exhibit 4.9(d)(i) - LP Borrowing Base Certificate
Exhibit 4.9(d)(ii) - NU Borrowing Base Certificate
Exhibit 4.9(d)(iii) - USA Borrowing Base Certificate
Exhibit 4.9(k) - Compliance Certificate
Exhibit 6.1(o) - Inter-Creditor Agreement
Exhibit 8.1 - Assignment Agreement
Exhibit A1 - Indenture
Exhibit A2 - Intercompany Subordination Agreement
Exhibit A3 - Master Documentary Agreement
Exhibit A4 - Master Standby Agreement
Exhibit F1 - Blocked Account Agreement (LP Operating Account)
Exhibit F2 - Blocked Account Agreement (Other Accounts)
Schedules
Schedule 2.7 - Corporate and Trade Names
Schedule 3.2 - Liens
Schedule 3.4 - Contingent Obligations
Schedule 3.8 - Affiliate Transactions
Schedule 3.9 - Business Description
Schedule 5.4(a) - Jurisdictions of Organization and Qualifications
Schedule 5.4(b) - Capitalization
Schedule 5.6 - Intellectual Property
Schedule 5.7 - Investigations and Audits
Schedule 5.8 - Employee Matters
Schedule 5.10 - Litigation
Schedule 5.11 - Use of Proceeds
Schedule 5.12 - Real Estate
Schedule 5.13 - Environmental Matters
Schedule 5.14 - ERISA
Schedule 5.16 - Deposit and Disbursement Accounts
Schedule 5.17 - Agreements and Other Documents
Schedule 5.18 - Insurance
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CREDIT AGREEMENT
This CREDIT AGREEMENT is dated as of October 15, 2002 and entered into
by and among GOLFSMITH INTERNATIONAL, L.P., a Delaware limited partnership
("LP"), GOLFSMITH NU, L.L.C., a Delaware limited liability company ("NU") and
GOLFSMITH USA, L.L.C., a Delaware limited liability company ("USA") (LP, NU and
USA are sometimes referred to herein as the "Borrowers" and individually as a
"Borrower"), the other persons designated as "Credit Parties" on the signature
pages hereof, the financial institutions who are or hereafter become parties to
this Agreement as Lenders, and GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware
corporation (in its individual capacity "GE Capital"), as a Lender, as the
initial L/C Issuer and as Agent.
R E C I T A L S:
WHEREAS, Borrowers desire that Lenders extend a revolving credit
facility to Borrowers to provide working capital financing for Borrowers; and
WHEREAS, Borrowers desire to secure all of their Obligations (as
hereinafter defined) under the Loan Documents (as hereinafter defined) by
granting to Agent, for the benefit of Agent and Lenders, a security interest in
and lien upon substantially all of their personal property, except for Equipment
and Fixtures; and
WHEREAS, Golfsmith International Holdings, Inc., a Delaware corporation
("Holdings"), that indirectly owns all of the Stock of Borrowers is willing to
guaranty all of the Obligations and to pledge to Agent, for the benefit of Agent
and Lenders, all of the Stock of Golfsmith International, Inc. ("GII"), a
Delaware corporation, which either directly or indirectly owns all of the stock
of Borrowers and GII's other Subsidiaries to secure the Obligations; and
WHEREAS, each of GII, GII's Subsidiaries other than Borrowers and
Borrowers' Subsidiaries is willing to guaranty all of the Obligations of
Borrowers and to grant to Agent, for the benefit of Agent and Lenders, a
security interest in and lien upon substantially all of its personal property,
except for Equipment and Fixtures, to secure the Obligations; and
WHEREAS, all capitalized terms herein shall have the meanings ascribed
thereto in Annex A hereto which is incorporated herein by reference.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Borrowers, Credit Parties, Lenders
and Agent agree as follows:
SECTION 1.
AMOUNTS AND TERMS OF LOANS
1.1. Loans. Subject to the terms and conditions of this Agreement and in
reliance upon the representations and warranties of Borrowers and the Other
Credit Parties contained herein:
(a) Revolving Loans.
(i) Each Revolving Lender agrees, severally and not
jointly, to make available to Borrowers from time to time until the Commitment
Termination Date its Pro Rata Share of advances (each a "Revolving Credit
Advance") requested by Borrower Representative on behalf of the Borrowers
hereunder; provided that no Revolving Credit Advance shall be made in an amount
less than
$250,000. The Pro Rata Share of the Revolving Loan of any Revolving Lender shall
not at any time exceed its separate Revolving Loan Commitment. Revolving Credit
Advances may be repaid and reborrowed; provided that the amount of any Revolving
Credit Advance to be made at any time shall not exceed Borrowing Availability.
Borrowing Availability may be further reduced by Reserves imposed by Agent in
its reasonable credit judgment. Moreover, the Revolving Loan outstanding to any
Borrower shall not exceed at any time that Borrower's separate Borrowing Base.
All Revolving Loans shall be repaid in full on the Commitment Termination Date.
Each Borrower shall execute and deliver to each Revolving Lender a promissory
note to evidence the Revolving Loan Commitment of that Revolving Lender. Each
promissory note shall be in the principal amount of the Revolving Loan
Commitment of the applicable Revolving Lender, dated the Closing Date and
substantially in the form of Exhibit 1.1(a)(i) (each a "Revolving Note" and,
collectively, the "Revolving Notes"). Other than pursuant to Section 1.1(a)(ii),
if at any time the outstanding Revolving Loans exceed the Aggregate Borrowing
Base or which cause the outstanding balance of the Revolving Loan by any
Borrower to exceed that Borrower's separate Borrowing Base (any such excess
Revolving Loans are herein referred to collectively as "Overadvances"), Lenders
shall not be obligated to make Revolving Credit Advances, no additional Letters
of Credit shall be issued and, except as provided in Section 1.1(a)(ii) below,
Revolving Loans must be repaid immediately and Letters of Credit cash
collateralized in an amount sufficient to eliminate any Overadvances.
Furthermore, if, at any time, the outstanding balance of the Revolving Loan of
any Borrower exceeds that Borrower's separate Borrowing Base, the applicable
Borrower shall immediately repay its Revolving Credit Advances in the amount of
such excess (and, if necessary, shall provide cash collateral for its Letter of
Credit Obligations). All Overadvances shall constitute Index Rate Loans and
shall bear interest at the Default Rate. Revolving Loans which are Index Rate
Loans may be requested in any amount with one (1) Business Day prior written
notice required for funding requests equal to or greater than $5,000,000. For
funding requests for such Loans less than $5,000,000, written notice must be
provided by 1:00 p.m. (New York time) on the Business Day on which the Loan is
to be made. All LIBOR Loans require three (3) Business Days prior written
notice. Written notices for funding requests shall be in the form attached as
Exhibit 1.1(a)(ii) ("Notice of Revolving Credit Advance").
(ii) If Borrower Representative on behalf of Borrowers
requests that Revolving Lenders make, or permit to remain outstanding any
Overadvances, Agent may, in its sole discretion, elect to make, or permit to
remain outstanding such Overadvances; provided, however, that Agent may not
cause Revolving Lenders to make, or permit to remain outstanding, (a) aggregate
Revolving Loans in excess of the Maximum Amount or (b) Overadvances in an
aggregate amount in excess of 5% of the Revolving Loan Commitment. If an
Overadvance is made, or permitted to remain outstanding, pursuant to the
preceding sentence, then all Revolving Lenders shall be bound to make, or permit
to remain outstanding such Overadvance based upon their Pro Rata Shares of the
Revolving Loan Commitments in accordance with the terms of this Agreement. If an
Overadvance remains outstanding for more than ninety (90) days during any one
hundred eighty (180) day period, Revolving Loans must be repaid immediately in
an amount sufficient to eliminate all of such Overadvances. Furthermore, holders
of a majority of the Revolving Loan Commitment may prospectively revoke Agent's
ability to make or permit Overadvances by written notice to Agent.
(b) (Intentionally Omitted).
(c) (Intentionally Omitted).
(d) Letters of Credit. The Revolving Loan Commitment may, in
addition to advances under the Revolving Loan, be utilized, upon the request of
Borrower Representative on behalf of the applicable Borrower, for the issuance
of Letters of Credit. Immediately upon the issuance by an L/C Issuer of a Letter
of Credit, and without further action on the part of Agent or any of the
Lenders, each Revolving Lender shall be deemed to have purchased from such L/C
Issuer a participation in such
2
Letter of Credit (or in its obligation under a risk participation agreement with
respect thereto) equal to such Revolving Lender's Pro Rata Share of the
aggregate amount available to be drawn under such Letter of Credit. Issuance of
Letters of Credit shall be subject to the limits of Section 1.1(a).
(i) Maximum Amount. The aggregate amount of Letter of
Credit Obligations with respect to all Letters of Credit outstanding at any time
shall not exceed $1,000,000 ("L/C Sublimit").
(ii) Reimbursement. Borrowers shall be irrevocably and
unconditionally obligated forthwith without presentment, demand, protest or
other formalities of any kind (including for purposes of Section 10), to
reimburse any L/C Issuer on demand in immediately available funds for any
amounts paid by such L/C Issuer with respect to a Letter of Credit, including
all reimbursement payments, Fees, Charges, costs and expenses paid by such L/C
Issuer. Borrowers hereby authorize and direct Agent, at Agent's option, to debit
Borrowers' account (by increasing the outstanding principal balance of the
Revolving Credit Advances) in the amount of any payment made by an L/C Issuer
with respect to any Letter of Credit. All amounts paid by an L/C Issuer with
respect to any Letter of Credit that are not immediately repaid by Borrowers
with the proceeds of a Revolving Credit Advance or otherwise shall bear interest
at the interest rate applicable to Revolving Loans which are Index Rate Loans
plus, at the election of Agent or Requisite Revolving Lenders, an additional two
percent (2.00%) per annum. Each Revolving Lender agrees to fund its Pro Rata
Share of any Revolving Loan made pursuant to this Section 1.1(d)(ii). In the
event Agent elects not to debit Borrowers' account and Borrowers fail to
reimburse the L/C Issuer in full on the date of any payment in respect of a
Letter of Credit, Agent shall promptly notify each Revolving Lender of the
amount of such unreimbursed payment and the accrued interest thereon and each
Revolving Lender, on the next Business Day prior to 3:00 p.m. (New York time),
shall deliver to Agent an amount equal to its Pro Rata Share thereof in same day
funds. Each Revolving Lender hereby absolutely and unconditionally agrees to pay
to the L/C Issuer upon demand by the L/C Issuer such Revolving Lender's Pro Rata
Share of each payment made by the L/C Issuer in respect of a Letter of Credit
and not immediately reimbursed by Borrowers or satisfied through a debit of
Borrowers' account. Each Revolving Lender acknowledges and agrees that its
obligations pursuant to this subsection in respect of Letters of Credit are
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including setoff, counterclaim, the occurrence and continuance of a
Default or an Event of Default or any failure by Borrowers to satisfy any of the
conditions set forth in Section 7.2. If any Revolving Lender fails to make
available to the L/C Issuer the amount of such Revolving Lender's Pro Rata Share
of any payments made by the L/C Issuer in respect of a Letter of Credit as
provided in this Section 1.1(d)(ii), the L/C Issuer shall be entitled to recover
such amount on demand from such Revolving Lender together with interest at the
Index Rate.
(iii) Request for Letters of Credit. Borrower
Representative shall give Agent at least three (3) Business Days prior written
notice specifying the date a Letter of Credit is requested to be issued, the
amount and the name and address of the beneficiary and a description of the
transactions proposed to be supported thereby. If Agent informs Borrower
Representative that the L/C Issuer cannot issue the requested Letter of Credit
directly, such Borrower Representative may request that L/C Issuer arrange for
the issuance of the requested Letter of Credit under a risk participation
agreement with another financial institution reasonably acceptable to Agent, L/C
Issuer and Borrower Representative. The issuance of any Letter of Credit under
this Agreement shall be subject to the conditions that the Letter of Credit (i)
supports a transaction entered into in the ordinary course of business of
Borrowers and (ii) is in a form, is for an amount and contains such terms and
conditions as are reasonably satisfactory to the L/C Issuer and, in the case of
standby letters of credit, Agent. The initial notice requesting the issuance of
a Letter of Credit shall be accompanied by the form of the Letter of Credit and
the Master Standby Agreement or Master Documentary Agreement, as applicable, and
an application for a letter of credit, if any, then required by the L/C Issuer
completed in a manner satisfactory to such L/C Issuer. If any
3
provision of any application or reimbursement agreement is inconsistent with the
terms of this Agreement, then the provisions of this Agreement, to the extent of
such inconsistency, shall control.
(iv) Expiration Dates of Letters of Credit. The expiration
date of each Letter of Credit shall be on a date which is not later than the
earlier of (a) one year from its date of issuance or (b) the thirtieth (30th)
day prior to the date set forth in clause (a) of the definition of the term
Commitment Termination Date. Notwithstanding the foregoing, a Letter of Credit
may provide for automatic extensions of its expiration date for one (1) or more
successive one (1) year periods provided that the L/C Issuer has the right to
terminate such Letter of Credit on each such annual expiration date and no
renewal term may extend the term of the Letter of Credit to a date that is later
than the thirtieth (30th) day prior to the date set forth in clause (a) of the
definition of the term Commitment Termination Date. The L/C Issuer may elect not
to renew any such Letter of Credit and, upon direction by Agent or Requisite
Revolving Lenders, shall not renew any such Letter of Credit at any time during
the continuance of an Event of Default, provided that, in the case of a
direction by Agent or Requisite Revolving Lenders, the L/C Issuer receives such
directions prior to the date notice of non-renewal is required to be given by
the L/C Issuer and the L/C Issuer has had a reasonable period of time to act on
such notice.
(v) Obligations Absolute. The obligation of Borrowers to
reimburse the L/C Issuer, Agent and Lenders for payments made in respect of
Letters of Credit issued by the L/C Issuer shall be unconditional and
irrevocable and shall be paid under all circumstances strictly in accordance
with the terms of this Agreement, including the following circumstances: (a) any
lack of validity or enforceability of any Letter of Credit; (b) any amendment or
waiver of or any consent or departure from all or any of the provisions of any
Letter of Credit or any Loan Document; (c) the existence of any claim, set-off,
defense or other right which Borrowers, any of their Subsidiaries or Affiliates
or any other Person may at any time have against any beneficiary of any Letter
of Credit, Agent, any L/C Issuer, any Lender or any other Person, whether in
connection with this Agreement, any other Loan Document or any other related or
unrelated agreements or transactions; (d) any draft 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; (e) payment under any Letter of Credit against presentation of a
draft or other document that does not substantially comply with the terms of
such Letter of Credit; or (f) any other act or omission to act or delay of any
kind of any L/C Issuer, Agent, any Lender or any other Person or any other event
or circumstance whatsoever that might, but for the provisions of this Section
1.1(d)(v), constitute a legal or equitable discharge of Borrowers' obligations
hereunder.
(vi) Obligations of L/C Issuers. Each L/C Issuer (other
than GE Capital) hereby agrees that it will not issue a Letter of Credit
hereunder until it has provided Agent with written notice specifying the amount
and intended issuance date of such Letter of Credit and Agent has returned a
written acknowledgment of such notice to L/C Issuer. Each L/C Issuer (other than
GE Capital) further agrees to provide to Agent: (a) a copy of each Letter of
Credit issued by such L/C Issuer promptly after its issuance; (b) a weekly
report summarizing available amounts under Letters of Credit issued by such L/C
Issuer, the dates and amounts of any draws under such Letters of Credit, the
effective date of any increase or decrease in the face amount of any Letters of
Credit during such week and the amount of any unreimbursed draws under such
Letters of Credit; and (c) such additional information reasonably requested by
Agent from time to time with respect to the Letters of Credit issued by such L/C
Issuer. Without limiting the generality of the foregoing, it is expressly
understood and agreed by Borrowers that the absolute and unconditional
obligation of Borrowers to Agent and Lenders hereunder to reimburse payments
made under a Letter of Credit will not be excused by the gross negligence or
willful misconduct of the L/C Issuer. However, the foregoing shall not be
construed to excuse an L/C Issuer from liability to Borrowers to the extent of
any direct damages (as opposed to consequential damages, with Borrowers hereby
waiving all claims for any consequential damages to the extent permitted by
applicable law)
4
suffered by Borrowers that are subject to indemnification under the Master
Standby Agreement or the Master Documentary Agreement.
(e) Funding Authorization. The proceeds of all Loans made
pursuant to this Agreement subsequent to the Closing Date are to be funded by
Agent by wire transfer to the account designated by Borrower Representative
below (the "Disbursement Account"):
Bank: Xxxxx Fargo
ABA No.: 000000000
Bank Address: 000 Xxxxxxxx Xxx., Xxxxxx, Xxxxx
Account No.: 4496864422
Account Name: GOLFSMITH INTERNATIONAL, L.P.
Borrower Representative shall provide Agent with written notice of any change in
the foregoing instructions at least three (3) Business Days before the desired
effective date of such change.
1.2. Interest and Applicable Margins.
(a) Borrowers shall pay interest to Agent, for the ratable
benefit of Lenders, in accordance with the Loans being made by each Lender, in
arrears on each applicable Interest Payment Date, at the following rates: with
respect to the Revolving Credit Advances which are designated as Index Rate
Loans, the Index Rate plus the Applicable Revolver Index Margin per annum or,
with respect to Revolving Credit Advances which are designated as LIBOR Loans,
at the election of Borrower Representative, the applicable LIBOR Rate plus the
Applicable Revolver LIBOR Margin per annum.
The Applicable Margins are as follows:
Applicable Revolver Index Margin 1.00%
Applicable Revolver LIBOR Margin 2.50%
Applicable L/C Margin 2.50%
(b) If any payment on any Loan becomes due and payable on a day
other than a Business Day, the maturity thereof will be extended to the next
succeeding Business Day (except as set forth in the definition of LIBOR Period)
and, with respect to payments of principal, interest thereon shall be payable at
the then applicable rate during such extension.
(c) All computations of Fees calculated on a per annum basis and
interest shall be made by Agent on the basis of a 360-day year, in each case for
the actual number of days occurring in the period for which such Fees and
interest are payable. The Index Rate is a floating rate determined for each day.
Each determination by Agent of an interest rate and Fees hereunder shall be
final, binding and conclusive on Borrowers, absent manifest error.
(d) So long as an Event of Default has occurred and is continuing
under Section 6.1(a), (f) or (g) and without notice of any kind, or so long as
any other Event of Default has occurred and is continuing and at the election of
Agent (or upon the written request of Requisite Lenders) confirmed by written
notice from Agent to Borrower Representative, the interest rates applicable to
the Loans and the Letter of Credit Fee shall be increased by two percentage
points (2%) per annum above the rates of interest or the rate of such Fee
otherwise applicable hereunder ("Default Rate") and all outstanding Obligations
shall bear interest at the Default Rate applicable to such Obligations. Interest
and Letter of
5
Credit Fees at the Default Rate shall accrue from the initial date of such Event
of Default until that Event of Default is cured or waived and shall be payable
upon demand, but in any event, shall be payable on the next regularly scheduled
payment date sate forth herein for such Obligation.
(e) Borrower Representative shall have the option to (i) request
that any Revolving Credit Advance be made as a LIBOR Loan, (ii) convert at any
time all or any part of outstanding Loans from Index Rate Loans to LIBOR Loans,
(iii) convert any LIBOR Loan to an Index Rate Loan, subject to payment of the
LIBOR Breakage Fee in accordance with Section 1.3(e) if such conversion is made
prior to the expiration of the LIBOR Period applicable thereto, or (iv) continue
all or any portion of any Loan as a LIBOR Loan upon the expiration of the
applicable LIBOR Period and the succeeding LIBOR Period of that continued Loan
shall commence on the first day after the last day of the LIBOR Period of the
Loan to be continued. Any Loan or group of Loans having the same proposed LIBOR
Period to be made or continued as, or converted into, a LIBOR Loan must be in a
minimum amount of $250,000 and integral multiples of $100,000 in excess of such
amount. Any such election must be made by 1:00 p.m. (New York time) on the 3rd
Business Day prior to (1) the date of any proposed Revolving Credit Advance
which is to bear interest at the LIBOR Rate, (2) the end of each LIBOR Period
with respect to any LIBOR Loans to be continued as such, or (3) the date on
which Borrower Representative wishes to convert any Index Rate Loan to a LIBOR
Loan for a LIBOR Period designated by Borrower Representative in such election.
If no election is received with respect to a LIBOR Loan by 1:00 p.m. (New York
time) on the 3rd Business Day prior to the end of the LIBOR Period with respect
thereto, that LIBOR Loan shall be converted to an Index Rate Loan at the end of
its LIBOR Period. Borrower Representative must make such election by notice to
Agent in writing, by fax or overnight courier. In the case of any conversion or
continuation, such election must be made pursuant to a written notice (a "Notice
of Conversion/Continuation") in the form of Exhibit 1.2(e). No Loan shall be
made, converted into or continued as a LIBOR Loan, if an Event of Default has
occurred and is continuing and Agent or Requisite Lenders have determined not to
make or continue any Loan as a LIBOR Loan as a result thereof.
(f) Notwithstanding anything to the contrary set forth in this
Section 1.2, if a court of competent jurisdiction determines in a final order
that the rate of interest payable hereunder exceeds the highest rate of interest
permissible under law (the "Maximum Lawful Rate"), then so long as the Maximum
Lawful Rate would be so exceeded, the rate of interest payable hereunder shall
be equal to the Maximum Lawful Rate; provided, however, that if at any time
thereafter the rate of interest payable hereunder is less than the Maximum
Lawful Rate, Borrowers shall continue to pay interest hereunder at the Maximum
Lawful Rate until such time as the total interest received by Agent, on behalf
of Lenders, is equal to the total interest that would have been received had the
interest rate payable hereunder been (but for the operation of this paragraph)
the interest rate payable since the Closing Date as otherwise provided in this
Agreement. Thereafter, interest hereunder shall be paid at the rate(s) of
interest and in the manner provided in Sections 1.2(a) through (e), unless and
until the rate of interest again exceeds the Maximum Lawful Rate, and at that
time this paragraph shall again apply. In no event shall the total interest
received by any Lender pursuant to the terms hereof exceed the amount that such
Lender could lawfully have received had the interest due hereunder been
calculated for the full term hereof at the Maximum Lawful Rate. If the Maximum
Lawful Rate is calculated pursuant to this paragraph, such interest shall be
calculated at a daily rate equal to the Maximum Lawful Rate divided by the
number of days in the year in which such calculation is made. If,
notwithstanding the provisions of this Section 1.2(f), a court of competent
jurisdiction shall determine by a final, non-appealable order that a Lender has
received interest hereunder in excess of the Maximum Lawful Rate, Agent shall,
to the extent permitted by applicable law, promptly apply such excess as
specified in Section 1.5(e) and thereafter shall refund any excess to Borrowers
or as such court of competent jurisdiction may otherwise order.
6
1.3. Fees.
(a) Fee Letter. Borrowers shall pay to GE Capital, individually,
the Fees specified in that certain fee letter dated as of October 7, 2002,
between First Atlantic Capital, Ltd. and GE Capital (as may be amended from time
to time, the "GE Capital Fee Letter"), at the times specified for payment
therein.
(b) Unused Line Fee. As additional compensation for the Revolving
Lenders, Borrowers shall pay to Agent, for the ratable benefit of such Lenders,
in arrears, on the first Business Day of each month prior to the Commitment
Termination Date and on the Commitment Termination Date, a fee for Borrowers'
non-use of available funds in an amount equal to one half of one percent (0.50%)
per annum multiplied by the difference between (x) the Maximum Amount (as it may
be reduced from time to time) and (y) the average for the period of the daily
closing balances of the Revolving Loan outstanding during the period for which
such Fee is due.
(c) (Intentionally Omitted).
(d) Letter of Credit Fee. Borrowers agree to pay to Agent for the
benefit of Revolving Lenders, as compensation to such Revolving Lenders for
Letter of Credit Obligations incurred hereunder, (i) all costs and expenses
incurred by Agent or any Lender on account of such Letter of Credit Obligations,
and (ii) for each month during which any Letter of Credit Obligation shall
remain outstanding, a fee (the "Letter of Credit Fee") in an amount equal to the
Applicable L/C Margin from time to time in effect multiplied by the maximum
amount available from time to time to be drawn under the applicable Letter of
Credit. Such fee shall be paid to Agent for the benefit of the Revolving Lenders
in arrears, on the first Business Day of each month and on the Commitment
Termination Date. In addition, Borrowers shall pay to any L/C Issuer, on demand,
such fees (including all per annum fees), charges and expenses of such L/C
Issuer in respect of the issuance, negotiation, acceptance, amendment, transfer
and payment of such Letter of Credit or otherwise payable pursuant to the
application and related documentation under which such Letter of Credit is
issued.
(e) LIBOR Breakage Fee. Upon (i) any default by any Borrower in
making any borrowing of, conversion into or continuation of any LIBOR Loan
following Borrower Representative's delivery to Agent of any LIBOR Loan request
in respect thereof or (ii) any payment of a LIBOR Loan on any day that is not
the last day of the LIBOR Period applicable thereto (regardless of the source of
such prepayment and whether voluntary, by acceleration or otherwise), Borrowers
shall pay Agent, for the benefit of all Lenders that funded or were prepared to
fund any such LIBOR Loan, the LIBOR Breakage Fee.
(f) (Intentionally Omitted).
(g) Expenses and Attorneys' Fees. Borrowers agree to promptly pay
all fees, charges, costs and expenses (including reasonable attorneys' fees and
expenses and the allocated cost of internal legal staff) incurred by Agent in
connection with any matters contemplated by or arising out of the Loan
Documents, in connection with the examination, review, due diligence
investigation, documentation, negotiation, closing and syndication of the
transactions contemplated herein and in connection with the continued
administration of the Loan Documents including any amendments, modifications,
consents and waivers. Borrowers agree to promptly pay reasonable documentation
charges assessed by Agent for amendments, waivers, consents and any of the
documentation prepared by Agent's internal legal staff. Borrowers agree to
promptly pay all fees, charges, costs and expenses (including fees, charges,
costs and expenses of attorneys, auditors (whether internal or external),
appraisers, consultants and advisors and the allocated cost of internal legal
staff) incurred by Agent in connection with any Event
7
of Default, work-out or action to enforce any Loan Document or to collect any
payments due from Borrowers or any other Credit Party. In addition, in
connection with any work-out or action to enforce any Loan Document or to
collect any payments due from Borrowers or any other Credit Party, Borrowers
agree to promptly pay all fees, charges, costs and expenses incurred by Lenders
for one (1) counsel acting for all Lenders other than Agent. All fees, charges,
costs and expenses for which Borrowers are responsible under this Section 1.3(g)
shall be deemed part of the Obligations when incurred, payable upon demand or in
accordance with the final sentence of Section 1.4 and secured by the Collateral.
1.4. Payments. All payments by Borrowers of the Obligations shall be
without deduction, defense, setoff or counterclaim and shall be made in same day
funds and delivered to Agent, for the benefit of Agent and Lenders, as
applicable, by wire transfer to the following account or such other place as
Agent may from time to time designate in writing.
ABA No. 000-000-000
Account Number 000-000-00
Bankers Trust Company
New York, New York
ACCOUNT NAME: GECC/CAF DEPOSITORY
Reference: GE Capital re Golfsmith
Borrowers shall receive credit on the day of receipt for funds received by Agent
by 2:00 p.m. (New York time). In the absence of timely receipt, such funds shall
be deemed to have been paid on the next Business Day. Whenever any payment to be
made hereunder shall be stated to be due on a day that is not a Business Day,
the payment may be made on the next succeeding Business Day and such extension
of time shall be included in the computation of the amount of interest and Fees
due hereunder.
Borrowers hereby authorize Lenders to make Revolving Credit Advances, on
the basis of their Pro Rata Shares, for the payment of Scheduled Installments,
interest, Fees and expenses, Letter of Credit reimbursement obligations and any
amounts required to be deposited with respect to outstanding Letter of Credit
Obligations pursuant to Sections 1.5(g) or 6.3.
1.5. Prepayments.
(a) Voluntary Prepayments of Loans. At any time, Borrowers may
prepay the Loans, in whole or in part, without premium or penalty subject to the
payment of LIBOR Breakage Fees, if applicable.
(b) (Intentionally Omitted).
(c) (Intentionally Omitted).
(d) (Intentionally Omitted).
(e) Application of Proceeds. Prepayments made by any Borrower
pursuant to Section 1.5(a) shall be applied to the Revolving Credit Advances
outstanding to that Borrower until the same have been repaid in full but not as
a permanent reduction of the Revolving Loan Commitment. Any such prepayment
shall be applied first to Index Rate Loans of the type required to be prepaid
before application to LIBOR Loans of the type required to be prepaid, in each
case in a manner which minimizes any resulting LIBOR Breakage Fee.
8
(f) Application of Prepayments from Insurance Proceeds.
Prepayments from insurance in accordance with Section 2.2 or condemnation
proceeds shall be applied to the Revolving Credit Advances of the Borrower that
incurred such casualties with losses but not as a permanent reduction of the
Revolving Loan Commitment.
(g) Letter of Credit Obligations. In the event any Letters of
Credit are outstanding at the time that the Revolving Loan Commitment is
terminated, Borrowers shall (1) deposit with Agent for the benefit of all
Revolving Lenders cash in an amount equal to 105% of the aggregate outstanding
Letter of Credit Obligations to be available to Agent to reimburse payments of
drafts drawn under such Letters of Credit and pay any Fees and expenses related
thereto and (2) prepay the fee payable under Section 1.3(d) with respect to such
Letters of Credit for the full remaining terms of such Letters of Credit. Upon
termination of any such Letter of Credit, the unearned portion of such prepaid
fee attributable to such Letter of Credit shall be refunded to Borrowers.
1.6. Maturity. All of the Obligations shall become due and payable as
otherwise set forth herein, but in any event all of the remaining Obligations
shall become due and payable upon termination of this Agreement. Until all
Obligations have been fully paid and satisfied (other than contingent
indemnification obligations to the extent no unsatisfied claim has been
asserted), the Revolving Loan Commitment has been terminated and all Letters of
Credit have been terminated or otherwise secured to the satisfaction of Agent,
Agent shall be entitled to retain the security interests in the Collateral
granted under the Collateral Documents and the ability to exercise all rights
and remedies available to them under the Loan Documents and applicable laws.
Notwithstanding anything contained in this Agreement to the contrary, upon any
termination of the Revolving Loan Commitment, all of the Obligations shall be
immediately due and payable.
1.7. Eligible Accounts. All of the Accounts owned by each Borrower and
reflected in the most recent Borrowing Base Certificate delivered by each
Borrower to Agent shall be "Eligible Accounts" for purposes of this Agreement,
except any Account to which any of the exclusionary criteria set forth below
applies. Agent shall have the right to establish or modify or eliminate Reserves
against Eligible Accounts from time to time in its reasonable credit judgment.
In addition, Agent reserves the right, at any time and from time to time after
the Closing Date, to adjust any of the criteria set forth below, to establish
new criteria and to adjust advance rates with respect to Eligible Accounts, in
its reasonable credit judgment, subject to the approval of Supermajority
Revolving Lenders in the case of adjustments or new criteria or changes in
advance rates which have the effect of making more credit available. Eligible
Accounts shall not include any Account of any Borrower:
(a) that does not arise from the sale of goods or the performance
of services by such Borrower in the ordinary course of its business;
(b) (i) upon which such Borrower's right to receive payment is
not absolute or is contingent upon the fulfillment of any condition whatsoever
or (ii) as to which such Borrower is not able to bring suit or otherwise enforce
its remedies against the Account Debtor through judicial process, or (iii) if
the Account represents a progress billing consisting of an invoice for goods
sold or used or services rendered pursuant to a contract under which the Account
Debtor's obligation to pay that invoice is subject to such Borrower's completion
of further performance under such contract or is subject to the equitable lien
of a surety bond issuer;
(c) to the extent that any defense, counterclaim, setoff or
dispute is asserted as to such Account;
9
(d) that is not a true and correct statement of bona fide
indebtedness incurred in the amount of the Account for merchandise sold to or
services rendered and accepted by the applicable Account Debtor;
(e) with respect to which an invoice, reasonably acceptable to
Agent in form and substance, has not been sent to the applicable Account Debtor;
(f) that (i) is not owned by such Borrower or (ii) is subject to
any right, claim, security interest or other interest of any other Person, other
than Liens in favor of Agent or the Trustee, on behalf of itself and Lenders;
(g) that arises from a sale to any director, officer, other
employee or Affiliate of any Credit Party, or to any entity that has any common
officer or director with any Credit Party;
(h) that is the obligation of an Account Debtor that is the
United States government or a political subdivision thereof, or any state,
county or municipality or department, agency or instrumentality thereof unless
Agent, in its sole discretion, has agreed to the contrary in writing and such
Borrower, if necessary or desirable, has complied with respect to such
obligation with the Federal Assignment of Claims Act of 1940, or any applicable
state, county or municipal law restricting the assignment thereof with respect
to such obligation;
(i) that is the obligation of an Account Debtor located in a
foreign country other than Canada unless payment thereof is assured by a letter
of credit assigned and delivered to Agent, satisfactory to Agent as to form,
amount and issuer;
(j) to the extent such Borrower or any Subsidiary thereof is
liable for goods sold or services rendered by the applicable Account Debtor to
such Borrower or any Subsidiary thereof but only to the extent of the potential
offset;
(k) that arises with respect to goods that are delivered on a
xxxx-and-hold, credit hold, cash-on-delivery basis or placed on consignment,
guaranteed sale or other terms by reason of which the payment by the Account
Debtor is or may be conditional;
(l) that is in default; provided, that, without limiting the
generality of the foregoing, an Account shall be deemed in default upon the
occurrence of any of the following:
(i) the Account is not paid within the earlier of: 60 days
following its due date or 90 days following its original invoice date;
(ii) the Account Debtor obligated upon such Account
suspends business, makes a general assignment for the benefit of creditors or
fails to pay its debts generally as they come due; or
(iii) a petition is filed by or against any Account Debtor
obligated upon such Account under any bankruptcy law or any other federal, state
or foreign (including any provincial) receivership, insolvency relief or other
law or laws for the relief of debtors;
(m) that is the obligation of an Account Debtor if 50% or more of
the Dollar amount of all Accounts owing by that Account Debtor are ineligible
under the other criteria set forth in this Section 1.7;
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(n) as to which Agent's Lien thereon, on behalf of itself and
Lenders, is not a first priority perfected Lien;
(o) as to which any of the representations or warranties in the
Loan Documents are untrue;
(p) to the extent such Account is evidenced by a judgment,
Instrument or Chattel Paper;
(q) to the extent such Account exceeds any credit limit
established by Agent, in its reasonable credit judgment;
(r) to the extent that such Account, together with all other
Accounts owing to such Account Debtor and its Affiliates as of any date of
determination exceed 10% of all Eligible Accounts of all Borrowers;
(s) that is payable in any currency other than Dollars; or
(t) that is otherwise unacceptable to Agent in its reasonable
credit judgment.
1.8. Eligible Inventory. All of the Inventory owned by the Borrowers and
reflected in the most recent Borrowing Base Certificate delivered by each
Borrower to Agent shall be "Eligible Inventory" for purposes of this Agreement,
except any Inventory to which any of the exclusionary criteria set forth below
applies. Agent shall have the right to establish, modify, or eliminate Reserves
against Eligible Inventory from time to time in its reasonable credit judgment.
In addition, Agent reserves the right, at any time and from time to time after
the Closing Date, to adjust any of the criteria set forth below, to establish
new criteria and to adjust advance rates with respect to Eligible Inventory in
its reasonable credit judgment, subject to the approval of Supermajority
Revolving Lenders in the case of adjustments or new criteria or changes in
advance rates which have the effect of making more credit available. Eligible
Inventory shall not include any Inventory of any Borrower that:
(a) is not owned by such Borrower free and clear of all Liens and
rights of any other Person (including the rights of a purchaser that has made
progress payments and the rights of a surety that has issued a bond to assure
such Borrower's performance with respect to that Inventory), except the Liens in
favor of Agent, on behalf of itself and Lenders and Liens in favor of the
Trustee;
(b) (i) is not located on premises owned, leased or rented by
such Borrower and set forth in Disclosure Schedule (5.12) or (ii) is stored at a
leased location, unless Agent has given its prior consent thereto and unless on
or after the ninetieth (90th) day following the Closing Date (x) a reasonably
satisfactory landlord waiver has been delivered to Agent, or (y) Reserves
satisfactory to Agent have been established with respect thereto, (iii) is
stored with a bailee or warehouseman unless a reasonably satisfactory,
acknowledged bailee letter has been received by Agent and Reserves reasonably
satisfactory to Agent have been established with respect thereto, or (iv) is
located at an owned location subject to a mortgage in favor of a lender other
than Agent, unless a reasonably satisfactory mortgagee waiver has been delivered
to Agent, or (v) is located at any site if the aggregate book value of Inventory
at any such location is less than $100,000;
(c) is placed on consignment or is in transit, except for
Inventory in transit between domestic locations of Credit Parties as to which
Agent's Liens have been perfected at origin and destination;
11
(d) is covered by a negotiable document of title, unless such
document has been delivered to Agent with all necessary endorsements, free and
clear of all Liens except those in favor of Agent and Lenders;
(e) is used (other than trade-ins and other than returns that
have been restocked and can be resold as new), excess, obsolete, unsaleable,
shopworn, seconds, damaged or unfit for sale;
(f) consists of display items or packing or shipping materials,
manufacturing supplies, work-in-process Inventory or replacement parts
(excluding from the foregoing, however, readily saleable golf club components);
(g) consists of goods which have been returned by the buyer
(other than trade-ins and other than returns that have been restocked and can be
resold as new);
(h) is not of a type held for sale in the ordinary course of such
Borrower's business;
(i) is not subject to a first priority lien in favor of Agent on
behalf of itself and Lenders subject to Permitted Encumbrances;
(j) breaches any of the representations or warranties pertaining
to Inventory set forth in the Loan Documents;
(k) consists of any costs associated with "freight-in" charges;
(l) consists of Hazardous Materials or goods that can be
transported or sold only with licenses that are not readily available;
(m) is not covered by casualty insurance reasonably acceptable to
Agent; or
(n) may not be sold without violation or infringement of the
intellectual property rights of others; or
(o) is otherwise unacceptable to Agent in its reasonable credit
judgment.
1.9. Loan Accounts. Agent shall maintain a loan account (the "Loan
Account") on its books to record: all Advances, all payments made by Borrowers,
and all other debits and credits as provided in this Agreement with respect to
the Loans or any other Obligations. All entries in the Loan Account shall be
made in accordance with Agent's customary accounting practices as in effect from
time to time. The balance in the Loan Account, as recorded on Agent's most
recent printout or other written statement, shall, absent manifest error, be
presumptive evidence of the amounts due and owing to Agent and Lenders by
Borrowers; provided that any failure to so record or any error in so recording
shall not limit or otherwise affect any Borrower's duty to pay the Obligations.
Agent shall render to Borrower Representative a monthly accounting of
transactions with respect to the Loans setting forth the balance of the Loan
Account as to each Borrower for the immediately preceding month. Unless Borrower
Representative notifies Agent in writing of any objection to any such accounting
(specifically describing the basis for such objection), within thirty (30) days
after the date thereof, each and every such accounting shall, absent manifest
error, be deemed final, binding and conclusive on Borrowers in all respects as
to all matters reflected therein. Only those items expressly objected to in such
notice shall be deemed to be disputed by Borrowers. Notwithstanding any
provision herein contained to the contrary, any Lender may elect (which election
may be revoked) to dispense with the issuance of Notes to that Lender and may
rely on the Loan Account as evidence of the amount of Obligations from time to
time owing to it.
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1.10. Yield Protection; Illegality.
(a) Capital Adequacy and Other Adjustments. In the event that any
Lender shall have determined that the adoption after the date hereof of any law,
treaty, governmental (or quasi-governmental) rule, regulation, guideline or
order regarding capital adequacy, reserve requirements or similar requirements
or compliance by any Lender or any corporation controlling such Lender with any
request or directive regarding capital adequacy, reserve requirements or similar
requirements (whether or not having the force of law and whether or not failure
to comply therewith would be unlawful) from any central bank or governmental
agency or body having jurisdiction does or shall have the effect of increasing
the amount of capital, reserves or other funds required to be maintained by such
Lender or any corporation controlling such Lender and thereby reducing the rate
of return on such Lender's or such corporation's capital as a consequence of its
obligations hereunder, then Borrowers shall from time to time within fifteen
(15) days after notice and demand from such Lender (together with the
certificate referred to in the next sentence and with a copy to Agent) pay to
Agent, for the account of such Lender, additional amounts sufficient to
compensate such Lender for such reduction. A certificate as to the amount of
such cost and showing the basis of the computation of such cost submitted by
such Lender to Borrower Representative and Agent shall, absent manifest error,
be final, conclusive and binding for all purposes.
(b) Increased LIBOR Funding Costs; Illegality. Notwithstanding
anything to the contrary contained herein, if the introduction of or any change
in any law, rule, regulation, treaty or directive (or any change in the
interpretation thereof) shall make it unlawful, or any central bank or other
Governmental Authority shall assert that it is unlawful, for any Lender to agree
to make or to make or to continue to fund or maintain any LIBOR Loan, then,
unless that Lender is able to make or to continue to fund or to maintain such
LIBOR Loan at another branch or office of that Lender without, in that Lender's
opinion, adversely affecting it or its Loans or the income obtained therefrom,
on notice thereof and demand therefor by such Lender to Borrower Representative
through Agent, (i) the obligation of such Lender to agree to make or to make or
to continue to fund or maintain LIBOR Loans shall terminate and (ii) each
Borrower shall forthwith prepay in full all outstanding LIBOR Loans owing by
such Borrower to such Lender, together with interest accrued thereon, unless
Borrower Representative on behalf of such Borrower, within five (5) Business
Days after the delivery of such notice and demand, converts all LIBOR Loans into
Index Rate Loans. If, after the date hereof, the introduction of, change in or
interpretation of any law, rule, regulation, treaty or directive would impose or
increase reserve requirements (other than as taken into account in the
definition of LIBOR) or otherwise increase the cost to any Lender of making or
maintaining a LIBOR Loan, then Borrowers shall from time to time within fifteen
(15) days after notice and demand from Agent to Borrower Representative
(together with the certificate referred to in the next sentence) pay to Agent,
for the account of all such affected Lenders, additional amounts sufficient to
compensate such Lenders for such increased cost. A certificate as to the amount
of such cost and showing the basis of the computation of such cost submitted by
Agent on behalf of all such affected Lenders to Borrower Representative shall,
absent manifest error, be final, conclusive and binding for all purposes.
1.11. Taxes.
(a) No Deductions. Any and all payments or reimbursements made
hereunder (including any payments made pursuant to Section 10) or under the
Notes shall be made free and clear of and without deduction for any and all
Charges, taxes, levies, imposts, deductions or withholdings, and all liabilities
with respect thereto of any nature whatsoever imposed by any taxing authority,
excluding such taxes to the extent imposed on Agent's or a Lender's net income
by the jurisdiction in which Agent or such Lender is organized. If any Borrower
shall be required by law to deduct any such amounts from or in respect of any
sum payable hereunder to any Lender or Agent, then the sum payable hereunder
shall be
13
increased as may be necessary so that, after making all required deductions,
such Lender or Agent receives an amount equal to the sum it would have received
had no such deductions been made.
(b) Changes in Tax Laws. In the event that, subsequent to the
Closing Date, (1) any changes in any existing law, regulation, treaty or
directive or in the interpretation or application thereof, (2) any new law,
regulation, treaty or directive enacted or any interpretation or application
thereof, or (3) compliance by Agent or any Lender with any request or directive
(whether or not having the force of law) from any Governmental Authority:
(i) does or shall subject Agent or any Lender to any tax
of any kind whatsoever with respect to this Agreement, the other Loan Documents
or any Loans made or Letters of Credit issued hereunder, or change the basis of
taxation of payments to Agent or such Lender of principal, fees, interest or any
other amount payable hereunder (except for net income taxes, or franchise taxes
imposed in lieu of net income taxes, imposed generally by federal, state or
local taxing authorities with respect to interest or commitment Fees or other
Fees payable hereunder or changes in the rate of tax on the overall net income
of Agent or such Lender); or
(ii) does or shall impose on Agent or any Lender any other
condition or increased cost in connection with the transactions contemplated
hereby or participations herein;
and the result of any of the foregoing is to increase the cost to Agent or any
such Lender of issuing any Letter of Credit or making or continuing any Loan
hereunder, as the case may be, or to reduce any amount receivable hereunder,
then, in any such case, Borrowers shall promptly pay to Agent or such Lender,
upon its demand, any additional amounts necessary to compensate Agent or such
Lender, on an after-tax basis, for such additional cost or reduced amount
receivable, as determined by Agent or such Lender with respect to this Agreement
or the other Loan Documents. If Agent or such Lender becomes entitled to claim
any additional amounts pursuant to this Section 1.11(b), it shall promptly
notify Borrower Representative of the event by reason of which Agent or such
Lender has become so entitled. A certificate as to any additional amounts
payable pursuant to the foregoing sentence submitted by Agent or such Lender to
Borrower Representative (with a copy to Agent) shall, absent manifest error, be
final, conclusive and binding for all purposes.
(c) Foreign Lenders. Each Lender organized under the laws of a
jurisdiction outside the United States (a "Foreign Lender") shall provide to
Borrower Representative and Agent a properly completed and executed IRS Form
W-8BEN or Form W-8ECI or other applicable form, certificate or document
prescribed by the IRS of the United States certifying as to such Foreign
Lender's entitlement to such exemption with respect to payments to be made to
such Foreign Lender under this Agreement and under the Notes (a "Certificate of
Exemption"). Prior to becoming a Lender under this Agreement and within fifteen
(15) days after a reasonable written request of Borrower Representative or Agent
from time to time thereafter, each Foreign Lender that becomes a Lender under
this Agreement shall provide a Certificate of Exemption to Borrower
Representative and Agent. If a Foreign Lender is entitled to an exemption with
respect to payments to be made to such Foreign Lender under this Agreement and
does not provide a Certificate of Exemption to Borrower Representative and Agent
within the time periods set forth in the preceding sentence, Borrowers shall
withhold taxes from payments to such Foreign Lender at the applicable statutory
rates and Borrowers shall not be required to pay any additional amounts as a
result of such withholding, provided that all such withholding shall cease upon
delivery by such Foreign Lender of a Certificate of Exemption to Borrower
Representative and Agent.
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1.12. (Intentionally Omitted).
1.13. Borrower Representative. Each Borrower hereby designates GII as
its representative and agent on its behalf (in such capacity, the "Borrower
Representative") for the purposes of issuing Notices of Revolving Credit
Advances and Notices of Conversion/Continuation, giving instructions with
respect to the disbursement of the proceeds of the Loans, selecting interest
rate options, requesting Letters of Credit, giving and receiving all other
notices and consents hereunder or under any of the other Loan Documents and
taking all other actions (including in respect of compliance with covenants) on
behalf of any Borrower or Borrowers under the Loan Documents. Borrower
Representative hereby accepts such appointment. Agent and each Lender may regard
any notice or other communication pursuant to any Loan Document from Borrower
Representative as a notice or communication from all Borrowers. Each warranty,
covenant, agreement and undertaking made on its behalf by Borrower
Representative shall be deemed for all purposes to have been made by such
Borrower and shall be binding upon and enforceable against such Borrower to the
same extent as it if the same had been made directly by such Borrower.
1.14. Credit Card Collections.
(a) Annexed hereto is Schedule 1.14, which describes all
arrangements to which the Credit Parties are a party as of the date of this
Agreement with respect to the payment to the Credit Parties of the proceeds of
all credit card charges for sales by the Credit Parties. Borrower Representative
may amend Schedule 1.14 so long as (i) such amendment occurs by written notice
to Agent not less than thirty (30) days prior to the date on which any new
arrangements are to be effective or any existing arrangements are to be
terminated, (ii) Agent is reasonably satisfied with any such arrangements, and
(iii) with respect to any new arrangement, Agent has received a notification of
such arrangement and is reasonably satisfied therewith.
(b) Payment of all credit card charges submitted by the Credit
Parties to credit card clearinghouses or other processors identified on Schedule
1.14 or otherwise and any other amounts payable to the Credit Parties by such
clearinghouses or other processors shall be directed to such deposit account as
may be designated by Agent.
SECTION 2.
AFFIRMATIVE COVENANTS
Each Credit Party executing this Agreement jointly and severally agrees
as to all Credit Parties that from and after the date hereof and until the
Termination Date:
2.1. Compliance With Laws and Contractual Obligations. Each Credit Party
will (a) comply with and shall cause each of its Subsidiaries to comply with (i)
the requirements of all applicable laws, rules, regulations and orders of any
Governmental Authority (including, without limitation, laws, rules, regulations
and orders relating to taxes, employer and employee contributions, securities,
employee retirement and welfare benefits, environmental protection matters and
employee health and safety) as now in effect and which may be imposed in the
future in all jurisdictions in which any Credit Party or any of its Subsidiaries
is now doing business or may hereafter be doing business and (ii) the
obligations, covenants and conditions contained in all Contractual Obligations
of such Credit Party or any of its Subsidiaries other than those laws, rules,
regulations, orders and provisions of such Contractual Obligations the
noncompliance with which could not be reasonably expected to have, either
individually or in the aggregate, a Material Adverse Effect, and (b) maintain or
obtain and shall cause each of its Subsidiaries to maintain or obtain all
licenses, qualifications and permits now held or hereafter required to be held
by such Credit Party or any of its Subsidiaries, for which the loss, suspension,
revocation or failure to obtain or renew, could reasonably be expected to have,
either individually or in the aggregate, a
15
Material Adverse Effect. This Section 2.1 shall not preclude any Credit Party or
its Subsidiaries from contesting any taxes or other payments, if they are being
diligently contested in good faith in a manner which stays enforcement thereof
and if appropriate expense provisions have been recorded in conformity with
GAAP, subject to Section 3.2. Each Credit Party represents and warrants that it
(i) is in compliance and each of its Subsidiaries is in compliance with the
requirements of all applicable laws, rules, regulations and orders of any
Governmental Authority and the obligations, covenants and conditions contained
in all Contractual Obligations other than those laws, rules, regulations, orders
and provisions of such Contractual Obligations the noncompliance with which
could not be reasonably expected to have, either individually or in the
aggregate, a Material Adverse Effect, and (ii) maintains and each of its
Subsidiaries maintains all licenses, qualifications and permits referred to
above.
2.2. Insurance; Damage to or Destruction of Collateral.
(a) The Credit Parties shall, at their sole cost and expense,
maintain the policies of insurance described on Schedule 5.18 as in effect on
the date hereof or otherwise in form and amounts and with insurers reasonably
acceptable to Agent. Such policies of insurance (or the loss payable and
additional insured endorsements delivered to Agent) shall contain provisions
pursuant to which the insurer agrees to provide 30 days prior written notice to
Agent in the event of any non-renewal, cancellation or amendment of any such
insurance policy. If any Credit Party at any time or times hereafter shall fail
to obtain or maintain any of the policies of insurance required above or to pay
all premiums relating thereto, Agent may at any time or times thereafter obtain
and maintain such policies of insurance and pay such premiums and take any other
action with respect thereto that Agent deems advisable. Agent shall have no
obligation to obtain insurance for any Credit Party or pay any premiums
therefor. By doing so, Agent shall not be deemed to have waived any Default or
Event of Default arising from any Credit Party's failure to maintain such
insurance or pay any premiums therefor. All sums so disbursed, including
reasonable attorneys' fees, court costs and other charges related thereto, shall
be payable on demand by Borrowers to Agent and shall be additional Obligations
hereunder secured by the Collateral.
(b) Agent reserves the right at any time upon any change in any
Credit Party's risk profile (including any change in the product mix maintained
by any Credit Party or any laws affecting the potential liability of such Credit
Party) to require additional forms and limits of insurance to, in Agent's
opinion, adequately protect both Agent's and Lenders' interests in all or any
portion of the Collateral and to ensure that each Credit Party is protected by
insurance in amounts and with coverage customary for its industry. If reasonably
requested by Agent, each Credit Party shall deliver to Agent from time to time a
report of a reputable insurance broker, reasonably satisfactory to Agent, with
respect to its insurance policies.
(c) Each Credit Party shall deliver to Agent, in form and
substance reasonably satisfactory to Agent, endorsements to (i) all "All Risk"
and business interruption insurance naming Agent, on behalf of itself and
Lenders, as loss payee, and (ii) all general liability and other liability
policies naming Agent, on behalf of itself and Lenders, as additional insured.
Each Credit Party irrevocably makes, constitutes and appoints Agent (and all
officers, employees or agents designated by Agent), so long as any Default or
Event of Default has occurred and is continuing or the anticipated insurance
proceeds exceed $100,000 per instance for any retail location or $250,000 per
instance for the headquarters facility located in Austin, Texas, as each Credit
Party's true and lawful agent and attorney-in-fact for the purpose of making,
settling and adjusting claims under such "All Risk" policies of insurance,
endorsing the name of each Credit Party on any check or other item of payment
for the proceeds of such "All Risk" policies of insurance and for making all
determinations and decisions with respect to such "All Risk" policies of
insurance; provided that no such appointment is made with respect to claims
arising from loss or destruction of or damage to Equipment or Fixtures. Agent
shall have no
16
duty to exercise any rights or powers granted to it pursuant to the foregoing
power-of-attorney. Each Credit Party shall promptly notify Agent of any loss,
damage, or destruction to the Collateral in the amount of $100,000 per instance
for any retail location or $250,000 per instance for the headquarters facility
located in Austin, Texas or more, whether or not covered by insurance. After
deducting from any insurance proceeds the expenses, if any, incurred by Agent in
the collection or handling thereof, Agent may, at its option, apply such
proceeds to the reduction of the Obligations in accordance with Section 1.5(f),
provided that in the case of insurance proceeds pertaining to any Credit Party
other than a Borrower, such insurance proceeds shall be applied to the Loans
owing by any Borrower, or permit or require the applicable Credit Party to use
such money, or any part thereof, to replace, repair or restore the Collateral in
a diligent and expeditious manner with materials and workmanship of
substantially the same quality as existed before the loss, damage or
destruction. Notwithstanding the foregoing, if the casualty giving rise to such
insurance proceeds could not reasonably be expected to have a Material Adverse
Effect and such insurance proceeds do not exceed $100,000 per instance for any
retail location or $250,000 per instance for the headquarters facility located
in Austin, Texas, Agent shall permit the applicable Credit Party to replace,
restore or repair the Collateral; provided that if such Credit Party has not
completed or entered into binding agreements to complete such replacement,
restoration or repair within 180 days of such casualty, Agent may apply such
insurance proceeds to the Obligations in accordance with Section 1.5(f);
provided further that in the case of insurance proceeds pertaining to any Credit
Party other than a Borrower, such insurance proceeds shall be applied to the
Loans owing by a Borrower. All insurance proceeds that are to be made available
to such Borrower to replace, repair or restore the Collateral shall be applied
by Agent to reduce the outstanding principal balance of the Revolving Loan
(which application shall not result in a permanent reduction of the Revolving
Loan Commitment) and upon such application, Agent shall establish a Reserve
against the Borrowing Base of such Borrower or if the loss was of property of a
Credit Party other than a Borrower, to the Aggregate Borrowing Base in an amount
equal to the amount of such proceeds so applied. All insurance proceeds made
available to any Credit Party that is not a Borrower to replace, repair or
restore Collateral shall be deposited in a cash collateral account. Thereafter,
such funds shall be made available to such Credit Party to provide funds to
replace, repair or restore the Collateral as follows: (i) such Borrower shall
request a Revolving Credit Advance or release from the cash collateral account
be made to such Borrower or such Credit Party, as applicable, in the amount
requested to be released; (ii) so long as the conditions set forth in Section
7.2 have been met, Revolving Lenders shall make such Revolving Credit Advance or
Agent shall release funds from the cash collateral account; and (iii) in the
case of insurance proceeds applied against the Revolving Loan, the Reserve
established with respect to such insurance proceeds shall be reduced by the
amount of such Revolving Credit Advance. To the extent not used to replace,
repair or restore the Collateral, such insurance proceeds shall be applied in
accordance with Section 1.5(f); provided that in the case of insurance proceeds
pertaining to any Credit Party other than a Borrower, such insurance proceeds
shall be applied to the Loans owing by a Borrower.
2.3. Inspection; Lender Meeting. Each Credit Party shall permit any
authorized representatives of Agent to visit, audit and inspect any of the
properties of such Credit Party and its Subsidiaries, including its and their
financial and accounting records, and to make copies and take extracts
therefrom, and to discuss its and their affairs, finances and business with its
and their officers and certified public accountants, at such reasonable times
during normal business hours and as often as may be reasonably requested.
Representatives of each Lender will be permitted to accompany representatives of
Agent during each visit, inspection and discussion referred to in the
immediately preceding sentence. Without in any way limiting the foregoing, each
Credit Party will participate and will cause key management personnel of each
Credit Party and its Subsidiaries to participate in a meeting with Agent and
Lenders at least once during each year, which meeting shall be held at such time
and such place as may be reasonably requested by Agent.
17
2.4. Organizational Existence. Except as otherwise permitted by Section
3.6, each Credit Party will and will cause its Subsidiaries to at all times
preserve and keep in full force and effect its organizational existence and all
rights and franchises material to its business.
2.5. Environmental Matters. Each Credit Party shall and shall cause each
Person within its control to: (a) conduct its operations and keep and maintain
its Real Estate in compliance with all Environmental Laws and Environmental
Permits other than noncompliance that could not reasonably be expected to have a
Material Adverse Effect; (b) implement any and all investigation, remediation,
removal and response actions that are appropriate or necessary to maintain the
value and marketability of the Real Estate or to otherwise comply with
Environmental Laws and Environmental Permits pertaining to the presence,
generation, treatment, storage, use, disposal, transportation or Release of any
Hazardous Material on, at, in, under, above, to, from or about any of its Real
Estate; (c) notify Agent promptly after such Credit Party or any Person within
its control becomes aware of any violation of Environmental Laws or
Environmental Permits or any Release on, at, in, under, above, to, from or about
any Real Estate that is reasonably likely to result in Environmental Liabilities
to a Credit Party or its Subsidiaries in excess of $25,000; and (d) promptly
forward to Agent a copy of any order, notice, request for information or any
communication or report received by such Credit Party or any Person within its
control in connection with any such violation or Release or any other matter
relating to any Environmental Laws or Environmental Permits that could
reasonably be expected to result in Environmental Liabilities, in each case
whether or not the Environmental Protection Agency or any Governmental Authority
has taken or threatened any action in connection with any such violation,
Release or other matter. If Agent at any time has a reasonable basis to believe
that there may be a violation of any Environmental Laws or Environmental Permits
by any Credit Party or any Person under its control or any Environmental
Liability arising thereunder, or a Release of Hazardous Materials on, at, in,
under, above, to, from or about any of its Real Estate, that, in each case,
could reasonably be expected to have a Material Adverse Effect, then each Credit
Party and its Subsidiaries shall, upon Agent's written request (i) cause the
performance of such environmental audits including subsurface sampling of soil
and groundwater, and preparation of such environmental reports, at Borrowers'
expense, as Agent may from time to time reasonably request, which shall be
conducted by reputable environmental consulting firms reasonably acceptable to
Agent and shall be in form and substance reasonably acceptable to Agent, and
(ii) permit Agent or its representatives to have access to all Real Estate for
the purpose of conducting such environmental audits and testing as Agent deems
appropriate, including subsurface sampling of soil and groundwater. Borrowers
shall reimburse Agent for the costs of such audits and tests and the same will
constitute a part of the Obligations secured hereunder.
2.6. Landlords' Agreements, Mortgagee Agreements, Bailee Letters and
Real Estate Purchases. Each Credit Party shall use reasonable efforts to obtain
a landlord's agreement, mortgagee agreement or bailee letter, as applicable,
from the lessor of each leased property, mortgagee of owned property or bailee
with respect to any warehouse, processor or converter facility or other location
where Collateral is stored or located, which agreement or letter shall contain a
waiver or subordination of all Liens or claims that the landlord, mortgagee or
bailee may assert against the Collateral at that location, and shall otherwise
be reasonably satisfactory in form and substance to Agent. With respect to such
locations or warehouse space leased or owned as of the Closing Date and
thereafter, if Agent has not received a landlord or mortgagee agreement or
bailee letter as of the Closing Date (or, if later, as of the date such location
is acquired or leased), the Eligible Inventory at that location shall, in
Agent's discretion, be subject to such Reserves as may be established by Agent
in its reasonable credit judgment; provided that no such Reserve shall be
established due to the absence of a landlord's agreement prior to the ninetieth
(90th) day following the Closing Date. After the Closing Date, no real property
or warehouse space shall be leased by any Credit Party or its Subsidiary and no
Inventory shall be shipped to a processor or converter under arrangements
established after the Closing Date without the prior written consent of Agent
(which consent, in Agent's discretion, may be conditioned upon the exclusion
from the
18
Borrowing Base of Eligible Inventory at that location or the establishment of
Reserves acceptable to Agent) or, unless and until a satisfactory landlord
agreement or bailee letter, as appropriate, shall first have been obtained with
respect to such location; provided, further, that the foregoing shall not apply
to the Lincoln Park (Chicago) and Buckhead (Atlanta) store locations scheduled
to open shortly following the Closing Date if the relevant Credit Party in each
such case delivers a landlord's agreement prior to the ninetieth (90th) day
following the date on which such location opens for business. Each Credit Party
shall and shall cause its Subsidiaries to timely and fully pay and perform their
obligations under all leases and other agreements with respect to each leased
location or public warehouse where any Collateral is or may be located. The
Inter-Creditor Agreement shall constitute a mortgagee's agreement as to the
mortgages or deeds of trust held by the Trustee.
2.7. Conduct of Business. Each Credit Party shall at all times maintain,
preserve and protect all of its assets and properties used or useful in the
conduct of its business, and keep the same in good repair, working order and
condition in all material respects (taking into consideration ordinary wear and
tear) and from time to time make, or cause to be made, all necessary or
appropriate repairs, replacements and improvements thereto consistent with
industry practices; and transact business only in such corporate and trade names
as are set forth in Schedule 2.7.
2.8. Further Assurances.
(a) Each Credit Party shall, from time to time, execute such
guaranties, financing statements, documents, security agreements and reports as
Agent or Requisite Lenders at any time may reasonably request to evidence,
perfect or otherwise implement the guaranties and security for repayment of the
Obligations contemplated by the Loan Documents.
(b) (Intentionally Omitted).
(c) Each Credit Party shall (i) cause each Person, upon its
becoming a Subsidiary of such Credit Party (provided that this shall not be
construed to constitute consent by any of the Lenders to any transaction
referred to above which is not expressly permitted by the terms of this
Agreement), promptly to guaranty the Obligations and to grant to Agent, for the
benefit of Agent and Lenders, a security interest in the personal property
(other than Equipment and Fixtures) of such Person to secure the Obligations,
(ii) pledge, or cause to be pledged, to Agent, for the benefit of Agent and
Lenders, all of the Stock of such Subsidiary to secure the Obligations (limited,
however, in the case of any Foreign Subsidiary, to 65% of the Voting Stock, and
all other Stock, of such Subsidiary) and (iii) cause such Subsidiary to become a
party to the Intercompany Subordination Agreement, the Inter-Creditor Agreement
and, as a Credit Party, this Agreement. The documentation for such guaranty,
security and pledge shall be substantially similar to the Loan Documents
executed concurrently herewith with such modifications as are reasonably
requested by Agent.
2.9. (Intentionally Omitted).
2.10. Cash Management Systems. On or prior to the Closing Date each
Credit Party shall establish and will maintain until the Termination Date, the
cash management systems described in Annex F (the "Cash Management Systems").
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SECTION 3.
NEGATIVE COVENANTS
Each Credit Party executing this Agreement jointly and severally agrees
as to all Credit Parties that from and after the date hereof until the
Termination Date:
3.1. Indebtedness. The Credit Parties shall not and shall not cause or
permit their Subsidiaries directly or indirectly to create, incur, assume, or
otherwise become or remain directly or indirectly liable with respect to any
Indebtedness (other than pursuant to a Contingent Obligation permitted under
Section 3.4) except:
(a) the Obligations;
(b) Indebtedness consisting of intercompany loans and advances
made by any Borrower to any Credit Party, other than Holdings, that is a
Borrower or Guarantor or by such Guarantor to any Borrower or other Guarantor;
provided, that: (i) (x) except in the case of unpaid amounts for intercompany
sales of inventory in the ordinary course of business, such Borrower shall have
executed and delivered to each such Guarantor, and each such Guarantor shall
have executed and delivered to such Borrower, on the Closing Date, a demand note
(collectively, the "Intercompany Notes") to evidence any such intercompany
Indebtedness owing at any time by such Borrower to such Guarantor or by such
Guarantor to such Borrower, which Intercompany Notes shall be in form and
substance reasonably satisfactory to Agent and shall be pledged and delivered to
Agent pursuant to the applicable Pledge Agreement or Security Agreement as
additional collateral security for the Obligations or (y) such Borrower need not
have executed such an Intercompany Note if the subject Intercompany Indebtedness
arises under an Intercompany Management Agreement; (ii) such Borrower shall
record all intercompany transactions on its books and records in a manner
reasonably satisfactory to Agent; (iii) the obligations of such Borrower under
any such Intercompany Notes or an Intercompany Management Agreement shall be
subordinated to the Obligations of such Borrower hereunder pursuant to the
Intercompany Subordination Agreement; (iv) at the time any such intercompany
loan or advance is made by such Borrower and after giving effect thereto, such
Borrower shall be Solvent; (v) no Default or Event of Default would occur and be
continuing after giving effect to any such proposed intercompany loan; (vi) in
the case of any such intercompany loans made by such Borrower, such Borrower
shall have Borrowing Availability based on its own Borrowing Base of not less
than $500,000 after giving effect to such intercompany loan; (vii) the aggregate
amount of such intercompany loans owing by Borrowers to all other Credit Parties
shall not exceed $2,500,000 at any one time outstanding; (viii) the aggregate
balance of all such intercompany loans owing to Borrowers and Guarantors shall
not exceed $3,500,000 at any time; and (ix) the recipient of any such
intercompany loans shall be creditworthy as determined by Agent;
(c) Indebtedness the Credit Parties rising under the Senior
Notes, less all payments and prepayments of principal thereunder (excluding any
exchange of the original Senior Notes for "Exchange Notes" (as such term is
defined in the Indenture));
(d) Indebtedness not to exceed $3,000,000 in the aggregate at any
time outstanding secured by purchase money Liens or incurred with respect to
Capital Leases;
(e) any other unsecured Indebtedness not to exceed $1,000,000 in
the aggregate at any time outstanding; and
(f) the guarantee of Indebtedness owing by Golfsmith Europe in
connection with financing obtained by Golfsmith Europe from a non-Affiliate as
long as such guarantor is the Credit Party
20
that is the owner of the Stock of Golfsmith Europe and recourse under such
guarantee is limited to the Stock of Golfsmith Europe pledged by such Credit
Party to secure such guarantee.
3.2. Liens and Related Matters.
(a) No Liens. The Credit Parties shall not and shall not cause or
permit their Subsidiaries to directly or indirectly create, incur, assume or
permit to exist any Lien on or with respect to any property or asset of such
Credit Party or any such Subsidiary, whether now owned or hereafter acquired, or
any income or profits therefrom, except Permitted Encumbrances (including,
without limitation, those Liens constituting Permitted Encumbrances existing on
the date hereof and renewals and extensions thereof, as set forth on Schedule
3.2).
(b) No Negative Pledges. The Credit Parties shall not and shall
not cause or permit their Subsidiaries to directly or indirectly enter into or
assume any agreement (other than the Loan Documents and, as in effect on the
date hereof, the Indenture) prohibiting the creation or assumption of any Lien
upon its properties or assets, whether now owned or hereafter acquired.
(c) No Restrictions on Subsidiary Distributions to Borrowers.
Except as provided herein and, as in effect on the date hereof, the Indenture,
the Credit Parties shall not and shall not cause or permit their Subsidiaries to
directly or indirectly create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction of any kind on the ability
of any such Subsidiary to: (1) pay dividends or make any other distribution on
any of such Subsidiary's Stock owned by any Borrower or any other Subsidiary;
(2) pay any Indebtedness owed to any Borrower or any other Subsidiary; (3) make
loans or advances to any Borrower or any other Subsidiary; or (4) transfer any
of its property or assets to any Borrower or any other Subsidiary.
3.3. Investments. The Credit Parties shall not and shall not cause or
permit their Subsidiaries to directly or indirectly make or own any Investment
in any Person except:
(a) GII and its Subsidiaries may make and own Investments in Cash
Equivalents subject to Control Agreements in favor of Agent; provided that such
Cash Equivalents are not subject to setoff rights;
(b) GII and its Subsidiaries may make intercompany loans to other
Credit Parties to the extent permitted under Section 3.1;
(c) GII and its Subsidiaries may make loans and advances to
employees for moving, entertainment, travel and other similar expenses in the
ordinary course of business not to exceed $250,000 in the aggregate at any time
outstanding; and
(d) GII and its Subsidiaries may make capital contributions to
their wholly-owned Domestic Subsidiaries in an amount not to exceed $250,000 in
the aggregate in addition to the amount of Investments made pursuant to Section
3.1(b);
(e) Any Credit Party may make an Investment in Golfsmith Europe;
provided that the aggregate amount of such Investments does not exceed
$1,500,000 during any Fiscal Year or $5,000,000 at any time; and
(f) Any Credit Party may acquire Inventory from bankruptcy
estates, if such Inventory (i) is in good condition and salable as new in
accordance with such Credit Party's normal practices, (ii) is acquired by such
Credit Party free and clear of any Liens and claims of others and (iii) is
21
acquired by such Credit Party on terms that are commercially reasonable or
advantageous to such Credit Party and do not impose any burdensome condition or
restriction on such Credit Party.
3.4. Contingent Obligations. The Credit Parties shall not and shall not
cause or permit their Subsidiaries to directly or indirectly create or become or
be liable with respect to any Contingent Obligation except:
(a) Letter of Credit Obligations;
(b) Indebtedness of Holdings and Domestic Subsidiaries of GII in
respect of guaranties of the Senior Notes;
(c) those resulting from endorsement of negotiable instruments
for collection in the ordinary course of business;
(d) those existing on the Closing Date and described in Schedule
3.4;
(e) those arising under indemnity agreements to title insurers to
cause such title insurers to issue to Agent mortgagee title insurance
policies;
(f) those arising with respect to customary indemnification
obligations incurred in connection with Asset Dispositions permitted
hereunder;
(g) those incurred in the ordinary course of business with
respect to surety and appeal bonds, performance and return-of-money
bonds and other similar obligations not exceeding at any time
outstanding $250,000 in aggregate liability;
(h) those incurred with respect to Indebtedness permitted by
Section 3.1 provided that any such Contingent Obligation is subordinated
to the Obligations to the same extent as the Indebtedness to which it
relates is subordinated to the Obligations;
(i) those arising under the Acquisition Agreement, whether for
indemnification, purchase price adjustments, compensation or otherwise;
and
(j) any other Contingent Obligation not expressly permitted by
clauses (a) through (i) above, so long as any such other Contingent
Obligations, in the aggregate at any time outstanding, do not exceed
$250,000.
3.5. Restricted Payments. The Credit Parties shall not and shall not
cause or permit their Subsidiaries to directly or indirectly declare, order,
pay, make or set apart any sum for any Restricted Payment, except that:
(a) GII may pay dividends to Holdings that are used by Holdings
to pay federal and state income taxes then due and owing, franchise
taxes and other similar licensing expenses incurred in the ordinary
course of business; provided that GII's aggregate contribution to taxes
as a result of the filing of a consolidated or combined return by
Holdings shall not be greater, nor the aggregate receipt of tax benefits
less, than they would have been had GII not filed a consolidated or
combined return with Holdings;
(b) Wholly-owned Subsidiaries of GII may make Restricted Payments
to GII or to a wholly-owned Subsidiary of GII;
22
(c) GII may pay fees due to First Atlantic on the Closing Date,
annual management fees and reasonable out-of-pocket expenses payable
monthly pursuant to the Management Services Agreement and any salary or
other amounts due under the Xxxx Agreements; provided that no Default or
Event of Default exists at the time of any such Restricted Payment or
would occur as a result thereof; and
(d) GII may pay dividends to Holdings to permit Holdings to
repurchase Stock owned by employees of GII and its Subsidiaries whose employment
with GII and its Subsidiaries has been terminated, provided that such dividend
payments shall not exceed $500,000 in any fiscal year and provided that no Event
of Default exists at the time of such Restricted Payment or would occur as a
result thereof; and
(e) GII and Holdings may make any Restricted Payment required to
be made by them pursuant to the Acquisition Agreement, whether in respect of
purchase price adjustment, indemnification or otherwise.
3.6. Restriction on Fundamental Changes. The Credit Parties shall not
and shall not cause or permit their Subsidiaries to directly or indirectly: (a)
amend, modify or waive any term or provision of its organizational documents,
including its articles of incorporation, certificates of designations pertaining
to preferred stock, by-laws, partnership agreement or operating agreement unless
required by law; (b) enter into any transaction of merger or consolidation
except, upon not less than five (5) Business Days prior written notice to Agent,
any wholly-owned Domestic Subsidiary of a Borrower may be merged with or into
such Borrower (provided that such Borrower is the surviving entity) or any other
wholly-owned Domestic Subsidiary of such Borrower that is a Guarantor; (c)
liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution); or (d) acquire by purchase or otherwise all or any substantial
part of the business or assets of any other Person.
3.7. Disposal of Assets or Subsidiary Stock. The Credit Parties shall
not and shall not cause or permit their Subsidiaries to directly or indirectly
convey, sell, lease, sublease, transfer or otherwise dispose of, or grant any
Person an option to acquire, in one transaction or a series of related
transactions, any of its property, business or assets, whether now owned or
hereafter acquired, except for (a) sales of inventory in good faith to customers
for fair value in the ordinary course of business and dispositions of obsolete
equipment not used or useful in the business, (b) closures of individual retail
stores, if, in the judgment of the relevant Credit Party's board of directors
such closure is appropriate and any inventory held therein having a value in
excess of $100,000 is transferred to other stores for sale in the ordinary
course of business or returned to such Credit Party's warehouse and (c) Asset
Dispositions of assets constituting Equipment and Fixtures by Borrowers and
their Subsidiaries (excluding sales of Accounts and Stock of any of Holdings'
Subsidiaries) if all of the following conditions are met: (i) the market value
of assets sold or otherwise disposed of in any single transaction or series of
related transactions does not exceed $500,000 and the aggregate market value of
assets sold or otherwise disposed of in any Fiscal Year does not exceed
$1,000,000; (ii) the consideration received is at least equal to the fair market
value of such assets; (iii) the sole consideration received is cash; (iv) after
giving effect to the Asset Disposition and the repayment of Indebtedness with
the proceeds thereof, Borrowers are in compliance on a pro forma basis with the
covenants set forth in Section 4 recomputed for the most recently ended month
for which information is available and is in compliance with all other terms and
conditions of this Agreement; and (v) no Default or Event of Default then exists
or would result from such Asset Disposition.
3.8. Transactions with Affiliates. The Credit Parties shall not and
shall not cause or permit their Subsidiaries to directly or indirectly enter
into or permit to exist any transaction (including the purchase, sale, lease or
exchange of any property or the rendering of any management, consulting,
23
investment banking, advisory or other similar services) with any Affiliate or
with any director, officer or employee of any Credit Party, except (a) as set
forth on Schedule 3.8, (b) transactions in the ordinary course of and pursuant
to the reasonable requirements of the business of any such Credit Party or any
of its Subsidiaries and upon fair and reasonable terms which are fully disclosed
to Agent and are no less favorable to any such Credit Party or any of its
Subsidiaries than would be obtained in a comparable arm's length transaction
with a Person that is not an Affiliate, (c) payment of reasonable compensation
to officers and employees for services actually rendered to any such Credit
Party or any of its Subsidiaries and (d) payment of director's fees not to
exceed $5,000 per meeting, plus expenses.
3.9. Conduct of Business. The Credit Parties shall not and shall not
cause or permit their Subsidiaries to directly or indirectly engage in any
business other than businesses of the type described on Schedule 3.9. Holdings
shall engage in no business other than owning Stock in GII.
3.10. Changes Relating to Indebtedness. The Credit Parties shall not and
shall not cause or permit their Subsidiaries to directly or indirectly change or
amend the terms of any of its Indebtedness permitted by Section 3.1 (c) and (e)
if the effect of such amendment is to: (a) increase the interest rate on such
Indebtedness; (b) change the dates upon which payments of principal or interest
are due on or principal amount of such Indebtedness; (c) change any event of
default or add or make more restrictive any covenant with respect to such
Indebtedness; (d) change the redemption or prepayment provisions of such
Indebtedness; (e) change the subordination provisions thereof (or the
subordination terms of any guaranty thereof); (f) change or amend any other term
if such change or amendment would materially increase the obligations of the
obligor or confer additional material rights on the holder of such Indebtedness
in a manner adverse to any Credit Party or Lenders; (g) increase the portion of
interest payable in cash with respect to any Indebtedness for which interest is
payable by the issuance of payment-in-kind notes or is permitted to accrue or
(h) breach or cause a breach of the Inter-Creditor Agreement.
3.11. Fiscal Year. No Credit Party shall change its Fiscal Year or
permit any of its Subsidiaries to change their respective fiscal years.
3.12. Press Release; Public Offering Materials. Each Credit Party
executing this Agreement agrees that neither it nor its Affiliates will in the
future issue any press releases or other public disclosure, including any
prospectus, proxy statement or other materials filed with any Governmental
Authority relating to a public offering of the Stock of any Credit Party, using
the name of GE Capital or its affiliates or referring to this Agreement, the
other Loan Documents or the Related Transactions Documents without at least two
(2) Business Days' prior notice to GE Capital and without the prior written
consent of GE Capital unless (and only to the extent that) such Credit Party or
Affiliate is required to do so under law and then, in any event, such Credit
Party or Affiliate will consult with GE Capital before issuing such press
release or other public disclosure. Each Credit Party consents to the
publication by Agent or any Lender of a tombstone or similar advertising
material relating to the financing transactions contemplated by this Agreement.
Agent or such Lender shall provide a draft of any such tombstone or similar
advertising material to each Credit Party for review and comment prior to the
publication thereof. Agent reserves the right to provide to industry trade
organizations information necessary and customary for inclusion in league table
measurements.
3.13. Subsidiaries. The Credit Parties shall not and shall not cause or
permit their Subsidiaries to directly or indirectly establish, create or acquire
any new Subsidiary.
3.14. Bank Accounts. The Credit Parties shall not and shall not cause or
permit their Subsidiaries to establish any new bank accounts without prior
written notice to Agent and unless Agent and the bank at which the account is to
be opened enter into a tri-party agreement regarding such bank account pursuant
to which such bank acknowledges the security interest of Agent in such bank
account,
24
agrees to comply with instructions originated by Agent directing disposition of
the funds in the bank account without further consent from such Credit Party or
Subsidiary, and agrees to subordinate and limit any security interest the bank
may have in the bank account on terms satisfactory to Agent.
3.15. Hazardous Materials. The Credit Parties shall not and shall not
cause or permit their Subsidiaries to cause or permit a Release of any Hazardous
Material on, at, in, under, above, to, from or about any of the Real Estate
where such Release would (a) violate in any respect, or form the basis for any
Environmental Liabilities by the Credit Parties or any of their Subsidiaries
under, any Environmental Laws or Environmental Permits or (b) otherwise
adversely impact the value or marketability of any of the Real Estate or any of
the Collateral, other than such violations or Environmental Liabilities that
could not reasonably be expected to have a Material Adverse Effect.
3.16. ERISA. The Credit Parties shall not and shall not cause or permit
any ERISA Affiliate to, cause or permit to occur an ERISA Event to the extent
such ERISA Event could reasonably be expected to have a Material Adverse Effect.
3.17. (Intentionally Omitted).
3.18. Prepayments of Other Indebtedness. The Credit Parties shall not,
directly or indirectly, voluntarily purchase, redeem, defease or prepay any
principal of, premium, if any, interest or other amount payable in respect of
any Indebtedness, other than (i) the Obligations; (ii) Indebtedness secured by a
Permitted Encumbrance if the asset securing such Indebtedness has been sold or
otherwise disposed of in accordance with Section 3.7(b), limited, in the case of
the Senior Notes, to the Net Proceeds of the corresponding Asset Disposition;
(iii) prepayments on account of the Senior Notes to the extent required by the
terms thereof or of the Indenture as in effect on the date hereof and without
regard to any notice of prepayment, notice of redemption or notice of defeasance
and (iv) intercompany Indebtedness reflecting amounts owing to Borrowers.
3.19. Changes to Material Contracts. The Credit Parties shall not and
shall not cause or permit any of their Subsidiaries to change or amend the terms
of any of the following material contracts: the Management Services Agreement,
the Xxxx Agreements and the Intercompany Management Agreements.
SECTION 4.
FINANCIAL COVENANTS/REPORTING
The Credit Parties covenant and agree that from and after the date
hereof until the Termination Date, the Credit Parties shall perform and comply
with, and shall cause each of the other Credit Parties to perform and comply
with, all covenants in this Section 4 applicable to such Person.
4.1. Capital Expenditure Limits. Holdings and its Subsidiaries on a
consolidated basis shall not make Capital Expenditures during the following
periods that exceed in the aggregate the amounts set forth opposite each of such
periods (the "Capex Limit"):
$5,400,000 for the Fiscal Year ending on or about December 31, 2002;
$6,250,000 for the Fiscal Year ending on or about December 31, 2003;
$6,800,000 for the Fiscal Year ending on or about December 31, 2004;
$7,200,000 for the Fiscal Year ending on or about December 31, 2005; and
25
$8,400,000 for the Fiscal Year ending on or about December 31, 2006.
4.2. (Intentionally Omitted).
4.3. Minimum EBITDA. Holdings and its Subsidiaries on a consolidated
basis shall have, at the end of each Fiscal Quarter set forth below, EBITDA for
the 12-month period then ended of not less than the following:
$3,966,000 for the Fiscal Quarter ending on or about December 31, 2002;
$8,646,000 for the Fiscal Quarter ending on or about March 31, 2003;
$13,326,000 for the Fiscal Quarter ending on or about June 30, 2003;
$18,006,000 for the Fiscal Quarter ending on or about September 30,
2003;
$18,720,000 for the Fiscal Quarter ending on or about December 31, 2003;
$19,140,000 for the Fiscal Quarter ending on or about March 31, 2004;
$19,560,000 for the Fiscal Quarter ending on or about June 30, 2004;
$19,980,000 for the Fiscal Quarter ending on or about September 30,
2004;
$20,400,000 for the Fiscal Quarter ending on or about December 31, 2004;
$20,760,000 for the Fiscal Quarter ending on or about March 31, 2005;
$21,120,000 for the Fiscal Quarter ending on or about June 30, 2005;
$21,480,000 for the Fiscal Quarter ending on or about September 30,
2005;
$21,840,000 for the Fiscal Quarter ending on or about December 31, 2005;
$22,640,000 for the Fiscal Quarter ending on or about March 31, 2006;
$23,440,000 for the Fiscal Quarter ending on or about June 30, 2006;
$24,240,000 for the Fiscal Quarter ending on or about September 30,
2006;
$25,040,000 for the Fiscal Quarter ending on or about December 31, 2006;
and
$26,020,000 for the Fiscal Quarter ending on or about March 31, 2007;
provided that in calculating EBITDA for the period of twelve consecutive months
ending on the last day of the first three Fiscal Quarters following the Closing
Date, EBITDA shall be multiplied by 4.000, 2.000 and 1.333 respectively and
shall include only the period from the first day of GII's fourth Fiscal Quarter
to the end of each such Fiscal Quarter respectively.
4.4. (Intentionally Omitted).
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4.5. Minimum Interest Coverage Ratio. Holdings and its Subsidiaries on a
consolidated basis shall have at the end of each Fiscal Quarter set forth below,
an Interest Coverage Ratio for the 12-month period then ended of not less than
the following:
1.60 for the Fiscal Quarter ending on or about December 31, 2002;
1.60 for the Fiscal Quarter ending on or about March 31, 2003;
1.50 for the Fiscal Quarter ending on or about June 30, 2003;
1.40 for the Fiscal Quarter ending on or about September 30, 2003;
1.60 for the Fiscal Quarter ending on or about December 31, 2003;
1.40 for the Fiscal Quarter ending on or about March 31, 2004;
1.80 for the Fiscal Quarter ending on or about June 30, 2004;
1.80 for the Fiscal Quarter ending on or about September 30, 2004;
1.80 for the Fiscal Quarter ending on or about December 31, 2004;
1.80 for the Fiscal Quarter ending on or about March 31, 2005;
1.80 for the Fiscal Quarter ending on or about June 30, 2005;
1.90 for the Fiscal Quarter ending on or about September 30, 2005;
1.90 for the Fiscal Quarter ending on or about December 31, 2005;
1.90 for the Fiscal Quarter ending on or about March 31, 2006;
2.00 for the Fiscal Quarter ending on or about June 30, 2006;
2.00 for the Fiscal Quarter ending on or about September 30, 2006;
2.00 for the Fiscal Quarter ending on or about December 31, 2006; and
2.00 the Fiscal Quarter ending on or about March 31, 2007;
provided that in calculating EBITDA and Interest Expense for the period of
twelve consecutive months ending on the last day of the first three Fiscal
Quarters following the Closing Date, EBITDA and Interest Expense both shall be
multiplied by 4.000, 2.000 and 1.333 respectively and shall include only the
period from the first day of GII's fourth Fiscal Quarter to the end of each such
Fiscal Quarter respectively.
4.6. (Intentionally Omitted).
4.7. (Intentionally Omitted).
4.8. (Intentionally Omitted).
27
4.9. Financial Statements and Other Reports. Holdings and its
Subsidiaries will maintain, and cause each of their Subsidiaries to maintain, a
system of accounting established and administered in accordance with sound
business practices to permit preparation of Financial Statements in conformity
with GAAP (it being understood that monthly Financial Statements are not
required to have footnote disclosures). Borrower Representative will deliver
each of the Financial Statements and other reports described below to Agent (and
each Lender in the case of the Financial Statements and other reports described
in Sections (4.9)(a), (b), (d), (f), (g), (h), and (k)).
(a) Monthly Financials. As soon as available and in any event
within thirty (30) days after the end of each month (including the last month of
Holding's Fiscal Year), Borrower Representative will deliver (1) the
consolidated and consolidating balance sheets of Holdings and its Subsidiaries,
as at the end of such month, and the related consolidated and consolidating
statements of income, stockholders' equity and cash flow for such month and for
the period from the beginning of the then current Fiscal Year of Holdings to the
end of such month, (2) a report setting forth in comparative form the
corresponding figures for the corresponding periods of the previous Fiscal Year
and the corresponding figures from the most recent Projections for the current
Fiscal Year delivered pursuant to Section 4.9(f) and (3) a schedule of the
outstanding Indebtedness for borrowed money of Holdings and its Subsidiaries
describing in reasonable detail each such debt issue or loan outstanding and the
principal amount and amount of accrued and unpaid interest with respect to each
such debt issue or loan.
(b) Year-End Financials. As soon as available and in any event
within ninety (90) days after the end of each Fiscal Year of Holdings, Borrower
Representative will deliver (1) the consolidated and consolidating balance
sheets of Holdings and its Subsidiaries, as at the end of such year, and the
related consolidated and consolidating statements of income, stockholders'
equity and cash flow for such Fiscal Year, (2) a schedule of the outstanding
Indebtedness for borrowed money of Holdings and its Subsidiaries describing in
reasonable detail each such debt issue or loan outstanding and the principal
amount and amount of accrued and unpaid interest with respect to each such debt
issue or loan and (3) a report with respect to the consolidated Financial
Statements from a firm of Certified Public Accountants selected by Borrowers and
reasonably acceptable to Agent, which report shall be prepared in accordance
with Statement of Auditing Standards No. 58 (the "Statement") "Reports on
Audited Financial Statements" and such report shall be "Unqualified" (as such
term is defined in such Statement).
(c) Accountants' Reports. Promptly upon receipt thereof, Borrower
Representative will deliver copies of all significant reports submitted by
Borrowers' firm of certified public accountants in connection with each annual,
interim or special audit or review of any type of the Financial Statements or
related internal control systems of Holdings or its Subsidiaries made by such
accountants, including any comment letter submitted by such accountants to
management in connection with their services.
(d) Additional Deliveries.
(i) To Agent, upon its request, and in any event no less
frequently than noon New York time, five (5) Business Days after the end of each
Fiscal Month (together with a copy of any of the following reports requested by
any Lender in writing after the Closing Date), each of the following reports,
each of which shall be prepared by Borrowers as of the last day of the
immediately preceding Fiscal Month or the date 2 days prior to the date of any
such request:
(A) a Borrowing Base Certificate with respect to
each Borrower, accompanied by such supporting detail and
documentation as shall be requested by Agent in its
reasonable discretion (in substantially the same form as
Exhibits 4.9(d)(i), 4.9(d)(ii) and 4.9(d)(iii) (each, a
"Borrowing Base Certificate");
28
(B) with respect to each Borrower, a summary of
Inventory by location and type with a supporting perpetual
Inventory report, in each case accompanied by such
supporting detail and documentation as shall be requested
by Agent in its reasonable discretion; and
(C) (with respect to each Borrower, a monthly trial
balance showing Accounts outstanding aged from invoice
date as follows: 1 to 30 days, 31 to 60 days, 61 to 90
days and 91 days or more, accompanied by such supporting
detail and documentation as shall be requested by Agent in
its reasonable discretion.
(ii) To Agent, on a weekly basis or at such more frequent
intervals as Agent may request from time to time (together with a copy of all or
any part of such delivery requested by any Lender in writing after the Closing
Date), collateral reports with respect to each Borrower, including all additions
and reductions (cash and non-cash) with respect to Accounts of each Borrower, in
each case accompanied by such supporting detail and documentation as shall be
requested by Agent in its reasonable discretion each of which shall be prepared
by the applicable Borrower as of the last day of the immediately preceding week
or the date 2 days prior to the date of any request;
(iii) To Agent, at the time of delivery of each of the
monthly Financial Statements delivered pursuant to this Section 4.9:
(A) a reconciliation of the most recent Borrowing
Base, general ledger and month-end Inventory reports of
each Borrower to each Borrower's general ledger and
monthly Financial Statements delivered pursuant to this
Section 4.9, in each case accompanied by such supporting
detail and documentation as shall be requested by Agent in
its reasonable discretion;
(B) a reconciliation of the perpetual inventory by
location to each Borrower's most recent Borrowing Base
Certificate, general ledger and monthly Financial
Statements delivered pursuant to this Section 4.9, in each
case accompanied by such supporting detail and
documentation as shall be requested by Agent in its
reasonable discretion;
(C) an aging of accounts payable and a
reconciliation of that accounts payable aging to each
Borrower's general ledger and monthly Financial Statements
delivered pursuant to this Section 4.9, in each case
accompanied by such supporting detail and documentation as
shall be requested by Agent in its reasonable discretion;
(D) a reconciliation of the outstanding Loans as
set forth in the monthly Loan Account statement provided
by Agent to each Borrower's general ledger and monthly
Financial Statements delivered pursuant to this Section
4.9, in each case accompanied by such supporting detail
and documentation as shall be requested by Agent in its
reasonable discretion;
(iv) To Agent, at the time of delivery of each of the
annual Financial Statements delivered pursuant to Section 4.9, (i) a listing of
government contracts of each Borrower subject to the Federal Assignment of
Claims Act of 1940; and (ii) a list of any applications for the registration of
any Patent, Trademark or Copyright filed by any Credit Party with the United
States Patent and Trademark Office, the United States Copyright Office or any
similar office or agency in the prior Fiscal Quarter;
29
(e) Appraisals; Inspections.
(i) At Borrower's expense, at any time while and so long
as an Event of Default shall have occurred and be continuing, and in the absence
of a Default or Event of Default not more than twice during each calendar year,
Agent shall be entitled to (x) conduct or cause to be conducted, an audit of the
Collateral and (y) obtain appraisal reports in form and substance and from
appraisers satisfactory to Agent stating the then current market values of all
or any portion of the personal property owned by any of the Credit Parties; it
being understood that Agent may, in its sole discretion; increase the frequency
of the aforementioned audits of Collateral and appraisals of personal property
to four times during each calendar year, but not more than once in each Fiscal
Quarter.
(ii) Borrowers, at their own expense, shall deliver to
Agent the results of each physical verification, if any, that Borrowers or any
other Credit Party may in their discretion have made, or caused any other Person
to have made on their behalf, of all or any portion of their Inventory (and, if
a Default or an Event of Default has occurred and is continuing, Borrowers
shall, upon the request of Agent, conduct, and deliver the results of, such
physical verifications as Agent may require).
(f) Projections. As soon as available and in any event no later
than the last day of each of Holdings' Fiscal Years, Borrower Representative
will deliver Projections of Holdings and its Subsidiaries for the forthcoming
three (3) fiscal years, year by year, and for the forthcoming fiscal year, month
by month.
(g) SEC Filings and Press Releases. Promptly upon their becoming
available, Borrower Representative will deliver copies of (1) all Financial
Statements, reports, notices and proxy statements sent or made available by
Holdings to its Stockholders, (2) all regular and periodic reports and all
registration statements and prospectuses, if any, filed by Holdings, or any of
its Subsidiaries with any securities exchange or with the Securities and
Exchange Commission, any Governmental Authority or any private regulatory
authority, and (3) all press releases and other statements made available by
Holdings or any of its Subsidiaries to the public concerning developments in the
business of any such Person.
(h) Events of Default, Etc. Promptly upon any officer of any
Credit Party obtaining knowledge of any of the following events or conditions,
Borrower Representative shall deliver copies of all notices given or received by
Holdings or any of its Subsidiaries with respect to any such event or condition
and a certificate of Borrower Representative's chief executive officer
specifying the nature and period of existence of such event or condition and
what action Holdings or any of its Subsidiaries has taken, is taking and
proposes to take with respect thereto: (1) any condition or event that
constitutes, or which could reasonably be expected to result in the occurrence
of, an Event of Default or Default; (2) any notice that any Person has given to
Holdings or any of its Subsidiaries or any other action taken with respect to a
claimed default or event or condition of the type referred to in Section 6.1(b);
(3) any event or condition that could reasonably be expected to result in any
Material Adverse Effect; or (4) any default or event of default with respect to
any Indebtedness of Holdings or any of its Subsidiaries.
(i) Litigation. Promptly upon any officer of any Credit Party
obtaining knowledge of (1) the institution of any action, charge, claim, demand,
suit, proceeding, petition, governmental investigation, tax audit or arbitration
now pending or, to the best knowledge of such Credit Party after due inquiry,
threatened against or affecting any Credit Party or any of its Subsidiaries or
any property of any Credit Party or any of its Subsidiaries ("Litigation") not
previously disclosed by Borrower Representative to Agent or (2) any material
development in any action, suit, proceeding, governmental investigation or
arbitration at any time pending against or affecting any Credit Party or any
property of any Credit Party which, in each case, could reasonably be expected
to have a Material Adverse Effect, Borrower
30
Representative will promptly give notice thereof to Agent and provide such other
information as may be reasonably available to them to enable Agent and its
counsel to evaluate such matter.
(j) Notice of Corporate and other Changes. Borrower
Representative shall provide prompt written notice of (1) all jurisdictions in
which a Credit Party becomes qualified after the Closing Date to transact
business, (2) any change after the Closing Date in the authorized and issued
Stock of any Credit Party or any Subsidiary of any Credit Party or any amendment
to their articles or certificate of incorporation, by-laws, partnership
agreement or other organizational documents, (3) any Subsidiary created or
acquired by any Credit Party or any of its Subsidiaries after the Closing Date,
such notice, in each case, to identify the applicable jurisdictions, capital
structures or Subsidiaries, as applicable, and (4) any other event that occurs
after the Closing Date which would cause any of the representations and
warranties in Section 5 of this Agreement or in any other Loan Document to be
untrue or misleading in any material respect. The foregoing notice requirement
shall not be construed to constitute consent by any of the Lenders to any
transaction referred to above which is not expressly permitted by the terms of
this Agreement.
(k) Compliance Certificate. Together with each delivery of
Financial Statements of Holdings and its Subsidiaries pursuant to Sections
4.9(a) and (b), Borrower Representative will deliver a fully and properly
completed Compliance Certificate (in substantially the same form as Exhibit
4.9(k) (the "Compliance Certificate") signed by each Borrower's chief executive
officer or chief financial officer.
(l) (Intentionally Omitted).
(m) Other Information. With reasonable promptness, Borrower
Representative will deliver such other information and data with respect to any
Credit Party or any Subsidiary of any Credit Party as from time to time may be
reasonably requested by Agent.
(n) Taxes. Borrower Representative shall provide prompt written
notice of (i) the execution or filing with the IRS or any other Governmental
Authority of any agreement or other document extending, or having the effect of
extending, the period for assessment or collection of any Charges by any Credit
Party or any of its Subsidiaries and (ii) any agreement by any Credit Party or
any of its Subsidiaries or request directed to any Credit Party or any of its
Subsidiaries to make any adjustment under IRC Section 481(a), by reason of a
change in accounting method or otherwise, which could reasonably be expected to
have a Material Adverse Effect.
4.10. Accounting Terms; Utilization of GAAP for Purposes of Calculations
Under Agreement. For purposes of this Agreement, all accounting terms not
otherwise defined herein shall have the meanings assigned to such terms in
conformity with GAAP. Financial statements and other information furnished to
Agent pursuant to Section 4.9 or any other section (unless specifically
indicated otherwise) shall be prepared in accordance with GAAP as in effect at
the time of such preparation; provided that no Accounting Change shall affect
financial covenants, standards or terms in this Agreement; provided further that
Borrowers shall prepare footnotes to the Financial Statements required to be
delivered hereunder that show the differences between the Financial Statements
delivered (which reflect such Accounting Changes) and the basis for calculating
financial covenant compliance (without reflecting such Accounting Changes). All
such adjustments described in clause (c) of the definition of the term
Accounting Changes resulting from expenditures made subsequent to the Closing
Date (including capitalization of costs and expenses or payment of pre-Closing
Date liabilities) shall be treated as expenses in the period the expenditures
are made.
31
SECTION 5.
REPRESENTATIONS AND WARRANTIES
To induce Agent and Lenders to enter into the Loan Documents, to make
Loans and to issue or cause to be issued Letters of Credit, Borrowers and the
other Credit Parties executing this Agreement, jointly and severally, represent,
warrant and covenant to Agent and each Lender that the following statements are
and, after giving effect to the Related Transactions, will remain true, correct
and complete until the Termination Date with respect to all Credit Parties:
5.1. Disclosure. No representation or warranty of any Credit Party
contained in this Agreement, the Financial Statements referred to in Section
5.5, the other Related Transactions Documents or any other document, certificate
or written statement furnished to Agent or any Lender by or on behalf of any
such Person for use in connection with the Loan Documents or the Related
Transactions Documents contains any untrue statement of a material fact or
omitted, omits or will omit to state a material fact necessary in order to make
the statements contained herein or therein not misleading in light of the
circumstances in which the same were made.
5.2. No Material Adverse Effect. Since December 29, 2001 there have been
no events or changes in facts or circumstances affecting any Credit Party or any
of its Subsidiaries which individually or in the aggregate have had or could
reasonably be expected to have a Material Adverse Effect and that have not been
disclosed herein or in the attached Disclosure Schedules.
5.3. No Conflict. The consummation of the Related Transactions does not
and will not violate or conflict with any laws, rules, regulations or orders of
any Governmental Authority or violate, conflict with, result in a breach of, or
constitute a default (with due notice or lapse of time or both) under any
Contractual Obligation or organizational documents of Acquisition Co., any
Credit Party or any of its Subsidiaries except if such violations, conflicts,
breaches or defaults could not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect.
5.4. Organization, Powers, Capitalization and Good Standing.
(a) Organization and Powers. Each of the Credit Parties and each
of their Subsidiaries is and immediately prior to the consummation of the
Related Transactions, Acquisition Co. was, duly organized, validly existing and
in good standing under the laws of its jurisdiction of organization and
qualified to do business in all states where such qualification is required
except where failure to be so qualified could not reasonably be expected to have
a Material Adverse Effect. The jurisdiction of organization and all
jurisdictions in which each Credit Party is qualified to do business are set
forth on Schedule 5.4(a). Each of the Credit Parties and each of their
Subsidiaries has and, immediately prior to the consummation of the Related
Transactions, Acquisition Co. had, all requisite organizational power and
authority to own and operate its properties, to carry on its business as now
conducted and proposed to be conducted, to enter into each Related Transactions
Document to which it is a party and to incur the Obligations, grant liens and
security interests in the Collateral and carry out the Related Transactions.
(b) Capitalization. As of the Closing Date: (i) the authorized
Stock of each of the Credit Parties and each of their Subsidiaries is as set
forth on Schedule 5.4(b); (ii) all issued and outstanding Stock of each of the
Credit Parties and each of their Subsidiaries is duly authorized and validly
issued, fully paid, nonassessable, free and clear of all Liens other than those
in favor of Agent for the benefit of Agent and Lenders, and such Stock was
issued in compliance with all applicable state, federal and foreign laws
concerning the issuance of securities; (iii) the identity of the holders of the
Stock of each of the Credit Parties and each of its Subsidiaries and the
percentage of their fully-diluted
32
ownership of the Stock of each of the Credit Parties and each of their
Subsidiaries is set forth on Schedule 5.4(b); and (iv) no Stock of any Credit
Party or any of their Subsidiaries, other than those described above, is issued
and outstanding. Except as provided in Schedule 5.4(b), as of the Closing Date,
there are no preemptive or other outstanding rights, options, warrants,
conversion rights or similar agreements or understandings for the purchase or
acquisition from any Credit Party or any of its Subsidiaries of any Stock of any
such entity.
(c) Binding Obligation. This Agreement is, and the other Related
Transactions Documents when executed and delivered will be, the legally valid
and binding obligations of the applicable parties thereto (other than Agent and
Lenders, as to whom no representation is made), each enforceable against each of
such parties, as applicable, in accordance with their respective terms.
5.5. Financial Statements and Projections. All Financial Statements
concerning Holdings and its Subsidiaries (including GII and its Subsidiaries)
which have been or will hereafter be furnished to Agent pursuant to this
Agreement, including those listed below, have been or will be prepared in
accordance with GAAP consistently applied (except as disclosed therein) and do
or will present fairly the financial condition of the entities covered thereby
as at the dates thereof and the results of their operations for the periods then
ended, subject to, in the case of unaudited Financial Statements, the absence of
footnotes and normal year-end adjustments.
(a) The consolidated balance sheets at December 29, 2001 and the
related statement of income of GII and its Subsidiaries, for the Fiscal Year
then ended, audited by Ernst & Young LLP.
(b) The consolidated balance sheet at September 28, 2002 and the
related statement of income of GII and its Subsidiaries for the nine (9) months
then ended.
The Projections delivered on or prior to the Closing Date and the updated
Projections delivered pursuant to Section 4.9(h) represent and will represent as
of the date thereof the good faith estimate of Credit Parties and their senior
management concerning the most probable course of their business.
5.6. Intellectual Property. GII or another Credit Party owns, is
licensed to use or otherwise has the right to use, all Intellectual Property
that is used in and necessary for the conduct of each Credit Party's business as
currently conducted and that is material to the condition (financial or other),
business or operations of such Credit Party and its Subsidiaries. Such
Intellectual Property is identified on Schedule 5.6. Each of the trademarks and
domain names shown on Schedule 5.6 has been registered or applied for, as the
case may be, in accordance with the intellectual property laws of the particular
countries. Except as disclosed in Schedule 5.6, to GII's knowledge, the use of
such trademarks and domain names by the Credit Parties and their Subsidiaries
does not infringe the rights of any Person, and GII has not received notice of
any claim which challenges the right of the Credit Parties and their
Subsidiaries to use the trademarks or domain names listed in Schedule 5.6.
5.7. Investigations, Audits, Etc. As of the Closing Date, except as set
forth on Schedule 5.7, neither any Credit Party nor any of its Subsidiaries is
the subject of any review or audit by the IRS or any governmental investigation
concerning the violation or possible violation of any law.
5.8. Employee Matters. Except as set forth on Schedule 5.8, (a) no
Credit Party or Subsidiary of a Credit Party nor any of their respective
employees is subject to any collective bargaining agreement, (b) no petition for
certification or union election is pending with respect to the employees of any
Credit Party or any of their Subsidiaries and no union or collective bargaining
unit has sought such certification or recognition with respect to the employees
of any Credit Party or any Subsidiary of a Credit Party, (c) there are no
strikes, slowdowns, work stoppages or controversies pending or, to the best
knowledge of
33
any Credit Party after due inquiry, threatened between any Credit Party or any
Subsidiary of a Credit Party and its respective employees, other than employee
grievances arising in the ordinary course of business which could not reasonably
be expected to have, either individually or in the aggregate, a Material Adverse
Effect and (d) hours worked by and payment made to employees of each Credit
Party and each of its Subsidiaries comply with the Fair Labor Standards Act and
each other federal, state, local or foreign law applicable to such matters.
Except as set forth on Schedule 5.8, neither any Credit Party nor any of its
Subsidiaries is party to an employment contract.
5.9. Solvency. Each Credit Party and each Subsidiary of a Credit Party
is Solvent.
5.10. Litigation; Adverse Facts. Except as set forth on Schedule 5.10,
there are no judgments outstanding against any Credit Party or any of its
Subsidiaries or affecting any property of any Credit Party or any of its
Subsidiaries, nor is there any Litigation pending, or to the best knowledge of
any Credit Party threatened, against any Credit Party or any of its Subsidiaries
which could reasonably be expected to result in any Material Adverse Effect.
5.11. Use of Proceeds; Margin Regulations. No part of the proceeds of
any Loan will be used for "buying" or "carrying" "margin stock" within the
respective meanings of such terms under Regulation U of the Board of Governors
of the Federal Reserve System as now and from time to time hereafter in effect
or for any other purpose that violates the provisions of the regulations of the
Board of Governors of the Federal Reserve System. If requested by Agent, each
Credit Party will furnish to Agent and each Lender a statement to the foregoing
effect in conformity with the requirements of FR Form G-3 or FR Form U-1, as
applicable, referred to in Regulation U.
(a) Borrowers shall utilize the proceeds of the Loans solely to
pay any transaction expenses relating to the Acquisition and this Agreement, and
for the financing of Borrowers' ordinary working capital and general corporate
needs. Schedule 5.11 contains a description of Borrowers' sources and uses of
funds as of the Closing Date, including Loans and Letter of Credit Obligations
to be made or incurred on that date, and a funds flow memorandum detailing how
funds from each source are to be transferred for particular uses.
5.12. Ownership of Property; Liens. As of the Closing Date, the real
estate ("Real Estate") listed in Schedule 5.12 constitutes all of the real
property owned, leased, subleased, or used by any Credit Party or any of its
Subsidiaries. Each of the Credit Parties and each of its Subsidiaries owns good
and marketable fee simple title to all of its owned Real Estate, and valid and
marketable leasehold interests in all of its leased Real Estate, all as
described on Schedule 5.12, and copies of all such leases or a summary of terms
thereof reasonably satisfactory to Agent have been delivered to Agent. Schedule
5.12 further describes any Real Estate with respect to which any Credit Party or
any of its Subsidiaries is a lessor, sublessor or assignor as of the Closing
Date. Each of the Credit Parties and each of its Subsidiaries also has good and
marketable title to, or valid leasehold interests in, all of its personal
property and assets. As of the Closing Date, none of the properties and assets
of any Credit Party or any of its Subsidiaries are subject to any Liens other
than Permitted Encumbrances, and there are no facts, circumstances or conditions
known to any Borrower that may result in any Liens (including Liens arising
under Environmental Laws) other than Permitted Encumbrances against the
properties or assets of any Credit Party or any of its Subsidiaries.
5.13. Environmental Matters.
(a) Except as set forth in Schedule 5.13, as of the Closing Date:
(i) the Real Estate is free of contamination from any Hazardous Material except
for such contamination that could not reasonably be expected to adversely impact
the value or marketability of such Real Estate and that could
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not reasonably be expected to result in Environmental Liabilities of the Credit
Parties or their Subsidiaries in excess of $25,000 in the aggregate; (ii) no
Credit Party and no Subsidiary of a Credit Party has caused or suffered to occur
any Release of Hazardous Materials on, at, in, under, above, to, from or about
any of their Real Estate; (iii) the Credit Parties and their Subsidiaries are
and have been in compliance with all Environmental Laws, except for such
noncompliance that could not reasonably be expected to result in Environmental
Liabilities of the Credit Parties or their Subsidiaries in excess of $25,000 in
the aggregate; (iv) the Credit Parties and their Subsidiaries have obtained, and
are in compliance with, all Environmental Permits required by Environmental Laws
for the operations of their respective businesses as presently conducted or as
proposed to be conducted, except where the failure to so obtain or comply with
such Environmental Permits could not reasonably be expected to result in
Environmental Liabilities of the Credit Parties or their Subsidiaries in excess
of $25,000 in the aggregate, and all such Environmental Permits are valid,
uncontested and in good standing; (v) no Credit Party and no Subsidiary of a
Credit Party is involved in operations or knows of any facts, circumstances or
conditions, including any Releases of Hazardous Materials, that are likely to
result in any Environmental Liabilities of such Credit Party or Subsidiary which
could reasonably be expected to be in excess of $25,000 in the aggregate, and no
Credit Party or Subsidiary of a Credit Party has permitted any current or former
tenant or occupant of the Real Estate to engage in any such operations; (vi)
there is no Litigation arising under or related to any Environmental Laws,
Environmental Permits or Hazardous Material that seeks damages, penalties,
fines, costs or expenses in excess of $25,000 in the aggregate or injunctive
relief against, or that alleges criminal misconduct by any Credit Party or any
Subsidiary of a Credit Party; (vii) no notice has been received by any Credit
Party or any Subsidiary of a Credit Party identifying any of them as a
"potentially responsible party" or requesting information under CERCLA or
analogous state statutes, and to the knowledge of the Credit Parties, there are
no facts, circumstances or conditions that may result in any of the Credit
Parties or their Subsidiaries being identified as a "potentially responsible
party" under CERCLA or analogous state statutes; and (viii) the Credit Parties
have provided to Agent copies of all existing environmental reports, reviews and
audits and all written information pertaining to actual or potential
Environmental Liabilities, in each case relating to any of the Credit Parties or
their Subsidiaries.
(b) Each Credit Party hereby acknowledges and agrees that Agent
(i) is not now, and has not ever been, in control of any of the Real Estate or
affairs of such Credit Party or its Subsidiaries and (ii) does not have the
capacity through the provisions of the Loan Documents or otherwise to influence
any Credit Party's or its Subsidiaries' conduct with respect to the ownership,
operation or management of any of their Real Estate or compliance with
Environmental Laws or Environmental Permits.
5.14. ERISA.
(a) Schedule 5.14 lists all Plans and separately identifies all
Pension Plans, including Title IV Plans, Multiemployer Plans, ESOPs and Welfare
Plans, including all Retiree Welfare Plans. Copies of all such listed Plans,
together with a copy of the latest form IRS/DOL 5500-series for each such Plan
have been delivered to Agent. Except with respect to Multiemployer Plans, each
Qualified Plan has been determined by the IRS to qualify under Section 401 of
the IRC, the trusts created thereunder have been determined to be exempt from
tax under the provisions of Section 501 of the IRC, and nothing has occurred
that would cause the loss of such qualification or tax-exempt status. Each Plan
is in compliance with the applicable provisions of ERISA and the IRC, including
the timely filing of all reports required under the IRC or ERISA, including the
statement required by 29 CFR Section 2520.104-23. Neither any Credit Party nor
ERISA Affiliate has failed to make any contribution or pay any amount due as
required by either Section 412 of the IRC or Section 302 of ERISA or the terms
of any such Plan. Neither any Credit Party nor ERISA Affiliate has engaged in a
"prohibited transaction," as defined in Section 406 of ERISA and Section 4975 of
the IRC, in connection with any Plan, that would subject any Credit Party to a
material tax on prohibited transactions imposed by Section 502(i) of ERISA or
Section 4975 of the IRC.
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(b) Except as set forth in Schedule 5.14: (i) no Title IV Plan
has any Unfunded Pension Liability; (ii) no ERISA Event or event described in
Section 4062(e) of ERISA with respect to any Title IV Plan has occurred or is
reasonably expected to occur; (iii) there are no pending, or to the knowledge of
any Borrower, threatened claims (other than claims for benefits in the normal
course), sanctions, actions or lawsuits, asserted or instituted against any Plan
or any Person as fiduciary or sponsor of any Plan; (iv) no Credit Party or ERISA
Affiliate has incurred or reasonably expects to incur any liability as a result
of a complete or partial withdrawal from a Multiemployer Plan; (v) within the
last five years no Title IV Plan of any Credit Party or ERISA Affiliate has been
terminated, whether or not in a "standard termination" as that term is used in
Section 404(b)(1) of ERISA, nor has any Title IV Plan of any Credit Party or
ERISA Affiliate (determined at any time within the past five years) with
Unfunded Pension Liabilities been transferred outside of the "controlled group"
(within the meaning of Section 4001(a)(14) of ERISA) of any Credit Party or
ERISA Affiliate; (vi) except in the case of any ESOP, Stock of all Credit
Parties and their ERISA Affiliates makes up, in the aggregate, no more than 10%
of fair market value of the assets of any Plan measured on the basis of fair
market value as of the latest valuation date of any Plan; and (vii) no liability
under any Title IV Plan has been satisfied with the purchase of a contract from
an insurance company that is not rated AAA by the S&P or an equivalent rating by
another nationally recognized rating agency.
5.15. Brokers. No broker or finder acting on behalf of any Credit Party
or Affiliate thereof brought about the obtaining, making or closing of the Loans
or the Related Transactions, and no Credit Party or Affiliate thereof has any
obligation to any Person in respect of any finder's or brokerage fees in
connection therewith other than the payment of the transaction fee under the
Management Services Agreement.
5.16. Deposit and Disbursement Accounts. Schedule 5.16 lists all banks
and other financial institutions at which any Credit Party maintains deposit or
other accounts as of the Closing Date, including any Disbursement Accounts, and
such Schedule correctly identifies the name, address and telephone number of
each depository, the name in which the account is held, a description of the
purpose of the account, and the complete account number therefor.
5.17. Agreements and Other Documents. As of the Closing Date, each
Credit Party has provided to Agent or its counsel, on behalf of Lenders,
accurate and complete copies (or summaries) of all of the following agreements
or documents to which it is subject and each of which is listed in Schedule
5.17: supply agreements and purchase agreements not terminable by such Credit
Party within sixty (60) days following written notice issued by such Credit
Party and involving transactions in excess of $1,000,000 per annum; licenses and
permits held by the Credit Parties, the absence of which could reasonably be
expected to have a Material Adverse Effect; instruments and documents evidencing
any Indebtedness or Guaranteed Indebtedness of such Credit Party and any Lien
granted by such Credit Party with respect thereto; and instruments and
agreements evidencing the issuance of any equity securities, warrants, rights or
options to purchase equity securities of such Credit Party. Notwithstanding the
foregoing, each Credit Party has provided to Agent or its counsel, on behalf of
Lenders, accurate and complete copies (or summaries) of all other agreements,
instruments, and other documents that Agent or its counsel has requested.
5.18. Insurance. Schedule 5.18 lists all insurance policies of any
nature maintained, as of the Closing Date, for current occurrences by each
Credit Party, as well as a summary of the key business terms of each such policy
such as deductibles, coverage limits and term of policy.
5.19. Acquisition Agreement. As of the Closing Date, Borrowers have
delivered to Agent a complete and correct copy of the Acquisition Agreement
(including all schedules, exhibits, amendments, supplements, modifications,
assignments and all other documents delivered pursuant thereto or in
36
connection therewith). No Credit Party and no other Person party thereto is in
default in the performance or compliance with any provisions thereof. The
Acquisition Agreement complies with, and the Acquisition has been consummated in
accordance with, all applicable laws. The Acquisition Agreement is in full force
and effect as of the Closing Date and has not been terminated, rescinded or
withdrawn. All requisite approvals by Governmental Authorities having
jurisdiction over any party thereto, with respect to the transactions
contemplated by the Acquisition Agreement, have been obtained, and no such
approvals impose any conditions to the consummation of the transactions
contemplated by the Acquisition Agreement or to the conduct by any Credit Party
of its business thereafter.
SECTION 6.
DEFAULT, RIGHTS AND REMEDIES
6.1. Event of Default. "Event of Default" shall mean the occurrence or
existence of any one or more of the following:
(a) Payment. (1) Failure by any Credit Party to pay any
installment or other payment of principal of any Loan when due, or to repay
Revolving Loans to reduce their balance to the maximum amount of Revolving Loans
then permitted to be outstanding or to reimburse any L/C Issuer for any payment
made by such L/C Issuer under or in respect of any Letter of Credit when due or
to provide cash collateral for any Letter of Credit when due or (2) failure to
pay, within three (3) days after the due date, any interest on any Loan or any
other amount due under this Agreement or any of the other Loan Documents; or
(b) Default in Other Agreements. (1) Any Credit Party or any of
its Subsidiaries fails to pay when due or within any applicable grace period any
principal or interest on Indebtedness (other than the Loans) or any Contingent
Obligations or (2) breach or default of any Credit Party or any of its
Subsidiaries, or the occurrence of any condition or event, with respect to any
Indebtedness (other than the Loans) or any Contingent Obligations, if the effect
of such breach, default or occurrence is to cause or to permit the holder or
holders then to cause, Indebtedness and/or Contingent Obligations having an
individual principal amount in excess of $5,000,000 or having an aggregate
principal amount in excess of $5,000,000 to become or be declared due prior to
their stated maturity; or
(c) Breach of Certain Provisions; Breach of Warranty. Failure of
any Credit Party to perform or comply with any term or condition contained in
that portion of Section 2.2 relating to the Credit Parties' obligation to
maintain insurance, Section 2.3, Section 3 or Section 4; or
(d) Borrowing Base Certificate; Breach of Warranty. Any
information contained in any Borrowing Base Certificate is untrue or incorrect
in any respect in the aggregate in any Borrowing Base, or any representation or
warranty herein or in any Loan Document or in any written statement, report,
financial statement or certificate (other than a Borrowing Base Certificate)
made or delivered to Agent or any Lender by any Credit Party is untrue or
incorrect in any material respect (without duplication of materiality qualifiers
contained therein) as of the date when made or deemed made; or
(e) Other Defaults Under Loan Documents. Any Credit Party
defaults in the performance of or compliance with any term contained in this
Agreement or the other Loan Documents (other than occurrences described in other
provisions of this Section 6.1 for which a different grace or cure period is
specified, or for which no cure period is specified and which constitute
immediate Events of Default) and such default is not remedied or waived within
thirty (30) days after the earlier of (1) receipt by Borrower Representative of
notice from Agent or Requisite Lenders of such default or (2) actual knowledge
of any Borrower or any other Credit Party of such default; or
37
(f) Involuntary Bankruptcy; Appointment of Receiver, Etc. (1) A
court enters a decree or order for relief with respect to any Credit Party in an
involuntary case under the Bankruptcy Code, which decree or order is not stayed
or other similar relief is not granted under any applicable federal or state
law; or (2) the continuance of any of the following events for forty-five (45)
days unless dismissed, bonded or discharged: (a) an involuntary case is
commenced against any Credit Party, under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect; or (b) a decree or order of a
court for the appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over any Credit Party, or over
all or a substantial part of its property, is entered; or (c) a receiver,
trustee or other custodian is appointed without the consent of a Credit Party,
for all or a substantial part of the property of the Credit Party; or
(g) Voluntary Bankruptcy; Appointment of Receiver, Etc. (1) any
Credit Party commences a voluntary case under the Bankruptcy Code, or consents
to the entry of an order for relief in an involuntary case or to the conversion
of an involuntary case to a voluntary case under any such law or consents to the
appointment of or taking possession by a receiver, trustee or other custodian
for all or a substantial part of its property; or (2) any Credit Party makes any
assignment for the benefit of creditors; or (3) the Board of Directors of any
Credit Party adopts any resolution or otherwise authorizes action to approve any
of the actions referred to in this Section 6.1(g); or
(h) Judgment and Attachments. Any money judgment, writ or warrant
of attachment, or similar process (other than those described elsewhere in this
Section 6.1) involving (1) an amount in any individual case in excess of
$1,000,000 or (2) an amount in the aggregate at any time in excess of $5,000,000
(in either case to the extent not adequately covered by insurance in Agent's
sole discretion as to which the insurance company has acknowledged coverage) is
entered or filed against one or more of the Credit Parties or any of their
respective assets and remains undischarged, unvacated, unbonded or unstayed for
a period of thirty (30) days or in any event later than five (5) Business Days
prior to the date of any proposed sale thereunder; or
(i) Dissolution. Any order, judgment or decree is entered against
any Credit Party decreeing the dissolution or split up of such Credit Party and
such order remains undischarged or unstayed for a period in excess of fifteen
(15) days; or
(j) Solvency. Any Credit Party ceases to be Solvent, fails to pay
its debts as they become due or admits in writing its present or prospective
inability to pay its debts as they become due; or
(k) Invalidity of Loan Documents. Any of the Loan Documents for
any reason, other than a partial or full release in accordance with the terms
thereof, ceases to be in full force and effect or is declared to be null and
void, or any Credit Party denies that it has any further liability under any
Loan Documents to which it is party, or gives notice to such effect; or
(l) Damage; Casualty. Any event occurs, whether or not insured or
insurable, as a result of which revenue-producing activities cease or are
substantially curtailed at any facility of any Credit Party generating more than
10% of the consolidated revenues of Holdings and its Subsidiaries taken as a
whole for the Fiscal Year preceding such event and such cessation or curtailment
continues for more than 30 days; or
(m) Business Activities. Holdings engages in any type of business
activity other than the ownership of Stock of GII and performance of its
obligations under the Related Transaction Documents to which it is a party; or
38
(n) Change of Control. A Change of Control occurs; or
(o) Inter-Creditor Agreement. The failure of any Credit Party or
any creditor of any GII or any of its Subsidiaries to comply with the terms of
any intercreditor agreement or other document or agreement with or running to
the benefit of Agent or Lenders, or if any such document or agreement becomes
null and void or any party denies further liability under any such document or
agreement or provides notice to that effect.
6.2. Suspension or Termination of Commitments. Upon the occurrence of
any Default or Event of Default, Agent may, and at the request of Requisite
Revolving Lenders Agent shall, without notice or demand, immediately suspend or
terminate all or any portion of Lenders' obligations to make additional Loans or
issue or cause to be issued Letters of Credit under the Revolving Loan
Commitment; provided that, in the case of a Default, if the subject condition or
event is waived by Requisite Revolving Lenders or cured within any applicable
grace or cure period, the Revolving Loan Commitment shall be reinstated.
6.3. Acceleration and other Remedies. Upon the occurrence of any Event
of Default described in Sections 6.1(f) or 6.1(g), the Commitments shall be
immediately terminated and all of the Obligations, including the Revolving
Loans, shall automatically become immediately due and payable, without
presentment, demand, protest, notice of intent to accelerate, notice of
acceleration or other requirements of any kind, all of which are hereby
expressly waived (including for purposes of Section 10) by Borrowers, and the
Commitments shall thereupon terminate. Upon the occurrence and during the
continuance of any other Event of Default, Agent may, and at the request of the
Requisite Lenders, Agent shall, by written notice to Borrower Representative (a)
reduce the aggregate amount of the Commitments from time to time, (b) declare
all or any portion of the Loans and all or any portion of the other Obligations
to be, and the same shall forthwith become, immediately due and payable together
with accrued interest thereon, (c) terminate all or any portion of the
obligations of Agent, L/C Issuers and Lenders to make Revolving Credit Advances
and issue Letters of Credit, (d) demand that Borrowers immediately deliver cash
to Agent for the benefit of L/C Issuers (and Borrowers shall then immediately so
deliver) in an amount equal to 105% of the aggregate outstanding Letter of
Credit Obligations and (e) exercise any other remedies which may be available
under the Loan Documents or applicable law. Borrowers hereby grant to Agent, for
the benefit of L/C Issuers and each Lender with a participation in any Letters
of Credit then outstanding, a security interest in such cash collateral to
secure all of the Letter of Credit Obligations. Any such cash collateral shall
be made available by Agent to L/C Issuers to reimburse L/C Issuers for payments
of drafts drawn under such Letters of Credit and any Fees, Charges and expenses
of L/C Issuers with respect to such Letters of Credit and the unused portion
thereof, after all such Letters of Credit shall have expired or been fully drawn
upon, shall be applied to repay any other Obligations. After all such Letters of
Credit shall have expired or been fully drawn upon and all Obligations shall
have been satisfied and paid in full, the balance, if any, of such cash
collateral shall be returned to Borrowers. Borrowers shall from time to time
execute and deliver to Agent such further documents and instruments as Agent may
request with respect to such cash collateral.
6.4. Performance by Agent. If any Credit Party shall fail to perform any
covenant, duty or agreement contained in any of the Loan Documents, Agent may
perform or attempt to perform such covenant, duty or agreement on behalf of such
Credit Party after the expiration of any cure or grace periods set forth herein.
In such event, such Credit Party shall, at the request of Agent, promptly pay
any amount reasonably expended by Agent in such performance or attempted
performance to Agent, together with interest thereon at the highest rate of
interest in effect upon the occurrence of an Event of Default as specified in
Section 1.2(d) from the date of such expenditure until paid. Notwithstanding the
foregoing, it is expressly agreed that Agent shall not have any liability or
responsibility for the performance of any obligation of any Credit Party under
this Agreement or any other Loan Document.
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6.5. Application of Proceeds. Notwithstanding anything to the contrary
contained in this Agreement, upon the occurrence and during the continuance of
an Event of Default, (a) Borrowers irrevocably waive the right to direct the
application of any and all payments at any time or times thereafter received by
Agent from or on behalf of Borrowers, and Agent shall have the continuing and
exclusive right to apply and to reapply any and all payments received at any
time or times after the occurrence and during the continuance of an Event of
Default against the Obligations in such manner as Agent may deem advisable
notwithstanding any previous application by Agent and (b) in the absence of a
specific determination by Agent with respect thereto, the proceeds of any sale
of, or other realization upon, all or any part of the Collateral shall be
applied: first, to all Fees, costs and expenses incurred by or owing to Agent
and any Lender with respect to this Agreement, the other Loan Documents or the
Collateral; second, to accrued and unpaid interest on the Obligations (including
any interest which but for the provisions of the Bankruptcy Code, would have
accrued on such amounts); third, to the principal amount of the Obligations
(including Letters of Credit and to provide cash collateral for any undrawn
Letters of Credit) outstanding (other than Obligations owed to any Lender under
an Interest Rate Agreement); and fourth to any other obligations of Borrowers
owing to Agent or any Lender under the Loan Documents or any Interest Rate
Agreement. Any balance remaining shall be delivered to Borrowers or to whomever
may be lawfully entitled to receive such balance or as a court of competent
jurisdiction may direct.
SECTION 7.
CONDITIONS TO LOANS
The obligations of Lenders and L/C Issuers to make Loans and to issue or
cause to be issued Letters of Credit are subject to satisfaction of all of the
applicable conditions set forth below.
7.1. Conditions to Initial Loans. The obligations of Lenders and L/C
Issuers to make the initial Loans and to the initial issuance of Letters of
Credit, whichever occurs first, are, in addition to the conditions precedent
specified in Section 7.2, subject to the delivery of all documents listed on,
the taking of all actions set forth on and the satisfaction of all other
conditions precedent listed in the Closing Checklist attached hereto as Annex C,
all in form and substance, or in a manner, satisfactory to Agent and Lenders.
7.2. Conditions to All Loans. Except as otherwise expressly provided
herein, no Lender or L/C Issuer shall be obligated to fund any Advance or incur
any Letter of Credit Obligation, if, as of the date thereof (the "Funding
Date"):
(a) any representation or warranty by any Credit Party contained
herein or in any other Loan Document is untrue or incorrect in any material
respect (without duplication of any materiality qualifier contained therein) as
of such date, except to the extent that such representation or warranty
expressly relates to an earlier date, and Agent or Requisite Revolving Lenders
have determined not to make such Advance or incur such Letter of Credit
Obligation as a result of the fact that such warranty or representation is
untrue or incorrect;
(b) any Default or Event of Default has occurred and is
continuing or would result after giving effect to any Advance (or the incurrence
of any Letter of Credit Obligation), and Agent or Requisite Revolving Lenders
shall have determined not to make any Advance or incur any Letter of Credit
Obligation as a result of that Default or Event of Default;
(c) after giving effect to any Advance (or the incurrence of any
Letter of Credit Obligations), (i) the outstanding amount of the aggregate
Revolving Loan would exceed remaining
40
Borrowing Availability (except as provided in Section 1.1(a)(ii)) or (ii) the
outstanding amount of the Revolving Loan of the applicable Borrower would exceed
such Borrower's separate Borrowing Base; or
(d) in the case of any Funding Date on or after a Triggering
Request, Borrowers shall have complied with paragraph (b) of Annex F to the
extent Borrowers are at such time required so to be in compliance.
The request and acceptance by any Borrower of the proceeds of any Advance, the
incurrence of any Letter of Credit Obligations or the conversion or continuation
of any Loan into, or as, a LIBOR Loan shall be deemed to constitute, as of the
date thereof, (i) a representation and warranty by Borrowers that the conditions
in this Section 7.2 have been satisfied and (ii) a reaffirmation by Borrowers of
the cross guaranty provisions set forth in Section 10 and of the granting and
continuance of Agent's Liens, on behalf of itself and Lenders, pursuant to the
Collateral Documents.
SECTION 8.
ASSIGNMENT AND PARTICIPATION
8.1. Assignment and Participations.
(a) Subject to the terms of this Section 8.1, any Lender may make
an assignment to a Qualified Assignee of, or sale of participations in, at any
time or times, the Loan Documents, Loans, Letter of Credit Obligations and any
Commitment or any portion thereof or interest therein, including any Lender's
rights, title, interests, remedies, powers or duties thereunder. Any assignment
by a Lender shall: (i) require the consent of Agent (which consent shall not be
unreasonably withheld or delayed with respect to a Qualified Assignee) and the
execution of an assignment agreement (an "Assignment Agreement" substantially in
the form attached hereto as Exhibit 8.1 and otherwise in form and substance
reasonably satisfactory to, and acknowledged by, Agent); (ii) be conditioned on
such assignee Lender representing to the assigning Lender and Agent that it is
purchasing the applicable Loans to be assigned to it for its own account, for
investment purposes and not with a view to the distribution thereof; (iii) after
giving effect to any such partial assignment, the assignee Lender shall have
Commitments in an amount at least equal to $2,500,000 and the assigning Lender
shall have retained Commitments in an amount at least equal to $2,500,000; and
(iv) require a payment to Agent of an assignment fee of $3,500. Notwithstanding
the above, Agent may in its sole and absolute discretion permit any assignment
by a Lender to a Person or Persons that are not Qualified Assignees. In the case
of an assignment by a Lender under this Section 8.1, the assignee shall have, to
the extent of such assignment, the same rights, benefits and obligations as all
other Lenders hereunder. The assigning Lender shall be relieved of its
obligations hereunder with respect to its Commitments or assigned portion
thereof from and after the date of such assignment. Borrowers hereby acknowledge
and agree that any assignment shall give rise to a direct obligation of
Borrowers to the assignee and that the assignee shall be considered to be a
"Lender." In all instances, each Lender's liability to make Loans hereunder
shall be several and not joint and shall be limited to such Lender's Pro Rata
Share of the applicable Commitment. In the event Agent or any Lender assigns or
otherwise transfers all or any part of the Obligations, Agent or any such Lender
shall so notify Borrowers and Borrowers shall, upon the request of Agent or such
Lender, execute new Notes in exchange for the Notes, if any, being assigned.
Notwithstanding the foregoing provisions of this Section 8.1(a), (a) any Lender
may at any time pledge the Obligations held by it and such Lender's rights under
this Agreement and the other Loan Documents to a Federal Reserve Bank, (b) any
Lender that is an investment fund may assign the Obligations held by it and such
Lender's rights under this Agreement and the other Loan Documents to another
investment fund managed by the same investment advisor or pledge such
Obligations and rights to trustee for the benefit of its investors and (c) any
Lender may assign the
41
Obligations to an Affiliate of such Lender or to a Person that is a Lender prior
to the date of such assignment.
(b) Any participation by a Lender of all or any part of its
Commitments shall be made with the understanding that all amounts payable by
Borrowers hereunder shall be determined as if that Lender had not sold such
participation, and that the holder of any such participation shall not be
entitled to require such Lender to take or omit to take any action hereunder
except actions directly affecting (i) any reduction in the principal amount of,
or interest rate or Fees payable with respect to, any Loan in which such holder
participates, (ii) any extension of the scheduled amortization of the principal
amount of any Loan in which such holder participates or the final maturity date
thereof, and (iii) any release of all or substantially all of the Collateral
(other than in accordance with the terms of this Agreement, the Collateral
Documents or the other Loan Documents). Solely for purposes of Sections 1.10,
1.11, 8.3 and 9.1, Borrowers acknowledge and agree that a participation shall
give rise to a direct obligation of Borrowers to the participant and the
participant shall be considered to be a "Lender." Except as set forth in the
preceding sentence no Borrower or any other Credit Party shall have any
obligation or duty to any participant. Neither Agent nor any Lender (other than
the Lender selling a participation) shall have any duty to any participant and
may continue to deal solely with the Lender selling a participation as if no
such sale had occurred.
(c) Except as expressly provided in this Section 8.1, no Lender
shall, as between Borrowers and that Lender, or Agent and that Lender, be
relieved of any of its obligations hereunder as a result of any sale,
assignment, transfer or negotiation of, or granting of participation in, all or
any part of the Loans, the Notes or other Obligations owed to such Lender.
(d) Each Credit Party shall assist each Lender permitted to sell
assignments or participations under this Section 8.1 as required to enable the
assigning or selling Lender to effect any such assignment or participation,
including the execution and delivery of any and all agreements, notes and other
documents and instruments as shall be requested and the prompt preparation of
informational materials for, and the participation of management in meetings
with, potential assignees or participants, all on a timetable established by
Agent in its sole discretion. Each Credit Party executing this Agreement shall
certify the correctness, completeness and accuracy of all descriptions of the
Credit Parties and their respective affairs contained in any selling materials
provided by it and all other information provided by it and included in such
materials, except that any Projections delivered by Borrowers shall only be
certified by Borrowers as having been prepared by Borrowers in compliance with
the representations contained in Section 5.5. Agent shall maintain, on behalf of
Borrowers, in its offices located at 000 Xxxx Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx
or such other office as Agent shall determine a "register" for recording the
name, address, commitment and Loans owing to each Lender. The entries in such
register shall be presumptive evidence of the amounts due and owing to each
Lender in the absence of manifest error. Borrowers, Agent and each Lender may
treat each Person whose name is recorded in such register pursuant to the terms
hereof as a Lender for all purposes of this Agreement. The register described
herein shall be available for inspection by Borrower and any Lender, at any
reasonable time upon reasonable prior notice.
(e) A Lender may furnish any information concerning Credit
Parties in the possession of such Lender from time to time to assignees and
participants (including prospective assignees and participants); provided that
such Lender shall obtain from assignees or participants confidentiality
covenants substantially equivalent to those contained in Section 9.13.
(f) So long as no Event of Default has occurred and is
continuing, no Lender shall assign or sell participations in any portion of its
Loans or Commitments to a potential Lender or participant, if, as of the date of
the proposed assignment or sale, the assignee Lender or participant would
42
be subject to capital adequacy or similar requirements under Section 1.10(a),
increased costs or an inability to fund LIBOR Loans under Section 1.10(b), or
withholding taxes in accordance with Section 1.11.
8.2. Agent.
(a) Appointment. Each Lender hereby designates and appoints GE
Capital as its Agent under this Agreement and the other Loan Documents, and each
Lender hereby irrevocably authorizes Agent to execute and deliver the Collateral
Documents, including the Inter-Creditor Agreement, and to take such action or to
refrain from taking such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers as are set
forth herein or therein, together with such other powers as are reasonably
incidental thereto. Agent is authorized and empowered to amend, modify, or waive
any provisions of this Agreement or the other Loan Documents on behalf of
Lenders subject to the requirement that certain of Lenders' consent be obtained
in certain instances as provided in this Section 8.2 and Section 9.2. The
provisions of this Section 8.2 are solely for the benefit of Agent and Lenders
and neither Borrowers nor any other Credit Party shall have any rights as a
third party beneficiary of any of the provisions hereof. In performing its
functions and duties under this Agreement, Agent shall act solely as agent of
Lenders and does not assume and shall not be deemed to have assumed any
obligation toward or relationship of agency or trust with or for Borrowers or
any other Credit Party. Agent may perform any of its duties hereunder, or under
the Loan Documents, by or through its agents or employees. Each Revolving Lender
hereby agrees to be bound by the terms of the Inter-Creditor Agreement
applicable to the Revolving Lenders.
(b) Nature of Duties. The duties of Agent shall be mechanical and
administrative in nature. Agent shall not have by reason of this Agreement a
fiduciary relationship in respect of any Lender. Nothing in this Agreement or
any of the Loan Documents, express or implied, is intended to or shall be
construed to impose upon Agent any obligations in respect of this Agreement or
any of the Loan Documents except as expressly set forth herein or therein. Each
Lender shall make its own independent investigation of the financial condition
and affairs of each Credit Party in connection with the extension of credit
hereunder and shall make its own appraisal of the creditworthiness of each
Credit Party, and Agent shall have no duty or responsibility, either initially
or on a continuing basis, to provide any Lender with any credit or other
information with respect thereto (other than as expressly required herein). If
Agent seeks the consent or approval of any Lenders to the taking or refraining
from taking any action hereunder, then Agent shall send notice thereof to each
Lender. Agent shall promptly notify each Lender any time that the Requisite
Lenders or Supermajority Revolving Lenders have instructed Agent to act or
refrain from acting pursuant hereto.
(c) Rights, Exculpation, Etc. Neither Agent nor any of its
officers, directors, employees or agents shall be liable to any Lender for any
action taken or omitted by them hereunder or under any of the Loan Documents, or
in connection herewith or therewith, except that Agent shall be liable to the
extent of its own gross negligence or willful misconduct as determined by a
final non-appealable order by a court of competent jurisdiction. Agent shall not
be liable for any apportionment or distribution of payments made by it in good
faith and if any such apportionment or distribution is subsequently determined
to have been made in error the sole recourse of any Lender to whom payment was
due but not made, shall be to recover from other Lenders any payment in excess
of the amount to which they are determined to be entitled (and such other
Lenders hereby agree to return to such Lender any such erroneous payments
received by them). In no event shall Agent be liable for punitive, special,
consequential, incidental, exemplary or other similar damages. In performing its
functions and duties hereunder, Agent shall exercise the same care which it
would in dealing with loans for its own account, but neither Agent nor any of
its agents or representatives shall be responsible to any Lender for any
recitals, statements, representations or warranties herein or for the execution,
effectiveness, genuineness,
43
validity, enforceability, collectibility, or sufficiency of this Agreement or
any of the Loan Documents or the transactions contemplated thereby, or for the
financial condition of any Credit Party. Agent shall not be required to make any
inquiry concerning either the performance or observance of any of the terms,
provisions or conditions of this Agreement or any of the Loan Documents or the
financial condition of any Credit Party, or the existence or possible existence
of any Default or Event of Default. Agent may at any time request instructions
from Requisite Lenders, Supermajority Revolving Lenders or all affected Lenders
with respect to any actions or approvals which by the terms of this Agreement or
of any of the Loan Documents Agent is permitted or required to take or to grant.
If such instructions are promptly requested, Agent shall be absolutely entitled
to refrain from taking any action or to withhold any approval and shall not be
under any liability whatsoever to any Person for refraining from any action or
withholding any approval under any of the Loan Documents until it shall have
received such instructions from the Requisite Lenders, Supermajority Revolving
Lenders or such other portion of the Lenders as shall be prescribed by this
Agreement. Without limiting the foregoing, no Lender shall have any right of
action whatsoever against Agent as a result of Agent acting or refraining from
acting under this Agreement or any of the other Loan Documents in accordance
with the instructions of Requisite Lenders, Supermajority Revolving Lenders or
all affected Lenders, as applicable; and, notwithstanding the instructions of
Requisite Lenders, Supermajority Revolving Lenders or all affected Lenders, as
applicable, Agent shall have no obligation to take any action if it believes, in
good faith, that such action is deemed to be illegal by Agent or exposes Agent
to any liability for which it has not received satisfactory indemnification in
accordance with Section 8.2(e).
(d) Reliance. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any written or oral notices, statements,
certificates, orders or other documents or any telephone message or other
communication (including any writing, telex, fax or telegram) believed by it in
good faith to be genuine and correct and to have been signed, sent or made by
the proper Person, and with respect to all matters pertaining to this Agreement
or any of the Loan Documents and its duties hereunder or thereunder. Agent shall
be entitled to rely upon the advice of legal counsel, independent accountants,
and other experts selected by Agent in its sole discretion.
(e) Indemnification. Lenders will reimburse and indemnify Agent
for and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including, without
limitation, attorneys' fees and expenses), advances or disbursements of any kind
or nature whatsoever which may be imposed on, incurred by, or asserted against
Agent in any way relating to or arising out of this Agreement or any of the Loan
Documents or any action taken or omitted by Agent under this Agreement or any of
the Loan Documents, in proportion to each Lender's Pro Rata Share, but only to
the extent that any of the foregoing is not reimbursed by Borrowers; provided,
however, that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses, advances or disbursements to the extent resulting from Agent's gross
negligence or willful misconduct as determined by a final non-appealable order
by a court of competent jurisdiction. If any indemnity furnished to Agent for
any purpose shall, in the opinion of Agent, be insufficient or become impaired,
Agent may call for additional indemnity and cease, or not commence, to do the
acts indemnified against even if so directed by the Requisite Lenders,
Supermajority Revolving Lenders or such other portion of the Lenders as shall be
prescribed by this Agreement until such additional indemnity is furnished. The
obligations of Lenders under this Section 8.2(e) shall survive the payment in
full of the Obligations and the termination of this Agreement.
(f) GE Capital Individually. With respect to its Commitments
hereunder, GE Capital shall have and may exercise the same rights and powers
hereunder and is subject to the same obligations and liabilities as and to the
extent set forth herein for any other Lender. The terms "Lenders", "Requisite
Lenders", "Supermajority Revolving Lenders" or any similar terms shall, unless
the context clearly otherwise indicates, include GE Capital in its individual
capacity as a Lender or one of the
44
Requisite Lenders or Supermajority Revolving Lenders. GE Capital, either
directly or through strategic affiliations, may lend money to, acquire equity or
other ownership interests in, provide advisory services to and generally engage
in any kind of banking, trust or other business with any Credit Party as if it
were not acting as Agent pursuant hereto and without any duty to account
therefor to Lenders. GE Capital, either directly or through strategic
affiliations, may accept fees and other consideration from any Credit Party for
services in connection with this Agreement or otherwise without having to
account for the same to Lenders.
(g) Successor Agent.
(i) Resignation. Agent may resign from the performance of
all its agency functions and duties hereunder at any time by giving at least
thirty (30) Business Days' prior written notice to Borrower Representative and
Lenders. Such resignation shall take effect upon the acceptance by a successor
Agent of appointment pursuant to clause (ii) below or as otherwise provided in
clause (ii) below.
(ii) Appointment of Successor. Upon any such notice of
resignation pursuant to clause (i) above, Requisite Lenders shall appoint a
successor Agent which, unless an Event of Default has occurred and is
continuing, shall be reasonably acceptable to Borrowers. If a successor Agent
shall not have been so appointed within the thirty (30) Business Day period
referred to in clause (i) above, the retiring Agent, upon notice to Borrower
Representative, shall then appoint a successor Agent who shall serve as Agent
until such time, if any, as Requisite Lenders appoint a successor Agent as
provided above.
(iii) Successor Agent. Upon the acceptance of any
appointment as Agent under the Loan Documents by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under the Loan
Documents. After any retiring Agent's resignation as Agent, the provisions of
this Section 8.2 shall continue to inure to its benefit as to any actions taken
or omitted to be taken by it in its capacity as Agent.
(h) Collateral Matters.
(i) Release of Collateral. Lenders hereby irrevocably
authorize Agent, at its option and in its discretion, to release any Lien
granted to or held by Agent upon any Collateral (x) upon termination of the
Commitments and payment and satisfaction of all Obligations (other than
contingent indemnification obligations to the extent no claims giving rise
thereto have been asserted) or (y) constituting property being sold or disposed
of if Borrowers (or any of them) or the Borrower Representative certify to Agent
that the sale or disposition is made in compliance with the provisions of this
Agreement (and Agent may rely in good faith conclusively on any such
certificate, without further inquiry).
(ii) Confirmation of Authority; Execution of Releases.
Without in any manner limiting Agent's authority to act without any specific or
further authorization or consent by Lenders (as set forth in Section 8.2(h)(i)),
each Lender agrees to confirm in writing, upon request by Agent or Borrower
Representative, the authority to release any Collateral conferred upon Agent
under clauses (x) and (y) of Section 8.2(h)(i). Upon receipt by Agent of any
required confirmation from the Requisite Lenders of its authority to release any
particular item or types of Collateral, and upon at least ten (10) Business
Days' prior written request by Borrower Representative, Agent shall (and is
hereby irrevocably authorized by Lenders to) execute such documents as may be
necessary to evidence the release of the Liens granted to Agent upon such
Collateral; provided, however, that (x) Agent shall not be
45
required to execute any such document on terms which, in Agent's opinion, would
expose Agent to liability or create any obligation or entail any consequence
other than the release of such Liens without recourse or warranty, and (y) such
release shall not in any manner discharge, affect or impair the Obligations or
any Liens upon (or obligations of any Credit Party, in respect of), all
interests retained by any Credit Party, including the proceeds of any sale, all
of which shall continue to constitute part of the Collateral.
(iii) Absence of Duty. Agent shall have no obligation
whatsoever to any Lender or any other Person to assure that the property covered
by the Collateral Documents exists or is owned by Borrowers or any other Credit
Party or is cared for, protected or insured or has been encumbered or that the
Liens granted to Agent have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular priority, or
to exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Agent in this Section 8.2(h) or
in any of the Loan Documents, it being understood and agreed that in respect of
the property covered by the Collateral Documents or any act, omission or event
related thereto, Agent may act in any manner it may deem appropriate, in its
discretion, given Agent's own interest in property covered by the Collateral
Documents as one of the Lenders and that Agent shall have no duty or liability
whatsoever to any of the other Lenders, provided that Agent shall exercise the
same care which it would in dealing with loans for its own account.
(i) Agency for Perfection. Agent and each Lender hereby appoint
each other Lender as agent for the purpose of perfecting Agent's security
interest in assets which, in accordance with the Code in any applicable
jurisdiction, can be perfected by possession or control. Should any Lender
(other than Agent) obtain possession or control of any such assets, such Lender
shall notify Agent thereof, and, promptly upon Agent's request therefor, shall
deliver such assets to Agent or in accordance with Agent's instructions or
transfer control to Agent in accordance with Agent's instructions. Each Lender
agrees that it will not have any right individually to enforce or seek to
enforce any Collateral Document or to realize upon any collateral security for
the Loans unless instructed to do so by Agent in writing, it being understood
and agreed that such rights and remedies may be exercised only by Agent.
(j) Notice of Default. Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default except
with respect to defaults in the payment of principal, interest and Fees required
to be paid to Agent for the account of Lenders, unless Agent shall have received
written notice from a Lender or Borrower Representative referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default". Agent will use reasonable efforts to notify
each Lender of its receipt of any such notice, unless such notice is with
respect to defaults in the payment of principal, interest and fees, in which
case Agent will notify each Lender of its receipt of such notice. Agent shall
take such action with respect to such Default or Event of Default as may be
requested by Requisite Lenders in accordance with Section 6. Unless and until
Agent has received any such request, Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable or in the best interests
of Lenders.
(k) Lender Actions Against Collateral. Each Lender agrees that it
will not take any action, nor institute any actions or proceedings, with respect
to the Loans, against any Borrower or any Credit Party hereunder or under the
other Loan Documents or against any of the Real Estate encumbered by Mortgages
without the consent of the Required Lenders. With respect to any action by Agent
to enforce the rights and remedies of Agent and the Lenders under this Agreement
and the other Loan Documents, each Lender hereby consents to the jurisdiction of
the court in which such action is maintained, and agrees to deliver its Notes to
Agent to the extent necessary to enforce the rights and
46
remedies of Agent for the benefit of the Lenders under the Mortgages in
accordance with the provisions hereof.
8.3. Set Off and Sharing of Payments. In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such
rights, during the continuance of any Event of Default, each Lender is hereby
authorized by Borrowers at any time or from time to time, with reasonably prompt
subsequent notice to Borrower Representative (any prior or contemporaneous
notice being hereby expressly waived) to set off and to appropriate and to apply
any and all (A) balances held by such Lender at any of its offices for the
account of any Borrower or any of its Subsidiaries (regardless of whether such
balances are then due to Borrower or its Subsidiaries), and (B) other property
at any time held or owing by such Lender to or for the credit or for the account
of any Borrower or any of its Subsidiaries, against and on account of any of the
Obligations; except that no Lender shall exercise any such right without the
prior written consent of Agent. Any Lender exercising a right to set off shall
purchase for cash (and the other Lenders shall sell) interests in each of such
other Lender's Pro Rata Share of the Obligations as would be necessary to cause
all Lenders to share the amount so set off with each other Lender in accordance
with their respective Pro Rata Shares. Borrowers agree, to the fullest extent
permitted by law, that any Lender may exercise its right to set off with respect
to amounts in excess of its Pro Rata Share of the Obligations and upon doing so
shall deliver such amount so set off to the Agent for the benefit of all Lenders
in accordance with their Pro Rata Shares.
8.4. Disbursement of Funds. Agent may, on behalf of Lenders, disburse
funds to Borrowers for Loans requested. Each Lender shall reimburse Agent on
demand for all funds disbursed on its behalf by Agent, or if Agent so requests,
each Lender will remit to Agent its Pro Rata Share of any Loan before Agent
disburses same to Borrowers. If Agent elects to require that each Lender make
funds available to Agent prior to a disbursement by Agent to Borrowers, Agent
shall advise each Lender by telephone or fax of the amount of such Lender's Pro
Rata Share of the Loan requested by Borrower Representative no later than 1:00
p.m. (New York time) on the Funding Date applicable thereto, and each such
Lender shall pay Agent such Lender's Pro Rata Share of such requested Loan, in
same day funds, by wire transfer to Agent's account on such Funding Date. If any
Lender fails to pay the amount of its Pro Rata Share within one (1) Business Day
after Agent's demand, Agent shall promptly notify Borrower Representative, and
Borrowers shall immediately repay such amount to Agent. Any repayment required
pursuant to this Section 8.4 shall be without premium or penalty. Nothing in
this Section 8.4 or elsewhere in this Agreement or the other Loan Documents,
including the provisions of Section 8.5, shall be deemed to require Agent to
advance funds on behalf of any Lender or to relieve any Lender from its
obligation to fulfill its commitments hereunder or to prejudice any rights that
Agent or Borrowers may have against any Lender as a result of any default by
such Lender hereunder.
8.5. Disbursements of Advances; Payment.
(a) Advances; Payments.
(i) Agent shall notify Revolving Lenders, promptly after
receipt of a Notice of Revolving Credit Advance and in any event prior to 1:00
p.m. (New York time) on the date such Notice of a Revolving Credit Advance is
received, by fax, telephone or other similar form of transmission. Each
Revolving Lender shall make the amount of such Lender's Pro Rata Share of such
Revolving Credit Advance available to Agent in same day funds by wire transfer
to Agent's account as set forth in Section 1.1(e) not later than 3:00 p.m. (New
York time) on the requested Funding Date in the case of an Index Rate Loans and
not later than 11:00 a.m. (New York time) on the requested Funding Date in the
case of a LIBOR Loan. After receipt of such wire transfers (or, in the Agent's
sole discretion, before receipt of such wire transfers), subject to the terms
hereof, Agent shall make the requested Revolving Credit Advance to Borrowers as
designated by Borrower Representative in the Notice of Revolving
47
Credit Advance. All payments by each Revolving Lender shall be made without
setoff, counterclaim or deduction of any kind.
(ii) At least once each calendar week or more frequently
at Agent's election (each, a "Settlement Date"), Agent shall advise each Lender
by telephone or fax of the amount of such Lender's Pro Rata Share of principal,
interest and Fees paid for the benefit of Lenders with respect to each
applicable Loan. Provided that each Lender has funded all payments and Advances
required to be made by it and purchased all participations required to be
purchased by it under this Agreement and the other Loan Documents as of such
Settlement Date, Agent shall pay to each Lender such Lender's Pro Rata Share of
principal, interest and Fees paid by Borrowers since the previous Settlement
Date for the benefit of such Lender on the Loans held by it. Such payments shall
be made by wire transfer to such Lender's account (as specified by such Lender
in Annex E or the applicable Assignment Agreement) not later than 2:00 p.m. (New
York time) on the next Business Day following each Settlement Date. To the
extent that any Lender (a "Non-Funding Lender") has failed to fund all such
payments and Advances or failed to fund the purchase of all such participations,
Agent shall be entitled to set off the funding shortfall against that
Non-Funding Lender's Pro Rata Share of all payments received from Borrowers.
(b) Availability of Lender's Pro Rata Share. Agent may assume
that each Revolving Lender will make its Pro Rata Share of each Revolving Credit
Advance available to Agent on each Funding Date. If such Pro Rata Share is not,
in fact, paid to Agent by such Revolving Lender when due, Agent will be entitled
to recover such amount on demand from such Revolving Lender without setoff,
counterclaim or deduction of any kind. If any Revolving Lender fails to pay the
amount of its Pro Rata Share forthwith upon Agent's demand, Agent shall promptly
notify Borrower Representative and Borrowers shall immediately repay such amount
to Agent. Nothing in this Section 8.5(b) or elsewhere in this Agreement or the
other Loan Documents shall be deemed to require Agent to advance funds on behalf
of any Revolving Lender or to relieve any Revolving Lender from its obligation
to fulfill its Commitments hereunder or to prejudice any rights that Borrowers
may have against any Revolving Lender as a result of any default by such
Revolving Lender hereunder. To the extent that Agent advances funds to Borrowers
on behalf of any Revolving Lender and is not reimbursed therefor on the same
Business Day as such Advance is made, Agent shall be entitled to retain for its
account all interest accrued on such Advance until reimbursed by the applicable
Revolving Lender.
(c) Return of Payments.
(i) If Agent pays an amount to a Lender under this
Agreement in the belief or expectation that a related payment has been or will
be received by Agent from Borrowers and such related payment is not received by
Agent, then Agent will be entitled to recover such amount from such Lender on
demand without setoff, counterclaim or deduction of any kind.
(ii) If Agent determines at any time that any amount
received by Agent under this Agreement must be returned to any Borrower or paid
to any other Person pursuant to any insolvency law or otherwise, then,
notwithstanding any other term or condition of this Agreement or any other Loan
Document, Agent will not be required to distribute any portion thereof to any
Lender. In addition, each Lender will repay to Agent on demand any portion of
such amount that Agent has distributed to such Lender, together with interest at
such rate, if any, as Agent is required to pay to any Borrower or such other
Person, without setoff, counterclaim or deduction of any kind.
(d) Non-Funding Lenders. The failure of any Non-Funding Lender to
make any Revolving Credit Advance or any payment required by it hereunder, shall
not relieve any other Lender (each such other Revolving Lender, an "Other
Lender") of its obligations to make such Advance, but neither any Other Lender
nor Agent shall be responsible for the failure of any Non-Funding Lender to
48
make an Advance, or make any other payment required hereunder. Notwithstanding
anything set forth herein to the contrary, a Non-Funding Lender shall not have
any voting or consent rights under or with respect to any Loan Document or
constitute a "Lender" or a "Revolving Lender" (or be included in the calculation
of "Requisite Lenders" or "Supermajority Revolving Lenders" hereunder) for any
voting or consent rights under or with respect to any Loan Document.
(e) Dissemination of Information. Agent shall use reasonable
efforts to provide Lenders with any notice of Default or Event of Default
received by Agent from, or delivered by Agent to, any Credit Party, with notice
of any Event of Default of which Agent has actually become aware and with notice
of any action taken by Agent following any Event of Default; provided, that
Agent shall not be liable to any Lender for any failure to do so.
(f) Actions in Concert. Anything in this Agreement to the
contrary notwithstanding, each Lender hereby agrees with each other Lender that
no Lender shall take any action to protect or enforce its rights arising out of
this Agreement or the Notes (including exercising any rights of setoff) without
first obtaining the prior written consent of Agent and Requisite Lenders, it
being the intent of Lenders that any such action to protect or enforce rights
under this Agreement and the Notes shall be taken in concert and at the
direction or with the consent of Agent or Requisite Lenders. Agent is authorized
to issue all notices to be issued by or on behalf of the Lenders with respect to
any Subordinated Debt and in respect of the Senior Notes and Inter-Creditor
Agreement.
SECTION 9.
MISCELLANEOUS
9.1. Indemnities. Borrowers agree, jointly and severally, to indemnify,
pay, and hold Agent, each Lender, each L/C Issuer and their respective officers,
directors, employees, agents, and attorneys (the "Indemnitees") harmless from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs and expenses (including all reasonable
fees and expenses of counsel to such Indemnitees) of any kind or nature
whatsoever that may be imposed on, incurred by, or asserted against the
Indemnitee as a result of such Indemnitees being a party to this Agreement or
the transactions consummated pursuant to this Agreement or otherwise relating to
any of the Related Transactions; provided, that Borrowers shall have no
obligation to an Indemnitee hereunder with respect to liabilities to the extent
resulting from the gross negligence or willful misconduct of that Indemnitee as
determined by a court of competent jurisdiction. If and to the extent that the
foregoing undertaking may be unenforceable for any reason, Borrowers agree to
make the maximum contribution to the payment and satisfaction thereof which is
permissible under applicable law.
9.2. Amendments and Waivers.
(a) Except for actions expressly permitted to be taken by Agent,
no amendment, modification, termination or waiver of any provision of this
Agreement or any other Loan Document, or any consent to any departure by any
Credit Party therefrom, shall in any event be effective unless the same shall be
in writing and signed by Borrowers, and by Requisite Lenders, Supermajority
Revolving Lenders or all affected Lenders, as applicable. Except as set forth in
clauses (b) and (c) below, all such amendments, modifications, terminations or
waivers requiring the consent of any Lenders shall require the written consent
of Requisite Lenders.
(b) No amendment, modification, termination or waiver of or
consent with respect to any provision of this Agreement that increases the
percentage advance rates set forth in the definition of the LP Borrowing Base,
the NU Borrowing Base or the USA Borrowing Base, or that makes less
49
restrictive the nondiscretionary criteria for exclusion from Eligible Accounts
and Eligible Inventory set forth in Exhibit 4.9(d), shall be effective unless
the same shall be in writing and signed by Agent, Supermajority Revolving
Lenders and Borrowers. No amendment, modification, termination or waiver of or
consent with respect to any provision of this Agreement that waives compliance
with the conditions precedent set forth in Section 7.2 to the making of any Loan
or the incurrence of any Letter of Credit Obligations shall be effective unless
the same shall be in writing and signed by Agent, Requisite Lenders and
Borrowers. Notwithstanding anything contained in this Agreement to the contrary,
no waiver or consent with respect to any Default or any Event of Default shall
be effective for purposes of the conditions precedent to the making of Loans or
the incurrence of Letter of Credit Obligations set forth in Section 7.2 unless
the same shall be in writing and signed by Agent, Requisite Lenders and
Borrowers.
(c) No amendment, modification, termination or waiver shall,
unless in writing and signed by Agent and each Lender directly affected thereby:
(i) increase the principal amount of any Lender's Commitment (which action shall
be deemed only to affect those Lenders whose Commitments are increased and may
be approved by Requisite Lenders, including those Lenders whose Commitments are
increased); (ii) reduce the principal of, rate of interest on or Fees payable
with respect to any Loan or Letter of Credit Obligations of any affected Lender;
(iii) extend any scheduled payment date or final maturity date of the principal
amount of any Loan of any affected Lender; (iv) waive, forgive, defer, extend or
postpone any payment of interest or Fees as to any affected Lender (which action
shall be deemed only to affect those Lenders to whom such payments are made);
(v) release any Guaranty or, except as otherwise permitted in Section 3.7,
release Collateral with a book value exceeding 5% of the book value of all
assets in the aggregate in any one (1) year (which action shall be deemed to
directly affect all Lenders); (vi) change the percentage of the Commitments or
of the aggregate unpaid principal amount of the Loans that shall be required for
Lenders or any of them to take any action hereunder; and (vii) amend or waive
this Section 9.2 or the definitions of the terms "Requisite Lenders" or
"Supermajority Revolving Lenders" insofar as such definitions affect the
substance of this Section 9.2. Furthermore, no amendment, modification,
termination or waiver affecting the rights or duties of Agent or L/C Issuers
under this Agreement or any other Loan Document shall be effective unless in
writing and signed by Agent or L/C Issuers, as the case may be, in addition to
Lenders required hereinabove to take such action. Each amendment, modification,
termination or waiver shall be effective only in the specific instance and for
the specific purpose for which it was given. No amendment, modification,
termination or waiver shall be required for Agent to take additional Collateral
pursuant to any Loan Document. No amendment, modification, termination or waiver
of any provision of any Note shall be effective without the written concurrence
of the holder of that Note. No notice to or demand on any Credit Party in any
case shall entitle such Credit Party or any other Credit Party to any other or
further notice or demand in similar or other circumstances. Any amendment,
modification, termination, waiver or consent effected in accordance with this
Section 9.2 shall be binding upon each holder of the Notes at the time
outstanding and each future holder of the Notes.
9.3. Notices. Any notice or other communication required shall be in
writing addressed to the respective party as set forth below and may be
personally served, telecopied, sent by overnight courier service or U.S. mail
and shall be deemed to have been given: (a) if delivered in person, when
delivered; (b) if delivered by fax, on the date of transmission if transmitted
on a Business Day before 4:00 p.m. New York Time; (c) if delivered by overnight
courier, one (1) Business Day after delivery to the courier properly addressed;
or (d) if delivered by U.S. mail, four (4) Business Days after deposit with
postage prepaid and properly addressed.
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Notices shall be addressed as follows:
If to Borrower Representative: GOLFSMITH INTERNATIONAL, INC.
00000 Xxxxx XX-00
Xxxxxx, Xxxxx 00000
ATTN: Xxxx Xxxxxx
Fax: (000) 000-0000
With a copy to: First Atlantic Capital, Ltd.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
ATTN: Xxxx Xxxxxx
Fax: (000) 000-0000
If to Agent or GE Capital: GENERAL ELECTRIC CAPITAL CORPORATION
000 Xxxxxxx Xxx
Xxx Xxxx, Xxx Xxxx 00000
ATTN: Golfsmith Account Officer
Fax: (000) 000-0000
With a copy to: GENERAL ELECTRIC CAPITAL
CORPORATION
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
ATTN: Corporate Counsel
Commercial Finance - Merchant Banking
Fax: (000) 000-0000
and
GENERAL ELECTRIC CAPITAL
CORPORATION
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
ATTN: Corporate Counsel
Commercial Finance - Merchant Banking
Fax: (000) 000-0000
If to a Lender: To the address set forth on the signature page
hereto or in the applicable Assignment
Agreement
9.4. Failure or Indulgence Not Waiver; Remedies Cumulative. No failure
or delay on the part of Agent or any Lender to exercise, nor any partial
exercise of, any power, right or privilege hereunder or under any other Loan
Documents shall impair such power, right, or privilege or be construed to be a
waiver of any Default or Event of Default. All rights and remedies existing
hereunder or under any other Loan Document are cumulative to and not exclusive
of any rights or remedies otherwise available.
9.5. Marshaling; Payments Set Aside. Neither Agent nor any Lender shall
be under any obligation to marshal any assets in payment of any or all of the
Obligations. To the extent that Borrowers make payment(s) or Agent enforces its
Liens or Agent or any Lender exercises its right of set-off, and such payment(s)
or the proceeds of such enforcement or set-off is subsequently invalidated,
declared to be
51
fraudulent or preferential, set aside, or required to be repaid by anyone, then
to the extent of such recovery, the Obligations or part thereof originally
intended to be satisfied, and all Liens, rights and remedies therefor, shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or set-off had not occurred.
9.6. Severability. The invalidity, illegality, or unenforceability in
any jurisdiction of any provision under the Loan Documents shall not affect or
impair the remaining provisions in the Loan Documents.
9.7. Lenders' Obligations Several; Independent Nature of Lenders'
Rights. The obligation of each Lender hereunder is several and not joint and no
Lender shall be responsible for the obligation or commitment of any other Lender
hereunder. In the event that any Lender at any time should fail to make a Loan
as herein provided, the Lenders, or any of them, at their sole option, may make
the Loan that was to have been made by the Lender so failing to make such Loan.
Nothing contained in any Loan Document and no action taken by Agent or any
Lender pursuant hereto or thereto shall be deemed to constitute Lenders to be a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt.
9.8. Headings. Section and subsection headings are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purposes or be given substantive effect.
9.9. Applicable Law. THIS AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS
WHICH DOES NOT EXPRESSLY SET FORTH APPLICABLE LAW SHALL BE GOVERNED BY AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.
9.10. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns except that Borrowers may not assign their rights or
obligations hereunder without the written consent of all Lenders which
assignment without such consent shall be void.
9.11. No Fiduciary Relationship; Limited Liability. No provision in the
Loan Documents and no course of dealing between the parties shall be deemed to
create any fiduciary duty owing to any Credit Party by Agent or any Lender. Each
Credit Party agrees that neither Agent nor any Lender shall have liability to
any Credit Party (whether sounding in tort, contract or otherwise) for losses
suffered by any Credit Party in connection with, arising out of, or in any way
related to the transactions contemplated and the relationship established by the
Loan Documents, or any act, omission or event occurring in connection therewith,
unless and to the extent that it is determined that such losses resulted from
the gross negligence or willful misconduct of the party from which recovery is
sought as determined by a final non-appealable order by a court of competent
jurisdiction. Neither Agent nor any Lender shall have any liability with respect
to, and each Credit Party hereby waives, releases and agrees not to xxx for, any
special, indirect or consequential damages suffered by any Credit Party in
connection with, arising out of, or in any way related to the Loan Documents or
the transactions contemplated thereby.
9.12. Construction. Agent, each Lender, Borrowers and each other Credit
Party acknowledge that each of them has had the benefit of legal counsel of its
own choice and has been afforded an opportunity to review the Loan Documents
with its legal counsel and that the Loan Documents shall be construed as if
jointly drafted by Agent, each Lender, Borrowers and each other Credit Party.
52
9.13. Confidentiality. Agent and each Lender agree to exercise their
best efforts to keep confidential any non-public information delivered pursuant
to the Loan Documents and identified as such by Borrower Representative and not
to disclose such information to Persons other than to potential assignees or
participants or to Persons employed by or engaged by Agent a Lender or a
Lender's assignees or participants including attorneys, auditors, professional
consultants, rating agencies, insurance industry associations and portfolio
management services. The confidentiality provisions contained in this Section
9.13 shall not apply to disclosures (i) required to be made by Agent or any
Lender to any regulatory or governmental agency or pursuant to legal process or
(ii) consisting of general portfolio information that does not identify
Borrowers. The obligations of Agent and Lenders under this Section 9.13 shall
supersede and replace the obligations of Agent and Lenders under any
confidentiality agreement in respect of this financing executed and delivered by
Agent or any Lender prior to the date hereof.
9.14. CONSENT TO JURISDICTION. BORROWERS AND CREDIT PARTIES HEREBY
CONSENT TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN NEW
YORK COUNTY, STATE OF NEW YORK AND IRREVOCABLY AGREE THAT, SUBJECT TO AGENT'S
ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE OTHER LOAN DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS.
BORROWERS AND CREDIT PARTIES EXPRESSLY SUBMIT AND CONSENT TO THE JURISDICTION OF
THE AFORESAID COURTS AND WAIVE ANY DEFENSE OF FORUM NON CONVENIENS. BORROWERS
AND CREDIT PARTIES HEREBY WAIVE PERSONAL SERVICE OF ANY AND ALL PROCESS AND
AGREE THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON BORROWERS AND CREDIT
PARTIES BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO
BORROWER REPRESENTATIVE, AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND SERVICE
SO MADE SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED. IN ANY
LITIGATION, TRIAL, ARBITRATION OR OTHER DISPUTE RESOLUTION PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, ALL DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS OF BORROWERS, CREDIT PARTIES OR ANY OF THEIR AFFILIATES
SHALL BE DEEMED TO BE EMPLOYEES OR MANAGING AGENTS OF BORROWERS OR SUCH CREDIT
PARTIES FOR PURPOSES OF ALL APPLICABLE LAW OR COURT RULES REGARDING THE
PRODUCTION OF WITNESSES BY NOTICE FOR TESTIMONY (WHETHER IN A DEPOSITION, AT
TRIAL OR OTHERWISE). BORROWERS AND CREDIT PARTIES AGREE THAT AGENT'S OR ANY
LENDER'S COUNSEL IN ANY SUCH DISPUTE RESOLUTION PROCEEDING MAY EXAMINE ANY OF
THESE INDIVIDUALS AS IF UNDER CROSS-EXAMINATION AND THAT ANY DISCOVERY
DEPOSITION OF ANY OF THEM MAY BE USED IN THAT PROCEEDING AS IF IT WERE AN
EVIDENCE DEPOSITION. BORROWERS AND CREDIT PARTIES IN ANY EVENT WILL USE ALL
COMMERCIALLY REASONABLE EFFORTS TO PRODUCE IN ANY SUCH DISPUTE RESOLUTION
PROCEEDING, AT THE TIME AND IN THE MANNER REQUESTED BY AGENT OR ANY LENDER, ALL
PERSONS, DOCUMENTS (WHETHER IN TANGIBLE, ELECTRONIC OR OTHER FORM) OR OTHER
THINGS UNDER THEIR CONTROL AND RELATING TO THE DISPUTE.
9.15. WAIVER OF JURY TRIAL. BORROWERS, CREDIT PARTIES, AGENT AND EACH
LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS. BORROWERS, CREDIT PARTIES, AGENT AND EACH LENDER ACKNOWLEDGE THAT
THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT
EACH HAS RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED
FUTURE DEALINGS.
53
BORROWERS, CREDIT PARTIES, AGENT AND EACH LENDER WARRANT AND REPRESENT THAT EACH
HAS HAD THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND
THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.
9.16. Survival of Warranties and Certain Agreements. All agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement, the making of the Loans, issuances of Letters of
Credit and the execution and delivery of the Notes. Notwithstanding anything in
this Agreement or implied by law to the contrary, the agreements of Borrowers
set forth in Sections 1.3(g), 1.10, 1.11 and 9.1 shall survive the repayment of
the Obligations and the termination of this Agreement.
9.17. Entire Agreement. This Agreement, the Notes and the other Loan
Documents embody the entire agreement among the parties hereto and supersede all
prior commitments, agreements, representations, and understandings, whether oral
or written, relating to the subject matter hereof, and may not be contradicted
or varied by evidence of prior, contemporaneous, or subsequent oral agreements
or discussions of the parties hereto. All Exhibits, Schedules and Annexes
referred to herein are incorporated in this Agreement by reference and
constitute a part of this Agreement.
9.18. Counterparts; Effectiveness. This Agreement and any amendments,
waivers, consents or supplements may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all of which
counterparts together shall constitute but one in the same instrument. This
Agreement shall become effective upon the execution of a counterpart hereof by
each of the parties hereto.
9.19. Replacement of Lenders.
(a) Within fifteen (15) days after receipt by Borrower
Representative of written notice and demand from any Lender for payment pursuant
to Section 1.10 or 1.11 or, as provided in this Section 9.19(c), in the case of
certain refusals by any Lender to consent to certain proposed amendments,
modifications, terminations or waivers with respect to this Agreement that have
been approved by Requisite Lenders, Supermajority Revolving Lenders or all
affected Lenders, as applicable (any such Lender demanding such payment or
refusing to so consent being referred to herein as an "Affected Lender"),
Borrowers may, at their option, notify Agent and such Affected Lender of its
intention to do one of the following:
(i) Borrowers may obtain, at Borrowers' expense, a
replacement Lender ("Replacement Lender") for such Affected Lender, which
Replacement Lender shall be reasonably satisfactory to Agent. In the event
Borrowers obtain a Replacement Lender that will purchase all outstanding
Obligations owed to such Affected Lender and assume its Commitments hereunder
within ninety (90) days following notice of Borrowers' intention to do so, the
Affected Lender shall sell and assign all of its rights and delegate all of its
obligations under this Agreement to such Replacement Lender in accordance with
the provisions of Section 8.1, provided that Borrowers have reimbursed such
Affected Lender for any administrative fee payable pursuant to Section 8.1 and,
in any case where such replacement occurs as the result of a demand for payment
pursuant to Section 1.10 or 1.11, paid all amounts required to be paid to such
Affected Lender pursuant to Section 1.10 or 1.11 through the date of such sale
and assignment; or
(ii) Borrowers may, with Agent's consent, prepay in full
all outstanding Obligations owed to such Affected Lender and terminate such
Affected Lender's Pro Rata Share of the Revolving Loan Commitment, in which case
the Revolving Loan Commitment will be reduced by the
54
amount of such Pro Rata Share. Borrowers shall, within ninety (90) days
following notice of their intention to do so, prepay in full all outstanding
Obligations owed to such Affected Lender (including, in any case where such
prepayment occurs as the result of a demand for payment for increased costs,
such Affected Lender's increased costs for which it is entitled to reimbursement
under this Agreement through the date of such prepayment), and terminate such
Affected Lender's obligations under the Revolving Loan Commitment.
(b) In the case of a Non-Funding Lender pursuant to Section
8.5(a), at Borrower Representative's request, Agent or a Person acceptable to
Agent shall have the right with Agent's consent and in Agent's sole discretion
(but shall have no obligation) to purchase from any Non-Funding Lender, and each
Non-Funding Lender agrees that it shall, at Agent's request, sell and assign to
Agent or such Person, all of the Loans and Commitments of that Non-Funding
Lender for an amount equal to the principal balance of all Loans held by such
Non-Funding Lender and all accrued interest and Fees with respect thereto
through the date of sale, such purchase and sale to be consummated pursuant to
an executed Assignment Agreement.
(c) If, in connection with any proposed amendment, modification,
waiver or termination pursuant to Section 9.2 (a "Proposed Change"):
(i) requiring the consent of all affected Lenders, the
consent of Requisite Lenders is obtained, but the consent of other Lenders whose
consent is required is not obtained (any such Lender whose consent is not
obtained as described in this clause (i) and in clauses (ii), (iii) and (iv)
below being referred to as a "Non-Consenting Lender"),
(ii) requiring the consent of Supermajority Revolving
Lenders, the consent of Requisite Lenders is obtained, but the consent of
Supermajority Revolving Lenders is not obtained, or
(iii) requiring the consent of Requisite Lenders, the
consent of Lenders holding 51% or more of the aggregate Commitments is obtained,
but the consent of Requisite Lenders is not obtained.
then, so long as Agent is not a Non-Consenting Lender, at Borrower
Representative's request Agent, or a Person reasonably acceptable to Agent,
shall have the right with Agent's consent and in Agent's sole discretion (but
shall have no obligation) to purchase from such Non-Consenting Lenders, and such
Non-Consenting Lenders agree that they shall, upon Agent's request, sell and
assign to Agent or such Person, all of the Loans and Commitments of such
Non-Consenting Lenders for an amount equal to the principal balance of all Loans
held by the Non-Consenting Lenders and all accrued interest and Fees with
respect thereto through the date of sale, such purchase and sale to be
consummated pursuant to an executed Assignment Agreement.
9.20. Delivery of Termination Statements. Upon payment in full in cash
and performance of all of the Obligations (other than indemnification
Obligations), termination of the Commitments and a release of all claims against
Agent and Lenders, and so long as no suits, actions proceedings, or claims are
pending or threatened against any Indemnitee asserting any damages, losses or
liabilities that are indemnified liabilities hereunder, Agent shall deliver to
Borrower Representative termination statements, and other documents necessary or
appropriate to evidence the termination of the Liens securing payment of the
Obligations.
9.21. Default Purchase Option. Agent agrees to promptly provide notice
to the Trustee under the Indenture when there has occurred (1) the maturity
(including as a result of acceleration or the commencement of an Event of
Default under Section 6.1(f) or 6.1(g)) of the Obligations or (2) the
55
termination of the Revolving Loan Commitment (the occurrence of (1) or (2), an
"Occurrence"). Such notice (the "Default Notice") shall include the name and
address of each Lender, and Agent agrees to notify Trustee of the name and
address of any new Lender that acquires a Loan during the period beginning on
the date of an Occurrence and ending on the earlier of the date twenty (20)
Business Days following the delivery of the Default Notice or the Noteholder(s)
(as hereinafter defined) Properly Elects under this Section 9.21. If one or more
Noteholders (as defined in the Inter-Creditor Agreement) Properly Elects to
purchase all "Senior Lender Claims" (as such term is defined in the
Inter-Creditor Agreement), each Lender shall, upon and subject to the terms set
forth below, sell to such Noteholders all, but not less than all, of the Senior
Lender Claims held by it that are outstanding at the time of purchase (except
Unasserted Contingent Obligations (as defined in the Inter-Creditor Agreement))
then outstanding, together with all rights of such Lender with respect to Liens
securing such Obligations and all Guarantees and other supporting obligations
relating to such Obligations and all rights of such Lender in respect thereof,
other the rights in respect of Unasserted Contingent Obligations (as defined in
the Inter-Creditor Agreement) and rights in respect of undrawn Letters of Credit
(the "Subject Property"), upon the following terms and conditions: (a) for a
purchase price equal to 100% of the principal amount and accrued interest
outstanding on the Obligations included in the Subject Property on the date of
purchase plus 100% of all other Obligations included in the Subject Property
(including LIBOR Breakage Fees) then unpaid, (b) with such purchase price
payable in cash on the date of purchase (which date of purchase shall occur
before the latter of (i) twenty (20) Business Days following the date of receipt
by such Trustee of the Default Notice and (ii) five (5) Business Days after such
Noteholder(s) shall have Properly Elected to purchase under this Section 9.21),
against transfer to such Noteholder(s) (such transfer to be without recourse and
without any representation or warranty whatsoever, whether as to the
enforceability of any Obligations included in the Subject Property or the
validity, enforceability, perfection or priority or sufficiency of any Lien
securing, or Guaranty or other supporting obligation for, any Obligations
included in the Subject Property or as to any other matter whatsoever, other
than the representation and warranty that the Subject Property is being sold and
transferred without any adverse claim created by the applicable Lender), (c)
with such purchase accompanied by a deposit by such Noteholder(s) or the Trustee
of cash collateral under control of the Agent or, at the direction of the Agent,
the applicable L/C Issuer or L/C Issuers (pursuant to agreements reasonably
acceptable to the Agent or such L/C Issuer or L/C Issuers, as the case may be,
and with a depositary reasonably acceptable to the Agent or such L/C Issuer or
L/C Issuers, as the case may be) in an amount equal to 105% of the undrawn
amount of each Letter of Credit then outstanding, as security for the additional
obligation of the purchaser to purchase, at par plus accrued interest, the
reimbursement obligation in respect of such Letters of Credit as and when such
Letters of Credit are funded and to pay all Obligations included in the Subject
Property then outstanding relating to such Letter of Credit, (d) no Lender shall
be required to sell any Senior Lender Claims unless one or more Noteholders
Properly Elects to purchase all Senior Lender Claims held by all Lenders and all
Senior Lender Claims of all Lenders are sold concurrently and (e) upon documents
reasonably acceptable to Agent, such Lender, the Trustee and such Noteholder(s)
and consistent with the foregoing clauses (a) through (d). The option to
purchase under this Section 9.21 is exercisable only once. The term "Properly
Elects" means the delivery by such Noteholder(s) or the Trustee on its (or
their) behalf during the period that begins on the date of an Occurrence and
ends on the twentieth (20th) Business Day following receipt by the Trustee of a
Default Notice, to the Agent and each Lender by such Noteholder(s) of an
irrevocable written notice to purchase all "Senior Lender Claims" (as such term
is defined in the Inter-Creditor Agreement) pursuant to the terms of this
Section 9.21. Notwithstanding anything to the contrary herein or in the
Inter-Creditor Agreement, the Noteholders shall be a third-party beneficiary of
this Section 9.21, and no amendments or modifications of this Section 9.21 shall
be made or become effective without the written consent of the Noteholders
holding more than 50% of the principal of the Notes (as defined in the
Inter-Creditor Agreement).
56
SECTION 10.
CROSS-GUARANTY
10.1. Cross-Guaranty. Each Borrower hereby agrees that such Borrower is
jointly and severally liable for, and hereby absolutely and unconditionally
guarantees to Agent and Lenders and their respective successors and assigns, the
full and prompt payment (whether at stated maturity, by acceleration or
otherwise) and performance of, all Obligations owed or hereafter owing to Agent
and Lenders by each other Borrower. Each Borrower agrees that its guaranty
obligation hereunder is a continuing guaranty of payment and performance and not
of collection, that its obligations under this Section 10 shall not be
discharged until payment and performance, in full, of the Obligations has
occurred, and that its obligations under this Section 10 shall be absolute and
unconditional, irrespective of, and unaffected by,
(a) the genuineness, validity, regularity, enforceability or any
future amendment of, or change in, this Agreement, any other Loan Document or
any other agreement, document or instrument to which any Borrower is or may
become a party;
(b) the absence of any action to enforce this Agreement
(including this Section 10) or any other Loan Document or the waiver or consent
by Agent and Lenders with respect to any of the provisions thereof;
(c) the existence, value or condition of, or failure to perfect
its Lien against, any security for the Obligations or any action, or the absence
of any action, by Agent and Lenders in respect thereof (including the release of
any such security);
(d) the insolvency of any Credit Party; or
(e) any other action or circumstances that might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor.
Each Borrower shall be regarded, and shall be in the same position, as principal
debtor with respect to the Obligations guaranteed hereunder.
10.2. Waivers by Borrowers. Each Borrower expressly waives all rights it
may have now or in the future under any statute, or at common law, or at law or
in equity, or otherwise, to compel Agent or Lenders to marshal assets or to
proceed in respect of the Obligations guaranteed hereunder against any other
Credit Party, any other party or against any security for the payment and
performance of the Obligations before proceeding against, or as a condition to
proceeding against, such Borrower. It is agreed among each Borrower, Agent and
Lenders that the foregoing waivers are of the essence of the transaction
contemplated by this Agreement and the other Loan Documents and that, but for
the provisions of this Section 10 and such waivers, Agent and Lenders would
decline to enter into this Agreement.
10.3. Benefit of Guaranty. Each Borrower agrees that the provisions of
this Section 10 are for the benefit of Agent and Lenders and their respective
successors, transferees, endorsees and assigns, and nothing herein contained
shall impair, as between any other Borrower and Agent or Lenders, the
obligations of such other Borrower under the Loan Documents.
10.4. Waiver of Subrogation, Etc. Notwithstanding anything to the
contrary in this Agreement or in any other Loan Document, and except as set
forth in Section 10.7, each Borrower hereby expressly
57
and irrevocably waives any and all rights at law or in equity to subrogation,
reimbursement, exoneration, contribution, indemnification or set off and any and
all defenses available to a surety, guarantor or accommodation co-obligor. Each
Borrower acknowledges and agrees that this waiver is intended to benefit Agent
and Lenders and shall not limit or otherwise affect such Borrower's liability
hereunder or the enforceability of this Section 10, and that Agent, Lenders and
their respective successors and assigns are intended third party beneficiaries
of the waivers and agreements set forth in this Section 10.4.
10.5. Election of Remedies. If Agent or any Lender may, under applicable
law, proceed to realize its benefits under any of the Loan Documents giving
Agent or such Lender a Lien upon any Collateral, whether owned by any Borrower
or by any other Person, either by judicial foreclosure or by non-judicial sale
or enforcement, Agent or any Lender may, at its sole option, determine which of
its remedies or rights it may pursue without affecting any of its rights and
remedies under this Section 10. If, in the exercise of any of its rights and
remedies, Agent or any Lender shall forfeit any of its rights or remedies,
including its right to enter a deficiency judgment against any Borrower or any
other Person, whether because of any applicable laws pertaining to "election of
remedies" or the like, each Borrower hereby consents to such action by Agent or
such Lender and waives any claim based upon such action, even if such action by
Agent or such Lender shall result in a full or partial loss of any rights of
subrogation that each Borrower might otherwise have had but for such action by
Agent or such Lender. Any election of remedies that results in the denial or
impairment of the right of Agent or any Lender to seek a deficiency judgment
against any Borrower shall not impair any other Borrower's obligation to pay the
full amount of the Obligations. In the event Agent or any Lender shall bid at
any foreclosure or trustee's sale or at any private sale permitted by law or the
Loan Documents, Agent or such Lender may bid all or less than the amount of the
Obligations and the amount of such bid need not be paid by Agent or such Lender
but shall be credited against the Obligations. The amount of the successful bid
at any such sale, whether Agent, Lender or any other party is the successful
bidder, shall be conclusively deemed to be the fair market value of the
Collateral and the difference between such bid amount and the remaining balance
of the Obligations shall be conclusively deemed to be the amount of the
Obligations guaranteed under this Section 10, notwithstanding that any present
or future law or court decision or ruling may have the effect of reducing the
amount of any deficiency claim to which Agent or any Lender might otherwise be
entitled but for such bidding at any such sale.
10.6. Limitation. Notwithstanding any provision herein contained to the
contrary, each Borrower's liability under this Section 10 (which liability is in
any event in addition to amounts for which such Borrower is primarily liable
under Section 1) shall be limited to an amount not to exceed as of any date of
determination the greater of:
(a) the net amount of all Loans advanced to any other Borrower
under this Agreement and then re-loaned or otherwise transferred to, or for the
benefit of, such Borrower; and
(b) the amount that could be claimed by Agent and Lenders from
such Borrower under this Section 10 without rendering such claim voidable or
avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any
applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance
Act or similar statute or common law after taking into account, among other
things, such Borrower's right of contribution and indemnification from each
other Borrower under Section 10.7.
10.7. Contribution with Respect to Guaranty Obligations.
(a) To the extent that any Borrower shall make a payment under
this Section 10 of all or any of the Obligations (other than Loans made to that
Borrower for which it is primarily liable) (a "Guarantor Payment") that, taking
into account all other Guarantor Payments then previously or
58
concurrently made by any other Borrower, exceeds the amount that such Borrower
would otherwise have paid if each Borrower had paid the aggregate Obligations
satisfied by such Guarantor Payment in the same proportion that such Borrower's
"Allocable Amount" (as defined below) (as determined immediately prior to such
Guarantor Payment) bore to the aggregate Allocable Amounts of each of the
Borrowers as determined immediately prior to the making of such Guarantor
Payment, then, following indefeasible payment in full in cash of the Obligations
and termination of the Commitments, such Borrower shall be entitled to receive
contribution and indemnification payments from, and be reimbursed by, each other
Borrower for the amount of such excess, pro rata based upon their respective
Allocable Amounts in effect immediately prior to such Guarantor Payment.
(b) As of any date of determination, the "Allocable Amount" of
any Borrower shall be equal to the maximum amount of the claim that could then
be recovered from such Borrower under this Section 10 without rendering such
claim voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy
Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform
Fraudulent Conveyance Act or similar statute or common law.
(c) This Section 10.7 is intended only to define the relative
rights of Borrowers and nothing set forth in this Section 10.7 is intended to or
shall impair the obligations of Borrowers, jointly and severally, to pay any
amounts as and when the same shall become due and payable in accordance with the
terms of this Agreement, including Section 10.1. Nothing contained in this
Section 10.7 shall limit the liability of any Borrower to pay the Loans made
directly or indirectly to that Borrower and accrued interest, Fees and expenses
with respect thereto for which such Borrower shall be primarily liable.
(d) The parties hereto acknowledge that the rights of
contribution and indemnification hereunder shall constitute assets of the
Borrower to which such contribution and indemnification is owing.
(e) The rights of the indemnifying Borrowers against other Credit
Parties under this Section 10.7 shall be exercisable upon the full and
indefeasible payment of the Obligations and the termination of the Commitments.
10.8. Liability Cumulative. The liability of Borrowers under this
Section 10 is in addition to and shall be cumulative with all liabilities of
each Borrower to Agent and Lenders under this Agreement and the other Loan
Documents to which such Borrower is a party or in respect of any Obligations or
obligation of the other Borrower, without any limitation as to amount, unless
the instrument or agreement evidencing or creating such other liability
specifically provides to the contrary.
[SIGNATURES CONTINUE ON FOLLOWING PAGES.]
59
Witness the due execution hereof by the respective duly authorized officers of
the undersigned as of the date first written above.
GOLFSMITH INTERNATIONAL, L.P.
By Golfsmith GP, L.L.C., as General Partner
By Golfsmith Holdings, L.P., as Sole Member
By Golfsmith GP Holdings, Inc., as General Partner
By /s/ XXXX X. XXXXXX
-----------------------------------------------
Xxxx X. Xxxxxx
Vice President
GOLFSMITH NU, L.L.C.
By Golfsmith Holdings, L.P., as Sole Member
By Golfsmith GP Holdings, Inc., as General Partner
By /s/ XXXX X. XXXXXX
-----------------------------------------------
Xxxx X. Xxxxxx
Vice President
GOLFSMITH USA, L.L.C.
By Golfsmith Holdings, L.P., as Sole Member
By Golfsmith GP Holdings, Inc., as General Partner
By /s/ XXXX X. XXXXXX
-----------------------------------------------
Xxxx X. Xxxxxx
Vice President
GOLFSMITH INTERNATIONAL, INC.
By /s/ XXXX X. XXXXXX
-----------------------------------------------
Xxxx X. Xxxxxx
Vice President
GOLFSMITH INTERNATIONAL HOLDINGS, INC.
By /s/ XXXX X. XXXXXX
-----------------------------------------------
Xxxx X. Xxxxxx
Vice President
SIGNATURE PAGE TO GOLFSMITH CREDIT AGREEMENT
GOLFSMITH GP HOLDINGS, INC.
By /s/ XXXX X. XXXXXX
-----------------------------------------------
Xxxx X. Xxxxxx
Vice President
GOLFSMITH HOLDINGS, L.P.
By Golfsmith GP Holdings, Inc., as General Partner
By /s/ XXXX X. XXXXXX
-----------------------------------------------
Xxxx X. Xxxxxx
Vice President
GOLFSMITH GP, L.L.C.
By Golfsmith Holdings, L.P., as Sole Member
By Golfsmith GP Holdings, Inc., as General Partner
By /s/ XXXX X. XXXXXX
-----------------------------------------------
Xxxx X. Xxxxxx
Vice President
GOLFSMITH DELAWARE, L.L.C.
By Golfsmith Holdings, L.P., as Sole Member
By Golfsmith GP Holdings, Inc., as General Partner
By /s/ XXXX X. XXXXXX
-----------------------------------------------
Xxxx X. Xxxxxx
Vice President
GOLFSMITH CANADA, L.L.C.
By Golfsmith Holdings, L.P., as Sole Member
By Golfsmith GP Holdings, Inc., as General Partner
By /s/ XXXX X. XXXXXX
-----------------------------------------------
Xxxx X. Xxxxxx
Vice President
SIGNATURE PAGE TO GOLFSMITH CREDIT AGREEMENT
GOLFSMITH EUROPE, L.L.C.
By Golfsmith Holdings, L.P., as Sole Member
By Golfsmith GP Holdings, Inc., as General Partner
By /s/ XXXX X. XXXXXX
-----------------------------------------------
Xxxx X. Xxxxxx
Vice President
GOLFSMITH LICENSING, L.L.C.
By Golfsmith Holdings, L.P., as Sole Member
By Golfsmith GP Holdings, Inc., as General Partner
By /s/ XXXX X. XXXXXX
-----------------------------------------------
Xxxx X. Xxxxxx
Vice President
GENERAL ELECTRIC CAPITAL CORPORATION,
AS AGENT, AN L/C ISSUER AND A LENDER
By: /s/ LAURENT PARIS
-----------------------------------------------
Name: Laurent Paris
its Duly Authorized Signatory
SIGNATURE PAGE TO GOLFSMITH CREDIT AGREEMENT
ANNEX A
TO
CREDIT AGREEMENT
DEFINITIONS
Capitalized terms used in the Loan Documents shall have (unless
otherwise provided elsewhere in the Loan Documents) the following respective
meanings and all references to Sections, Exhibits, Schedules or Annexes in the
following definitions shall refer to Sections, Exhibits, Schedules or Annexes of
or to the Agreement:
"Account Debtor" means any Person who may become obligated to any
Credit Party under, with respect to, or on account of, an Account, Chattel Paper
or General Intangibles (including a payment intangible).
"Accounting Changes" means: (a) changes in accounting principles
required by GAAP and implemented by Holdings or any of its Subsidiaries; (b)
changes in accounting principles recommended by Holdings' certified public
accountants and implemented by Holdings or any of its Subsidiaries; and (c)
changes in carrying value of Holdings' or any of its Subsidiaries' assets,
liabilities or equity accounts resulting from (i) the application of purchase
accounting principles (A.P.B. 16 and/or 17 and EITF 88-16 and FASB 109) to the
Related Transactions or (ii) as the result of any other adjustments that, in
each case, were applicable to, but not included in, the Pro Forma.
"Accounts" means all "accounts," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, including (a) all
accounts receivable, other receivables, book debts and other forms of
obligations (other than forms of obligations evidenced by Chattel Paper or
Instruments), (including any such obligations that may be characterized as an
account or contract right under the Code), (b) all of each Credit Party's rights
in, to and under all purchase orders or receipts for goods or services, (c) all
of each Credit Party's rights to any goods represented by any of the foregoing
(including unpaid sellers' rights of rescission, replevin, reclamation and
stoppage in transit and rights to returned, reclaimed or repossessed goods), (d)
all rights to payment due to any Credit Party for property sold, leased,
licensed, assigned or otherwise disposed of, for a policy of insurance issued or
to be issued, for a secondary obligation incurred or to be incurred, for energy
provided or to be provided, for the use or hire of a vessel under a charter or
other contract, arising out of the use of a credit card or charge card, or for
services rendered or to be rendered by such Credit Party or in connection with
any other transaction (whether or not yet earned by performance on the part of
such Credit Party), (e) all healthcare insurance receivables, and (f) all
collateral security of any kind, now or hereafter in existence, given by any
Account Debtor or other Person with respect to any of the foregoing.
"Acquisition" means the merger of Acquisition Co. with and into GII.
"Acquisition Agreement" means the Agreement and Plan of Merger,
dated September 23, 2002, between Holdings, Acquisition Co. and GII.
"Acquisition Co." means BGA Acquisition Corp., a Delaware
corporation.
"Activation Event" has the meaning ascribed to it in Annex F.
"Activation Notice" has the meaning ascribed to it in Annex F.
63
"Advances" means any Revolving Credit Advance.
"Affected Lender" has the meaning ascribed to it in Section 9.19(a).
"Affiliate" means, with respect to any Person, (a) each Person that,
directly or indirectly, owns or controls, whether beneficially, or as a trustee,
guardian or other fiduciary, 5% or more of the Stock having ordinary voting
power in the election of directors of such Person, (b) each Person that
controls, is controlled by or is under common control with such Person, (c) each
of such Person's officers, directors, joint venturers and partners and (d) in
the case of Borrowers, the immediate family members, spouses and lineal
descendants of individuals who are Affiliates of any Borrower. For the purposes
of this definition, "control" of a Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by contract or
otherwise; provided, however, that the term "Affiliate" shall specifically
exclude Agent and each Lender.
"Agent" means GE Capital in its capacity as Agent for Lenders or its
successor appointed pursuant to Section 8.2.
"Aggregate Borrowing Base" means as of any date of determination, an
amount equal to (i) the sum of the LP Borrowing Base, the NU Borrowing Base and
the USA Borrowing Base; less (ii) any Reserves except to the extent already
deducted therefrom.
"Agreement" means this Credit Agreement (including all schedules,
subschedules, annexes and exhibits hereto), as the same may be amended,
supplemented, restated or otherwise modified from time to time.
"Allocable Amount" has the meaning ascribed to it in Section 10.7.
"Applicable L/C Margin" means the per annum fee, from time to time
in effect, payable with respect to outstanding Letter of Credit Obligations as
determined by reference to Section 1.2(a).
"Applicable Margins" means collectively the Applicable L/C Margin,
the fee payable under Section 1.3(a), the Applicable Revolver Index Margin and
the Applicable Revolver LIBOR Margin.
"Applicable Revolver Index Margin" means the per annum interest rate
margin from time to time in effect and payable in addition to the Index Rate
applicable to the Revolving Loan, as determined by reference to Section 1.2(a).
"Applicable Revolver LIBOR Margin" means the per annum interest rate
from time to time in effect and payable in addition to the LIBOR Rate applicable
to the Revolving Loan, as determined by reference to Section 1.2(a).
"Asset Disposition" means the disposition whether by sale, lease,
transfer, loss, damage, destruction, casualty, condemnation or otherwise of any
of the following: (a) any of the Stock or other equity or ownership interest of
any of GII or any of its Subsidiaries or (b) any or all of the assets of GII or
any of its Subsidiaries other than sales of Inventory in the ordinary course of
business.
"Assignment Agreement" has the meaning ascribed to it in Section
8.1(a).
"Bankruptcy Code" means the provisions of Title 11 of the United
States Code, 11 U.S.C.Section Section 101 et seq. or other applicable
bankruptcy, insolvency or similar laws.
64
"Blocked Account Agreement" has the meaning ascribed to it in Annex
F.
"Blocked Accounts" has the meaning ascribed to it in Annex F.
"Borrower" and "Borrowers" have the respective meanings ascribed to
them in the preamble to the Agreement.
"Borrower Representative" means GII in its capacity as Borrower
Representative pursuant to the provisions of Section 1.13.
"Borrowing Base" shall mean individually the LP Borrowing Base, the
NU Borrowing Base or the USA Borrowing Base.
"Borrowing Availability" means as of any date of determination the
lesser of (i) the Maximum Amount and (ii) the Aggregate Borrowing Base, in each
case, less the sum of (a) $500,000, (b) the Revolving Loan then outstanding
(including, without duplication, the outstanding balance of Letter of Credit
Obligations then outstanding), and (c) Reserves required by Agent in its
reasonable credit judgment.
"Borrowing Base Certificate" has the meaning ascribed to it in
Section 4.9(d).
"Business Day" means any day that is not a Saturday, a Sunday or a
day on which banks are required or permitted to be closed in the States of New
York, Texas or Illinois and in reference to LIBOR Loans shall mean any such day
that is also a LIBOR Business Day.
"Cash Management Systems" has the meaning ascribed to it in Section
2.10.
"Capex Limit" has the meaning ascribed to it in Section 4.1.
"Capital Expenditures" has the meaning ascribed to it in Section 4.1
of Schedule 1 to Exhibit 4.9(k).
"Capital Lease" means, with respect to any Person, any lease of any
property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, would be required to be classified and accounted for as a
capital lease on a balance sheet of such Person.
"Capital Lease Obligation" means, with respect to any Capital Lease
of any Person, the amount of the obligation of the lessee thereunder that, in
accordance with GAAP, would appear on a balance sheet of such lessee in respect
of such Capital Lease.
"Cash Equivalents" means: (i) marketable securities (A) issued or
directly and unconditionally guaranteed as to interest and principal by the
United States government or (B) issued by any agency of the United States
government the obligations of which are backed by the full faith and credit of
the United States, in each case maturing within one (1) year after acquisition
thereof; (ii) marketable direct obligations issued by any state of the United
States of America or any political subdivision of any such state or any public
instrumentality thereof, in each case maturing within one year after acquisition
thereof and having, at the time of acquisition, a rating of at least A-1 from
S&P or at least P-1 from Xxxxx'x; (iii) commercial paper maturing no more than
one year from the date of acquisition and, at the time of acquisition, having a
rating of at least A-1 from S&P or at least P-1 from Xxxxx'x; (iv) certificates
of deposit or bankers' acceptances issued or accepted by any Lender or by any
commercial bank organized under the laws of the United States of America or any
state thereof or the
00
Xxxxxxxx xx Xxxxxxxx that is at least (A) "adequately capitalized" (as defined
in the regulations of its primary Federal banking regulator) and (B) has Tier 1
capital (as defined in such regulations) of not less than $250,000,000, in each
case maturing within one year after issuance or acceptance thereof; and (v)
shares of any money market mutual or similar funds that (A) has substantially
all of its assets invested continuously in the types of investments referred to
in clauses (i) through (iv) above, (B) has net assets of not less than
$500,000,000 and (C) has the highest rating obtainable from either S&P or
Xxxxx'x.
"Certificate of Exemption" has the meaning ascribed to it in Section
1.11(c).
"Change of Control" means any event, transaction or occurrence as a
result of which (a) Atlantic Equity Partners III, L.P. and/or other investment
funds controlled by First Atlantic cease to own and control all of the economic
and voting rights associated with ownership of at least fifty-one percent (51%)
of all classes of the outstanding capital Stock of Holdings on a fully diluted
basis, (b) Holdings ceases to own and control all of the economic and voting
rights associated with all of the outstanding Stock of GII, (c) GII ceases to
own and control directly or indirectly all of the economic and voting rights
associated with all of the outstanding Stock of LP, NU or USA or any of GII's
other subsidiaries, other than director's qualifying shares, if any, or (d) a
"Change of Control" (as defined in the Indenture) shall occur.
"Charges" means all federal, state, county, city, municipal, local,
foreign or other governmental taxes (including premiums and other amounts owed
to the PBGC at the time due and payable), levies, assessments, charges, liens,
claims or encumbrances upon or relating to (a) the Collateral, (b) the
Obligations, (c) the employees, payroll, income or gross receipts of any Credit
Party, (d) any Credit Party's ownership or use of any properties or other
assets, or (e) any other aspect of any Credit Party's business.
"Chattel Paper" means any "chattel paper," as such term is defined
in the Code, including electronic chattel paper, now owned or hereafter acquired
by any Credit Party, wherever located.
"Closing Checklist" means the schedule, including all appendices,
exhibits or schedules thereto, listing certain documents and information to be
delivered in connection with the Agreement, the other Loan Documents and the
transactions contemplated thereunder, substantially in the form attached hereto
as Annex C.
"Closing Date" means October 15, 2002.
"Code" means the Uniform Commercial Code as the same may, from time
to time, be enacted and in effect in the State of New York; provided, that to
the extent that the Code is used to define any term herein or in any Loan
Document and such term is defined differently in different Articles or Divisions
of the Code, the definition of such term contained in Article or Division 9
shall govern; provided further, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection or priority of, or
remedies with respect to, Agent's or any Lender's Lien on any Collateral is
governed by the Uniform Commercial Code as enacted and in effect in a
jurisdiction other than the State of New York, the term "Code" shall mean the
Uniform Commercial Code as enacted and in effect in such other jurisdiction
solely for purposes of the provisions thereof relating to such attachment,
perfection, priority or remedies and for purposes of definitions related to such
provisions.
"Collateral" means the property covered by the Security Agreement
and the other Collateral Documents and any other property, real or personal,
tangible or intangible, now existing or hereafter acquired, that may at any time
be or become subject to a security interest or Lien in favor of Agent, on behalf
of itself and Lenders, to secure the Obligations or any portion thereof.
66
"Collateral Documents" means the Security Agreement, the Pledge
Agreements, the Guaranties, the Patent Security Agreements, the Trademark
Security Agreements, the Copyright Security Agreements and all similar
agreements entered into guaranteeing payment of, or granting a Lien upon
property as security for payment of, the Obligations or any portion thereof and
the Inter-Creditor Agreement.
"Collection Account" has the meaning ascribed to it in Annex F.
"Commitment Termination Date" means the earliest of (a) Xxxxx 00,
0000, (x) the date of termination of Lenders' obligations to make Advances and
to incur Letter of Credit Obligations or permit existing Loans to remain
outstanding pursuant to Section 6.3, and (c) the date of (i) indefeasible
prepayment in full by Borrowers of the Loans, (ii) the cancellation and return
(or stand-by guarantee) of all Letters of Credit or the cash collateralization
of all Letter of Credit Obligations pursuant to Section 1.5(g), and (iii) the
permanent reduction of the Commitments to zero dollars ($0).
"Commitments" means (a) as to any Lender, the aggregate of such
Lender's Revolving Loan Commitment as set forth on Annex B to the Agreement or
in the most recent Assignment Agreement executed by such Lender and (b) as to
all Lenders, the aggregate of all Lenders' Revolving Loan Commitments which
aggregate commitment shall be Ten Million Dollars ($10,000,000) on the Closing
Date, as such Commitments may be reduced, amortized or adjusted from time to
time in accordance with the Agreement.
"Compliance Certificate" has the meaning ascribed to it in Section
4.9(k).
"Consolidated Net Income" has the meaning ascribed to it in Section
4.3 of Schedule 1 to Exhibit 4.9(k).
"Contingent Obligation" means, as applied to any Person, any direct
or indirect liability of that Person: (i) with respect to Guaranteed
Indebtedness and with respect to any Indebtedness, lease, dividend or other
obligation of another Person if the purpose or intent of the Person incurring
such liability, or the effect thereof, is to provide assurance to the obligee of
such liability that such liability will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
liability will be protected (in whole or in part) against loss with respect
thereto; (ii) with respect to any letter of credit issued for the account of
that Person or as to which that Person is otherwise liable for reimbursement of
drawings; (iii) under any foreign exchange contract, currency swap agreement,
interest rate swap agreement or other similar agreement or arrangement designed
to alter the risks of that Person arising from fluctuations in currency values
or interest rates, (iv) any agreement, contract or transaction involving
commodity options or future contracts, (v) to make take-or-pay or similar
payments if required regardless of nonperformance by any other party or parties
to an agreement, or (vi) pursuant to any agreement to purchase, repurchase or
otherwise acquire any obligation or any property constituting security therefor,
to provide funds for the payment or discharge of such obligation or to maintain
the solvency, financial condition or any balance sheet item or level of income
of another. The amount of any Contingent Obligation shall be equal to the amount
of the obligation so guaranteed or otherwise supported or, if not a fixed and
determined amount, the maximum amount so guaranteed.
"Contractual Obligations" means, as applied to any Person, any
indenture, mortgage, deed of trust, contract, undertaking, agreement or other
instrument to which that Person is a party or by which it or any of its
properties is bound or to which it or any of its properties is subject including
the Related Transactions Documents.
67
"Copyright License" means any and all rights nor owned or hereafter
acquired by any Credit Party under any written agreement granting any right to
use any Copyright or Copyright registration.
"Copyright Security Agreements" means the Copyright Security
Agreements made in favor of Agent, on behalf of itself and Lenders, by each
applicable Credit Party.
"Copyrights" means all of the following now owned or hereafter
adopted or acquired by any Credit Party: (a) all copyrights and General
Intangibles of like nature (whether registered or unregistered), all
registrations and recordings thereof, and all applications in connection
therewith, including all registrations, recordings and applications in the
United States Copyright Office or in any similar office or agency of the United
States, any state or territory thereof, or any other country or any political
subdivision thereof; and (b) all reissues, extensions or renewals thereof.
"Credit Parties" means Holdings, GII, Borrowers, each other
Subsidiary of GII that executes this Agreement as a "Credit Party" or executes a
Guaranty or who grants a Lien on all or part of its assets to secure all of part
of the Obligations.
"Default" means any event that, with the passage of time or notice
or both, would, unless cured or waived, become an Event of Default.
"Default Notice" has the meaning ascribed to it in Section 9.21.
"Default Rate" has the meaning ascribed to it in Section 1.2(d).
"Disbursement Account" has the meaning ascribed to it in Section
1.1(e).
"Disclosure Schedules" means the Schedules prepared by Borrower
Representative and denominated as Schedules 1.1(b) through 5.18 in the index to
the Agreement.
"Documents" means any "document," as such term is defined in the
Code, including electronic documents, now owned or hereafter acquired by any
Credit Party, wherever located.
"Dollars" or "$" means lawful currency of the United States of
America.
"Domestic Subsidiary" means each Subsidiary of Holdings that is
organized under the laws of the United States or a state thereof.
"EBITDA" has the meaning ascribed to it in Section 4.3 of Schedule 1
to Exhibit 4.9(k).
"Eligible Accounts" has the meaning ascribed to it in Schedule 1 to
Exhibit 4.9(d).
"Eligible Inventory" has the meaning ascribed to it in Schedule 1 to
Exhibit 4.9(d).
"Environmental Laws" means all applicable federal, state, local and
foreign laws, statutes, ordinances, codes, rules, standards and regulations, now
or hereafter in effect, and any applicable judicial or administrative
interpretation thereof, including any applicable judicial or administrative
order, consent decree, order or judgment, imposing liability or standards of
conduct for or relating to the regulation and protection of human health,
safety, the environment and natural resources (including ambient air, surface
water, groundwater, wetlands, land surface or subsurface strata, wildlife,
aquatic species and vegetation). Environmental Laws include the Comprehensive
Environmental Response,
68
Compensation, and Liability Act of 1980 (42 U.S.C. Sections 9601 et seq.)
("CERCLA"); the Hazardous Materials Transportation Authorization Act of 1994 (49
U.S.C. Sections 5101 et seq.); the Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C. Sections 136 et seq.); the Solid Waste Disposal Act
(42 U.S.C. Sections 6901 et seq.); the Toxic Substance Control Act (15 U.S.C.
Sections 2601 et seq.); the Clean Air Act (42 U.S.C. Sections 7401 et seq.); the
Federal Water Pollution Control Act (33 U.S.C. Sections 1251 et seq.); the
Occupational Safety and Health Act (29 U.S.C. Sections 651 et seq.); and the
Safe Drinking Water Act (42 U.S.C. Sections 300(f) et seq.), and any and all
regulations promulgated thereunder, and all analogous state, local and foreign
counterparts or equivalents and any transfer of ownership notification or
approval statutes.
"Environmental Liabilities" means, with respect to any Person, all
liabilities, obligations, responsibilities, response, remedial and removal
costs, investigation and feasibility study costs, capital costs, operation and
maintenance costs, losses, damages, punitive damages, property damages, natural
resource damages, consequential damages, treble damages, costs and expenses
(including all reasonable fees, disbursements and expenses of counsel, experts
and consultants), fines, penalties, sanctions and interest incurred as a result
of or related to any claim, suit, action, investigation, proceeding or demand by
any Person, whether based in contract, tort, implied or express warranty, strict
liability, criminal or civil statute or common law, including any arising under
or related to any Environmental Laws, Environmental Permits, or in connection
with any Release or threatened Release or presence of a Hazardous Material
whether on, at, in, under, from or about or in the vicinity of any real or
personal property.
"Environmental Permits" means all permits, licenses, authorizations,
certificates, approvals or registrations required by any Governmental Authority
under any Environmental Laws.
"Equipment" means all "equipment," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located and,
in any event, including all such Credit Party's machinery and equipment,
including processing equipment, conveyors, machine tools, data processing and
computer equipment, including embedded software and peripheral equipment and all
engineering, processing and manufacturing equipment, office machinery,
furniture, materials handling equipment, tools, attachments, accessories,
automotive equipment, trailers, trucks, forklifts, molds, dies, stamps, motor
vehicles, rolling stock and other equipment of every kind and nature, trade
fixtures and fixtures not forming a part of real property, together with all
additions and accessions thereto, replacements therefor, all parts therefor, all
substitutes for any of the foregoing, fuel therefor, and all manuals, drawings,
instructions, warranties and rights with respect thereto, and all products and
proceeds thereof and condemnation awards and insurance proceeds with respect
thereto.
"Equity Capital Contribution" means a contribution in cash of common
equity capital by Holdings to GII in the amount of at least $61,450,000
($12,770,000 of which shall consist of management rollover and the remainder of
which shall be in cash), subject to the Opening Adjustment.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any regulations promulgated thereunder.
"ERISA Affiliate" means, with respect to any Credit Party, any trade
or business (whether or not incorporated) that, together with such Credit Party,
are treated as a single employer within the meaning of Sections 414(b), (c), (m)
or (o) of the IRC.
"ERISA Event" means, with respect to any Credit Party or any ERISA
Affiliate, (a) any event described in Section 4043(c) of ERISA with respect to a
Title IV Plan; (b) the withdrawal of any Credit Party or ERISA Affiliate from a
Title IV Plan subject to Section 4063 of ERISA during a plan year in which it
was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (c) the
complete or
69
partial withdrawal of any Credit Party or any ERISA Affiliate from any
Multiemployer Plan; (d) the filing of a notice of intent to terminate a Title IV
Plan or the treatment of a plan amendment as a termination under Section 4041 of
ERISA; (e) the institution of proceedings to terminate a Title IV Plan or
Multiemployer Plan by the PBGC; (f) the failure by any Credit Party or ERISA
Affiliate to make when due required contributions to a Multiemployer Plan or
Title IV Plan unless such failure is cured within 30 days; (g) any other event
or condition that might reasonably be expected to constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Title IV Plan or Multiemployer Plan or for the imposition of
liability under Section 4069 or 4212(c) of ERISA; (h) the termination of a
Multiemployer Plan under Section 4041A of ERISA or the reorganization or
insolvency of a Multiemployer Plan under Section 4241 or 4245 of ERISA; or (i)
the loss of a Qualified Plan's qualification or tax exempt status; or (j) the
termination of a Plan described in Section 4064 of ERISA.
"ESOP" means a Plan that is intended to satisfy the requirements of
Section 4975(e)(7) of the IRC.
"Event of Default" has the meaning ascribed to it in Section 6.1.
"Excess Cash Flow" has the meaning ascribed to it in Schedule 2 to
Exhibit 4.9(k).
"Fair Labor Standards Act" means the Fair Labor Standards Act, 29
U.S.C. Section 201 et seq.
"Federal Funds Rate" means, for any day, a floating rate equal to
the weighted average of the rates on overnight federal funds transactions among
members of the Federal Reserve System, as determined by Agent in its sole
discretion, which determination shall be final, binding and conclusive (absent
manifest error).
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System.
"Fees" means any and all fees payable to Agent or any Lender
pursuant to the Agreement or any of the other Loan Documents.
"Financial Statements" means the consolidated and consolidating
income statements, statements of cash flows and balance sheets of Holdings and
its Subsidiaries delivered in accordance with Section 4.9.
"First Atlantic" means First Atlantic Capital, Ltd., a Delaware
corporation.
"Fiscal Month" means any of the monthly accounting periods of
Holdings.
"Fiscal Quarter" means any of the quarterly accounting periods of
Holdings measured on a 4-4-5 basis such that each Fiscal Quarter consists of
precisely 13 weeks and each month ends on a Saturday, such Fiscal Quarters
ending on or about March 31, June 30, September 30 and December 31 of each year.
"Fiscal Year" means any of the annual accounting periods of Holdings
ending on the Saturday closest to December 31 of each year.
"Fixed Charges" has the meaning ascribed to it in Section 4.4 of
Schedule 1 to Exhibit 4.9(k).
70
"Fixed Charge Coverage Ratio" has the meaning ascribed to it in
Section 4.4 of Schedule 1 to Exhibit 4.9(k).
"Fixtures" means all "fixtures" as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party.
"Foreign Lender" has the meaning ascribed to it in Section 1.11(c).
"Foreign Subsidiary" means any Subsidiary of Holdings that is not a
Domestic Subsidiary.
"Funded Debt" means, with respect to any Person, without
duplication, all Indebtedness for borrowed money evidenced by notes, bonds,
debentures, or similar evidences of Indebtedness and that by its terms matures
more than one year from, or is directly or indirectly renewable or extendible at
such Person's option under a revolving credit or similar agreement obligating
the lender or lenders to extend credit over a period of more than one year from
the date of creation thereof, and specifically including Capital Lease
Obligations, current maturities of long-term debt, revolving credit and
short-term debt extendible beyond one year at the option of the debtor, and also
including, in the case of Borrowers, the average daily outstanding principal
amount during the trailing twelve fiscal months ending as of the date of
determination of Obligations (including Letter of Credit Obligations) and,
without duplication, Guaranteed Indebtedness consisting of guaranties of Funded
Debt of other Persons.
"Funding Date" has the meaning ascribed to it in Section 7.2.
"GAAP" means generally accepted accounting principles in the United
States of America, consistently applied.
"GE Capital" has the meaning ascribed to it in the Preamble.
"GE Capital Fee Letter" has the meaning ascribed to it in Section
1.3(a).
"General Intangibles" means "general intangibles," as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party,
including all right, title and interest that such Credit Party may now or
hereafter have in or under any Contractual Obligation, all payment intangibles,
customer lists, Licenses, Copyrights, Trademarks, Patents, and all applications
therefor and reissues, extensions or renewals thereof, rights in Intellectual
Property, interests in partnerships, joint ventures and other business
associations, licenses, permits, copyrights, trade secrets, proprietary or
confidential information, inventions (whether or not patented or patentable),
technical information, procedures, designs, knowledge, know-how, software, data
bases, data, skill, expertise, experience, processes, models, drawings,
materials and records, goodwill (including the goodwill associated with any
Trademark or Trademark License), all rights and claims in or under insurance
policies (including insurance for fire, damage, loss and casualty, whether
covering personal property, real property, tangible rights or intangible rights,
all liability, life, key man and business interruption insurance, and all
unearned premiums), uncertificated securities, chooses in action, deposit,
checking and other bank accounts, rights to receive tax refunds and other
payments, rights to receive dividends, distributions, cash, Instruments and
other property in respect of or in exchange for pledged Stock and Investment
Property, rights of indemnification, all books and records, correspondence,
credit files, invoices and other papers, including all tapes, cards, computer
runs and other papers and documents in the possession or under the control of
such Credit Party or any computer bureau or service company from time to time
acting for such Credit Party.
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"GII" has the meaning ascribed thereto in the recitals to the
Agreement.
"GII Guaranty" means the guaranty of even date herewith executed by
GII in favor of Agent, on behalf of itself and the Lenders.
"Golfsmith Europe" means Golfsmith Europe, LLC, a Delaware limited
liability company.
"Golfsmith Licensing" means Golfsmith Licensing, LLC, a Delaware
limited liability company.
"Goods" means any "goods," as such term is defined in the Code, now
owned or hereafter acquired by any Credit Party, wherever located, including
embedded software to the extent included in "goods" as defined in the Code,
manufactured homes, standing timber that is cut and removed for sale and unborn
young of animals.
"Governmental Authority" means any nation or government, any state
or other political subdivision thereof, and any agency, department or other
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guaranteed Indebtedness" means, as to any Person, any obligation of
such Person guaranteeing, providing comfort or otherwise supporting any
Indebtedness, lease, dividend, or other obligation ("primary obligation") of any
other Person (the "primary obligor") in any manner, including any obligation or
arrangement of such Person to (a) purchase or repurchase any such primary
obligation, (b) advance or supply funds (i) for the purchase or payment of any
such primary obligation or (ii) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency or any
balance sheet condition of the primary obligor, (c) purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation, (d) protect the beneficiary of such arrangement from
loss (other than product warranties given in the ordinary course of business) or
(e) indemnify the owner of such primary obligation against loss in respect
thereof. The amount of any Guaranteed Indebtedness at any time shall be deemed
to be an amount equal to the lesser at such time of (x) the stated or
determinable amount of the primary obligation in respect of which such
Guaranteed Indebtedness is incurred and (y) the maximum amount for which such
Person may be liable pursuant to the terms of the instrument embodying such
Guaranteed Indebtedness, or, if not stated or determinable, the maximum
reasonably anticipated liability (assuming full performance) in respect thereof.
"Guaranties" means, collectively, the Holdings Guaranty, the GII
Guaranty, each Subsidiary Guaranty and any other guaranty executed by any
Guarantor in favor of Agent and Lenders in respect of the Obligations.
"Guarantor Payment" has the meaning ascribed to it on Section 10.7.
"Guarantors" means Holdings, GII, each Domestic Subsidiary of GII
(other than a Borrower), and each other Person, if any, that executes a guaranty
or other similar agreement in favor of Agent, for itself and the ratable benefit
of Lenders, in connection with the transactions contemplated by the Agreement
and the other Loan Documents.
"Hazardous Material" means any substance, material or waste that is
regulated by, or forms the basis of liability now or hereafter under, any
Environmental Laws, including any material or substance that is (a) defined as a
"solid waste," "hazardous waste," "hazardous material," "hazardous
72
substance," "extremely hazardous waste," "restricted hazardous waste,"
"pollutant," "contaminant," "hazardous constituent," "special waste," "toxic
substance" or other similar term or phrase under any Environmental Laws, or (b)
petroleum or any fraction or by-product thereof, asbestos, polychlorinated
biphenyls (PCB's), or any radioactive substance.
"Holdings" has the meaning ascribed thereto in the recitals to the
Agreement.
"Holdings Guaranty" means the guaranty of even date herewith
executed by Holdings in favor of Agent, on behalf of itself and Lenders.
"Indebtedness" means, with respect to any Person, without
duplication (a) all indebtedness of such Person for borrowed money or for the
deferred purchase price of property payment for which is deferred six (6) months
or more, but excluding obligations to trade creditors incurred in the ordinary
course of business that are unsecured and not overdue by more than six (6)
months unless being contested in good faith, (b) all reimbursement and other
obligations with respect to letters of credit, bankers' acceptances and surety
bonds, whether or not matured, (c) all obligations evidenced by notes, bonds,
debentures or similar instruments, (d) all indebtedness created or arising under
any conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (e) all Capital Lease Obligations and the present
value (discounted at the Index Rate as in effect on the Closing Date) of future
rental payments under all synthetic leases, (f) all obligations of such Person
under commodity purchase or option agreements or other commodity price hedging
arrangements, in each case whether contingent or matured, (g) all obligations of
such Person under any foreign exchange contract, currency swap agreement,
interest rate swap, cap or collar agreement or other similar agreement or
arrangement designed to alter the risks of that Person arising from fluctuations
in currency values or interest rates, in each case whether contingent or
matured, (h) all Indebtedness referred to above secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien upon or in property or other assets (including accounts
and contract rights) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Indebtedness, (i) "earnouts"
and similar payment obligations, and (j) the Obligations.
"Indemnitees" has the meaning ascribed to it in Section 9.1.
"Indenture" means the senior secured notes trust indenture by and
between the Trustee and GII, of even date herewith, and substantially in the
form of Exhibit A1.
"Index Rate" means, for any day, a floating rate equal to the higher
of (i) the rate publicly quoted from time to time by The Wall Street Journal as
the "base rate on corporate loans posted by at least 75% of the nation's 30
largest banks" (or, if The Wall Street Journal ceases quoting a base rate of the
type described, the highest per annum rate of interest published by the Federal
Reserve Board in Federal Reserve statistical release H.15 (519) entitled
"Selected Interest Rates" as the Bank prime loan rate or its equivalent), and
(ii) the Federal Funds Rate plus 50 basis points per annum. Each change in any
interest rate provided for in the Agreement based upon the Index Rate shall take
effect at the time of such change in the Index Rate.
"Index Rate Loan" means a Loan or portion thereof bearing interest
by reference to the Index Rate.
"Instruments" means all "instruments," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, wherever located,
and, in any event, including all certificated
73
securities, all certificates of deposit, and all promissory notes and other
evidences of indebtedness, other than instruments that constitute, or are a part
of a group of writings that constitute, Chattel Paper.
"Intellectual Property" means any and all Licenses, Patents,
Copyrights, Trademarks, and the goodwill associated with such Trademarks.
"Intercompany Management Agreements" means the management agreements
between LP and the various other Credit Parties whereby LP performs management
services for such other Credit Parties and receives compensation from such other
Credit Parties therefor.
"Intercompany Notes" has the meaning ascribed to it in Section 3.1.
"Intercompany Subordination Agreement" means the subordination
agreement, substantially in the form of Exhibit A2 hereto, of even date
herewith, by and among the Credit Parties.
"Inter-Creditor Agreement" means the Intercreditor Agreement, dated
as of October 15, 2002, among Agent, Trustee, the Collateral Agent (as defined
in the Indenture) and the Credit Parties.
"Interest Coverage Ratio" has the meaning ascribed to it in Section
4.5 of Schedule 1 to Exhibit 4.9(k).
"Interest Expense" has the meaning ascribed to it in Section 4.5 of
Schedule 1 to Exhibit 4.9(k).
"Interest Payment Date" means (a) as to any Index Rate Loan, the
first Business Day of each month to occur while such Loan is outstanding, and
(b) as to any LIBOR Loan, the last day of the applicable LIBOR Period; provided,
that in the case of any LIBOR Period greater than three months in duration,
interest shall be payable at three month intervals and on the last day of such
LIBOR Period; and provided, further, that, in addition to the foregoing, each of
(x) the date upon which all of the Commitments have been terminated and the
Loans have been paid in full and (y) the Commitment Termination Date shall be
deemed to be an "Interest Payment Date" with respect to any interest that has
then accrued under the Agreement.
"Inventory" means any "inventory," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located,
including inventory, merchandise, goods and other personal property that are
held by or on behalf of any Credit Party for sale or lease or are furnished or
are to be furnished under a contract of service, or that constitute raw
materials, work in process, finished goods, returned goods, supplies or
materials of any kind, nature or description used or consumed or to be used or
consumed in such Credit Party's business or in the processing, production,
packaging, promotion, delivery or shipping of the same, including all supplies
and embedded software.
"Investment" means (i) any direct or indirect purchase or other
acquisition by Borrowers or any of their Subsidiaries of any Stock, or other
ownership interest in, any other Person, and (ii) any direct or indirect loan,
advance or capital contribution by Borrowers or any of their Subsidiaries to any
other Person, including all indebtedness and accounts receivable from that other
Person that are not current assets or did not arise from sales to that other
Person in the ordinary course of business.
"Investment Property" means all "investment property," as such term
is defined in the Code, now owned or hereafter acquired by any Credit Party,
wherever located, including: (i) all securities, whether certificated or
uncertificated, including stocks, bonds, interests in limited liability
companies, partnership interests, treasuries, certificates of deposit, and
mutual fund shares; (ii) all securities
74
entitlements of any Credit Party, including the rights of such Credit Party to
any securities account and the financial assets held by a securities
intermediary in such securities account and any free credit balance or other
money owing by any securities intermediary with respect to that account; (iii)
all securities accounts of any Credit Party; (iv) all commodity contracts of any
Credit Party; and (v) all commodity accounts held by any Credit Party.
"IRC" means the Internal Revenue Code of 1986, as amended, and all
regulations promulgated thereunder.
"IRS" means the Internal Revenue Service.
"L/C Issuer" means GE Capital or a Subsidiary thereof or a bank or
other legally authorized Person selected by or acceptable to Agent in its sole
discretion, in such Person's capacity as an issuer of Letters of Credit
hereunder.
"L/C Sublimit" has the meaning ascribed to it in Section 1.1(d).
"Lenders" means GE Capital, the other Lenders named on the signature
pages of the Agreement, and, if any such Lender shall decide to assign all or
any portion of the Obligations, such term shall include any assignee of such
Lender.
"Letters of Credit" means documentary or standby letters of credit
issued for the account of Borrowers by L/C Issuers, and bankers' acceptances
issued by Borrowers, for which Agent and Lenders have incurred Letter of Credit
Obligations.
"Letter of Credit Fee" has the meaning ascribed to it in Section
1.3(d).
"Letter of Credit Obligations" means all outstanding obligations
incurred by Agent and Lenders at the request of Borrower Representative, whether
direct or indirect, contingent or otherwise, due or not due, in connection with
the issuance of Letters of Credit by L/C Issuers or the purchase of a
participation as set forth in Section 1.1(d) with respect to any Letter of
Credit. The amount of such Letter of Credit Obligations shall equal the maximum
amount that may be payable by Agent and Lenders thereupon or pursuant thereto.
"Leverage Ratio" has the meaning ascribed to it in Section 4.6 of
Schedule 1 to Exhibit 4.9(k).
"LIBOR Breakage Fee" means an amount equal to the amount of any
losses, expenses, liabilities (including, without limitation, any loss
(including interest paid) and lost opportunity cost in connection with the
re-employment of such funds) that any Lender may sustain as a result of (i) any
default by any Borrower in making any borrowing of, conversion into or
continuation of any LIBOR Loan following Borrower Representative's delivery to
Agent of any LIBOR Loan request in respect thereof or (ii) any payment of a
LIBOR Loan on any day that is not the last day of the LIBOR Period applicable
thereto (regardless of the source of such prepayment and whether voluntary, by
acceleration or otherwise). For purposes of calculating amounts payable to a
Lender under Section 1.3(e), each Lender shall be deemed to have actually funded
its relevant LIBOR Loan through the purchase of a deposit bearing interest at
LIBOR in an amount equal to the amount of that LIBOR Loan and having a maturity
and repricing characteristics comparable to the relevant LIBOR Period; provided,
however, that each Lender may fund each of its LIBOR Loans in any manner it sees
fit, and the foregoing assumption shall be utilized only for the calculation of
amounts payable under Section 1.3(e).
75
"LIBOR Business Day" means a Business Day on which banks in the City
of London are generally open for interbank or foreign exchange transactions.
"LIBOR Loans" means a Loan or any portion thereof bearing interest
by reference to the LIBOR Rate.
"LIBOR Period" means, with respect to any LIBOR Loan, each period
commencing on a LIBOR Business Day selected by Borrower Representative pursuant
to the Agreement and ending one, two, three or six months thereafter, as
selected by Borrower Representative's irrevocable notice to Agent as set forth
in Section 1.2(e); provided, that the foregoing provision relating to LIBOR
Periods is subject to the following:
(a) if any LIBOR Period would otherwise end on a day that is not a
LIBOR Business Day, such LIBOR Period shall be extended to the next
succeeding LIBOR Business Day unless the result of such extension would be
to carry such LIBOR Period into another calendar month in which event such
LIBOR Period shall end on the immediately preceding LIBOR Business Day;
(b) any LIBOR Period that would otherwise extend beyond the date set
forth in clause (a) of the definition of "Commitment Termination Date"
shall end two (2) LIBOR Business Days prior to such date;
(c) any LIBOR Period that begins on the last LIBOR Business Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such LIBOR Period)
shall end on the last LIBOR Business Day of a calendar month;
(d) Borrower Representative shall select LIBOR Periods so that there
shall be no more than 5 separate LIBOR Loans in existence at any one time.
"LIBOR Rate" means for each LIBOR Period, a rate of interest
determined by Agent equal to:
(a) the offered rate for deposits in United States Dollars for the
applicable LIBOR Period that appears on Telerate Page 3750 as of 11:00
a.m. (London time), on the second full LIBOR Business Day next preceding
the first day of such LIBOR Period (unless such date is not a Business
Day, in which event the next succeeding Business Day will be used);
divided by
(b) a number equal to 1.0 minus the aggregate (but without
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day that is two (2) LIBOR Business Days
prior to the beginning of such LIBOR Period (including basic,
supplemental, marginal and emergency reserves under any regulations of the
Federal Reserve Board or other Governmental Authority having jurisdiction
with respect thereto, as now and from time to time in effect) for
Eurocurrency funding (currently referred to as "Eurocurrency Liabilities"
in Regulation D of the Federal Reserve Board that are required to be
maintained by a member bank of the Federal Reserve System.
If such interest rates shall cease to be available from Telerate
News Service, the LIBOR Rate shall be determined from such financial reporting
service or other information as shall be available to Agent.
"License" means any Copyright License, Patent License, Trademark
License or other license of rights or interests now held or hereafter acquired
by any Credit Party.
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"Lien" means any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, security interest,
easement or encumbrance, or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including any lease
or title retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of, or agreement to
give, any financing statement perfecting a security interest under the Code or
comparable law of any jurisdiction).
"Litigation" has the meaning ascribed to it in Section 4.9(i).
"Loan Account" as the meaning ascribed to it in Section 1.9.
"Loan Documents" means the Agreement, the Notes, the Collateral
Documents, the GE Capital Fee Letter and all other agreements, instruments,
documents and certificates identified in the Closing Checklist executed and
delivered to, or in favor of, Agent or any Lenders and including all other
pledges, powers of attorney, consents, assignments, contracts, notices, and all
other written matter whether heretofore, now or hereafter executed by or on
behalf of any Credit Party, or any employee of any Credit Party, and delivered
to Agent or any Lender in connection with the Agreement or the transactions
contemplated thereby. Any reference in the Agreement or any other Loan Document
to a Loan Document shall include all appendices, exhibits or schedules thereto,
and all amendments, restatements, supplements or other modifications thereto,
and shall refer to the Agreement or such Loan Document as the same may be in
effect at any and all times such reference becomes operative.
"Loans" means the Revolving Loan.
"LP" means Golfsmith International, L.P., a Delaware limited
partnership.
"LP Borrowing Base" means, as of any date of determination by Agent,
from time to time, an amount equal to the sum at such time of:
(a) 85% of the book value of LP's Eligible Accounts at such time;
and
(b) up to the lesser of (i) 65% of the book value of LP's Eligible
Inventory valued at the lower of cost (determined on a first-in, first-out
basis) or market and (ii) 60% of the orderly liquidation value of LP's
Eligible Inventory.
"LP Operating Account" has the meaning ascribed to it in Annex F.
"Management Services Agreement" means the Management Consulting
Agreement between First Atlantic and GII, substantially in the form of Exhibit
3.5(c), as in existence as of the Closing Date.
"Master Documentary Agreement" means a Master Agreement for
Documentary Letters of Credit between an L/C Issuer and Borrowers, substantially
in the form of Exhibit A3.
"Master Standby Agreement" means a Master Agreement for Standby
Letters of Credit between an L/C Issuer and Borrowers, substantially in the form
of Exhibit A4.
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations, prospects or financial or other condition of the
Credit Parties considered as a whole, (b) Borrowers' ability to pay any of the
Loans or any of the other Obligations in accordance with the terms of the
Agreement, (c) the Collateral or Agent's Liens, on behalf of itself and Lenders,
on the
77
Collateral or the priority of such Liens, or (d) Agent's or any Lender's rights
and remedies under the Agreement and the other Loan Documents. Without limiting
the generality of the foregoing, any event or occurrence adverse to one or more
Credit Parties which results or could reasonably be expected to result in costs
and/or liabilities in excess of $2,500,000 shall constitute a Material Adverse
Effect.
"Maximum Amount" means, as of any date of determination, an amount
equal to the Revolving Loan Commitment of all Lenders as of that date.
"Maximum Lawful Rate" has the meaning ascribed to it in Section
1.2(f).
"Xxxxx'x" means Xxxxx'x Investor's Services, Inc.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA, and to which any Credit Party or ERISA Affiliate is
making, is obligated to make or has made or been obligated to make,
contributions on behalf of participants who are or were employed by any of them.
"Net Proceeds" means (i) cash proceeds received by Borrowers or any
of their Subsidiaries from any Asset Disposition (including insurance proceeds,
awards of condemnation, and payments under notes or other debt securities
received in connection with any Asset Disposition), net of (a) the costs of such
Asset Disposition (including taxes attributable to such sale, lease or transfer)
and (b) amounts applied to repayment of Indebtedness (other than the
Obligations) secured by a Lien on the asset or property disposed, and (ii) cash
proceeds attributable to any working capital, earnings, balance sheet or similar
adjustment under the Acquisition Agreement.
"Non-Consenting Lender" has the meaning ascribed to it in Section
9.19(c).
"Non-Funding Lender" has the meaning ascribed to it in Section
8.5(a).
"Notes" means, collectively, the Revolving Notes.
"Notice of Conversion/Continuation" has the meaning ascribed to it
in Section 1.2(e).
"Notice of Revolving Credit Advance" has the meaning ascribed to it
in Section 1.1(a).
"NU" means Golfsmith NU, LLC, a Delaware corporation.
"NU Borrowing Base" means, as of any date of determination by Agent,
from time to time, an amount equal to the sum at such time of:
(a) up to 85% of the book value of NU's Eligible Accounts at such
time; and
(b) up to the lesser of (i) 65% of the book value of NU's Eligible
Inventory valued at the lower of cost (determined on a first-in, first-out
basis) or market and (ii) 60% of the orderly liquidation value of NU's
Eligible Inventory.
"Obligations" means all loans, advances, debts, liabilities and
obligations, for the performance of covenants, tasks or duties or for payment of
monetary amounts (whether or not such performance is then required or
contingent, or such amounts are liquidated or determinable), including
obligations pursuant to Letter of Credit Obligations, owing by any Credit Party
to Agent or any Lender, and all covenants and duties regarding such amounts, of
any kind or nature, present or future, whether or not evidenced by any note,
agreement or other instrument, arising under the Agreement or any of the
78
other Loan Documents. This term includes all principal, interest (including all
interest that accrues after the commencement of any case or proceeding by or
against any Credit Party in bankruptcy, whether or not allowed in such case or
proceeding), Fees, Charges, expenses, attorneys' fees and any other sum
chargeable to any Credit Party under the Agreement or any of the other Loan
Documents.
"Occurrence" has the meaning ascribed to such term in Section 9.21.
"Opening Adjustment" means an adjustment as determined by Agent to
the amount to be required by Agent as the Equity Capital Contribution based on
the Aggregate Borrowing Base as of the Closing Date and working capital
adjustments made through the Closing Date.
"Other Lender" has the meaning ascribed to it in Section 8.5(d).
"Overadvance" has the meaning ascribed to it in Section 1.1(a).
"Xxxx Agreements" means those certain Employment Agreements, dated
as of October 15, 2002, between GII and each of Xxxx Xxxx and Xxxxx Xxxx.
"Patent License" means rights under any written agreement now owned
or hereafter acquired by any Credit Party granting any right with respect to any
invention on which a Patent is in existence.
"Patent Security Agreements" means the Patent Security Agreements
made in favor of Agent, on behalf of itself and Lenders, by each applicable
Credit Party.
"Patents" means all of the following in which any Credit Party now
holds or hereafter acquires any interest: (a) all letters patent of the United
States or any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or of any other country,
including registrations, recordings and applications in the United States Patent
and Trademark Office or in any similar office or agency of the United States,
any State or any other country, and (b) all reissues, continuations,
continuations-in-part or extensions thereof.
"Payment Account" has the meaning ascribed to it in Annex F.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plan" means a Plan described in Section 3(2) of ERISA.
"Permitted Encumbrances" means the following encumbrances: (a) Liens
for taxes or assessments or other governmental Charges not yet due and payable;
(b) pledges or deposits of money securing statutory obligations under workmen's
compensation, unemployment insurance, social security or public liability laws
or similar legislation (excluding Liens under ERISA); (c) pledges or deposits of
money securing bids, tenders, contracts (other than contracts for the payment of
money) or leases to which any Credit Party is a party as lessee made in the
ordinary course of business; (d) inchoate and unperfected workers', mechanics'
or similar liens arising in the ordinary course of business, so long as such
Liens attach only to Equipment, Fixtures and/or Real Estate; (e) carriers',
warehousemen's, suppliers' or other similar possessory liens arising in the
ordinary course of business and securing liabilities in an outstanding aggregate
amount not in excess of $50,000 at any time, so long as such Liens attach only
to Inventory; (f) deposits securing, or in lieu of, surety, appeal or customs
bonds in proceedings to which any Credit Party is a party; (g) any attachment or
judgment lien not constituting an Event of Default under Section 6.1; (h) zoning
restrictions, easements, licenses, or other restrictions on the use of any Real
Estate
79
or other minor irregularities in title (including leasehold title) thereto, so
long as the same do not materially impair the use, value, or marketability of
such Real Estate; (i) presently existing or hereafter created Liens in favor of
Agent, on behalf of Lenders; (j) Liens existing on the date hereof and renewal,
and extensions thereof which Liens are set forth on Schedule 3.2; (k) Liens
securing Indebtedness permitted by Section 3.1(d), provided that the Liens
attach only to the assets financed by such Indebtedness and (l) Liens securing
the obligations of GII and its Domestic Subsidiaries in respect of the Senior
Notes and the guaranties thereof, so long as such Liens are subject to the
Inter-Creditor Agreement.
"Person" means any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
limited liability company, institution, public benefit corporation, other entity
or government (whether federal, state, county, city, municipal, local, foreign,
or otherwise, including any instrumentality, division, agency, body or
department thereof).
"Plan" means, at any time, an "employee benefit plan," as defined in
Section 3(3) of ERISA, that any Credit Party or ERISA Affiliate maintains,
contributes to or has an obligation to contribute to on behalf of participants
who are or were employed by any Credit Party.
"Pledge Agreement" means the various Pledge Agreements, each dated
on or after the date hereof executed by Holdings, GII, each Borrower and each
other Credit Party in favor of Agent, on behalf of itself and Lenders, pledging
all Stock of any Credit Party owned by such Person and all Intercompany Notes
owned by such Person.
"Prior Lender" means Foothill Capital Corporation.
"Prior Lender Obligations" means all obligations under (i) the Loan
and Security Agreement, dated as of November 10, 2000, among LP, USA, NU and
Golfsmith Canada, LLC, as borrower, the other Golfsmith entities named therein
as guarantors, the lenders party thereto and Prior Lender, as manager and
administrative agent and (ii) all other documents, instruments and agreements in
connection thereto.
"Pro Forma" means the unaudited consolidated and consolidating
balance sheets of Holdings and its Subsidiaries prepared in accordance with GAAP
as of the Closing Date after giving effect to the Related Transactions. The Pro
Forma is annexed hereto as Annex D.
"Pro Rata Share" means with respect to all matters relating to any
Lender (a) with respect to the Revolving Loan, the percentage obtained by
dividing (i) the Revolving Loan Commitment of that Lender by (ii) the aggregate
Revolving Loan Commitments of all Lenders and (b) with respect to all Loans on
and after the Commitment Termination Date, the percentage obtained by dividing
(i) the aggregate outstanding principal balance of the Loans held by that
Lender, by (ii) the outstanding principal balance of the Loans held by all
Lenders, as such percentages may be adjusted by assignments pursuant to Section
8.1.
"Projections" means Holdings', and its Subsidiaries' forecasted
consolidated and consolidating: (a) balance sheets; (b) profit and loss
statements; (c) cash flow statements; and (d) capitalization statements, all
prepared on a Subsidiary by Subsidiary or division-by-division basis, if
applicable, and otherwise consistent with the historical Financial Statements of
Borrowers, together with appropriate supporting details and a statement of
underlying assumptions.
"Properly Elects" has the meaning ascribed to it in Section 9.21.
80
"Proposed Change" has the meaning ascribed to it in Section 9.19(c).
"Qualified Assignee" means (a) any Lender, any Affiliate of any
Lender and, with respect to any Lender that is an investment fund that invests
in commercial loans, any other investment fund that invests in commercial loans
and that is managed or advised by the same investment advisor as such Lender or
by an Affiliate of such investment advisor, and (b) any commercial bank, savings
and loan association or savings bank or any other entity which is an "accredited
investor" (as defined in Regulation D under the Securities Act of 1933) which
extends credit or buys loans as one of its businesses, including insurance
companies, mutual funds, lease financing companies and commercial finance
companies, in each case, which has a rating of BBB or higher from S&P and a
rating of Baa2 or higher from Xxxxx'x at the date that it becomes a Lender and
which, through its applicable lending office, is capable of lending to Borrowers
without the imposition of any withholding or similar taxes; provided that no
Person determined by Agent to be acting in the capacity of a vulture fund or
distressed debt purchaser shall be a Qualified Assignee and no Person or
Affiliate of such Person (other than a Person that is already a Lender) holding
Subordinated Debt or Stock issued by any Credit Party shall be a Qualified
Assignee.
"Qualified Plan" means a Pension Plan that is intended to be
tax-qualified under Section 401(a) of the IRC.
"Real Estate" has the meaning ascribed to it in Section 5.12.
"Refinancing" means the repayment in full by Borrowers of the Prior
Lender Obligations on the Closing Date.
"Related Person" has the meaning ascribed to it in Annex F.
"Related Transactions" means the Acquisition, the Refinancing, the
issuance of the Senior Notes, the Equity Capital Contribution, the execution and
delivery of the Loan Documents, the payment of all Fees, costs and expenses
associated with all of the foregoing and the execution and delivery of all of
the Related Transactions Documents.
"Related Transactions Documents" means the Loan Documents, the
Acquisition Agreement, the Indenture, the Senior Notes and all security
agreements, mortgages, deeds of trust and other agreements or instruments
executed in connection with the Related Transactions.
"Relationship Bank" has the meaning ascribed to it in Annex F.
"Release" means any release, threatened release, spill, emission,
leaking, pumping, pouring, emitting, emptying, escape, injection, deposit,
disposal, discharge, dispersal, dumping, leaching or migration of Hazardous
Material in the indoor or outdoor environment, including the movement of
Hazardous Material through or in the air, soil, surface water, ground water or
property.
"Replacement Lender" has the meaning ascribed to it in Section
9.19(a).
"Requisite Lenders" means Lenders having (a) more than 66 2/3% of
the Commitments of all Lenders, or (b) if the Commitments have been terminated,
more than 66 2/3% of the aggregate outstanding amount of the Loans.
"Reserves" means, with respect to any Borrowing Base (a) reserves
established by Agent from time to time against Eligible Accounts and Eligible
Inventory pursuant to Exhibit 4.9(d) and (b) such other reserves against
Eligible Accounts, Eligible Inventory or Borrowing Availability that Agent
81
may, in its reasonable credit judgment, establish from time to time. Without
limiting the generality of the foregoing, Reserves established to ensure the
payment of accrued Interest Expenses or Indebtedness shall be deemed to be a
reasonable exercise of Agent's credit judgment.
"Restricted Payment" means, with respect to any Credit Party (a) the
declaration or payment of any dividend or the incurrence of any liability to
make any other payment or distribution of cash or other property or assets in
respect of Stock; (b) any payment on account of the purchase, redemption,
defeasance, sinking fund or other retirement of such Credit Party's Stock or any
other payment or distribution made in respect thereof, either directly or
indirectly; (c) any payment or prepayment of principal of, premium, if any, or
interest, fees or other charges on or with respect to, and any redemption,
purchase, retirement, defeasance, sinking fund or similar payment and any claim
for rescission with respect to, any Subordinated Debt; (d) any payment made to
redeem, purchase, repurchase or retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire Stock of such Credit
Party now or hereafter outstanding; (e) any payment of a claim for the
rescission of the purchase or sale of, or for material damages arising from the
purchase or sale of, any shares of such Credit Party's Stock or of a claim for
reimbursement, indemnification or contribution arising out of or related to any
such claim for damages or rescission; (f) any payment, loan, contribution, or
other transfer of funds or other property to any Stockholder of such Credit
Party other than payment of compensation in the ordinary course of business to
Stockholders who are employees of such Credit Party; and (g) any payment of
management fees (or other fees of a similar nature), indemnification payments
and out-of-pocket expenses in connection therewith by such Credit Party to any
Stockholder of such Credit Party or its Affiliates.
"Retiree Welfare Plan" means, at any time, a Welfare Plan that
provides for continuing coverage or benefits for any participant or any
beneficiary of a participant after such participant's termination of employment,
other than continuation coverage provided pursuant to Section 4980B of the IRC
and at the sole expense of the participant or the beneficiary of the
participant.
"Revolving Credit Advance" has the meaning ascribed to it in Section
1.1(a).
"Revolving Lenders" means those Lenders having a Revolving Loan
Commitment.
"Revolving Loan(s)" means, at any time, the sum of (i) the aggregate
amount of Revolving Credit Advances outstanding to Borrowers plus (ii) the
aggregate Letter of Credit Obligations incurred on behalf of Borrowers. Unless
the context otherwise requires, references to the outstanding principal balance
of the Revolving Loan shall include the outstanding balance of Letter of Credit
Obligations.
"Revolving Loan Commitment" means (a) as to any Lender, the
commitment of such Lender to make its Pro Rata Share of Revolving Credit
Advances or incur its Pro Rata Share of Letter of Credit Obligations as set
forth on Annex B or in the most recent Assignment Agreement, if any, executed by
such Lender and (b) as to all Lenders, the aggregate commitment of all Lenders
to make the Revolving Credit Advances or incur Letter of Credit Obligations,
which aggregate commitment shall be Ten Million Dollars ($10,000,000) on the
Closing Date, as such amount may be adjusted, if at all, from time to time in
accordance with the Agreement.
"Revolving Notes" has the meaning ascribed to it in Section 1.1(a).
"S&P" means Standard & Poor's Ratings Services, a division of the
XxXxxx-Xxxx Companies, Inc.
82
"Security Agreement" means the various Security Agreements dated on
or after the Closing Date entered into by and among Agent, on behalf of itself
and Lenders, Holdings, GII and the other Credit Parties signatory thereto.
"Senior Notes" means the 8.375% senior secured notes of GII due 2009
issued pursuant to the Indenture in the original aggregate principal amount of
not more than $93,750,000 (provided that solely for purposes of the calculations
contained in the schedules to Exhibit 4.9(k), the Senior Notes shall be deemed
to bear interest at a rate of 12.78% per annum and to have been issued in the
aggregate principal amount of $75,000,000), together with any "Exchange Notes"
(as defined in the Indenture) issued in exchange therefor so long as any such
Exchange Notes replace such Senior Notes dollar for dollar.
"Settlement Date" has the meaning ascribed to it in Section
8.5(a)(ii).
"Software" means all "software" as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party, other than software
embedded in any category of Goods, including all computer programs and all
supporting information provided in connection with a transaction related to any
program.
"Solvent" means, with respect to any Person on a particular date,
that on such date (a) the fair value of the property of such Person is greater
than the total amount of liabilities, including subordinated and contingent
liabilities, of such Person; (b) the present fair saleable value of the assets
of such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts and liabilities, including
subordinated and contingent liabilities as they become absolute and matured; (c)
such Person does not intend to, and does not believe that it will, incur debts
or liabilities beyond such Person's ability to pay as such debts and liabilities
mature; and (d) such Person is not engaged in a business or transaction, and is
not about to engage in a business or transaction, for which such Person's
property would constitute an unreasonably small capital. The amount of
contingent liabilities (such as Litigation, guaranties and pension plan
liabilities) at any time shall be computed as the amount that, in light of all
the facts and circumstances existing at the time, represents the amount that can
be reasonably be expected to become an actual or matured liability.
"Statement" has the meaning ascribed to it in Section 4.9(b).
"Stock" means all shares, options, warrants, general or limited
partnership interests, membership interests or other equivalents (regardless of
how designated and regardless whether represented by a certificate or not) of or
in a corporation, partnership, limited liability company or equivalent entity
whether voting or nonvoting, including common stock, preferred stock or any
other "equity security" (as such term is defined in Rule 3a11-1 of the General
Rules and Regulations promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934).
"Stockholder" means, with respect to any Person, each holder of
Stock of such Person.
"Subject Property" has the meaning ascribed to it in Section 9.21.
"Subordinated Debt" means any Indebtedness of any Credit Party
subordinated to the Obligations in a manner and form satisfactory to Agent and
Requisite Lenders in their sole discretion, as to right and time of payment and
as to any other rights and remedies thereunder.
"Subsidiary" means, with respect to any Person, (a) any corporation
of which an aggregate of more than 50% of the outstanding Stock having ordinary
voting power to elect a majority of
83
the board of directors of such corporation (irrespective of whether, at the
time, Stock of any other class or classes of such corporation shall have or
might have voting power by reason of the happening of any contingency) is at the
time, directly or indirectly, owned legally or beneficially by such Person or
one or more Subsidiaries of such Person, or with respect to which any such
Person has the right to vote or designate the vote of 50% or more of such Stock
whether by proxy, agreement, operation of law or otherwise, and (b) any
partnership or limited liability company in which such Person and/or one or more
Subsidiaries of such Person shall have an interest (whether in the form of
voting or participation in profits or capital contribution) of more than 50% or
of which any such Person is a general partner or may exercise the powers of a
general partner. Unless the context otherwise requires, each reference to a
Subsidiary shall be a reference to a Subsidiary of a Borrowers.
"Subsidiary Guaranty" means the Subsidiary Guaranty of even date
herewith executed by one or more Subsidiaries of GII in favor of Agent, on
behalf of itself and Lenders.
"Supermajority Revolving Lenders" means Lenders having (a) 80% or
more of the Revolving Loan Commitments of all Lenders, or (b) if the Revolving
Loan Commitments have been terminated, 80% or more of the aggregate outstanding
amount of the Revolving Loan.
"Termination Date" means the date on which (a) the Loans have been
indefeasibly repaid in full, (b) all other Obligations under the Agreement and
the other Loan Documents have been completely discharged, (c) all Letter of
Credit Obligations have been cash collateralized in the amount set forth in
Section 1.5(g), cancelled or backed by standby letters of credit acceptable to
Agent and (d) no Borrower shall have any further right to borrow any monies
under the Agreement.
"Title IV Plan" means a Pension Plan (other than a Multiemployer
Plan), that is covered by Title IV of ERISA, and that any Credit Party or ERISA
Affiliate maintains, contributes to or has an obligation to contribute to on
behalf of participants who are or were employed by any of them.
"Trademark Security Agreements" means the Trademark Security
Agreements made in favor of Agent, on behalf of itself and Lenders, by each
applicable Credit Party.
"Trademark License" means rights under any written agreement now
owned or hereafter acquired by any Credit Party granting any right to use any
Trademark.
"Trademarks" means all of the following now owned or hereafter
adopted or acquired by any Credit Party: (a) all trademarks, trade names,
corporate names, business names, trade styles, service marks, logos, internet
domain names, other source or business identifiers, prints and labels on which
any of the foregoing have appeared or appear, designs and general intangibles of
like nature (whether registered or unregistered), all registrations and
recordings thereof, and all applications in connection therewith, including
registrations, recordings and applications in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
state or territory thereof, or any other country or any political subdivision
thereof; (b) all reissues, extensions or renewals thereof; and (c) all goodwill
associated with or symbolized by any of the foregoing.
"Triggering Request" has the meaning ascribed to it in Annex F.
"Trustee" means U.S. Bank Trust National Association, as trustee
under the Indenture, or any successor trustee thereunder.
"Unfunded Pension Liability" means, at any time, the aggregate
amount, if any, of the sum of (a) the amount by which the present value of all
accrued benefits under each Title IV Plan exceeds
84
the fair market value of all assets of such Title IV Plan allocable to such
benefits in accordance with Title IV of ERISA, all determined as of the most
recent valuation date for each such Title IV Plan using the actuarial
assumptions for funding purposes in effect under such Title IV Plan, and (b) for
a period of 5 years following a transaction which might reasonably be expected
to be covered by Section 4069 of ERISA, the liabilities (whether or not accrued)
that could be avoided by any Credit Party or any ERISA Affiliate as a result of
such transaction.
"USA" means Golfsmith USA, LLC, a Delaware limited liability
company.
"USA Borrowing Base" means, as of any date of determination by
Agent, from time to time, an amount equal to the sum at such time of:
(a) up to 85% of the book value of USA's Eligible Accounts at such
time; and
(b) up to the lesser of (i) 65% of the book value of USA's Eligible
Inventory valued at the lower of cost (determined on a first-in, first-out
basis) or market and (ii) 60% of the orderly liquidation value of USA's
Eligible Inventory.
"Welfare Plan" means a Plan described in Section 3(1) of ERISA.
Rules of construction with respect to accounting terms used in the
Agreement or the other Loan Documents shall be as set forth or referred to in
this Annex A. All other undefined terms contained in any of the Loan Documents
shall, unless the context indicates otherwise, have the meanings provided for by
the Code to the extent the same are used or defined therein; in the event that
any term is defined differently in different Articles or Divisions of the Code,
the definition contained in Article or Division 9 shall control. Unless
otherwise specified, references in the Agreement or any of the Appendices to a
Section, subsection or clause refer to such Section, subsection or clause as
contained in the Agreement. The words "herein," "hereof" and "hereunder" and
other words of similar import refer to the Agreement as a whole, including all
Annexes, Exhibits and Schedules, as the same may from time to time be amended,
restated, modified or supplemented, and not to any particular section,
subsection or clause contained in the Agreement or any such Annex, Exhibit or
Schedule.
Wherever from the context it appears appropriate, each term stated
in either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, feminine and neuter genders. The words "including", "includes" and
"include" shall be deemed to be followed by the words "without limitation"; the
word "or" is not exclusive; references to Persons include their respective
successors and assigns (to the extent and only to the extent permitted by the
Loan Documents) or, in the case of governmental Persons, Persons succeeding to
the relevant functions of such Persons; and all references to statutes and
related regulations shall include any amendments of the same and any successor
statutes and regulations. Whenever any provision in any Loan Document refers to
the knowledge (or an analogous phrase) of any Credit Party, such words are
intended to signify that such Credit Party has actual knowledge or awareness of
a particular fact or circumstance or that such Credit Party, if it had exercised
reasonable diligence, would have known or been aware of such fact or
circumstance. Except as otherwise provided therein, all definitions of
agreements and instruments shall mean such agreements or instruments as amended,
modified or supplemented (and in the case of instruments, replaced, renewed or
substituted) from time to time in accordance with their respective terms and the
terms of the Loan Documents.
85
ANNEX B
to
CREDIT AGREEMENT
PRO RATA SHARES AND COMMITMENT AMOUNTS
Lender(s)
---------
Revolving Loan Commitment General Electric Capital Corporation
$10,000,000 (100%)
86
ANNEX C
to
CREDIT AGREEMENT
CLOSING CHECKLIST
A. DOCUMENTS
1. Credit Agreement: This Agreement or counterparts hereof shall have been
duly executed by, and delivered to, each Credit Party, Agent and Lenders.
2. Revolving Notes: Duly executed originals of the Revolving Notes for each
Lender, dated the Closing Date, if requested by such Lender.
3. Security Agreements: Duly executed originals of Security Agreements
executed by each Credit Party, dated the Closing Date, and all
instruments, documents and agreements executed pursuant thereto.
4. Insurance: Satisfactory evidence that the insurance policies required by
Section 2.2 are in full force and effect, together with appropriate
evidence showing loss payable and/or additional insured clauses or
endorsements, as requested by Agent, in favor of Agent, on behalf of
Lenders.
5. Security Interests and Code Filings
(a) Evidence satisfactory to Agent that Agent (for the benefit of itself
and Lenders) has a valid and perfected first priority security
interest in the Collateral, including (i) such documents duly
executed by each Credit Party (including financing statements under
the Code and other applicable documents under the laws of any
jurisdiction with respect to the perfection of Liens) as Agent may
request in order to perfect its security interests in the Collateral
and (ii) copies of Code search reports listing all effective
financing statements that name any Credit Party as debtor, together
with copies of such financing statements, none of which shall cover
the Collateral, except for those relating to Permitted Encumbrances.
(b) UCC-3 or other appropriate termination statements, in form and
substance reasonably satisfactory to Agent releasing all liens on
the Collateral of each Credit Party, and termination of all blocked
account agreements, bank agency agreements or other similar
agreements or arrangements or arrangements in favor of any creditors
other than Lenders.
6. Intellectual Property Security Agreements: Duly executed originals of
Trademark Security Agreements, each dated the Closing Date and signed by
each Credit Party that owns Trademarks.
7. Initial Borrowing Base Certificate: Duly executed originals of an initial
Borrowing Base Certificate.
8. Cash Management Systems; Blocked Account Agreements:
(a) Evidence satisfactory to Agent that, as of the first Funding Date,
Cash Management Systems complying with Annex F have been established
and are currently being maintained in the manner set forth in such
Annex F.
87
(b) On or prior to the first Funding Date, duly executed originals of a
Blocked Account Agreement in the form of Exhibit F1 evidencing
Agent's control over the LP Operating Account.
(c) Within 30 days after the Closing Date, duly executed originals of
Blocked Account Agreements in the form of Exhibit F2 evidencing
Agent's control over such deposit accounts (other than the LP
Operating Account) as are listed on Schedule 5.16.
9. Certificate of Formation and Good Standing: For each Credit Party, (a) its
articles or certificate of incorporation or certificate of formation, as
applicable, and all amendments thereto, (b) good standing certificates
(including verification of tax status) in its state of incorporation or
formation, as applicable, and (c) good standing certificates (including
verification of tax status) and certificates of qualification to conduct
business in each jurisdiction where its ownership or lease of property or
the conduct of its business requires such qualification, each dated a
recent date prior to the Closing Date and certified by the applicable
Secretary of State or other authorized Governmental Authority.
10. By-laws and Resolutions: For each Credit Party, (a) its by-laws or
operating agreement, as applicable, together with all amendments thereto
and (b) resolutions of such Person's Board of Directors or Board of
Members, as applicable, approving and authorizing the execution, delivery
and performance of the Loan Documents to which it is a party and the
transactions to be consummated in connection therewith, each certified as
of the Closing Date by such Person's secretary or an assistant secretary
as being in full force and effect without any modification or amendment.
11. Incumbency Certificates: For each Credit Party, signature and incumbency
certificates of the officers of such Person executing any of the Loan
Documents, certified as of the Closing Date by such Person's secretary or
an assistant secretary as being true, accurate, correct and complete.
12. Opinions of Counsel: Duly executed originals of an opinion of King &
Spalding, counsel for the Credit Parties, dated the Closing Date.
13. Pledge Agreements: Duly executed originals of each of the Pledge
Agreements accompanied by (as applicable) share certificates representing
all of the outstanding Stock being pledged pursuant to such Pledge
Agreement and stock powers for such share certificates executed in blank,
and duly executed control letters from each of the Credit Parties that is
a limited partnership or a limited liability company in form and substance
satisfactory to Agent.
14. Intercompany Subordination Agreement: Duly executed originals of the
Intercompany Subordination Agreement.
15. Accountants' Letter: A letter from the Credit Parties to the independent
auditors authorizing the independent certified public accountants of the
Credit Parties to communicate with Agent and Lenders in accordance with
Section 2.3 and acknowledging Lenders' reliance on the auditor's
certification of past and future Financial Statements.
16. Appointment of Agent for Service: Evidence that CT Corporation has been
appointed as each Credit Party's agent for service of process in New York.
17. Guaranties: Duly executed originals of each Guaranty dated the Closing
Date, and all documents, instruments and agreements executed pursuant
thereto.
88
18. Fee Letter: Duly executed originals of the GE Capital Fee Letter in form
and substance satisfactory to GE Capital.
19. Officer's Certificate: Duly executed originals of a certificate of an
authorized officer of each Credit Party, dated the Closing Date, stating
that, since December 29, 2001 (a) no event or condition has occurred or is
existing which could reasonably be expected to have a Material Adverse
Effect; (b) there has been no material adverse change in the industry in
which any Credit Party operates; (c) no Litigation has been commenced
against such Credit Party which, if successful, would have a Material
Adverse Effect or could challenge any of the transactions contemplated by
the Agreement and the other Loan Documents; (d) there have been no
Restricted Payments made by any Credit Party; and (e) there has been no
material increase in liabilities, liquidated or contingent, and no
material decrease in assets of Holdings, Borrower or any of their
respective Subsidiaries.
20. Waivers: Within 90 days after the Closing Date, landlord waivers and
consents, bailee letters and mortgagee agreements, in each case as
required pursuant to Section 2.6.
21. Environmental Reports: Agent shall have received such environmental review
and audit reports with respect to the Real Estate of any Credit Party as
Agent shall have requested.
22. Audited Financials; Financial Condition: The Financial Statements,
Projections and other materials set forth in Section 5.5 along with a
business plan for Holdings and its Subsidiaries, all certified by an
authorized officer of Holdings or a Borrower, as appropriate. Agent shall
have further received a certificate of an authorized officer of each
Credit Party, based on the Pro Forma and Projections, to the effect that
(a) such Borrower will be Solvent upon the consummation of the
transactions contemplated herein; (b) the Pro Forma fairly presents the
financial condition of such Credit Party as of the date thereof after
giving effect to the transactions contemplated by the Loan Documents and
the Related Transactions; (c) the Projections are based upon estimates and
assumptions stated therein, all of which such Credit Party believes to be
reasonable and fair in light of current conditions and current facts known
to such Credit Party and, as of the Closing Date, reflect such Credit
Party's good faith and reasonable estimates of its future financial
performance and of the other information projected therein for the period
set forth therein; and (d) containing such other statements with respect
to the solvency of such Credit Party and matters related thereto as Agent
shall request.
23. Pro Forma: Copies of the Pro Forma in form and substance satisfactory to
the Agent.
24. Approvals: Copies of any third-party, Governmental Authority or other
regulatory approvals and consents necessary to consummate the Revolving
Credit Facility and the Related Transactions.
25. Related Transaction Documents:
(a) Duly executed copies of the Acquisition Agreement.
(b) Duly executed copies of the Indenture, and all documents,
instruments and agreements pursuant thereto.
(c) Copies of the duly executed Xxxx Agreements.
89
(d) Duly executed copies of amendments to the Intercompany Management
Agreements (i) between LP and NU and (ii) between LP and USA, each
clarifying the passing of title to Inventory.
26. Inter-Creditor Agreement: Duly executed originals of the Inter-Creditor
Agreement, and all documents, instruments and agreements executed pursuant
thereto.
27. Other Documents: Such other certificates, documents and agreements
respecting any Credit Party as Agent may, in its sole discretion, request.
B. NON-DOCUMENTARY CONDITIONS
1. Payment of Fees: Borrowers shall have paid the Fees required to be paid on
the Closing Date, including but not limited to such Fees specified in the
GE Capital Fee Letter and expenses and attorneys' fees the respective
amounts pursuant to Sections 1.3(a) and 1.3(g) respectively.
2. Capital Structure; Other Indebtedness: The organizational documents, terms
of equity interests, capital structure of each Credit Party and the terms
and conditions of all Indebtedness of each Credit Party shall be
reasonably acceptable to Agent. Total Indebtedness of Holdings on a
consolidated basis (including the Revolving Credit Facility) shall not
exceed $75,000,000 as of the Closing Date, and the Leverage Ratio shall be
less than or equal to 3.6x (subject to an Opening Adjustment) as of the
Closing Date.
3. Due Diligence: Agent shall have completed its business and legal due
diligence with results reasonably satisfactory to Agent.
4. Consummation of Related Transactions
(a) Acquisition: Agent shall have received evidence satisfactory to it
that (i) the Acquisition shall have occurred in accordance with the
terms of the Acquisition Agreement (ii) the purchase price
(inclusive of aggregate fees and closing costs, including those
payable to Agent and Lenders) associated with the Acquisition shall
not exceed $136,500,000 (subject to an Opening Adjustment) and (iii)
in connection with the Acquisition, one or more of the Credit
Parties shall have paid in full $34,300,000 of the 12% senior
subordinated notes outstanding prior to the Closing Date.
(b) Senior Notes: Agent shall have received evidence satisfactory to it
that the Senior Notes shall have been issued, the proceeds of which
Borrower shall have received in an amount not less than $75,000,000.
(c) Equity Capital Contribution: Agent shall have received evidence
satisfactory to it that the Equity Capital Contribution shall have
occurred.
(d) Foothill Payoff: Agent shall have received evidence satisfactory to
it that all Prior Lender Obligations shall have been terminated.
(e) Other Requirements: Such other requirements of any Credit Party as
Agent may, in its sole discretion, request.
90
ANNEX D
to
CREDIT AGREEMENT
PRO FORMA
91
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma combined condensed financial
statements of Holdings give effect to the purchase of our company by Holdings
pursuant to the merger and this offering. We have presented the pro forma
financial statements of Holdings, the 100% parent of the issuer of the notes,
Golfsmith. Holdings has no independent operations or other subsidiaries and has
fully and unconditionally guaranteed the 8.375% senior secured notes offered by
this offering circular. The pro forma combined condensed statements of income
assume the merger and this offering occurred as of December 31, 2000. The
unaudited pro forma combined condensed balance sheet combines the unaudited
historical condensed balance sheets of Holdings and Golfsmith as of June 29,
2002.
Holdings is acquiring Golfsmith in a merger transaction for an
aggregate purchase price of $124.5 million, which includes the repayment of
approximately $34.3 million of existing indebtedness (including a prepayment
penalty of $0.8 million) less existing cash of $31.4 million, in each case as
of June 29, 2002, or $2.9 million, the payment of $100.8 million in cash and
$12.8 million in equity securities in Holdings to our existing stockholders,
and the repurchase of an $8.0 million minority interest in one of Golfsmith's
subsidiaries. We will use the net proceeds of this offering to finance part of
the cash portion of the merger consideration to our stockholders, subject to a
possible post-closing adjustment. In addition, we expect to incur $12.0 million
of fees and expenses in connection with the merger and estimated direct
transaction costs of this offering, including $7.1 million in connection with
this offering and $4.9 million in connection with the merger. The estimated
direct transaction costs consist primarily of investment banker, private
placement fees, legal and accounting fees and printing costs to be incurred
that are directly related to the merger and this offering. The amount of merger
consideration is estimated based on Golfsmith's outstanding indebtedness and
available cash as of June 29, 2002. The actual consideration payable in
connection with the merger will be determined based on the outstanding
indebtedness and available cash as of the date of the merger. In addition,
there can be no assurance that Holdings and Golfsmith will not incur additional
expenses related to the merger. For the purpose of the following pro forma
financial information, the number of shares of Holdings' common stock assumed
to be issued and outstanding following the merger is approximately 20.5 million.
The unaudited pro forma combined condensed statements of income give
effect to: (1) the proposed acquisition of our company by Holdings, (2) this
offering, (3) the repayment of our outstanding debt and the settlement of
minority interest, and (4) provision for taxes and earnings per share as if the
combined condensed financial statements were for a C corporation. The pro forma
combined condensed financial statements have been prepared giving effect to the
recapitalization of our company in accordance with EITF 88-16, "Basis in
Leveraged Buyout Transactions" as a partial purchase. Under EITF 88-16, our
business has been revalued to fair value to the extent of Atlantic Equity
Partners III, L.P.'s 79.2% controlling interest in the business. The remaining
20.8% is accounted for at continuing stockholder's carryover basis in the
business.
After the merger, the excess of the purchase price over the
historical basis of the net assets acquired will be applied to adjust net
assets to their fair values to the extent of Atlantic Equity Partners III's
79.2% ownership. No appraisals of assets have yet been performed and all of the
excess purchase price over the net assets is being allocated to cost in excess
of acquired net assets. Any adjustment that increases the value of the net
assets will reduce net income on a pro forma basis.
The pro forma combined condensed financial statements are presented
for illustrative purposes only and are not necessarily indicative of the
operating results or financial position that would have occurred if the merger
and this offering had been consummated at the beginning of the earliest period
presented, nor is it necessarily indicative of future operating results or
financial position. The pro forma adjustments are based upon preliminary
information and assumptions available at the time of the preparation of this
offering circular. The pro forma combined condensed financial statements should
be read in conjunction with the accompanying notes thereto and our historical
consolidated financial statements and related notes thereto included in this
offering circular. In our opinion, all adjustments have been made that are
necessary to present fairly the pro forma data.
92
GOLFSMITH INTERNATIONAL HOLDINGS, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
JUNE 29, 2002
(DOLLARS IN THOUSANDS)
HISTORICAL
GOLFSMITH ADJUSTMENTS PRO FORMA
---------- ----------- ---------
ASSETS:
Current assets:
Cash........................................ $ 31,424 $(31,424)(a) $ --
Receivables................................. 6,014 -- 6,014
Inventories................................. 40,889 -- 40,889
Deferred taxes.............................. -- 1,261 (b) 1,261
Prepaids and other.......................... 2,320 -- 2,320
-------- -------- --------
Total current assets........................ 80,647 (30,163) 50,484
Net property and equipment.................... 27,096 -- 27,096
Intangible assets, net........................ 1,923 -- 1,923
Cost in excess of acquired net assets......... -- 64,625 (c) 64,625
Other assets.................................. 1,822 5,278 (d) 7,100
-------- -------- --------
Total assets.................................. $111,488 $ 39,740 $151,228
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable and accrued expenses....... $ 32,725 $ (664)(a) $ 32,061
-------- -------- --------
Total current liabilities..................... 32,725 (664) 32,061
Long-term debt................................ 26,659 48,341 (e) 75,000
Deferred rent................................. 2,167 (1,717)(c) 450
-------- -------- --------
Total liabilities............................. 61,551 45,960 107,511
Minority interest............................. 12,881 (12,881)(f) --
Stockholders' equity.......................... 37,056 6,661 (g) 43,717
-------- -------- --------
Total liabilities and stockholders' equity.... $111,488 $ 39,740 $151,228
======== ======== ========
See accompanying notes to Unaudited Pro Forma Combined Condensed Balance Sheet.
93
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
(DOLLARS IN THOUSANDS UNLESS OTHERWISE NOTED)
GENERAL
Holdings will account for the acquisition of Golfsmith as a purchase
business combination following the guidance specified in EITF 88-16. The
accompanying unaudited pro forma combined condensed financial statements
reflect an estimated aggregate purchase price of approximately $124.5 million,
excluding offering and merger-related costs of approximately $12.0 million.
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
The accompanying unaudited pro forma combined condensed balance sheet has
been prepared as if the merger was consummated on June 29, 2002. Pro forma
adjustments were made:
(a) The sources and use of funds relating to the merger:
SOURCES:
Existing cash as of June 29, 2002 ....................... $ 31,424
Notes offered hereby(1) ................................. 75,000
New equity capital(2) ................................... 48,679
--------
Total .............................................. $155,103
========
USES:
Cash merger consideration ............................... $100,837
Repayment of existing indebtedness(3) ................... 34,266
Redemption of existing minority interest(4) ............. 8,000
Estimated fees and expenses ............................. 12,000
--------
Total .............................................. $155,103
========
---------------
(1) Reflects $93.75 million of the 8.375% senior secured notes, net of
discount of $18.75 million.
(2) Reflects amounts paid by Atlantic Equity Partners III for 79.2% equity
ownership in Holdings.
(3) Reflects the payment of existing long-term debt of $32.8 million
(including $6.1 million in connection with the unamortized discount of
the existing 12% senior subordinated notes), payment of accrued
interest of $0.6 million, and prepayment penalty costs of $0.8 million
associated with the early retirement of the existing 12% senior
subordinated notes.
(4) Reflects amounts paid to satisfy the minority interest obligation
immediately preceding the merger. This would result in a gain of $4.9
million on the satisfaction of this liability. This gain has not been
reflected in the pro forma combined condensed statements of operations
for the periods ended June 20, 2002 and December 29, 2001.
94
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
(DOLLARS IN THOUSANDS UNLESS OTHERWISE NOTED)
(b) The pro forma adjustments related to deferred taxes reflect our conversion
from an S Corporation to a C Corporation on a pro forma basis:
DEFERRED TAX ASSETS:
Allowance for doubtful accounts............................ $ 375
Inventory reserve.......................................... 1,435
Unicap..................................................... 1,416
Accrued legal expenses..................................... 250
Store closing expenses..................................... 54
Deferred compensation...................................... 1,114
Deferred interest.......................................... 38
--------
Total...................................................... 4,682
========
Pro forma deferred tax asset at 34%........................ $ 1,592
To reflect portion whose basis will be revalued in purchase
accounting (79.2% of $1,592)................................. $ 1,261
========
(c) To record cost in excess of acquired net assets:
Purchase price............................................... $136,450
Less: Golfsmith net assets acquired (1)...................... (44,014)
Allocation of deferred financing costs (see footnote (d)).... (7,100)
Deferred taxes and adjustments to deferred rent (2).......... (2,978)
EITF 88-16 denial (assets remain at historical cost)......... (17,733)
--------
Cost in excess of acquired net assets (3).................... $ 64,625
========
--------------
(1) Represents Golfsmith's historical book value of $37,056 plus the net
assets and liabilities not acquired comprising of cash, long-term debt,
deferred financing costs and minority interest.
(2) The pro forma balance sheet includes (i) the deferred taxes impact
related to changing from an S Corporation to a C corporation as denoted
in footnote (b) above; and (ii) a reduction of deferred rent of $1.7
million resulting in a $450,000 carryover basic liability (20.8% of the
carryover interest).
(3) The excess of the purchase consideration over the historical basis of
the net assets acquired will be applied to revalue assets to their fair
market value to the extent of Atlantic Equity Partners III's 79.2%
ownership in Holdings. No appraisals of assets have yet been performed
and all of the excess of purchase consideration over the net assets is
being presented as cost in excess of acquired net assets. Subsequent
valuation analysis could potentially affect the purchase price
allocation made herein.
(d) The adjustment reflects the following:
Capitalized financing costs.................................. $ 7,100
Write-off of unamortized financing costs on existing debt.... (1,822)
--------
$ 5,278
========
The $7.1 million reflects the capitalized portion of fees and expenses
anticipated to be paid in connection with the sale of the 8.375% senior
secured notes. Total estimated fees and expenses are $12.0 million, the
remaining $4.9 million of which will be recorded as a reduction of
stockholders' equity. Such estimated fees and expenses are anticipated to
consist of (1) fees and expenses related to the merger, including bank
commitment fees and underwriting discounts and commissions, (2) professional
and advisory and
95
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
(DOLLARS IN THOUSANDS UNLESS OTHERWISE NOTED)
investment banking fees and expenses, and (3) miscellaneous fees and
expenses such as printing and filing fees. The $1.8 million write-off
relates to unamortized financing costs related to Golfsmith's 12% senior
subordinated notes and existing credit facility, which are being repaid
concurrent with the merger.
(e) The pro forma adjustments to long-term debt reflect the following:
8.375% senior secured notes offered hereby .................. $ 75,000
Repayment of existing long-term debt outstanding ............ (26,659)
--------
$ 48,341
========
(f) This adjustment reflects the elimination of the existing minority interest
as this obligation will be satisfied in its entirety.
(g) The pro forma stockholders' equity account has been determined as follows:
Equity contributed by Atlantic Equity Partners II, L.P. ..... $ 48,679
Carryover equity retained by Golfsmith stockholders and
management (20.8% of $37,056) ............................ 7,700
Net costs associated with the retirement of Golfsmith's
existing long-term debt and minority interest ............ (807)
Less deemed dividend to Golfsmith stockholders and
management (20.8% of $52,158)(1) ......................... (10,838)
Less transaction related expenses charged to equity ......... (1,017)
--------
$ 43,717
========
--------------
(1) Represents the cash on the historical Golfsmith balance sheet plus the net
proceeds of the new debt, offset by cash payments to retire existing debt
and minority interest and transaction fees and expenses.
96
GOLFSMITH INTERNATIONAL HOLDINGS, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 29, 2001
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
Historical
Golfsmith Adjustments Pro Forma
---------- ----------- ---------
Net revenues ......................... $229,206 $ -- $229,206
Cost of products sold ................ 148,410 -- 148,410
-------- ------- --------
Gross profit ......................... 80,796 -- 80,796
Selling, general and administrative .. 66,949 -- 66,949
Store pre-opening/closing expenses ... 655 -- 655
-------- ------- --------
Total operating expenses ............. 67,604 -- 67,604
Operating income ..................... 13,192 -- 13,192
Interest expense ..................... 6,825 3,904 (a) 10,729
Interest income ...................... (597) 597 (b) --
Other income, net .................... (1,031) -- (1,031)
Minority interest .................... 581 (581)(c) --
-------- ------- --------
Income before income taxes ........... 7,414 (3,920) 3,494
Income tax expense ................... 251 937 (d) 1,188
-------- ------- --------
Net income ........................... $ 7,163 $ (4,857) $ 2,306
======== ======= ========
Pro forma shares outstanding ................................... 20,483(e)
========
Pro forma earnings per share ................................... $ 0.11
========
See accompanying notes to Unaudited Pro Forma Combined Condensed Statement of
Income.
97
GOLFSMITH INTERNATIONAL HOLDINGS, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 29, 2002
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
HISTORICAL
GOLFSMITH ADJUSTMENTS PRO FORMA
---------- ----------- ---------
Net revenues .................................. $119,603 $ -- $119,603
Cost of products sold ......................... 77,291 -- 77,291
-------- ------- --------
Gross profit .................................. 42,312 -- 42,312
Selling, general and administrative ........... 33,729 -- 33,729
Store pre-opening/closing expenses ............ 347 -- 347
-------- ------- --------
Total operating expenses ...................... 34,076 -- 34,076
Operating income .............................. 8,236 -- 8,236
Interest expense .............................. 3,122 2,164 (a) 5,286
Interest income ............................... (201) 201 (b) --
Other income, net ............................. (2,302) -- (2,302)
Minority interest ............................. 621 (621)(c) --
-------- ------- --------
Income before income taxes .................... 6,996 (1,744) 5,252
Income tax expense ............................ 458 1,328 (d) 1,786
-------- ------- --------
Net income .................................... $ 6,538 $(3,072)(e) $ 3,466
======== ======= ========
Pro forma shares outstanding ................................................. 20,483
========
Pro forma earnings per share ................................................. $ 0.17
========
See accompanying notes to Unaudited Pro Forma
Combined Condensed Statement of Income.
98
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
(DOLLARS IN THOUSANDS UNLESS OTHERWISE NOTED)
The accompanying unaudited pro forma combined condensed statements of
income have been prepared as if the merger was consummated as of the beginning
of fiscal year 2002 (December 30, 2001) and as of the beginning of fiscal year
2001 (December 31, 2000). Pro forma adjustments were made to reflect the:
(a) The pro forma adjustments for interest expense reflect the following:
FOR THE PRO FORMA YEAR ENDED DECEMBER 29, 2001:
Elimination of historical interest expense relating to
existing 12% senior subordinated notes and existing
line of credit............................................ $(6,825)
Amortization of debt issuance costs of $7.1 million and
accretion of the $18.75 million notes discount, over
the period of the notes maturity, assuming seven years
to maturity............................................... 2,742
Cash interest expense impact of the notes at the stated
rate of 8.375%............................................ 7,852
Interest expense for assumed borrowings under the new
senior credit facility.................................... 135
-------
$ 3,094
=======
FOR THE PRO FORMA YEAR TO DATE PERIOD ENDED JUNE 29, 2002:
Elimination of historical interest expense relating to
existing 12% senior subordinated notes and existing
line of credit............................................ $(3,122)
Amortization of debt issuance costs of $7.1 million and
accretion of the $18.75 million notes discount, over the
period of the notes maturity, assuming seven years to
maturity.................................................. 1,330
Cash interest expense impact of the notes at the stated
rate of 8.375%............................................ 3,926
Interest expense for assumed borrowings under the new
senior credit facility.................................... 30
-------
$ 2,164
=======
At June 29, 2002, we would also incur losses on the extinguishment of
the outstanding debt of $8,765, primarily related to unamortized discount,
prepayment penalties and the write-off of debt issuance costs related to the
outstanding debt. This loss is not reflected in the pro forma results of
operations for the six months ended June 29, 2002 or the year ended December 29,
2001.
(b) Reflects the elimination of historical interest income of $597 and $201 for
the twelve and six months ended December 29, 2001 and June 29, 2002,
respectively, as the merger transaction eliminates our cash balances.
99
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
(DOLLARS IN THOUSANDS UNLESS OTHERWISE NOTED)
(c) Elimination of minority interest. We would also incur a gain on the
elimination of minority interest of approximately $4,881 as this obligation
currently carried at $12,881 will be settled for $8,000. This gain is not
reflected in the pro forma results for the six months ended June 29, 2002 or
the year ended December 29, 2001.
(d) Impact of taxes at an estimated 34% domestic rate as if we were a C
Corporation for the entire period.
(e) Reflects the issuance of approximately 20.5 million shares of common stock
issued in consideration for all outstanding shares of common stock.
The unaudited pro forma combined condensed statements of income do not
give effect to a variable compensation charge of $10.1 million and $7.6 million
for the periods ended December 29, 2001 and June 29, 2002, respectively,
relating to a change of control provision in Golfsmith's employee stock option
plan. In addition, the unaudited pro forma combined condensed statements of
income do not give effect to the additional expenses associated with the
write-up of assets to fair value.
100
ANNEX E
to
CREDIT AGREEMENT
WIRE TRANSFER INFORMATION
Name: General Electric Capital Corporation
Bank: Bankers Trust Company
New York, New York
ABA #: 000000000
Account #: 00000000
Account Name: GECC/CAF Depository
Reference: CFN4852
101
ANNEX F
TO
CREDIT AGREEMENT
CASH MANAGEMENT SYSTEMS
Borrowers shall and shall cause each other Credit Party to establish and
maintain the Cash Management Systems described below:
(a) On or before the first Funding Date and until the Termination Date, LP
shall request in writing and otherwise take such reasonable steps to
ensure that all payments from credit card sales by any Credit Party shall,
except as provided in paragraph (b) below, be deposited directly by the
credit card issuer into LP's operating account. Subject to paragraph (b)
below, prior to the First Funding Date and as a condition precedent to the
first Revolving Credit Advance or first Letter of Credit, whichever is to
occur first, LP's operating account (account number 4496864422, maintained
with Xxxxx Fargo Bank at 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxx 78701) (the
"LP Operating Account") shall be subject to a tri-party blocked account
agreement (a "Blocked Account Agreement"), and such Blocked Account
Agreement shall be in the form of Exhibit F-1 hereto. Subject to paragraph
(b) below, each Credit Party shall deposit or cause to be deposited
promptly, and in any event no later than the first Business Day after the
date of receipt thereof, all cash, checks, drafts or other similar items
of payment relating to or constituting payments made in respect of any and
all Collateral into one or more deposit accounts (which, to the extent
that such Borrower is required by this Annex F to enter into Blocked
Account Agreements, shall be Blocked Accounts (as hereinafter defined)) in
such Borrower's name at a bank identified in Schedule 5.16 (each, a
"Relationship Bank"), and, on each Business Day shall cause all collected
funds in each such deposit account (other than the LP Operating Account)
to be transferred to the LP Operating Account except to the extent that
such collected funds do not exceed $10,000.
(b) In the event that any request by a Borrower for a Revolving Credit Advance
or a Letter of Credit would first cause the principal amount of the
Revolving Loan to exceed $6,000,000 (a "Triggering Request"), then
notwithstanding anything to the contrary contained in this Agreement, such
Borrower shall, within thirty (30) days following the date of such
Triggering Request, comply with this paragraph (b). In order to comply
with this paragraph (b) each Borrower shall (i) establish a Blocked
Account (the "Collection Account"), subject to a Blocked Account Agreement
in form and substance satisfactory to Agent and consistent with clause
(ii) below, and into which shall be deposited on a daily basis, all
receipts from sales of such Borrower, including without limitation,
receipts from credit card sales of such Borrower and such receipts shall
be deposited directly by the credit card issuers into such Collection
Account of such Borrower, and (ii) cause, on each Business Day, all
collected funds in the Collection Account of such Borrower to be
transferred into an account of Agent (as designated by Agent from time to
time) (each, a "Payment Account") provided that, prior to the delivery of
an Activation Notice, as defined below, such Borrower shall, on any
Business Day, after transferring to the Payment Account an amount equal to
the sum of (x) the Revolving Credit Advances of such Borrower, plus (y)
any other Obligations of such Borrower then due and payable, be entitled
to transfer any remaining balance in such Collection Account to the LP
Operating Account and the applicable Blocked Account Agreement shall so
provide.
(c) Borrower Representative shall maintain, in its name on behalf of the
Borrowers, the Disbursement Account into which Agent shall, from time to
time, deposit proceeds of Revolving
102
Credit Advances made to such Borrower pursuant to Section 1.1 for use by
such Borrower solely in accordance with the provisions of Section 1.4. No
Credit Party shall maintain any deposit account other than a deposit
account that is subject to a Blocked Account Agreement, provided, that,
except as required in paragraph (a) above with respect to the LP Operating
Account and subject to paragraph (b) above, until the date thirty (30)
days following the Closing Date the Credit Parties may maintain deposit
accounts that are not subject to a Blocked Account Agreement so long as no
such deposit account (other than the LP Operating Account) has at any time
a balance of more than $10,000. For the purposes of this Agreement, a
"Blocked Account" shall mean a deposit account of a Credit Party that is
subject to a Blocked Account Agreement.
(d) Each Blocked Account Agreement shall, except as provided in paragraph (b)
and except for the Blocked Account Agreement for the LP Operating Account,
be in the form of Exhibit F-2 (or in such other form as may be acceptable
to Agent), and each Blocked Account Agreement shall provide, among other
things, that (i) all items of payment deposited in such Blocked Account
and proceeds thereof deposited in the applicable Blocked Account are held
by such bank as agent or bailee-in-possession for Agent, on behalf of
itself and Lenders, (ii) the bank executing such agreement has no rights
of setoff or recoupment or any other claim against such account, as the
case may be, other than for payment of its service fees and other charges
directly related to the administration of such account and for returned
checks or other items of payment, and (iii) from and after the Closing
Date (A) with respect to banks at which a Blocked Account is maintained,
such bank agrees, from and after the receipt of a notice (an "Activation
Notice") from Agent (which Activation Notice may be given by Agent at any
time at which (1) a Default or Event of Default has occurred and is
continuing, (2) Agent reasonably believes based upon information available
to it that a Default or an Event of Default is likely to occur; (3) Agent
reasonably believes that an event or circumstance that is likely to have a
Material Adverse Effect has occurred, or (4) Agent reasonably has grounds
to believe that the integrity of any Credit Party Cash Management Systems
has been compromised or any Credit Party compliance with the provisions of
this Annex F or any other provisions of the Loan Documents to the extent
related to such Cash Management Systems (any of the foregoing being
referred to herein as an "Activation Event")), to forward immediately all
amounts in each Blocked Account to a deposit account designated by Agent.
From and after the date Agent has delivered an Activation Notice to any
bank with respect to any Blocked Account(s), no Credit Party shall
accumulate or maintain cash in Disbursement Accounts or payroll accounts
as of any date of determination in excess of checks outstanding against
such accounts as of that date and amounts necessary to meet minimum
balance requirements. Each Disbursement Account and Collection Account
shall be required to be, and shall, upon execution and delivery of a
Blocked Account Agreement with respect thereto, constitute, a Blocked
Account.
(e) So long as no Default or Event of Default has occurred and is continuing,
and subject to paragraph (b) above, Credit Parties may amend Schedule 5.16
to add or replace a Relationship Bank or Blocked Account; provided, that
(i) Agent shall have consented in writing in advance to the opening of
such deposit account with the relevant bank and (ii) prior to the time of
the opening of such account, the applicable Credit Party, and such bank
shall have executed and delivered to Agent a Blocked Account Agreement, in
the form required by this Annex F or otherwise in form and substance
reasonably satisfactory to Agent. Each Credit Party shall close any of its
deposit accounts (and establish replacement deposit accounts in accordance
with the foregoing sentence) promptly and in any event within thirty (30)
days following notice from Agent that the creditworthiness of any bank
holding a deposit account is no longer acceptable in Agent's reasonable
judgment, or as promptly as practicable and in any event within sixty (60)
days following notice from Agent that the operating performance, funds
transfer or availability procedures or performance with respect to deposit
accounts of the bank holding such
103
deposit accounts or Agent's liability under any Blocked Account Agreement
with such bank is no longer acceptable in Agent's reasonable judgment.
(f) The Blocked Accounts shall be cash collateral accounts, with all cash,
checks and other similar items of payment in such accounts securing
payment of the Loans and all other Obligations, and in which the
applicable Credit Party shall have granted a Lien to Agent, on behalf of
itself and Lenders, pursuant to its Security Agreement.
(g) All amounts deposited in the Payment Account shall be deemed received by
Agent in accordance with Section 1.4 and shall be applied (and allocated)
by Agent in accordance with Section 1.5(e). In no event shall any amount
be so applied unless and until such amount shall have been credited in
immediately available funds to the Payment Account.
104
EXHIBIT 1.1(a)(i)
to
CREDIT AGREEMENT
FORM OF REVOLVING NOTE
(Multi-Borrower)
New York, New York
$10,000,000
FOR VALUE RECEIVED, each of the undersigned (each individually a
"Borrower" and collectively, the "Borrowers"), HEREBY JOINTLY AND SEVERALLY
PROMISES TO PAY to the order of _______________________ ("Lender"), at the
offices of GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation, as
Agent for Lenders ("Agent"), at its address at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx, or at such other place as Agent may designate from time to time in
writing, in lawful money of the United States of America and in immediately
available funds, the amount of TEN MILLION DOLLARS AND NO CENTS ($10,000,000)
or, if less, the aggregate unpaid amount of all Revolving Credit Advances made
to the undersigned under the "Credit Agreement" (as hereinafter defined). All
capitalized terms used but not otherwise defined herein have the meanings given
to them in the Credit Agreement or in Annex A thereto.
This Revolving Note is one of the Revolving Notes issued pursuant to that
certain Credit Agreement dated as of October __, 2002 by and among Borrowers,
the other Persons named therein as Credit Parties, Agent, Lender and the other
Persons signatory thereto from time to time as Lenders (including all annexes,
exhibits and schedules thereto, and as from time to time amended, restated,
supplemented or otherwise modified, the "Credit Agreement"), and is entitled to
the benefit and security of the Credit Agreement, the Security Agreement and all
of the other Loan Documents referred to therein. Reference is hereby made to the
Credit Agreement for a statement of all of the terms and conditions under which
the Loans evidenced hereby are made and are to be repaid. The date and amount of
each Revolving Credit Advance made by Lenders to Borrowers, the rates of
interest applicable thereto and each payment made on account of the principal
thereof, shall be recorded by Agent on its books; provided that the failure of
Agent to make any such recordation shall not affect the obligations of Borrowers
to make a payment when due of any amount owing under the Credit Agreement or
this Revolving Note in respect of the Revolving Credit Advances made by Lender
to Borrowers.
The principal amount of the indebtedness evidenced hereby shall be payable
in the amounts and on the dates specified in the Credit Agreement, the terms of
which are hereby incorporated herein by reference. Interest thereon shall be
paid until such principal amount is paid in full at such interest rates and at
such times, and pursuant to such calculations, as are specified in the Credit
Agreement. The terms of the Credit Agreement are hereby incorporated herein by
reference.
If any payment on this Revolving Note becomes due and payable on a day
other than a Business Day, the payment thereof shall be extended to the next
succeeding Business Day and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension.
Upon and after the occurrence of any Event of Default, this Revolving Note
may, as provided in the Credit Agreement, and without presentment, demand,
protest, notice of intent to accelerate, notice of acceleration or other legal
requirement of any kind (all of which are hereby expressly waived by Borrowers),
be declared, and immediately shall become, due and payable.
105
Time is of the essence of this Revolving Note.
Except as provided in the Credit Agreement, this Revolving Note may not be
assigned by Lender to any Person.
THIS REVOLVING NOTE SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICTS OF LAW PRINCIPLES. (EXCEPT SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW).
GOLFSMITH INTERNATIONAL, L.P.
By:
-------------------------------------
Its general partner
By:
-------------------------------------
Name:
Title:
GOLFSMITH NU, LLC
By:
-------------------------------------
Name:
Title:
GOLFSMITH USA, LLC
By:
-------------------------------------
Name:
Title:
106
EXHIBIT 1.1(a)(ii)
to
CREDIT AGREEMENT
FORM OF NOTICE OF REVOLVING CREDIT ADVANCE
-----------, -----
General Electric Capital Corporation,
for itself, as Lender, and as Agent
for Lenders
000 Xxxxxxx Xxx.
Xxx Xxxx, Xxx Xxxx 00000
Attention: Golfsmith International, Inc.
Account Manager
Ladies and Gentlemen:
The undersigned, Golfsmith International, Inc. ("Borrower Representative")
refers to the Credit Agreement, dated as of October __, 2002 (the "Credit
Agreement," the terms defined therein being used herein as therein defined), by
and among the undersigned, the other persons named therein as Borrowers, the
other Credit Parties signatory thereto, General Electric Capital Corporation,
for itself, as Lender, and as Agent for Lenders, and Lenders, and hereby gives
you notice, irrevocably, pursuant to Section [1.1(B)] of the Credit Agreement,
that the undersigned hereby requests a Revolving Credit Advance under the Credit
Agreement, and in that connection sets forth below the information relating to
such Revolving Credit Advance as required by Section [1.1(B)] of the Credit
Agreement:
(i) The date of the requested Revolving Credit Advance is __________, ____.
(ii) The aggregate amount of the requested Revolving Credit Advance is
$____________.
(iii) The requested Revolving Credit Advance is [AN INDEX RATE LOAN] [A LIBOR
LOAN WITH A LIBOR PERIOD OF ________].
(iv) The requested Revolving Credit Advance is to be sent to:
[Name of Bank]
[City of Bank]
Beneficiary:
Account No.: [number]
ABA No.: [number]
Attn: [name]
107
The undersigned hereby certifies that all of the statements contained in
Section 7.2 of the Credit Agreement are true and correct in all material
respects on the date hereof, and will be true in all material respects on the
date of the requested Revolving Credit Advance, before and after giving effect
thereto and to the application of the proceeds therefrom.
GOLFSMITH INTERNATIONAL, INC.
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
108
EXHIBIT 1.2(e)
to
CREDIT AGREEMENT
FORM OF NOTICE OF CONVERSION/CONTINUATION
Reference is made to that certain Credit Agreement dated as of October __,
2002 by and among the undersigned ("Borrower Representative"), the other Persons
named therein as Borrowers, the other Persons named therein as Credit Parties,
General Electric Capital Corporation ("Agent") and the Lenders from time to time
signatory thereto (including all annexes, exhibits or schedules thereto, and as
from time to time amended, restated, supplemented or otherwise modified, the
"Credit Agreement"). Capitalized terms used herein without definition are so
used as defined in the Credit Agreement.
Borrower Representative hereby gives irrevocable notice, pursuant to
Section 1.2(e) of the Credit Agreement, of its request to:
(a) on [ date ] convert $[________]of the aggregate outstanding principal
amount of the [_______] Loan, bearing interest at the [________] Rate, into a(n)
[________] Loan [and, in the case of a LIBOR Loan, having a LIBOR Period of
[_____] month(s)];
[(b) on [ date ] continue $[________]of the aggregate outstanding
principal amount of the [_______] Loan, bearing interest at the LIBOR Rate, as a
LIBOR Loan having a LIBOR Period of [_____] month(s)].
Borrower Representative certifies that the conversion and/or continuation
of the Loans requested above is for the separate account(s) of the following
Borrowers[s] in the following [respective] amount[s]: [Name: $_____________] and
[Name: $_______________].
Borrower Representative hereby (i) certifies that all of the statements
contained in Section 7.2 of the Credit Agreement are true and correct in all
material respects on the date hereof, and will be true in all material respects
on the date of the requested conversion/continuation, before and after giving
effect thereto and (ii) reaffirms the cross-guaranty provisions set forth in
Section 10 of the Credit Agreement and the guaranty and continuance of Agent's
Liens, on behalf of itself and Lenders, pursuant to the Collateral Documents.
GOLFSMITH INTERNATIONAL, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
109
EXHIBIT 4.9(d) to CREDIT AGREEMENT
BORROWING BASE CERTIFICATE
[BORROWER]
DATE: ___________, ______
This Certificate is given by [LP] [NU] [USA] ("Borrower") pursuant to
subsection 4.9(d) of that certain Credit Agreement dated as of October ___, 2002
among Borrower, the other Credit Parties party thereto, the Lenders from time to
time party thereto and General Electric Capital Corporation, as agent for the
Lenders (as such agreement may have been amended, restated, supplemented or
otherwise modified from time to time the "Credit Agreement"). Capitalized terms
used herein without definition shall have the meanings set forth in the Credit
Agreement.
The undersigned is duly authorized to execute and deliver this Certificate
on behalf of Borrower. By executing this Certificate such officer hereby
certifies to Agent and Lenders that:
(a) Attached hereto as Schedule 1 is a calculation of the proposed
Borrowing Base for Borrower as of the above date;
(b) Based on such schedule, the proposed Borrowing Base as of the above
date is:
$__________________
(c) Agent shall have the right to establish or modify or eliminate
Reserves against Eligible Accounts and Eligible Inventory from time
to time in its reasonable credit judgment based on events or
occurrences after the Closing Date that adversely affect the
collectibility of Accounts or the saleability of Inventory. In
addition, Agent reserves the right at any time to adjust any of the
criteria set forth below and to establish new criteria in its
reasonable credit judgment, subject to the approval of Supermajority
Revolving Lenders in the case of adjustments which have the effect
of making more credit available. Borrower acknowledges that the
exercise by Agent of any right pursuant to this clause (c) shall
have the effect of adjusting the proposed Borrowing Base set forth
above.
IN WITNESS WHEREOF, Borrower has caused this Certificate to be executed by
its ________________ this ____ day of ___________, ____.
[LP] [NU] [USA]
By: ____________________________________
Its:____________________________________
111
Schedule 1
to Exhibit 4.9(d)
BORROWING BASE CALCULATION
[BORROWER]
Accounts of the Borrower reflected as accounts
receivable on the Borrower's balance sheet (as of the
date above), but solely to the extent of the unpaid
portion of the obligations stated on the respective
invoices issued to a customer of Borrower with respect
to inventory sold and shipped or services performed in
the ordinary course of business, net of any credits,
rebates or offsets owed by Borrower to the respective
customer. $___________
Less: Ineligible Accounts:
Accounts that do not arise from the sale of goods or
the performance of services by Borrower in the
ordinary course of its business; ___________
Accounts (i) upon which Borrower's right to receive
payment is not absolute or is contingent upon the
fulfillment of any condition whatsoever or (ii) as to
which Borrower is not able to bring suit or otherwise
enforce its remedies against the Account Debtor
through judicial process, or (iii) if the Account
represents a progress billing consisting of an invoice
for goods sold or used or services rendered pursuant
to a contract under which the Account Debtor's
obligation to pay that invoice is subject to
Borrower's completion of further performance under
such contract or is subject to the equitable lien of a
surety bond issuer; ____________
Any Account to the extent that any defense,
counterclaim, setoff or dispute is asserted as to such
Account; ____________
Accounts that are not true and correct statements of
bona fide indebtedness incurred in the amount of such
Account for merchandise sold to or services rendered
and accepted by the applicable Account Debtor;
____________
Accounts with respect to which an invoice, reasonably
acceptable to Agent in form and substance, has not
been sent to the applicable Account Debtor;
____________
Accounts that (i) are not owned by Borrower or (ii)
are subject to any right, claim, security interest or
other interest of any other Person, other than Liens
in favor of Agent, on behalf of itself and Lenders;
___________
112
Accounts that arise from a sale to any director,
officer, other employee or Affiliate of any Credit
Party, or to any entity that has any common officer or
director with any Credit Party; ____________
Accounts that are the obligation of an Account Debtor
that is the United States government or a political
subdivision thereof, or any state, county or
municipality or department, agency or instrumentality
thereof unless Agent, in its sole discretion, has
agreed to the contrary in writing and Borrower, if
necessary or desirable, has complied with respect to
such obligation with the Federal Assignment of Claims
Act of 1940, or any applicable state, county or
municipal law restricting the assignment thereof with
respect to such obligation; ____________
Accounts that are the obligations of an Account Debtor
located in a foreign country other than Canada unless
payment thereof is assured by a letter of credit
assigned and delivered to Agent, satisfactory to Agent
as to form, amount and issuer; ____________
Accounts to the extent Borrower or any Subsidiary
thereof is liable for goods sold or services rendered
by the applicable Account Debtor to Borrower or any
Subsidiary thereof but only to the extent of the
potential offset; ____________
Accounts that arise with respect to goods that are
delivered on a xxxx-and-hold, credit hold,
cash-on-delivery basis or placed on consignment,
guaranteed sale or other terms by reason of which the
payment by the Account Debtor is or may be
conditional; ____________
Accounts that are in default; provided, that, without
limiting the generality of the foregoing, an Account
shall be deemed in default upon the occurrence of any
of the following: ____________
(i) the Account is not paid within the earlier of:
60 days following its due date or 90 days
following its original invoice date;
(ii) the Account Debtor obligated upon such Account
suspends business, makes a general assignment
for the benefit of creditors or fails to pay its
debts generally as they come due; or
(iii) a petition is filed by or against any Account
Debtor obligated upon such Account under any
bankruptcy law or any other federal, state or
foreign (including any provincial) receivership,
insolvency relief or other law or laws for the
relief of debtors;
113
Accounts that are the obligations of an Account Debtor
if 50% or more of the Dollar amount of all Accounts
owing by that Account Debtor are ineligible under the
other criteria set forth in this Schedule 1 to Exhibit
4.9(d); ____________
Accounts as to which Agent's Lien thereon, on behalf
of itself and Lenders, is not a first priority
perfected Lien; ____________
Accounts as to which any of the representations or
warranties in the Loan Documents are untrue; ____________
Accounts that are evidenced by a judgment, Instrument
or Chattel Paper; ____________
Accounts to the extent such Account exceeds any credit
limit established by Agent, in its reasonable credit
judgment ____________
Accounts to the extent that such Account, together
with all other Accounts owing to such Account Debtor
and its Affiliates as of any date of determination
exceed 10% of all Eligible Accounts; ____________
Accounts that are payable in any currency other than
Dollars; or ____________
Accounts that are otherwise unacceptable to Agent in
its reasonable credit judgment. ____________
Total Ineligible Accounts $
============
Total Eligible Accounts (Accounts less Total Ineligible Accounts) $
============
Advance Rate ___________%
Accounts Availability $
============
Inventory owned by, and in the possession of the $___________
Borrower [OR ANY OF ITS SUBSIDIARIES], and located in
the United States of America, reflected as inventory
on the Borrower's [CONSOLIDATED] balance sheet (as of
the date above), valued at the lower of cost or market
(including adequate reserves for obsolete, slow moving
or excess quantities), on a first-in, first-out basis
Less: Ineligible Inventory:
Inventory that is not owned by Borrower free and clear ____________
of all Liens and rights of any other Person (including
the rights of a purchaser that has made progress
payments and the rights of a surety that has issued a
bond to assure Borrower's performance with respect to
that Inventory), except the Liens in favor of Agent,
on behalf of itself and Lenders;
114
Inventory that (i) is not located on premises owned, ____________
leased or rented by Borrower and set forth in Schedule
III to the Security Agreement or (ii) is stored at a
leased location, unless Agent has given its prior
consent thereto and unless [ON OR AFTER THE 90TH DAY
FOLLOWING THE CLOSING DATE] (x) a reasonably
satisfactory landlord waiver has been delivered to
Agent, or (y) Reserves satisfactory to Agent have been
established with respect thereto, (iii) is stored with
a bailee or warehouseman unless a reasonably
satisfactory, acknowledged bailee letter has been
received by Agent and Reserves reasonably satisfactory
to Agent have been established with respect thereto,
or (iv) is located at an owned location subject to a
mortgage in favor of a lender other than Agent, unless
a reasonably satisfactory mortgagee waiver has been
delivered to Agent, or (v) is located at any site if
the aggregate book value of Inventory at any such
location is less than $100,000;
Inventory that is placed on consignment or is in ____________
transit[, EXCEPT FOR INVENTORY IN TRANSIT BETWEEN
DOMESTIC LOCATIONS OF CREDIT PARTIES AS TO WHICH
AGENT'S LIENS HAVE BEEN PERFECTED AT ORIGIN AND
DESTINATION];
Inventory that is covered by a negotiable document of ____________
title, unless such document has been delivered to
Agent with all necessary endorsements, free and clear
of all Liens except those in favor of Agent and
Lenders;
Inventory that is used (other than trade-ins and other ____________
than returns that have been restocked and can be sold
as new), excess, obsolete, unsaleable, shopworn,
seconds, damaged or unfit for sale;
Inventory that consists of display items or packing or ____________
shipping materials, manufacturing supplies,
work-in-process Inventory or replacement parts;
Inventory that consists of goods which have been ____________
returned by the buyer (other than trade-ins and other
than returns that have been restocked and can be sold
as new);
Inventory (other than raw materials) that is not of a ____________
type held for sale in the ordinary course of
Borrower's business;
Inventory that is not subject to a first priority lien ____________
in favor of Agent on behalf of itself and Lenders
subject to Permitted Encumbrances;
Inventory that breaches any of the representations or ____________
warranties pertaining to Inventory set forth in the
Loan Documents;
Inventory that consists of any costs associated with ____________
"freight-in" charges;
115
Inventory that consists of Hazardous Materials or ____________
goods that can be transported or sold only with
licenses that are not readily available;
Inventory that is not covered by casualty insurance ____________
reasonably acceptable to Agent; or
Inventory for which a patent, trademark, copyright or ____________
other intellectual property owned or licensed by
Golfsmith Licensing that Borrower does not own is
required by borrower to manufacture, sell or otherwise
distribute such Inventory.
Inventory that is otherwise unacceptable to Agent in ____________
its reasonable credit judgment.
Total Ineligible Inventory $
============
Total Eligible Inventory (Inventory less Total Ineligible
Inventory) $
============
Advance Rate ___________%
Inventory Availability (before Vendor Discount Reserve) $
============
Vendor Discount Reserve ___________
Net Inventory Availability $
============
116
EXHIBIT 4.9(k) to CREDIT AGREEMENT
COMPLIANCE CERTIFICATE
GOLFSMITH INTERNATIONAL, INC. AND ITS SUBSIDIARIES
DATE: __________, _____
This Certificate is given by Golfsmith International, Inc. ("Borrower
Representative") pursuant to Section 4.9(k) of that certain Credit Agreement
dated as of October ______, 2002 among Borrower, Representatives, Borrowers, the
other Credit Parties party thereto, the Lenders from time to time party thereto
and General Electric Capital Corporation, as agent for the Lenders (as such
agreement may have been amended, restated, supplemented or otherwise modified
from time to time, the "Credit Agreement"). Capitalized terms used herein
without definition shall have the meanings set forth in the Credit Agreement.
The undersigned is duly authorized to execute and deliver this Certificate
on behalf of Borrower Representative. By executing this Certificate such officer
hereby certifies to Agent and Lenders that:
(a) the financial statements delivered with this Certificate in accordance
with Section 4.9(a) and/or 4.9(b) of the Credit Agreement fairly present in all
material respects the results of operations and financial condition of Holdings
and its Subsidiaries as of the dates of such financial statements;
(b) I have reviewed the terms of the Credit Agreement and have made, or
caused to be made under my supervision, a review in reasonable detail of the
transactions and conditions of the Credit Parties during the accounting period
covered by such financial statements;
(c) such review has not disclosed the existence during or at the end of
such accounting period, and I have no knowledge of the existence as of the date
hereof, of any condition or event that constitutes a Default or an Event of
Default, except as set forth on Schedule 1 hereto, which includes a description
of the nature and period of existence of such Default or an Event of Default and
what action Borrower has taken, is taking and proposes to take with respect
thereto;
(d) except as set forth on Schedule 1 hereto, each Borrower is in
compliance with the covenants contained in Sections 3.1, 3.3, 3.4, 3.5, 3.7 and
3.8 and Section 4 of the Credit Agreement, as demonstrated on Schedule 1 hereto
[NOTE TO BORROWER: THE PORTION OF SCHEDULE 1 PERTAINING TO FINANCIAL COVENANTS
IS ONLY REQUIRED TO BE COMPLETED AS OF THE END OF EACH FISCAL QUARTER];
(e) Omitted.
(f) Omitted.
(g) except as set forth on Schedule 3 hereto, subsequent to the date of
the most recent Certificate submitted by Borrower Representative pursuant to
Section 4.9(k) of the Credit Agreement, no Credit Party has (i) changed its name
as it appears in official filings in the jurisdiction of its organization, (ii)
changed its chief executive office, principal place of business, corporate
offices, warehouses or locations at which Collateral is held or stored, or the
location of its records concerning Collateral, (iii) changed the type of entity
that it is, (iv) changed (or has had changed) its organization identification
number, if any, issued by its jurisdiction of organization, (v) changed its
jurisdiction of organization,
117
(vi) changed the end of its Fiscal Year, or (vii) formed any new Subsidiary or
entered into any partnership or joint venture with any other Person; and
(h) except as set forth on Schedule 4 hereto, subsequent to the date of
the most recent Certificate submitted by Borrower pursuant to Section 4.9(k) of
the Credit Agreement, there has been no event which would alter any of the
disclosures set forth on Schedule 5.4(b) of the Credit Agreement.
IN WITNESS WHEREOF, Borrower Representative has caused this Certificate to
be executed by its __________________ this ____ day of ___________, ____.
GOLFSMITH INTERNATIONAL, INC.
By
----------------------------------------
Its
---------------------------------------
118
SCHEDULE 1
Exhibit 4.9(k)
ALL AMOUNTS IN EXHIBIT 4.9(K) ARE WITHOUT DUPLICATION AND, UNLESS OTHERWISE
INDICATED, ARE CALCULATED FOR [HOLDINGS] [BORROWER] AND ITS SUBSIDIARIES ON A
CONSOLIDATED BASIS
INDEBTEDNESS
(SECTION 3.1)
Intercompany Indebtedness among Credit Parties:
Actual in the aggregate $_______________
Permitted in the aggregate $_______________
In Compliance Yes/No
Debt of GII pursuant to the Senior Notes:
Actual in the aggregate $_______________
Permitted in the aggregate $93,750,000 [DEDUCT PAYMENTS
AND PREPAYMENTS]
In Compliance Yes/No
Other unsecured Indebtedness:
Actual in the aggregate $_______________
Permitted in the aggregate $_______________
In Compliance Yes/No
Other unsecured Indebtedness:
Actual in the aggregate $_______________
Permitted in the aggregate $_______________
In Compliance Yes/No
119
INVESTMENTS
(SECTION 3.3)
Loans and advances to employees for moving, traveling and other similar expenses
in the ordinary course of business:
Actual in the aggregate $_______________
Permitted in the aggregate $_______________
In Compliance Yes/No
Capital contributions to wholly-owned domestic Subsidiaries:
Actual in the aggregate $_______________
Permitted in the aggregate $_______________
In Compliance Yes/No
120
CONTINGENT OBLIGATIONS
(SECTION 3.4)
Contingent Obligations incurred in the ordinary course of business with respect
to surety and appeal bonds, performance and return-of-money bonds and other
similar obligations:
Actual in the aggregate $_______________
Permitted in the aggregate $_______________
In Compliance Yes/No
Other Contingent Obligations not otherwise permitted in Sections 3.4(a) through
(h):*
Actual in the aggregate $_______________
Permitted in the aggregate $_______________
In Compliance Yes/No
*deduct payments and prepayments under Senior Notes for 3.4(b).
121
RESTRICTED JUNIOR PAYMENTS
(SECTION 3.5)
Management fees paid:
Actual $_______________
Permitted $_______________
In Compliance Yes/No
Dividends paid to Holdings to permit repurchase of Stock:
Actual (current Fiscal Year) $_______________
Current (current Fiscal Year) $_______________
In Compliance Yes/No
Actual (term of Credit Agreement) $_______________
Permitted (term of Credit Agreement) $_______________
In Compliance Yes/No
122
DISPOSAL OF ASSETS
(SECTION 3.7)
Describe any Asset Dispositions made during the period (list each transaction by
market value of assets sold):
_______________________________________________ $______________
_______________________________________________ $______________
_______________________________________________ $______________
_______________________________________________ $______________
Permitted Asset Dispositions in a single transaction or series of related
transactions (asset market value) $______________
In Compliance Yes/No
Aggregate market value of Asset Dispositions in Fiscal Year $______________
Permitted aggregate market value of Asset Dispositions in Fiscal Year
$______________
In Compliance Yes/No
123
TRANSACTIONS WITH AFFILIATES
(SECTION 3.8)
Directors fees paid in current Fiscal Year:
Actual in the aggregate $_____________
Permitted in the aggregate $_____________
In Compliance Yes/No
124
CAPITAL EXPENDITURE LIMIT
(SECTION 4.1)
Capital Expenditures are defined as follows:
All expenditures (by the expenditure of cash or the incurrence of
Indebtedness) during the measuring period for any fixed asset or
improvements or for replacements, substitutions or additions
thereto that have a useful life of more than one year and that
are required to be capitalized under GAAP $
----------
Plus: deposits made during the measuring period in
connection with fixed assets; less deposits of a
prior period included above
----------
Less: Net Proceeds of Asset Dispositions which Borrowers
are permitted to reinvest under Section 1.5(c) of the
Credit Agreement and are included in the expenditures
above
----------
Capital Expenditures $
==========
Permitted Capital Expenditures $
==========
In Compliance Yes/No
125
MINIMUM EBITDA
(SECTION 4.3)
[DRAFTING NOTE: IF EBITDA IS NOT SEPARATELY TESTED AS A FINANCIAL COVENANT, MOVE
IT TO BACK OF EXHIBIT 4.9(K) AS A SCHEDULE AND REFER TO THE SCHEDULE IN THE
SECTIONS OF THIS EXHIBIT THAT REQUIRE AN EBITDA CALCULATION]
Consolidated Net Income is defined as follows:
Consolidated net income during the measuring period excluding: $
----------
the income (or deficit) of any Person accrued prior to the
date it became a Subsidiary of, or was merged or
consolidated into, Holdings or any of Holdings'
Subsidiaries
----------
the income (or deficit) of any Person (other than a
Subsidiary) in which Holdings have an ownership interest,
except to the extent any such income has actually been
received by Borrowers or any of their Subsidiaries in the
form of cash dividends or distributions
----------
the undistributed earnings of any Subsidiary of Holdings to
the extent that the declaration or payment of dividends or
similar distributions by such Subsidiary is not at the time
permitted by the terms of any contractual obligation or
requirement of law applicable to such Subsidiary
----------
any restoration to income of any contingency reserve,
except to the extent that provision for such reserve was
made out of income accrued during such period
----------
any net gain attributable to the write-up of any asset
----------
any net gain from the collection of the proceeds of life
insurance policies
----------
any net gain arising from the acquisition of any
securities, or the extinguishment of any Indebtedness, of
Holdings or any of their Subsidiaries
----------
in the case of a successor to Holdings or any of their
Subsidiaries by consolidation or merger or as a transferee
of its assets, any earnings of such successor prior to such
consolidation, merger or transfer of assets
----------
any deferred credit representing the excess of equity in
any Subsidiary of Holdings at the date of acquisition of
such Subsidiary over the cost to Holdings of the investment
in such Subsidiary
----------
Consolidated Net Income $
==========
126
EBITDA is defined as follows:
Consolidated Net Income (from above) $
----------
Less: (in each case to the extent included in the calculation of
Consolidated Net Income, but without duplication):
Income tax credits
----------
Interest income
----------
gain from extraordinary items (net of loss from
extraordinary items)
----------
any aggregate net gain [(BUT NOT ANY AGGREGATE NET LOSS)]
arising from the sale, exchange or other disposition of
capital assets (including any fixed assets, whether
tangible or intangible, all inventory sold in conjunction
with the disposition of fixed assets and all securities)
----------
any other non-cash gains
----------
expenditures pursuant to the last sentence of Section 4.9
of the Credit Agreement applicable to, but not included on, the
Pro Forma, including expenditures made in connection with Related
Transactions and payment of liabilities on the Closing Date
----------
Plus: (in each case to the extent deducted in the calculation of
Consolidated Net Income, but without duplication):
any provision for income taxes
----------
Interest Expense (calculated in Section 4.4 of this
Exhibit)
----------
depreciation and amortization
----------
amortized debt discount (but in the case of amortization
and expenses of Related Transactions, only to the extent included
in the Pro Forma)
----------
any deduction as the result of any grant to any members of
the management of Holdings or any of its Subsidiaries of any
Stock
----------
[EXPENSES OF THE RELATED TRANSACTIONS, PROVIDED THAT SUCH
EXPENSES WERE INCLUDED IN THE PRO FORMA, OR DISCLOSED IN
ANY NOTES THERETO]
----------
EBITDA
$
==========
127
Required EBITDA
$
==========
In Compliance Yes/No
128
MINIMUM INTEREST COVERAGE RATIO
(SECTION 4.5)
Interest Coverage Ratio is defined as follows:
Interest expense (cash only) deducted in the determination of
Consolidated Net Income, including interest expense with respect
to any Funded Debt and interest expense that has been capitalized $
----------
Less: Amortization of capitalized fees and expenses incurred with
respect to the Related Transactions included in interest expense
above
----------
Interest paid in kind and included in interest expense
above
----------
Interest Expense $
----------
EBITDA (calculated in Section 4.3 of this Exhibit) $
----------
Less: Capital Expenditures (calculated in Section 4.1 of this
Exhibit), other than the portion thereof funded by third
party financing
----------
Subtotal $
==========
Interest Coverage Ratio (Subtotal from above, divided by Interest
Expense)
==========
Required Interest Coverage Ratio
==========
In Compliance Yes/No
129
CONDITIONS OR EVENTS WHICH CONSTITUTE A DEFAULT OR
EVENT OF DEFAULT
[IF ANY CONDITION OR EVENT EXISTS THAT CONSTITUTES A DEFAULT OR EVENT OF
DEFAULT, SPECIFY NATURE AND PERIOD OF EXISTENCE AND WHAT ACTION BORROWERS HAVE
TAKEN, IS TAKING OR PROPOSES TO TAKE WITH RESPECT THERETO; IF NO CONDITION OR
EVENT EXISTS, STATE "NONE."]
130
SCHEDULE 3
Exhibit 4.9(k)
ORGANIZATION/LOCATION CHANGES
[IF ANY CREDIT PARTY HAS (I) CHANGED ITS NAME AS IT APPEARS IN OFFICIAL FILINGS
IN THE STATE OF ITS ORGANIZATION, (II) CHANGED ITS CHIEF EXECUTIVE OFFICE,
PRINCIPAL PLACE OF BUSINESS, CORPORATE OFFICES, WAREHOUSES OR LOCATIONS AT WHICH
COLLATERAL IS HELD OR STORED, OR THE LOCATION OF ITS RECORDS CONCERNING
COLLATERAL, (III) CHANGED THE TYPE OF ENTITY THAT IT IS, (IV) CHANGED (OR HAS
HAD CHANGED) ITS ORGANIZATION IDENTIFICATION NUMBER, IF ANY, ISSUED BY ITS
JURISDICTION OR ORGANIZATION, (V) CHANGED ITS JURISDICTION OF ORGANIZATION, (VI)
CHANGED THE END OF ITS FISCAL YEAR, OR (VII) FORMED ANY NEW SUBSIDIARY OR
ENTERED INTO ANY PARTNERSHIP OR JOINT VENTURE WITH ANY PERSON, SUCH CHANGE SHALL
BE SPECIFIED BELOW; IF NO SUCH CHANGE HAS BEEN MADE, STATE "NONE."]
131
SCHEDULE 4
Exhibit 4.9(k)
CAPITALIZATION CHANGES
[IF WITH RESPECT TO ANY CREDIT PARTY THERE HAS BEEN A CHANGE IN AUTHORIZED
STOCK, ISSUED AND OUTSTANDING STOCK OR THE IDENTITY OF THE HOLDERS OF ANY STOCK,
OR IF WITH RESPECT TO ANY CREDIT PARTY THERE HAS BEEN A CHANGE PERTAINING TO
PREEMPTIVE RIGHTS OR ANY OTHER OUTSTANDING RIGHTS, OPTIONS, WARRANTS, CONVERSION
RIGHTS OR SIMILAR AGREEMENTS OR UNDERSTANDINGS FOR THE PURCHASE OR ACQUISITION
OF ANY STOCK, SUCH CHANGE SHALL BE SET FORTH BELOW; IF NO SUCH CHANGE HAS
OCCURRED, STATE "NONE."]
132
EXHIBIT 6.1(o) to CREDIT AGREEMENT
INTERCREDITOR AGREEMENT
This INTERCREDITOR AGREEMENT, dated as of October 15, 2002 is entered into
among GENERAL ELECTRIC CAPITAL CORPORATION, as Senior Agent (as defined below),
U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee and under the Indenture (as
such terms are defined below); U.S. BANK TRUST NATIONAL ASSOCIATION, as
Collateral Agent under the Noteholder Security Agreement (as such terms are
defined below), and the parties whose names are set forth below "Credit Parties"
on the signature pages hereto (each such party being referred to as an
"Obligor", and collectively, the "Obligors").
W I T N E S S E T H :
WHEREAS, the Obligors, the lenders to the Senior Credit Agreement referred
to below as lenders and issuing banks, and General Electric Capital Corporation,
as agent for such lenders and issuing banks (in such capacity, the "Senior
Agent") propose to enter into a Credit Agreement, dated as of October 15, 2002,
(as such agreement may be amended, amended and restated, supplemented or
otherwise modified, from time to time at the option of the parties thereto and
any other agreements pursuant to which any of the indebtedness, commitments,
obligations, costs, expenses, fees, reimbursements, indemnities or other
obligations payable or owing thereunder may be refinanced, restructured,
renewed, extended, increased, refunded or replaced (including pursuant to a DIP
Financing, as hereinafter defined) as any such other agreements may from time to
time at the option of the parties thereto be amended, amended and restated,
supplemented, renewed or otherwise modified, in each case, except as prohibited
by the terms hereof, being collectively referred to herein the "Senior Credit
Agreement"); and
WHEREAS, Golfsmith International, Inc., a Delaware corporation
("Golfsmith"), the Obligors parties thereto as "Guarantors" thereunder and U.S.
Bank National Association, as trustee have entered into an Indenture, dated as
of October 15, 2002 (as such Indenture may be amended, amended and restated,
supplemented or otherwise modified, from time to time at the option of the
parties thereto, the "Indenture") governing the rights and duties of Golfsmith
under its 8.375% Senior Secured Notes due 2009 in the original aggregate
principal amount of $93,750,000 (or, if applicable its Senior Secured Notes due
2009, Series B, issued in exchange thereof, the "Notes");
WHEREAS, Golfsmith International Holdings, Inc., Golfsmith and certain
Subsidiaries of Golfsmith have entered into the Noteholder Security Agreement,
which Noteholder Security Agreement shall provide for an assignment, pledge and
grant or a security interest in certain collateral in favor of the Collateral
Agent and for the benefit of the Noteholders, the Trustee and the Collateral
Agent; and
WHEREAS, it is a condition precedent to the effectiveness of the Senior
Credit Agreement that the Senior Agent (for itself and for the benefit of the
Senior Lenders), the Trustee (on behalf of itself and on behalf and for the
benefit of the Noteholders), the Collateral Agent and the Obligors enter into
this Agreement.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
and obligations herein set forth and for other good and valuable consideration,
the adequacy and receipt of which are hereby acknowledged, and in reliance upon
the representations, warranties and covenants herein contained, the parties
hereto, intending to be legally bound, hereby agree as follows:
SECTION 1. DEFINITIONS. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and the plural form of the terms indicated) and capitalized
terms defined in the Senior Credit Agreement used (but not
133
otherwise defined) herein shall have the meanings ascribed to them in the Senior
Credit Agreement (as in effect on the date hereof) :
"Agreement" shall mean this Agreement, as amended, supplemented or
otherwise modified from time to time in accordance with the terms hereof.
"Bankruptcy Code" shall mean title 11 of the United States Code (11 U.S.C.
101 et seq.), as amended from time to time and any successor statute.
"Business Day" shall mean any day other than Saturday, Sunday and a day
that is a legal holiday under the laws of the State of New York or on which
banking institutions in the City of New York are required or authorized by law
or other governmental action to close.
"Collateral Agent" shall mean U.S. Bank Trust National Association in its
capacity as collateral agent under the Indenture and any successor in such
capacity.
"Common Collateral" shall mean all of the assets of the Obligors
constituting both Senior Lender Collateral and Noteholder Collateral.
"Comparable Noteholder Collateral Document" means, in relation to any
Common Collateral subject to any Senior Lender Collateral Document, that
Noteholder Collateral Document which creates a security interest in the same
Common Collateral, granted by the same Obligor, as applicable.
"Discharge of Senior Lender Claims" shall mean, except as otherwise
provided in Section 6.5, payment in full in cash of the principal of, interest
and premium, if any, on all Indebtedness outstanding under the Senior Credit
Agreement and all letters of credit outstanding thereunder, delivery of cash
collateral in respect thereof equal to 105% of the aggregate undrawn amount of
all letters of credit in compliance with the Senior Credit Agreement, as
applicable, in each case after or concurrently with termination of all
commitments to extend credit thereunder, and payment in full in cash of all
other Senior Lender Claims, other than those that constitute Unasserted
Contingent Obligations.
"Guarantor" means Golfsmith International Holdings, Inc., a Delaware
corporation ("Holdings") and each Subsidiary of Golfsmith that is a guarantor of
the Noteholder Claims.
"Indebtedness" means, with respect to any specified Person without
duplication, any indebtedness of such Person, whether or not contingent (a) in
respect of borrowed money; (b) evidenced by bonds, notes, debentures or other
similar instruments or letters of credit (or reimbursement agreements in respect
thereof); (c) in respect of banker's acceptances; (d) representing obligations
in connection with Capital Leases; (e) representing the balance deferred and
unpaid of the purchase price of any property, except any such balance that
constitutes an accrued expense or trade payable, if and to the extent any of the
preceding items (other than letters of credit) would appear as a liability upon
a balance sheet of the specified Person prepared in accordance with GAAP. In
addition, the term "Indebtedness" includes all Indebtedness of any other Person
secured by a Lien on any asset of the specified Person (whether or not such
Indebtedness is assumed by the specified Person) to the extent of the fair
market value of such asset where the Indebtedness so secured is not the
Indebtedness of such Person and, to the extent not otherwise included, the
guaranty by the specified Person of the Indebtedness of any other Person. The
amount of any Indebtedness outstanding as of any date will be (i) the accreted
value of the Indebtedness, in the case of any Indebtedness issued with original
issue discount (as determined in accordance with the agreements and instruments
evidencing such Indebtedness); and (ii) the principal amount of the
Indebtedness, together with any interest on the Indebtedness that is more than
30 days past due, in the case of any other
134
Indebtedness. Indebtedness of the Obligors shall not include any Indebtedness of
Golfsmith that has been either satisfied and discharged or defeased through
covenant defeasance or legal defeasance.
"Indenture" shall have the meaning set forth in the recitals hereto.
"Insolvency or Liquidation Proceeding" shall mean (a) any voluntary or
involuntary case or proceeding under the Bankruptcy Code with respect to any
Obligor as a debtor, (b) any other voluntary or involuntary insolvency,
reorganization or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding with respect to
any Obligor as a debtor or with respect to any of their respective assets, (c)
any liquidation, dissolution, reorganization or winding up of any Obligor
whether voluntary or involuntary and whether or not involving insolvency or
bankruptcy or (d) any assignment for the benefit of creditors or any other
marshalling of assets and liabilities of any Obligor.
"Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, security interest, deposit arrangement, encumbrance, lien or
preference priority or other security agreement or other preferential
arrangement whatsoever, including, without limitation, any right of setoff, any
conditional sale or other title retention agreement, the interest of a lessor
under a lease or any financing lease having substantially the same economic
effect as any of the foregoing and the filing of any financing statement naming
the owner of the asset to which such Lien relates as debtor.
"Noteholder" shall mean a holder of Noteholder Claims.
"Noteholder Claims" shall mean all Indebtedness, Obligations and other
liabilities (contingent or otherwise) arising under or with respect to the
Noteholder Documents or any of them.
"Noteholder Collateral" shall mean all of the assets of the Obligors
whether real, personal or mixed, in which the Noteholders, the Trustee or the
Collateral Agent or any of them now or hereafter holds a Lien as security for
any Noteholder Claim.
"Noteholder Collateral Documents" shall mean the Noteholder Security
Agreement, the Noteholder Mortgages, and any document or instrument executed and
delivered pursuant to any Noteholder Document at any time or otherwise pursuant
to which a Lien is granted by any Obligor to secure the Noteholder Claims or
under which rights or remedies with respect to any such Lien are governed, as
the same may be amended, renewed, extended, supplemented or modified from time
to time.
"Noteholder Common Liens" shall mean Liens in Common Collateral in favor
of the Collateral Agent created as collateral security for Noteholder Claims.
"Noteholder Documents" shall mean the Indenture, the Notes, the Noteholder
Collateral Documents, and any other related document or instrument executed and
delivered pursuant to any Noteholder Document at any time or otherwise
evidencing any Noteholder Claims, as the same may be amended, renewed, extended,
supplemented or modified from time to time.
"Noteholder Mortgages" shall mean a collective reference to each mortgage,
deed of trust and any other document or instrument under which any Lien on real
property owned or leased by any Obligor is granted to secure the Noteholder
Claims or under which rights or remedies with respect to any such Liens are
governed, as the same may be amended, renewed, extended, supplemented or
modified.
"Noteholder Priority Collateral" shall mean real property, fixtures and
equipment of the Obligors and proceeds thereof (other than Senior Lender PP&E
Proceeds and other than any real property, fixtures
135
or equipment that secures an obligation owed to an Obligor (excluding any
obligation that is proceeds of property, fixtures or equipment that was
Noteholder Priority Collateral) that constitutes Common Collateral).
"Noteholder Priority Liens" shall mean Liens in Noteholder Priority
Collateral in favor of the Collateral Agent created as collateral security for
Noteholder Claims.
"Noteholder Security Agreement" shall mean the Security Agreement, dated
as of October 15, 2002, by and among certain Obligors and the Collateral Agent,
as the same may be amended, renewed, extended, supplemented or modified.
"Obligations" shall mean any principal, premium, interest, penalties,
fees, indemnifications, reimbursements, damages and other liabilities payable
under the documentation governing any Indebtedness (including any obligation to
post cash collateral in respect of letters of credit and any other obligations),
or any obligation for cash management services or Hedging Obligations.
"Person" shall mean any person, individual, sole proprietorship,
partnership, joint venture, corporation, unincorporated organization,
association, institution, entity or other party, including, without limitation,
any government and any political subdivision, agency or instrumentality thereof.
"Pledged Collateral" shall have the meaning set forth in the Pledge
Agreements, and shall include any other tangible property in the possession of
the Senior Agent (or its agents or bailees) in which a security interest is
perfected by such possession.
"Recovery" shall have the meaning set forth in Section 6.5 hereof.
"Required Lenders" shall mean, with respect to any amendment or
modification of the Senior Credit Agreement, or any termination or waiver of any
provision of the Senior Credit Agreement, or any consent or departure by any
Obligor therefrom, those Senior Lenders, the approval of which is required to
approve such amendment or modification, termination or waiver or consent or
departure.
"Senior Agent" shall include, in addition to the Senior Agent referred to
in the recitals hereto, the then acting collateral agent for the Senior Lenders
under the Senior Lender Documents and any successor thereto exercising
substantially the same rights and powers, or if there is no acting Senior Agent
under the Senior Credit Agreement, the Required Lenders.
"Senior Lender Claims" shall mean (a) the principal of all Indebtedness
outstanding under one or more of the Senior Lender Documents to the extent not
prohibited by the Indenture (as in effect on the date hereof), and (b) all other
Obligations not constituting principal of Indebtedness of any Obligor under the
Senior Lender Documents, including, without limitation, all claims under the
Senior Lender Documents for interest, fees, expense reimbursements,
indemnification and other similar claims. Senior Lender Claims shall include all
interest accrued or accruing (or which would, absent the commencement of an
Insolvency or Liquidation Proceeding, accrue) after the commencement of an
Insolvency or Liquidation Proceeding in accordance with and at the rate
specified in the Senior Credit Agreement whether or not the claim for such
interest is allowed as a claim in such Insolvency or Liquidation Proceeding. To
the extent any payment with respect to the Senior Lender Claims (whether by or
on behalf of any Obligor, as proceeds of security, enforcement of any right of
setoff or otherwise) is declared to be fraudulent or preferential in any
respect, set aside or required to be paid to a debtor in possession, trustee,
receiver or similar Person, then the obligation or part thereof originally
intended to be satisfied shall be deemed to be reinstated and outstanding as if
such payment had not occurred. Notwithstanding anything to the contrary
contained in the first sentence of this definition, any principal Indebtedness
136
(including reimbursement obligations for drawn or undrawn letters of credit)
incurred under the Senior Credit Agreement shall constitute a "Senior Lender
Claim" (whether or not such Indebtedness is at any time determined not to have
been permitted to be incurred under the Indenture), to the extent, after giving
effect to such incurrence, the aggregate principal amount of Indebtedness
outstanding under the Senior Credit Agreement (x) does not exceed $10,000,000
(less any prior permanent reductions in the Revolving Loan Commitment) or (y)
(1) exceeds $10,000,000 (less any prior permanent reductions in the Revolving
Loan Commitment) and does not exceed $12,500,000 (less any prior permanent
reductions in the Revolving Loan Commitment) and (2) at or about the time of
such incurrence, the Senior Agent shall have received a certificate (which may
be the Borrowing Certificate in respect of such incurrence) from an authorized
officer of the Borrower Representative certifying that (A) such Indebtedness
constitutes "Permitted Indebtedness", under and as defined in the Indenture and
(B) the Borrower Representative has at or about such time delivered a copy of
such certificate to the Trustee and the Collateral Agent.
"Senior Lender Collateral" shall mean all of the assets of the Obligors in
which the Senior Lenders or the Senior Agent or any of them now or hereafter
holds a Lien as security for any Senior Lender Claim. The Senior Lender
Collateral does not include Noteholder Priority Collateral.
"Senior Lender Collateral Documents" shall mean each Security Agreement,
each Pledge Agreement, the Blocked Account Agreements, each securities account
control agreement, and each other Loan Document or other document or instrument
pursuant to which a Lien is granted securing the Senior Lender Claims, as the
same may be amended, renewed, extended, supplemented or modified from time to
time.
"Senior Lender Common Liens" shall mean Liens in Common Collateral in
favor of the Senior Agent or Senior Lenders created as collateral security for
Senior Lender Claims.
"Senior Lender Documents" shall mean the Senior Credit Agreement, the
Holdings Guaranty, the GII Guaranty, the other Guaranties and each of the other
Loan Documents, the Senior Lender Collateral Documents, all documents and
instruments evidencing any other obligation under the Senior Credit Agreement,
and any other related document or instrument executed or delivered pursuant to
any Senior Lender Document at any time or otherwise evidencing any Senior Lender
Claims, as any such document or instrument may from time to time be amended,
renewed, restated, supplemented or otherwise modified.
"Senior Lender Lien" shall mean Liens in Common Collateral or Senior
Lender Collateral in favor of the Senior Agent or Senior Lenders created as
collateral security for the Senior Lender Claims.
"Senior Lenders" shall mean the Persons holding Senior Lender Claims,
including, without limitation, the Senior Agent.
"Senior PP&E Proceeds" shall mean proceeds of Noteholder Priority
Collateral consisting of real estate, fixtures and equipment of the Obligors to
the extent that (i) such proceeds have been deposited in a deposit account that
constitutes Common Collateral or Senior Lender Collateral, except to the extent
that such proceeds are original proceeds of such real estate, fixtures or
equipment, have not been transferred from such deposit account and are traceable
to such real estate or equipment, (ii) such proceeds constitute proceeds of any
such deposit account, (iii) such proceeds have been used to acquire Common
Collateral or Senior Lender Collateral.
"Trustee" shall mean, at any time, the Person that is the U.S. Bank Trust
National Association, in its capacity as trustee under the Indenture, and any
successor in such capacity.
137
"Unasserted Contingent Obligations" shall mean, at any time, Obligations
for taxes, costs, indemnifications, reimbursements, damages and other
liabilities (except for (i) the principal of and interest and premium (if any)
on, and fees relating to, any Indebtedness and (ii) contingent reimbursement
obligations in respect of amounts that may be drawn under letters of credit) in
respect of which no claim or demand for payment has been made (or, in the case
of Obligations for indemnification, no notice for indemnification has been
issued by the indemnitee) at such time.
"Uniform Commercial Code" or "UCC" shall mean the Uniform Commercial Code
of the State of New York, as amended.
SECTION 2. LIEN PRIORITIES.
2.1 Subordination.
(a) Notwithstanding the date, manner or order of grant, attachment
or perfection of any Liens granted to the Collateral Agent, the Trustee or the
Noteholders on the Common Collateral or of any Liens granted to the Senior Agent
or the Senior Lenders on the Common Collateral and notwithstanding any provision
of the UCC, or any applicable law, the avoidance or setting aside of any lien on
or security interest granted to the Senior Agent or Senior Lenders in the Common
Collateral, or the Noteholder Documents or the Senior Lender Documents or any
other circumstance whatsoever, the Trustee, on behalf of itself and the
Noteholders, and the Collateral Agent, hereby agree that: (a) any Senior Lender
Common Lien now or hereafter held by the Senior Agent or the Senior Lenders
shall be senior and prior to any Noteholder Common Lien; and (b) any Noteholder
Common Lien now or hereafter held by the Collateral Agent or the Noteholders
regardless of how acquired, whether by grant, statute, operation of law,
subrogation or otherwise, shall be junior and subordinate in all respects to all
Senior Lender Common Liens. All Senior Lender Common Liens shall be and remain
senior to all Noteholder Common Liens for all purposes, whether or not such
Senior Lender Common Liens are subordinated to any Lien securing any other
obligation of any Obligor.
(b) Neither the Senior Agent nor any Senior Lender shall acquire any
security interest in and shall have no interest in (including following
avoidance of any Noteholder Priority Liens) Noteholder Priority Collateral.
2.2 Prohibition on Contesting Liens.
(a) The Trustee, on behalf of itself and each Noteholder, and the
Collateral Agent, agree that until the Discharge of Senior Lender Claims,
neither the Collateral Agent, the Trustee nor any Noteholder shall (i) request
judicial relief, in an Insolvency or Liquidation Proceeding or in any other
court, that would hinder, delay, limit or prohibit the exercise or enforcement
of any right or remedy otherwise available to the holders of Senior Lender Liens
or that would limit, invalidate, avoid or set aside any Senior Lender Lien or
Senior Lender Collateral Document or subordinate any Senior Lender Lien to any
Noteholder Common Lien or grant any Senior Lender Lien equal ranking to any
Noteholder Common Lien; (ii) oppose or otherwise contest any motion for relief
from the automatic stay or from any injunction against foreclosure or
enforcement of Senior Lender Liens made by any holder of Liens in any Insolvency
Liquidation Proceeding; (iii) oppose or otherwise contest any exercise by any
holder of Senior Lender Liens of the right to credit bid Senior Lender Claims at
any sale in foreclosure of Senior Lender Liens; or (iv) oppose or otherwise
contest any other request for judicial relief made in any court by any holder of
Senior Lender Liens relating to the enforcement of any Senior Lender Lien.
(b) The Senior Agent, for itself and on behalf of each Senior
Lender, agrees that until the Discharge of Noteholder Claims, neither the Senior
Agent nor any Senior Lender shall (i) request
138
judicial relief, in an Insolvency or Liquidation Proceeding or in any other
court, that would hinder, delay, limit or prohibit the exercise or enforcement
of any right or remedy otherwise available to the holders of Noteholder Priority
Liens or that would limit, invalidate, avoid or set aside any Noteholder
Priority Lien or Noteholder Collateral Document or subordinate any Noteholder
Lien or grant any Noteholder Priority Lien equal ranking to any Senior Lender
Lien; (ii) oppose or otherwise contest any motion for relief from the automatic
stay or from any injunction against foreclosure or enforcement of Noteholder
Priority Liens made by any holder of Noteholder Priority Liens in any Insolvency
or Liquidation Proceeding; (iii) oppose or otherwise contest any exercise by any
holder of Noteholder Priority Liens of the right to credit bid Noteholder Claims
at any sale in foreclosure of Noteholder Priority Liens; or (iv) oppose or
otherwise contest any other request for judicial relief made in any court by any
holder of Noteholder Priority Liens relating to the enforcement of any
Noteholder Priority Lien.
2.3 No New Liens. So long as the Discharge of Senior Lender Claims
has not occurred, the parties hereto agree that each Obligor shall not grant any
Lien on any of its assets (other than Noteholder Priority Collateral), in favor
of the Collateral Agent, the Trustee or the Noteholders unless such Obligor, has
granted a similar Lien on such assets in favor of the Senior Agent or the Senior
Lenders and any property (other than Noteholder Priority Collateral) subject to
any such Lien shall constitute Common Collateral.
SECTION 3. ENFORCEMENT.
3.1 Exercise of Remedies by Senior Agent.
(a) So long as the Discharge of Senior Lender Claims has not
occurred, whether or not any Insolvency or Liquidation Proceeding has been
commenced by or against any Obligor,
(i) the Collateral Agent, the Trustee and the Noteholders will
not, and no Noteholder shall instruct the Collateral Agent or Trustee to,
exercise or seek to exercise any rights or remedies (including setoff)
with respect to any Common Collateral, take any action to enforce, collect
or realize upon any Common Collateral, institute any action or proceeding
with respect to such rights or remedies, including, without limitation,
any action of foreclosure, or contest protest or object to any foreclosure
proceeding or action brought by the Senior Agent or any Senior Lender, the
exercise of any right under any control agreement in respect of a deposit
account or securities entitlement constituting Common Collateral, landlord
waiver or bailee's letter or similar agreement or arrangement to which the
Collateral Agent, the Trustee or any Noteholder is a party, or any other
exercise by any such party, of any rights and remedies relating to the
Common Collateral under the Senior Lender Documents or otherwise, or
object to the forbearance by the Senior Lenders from bringing or pursuing
any foreclosure proceeding or action or any other exercise of any rights
or remedies relating to the Common Collateral and, without limitation, the
Collateral Agent, the Trustee and the Noteholders shall not
(1) take possession of or control over any Common
Collateral;
(2) exercise any collection rights in respect of any
Common Collateral, exercise any voting, other incidental rights of ownership or
similar rights in respect of Common Collateral consisting of equity interests,
or retain any proceeds of accounts and other obligations receivable paid to it
directly by any account debtor;
(3) exercise any right of set-off against any property
subject to any Senior Lender Lien;
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(4) foreclose upon any Common Collateral or take or
accept any transfer of title in lieu of foreclosure upon any Common Collateral;
(5) enforce any claim to the proceeds of insurance upon
any Common Collateral;
(6) deliver any notice, instruction, claim or demand
relating to the Common Collateral to any Person (including any securities
intermediary, depositary bank, landlord or issuer of uncertificated securities)
in the possession or control of any Common Collateral or acting as bailee,
custodian or agent for any holder of any Senior Lender Lien in respect of any
Common Collateral;
(7) otherwise enforce any remedy available upon default
for the enforcement of any Lien upon the Common Collateral;
(8) deliver any notice or commence any proceeding for
any of the foregoing purposes; or
(9) seek relief in any Insolvency or Liquidation
Proceeding permitting it to do any of the foregoing, and
(ii) the Senior Agent and the Senior Lenders shall have the
exclusive right to enforce rights, exercise remedies (including, without
limitation, setoff and the right to credit bid their debt) refrain from
enforcing or exercising remedies, and make determinations regarding
release, disposition, or restrictions with respect to the Common
Collateral without any consultation with or the consent of the Collateral
Agent, the Trustee or any Noteholder, all according to the discretion and
exercise of the business judgment of the Senior Agent and Senior Lenders,
including, without limitation, the exclusive right to take the actions
enumerated in clauses (1) through (9) of Section 3.1(a)(i). In connection
therewith, each of the Noteholders, the Trustee, and the Collateral Agent
waives any and all rights to affect the method or challenge the
appropriateness of any action by the Senior Agent or any Senior Lender and
hereby consents to the Senior Agent or any Senior Lender exercising or not
exercising such rights and remedies as if no Noteholder existed, except
only that the Collateral Agent, the Trustee and the Noteholders reserve
all rights granted by law: to request or receive notice of any sale of
Common Collateral in foreclosure of any Senior Lender Lien. In exercising
rights and remedies with respect to the Common Collateral, the Senior
Agent and the Senior Lenders may enforce the provisions of the Senior
Lender Documents and exercise remedies thereunder, all in such order and
in such manner as they may determine in the exercise of their sole
discretion. Such exercise and enforcement shall include, without
limitation, the rights of an agent appointed by them to sell or otherwise
dispose of Common Collateral upon foreclosure, to incur expenses in
connection with such sale or disposition, and to exercise all the rights
and remedies of a secured lender under the Uniform Commercial Code of any
applicable jurisdiction and of a secured creditor under bankruptcy or
similar laws of any applicable jurisdiction.
(b) The Trustee, on behalf of itself and the Noteholders and the
Collateral Agent, agree that none of them will take or receive any Common
Collateral or any proceeds of Common Collateral in connection with the exercise
of any right or remedy (including setoff) with respect to any Common Collateral,
unless and until the Discharge of Senior Lender Claims has occurred. Without
limiting the generality of the foregoing, unless and until the Discharge of
Senior Lender Claims has occurred, the sole right of the Collateral Agent, the
Trustee and the Noteholders with respect to the Common Collateral is to hold a
Lien on the Common Collateral pursuant to the Noteholder Documents
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for the period and to the extent granted therein and to receive a share of the
proceeds thereof, if any, after the Discharge of the Senior Lender Claims has
occurred.
(c) The Trustee, on behalf of itself and the Noteholders, and the
Collateral Agent, agree that none of the Collateral Agent, the Trustee or the
Noteholders will take any action that would hinder any exercise of remedies
undertaken by the Senior Agent under the Senior Loan Documents, including any
sale, lease, exchange, transfer or other disposition of the Common Collateral,
whether by foreclosure or otherwise, and the Collateral Agent, for itself and
the Noteholders, and the Trustee, hereby waive any and all rights it or the
Noteholders may have as a junior lien creditor or otherwise to object to the
manner in which the Senior Agent or the Senior Lenders seek to enforce or
collect the Senior Lender Claims or the Liens granted in any of the Senior
Lender Collateral.
3.2 No Hindrance by the Senior Agent. The Senior Agent, on behalf of
itself and the Senior Lenders, agrees that neither the Senior Agent nor any
Senior Lender will take any action that would hinder any exercise of remedies
undertaken by the Collateral Agent, the Trustee or any Noteholder under the
Noteholder Security Agreement or any Noteholder Mortgage in respect of
Noteholder Priority Collateral, including any sale, lease, exchange, transfer or
other disposition of any Noteholder Priority Collateral, whether by foreclosure
or otherwise, and the Senior Agent, for itself and the Senior Lenders, hereby
waives any and all rights it or the Senior Lenders may have to object to the
manner in which the Collateral Agent, the Trustee or the Noteholders seek to
enforce or collect the Noteholder Claims or the Noteholder Priority Liens.
3.3 Cooperation. The Collateral Agent, on behalf of itself and the
Noteholders, and the Trustee, agree that, unless and until the Discharge of
Senior Lender Claims has occurred, it will not commence, or join with any Person
(other than the Senior Lenders and the Senior Agent upon the request thereof) in
commencing any enforcement, collection, execution, levy or foreclosure action or
proceeding with respect to any Lien held by it under any of the Noteholder
Documents (other than any Noteholder Property Lien) or otherwise.
3.4 Notice by Senior Agent. The Senior Agent agrees to notify
promptly the Collateral Agent and the Trustee of a Discharge of Senior Lender
Claims.
SECTION 4. PAYMENTS.
4.1 Application of Proceeds. As long as the Discharge of Senior
Lender Claims has not occurred, the cash proceeds of Common Collateral received
in connection with the sale of, or collection on, such Common Collateral upon
the exercise of remedies, shall be applied by the Senior Agent to the Senior
Lender Claims in such order as specified in the Senior Credit Agreement until
Discharge of Senior Lender Claims has occurred. Upon Discharge of the Senior
Lender Claims, the Senior Agent shall deliver to the Collateral Agent any
proceeds of Common Collateral held by it in the same form as received, with any
necessary endorsements or as a court of competent jurisdiction may otherwise
direct or in the case of any such proceeds in any such deposit account or
securities account take such steps as may be required under the Senior Lender
Documents to cause such proceeds to be transferred to the Collateral Agent,
except as a court of competent jurisdiction may otherwise direct.
4.2 Payments Over by Collateral Agent, the Trustee and Noteholders.
So long as any Senior Lender Claims are outstanding, any Common Collateral or
proceeds thereof received by the Collateral Agent, the Trustee or any Noteholder
shall be segregated and held in trust and forthwith paid over to the Senior
Agent for the benefit of the Senior Lenders in the same form as received, with
any necessary endorsements or as a court of competent jurisdiction may otherwise
direct. The Senior Agent is hereby authorized to make any such endorsements as
agent for the Collateral Agent, the Trustee or any
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such Noteholder. This authorization is coupled with an interest and is
irrevocable. Notwithstanding the foregoing, except for payments constituting
proceeds of Common Collateral that are (1) made in breach of any provision of
any Senior Lender Document to purchase, redeem, prepay or pay the principal of
any Notes or to fund a legal or covenant defeasance of the Notes under Article 8
of the Indenture, unless in connection with any such payment the Collateral
Agent and the Trustee received an Opinion of Counsel (as defined in the
Indenture), or a certificate of the Senior Agent, that application of such
payment to principal of the Notes was permitted under the Credit Agreement or
(2) received by the Collateral Agent, the Trustee or any Noteholder (A) as a
result of any breach of the provisions of this Agreement, (B) any time after
commencement of any Insolvency or Liquidation Proceeding or (C) at any time
after the Trustee and the Collateral Agent have received written notice from the
Senior Agent stating that (i) the Indebtedness constituting Senior Lender Claims
has become immediately due and payable (whether at maturity, by acceleration or
otherwise, and all Letters of Credit are required to be cash collateralized) or
(ii) the Senior Agent has become entitled to enforce any or all Senior Lender
Liens by reason of default by any Obligor under the Senior Lender Documents, no
payment of money made by any Obligor to the Collateral Agent, the Trustee or any
Noteholder will in any event be subject to the foregoing provisions of this
Section 4.2.
4.3 Payments Over by Senior Agent and Senior Lenders. In the event
that the Senior Agent or any Senior Lender receives possession of any Noteholder
Priority Collateral or any proceeds thereof or has control as a secured party of
any proceeds of Noteholder Priority Collateral in a deposit account or
securities account, and whether or not any such Noteholder Priority Lien in such
Noteholder Priority Collateral was avoided or set aside, the Senior Agent or
such Senior Lender shall deliver same to the Collateral Agent or in the case of
any such proceeds in any such deposit account or securities account take such
steps as may be required under the Senior Lender Documents or Section 5.5(e) to
cause such proceeds to be transferred to the Collateral Agent, in each case,
except as a court of competent jurisdiction may otherwise direct.
SECTION 5. OTHER AGREEMENTS.
5.1 Releases.
(a) If in connection with:
(i) the exercise of the Senior Agent's remedies in respect of
the Common Collateral including any sale, lease, exchange, transfer or
other disposition of such Common Collateral made by the Senior Agent or
any Senior Lender; or
(ii) any sale, lease, exchange, transfer or other disposition
of Common Collateral permitted under the terms of the Senior Credit
Agreement (whether or not an event of default under, and as defined
therein, has occurred and is continuing) and not prohibited under Section
4.16 of the Indenture (Asset Sales);
the Senior Agent, for itself or on behalf of any of the Senior Lenders, releases
any of its Liens on any part of the Common Collateral and, in the case of
Section 5.1(a)(ii), the commitment under the Senior Credit Agreement is reduced
by the net cash proceeds of such sale, lease, exchange, transfer or other
disposition (or to $0, if the net cash proceeds exceeds the then remaining
commitment) and such net cash proceeds shall have been applied to repay or
collateralize any Senior Lender Claims or letters of credit issued under the
Senior Credit Agreement to the extent of any principal balance (including
undrawn letters of credit) outstanding and in excess of such reduced commitment,
the Liens, if any, of the Collateral Agent on such Common Collateral shall be
automatically, unconditionally and simultaneously released and the Collateral
Agent shall promptly shall execute and deliver to the Senior Agent or the
applicable Obligor
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such termination statements, releases and other documents as the Senior Agent or
the applicable Obligor may request to effectively confirm such release.
(b) The Collateral Agent hereby irrevocably constitutes and appoints
the Senior Agent and any officer or agent of the Senior Agent, with full power
of substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of the Collateral Agent or such
holder or in the Senior Agent's own name, from time to time in the Senior
Agent's discretion, for the purpose of carrying out the terms of this Section
5.1, to take any and all appropriate action and to execute any and all documents
and instruments which may be necessary or desirable to accomplish the purposes
of this Section 5.1, including, without limitation, any termination statements,
endorsements or other instruments or transfer or release.
5.2 Insurance. Unless and until the Discharge of Senior Lender
Claims has occurred, the Senior Agent and the Senior Lenders shall have the sole
and exclusive right, subject to the rights of the Obligors under the Senior
Lender Documents, to adjust settlement for any insurance policy covering the
Common Collateral in the event of any loss thereof and to approve any award
granted in any condemnation or similar proceeding affecting the Common
Collateral. Unless and until the Discharge of Senior Lender Claims has occurred,
all proceeds of any such policy and any such award in respect of the Common
Collateral shall be paid to the Senior Agent for the benefit of the Senior
Lenders to the extent required under the Senior Credit Agreement and thereafter
to the Collateral Agent to the extent required under the applicable Noteholder
Documents and then to the owner of the subject property or as a court of
competent jurisdiction may otherwise direct; provided, however, that from and
after the Commitment Termination Date, all such proceeds shall be paid to the
Senior Agent for the benefit of the Senior Lenders until the Discharge of Senior
Lender Claims has occurred and thereafter to the Collateral Agent for the
benefit of the Noteholders to the extent required under the applicable
Noteholder Documents and then to the owner of the subject property or as a court
of competent jurisdiction may otherwise direct. If the Collateral Agent, the
Trustee or any Noteholder shall, at any time, receive any proceeds of any such
insurance policy or any such award in respect of the loss of any Common
Collateral in contravention of this Agreement, it shall pay such proceeds over
to the Senior Agent in accordance with the terms of Section 4.2.
5.3 Amendments to Noteholder Collateral Documents.
(a) Without the prior written consent of the Senior Agent and the
Required Lenders, no Noteholder Collateral Document may be amended, supplemented
or otherwise modified or entered into to the extent such amendment, supplement
or modification, or the terms of any new Noteholder Collateral Document, would
be inconsistent with any of the terms of this Agreement or could reasonably be
expected to have an adverse effect on the Senior Agent or Senior Lenders. The
Trustee and the Collateral Agent agree that each Noteholder Collateral Document
creating a Noteholder Common Lien shall include the following language:
"Notwithstanding anything herein to the contrary, the lien and
security interest granted to the [Collateral Agent/Trustee] pursuant
to this Agreement and the exercise of any right or remedy by the
[Collateral Agent/ Trustee] hereunder, in each case in respect of
any collateral constituting Noteholder Common Collateral (as defined
in the Intercreditor Agreement described below) are subject to the
provisions of the Intercreditor Agreement, dated as of October 15,
2002 (as amended, modified or supplemented from time to time, the
"Intercreditor Agreement") among General Electric Capital
Corporation as Senior Agent, and U.S. Bank National Association, as
Collateral Agent, U.S.
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Bank National Association, as Trustee, and the Obligors (as defined
therein), including the grantor of security interest in this
Agreement, named therein. In the event of any conflict between the
terms of the Intercreditor Agreement and this Agreement, the terms
of the Intercreditor Agreement shall govern."
(b) In the event the Senior Agent or the Senior Lenders enter into
any amendment, waiver or consent in respect of any of the Senior Lender
Collateral Documents for the purpose of adding to, or deleting from, or waiving
or consenting to any departures from any provisions of, any Senior Lender
Collateral Document or changing in any manner the rights of the Senior Agent,
the Senior Lenders, the Obligors thereunder, then such amendment, waiver or
consent shall apply automatically to any comparable provision of the Comparable
Noteholder Collateral Document without the consent of the Collateral Agent or
the Trustee and without any action by the Collateral Agent or Trustee, or any
Obligor; provided, however, that (A) no such amendment, waiver or consent shall
have the effect of removing assets subject to the Lien of the Noteholder
Collateral Documents, except to the extent that a release of such Lien is
permitted by Section 5.1, (B) notice of such amendment, waiver or consent shall
have been given to the Collateral Agent, and (C) no such amendment, waiver or
consent that could reasonably be expected to be adverse to the Collateral Agent
or Noteholder shall apply to such Comparable Noteholder Collateral Document.
5.4 Rights As Unsecured Creditors.
(a) Notwithstanding anything to the contrary in this Agreement, the
Collateral Agent and the Trustee may exercise rights and remedies as an
unsecured creditor against the Obligors in accordance with the terms of the
Noteholder Documents and applicable law. In the event the Collateral Agent, the
Trustee or any Noteholder becomes a judgment lien creditor in respect of Common
Collateral as a result of its enforcement of its rights as an unsecured
creditor, such judgment lien shall be subordinated to the Senior Lender Liens on
the same basis as the other Noteholder Common Liens are so subordinated to such
Senior Lender Liens under this Agreement. Nothing in this Agreement modifies any
rights or remedies the Senior Agent or the Senior Lenders may have with respect
to the Senior Lender Collateral.
(b) Notwithstanding anything to the contrary in this Agreement, the
Senior Agent and the Senior Lenders may exercise rights and remedies as an
unsecured creditor against the Obligors in accordance with the terms of the
Senior Lender Documents and applicable law. In the event the Senior Agent or any
Senior Lender becomes a judgment lien creditor in respect of Noteholder Priority
Collateral as a result of its enforcement of its rights as an unsecured
creditor, such judgment lien shall be subordinated to the Noteholder Priority
Liens and the Senior Agent on behalf of itself and the Senior Lenders agrees
that the terms of this Agreement shall apply, mutatis mutandis, to such judgment
lien as if it were the Noteholder Common Lien and the Liens of the Noteholders
for Noteholder Claims were the Senior Lender Liens. Nothing in this Agreement
modifies any rights or remedies the Collateral Agent or any Noteholder may have
with respect to the Noteholder Priority Collateral.
5.5 Bailee for Perfection.
(a) The Senior Agent agrees to hold the Pledged Collateral that is
part of the Common Collateral in its possession or control (or in the possession
or control of its agents or bailees) as bailee for the Collateral Agent and any
assignee solely for the purpose of perfecting the security interest granted in
such Pledged Collateral pursuant to the Noteholder Security Agreement, subject
to the terms and conditions of this Section 5.5.
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(b) Until the Discharge of Senior Lender Claims has occurred, the
Senior Agent shall be entitled to deal with the Pledged Collateral in accordance
with the terms of the Senior Lender Documents as if the Lien of the Collateral
Agent under the Noteholder Security Agreement did not exist. The rights of the
Collateral Agent, the Noteholders and Trustee shall at all times be subject to
the terms of this Agreement.
(c) The Senior Agent shall have no obligation whatsoever to the
Collateral Agent, the Trustee or any Noteholder to assure that the Pledged
Collateral is genuine or owned by any Obligor or to preserve rights or benefits
of any Person except as expressly set forth in this Section 5.5. The duties or
responsibilities of the Senior Agent under this Section 5.5 shall be limited
solely to holding the Pledged Collateral as bailee for the Collateral Agent for
purposes of perfecting the Lien held by the Collateral Agent.
(d) The Senior Agent shall not have by reason of the Noteholder
Security Agreement or this Agreement or any other document a fiduciary
relationship in respect of the Collateral Agent, the Trustee or any Noteholder.
(e) Upon the Discharge of Senior Lender Claims, (i) the Senior Agent
shall deliver to the Collateral Agent the Pledged Collateral together with any
necessary endorsements or as a court of competent jurisdiction may otherwise
direct and (ii) in the case of any deposit account or securities account take
such steps as may be required to transfer (without recourse and without
representation or warranty and at the expense of the Collateral Agent) all of
its rights (as in effect immediately prior to the Discharge of Senior Lender
Claims) to such deposit account or securities account to the Collateral Agent
except as a court of competent jurisdiction may otherwise direct.
5.6 Enforcement of Noteholder Priority Liens. The Collateral Agent
shall give the Senior Agent at least twenty (20) Business Days prior written
notice before the Collateral Agent, the Trustee or any Noteholder shall commence
or seek to commence any enforcement of the Noteholder Priority Liens, and shall
not prevent the Senior Agent, or its agents, employees or consultants, from
access to any real property that is subject to the Noteholder Priority Lien, so
long as the Senior Agent indemnifies the Collateral Agent, the Trustee and the
Noteholders against any physical damages to the premises caused by the Senior
Agent or its agents or employees at such premises and releases the Collateral
Agent, the Trustee and the Noteholders from any liability arising from injury
any agent or employee of the Senior Agent suffers at such premises. During any
such twenty (20) Business Days period, the Senior Agent shall be entitled to,
but shall have no obligations to cure any event of default under the Indenture
that is then continuing, it being understood that such cure shall not rescind
any acceleration of the Notes based on such event of default, unless the
Noteholders take the requisite action in respect thereof under the Indenture.
SECTION 6. INSOLVENCY OR LIQUIDATION PROCEEDINGS.
6.1 Financing Issues. If any Obligor shall be subject to any
Insolvency or Liquidation Proceeding and the Senior Agent shall desire to permit
the use of cash collateral or to permit such Obligor to obtain financing under
section 363 or section 364 of the Bankruptcy Code ("DIP Financing"), then the
Trustee, on behalf of itself and the Noteholders, agrees that it will raise no
objection to such use or DIP Financing, any conditions thereto, or any other
relief afforded to the Senior Agent or Senior Lender in connection therewith or
to any priming of any Lien securing the DIP Financing to the Noteholder Common
Lien so long as (i) the principal amount of such DIP Financing, together with
the outstanding amount of principal under the Senior Credit Agreement
immediately prior to the initial funding under the DIP Financing (and after
giving effect to the application of proceeds of such initial funding) does not
exceed $12,500,000 and (ii) in the event that any Noteholder Common Lien is
primed
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by the DIP Financing (and all Obligations relating thereto), the Senior Lender
Lien is also primed. In the event that the Senior Agent or Senior Lenders
subordinate the Senior Lender Lien in connection with any such DIP Financing
(and all Obligations relating thereto), the Trustee on behalf of itself and the
Noteholders will subordinate the Noteholder Priority Lien and Noteholder Common
Lien to such DIP Financing (and all Obligations relating thereto).
6.2 Relief from the Automatic Stay. While any amounts are
outstanding under the Senior Lender Documents or any commitment under any DIP
Financing provided by any Senior Lender is in effect, the Collateral Agent on
behalf of itself and the Noteholders, and the Trustee, agree that none of them
shall seek relief from the automatic stay or any other stay in any Insolvency or
Liquidation Proceeding in respect of the Common Collateral, without the prior
written consent of the Senior Agent and the Requisite Lenders.
6.3 Adequate Protection. In any Insolvency or Liquidation Proceeding
the Trustee, on behalf of itself and each Noteholder, and the Collateral Agent,
agree that none of them shall contest (or support any other Person contesting)
(a) any request by the Senior Agent or the Senior Lenders for any replacement
lien, payment or other adequate protection or (b) any objection by the Senior
Agent or the Senior Lenders to any motion, relief, action or proceeding based on
the Senior Agent or the Senior Lenders claiming a lack of adequate protection.
In any Insolvency or Liquidation Proceeding, at no time shall the Trustee, the
Collateral Agent or any Noteholder file, make or prosecute any motion for
adequate protection (or any comparable request for relief) or otherwise seek
adequate protection in respect of any Noteholder Common Lien.
6.4 Voting Rights. In any Insolvency or Liquidation Proceeding,
neither the Trustee, the Collateral Agent nor any Noteholder shall vote any
Noteholder Claim for any plan of reorganization of any Obligor if such plan does
not provide for the payment in full in cash of all Senior Lender Claims on the
effective date of such plan of reorganization or otherwise provides treatment of
the Senior Lender Claims in a manner approved by the Senior Agent and Required
Lenders.
6.5 Preference Issues. If any Senior Lender is required in any
Insolvency or Liquidation Proceeding or otherwise to turn over or otherwise pay
to the estate of any Obligor any amount (a "Recovery"), then the Senior Lender
Claims shall be reinstated to the extent of such Recovery and the Senior Lenders
shall be entitled to a Discharge of Senior Lender Claims with respect to all
such recovered amounts. If this Agreement shall have been terminated prior to
such Recovery, this Agreement shall be reinstated in full force and effect, and
such prior termination shall not diminish, release, discharge, impair or
otherwise affect the obligations of the parties hereto from such date of
reinstatement.
6.6 Reorganization Securities. If, in any Liquidation or Insolvency
Proceeding, debt obligations of the reorganized debtor secured by Liens upon any
property of the reorganized debtor are distributed, pursuant to a plan of
reorganization or similar dispositive restructuring plan, both on account of
Senior Lender Claims and on account of Noteholder Claims, then, to the extent
the debt obligations distributed on account of the Senior Lender Claims and on
account of the Noteholder Claims are secured by Liens upon the same property,
the provisions of this Agreement will survive the distribution of such debt
obligations pursuant to such plan and will apply with like effect to the Liens
securing such debt obligations.
6.7 Expense Claims. Neither the Trustee, the Collateral Agent nor
any Noteholder will assert or enforce, at any time prior to the Discharge of
Senior Lender Claims, any claim under Section 506(c) of the Bankruptcy Code
senior to or on a parity with the Senior Lender Liens for costs or expenses of
preserving or disposing of any Common Collateral.
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6.8 Post-Petition Claims. (a) Neither the Trustee, the Collateral
Agent nor any Noteholder shall oppose or seek to challenge any claim by the
Senior Agent or any Senior Lender for allowance in any Insolvency or Liquidation
Proceeding of Senior Lender Claims consisting of post-petition interest, fees or
expenses to the extent of the value of the Senior Lender Lien, without regard to
the existence of the Noteholder Common Lien.
(b) Neither the Senior Agent nor any Senior Lender shall oppose or
seek to challenge any claim by the Trustee, the Collateral Agent or any
Noteholder for allowance in any Insolvency or Liquidation Proceeding of
Noteholder Claims consisting of post-petition interest, fees or expenses to the
extent of the value of the Noteholder Priority Lien and the Noteholder Common
Lien (after taking into account the Senior Lender Liens).
6.9 Noteholder DIP Financing. Nothing contained in this Agreement
shall prevent any Noteholder from providing DIP Financing in any Insolvency or
Liquidation Proceeding, provided, however, that in the event that any such DIP
Financing is secured by a priming Lien under Section 364 of the Bankruptcy Code,
such priming Lien will (if it primes Senior Lender Liens) also prime the
Noteholder Priority Lien and Noteholder Common Lien.
SECTION 7. RELIANCE; WAIVERS; ETC.
7.1 Reliance. The consent by the Senior Lenders to the execution and
delivery of the Noteholder Documents and the grant to the Collateral Agent on
behalf of the Noteholders of a Lien on the Common Collateral and all loans and
other extensions of credit made or deemed made on and after the date hereof by
the Senior Lenders to Obligors (that are borrowers) shall be deemed to have been
given and made in reliance upon this Agreement.
7.2 No Warranties or Liability. The Trustee, on behalf of itself and
the Noteholders, and the Collateral Agent, acknowledge and agree that each of
the Senior Agent and the Senior Lenders have made no express or implied
representation or warranty, including, without limitation, with respect to the
execution, validity, legality, completeness, collectibility or enforceability of
any of the Senior Lender Documents. The Senior Lenders will be entitled to
manage and supervise their respective loans and extensions of credit to the
Obligors (that are borrowers) in accordance with law and as they may otherwise,
in their sole discretion, deem appropriate, and the Senior Lenders may manage
their loans and extensions of credit without regard to any rights or interests
that the Trustee, the Collateral Agent or any of the Noteholders have in the
Common Collateral or otherwise, except as otherwise provided in this Agreement.
Neither the Senior Agent nor any Senior Lender shall have any duty to the
Trustee or any of the Noteholders to act or refrain from acting in a manner
which allows, or results in, the occurrence or continuance of an event of
default or default under any agreements with any Obligor (including, without
limitation, the Noteholder Documents), regardless of any knowledge thereof which
they may have or be charged with.
7.3 No Waiver of Lien Priorities.
(a) No right of the Senior Lenders, the Senior Agent or any of them
to enforce any provision of this Agreement shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of any Obligor
or by any act or failure to act by any Senior Lender or the Senior Agent, or by
any noncompliance by any Person with the terms, provisions and covenants of this
Agreement, any of the Senior Lender Documents or any of the Noteholder
Documents, regardless of any knowledge thereof which the Senior Agent or the
Senior Lenders, or any of them, may have or be otherwise charged with.
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(b) To the fullest extent permitted by law, the Collateral Agent,
the Noteholders and the Trustee agree not to assert or enforce at any time prior
to the Discharge of Senior Lender Claims:
(1) any right of subrogation to the rights or interests
of holders of Senior Lender Liens or Senior Lender Claims (or any claim or
defense based upon impairment of any such right of subrogation); provided,
however, that promptly following the Discharge of Senior Lender Claims, the
Senior Agent and Senior Lenders shall execute and deliver to the Trustee and the
Collateral Agent appropriate documents (without recourse and without
representation or warranty) necessary to evidence any transfer by subrogation to
the Trustee and the Collateral Agent of an interest in the Senior Lender Claims
resulting from, among other things, any turnover by the Trustee, the Collateral
Agent and/or the Noteholders of proceeds of Common Collateral to the Senior
Agent or Senior Lenders so long as the reasonable costs and expenses incurred by
the Senior Agent and Senior Lenders in connection with the preparation and
delivery of such appropriate documents are paid by the Trustee, the Collateral
Agent and/or the Noteholders;
(2) any right of marshalling accorded to a junior
lienholder, as against a priority lienholder, under equitable principles; and
(3) any statutory right of appraisal or valuation
accorded to a junior lienholder in a proceeding to foreclose a senior lien,
that otherwise may be enforceable in respect of any Noteholder Common Lien or as
against any holder of Senior Lender Liens.
(c) Without in any way limiting the generality of the foregoing,
each holder of Senior Lender Claims or Senior Lender Liens may at any time and
from time to time, without the consent of or notice to the Trustee or any holder
of Noteholder Claims, Noteholder Priority Liens or Noteholder Common Liens
without incurring any responsibility or liability to any holder of Noteholder
Claims, Noteholder Priority Liens or Noteholder Common Liens and without in any
manner prejudicing, affecting or impairing the ranking agreements and other
obligations set forth in this Agreement:
(1) make loans and advances to any Obligor or issue,
guaranty or obtain letters of credit for account of any Obligor or otherwise
extend credit to any Obligor, in any amount (subject to the provisions of this
Agreement relating to the maximum amount of principal of Indebtedness
constituting Senior Lender Claims) and on any terms, whether pursuant to a
commitment or as a discretionary advance and whether or not any default or event
of default or failure of condition is then continuing;
(2) change the manner, place or terms of payment or
extend the time of payment of, or renew or alter, compromise, accelerate, extend
or refinance, any Senior Lender Claims or any agreement, guaranty, Lien or
obligation of any Obligor or any other person or entity in any manner related
thereto, or otherwise amend, supplement or change in any manner any Senior
Lender Claims or Senior Lender Liens or any such agreement, guaranty, lien or
obligation;
(3) increase or reduce the amount of any Senior Lender
Claims (subject to the provisions of this Agreement relating to the maximum
amount of principal of Indebtedness constituting Senior Lender Claims) or the
interest, premium, fees or other amounts payable in respect thereof;
(4) release or discharge any Senior Lender Claims or any
guaranty thereof or any agreement or obligation of any Obligor or any other
person or entity with respect thereto;
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(5) take or fail to take any Senior Lender Lien or any
other collateral security for any Senior Lender Claims or take or fail to take
any action which may be necessary or appropriate to ensure that any Senior
Lender Lien or any other Lien upon any property is duly enforceable or perfected
or entitled to priority as against any other Lien or to ensure that any proceeds
of any property subject to any Lien are applied to the payment of any Senior
Lender Claim or any other obligation secured thereby;
(6) release, discharge or permit the lapse of any or all
Senior Lender Liens or any other Liens upon any property at any time securing
any Senior Lender Claims;
(7) exercise or enforce, in any manner, order or
sequence, or fail to exercise or enforce, any right or remedy against any
Obligor or any collateral security or any other person, entity or property in
respect of any Senior Lender Claims or any Senior Lender Lien or other Lien
securing any Senior Lender Claims or any right or power under this Agreement,
and apply any payment or proceeds of collateral in any order of application; or
(8) sell, exchange, release, foreclose upon or otherwise
deal with any property that may at any time be subject to any Senior Lender Lien
or any other Lien securing any Senior Lender Claims.
(d) To the maximum extent permitted by law, the Trustee, on behalf
of itself and each of the Noteholders, and the Collateral Agent, waive any claim
it may have against the Senior Agent or any Senior Lender with respect to or
arising out of any action or failure to act or any error (whether constituting
negligence or gross negligence but excluding errors due to willful misconduct or
breach of this Agreement) on the part of the Senior Agent or any Senior Lender
or their respective directors, officers, employees or agents with respect to any
exercise of rights or remedies in respect of the Senior Lender Liens or the
Senior Lender Claims or under the Senior Lender Documents or any transaction
relating to the Common Collateral. Neither the Senior Agent nor any Senior
Lender nor any of their respective directors, officers, employees or agents will
be liable for failure to demand, collect or realize upon any of the Common
Collateral or for any delay in doing so, except to the extent arising out of the
breach of this agreement by, or the willful misconduct of, the Senior Agent or
any Senior Lender or any of their respective directors, officers, employees or
agents, and will be under no obligation to sell or otherwise dispose of any
Common Collateral upon the request of any Obligor or upon the request of any
holder of Noteholder Claims, Noteholder Priority Liens or Noteholder Common
Liens or any other Person or to take any other action whatsoever with regard to
the Common Collateral or any part thereof. The Trustee, on behalf of itself and
the Noteholders, agrees that the Senior Lenders and the Senior Agent have no
duty to them in respect of the maintenance or preservation of the Senior Lender
Collateral, the Senior Lender Claims or otherwise.
(e) The Senior Lenders, on the one hand, and the Noteholders, on the
other hand, shall each be responsible for keeping themselves informed of the
financial condition of the Obligors and all other circumstances bearing upon the
risk of nonpayment of the Senior Lender Claims or Noteholder Claims. The Senior
Lenders and the Senior Agent shall have no duty to advise the Collateral Agent,
the Trustee or any Noteholder of information regarding such condition or
circumstances or as to any other matter. If any Senior Lender or the Senior
Agent, in its sole discretion, undertakes at any time or from time to time to
provide any such information, it shall have no duty to supply any such
information on any other occasion.
(f) None of the Senior Agent or any Senior Lender will have any
duty, express or implied, fiduciary or otherwise, to Noteholder, the Collateral
Agent or to the Trustee except for the contractual obligations hereunder.
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7.4 Obligations Unconditional. All rights, interests, agreements and
obligations of the Senior Agent and the Senior Lenders and the Collateral Agent,
the Trustee and the Noteholders, respectively, hereunder shall remain in full
force and effect irrespective of:
(a) any lack of validity or enforceability of any Senior Lender
Documents or any Noteholder Documents or any setting aside or avoidance of any
Senior Lender Lien or Noteholder Priority Lien;
(b) any change in the time, manner or place of payment of, or in any
other terms of, all or any of the Senior Lender Claims or Noteholder Claims, or
any amendment or waiver or other modification, including, without limitation,
any increase in the amount thereof (to the extent not prohibited by the
Indenture as in effect on the date hereof), whether by course of conduct or
otherwise, of the terms of the Senior Credit Agreement or any other Senior
Lender Document or of the terms of the Indenture or any other Noteholder
Document;
(c) any exchange of any security interest in any Common Collateral,
Noteholder Priority Collateral or any other collateral, or any amendment, waiver
or other modification, whether in writing or by course of conduct or otherwise,
of all or any of the Senior Lender Claims or Noteholder Claims or any guarantee
thereof;
(d) the commencement of any Insolvency or Liquidation Proceeding in
respect of any Obligor; or
(e) any other circumstances which otherwise might constitute a
defense available to, or a discharge of, any Obligor in respect of the Senior
Lender Claims, or of the Trustee, the Collateral Agent, any Noteholder, the
Senior Agent or any Senior Lender in respect of this Agreement.
SECTION 8. MISCELLANEOUS.
8.1 Conflicts. In the event of any conflict between the provisions
of this Agreement and the provisions of the Senior Lender Documents or the
Noteholder Documents, the provisions of this Agreement shall govern.
8.2 Continuing Nature of this Agreement. This Agreement shall
continue to be effective until the Discharge of Senior Lender Claims shall have
occurred. This is a continuing agreement of lien subordination and the Senior
Lenders may continue, at any time and without notice to the Trustee or any
Noteholder, to extend credit and other financial accommodations and lend monies
to or for the benefit of the Borrower constituting Senior Lender Claims on the
faith hereof. The Collateral Agent, on behalf of itself and the Noteholders, and
the Trustee, hereby waive any right any of them may have under applicable law to
revoke this Agreement or any of the provisions of this Agreement. The terms of
this Agreement shall survive, and shall continue in full force and effect, in
any Insolvency or Liquidation Proceeding.
8.3 Amendments; Waivers. No amendment, modification or waiver of any
of the provisions of this Agreement by the Trustee, the Collateral Agent or the
Senior Agent shall be deemed to be made unless the same shall be in writing
signed on behalf of the party to be charged or its authorized agent and each
waiver, if any, shall be a waiver only with respect to the specific instance
involved and shall in no way impair the rights of the parties making such waiver
or the obligations of the other parties to such party in any other respect or at
any other time. No Obligor shall have any right to amend, modify or waive any
provision of this Agreement without the consent of the Trustee, the Collateral
Agent and the Senior Agent, nor shall any consent or signed writing be required
of any of them to effect any
150
amendment, modification or waiver of any provision of this Agreement, except
that no amendment, modification or waiver affecting any obligation of any
Obligor hereunder shall be made without the consent of such Obligor.
8.4 Representations.
(a) Each of the Trustee and the Collateral Agent represents and
warrants to the Senior Agent and the Senior Lenders that it has all requisite
corporate power and authority to enter into this Agreement, is authorized to do
so, has duly executed and delivered this Agreement by a duly authorized officer
and its execution and deliver of this Agreement binds the Trustee and the
Collateral Agent, respectively, and each present and future Noteholder.
(b) The Senior Agent represents and warrants to the Trustee and the
Noteholders that it has all requisite corporate power and authority to enter
into this Agreement, is authorized to do so under the Senior Credit Agreement,
has duly executed and delivered this Agreement by a duly authorized signatory
and its execution and deliver of this Agreement binds the Senior Agent, and each
present and future Senior Lender.
8.5 Successor Collateral Agent.
(a) Each successor Collateral Agent and Trustee under the Indenture
shall execute and deliver a counterpart of and become a party to this Agreement,
and no replacement or resignation of the Collateral Agent or Trustee shall be
effective until the successor Collateral Agent or Trustee, as the case may be,
shall have executed and delivered a counterpart of this Agreement.
(b) Each successor Senior Agent under the Senior Credit Agreement
shall execute and deliver a counterpart of and become a party to this Agreement,
and no replacement or resignation of the Senior Agent shall be effective until
the successor Senior Agent shall have executed and delivered a counterpart of
this Agreement.
8.6 Application of Payments. All payments received by the Senior
Lenders may be applied, reversed and reapplied, in whole or in part, to such
part of the Senior Lender Claims as the Senior Lenders, in their sole
discretion, deem appropriate. The Collateral Agent, on behalf of itself and the
Noteholders, and the Trustee, assent to any extension or postponement of the
time of payment of the Senior Lender Claims or any part thereof and to any other
indulgence with respect thereto, to any substitution, exchange or release of any
security which may at any time secure any part of the Senior Lender Claims and
to the addition or release of any other Person primarily or secondarily liable
therefor.
8.7 Consent to Jurisdiction; Waivers. The parties hereto consent to
the jurisdiction of any state or federal court located in Borough of Manhattan,
City of New York, New York, and consent that all service of process may be made
by registered mail directed to such party as provided in Section 8.8 below for
such party. Service so made shall be deemed to be completed three (3) days after
the same shall be posted as aforesaid. The parties hereto waive any objection to
any action instituted hereunder based on forum non conveniens, and any objection
to the venue of any action instituted hereunder. EACH OF THE PARTIES HERETO
WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
SENIOR LENDER DOCUMENT OR NOTEHOLDER DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE
OF DEALING, VERBAL OR WRITTEN STATEMENT OR ACTION OF ANY PARTY HERETO.
8.8 Notices. All notices to the Collateral Agent, the Trustee and
the Senior Lenders permitted or required under this Agreement may be sent to the
Collateral Agent, the Trustee and the
151
Senior Agent, respectively. Unless otherwise specifically provided herein, any
notice or other communication herein required or permitted to be given shall be
in writing and may be personally served, telecopied, electronically mailed or
sent by courier service or U.S. registered or certified mail and shall be deemed
to have been given when delivered in person or by courier service, upon receipt
of a telecopy or electronic mail or four Business Days after deposit in the U.S.
mail (registered or certified, with postage prepaid and properly addressed). For
the purposes hereof, the addresses of the parties hereto shall be as set forth
below each party's name on the signature pages hereto, or, as to each party, at
such other address as may be designated by such party in a written notice to all
of the other parties.
8.9 Further Assurances.
(a) The Trustee, on behalf of itself and the Noteholders, and the
Collateral Agent, agree that each of them shall take such further action and
shall execute and deliver to the Senior Agent and the Senior Lenders such
additional documents and instruments (in recordable form, if requested) as the
Senior Agent or the Senior Lenders may reasonably request to effectuate the
terms of and the lien priorities contemplated by this Agreement.
(b) The Senior Agent, on behalf of itself and the Senior Lenders,
agrees that it shall take such further action and shall execute and deliver to
the Collateral Agent and the Trustee such additional documents and instruments
(in recordable form, if requested) as the Collateral Agent or the Trustee may
reasonably request to effectuate the terms of and the lien priorities
contemplated by this Agreement.
8.10 Governing Law. This Agreement has been delivered and accepted
at and shall be deemed to have been made at New York, New York and shall be
interpreted, and the rights and liabilities of the parties bound hereby
determined, in accordance with the laws of the State of New York.
8.11 Binding on Successors and Assigns No Third Party Beneficiaries.
This Agreement shall be binding upon and inure to the benefit of the Senior
Agent, the Senior Lenders, the Collateral Agent, Trustee, the Noteholders and
their respective successors and assigns. No other Person, shall have or be
entitled to assert rights or benefits hereunder. This Agreement shall be binding
upon the Obligors and their successors and assigns, provided, however, that no
Obligor or any successor or assign thereof shall be entitled to enforce any
provision of this Agreement.
8.12 Specific Performance. The Senior Agent may demand specific
performance of this Agreement. The Collateral Agent, on behalf of itself and the
Noteholders and the Trustee, hereby irrevocably waive any defense based on the
adequacy of a remedy at law and any other defense which might be asserted to bar
the remedy of specific performance in any action which may be brought by the
Senior Agent.
8.13 Section Titles; Time Periods. The section titles contained in
this Agreement are and shall be without substantive meaning or content of any
kind whatsoever and are not a part of this Agreement. In the computation of time
periods, unless otherwise specified, the word "from" means "from and including"
and each of the words "to" and "until" means "to but excluding" and the word
"through" means "to and including".
8.14 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be an original and all of which shall together
constitute one and the same document.
152
8.15 Authorization. By its signature, each Person executing this
Agreement on behalf of a party hereto represents and warrants to the other
parties hereto that it is duly authorized to execute this Agreement.
8.16 Credit Agreement. On behalf of itself and the Noteholders, the
Trustee agrees and acknowledges that the Senior Credit Agreement is the "Credit
Agreement" as such term is defined in the Indenture.
8.17 Effectiveness. This Agreement shall become effective when
executed and delivered by the parties listed below. This Agreement shall be
effective both before and after the commencement of any Insolvency or
Liquidation Proceeding. All references to any Obligor shall include any Obligor
as debtor and debtor-in-possession and any receiver or trustee for such Obligor
(as the case may be) in any Insolvency or Liquidation Proceeding.
153
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
Senior Agent:
GENERAL ELECTRIC CAPITAL CORPORATION,
as Senior Agent
By:
--------------------------------
Name:
Title:
Address:
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Golfsmith - Account Officer
Telecopy no.: (000) 000-0000
Collateral Agent:
U.S. BANK TRUST NATIONAL ASSOCIATION, as
Collateral Agent
By:
--------------------------------
Name:
Title:
Address:
000 Xxxx Xxxxx Xxxxxx
Xx. Xxxx, Xxxxxxxxx 00000
Attention:
Telecopy no.: (000) 000-0000
Trustee:
U.S. BANK TRUST NATIONAL ASSOCIATION, as
Trustee
By:
--------------------------------
Name:
Title:
Address:
000 Xxxx Xxxxx Xxxxxx
Xx. Xxxx, Xxxxxxxxx 00000
Attention:
Telecopy no.: (000) 000-0000
154
Credit Parties:
Address for all Credit Parties:
c/o Golfsmith International, Inc.
00000 Xxxxx XX-00
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxxx Xxxxx
With a copy to:
First Atlantic Capital, Ltd.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxx
Fax: (000) 000-0000
GOLFSMITH INTERNATIONAL, L.P.
By Golfsmith GP, L.L.C., as General Partner
By Golfsmith Holdings, L.P., as Sole Member
By Golfsmith GP Holdings, Inc., as General Partner
By
-----------------------------------
Xxxx X. Xxxxxx
Vice President
155
GOLFSMITH NU, L.L.C.
By Golfsmith Holdings, L.P., as Sole Member
By Golfsmith GP Holdings, Inc., as General Partner
By
-----------------------------------
Xxxx X. Xxxxxx
Vice President
GOLFSMITH USA, L.L.C.
By Golfsmith Holdings, L.P., as Sole Member
By Golfsmith GP Holdings, Inc., as General Partner
By
-----------------------------------
Xxxx X. Xxxxxx
Vice President
GOLFSMITH INTERNATIONAL, INC.
By
-----------------------------------
Xxxx X. Xxxxxx
Vice President
GOLFSMITH INTERNATIONAL HOLDINGS, INC.
By
-----------------------------------
Xxxx X. Xxxxxx
Vice President
GOLFSMITH GP HOLDINGS, INC.
By
-----------------------------------
Xxxx X. Xxxxxx
Vice President
156
GOLFSMITH HOLDINGS, L.P.
By Golfsmith GP Holdings, Inc., as General Partner
By
-----------------------------------
Xxxx X. Xxxxxx
Vice President
GOLFSMITH GP, L.L.C.
By Golfsmith Holdings, L.P., as Sole Member
By Golfsmith GP Holdings, Inc., as General Partner
By
-----------------------------------
Xxxx X. Xxxxxx
Vice President
GOLFSMITH DELAWARE, L.L.C.
By Golfsmith Holdings, L.P., as Sole Member
By Golfsmith GP Holdings, Inc., as General Partner
By
-----------------------------------
Xxxx X. Xxxxxx
Vice President
GOLFSMITH CANADA, L.L.C.
By Golfsmith Holdings, L.P., as Sole Member
By Golfsmith GP Holdings, Inc., as General Partner
By
-----------------------------------
Xxxx X. Xxxxxx
Vice President
GOLFSMITH EUROPE, L.L.C.
By Golfsmith Holdings, L.P., as Sole Member
By Golfsmith GP Holdings, Inc., as General Partner
By
-----------------------------------
Xxxx X. Xxxxxx
Vice President
157
GOLFSMITH LICENSING, L.L.C.
By Golfsmith Holdings, L.P., as Sole Member
By Golfsmith GP Holdings, Inc., as General Partner
By
-----------------------------------
Xxxx X. Xxxxxx
Vice President
158
EXHIBIT 8.1
to
CREDIT AGREEMENT
ASSIGNMENT AGREEMENT
This Assignment Agreement (this "Agreement") is made as of
___________ __, ____ by and between __________________________________
("Assignor Lender") and ________________________ ("Assignee Lender") and
acknowledged and consented to by GENERAL ELECTRIC CAPITAL CORPORATION, as agent
("Agent"). All capitalized terms used in this Agreement and not otherwise
defined herein will have the respective meanings set forth in the Credit
Agreement as hereinafter defined.
[DRAFTING NOTE: THE TERMS OF THIS AGREEMENT WILL VARY SUBSTANTIALLY
FOR ASSIGNMENTS OF 100% OF A LENDER'S COMMITMENTS AS OPPOSED TO PARTIAL
ASSIGNMENT]
RECITALS:
WHEREAS, Golfsmith International Holdings, Inc., a Delaware
corporation, Golfsmith International, Inc., a Delaware corporation, and all
domestic subsidiaries thereof ("Credit Parties"), Agent, Assignor Lender and
other Persons signatory thereto as Lenders have entered into that certain Credit
Agreement dated as of October ___, 2002 (as amended, restated, supplemented or
otherwise modified from time to time, the "Credit Agreement") pursuant to which
Assignor Lender has agreed to make certain Loans to, and incur certain Letter of
Credit Obligations for, Borrowers;
WHEREAS, Assignor Lender desires to assign to Assignee Lender [ALL/A
PORTION] of its interest in the Loans (as described below), the Letter of Credit
Obligations and the Collateral and to delegate to Assignee Lender [ALL/A
PORTION] of its Commitments and other duties with respect to such Loans, Letter
of Credit Obligations and Collateral;
WHEREAS, Assignee Lender desires to become a Lender under the Credit
Agreement and to accept such assignment and delegation from Assignor Lender; and
WHEREAS, Assignee Lender desires to appoint Agent to serve as agent
for Assignee Lender under the Credit Agreement.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions, and covenants herein contained, Assignor Lender and Assignee Lender
agree as follows:
159
1. ASSIGNMENT, DELEGATION, AND ACCEPTANCE
1.1 Assignment. Assignor Lender hereby transfers and assigns to Assignee
Lender, without recourse and without representations or warranties of any kind
(except as set forth in Section 3.2), [all/such percentage] of Assignor Lender's
right, title, and interest in the Revolving Loan, including Letter of Credit
Obligations, Loan Documents and the Collateral as will result in Assignee Lender
having as of the Effective Date (as hereinafter defined) a Pro Rata Share
thereof, as follows:
Assignee Lender's Loans Principal Amount Pro Rata Share
----------------------- ---------------- --------------
Revolving Loan $ %
------------ ----
1.2 Delegation. Assignor Lender hereby irrevocably assigns and delegates
to Assignee Lender [ALL/A PORTION] of its Commitments and its other duties and
obligations as a Lender under the Loan Documents equivalent to the Pro Rata
Shares set forth above.
1.3 Acceptance by Assignee Lender. By its execution of this Agreement,
Assignee Lender irrevocably purchases, assumes and accepts such assignment and
delegation and agrees to be a Lender with respect to the delegated interest
under the Loan Documents and to be bound by the terms and conditions thereof. By
its execution of this Agreement, Assignor Lender agrees, to the extent provided
herein, to relinquish its rights and be released from its obligations and duties
under the Credit Agreement.
1.4 Effective Date. Such assignment and delegation by Assignor Lender
and acceptance by Assignee Lender will be effective and Assignee Lender will
become a Lender under the Loan Documents as of [THE DATE OF THIS AGREEMENT]
[_____ __, ____] ("Effective Date") and upon payment of the Assigned Amount and
the Assignment Fee (as each term is defined below). [INTEREST AND FEES ACCRUED
PRIOR TO THE EFFECTIVE DATE ARE FOR THE ACCOUNT OF ASSIGNOR LENDER, AND INTEREST
AND FEES ACCRUED FROM AND AFTER THE EFFECTIVE DATE ARE FOR THE ACCOUNT OF
ASSIGNEE LENDER.]
2. INITIAL PAYMENT AND DELIVERY OF NOTES
2.1 Payment of the Assigned Amount. Assignee Lender will pay to Assignor
Lender, in immediately available funds, not later than 12:00 noon (New York
time) on the Effective Date, an amount equal to its Pro Rata Share of the then
outstanding principal amount of the Loans as set forth above in Section 1.1
[TOGETHER WITH ACCRUED INTEREST, FEES AND OTHER AMOUNTS AS SET FORTH ON SCHEDULE
2.1] (the "Assigned Amount").
2.2 Payment of Assignment Fee. [Assignor Lender and/or Assignee Lender]
will pay to Agent, for its own account in immediately available funds, not later
than 12:00 noon (New York time) on the Effective Date, the assignment fee in the
amount of $3,500 (the "Assignment Fee") as required pursuant to Section 8.1(a)
of the Credit Agreement.
2.3 Execution and Delivery of Notes. Following payment of the Assigned
Amount and the Assignment Fee, Assignor Lender will deliver to Agent the Notes
previously delivered to Assignor Lender for redelivery to Borrowers and Agent
will obtain from Borrowers for delivery to [ASSIGNOR LENDER AND] Assignee
Lender, new executed Notes evidencing Assignee Lender's [AND ASSIGNOR LENDER'S
RESPECTIVE] Pro Rata Share[s] in the Revolving Loan after giving effect to the
assignment described in Section 1. Each new Note will be issued in the aggregate
maximum principal amount of the [APPLICABLE] Commitment [OF THE LENDER TO WHOM
SUCH NOTE IS ISSUED] OR [THE ASSIGNEE LENDER].
160
3. REPRESENTATIONS, WARRANTIES AND COVENANTS
3.1 Assignee Lender's Representations, Warranties and Covenants.
Assignee Lender hereby represents, warrants, and covenants the following to
Assignor Lender and Agent:
(a) This Agreement is a legal, valid, and binding agreement of
Assignee Lender, enforceable according to its terms;
(b) The execution and performance by Assignee Lender of its duties
and obligations under this Agreement and the Loan Documents will not require any
registration with, notice to, or consent or approval by any Governmental
Authority;
(c) Assignee Lender is familiar with transactions of the kind and
scope reflected in the Loan Documents and in this Agreement;
(d) Assignee Lender has made its own independent investigation and
appraisal of the financial condition and affairs of each Credit Party, has
conducted its own evaluation of the Loans and Letter of Credit Obligations, the
Loan Documents and each Credit Party's creditworthiness, has made its decision
to become a Lender to Borrowers under the Credit Agreement independently and
without reliance upon Assignor Lender or Agent, and will continue to do so;
(e) Assignee Lender is entering into this Agreement in the
ordinary course of its business, and is acquiring its interest in the Loans and
Letter of Credit Obligations for its own account and not with a view to or for
sale in connection with any subsequent distribution; provided, however, that at
all times the distribution of Assignee Lender's property shall, subject to the
terms of the Credit Agreement, be and remain within its control;
(f) No future assignment or participation granted by Assignee
Lender pursuant to Section 8.1 of the Credit Agreement will require Assignor
Lender, Agent, or Borrower to file any registration statement with the
Securities and Exchange Commission or to apply to qualify under the blue sky
laws of any state;
(g) Assignee Lender has no loans to, written or oral agreements
with, or equity or other ownership interest in any Credit Party;
(h) Assignee Lender will not enter into any written or oral
agreement with, or acquire any equity or other ownership interest in, any Credit
Party without the prior written consent of Agent; and
(i) As of the Effective Date, Assignee Lender (i) is entitled to
receive payments of principal and interest in respect of the Obligations without
deduction for or on account of any taxes imposed by the United States of America
or any political subdivision thereof [, (ii) is not subject to capital adequacy
or similar requirements under Section 1.10(a) of the Credit Agreement, (iii)
does not require the payment of any increased costs under Section 1.10(b) of the
Credit Agreement, and (iv) is not unable to fund LIBOR Loans under Section
1.10(b) of the Credit Agreement, ] and Assignee Lender will indemnify Agent from
and against all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, or expenses that result from Assignee Lender's failure
to fulfill its obligations under the terms of Section 1.11(c) of the Credit
Agreement [or from any other inaccuracy in the foregoing]. [DRAFTING NOTE: THE
REPS IN CLAUSES (II) THROUGH (IV) SHOULD BE DELETED (A) FROM THE FORM ENTIRELY
IF SECTION 8.1(F) OF THE CREDIT AGREEMENT HAS BEEN DELETED, AND (B) IN THE EVENT
THIS FORM IS SUBSEQUENTLY USED TO EFFECT AN ACTUAL
161
ASSIGNMENT AT A TIME WHEN AN EVENT OF DEFAULT EXISTS AND IS CONTINUING UNDER THE
CREDIT AGREEMENT].
3.2 Assignor Lender's Representations, Warranties and Covenants.
Assignor Lender hereby represents, warrants and covenants the following to
Assignee Lender:
(a) Assignor Lender is the legal and beneficial owner of the
Assigned Amount;
(b) This Agreement is a legal, valid and binding agreement of
Assignor Lender, enforceable according to its terms;
(c) The execution and performance by Assignor Lender of its duties
and obligations under this Agreement and the Loan Documents will not require any
registration with, notice to or consent or approval by any Governmental
Authority;
(d) Assignor Lender has full power and authority, and has taken
all action necessary to execute and deliver this Agreement and to fulfill the
obligations hereunder and to consummate the transactions contemplated hereby;
(e) Assignor Lender is the legal and beneficial owner of the
interests being assigned hereby, free and clear of any adverse claim, lien,
encumbrance, security interest, restriction on transfer, purchase option, call
or similar right of a third party; and
(f) This Assignment by Assignor Lender to Assignee Lender
complies, in all material respects, with the terms of the Loan Documents.
4. LIMITATIONS OF LIABILITY
Neither Assignor Lender (except as provided in Section 3.2) nor Agent
makes any representations or warranties of any kind, nor assumes any
responsibility or liability whatsoever, with regard to (a) the Loan Documents or
any other document or instrument furnished pursuant thereto or the Loans, Letter
of Credit Obligations or other Obligations, (b) the creation, validity,
genuineness, enforceability, sufficiency, value or collectibility of any of
them, (c) the amount, value or existence of the Collateral, (d) the perfection
or priority of any Lien upon the Collateral, or (e) the financial condition of
any Credit Party or other obligor or the performance or observance by any Credit
Party of its obligations under any of the Loan Documents. Neither Assignor
Lender nor Agent has or will have any duty, either initially or on a continuing
basis, to make any investigation, evaluation, appraisal of, or any
responsibility or liability with respect to the accuracy or completeness of, any
information provided to Assignee Lender which has been provided to Assignor
Lender or Agent by any Credit Party. Nothing in this Agreement or in the Loan
Documents shall impose upon the Assignor Lender or Agent any fiduciary
relationship in respect of the Assignee Lender.
5. FAILURE TO ENFORCE
No failure or delay on the part of Agent or Assignor Lender in the
exercise of any power, right, or privilege hereunder or under any Loan Document
will impair such power, right, or privilege or be construed to be a waiver of
any default or acquiescence therein. No single or partial exercise of any such
power, right, or privilege will preclude further exercise thereof or of any
other right, power, or privilege. All rights and remedies existing under this
Agreement are cumulative with, and not exclusive of, any rights or remedies
otherwise available.
162
6. NOTICES
Unless otherwise specifically provided herein, any notice or other
communication required or permitted to be given will be in writing and addressed
to the respective party as set forth below its signature hereunder, or to such
other address as the party may designate in writing to the other.
7. AMENDMENTS AND WAIVERS
No amendment, modification, termination, or waiver of any provision of
this Agreement will be effective without the written concurrence of Assignor
Lender, Agent and Assignee Lender.
8. SEVERABILITY
Whenever possible, each provision of this Agreement will be interpreted in
such manner as to be effective and valid under applicable law. In the event any
provision of this Agreement is or is held to be invalid, illegal, or
unenforceable under applicable law, such provision will be ineffective only to
the extent of such invalidity, illegality, or unenforceability, without
invalidating the remainder of such provision or the remaining provisions of the
Agreement. In addition, in the event any provision of or obligation under this
Agreement is or is held to be invalid, illegal, or unenforceable in any
jurisdiction, the validity, legality, and enforceability of the remaining
provisions or obligations in any other jurisdictions will not in any way be
affected or impaired thereby.
9. SECTION TITLES
Section and Subsection titles in this Agreement are included for
convenience of reference only, do not constitute a part of this Agreement for
any other purpose, and have no substantive effect.
10. SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
11. APPLICABLE LAW
THIS AGREEMENT WILL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT
STATE.
12. COUNTERPARTS
This Agreement and any amendments, waivers, consents, or supplements may
be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which, when so executed and delivered, will be
deemed an original and all of which shall together constitute one and the same
instrument.
[SIGNATURE PAGE FOLLOWS]
163
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first written above.
ASSIGNEE LENDER: ASSIGNOR LENDER:
----------------------------------- -----------------------------------
By: By:
---------------------------- ----------------------------
Title: Title:
---------------------------- ----------------------------
Notice Address: Notice Address:
----------------------------------- -----------------------------------
----------------------------------- -----------------------------------
----------------------------------- -----------------------------------
ACKNOWLEDGED AND CONSENTED TO:
GENERAL ELECTRIC CAPITAL
CORPORATION, AS AGENT
By:
----------------------------
Title:
----------------------------
164
SCHEDULE 2.1
Assignor Lender's Loans
Principal Amount
Revolving Loan $
----------------
Accrued Interest $
----------------
Unused Line Fee $
----------------
Other + or -$ $
----------------
Total $
================
All determined as of the Effective Date.
165
EXHIBIT 3.5(c) to CREDIT AGREEMENT
MANAGEMENT CONSULTING AGREEMENT (this "AGREEMENT"), dated as of October
15, 2002, among GOLFSMITH INTERNATIONAL HOLDINGS, INC., a Delaware corporation
("HOLDINGS"), GOLFSMITH INTERNATIONAL, INC., a Delaware corporation ("GOLFSMITH"
and, together with Holdings and each of their respective subsidiaries, the
"COMPANIES"), and FIRST ATLANTIC CAPITAL LTD., a Delaware corporation (together
with its affiliates, successors, and assigns, "FIRST ATLANTIC").
WHEREAS, the Companies have heretofore availed themselves of the
management, advisory, financing arrangement and corporate structuring expertise
of First Atlantic in connection with the transactions contemplated by the
Agreement and Plan of Merger, dated as of September 23, 2002 (the "MERGER
AGREEMENT"), among Holdings, BGA Acquisition Corporation and Golfsmith;
WHEREAS, Holdings, Atlantic Equity Partners III, L.P. and certain other
equity holders of Holdings have entered into a Stockholders Agreement (the
"STOCKHOLDERS AGREEMENT") dated as of the date hereof;
WHEREAS, the Companies desire to continue to avail themselves of First
Atlantic's expertise and consequently have requested First Atlantic to make such
expertise available from time to time in rendering certain management consulting
and advisory services related to the business and affairs of the Companies and
the review and analysis of certain financial and other transactions; and
WHEREAS, First Atlantic and the Companies agree that it is in their
respective best interests to enter into this Agreement whereby, for the
consideration specified herein, First Atlantic shall provide such services as an
independent consultant to the Companies.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the Companies and First Atlantic agree as follows:
SECTION 1. RETENTION OF FIRST ATLANTIC.
The Companies hereby retain First Atlantic, and First Atlantic accepts
such retention, upon the terms and conditions set forth in this Agreement.
SECTION 2. TERM.
This Agreement shall commence on the date hereof and shall terminate on
the tenth anniversary of the date hereof (the "INITIAL TERM"). Upon the
termination of the Initial Term and at the end of each year thereafter this
Agreement shall automatically be extended for an additional year unless notice
to the contrary is given by either party at least 30, but no more than 60, days
prior to such anniversary (the Initial Term and all extensions thereof are
collectively referred to as the "TERM"). Notwithstanding the foregoing, this
Agreement shall terminate on the date on which Atlantic Equity Partners III,
L.P. and its Affiliates (including the Transferee Partnership as defined in the
Stockholders Agreement) collectively are no longer the beneficial owner of at
least 50% of the outstanding shares of common stock of Holdings. In addition,
notwithstanding the foregoing, this Agreement will terminate upon the
consummation of a Public
Offering (as defined in the Stockholders Agreement) if the underwriters require
that it be terminated.
SECTION 3. MANAGEMENT CONSULTING SERVICES.
(a) First Atlantic shall advise the Companies concerning such management
matters that relate to proposed financial transactions, acquisitions and other
senior management matters related to the business, administration and policies
of the Companies and their respective affiliates, in each case as the Companies
shall reasonably and specifically request. First Atlantic shall devote such time
to any such request as First Atlantic shall, in its discretion, deem necessary.
Such consulting services shall, in First Atlantic's discretion, be rendered in
person or by telephone or other communication. First Atlantic shall have no
obligation to the Companies as to the manner and time of rendering its services
hereunder, and the Companies shall have no right to dictate or direct the
details of the services rendered hereunder.
(b) First Atlantic shall perform all such services as an independent
contractor of the Companies and not as an employee, agent or representative of
the Companies. First Atlantic shall have no authority to act for or to bind any
of the Companies without their prior written consent.
(c) This Agreement shall in no way prohibit First Atlantic or any
director, officer, shareholder or employee thereof from engaging in other
activities, whether or not competitive with any business of the Companies or
their affiliates.
SECTION 4. COMPENSATION.
(a) As consideration for the expertise and services set forth in the
recital of this Agreement and provided by First Atlantic heretofore in
connection with the transactions contemplated by the Merger Agreement, the
Companies shall (i) pay to First Atlantic a closing fee of $1,252,500 and (ii)
reimburse First Atlantic for all out-of-pocket expenses and other disbursements
incurred by First Atlantic and any of its directors, officers, employees or
agents in connection with the transactions contemplated by the Merger Agreement,
such payments to be made on the Closing Date (as such term is defined in the
Merger Agreement).
(b) As consideration for First Atlantic's agreement to render the
management consulting services set forth in Section 3 of this Agreement and as
compensation for any such services rendered by First Atlantic, the Companies
shall pay First Atlantic an annual fee in the aggregate amount of up to
$600,000, payable in advance in equal monthly installments on the first day of
each month (or, if such date is not a business day, on the next business day
thereafter) commencing with the month of October 2002. The amount of such annual
fee shall be determined by the board of directors of Holdings.
(c) The Companies (or, at the Companies' option, any affiliate thereof)
shall, upon presentation of an itemized listing by First Atlantic, reimburse
First Atlantic for all out-of-pocket expenses and other disbursements incurred
by any of its directors, officers, employees or agents in the performance of
First Atlantic's obligations hereunder.
2
(d) Nothing in this Agreement shall have the effect of prohibiting First
Atlantic from receiving from the Companies or any of their affiliates any other
fees, including any fee for financial advisory and consulting services in
connection with future acquisitions, dispositions or debt or equity financings
by any of the Companies or their affiliates; provided, that with respect to each
such transaction, such fee shall not exceed an amount equal to (i) in the case
of a transaction involving less than $50,000,000 in total enterprise value, 2%
of such total enterprise value, (ii) in the case of a transaction involving
$50,000,000 or more but less than $100,000,000 in total enterprise value,
$1,000,000, and (iii) in the case of a transaction involving $100,000,000 or
more in total enterprise value 1% of such total enterprise value. With respect
to a transaction involving a Sale of Holdings, such fee shall be equal to 1% of
the total enterprise value. For purposes of this paragraph (d), "total
enterprise value" shall be determined by the board of directors of Holdings in
good faith. For purposes of this paragraph (d), "SALE OF HOLDINGS" shall mean
the sale of Holdings pursuant to which such purchaser or purchasers acquire (i)
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended) of at least majority of the capital
stock of Holdings (whether by purchase, merger, consolidation, tender offer or
other business combination transaction) or (ii) all or substantially all of
Holdings' assets determined on a consolidated basis.
SECTION 5. INDEMNIFICATION.
The Companies shall indemnify and hold harmless First Atlantic and its
directors, officers, employees, agents and affiliates (collectively, the
"INDEMNIFIED PERSONS") on demand from and against any and all liabilities,
costs, expenses and disbursements (collectively, "CLAIMS") of any kind with
respect to or arising from this Agreement or the performance by any Indemnified
Person of any services in connection herewith. Notwithstanding the foregoing
provision, the Companies shall not be liable for any Claim under this Section 5
arising from the gross negligence or willful misconduct of such Indemnified
Person.
SECTION 6. OBLIGATIONS OF THE COMPANIES.
Each of the Companies acknowledges and agrees that any obligation of the
Companies hereunder is the obligation of each of Holdings and Golfsmith jointly
and severally.
SECTION 7. NOTICES.
All notices, requests, consents and other communications hereunder shall
be in writing and shall be deemed sufficient if personally delivered, sent by
nationally-recognized overnight courier, by telecopy, or by registered or
certified mail, return receipt requested and postage prepaid, addressed as
follows:
if to First Atlantic, to:
First Atlantic Capital, Ltd.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxx Xxxxxx
Fax: (000) 000-0000
3
if to the Companies, to:
Golfsmith International Holdings, Inc.
c/o First Atlantic Capital, Ltd.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxx Xxxxxx
Fax: (000) 000-0000
in either case, with a copy to:
King & Spalding
1185 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxxx, Esq.
Xxxx X. Xxxxxxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
or to such other address as the party to whom notice is to be given may have
furnished to each other party in writing in accordance herewith. Any such notice
or communication shall be deemed to have been received (a) in the case of
personal delivery, on the date of such delivery, (b) in the case of
nationally-recognized overnight courier, on the next business day after the date
when sent, (c) in the case of telecopy or facsimile transmission, when received,
and (d) in the case of mailing, on the third business day following that on
which the piece of mail containing such communication is posted.
SECTION 8. BENEFITS OF AGREEMENT.
This Agreement shall bind and inure to the benefit of the Indemnified
Persons and any successors to or assigns of First Atlantic and the Companies;
provided, however, that this Agreement may not be assigned by First Atlantic
without the prior written consent of Holdings and may not be assigned by any of
the Companies without the prior written consent of First Atlantic.
SECTION 9. GOVERNING LAW.
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York without giving effect to any
choice or conflict of law provision or rule (whether in the State of New York or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New York.
SECTION 10. HEADINGS.
Section headings are used for convenience only and shall in no way affect
the construction of this Agreement.
4
SECTION 11. ENTIRE AGREEMENT; AMENDMENTS.
This Agreement contains the entire understanding of the parties with
respect to its subject matter, and neither it nor any part of it may in any way
be altered, amended, extended, waived, discharged or terminated except by a
written agreement signed by each of the parties hereto.
SECTION 12. COUNTERPARTS.
This Agreement may be executed in counterparts, and each such counterpart
shall be deemed to be an original instrument, but all such counterparts together
shall constitute but one agreement.
SECTION 13. WAIVERS.
Any party to this Agreement may, by written notice to the other party,
waive any provision of this Agreement. The waiver by any party of a breach of
any provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach.
[SIGNATURE PAGE FOLLOWS]
5
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
GOLFSMITH INTERNATIONAL HOLDINGS, INC.
By:_____________________________________
Name:
Title:
GOLFSMITH INTERNATIONAL, INC.
By:_____________________________________
Name:
Title:
FIRST ATLANTIC CAPITAL, LTD.
By:_____________________________________
Name:
Title:
EXHIBIT A1 to CREDIT AGREEMENT
GOLFSMITH INTERNATIONAL, INC.,
as Issuer,
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Trustee,
AND
THE GUARANTORS NAMED HEREIN,
as Guarantors,
INDENTURE
Dated as of October 15, 2002
8.375% SENIOR SECURED NOTES DUE 2009
CROSS-REFERENCE TABLE
TIA INDENTURE
SECTION SECTION
------- -------
310(a)(1) ..................................................... 7.10
(a)(2)..................................................... 7.10
(a)(3)..................................................... 7.10; 7.13
(a)(4)..................................................... N.A.
(a)(5)..................................................... 7.10
(b)........................................................ 7.08; 7.10
(c)........................................................ N.A.
311(a) ........................................................ 7.03; 7.11
(b)........................................................ 7.03; 7.11
(c)........................................................ N.A.
312(a) ........................................................ 2.06
(b)........................................................ 11.03
(c)........................................................ 11.03
313(a) ........................................................ 7.06
(b)........................................................ 7.06
(c)........................................................ 7.06; 11.02
(d)........................................................ 7.06
314(a) ........................................................ 4.06; 4.08; 11.02
(b)........................................................ 12.03
(c)(1)..................................................... 11.04
(c)(2)..................................................... 11.04
(c)(3)..................................................... N.A.
(d)........................................................ 12.04
(e)........................................................ 11.05
315(a) ........................................................ 7.01(b)
(b)........................................................ 7.05; 11.02
(c)........................................................ 7.01(a)
(d)........................................................ 7.01(c)
(e)........................................................ 6.12
316(a)(last sentence).......................................... 2.09
(a)(1)(A).................................................. 6.06
(a)(1)(B).................................................. 6.05
(a)(2)..................................................... N.A.
(b)........................................................ 6.08
(c)........................................................ 9.04
317(a)(1)...................................................... 6.09
(a)(2)..................................................... 6.10
(b)........................................................ 2.04
318(a) ........................................................ 11.01
(c)........................................................ 11.01
--------------------
N.A. means Not Applicable
NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of this Indenture.
TABLE OF CONTENTS
Page
----
ARTICLE ONE DEFINITIONS AND INCORPORATION BY REFERENCE ................ 1
SECTION 1.01. Definitions ............................................ 1
SECTION 1.02. Incorporation by Reference of Trust Indenture Act ...... 24
SECTION 1.03. Rules of Construction .................................. 25
ARTICLE TWO THE NOTES ................................................. 25
SECTION 2.01. Form and Dating ........................................ 25
SECTION 2.02. Execution and Authentication; Aggregate Principal Amount 26
SECTION 2.03. Registrar and Paying Agent ............................. 27
SECTION 2.04. Obligations of Paying Agent ............................ 27
SECTION 2.05. Holder Lists ........................................... 28
SECTION 2.06. Transfer and Exchange .................................. 28
SECTION 2.07. Replacement Notes ...................................... 28
SECTION 2.08. Outstanding Notes ...................................... 29
SECTION 2.09. Treasury Notes; When Notes Are Disregarded ............. 29
SECTION 2.10. Temporary Notes ........................................ 29
SECTION 2.11. Cancellation ........................................... 30
SECTION 2.12. CUSIP Numbers .......................................... 30
SECTION 2.13. Deposit of Moneys ...................................... 30
SECTION 2.14. Book-Entry Provisions for Global Notes ................. 30
SECTION 2.15. Special Transfer Provisions ............................ 32
ARTICLE THREE REDEMPTION ................................................ 33
SECTION 3.01. Mandatory Redemption ................................... 33
SECTION 3.02. Optional Redemption .................................... 34
SECTION 3.03. Selection of Notes to Be Redeemed ...................... 34
SECTION 3.04. Notice of Redemption ................................... 34
SECTION 3.05. Effect of Notice of Redemption ......................... 35
SECTION 3.06. Deposit of Redemption Price ............................ 35
SECTION 3.07. Notes Redeemed in Part ................................. 36
ARTICLE FOUR COVENANTS ................................................. 36
SECTION 4.01. Payment of Notes ....................................... 36
SECTION 4.02. Maintenance of Office or Agency ........................ 36
SECTION 4.03. Corporate Existence .................................... 37
SECTION 4.04. Payment of Taxes and Other Claims ...................... 37
SECTION 4.05. Maintenance of Properties and Insurance ................ 37
SECTION 4.06. Compliance Certificate; Notice of Default .............. 38
SECTION 4.07. Compliance with Laws ................................... 38
SECTION 4.08. Reports to Holders ..................................... 38
SECTION 4.09. Waiver of Stay, Extension or Usury Laws ................ 39
SECTION 4.10. Limitation on Restricted Payments ...................... 39
SECTION 4.11. Limitation on Transactions with Affiliates ............. 42
SECTION 4.12. Limitation on Incurrence of Additional Indebtedness .... 43
TABLE OF CONTENTS
(CONT'D)
Page
----
SECTION 4.13. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries ...................... 43
SECTION 4.14. Additional Subsidiary Guarantees ....................... 44
SECTION 4.15. Limitation on Change of Control ........................ 45
SECTION 4.16. Limitation on Asset Sales .............................. 46
SECTION 4.17. Impairment of Security Interest ........................ 49
SECTION 4.18. Limitation on Liens .................................... 49
SECTION 4.19. Conduct of Business .................................... 49
SECTION 4.20. Limitation on Issuances and Sales of Capital Stock of
Subsidiaries ........................................... 49
SECTION 4.21. Real Estate Mortgages and Filings ...................... 50
SECTION 4.22. Leasehold Mortgages and Filings ........................ 50
SECTION 4.23. Excess Cash Flow Offer ................................. 50
SECTION 4.24. Limitation on Capital Expenditures ..................... 52
SECTION 4.25. Limitation on Sale/Leaseback Transactions .............. 52
SECTION 4.26. Choice of Accrual Periods .............................. 52
ARTICLE FIVE SUCCESSOR CORPORATION ..................................... 52
SECTION 5.01. Merger, Consolidation and Sale of Assets ............... 52
SECTION 5.02. Successor Corporation Substituted ...................... 53
ARTICLE SIX DEFAULT AND REMEDIES ...................................... 53
SECTION 6.01. Events of Default ...................................... 53
SECTION 6.02. Rights of the Company .................................. 55
SECTION 6.03. Acceleration ........................................... 55
SECTION 6.04. Other Remedies ......................................... 56
SECTION 6.05. Waiver of Past Defaults ................................ 56
SECTION 6.06. Control by Majority .................................... 56
SECTION 6.07. Limitation on Suits .................................... 56
SECTION 6.08. Rights of Holders to Receive Payment ................... 57
SECTION 6.09. Collection Suit by Trustee ............................. 57
SECTION 6.10. Trustee May File Proofs of Claim ....................... 57
SECTION 6.11. Priorities ............................................. 58
SECTION 6.12. Undertaking for Costs .................................. 58
SECTION 6.13. Restoration of Rights and Remedies ..................... 58
ARTICLE SEVEN TRUSTEE ................................................... 58
SECTION 7.01. Duties of Trustee ...................................... 58
SECTION 7.02. Rights of Trustee ...................................... 59
SECTION 7.03. Individual Rights of Trustee ........................... 60
SECTION 7.04. Trustee's Disclaimer ................................... 60
SECTION 7.05. Notice of Default ...................................... 60
SECTION 7.06. Reports by Trustee to Holders .......................... 61
SECTION 7.07. Compensation and Indemnity ............................. 61
SECTION 7.08. Replacement of Trustee ................................. 62
SECTION 7.09. Successor Trustee by Merger, Etc ....................... 63
SECTION 7.10. Eligibility; Disqualification .......................... 63
-ii-
TABLE OF CONTENTS
(CONT'D)
Page
----
SECTION 7.11. Preferential Collection of Claims Against Company ...... 63
SECTION 7.12. [RESERVED] ............................................. 64
SECTION 7.13. Co-trustees, co-Collateral Agent and Separate Trustees,
Collateral Agent ....................................... 65
SECTION 7.14. Authorization of Actions to Be Taken by the Trustee
Under the Collateral Agreements ........................ 66
SECTION 7.15. Authorization of Receipt of Funds by the Trustee Under
the Collateral Agreements .............................. 66
ARTICLE EIGHT SATISFACTION AND DISCHARGE OF INDENTURE ................... 67
SECTION 8.01. Legal Defeasance and Covenant Defeasance ............... 67
SECTION 8.02. Satisfaction and Discharge ............................. 69
SECTION 8.03. Survival of Certain Obligations ........................ 69
SECTION 8.04. Acknowledgment of Discharge by Trustee ................. 70
SECTION 8.05. Application of Trust Moneys ............................ 70
SECTION 8.06. Repayment to the Company; Unclaimed Money .............. 70
SECTION 8.07. Reinstatement .......................................... 70
ARTICLE NINE AMENDMENTS, SUPPLEMENTS AND WAIVERS ....................... 71
SECTION 9.01. Without Consent of Holders ............................. 71
SECTION 9.02. With Consent of Holders ................................ 71
SECTION 9.03. Compliance with TIA .................................... 73
SECTION 9.04. Revocation and Effect of Consents ...................... 73
SECTION 9.05. Notation on or Exchange of Notes ....................... 73
SECTION 9.06. Trustee to Sign Amendments, Etc ........................ 73
SECTION 9.07. Conformity with Trust Indenture Act .................... 74
ARTICLE TEN GUARANTEE ................................................. 74
SECTION 10.01. Guarantee .............................................. 74
SECTION 10.02. Release of a Subsidiary Guarantor ...................... 75
SECTION 10.03. Limitation of Subsidiary Guarantor's Liability ......... 75
SECTION 10.04. Guarantors May Consolidate, etc., on Certain Terms ..... 75
SECTION 10.05. Contribution ........................................... 76
SECTION 10.06. Waiver of Subrogation .................................. 76
SECTION 10.07. No Set-Off ............................................. 76
SECTION 10.08. Obligations Absolute ................................... 76
SECTION 10.09. Obligations Continuing ................................. 77
SECTION 10.10. Obligations Not Reduced ................................ 77
SECTION 10.11. Obligations Reinstated ................................. 77
SECTION 10.12. Obligations Not Affected ............................... 77
SECTION 10.13. No Obligation to Take Action Against the Company ....... 78
SECTION 10.14. Dealing with the Company and Others .................... 78
SECTION 10.15. Default and Enforcement ................................ 79
SECTION 10.16. Evidence of Guarantee .................................. 79
SECTION 10.17. Waiver of Stay, Extension or Usury Laws ................ 79
-iii-
TABLE OF CONTENTS
(CONT'D)
Page
----
ARTICLE ELEVEN MISCELLANEOUS ............................................. 80
SECTION 11.01. Trust Indenture Act Controls ........................... 80
SECTION 11.02. Notices ................................................ 80
SECTION 11.03. Communications by Holders with Other Holders ........... 81
SECTION 11.04. Certificate and Opinion as to Conditions Precedent ..... 81
SECTION 11.05. Statements Required in Certificate or Opinion .......... 81
SECTION 11.06. Rules by Trustee, Paying Agent, Registrar .............. 81
SECTION 11.07. Legal Holidays ......................................... 81
SECTION 11.08. Governing Law .......................................... 82
SECTION 11.09. No Adverse Interpretation of Other Agreements .......... 82
SECTION 11.10. No Recourse Against Others ............................. 82
SECTION 11.11. Successors ............................................. 82
SECTION 11.12. Duplicate Originals .................................... 82
SECTION 11.13. Severability ........................................... 82
ARTICLE TWELVE AGREEMENT TO SUBORDINATE CERTAIN SECURITY INTERESTS;
SECURITY .................................................. 83
SECTION 12.01. Subordination of Certain Security Interests ............ 83
SECTION 12.02. Further Assurances ..................................... 83
SECTION 12.03. Recording and Opinions ................................. 83
SECTION 12.04. Release of Collateral .................................. 84
SECTION 12.05. Authorization of Actions to Be Taken by the Trustee
Under the Collateral Agreements ........................ 85
SECTION 12.06. Authorization of Receipt of Funds by the Trustee Under
the Collateral Agreements .............................. 85
Exhibit A - Form of Initial Note......................................... A-1
Exhibit B - Form of Exchange Note........................................ B-1
Exhibit C - Form of Legend for Global Notes.............................. C-1
Exhibit D - Form of Certificate to Be Delivered in Connection with
Transfers to Non-QIB Accredited Investors.................. D-1
Exhibit E - Form of Certificate to Be Delivered in Connection with
Transfers Pursuant to Regulation S......................... E-1
NOTE: This Table of Contents shall not, for any purpose, be deemed to be
part of this Indenture.
-iv-
INDENTURE, dated as of October 15, 2002, between Golfsmith
International, Inc., a Delaware corporation (the "Company"), the Guarantors (as
herein defined) and U.S. Bank Trust National Association, as Trustee (the
"Trustee").
The Company and the Guarantors (with respect to the Guarantees) have
duly authorized the creation of an issue of 8.375% Senior Notes due 2009 (the
"Initial Notes"), and Series B 8.375% Exchange Notes due 2009 (the "Exchange
Notes," and collectively with the Initial Notes and any Additional Notes (as
herein defined), the "Notes") and the Guarantees (as herein defined) and, to
provide therefor, the Company and the Guarantors have duly authorized the
execution and delivery of this Indenture. All things necessary to make the Notes
and Guarantees, when each are duly issued and executed by the Company and the
Guarantors, as applicable, and authenticated and delivered hereunder, the valid
obligations of each of the Company and the Guarantors, respectively, and to make
this Indenture a valid and binding agreement of each of the Company and the
Guarantors, have been done.
Each party hereto agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the Holders of the Notes.
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Accreted Value" means, as of any date (the "Specified Date"), with
respect to each $1,000 principal amount at maturity of Notes:
(1) if the Specified Date is one of the following dates (each a
"Semi-Annual Accrual Date"), the amount set forth opposite such date
below:
SEMI-ANNUAL ACCRUAL DATE ACCRETED VALUE
------------------------ --------------
Issue Date.................... $ 800.00
March 1, 2003................. $ 809.64
September 1, 2003............. $ 822.64
March 1, 2004................. $ 835.86
September 1, 2004............. $ 849.28
March 1, 2005................. $ 862.93
September 1, 2005............. $ 876.79
March 1, 2006................. $ 890.87
September 1, 2006............. $ 905.18
March 1, 2007................. $ 919.72
September 1, 2007............. $ 934.49
March 1, 2008................. $ 949.51
September 1, 2008............. $ 964.76
SEMI-ANNUAL ACCRUAL DATE ACCRETED VALUE
------------------------ --------------
March 1, 2009................. $ 980.25
September 1, 2009............. $ 996.00
October 15, 2009 ............. $1,000.00
(2) if the Specified Date occurs between two Semi-Annual
Accrual Dates, the sum of (A) the Accreted Value for the Semi-Annual
Accrual Date immediately preceding the Specified Date and (B) an
amount equal to the product of (a) the difference of (x) the
Accreted Value for the immediately following Semi-Annual Accrual
Date and (y) the Accreted Value for the immediately preceding
Semi-Annual Accrual Date and (b) a fraction, the numerator of which
is the number of days actually elapsed from the immediately
preceding Semi-Annual Accrual Date to the Specified Date and the
denominator of which is the number of days between the two
Semi-Annual Accrual Dates.
"Acceleration Notice" has the meaning set forth in Section 6.03(a).
"Acquired Indebtedness" means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Restricted Subsidiary of
the Company or at the time it merges or consolidates with or into the Company or
any of its Subsidiaries or assumed in connection with the acquisition of assets
from such Person and in each case not incurred by such Person in connection
with, or in anticipation or contemplation of, such Person becoming a Restricted
Subsidiary of the Company or such acquisition, and which Indebtedness is without
recourse to the Company or any of its Restricted Subsidiaries or to any of their
respective properties or assets other than the Person or the assets to which
such Indebtedness related prior to the time such Person becomes a Restricted
Subsidiary of the Company or the time of such acquisition, merger or
consolidation. Acquired Indebtedness shall be deemed to be incurred on the date
of the related acquisition of assets from any Person or the date the acquired
Person becomes a Restricted Subsidiary.
"Additional Notes" has the meaning set forth in Section 2.02 and
means any Notes that are not Exchange Notes issued after the Issue Date from
time to time in accordance with the terms of this Indenture including, without
limitation, the provisions of Sections 2.02 and 4.12.
"Affiliate" means, with respect to any specified Person, any other
Person who directly or indirectly through one or more intermediaries controls,
or is controlled by, or is under common control with, such specified Person. The
term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Agent Members" has the meaning set forth in Section 2.14(a) and
means, with respect to the Depository, Euroclear or Clearstream, a Person who
has an account with the Depository, Euroclear or Clearstream, respectively (and,
with respect to the Depository, shall include Euroclear and Clearstream).
"Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depository, Euroclear and Clearstream that apply to such
transfer or exchange.
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"Asset Acquisition" means (1) an Investment by the Company or any
Restricted Subsidiary of the Company in any other Person pursuant to which such
Person shall become a Restricted Subsidiary of the Company or any Restricted
Subsidiary of the Company, or shall be merged with or into the Company or any
Restricted Subsidiary of the Company, or (2) the acquisition by the Company or
any Restricted Subsidiary of the Company of the assets of any Person (other than
a Restricted Subsidiary of the Company) which constitute all or substantially
all of the assets of such Person or comprise any division or line of business of
such Person or any other properties or assets of such Person other than in the
ordinary course of business.
"Asset Sale" means any direct or indirect sale, issuance,
conveyance, transfer, lease (other than operating leases entered into in the
ordinary course of business), assignment or other transfer for value by the
Company or any of its Restricted Subsidiaries (including any Sale and Leaseback
Transaction) to any Person other than the Company or a Subsidiary Guarantor of:
(1) any Capital Stock of any Restricted Subsidiary of the Company; or (2) any
other property or assets of the Company or any Restricted Subsidiary of the
Company other than in the ordinary course of business; provided, however, that
the term "Asset Sale" will not include: (a) a transaction or series of related
transactions for which the Company or its Restricted Subsidiaries receive
aggregate consideration of less than $2,500,000; (b) the sale, lease,
conveyance, disposition or other transfer of all or substantially all of the
assets of the Company as permitted under Section 5.01; (c) any Restricted
Payment permitted by Section 4.10 or that constitutes a Permitted Investment;
(d) the sale of cash or Cash Equivalents, (e) the sale of used, worn out,
damaged, obsolete or surplus assets; (f) the lease, assignment or sublease of
any real or personal property in the ordinary course of business; and (g) any
sale or disposition deemed to occur in connection with creating, granting or
exercising remedies in respect of any Liens permitted pursuant to this
Indenture.
"Authenticating Agent" has the meaning set forth in Section 2.02.
"Bankruptcy Law" means Title 11, U.S. Code, or any similar federal,
state or foreign law for the relief of debtors.
"Board of Directors" means, as to any Person, the board of directors
of such Person or any duly authorized committee thereof.
"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"Business Day" means a day that is not a Legal Holiday.
"Capital Expenditure Basket" means, in any four fiscal quarter
period, (x) $7,000,000 plus (y) the amount, if any, of the Excess Cash Flow
Offer made and not accepted by the Holders during the previous four fiscal
quarter period ending immediately prior to such four fiscal quarter period plus
(z) any Capital Expenditure Basket amounts (not to exceed $1,000,000) not
previously applied by the Company as Capital Expenditures.
"Capital Expenditures" means for any period all direct or indirect
(by way of the acquisition of securities of a Person or the expenditure of cash
or the transfer of Property or the incurrence of Indebtedness) expenditures in
respect of the purchase or other acquisition of fixed or capital assets
determined in conformity with GAAP, excluding (i) normal replacement and
maintenance programs properly charged to current operations, and (ii) the
purchase price of equipment to the extent that the
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consideration therefor consists of used, worn out, damaged, obsolete or surplus
equipment being traded in at such time or the proceeds of a concurrent sale of
such used, worn out, damaged, obsolete or surplus equipment.
"Capital Stock" means, with respect to any Person:
(1) any and all shares, interests, participations, rights in
or other equivalents (however designated) of such Person's capital
stock, other equity interests, whether now outstanding or issued
after the date of this Indenture, partnership interests (whether
general or limited), any other interest or participation that
confers on a Person the right to receive a share of the profits and
losses of, or distributions of assets of, the issuing Person; and
(2) any warrants, options or other rights (other than debt
securities exchangeable for or convertible into any such Capital
Stock referred to in clause (1) above) exchangeable for or
convertible into such Capital Stock.
"Capitalized Lease Obligation" means, as to any Person, the
obligations of such Person under a lease that are required to be classified and
accounted for as capital lease obligations under GAAP and, for purposes of this
definition, the amount of such obligations at any date shall be the capitalized
amount of such obligations at such date, determined in accordance with GAAP.
"Cash Equivalents" means: (1) securities issued or directly and
fully guaranteed by the United States government or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States is pledged in support thereof) having a maturity of not more than one
year from the date of acquisition thereof; (2) securities issued or directly and
fully guaranteed by any state of the United States of America or the District of
Columbia, or any political subdivision of any such state or the District of
Columbia or any public instrumentality thereof, having a maturity of not more
than one year from the date of acquisition thereof and, at the time of
acquisition, having one of the two highest ratings obtainable from either
Standard & Poor's Ratings Group ("S&P") or Xxxxx'x Investors Service, Inc.
("Moody's"); (3) commercial paper maturing no more than one year after the date
of acquisition thereof and, at the time of acquisition, having a rating of at
least A-1 from S&P or at least P-1 from Moody's; (4) certificates of deposit or
bankers' acceptances having a maturity of not more than one year from the date
of acquisition thereof issued by any bank organized under the laws of the United
States of America or any state thereof or the District of Columbia or any U.S.
branch of a foreign bank having at the date of acquisition thereof combined
capital and surplus of not less than $250,000,000; (5) repurchase obligations
with a term of not more than seven (7) days for underlying securities of the
types described in clauses (1), (2) and (4) above entered into with any bank
meeting the qualifications specified in clause (4) above; and (6) investments in
money market funds which invest substantially all their assets in securities of
the types described in clauses (1) through (5) above.
"Change of Control" means the occurrence of one or more of the
following events:
(1) prior to the earlier to occur of the first public offering
of common stock (an "IPO") of the Company or Holdings, the Permitted
Holders cease to be the "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of
a majority in the aggregate of the total voting power of the Voting
Stock of the Company, whether as a result of issuance of securities
of Holdings or the Company, any merger, consolidation, liquidation
or dissolution of Holdings or the Company, or any direct or indirect
transfer of securities by Holdings or otherwise (for purposes of
this clause (1) and clause (2) below, the Permitted Holders shall be
deemed
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to beneficially own any Voting Stock of a Person (the "specified
person") held by any other Person (the "parent entity") so long as
the Permitted Holders beneficially own (as so defined), directly or
indirectly, in the aggregate a majority of the voting power of the
Voting Stock of the parent entity);
(2) following an IPO of the Company or Holdings, any "person"
(as such term is used in Sections 13(d) and 14(d) of the Exchange
Act), other than one or more Permitted Holders, is or becomes the
beneficial owner (as defined in clause (1) above, except that for
purposes of this clause (2) such person shall be deemed to have
"beneficial ownership" of all shares that any such person has the
right to acquire, whether such right is exercisable immediately or
only after the passage of time), directly or indirectly, of more
than 45% of the total voting power of the Voting Stock of the
Company; provided, however, that the Permitted Holders beneficially
own (as defined in clause (1) above), directly or indirectly, in the
aggregate a lesser percentage of the total voting power of the
Voting Stock of the Company than such other person and do not have
the right or ability by voting power, contract or otherwise to elect
or designate for election a majority of the Board of Directors of
the Company (for the purposes of this clause (2), such other person
shall be deemed to beneficially own any Voting Stock of a specified
person held by a parent entity, if such other person is the
beneficial owner (as defined in this clause (2)), directly or
indirectly, of more than 35% of the voting power of the Voting Stock
of such parent entity and the Permitted Holders beneficially own (as
defined in clause (1) above), directly or indirectly, in the
aggregate a lesser percentage of the voting power of the Voting
Stock of such parent entity and do not have the right or ability by
voting power, contract or otherwise to elect or designate for
election a majority of the Board of Directors of such parent
entity);
(3) during any consecutive two-year period, individuals who at
the beginning of the period constituted the Board of Directors of
the Company or the Board of Directors of Holdings (together with any
new directors whose election by the Board of Directors of the
Company or the Board of Directors of Holdings, as the case may be,
or whose nomination for election by the stockholders of such Person
was approved by a vote of a majority of the directors then still in
office who were either directors at the beginning of the period or
whose election or nomination for election was previously so approved
or approved by the Permitted Holders) cease for any reason to
constitute a majority of the Board of Directors of the Company or
the Board of Directors of Holdings then in office;
(4) the adoption of a plan relating to the liquidation or
dissolution of the Company; or
(5) the merger or consolidation of Holdings or the Company
with or into another Person or the merger of another Person with or
into Holdings or the Company, or the sale of all or substantially
all the assets of Holdings or the Company (determined on a
consolidated basis) to another Person (other than, in all such
cases, a Person that is controlled by the Permitted Holders), other
than a transaction following which (A) in the case of a merger or
consolidation transaction, holders of securities that represented
100% of the Voting Stock of Holdings or the Company, as applicable,
immediately prior to such transaction (or other securities into
which such securities are converted as part of such merger or
consolidation transaction) own directly or indirectly at least a
majority of the voting power of the Voting Stock of the surviving
Person in such merger or consolidation transaction immediately after
such transaction and in substantially the same
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proportion as before the transaction and (B) in the case of a sale
of assets transaction, each transferee becomes an obligor in respect
of the Notes and a Subsidiary of the transferor of such assets.
"Change of Control Date" has the meaning set forth in Section
4.15(b).
"Change of Control Offer" has the meaning set forth in Section
4.15(a).
"Change of Control Payment Date" has the meaning set forth in
Section 4.15(b)(2).
"Clearstream" means Clearstream Banking, societe anonyme.
"Code" has the meaning set forth in Section 4.01.
"Collateral" means collateral as such term is defined in the
Security Agreement, all property mortgaged under the Mortgages and any other
property, whether now owned or hereafter acquired, upon which a Lien securing
the Obligations is granted or purported to be granted under any Collateral
Agreement.
"Collateral Agent" means the collateral agent appointed pursuant to
this Indenture. U.S. Bank Trust National Association will be the initial
Collateral Agent.
"Collateral Agreements" means, collectively, the Security Agreement
and each Mortgage and each other contract, agreement or instrument creating or
purporting to create a lien, security interest, charge or similar encumbrance on
Collateral in favor of the Collateral Agent for the benefit of the holders of
the Notes, in each case, as the same may be in force from time to time.
"Common Stock" means, with respect to any Person, any and all
shares, interests or other participations in, and other equivalents (however
designated and whether voting or non-voting) of such Person's common stock,
whether outstanding on the Issue Date or issued after the Issue Date, and
includes, without limitation, all series and classes of such common stock.
"Company" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture and thereafter means such
successor.
"Consolidated EBITDA" means, with respect to any Person, for any
period, the sum (without duplication) of: (1) Consolidated Net Income; and (2)
to the extent Consolidated Net Income has been reduced thereby: (a) all income
taxes of such Person and its Restricted Subsidiaries paid or accrued in
accordance with GAAP for such period; (b) Consolidated Interest Expense,
amortization expense and depreciation expense; and (c) Consolidated Non-cash
Charges less any non-cash items increasing Consolidated Net Income for such
period, all as determined on a consolidated basis for such Person and its
Restricted Subsidiaries in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to
any Person, the ratio of Consolidated EBITDA of such Person during the four full
fiscal quarters (the "Four Quarter Period") ending on or prior to the date of
the transaction or event giving rise to the need to calculate the Consolidated
Fixed Charge Coverage Ratio for which financial statements are available (the
"Transaction Date") to Consolidated Fixed Charges of such Person for the Four
Quarter Period. In addition to and without limitation of the foregoing, for
purposes of this definition, "Consolidated EBITDA" and "Consolidated Fixed
Charges" shall be calculated after giving effect on a pro forma basis for the
period of such calculation to:
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(1) the incurrence or repayment of any Indebtedness of such
Person or any of its Restricted Subsidiaries (and the application of
the proceeds thereof) giving rise to the need to make such
calculation and any incurrence or repayment of other Indebtedness
(and the application of the proceeds thereof), other than the
incurrence or repayment of Indebtedness in the ordinary course of
business for working capital purposes pursuant to working capital
facilities, occurring during the Four Quarter Period or at any time
subsequent to the last day of the Four Quarter Period and on or
prior to the Transaction Date, as if such incurrence or repayment,
as the case may be (and the application of the proceeds thereof),
occurred on the first day of the Four Quarter Period; and
(2) any Asset Sale or other disposition or Asset Acquisition
(including, without limitation, any Asset Acquisition giving rise to
the need to make such calculation as a result of such Person or one
of its Restricted Subsidiaries (including any Person who becomes a
Restricted Subsidiary as a result of any such Asset Acquisition)
incurring, assuming or otherwise being liable for Acquired
Indebtedness during the Four Quarter Period or at any time
subsequent to the last day of the Four Quarter Period and on or
prior to the Transaction Date), as if such Asset Sale or other
disposition or Asset Acquisition (including the incurrence,
assumption or liability for any such Indebtedness or Acquired
Indebtedness and also including any Consolidated EBITDA associated
with such Asset Acquisition) occurred on the first day of the Four
Quarter Period; provided that the Consolidated EBITDA of any Person
acquired shall be included only to the extent that it would be
includible pursuant to the definition of Consolidated Net Income. If
such Person or any of its Restricted Subsidiaries directly or
indirectly guarantees Indebtedness of a third Person, the preceding
sentence shall give effect to the incurrence of such guaranteed
Indebtedness as if such Person or any Restricted Subsidiary of such
Person had directly incurred or otherwise assumed such guaranteed
Indebtedness.
Furthermore, in calculating "Consolidated Fixed Charges" for
purposes of determining the denominator (but not the numerator) of
this "Consolidated Fixed Charge Coverage Ratio":
(1) interest on outstanding Indebtedness determined on a
fluctuating basis as of the Transaction Date (including Indebtedness
actually incurred on the Transaction Date) and which will continue
to be so determined thereafter shall be deemed to have accrued at a
fixed rate per annum equal to the average rate of interest on such
Indebtedness during the Four Quarter Period ending on or prior to
the Transaction Date; and
(2) notwithstanding clause (1) above, interest on Indebtedness
determined on a fluctuating basis, to the extent such interest is
covered by agreements relating to Interest Swap Obligations, shall
be deemed to accrue at the rate per annum resulting after giving
effect to the operation of such agreements.
"Consolidated Fixed Charges" means, with respect to any Person for
any period, the sum, without duplication, of: (1) Consolidated Interest Expense
(excluding amortization or write-off of deferred financing costs and debt
issuance costs of such Person and its consolidated Restricted Subsidiaries
during such period and any premium or penalty paid in connection with redeeming
or retiring Indebtedness of such Person and its consolidated Restricted
Subsidiaries prior to the stated maturity thereof pursuant to the agreements
governing such Indebtedness); plus (2) the product of (x) the amount of all
dividend payments on any series of Preferred Stock of such Person (other than
dividends paid in Qualified Capital Stock) paid, accrued or scheduled to be paid
or accrued during such period times
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(y) a fraction, the numerator of which is one and the denominator of which is
one minus the then current effective consolidated federal, state and local tax
rate of such Person, expressed as a decimal.
"Consolidated Interest Expense" means, with respect to any Person
for any period, the aggregate of the interest expense of such Person and its
Restricted Subsidiaries for such period, on a consolidated basis, as determined
in accordance with GAAP, and including, without duplication, (a) all
amortization of original issue discount; (b) the interest component of
Capitalized Lease Obligations paid, accrued and/or scheduled to be paid or
accrued by such Person and its Restricted Subsidiaries during such period; and
(c) net cash costs under all Interest Swap Obligations (including amortization
of fees), other than any cash costs paid to unwind Interest Rate Obligations
existing on and prior to the Issue Date.
"Consolidated Net Income" means, with respect to any Person, for any
period, the aggregate net income (or loss) of such Person and its Restricted
Subsidiaries for such period on a consolidated basis, determined in accordance
with GAAP; provided that there shall be excluded therefrom:
(1) after-tax gains and losses from Asset Sales or
abandonments or reserves relating thereto;
(2) after-tax items classified as extraordinary or
nonrecurring gains or losses;
(3) the net income (but not loss) of any Restricted Subsidiary
of the referent Person to the extent that the declaration of
dividends or similar distributions paid by that Restricted
Subsidiary of that income is restricted by a contract, operation of
law or otherwise;
(4) the net income of any Person, other than a Restricted
Subsidiary of the referent Person, except to the extent of cash
dividends or distributions paid to the referent Person or to a
Wholly-Owned Subsidiary of the referent Person by such Person;
(5) income or loss attributable to discontinued operations
(including, without limitation, operations disposed of during such
period whether or not such operations were classified as
discontinued);
(6) all gains and losses realized on or because of the
purchase or other acquisition by such Person or any of its
Restricted Subsidiaries of any securities of such Person or any of
its Restricted Subsidiaries; and
(7) in the case of a successor to the referent Person by
consolidation or merger or as a transferee of the referent Person's
assets, any earnings of the successor corporation prior to such
consolidation, merger or transfer of assets.
"Consolidated Non-cash Charges" means, with respect to any Person,
for any period, the aggregate depreciation, amortization and other non-cash
expenses of such Person and its Restricted Subsidiaries reducing Consolidated
Net Income of such Person and its Restricted Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP (excluding any such
charges which requires an accrual of or a reserve for cash charges for any
future period).
"Corporate Trust Office" means the office of the Trustee at which
the corporate trust business of the Trustee shall, at any particular time, be
principally administered, which office is, at the
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date of this Indenture, located at 000 Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX
00000, Attention: Corporate Trust Services.
"Covenant Defeasance" has the meaning set forth in Section 8.01(c).
"Credit Agreement" means the Credit Agreement dated as of the Issue
Date, among the Company, Holdings, the borrowers, the Lenders and the Lender
Agent, together with the related documents thereto (including, without
limitation, any guarantee agreements and security documents), in each case as
such agreements may be amended, supplemented or otherwise modified from time to
time, including any agreement (and related documents) adding Restricted
Subsidiaries as additional borrowers or guarantors thereunder or extending the
maturity of, refinancing, replacing or otherwise restructuring all or any
portion of the Indebtedness under such agreement or any successor or replacement
agreement and whether by the same or any other agent, lender or group of
lenders, in each case, as certified by the Company to the Collateral Agent
pursuant to an Officers' Certificate.
"Currency Agreement" means any spot or forward foreign exchange
contract, currency swap agreement or other similar agreement or arrangement
designed to protect the Company or any Restricted Subsidiary of the Company
against or manage fluctuations in currency values.
"CUSIP" has the meaning set forth in Section 2.12.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means an event or condition the occurrence of which is, or
with the lapse of time or the giving of notice or both would be, an Event of
Default.
"Depository" means The Depository Trust Company, its nominees and
successors ("DTC").
"Disqualified Capital Stock" means that portion of any Capital Stock
which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable at the option of the holder
thereof), or upon the happening of any event (other than an event which would
constitute a Change of Control), matures or is mandatorily redeemable, pursuant
to a sinking fund obligation or otherwise, or is redeemable at the sole option
of the holder thereof (except in each case, upon the occurrence of a Change of
Control) on or prior to the first final maturity date of the Notes for cash or
is convertible into or exchangeable for debt securities of the Company or its
Subsidiaries at any time prior to such anniversary.
"Domestic Restricted Subsidiary" means any Restricted Subsidiary of
the Company other than a Foreign Restricted Subsidiary.
"Domestic Subsidiary" means any Subsidiary of the Company other than
a Foreign Subsidiary.
"Equity Offering" means any public or private offering of Qualified
Capital Stock of the Company.
"Excess Cash Flow" means for any fiscal year, the Consolidated
EBITDA of the Company for such year, adjusted as follows: (i) minus the cash
portion of the Consolidated Interest Expense of the Company (net of interest
income) for such year, (ii) minus all federal, state and foreign
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income taxes accrued or paid (without duplication) by the Company and its
Subsidiaries during such year, (iii) minus all Capital Expenditures made during
such year by the Company and its Subsidiaries and (iv) minus any net increase in
the difference between (x) current assets, other than cash and Cash Equivalents,
and (y) current liabilities of the Company and its Subsidiaries for such year.
"Excess Proceeds" has the meaning set forth in Section 4.16(c).
"Excess Proceeds Offer" has the meaning set forth in Section
4.16(d).
"Euroclear" means Euroclear Bank S.A./N.V., as operator of the
Euroclear system.
"Event of Default" has the meaning set forth in Section 6.01.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute or statutes thereto.
"Exchange Notes" has the meaning set forth in the preamble to this
Indenture and means the Notes, if any, issued under Section 2.02 pursuant to a
registration rights agreement substantially similar to the Registration Rights
Agreement.
"Exchange Offer" means the offer that may be made by the Company,
pursuant to the Registration Rights Agreement, to exchange for any and all the
Notes a like aggregate principal amount at maturity of Notes registered under
the Securities Act ("Exchange Act") having substantially identical terms to the
Notes (except that the Exchange Notes will not contain terms with respect to
transfer restrictions or interest rate increases as described herein).
"Fair Market Value" means, with respect to any asset or property,
the price which could be negotiated in an arm's length, free market transaction,
for cash, between a willing seller and a willing and able buyer, neither of whom
is under undue pressure or compulsion to complete the transaction. Fair Market
Value shall be determined by the Board of Directors of the Company acting
reasonably and in good faith and shall be evidenced by a Board Resolution of the
Board of Directors of the Company delivered to the Trustee.
"Foreign Restricted Subsidiary" means any Restricted Subsidiary of
the Company which is organized under the laws of a jurisdiction other than the
United States of America, any state thereof or the District of Columbia.
"Foreign Subsidiary" means any Subsidiary of the Company which is
organized under the laws of a jurisdiction other than the United States of
America, any state thereof or the District of Columbia.
"GAAP" means accounting principles generally accepted in the United
States set forth in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession of the United States, which are in effect from time to
time.
"Global Note" has the meaning set forth in Section 2.01.
"Guarantee" means a guarantee of the Notes by a Guarantor.
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"Guarantor" means (i) Holdings and (ii) each Subsidiary Guarantor;
provided that any Person constituting a Guarantor as described above shall cease
to constitute a Guarantor when its respective Guarantee is released in
accordance with the terms of this Indenture.
"Holder" means the Person in whose name a Note is registered on the
registrar's books.
"Holdings" means Golfsmith International Holdings, Inc., a Delaware
corporation.
"HYDO Payment" has the meaning set forth in Section 4.01.
"incur" has the meaning set forth in Section 4.12.
"Indebtedness" means, with respect to any Person, without
duplication: (1) all Obligations of such Person for borrowed money; (2) all
Obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments; (3) all Capitalized Lease Obligations of such Person; (4)
all Obligations of such Person issued or assumed as the deferred purchase price
of property, all conditional sale obligations and all Obligations under any
title retention agreement (but excluding trade accounts payable and other
accrued liabilities arising in the ordinary course of business that are not
overdue by 90 days or more or are being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted and any deferred
purchase price represented by earn outs consistent with the Company's past
practice); (5) all Obligations for the reimbursement of any obligor on any
letter of credit, banker's acceptance or similar credit transaction; (6)
guarantees and other contingent obligations in respect of Indebtedness referred
to in clauses (1) through (5) above and clause (8) below; (7) all Obligations of
any other Person of the type referred to in clauses (1) through (6) which are
secured by any lien on any property or asset of such Person, the amount of such
Obligation being deemed to be the lesser of the Fair Market Value of such
property or asset or the amount of the Obligation so secured; (8) all Interest
Swap Obligations and all Obligations under Currency Agreements of such Person;
and (9) all Disqualified Capital Stock issued by such Person with the amount of
Indebtedness represented by such Disqualified Capital Stock being equal to the
greater of its voluntary or involuntary liquidation preference and its maximum
fixed repurchase price, but excluding accrued dividends, if any. For purposes
hereof, the "maximum fixed repurchase price" of any Disqualified Capital Stock
which does not have a fixed repurchase price shall be calculated in accordance
with the terms of such Disqualified Capital Stock as if such Disqualified
Capital Stock were purchased on any date on which Indebtedness shall be required
to be determined pursuant to this Indenture, and if such price is based upon, or
measured by, the Fair Market Value of such Disqualified Capital Stock, such Fair
Market Value shall be determined reasonably and in good faith by the Board of
Directors of the issuer of such Disqualified Capital Stock.
"Indenture" means this Indenture, as amended or supplemented from
time to time in accordance with the terms hereof.
"Independent Financial Advisor" means an accounting, appraisal or
investment banking firm of national standing: (1) which does not, and whose
directors, officers and employees or Affiliates do not, have a direct or
indirect financial interest in the Company; and (2) which, in the judgment of
the Board of Directors of the Company, is otherwise independent and qualified to
perform the task for which it is to be engaged.
"Initial Notes" has the meaning set forth in the preamble to this
Indenture.
"Initial Purchaser" means Xxxxxxxxx & Company, Inc.
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"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"Intercreditor Agreement" means the Intercreditor Agreement among
the Lender Agent, as agent for the Lenders, the Trustee, the Collateral Agent,
the Company and the Guarantors, dated as of the Issue Date, as the same may be
amended, supplemented or modified from time to time.
"Interest Payment Date" means the stated maturity of an installment
of interest on the Notes.
"Interest Swap Obligations" means the obligations of any Person
pursuant to any arrangement with any other Person, whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such other
Person calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include, without limitation, interest rate swaps,
caps, floors, collars and similar agreements.
"Investment" means, with respect to any Person, any direct or
indirect loan or other extension of credit (including, without limitation, a
guarantee) or capital contribution to (by means of any transfer of cash or other
property to others or any payment for property or services for the account or
use of others), or any purchase or acquisition for value by such Person of any
Capital Stock, bonds, notes, debentures or other securities or evidences of
Indebtedness issued by, any other Person. "Investment" shall exclude direct or
indirect advances to customers or suppliers in the ordinary course of business
that are, in conformity with GAAP, recorded as accounts receivable, prepaid
expenses or deposits on the Company's or any Restricted Subsidiary's balance
sheet; endorsements for collection or deposit arising in the ordinary course of
business and extensions of trade credit by the Company and its Restricted
Subsidiaries on commercially reasonable terms in accordance with normal trade
practices of the Company or such Restricted Subsidiary, as the case may be. For
the purposes of Section 4.10, the amount of any Investment shall be the original
cost of such Investment plus the cost of all additional Investments by the
Company or any of its Restricted Subsidiaries, without any adjustments for
increases or decreases in value, or write-ups, write-downs or write-offs with
respect to such Investment, reduced by the payment of dividends or distributions
in connection with such Investment or any other amounts received in respect of
such Investment; provided that no such payment of dividends or distributions or
receipt of any such other amounts shall reduce the amount of any Investment if
such payment of dividends or distributions or receipt of any such amounts would
be included in Consolidated Net Income. If the Company or any Restricted
Subsidiary of the Company sell or otherwise dispose of any Common Stock of any
direct or indirect Restricted Subsidiary of the Company such that, after giving
effect to any such sale or disposition, the Company no longer owns, directly or
indirectly, 100% of the outstanding Common Stock of such Restricted Subsidiary,
the Company shall be deemed to have made an Investment on the date of any such
sale or disposition equal to the Fair Market Value of the Common Stock of such
Restricted Subsidiary not sold or disposed of.
"Issue Date" means the date of original issuance of the Notes.
"Lease" has the meaning set forth in Section 4.22.
"Leased Premises" has the meaning set forth in Section 4.22.
"Legal Defeasance" has the meaning set forth in Section 8.01(b).
"Legal Holiday" has the meaning set forth in Section 11.07.
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"Lender Agent" means General Electric Capital Corporation, as agent
for the Lenders, or any successor in that capacity.
"Lenders" means the lenders party from time to time to the Credit
Agreement.
"Lien" means any lien, mortgage, deed of trust, pledge, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof and any
agreement to give any security interest).
"Management Consulting Agreement" means the Management Consulting
Agreement dated October 15, 2002 among the Company, Holdings and First Atlantic
Capital, Ltd.
"Maturity" when used with respect to any Note means the date on
which the principal of that Note or an installment of principal becomes due and
payable as therein or herein provided, whether at the Maturity Date or by
declaration of acceleration, call for redemption or otherwise.
"Maturity Date" means October 15, 2009.
"Merger Agreement" means the Agreement and Plan of Merger dated as
of September 23, 2002 by and among Golfsmith International, Inc., Golfsmith
International Holdings, Inc. and BGA Corporation, as amended to the Issue Date.
"Mortgages" means the mortgages, deeds of trust, deeds to secure
debt or other similar documents creating liens in favor of the Collateral Agent
upon the owned or leased real property constituting Collateral of the Company or
any of its Domestic Restricted Subsidiaries from time to time.
"Net Cash Proceeds" means, with respect to any Asset Sale, the
proceeds in the form of cash or Cash Equivalents including payments in respect
of deferred payment obligations when received in the form of cash or Cash
Equivalents (other than the portion of any such deferred payment constituting
interest) received by the Company or any of its Restricted Subsidiaries from
such Asset Sale net of:
(1) reasonable out-of-pocket expenses and fees relating to
such Asset Sale (including, without limitation, legal, accounting
and investment banking fees and sales commissions);
(2) all taxes and other costs and expenses actually paid or
estimated by the Company (in good faith) to be payable in cash in
connection with such Asset Sale;
(3) repayment of Indebtedness that is secured by the property
or assets that are the subject of such Asset Sale and is required to
be repaid in connection with such Asset Sale;
(4) amounts required to be paid to any Person (other than the
Company or any Restricted Subsidiary) owning a beneficial interest
in or having a Lien on the assets subject to the Asset Sale;
(5) all distributions and other payments required to be made
to non-majority interest holders in Subsidiaries as a result of such
Asset Sale; and
(6) appropriate amounts to be provided by the Company or any
Restricted Subsidiary, as the case may be, as a reserve, in
accordance with GAAP, against any
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liabilities associated with such Asset Sale and retained by the
Company or any Restricted Subsidiary, as the case may be, after such
Asset Sale, including, without limitation, pension and other
post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification
obligations associated with such Asset Sale;
provided, however, that if, after the payment of all taxes with respect to such
Asset Sale, the amount of estimated taxes, if any, pursuant to clause (2) above
exceeded the tax amount actually paid in cash in respect of such Asset Sale, the
aggregate amount of such excess shall, at such time, constitute Net Cash
Proceeds.
"Non-U.S. Person" means a Person who is not a U.S. person, as
defined in Regulation S.
"Notes" has the meaning set forth in the preamble to this Indenture
and means the Initial Notes, the Additional Notes, if any, and the Exchange
Notes treated as a single class of securities, as amended or supplemented from
time to time in accordance with the terms hereof, that are issued pursuant to
this Indenture.
"Obligations" means all obligations for principal, premium,
interest, penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.
"Offering" means the offering of the Notes pursuant to that certain
Purchase Agreement dated October 8, 2002 among the Company, the Guarantors and
the Initial Purchaser.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, any Vice President, the Chief
Financial Officer, the Treasurer, the Controller or the Secretary of such
Person, or any other officer designated by the Board of Directors serving in a
similar capacity.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Officers or by an Officer and either an Assistant
Treasurer or an Assistant Secretary of such Person and otherwise complying with
the requirements of Sections 11.04 and 11.05, as they relate to the making of an
Officers' Certificate.
"Offshore Physical Notes" has the meaning set forth in Section 2.01.
"Opinion of Counsel" means a written opinion from legal counsel, who
may be counsel for the Company and who is reasonably acceptable to the Trustee,
complying with the requirements of Sections 11.04 and 11.05, as they relate to
the giving of an Opinion of Counsel.
"Paying Agent" has the meaning set forth in Section 2.03.
"Permitted Holders" means (i) Atlantic Equity Partners III, L.P., a
fund sponsored by First Atlantic Capital, Ltd., (ii) First Atlantic Capital,
Ltd. or (iii) any Affiliate thereof.
"Permitted Indebtedness" means, without duplication, each of the
following:
(1) Indebtedness under the Notes issued on the Issue Date (and
Exchange Notes issued in exchange therefor) in an aggregate
outstanding principal amount at maturity not to exceed $93,750,000
or of any Guarantor pursuant to a Guarantee thereof;
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(2) Indebtedness incurred pursuant to the Credit Agreement in
an aggregate principal amount at any one time outstanding not to
exceed $10,000,000;
(3) other Indebtedness of the Company and its Restricted
Subsidiaries outstanding on the Issue Date;
(4) Interest Swap Obligations of the Company or any Restricted
Subsidiary of the Company covering Indebtedness of the Company or
any of its Restricted Subsidiaries; provided, however, that such
Interest Swap Obligations are entered into for the purpose of fixing
or hedging interest rates with respect to any fixed or variable rate
Indebtedness that is permitted by this Indenture to be outstanding
to the extent that the notional amount of any such Interest Swap
Obligation does not exceed the principal amount of Indebtedness to
which such Interest Swap Obligation relates;
(5) Indebtedness under Currency Agreements; provided that in
the case of Currency Agreements which relate to Indebtedness, such
Currency Agreements do not increase the Indebtedness of the Company
and its Restricted Subsidiaries outstanding other than as a result
of fluctuations in foreign currency exchange rates or by reason of
fees, indemnities and compensation payable thereunder;
(6) Indebtedness of a Restricted Subsidiary Guarantor to the
Company or to another Restricted Subsidiary Guarantor for so long as
such Indebtedness is held by the Company or a Restricted Subsidiary
Guarantor, in each case subject to no Lien held by a Person other
than the Company or a Restricted Subsidiary Guarantor; provided
that: (a) any such Indebtedness is unsecured and subordinated,
pursuant to a written agreement, to such Restricted Subsidiary
Guarantor's obligations under this Indenture and its Guarantee, if
applicable, (b) if as of any date any Person other than the Company
or a Restricted Subsidiary Guarantor owns or holds any such
Indebtedness or holds a Lien in respect of such Indebtedness, such
date shall be deemed the incurrence of Indebtedness not constituting
Permitted Indebtedness by the issuer of such Indebtedness and (c)
the aggregate amount of Indebtedness of Restricted Subsidiary that
is not a Guarantor incurred pursuant to this clause (6) may not
exceed $3,000,000 at any one time outstanding;
(7) Indebtedness of the Company to a Restricted Subsidiary
Guarantor for so long as such Indebtedness is held by a Restricted
Subsidiary Guarantor, in each case subject to no Lien; provided
that: (a) any such Indebtedness is unsecured and subordinated,
pursuant to a written agreement, to the Company's obligations under
this Indenture and the Notes and (b) if as of any date any Person
other than a Restricted Subsidiary Guarantor owns or holds any such
Indebtedness or any Person holds a Lien in respect of such
Indebtedness, such date shall be deemed the incurrence of
Indebtedness not constituting Permitted Indebtedness;
(8) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument
inadvertently (except in the case of daylight overdrafts) drawn
against insufficient funds in the ordinary course of business;
provided, however, that such Indebtedness is extinguished within
five (5) Business Days of incurrence;
(9) Indebtedness of the Company or any of its Restricted
Subsidiaries represented by letters of credit for the account of the
Company or such Restricted
-15-
Subsidiary, as the case may be, in order to provide security for
workers' compensation claims, payment obligations in connection with
self-insurance or similar requirements in the ordinary course of
business;
(10) Indebtedness represented by Capitalized Lease Obligations
and Purchase Money Indebtedness of the Company and its Restricted
Subsidiaries incurred in the ordinary course of business (including
Refinancings thereof that do not result in an increase in the
aggregate principal amount of Indebtedness of such Person as of the
date of such proposed Refinancing (plus the amount of any premium
required to be paid under the terms of the instrument governing such
Indebtedness and plus the amount of reasonable expenses incurred by
the Company in connection with such Refinancing)) not to exceed
$3,000,000 at any one time outstanding;
(11) Refinancing Indebtedness;
(12) Guarantees by the Company or a Restricted Subsidiary of
Indebtedness incurred by the Company or a Restricted Subsidiary so
long as the incurrence of such Indebtedness by the Company or any
such Restricted Subsidiary is otherwise permitted by the terms of
this Indenture;
(13) Indebtedness arising from agreements of the Company or a
Subsidiary providing for indemnification, adjustment of purchase
price or similar obligations, in each case, incurred in connection
with the disposition of any business, assets or Subsidiary, other
than guarantees of Indebtedness incurred by any person acquiring all
or any portion of such business, assets or Subsidiary for the
purpose of financing such acquisition; provided that the maximum
aggregate liability in respect of all such Indebtedness shall at no
time exceed the gross proceeds actually received by the Company and
the Subsidiary in connection with such disposition;
(14) Indebtedness of the Company or any Restricted Subsidiary
to the extent the net proceeds thereof are promptly deposited to
defease all outstanding Notes as described below under Section 8.01;
and
(15) additional Indebtedness of the Company and its Restricted
Subsidiaries in an aggregate principal amount not to exceed
$2,500,000 at any one time outstanding.
For purposes of determining compliance with Section 4.12, in
the event that an item of Indebtedness meets the criteria of more
than one of the categories of Permitted Indebtedness described in
clauses (1) through (15) above or is entitled to be incurred
pursuant to the Consolidated Fixed Charge Coverage Ratio provisions
of Section 4.12, the Company shall, in its sole discretion, classify
(or later reclassify) such item of Indebtedness in any manner that
complies with Section 4.12. Accrual of interest, accretion or
amortization of original issue discount, the payment of interest on
any Indebtedness in the form of additional Indebtedness with the
same terms, and the payment of dividends on Disqualified Capital
Stock in the form of additional shares of the same class of
Disqualified Capital Stock will not be deemed to be an incurrence of
Indebtedness or an issuance of Disqualified Capital Stock for
purposes of Section 4.12.
"Permitted Investments" means:
-16-
(1) Investments by the Company or any Restricted Subsidiary of the
Company in any Person that is or will become immediately after such
Investment a Subsidiary Guarantor or that will merge or consolidate into
the Company or a Subsidiary Guarantor;
(2) Investments in the Company by any Restricted Subsidiary of the
Company; provided that any Indebtedness evidencing such Investment is
unsecured (except to the extent permitted by clause (14) of the definition
of Permitted Liens) and subordinated pursuant to a written agreement, to
the Company's obligations under the Notes and this Indenture;
(3) Investments in cash and Cash Equivalents;
(4) loans and advances to employees, officers and directors of the
Company and its Restricted Subsidiaries in the ordinary course of business
for bona fide business purposes not in excess of $1,000,000 at any one
time outstanding;
(5) Currency Agreements and Interest Swap Obligations entered into
in the ordinary course of the Company's or its Restricted Subsidiaries'
businesses and otherwise in compliance with this Indenture;
(6) Investments in the Notes;
(7) Investments in trade creditors or customers received pursuant to
any plan of reorganization or similar arrangement upon the bankruptcy or
insolvency of such trade creditors or customers;
(8) Investments made by the Company or its Restricted Subsidiaries
as a result of consideration received in connection with any Asset Sale
made in compliance with Section 4.16;
(9) any Investment existing on the Issue Date;
(10) Investments in prepaid expenses, negotiable instruments held
for collection and lease, utility and workers' compensation, performance
and other similar deposits made in the ordinary course of business;
(11) any Investment to the extent that the consideration therefor is
Qualified Capital Stock of the Company;
(12) Investments in Foreign Restricted Subsidiaries in an amount not
to exceed $3,000,000 at any one time outstanding; and
(13) additional Investments not to exceed $2,500,000 at any one time
outstanding.
"Permitted Liens" means the following types of Liens:
(1) Liens for taxes, assessments or governmental charges or claims
either (a) not delinquent or (b) contested in good faith by appropriate
proceedings and as to which the Company or its Restricted Subsidiaries
shall have set aside on its books such reserves as may be required
pursuant to GAAP;
(2) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens
imposed by law or pursuant to customary
-17-
reservations or retentions of title incurred in the ordinary course of
business for sums not yet delinquent or being contested in good faith, if
such reserve or other appropriate provision, if any, as shall be required
by GAAP shall have been made in respect thereof;
(3) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, including any Lien securing letters of
credit issued in the ordinary course of business consistent with past
practice in connection therewith, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed money);
(4) judgment Liens not giving rise to an Event of Default so long as
such Lien is adequately bonded and any appropriate legal proceedings which
may have been duly initiated for the review of such judgment shall not
have been finally terminated or the period within which such proceedings
may be initiated shall not have expired;
(5) easements, rights-of-way, zoning restrictions and other similar
charges or encumbrances in respect of real property not interfering in any
material respect with the ordinary conduct of the business of the Company
or any of its Restricted Subsidiaries;
(6) any interest or title of a lessor under any Capitalized Lease
Obligation permitted pursuant to clause (10) of the definition of
Permitted Indebtedness; provided that such Liens do not extend to any
property or assets which is not leased property subject to such
Capitalized Lease Obligation;
(7) Liens securing Capitalized Lease Obligations and Purchase Money
Indebtedness permitted pursuant to clause (10) or clause (15) of the
definition of Permitted Indebtedness; provided, however, that in the case
of Purchase Money Indebtedness (a) the Indebtedness shall not exceed the
cost of such property or assets and shall not be secured by any property
or assets of the Company or any Restricted Subsidiary of the Company other
than the property and assets so acquired or constructed and (b) the Lien
securing such Indebtedness shall be created within 180 days of such
acquisition or construction or, in the case of a refinancing of any
Purchase Money Indebtedness, within 180 days of such refinancing;
(8) Liens upon specific items of inventory or other goods and
proceeds of any Person securing such Person's obligations in respect of
bankers' acceptances issued or created for the account of such Person to
facilitate the purchase, shipment or storage of such inventory or other
goods;
(9) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and other property
relating to such letters of credit and products and proceeds thereof;
(10) Liens encumbering deposits made to secure obligations arising
from statutory, regulatory, contractual, or warranty requirements of the
Company or any of its Restricted Subsidiaries, including rights of offset
and set-off;
(11) Liens securing Interest Swap Obligations which Interest Swap
Obligations relate to Indebtedness that is otherwise permitted under this
Indenture;
-18-
(12) Liens securing Indebtedness under Currency Agreements that are
permitted under this Indenture;
(13) Liens securing Acquired Indebtedness incurred in accordance
with Section 4.12; provided that:
(a) such Liens secured such Acquired Indebtedness at the time
of and prior to the incurrence of such Acquired Indebtedness by the
Company or a Restricted Subsidiary of the Company and were not
granted in connection with, or in anticipation of, the incurrence of
such Acquired Indebtedness by the Company or a Restricted Subsidiary
of the Company; and
(b) such Liens do not extend to or cover any property or
assets of the Company or of any of its Restricted Subsidiaries other
than the property or assets that secured the Acquired Indebtedness
prior to the time such Indebtedness became Acquired Indebtedness of
the Company or a Restricted Subsidiary of the Company and are no
more favorable to the lienholders than those securing the Acquired
Indebtedness prior to the incurrence of such Acquired Indebtedness
by the Company or a Restricted Subsidiary of the Company;
(14) Liens existing as of the Issue Date and securing Indebtedness
permitted to be outstanding under clause (3) of the definition of
Permitted Indebtedness to the extent and in the manner such Liens are in
effect on the Issue Date;
(15) Liens securing the Notes and the Guarantees;
(16) Liens securing Indebtedness under the Credit Agreement to the
extent such Indebtedness is permitted under clause (2) or clause (15) of
the definition of Permitted Indebtedness;
(17) any interest of third parties in any escrow account established
pursuant to the Merger Agreement;
(18) Liens for the benefit of the Company or a Subsidiary Guarantor
on assets of any Restricted Subsidiary of the Company;
(19) Liens securing Refinancing Indebtedness which is incurred to
Refinance any Indebtedness which has been secured by a Lien permitted
under this paragraph and which has been incurred in accordance with
Section 4.12; provided, however, that such Liens: (i) are no less
favorable to the Holders and are not more favorable to the lienholders
with respect to such Liens than the Liens in respect of the Indebtedness
being Refinanced; and (ii) do not extend to or cover any property or
assets of the Company or any of its Restricted Subsidiaries not securing
the Indebtedness so Refinanced; and
(20) Liens incurred in the ordinary course of business securing
assets of the Company in addition to that described in clauses (1) through
(19) above, so long as the obligations secured by such Liens do not exceed
$1,000,000 at any one time outstanding and such obligations are not
incurred in connection with the borrowing of money or the obtaining of
advances or credit (other than trade credit in the ordinary course of
business).
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"Person" means an individual, partnership, corporation,
unincorporated organization, trust or joint venture, or a governmental agency or
political subdivision thereof.
"Physical Notes" has the meaning set forth in Section 2.01.
"Preferred Stock" of any Person means any Capital Stock of such
Person that has preferential rights to any other Capital Stock of such Person
with respect to dividends or redemptions or upon liquidation.
"Premises" has the meaning set forth in Section 4.21.
"principal" of any Indebtedness (including the Notes) means the
principal amount of such Indebtedness plus the premium, if any, on such
Indebtedness.
"Private Placement Legend" means the legend initially set forth on
the Notes in the form set forth in Exhibit C.
"Proceeds Purchase Date" has the meaning set forth in Section
4.16(f)(2).
"pro forma" means, with respect to any calculation made or required
to be made pursuant to the terms of this Indenture, a calculation made in
accordance with Article 11 of Regulation S-X under the Securities Act, as
determined by the Board of Directors of the Company in consultation with its
independent public accountants.
"Purchase Money Indebtedness" means Indebtedness of the Company and
its Restricted Subsidiaries incurred for the purpose of financing all or any
part of the purchase price, or the cost of installation, construction or
improvement, of property or equipment (including Indebtedness incurred within
one hundred eighty (180) days following such purchase, construction or
improvement), including Indebtedness of a Person existing at the time such
Person becomes a Subsidiary or assumed by the Company or one of its Subsidiaries
in connection with the acquisition of assets from such Person; provided,
however, that any Lien on such Indebtedness shall not extend to any property
other than the property so acquired or constructed.
"QIB" means a "qualified institutional buyer" as defined in Rule
144A.
"Qualified Capital Stock" means any Capital Stock that is not
Disqualified Capital Stock.
"Record Date" means any of the Record Dates specified in the Notes,
whether or not a Legal Holiday.
"Redemption Date" means, when used with respect to any Note to be
redeemed, the date fixed for such redemption pursuant to this Indenture and the
Notes.
"Redemption Price" means, when used with respect to any Note to be
redeemed, the price fixed for such redemption pursuant to this Indenture and the
Notes.
"Reference Date" has the meaning set forth in Section 4.10.
"Refinance" means, in respect of any security or Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue a security or Indebtedness in exchange
-20-
or replacement for, such security or Indebtedness in whole or in part.
"Refinanced" and "Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means any Refinancing by the Company or
any Restricted Subsidiary of the Company of Indebtedness incurred in accordance
with Section 4.12 (other than pursuant to clauses (1), (2), and (11) of the
definition of Permitted Indebtedness), in each case that does not:
(1) result in an increase in the aggregate principal amount of
Indebtedness of such Person as of the date of such proposed
Refinancing (plus the amount of any premium required to be paid
under the terms of the instrument governing such Indebtedness and
plus the amount of reasonable expenses incurred by the Company in
connection with such Refinancing); or
(2) create Indebtedness with: (a) a Weighted Average Life to
Maturity that is less than the Weighted Average Life to Maturity of
the Indebtedness being Refinanced; or (b) a final maturity earlier
than the final maturity of the Indebtedness being Refinanced;
provided that (x) if such Indebtedness being Refinanced is
Indebtedness of the Company, then such Refinancing Indebtedness
shall be Indebtedness solely of the Company or a Guarantor and (y)
if such Indebtedness being Refinanced is subordinate or junior to
the Notes, then such Refinancing Indebtedness shall be subordinate
to the Notes at least to the same extent and in the same manner as
the Indebtedness being Refinanced;
(3) change any of the respective obligors on such Refinancing
Indebtedness;
(4) affect the security, if any, for such Refinancing
Indebtedness (except to the extent that less security is granted to
holders of such Refinancing Indebtedness); or
(5) afford the holders of such Refinancing Indebtedness
covenants, defaults, rights or remedies more burdensome to the
obligors than those contained in the Indebtedness being refinanced.
"Registrar" has the meaning set forth in Section 2.03.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the Issue Date, between the Company, the Guarantors and
the Initial Purchaser, as the same may be amended or modified from time to time
in accordance with the terms thereof.
"Regulation S" means Regulation S under the Securities Act.
"Released Interests" means any asset constituting Liens securing the
Notes with respect to items of Collateral: (1) that is sold or otherwise
disposed of by the Company or one of the Subsidiary Guarantors to a Person other
than the Company or a Subsidiary Guarantor in a transaction permitted by this
Indenture, at the time of such sale or disposition; (2) that is owned or at any
time acquired by a Subsidiary Guarantor that has been released from its
Guarantee concurrently with the release of the Guarantee (including by virtue of
such Restricted Guarantor becoming an Unrestricted Subsidiary); or (3) to the
extent that the Company mails written notice of its request to release the Lien
relating to such asset to the Trustee and the Holders and the Company does not
receive written objections from Holders of at least 25% in aggregate principal
amount at maturity of the Notes within twenty (20) Business Days after the
mailing, provided that if the Company receive such objections, then the Company
shall not be entitled to the release unless it obtain the consent of Holders of
at least a majority in principal amount at maturity of the Notes.
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"Replacement Assets" means, with respect to any Asset Sale,
properties and assets (including Capital Stock of a Person) that replace the
properties and assets that were the subject of such Asset Sale or properties and
assets (including Capital Stock of a Person) that will be used in the business
of the Company and the Restricted Subsidiaries or in businesses reasonably
related or ancillary thereto.
"Restricted Payment" has the meaning set forth in Section 4.10.
"Restricted Security" has the meaning assigned to such term in Rule
144(a)(3) under the Securities Act; provided that the Trustee shall be entitled
to request and conclusively rely on an Opinion of Counsel with respect to
whether any Note constitutes a Restricted Security.
"Restricted Subsidiary" means, with respect to any Person, any
Subsidiary of such Person which at the time of determination is not an
Unrestricted Subsidiary.
"Rule 144A" means Rule 144A under the Securities Act.
"Sale/Leaseback Transaction" means any direct or indirect
arrangement with any Person or to which any such Person is a party, providing
for the leasing to the Company or a Restricted Subsidiary of any property,
whether owned by the Company or any Restricted Subsidiary at the Issue Date or
later acquired, which has been or is to be sold or transferred by the Company or
such Restricted Subsidiary to such Person or to any other Person from whom funds
have been or are to be advanced by such Person on the security of such Property.
"SEC" means the Securities and Exchange Commission.
"Secured Parties" has the meaning set forth in the Security
Agreement.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
"Security Agreement" means the Security Agreement, dated as of the
Issue Date, made by the Company and the Guarantors in favor of the Collateral
Agent, as amended or supplemented from time to time in accordance with its
terms.
"Significant Subsidiary" with respect to any Person, means any
Restricted Subsidiary of such Person that satisfies the criteria for a
"significant subsidiary" set forth in Rule 1-02(w) of Regulation S-X under the
Exchange Act.
"Stockholders Agreement" means the Stockholders Agreement dated
October 15, 2002 among Holdings, Atlantic Equity III, L.P. a Delaware limited
partnership and the management stockholders listed therein.
"Subsidiary" means, with respect to any Person: (1) any corporation
of which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances
shall at the time be owned, directly or indirectly, by such Person; or (2) any
other Person of which at least a majority of the voting interest under ordinary
circumstances is at the time, directly or indirectly, owned by such Person.
"Subsidiary Guarantor" means (1) all existing Domestic Restricted
Subsidiaries and (2) each of the Company's Restricted Subsidiaries that in the
future executes a supplemental indenture in which such Restricted Subsidiary
agrees to be bound by the terms of this Indenture as a Subsidiary
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Guarantor; provided that any Person constituting a Subsidiary Guarantor as
described above will cease to constitute a Subsidiary Guarantor when its
respective Guarantee is released in accordance with the terms of this Indenture.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb), as amended, as in effect on the date of this Indenture,
except as otherwise set forth in Section 9.03.
"Trust Officer" means any officer of the Trustee assigned by the
Trustee to administer this Indenture or, in the case of a successor trustee, an
officer assigned to the department, division or group performing the corporation
trust work of such successor and assigned to administer this Indenture.
"Trustee" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.
"U.C.C." means the Uniform Commercial Code, as in effect from time
to time in the State of New York.
"Unrestricted Subsidiary" of any Person means:
(1) any Subsidiary of such Person that at the time of
determination shall be or continue to be designated an Unrestricted
Subsidiary by the Board of Directors of such Person in the manner
provided below; and
(2) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors may designate any Subsidiary (including
any newly acquired or newly formed Subsidiary) to be an Unrestricted
Subsidiary unless such Subsidiary owns any Capital Stock of, or owns
or holds any Lien on any property of, the Company or any other
Subsidiary of the Company that is not a Subsidiary of the Subsidiary
to be so designated, provided that:
(1) the Company certifies to the Trustee that such designation
complies with Section 4.10; and
(2) each Subsidiary to be so designated and each of its
Subsidiaries has not at the time of designation, and does not
thereafter, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable with respect to any
Indebtedness pursuant to which the lender has recourse to any of the
assets of the Company or any of its Restricted Subsidiaries.
The Board of Directors may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary only if:
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(1) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately following such designation would, after
giving effect to the designation of the Subsidiary as an
Unrestricted Subsidiary, have been permitted to be incurred for all
purposes of this Indenture; and
(2) immediately before and immediately after giving effect to
such designation, no Default or Event of Default will have occurred
and be continuing.
Any such designation by the Board of Directors shall be
evidenced to the Trustee by promptly filing with the Trustee a copy
of the Board Resolution giving effect to such designation and an
officers' certificate certifying that such designation complied with
the foregoing provisions.
"U.S. Government Obligations" means non-callable direct obligations
of, and non-callable obligations guaranteed by, the United States of America for
the payment of which the full faith and credit of the United States of America
is pledged.
"U.S. Legal Tender" means such coin or currency of the United States
of America which, as at the time of payment, shall be legal tender for the
payment of public and private debts.
"U.S. Physical Notes" has the meaning set forth in Section 2.01.
"Voting Stock" means, with respect to any Person, securities of any
class or classes of Capital Stock in such Person entitling the holders thereof
(whether at all times or only so long as no senior class of stock has voting
power by reason of any contingency) to vote in the election of members of the
Board of Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the sum of
the total of the products obtained by multiplying (i) the amount of each then
remaining installment, sinking fund, serial maturity or other required payment
of principal, including payment at final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"Wholly-Owned Subsidiary" means, with respect to any Person, any
Restricted Subsidiary of such Person of which all the outstanding Capital Stock
(other than in the case of a foreign Subsidiary, directors' qualifying shares or
an immaterial amount of shares required to be owned by other Persons pursuant to
applicable law) are owned by such Person or any Wholly-Owned Subsidiary of such
Person.
"Working Capital Collateral" means that portion of the Collateral
consisting of cash, deposit accounts, receivables and inventory, together with
all documents of title, letters of credit, books, records and files (whether in
physical or electronic form) relating to the foregoing.
SECTION 1.02. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in, and made a part of, this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Notes.
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"indenture security holder" means a Holder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on this Indenture securities means the Company or any
other obligor on the Notes.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them therein.
SECTION 1.03. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the
plural include the singular;
(5) "herein," "hereof" and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or
other subdivision; and
(6) all references to Sections or Articles refer to Sections or
Articles of this Indenture unless otherwise indicated.
ARTICLE TWO
THE NOTES
SECTION 2.01. Form and Dating.
The Initial Notes and the Trustee's certificate of authentication
thereon shall be substantially in the form of Exhibit A hereto. The Exchange
Notes and the Trustee's certificate of authentication thereon shall be
substantially in the form of Exhibit B hereto. The Notes may have notations,
legends or endorsements required by law, stock exchange rule or Depository rule
or usage. The Company and the Trustee shall approve the form of the Notes and
any notation, legend or endorsement on them. Each Note shall be dated the date
of its authentication.
The terms and provisions contained in the forms of the Notes annexed
hereto as Exhibit A and Exhibit B, shall constitute, and are hereby expressly
made, a part of this Indenture and, to the extent applicable, the Company, the
Guarantors and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby.
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Notes offered and sold in reliance on Rule 144A shall be issued
initially in the form of one or more permanent Global Notes in registered form,
substantially in the form set forth in Exhibit A ("Global Notes"), deposited
with the Trustee, as custodian for the Depository, duly executed by the Company
and authenticated by the Trustee as hereinafter provided and shall bear the
legend set forth in Exhibit C.
Notes offered and sold in reliance on Rule 501(a)(1), (2), (3) or
(7) under the Securities Act shall be issued initially in the form of one or
more permanent Global Notes deposited with the Trustee, as custodian for the
Depository, duly executed by the Company and authenticated by the Trustee as
hereinafter provided and shall bear the legend set forth in Exhibit C.
Notes offered and sold in offshore transactions in reliance on
Regulation S shall be issued initially in the form of one or more Global Notes
deposited with the Trustee, as custodian for the Depository, duly executed by
the Company and authenticated by the Trustee as hereinafter provided and shall
bear the legend set forth in Exhibit C or shall be issued in the form of
certificated Notes in registered form set forth in Exhibit A (the "Offshore
Physical Notes").
The aggregate principal amount of any Global Note may from time to
time be increased or decreased by adjustments made on the records of the
Trustee, as custodian for the Depository, as hereinafter provided.
Notes offered and sold in reliance on any exemption from
registration under the Securities Act other than pursuant to Rule 144A or Rule
501(a)(1), (2), (3) or (7) or Regulation S shall be issued, and Notes offered
and sold in reliance on Rule 144A and Rule 501(a)(1), (2), (3) or (7) may be
issued, in the form of certificated Notes in registered form in substantially
the form set forth in Exhibit A (the "U.S. Physical Notes"). The Offshore
Physical Notes and the U.S. Physical Notes are sometimes collectively herein
referred to as the "Physical Notes."
The definitive Notes shall be typed, printed, lithographed or
engraved or produced by any combination of these methods or may be produced in
any other manner permitted by the rules of any securities exchange on which the
Notes may be listed, all as determined by the Officers executing such Notes, as
evidenced by their execution of such Notes.
SECTION 2.02. Execution and Authentication; Aggregate Principal
Amount.
An Officer (who shall have been duly authorized by all requisite
corporate actions) shall sign the Notes for the Company by manual or facsimile
signature.
If an Officer or Assistant Secretary whose signature is on a Note
was an Officer at the time of such execution but no longer holds that office or
position at the time the Trustee authenticates the Note, the Note shall
nevertheless be valid.
A Note shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Note. The
signature shall be conclusive evidence that the Note has been authenticated
under this Indenture.
The Trustee shall authenticate (i) Initial Notes for original issue
in the aggregate principal amount not to exceed $93,750,000, (ii) Exchange Notes
from time to time for issue only in exchange for a like principal amount of
Initial Notes and (iii) subject to compliance with Section 4.12, one or more
series of Notes for original issue after the Issue Date (such Notes to be
substantially in the form of Exhibit A) in an unlimited amount ("Additional
Notes") in each case upon written orders of the Company in the form
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of an Officers' Certificate, which Officers' Certificate shall, in the case of
any issuance of Additional Notes, certify that such issuance is in compliance
with Section 4.12. In addition, each Officers' Certificate shall specify the
amount of Notes to be authenticated and the date on which the Notes are to be
authenticated, whether the Notes are to be Initial Notes, Exchange Notes or
Additional Notes, and shall further specify the amount of such Notes to be
issued as Global Notes, Offshore Physical Notes or U.S. Physical Notes. All
Notes issued under this Indenture shall vote and consent together on all matters
as one class and no series of Notes will have the right to vote or consent as a
separate class on any matter.
The Trustee may appoint an authenticating agent (the "Authenticating
Agent") reasonably acceptable to the Company to authenticate Notes. Unless
otherwise provided in the appointment, an Authenticating Agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such Authenticating
Agent. An Authenticating Agent has the same rights as an Agent to deal with the
Company and Affiliates of the Company.
The Notes shall be issuable in fully registered form only, without
coupons, in denominations of $1,000 in principal amount and any integral
multiple thereof.
SECTION 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency which shall initially
be the office of the Trustee in The Borough of Manhattan, The City of New York,
where (a) Notes may be presented or surrendered for registration of transfer or
for exchange ("Registrar"), (b) Notes may be presented or surrendered for
payment ("Paying Agent") and (c) notices and demands to or upon the Company in
respect of the Notes and this Indenture may be served. The Registrar shall keep
a register of the Notes and of their transfer and exchange. The Company, upon
prior written notice to the Trustee, may have one or more co-Registrars and one
or more additional Paying Agents reasonably acceptable to the Trustee. The term
"Paying Agent" includes any additional Paying Agent. Neither the Company nor any
Affiliate of the Company may act as Paying Agent.
The Company shall enter into an appropriate agency agreement with
any Agent not a party to this Indenture, which agreement shall incorporate the
provisions of the TIA and implement the provisions of this Indenture that relate
to such Agent. The Company shall notify the Trustee, in advance, of the name and
address of any such Agent. If the Company fails to maintain a Registrar or
Paying Agent, or fails to give the foregoing notice, the Trustee shall act as
such.
The Company initially appoints the Trustee as Registrar, Paying
Agent and agent for service of demands and notices in connection with the Notes.
The Paying Agent or Registrar may resign upon thirty (30) days' written notice
to the Company.
SECTION 2.04. Obligations of Paying Agent.
The Company shall require each Paying Agent other than the Trustee
to agree in writing that such Paying Agent shall hold separate and apart from,
and not commingle with any other properties, for the benefit of the Holders or
the Trustee, all assets held by the Paying Agent for the payment of principal
of, or interest on, the Notes (whether such assets have been distributed to it
by the Company or any other obligor on the Notes), and the Company and the
Paying Agent shall notify the Trustee of any Default by the Company (or any
other obligor on the Notes) in making any such payment. The Company at any time
may require a Paying Agent to distribute all assets held by it to the Trustee
and account for any assets disbursed and the Trustee may at any time during the
continuance of any payment Default, upon written request to a Paying Agent,
require such Paying Agent to distribute all assets held by it to the
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Trustee and to account for any assets distributed. Upon distribution to the
Trustee of all assets that shall have been delivered by the Company to the
Paying Agent, the Paying Agent shall have no further liability for such assets.
SECTION 2.05. Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Holders and shall otherwise comply with TIA Section 312(a). If the Trustee
is not the Registrar, the Company shall furnish or cause the Registrar to
furnish to the Trustee before each Record Date and at such other times as the
Trustee may request in writing a list as of such date and in such form as the
Trustee may reasonably request of the names and addresses of the Holders, which
list may be conclusively relied upon by the Trustee.
SECTION 2.06. Transfer and Exchange.
Subject to the provisions of Sections 2.14 and 2.15, when Notes are
presented to the Registrar or a co-Registrar with a request to register the
transfer of such Notes or to exchange such Notes for an equal principal amount
of Notes of other authorized denominations, the Registrar or co-Registrar shall
register the transfer or make the exchange as requested; provided, however, that
the Notes presented or surrendered for registration of transfer or exchange
shall be duly endorsed or accompanied by a written instrument of transfer in
form satisfactory to the Company and the Registrar or co-Registrar, duly
executed by the Holder thereof or his attorney duly authorized in writing. To
permit registrations of transfer and exchanges, the Company shall execute and
the Trustee shall authenticate Notes at the Registrar's or co-Registrar's
request. No service charge shall be made for any registration of transfer or
exchange, but the Company or the Trustee may require payment of a sum sufficient
to cover any transfer tax or similar governmental charge payable in connection
therewith (other than any such transfer taxes or similar governmental charge
payable upon exchanges or transfers pursuant to Section 2.10, Article Three,
4.15, 4.16 or 9.05, in which event the Company shall be responsible for the
payment of such taxes).
The Registrar or co-Registrar shall not be required to register the
transfer or exchange of any Note (i) during a period beginning at the opening of
business fifteen (15) days before the mailing of a notice of redemption of Notes
and ending at the close of business on the day of such mailing and (ii) selected
for redemption in whole or in part pursuant to Article Three, except the
unredeemed portion of any Note being redeemed in part.
Any Holder of a Global Note shall, by acceptance of such Global
Note, agree that transfers of beneficial interests in such Global Note may be
effected only through the Depository, in accordance with this Indenture and the
Applicable Procedures.
SECTION 2.07. Replacement Notes.
If a mutilated Note is surrendered to the Trustee or if the Holder
of a Note claims that the Note has been lost, destroyed or wrongfully taken,
then, in the absence of written notice to the Company or the Trustee that such
Note has been acquired by a protected purchaser, the Company shall issue and the
Trustee shall authenticate a replacement Note of like tenor and principal amount
and bearing a number not contemporaneously outstanding if the Trustee's
requirements are met. Except with respect to mutilated Notes, if required by the
Trustee or the Company, such Holder must provide an affidavit of lost
certificate and an indemnity bond or other indemnity, sufficient in the judgment
of both the Company and the Trustee, to protect the Company, the Trustee or any
Agent from any loss which any of them may suffer if a Note is replaced. The
Company may charge such Holder for its reasonable out-of-pocket expenses in
replacing a Note, including reasonable fees and expenses of its counsel and of
the Trustee and
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its counsel. In case any such mutilated, lost, destroyed or wrongfully taken
Note has become or is about to become due and payable, the Company in its
discretion may pay such Note instead of issuing a new Note in replacement
thereof. Every replacement Note shall constitute an additional obligation of the
Company, entitled to the benefits of this Indenture.
SECTION 2.08. Outstanding Notes.
Notes outstanding at any time are all the Notes that have been
authenticated by the Trustee except those cancelled by it, those delivered to it
for cancellation and those described in this Section 2.08 as not outstanding.
Subject to the provisions of Section 2.09, a Note does not cease to be
outstanding because the Company or any of its Affiliates holds the Note.
If a Note is replaced pursuant to Section 2.07 (other than a
mutilated Note surrendered for replacement), it ceases to be outstanding unless
the Trustee receives proof satisfactory to it that the replaced Note is held by
a bona fide purchaser. A mutilated Note ceases to be outstanding upon surrender
of such Note and replacement thereof pursuant to Section 2.07.
If on a Redemption Date or the Maturity Date the Paying Agent holds
U.S. Legal Tender or U.S. Government Obligations sufficient to pay all of the
principal and interest due on the Notes payable on that date and is not
prohibited from paying such money to the Holders thereof pursuant to the terms
of this Indenture, then on and after that date such Notes cease to be
outstanding and interest on them ceases to accrue.
SECTION 2.09. Treasury Notes; When Notes Are Disregarded.
In determining whether the Holders of the required principal amount
of Notes have concurred in any direction, waiver, consent or notice, Notes owned
by the Company or any of its Affiliates shall be considered as though they are
not outstanding, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Notes which the Trustee actually knows are so owned shall be so considered. The
Company shall notify the Trustee, in writing (which notice shall constitute
actual notice for purposes of the foregoing sentence), when it or any of its
Affiliates repurchases or otherwise acquires Notes, of the aggregate principal
amount of such Notes so repurchased or otherwise acquired. Notes so owned which
have been pledged in good faith may be regarded as outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Notes and that the pledgee is not the Company or any of its
Affiliates.
SECTION 2.10. Temporary Notes.
Until definitive Notes are ready for delivery, the Company may
prepare and execute and the Trustee shall authenticate temporary Notes upon
receipt of a written order of the Company in the form of an Officers'
Certificate. The Officers' Certificate shall specify the amount of temporary
Notes to be authenticated and the date on which the temporary Notes are to be
authenticated. Temporary Notes shall be substantially in the form of definitive
Notes but may have variations that the Company considers appropriate for
temporary Notes. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate upon receipt of a written order of the Company
pursuant to Section 2.02 definitive Notes in exchange for temporary Notes. Until
so exchanged, the temporary Notes shall be entitled to the same benefits under
this Indenture as definitive Notes.
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SECTION 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Notes surrendered to them for transfer, exchange or payment. The Trustee, or
at the direction of the Trustee, the Registrar or the Paying Agent, and no one
else, shall cancel all Notes surrendered for transfer, exchange, payment or
cancellation. Subject to Section 2.07, the Company may not issue new Notes to
replace Notes that it has paid or delivered to the Trustee for cancellation. If
the Company shall acquire any of the Notes, such acquisition shall not operate
as a redemption or satisfaction of the Indebtedness represented by such Notes
unless and until the same are surrendered to the Trustee for cancellation
pursuant to this Section 2.11. The Trustee shall dispose of all cancelled Notes
in accordance with customary procedures or, at the written request of the
Company, shall return the same to the Company.
SECTION 2.12. CUSIP Numbers.
A "CUSIP" number will be printed on the Notes, and the Trustee shall
use the CUSIP number in notices of redemption, purchase or exchange as a
convenience to Holders; provided that any such notice may state that no
representation is made as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Notes and that reliance may be placed only on
the other identification numbers printed on the Notes. The Company will promptly
notify the Trustee of any change in the CUSIP number.
The Company shall obtain separate CUSIP numbers for the Initial
Notes and each series of Additional Notes; provided, however, that if the "issue
price" within the meaning of Treasury regulations section 1.1273-2 of a series
of Additional Notes is equal as of the date of issue of such series to the
"adjusted issue price" within the meaning of Treasury regulations section
1.1275-1(b) of the Initial Notes (or Exchange Notes exchanged therefor) or
another series of Additional Notes (or Exchange Notes exchanged therefor), then
such series of Additional Notes (and Exchange Notes exchanged therefor) may be
designated the same CUSIP number as the Initial Notes (or Exchange Notes
exchanged therefor) or such other series of Additional Notes (or Exchange Notes
exchanged therefor), as the case may be. The CUSIP number of each Exchange Note
shall be the same as the CUSIP number of the Note exchanged therefor.
SECTION 2.13. Deposit of Moneys.
Prior to 11:00 a.m. New York City time on each Interest Payment Date
and the Maturity Date, the Company shall have deposited with the Paying Agent in
immediately available funds money sufficient to make cash payments, if any, due
on such Interest Payment Date or the Maturity Date, as the case may be.
SECTION 2.14. Book-Entry Provisions for Global Notes.
(a) The Global Notes initially shall (i) be registered in the name
of the Depository or the nominee of such Depository, (ii) be delivered to the
Trustee as custodian for such Depository and (iii) bear legends as set forth in
Exhibit C.
Members of, or participants in, the Depository ("Agent Members")
shall have no rights under this Indenture with respect to any Global Note held
on their behalf by the Depository, or the Trustee as its custodian, or under any
Global Note, and the Depository may be treated by the Company, the Trustee and
any agent of the Company or the Trustee as the absolute owner of the Global Note
for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Company, the
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Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depository
or impair, as between the Depository and its Agent Members, the operation of
customary practices governing the exercise of the rights of a Holder of any
Note.
(b) Transfers of the Global Notes shall be limited to transfers in
whole, but not in part, to the Depository, its successors or their respective
nominees. Interests of beneficial owners in the Global Notes may be transferred
or exchanged in accordance with the Applicable Procedures of the Depository and
the provisions of Section 2.15. In addition, Physical Notes shall be transferred
to all beneficial owners in exchange for their beneficial interests in the
Global Notes if (i) the Depository notifies the Company that it is unwilling or
unable to continue as Depository for the Global Notes and a successor Depository
is not appointed by the Company within ninety (90) days of such notice or (ii)
an Event of Default has occurred and is continuing and the Registrar has
received a request from the Depository to issue Physical Notes.
(c) Any beneficial interest in one of the Global Notes that is
transferred to a person who takes delivery in the form of an interest in another
Global Note shall, upon transfer, cease to be an interest in such Global Note
and become a beneficial interest in such other Global Note and, accordingly,
shall thereafter be subject to all transfer restrictions, if any, and other
procedures applicable to a beneficial interest in such other Global Notes for as
long as it remains such an interest.
(d) In connection with any transfer or exchange of a portion of the
beneficial interest in the Global Note to beneficial owners pursuant to
paragraph (b), the Registrar shall (if one or more Physical Notes are to be
issued) reflect on its books and records the date and a decrease in the
principal amount of the Global Note in an amount equal to the principal amount
of the beneficial interest in the Global Note to be transferred, and the Company
shall execute, and the Trustee shall authenticate and deliver, one or more
Physical Notes of like tenor and aggregate principal amount.
(e) In connection with the transfer of an entire Global Note to
beneficial owners pursuant to paragraph (b), the Global Notes shall be deemed to
be surrendered to the Trustee for cancellation, and the Company shall execute,
and the Trustee shall authenticate and deliver, to each beneficial owner
identified by the Depository in exchange for its beneficial interest in the
Global Notes, an equal aggregate principal amount of Physical Notes of
authorized denominations.
(f) The Initial Notes (and Exchange Notes exchanged therefor) and
each series of Additional Notes (and Exchange Notes exchanged therefor) shall be
represented by different Global Notes; provided, however, that if a series of
Additional Notes has an "issue price" within the meaning of Treasury regulations
section 1.1273-2 as of the date of issue of such series equal to the "adjusted
issue price" within the meaning of Treasury regulations section 1.1275-1(b) of
the Initial Notes (or Exchange Notes exchanged therefor) or another series of
Additional Notes (or Exchange Notes exchanged therefor), then such series of
Additional Notes (and Exchange Notes exchanged therefor) may be represented by
the same Global Note as the Initial Notes (or Exchange Notes exchanged therefor)
or such other series of Additional Notes (or Exchange Notes exchanged therefor),
as the case may be.
(g) Any Physical Note constituting a Restricted Security delivered
in exchange for an interest in the Global Note pursuant to paragraph (b) or (c)
shall, except as otherwise provided by paragraphs (a)(i)(x) and (c) of Section
2.15, bear the legend regarding transfer restrictions applicable to the Physical
Notes set forth in Exhibit A.
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(h) The Holder of a Global Note may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Notes.
SECTION 2.15. Special Transfer Provisions.
(a) Transfers to Non-QIB Institutional Accredited Investors and
Non-U.S. Persons. The following provisions shall apply with respect to the
registration of any proposed transfer of a Note constituting a Restricted
Security to any Institutional Accredited Investor which is not a QIB or to any
Non-U.S. Person:
(i) the Registrar shall register the transfer of any Note
constituting a Restricted Security, whether or not such Note bears the
Private Placement Legend, if (x) the requested transfer is after October
15, 2004 or (y) (1) in the case of a transfer to an Institutional
Accredited Investor which is not a QIB (excluding Non-U.S. Persons), the
proposed transferee has delivered to the Registrar a certificate
substantially in the form of Exhibit D hereto or (2) in the case of a
transfer to a Non-U.S. Person, the proposed transferor has delivered to
the Registrar a certificate substantially in the form of Exhibit E hereto;
and
(ii) if the proposed transferor is an Agent Member holding a
beneficial interest in the Global Note, upon receipt by the Registrar of
(x) the certificate, if any, required by paragraph (i) above and (y)
instructions given in accordance with the Applicable Procedures and the
Registrar's procedures,
whereupon (1) the Registrar shall reflect on its books and records the date and
(if the transfer does not involve a transfer of outstanding Physical Notes) a
decrease in the principal amount of the Global Note in an amount equal to the
principal amount of the beneficial interest in the Global Note to be
transferred, and (2) the Company shall execute and the Trustee shall
authenticate and deliver one or more Physical Notes of like tenor and principal
amount.
(b) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of a Note constituting a
Restricted Security to a QIB (excluding transfers to Non-U.S. Persons):
(i) the Registrar shall register the transfer if such transfer is
being made by a proposed transferor who has checked the box provided for
on the form of Note stating, or has otherwise advised the Company and the
Registrar in writing, that the sale has been made in compliance with the
provisions of Rule 144A to a transferee who has signed the certification
provided for on the form of Note stating, or has otherwise advised the
Company and the Registrar in writing, that it is purchasing the Note for
its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a QIB within the
meaning of Rule 144A, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as it has requested pursuant to Rule
144A or has determined not to request such information and that it is
aware that the transferor is relying upon its foregoing representations in
order to claim the exemption from registration provided by Rule 144A; and
(ii) if the proposed transferee is an Agent Member, and the Notes to
be transferred consist of Physical Notes which after transfer are to be
evidenced by an interest in the Global Note, upon receipt by the Registrar
of instructions given in accordance with the Applicable Procedures and the
Registrar's procedures, the Registrar shall reflect on its books and
records the
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date and an increase in the principal amount of the Global Note in an
amount equal to the principal amount of the Physical Notes to be
transferred, and the Trustee shall cancel the Physical Notes so
transferred.
(c) Private Placement Legend. Upon the transfer, exchange or
replacement of Notes not bearing the Private Placement Legend, the Registrar
shall deliver Notes that do not bear the Private Placement Legend. Upon the
transfer, exchange or replacement of Notes bearing the Private Placement Legend,
the Registrar shall deliver only Notes that bear the Private Placement Legend
unless (i) the circumstance contemplated by paragraph (a)(i)(x) of this Section
2.15 exists or (ii) there is delivered to the Registrar an Opinion of Counsel
reasonably satisfactory to the Company and the Trustee to the effect that
neither such legend nor the related restrictions on transfer are required in
order to maintain compliance with the provisions of the Securities Act. The
Registrar shall not register a transfer of any Note unless such transfer
complies with the restrictions on transfer of such Note set forth in this
Indenture. In connection with any transfer of Notes, each Holder agrees by its
acceptance of the Notes to furnish the Registrar or the Company such
certifications, legal opinions or other information as either of them may
reasonably require to confirm that such transfer is being made pursuant to an
exemption from, or a transaction not subject to, the registration requirements
of the Securities Act; provided that the Registrar shall not be required to
determine (but may rely on a determination made by the Company with respect to)
the sufficiency of any such certifications, legal opinions or other information.
(d) General. By its acceptance of any Note bearing the Private
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.14 or this Section 2.15.
The Company shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time upon the giving
of reasonable written notice to the Registrar.
ARTICLE THREE
REDEMPTION
SECTION 3.01. Mandatory Redemption. On each of October 15, 2007 and
October 15, 2008, the Company must make a pro rata partial redemption of the
principal amount of each Note equal to 20% and 10%, respectively, of the
original principal amount at maturity of such Note. In addition, the Company
must pay accrued and unpaid interest on the principal amount of the Notes
redeemed to the Redemption Date. If the Company issues Additional Notes after
the Issue Date, these percentages will be reduced by multiplying the relevant
percentage by a fraction, the numerator of which is the principal amount at
maturity of Notes issued on the Issue Date and the denominator of which is the
sum of the principal amount at maturity of such Notes and the principal amount
at maturity of any Additional Notes. The principal amount at maturity of Notes
the Company must redeem on the dates set forth above may be reduced, at the
Company's option, by up to 100% of the aggregate principal amount at maturity of
Notes the Company has previously repurchased pursuant to the Excess Cash Flow
Offers described in Section 4.23. Mandatory redemption payments made pursuant to
this Section 3.01 will be made in the same manner as interest payments on the
Notes made on Interest Payment Dates. Any redemption as described in this
Section 3.01 will reduce the principal amount at maturity of each Note for all
purposes under this Indenture.
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The Company will, no later than August 15th in the year in which a
mandatory redemption is required, provide the trustee with an Officers'
Certificate stating the aggregate principal amount of each Note to be redeemed
pursuant to the provisions of the first paragraph of this Section 3.01 and
setting forth the aggregate principal amount at maturity of Notes previously
repurchased pursuant to Section 4.23 to be credited against such mandatory
redemption. The Company will deliver any Notes which are to be so credited to
the trustee with such Officers' Certificate (if not previously delivered to the
trustee for cancellation) for credit and cancellation in accordance with such
Officers' Certificate.
SECTION 3.02. Optional Redemption.
The Company may, at its option, redeem the Notes, in whole or in
part, at specified times and under specified conditions, as set forth in
Paragraph 5 of the Notes. If the Company elects to redeem Notes pursuant to
Paragraph 5 of the Notes, it shall notify the Trustee and the Paying Agent in
writing of the Redemption Date and the principal amount at maturity of the Notes
to be redeemed.
The Company shall give each notice provided for in this Section 3.02
at least sixty (60) days before the Redemption Date, together with an Officers'
Certificate and Opinion of Counsel stating that such redemption shall comply
with the conditions contained herein and in the Notes.
SECTION 3.03. Selection of Notes to Be Redeemed.
If fewer than all of the Notes are to be redeemed Notes pursuant to
Paragraph [ ] of the Notes, the Trustee shall select the Notes to be redeemed
(1) in compliance with the requirements of the principal national securities
exchange, if any, on which such Notes are listed or (2) if such Notes are not
then listed on a national securities exchange, on a pro rata basis, by lot or in
such other fair and appropriate manner determined at the discretion of the
Trustee; provided that no partial redemption will reduce the principal amount at
maturity of a Note not redeemed to less than $1,000; and provided, further, that
if a partial redemption is made with the proceeds of an Equity Offering then the
selection of the Notes or portions thereof for redemption shall be made by the
Trustee only on a pro rata basis or on as nearly a pro rata basis as is
practicable (subject to the procedures of the Depository), unless such method is
prohibited. The Trustee shall make the selection from the Notes outstanding and
not previously called for redemption and shall promptly notify the Company in
writing of the Notes selected for redemption and, in the case of any Note
selected for partial redemption, the principal amount thereof, to be redeemed.
Notes in denominations of $1,000 may be redeemed only in whole. The Trustee may
select for redemption portions (equal to $1,000 or any integral multiple
thereof) of the principal of Notes that have denominations larger than $1,000.
Provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
SECTION 3.04. Notice of Redemption.
At least thirty (30) days but not more than sixty (60) days before a
Redemption Date, the Company shall mail or cause to be mailed a notice of
redemption by first class mail, postage prepaid, to each Holder whose Notes are
to be redeemed at its registered address, with a copy to the Trustee and any
Paying Agent. At the Company's written request, the Trustee shall give the
notice of redemption in the Company's name and at the Company's expense.
Each notice of redemption shall identify the Notes to be redeemed
and shall state:
(1) the Redemption Date;
(2) the Redemption Price and the amount of accrued interest, if any,
to be paid;
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(3) the name and address of the Paying Agent;
(4) the CUSIP number;
(5) the subparagraph of the Notes pursuant to which such redemption
is being made;
(6) that Notes called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price plus accrued interest, if
any;
(7) that, unless the Company fails to deposit with the Paying Agent
funds in satisfaction of the applicable redemption price, interest on
Notes called for redemption ceases to accrue on and after the Redemption
Date, and the only remaining right of the Holders of such Notes is to
receive payment of the Redemption Price plus accrued interest, if any,
upon surrender to the Paying Agent of the Notes redeemed;
(8) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the
Redemption Date, and upon surrender of such Note, a new Note or Notes in
the aggregate principal amount equal to the unredeemed portion thereof
will be issued; and
(9) if fewer than all the Notes are to be redeemed, the
identification of the particular Notes (or portion thereof) to be
redeemed, as well as the aggregate principal amount of Notes to be
redeemed and the aggregate principal amount of Notes to be outstanding
after such partial redemption.
SECTION 3.05. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.04,
Notes called for redemption become due and payable on the Redemption Date and at
the Redemption Price plus accrued interest, if any. Upon surrender to the
Trustee or Paying Agent, such Notes called for redemption shall be paid at the
Redemption Price (which shall include accrued interest thereon to the Redemption
Date), but installments of interest, the maturity of which is on or prior to the
Redemption Date, shall be payable to Holders of record at the close of business
on the relevant record dates referred to in the Notes.
SECTION 3.06. Deposit of Redemption Price.
Not later than 10:00 a.m. local time in the place of payment on the
Redemption Date, the Company shall deposit with the Paying Agent U.S. Legal
Tender sufficient to pay the Redemption Price plus accrued interest, if any, of
all Notes to be redeemed on that date.
The Paying Agent shall promptly return to the Company any U.S. Legal
Tender so deposited which is not required for that purpose, except with respect
to monies owed as obligations to the Trustee pursuant to Article Seven.
If the Company complies with the preceding paragraph, then, unless
the Company defaults in the payment of such Redemption Price plus accrued
interest, if any, interest on the Notes to be redeemed will cease to accrue on
and after the applicable Redemption Date, whether or not such Notes are
presented for payment.
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SECTION 3.07. Notes Redeemed in Part.
Upon surrender of a Note that is to be redeemed in part, the Trustee
shall authenticate for the Holder a new Note or Notes equal in principal amount
to the unredeemed portion of the Note surrendered.
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes.
The Company shall pay the principal of, or premium, if any, or
interest on, the Notes on the dates and in the manner provided in the Notes and
in this Indenture. An installment of principal of, or premium, if any, or
interest on, the Notes shall be considered paid on the date it is due if the
Trustee or Paying Agent (other than the Company or an Affiliate of the Company)
holds on that date U.S. Legal Tender designated for and sufficient to pay the
installment in full and is not prohibited from paying such money to the Holders
pursuant to the terms of this Indenture.
Notwithstanding anything to the contrary contained in this
Indenture, the Company may, to the extent it is required to do so by law, deduct
or withhold income or other similar taxes imposed by the United States of
America from principal or interest payments hereunder.
On each Interest Payment Date beginning March 1, 2008, in addition
to accrued interest due on that date, the Company shall make a payment (the
"HYDO Payment") on each Note in cash in immediately available funds, which
payment will reduce the outstanding principal amount at maturity of the Note in
an amount equal to the excess, if any, of (1) the total amount of interest and
original issue discount (as determined under the Internal Revenue Code of 1986,
as amended (the "Code")) accrued on the Note through such Interest Payment Date,
over (2) the sum of (x) all amounts of interest (including accrued original
issue discount) paid in cash with respect to such Note (or any predecessor Note)
through and including such Interest Payment Date; (y) all HYDO Payments
previously made by the Company; and (z) the annual "yield to maturity"
applicable for purposes of the accrual of original issue discount under the Code
multiplied by the original principal amount at maturity (without regard to any
principal at maturity increases) of the Note. Any reduction as described in this
paragraph will reduce the principal amount at maturity of the Note for all
purposes under this Indenture.
SECTION 4.02. Maintenance of Office or Agency.
The Company shall maintain the office or agency required under
Section 2.03. The Company shall give prior written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the address of the
Trustee set forth in Section 11.02 and the Company hereby appoints the Trustee
as its agent to receive all such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided
that no such designation or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency in the Borough of Manhattan,
The City of New
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York for such purposes. The Company shall give prompt written notice of any such
designation or rescission and of any change in the location of any such other
office or agency.
The Company hereby initially designates the Corporate Trust Office
of the Trustee as such office of the Company in accordance with Section 2.03.
SECTION 4.03. Corporate Existence.
Except as otherwise permitted by Article Five, Holdings and the
Company shall each do or cause to be done, at its own cost and expense, all
things necessary to preserve and keep in full force and effect its corporate
existence and the corporate existence of each of its Restricted Subsidiaries in
accordance with the respective organizational documents of each such Restricted
Subsidiary and the material rights (charter and statutory) and franchises of
Holdings, the Company and each such Restricted Subsidiary; provided, however,
that Holdings and the Company shall not be required to preserve, with respect to
itself, any material right or franchise and, with respect to any of its
Restricted Subsidiaries, any such existence, material right or franchise, if the
Board of Directors of Holdings and the Company, as applicable, shall determine
in good faith that the preservation thereof is no longer desirable in the
conduct of the business of the Company and its Subsidiaries, taken as a whole.
SECTION 4.04. Payment of Taxes and Other Claims.
Holdings and the Company shall pay or discharge or cause to be paid
or discharged, before the same shall become delinquent, (i) all material taxes,
assessments and governmental charges (including withholding taxes and any
penalties, interest and additions to taxes) levied or imposed upon it or any of
its Subsidiaries or its properties or any of its Subsidiaries' properties and
(ii) all material lawful claims for labor, materials and supplies that, if
unpaid, might by law become a Lien upon its properties or any of its
Subsidiaries' properties; provided, however, that Holdings and the Company shall
not be required to pay or discharge or cause to be paid or discharged any such
tax, assessment, charge or claim whose amount, applicability or validity is
being or shall be contested in good faith by appropriate proceedings properly
instituted and diligently conducted for which adequate reserves, to the extent
required under GAAP, have been taken.
SECTION 4.05. Maintenance of Properties and Insurance.
(a) Holdings and the Company shall, and shall cause each of their
respective Restricted Subsidiaries to, maintain all material properties in good
working order and condition in all material respects (subject to ordinary wear
and tear) and make all necessary repairs, renewals, replacements, additions,
betterments and improvements thereto and actively conduct and carry on its
business; provided, however, that nothing in this Section 4.05 shall prevent the
Company or any of its Restricted Subsidiaries from discontinuing the operation
and maintenance of any of its properties if such discontinuance is, in the good
faith judgment of the Board of Directors or other governing body of the Company
or the Restricted Subsidiary concerned, as the case may be, desirable in the
conduct of its businesses and is not disadvantageous in any material respect to
the Holders.
(b) Holdings and the Company shall maintain insurance (including
appropriate self-insurance) against loss or damage of the kinds that, in the
good faith judgment of Holdings and the Company, are adequate and appropriate
for the conduct of the business of Holdings, the Company and its Subsidiaries in
a prudent manner, with reputable insurers or with the government of the United
States of America or an agency or instrumentality thereof, in such amounts, with
such deductibles, and by such methods as shall be customary, in the good faith
judgment of the Company, for companies similarly situated in the industry.
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SECTION 4.06. Compliance Certificate; Notice of Default.
(a) The Company shall deliver to the Trustee, within ninety (90)
days after the end of the Company's fiscal year, an Officers' Certificate
stating that a review of its activities during the preceding fiscal year has
been made under the supervision of the signing Officers (one of whom is the
principal executive officer, principal financial officer or principal accounting
officer) with a view to determining whether it has kept, observed, performed and
fulfilled its obligations under this Indenture and further stating, as to each
such Officer signing such certificate, that to the best of such Officer's actual
knowledge Holdings during such preceding fiscal year has kept, observed,
performed and fulfilled each and every condition and covenant under this
Indenture and no Default or Event of Default occurred during such year and at
the date of such certificate there is no Default or Event of Default that has
occurred and is continuing or, if such signers do know of such Default or Event
of Default, the certificate shall describe the Default or Event of Default and
its status with particularity. The Officers' Certificate shall also notify the
Trustee should the Company elect to change the manner in which it fixes its
fiscal year end.
(b) The annual financial statements delivered pursuant to Section
4.08 shall be accompanied by a written report of Holdings' independent
accountants (who shall be a firm of established national reputation) that in
conducting their audit of such financial statements nothing has come to their
attention that would lead them to believe that Holdings has violated any
provisions of Sections 4.04, 4.10, 4.11, 4.12 or Article Five insofar as they
relate to accounting matters or, if any such violation has occurred, specifying
the nature and period of existence thereof, it being understood that such
accountants shall not be liable directly or indirectly to any Person for any
failure to obtain knowledge of any such violation.
(c) (i) If any Default or Event of Default has occurred and is
continuing or (ii) if any Holder seeks to exercise any remedy hereunder with
respect to a claimed Default under this Indenture or the Notes, the Company
shall deliver to the Trustee, at its address set forth in Section 11.02, by
registered or certified mail or by telegram, telex or facsimile transmission
followed by hard copy by registered or certified mail an Officers' Certificate
specifying such event, notice or other action within five (5) Business Days of
its becoming aware of such occurrence.
SECTION 4.07. Compliance with Laws.
Holdings and the Company shall, and shall cause each of its
Subsidiaries to, comply with all applicable statutes, rules, regulations, orders
and restrictions of the United States of America, all states and municipalities
thereof, and of any governmental department, commission, board, regulatory
authority, bureau, agency and instrumentality of the foregoing, in respect of
the conduct of its businesses and the ownership of its properties, except for
such noncompliances as are not in the aggregate reasonably likely to have a
material adverse effect on the financial condition or results of operations of
the Company and its Subsidiaries, taken as a whole.
SECTION 4.08. Reports to Holders.
Whether or not required by the rules and regulations of the SEC, so
long as any Notes are outstanding, the Company shall furnish to the Trustee and,
upon request, to the Holders of Notes:
(a) all quarterly and annual financial information that would be
required to be contained in a filing with the SEC on Forms 10-Q and 10-K if the
Company were required to file such Forms, including a "Management's Discussion
and Analysis of Financial Condition and Results of Operations" that describes
the financial condition and results of operations of the Company and its
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consolidated Subsidiaries (showing in reasonable detail, either on the face of
the financial statements or in the footnotes thereto and in Management's
Discussion and Analysis of Financial Condition and Results of Operations, the
financial condition and results of operations of the Company and its Restricted
Subsidiaries separate from the financial condition and results of operations of
the Unrestricted Subsidiaries of the Company, if any, but only to the extent
such Unrestricted Subsidiaries are material to the consolidated results of
operations or financial condition of the Company or Holdings, as applicable)
and, with respect to the annual information only, a report thereon by the
Company's certified independent accountants; and
(b) all current reports that would be required to be filed with the
SEC on Form 8-K if the Company were required to file such reports, in each case
within the time periods specified in the SEC's rules and regulations;
provided, however, that so long as Holdings is a Guarantor of the Notes and
complies with the requirements of Rule 3-10 of Regulation S-X promulgated by the
SEC (or any successor provision), the reports, information and other documents
required to be filed and provided as described hereunder may, at the option of
the Company, be filed by and be those of Holdings rather than the Company.
In addition, following the consummation of the Exchange Offer,
whether or not required by the rules and regulations of the SEC, the Company
shall file a copy of all such information and reports with the SEC for public
availability within the time periods specified in the SEC'S rules and
regulations (unless the SEC will not accept such a filing). In addition, prior
to the consummation of the Exchange Offer, for so long as any Notes remain
outstanding, the Company shall furnish to the Holders, upon their request, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act.
SECTION 4.09. Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law or any
usury law or other law that would prohibit or forgive the Company from paying
all or any portion of the principal of or interest on the Notes as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of this Indenture; and (to the extent
that it may lawfully do so) the Company hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will suffer
and permit the execution of every such power as though no such law had been
enacted.
SECTION 4.10. Limitation on Restricted Payments. The Company shall
not, and shall not cause or permit any of its Restricted Subsidiaries to,
directly or indirectly (each, a "Restricted Payment"),
(a) declare or pay any dividend or make any distribution (other than
dividends or distributions payable in Qualified Capital Stock of the
Company and dividends and distributions payable to the Company or another
Restricted Subsidiary of the Company and pro rata dividends or
distributions made by a Restricted Subsidiary that is not a Wholly-Owned
Subsidiary) on or in respect of Capital Stock of the Company or its
Restricted Subsidiaries to holders of such Capital Stock;
(b) purchase, redeem or otherwise acquire or retire for value any
Capital Stock of the Company or its Restricted Subsidiaries (other than
any such Capital Stock of a Restricted Subsidiary of the Company or a
Subsidiary Guarantor);
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(c) make any principal payment on, purchase, defease, redeem,
prepay, decrease or otherwise acquire or retire for value, prior to any
scheduled final maturity, scheduled repayment or scheduled sinking fund
payment, any Indebtedness of the Company or any Guarantor that is
subordinate or junior in right of payment to the Notes or a Guarantee
(other than Indebtedness permitted under clause (6) of the definition of
Permitted Indebtedness); or
(d) make any Investment (other than any Permitted Investment),
if at the time of such Restricted Payment or immediately after giving
effect thereto, (1) a Default or an Event of Default shall have occurred
and be continuing; or (2) the Company is not able to incur at least $1.00
of additional Indebtedness (other than Permitted Indebtedness) in
compliance with Section 4.12; or (3) the aggregate amount of all
Restricted Payments (including such proposed Restricted Payment) made
subsequent to the Issue Date (the amount expended for such purposes, if
other than in cash, being the Fair Market Value of such property as
determined in good faith by the Board of Directors of the Company at the
time of the making thereof) shall exceed the sum of:
(w) 50% of the cumulative Consolidated Net Income (or if cumulative
Consolidated Net Income shall be a loss, minus 100% of such loss) of
the Company earned subsequent to the Issue Date and ending on the
last day of the Company's last fiscal quarter for which financial
statements are available (the "Reference Date") (treating such
period as a single accounting period); plus
(x) 100% of the aggregate net cash proceeds received by the Company
from any Person (other than a Subsidiary of the Company) as a
contribution to its capital or from the issuance and sale subsequent
to the Issue Date and on or prior to the Reference Date of Qualified
Capital Stock of the Company (including upon the exercise of
options, warrants or rights); plus
(y) 100% of the aggregate net cash proceeds received from the
issuance of Indebtedness of the Company that have been converted
into or exchanged for Qualified Capital Stock of the Company
subsequent to the Issue Date and on or prior to the Reference Date;
plus
(z) an amount equal to the sum of (i) the net reduction in the
Investments (other than Permitted Investments) made by the Company
or any of its Restricted Subsidiaries in any Person resulting from
repurchases, repayments or redemptions of such Investments by such
Person, proceeds realized on the sale of such Investment and
proceeds representing the return of capital (excluding dividends and
distributions), in each case received by the Company or any of its
Restricted Subsidiaries, and (ii) to the extent such Person is an
Unrestricted Subsidiary, the portion (proportionate to the Company's
equity interest in such Subsidiary) of the fair market value of the
net assets of such Unrestricted Subsidiary at the time such
Unrestricted Subsidiary is designated a Restricted Subsidiary;
provided, however, that the foregoing sum will not exceed, in the case of
any such Person or Unrestricted Subsidiary, the amount of Investments
(excluding Permitted Investments) previously made (and treated as a
Restricted Payment) by the Company or any of its Restricted Subsidiaries
in such Person or Unrestricted Subsidiary; provided further, however, that
no amount will be included under this clause (z) to the extent it is
already included in the Consolidated Net Income of the Company pursuant to
clause (w) above.
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Notwithstanding the foregoing, the provisions set forth in the
immediately preceding paragraph do not prohibit:
(1) the payment of any dividend or redemption of any Capital Stock
within sixty (60) days after the date of declaration or call for
redemption thereof, if at such date of declaration or call for redemption,
such payment or redemption would have been permitted;
(2) the purchase, redemption or other acquisition or retirement for
value of any Capital Stock of the Company, either (i) solely in exchange
for Qualified Capital Stock of the Company or (ii) through the application
of net proceeds of a substantially concurrent sale for cash (other than to
a Subsidiary of the Company) of Qualified Capital Stock of the Company;
(3) the purchase, redemption, defeasance or other acquisition or
retirement for value of any Indebtedness of the Company or the Guarantors
that is subordinate or junior in right of payment to the Notes and
Guarantees either (i) solely in exchange for Qualified Capital Stock of
the Company, or (ii) through the application of net proceeds of a
substantially concurrent sale for cash (other than to a Subsidiary of the
Company) of (a) Qualified Capital Stock of the Company or (b) Refinancing
Indebtedness;
(4) an Investment acquired as a result of the capital contribution
or in exchange for, or out of the proceeds of, a substantially concurrent
offering (other than to a Subsidiary of the Company) of Qualified Capital
Stock of the Company;
(5) payments or distributions to stockholders pursuant to appraisal
rights required under applicable law in connection with any consolidation,
merger or transfer of assets that complies with Section 5.01;
(6) if no Default or Event of Default will have occurred and be
continuing, repurchases, redemptions, acquisitions or retirements of (or
payments to Holdings to permit Holdings to repurchase, redeem, acquire or
retire) the Qualified Capital Stock of Holdings, the Company or any of its
Restricted Subsidiaries from employees, former employees, directors or
former directors of the Company or any of its Restricted Subsidiaries or
their authorized representatives upon the death, disability or termination
of employment of such employees, former employees, directors or former
directors; provided, however, that the aggregate amount paid for all
repurchased, redeemed, acquired or retired Qualified Capital Stock does
not exceed $500,000 during any twelve (12) month period (excluding any
such repurchases, redemptions, acquisitions or retirements with the
proceeds of any life insurance policy or policies maintained by the
Company or under which the Company is a beneficiary);
(7) repurchases, redemptions, acquisitions or retirements of the
Qualified Capital Stock of the Company deemed to occur upon the exercise
of options, warrants or other rights under employee benefit plans of the
Company or any of its Subsidiaries if such Qualified Capital Stock
represents all or a portion of the exercise price thereof;
(8) if no Default or Event of Default will have occurred and be
continuing, the redemption, repurchase, acquisition or retirement of
Capital Stock of any Restricted Subsidiary; provided that if the Company
or any of its Restricted Subsidiaries incurs Indebtedness in connection
with such redemption, repurchase, acquisition or retirement, after giving
effect to such incurrence and such redemption, repurchase, acquisition or
retirement, the Company could incur $1.00 of additional Indebtedness
(other than Permitted Indebtedness) in compliance with Section 4.12;
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(9) dividends or distributions paid by the Company to Holdings to be
used by Holdings to pay Federal, state and local taxes payable by Holdings
and directly attributable or which arise as a result of the operations of
the Company or any of its Restricted Subsidiaries; provided that such
dividends or distributions do not exceed the amount the Company and its
Restricted Subsidiaries would be required to pay as a stand-alone
taxpayer;
(10) any Restricted Payment pursuant to or contemplated by, or to
pay amounts due under (whether such Restricted Payment is made to third
parties or to Holdings for payment to third parties), the Merger Agreement
or the Management Consulting Agreement; and
(11) if no Default or Event of Default shall have occurred and be
continuing, Restricted Payments (in addition to those permitted by clauses
(1) through (10) of this paragraph) in an aggregate amount not to exceed
$2,000,000 subsequent to the Issue Date.
In determining the aggregate amount of Restricted Payments made
subsequent to the Issue Date in accordance with clause (3) of the immediately
preceding paragraph, amounts expended pursuant to clauses (1), (2)(ii),
3(ii)(a), (4), (6) and (11) shall be included in such calculation.
Not later than the date of making any Restricted Payment, the
Company shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment complies with this Indenture and setting forth in reasonable
detail the basis upon which the required calculations were computed, which
calculations may be based upon the Company's latest available internal quarterly
financial statements.
SECTION 4.11. Limitation on Transactions with Affiliates.
(a) The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into any contract, agreement,
understanding, loan, advance, guarantee or other transaction or series of
related transactions with, or for the benefit of, any Affiliate of the Company
or any Restricted Subsidiary (other than the Company or a Restricted Subsidiary,
including any Person that becomes a Restricted Subsidiary as a result of such
transaction) (collectively, "Interested Persons"), unless: (1) such transaction
or series of transactions are on terms that are no less favorable to the Company
or such Restricted Subsidiary, as the case may be, than would have been able to
be obtained at the time for a comparable transaction in arm's-length dealings
with third-parties that are not Interested Persons; (2) with respect to any
transaction or series of related transactions involving aggregate value equal to
or greater than $500,000 and less than $1,000,000, the Company shall have
delivered an Officers' Certificate to the Trustee certifying that such
transaction or series of transactions complies with clause (1) above; (3) with
respect to any transaction or series of related transactions involving aggregate
value equal to or greater than $1,000,000 and less than $5,000,000, (x) such
transaction or series of related transactions will be approved by a majority of
the disinterested members of the Board of Directors of the Company or the Board
of Directors of such Restricted Subsidiary, as the case may be, such approval to
be evidenced by a Board Resolution stating that such Board of Directors has
determined that such transaction or series of related transactions complies with
the foregoing provisions or (y) the Company shall have obtained a written
opinion from an Independent Financial Advisor certifying that such transaction
or series of related transactions is fair to the Company or the relevant
Restricted Subsidiary, as the case may be, from a financial point of view; and
(4) with respect to any transaction or series of related transactions involving
aggregate value equal to or greater than $5,000,000, the Company shall have
obtained a written opinion from an Independent Financial Advisor certifying that
such transaction or series of related transactions is fair to the Company or the
relevant Restricted Subsidiary, as the case may be, from a financial point of
view.
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(b) The restrictions set forth in clause (a) above shall not apply
to: (1) reasonable fees and compensation (including stock options and other
awards pursuant to the employee benefit plans of the Company or any of its
Restricted Subsidiaries) paid to, and indemnity provided on behalf of, officers,
directors, employees or consultants of the Company or any Restricted Subsidiary
of the Company as determined in good faith by the Company's Board of Directors
or senior management; (2) transactions exclusively between or among the Company
and any of its Restricted Subsidiaries or exclusively between or among such
Restricted Subsidiaries, provided that such transactions are not otherwise
prohibited by this Indenture; (3) transactions pursuant to or contemplated by
any agreement as in effect as of the Issue Date (including, without limitation,
the Merger Agreement, the Stockholders Agreement and the Management Consulting
Agreement), or any amendment, modification, renewal, Refinancing, replacement or
substitution thereof so long as any such amendment, modification, renewal,
Refinancing, replacement or substitution thereof is not more disadvantageous to
the Holders in any material respect than the original agreement as in effect on
the Issue Date; (4) loans and advances to, and reimbursement of expenses
incurred by, officers, directors and employees in the ordinary course of
business of the Company or any of its Restricted Subsidiaries; (5) any issuance
or sale of the Qualified Capital Stock of the Company; or (6) Restricted
Payments permitted by this Indenture.
SECTION 4.12. Limitation on Incurrence of Additional Indebtedness.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume, guarantee,
acquire, become liable with respect to, or otherwise become responsible for
payment of (collectively, "incur") any Indebtedness (other than Permitted
Indebtedness); provided, however, that if no Default or Event of Default shall
have occurred and be continuing at the time of or as a consequence of the
incurrence of any such Indebtedness, the Company or any of its Restricted
Subsidiaries that is or, upon such incurrence, becomes a Guarantor may incur
Indebtedness (including, without limitation, Acquired Indebtedness) and any
Restricted Subsidiary of the Company that is not or will not, upon such
incurrence, become a Guarantor may incur Acquired Indebtedness, in each case if
on the date of the incurrence of such Indebtedness, after giving effect to the
incurrence thereof, the Consolidated Fixed Charge Coverage Ratio of the Company
is at least equal to (i) 2.0 to 1.0, if such proposed incurrence is to be
consummated on or prior to October 15, 2004, (ii) 2.25 to 1.0, if such proposed
incurrence is to be consummated on or prior to October 15, 2005 and (iii) 2.5 to
1.0, if such proposed incurrence is to be consummated thereafter.
SECTION 4.13. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries.
The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
permit to exist or become effective any consensual encumbrance or restriction on
the ability of any Restricted Subsidiary of the Company to (a) pay dividends or
make any other distributions on or in respect of its Capital Stock to itself;
(b) make loans or advances or to pay any Indebtedness or other obligation owed
to the Company or any other Restricted Subsidiary of the Company; or (c)
transfer any of its property or assets to the Company or any other Restricted
Subsidiary of the Company, except for such encumbrances or restrictions existing
under or by reason of (1) applicable law; (2) this Indenture, the Notes, the
Guarantees and the Collateral Agreements; (3) customary non-assignment
provisions of any contract or any lease governing a leasehold interest of any
Restricted Subsidiary of the Company; (4) any instrument governing Acquired
Indebtedness, which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person or the
properties or assets of the Person so acquired; (5) agreements existing on the
Issue Date, including, without limitation, the Credit Agreement; (6) any
contract for sale of assets permitted by Section 4.16 with respect to the assets
to be sold pursuant to such contract; (7) in the case of clause (c) above,
restrictions contained in security agreements or mortgages securing Indebtedness
of a Restricted
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Subsidiary permitted under this Indenture to the extent such restrictions
restrict the transfer of the property subject to such security agreements or
mortgages; and (8) amendments, modifications, renewals, Refinancings,
replacements or substitutions of an instrument or agreement referred to in
clause (2), (4) or (5) above; provided, however, that the provisions relating to
such encumbrances or restrictions contained in any such Indebtedness, taken as a
whole, are no less favorable to the Company in any material respect as
determined by the Board of Directors of the Company in their reasonable and good
faith judgment than the provisions relating to such encumbrances or restrictions
contained in the agreements or instruments so amended, modified, renewed,
Refinanced, replaced or substituted.
SECTION 4.14. Additional Subsidiary Guarantees.
If the Company or any of its Subsidiaries transfers or causes to be
transferred, in one transaction or a series of related transactions, any
property to any Subsidiary that, following such transaction or series of related
transactions is a Domestic Restricted Subsidiary but is not a Guarantor, or if
the Company or any of its Subsidiaries shall organize, acquire or otherwise
invest in another Subsidiary that, following such organization, acquisition or
investment, is a Domestic Restricted Subsidiary but is not a Guarantor, then
such transferee or acquired or other Subsidiary shall:
(a) execute and deliver to the Trustee a Guarantee in the form of
Guarantee set forth in Exhibit A pursuant to which such Subsidiary shall
unconditionally guarantee on a senior secured basis all of the Company's
obligations under the Notes and this Indenture on the terms set forth in this
Indenture;
(b) (i) execute and deliver to the Lender Agent such amendments to
the Intercreditor Agreement as the Lender Agent deems necessary or advisable in
order to make such Subsidiary a party to the Intercreditor Agreement; (ii)
execute and deliver to the Collateral Agent and the Trustee such amendments to
the Collateral Agreements as the Collateral Agent deems necessary or advisable
in order to grant to Collateral Agent, for the benefit of the Holders and the
Lenders, a perfected security interest in the Capital Stock of such new
Subsidiary and the debt securities of such new Subsidiary (including (A) 100% of
all Capital Stock of each of its direct Domestic Subsidiaries, (B) 65% of all
Voting Stock of each of its direct Foreign Subsidiaries and (C) 100% of all
Capital Stock (other than Voting Stock) of such Foreign Subsidiaries), subject
only to Permitted Liens, which are owned by the Company or any Subsidiary and
required to be pledged pursuant to the Security Agreement and (iii) deliver to
the Collateral Agent the certificates representing such Capital Stock and debt
securities, together with (x) in the case of such Capital Stock, undated stock
powers or instruments of transfer, as applicable, endorsed in blank, and (y) in
the case of such debt securities, endorsed in blank, in each case executed and
delivered by an Officer of the Company or such Subsidiary, as the case may be;
(c) take such actions necessary or advisable to grant to the
Collateral Agent for the benefit of the Holders and the Trustee a perfected
security interest in the assets of such new Subsidiary, subject only to
Permitted Liens, including the filing of Uniform Commercial Code financing
statements in such jurisdictions as may be required by the Security Agreement or
by law or as may be reasonably requested by the Collateral Agent;
(d) take such further action and execute and deliver such other
documents specified in this Indenture or otherwise reasonably requested by the
Trustee or the Collateral Agent to effectuate the foregoing; and
(e) deliver to the Trustee an opinion of counsel that such
supplemental indenture and any other documents required to be delivered (A) have
been duly authorized, executed and delivered by such Restricted Subsidiary, (B)
comply with the applicable requirements of this Section 4.14 and (C)
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constitute legal, valid, binding and enforceable obligations of such Restricted
Subsidiary and such other opinions regarding the perfection of such liens in the
Collateral of or consisting of the Capital Stock of such Restricted Subsidiary
as provided for in this Indenture.
Thereafter, such Domestic Subsidiary shall be a Subsidiary Guarantor for all
purposes of this Indenture.
SECTION 4.15. Limitation on Change of Control.
(a) Upon the occurrence of a Change of Control, the Company shall
make an offer to purchase all outstanding Notes pursuant to the offer described
in clause (b) below (the "Change of Control Offer") at a purchase price equal to
101% of the Accreted Value thereof plus accrued and unpaid interest, if any, to
the date of purchase.
(b) Within thirty (30) days following the date upon which the Change
of Control occurred (the "Change of Control Date"), the Company shall send, by
first class mail, postage prepaid, a notice to each Holder, with a copy to the
Trustee, which notice shall govern the terms of the Change of Control Offer. The
notice to the Holders shall contain all instructions and materials necessary to
enable such Holders to tender Notes pursuant to the Change of Control Offer.
Such notice shall state:
(1) that the Change of Control Offer is being made pursuant to this
Section 4.15 and that all Notes tendered and not withdrawn will be
accepted for payment;
(2) the purchase price (including the amount of accrued interest)
and the purchase date (which shall be no earlier than thirty (30) days nor
later than sixty (60) days from the date such notice is mailed, other than
as may be required by law) (the "Change of Control Payment Date");
(3) that any Note not tendered will continue to accrue interest;
(4) that, unless the Company defaults in making payment therefor,
any Note accepted for payment pursuant to the Change of Control Offer
shall cease to accrue interest after the Change of Control Payment Date;
(5) that Holders electing to have a Note purchased pursuant to a
Change of Control Offer will be required to surrender the Note, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the
Note completed, to the Paying Agent at the address specified in the notice
prior to the close of business on the third Business Day prior to the
Change of Control Payment Date;
(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than five (5) Business Days prior to the
Change of Control Payment Date, a telegram, telex, facsimile transmission
or letter setting forth the name of the Holder, the principal amount of
the Notes the Holder delivered for purchase and a statement that such
Holder is withdrawing its election to have such Notes purchased;
(7) that Holders whose Notes are purchased only in part will be
issued new Notes in a principal amount equal to the unpurchased portion of
the Notes surrendered; provided that each Note purchased and each new Note
issued shall be in an original principal amount of $1,000 or integral
multiples thereof; and
(8) the circumstances and relevant facts regarding such Change of
Control.
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On or before the Change of Control Payment Date, the Company shall
(i) accept for payment Notes or portions thereof properly tendered pursuant to
the Change of Control Offer, (ii) deposit with the Paying Agent U.S. Legal
Tender sufficient to pay the purchase price plus accrued interest, if any, of
all Notes or portions thereof so tendered and (iii) deliver or cause to be
delivered to the Trustee the Notes so accepted together with an Officers'
Certificate stating the aggregate principal amount at maturity of Notes or
portions thereof being purchased by the Company. The Paying Agent shall promptly
mail to the Holders of Notes so tendered the purchase price for such Notes and
the Trustee shall promptly authenticate and mail (or cause to be transferred by
book entry) to each Holder a new Note equal in principal amount at maturity to
any unpurchased portion of the Notes surrendered; provided that each such new
Note shall be in a principal amount at maturity of $1,000 or an integral
multiple thereof. Any Notes not so accepted shall be promptly mailed by the
Company to the Holders thereof. For purposes of this Section 4.15, the Trustee
shall act as the Paying Agent.
Any amounts remaining after the purchase of Notes pursuant to a
Change of Control Offer shall be returned by the Trustee to the Company.
The Trustee may not waive the Company's obligation to offer to
purchase the Notes pursuant to this Section 4.15.
The Company shall comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Change of Control Offer. To the extent the
provisions of any securities laws or regulations conflict with the provisions
under this Section 4.15, the Company shall comply with the applicable securities
laws and regulations and shall not be deemed to have breached its obligations
under this Section 4.15 by virtue thereof.
The Company shall not be required to make a Change of Control Offer
upon a Change of Control if a third party makes the Change of Control Offer in
the manner, at the times and otherwise in compliance with the requirements of
this Section 4.15 and purchases all Notes validly tendered and not withdrawn
under such Change of Control Offer.
SECTION 4.16. Limitation on Asset Sales.
(a) The Company will not, and will not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (1) the Company or the
applicable Restricted Subsidiary, as the case may be, receives consideration at
the time of such Asset Sale at least equal to the Fair Market Value of the
assets sold or otherwise disposed of (as determined in good faith by the
Company's Board of Directors); and (2) at least 75% of the consideration
received by the Company or the Restricted Subsidiary, as the case may be, from
such Asset Sale shall be in the form of cash and/or Cash Equivalents and is
received at the time of such disposition. For purposes of this provision, the
following will be deemed to be cash: (A) the amount of any liabilities (as shown
on the most recent applicable balance sheet) of the Company or such Restricted
Subsidiary (other than liabilities that are by their terms subordinated to the
Notes) that are assumed by the transferee of any such assets so long as the
documents governing such liabilities provide that there is no further recourse
to the Company or any of its Subsidiaries with respect to such liabilities and
(B) notes, securities or other similar obligations received by the Company or
any of its Restricted Subsidiaries from such transferee that are converted, sold
or exchanged, within one hundred eighty (180 ) days of the related Asset Sale,
by the Company or any of its Restricted Subsidiaries into cash (with such amount
actually realized being the portion deemed to be cash).
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(b) Upon the consummation of an Asset Sale, the Company may apply,
or cause such Restricted Subsidiary to apply, the Net Cash Proceeds relating to
such Asset Sale within one hundred eighty (180) days of receipt thereof either
(i) to repay Indebtedness under the Credit Agreement; (ii) to make an investment
(or to enter into a legally binding agreement to invest) in Replacement Assets
or to repay any Indebtedness incurred within one hundred eighty (180) days prior
to such Asset Sale and used to acquire Replacement Assets in contemplation of
such Asset Sale; or (iii) a combination of prepayment and investment permitted
by the foregoing clauses.
(c) Pending the application of any such Net Cash Proceeds, the
Company may temporarily reduce Indebtedness or otherwise invest such Net Cash
Proceeds in any manner that is not prohibited by this Indenture. If any such
legally binding agreement to invest such Net Cash Proceeds is terminated, then
the Company may, within ninety (90) days of such termination or within one
hundred eighty (180) days of such Asset Sale, whichever is later, invest such
Net Cash Proceeds as provided in Section 4.16(b) (without regard to the
parenthetical contained in clause (ii) thereof). The amount of such Net Cash
Proceeds not so used as set forth in the immediately preceding paragraph or in
this paragraph constitutes "Excess Proceeds." Notwithstanding the foregoing, for
purposes of determining whether an Excess Proceeds Offer is required, pursuant
to clause (d) below, Excess Proceeds at any time will be reduced by the Accreted
Value of Notes acquired (and surrendered to the Trustee for cancellation) by the
Company through open market purchases or optional redemption subsequent to the
date of the Asset Sale giving rise to the Excess Proceeds.
(d) When the aggregate amount of Excess Proceeds exceeds $5,000,000,
the Company will, not less than thirty (30) nor more than sixty (60) days
following such date, make an offer to purchase (an "Excess Proceeds Offer") from
all Holders and all holders of other Indebtedness that ranks pari passu in right
of payment with the Notes containing provisions requiring the redemption or
prepayment or offers to purchase with the proceeds of sales of assets on a pro
rata basis, that amount of Notes equal to the amount of the Excess Proceeds at a
price equal to 100% of the Accreted Value of the Notes to be purchased, plus
accrued and unpaid interest, if any, thereon to the date of purchase (provided
that in the case where such other Indebtedness is outstanding under a revolving
credit or similar agreement, the commitment to lend thereunder is concurrently
or permanently reduced). The aggregate Accreted Value of Notes to be purchased
pursuant to an Excess Proceeds Offer may be reduced by the Accreted Value of
Notes acquired by the Company through open market purchases or optional
redemption subsequent to the date of the Asset Sale giving rise to the Excess
Proceeds Offer and surrendered to the trustee for cancellation.
(e) In the event of the transfer of substantially all (but not all)
of the property and assets of the Company and its Restricted Subsidiaries as an
entirety to a Person in a transaction permitted under Section 5.01, which
transaction does not constitute a Change of Control, the successor corporation
shall be deemed to have sold the properties and assets of the Company and its
Restricted Subsidiaries not so transferred for purposes of this Section 4.16,
and shall comply with the provisions of this Section 4.16 with respect to such
deemed sale as if it constituted an Asset Sale. In addition, the Fair Market
Value of such properties and assets of the Company or its Restricted
Subsidiaries deemed to be sold shall be deemed to be Net Cash Proceeds for
purposes of this Section 4.16.
(f) Each notice of an Excess Proceeds Offer pursuant to this Section
4.16 shall be mailed, by first class mail, postage prepaid, by the Company to
all Holders at their last registered addresses as of a date within fifteen (15)
days of the mailing of such notice, with a copy to the Trustee. The notice shall
contain all instructions and materials necessary to enable such Holders to
tender Notes pursuant to the Excess Proceeds Offer and shall state the following
terms:
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(1) that the Excess Proceeds Offer is being made pursuant to this
Section 4.16 and that all Notes tendered, in whole or in part in integral
multiples of $1,000, will be accepted for payment; provided, however, that
(i) if the aggregate principal amount of Notes tendered in an Excess
Proceeds Offer plus accrued interest at the expiration of such offer is
less than the aggregate amount of the Excess Proceeds Offer, the Company
may use the deficiency for any purpose not otherwise prohibited by this
Indenture and (ii) if the aggregate principal amount of Notes tendered in
an Excess Proceeds Offer plus accrued interest thereon at the expiration
of such offer exceeds the aggregate amount of the Excess Proceeds Offer,
the Company shall select the Notes to be purchased on a pro rata basis
based on amounts tendered;
(2) the purchase price (including the amount of accrued interest)
and the purchase date (which shall be twenty (20) Business Days from the
date of mailing of notice of such Excess Proceeds Offer, or such longer
period as required by law) (the "Proceeds Purchase Date");
(3) that any Note not tendered will continue to accrue interest;
(4) that, unless the Company defaults in making payment therefor,
any Note accepted for payment pursuant to the Excess Proceeds Offer shall
cease to accrue interest after the Proceeds Purchase Date;
(5) that Holders electing to have a Note purchased pursuant to an
Excess Proceeds Offer will be required to surrender the Note, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the
Note completed, to the Paying Agent at the address specified in the notice
prior to the close of business on the third Business Day prior to the
Proceeds Purchase Date;
(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than five (5) Business Days prior to the
Proceeds Purchase Date, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of the
Notes the Holder delivered for purchase and a statement that such Holder
is withdrawing its election to have such Notes purchased; and
(7) that Holders whose Notes are purchased only in part will be
issued new Notes in a principal amount equal to the unpurchased portion of
the Notes surrendered; provided that each Note purchased and each new Note
issued shall be in an original principal amount of $1,000 or integral
multiples thereof.
On or before the Proceeds Purchase Date, the Company shall (i)
accept for payment Notes or portions thereof properly tendered pursuant to the
Excess Proceeds Offer which are to be purchased in accordance with paragraph
(f)(1) above, (ii) deposit with the Paying Agent U.S. Legal Tender sufficient to
pay the purchase price plus accrued interest, if any, of all Notes to be
purchased and (iii) deliver to the Trustee Notes so accepted together with an
Officers' Certificate stating the Notes or portions thereof being purchased by
the Company. The Paying Agent shall promptly mail to the Holders of Notes so
accepted the purchase price for such Notes and the Trustee shall promptly
authenticate and mail (or cause to be transferred by book entry) to each Holder
a new Note equal in principal amount at maturity to any unpurchased portion of
the Notes surrendered; provided that each such new Note shall be in a principal
amount at maturity of $1,000 or an integral multiple thereof. Any Notes not so
accepted shall be promptly mailed by the Company to the Holders thereof. For
purposes of this Section 4.16, the Trustee shall act as the Paying Agent.
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Any amounts remaining after the purchase of Notes pursuant to an
Excess Proceeds Offer shall be returned by the Trustee to the Company and may be
used for any purpose not otherwise prohibited by this Indenture.
The Company shall comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to an Excess Proceeds Offer. To the extent that the
provisions of any securities laws or regulations conflict with this Section
4.16, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Section 4.16 by virtue thereof.
SECTION 4.17. Impairment of Security Interest.
Neither the Company nor any of the Guarantors will take or omit to
take any action which would adversely affect or impair the Liens in favor of the
Collateral Agent, on behalf of itself, the Trustee and the holders of the Notes,
with respect to the Collateral. Neither the Company nor any of its Restricted
Subsidiaries shall grant to any Person, or permit any Person to retain (other
than the Collateral Agent or a Sub-Collateral Agent), any interest whatsoever in
the Collateral other than Permitted Liens. Neither the Company nor any of its
Restricted Subsidiaries will enter into any agreement that requires the proceeds
received from any sale of Collateral to be applied to repay, redeem, defease or
otherwise acquire or retire any Indebtedness of any Person, other than as
permitted or required by this Indenture, the Notes, the Intercreditor Agreement,
the Credit Agreement or the Collateral Agreements. The Company shall, and shall
cause each Guarantor to, at their sole cost and expense, execute and deliver all
such agreements and instruments as the Collateral Agent or the Trustee shall
reasonably request to more fully or accurately describe the property intended to
be Collateral or the obligations intended to be secured by the Collateral
Agreements. The Company shall, and shall cause each Guarantor to, at its sole
cost and expense, file any such notice filings or other agreements or
instruments as may be reasonably necessary or desirable under applicable law to
perfect the Liens created by the Collateral Agreements at such times and at such
places as the Collateral Agent or the Trustee may reasonably request.
SECTION 4.18. Limitation on Liens.
The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
permit or suffer to exist any Liens (other than Permitted Liens) of any kind
against or upon any property or assets of the Company or any of its Restricted
Subsidiaries whether owned on the Issue Date or acquired after the Issue Date,
or any proceeds therefrom, or assign or otherwise convey any right to receive
income or profits therefrom.
SECTION 4.19. Conduct of Business.
The Company and its Restricted Subsidiaries will not engage in any
businesses which are not the same, similar or reasonably related or ancillary to
the businesses in which the Company and its Restricted Subsidiaries are engaged
on the Issue Date.
SECTION 4.20. Limitation on Issuances and Sales of Capital Stock of
Subsidiaries.
The Company will not permit or cause any of its Restricted
Subsidiaries to issue or sell any Capital Stock (other than director's
qualifying shares and other than to the Company or to a Wholly Owned Subsidiary
of the Company) or permit any Person (other than the Company or a Wholly Owned
Subsidiary of the Company) to own or hold any Capital Stock of any Restricted
Subsidiary of the Company or any Lien or security interest therein (other than
the lenders under the Credit Agreement);
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provided, however, that this provision shall not prohibit the sale of all of the
Capital Stock of a Restricted Subsidiary in compliance with the provisions of
Section 4.16.
SECTION 4.21. Real Estate Mortgages and Filings.
With respect to any real property, other than a leasehold
(individually and collectively, the "Premises"), (i) acquired after the Issue
Date with a purchase price or (ii) as of the Issue Date, with a Fair Market
Value, of greater than $500,000:
(a) the Company shall deliver to the Collateral Agent, as mortgagee,
fully-executed counterparts of Mortgages, each dated as of the date of
acquisition of such property, duly executed by the Company or the applicable
Subsidiary, together with evidence of the completion (or satisfactory
arrangements for the completion), of all recordings and filings of such Mortgage
as may be necessary or, in the reasonable opinion of the Collateral Agent
desirable, to create a valid, perfected Lien, subject to Permitted Liens,
against the properties purported to be covered thereby;
(b) the Collateral Agent shall have received mortgagee's title
insurance policies in favor of the Collateral Agent, as mortgagee for the
ratable benefit of the Collateral Agent, the Trustee and the Holders in amounts
and in form and substance and issued by insurers reasonably acceptable to the
Collateral Agent, with respect to the property purported to be covered by such
Mortgage, insuring that title to such property is marketable and that the
interests created by the Mortgage constitute valid Liens thereon free and clear
of all liens, defects and encumbrances other than Permitted Liens, and such
policies shall also include, to the extent available, a revolving credit
endorsement and such other endorsements as the Collateral Agent shall reasonably
request and shall be accompanied by evidence of the payment in full of all
premiums thereon; and
(c) the Company shall deliver to the Collateral Agent, with respect
to each of the covered Premises, filings, surveys, local counsel opinions and
fixture filings, along with such other documents, instruments, certificates and
agreements as the Collateral Agent and its counsel shall reasonably request.
SECTION 4.22. Leasehold Mortgages and Filings.
The Company and each of its Restricted Subsidiaries shall deliver
Mortgages with respect to the Company's leasehold interests in the premises (the
"Leased Premises") occupied by the Company pursuant to leases entered into after
the Issue Date (collectively, the "Leases," and individually, a "Lease"), other
than renewals of leases existing on the Issue Date.
Prior to the effective date of any Lease, the Company and such
Restricted Subsidiaries shall provide to the Trustee all of the items described
in clauses (b) and (c) of Section 4.21 and in addition shall use its reasonable
commercial efforts to obtain an agreement executed by the lessor of the Lease,
whereby the lessor consents to the Mortgage and waives or subordinates its
landlord Lien (whether granted by the instrument creating the leasehold estate
or by applicable law), if any, and which shall be entered into by the Collateral
Agent.
SECTION 4.23. Excess Cash Flow Offer.
(a) Within one hundred twenty (120) days after the end of each
fiscal year (beginning with the first full fiscal year after the Issue Date),
the Company will make an offer to purchase to all Holders (the "Excess Cash Flow
Offer") to purchase the maximum principal amount of Notes that may be purchased
with 50% of Excess Cash Flow for such fiscal year (the "Excess Cash Flow Offer
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Amount"), at a purchase price in cash equal to 100% of the Accreted Value of the
Notes to be purchased, plus accrued and unpaid interest to the date of such
purchase. Each Excess Cash Flow Offer shall remain open for a period of twenty
(20) Business Days, unless a longer period is required by law (the "Excess Cash
Flow Offer Period"). Promptly after the termination of the Excess Cash Flow
Offer Period, the Company shall purchase and send, by first-class mail, postage
prepaid, payment for the Excess Cash Flow Offer Amount for the Notes or portions
thereof tendered, pro rata (based on amounts tendered) or by such other method
as may be required by law, or, if less than the Excess Cash Flow Offer Amount
has been tendered, all Notes tendered pursuant to the Excess Cash Flow Offer. If
the aggregate amount of Notes tendered pursuant to any Excess Cash Flow Offer is
less than the Excess Cash Flow Offer Amount, the Company may, subject to the
other provisions of this Indenture and the Collateral Agreements, use any such
excess cash flow for general corporate purposes. Upon receiving notice of the
Excess Cash Flow Offer, Holders may elect to tender their Notes, in whole or in
part, in integral multiples of $1,000 in exchange for cash.
(b) No later than thirty (30) days prior to the required purchase
date, the Company shall send, by first-class mail, postage prepaid, notice to
each holder, with a copy to the Trustee, which notice will govern the terms of
the Excess Cash Flow Offer. Such notice will state, among other things: (1) the
purchase price; (2) the purchase date, which must be no earlier than thirty (30)
days nor later than sixty (60) days from the date such notice is mailed, other
than as may be required by law; (3) that the Company is making an Excess Cash
Flow Offer; (4) that any Note not tendered will continue to accrue interest; (5)
that unless the Company defaults on the payment of the purchase price, any Notes
accepted for payment pursuant to the Excess Cash Flow Offer will cease to accrue
interest after the purchase date; (6) that Holders will be entitled to withdraw
their election if the Paying Agent receives, not later than five (5) Business
Days prior to the purchase date, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of the Notes
the Holder delivered for purchase and a statement that such Holder is
withdrawing its election to have such Notes purchased; and (6) that Holders
whose Notes are purchased only in part will be issued new Notes in a principal
amount equal to the unpurchased portion of the Notes surrendered; provided that
each Note purchased and each new Note issued shall be in an original principal
amount of $1,000 or integral multiples thereof.
(c) Holders electing to have a Note purchased pursuant to an Excess
Cash Flow Offer will be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, to
the Paying Agent at the address specified in the notice prior to the close of
business on the third Business Day prior to the purchase date.
(d) On the purchase date, the Company shall, to the extent lawful:
(1) accept for payment all Notes or portions thereof properly tendered pursuant
to the Excess Cash Flow Offer; (2) deposit with the Paying Agent an amount equal
to the purchase price in respect of all Notes or portions thereof so tendered;
and (3) deliver or cause to be delivered to the Trustee the Notes so accepted
together with an Officers' Certificate stating the aggregate principal amount at
maturity of Notes or portions thereof being purchased by the Company.
(e) The Paying Agent shall promptly mail to each Holder of Notes so
tendered the purchase price for such Notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each Holder
a new Note equal in principal amount at maturity to any unpurchased portion of
the Notes surrendered; provided that each such new Note will be in a principal
amount at maturity of $1,000 or an integral multiple thereof.
(f) The Company shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to an Excess Cash Flow
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offer. To the extent that the provisions of any securities laws or regulations
conflict with this Section 4.23, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under this Section 4.23 by virtue thereof.
SECTION 4.24. Limitation on Capital Expenditures.
The aggregate amount of the Company's and its Restricted
Subsidiaries' Capital Expenditures in any consecutive four fiscal quarter period
is limited to the greater of (i) one-third of the Company's EBITDA in the
consecutive four fiscal quarter period ending with the latest fiscal quarter for
which financial statements are required to be delivered by the Company or
Holdings pursuant to Section 4.08 of this Indenture and (ii) the Capital
Expenditures Basket.
SECTION 4.25. Limitation on Sale/Leaseback Transactions.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, enter into any Sale/Leaseback Transaction with respect to any
property unless (a) immediately after giving effect to such Sales/Leaseback
Transaction, the Company or such Restricted Subsidiary would be entitled to
incur at least $1.00 of additional Indebtedness (other than Permitted
Indebtedness) in compliance with Section 4.12 and (ii) to the extent such
Sale/Leaseback Transaction is an Asset Sale, the Company complies with Section
4.16.
SECTION 4.26. Choice of Accrual Periods. For periods beginning after
October 15, 2007, the final date of each "accrual period" for the Notes chosen
by the Company for purposes of Treasury regulations section 1.163-7(d) will be
each Interest Payment Date after October 15, 2007.
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Merger, Consolidation and Sale of Assets.
(a) The Company will not, in a single transaction or series of
related transactions, consolidate or merge with or into any Person, or sell,
assign, transfer, lease, convey or otherwise dispose of (or cause or permit any
Restricted Subsidiary of the Company to sell, assign, transfer, lease, convey or
otherwise dispose of) all or substantially all of the Company's properties and
assets (determined on a consolidated basis for the Company and the Company's
Restricted Subsidiaries) to any Person unless:
(1) either: (i) the Company shall be the surviving or continuing
corporation; or (ii) the Person (if other than the Company) formed by or
surviving such consolidation or merger or the Person which acquires by
sale, assignment, transfer, lease, conveyance or other disposition all or
substantially all of the properties and assets of the Company and of the
Company's Restricted Subsidiaries: (x) shall be a corporation organized
and validly existing under the laws of the United States or any State
thereof or the District of Columbia; and (y) shall expressly assume, by
supplemental indenture (in form and substance reasonably satisfactory to
the Trustee), executed and delivered to the Trustee, the Company's
obligation for the due and punctual payment of the principal of, premium,
if any, and interest on all of the Notes and the performance of every
covenant of the Notes, this Indenture, the Collateral Agreements and the
Registration Rights Agreement on the part of the Company to be performed
or observed;
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(2) immediately after giving effect to such transaction, the Company
or such surviving entity, as the case may be will be able to incur at
least $1.00 of additional Indebtedness (other than Permitted Indebtedness)
in compliance with Section 4.12; provided that this clause (2) does not
apply if, in the good faith determination of the Board of Directors of the
Company, whose determination will be evidenced by a Board Resolution, the
principal purpose of such transaction is to change the state of
incorporation of the Company and any such transaction will not have as one
of its purposes the evasion of the foregoing limitations; and
(3) immediately after giving effect to such transaction or series of
related transactions, no Default or Event of Default will have occurred or
be continuing.
In connection with any such consolidation, merger, sale, assignment,
transfer, lease, conveyance or other disposition, the Company or the surviving
Person must deliver to the trustee, in form and substance reasonably
satisfactory to the Trustee, an Officers' Certificate and an Opinion of Counsel,
each stating that such consolidation, merger, sale, assignment, transfer, lease,
conveyance or other disposition and, if a supplemental indenture is required in
connection with such transaction, such supplemental indenture comply with the
applicable provisions of this Indenture and that all conditions precedent in
this Indenture relating to such transaction have been satisfied.
SECTION 5.02. Successor Corporation Substituted.
Upon any consolidation, combination or merger or any transfer of all
or substantially all of the assets of the Company in accordance with Section
5.01 in which the Company is not the continuing corporation, the successor
Person formed by such consolidation or into which the Company is merged or to
which such conveyance, lease or transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture and the Notes with the same effect as if such surviving entity
had been named as such, and upon such substitution, the Company and any
Guarantors that remain Subsidiaries of the Company after such consolidation,
merger or sale shall be released from the Notes and this Indenture.
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default.
Each of the following is an "Event of Default":
(1) the Company or any Guarantor fails to pay premium, if any,
interest on or any other amount (other than principal of the Notes) on any
Notes when the same becomes due and payable and the default continues for
a period of thirty (30) days;
(2) the Company or any Guarantor fails to pay the principal on any
Notes, when such principal becomes due and payable, at maturity, upon
optional or mandatory redemption, required purchase or otherwise;
(3) a default occurs in the observance or performance of any other
covenant contained in this Indenture (other than the payment of the
principal of, or premium, if any, interest or any other amount on any Note
or a failure to purchase Notes validly tendered under Section 4.15 or
4.16) which default continues for a period of thirty (30) days after the
Company
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receives written notice specifying the default (and demanding that such
default be remedied) from the Trustee or the Holders of at least 25% of
the outstanding principal amount at maturity of the Notes (except in the
case of a default with respect to Section 5.01, which will constitute an
Event of Default with such notice requirement but without such passage of
time requirement);
(4) a default under any other agreement contained in this Indenture
or under any agreement contained in any Collateral Agreement, which
default continues for a period of sixty (60) days after the Company
receives written notice specifying the default (and demanding that such
default be remedied) from the Trustee or the Holders of at least 25% of
the outstanding principal amount at maturity of the Notes;
(5) the failure to pay at final maturity (giving effect to any
applicable grace periods and any extensions thereof) the principal amount
of any Indebtedness of the Company or any Restricted Subsidiary of the
Company, or the acceleration of the final stated maturity of any such
Indebtedness (which acceleration is not rescinded, annulled or otherwise
cured within twenty (20) days from the date of acceleration) if the
aggregate principal amount of such Indebtedness, together with the
principal amount of any other such Indebtedness in default for failure to
pay principal at final maturity or which has been accelerated (in each
case with respect to which the 20-day period described above has elapsed),
aggregates $5,000,000 or more at any one time;
(6) one or more judgments in an aggregate amount in excess of
$5,000,000 (which are not covered by a reputable and solvent third party
insurer as to which such insurer has not disclaimed coverage) shall have
been rendered against the Company or any of its Restricted Subsidiaries
and such judgments remain undischarged, unbonded, unpaid or unstayed for a
period of sixty (60) days after such judgment or judgments become final
and non-appealable;
(7) the Company or any Significant Subsidiary (A) commences a
voluntary case or proceeding under any Bankruptcy Law with respect to
itself, (B) consents to the entry of a judgment, decree or order for
relief against it in an involuntary case or proceeding under any
Bankruptcy Law, (C) consents to the appointment of a Custodian of it or
for substantially all of its property, (D) consents to or acquiesces in
the institution of a bankruptcy or an insolvency proceeding against it or
(E) makes a general assignment for the benefit of its creditors;
(8) a court of competent jurisdiction enters a judgment, decree or
order for relief in respect of the Company or any Significant Subsidiary
in an involuntary case or proceeding under any Bankruptcy Law, which shall
(A) approve as properly filed a petition seeking reorganization,
arrangement, adjustment or composition in respect of the Company or any
Significant Subsidiary, (B) appoint a Custodian of the Company or any
Significant Subsidiary or for substantially all of its property or (C)
order the winding-up or liquidation of its affairs; and such judgment,
decree or order shall remain unstayed and in effect for a period of sixty
(60) consecutive days;
(9) any Collateral Agreement at any time for any reason shall cease
to be in full force and effect (other than as provided by the terms of
such Collateral Agreement and this Indenture), or ceases to give the
Collateral Agent the Liens, rights, powers and privileges purported to be
created thereby, superior to and prior to the rights of all third Persons
other than the Lenders and other than the holders of Permitted Liens and
subject to no other Liens except as expressly permitted by the applicable
Collateral Agreement;
(10) the Company or any of the Subsidiaries, directly or indirectly,
contest in any manner the effectiveness, validity, binding nature or
enforceability of any Collateral Agreement; or
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(11) any Guarantee of a Significant Subsidiary ceases to be in full
force and effect or any Guarantee of a Significant Subsidiary is declared
to be null and void and unenforceable or any Guarantee of a Significant
Subsidiary is found to be invalid or any Guarantor that is a Significant
Subsidiary denies its liability under its Guarantee (in each case, other
than by reason of release of a Guarantor in accordance with the terms of
this Indenture).
SECTION 6.02. Rights of the Company.
So long as no Event of Default has occurred and is continuing, and
subject to certain terms and conditions in this Indenture, the Credit Agreement,
the Collateral Agreements and the Intercreditor Agreement, the Company shall be
entitled to receive all cash dividends, interest and other payments made upon or
with respect to the Capital Stock of any of its Subsidiaries held as Collateral
and to exercise any voting, consensual rights and other rights pertaining to
such Capital Stock. Upon the occurrence and during the continuance of an Event
of Default, subject to the terms of the Intercreditor Agreement and the
documents securing the Credit Agreement, upon notice from the Collateral Agent,
(a) all of the Company's rights to exercise such voting, consensual rights, or
other rights will cease and all such rights will become vested in the Collateral
Agent, which, to the extent permitted by law, will have the sole right to
exercise such voting, consensual rights or other rights, (b) all of the
Company's rights to receive all cash dividends, interest and other payments made
upon or with respect to the Collateral will cease, and such cash dividends,
interest and other payments will be paid to the Collateral Agent or the lenders
under the Credit Agreement, and (c) the Collateral Agent may sell the Collateral
or any part thereof in accordance with, and subject to the terms of, the
Collateral Agreements subject to the prior rights of the lenders under the
Credit Agreement. All funds distributed under the Collateral Agreements by the
Collateral Agent will be distributed by the Collateral Agent in accordance with
the provisions of the Intercreditor Agreement and this Indenture.
SECTION 6.03. Acceleration.
(a) If an Event of Default (other than an Event of Default specified
in Section 6.01(7) or (8) with respect to the Company) occurs and is continuing
and has not been waived pursuant to Section 6.05, then the Trustee or the
Holders of at least 25% in principal amount at maturity of outstanding Notes may
declare the Accreted Value of and accrued and unpaid interest on all the
outstanding Notes to be due and payable by notice in writing to the Company and
the Trustee specifying the respective Event of Default and that it is a "notice
of acceleration" (the "Acceleration Notice"), and the same shall become
immediately due and payable.
(b) If an Event of Default specified in Section 6.01(7) or (8) with
respect to the Company occurs and is continuing, then the Accreted Value of and
accrued and unpaid interest on all of the outstanding Notes shall ipso facto
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any Holder.
(c) At any time after a declaration of acceleration with respect to
the Notes in accordance with this Section 6.03, the Holders of a majority in
principal amount at maturity of the Notes may rescind and cancel such
declaration and its consequences if (1) the rescission would not conflict with
any judgment or decree; (2) all existing Events of Default have been cured or
waived except nonpayment of principal or interest that has become due solely
because of the acceleration; (3) to the extent the payment of such interest is
lawful, interest on overdue installments of interest and overdue principal and
premium, if any, which has become due otherwise than by such declaration of
acceleration, has been paid; (4) the Company has paid the Trustee its reasonable
compensation and reimbursed the Trustee for its expenses, disbursements and
advances; and (5) in the event of the cure or waiver of an Event of Default of
the type described in Section 6.01(7) or (8), the Trustee shall have received an
Officers' Certificate and
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an Opinion of Counsel that such Event of Default has been cured or waived. No
such rescission shall affect any subsequent Event of Default or impair any right
consequent thereto.
SECTION 6.04. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of or interest on the Notes or to enforce the performance
of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. No remedy is exclusive of any
other remedy. All available remedies are cumulative to the extent permitted by
law.
SECTION 6.05. Waiver of Past Defaults.
Subject to Sections 2.09, 6.08 and 9.02, the Holders of a majority
in principal amount at maturity of the Notes by notice to the Trustee may waive
an existing Default or Event of Default under this Indenture, and its
consequences, except a Default in the payment of principal thereof, or premium
or interest thereon, as specified in clauses (1) and (2) of Section 6.01 or in
respect of a covenant or provision which under this Indenture cannot be modified
or amended without the consent of the Holder of each Note then outstanding. When
a Default or Event of Default is waived, it is cured and ceases.
SECTION 6.06. Control by Majority.
Subject to Section 2.09, the Holders of a majority in aggregate
principal amount at maturity of the outstanding Notes may direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred on the Trustee, including,
without limitation, any remedies provided for in Section 6.04. Subject to
Section 7.01 and 7.02(f), however, the Trustee may refuse to follow any
direction that the Trustee reasonably believes conflicts with any law or this
Indenture, that the Trustee determines may be unduly prejudicial to the rights
of another Holder, or that may involve the Trustee in personal liability;
provided that the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
SECTION 6.07. Limitation on Suits.
A Holder may not pursue any remedy with respect to this Indenture or
the Notes unless:
(1) the Holder gives to the Trustee written notice of a continuing
Event of Default;
(2) Holders of at least 25% in principal amount of the outstanding
Notes make a written request to the Trustee to institute proceedings in
respect of that Event of Default;
(3) such Holders offer to the Trustee security or indemnity
reasonably satisfactory to the Trustee against any loss, liability or
expense to be incurred in compliance with such request;
(4) the Trustee does not comply with the request within sixty (60)
days after receipt of the request and the offer of indemnity; and
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(5) during such 60-day period the Holders of a majority in principal
amount at maturity of the outstanding Notes do not give the Trustee a
direction which, in the opinion of the Trustee, is inconsistent with the
request.
The foregoing limitations shall not apply to a suit instituted by a
Holder for the enforcement of the payment of principal and premium, if any, or
interest on such Note on or after the respective due dates set forth in such
Note (including upon acceleration thereof) or the institution of any proceeding
with respect to this Indenture or any remedy hereunder, including without
limitation acceleration, by the Holders of a majority in principal amount at
maturity of outstanding Notes; provided that upon institution of any proceeding
or exercise of any remedy, such Holders provide the Trustee with prompt notice
thereof.
A Holder may not use this Indenture to prejudice the rights of
another Holder or to obtain a preference or priority over such other Holder.
SECTION 6.08. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of
any Holder to receive payment of principal of and interest on a Note, on or
after the respective due dates expressed in such Note, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.
SECTION 6.09. Collection Suit by Trustee.
If an Event of Default in payment of principal or interest specified
in Section 6.01(1) or (2) occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express trust against the Company
or any other obligor on the Notes for the whole amount of principal and accrued
interest remaining unpaid, together with interest on overdue principal and, to
the extent that payment of such interest is lawful, interest on overdue
installments of interest at the rate set forth in Section 4.01 and such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.
SECTION 6.10. Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses, taxes,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders allowed in any judicial proceedings relating to the Company or any other
obligor upon the Notes, any of their respective creditors or any of their
respective property and shall be entitled and empowered to collect and receive
any monies or other property payable or deliverable on any such claims and to
distribute the same, and any Custodian in any such judicial proceedings is
hereby authorized by each Holder to make such payments to the Trustee and, in
the event that the Trustee shall consent to the making of such payments directly
to the Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, taxes, disbursements and advances of the Trustee, its
agent and counsel, and any other amounts due the Trustee under Section 7.07. The
Company's payment obligations under this Section 6.10 shall be secured in
accordance with the provisions of Section 7.07. Nothing herein contained shall
be deemed to authorize the Trustee to authorize or consent to or accept or adopt
on behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
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SECTION 6.11. Priorities.
If the Trustee collects any money or property pursuant to this
Article Six, it shall, subject to the terms of the Intercreditor Agreement, pay
out the money in the following order:
First: to the Trustee, the Collateral Agent, the Paying Agent and
the Registrar for amounts due under Section 7.07;
Second: if the Holders are forced to proceed against the Company
directly without the Trustee, to Holders for their collection costs;
Third: to Holders for amounts due and unpaid on the Notes for
principal and interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes for principal and
interest, respectively; and
Fourth: to the Company or any other obligor on the Notes, as their
interests may appear, or as a court of competent jurisdiction may direct.
The Trustee, upon prior notice to the Company, may fix a record date
and payment date for any payment to Holders pursuant to this Section 6.11.
SECTION 6.12. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.12 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.08, or a suit by a Holder or Holders of more than 10% in
principal amount of the outstanding Notes.
SECTION 6.13. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceedings to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders will
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders will continue
as though no such proceeding has been instituted.
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee.
The duties and responsibilities of the Trustee shall be as provided
by the TIA and as set forth herein.
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(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such rights and powers vested in it by this Indenture and
use the same degree of care and skill in its exercise thereof as a prudent
person would exercise or use under the circumstances in the conduct of his or
her own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee need perform only those duties as are specifically
set forth in this Indenture and no covenants or obligations shall be
implied in this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and substantially conforming to the requirements of this
Indenture. However, the Trustee shall examine the certificates and
opinions to determine whether or not they substantially conform to the
requirements of this Indenture.
(c) Notwithstanding anything to the contrary herein contained, the
Trustee may not be relieved from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b) of
this Section 7.01;
(2) the Trustee shall not be liable for any error of judgment made
in good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.06.
(d) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section 7.01.
(f) The Trustee shall not be liable for interest on any money or
assets received by it except as the Trustee may agree in writing with the
Company. Assets held in trust by the Trustee need not be segregated from other
assets except to the extent required by law.
SECTION 7.02. Rights of Trustee.
Subject to Section 7.01:
(a) The Trustee may rely and shall be fully protected in acting or
refraining from acting upon any document reasonably believed by it to be genuine
and to have been signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.
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(b) Before the Trustee acts or refrains from acting, it may consult
with counsel and may require an Officers' Certificate or an Opinion of Counsel,
or both, which shall conform to Sections 11.04 and 11.05. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed with
due care.
(d) The Trustee shall not be liable for any action that it takes or
omits to take in good faith which it reasonably believes to be authorized or
within its rights or powers under this Indenture.
(e) The Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, notice, request, direction, consent, order, bond,
debenture, or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters as it may
see fit and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled, upon reasonable notice to the Company, to
examine the books, records and premises of the Company, personally or by agent
or attorney and to consult with the officers and representatives of the Company,
including the Company's accountants and attorneys. Except as expressly stated
herein to the contrary, in no event shall the Trustee have any responsibility to
ascertain whether there has been compliance with any of the covenants or
provisions of Articles 4 or 5 hereof.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders pursuant to the provisions of this Indenture
unless such Holders shall have offered to the Trustee security or indemnity
reasonably satisfactory to the Trustee against the costs, expenses and
liabilities which may be incurred by it in compliance with such request, order
or direction.
(g) The Trustee shall not be required to give any bond or surety in
respect of the performance of its powers and duties hereunder.
SECTION 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company, any
Subsidiary of the Company or their respective Affiliates with the same rights it
would have if it were not Trustee. Any Agent may do the same with like rights.
However, the Trustee must comply with Sections 7.10 and 7.11 of this Indenture,
and the Trustee is subject to TIA Sections 310(b) and 311.
SECTION 7.04. Trustee's Disclaimer.
The Trustee makes no representation as to the validity or adequacy
of this Indenture or the Notes, and it shall not be accountable for the
Company's use of the proceeds from the Notes, and it shall not be responsible
for any statement of the Company in this Indenture or the Notes other than the
Trustee's certificate of authentication.
SECTION 7.05. Notice of Default.
If a Default or an Event of Default occurs and is continuing and if
it is actually known to a Trust Officer of the Trustee, the Trustee shall mail
to each Holder, with a copy to the Company, notice of the Default or Event of
Default within ten (10) days after the occurrence thereof. Except in the case of
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a Default or an Event of Default in payment of principal of, or interest on, any
Note, including an accelerated payment and the failure to make payment on the
Change of Control Payment Date pursuant to a Change of Control Offer or on the
Proceeds Purchase Date pursuant to an Excess Proceeds Offer and, except in the
case of a failure to comply with Article Five, the Trustee may withhold the
notice if a committee of its Trust Officers in good faith determines that
withholding the notice is in the interest of the Holders.
The Company shall furnish to the Trustee annual statements as to the
performance by the Company and the Guarantors of their respective obligations
under this Indenture and as to any default in such performance. The Company
shall notify the Trustee promptly of the occurrence of any Default or Event of
Default.
SECTION 7.06. Reports by Trustee to Holders.
Within sixty (60) days after each October 15, beginning with October
15, 2003, the Trustee shall, to the extent that any of the events described in
TIA Section 313(a) occurred within the previous twelve months, but not
otherwise, mail to each Holder a brief report dated as of such date that
complies with TIA Section 313(a). The Trustee also shall comply with TIA
Sections 313(b) and (c).
A copy of each report at the time of its mailing to Holders shall be
mailed to the Company and filed with the SEC and each stock exchange or market,
if any, on which the Notes are listed or quoted.
The Company shall promptly notify the Trustee if the Notes become
listed or quoted on any stock exchange or market and the Trustee shall comply
with TIA Section 313(d).
SECTION 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee, the Collateral Agent, the
Paying Agent and the Registrar (each an "Indemnified Party") from time to time
reasonable compensation for their respective services as Trustee, Collateral
Agent, Paying Agent or Registrar, as the case may be. The Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Company shall reimburse each Indemnified Party upon request for all
reasonable out-of-pocket expenses incurred or made by it in connection with the
performance of its duties under, as the case may be, this Indenture, the
Collateral Agreements or the Intercreditor Agreement, except any such expense as
may arise from its gross negligence (or in the case of the Trustee, mere
"negligence"), bad faith or willful misconduct. Such expenses shall include the
reasonable fees and expenses of each of such Indemnified Party's agents and
counsel.
The Company hereby indemnifies each Indemnified Party and its
agents, employees, stockholders and directors and officers for, and holds each
of them harmless against, any loss, cost, claim, liability or expense incurred
by any of them except for such actions to the extent caused by any gross
negligence (or in the case of the Trustee, mere "negligence"), bad faith or
willful misconduct on the part of such Indemnified Party, arising out of or in
connection with this Indenture, the Collateral Agreements or the Intercreditor
Agreement, or the administration of this trust, including the reasonable costs
and expenses of enforcing this Indenture against the Company (including this
Section 7.07) and defending themselves against any claim or liability in
connection with the exercise or performance of any of their rights, powers or
duties hereunder or thereunder. The Trustee shall notify the Company promptly of
any claim asserted against an Indemnified Party for which such Indemnified Party
has advised the Trustee that it may seek indemnity hereunder. Failure by the
Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder. At the Indemnified Party's sole discretion, the Company
shall
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defend the claim and the Indemnified Party shall cooperate and may participate
in the defense; provided that any settlement of a claim shall be approved in
writing by the Indemnified Party. Alternatively, the Indemnified Party may at
its option have separate counsel of its own choosing and the Company shall pay
the reasonable fees and expenses of such counsel; provided that the Company will
not be required to pay such fees and expenses if it assumes the Indemnified
Party's defense and there is no conflict of interest between the Company and the
Indemnified Party in connection with such defense as reasonably determined by
the Indemnified Party. The Company need not pay for any settlement made without
its written consent, which consent shall not be unreasonably withheld. The
Company need not reimburse any expense or indemnify against any loss or
liability to the extent incurred by an Indemnified Party through its gross
negligence (or in the case of the Trustee, mere "negligence", bad faith or
willful misconduct.
To secure the Company's payment obligations in this Section 7.07,
each Indemnified Party shall have a lien prior to the Notes on all assets or
money held or collected by the Trustee, in its capacity as Trustee, except
assets or money held in trust to pay principal of or interest on particular
Notes which have been called for redemption.
When an Indemnified Party incurs expenses or renders services after
an Event of Default specified in Section 6.01(7) or (8) occurs, such expenses
(including the reasonable charges and expenses of its counsel) and the
compensation for such services are intended to constitute expenses of
administration under any Bankruptcy Law.
The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture, termination of the Collateral
Agreements or the Intercreditor Agreement or the resignation of the Trustee.
The Trustee shall comply with the provisions of TIA Section
312(b)(2) to the extent applicable.
SECTION 7.08. Replacement of Trustee.
The Trustee may resign by so notifying the Company. The Holders of a
majority in principal amount at maturity of the outstanding Notes may remove the
Trustee by so notifying the Company and the Trustee and may appoint a successor
Trustee. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee
or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall notify each Holder of such
event and shall promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holders of a majority in aggregate principal
amount at maturity of the outstanding Notes may appoint a successor Trustee to
replace the successor Trustee appointed by the Company.
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A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that,
the retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee, subject to the lien provided in Section 7.07, the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. A successor Trustee shall mail notice of its succession to each
Holder.
If a successor Trustee does not take office within sixty (60) days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or the Holders of at least 10% in principal amount of the outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee fails to comply with Section 7.10, any Holder who
satisfies the requirements of TIA Section 310(b) may petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.
The Company shall give notice of any resignation and any removal of
the Trustee and each appointment of a successor Trustee to all Holders. Each
notice shall include the name of the successor Trustee and the address of its
corporate trust office.
Notwithstanding any resignation or replacement of the Trustee
pursuant to this Section 7.08, the Company's obligations under Section 7.07
shall continue for the benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
Person, the resulting, surviving or transferee Person without any further act
shall, if such resulting, surviving or transferee Person is otherwise eligible
hereunder, be the successor Trustee; provided, however, that such Person shall
be otherwise qualified and eligible under this Article Seven.
SECTION 7.10. Eligibility; Disqualification.
(a) This Indenture shall always have a Trustee who satisfies the
requirements of TIA Sections 310(a)(1), (2), (3) and (5). The Trustee (or, in
the case of a corporation included in a bank holding company system, the related
bank holding company) shall have a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of
condition. In addition, if the Trustee is a corporation included in a bank
holding company system, the Trustee, independently of such bank holding company,
shall meet the capital requirements of TIA Section 310(a)(2). The Trustee shall
comply with TIA Section 310(b); provided, however, that there shall be excluded
from the operation of TIA Section 310(b)(1) any indenture or indentures under
which other securities, or certificates of interest or participation in other
securities, of the Company are outstanding if the requirements for such
exclusion set forth in TIA Section 310(b)(1) are met. The provisions of TIA
Section 310 shall apply to the Company, as obligor of the Notes.
(b) If the Trustee has or acquires a conflicting interest within the
meaning of the TIA, the Trustee will either eliminate such interest or resign,
to the extent and in the manner provided by, and subject to the provisions of,
the TIA and this Indenture.
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SECTION 7.11. Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated
therein.
SECTION 7.12. [RESERVED]
SECTION 7.13. Co-trustees, co-Collateral Agent and Separate
Trustees, Collateral Agent.
(a) At any time or times, for the purpose of meeting the legal
requirements of any jurisdiction in which any of the Collateral may at the time
be located, the Company and the Trustee shall have the power to appoint, and,
upon the written request of the Trustee or of the Holders of at least 25% in
principal amount of the Notes outstanding, the Company shall for such purpose
join with the Trustee in the execution, delivery and performance of all
instruments and agreements necessary or proper to appoint, one or more Persons
approved by the Trustee either to act as co-trustee, jointly with the Trustee,
of all or any part of the Collateral, to act as co-collateral agent, jointly
with the Collateral Agent, or to act as separate trustees or Collateral Agent of
any such property, in either case with such powers as may be provided in the
instrument of appointment, and to vest in such Person or Persons in the capacity
aforesaid, any property, title, right or power deemed necessary or desirable,
subject to the other provisions of this Section 7.13. As of the Issue Date, the
Company and the Trustee hereby appoint U.S. Bank Trust National Association as
the initial Collateral Agent and U.S. Bank Trust National Association hereby
accepts such appointment and agrees to act and serve in such capacity. If the
Company does not join in such appointment within fifteen (15) days after the
receipt by it of a request so to do, or in case an Event of Default has occurred
and is continuing, the Trustee alone shall have the power to make such
appointment.
(b) Should any written instrument from the Company be required by
any co-trustee, co-Collateral Agent or separate trustee or separate Collateral
Agent so appointed for more fully confirming to such co-trustee or separate
trustee such property, title, right or power, any and all such instruments
shall, on request, be executed, acknowledged and delivered by the Company.
(c) Every co-trustee, co-collateral agent or separate trustee or
separate collateral agent shall, to the extent permitted by law, but to such
extent only, be appointed subject to the following terms, namely:
(i) The Notes shall be authenticated and delivered, and all rights,
powers, duties and obligations hereunder in respect of the custody of
securities, cash and other personal property held by, or required to be
deposited or pledged with, the Trustee hereunder, shall be exercised
solely, by the Trustee.
(ii) The rights, powers, duties and obligations hereby conferred or
imposed upon the Trustee in respect of any property covered by such
appointment shall be conferred or imposed upon and exercised or performed
by the Trustee or by the Trustee and such co-trustee or separate trustee
jointly, or by the Collateral Agent and such co-Collateral Agent or
separate Collateral Agent, jointly as shall be provided in the instrument
appointing such co-trustee or separate trustee, Collateral Agent or
co-Collateral Agent, except to the extent that under any law of any
jurisdiction in which any particular act is to be performed, the Trustee
shall be incompetent or unqualified to perform such act, in which event
such rights, powers, duties and obligations shall
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be exercised and performed by such co-trustee or separate trustee,
Collateral Agent or co-Collateral Agent.
(iii) The Trustee at any time, by an instrument in writing executed
by it, with the concurrence of the Company evidenced by a Board
Resolution, may accept the resignation of or remove any co-trustee or
separate trustee appointed under this Section 7.13, and, in case an Event
of Default has occurred and is continuing, the Trustee shall have power to
accept the resignation of, or remove, any such co-trustee, co-collateral
agent or separate trustee, separate collateral agent without the
concurrence of the Company. Upon the written request of the Trustee, the
Company shall join with the Trustee in the execution, delivery and
performance of all instruments and agreements necessary or proper to
effectuate such resignation or removal. A successor to any co-trustee,
co-collateral agent, separate trustee or separate collateral agent so
resigned or removed may be appointed in the manner provided in this
Section 7.13.
(iv) No co-trustee, co-collateral agent, separate trustee or
separate collateral agent hereunder shall be personally liable by reason
of any act or omission of the Trustee, or any, other such trustee
hereunder.
(v) Any act of Holders delivered to the Trustee or Collateral Agent
shall be deemed to have been delivered to each such co-trustee,
co-collateral agent, separate trustee and separate collateral agent.
SECTION 7.14. Authorization of Actions to Be Taken by the Trustee
Under the Collateral Agreements.
Subject to the provisions of the applicable Collateral Agreements
and the Intercreditor Agreement, (a) the Trustee and the Collateral Agent will
execute and deliver the Collateral Agreements and the Intercreditor Agreement
and act in accordance with the terms thereof, (b) the Trustee and the Collateral
Agent may, in their sole discretion and without the consent of the Holders, take
all actions they deem necessary or appropriate in order to (i) enforce any of
the terms of the Collateral Agreements and (ii) collect and receive any and all
amounts payable in respect of the Obligations of the Company hereunder, and (c)
the Trustee and the Collateral Agent shall have power to institute and to
maintain such suits and proceedings as they may deem expedient to prevent any
impairment of the Collateral by any act that may be unlawful or in violation of
the Collateral Agreements or this Indenture, and suits and proceedings as the
Trustee and the Collateral Agent may deem expedient to preserve or protect their
interests and the interests of the Holders in the Collateral (including the
power to institute and maintain suits or proceedings to restrain the enforcement
of or compliance with any legislative or other governmental enactment, rule or
order that may be unconstitutional or otherwise invalid if the enforcement of,
or compliance with, such enactment, rule or order would impair the security
interest thereunder or be prejudicial to the interests of the Holders, the
Trustee or the Collateral Agent). Notwithstanding the foregoing, the Trustee
may, at the expense of the Company, request the direction of the Holders with
respect to any such actions and upon receipt of the written consent of the
Holders of at least a majority in aggregate principal amount of the Outstanding
Notes, shall take such actions.
SECTION 7.15. Authorization of Receipt of Funds by the Trustee Under
the Collateral Agreements.
The Trustee is authorized to receive any funds for the benefit of the Holders
distributed under the Collateral Agreements, and to make further distributions
of such funds to the Holders in accordance with the provisions of Section 6.11
and the other provisions of this Indenture.
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ARTICLE EIGHT
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 8.01. Legal Defeasance and Covenant Defeasance.
(a) The Company may, at its option and at any time, elect to have
either paragraph (b) or paragraph (c) below be applied to the outstanding Notes
upon compliance with the applicable conditions set forth in paragraph (d).
(b) Upon the Company's exercise under paragraph (a) of the option
applicable to this paragraph (b), the Company and the Guarantors shall be deemed
to have been released and discharged from their obligations with respect to the
outstanding Notes on the date the applicable conditions set forth below are
satisfied (hereinafter, "Legal Defeasance"). For this purpose, such Legal
Defeasance means that the Company shall be deemed to have paid and discharged
the entire Indebtedness represented by the outstanding Notes, which shall
thereafter be deemed to be "outstanding" only for the purposes of the Sections
and matters under this Indenture referred to in (i) and (ii) below, and to have
satisfied all their other obligations under such Notes and this Indenture
insofar as such Notes are concerned, except for the following which shall
survive until otherwise terminated or discharged hereunder: (i) the rights of
Holders of outstanding Notes to receive solely from the trust fund described in
paragraph (d) below and as more fully set forth in such paragraph payments in
respect of the principal of, premium, if any, and interest on such Notes when
such payments are due, (ii) obligations listed in Section 8.03, subject to
compliance with this Section 8.01 and (iii) the rights, powers, trusts, duties
and immunities of the Trustee and the Company's obligations in connection
therewith. The Company may exercise its option under this paragraph (b)
notwithstanding the prior exercise of its option under paragraph (c) below with
respect to the Notes.
(c) Upon the Company's exercise under paragraph (a) of the option
applicable to this paragraph (c), the Company and its Restricted Subsidiaries
shall be released and discharged from their obligations under any covenant
contained in Article Five, Sections 4.05 and 4.08, and Sections 4.10 through
4.25 with respect to the outstanding Notes on and after the date the conditions
set forth below are satisfied (hereinafter, "Covenant Defeasance"), and the
Notes shall thereafter be deemed to be not "outstanding" for the purpose of any
direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes). For this purpose, such Covenant Defeasance means that, with respect
to the outstanding Notes, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section
6.01(3) or 6.01(4), but, except as specified above, the remainder of this
Indenture and such Notes shall be unaffected thereby. In addition, upon the
Company's exercise under paragraph (a) hereof of the option applicable to this
paragraph (c), subject to the satisfaction of the conditions set forth in
Section 8.03, Sections 6.01(3), 6.01(4), 6.01(5) and 6.01(6) shall not
constitute Events of Default.
(d) The following shall be the conditions to application of either
paragraph (b) or paragraph (c) above to the outstanding Notes:
(1) The Company shall have irrevocably deposited in trust with the
Trustee, pursuant to an irrevocable trust and security agreement in form
and substance reasonably satisfactory to the
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Trustee, U.S. Legal Tender or U.S. Government Obligations or a combination
thereof in such amounts and at such times as are sufficient, in the
opinion of a nationally recognized firm of independent public accountants,
to pay the principal of and interest on the outstanding Notes to maturity
or redemption; provided, however, that the Trustee (or other qualifying
trustee) shall have received an irrevocable written order from the Company
instructing the Trustee (or other qualifying trustee) to apply such U.S.
Legal Tender or the proceeds of such U.S. Government Obligations to said
payments with respect to the Notes to maturity or redemption;
(2) No Default or Event of Default shall have occurred and be
continuing on the date of such deposit or insofar as Events of Default
from bankruptcy or insolvency events are concerned at any time in the
period ending on the 91st day after the date of deposit (other than a
Default or Event of Default resulting from the Incurrence of Indebtedness,
all or a portion of which will be used to defease the Notes concurrently
with such Incurrence);
(3) Such Legal Defeasance or Covenant Defeasance will not result in
a breach or violation of, or constitute a default under any material
agreement or instrument (other than this Indenture) to which the Company
or any of its Subsidiaries is a party or by which it or its property is
bound;
(4) (i) In the event the Company elects paragraph (b) above, the
Company shall deliver to the Trustee an Opinion of Counsel in the United
States, in form and substance reasonably satisfactory to the Trustee, to
the effect that (A) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (B) since the Issue
Date, there has been a change in the applicable federal income tax law, in
either case to the effect that, and based thereon such Opinion of Counsel
shall state that, Holders of the Notes will not recognize income, gain or
loss for federal income tax purposes as a result of such Legal Defeasance
contemplated hereby and will be subject to federal income tax in the same
amounts, in the same manner and at the same times as would have been the
case if such Legal Defeasance had not occurred or (ii) in the event the
Company elects paragraph (c) above, the Company shall deliver to the
Trustee an Opinion of Counsel in the United States, in form and substance
reasonably satisfactory to the Trustee, to the effect that Holders of the
Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance contemplated hereby and
will be subject to federal income tax in the same amounts, in the same
manner and at the same times as would have been the case if such Covenant
Defeasance had not occurred;
(5) The Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit under clause (1) was not made by the
Company with the intent of preferring the Holders over any other creditors
of the Company or with the intent of defeating, hindering, delaying or
defrauding any other creditors of the Company or others;
(6) The Company shall have delivered to the Trustee an Opinion of
Counsel, reasonably satisfactory to the Trustee, to the effect that (A)
the trust funds will not be subject to the rights of holders of
Indebtedness of the Company other than the Notes and (B) assuming no
intervening bankruptcy of the Company between the date of deposit and the
91st day following the date of deposit and that no Holder of Notes is an
insider of the Company, after the 91st day following the date of deposit,
the trust funds will not be subject to any applicable bankruptcy,
insolvency, reorganization or similar law affecting creditors' rights
generally; and
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(7) The Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent specified herein relating to the defeasance contemplated by this
Section 8.01 have been complied with.
Notwithstanding the foregoing, the Opinion of Counsel required by Section
8.01(d)(4)(i) above with respect to a Legal Defeasance need not be delivered if
all Notes not theretofore delivered to the Trustee for cancellation (1) have
become due and payable or (2) will become due and payable on the maturity date
within one year under arrangements satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the expense, of the
Company.
In the event all or any portion of the Notes are to be redeemed
through such irrevocable trust, the Company must make arrangements reasonably
satisfactory to the Trustee, at the time of such deposit, for the giving of the
notice of such redemption or redemptions by the Trustee in the name and at the
expense of the Company.
SECTION 8.02. Satisfaction and Discharge.
In addition to the Company's rights under Section 8.01, the Company
may terminate all of its obligations under this Indenture (subject to Section
8.03), when:
(1) either:
(a) all the Notes theretofore authenticated and delivered
(except lost, stolen or destroyed Notes which have been replaced or
paid as provided in Section 2.07 and Notes for whose payment money
has theretofore been deposited in trust or segregated and held in
trust by the Company and thereafter repaid to the Company or
discharged from such trust) have been delivered to the Trustee for
cancellation; or
(b) all Notes not theretofore delivered to the Trustee for
cancellation (i) have become due and payable, (ii) will become due
and payable at their stated maturity within one year or (iii) are to
be called for redemption within one year under arrangement
satisfactory to the Trustee, and the Company has irrevocably
deposited or caused to be deposited with the Trustee funds in an
amount sufficient to pay and discharge the entire Indebtedness on
the Notes not theretofore delivered to the Trustee for cancellation,
for principal of, premium, if any, and interest on the Notes to the
date of deposit together with irrevocable instructions from the
Company directing the Trustee to apply such funds to the payment
thereof at maturity or redemption, as the case may be;
(2) the Company or any Guarantor has paid all other sums payable
under this Indenture by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel stating that all conditions
precedent under this Indenture relating to the satisfaction and discharge
of this Indenture have been complied with.
SECTION 8.03. Survival of Certain Obligations.
Notwithstanding the satisfaction and discharge of this Indenture and
of the Notes referred to in Section 8.01 or 8.02, the respective obligations of
the Company and the Trustee under Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07,
2.10, 2.13, 4.01, 4.02 and 6.08, Article Seven and Sections 8.05, 8.06 and
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8.07 shall survive until the Notes are no longer outstanding, and thereafter the
obligations of the Company and the Trustee under Sections 7.07, 8.05, 8.06 and
8.07 shall survive.
SECTION 8.04. Acknowledgment of Discharge by Trustee.
Subject to Section 8.07, after (i) the conditions of Section 8.01 or
8.02 have been satisfied, (ii) the Company has paid or caused to be paid all
other sums payable hereunder by the Company and (iii) the Company has delivered
to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating
that all conditions precedent referred to in clause (i) above relating to the
satisfaction and discharge of this Indenture have been complied with, the
Trustee upon written request shall acknowledge in writing the discharge of the
Company's obligations under this Indenture except for those surviving
obligations specified in Section 8.03.
SECTION 8.05. Application of Trust Moneys.
The Trustee shall hold any U.S. Legal Tender or U.S. Government
Obligations deposited with it in the irrevocable trust established pursuant to
Section 8.01. The Trustee shall apply the deposited U.S. Legal Tender or the
U.S. Government obligations, together with earnings thereon, through the Paying
Agent, in accordance with this Indenture and the terms of the irrevocable trust
agreement established pursuant to Section 8.01, to the payment of principal of
and interest on the Notes. Anything in this Article Eight to the contrary
notwithstanding, the Trustee shall deliver or pay to the Company from time to
time upon the Company's request any U.S. Legal Tender or U.S. Government
Obligations held by it as provided in Section 8.01(d) which, in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, are in excess of the
amount thereof that would then be required to be deposited to effect an
equivalent Legal Defeasance or Covenant Defeasance.
SECTION 8.06. Repayment to the Company; Unclaimed Money.
Subject to Sections 7.07, 8.01 and 8.02, the Trustee and the Paying
Agent shall promptly pay to the Company upon request any excess U.S. Legal
Tender or U.S. Government Obligations held by them at any time. The Trustee and
the Paying Agent will pay to the Company, upon receipt by the Trustee or the
Paying Agent, as the case may be, of a written request from the Company any
money held by it for the payment of principal or interest that remains unclaimed
for two years after payment to the Holders is required, without interest
thereon; provided, however, that the Trustee and the Paying Agent before being
required to make any payment may, but need not, at the expense of the Company
cause to be published once in a newspaper of general circulation in the City of
New York or mail to each Holder entitled to such money notice that such money
remains unclaimed and that after a date specified therein, which shall be at
least thirty (30) days from the date of such publication or mailing, any
unclaimed balance of such money then remaining will be repaid to the Company,
without interest thereon. After payment to the Company, Holders entitled to
money must look solely to the Company for payment as general creditors unless an
applicable abandoned property law designated another Person, and all liability
of the Trustee or Paying Agent with respect to such money shall thereupon cease.
SECTION 8.07. Reinstatement.
If the Trustee or Paying Agent is unable to apply any U.S. Legal
Tender or U.S. Government Obligations in accordance with Section 8.01 or 8.02 by
reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.01 or 8.02 until
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such time as the Trustee or Paying Agent is permitted to apply all such U.S.
Legal Tender or U.S. Government Obligations in accordance with Section 8.01 or
8.02; provided, however, that if the Company has made any payment of interest on
or principal of any Notes because of the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the money or U.S. Government Obligations held by the
Trustee or Paying Agent.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders.
The Company and the Guarantors, when authorized by a Board
Resolution, and the Trustee, together, may amend or supplement this Indenture,
the Notes or the Guarantees without notice to or consent of any Holder:
(1) to cure any ambiguity, defect or inconsistency; provided that
such amendment or supplement does not in the opinion of the Trustee (which
may be based on such opinions and certificates as it deems advisable)
adversely affect the rights of any Holder in any material respect;
(2) to comply with Article Five or Section 4.14;
(3) to provide for uncertificated Notes or Guarantees in addition to
or in place of certificated Notes or Guarantees;
(4) to comply with any requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA;
(5) to make any change that would provide any additional benefit or
rights to the Holders;
(6) to provide for issuance of the Exchange Notes, which will have
terms substantially identical in all material respects to the Initial
Notes (except that the transfer restrictions contained in the Initial
Notes will be modified or eliminated, as appropriate), and which will be
treated together with any outstanding Initial Notes as a single issue of
securities; or
(7) to make any other change that does not adversely affect in any
material respect the rights of any Holders hereunder;
provided that the Company has delivered to the Trustee an Opinion of Counsel and
an Officers' Certificate stating that such amendment or supplement complies with
the provisions of this Section 9.01.
Notwithstanding the foregoing, in formulating its opinion in regards
to Section 9.01(1) or (7) the Trustee is entitled to rely on such evidence as it
deems appropriate, including, without limitation, solely on an Opinion of
Counsel.
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SECTION 9.02. With Consent of Holders.
Subject to Section 6.08, the Company and the Guarantors, when
authorized by a Board Resolution, and the Trustee, together, with the written
consent of the Holder or Holders of at least a majority in aggregate principal
amount of the outstanding Notes, may amend or supplement this Indenture, the
Notes or the Guarantees without notice to any other Holders. Subject to Section
6.08, the Holder or Holders of a majority in aggregate principal amount at
maturity of the outstanding Notes may waive compliance by the Company with any
provision of this Indenture or the Notes without notice to any other Holder.
However, no amendment, supplement or waiver, including a waiver pursuant to
Section 6.05, shall without the consent of each Holder of each Note affected
thereby:
(1) reduce the principal amount of Notes whose Holders must consent
to an amendment, supplement or waiver of any provision of this Indenture
or the Notes;
(2) reduce the rate of or change or have the effect of changing the
time for payment of interest, including defaulted interest, on any Notes;
(3) reduce the principal of or change or have the effect of changing
the fixed maturity of any Notes, or change the date on which any Notes may
be subject to redemption or reduce the redemption price therefor;
(4) make any Notes payable in money other than that stated in the
Notes;
(5) make any change in provisions of this Indenture protecting the
right of each Holder to receive payment of principal of and interest on
such Note on or after the due date thereof or to bring suit to enforce
such payment, permitting holders of a majority in principal amount at
maturity of a class of Notes to waive Defaults or Events of Default; or
(6) after the Company's obligation to purchase Notes arises
thereunder, amend, change or modify in any material respect the obligation
of the Company to make and consummate a Change of Control Offer in the
event of a Change of Control or make and consummate an offer with respect
to any Asset Sale that has been consummated or, after such Change of
Control has occurred or such Asset Sale has been consummated, modify any
of the provisions or definitions with respect thereto;
(7) modify or change any provision of this Indenture or the related
definitions affecting the ranking of the Notes or any Guarantee in a
manner which adversely affects the Holders;
(8) release any Guarantor that is a Significant Subsidiary from any
of its obligations under its Guarantee or this Indenture otherwise than in
accordance with the terms of this Indenture; or
(9) release all or substantially all of the Collateral; or
(10) make any change to Section 9.01 or this Section 9.02.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
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After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such supplemental indenture.
SECTION 9.03. Compliance with TIA.
Every amendment, waiver or supplement of this Indenture, the Notes
or the Guarantees shall comply with the TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents.
Until an amendment, waiver or supplement becomes effective, a
consent to it by a Holder is a continuing consent by the Holder and every
subsequent Holder of a Note or portion of a Note that evidences the same debt as
the consenting Holder's Note, even if notation of the consent is not made on any
Note. Subject to the following paragraph, any such Holder or subsequent Holder
may revoke the consent as to such Holder's Note or portion of such Note by
notice to the Trustee or the Company received before the date on which the
Trustee receives an Officers' Certificate certifying that the Holders of the
requisite principal amount of Notes have consented (and not theretofore revoked
such consent) to the amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which record date shall be either (i) at least thirty (30)
days prior to the first solicitation of such consent or (ii) the date of the
most recent list furnished to the Trustee under Section 2.05. If a record date
is fixed, then notwithstanding the last sentence of the immediately preceding
paragraph, those Persons who were Holders at such record date (or their duly
designated proxies), and only those Persons, shall be entitled to revoke any
consent previously given, whether or not such Persons continue to be Holders
after such record date. No such consent shall be valid or effective for more
than ninety (90) days after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Holder unless it makes a change described in any of clauses (1)
through (9) of Section 9.02, in which case, the amendment, supplement or waiver
shall bind only each Holder of a Note who has consented to it and every
subsequent Holder of a Note or portion of a Note that evidences the same debt as
the consenting Holder's Note; provided that any such waiver shall not impair or
affect the right of any Holder to receive payment of principal of and interest
on a Note, on or after the respective due dates expressed in such Note, or to
bring suit for the enforcement of any such payment on or after such respective
dates without the consent of such Holder.
SECTION 9.05. Notation on or Exchange of Notes.
If an amendment, supplement or waiver changes the terms of a Note,
the Trustee may require the Holder of the Note to deliver the Note to the
Trustee. The Trustee at the written direction of the Company may place an
appropriate notation on the Note about the changed terms and return it to the
Holder and the Trustee may place an appropriate notation on any Note thereafter
authenticated. Alternatively, if the Company or the Trustee so determines, the
Company in exchange for the Note shall issue and the Trustee shall authenticate
a new Note that reflects the changed terms. Failure to make an appropriate
notation, or issue a new Note, shall not affect the validity and effect of such
amendment, supplement or waiver. Any such notation or exchange shall be made at
the sole cost and expense of the Company.
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SECTION 9.06. Trustee to Sign Amendments, Etc.
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article Nine; provided that the Trustee may, but
shall not be obligated to, execute any such amendment, supplement or waiver
which affects the Trustee's own rights, duties or immunities under this
Indenture. The Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel and an Officers' Certificate
each stating that the execution of any amendment, supplement or waiver
authorized pursuant to this Article Nine is authorized or permitted by this
Indenture. Such Opinion of Counsel shall not be an expense of the Trustee and
shall be paid for by the Company.
SECTION 9.07. Conformity with Trust Indenture Act. Every
supplemental indenture executed pursuant to this Article Nine shall conform to
the requirements of the TIA as then in effect.
ARTICLE TEN
GUARANTEE
SECTION 10.01. Guarantee.
Each Guarantor hereby fully, irrevocably and unconditionally,
jointly and severally, unconditionally and irrevocably guarantees (such
guarantee to be referred to herein as the "Guarantee"), to each of the Holders,
the Trustee , the Collateral Agent, the Paying Agent and the Registrar and their
respective successors and assigns (each, a "Beneficiary" and, collectively, the
"Beneficiaries" that (i) the principal of, premium, if any and interest on the
Notes will be promptly paid in full when due, subject to any applicable grace
period, whether at maturity, upon redemption pursuant to the terms of the Notes,
by acceleration or otherwise, and interest on the overdue principal, if any, and
interest on any interest, if any, to the extent lawful, of the Notes and all
other obligations of the Company to any and all Beneficiaries hereunder or
thereunder will be promptly paid in full or performed, all in accordance with
the terms hereof, thereof and the Collateral Agreements and Intercreditor
Agreement; and (ii) in case of any extension of time of payment or renewal of
any of the Notes or of any such other obligations, the same will be promptly
paid in full when due or performed in accordance with the terms of the extension
or renewal, subject to any applicable grace period, whether at stated maturity,
by acceleration or otherwise, subject, however, in the case of clauses (i) and
(ii) above, to the limitations set forth in Section 10.03. The Guarantee of each
Guarantor will rank senior in right of payment to all subordinated Indebtedness
of such Guarantor and equal in right of payment with all other senior
obligations of such Guarantor, including borrowings or guarantees of borrowings
under the Credit Agreement. Each Guarantor hereby agrees that its obligations
hereunder shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any of the Holders or other
Beneficiaries with respect to any provisions hereof or thereof, any release of
any other Guarantor, the recovery of any judgment against the Company, any
action to enforce the same or any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a Guarantor. Each
Guarantor hereby waives diligence, presentment, demand of payment, filing of
claims with a court in the event of insolvency or bankruptcy of the Company, any
right to require a proceeding first against the Company, protest, notice and all
demands whatsoever and covenants that this Guarantee will not be discharged
except by complete performance of the obligations contained in the Notes, this
Indenture and in this Guarantee. The Guarantee is a guarantee of payment and not
of collection. If any Beneficiary is required by any court or otherwise to
return to the Company, any Guarantor, or any custodian, trustee, liquidator or
other similar official acting in relation to the Company or any Guarantor, any
amount paid by the Company or any Guarantor to such Beneficiary, this Guarantee,
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to the extent theretofore discharged, shall be reinstated in full force and
effect. Each Guarantor further agrees that, as between each Guarantor, on the
one hand, and the Beneficiaries, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article Six for
the purposes of this Guarantee notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any acceleration of such obligations
as provided in Article Six, such obligations (whether or not due and payable)
shall forthwith become due and payable by each Guarantor for the purpose of this
Guarantee.
SECTION 10.02. Release of a Subsidiary Guarantor.
In the event all of the Capital Stock of a Subsidiary Guarantor is
sold by the Company and the sale complies with Section 4.16, or in the event of
the designation of any Subsidiary Guarantor as an Unrestricted Subsidiary in
accordance with this Indenture, such Subsidiary Guarantor's Guarantee will be
released.
The Trustee shall promptly deliver an appropriate instrument
evidencing such release upon receipt of a request by the Company accompanied by
an Officers' Certificate certifying as to the compliance with this Section
10.02. Any Subsidiary Guarantor not so released remains liable for the full
amount of its Guarantee as provided in this Article Ten.
SECTION 10.03. Limitation of Subsidiary Guarantor's Liability.
Each Subsidiary Guarantor and, by its acceptance hereof, each of the
Holders hereby confirms that it is the intention of all such parties that the
guarantee by such Subsidiary Guarantor pursuant to its Guarantee not constitute
a fraudulent transfer or conveyance for purposes of any Bankruptcy Law, the
Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any
similar Federal or state law. To effectuate the foregoing intention, the Holders
and such Subsidiary Guarantor hereby irrevocably agree that the obligations of
such Subsidiary Guarantor under the Guarantee shall be limited to the maximum
amount as will, after giving effect to all other contingent and fixed
liabilities of such Subsidiary Guarantor and after giving effect to any
collections from or payments made by or on behalf of any other Subsidiary
Guarantor in respect of the obligations of such other Subsidiary Guarantor under
its Guarantee or pursuant to Section 10.05, result in the obligations of such
Subsidiary Guarantor under the Guarantee not constituting such fraudulent
transfer or conveyance.
SECTION 10.04. Guarantors May Consolidate, etc., on Certain Terms.
No Guarantor (other than any Guarantor whose Guarantee is to be
released in accordance with the terms of the Guarantee and this Indenture in
connection with any sale of such Guarantor in a transaction complying with
Section 4.16) will, and the Company will not cause or permit any Guarantor to,
consolidate with or merge with or into any Person other than the Company or any
other Guarantor that is a Wholly Owned Restricted Subsidiary unless:
(1) the entity formed by or surviving any such consolidation or
merger (if other than such Guarantor) or to which such sale, lease,
conveyance or other disposition shall have been made is a corporation
organized and existing under the laws of the United States, any State
thereof or the District of Columbia;
(2) such entity assumes by supplemental indenture all of the
obligations of the Guarantor on the Guarantee and the Collateral
Agreements;
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(3) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing; and
(4) immediately after giving effect to such transaction and the use
of any net proceeds therefrom on a pro forma basis, the Company could
satisfy the provisions of Section 5.01(a)(2).
In connection with any such consolidation or merger, the Company
shall deliver to the Trustee, in form and substance reasonably satisfactory to
the Trustee, an Officers' Certificate and an Opinion of Counsel, each stating
that such consolidation or merger and supplemental indenture comply with the
applicable provisions of this Indenture and that all conditions precedent in
this Indenture relating to such transaction have been satisfied. Any merger or
consolidation of a Guarantor with and into the Company (with the Company being
the surviving Person) or another Guarantor that is a Wholly-Owned Restricted
Subsidiary need only comply with this paragraph.
SECTION 10.05. Contribution.
In order to provide for just and equitable contribution among the
Guarantors, the Guarantors agree, inter se, that each Guarantor that makes a
payment or distribution under a Guarantee shall be entitled to a pro rata
contribution from each other Guarantor hereunder based on the net assets of each
other Guarantor. The preceding sentence shall in no way affect the rights of the
Holders of Notes to the benefits of this Indenture, the Notes or the Guarantees.
SECTION 10.06. Waiver of Subrogation.
Each Guarantor hereby agrees that it will not exercise any rights
which it may acquire by reason of any payment made hereunder, whether by way of
subrogation, reimbursement or otherwise, until the prior irrevocable payment in
full in cash of all obligations under the Guarantee and any other obligations
under this Indenture or the Notes (the "Guaranteed Obligations"). Any amount
paid to any Guarantor on account of any payment made hereunder prior to the
payment in full in cash of all Guaranteed Obligations shall be held in trust for
the benefit of the Secured Parties and shall immediately be paid to the Secured
Parties and credited and applied against the Guaranteed Obligations, whether
matured or unmatured, in accordance with the terms of this Indenture; provided,
however, that if (a) such Guarantor has made irrevocable payment of all of the
Guaranteed Obligations, (b) all Guaranteed Obligations have been irrevocably
paid in full in cash and (c) such Guarantor provides to the Trustee and the
Collateral Agent (in form and substance reasonably acceptable to the Trustee) an
Opinion of Counsel and Officers' Certificate supporting such request, the
Trustee agrees that, at the requesting Guarantor's request and at the expense of
the Company, the Trustee will execute and deliver to such Guarantor appropriate
documents (without recourse and without representation or warranty) necessary to
evidence the transfer by subrogation to such Guarantor of an interest in the
Guaranteed Obligations resulting from such payment by such Guarantor. In
furtherance of the foregoing, for so long as any Guaranteed Obligations remain
outstanding, each Guarantor shall refrain from taking any action or commencing
any proceeding against the Company or any other Guarantor (or its successors or
assigns, whether in connection with a bankruptcy proceeding or otherwise) to
recover any amounts in respect of payments made under this Guarantee.
SECTION 10.07. No Set-Off.
Each payment to be made by a Guarantor hereunder in respect of the
Obligations shall be payable in the currency or currencies in which such
Obligations are denominated, and shall be made without set-off, counterclaim,
reduction or diminution of any kind or nature.
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SECTION 10.08. Obligations Absolute.
The obligations of each Guarantor hereunder are and shall be
absolute and unconditional and any monies or amounts expressed to be owning or
payable by each Guarantor hereunder which may not be recoverable from such
Guarantor on the basis of a Guarantee shall be recoverable from such Guarantor
as a primary obligor and principal debtor in respect hereof.
SECTION 10.09. Obligations Continuing.
The obligations of each Guarantor hereunder shall be continuing and
shall remain in full force and effect until all the obligations have been paid
and satisfied in full. Each Guarantor agrees with the Trustee that it will from
time to time deliver to the Trustee suitable acknowledgments of this continued
liability hereunder and under any other instrument or instruments in such form
as counsel to the Trustee may advise and as will prevent any action brought
against it in respect of any default hereunder being barred by any statute of
limitations now or hereafter in force and, in the event of the failure of a
Guarantor so to do, it hereby irrevocably appoints the Trustee the attorney and
agent of such Guarantor to make, execute and deliver such written acknowledgment
or acknowledgments or other instruments as may from time to time become
necessary or advisable, in the judgment of the Trustee on the advice of counsel,
to fully maintain and keep in force the liability of such Guarantor hereunder.
SECTION 10.10. Obligations Not Reduced.
The obligations of each Guarantor hereunder shall not be satisfied,
reduced or discharged solely by the payment of such principal, premium, if any,
interest, fees and other monies or amounts as may at any time prior to discharge
of this Indenture pursuant to Article Eight be or become owing or payable under
or by virtue of or otherwise in connection with the Notes or this Indenture.
SECTION 10.11. Obligations Reinstated.
The obligations or each Guarantor hereunder shall continue to be
effective or shall be reinstated, as the case may be, if at any time any payment
which would otherwise have reduced the obligations of any Guarantor hereunder
(whether such payment shall have been made by or on behalf of the Company or by
or on behalf of a Guarantor) is rescinded or reclaimed from any of the Holders
or other Beneficiaries upon the insolvency, bankruptcy, liquidation or
reorganization of the Company or any Guarantor or otherwise, all as though such
payment had not been made. If demand for, or acceleration of the time for,
payment by the Company is stayed upon the insolvency, bankruptcy, liquidation or
reorganization of the Company, all such Indebtedness otherwise subject to demand
for payment or acceleration shall nonetheless be payable by each Guarantor as
provided herein.
SECTION 10.12. Obligations Not Affected.
The obligations of each Guarantor hereunder shall not be affected,
impaired or diminished in any way by any act, omission, matter or thing
whatsoever, occurring before, upon or after any demand for payment hereunder
(and whether or not known or consented to by any Guarantor or any of the
Holders) which, but for this provision, might constitute a whole or partial
defense to a claim against any Guarantor hereunder or might operate to release
or otherwise exonerate any Guarantor from any of its obligations hereunder or
otherwise affect such obligations, whether occasioned by default of any of the
Holders or otherwise, including, without limitation:
(a) any limitation of status or power, disability, incapacity or
other circumstance relating to the Company or any other Person, including any
insolvency, bankruptcy, liquidation,
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reorganization, readjustment, composition, dissolution, winding-up or other
proceeding involving or affecting the Company of any other Person;
(b) any irregularity, defect, unenforceability or invalidity in
respect of any indebtedness or other obligation of the Company or any other
Person under this Indenture, the Notes or any other document or instrument;
(c) any failure of the Company or the Trustee, whether or not
without fault on its part, to perform or comply with any of the provisions of
this Indenture or the Notes, or to give notice thereof to a Guarantor;
(d) the taking or enforcing or exercising or the refusal or neglect
to take or enforce or exercise any right or remedy from or against the Company
or any other Person or their respective assets or the release of discharge of
any such right or remedy;
(e) the granting of time, renewals, extensions, compromises,
concessions, waivers, releases, discharges and other indulgences to the Company
or any other Person;
(f) any change in the time, manner or place of payment of, or in any
other term of, any of the Notes, or any other amendment, variation, supplement,
replacement or waiver of, or any consent to departure from, any of the Notes or
this Indenture, including, without limitation, any increase or decrease in the
principal amount of or premium, if any, or interest on any of the Notes;
(g) any change in the ownership, control, name, objects, businesses,
assets, capital structure or constitution of the Company or a Guarantor;
(h) any merger or amalgamation of the Company or a Guarantor with
any Person or Persons;
(i) the occurrence of any change in the laws, rules, regulations or
ordinances of any jurisdiction by any present or future action of any
governmental authority or count amending, varying, reducing or otherwise
affecting, or purporting to amend, vary, reduce or otherwise affect, any of the
Obligations or the obligations of a Guarantor under its Guarantee; and
(j) any other circumstance, including release of the Guarantor
pursuant to Section 10.04 (other than by complete, irrevocable payment) that
might otherwise constitute a legal or equitable discharge or defense of the
Company under this Indenture or the Notes or of a Guarantor in respect of its
Guarantee hereunder.
SECTION 10.13. No Obligation to Take Action Against the Company.
Neither the Trustee nor any other Person shall have any obligation
to enforce or exhaust any rights or remedies or to take any other steps under
any security for the Obligations or against the Company or any other Person or
any property of the Company or any other Person before the Trustee is entitled
to demand payment and performance by any or all Guarantors of their liabilities
and obligations under their Guarantees or under this Indenture.
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SECTION 10.14. Dealing with the Company and Others.
The Holders or the Trustee (acting on behalf of the Holders),
without releasing, discharging, limiting or otherwise affecting in whole or in
part the obligations and liabilities of any Guarantor hereunder and without the
consent of or notice to any Guarantor, may
(a) grant time, renewals, extensions, compromises, concessions,
waivers, releases, discharges and other indulgences to the Company or any other
Person;
(b) take or abstain from taking security or collateral from the
Company or from perfecting security or collateral of the Company;
(c) accept compromises or arrangements from the Company;
(d) apply all monies at any time received from the Company or from
any security upon such part of the Obligations as the Holders may see fit or
change any such application in whole or in part from time to time as the Holders
may see fit.
SECTION 10.15. Default and Enforcement.
If any Guarantor fails to pay hereunder, the Trustee may proceed in
its name as trustee hereunder in the enforcement of the Guarantee of any such
Guarantor and such Guarantor's obligations thereunder and hereunder by any
remedy provided by law, whether by legal proceedings or otherwise, and recover
from such Guarantor the obligations.
SECTION 10.16. Evidence of Guarantee.
To evidence their guarantees to the Holders set forth in this
Article Ten, each of the Guarantors hereby agrees to execute the notation of
Guarantee in substantially the form included in the Notes attached as Exhibits A
and B. Each such notation of Guarantee shall be signed on behalf of each
Guarantor by an Officer or an assistant Secretary. An Officer (who shall, in
each case, have been duly authorized by all requisite corporate actions) of the
Guarantors shall execute the Guarantees by manual or facsimile signature.
If an Officer whose signature is on a Note was an Officer at the
time of such execution but no longer holds that office or position at the time
the Trustee authenticates such Note, such Note shall nevertheless be valid.
Each Guarantor hereby agrees that its Guarantee set forth in Section
10.01 shall remain in full force and effect notwithstanding any failure to
endorse on each Note a notation of such Guarantee.
If an Officer or assistant Secretary whose signature is on this
Indenture or on the Guarantee no longer holds that office at the time the
Trustee authenticates the Note on which a Guarantee is endorsed, the Guarantee
shall be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Guarantee set forth in
this Indenture on behalf of the Guarantors.
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SECTION 10.17. Waiver of Stay, Extension or Usury Laws.
Each Guarantor covenants to the extent permitted by law that it will
not at any time insist upon, plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay or extension law or any usury law or other
law that would prohibit or forgive such Guarantor from performing its Guarantee
as contemplated herein, wherever enacted, now or at any time hereafter in force,
or which may affect the covenants or the performance of this Guarantee; and each
Guarantor hereby expressly waives to the extent permitted by law all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will suffer
and permit the execution of every such power as though no such law had been
enacted.
ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies, or conflicts
with another provision which is required to be included in this Indenture by the
TIA, the required provision shall control. Any provision of the TIA which is
required to be included in a qualified Indenture, but not expressly included
herein, shall be deemed to be included by this reference.
SECTION 11.02. Notices.
Any notices or other communications required or permitted hereunder
shall be in writing, and shall be sufficiently given if made by hand delivery,
by telex, by telecopier or registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:
if to the Company:
Golfsmith International, Inc.
00000 X. XX-00
Xxxxxx, XX 00000-0000
Attn: Chief Executive Officer
Facsimile Number: 000-000-0000
if to the Trustee:
U.S. Bank Trust National Association
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Corporate Trust Services
Facsimile Number: 000-000-0000 and 000-000-0000
Each of the Company and the Trustee by written notice to each other
may designate additional or different addresses for notices to such Person. Any
notice or communication to the Company or the Trustee shall be deemed to have
been given or made as of the date so delivered if personally delivered; when
answered back, if telexed; when receipt is acknowledged, if faxed; and five (5)
calendar days after mailing if sent by registered or certified mail, postage
prepaid (except that a notice
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of change of address or a notice sent by mail to the Trustee shall not be deemed
to have been given until actually received by the addressee).
Any notice or communication mailed to a Holder shall be mailed to
such Holder by first class mail or other equivalent means at such Holder's
address as it appears on the registration books of the Registrar and shall be
sufficiently given to such Holder if so mailed within the time prescribed.
Failure to mail a notice or communication to a Holder or any defect
in it shall not affect its sufficiency with respect to other Holders. If a
notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
SECTION 11.03. Communications by Holders with Other Holders.
Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and any other Person shall have the
protection of TIA Section 312(c).
SECTION 11.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company or any Guarantor to
the Trustee to take any action under this Indenture, the Company shall furnish
to the Trustee upon request:
(1) an Officers' Certificate, in form and substance reasonably
satisfactory to the Trustee, stating that, in the opinion of the signers,
all conditions precedent to be performed by the Company or the applicable
Guarantor (as the case may be), if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent to be performed by the Company or
the applicable Guarantor (as the case may be), if any, provided for in
this Indenture relating to the proposed action have been complied with.
SECTION 11.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture, other than the Officers'
Certificate required by Section 4.06, shall include:
(1) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has made
such examination or investigation as is reasonably necessary to enable him
to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether or not, in the opinion of each such
Person, such condition or covenant has been complied with.
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SECTION 11.06. Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules in accordance with the
Trustee's customary practices for action by or at a meeting of Holders. The
Paying Agent or Registrar may make reasonable rules for its functions.
SECTION 11.07. Legal Holidays.
A "Legal Holiday" used with respect to a particular place of payment
is a Saturday, a Sunday or a day on which banking institutions in New York, New
York or at such place of payment are not required to be open. If a payment date
is a Legal Holiday at such place, payment may be made at such place on the next
succeeding day that is not a Legal Holiday, and no interest shall accrue for the
intervening period.
SECTION 11.08. Governing Law.
THIS INDENTURE, THE NOTES AND THE GUARANTEES SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED
TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE.
SECTION 11.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan
or debt agreement of the Company or any of its Subsidiaries. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
SECTION 11.10. No Recourse Against Others.
A past, present or future director, officer, employee, stockholder
or incorporator, as such, of the Company or of the Trustee shall not have any
liability for any obligations of the Company or the Guarantors under the Notes,
the Guarantees or this Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. Each Holder, by accepting a Note,
waives and releases all such liability. Such waiver and release are part of the
consideration for the issuance of the Notes.
SECTION 11.11. Successors.
All agreements of the Company and the Guarantors in this Indenture,
the Notes, and the Guarantees shall bind their successors. All agreements of the
Trustee in this Indenture shall bind its successors.
SECTION 11.12. Duplicate Originals.
All parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together shall represent the
same agreement.
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SECTION 11.13. Severability.
In case any one or more of the provisions in this Indenture, the
Notes or in the Guarantees shall be held invalid, illegal or unenforceable, in
any respect for any reason, the validity, legality and enforceability of any
such provision in every other respect and of the remaining provisions shall not
in any way be affected or impaired thereby, it being intended that all of the
provisions hereof shall be enforceable to the full extent permitted by law.
ARTICLE TWELVE
AGREEMENT TO SUBORDINATE
CERTAIN SECURITY INTERESTS; SECURITY
SECTION 12.01. Subordination of Certain Security Interests.
Each of the Company and each Guarantor agrees, and each Holder by
its acceptance of its Note likewise agrees, that the Trustee and the Collateral
Agent, on behalf of each Holder, shall enter into (and in the case of each
Holder, by its acceptance of its Note authorizes and directs the Trustee and the
Collateral Agent to execute and deliver) the Intercreditor Agreement with, inter
alia, the Company, the Guarantors and the Lender Agent pursuant to which, among
other things, (i) the Lender Agent shall be recognized as having a first
priority security interest for the benefit of itself and the Lenders in all of
the assets of the Company and the Guarantors other than the real property,
fixtures, equipment and proceeds thereof of such Persons and (ii) the Collateral
Agent shall be recognized as having (A) a second priority security interest for
the benefit of itself, the Trustee and the Holders in all of the assets of the
Company and the Guarantors other than the real property, fixtures, equipment and
proceeds thereof of such Persons and (B) a first priority security interest in
the real property, fixtures, equipment and proceeds of such Persons, in each
case, as more fully described therein. Notwithstanding the foregoing, the grant
of a Lien on such assets pursuant to the terms of the Credit Agreement shall
not, other than as specifically set forth in the Intercreditor Agreement,
adversely affect in any manner whatsoever the security interests created by the
Collateral Agreements.
SECTION 12.02. Further Assurances.
Each Holder by its acceptance of its Note further authorizes and
expressly directs the Trustee and the Collateral Agent on its behalf to take
such action as may be necessary or appropriate to effectuate the terms of the
Intercreditor Agreement including entering into replacement Intercreditor
Agreements substantially in the form of the one executed and delivered on the
Issue Date if the Credit Agreement is refinanced or otherwise replaced in
accordance with the terms of this Indenture. Each Holder, by its acceptance of
its Note, agrees to be bound by the terms of the Intercreditor Agreement and all
such replacement Intercreditor Agreements and each of the Guarantors and the
Holders hereby authorize the Trustee and the Collateral Agent to bind the
Holders to the extent provided in the Intercreditor Agreement.
SECTION 12.03. Recording and Opinions.
(a) The Company shall take or cause to be taken all action required
to perfect, maintain, preserve and protect the security interests in the
Collateral granted by the Collateral Agreements but subject to the Intercreditor
Agreement, including, without limitation, (i) the filing of financing
statements, continuation statements, collateral assignments and any instruments
of further assurance, in such manner and in such places as may be required by
law to preserve and protect fully the rights of the
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Holders, the Trustee and the Collateral Agent under this Indenture and the
Collateral Agreements to all property comprising the Collateral, and (ii) the
delivery (for so long as the Credit Agreement is in effect, as defined in
Section 8-301(a)(2) of the U.C.C.; otherwise, as defined in Section 8-301(a)(1)
of the U.C.C.) of the certificates evidencing the securities pledged under the
Security Agreement, duly endorsed in blank, it being understood that
concurrently with the execution of this Indenture the Company has delivered
financing statements for filing by the Initial Purchaser or its agents. The
Company shall from time to time promptly pay all financing and continuation
statement recording and/or filing fees, charges and taxes relating to this
Indenture, the Collateral Agreements, the Intercreditor Agreement and any
amendments hereto or thereto and any other instruments of further assurance
required pursuant hereto or thereto.
(b) The Company shall furnish to the Trustee and the Collateral
Agent (if other than the Trustee), at such time as required by TIA Section
314(b), and promptly after the execution and delivery of any other instrument of
further assurance or amendment granting, perfecting, protecting, preserving or
making effective a security interest pursuant to any Collateral Agreement, an
Opinion of Counsel either (i) stating that, in the opinion of such counsel, this
Indenture and the Collateral Agreements, financing statements and fixture
filings then executed and delivered, as applicable, and all other instruments of
further assurance or amendment then executed and delivered have been properly
recorded, registered and filed, and all certificates evidencing Pledged
Securities pledged to the Collateral Agent for the benefit of itself, the
Trustee and the Holders under the Security Agreement have been delivered and
duly endorsed in blank, to the extent necessary to perfect the security
interests created by the Security Agreement and reciting the details of such
action or referring to prior Opinions of Counsel in which such details are
given, and stating that as to such Collateral Agreements and such other
instruments, such recording, registering, filing and delivery are the only
recordings, registerings, filings and deliveries necessary to perfect such
security interest and that no re-recordings, re-registerings, re-filings or
re-deliveries are necessary to maintain such perfection, and further stating
that all financing statements and continuation statements have been executed and
filed, and all such certificates have been delivered, that are necessary fully
to preserve and protect the rights of and perfect such security interests of the
Collateral Agent for the benefit of itself, the Holders and, the Trustee under
the Collateral Agreements or (ii) stating that, in the Opinion of such Counsel,
no such action is necessary to perfect any security interest created under any
of the Collateral Agreements as intended by this Indenture, the Notes and such
Collateral Agreements.
(c) Annually, within thirty (30) days after the fifteenth day of
October and beginning with the year 2003, the Company shall furnish to the
Trustee and the Collateral Agent (if other than the Trustee), an Opinion of
Counsel, dated as of such date, either (i) stating that: (A) in the opinion of
such counsel, action has been taken with respect to the registering, recording,
filing, re-recording, re-registering and refiling of this Indenture, and all
supplemental indentures, financing statements, continuation statements and other
documents, and delivery of all certificates, as are then necessary to perfect or
continue the perfection of the security interests created by the Collateral
Agreements and reciting the details of such action or referring to prior
Opinions of Counsel in which such details are given; and (B) based on relevant
laws as in effect on the date of such Opinion of Counsel, all financing
statements, continuation statements and other documents have been executed and
filed that are necessary as of such date and during the succeeding 24 months
fully to maintain, perfect or continue the perfection of such security interests
under the Collateral Agreements with respect to the Collateral and to maintain,
preserve, and protect the rights of the Holders and the Trustee hereunder and
under the Collateral Agreements or (ii) stating that, in the opinion of such
counsel, no such action is then necessary to perfect or continue the perfection
of such security interests.
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SECTION 12.04. Release of Collateral.
(a) Subject to the Intercreditor Agreement, the Collateral Agent
shall not at any time release Collateral from the security interests created by
the Collateral Agreements unless such release is in accordance with the
provisions of this Indenture, the Intercreditor Agreement and the applicable
Collateral Agreements.
(b) To the extent applicable, the Company shall cause TIA Section
314(d) relating to the release of property from the security interests created
by this Indenture and the Collateral Agreements to be complied with. Any
certificate or opinion required by TIA Section 314(d) may be made by an Officer
of the Company, except in cases where TIA Section 314(d) requires that such
certificate or opinion be made by an independent Person, which Person shall be
an independent engineer, appraiser or other expert selected or approved by the
Trustee in the exercise of reasonable care. A Person is "independent" if such
Person (a) is in fact independent, (b) does not have any direct financial
interest or any material indirect financial interest in the Company or in any
Affiliate of the Company and (c) is not an officer, employee, promoter,
underwriter, trustee, partner or director or person performing similar functions
to any of the foregoing for the Company. The Trustee shall be entitled to
receive and rely upon a certificate provided by any such Person confirming that
such Person is independent within the foregoing definition.
(c) Notwithstanding any provision to the contrary in this Indenture,
but subject in all respects to the Intercreditor Agreement,Collateral comprised
of accounts receivable, inventory or (prior to an Event of Default) the proceeds
of the foregoing shall be subject to release upon sales of such inventory and
collection of the proceeds of such receivables in the ordinary course of
business. If requested in writing by the Company or any applicable Guarantor,
the Collateral Agent or the Sub-Collateral Agent shall execute and deliver such
documents, instruments or statements and to take such other action as the
Company or such other Pledgor may reasonably request to evidence or confirm that
the Collateral falling under this Section 12.04 has been released from the Lien
of each of the Collateral Agreements.
SECTION 12.05. Authorization of Actions to Be Taken by the Trustee
Under the Collateral Agreements.
Subject to the provisions of the applicable Collateral Agreements
and the Intercreditor Agreement, (a) the Trustee and the Collateral Agent may,
in their sole discretion and without the consent of the Holders, take all
actions they deem necessary or appropriate in order to (i) enforce any of the
terms of the Collateral Agreements and (ii) collect and receive any and all
amounts payable in respect of the Obligations of the Company hereunder, and (b)
the Trustee and the Collateral Agent shall have power to institute and to
maintain such suits and proceedings as they may deem expedient to prevent any
impairment of the Collateral by any act that may be unlawful or in violation of
the Collateral Agreements or this Indenture, and suits and proceedings as the
Trustee and the Collateral Agent may deem expedient to preserve or protect their
interests and the interests of the Holders in the Collateral (including the
power to institute and maintain suits or proceedings to restrain the enforcement
of or compliance with any legislative or other governmental enactment, rule or
order that may be unconstitutional or otherwise invalid if the enforcement of,
or compliance with, such enactment, rule or order would impair the security
interest thereunder or be prejudicial to the interests of the Holders, the
Trustee or the Collateral Agent). Notwithstanding the foregoing, the Trustee
may, at the expense of the Company, request the direction of the Holders with
respect to any such actions and upon receipt of the written consent of the
Holders of at least a majority in aggregate principal amount of the outstanding
Notes, shall take such actions; provided that all actions so taken shall, at all
times, be in conformity with the requirements of the Intercreditor Agreement.
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SECTION 12.06. Authorization of Receipt of Funds by the Trustee
Under the Collateral Agreements.
The Trustee is authorized to receive any funds for the benefit of
the Holders distributed under the Collateral Agreements, and to make further
distributions of such funds to the Holders in accordance with the provisions of
Section 6.11 and the other provisions of this Indenture.
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SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the date first written above.
GOLFSMITH INTERNATIONAL, INC.
By:
--------------------------------------------
Name:
Title:
U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee
By:
--------------------------------------------
Name:
Title:
GOLFSMITH INTERNATIONAL HOLDINGS, INC., as Guarantor
By:
--------------------------------------------
Name:
Title:
GOLFSMITH GP HOLDINGS, INC., as Subsidiary Guarantor
By:
--------------------------------------------
Name:
Title:
GOLFSMITH HOLDINGS, L.P., as Subsidiary Guarantor
By: Golfsmith GP Holdings, Inc., as General Partner
By:
--------------------------------------------
Name:
Title:
GOLFSMITH GP, L.L.C., as Subsidiary Guarantor
By: Golfsmith Holdings, L.P., as Sole Member
By: Golfsmith GP Holdings, Inc., as General Partner
By:
--------------------------------------------
Name:
Title:
GOLFSMITH DELAWARE, L.L.C., as Subsidiary Guarantor
By: Golfsmith Holdings, L.P., as Sole Member
By: Golfsmith GP Holdings, Inc., as General Partner
By:
--------------------------------------------
Name:
Title:
GOLFSMITH CANADA, L.L.C., as Subsidiary Guarantor
By: Golfsmith Holdings, L.P., as Sole Member
By: Golfsmith GP Holdings, Inc., as General Partner
By:
--------------------------------------------
Name:
Title:
GOLFSMITH EUROPE, L.L.C., as Subsidiary Guarantor
By: Golfsmith Holdings, L.P., as Sole Member
By: Golfsmith GP Holdings, Inc., as General Partner
By:
--------------------------------------------
Name:
Title:
GOLFSMITH USA, L.L.C., as Subsidiary Guarantor
By: Golfsmith Holdings, L.P., as Sole Member
By: Golfsmith GP Holdings, Inc., as General Partner
By:
--------------------------------------------
Name:
Title:
GOLFSMITH NU, L.L.C., as Subsidiary Guarantor
By: Golfsmith Holdings, L.P., as Sole Member
By: Golfsmith GP Holdings, Inc., as General Partner
By:
--------------------------------------------
Name:
Title:
GOLFSMITH LICENSING, L.L.C., as Subsidiary Guarantor
By: Golfsmith Holdings, L.P., as Sole Member
By: Golfsmith GP Holdings, Inc., as General Partner
By:
--------------------------------------------
Name:
Title:
GOLFSMITH INTERNATIONAL, L.P., as Subsidiary Guarantor
By: Golfsmith GP, L.L.C., as General Partner
By: Golfsmith Holdings, L.P., as Sole Member
By: Golfsmith GP Holdings, Inc., as General Partner
By:
--------------------------------------------
Name:
Title:
EXHIBIT A
[FORM OF NOTE]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, SUCH REGISTRATION.
THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN, PRIOR
TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE"), WHICH IS TWO YEARS
AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH
GOLFSMITH INTERNATIONAL, INC., OR ANY AFFILIATE OF GOLFSMITH INTERNATIONAL, INC.
WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY) ONLY (A) TO
GOLFSMITH INTERNATIONAL, INC. OR ANY SUBSIDIARY THEREOF, (B) FOR SO LONG AS THE
SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES
ACT, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHICH NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) PURSUANT TO OFFERS
AND SALES TO NON-U.S. PURCHASERS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S UNDER THE SECURITIES ACT, (D) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7)
OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN
ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION
WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, (E) PURSUANT TO A
REGISTRATION STATEMENT WHICH AS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO GOLFSMITH INTERNATIONAL, INC.'S
AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSE (C), (D) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH
OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE
OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE
RESALE RESTRICTION TERMINATION DATE.
A-1
GOLFSMITH INTERNATIONAL, INC.
8.375% SENIOR SECURED NOTES DUE 2009
CUSIP No.
No. $
This Note is issued with original issue discount for purposes of Section
1271 et seq. of the Internal Revenue Code. For each $1,000 of principal amount
of this Note, the issue price is $800.00 and the amount of original issue
discount is $200.00. The issue date of this Note is October 15, 2002 and the
yield to maturity is ___% (assuming mandatory redemption of the maximum
principal amount at Maturity of the Notes provided in Section 3.01 of the
Indenture).
Golfsmith International, Inc., a Delaware corporation (the "Company,"
which term includes any successor entity), for value received promises to pay to
___________________ or registered assigns the principal sum of _______________
Dollars (or such principal amount as may be set forth in the records of the
Trustee hereinafter referred to in accordance with the Indenture) on October 15,
2009, and to pay interest thereon as hereinafter set forth.
Interest Rate: 8.375%
Interest Payment Dates: Interest will be payable semi-annually in
cash in arrears on March 1 and September 1 of each year, beginning on March 1,
2003.
Record Dates: February 15 and August 15
Reference is made to the further provisions of this Note contained
on the reverse side of this Note, which will for all purposes have the same
effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officer.
GOLFSMITH INTERNATIONAL, INC.
By:
---------------------------------
Name:
Title:
Dated: October 15, 2002
A-2
TRUSTEE CERTIFICATE OF AUTHENTICATION
This is one of the 8.375% Senior Secured Notes due 2009 referred to
in the within-mentioned Indenture.
U.S. TRUST BANK NATIONAL ASSOCIATION,
as Trustee
Dated: October 15, 2002 By:
-----------------------------------
Authorized Signatory
A-3
(REVERSE OF SECURITY)
8.375% SENIOR SECURED NOTE DUE 2009
1. Interest. Golfsmith International, Inc., a Delaware corporation
(the "Company"), promises to pay interest on the principal amount of this Note
at the rate per annum shown above. Interest on the Note will accrue from the
most recent date on which interest has been paid or, if no interest has been
paid, from and including the date of issuance. The Company will pay interest
semi-annually in arrears on each Interest Payment Date, commencing March 1,
2003. Interest will be computed on the basis of a 360-day year comprised of
twelve 30-day months.
2. Method of Payment. The Company shall pay interest on the Notes
(except defaulted interest) to the Persons who are the registered Holders at the
close of business on the Record Date immediately preceding the Interest Payment
Date even if the Notes are cancelled on registration of transfer or registration
of exchange after such Record Date and on or before such Interest Payment Date.
Holders must surrender Notes to a Paying Agent to collect principal payments.
The Company shall pay principal and interest in money of the United States that
at the time of payment is legal tender for payment of public and private debts
("U.S. Legal Tender"). However, the Company may pay principal and interest by
check payable in such U.S. Legal Tender. The Company may deliver any such
interest payment to the Paying Agent or to a Holder at the Holder's registered
address.
3. Paying Agent and Registrar. Initially, U.S. Trust Bank National
Association (the "Trustee") will act as Paying Agent and Registrar. The Company
may change any Paying Agent, Registrar or co-Registrar without notice to the
Holders. The Company may act as Paying Agent or Registrar.
4. Indenture. The Notes and the Guarantees were issued under an
Indenture, dated as of October 15, 2002 (the "Indenture"), among the Company,
the Guarantors and the Trustee. Capitalized terms herein are used as defined in
the Indenture unless otherwise defined herein. The terms of the Notes include
those stated in the Indenture and those made part of the Indenture by reference
to the Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb)
(the "TIA"), as in effect on the date of the Indenture until such time as the
Indenture is qualified under the TIA, and thereafter as in effect on the date on
which the Indenture is qualified under the TIA. Notwithstanding anything to the
contrary herein, the Notes are subject to all such terms, and Holders of Notes
are referred to the Indenture and the TIA for a statement of them. The Notes are
senior secured obligations of the Company. Each Holder, by accepting a Note,
agrees to be bound by all of the terms and provisions of the Indenture, as the
same may be amended from time to time.
5. Redemption.
(b) Optional Redemption Prior to October 15, 2006. The Notes will be
redeemable at the option of the Company, in whole or in part at any time or from
time to time, at any time prior to October 15, 2006, at a Redemption Price equal
to the greater of (1) 100% of the Accreted Value of the Notes being redeemed and
(2) the sum of the present values of 106.50% of the Accreted Value of the Notes
being redeemed and scheduled payments of interest on such Notes to and including
October 15, 2006 discounted to the Redemption Date on a semi-annual basis
(assuming a 360-day year consisting of twelve 30-day months) at the Treasury
Rate plus 50 basis points, together in either case with accrued and unpaid
interest, if any, to the Redemption Date.
A-4
"Treasury Rate" means, with respect to any Redemption Date, the rate per
annum equal to the semi-annual equivalent yield to Maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption period.
"Comparable Treasury Issue" means the United States Treasury security
selected by a Reference Treasury Dealer appointed by the Company as having a
Maturity comparable to the remaining term of the Notes (as if the final Maturity
of the Notes was October 15, 2006) that would be utilized at the time of
selection and in accordance with customary financial practice in pricing new
issues of corporate debt securities of comparable Maturity to the remaining term
of the Notes (as if the final Maturity of the Notes was October 15, 2006).
"Comparable Treasury Price" means, with respect to any Redemption Date,
(1) the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
Business Day preceding such Redemption Date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (2) if such release (or any successor release) is not
published or does not contain such prices on such Business Day , (A) the average
of the Reference Treasury Dealer Quotations for such Redemption Date, after
excluding the highest and lowest such Reference Treasury Dealer Quotation or (B)
if we obtain fewer than three such Reference Treasury Dealer Quotations, the
average of all such Reference Treasury Dealer Quotations.
"Reference Treasury Dealer Quotation" means, with respect to each
Reference Treasury Dealer and any Redemption Date, the average, as determined by
the Company, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Company by such Reference Treasury Dealer at 5:00 p.m. on the
third Business Day preceding such Redemption Date.
"Reference Treasury Dealer" means any primary U.S. government securities
dealer in the City of New York (a "Primary Treasury Dealer") selected by the
Company.
(c) Optional Redemption on or After October 15, 2006. The Notes will
be redeemable at the option of the Company, in whole or in part at any time or
from time to time, on and after October 15, 2006, at the following Redemption
Prices (expressed as percentages of the principal amount thereof) if redeemed
during the twelve-month period commencing on October 15 of the year set forth
below, plus, in each case, accrued interest thereon to the Redemption Date:
A-5
Year Percentage
---- ----------
2006............................... 106.50%
2007............................... 103.25%
2008 and thereafter................ 100.00%
(d) Optional Redemption upon Equity Offerings. At any time, or from
time to time, on or prior to October 15, 2005, the Company may, at its option,
use an amount equal to the net cash proceeds of one or more Equity Offerings to
redeem up to 35% of the principal amount at Maturity of the respective Notes
originally issued under the Indenture at a Redemption Price equal to 113.00% of
the Accreted Value thereof, plus accrued and unpaid interest thereon, if any, to
the Redemption Date; provided that at least 65% of the principal amount at
Maturity of Notes originally issued under the Indenture remains outstanding
immediately after any such redemption. In order to effect the foregoing
redemption with the proceeds of any Equity Offering, the Company shall make such
redemption not more than 120 days after the consummation of any such Equity
Offering.
(e) Mandatory Redemption. The Company shall be obligated to make a
pro rata partial redemption of the Notes in accordance with Section 3.01 of the
Indenture.
6. Notice of Redemption. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the Redemption Date to each
Holder of Notes to be redeemed at such Holder's registered address. Notes in
denominations larger than $1,000 may be redeemed in part.
7. Offers to Purchase. Sections 4.15, 4.16 and 4.23 of the Indenture
provide that after certain Asset Sales, upon the occurrence of a Change of
Control and in connection with an Excess Cash Flow Offer and subject to further
limitations contained therein, the Company will make an offer to purchase
certain amounts of the Notes in accordance with the procedures set forth in the
Indenture.
8. Registration Rights. Pursuant to the Registration Rights
Agreement among the Company, the Guarantors and the Holders of the Initial
Notes, the Company will be obligated to consummate an exchange offer. Upon such
exchange offering, the Holders of Notes shall have the right, subject to
compliance with securities laws, to exchange such Notes for 8.375% Senior
Secured Notes due 2009, which have been registered under the Securities Act (the
"Exchange Notes"), in like principal amount and having terms identical in all
material respects to the Initial Notes (except that the interest step-up
provisions referred to in the next sentence and the transfer restrictions shall
be modified or eliminated). The Holders of the Initial Notes shall be entitled
to receive certain additional interest payments in the event such exchange offer
is not consummated and upon certain other conditions, all pursuant to and in
accordance with the terms of the Registration Rights Agreement.
9. Denominations; Transfer; Exchange. The Notes are in registered
form, without coupons, in denominations of $1,000 and integral multiples
thereof. A Holder shall register the transfer of or exchange of Notes in
accordance with the Indenture. The Registrar may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and to pay
any taxes, fees or similar governmental charges payable in connection therewith
as permitted by the Indenture. The Registrar need not register the transfer of
or exchange of any Notes or portions thereof selected for redemption.
10. Persons Deemed Owners. The registered Holder of a Note shall be
treated as the owner of it and the Notes of which it is composed for all
purposes.
A-6
11. Unclaimed Money. If money for the payment of principal or
interest remains unclaimed for two years, the Trustee and the Paying Agent may
pay the money without interest thereon back to the Company. After that, all
liability of the Trustee and such Paying Agent with respect to such money shall
cease.
12. Discharge Prior to Redemption or Maturity. If the Company at any
time deposits with the Trustee U.S. Legal Tender or U.S. Government Obligations
sufficient to pay the principal of and interest on the Notes to redemption or
Maturity and complies with the other provisions of the Indenture relating
thereto, the Company will be discharged from certain provisions of the Indenture
and the Notes (including certain covenants, but excluding its obligation to pay
the principal of and interest on the Notes).
13. Amendment; Supplement; Waiver. Subject to certain exceptions,
the Indenture, the Notes or the Guarantees may be amended or supplemented with
the written consent of the Holders of at least a majority in aggregate principal
amount of the Notes then outstanding, and any existing Default or Event of
Default or noncompliance with any provision may be waived with the written
consent of the Holders of a majority in aggregate principal amount of the Notes
then outstanding. Without notice to or consent of any Holder, the parties
thereto may amend or supplement the Indenture, the Notes or the Guarantees to,
among other things, cure any ambiguity, defect or inconsistency, provide for
uncertificated Notes or Guarantees in addition to or in place of certificated
Notes or Guarantees, comply with the TIA, or comply with Article Five of the
Indenture or make any other change that does not adversely affect in any
material respect the rights of any Holder of a Note.
14. Restrictive Covenants. The Indenture imposes certain limitations
on the ability of the Company and its Restricted Subsidiaries to, among other
things, incur additional Indebtedness or Liens, make payments in respect of
their Capital Stock or certain Indebtedness, enter into transactions with
Affiliates, create dividend or other payment restrictions affecting
Subsidiaries, merge or consolidate with any other Person, sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
assets or adopt a plan of liquidation. Such limitations are subject to a number
of important qualifications and exceptions. The Company must annually report to
the Trustee on compliance with such limitations.
15. Successors. When a successor assumes, in accordance with the
Indenture, all the obligations of its predecessor under the Notes, the
Guarantees and the Indenture, the predecessor will be released from those
obligations.
16. Defaults and Remedies. If an Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of Notes then outstanding may declare all the Notes to be due and payable
in the manner, at the time and with the effect provided in the Indenture.
Holders of Notes may not enforce the Indenture except as provided in the
Indenture. The Trustee is not obligated to enforce the Indenture or the Notes
unless it has received indemnity satisfactory to it. The Indenture permits,
subject to certain limitations therein provided, Holders of a majority in
aggregate principal amount of the Notes then outstanding to direct the Trustee
in its exercise of any trust or power. The Trustee may withhold from Holders of
Notes notice of any continuing Default or Event of Default (except a Default in
payment of principal or interest) if it determines that withholding notice is in
their interest.
17. Trustee Dealings with Company. The Trustee under the Indenture,
in its individual or any other capacity, may become the owner or pledgee of
Notes and may otherwise deal with the Company, its Subsidiaries or their
respective Affiliates as if it were not the Trustee.
A-7
18. No Recourse Against Others. No past, present or future
stockholder, director, officer, employee or incorporator, as such, of the
Company or the Guarantors shall have any liability for any obligation of the
Company under the Notes, the Guarantees or the Indenture or for any claim based
on, in respect of or by reason of such obligations or their creation. Each
Holder of a Note by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for the issuance of the Notes.
19. Guarantees. Payment of principal and interest (including
interest on overdue principal and overdue interest, if lawful) is
unconditionally guaranteed, jointly and severally, by each of the Guarantors.
20. Intercreditor Agreement. Each Holder, by its acceptance of its
Note, agrees to be bound by the terms of the Intercreditor Agreement and all
such replacement Intercreditor Agreements and each of the Guarantors and the
Holders hereby authorize the Trustee and the Collateral Agent to bind the
Holders to the extent provided in the Intercreditor Agreement.
21. Authentication. This Note shall not be valid until the Trustee
or Authenticating Agent manually signs the certificate of authentication on this
Note.
22. Governing Law. The laws of the State of New York shall govern
this Note, the Guarantees and the Indenture, without regard to principles of
conflict of laws.
23. Abbreviations and Defined Terms. Customary abbreviations may be
used in the name of a Holder of a Note or an assignee, such as: TEN COM (=
tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST
(Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
The Company will furnish to any Holder of a Note upon written
request and without charge a copy of the Indenture. Requests may be made to:
Golfsmith International, Inc., 00000 X. XX-00, Xxxxxx, Xxxxx 00000-0000, Attn:
Secretary.
A-8
FORM OF GUARANTEE
[Name of Guarantor] and its successors under the Indenture, jointly
and severally with any other Guarantors, hereby irrevocably and unconditionally
guarantees, on a senior secured senior basis, (i) the due and punctual payment
of the principal of, premium, if any, and interest on the Notes, whether at
maturity, by acceleration or otherwise, the due and punctual payment of interest
on the overdue principal of and interest, if any, on the Notes, to the extent
lawful, and the due and punctual performance of all other obligations of
Golfsmith International, Inc. (the "Company") to the Holders or the Trustee all
in accordance with the terms set forth in Article Ten of the Indenture and (ii)
in case of any extension of time of payment or renewal of any Notes or any of
such other obligations, that the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at
stated maturity, by acceleration or otherwise. Capitalized terms used herein
have the meanings assigned to them in the Indenture unless otherwise indicated.
This Guarantee shall be binding upon [Name of Guarantor] and its
successors and assigns and shall inure to the benefit of the successors and
assigns of the Trustee and the Holders and, in the event of any transfer or
assignment of rights by any Holder or the Trustee, the rights and privileges
herein conferred upon that party shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions hereof.
This Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Note upon which this Guarantee is
noted shall have been executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers.
This Guarantee is subject to release upon the terms set forth in the
Indenture.
THE OBLIGATIONS OF THE UNDERSIGNED TO HOLDERS OF THE NOTES AND TO
THE TRUSTEE PURSUANT TO THIS GUARANTEE AND THE INDENTURE ARE EXPRESSLY SET FORTH
IN ARTICLE TEN OF THE INDENTURE AND REFERENCE IS HEREBY MADE TO THE INDENTURE
FOR THE PRECISE TERMS OF THE GUARANTEE AND ALL OTHER PROVISIONS OF THE INDENTURE
TO WHICH THE GUARANTEE RELATES.
This Guarantee shall be governed by and construed in accordance with
the laws of the State of New York.
[NAME OF GUARANTOR]
By: ________________________________________
Name:
Title:
A-9
ASSIGNMENT FORM
If you the Holder want to assign this Note, fill in the form below and
have your signature guaranteed:
I or we assign and transfer this Note to:
________________________________________________________________________________
________________________________________________________________________________
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint ________________________________________________________
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.
Dated: ____________________________ Signed: _________________________________
(Sign exactly as your name
appears on the other side of this
Note)
Signature Guarantee: _____________________________
In connection with any transfer of this Note occurring prior to the
date which is the earlier of (i) the date of the declaration by the SEC of the
effectiveness of a registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), covering resales of this Note (which
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) October 15, 2004, the undersigned confirms that it has not
utilized any general solicitation or general advertising in connection with the
transfer and that this Note is being transferred:
[Check One]
(1) to the Company or a subsidiary thereof; or
(2) pursuant to and in compliance with Rule 144A under the
Securities Act; or
(3) to an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act) that has
furnished to the Trustee a signed letter containing certain
representations and agreements (the form of which letter can be
obtained from the Trustee); or
(4) outside the United States to a person other than a "U.S.
person" in compliance with Rule 904 of Regulation S under the
Securities Act; or
(5) pursuant to the exemption from registration provided by
Rule 144 under the Securities Act; or
(6) pursuant to an effective registration statement under the
Securities Act.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Notes evidenced by this certificate in the name of any person other than the
registered Holder thereof; provided that if box (3), (4) or (5) is checked, the
Company or the Trustee may require, prior to registering any such transfer of
the
A-10
Notes, in its sole discretion, such legal opinions, certifications (including an
investment letter in the case of box (3) or (4)) and other information as the
Trustee or the Company has reasonably requested to confirm that such transfer is
being made pursuant to an exemption from, or in a transaction not subject to,
the registration requirements of the Securities Act.
If none of the foregoing boxes is checked, the Trustee or Registrar
shall not be obligated to register this Note in the name of any person other
than the Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.15 of the Indenture shall have
been satisfied.
Dated: ____________________________ Signed: _________________________________
(Sign exactly as your name
appears on the other side of this
Note)
Signature Guarantee: _____________________________
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this
Note for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated: _________________________ __________________________________________
NOTICE: To be executed by an executive
officer
A-11
[OPTION OF HOLDER TO ELECT PURCHASE]
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.15, Section 4.16 or 4.23 of the Indenture, check the
appropriate box:
Section 4.15 [ ]
Section 4.16 [ ]
Section 4.23 [ ]
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.15, Section 4.16 or 4.23 of the Indenture, state
the amount you elect to have purchased:
$ __________________________________
Dated: _______________________ ____________________________________________
NOTICE: The signature on this assignment
must correspond with the name as it
appears upon the face of the within
Note in every particular without
alteration or enlargement or any
change whatsoever and be guaranteed
by the endorser's bank or broker.
Signature Guarantee: __________________
A-12
EXHIBIT B
[FORM OF EXCHANGE NOTE]
GOLFSMITH INTERNATIONAL, INC.
8.375% SENIOR SECURED NOTES DUE 2009
CUSIP No.
No. $
This Note is issued with original issue discount for purposes of Section
1271 et seq. of the Internal Revenue Code. For each $1,000 of principal amount
of this Note, the issue price is $800.00 and the amount of original issue
discount is $200. The issue date of this Note is October 15, 2002 and the yield
to maturity is ___% (assuming mandatory redemption of the maximum principal
amount at Maturity of the Notes provided in Section 3.01 of the Indenture).
Golfsmith International, Inc., a Delaware corporation (the "Company,"
which term includes any successor entity), for value received promises to pay to
___________________ or registered assigns the principal sum of _______________
Dollars (or such principal amount as may be set forth in the records of the
Trustee hereinafter referred to in accordance with the Indenture) on October 15,
2009, and to pay interest thereon as hereinafter set forth.
Interest Rate: 8.375%
Interest Payment Dates: Interest will be payable semi-annually in
cash in arrears on March 1 and September 1 of each year, beginning on March 1,
2003.
Record Dates: February 15 and August 15
Reference is made to the further provisions of this Note contained
on the reverse side of this Note, which will for all purposes have the same
effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officer.
GOLFSMITH INTERNATIONAL, INC.
By: ________________________________________
Name:
Title:
Dated: October 15, 2002
B-1
TRUSTEE CERTIFICATE OF AUTHENTICATION
This is one of the 8.375% Senior Secured Notes due 2009 referred to
in the within-mentioned Indenture.
U.S. BANK TRUST NATIONAL ASSOCIATION, as
Trustee
Dated: October 15, 2002 By: ________________________________________
Authorized Signatory
B-2
(REVERSE OF SECURITY)
8.375% SENIOR SECURED NOTE DUE 2009
1. Interest. Golfsmith International, Inc., a Delaware corporation
(the "Company"), promises to pay interest on the principal amount of this Note
at the rate per annum shown above. Interest on the Note will accrue from the
most recent date on which interest has been paid or, if no interest has been
paid, from and including the date of issuance. The Company will pay interest
semi-annually in arrears on each Interest Payment Date, commencing March 1,
2003. Interest will be computed on the basis of a 360-day year comprised of
twelve 30-day months.
2. Method of Payment. The Company shall pay interest on the Notes
(except defaulted interest) to the Persons who are the registered Holders at the
close of business on the Record Date immediately preceding the Interest Payment
Date even if the Notes are cancelled on registration of transfer or registration
of exchange after such Record Date and on or before such Interest Payment Date.
Holders must surrender Notes to a Paying Agent to collect principal payments.
The Company shall pay principal and interest in money of the United States that
at the time of payment is legal tender for payment of public and private debts
("U.S. Legal Tender"). However, the Company may pay principal and interest by
check payable in such U.S. Legal Tender. The Company may deliver any such
interest payment to the Paying Agent or to a Holder at the Holder's registered
address.
3. Paying Agent and Registrar. Initially, U.S. Bank Trust National
Association (the "Trustee") will act as Paying Agent and Registrar. The Company
may change any Paying Agent, Registrar or co-Registrar without notice to the
Holders. The Company may Act as Paying Agent or Registrar.
4. Indenture. The Notes and the Guarantees were issued under an
Indenture, dated as of October 15, 2002 (the "Indenture"), among the Company,
the Guarantors and the Trustee. Capitalized terms herein are used as defined in
the Indenture unless otherwise defined herein. The terms of the Notes include
those stated in the Indenture and those made part of the Indenture by reference
to the Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb)
(the "TIA"), as in effect on the date of the Indenture until such time as the
Indenture is qualified under the TIA, and thereafter as in effect on the date on
which the Indenture is qualified under the TIA. Notwithstanding anything to the
contrary herein, the Notes are subject to all such terms, and Holders of Notes
are referred to the Indenture and the TIA for a statement of them. The Notes are
senior secured obligations of the Company. Each Holder, by accepting a Note,
agrees to be bound by all of the terms and provisions of the Indenture, as the
same may be amended from time to time.
5. Redemption.
(a) Optional Redemption Prior to October 15, 2006. The Notes will be
redeemable at the option of the Company, in whole or in part at any time or from
time to time, at any time prior to October 15, 2006, at a Redemption Price equal
to the greater of (1) 100% of the Accreted Value (as defined in the Indenture)
of the Notes being redeemed and (2) the sum of the present values of 106.50% of
the Accreted Value of the Notes being redeemed and scheduled payments of
interest on such Notes to and including October 15, 2006 discounted to the date
of redemption on a semi-annual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Treasury Rate plus 50 basis points, together in
either case with accrued and unpaid interest, if any, to the date of redemption.
B-3
"Treasury Rate" means, with respect to any Redemption Date, the rate per
annum equal to the semi-annual equivalent yield to Maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption period.
"Comparable Treasury Issue" means the United States Treasury security
selected by a Reference Treasury Dealer appointed by the Company as having a
Maturity comparable to the remaining term of the Notes (as if the final Maturity
of the Notes was October 15, 2006) that would be utilized at the time of
selection and in accordance with customary financial practice in pricing new
issues of corporate debt securities of comparable Maturity to the remaining term
of the Notes (as if the final Maturity of the Notes was October 15, 2006).
"Comparable Treasury Price" means, with respect to any Redemption Date,
(1) the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
Business Day preceding such Redemption Date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (2) if such release (or any successor release) is not
published or does not contain such prices on such Business Day, (A) the average
of the Reference Treasury Dealer Quotations (as defined below) for such
Redemption Date, after excluding the highest and lowest such Reference Treasury
Dealer Quotation or (B) if we obtain fewer than three such Reference Treasury
Dealer Quotations, the average of all such Reference Treasury Dealer Quotations.
"Reference Treasury Dealer Quotation" means, with respect to each
Reference Treasury Dealer and any Redemption Date, the average, as determined by
the Company, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Company by such Reference Treasury Dealer at 5:00 p.m. on the
third business date preceding such Redemption Date.
"Reference Treasury Dealer" means any primary U.S. government securities
dealer in the City of New York (a "Primary Treasury Dealer") selected by the
Company.
(b) Optional Redemption on or After October 15, 2006. The Notes will
be redeemable at the option of the Company, in whole or in part at any time or
from time to time, on and after October 15, 2006, at the following Redemption
Prices (expressed as percentages of the principal amount thereof) if redeemed
during the twelve-month period commencing on October 15 of the year set forth
below, plus, in each case, accrued interest thereon to the Redemption Date:
B-4
Year Percentage
---- ----------
2006............................... 106.50%
2007............................... 103.25%
2008 and thereafter................ 100.00%
(c) Optional Redemption upon Equity Offerings. At any time, or from
time to time, on or prior to October 15, 2005, the Company may, at its option,
use an amount equal to the net cash proceeds of one or more Equity Offerings to
redeem up to 35% of the principal amount at Maturity of the respective Notes
originally issued under the Indenture at a Redemption Price equal to 113.00% of
the Accreted Value thereof, plus accrued and unpaid interest thereon, if any, to
the Redemption Date; provided that at least 65% of the principal amount at
Maturity of Notes originally issued under the Indenture remains outstanding
immediately after any such redemption. In order to effect the foregoing
redemption with the proceeds of any Equity Offering, the Company shall make such
redemption not more than 120 days after the consummation of any such Equity
Offering.
(d) Mandatory Redemption. The Company shall be obligated to make a
pro rata partial redemption of the Notes in accordance with Section 3.01 of the
Indenture.
6. Notice of Redemption. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the Redemption Date to each
Holder of Notes to be redeemed at such Holder's registered address. Notes in
denominations larger than $1,000 may be redeemed in part.
7. Offers to Purchase. Sections 4.15, 4.16 and 4.23 of the Indenture
provide that after certain Asset Sales, upon the occurrence of a Change of
Control and in connection with an Excess Cash Flow Offer and subject to further
limitations contained therein, the Company will make an offer to purchase
certain amounts of the Notes in accordance with the procedures set forth in the
Indenture.
8. Denominations; Transfer; Exchange. The Notes are in registered
form, without coupons, in denominations of $1,000 and integral multiples
thereof. A Holder shall register the transfer of or exchange of Notes in
accordance with the Indenture. The Registrar may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and to pay
any taxes, fees or similar governmental charges payable in connection therewith
as permitted by the Indenture. The Registrar need not register the transfer of
or exchange of any Notes or portions thereof selected for redemption.
9. Persons Deemed Owners. The registered Holder of a Note shall be
treated as the owner of it and the Notes of which it is composed for all
purposes.
10. Unclaimed Money. If money for the payment of principal or
interest remains unclaimed for two years, the Trustee and the Paying Agent may
pay the money back without interest thereon to the Company. After that, all
liability of the Trustee and such Paying Agent with respect to such money shall
cease.
11. Discharge Prior to Redemption or Maturity. If the Company at any
time deposits with the Trustee U.S. Legal Tender or U.S. Government Obligations
sufficient to pay the principal of and interest on the Notes to redemption or
Maturity and complies with the other provisions of the Indenture relating
thereto, the Company will be discharged from certain provisions of the Indenture
and the Notes (including certain covenants, but excluding its obligation to pay
the principal of and interest on the Notes).
B-5
12. Amendment; Supplement; Waiver. Subject to certain exceptions,
the Indenture, the Notes or the Guarantees may be amended or supplemented with
the written consent of the Holders of at least a majority in aggregate principal
amount of the Notes then outstanding, and any existing Default or Event of
Default or noncompliance with any provision may be waived with the written
consent of the Holders of a majority in aggregate principal amount of the Notes
then outstanding. Without notice to or consent of any Holder, the parties
thereto may amend or supplement the Indenture, the Notes or the Guarantees to,
among other things, cure any ambiguity, defect or inconsistency, provide for
uncertificated Notes or Guarantees in addition to or in place of certificated
Notes or Guarantees, comply with the TIA, or comply with Article Five of the
Indenture or make any other change that does not adversely affect in any
material respect the rights of any Holder of a Note.
13. Restrictive Covenants. The Indenture imposes certain limitations
on the ability of the Company and its Restricted Subsidiaries to, among other
things, incur additional Indebtedness or Liens, make payments in respect of
their Capital Stock or certain Indebtedness, enter into transactions with
Affiliates, create dividend or other payment restrictions affecting
Subsidiaries, merge or consolidate with any other Person, sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
assets or adopt a plan of liquidation. Such limitations are subject to a number
of important qualifications and exceptions. The Company must annually report to
the Trustee on compliance with such limitations.
14. Successors. When a successor assumes, in accordance with the
Indenture, all the obligations of its predecessor under the Notes, the
Guarantees and the Indenture, the predecessor will be released from those
obligations.
15. Defaults and Remedies. If an Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of Notes then outstanding may declare all the Notes to be due and payable
in the manner, at the time and with the effect provided in the Indenture.
Holders of Notes may not enforce the Indenture except as provided in the
Indenture. The Trustee is not obligated to enforce the Indenture or the Notes
unless it has received indemnity satisfactory to it. The Indenture permits,
subject to certain limitations therein provided, Holders of a majority in
aggregate principal amount of the Notes then outstanding to direct the Trustee
in its exercise of any trust or power. The Trustee may withhold from Holders of
Notes notice of any continuing Default or Event of Default (except a Default in
payment of principal or interest) if it determines that withholding notice is in
their interest.
16. Trustee Dealings with Company. The Trustee under the Indenture,
in its individual or any other capacity, may become the owner or pledgee of
Notes and may otherwise deal with the Company, its Subsidiaries or their
respective Affiliates as if it were not the Trustee.
17. No Recourse Against Others. No past, present or future
stockholder, director, officer, employee or incorporator, as such, of the
Company or the Guarantors shall have any liability for any obligation of the
Company under the Notes, the Guarantees or the Indenture or for any claim based
on, in respect of or by reason of such obligations or their creation. Each
Holder of a Note by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for the issuance of the Notes.
18. Guarantees. Payment of principal and interest (including
interest on overdue principal and overdue interest, if lawful) is
unconditionally guaranteed, jointly and severally, by each of the Guarantors.
B-6
19. Intercreditor Agreement. Each Holder, by its acceptance of its
Note, agrees to be bound by the terms of the Intercreditor Agreement and all
such replacement Intercreditor Agreements and each of the Guarantors and the
Holders hereby authorize the Trustee and the Collateral Agent to bind the
Holders to the extent provided in the Intercreditor Agreement.
20. Authentication. This Note shall not be valid until the Trustee
or Authenticating Agent manually signs the certificate of authentication on this
Note.
21. Governing Law. The laws of the State of New York shall govern
this Note, the Guarantees and the Indenture, without regard to principles of
conflict of laws.
22. Abbreviations and Defined Terms. Customary abbreviations may be
used in the name of a Holder of a Note or an assignee, such as: TEN COM (=
tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST
(Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
The Company will furnish to any Holder of a Note upon written
request and without charge a copy of the Indenture. Requests may be made to:
Golfsmith International, Inc., 00000 X. XX-00, Xxxxxx, Xxxxx 00000-0000, Attn:
Secretary.
B-7
ASSIGNMENT FORM
If you the Holder want to assign this Note, fill in the form below
and have your signature guaranteed:
I or we assign and transfer this Note to:
________________________________________________________________________________
________________________________________________________________________________
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint ________________________________________________________
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.
Dated: ___________________________ Signed: _________________________________
(Sign exactly as your name
appears on the other side of this
Note)
Signature Guarantee: _____________________________
B-8
[OPTION OF HOLDER TO ELECT PURCHASE]
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.15, Section 4.16 or 4.23 of the Indenture, check the
appropriate box:
Section 4.15 [ ]
Section 4.16 [ ]
Section 4.23 [ ]
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.15, Section 4.16 or 4.23 of the Indenture, state
the amount you elect to have purchased:
$ __________________________________
Dated: _______________________ ____________________________________________
NOTICE: The signature on this assignment
must correspond with the name as it
appears upon the face of the within
Note in every particular without
alteration or enlargement or any
change whatsoever and be guaranteed
by the endorser's bank or broker.
Signature Guarantee: __________________
B-9
EXHIBIT C
FORM OF LEGEND FOR GLOBAL NOTES
Any Global Note authenticated and delivered hereunder shall bear a
legend (which would be in addition to any other legends required in the case of
a Restricted Security) in substantially the following form:
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE
NAME OF A DEPOSITORY OR A NOMINEE OF A DEPOSITORY OR A
SUCCESSOR DEPOSITORY. THIS NOTE IS NOT EXCHANGEABLE FOR NOTES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY
OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED
IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER THAN A
TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITORY TO A
NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO
THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE
REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN
THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO ISSUER OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND
ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY
OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
C-1
EXHIBIT D
Form of Certificate To Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
___________, ____
U.S. Bank Trust National Association
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Re: 8.375% Senior Secured Notes due 2009 (the "Notes") of Golfsmith
International, Inc. (the "Company")
Ladies and Gentlemen:
In connection with our proposed purchase of $ aggregate
principal amount at Maturity of the Notes, we confirm that:
1. We have received a copy of the Offering Circular (the "Offering
Circular"), dated October 8, 2002, relating to the Notes and such other
information as we deem necessary in order to make our investment decision. We
acknowledge that we have read and agreed to the matters stated in the section
entitled "Notice to Investors" of the Offering Circular.
2. We understand that any subsequent transfer of the Notes is
subject to certain restrictions and conditions set forth in the Indenture dated
as of October 15, 2002 relating to the Notes (the "Indenture") and the
undersigned agrees to be bound by, and not to resell, pledge or otherwise
transfer the Notes except in compliance with, such restrictions and conditions
and the Securities Act of 1933, as amended (the "Securities Act").
3. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes may not be offered or
sold except as permitted in the following sentence. We agree, on our own behalf
and on behalf of any accounts for which we are acting as hereinafter stated,
that if we should sell or otherwise transfer any Notes prior to the date which
is within two years after the original issuance of the Notes or the last date on
which the Note is owned by the Company or any affiliate of the Company, we will
do so only (i) to the Company or any of its subsidiaries, (ii) inside the United
States in accordance with Rule 144A under the Securities Act to a "qualified
institutional buyer" (as defined in Rule 144A under the Securities Act), (iii)
inside the United States to an institutional "accredited investor" (as defined
below) provided that, prior to such transfer, the transferee furnishes (or has
furnished on its behalf by a U.S. broker-dealer) to you a signed letter
containing certain representations and agreements relating to the restrictions
on transfer of the Notes, substantially in the form of this letter, (iv) outside
the United States in accordance with Rule 904 of Regulation S under the
Securities Act, (v) pursuant to the exemption from registration provided by Rule
144 under the Securities Act (if available), or (vi) pursuant to an effective
registration statement under the Securities Act, and we further agree to provide
to any person purchasing any of the Notes from us a notice advising such
purchaser that resales of the Notes are restricted as stated herein.
D-1
4. We are not acquiring the Notes for or on behalf of, and will not
transfer the Notes to, any pension or welfare plan (as defined in Section 3 of
the Employee Retirement Income Security Act of 1974), except as permitted in the
section entitled "Notice to Investors" of the Offering Circular.
5. We understand that, on any proposed resale of any Notes, we will
be required to furnish to you and the Company such certification, legal opinions
and other information as you and the Company may reasonably require to confirm
that the proposed sale complies with the foregoing restrictions. We further
understand that the Notes purchased by us will bear a legend to the foregoing
effect.
6. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or their investment, as the case may be.
7. We are acquiring the Notes purchased by us for our own account or
for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby, and we agree to notify you promptly if
any of our representations or warranties herein cease to be accurate and
complete.
This letter shall be governed by, and construed in accordance with,
the laws of the State of New York without regard to principles of conflicts of
laws.
Very truly yours,
[Name of Transferee]
By: ________________________________________
Authorized Signature
D-2
EXHIBIT E
Form of Certificate To Be
Delivered in Connection with
Transfers Pursuant to Regulation S
U.S. Bank Trust National Association
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Re: 8.375% Senior Secured Notes due 2009 (the "Notes") of Golfsmith
International, Inc. (the "Company")
Ladies and Gentlemen:
In connection with our proposed sale of $ aggregate
principal amount at Maturity of the Notes, we confirm that such sale has been
effected pursuant to and in accordance with Regulation S under the U.S.
Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we
represent that:
1. the offer of the Notes was not made to a person in the United
States;
2. either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on our
behalf reasonably believed that the transferee was outside the United States, or
(b) the transaction was executed in, on or through the facilities of a
designated off-shore securities market and neither we nor any person acting on
our behalf knows that the transaction has been pre-arranged with a buyer in the
United States;
3. no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation
S, as applicable;
4. the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
5. we have advised the transferee of the transfer restrictions
applicable to the Notes.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferee]
By: ________________________________________
Authorized Signature
E-1
EXHIBIT A2 to CREDIT AGREEMENT
SUBORDINATION AGREEMENT, dated as of October 15, 2002, by and among GOLFSMITH
INTERNATIONAL, INC., GOLFSMITH INTERNATIONAL HOLDINGS, INC., GOLFSMITH GP
HOLDINGS, INC., GOLFSMITH HOLDINGS, L.P., GOLFSMITH INTERNATIONAL, L.P.
("L.P."), GOLFSMITH GP, L.L.C., GOLFSMITH DELAWARE, L.L.C., GOLFSMITH CANADA,
L.L.C., GOLFSMITH EUROPE, L.L.C., GOLFSMITH USA, L.L.C. ("USA"), GOLFSMITH NU,
L.L.C. ("NU"), and GOLFSMITH LICENSING, L.L.C., and GENERAL ELECTRIC CAPITAL
CORPORATION, a Delaware corporation, in its capacity as Agent for Lenders.
R E C I T A L S:
WHEREAS, pursuant to that certain Credit Agreement dated as of the date hereof
by and among each Grantor as a Credit Party (with L.P., NU and USA as
Borrowers), Agent and Lenders (including all annexes, exhibits and schedules
thereto, and as from time to time amended, restated, supplemented or otherwise
modified, the "CREDIT AGREEMENT") the Lenders have agreed to make available to
Borrowers, upon terms and conditions thereof, the Revolving Loans and Letters of
Credit provided for in the Credit Agreement.
WHEREAS, Agent and Lenders have required, as one of the conditions to making
available the Revolving Loans and Letters of Credit, that the payment of the
Subordinated Debt (as hereinafter defined) be subordinated to the payment of the
Senior Debt.
A G R E E M E N T:
NOW, THEREFORE, for and in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the undersigned agree as follows:
1. Defined Terms.
(a) "DEBTOR" shall mean any Credit Party that may, from time to time,
owe any Subordinated Debt.
(b) "SUBORDINATED DEBT" shall mean and include the principal of,
interest on, and all other amounts owing in connection with any and
all obligations and liabilities of any Debtor to any other Debtor,
whether or not such Subordinated Debt is evidenced by a note,
instrument or other document..
(c) "SUBORDINATED DEBT HOLDER" a Debtor to whom any other Debtor owes
any amount, of every kind and description, direct or indirect,
absolute or contingent, now existing or hereafter arising.
(d) "SENIOR DEBT" shall mean the Obligations.
All capitalized terms used but not otherwise defined herein have the meanings
given to them in the Credit Agreement or in Annex A thereto.
2. Subordination. The Subordinated Debt is and shall be subordinated in right of
payment to the Senior Debt as provided in this Section 2. Each Debtor and each
Subordinated Debt Holder agrees and covenants, expressly for the benefit of the
present and future holders of the Senior Debt, that the payment
of the principal and interest of the Subordinated Debt, and all other
obligations of any Debtor to pay money to any Subordinated Debt Holder in
connection with the Subordinated Debt, are expressly subordinated in right of
payment to the prior payment in full of all outstanding Senior Debt. After the
occurrence and during the continuance of any Event of Default (as such term is
defined in the Credit Agreement), and except as provided below in Section 3, no
Debtor shall pay, and no Subordinated Debt Holder shall be entitled to receive
or demand (and each Subordinated Debt Holder hereby agrees not to receive or
demand), any amount in respect of the principal and interest of any Subordinated
Debt until the outstanding Senior Debt then due shall have been paid in full in
cash and the Credit Agreement shall have terminated. The prohibition against any
Subordinated Debt Holder receiving any payment from any Debtor in respect of the
Subordinated Debt set forth in this Section 2 shall occur immediately and
automatically upon the occurrence of any Event of Default, without requirement
of (a) any notice by Agent or any other Lender to any Debtor or any Subordinated
Debt Holder or (b) any actual knowledge of the occurrence of any Event of
Default by any Debtor, any Subordinated Debt Holder, Agent or any other Lender.
Any amount paid to a Subordinated Debt Holder in connection with the
Subordinated Debt in contravention of the provisions of this Section 2 shall be
held by such Subordinated Debt Holder in trust for the holder or holders of the
Senior Debt and, as soon as practicable following receipt thereof by such
Subordinated Debt Holder, shall be remitted to the holder or holders of the
Senior Debt for application to the Senior Debt. Each Subordinated Debt Holder
shall not, and each Subordinated Debt Holder hereby agrees not to, commence any
action or proceeding against any Debtor to recover all or any part of the
Subordinated Debt or commence or join with any creditor (other than the holder
of the Senior Debt) in bringing any proceedings against any Debtor under any
liquidation, dissolution, winding up of any such Debtor and/or its assets,
conservatorship, bankruptcy, reorganization, rearrangement, debtor's relief, or
other insolvency law now or hereafter existing, unless and until the Senior Debt
shall be indefeasibly paid in full and the Credit Agreement shall have
terminated. The provisions of this Section 2 are, and are intended to be, solely
for the purpose of defining the relative rights of Debtors, Subordinated Debt
Holders and the holder or holders of the Senior Debt. The subordination as to
payment and standstill as to remedies provided for in this Section 2 is not
intended and shall not be construed to impair, as among any Debtor, any such
Debtor's creditors (other than the holder or holders of the Senior Debt and
Subordinated Debt Holder) (i) the absolute and unconditional obligation of such
Debtor to make payments due in connection with the Subordinated Debt or (ii) the
rights and remedies available to a Subordinated Debt Holder in connection with
the Subordinated Debt, under applicable law, and under any other agreement
between such Subordinated Debt Holder and any such Debtor.
3. Bankruptcy of Maker. In the event of (i) any insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or other similar
case or proceeding relating to any Debtor, (ii) any liquidation, dissolution or
other winding up of any Debtor and/or its assets, by operation of law or
otherwise, or (iii) any assignment for the benefit of creditors or any other
marshalling of assets and liabilities of any Debtor, then the holder or holders
of the Senior Debt shall be entitled to receive payment in full in cash of all
amounts due or to become due on or in respect of all Senior Debt, or provision
shall be made for such payment in cash, before any Subordinated Debt Holder
shall be entitled to receive any payment on account of any portion of the
Subordinated Debt. Any such payment or distribution in any such proceeding,
whether in cash, securities or other property which would, but for the
provisions hereof, be payable or deliverable in respect of the Subordinated
Debt, shall be paid or delivered directly to Agent or its representatives, until
amounts owing upon the Senior Debt shall have been paid in full in cash and the
Credit Agreement irrevocably terminated.
2
Executed and delivered this 15th day of October, 2002.
GOLFSMITH INTERNATIONAL, L.P.
By Golfsmith GP, L.L.C., as General Partner
By Golfsmith Holdings, L.P., as Sole Member
By Golfsmith GP Holdings, Inc., as General
Partner
By ___________________________________
Xxxx X. Xxxxxx
Vice President
GOLFSMITH NU, L.L.C.
By Golfsmith Holdings, L.P., as Sole Member
By Golfsmith GP Holdings, Inc., as General
Partner
By ___________________________________
Xxxx X. Xxxxxx
Vice President
GOLFSMITH USA, L.L.C.
By Golfsmith Holdings, L.P., as Sole Member
By Golfsmith GP Holdings, Inc., as General
Partner
By ___________________________________
Xxxx X. Xxxxxx
Vice President
GOLFSMITH INTERNATIONAL, INC.
By ___________________________________
Xxxx X. Xxxxxx
Vice President
GOLFSMITH INTERNATIONAL HOLDINGS, INC.
By ___________________________________
Xxxx X. Xxxxxx
Vice President
SIGNATURE PAGE TO INTERCOMPANY SUBORDINATION AGREEMENT
GOLFSMITH GP HOLDINGS, INC.
By ___________________________________
Xxxx X. Xxxxxx
Vice President
GOLFSMITH HOLDINGS, L.P.
By Golfsmith GP Holdings, Inc., as General
Partner
By ___________________________________
Xxxx X. Xxxxxx
Vice President
GOLFSMITH GP, L.L.C.
By Golfsmith Holdings, L.P., as Sole Member
By Golfsmith GP Holdings, Inc., as General
Partner
By ___________________________________
Xxxx X. Xxxxxx
Vice President
GOLFSMITH DELAWARE, L.L.C.
By Golfsmith Holdings, L.P., as Sole Member
By Golfsmith GP Holdings, Inc., as General
Partner
By ___________________________________
Xxxx X. Xxxxxx
Vice President
GOLFSMITH CANADA, L.L.C.
By Golfsmith Holdings, L.P., as Sole Member
By Golfsmith GP Holdings, Inc., as General
Partner
By ___________________________________
Xxxx X. Xxxxxx
Vice President
SIGNATURE PAGE TO INTERCOMPANY SUBORDINATION AGREEMENT
GOLFSMITH EUROPE, L.L.C.
By Golfsmith Holdings, L.P., as Sole Member
By Golfsmith GP Holdings, Inc., as General
Partner
By ___________________________________
Xxxx X. Xxxxxx
Vice President
GOLFSMITH LICENSING, L.L.C.
By Golfsmith Holdings, L.P., as Sole Member
By Golfsmith GP Holdings, Inc., as General
Partner
By ___________________________________
Xxxx X. Xxxxxx
Vice President
GENERAL ELECTRIC CAPITAL
CORPORATION,
AS AGENT
By __________________________________
Name: _______________________________
its Duly Authorized Signature
SIGNATURE PAGE TO INTERCOMPANY SUBORDINATION AGREEMENT
EXHIBIT A3 to CREDIT AGREEMENT
MASTER AGREEMENT
FOR
DOCUMENTARY LETTERS OF CREDIT
TERMS AND CONDITIONS
General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
The undersigned ("APPLICANT") will require, from time to time,
Documentary Letters of Credit. General Electric Capital Corporation ("GE
CAPITAL") will, upon Applicant's application therefor, and to the extent such
application is approved by GE Capital in its sole discretion, arrange for the
issuance of Credits (as defined herein) through GE Capital Trade Services,
Limited or another subsidiary of GE Capital appointed in accordance with Section
3(d) (the "ISSUER"), an indirect wholly-owned subsidiary of GE Capital. Each
Credit will be governed by and interpreted in accordance with the following
terms and conditions. Capitalized terms shall have the meanings accorded them in
Section 9, Definitions, below.
1. PAYMENT TERMS.
In addition to all commissions, charges, fees and expenses payable
in connection with Credits pursuant to the Credit Agreement (including, without
limitation the Letter of Credit Fee, as defined in the Credit Agreement),
Applicant agrees to pay to GE Capital on demand, at GE Capital's office located
at 000 Xxxx Xxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxx 00000 or at such other address or
account as may be designated in writing by GE Capital, in Dollars, in
immediately available funds: (i) each amount drawn under any Credit in Dollars
or in the event that the Credit permits Drafts under such Credit to be payable
in a currency other than Dollars, the Dollar Equivalent of each amount so drawn;
(ii) interest on each amount (or the Dollar Equivalent thereof) so drawn for
each day from the date of payment of the relevant Draft to and including the
date of payment in full of such amount by Applicant to GE Capital, at the rate
specified in the Credit Agreement; and (iii) any and all commissions and charges
of, and any and all costs and expenses incurred by, GE Capital, Issuer and each
of their correspondents in relation to the Credits and all Drafts thereunder. A
schedule of commissions and charges is attached hereto as Annex I.
2. SECURITY INTEREST.
To secure the payment and performance of all Obligations (including,
without limitation, Letter of Credit Obligations), the Applicant hereby grants
to Agent a security interest in the Collateral, including, without limitation,
the unqualified right to the possession and disposal of all property shipped
under or in connection with each Credit, whether released to the Applicant under
security agreements or otherwise, and also in and to all shipping documents,
documents of title, or Drafts drawn under each Credit and in and to all other
property owned by the Applicant, in or coming into GE Capital's possession or
custody, and in any deposit balances
now or hereafter held by a bank as custodian for GE Capital for the Applicant's
account, together with the proceeds of each and all of the foregoing, until the
Termination Date (subject to reinstatement as provided in the Loan Documents).
The grant of a security interest in the preceding sentence supplements, rather
than limits or supersedes, any grant of a security interest by Applicant in the
Loan Documents. If Issuer honors any presentation or demand and Applicant fails
to reimburse GE Capital therefor in accordance with the terms of the Credit
Agreement, GE Capital and Issuer may assert their rights of subrogation under
applicable law, whether Issuer's honor satisfies all or only part of the
underlying obligation. The Applicant must, on reasonable notice, cooperate with
Issuer and GE Capital in their assertion of the Applicant's rights against the
Beneficiary, the Beneficiary's rights against the Applicant, and any other
rights that Issuer or GE Capital may have by subrogation or assignment. Subject
to the terms of the Credit Agreement, the Applicant agrees to make upon demand
such cash deposits with GE Capital as GE Capital may require to further secure
the Applicant's Letter of Credit Obligations.
3. ADMINISTRATION OF CREDIT.
(a) Applicant will promptly examine a copy of each Credit (and any
amendments thereof) sent to Applicant, as well as all other instruments and
documents delivered to Applicant from time to time in connection with such
Credit, and, in the event Applicant has any claim of non-compliance with the
instructions or of any discrepancy or other irregularity, Applicant will notify
GE Capital thereof in writing within two business days after its receipt of a
copy of such Credit (and any amendments thereof), and Applicant will
conclusively be deemed to have waived any such claim against GE Capital, Issuer
and their subcontractors, servicers and agents unless such notice is given as
aforesaid.
(b) Neither Issuer, GE Capital nor any of their correspondents shall
be responsible for, and neither Issuer's and GE Capital's powers and rights
hereunder nor Applicant's Obligations shall be affected by: (i) any act or
omission pursuant to Applicant's instructions; (ii) any other act or omission of
Issuer, GE Capital or their subcontractors, servicers and agents or their
respective agents or employees other than any such arising from its or their
gross negligence or willful misconduct; (iii) the validity, accuracy or
genuineness of Drafts, documents or required statements, even if such Drafts,
documents or statements should in fact prove to be in any or all respects
invalid, inaccurate, fraudulent or forged (and notwithstanding that Applicant
shall have notified Issuer or GE Capital thereof); (iv) failure of any Draft to
bear any reference or adequate reference to the applicable Credit; (v) errors,
omissions, interruptions or delays in transmission of delivery of any messages
however sent and whether or not in code or otherwise; (vi) any act, default,
omission, insolvency or failure in business of any other person (including any
correspondent) or any consequences arising from causes beyond Issuer's or GE
Capital's control; (vii) any acts or omissions of any Beneficiary of any Credit
or transferee of any Credit, if transferable; (viii) any act or omission of GE
Capital or Issuer required or permitted under any (1) law or practice to which a
Credit is subject, (2) applicable order, ruling or decree of any court,
arbitrator or governmental agency, or (3) published statement or interpretation
on a matter of law or practice; (ix) honor or other recognition of a
presentation or demand that includes forged or fraudulent documents or that is
otherwise affected by the fraudulent or illegal conduct of the Beneficiary or
other person (excluding GE Capital's and Issuer's employees), or (x) dishonor of
any presentation that does not strictly comply with the terms of the applicable
2
Credit or that is fraudulent, forged or otherwise not entitled to be honored.
Without limiting the generality of the foregoing, Issuer may (1) act in reliance
on any oral, telephone, telegraphic, electronic, facsimile or written request,
notice, or instruction believed in good faith to be from or have been authorized
by the Applicant, (2) receive, accept or pay as complying with the terms of a
Credit any Drafts or other documents, otherwise in order, which are signed by or
issued to any person or entity acting as the representative of, or in the place
of, the party in whose name such Credit provides that any Drafts or other
documents should be drawn or issued and (3) waive its stipulation that the bank
nominated in the applicable Credit shall accept or pay the Drafts, and Issuer
may then accept presentations of Drafts and documents for payment directly.
(c) Notwithstanding any waiver by Applicant of discrepancies in
Drafts, documents or required statements, GE Capital or Issuer, either one
acting alone, has the right in its sole judgement, to decline to approve any
discrepancies and to refuse payment on that basis under any Credit issued
hereunder. Such right is in addition to and not in limitation of rights of
Issuer under the UCP (as defined in paragraph 15(e) below).
(d) GE Capital may appoint any of its other subsidiaries as "Issuer"
at any time and any such Issuer may assign all or any portion of its rights
under this Agreement or any Credit, including without limitation any
reimbursement obligation owing to it to any subsidiary of GE Capital, in each
case without prior notice to Applicant.
4. EXTENSIONS, INCREASES AND MODIFICATIONS OF CREDIT.
Each Applicant agrees that GE Capital, acting through Issuer may at
any time and from time to time, in its discretion, by agreement with one or more
other Applicants (whether or not such Applicant shall have been appointed as the
"Agent Applicant" in the Joint Signature Agreement contained in the
Application): a) further finance or refinance any transaction under any Credit;
b) renew, extend or change the time of payment or the manner, place or terms of
payment of any of the Obligations; c) settle or compromise any of the
Obligations or subordinate the payment thereof to the payment of any other debts
of or claims against any Applicant which may at the time be due or owing to
Issuer; or d) release any Applicant or any Guarantor or any Collateral, or
modify the terms under which such Collateral is held, or forego any right of
setoff, or modify or amend in any way this Agreement or any Credit, or give any
waiver or consent under this Agreement; all in such manner and on such terms as
Issuer may deem proper and without notice or further assent from such Applicant.
In any such event, such Applicant shall remain bound by such event and this
Agreement after giving effect to such event, and the Obligations under this
Agreement shall be continuing obligations in respect of any transaction so
financed or refinanced and, in either case, if the Obligations are contingent,
may be treated by GE Capital as due and payable for their maximum face amount.
5. RESERVE REQUIREMENTS AND SIMILAR COSTS.
If Issuer is now or hereafter becomes subject to any reserve,
special deposit or similar requirement against assets of, deposits with, or for
the account of, or credit extended by, Issuer, or any other condition is imposed
upon Issuer which imposes a cost upon Issuer, and the result, in the
determination of Issuer is to increase the cost to Issuer of maintaining a
Credit or paying or funding the payment of any Draft thereunder, or to reduce
the amount of any sum
3
received or receivable, directly or indirectly, by Issuer hereunder, Applicant
will pay to Issuer upon demand such amounts required to compensate Issuer for
such increased cost or reduction. In making the determinations contemplated
hereunder, Issuer may make such estimates, assumptions, allocations and the like
which Issuer in good faith determines to be appropriate, but Issuer's selection
thereof, and Issuer's determinations based thereon, shall be final and binding
and conclusive upon Applicant.
6. POSSESSION OF PROPERTY BY APPLICANT.
If the Applicant accepts or retains possession of documents, goods
or other property, if any, covered by a Credit, prior to Issuer's review of
documents, then all discrepancies and other irregularities of said documents
shall be deemed waived by the Applicant, and Issuer is authorized and directed
to pay any Drafts drawn or purporting to be drawn upon such Credit.
7. PARTIAL SHIPMENTS.
(a) Except as otherwise expressly stated in any Credit (i) partial
shipments may be made under such Credit, and Issuer may honor the relative
Drafts without inquiry regardless of any apparent disproportion between the
quantity shipped and the amount of the relative Draft and the total amount of
such Credit and the total quantity to be shipped under such Credit, and (ii) if
such Credit specifies shipments in installments within stated periods and the
shipper fails to ship in any designated period, shipments of subsequent
installments may nevertheless be made in their respective designated periods and
Issuer may honor the relative Drafts.
8. EVENTS OF DEFAULT, REMEDIES; PRE-FUNDING.
(a) If any Event of Default has occurred and is continuing, other
than an Event of Default specified in Sections [8.1(h) OR 8.1(i)] of the Credit
Agreement [CONFIRM SECTION CROSS-REFERENCES IN EACH TRANSACTION], Issuer may
direct GE Capital in its capacity as Agent under the Credit Agreement to pursue
any of the remedies provided for in the Loan Documents, including without
limitation declaring that all of the Obligations (including any such Obligations
that may be contingent and not matured) are immediately due and payable. If an
Event of Default under [Section 8.1(h) or Section 8.1(i)] of the Credit
Agreement has occurred, the Obligations shall automatically be due and payable.
(b) Without limiting the generality of the foregoing, Applicant
agrees that if: i) any Default or Event of Default shall have occurred and be
continuing; ii) GE Capital at any time and for any reason deems itself or Issuer
to be insecure or the risk of non-payment or non-performance of any of the
Obligations to have increased; or iii) in the event that a Credit is denominated
in a currency other than Dollars, GE Capital determines that such currency is
unavailable or that the transactions contemplated by this Agreement are unlawful
or contrary to any regulations to which GE Capital, Issuer or any agent,
servicer or subcontractor of either of them may be subject or that due to
currency fluctuations the Dollar Equivalent of the amount of a Credit exceeds
the amount of Dollars that Issuer in its sole judgment expected to be its
maximum exposure under such Credit, then Applicant will upon demand pay to GE
Capital an amount equal to the undisbursed portion, if any, of such Credit, and
such amount shall be held as
4
additional Collateral for the payment of all Letter of Credit Obligations, and
after the expiration hereof, to the extent not applied to the Letter of Credit
Obligations, shall be returned to Applicant (unless otherwise provided in the
Credit Agreement or any other Loan Document).
9. DEFINITIONS.
As used herein, the following terms shall have the following
meanings:
"AGENT" shall have the meaning given such term in the Credit
Agreement.
"AGREEMENT" shall mean, collectively, these terms and conditions
[each Application for Documentary Letter of Credit entered into between GE
Capital and/or Issuer and Applicant, the Joint Signature Agreement and the
Authorization and Agreement of Account Party appended hereto], as the same may
be amended, modified, supplemented or restated from time to time.
"APPLICANT" shall mean the person or entity executing this Agreement
as Applicant; provided that if two or more persons or entities shall have
executed this Agreement as Applicant or as Joint Applicant, the terms
"Applicant" and "Applicants" shall mean each and all of such persons and
entities, individually and collectively, except that, if the term "Applicant" is
preceded by the word "any" or "each" or a word or words of similar import, such
terms shall be deemed to refer to each of such persons or entities,
individually.
"BENEFICIARY" shall mean, as to any Credit, the beneficiary of that
Credit.
"COLLATERAL" shall have the meaning given such term in the Credit
Agreement.
"CREDIT" shall mean a Documentary Letter of Credit issued by Issuer
upon Applicant's request of GE Capital, as the same may be amended and
supplemented from time to time, and any and all renewals, increases, extensions
and replacements thereof and therefor.
["CREDIT AGREEMENT" shall mean the Credit Agreement, dated as of
___________, 20___ among the Applicant, the other credit parties signatory
thereto, the lenders signatory thereto from time to time and GE Capital as agent
and as lender, as such Credit Agreement may be amended, modified, supplemented
or restated from time to time.]
"DEFAULT" shall have the meaning given such term in the Credit
Agreement.
"DOLLAR EQUIVALENT" shall mean: a) the number of Dollars that is
equivalent to an amount of a currency other than Dollars, determined by applying
the selling rate of First Union National Bank, First Union Bank International or
another bank of comparable size selected by Issuer; or b) in the event that
Issuer shall not at the time be offering such a rate, the amount of Dollars that
Issuer, in its sole judgment, specifies as sufficient to reimburse or provide
funds to Issuer in respect of amounts drawn or drawable under a Credit; in
either case as and when determined by Issuer.
"DOLLARS" shall mean lawful currency of the United States of
America.
5
"DRAFT" shall mean any Draft (sight or time), receipt, acceptance,
cable or other written demand for payment.
"EVENT OF DEFAULT" shall have the meaning given such term in the
Credit Agreement.
"GUARANTOR" shall have the meaning given such term in the Credit
Agreement.
"LETTER OF CREDIT OBLIGATIONS" shall have the meaning given such
term in the Credit Agreement.
"LOAN DOCUMENTS" shall have the meaning given such term in the
Credit Agreement.
"OBLIGATIONS" shall have the meaning given such term in the Credit
Agreement.
"TERMINATION DATE" shall have the meaning given such term in the
Credit Agreement.
10. EXPENSES; INDEMNIFICATION.
Applicant agrees to reimburse GE Capital and Issuer upon demand for
and to indemnify and hold GE Capital and Issuer harmless from and against all
claims, liabilities, losses, costs and expenses ("Indemnified Liabilities")
including attorneys' fees and disbursements, incurred or suffered by GE Capital
and/or Issuer in connection with any Credit. Such Indemnified Liabilities shall
include, but not be limited to, all such Indemnified Liabilities incurred or
suffered by GE Capital and/or Issuer in connection with (a) GE Capital and/or
Issuer's exercise of any right or remedy granted to it hereunder or under the
Loan Documents, (b) any claim and the prosecution or defense thereof arising out
of or in any way connected with this Agreement including, without limitation, as
a result of any act or omission by a Beneficiary, (c) the collection or
enforcement of the Obligations, and (d) any of the events or circumstances
referred to in paragraph 3(b) hereof. None of GE Capital, Issuer or any
subcontractor, servicer or agent of either of them shall be liable to Applicant
for any special, indirect, consequential or punitive damages arising with
respect to any Credit. Applicant must in all instances mitigate damages claimed
against Issuer or GE Capital or any subcontractor, servicer or agent of either
of them arising with respect to any Credit.
11. LICENSES; INSURANCE.
The Applicant shall procure or cause the Beneficiaries of each
Credit to procure promptly any necessary import and export or other licenses for
import or export or shipping of any goods referred to in or pursuant to such
Credit and to comply and to cause the Beneficiaries to comply with all foreign
and domestic governmental regulations in regard to the shipment and warehousing
of such goods or otherwise relating to or affecting such Credit, including
governmental regulations pertaining to transactions involving designated foreign
countries or their nationals, and to furnish such certificates in that respect
as GE Capital may at any time require, and to keep such goods adequately covered
by insurance in amounts, with carriers and
6
for such risks as shall be satisfactory to GE Capital, and to cause GE Capital's
interest to be endorsed thereon, and to furnish GE Capital on demand with
evidence thereof. Should the insurance upon said goods for any reason be
unsatisfactory to GE Capital, GE Capital may, at its expense, obtain insurance
satisfactory to it.
12. NO WAIVERS OF RIGHTS HEREUNDER; RIGHTS CUMULATIVE.
No delay by GE Capital or Issuer in exercising any right hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right preclude other or further exercises thereof or the exercise of any
other right. No waiver or amendment of any provision of this Agreement shall be
enforceable against GE Capital or Issuer unless in writing and signed by an
officer of GE Capital, and unless it expressly refers to the provision affected,
any such waiver shall be limited solely to the specific event waived. All rights
granted GE Capital or Issuer hereunder shall be cumulative and shall be
supplementary of and in addition to those granted or available to GE Capital or
Issuer under the Loan Documents or applicable law and nothing herein shall be
construed as limiting any such other right.
13. CONTINUING AGREEMENT; TERMINATION.
This Agreement shall continue in full force and effect until the
Termination Date (subject to reinstatement, as provided in the Loan Documents).
14. PERFORMANCE STANDARDS.
Notwithstanding any provision to the contrary herein, GE Capital
reserves the right to decline (i) any request made by the Applicant for the
issuance of a Credit or (ii) any instruction provided by the Applicant if, in
its discretion, GE Capital determines that the issuance of such Credit or the
carrying out of such instruction contravenes GE Capital's customary procedures
or policy or any applicable law, rule or regulation.
15. GOVERNING LAW; JURISDICTION; CERTAIN WAIVERS.
(a) This Agreement shall be governed by and interpreted and enforced
in accordance with the laws of the State of New York, and with respect to all
security interests granted in connection herewith, GE Capital and Issuer shall
have the rights and remedies of a secured party under applicable law, including
but not limited to the Uniform Commercial Code of New York.
(b) APPLICANT AGREES THAT ALL ACTIONS AND PROCEEDINGS RELATING
DIRECTLY OR INDIRECTLY TO THIS AGREEMENT SHALL BE LITIGATED ONLY IN COURTS
LOCATED WITHIN THE STATE OF NEW YORK AND THAT SUCH COURTS ARE CONVENIENT FORUMS
THEREFOR, AND APPLICANT SUBMITS TO THE PERSONAL JURISDICTION OF SUCH COURTS.
(c) Applicant waives personal service of process upon it and
consents that any such service of process may be made by certified or registered
mail, return receipt requested,
7
directed to Applicant at its address last specified for notices hereunder, and
service so made shall be deemed completed two (2) days after the same shall have
been so mailed.
(d) APPLICANT WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BETWEEN IT AND GE CAPITAL OR ISSUER AND WAIVES THE RIGHT TO ASSERT IN
ANY ACTION OR PROCEEDING WITH REGARD TO THIS AGREEMENT OR ANY OF THE OBLIGATIONS
ANY OFFSETS OR COUNTERCLAIMS WHICH IT MAY HAVE.
(e) Each Credit and this Agreement shall be subject to the Uniform
Customs and Practice for Documentary Credits (1993 Revision) International
Chamber of Commerce Publication No. 500, or the most recent revision thereof
(the "UCP"), the terms of which are known to us, and the same shall be
considered as incorporated herein. Solely for purposes of interpreting the UCP's
application to this Agreement and Credits issued hereunder, Issuer shall be
deemed to be a "bank" as such term is used in the UCP.
16. NOTICES.
Any notice to GE Capital or Issuer shall be effective only if in
writing or by authenticated teletransmission acceptable to GE Capital or Issuer,
as applicable, directed to the attention of and received by GE Capital or
Issuer's Letter of Credit Group, as applicable. Any notice to or demand on
Applicant, or, if more than one Applicant executes this Agreement, the Agent
Applicant, shall be binding on all Applicants and shall be effective when made
to Applicant, or if more than one Applicant executes this Agreement, the Agent
Applicant, by mail, telegraph, facsimile, telephone or otherwise, in the case of
mailed, telegraphed or cabled notices, to the address appearing below such
Applicant's signature or at such other address as may hereafter be specified in
a notice designated as a notice of change of address under this paragraph, and
in the case of telephonic or facsimile notices, to the telephone number of such
Applicant appearing below Applicant's signature. Any requirements under
applicable law of reasonable notice by GE Capital or Issuer to Applicant of any
event shall be met if notice is given to Applicant or Agent Applicant, as the
case may be, in the manner prescribed above at least seven days before (a) the
date of such event or (b) the date after which such event will occur.
17. THIRD PARTY BENEFICIARY.
Applicant hereby acknowledges that Issuer is a third party
beneficiary under this Agreement and may enforce its rights under this Agreement
directly against the Applicant as if Issuer were named herein as a party.
18. GENERAL.
(a) If this Agreement is executed by two or more Applicants, they
shall be jointly and severally liable hereunder, and all provisions hereof
regarding the Collateral shall apply to the Obligations and Collateral of any or
all of them.
8
(b) This Agreement shall be binding upon the heirs, executors,
administrators, assigns and successors of each of the Applicant(s) and shall
inure to the benefit of and be enforceable by GE Capital, Issuer and their
respective successors, transferees and assigns.
(c) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof in that jurisdiction or affecting the validity or
enforceability of such provision in any other jurisdiction.
(d) This Agreement shall be deemed to be a "Loan Document" for all
purposes under the Credit Agreement.
(e) This Agreement may be executed in any number of separate
counterparts, each of which shall collectively and separately constitute one
agreement.
Date:
NAME OF APPLICANT:
GENERAL ELECTRIC CAPITAL CORPORATION
By: By:
-------------------------------- -----------------------------------
Name: Name:
--------------------------- ------------------------------
Title: Title:
-------------------------- -----------------------------
Address of Applicant:
------------------------------------
------------------------------------
------------------------------------
Fax No.:
---------------------------
9
JOINT SIGNATURE AGREEMENT
In consideration of your establishment from time to time of a Credit
substantially as applied for herein, it is further agreed that this Agreement
shall be the joint and several agreement of the undersigned and all property
referred to in this Agreement as belonging to Applicant shall be understood to
refer to the joint property of any or all of the several Applicants as well as
to the individual property of each of them. The happening of any Event of
Default as specified in paragraph 6 of this Agreement with respect to any
Applicant shall mature the obligations of all Applicants. A demand made on any
Applicant pursuant to paragraph 1 of this Agreement shall fix the exchange rate
as to all Applicants.
It is agreed that [ ] shall appear in [each] Credit as Account Party
and that [ ] ("AGENT APPLICANT") has the exclusive right to issue all
instructions on any and all matters relating to such Credit, including, without
limitation, instructions as to disposition of documents and any unutilized
funds, and waivers of discrepancies, and to agree with you upon any amendments,
modifications, extensions, renewals, or increases in such Credit or any other
matter.
------------------------------------ --------------------------------------
JOINT APPLICANT JOINT APPLICANT
By: By:
-------------------------------- ----------------------------------
Authorized Signature Authorized Signature
Address of Joint Applicant Address of Joint Applicant
------------------------------------ --------------------------------------
------------------------------------ --------------------------------------
AUTHORIZATION AND AGREEMENT OF ACCOUNT PARTY
Gentlemen:
We hereby join the request of Applicant to issue from time to time the
Credits, described on page 1 with our name appearing as Account Party.
In consideration of your issuing each Credit in this form it is agreed
that Applicant has the exclusive right to issue all instructions on any and all
matters relating to such Credits including, without limitation, instructions as
to disposition of documents and any unutilized funds, and waivers of
discrepancies, and to agree with you upon any amendments, modifications,
extensions, renewals, or increases in each Credit or any other matters
irrespective of whether the same may now or hereafter affect our rights or those
of our successors or assigns.
-------------------------------------------
Account Party
By:
----------------------------------------
Authorized Signature
Address of Account Party:
-------------------------------------------
-------------------------------------------
(SAMPLE)
ANNEX I
The Applicant agrees to pay the following fees with respect to the Credits:
1. upon issuance thereof, the greater of (a) 1/8 of 1% of the amount of the
Credit or (b) $95;
2. upon any amendment which increases the amount thereof, the greater of
(c) 1/8 of 1% of such increased amount or (d) $45;
3. upon any other amendment thereof, $45;
4. upon the negotiation thereof, the greater of (e) 1/8 of 1% of the amount
thereof or (f) $60; and
5. with respect to any other activity related to such Credit, the standard
fees and charges of Issuer for such activity.
EXHIBIT A4 to CREDIT AGREEMENT
MASTER AGREEMENT
FOR
STANDBY LETTERS OF CREDIT
TERMS AND CONDITIONS
General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
The undersigned ("APPLICANT") will require, from time to time,
Standby Letters of Credit. General Electric Capital Corporation ("GE Capital")
will, upon Applicant's application therefor, and to the extent such application
is approved by GE Capital in its sole discretion, issue Standby Letters of
Credit or arrange for the issuance thereof through an indirect wholly-owned
subsidiary of GE Capital. Each Credit will be governed by and interpreted in
accordance with the following terms and conditions. Capitalized terms shall have
the meanings accorded them in Section 9, Definitions, below.
1. PAYMENT TERMS.
In addition to all commissions, charges, fees and expenses payable
in connection with Credits pursuant to the Credit Agreement (including, without
limitation the Letter of Credit Fee, as defined in the Credit Agreement),
Applicant agrees to pay to GE Capital on demand, at GE Capital's office located
at 000 Xxxx Xxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxx 00000 or at such other address or
account as may be designated in writing by GE Capital, in Dollars, in
immediately available funds: (i) each amount paid by GE Capital under any Credit
(which payment is permitted or required under this Agreement, ISP 98 or
applicable law) in Dollars or in the event that the Credit permits Drafts under
such Credit to be payable in a currency other than Dollars, the Dollar
Equivalent of each amount so drawn; (ii) interest on each amount (or the Dollar
Equivalent thereof) so drawn for each day from the date of payment of the
relevant Draft to and including the date of payment in full of such amount by
Applicant to GE Capital, at the rate specified in the Credit Agreement; and
(iii) any and all commissions and charges of, and any and all costs and expenses
incurred by, GE Capital and its subcontractors or agents in relation to the
Credits and all Drafts thereunder. A schedule of commissions and charges is
attached hereto as Annex I. If a Credit provides for sight payment,
reimbursement by Applicant is due on the day on which GE Capital pays on the
applicable Draft. All payments by Applicant hereunder shall be made without
withholding, deduction or set-off and shall be made free and clear of taxes.
2. SECURITY INTEREST.
To secure the payment and performance of all Obligations (including,
without limitation, Letter of Credit Obligations), the Applicant hereby grants
to Agent a security interest in the following, including, without limitation,
the unqualified right to the possession and disposal of all property shipped
under or in connection with each Credit, whether released to the Applicant under
security agreements or otherwise, and also in and to all shipping documents,
documents of title, or Drafts drawn under each Credit and in and to all other
property owned by the Applicant, in or coming into GE Capital's possession or
custody, and in any deposit balances now or hereafter held by a bank as
custodian for GE Capital for the Applicant's account, together with the proceeds
of each and all of the foregoing, until the Termination Date (subject to
reinstatement as provided in the Loan Documents). The grant of a security
interest in the preceding sentence supplements, rather than limits or
supersedes, any grant of a security interest by Applicant in the Loan Documents.
If GE Capital honors any presentation, demand or Draft and Applicant fails to
reimburse GE Capital therefor in accordance with the terms of the Credit
Agreement, GE Capital may assert its rights of subrogation under applicable law,
whether GE Capital's honor satisfies all or only part of the underlying
obligation. The Applicant must, on reasonable notice, cooperate with GE Capital
in its assertion of the Applicant's rights against the Beneficiary, the
Beneficiary's rights against the Applicant, and any other rights that GE Capital
may have by subrogation or assignment. Such cooperation shall include without
limitation the prompt return of all Drafts, documents, instruments and
statements in Applicant's possession that were presented by or on behalf of
Beneficiary in connection with any draw under a Credit. Subject to the terms of
the Credit Agreement and the terms of Section 8(b) below, the Applicant agrees
to make upon demand such cash deposits with GE Capital as GE Capital may require
to further secure Applicant's Letter of Credit Obligations.
3. ADMINISTRATION OF CREDIT.
(a) Applicant will promptly examine a copy of each Credit (and any proposed
amendments thereto) sent to Applicant, as well as all other instruments and
documents delivered to Applicant from time to time in connection with such
Credit, and, in the event Applicant has any claim of non-compliance with the
instructions or of any discrepancy or other irregularity or any objection to any
action taken or proposed to be taken by GE Capital with respect to any Credit,
Applicant will notify GE Capital thereof in writing within three business days
after its receipt of a copy of such Credit, any amendments thereto, or such
instruments or documents or notice of any such proposed action, and Applicant
will conclusively be deemed to have waived any such claim against GE Capital and
its subcontractors, servicers and agents or any defense to payment of GE
Capital, its subcontractors or agents, unless such notice is given as aforesaid.
This Section 3(a) is intended to substitute three business days for the "not
unreasonable time period" set forth in Rule 5.09 of ISP 98.
(b) Neither GE Capital nor any of its agents, subcontractors or servicers
shall be responsible for, and neither GE Capital's powers and rights hereunder
nor Applicant's obligations shall be affected by: (i) any act or omission
pursuant to Applicant's instructions; (ii) any other act or omission of GE
Capital or its subcontractors, servicers, agents or employees other than any
such arising from its or their gross negligence or willful misconduct; (iii) the
validity, accuracy or genuineness of Drafts, documents or required statements,
even if such Drafts, documents or statements should in fact prove to be in any
or all respects invalid, inaccurate, fraudulent or forged (and notwithstanding
that Applicant shall have notified GE Capital thereof); (iv) failure of any
Draft to bear any reference or adequate reference to the applicable Credit; (v)
errors, omissions, interruptions or delays in transmission of delivery of any
messages however sent and whether or not in code or otherwise; (vi) any act,
default, omission, insolvency or failure in business of any other person
(including any agent, subcontractor or
2
employee) or any consequences arising from causes beyond GE Capital's control;
(vii) any acts or omissions of any Beneficiary of any Credit or transferee of
any Credit, if transferable; (viii) any act or omission of GE Capital required
or permitted under any (1) law or practice to which a Credit is subject
(including ISP 98), (2) applicable order, ruling or decree of any court,
arbitrator or governmental agency, (3) a published statement or interpretation
on a matter of law or practice (including ISP 98); (ix) honor or other
recognition of a presentation or demand that includes forged or fraudulent
documents or that is otherwise affected by the fraudulent, bad faith, or illegal
conduct of the Beneficiary or other person (excluding GE Capital's employees),
including payment to a person who forges the signature of a Beneficiary or the
signature of an assignee of a Credit's proceeds, (x) honor of a presentation
without regard to any nondocumentary condition(s) in the Credit, regardless of
whether Rule 4.11 of ISP 98 applies, or (xi) dishonor of any presentation that
does not strictly comply with the terms of the applicable Credit or that is
fraudulent, forged or otherwise not entitled to be honored. Without limiting the
generality of the foregoing, GE Capital may (1) act in reliance on any oral,
telephone, telegraphic, electronic, facsimile or written request, notice, or
instruction believed in good faith to be from or have been authorized by the
Applicant, (2) receive, accept or pay as complying with the terms of a Credit
any Drafts or other documents, otherwise in order, which are signed by or issued
to any person or entity acting as the representative of, or in the place of, the
party in whose name such Credit provides that any Drafts or other documents
should be drawn or issued and (3) waive its stipulation that the bank nominated
in the applicable Credit shall accept or pay the Drafts, and GE Capital may then
accept presentations of Drafts and documents for payment directly.
(c) Subject to GE Capital's obtaining any necessary consent from the
Beneficiary or other third party, GE Capital may for Applicant's account at any
time (i) treat a Credit as governed by the law of the place where GE Capital or
the Beneficiary is located, notwithstanding a choice of law provision in the
Credit, and, in case of conflict, treat the law as prevailing over practice in
such place or vice versa; (ii) shorten or lengthen the examination period; (iii)
specify or amend a specified place or manner of receiving a presentation,
effecting honor, or giving notice of dishonor; or (iv) discount an accepted
Draft or deferred obligation incurred under the Credit.
(d) Unless GE Capital is enjoined by a court of competent jurisdiction, GE
Capital may assume that any Beneficiary or other presenter acts in good faith
and that any presentation or other demand is nonfraudulent.
(e) Unless the Credit specifically permits and GE Capital specifically
agrees, GE Capital need not check the authenticity or authority of any purported
Beneficiary signature, even if in other transactions the Beneficiary is a
customer or its signature is otherwise known to GE Capital.
(f) Unless specifically committed to do so in a writing signed by GE
Capital, GE Capital need not consent to any amendment of a Credit. GE Capital
may, without authorization from or notice to Applicant, send a notice of
non-extension to the Beneficiary under a Credit if it provides for automatic
extension. Any notice of dishonor given by GE Capital within six business days
after presentation of documents to GE Capital shall not be
3
deemed to be unreasonable. This Section 3(d) is intended to substitute six
business days for the three business days set forth in Rule 5.01a of ISP 98.
(g) Notwithstanding any waiver by Applicant of discrepancies in Drafts,
documents or required statements, GE Capital acting alone has the right in its
sole judgement, to decline to approve any discrepancies and to refuse payment on
that basis under any Credit issued hereunder.
(h) GE Capital may assign its rights and delegate its duties hereunder to
any subsidiary of GE Capital, in each case without prior notice to Applicant;
provided that such assignment and delegation does not diminish Applicant's
rights or increase Applicant's duties hereunder.
(i) No Credit shall be issued hereunder providing for the acceptance of
time Drafts or the incurrence of deferred payment undertakings.
(j) Notwithstanding any provision herein contained to the contrary, if
Applicant approves the issuance of a Credit requiring payment of a Draft on the
same day on which such Draft is presented, GE Capital shall be entitled to honor
such Draft without review or examination by Applicant and Applicant waives all
defenses to reimbursement thereof based on irregularities that may have been
revealed by Applicant's review or examination.
4. LETTER OF CREDIT TEXT; EXTENSIONS, INCREASES AND MODIFICATIONS OF CREDIT.
(a) Applicant is responsible for preparing or approving the text of each
Credit as issued by GE Capital and as received by the Beneficiary. GE Capital's
recommendation or drafting of text or GE Capital's use or non-use or refusal to
use text submitted by Applicant shall not affect Applicant's ultimate
responsibility for the final text and its receipt by the Beneficiary. Applicant
is responsible for the effect, or lack of effect under ISP 98, Rule 4.11 or
applicable law, of a provision in any Credit that requires GE Capital to verify
facts rather than examine documents or that fails to identify the documents to
which the provision applies.
Applicant is responsible for including suitable provisions in the
underlying agreement that permit Applicant to review the text of the Credit as
received by the Beneficiary and that describe the circumstances under which: a
drawing under the Credit may be made, Credit proceeds may be applied to the
underlying agreement, and part or all of those proceeds may be returned.
Applicant accepts the risk that the text of the Credit is consistent with the
underlying obligation, suitable for Applicant's purposes, and received by the
Beneficiary in time to permit the Beneficiary and Applicant to review the Credit
and to request any desired amendments.
(b) Each Applicant agrees that GE Capital may at any time and from time to
time, in its discretion, by agreement with one or more other Applicants (whether
or not such Applicant shall have been appointed as the "Agent Applicant" in the
Joint Signature Agreement contained in the Application): a) further finance or
refinance any transaction under any Credit; b) renew, extend or change the time
of payment or the manner, place or terms of payment of any of the Obligations;
c) settle or compromise any of the Obligations or subordinate the payment
thereof to the payment of any other debts of or claims against any Applicant
which may at the time be due
4
or owing to GE Capital; or d) release any Applicant or any Guarantor or any
Collateral, or modify the terms under which such Collateral is held, or forego
any right of setoff, or modify or amend in any way this Agreement or any Credit,
or give any waiver or consent under this Agreement; all in such manner and on
such terms as GE Capital may deem proper and without notice or further assent
from such Applicant. In any such event, such Applicant shall remain bound by
such event and this Agreement after giving effect to such event, and the
Obligations under this Agreement shall be continuing obligations in respect of
any transaction so financed or refinanced and, in either case, if the
Obligations are contingent, may be treated by GE Capital as due and payable for
their maximum face amount.
5. RESERVE REQUIREMENTS AND SIMILAR COSTS.
If GE Capital is now or hereafter becomes subject to any reserve,
special deposit or similar requirement against assets of, deposits with, or for
the account of, or credit extended by, GE Capital, or any other condition is
imposed upon GE Capital which imposes a cost upon GE Capital, and the result, in
the determination of GE Capital is to increase the cost to GE Capital of
maintaining a Credit or paying or funding the payment of any Draft thereunder,
or to reduce the amount of any sum received or receivable, directly or
indirectly, by GE Capital hereunder, Applicant will pay to GE Capital upon
demand such amounts required to compensate GE Capital for such increased cost or
reduction. In making the determinations contemplated hereunder, GE Capital may
make such estimates, assumptions, allocations and the like which GE Capital in
good faith determines to be appropriate, but GE Capital's selection thereof, and
GE Capital determinations based thereon, shall be final and binding and
conclusive upon Applicant.
6. POSSESSION OF PROPERTY BY APPLICANT.
If the Applicant accepts or retains possession of documents, goods
or other property, if any, covered by a Credit, prior to GE Capital's review of
such documents, then all discrepancies and other irregularities of said
documents shall be deemed waived by the Applicant, and GE Capital is authorized
and directed to pay any Drafts drawn or purporting to be drawn upon such Credit.
7. PARTIAL SHIPMENTS.
(a) Except as otherwise expressly stated in any Credit (i) partial
shipments may be made under such Credit, and GE Capital may honor the relative
Drafts without inquiry regardless of any apparent disproportion between the
quantity shipped and the amount of the relative Draft and the total amount of
such Credit and the total quantity to be shipped under such Credit, and (ii) if
such Credit specifies shipments in installments within stated periods and the
shipper fails to ship in any designated period, shipments of subsequent
installments may nevertheless be made in their respective designated periods and
GE Capital may honor the relative Drafts.
8. EVENTS OF DEFAULT, REMEDIES; PRE-FUNDING.
(a) If any Event of Default has occurred and is continuing, other than an
Event of Default specified in Sections [8.1(H) OR 8.1(I)] of the Credit
Agreement [CONFIRM SECTION CROSS-
5
REFERENCES IN EACH TRANSACTION], GE Capital as issuer hereunder and in its
capacity as Agent under the Credit Agreement may pursue any of the remedies
provided for in the Loan Documents, including without limitation declaring that
all of the Obligations (including any such Obligations hereunder that may be
contingent and not matured) are immediately due and payable. If an Event of
Default under [Section 8.1(h) or Section 8.1(i)] of the Credit Agreement has
occurred, the Obligations shall automatically be due and payable.
(b) Without limiting the generality of the foregoing, Applicant agrees that
if: i) any Default or Event of Default shall have occurred and be continuing;
ii) GE Capital at any time and for any reason deems itself to be insecure or the
risk of non-payment or non-performance of any of the Obligations to have
increased; or iii) in the event that a Credit is denominated in a currency other
than Dollars, GE Capital determines that such currency is unavailable or that
the transactions contemplated by this Agreement are unlawful or contrary to any
regulations to which GE Capital or any agent, servicer or subcontractor of GE
Capital may be subject or that due to currency fluctuations the Dollar
Equivalent of the amount of a Credit exceeds the amount of Dollars that GE
Capital in its sole judgment expected to be its maximum exposure under such
Credit, then Applicant will upon demand pay to GE Capital an amount equal to the
undisbursed portion, if any, of such Credit, and such amount shall be held as
additional Collateral for the payment of all Letter of Credit Obligations, and
after the expiration hereof, to the extent not applied to the Letter of Credit
Obligations, shall be returned to Applicant (unless otherwise provided in the
Credit Agreement or any other Loan Document).
9. DEFINITIONS.
As used herein, the following terms shall have the following
meanings:
"AGENT" shall have the meaning given such term in the Credit
Agreement.
"AGREEMENT" shall mean, collectively, this Agreement [each
Application for Standby Letter of Credit entered into between GE Capital and
Applicant, the Joint Signature Agreement and the Authorization and Agreement of
Account Party appended hereto], as the same may be amended, modified,
supplemented or restated from time to time.
"APPLICANT" shall mean the person or entity executing this Agreement
as Applicant; provided that if two or more persons or entities shall have
executed this Agreement as Applicant or as Joint Applicant, the terms
"Applicant" and "Applicants" shall mean each and all of such persons and
entities, individually and collectively, except that, if the term "Applicant" is
preceded by the word "any" or "each" or a word or words of similar import, such
terms shall be deemed to refer to each of such persons or entities,
individually.
"BENEFICIARY" shall mean, as to any Credit, the beneficiary of that
Credit.
"COLLATERAL" shall have the meaning given such term in the Credit
Agreement.
"CREDIT" shall mean a Standby Letter of Credit issued by GE Capital
upon Applicant's request of GE Capital, as the same may be amended and
supplemented from time to time, and any and all renewals, increases, extensions
and replacements thereof and therefor.
6
["CREDIT AGREEMENT" shall mean the Credit Agreement, dated as of
___________, 20___ among the Applicant, the other credit parties signatory
thereto, the lenders signatory thereto from time to time and GE Capital as agent
and as lender, as such Credit Agreement may be amended, modified, supplemented
or restated from time to time.]
"DEFAULT" shall have the meaning given such term in the Credit
Agreement.
"DOLLAR EQUIVALENT" shall mean: a) the number of Dollars that is
equivalent to an amount of a currency other than Dollars, determined by applying
the selling rate of First Union National Bank, First Union Bank International or
another bank of comparable size selected by GE Capital; or b) in the event that
GE Capital shall not at the time be offering such a rate, the amount of Dollars
that GE Capital, in its sole judgment, specifies as sufficient to reimburse or
provide funds to GE Capital in respect of amounts drawn or drawable under a
Credit; in either case as and when determined by GE Capital.
"DOLLARS" shall mean lawful currency of the United States of
America.
"DRAFT" shall mean any Draft (sight or time), receipt, acceptance,
cable or other written demand for payment.
"EVENT OF DEFAULT" shall have the meaning given such term in the
Credit Agreement.
"GUARANTOR" shall have the meaning given such term in the Credit
Agreement.
"LETTER OF CREDIT OBLIGATIONS" shall have the meaning given such
term in the Credit Agreement.
"LOAN DOCUMENTS" shall have the meaning given such term in the
Credit Agreement.
"OBLIGATIONS" shall have the meaning given such term in the Credit
Agreement.
"TERMINATION DATE" shall have the meaning given such term in the
Credit Agreement.
10. EXPENSES; INDEMNIFICATION.
Applicant agrees to reimburse GE Capital and its subcontractors,
servicers and agents upon demand for and to indemnify and hold GE Capital
harmless from and against all claims, liabilities, losses, costs and expenses
("Indemnified Liabilities") including attorneys' fees and disbursements,
incurred or suffered by GE Capital and its subcontractors, servicers and agents
in connection with this Agreement or any Credit. Such Indemnified Liabilities
shall include, but not be limited to, all such Indemnified Liabilities incurred
or suffered by GE Capital and its subcontractors, servicers and agents in
connection with (a) GE Capital's exercise of any right or remedy granted to it
hereunder or under the Loan Documents, (b) any claim and the prosecution or
defense thereof arising out of or in any way connected with this Agreement
including, without limitation, as a result of any act or omission by a
Beneficiary, (c) the
7
collection or enforcement of the Obligations, and (d) any of the events or
circumstances referred to in paragraph 3(b) hereof, including any defense by GE
Capital in an action in which Applicant obtains an injunction against
presentation or honor of any Draft. None of GE Capital or any subcontractor,
servicer or agent of GE Capital shall be liable to Applicant for any special,
indirect, consequential or punitive damages arising with respect to any Credit.
Applicant must in all instances mitigate damages claimed against GE Capital or
any subcontractor, servicer or agent arising with respect to any Credit. If GE
Capital honors a Draft or presentation under a Credit for which Applicant claims
it is not obligated to reimburse GE Capital, Applicant shall nonetheless pay to
GE Capital the amount paid by GE Capital, without prejudice to Applicant's
claims against GE Capital to recover fees and costs paid by Applicant with
respect to the honored presentation plus any direct damages resulting therefrom
which Applicant is unable to avoid or reduce. Applicant's prevailing in an
action based on forgery or fraud of the Beneficiary or other presenter does not
relieve Applicant from its obligation to pay GE Capital's costs and expenses in
contesting the entry or maintenance of injunctive relief.
11. LICENSES; INSURANCE.
If any Credit assures payment for goods to be imported, the
Applicant shall procure or cause the Beneficiaries of each Credit to procure
promptly any necessary import and export or other licenses for import or export
or shipping of any goods referred to in or pursuant to such Credit and to comply
and to cause the Beneficiaries to comply with all foreign and domestic
governmental regulations in regard to the shipment and warehousing of such goods
or otherwise relating to or affecting such Credit, including governmental
regulations pertaining to transactions involving designated foreign countries or
their nationals, and to furnish such certificates in that respect as GE Capital
may at any time require, and to keep such goods adequately covered by insurance
in amounts, with carriers and for such risks as shall be satisfactory to GE
Capital, and to cause GE Capital's interest to be endorsed thereon, and to
furnish GE Capital on demand with evidence thereof. Should the insurance upon
said goods for any reason be unsatisfactory to GE Capital, GE Capital may, at
its expense, obtain insurance satisfactory to it.
12. NO WAIVERS OF RIGHTS HEREUNDER; RIGHTS CUMULATIVE.
No delay by GE Capital in exercising any right hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right preclude other or further exercises thereof or the exercise of any other
right. No waiver or amendment of any provision of this Agreement shall be
enforceable against GE Capital unless in writing and signed by an officer of GE
Capital, and unless it expressly refers to the provision affected, any such
waiver shall be limited solely to the specific event waived. All rights granted
GE Capital hereunder shall be cumulative and shall be supplementary of and in
addition to those granted or available to GE Capital under the Loan Documents or
applicable law and nothing herein shall be construed as limiting any such other
right.
13. CONTINUING AGREEMENT; TERMINATION.
This Agreement shall continue in full force and effect until the
Termination Date (subject to reinstatement, as provided in the Loan Documents).
8
14. PERFORMANCE STANDARDS.
Notwithstanding any provision to the contrary herein, GE Capital
reserves the right to decline (i) any request made by the Applicant for the
issuance of a Credit or (ii) any instruction provided by the Applicant if, in
its discretion, GE Capital determines that the issuance of such Credit or the
carrying out of such instruction contravenes GE Capital's customary procedures
or policy, ISP 98 or any applicable law, rule or regulation.
15. GOVERNING LAW; JURISDICTION; CERTAIN WAIVERS.
(a) This Agreement shall be governed by and interpreted and enforced in
accordance with the laws of the State of New York, and with respect to all
security interests granted in connection herewith, GE Capital shall have the
rights and remedies of a secured party under applicable law, including but not
limited to the Uniform Commercial Code of New York. This Agreement supplements
the Loan Documents, including those provisions relating to Letter of Credit
Obligations and, except as expressly provided herein to the contrary, this
Agreement does not supersede the Loan Documents.
(b) APPLICANT AGREES THAT ALL ACTIONS AND PROCEEDINGS RELATING DIRECTLY OR
INDIRECTLY TO THIS AGREEMENT SHALL BE LITIGATED ONLY IN COURTS LOCATED WITHIN
THE STATE OF NEW YORK AND THAT SUCH COURTS ARE CONVENIENT FORUMS THEREFOR, AND
APPLICANT SUBMITS TO THE PERSONAL JURISDICTION OF SUCH COURTS.
(c) Applicant waives personal service of process upon it and consents that
any such service of process may be made by certified or registered mail, return
receipt requested, directed to Applicant at its address last specified for
notices hereunder, and service so made shall be deemed completed two (2) days
after the same shall have been so mailed.
(d) APPLICANT WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BETWEEN IT AND GE CAPITAL WAIVES THE RIGHT TO ASSERT IN ANY ACTION OR
PROCEEDING WITH REGARD TO THIS AGREEMENT OR ANY OF THE OBLIGATIONS ANY OFFSETS
OR COUNTERCLAIMS WHICH IT MAY HAVE.
(e) Each Credit and this Agreement shall be subject to the International
Standby Practices, International Chamber of Commerce Publication No. 590 ("ISP
98") and the same are incorporated herein by reference. Applicant is responsible
for knowing applicable letter of credit law and practice, including ISP 98.
Solely for purposes of interpreting the ISP 98's application to this Agreement
and Credits issued hereunder, GE Capital shall be deemed to be a "bank" as such
term is used in ISP 98. To the extent permitted by applicable law, this
Agreement shall prevail in case of a conflict with applicable law or ISP 98, and
ISP 98 shall prevail in case of a conflict with applicable law.
16. NOTICES.
Any notice to GE Capital shall be effective only if in writing or by
authenticated teletransmission acceptable to GE Capital, as applicable, directed
to the attention of and received
9
by GE Capital. Any notice to or demand on Applicant, or, if more than one
Applicant executes this Agreement, the Agent Applicant, shall be binding on all
Applicants and shall be effective when made to Applicant, or if more than one
Applicant executes this Agreement, the Agent Applicant, by mail, telegraph,
facsimile, telephone or otherwise, in the case of mailed, telegraphed or cabled
notices, to the address appearing below such Applicant's signature or at such
other address as may hereafter be specified in a notice designated as a notice
of change of address under this paragraph, and in the case of telephonic or
facsimile notices, to the telephone number of such Applicant appearing below
Applicant's signature. Any requirements under applicable law of reasonable
notice by GE Capital to Applicant of any event shall be met if notice is given
to Applicant or Agent Applicant, as the case may be, in the manner prescribed
above at least two days before (a) the date of such event or (b) the date after
which such event will occur.
17. APPLICANT STATUS.
The person identified in this Agreement as Applicant represents and
warrants, except as otherwise provided in this Agreement, that:
(a) it acts for itself and for no other person in requesting issuance of
each Credit for its account;
(b) it may be identified in each Credit as the "applicant," "account party"
or "customer" at whose request and on whose instruction and for those account
the Credit is issued;
(c) it alone (acting through its officers) may authorize GE Capital to
issue, amend, pay, or otherwise act under any Credit; and
(d) it alone has standing to enforce this Agreement or otherwise to assert
the rights and remedies of an applicant, including without limitation, to xxx
for any injunction against honor of any Credit.
18. GENERAL.
(a) If this Agreement is executed by two or more Applicants, they shall be
jointly and severally liable hereunder, and all provisions hereof regarding the
Collateral shall apply to the Obligations and Collateral of any or all of them.
(b) This Agreement shall be binding upon the heirs, executors,
administrators, assigns and successors of each of the Applicant(s) and shall
inure to the benefit of and be enforceable by GE Capital and its respective
successors, transferees and assigns.
(c) Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof in that jurisdiction or affecting the validity or
enforceability of such provision in any other jurisdiction.
(d) This Agreement shall be deemed to be a "Loan Document" for all purposes
under the Credit Agreement.
10
(e) This Agreement may be executed in any number of separate counterparts,
each of which shall collectively and separately constitute one agreement.
Date:
NAME OF APPLICANT:
GENERAL ELECTRIC CAPITAL CORPORATION
------------------------------------
By: By:
-------------------------------- ----------------------------------
Name: Name:
--------------------------- -----------------------------
Title: Title:
-------------------------- ---------------------------
Address of Applicant:
------------------------------------
------------------------------------
------------------------------------
Fax No.:
---------------------------
11
JOINT SIGNATURE AGREEMENT
In consideration of your establishment from time to time of a Credit
substantially as applied for herein, it is further agreed that this Agreement
shall be the joint and several agreement of the undersigned and all property
referred to in this Agreement as belonging to Applicant shall be understood to
refer to the joint property of any or all of the several Applicants as well as
to the individual property of each of them. The happening of any Event of
Default as specified in paragraph 6 of this Agreement with respect to any
Applicant shall mature the obligations of all Applicants. A demand made on any
Applicant pursuant to paragraph 1 of this Agreement shall fix the exchange rate
as to all Applicants.
It is agreed that [ ] shall appear in [each] Credit as Account Party
and that [ ] ("AGENT APPLICANT") has the exclusive right to issue all
instructions on any and all matters relating to such Credit, including, without
limitation, instructions as to disposition of documents and any unutilized
funds, and waivers of discrepancies, and to agree with you upon any amendments,
modifications, extensions, renewals, or increases in such Credit or any other
matter.
----------------------------------- --------------------------------------
JOINT APPLICANT JOINT APPLICANT
By: By:
-------------------------------- -----------------------------------
Authorized Signature Authorized Signature
Address of Joint Applicant Address of Joint Applicant
----------------------------------- --------------------------------------
----------------------------------- --------------------------------------
AUTHORIZATION AND AGREEMENT OF ACCOUNT PARTY
Gentlemen:
We hereby join the request of Applicant to issue from time to time the
Credits, described on page 1 with our name appearing as Account Party.
In consideration of your issuing each Credit in this form it is agreed
that Applicant has the exclusive right to issue all instructions on any and all
matters relating to such Credits including, without limitation, instructions as
to disposition of documents and any unutilized funds, and waivers of
discrepancies, and to agree with you upon any amendments, modifications,
extensions, renewals, or increases in each Credit or any other matters
irrespective of whether the same may now or hereafter affect our rights or those
of our successors or assigns.
-------------------------------------------
Account Party
By:
---------------------------------------
Authorized Signature
Address of Account Party:
-------------------------------------------
-------------------------------------------
(SAMPLE)
ANNEX I
The Applicant agrees to pay the following fees with respect to the
Credits:
I. ISSUANCE:
-Upon issuance thereof, the greater of (a) _____BP (the range is 20-30BP +) PA
of the amount of the Credit or (b) $150.00
Plus:
- (c) Issuance Fee $150.
II. AMENDMENT:
-Upon any amendment which increases the amount thereof, the greater of (d)____BP
PA (same BP charge as the issuance) of such increased amount or (e) $150.00
-Amendments changing a condition of the SBLC (f) $125.00
III. EVERGREEN RENEWAL:
- (g) Issuance fee (a) plus $150.
IV. DOCUMENT EXAMINATION:
- (h) $250
EXHIBIT F-1 TO CREDIT AGREEMENT
RESTRICTED ACCOUNT AGREEMENT
This RESTRICTED ACCOUNT AGREEMENT (this "AGREEMENT") dated as of the date
specified at the end of this Agreement is entered into among GOLFSMITH
INTERNATIONAL. L.P. ("CUSTOMER"), GENERAL ELECTRIC CAPITAL CORPORATION ("SENIOR
SECURED PARTY"), U.S. BANK TRUST NATIONAL ASSOCIATION, as collateral agent (in
such capacity, "JUNIOR SECURED PARTY" and, together with Senior Secured Party,
"SECURED PARTIES") for the Trustee and the Noteholders (in each case, as defined
in the Intercreditor Agreement referred to below) and the [branch of the] Xxxxx
Fargo Bank, National Association identified in the signature block at the end of
this Agreement ("XXXXX FARGO"), and sets forth the rights of Secured Parties and
the obligations of Xxxxx Fargo with respect to the deposit account of Customer
at Xxxxx Fargo identified as the Restricted Account at the end of this Agreement
(the "RESTRICTED ACCOUNT").
1. SECURED PARTIES' INTEREST IN RESTRICTED ACCOUNT. Each Secured Party
represents that it is either (i) a lender or noteholder who has extended credit
to Customer or an affiliate thereof the payment of whose debt Customer has
guaranteed and has been granted a security interest in the Restricted Account or
(ii) an agent for a group of such lenders or noteholders (the "LENDERS").
Customer hereby confirms, and Xxxxx Fargo hereby acknowledges, the security
interest granted by Customer to each Secured Party in all of Customer's right,
title and interest in and to the Restricted Account and all sums now or
hereafter on deposit in or payable or withdrawable from the Restricted Account
or any successor or replacement account (the "ACCOUNT Funds"). Except as
specifically provided otherwise in this Agreement, Customer has given each
Secured Party complete control over the Account Funds. Each Secured Party hereby
appoints Xxxxx Fargo as agent for such Secured Party only for the purpose of
perfecting the security interest of Secured Party in the Account Funds while
they are in the Restricted Account. Customer hereby instructs Xxxxx Fargo to
indicate on its records for the Restricted Account that each Secured Party has a
security interest in the Restricted Account. Xxxxx Fargo agrees to do this.
Customer and each Secured Party would like to use the service of Xxxxx Fargo
described in this Agreement (the "SERVICE") to further the arrangements among
Secured Parties and Customer regarding the Account Funds.
2. ACCESS TO RESTRICTED ACCOUNT. Xxxxx Fargo agrees to comply with instructions
originated by Controlling Secured Party directing disposition of Account Funds
without further consent by Customer or other Secured Party. Xxxxx Fargo may
comply with instructions (a "BLOCKAGE NOTICE") directing the disposition of
Account Funds originated by Customer until such time as Controlling Secured
Party delivers a notice to Xxxxx Fargo to the effect that Controlling Secured
Party is thereby exercising exclusive control over the Restricted Account and
from and after receipt by Xxxxx Fargo of a Blockage Notice (and until Xxxxx
Fargo receives from Controlling Secured Party a written withdrawal of such
Blockage Notice), none of Customer, any person acting through or under Customer
or other Secured Party shall have any access to the Restricted Account and Xxxxx
Fargo shall not comply with any instructions originated by Customer, any such
person or other Secured Party directing disposition of Account Funds. Xxxxx
Fargo has not agreed and will not agree with any person other than Secured
Parties to comply with instructions or other directions concerning the
Restricted Account or the disposition of Account Funds originated by such person
without the prior written consent in each instance of Secured Parties and
Customer. As used herein, the term (i) "CONTROLLING SECURED PARTY" shall mean
(x) Senior Secured Party until Senior Secured Party has given written notice to
Xxxxx Fargo
(with a copy of the same to Junior Secured Party and Customer of the Discharge
of Senior Lender Claims (as defined in the Intercreditor Agreement, dated as of
October 15, 2002 (as amended, supplemented, amended and restated or otherwise
modified from time to time, the "INTERCREDITOR AGREEMENT"), among, inter alia,
Customer and Secured Parties) and (y) thereafter, Junior Secured Party and (ii)
"OTHER SECURED PARTY" shall (x) mean for so long as the Controlling Secured
Party is Senior Secured Party, Junior Secured Party and (y) for so long as
Controlling Secured Party is Junior Secured Party, not refer to any person.
3. BALANCE REPORTS. Xxxxx Fargo agrees, at the telephone request of Secured
Party on any Business Day (a day on which Xxxxx Fargo is open to conduct its
regular banking business, other than a Saturday, Sunday or public holiday) to
make available to such Secured Party a report (the "BALANCE REPORT") showing the
opening available balance in the Restricted Account as of the beginning of that
Business Day, either on-line (over the internet) or by facsimile transmission,
at Bank's option. Customer expressly consents to this transmission of
information. Each Secured Party and Customer understand and agree that the
opening available balance in the Restricted Account at the beginning of any
Business Day will be determined after deducting from the Restricted Account the
face amount ("RETURNED ITEM AMOUNT") of all checks, automated clearing house
entries, and other items credited to the Restricted Account and then returned
unpaid on the immediately preceding Business Day for any reason ("RETURNED
ITEM"). Customer will be informed of the balances in the Restricted Account by
the means arranged between Xxxxx Fargo and Customer.
4. TRANSFERS TO CONTROLLING SECURED PARTY. Xxxxx Fargo agrees that, from and
after receipt of a Blockage Notice, on each Business Day it will transfer to the
Controlling Secured Party's account specified at the end of this Agreement with
the bank specified at the end of this Agreement (the "CONTROLLING SECURED PARTY
ACCOUNT") the full amount of the opening available balance in the Restricted
Account at the beginning of such Business Day, or such other partial amount
thereof if so directed in writing by Controlling Secured Party. Xxxxx Fargo will
use the Fedwire system to make such transfers unless for any reason the Fedwire
system is unavailable, in which case Xxxxx Fargo will determine the funds
transfer system to be used in making each funds transfer and the means by which
each transfer will be made. Except for changes to the Controlling Secured Party
Account or the frequency with which funds are transferred out of the Restricted
Account to the Controlling Secured Party Account, which changes each of Customer
and other Secured Party agrees may be made by the Controlling Secured Party
alone in any writing sent to Xxxxx Fargo, changes to the transfer instructions
in this Agreement can only be made by each Secured Party, Customer and Xxxxx
Fargo signing a new agreement or an amendment to this Agreement.
5. DELAYS IN MAKING FUNDS TRANSFERS. Each Secured Party and Customer understand
that a funds transfer may be delayed or not made if (a) the transfer would cause
Xxxxx Fargo to exceed any limitation on its intra-day net funds position
established in accordance with Federal Reserve or other regulatory guidelines or
to violate any other Federal Reserve or other regulatory risk control program,
or (b) the funds transfer would otherwise cause Xxxxx Fargo to violate any
applicable law or regulation. If a funds transfer cannot be made or will be
delayed, Xxxxx Fargo will attempt to notify Controlling Secured Party by
telephone.
6. RELIANCE ON ACCOUNT NUMBER OF WIRE TRANSFER BENEFICIARY. If Controlling
Secured Party indicates a name and an identifying number for the bank of the
person or entity to receive funds transfers out of the Restricted Account,
Controlling Secured Party and Customer understand that Xxxxx Fargo will rely on
the number Controlling Secured Party indicates even if that number identifies a
bank different from the bank Controlling Secured Party named. If Controlling
Secured Party indicates a name and an account number for the person or entity to
receive funds transfers
2
out of the Restricted Account, Controlling Secured Party and Customer understand
that the bank of that person or entity may rely on the account number
Controlling Secured Party indicates even if that account number is not the
account number for the person or entity who is to receive the transfers.
7. REPORTING ERRORS IN TRANSFERS. If Controlling Secured Party or Customer
learns of any error in a funds transfer or any unauthorized funds transfer, then
the party learning of such error or unauthorized transfer (the "INFORMED PARTY")
must notify Xxxxx Fargo as soon as possible by telephone at (800) AT-XXXXX
(which is a recorded line), and provide written confirmation to Xxxxx Fargo of
such telephonic notice within two Business Days at the address given for Xxxxx
Fargo on the signature page of this Agreement. In no case may such notice to
Xxxxx Fargo by an Informed Party be made more than fourteen (14) calendar days
after Xxxxx Fargo's first confirmation of a funds transfer to such Informed
Party. If a funds transfer is made in error and Xxxxx Fargo suffers a loss
because Controlling Secured Party or Customer breached its agreement to notify
Xxxxx Fargo of such error within this fourteen (14) calendar day period, then
the party or parties which breached this agreement shall be obligated to
reimburse Xxxxx Fargo for such loss promptly upon demand by Xxxxx Fargo;
provided, however, that in the event both Controlling Secured Party and Customer
breach this notification requirement, Controlling Secured Party shall not be
obligated to reimburse Xxxxx Fargo for such loss unless Customer fails to
satisfy Xxxxx Fargo's demand for such reimbursement within fifteen (15) calendar
days after such demand is made on Customer.
8. RETURNED ITEM AMOUNTS. Controlling Secured Party and Customer understand and
agree that the Returned Item Amount of each Returned Item will be paid by Xxxxx
Fargo debiting the Restricted Account, without notice to either Secured Party or
Customer, on the Business Day that each Returned Item is received. Customer
agrees to pay the Returned Item Amounts immediately on demand, without setoff or
counterclaim, to the extent there are not sufficient funds in the Restricted
Account to cover such Returned Item Amounts on the day they are to be debited to
the Restricted Account. Controlling Secured Party agrees to pay the Returned
Item Amounts within thirty (30) calendar days after demand, without setoff or
counterclaim, to the extent the Returned Item Amounts are not paid in full by
Customer within fifteen (15) calendar days after demand on Customer by Xxxxx
Fargo, and to the extent Controlling Secured Party received proceeds from the
corresponding Returned Item(s).
9. XXXXX FARGO FEES. Customer agrees to pay all Xxxxx Fargo's fees and charges
for the maintenance and administration of the Restricted Account and for the
cash management and other account services provided with respect to the
Restricted Account (collectively "XXXXX FARGO FEES"), including, but not limited
to, the fees for (a) the Balance Reports provided on the Restricted Account, (b)
the wire transfer services provided with respect to the Restricted Account, (c)
Returned Items, (d) funds advanced to cover overdrafts in the Restricted Account
(but without Xxxxx Fargo being in any way obligated to make any such advances),
and (e) duplicate bank statements on the Restricted Account. The Xxxxx Fargo
Fees will be paid by Xxxxx Fargo debiting the Restricted Account. All such
debits will be made on the Business Day that the Xxxxx Fargo Fees are due
without notice to either Secured Party or Customer. If there are not sufficient
funds in the Restricted Account to cover fully the Xxxxx Fargo Fees on the
Business Day they are debited from the Restricted Account such shortfall or the
amount of such Xxxxx Fargo Fees will be paid by Customer sending Xxxxx Fargo a
check in the amount of such shortfall or such Xxxxx Fargo Fees, without setoff
or counterclaim, within fifteen (15) calendar days after demand of Xxxxx Fargo.
Xxxxx Fargo may, in its discretion, change the Xxxxx Fargo Fees upon thirty (30)
calendar days prior written notice to Customer and each Secured Party.
10. ACCOUNT DOCUMENTATION. Each Secured Party and Customer agree that, except as
specifically provided in this Agreement, the Restricted Account will be subject
to, and Xxxxx Fargo's operation of the Restricted Account will be in accordance
with, the terms and provisions of Xxxxx Fargo's
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separate deposit account agreement governing the Restricted Account ("ACCOUNT
AGREEMENT"), a copy of which Customer and each Secured Party acknowledge having
received.
11. SUPPORT SERVICES FOR XXXXX FARGO. Customer and each Secured Party understand
that some bank affiliates of Xxxxx Fargo may provide support services in
connection with the services to be provided by Xxxxx Fargo under this Agreement.
Customer and each Secured Party agree to, and authorize, the performance of such
support services by such bank affiliates.
12. BANK STATEMENTS. Xxxxx Fargo will, if such address is so indicated on the
signature page of this Agreement, send to each Secured Party by United States
mail, at the address indicated for such Secured Party after its signature to
this Agreement, duplicate copies of all bank statements on the Restricted
Account which are sent to Customer. Customer will have thirty (30) calendar days
after its receipt of a bank statement and each Secured Party will have thirty
(30) calendar days after its receipt of a bank statement to notify Xxxxx Fargo
of an error in such statement, unless within such thirty (30) calendar days
either Customer or such Secured Party learns that any such other party has
notified Xxxxx Fargo of such error. Xxxxx Fargo's liability for such errors is
limited as provided in Section 19 of this Agreement.
13. WAIVER OF SETOFF RIGHTS. Xxxxx Fargo hereby waives any right it may now or
hereafter have from time to time to apply any Account Funds against the payment
of any indebtedness from time to time owing to Xxxxx Fargo from Customer, except
for debits to the Restricted Account permitted under this Agreement for the
payment of Returned Item Amounts and Xxxxx Fargo Fees.
14. BANKRUPTCY NOTICE. If Xxxxx Fargo at any time receives notice of the
commencement of a bankruptcy case or other insolvency or liquidation proceeding
by or against Customer (a "BANKRUPTCY NOTICE"), Xxxxx Fargo will notify the
other parties to this Agreement, other than Customer. In such circumstances
Xxxxx Fargo agrees to continue to comply with its obligations under this
Agreement, except to the extent that any action required of Xxxxx Fargo under
this Agreement is prohibited under applicable bankruptcy laws or regulations or
is stayed pursuant to the automatic stay imposed under the United States
Bankruptcy Code or by order of any court or agency having jurisdiction over
Customer or the Restricted Account.
15. CLAIMS, LEGAL PROCESS AND NOTICES. If Xxxxx Fargo receives any claim,
notice, legal process or court order relating to the Account Funds or the
Restricted Account, Xxxxx Fargo will notify each Secured Party and Customer of
such receipt, unless Xxxxx Fargo knows that such Secured Party, with respect to
so notifying such Secured Party, or Customer, with respect to so notifying
Customer, is already aware of such claim, notice, legal process or court order.
Each Secured Party and Customer understand and agree that Xxxxx Fargo will
comply with any such legal process, legal notice or court order it receives if
Xxxxx Fargo determines in its sole discretion that such legal process, legal
notice or court order is legally binding on it. If any claim or notice received
by Xxxxx Fargo is not legally binding on it, as determined in its sole
discretion, Controlling Secured Party agrees to instruct Xxxxx Fargo promptly by
telephone, confirmed in writing, to comply or not comply with such claim or
notice and Xxxxx Fargo agrees to comply with such instructions if (a) such
instructions are given promptly after Controlling Secured Party is notified of
such claim or notice and (b) such instructions do not require Xxxxx Fargo to
violate any applicable law, regulation or court order. Each of Customer and
other Secured Party hereby irrevocably agrees that Xxxxx Fargo is to follow such
instructions of Controlling Secured Party with respect to any such non-binding
claim or notice even if such claim or notice is from Customer or other Secured
Party. If Xxxxx Fargo does not receive prompt instructions from Secured Party
regarding compliance or non-compliance with any such non-binding claim or
notice, Secured Party and Customer agree that Xxxxx Fargo will not comply with
such claim or notice.
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16. INDEMNIFICATION FOR FOLLOWING INSTRUCTIONS. Each Secured Party and Customer
each agree that, notwithstanding any other provision of this Agreement, Xxxxx
Fargo will not be liable to either Secured Party or Customer for any losses,
liabilities, damages, claims (including, but not limited to, third party
claims), demands, obligations, actions, suits, judgments, penalties, costs or
expenses, including, but not limited to, attorneys' fees, (collectively, "LOSSES
AND LIABILITIES") suffered or incurred by such Secured Party or Customer as a
result of or in connection with, (a) Xxxxx Fargo complying with any binding
legal process, legal notice or court order referred to in Section 15 of this
Agreement, (b) Xxxxx Fargo following any instruction of Controlling Secured
Party to comply or not comply with any non-binding claim or notice referred to
in Section 15, (c) if no such instruction from Controlling Secured Party is
promptly received, Xxxxx Fargo not complying with any such non-binding claim or
notice, (d) Xxxxx Fargo following any other instruction or request of
Controlling Secured Party, or (e) Xxxxx Fargo complying with its obligations
under this Agreement. Further, Customer will indemnify Xxxxx Fargo against any
Losses and Liabilities Xxxxx Fargo may suffer or incur as a result of or in
connection with any of the circumstances referred to in subsections (a) through
(e) in the preceding sentence.
17. NO REPRESENTATIONS OR WARRANTIES OF XXXXX FARGO. Xxxxx Fargo agrees to
perform its obligations under this Agreement in a manner consistent with the
quality provided when Xxxxx Fargo performs similar services for its own account.
However, Xxxxx Fargo cannot be responsible for the errors, acts or omissions of
others, such as communications carriers, correspondents or clearinghouses
through which Xxxxx Fargo may perform its obligations under this Agreement or
receive or transmit information in performing its obligations under this
Agreement. Each Secured Party and the Customer also understand that Xxxxx Fargo
cannot be responsible for any loss, liability or delay caused by wars, failures
in communications networks, labor disputes, legal constraints, fires, power
surges or failures, earthquakes, civil disturbances or other events beyond Xxxxx
Fargo's control. XXXXX FARGO MAKES NO EXPRESS OR IMPLIED REPRESENTATIONS OR
WARRANTIES WITH RESPECT TO THE SERVICE IT IS TO PERFORM UNDER THIS AGREEMENT
OTHER THAN THOSE EXPRESSLY SPECIFIED IN THIS AGREEMENT.
18. LIMITATION OF LIABILITY. In the event that either Secured Party, the
Customer or Xxxxx Fargo suffers or incurs any Losses and Liabilities as a result
of, or in connection with, its or any other party's performance or failure to
perform its obligations under this Agreement, the affected parties shall
negotiate in good faith in an effort to reach a mutually satisfactory allocation
of such Losses and Liabilities, it being understood that Xxxxx Fargo will not be
responsible for any Losses and Liabilities due to any cause other than its own
negligence, willful misconduct or breach of this Agreement, in which case its
liability to each Secured Party and Customer shall, unless otherwise provided by
any law which cannot be varied by contract, be limited to direct money damages
in an amount not to exceed ten (10) times all the Xxxxx Fargo Fees charged or
incurred during the calendar month immediately preceding the calendar month in
which such Losses and Liabilities occurred (or, if no Xxxxx Fargo Fees were
charged or incurred in the preceding month, the Xxxxx Fargo Fees charged or
incurred in the month in which the Losses and Liabilities occurred). Customer
will indemnify Xxxxx Fargo against all Losses and Liabilities suffered or
incurred by Xxxxx Fargo as a result of third party claims; provided, however,
that to the extent such Losses and Liabilities are directly caused by Xxxxx
Fargo's negligence or breach of this Agreement such indemnity will only apply to
those Losses and Liabilities which exceed the liability limitation specified in
the preceding sentence. The limitation of Xxxxx Fargo's liability and the
indemnification by Customer set out above will not be applicable to the extent
any Losses and Liabilities of any party to this Agreement are directly caused by
Xxxxx Fargo's gross negligence or willful misconduct. IN NO EVENT XXXX XXXXX
FARGO BE LIABLE FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL, INDIRECT OR PUNITIVE
DAMAGES, WHETHER ANY CLAIM IS BASED ON CONTRACT OR TORT, WHETHER THE LIKELIHOOD
OF SUCH DAMAGES WAS KNOWN TO XXXXX
5
FARGO AND REGARDLESS OF THE FORM OF THE CLAIM OR ACTION, INCLUDING, BUT NOT
LIMITED TO, ANY CLAIM OR ACTION ALLEGING GROSS NEGLIGENCE, WILLFUL MISCONDUCT,
FAILURE TO EXERCISE REASONABLE CARE OR FAILURE TO ACT IN GOOD FAITH. Any action
against Xxxxx Fargo by Customer or either Secured Party under or related to this
Agreement must be brought within twelve months after the cause of action
accrues.
19. TERMINATION. This Agreement and the Service may be terminated by Controlling
Secured Party or Xxxxx Fargo at any time by either of them giving thirty (30)
calendar days prior written notice of such termination to the other parties to
this Agreement at their contact addresses specified after their signatures to
this Agreement; provided, however, that this Agreement and the Service may be
terminated (a) immediately upon written notice from Xxxxx Fargo to Customer and
each Secured Party should Controlling Secured Party fail to make any payment
when due to Xxxxx Fargo from Controlling Secured Party under the terms of this
Agreement, and (b) ten (10) calendar days after each Secured Party and Customer
receive written notice of such termination from Xxxxx Fargo if Customer fails to
pay any Xxxxx Fargo Fees as provided in this Agreement; provided, further,
however, that such termination will not occur if either Secured Party pays,
within such ten (10) calendar days (but without either Secured Party being
obligated to make such payment) all such unpaid fees up to the date the notice
of termination was sent. Each Secured Party and Customer agree that the
Restricted Account may be closed as provided in the Account Agreement.
Customer's and each Secured Party's obligations, as provided in this Agreement,
to report errors in funds transfers and bank statements and to pay the Xxxxx
Fargo Fees, as well as the indemnifications made, and the limitations on the
liability of Well Fargo accepted, by Customer and such Secured Party under this
Agreement will continue after the termination of this Agreement and/or the
closure of the Restricted Account with respect to all the circumstances to which
they are applicable existing or occurring before such termination or closure,
and any liability of any party to this Agreement, as determined under the
provisions of this Agreement, with respect to acts or omissions of such party
prior to such termination or closure will also survive such termination or
closure; provided, however, that Customer's obligations of indemnity and
reimbursement hereunder will end forty-five (45) calendar days after such
termination and/or closure, except with respect to written claims made to such
Secured Party prior to expiration of such forty-five (45) day period. Upon any
termination of this Agreement and the Service or closure of the Restricted
Account all collected balances in the Restricted Account on the date of such
termination or closure will be transferred to Controlling Secured Party as
requested by Controlling Secured Party in writing to Xxxxx Fargo without further
consent by Customer or other Secured Party.
20. MODIFICATIONS, AMENDMENTS, AND WAIVERS. This Agreement may not be modified
or amended, or any provision thereof waived, except in a writing signed by all
the parties to this Agreement; provided, however, that the Xxxxx Fargo Fees may
be changed after thirty (30) calendar days prior written notice to Customer and
each Secured Party.
21. NOTICES. All notices from one party to another shall be in writing, or be
made by a telecommunications device capable of creating a written record, shall
be delivered to Customer, each/either Secured Party and/or Xxxxx Fargo at their
respective contact addresses specified after their respective signatures to this
Agreement, or any other address of any party notified to each of the other
parties in writing, and shall be effective upon receipt. Any notice sent by one
party to this Agreement to another party shall also be sent to each other party
to this Agreement, except to the extent specifically contemplated in the first
sentence of Section 14 of this Agreement. Xxxxx Fargo is authorized by Customer
and each Secured Party to act on any instructions or notices received by Xxxxx
Fargo if (a) such instructions or notices purport to be made in the name of such
Secured Party, (b) Xxxxx Fargo reasonably believes that they are so made, and
(c) they do not conflict with the terms of this Agreement
6
as such terms may be amended from time to time, unless such conflicting
instructions or notices are supported by a court order.
22. SUCCESSORS AND ASSIGNS. Neither Customer nor either Secured Party may assign
or transfer its rights or obligations under this Agreement to any person or
entity without the prior written consent of Xxxxx Fargo, which consent will not
be unreasonably withheld. Xxxxx Fargo may not assign its rights or obligations
under this Agreement to any person or entity without the prior written consent
of each Secured Party, which consent will not be unreasonably withheld;
provided, however, that no such consent will be required if the assignee is a
bank affiliate of Xxxxx Fargo, that affirms its obligations hereunder in writing
to each Secured Party and Customer.
23. GOVERNING LAW. Customer and each Secured Party understand that Xxxxx Fargo's
provision of the Service under this Agreement is subject to federal laws and
regulations. To the extent that such federal laws and regulations are not
applicable, the rights and obligations of all the parties to this Agreement
under this Agreement shall be governed by and be construed in accordance with
the laws of the state in which the office of Xxxxx Fargo that maintains the
Restricted Account is located, without regard to conflicts of law principles.
24. SEVERABILITY. To the extent that this Agreement or the Service to be
provided under this Agreement are inconsistent with, or prohibited or
unenforceable under, any applicable law or regulation, they will be deemed
ineffective only to the extent of such prohibition or unenforceability and be
deemed modified and applied in a manner consistent with such law or regulation.
Any provision of this Agreement which is deemed unenforceable or invalid in any
jurisdiction shall not effect the enforceability or validity of the remaining
provisions of this Agreement or the same provision in any other jurisdiction.
25. USURY. It is never the intention of Xxxxx Fargo to violate any applicable
usury or interest rate laws. Xxxxx Fargo does not agree to, or intend to
contract for, charge, collect, take, reserve or receive (collectively, "charge
or collect") any amount in the nature of interest or in the nature of a fee,
penalty or other charge which would in any way or event cause Xxxxx Fargo to
charge or collect more than the maximum Xxxxx Fargo would be permitted to charge
or collect by any applicable federal or state law. Any such excess interest or
unauthorized fee shall, notwithstanding anything stated to the contrary in this
Agreement, be applied first to reduce the amount owed, if any, and then any
excess amounts will be refunded.
26. COUNTERPARTS. This Agreement may be executed in any number of counterparts,
each of which shall be an original with the same effect as if the signatures
thereto and hereto were upon the same instrument.
27. ENTIRE AGREEMENT. This Agreement, together with the Account Agreement,
contains the entire and only agreement among all the parties to this Agreement
and between Xxxxx Fargo and Customer and Xxxxx Fargo and each Secured Party with
respect to (a) the Service, (b) the interest of such Secured Party and the
Lenders in the Account Funds and the Restricted Account, and (c) Xxxxx Fargo's
obligations to such Secured Party and the Lenders in connection with the Account
Funds and the Restricted Account.
This Agreement has been signed by the duly authorized officers or
representatives of Customer, each Secured Party and Xxxxx Fargo on the date
specified below.
7
DATE: OCTOBER __, 2002
RESTRICTED ACCOUNT NUMBER:
-----------------------------
SENIOR SECURED PARTY ACCOUNT NUMBER:
-----------------------------
BANK OF SENIOR SECURED PARTY ACCOUNT:
-----------------------------
JUNIOR SECURED PARTY ACCOUNT NUMBER:
-----------------------------
BANK OF JUNIOR SECURED PARTY ACCOUNT:
-----------------------------
X EACH SECURED PARTY IS TO BE SENT DUPLICATE BANK STATEMENTS
--------
XXXXX FARGO BANK, NATIONAL ASSOCIATION
By:
--------------------------------------
Name:
-------------------------------
Title:
------------------------------
ADDRESS FOR ALL NOTICES:
------------------------------------------
------------------------------------------
GOLFSMITH INTERNATIONAL, L.P.,
as Customer
By:
--------------------------------------
Name:
-------------------------------
Title:
------------------------------
ADDRESS FOR ALL NOTICES:
------------------------------------------
------------------------------------------
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GENERAL ELECTRIC CAPITAL CORPORATION,
as Senior Secured Party
By:
--------------------------------------
Name:
-------------------------------
Title:
------------------------------
ADDRESS FOR ALL NOTICES:
------------------------------------------
------------------------------------------
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Junior Secured Party
By:
--------------------------------------
Name:
-------------------------------
Title:
------------------------------
ADDRESS FOR ALL NOTICES:
------------------------------------------
------------------------------------------
9
EXHIBIT F-2 TO CREDIT AGREEMENT
RESTRICTED ACCOUNT AGREEMENT
This RESTRICTED ACCOUNT AGREEMENT (this "AGREEMENT") dated as of the date
specified at the end of this Agreement is entered into among [RELEVANT GOLFSMITH
CREDIT PARTY] ("CUSTOMER"), GENERAL ELECTRIC CAPITAL CORPORATION ("SENIOR
SECURED PARTY"), U.S. BANK TRUST NATIONAL ASSOCIATION, as collateral agent (in
such capacity, "JUNIOR SECURED PARTY" and, together with Senior Secured Party,
"SECURED PARTIES") for the Trustee and the Noteholders (in each case, as defined
in the Intercreditor Agreement referred to below) and the [branch of the] Xxxxx
Fargo Bank, National Association identified in the signature block at the end of
this Agreement ("XXXXX FARGO"), and sets forth the rights of Secured Parties and
the obligations of Xxxxx Fargo with respect to the deposit account of Customer
at Xxxxx Fargo identified as the Restricted Account at the end of this Agreement
(the "RESTRICTED ACCOUNT").
1. SECURED PARTIES' INTEREST IN RESTRICTED ACCOUNT. Each Secured Party
represents that it is either (i) a lender or noteholder who has extended credit
to Customer or an affiliate thereof the payment of whose debt Customer has
guaranteed and has been granted a security interest in the Restricted Account or
(ii) an agent for a group of such lenders or noteholders (the "LENDERS").
Customer hereby confirms, and Xxxxx Fargo hereby acknowledges, the security
interest granted by Customer to each Secured Party in all of Customer's right,
title and interest in and to the Restricted Account and all sums now or
hereafter on deposit in or payable or withdrawable from the Restricted Account
or any successor or replacement account (the "ACCOUNT Funds"). Except as
specifically provided otherwise in this Agreement, Customer has given each
Secured Party complete control over the Account Funds. Each Secured Party hereby
appoints Xxxxx Fargo as agent for such Secured Party only for the purpose of
perfecting the security interest of Secured Party in the Account Funds while
they are in the Restricted Account. Customer hereby instructs Xxxxx Fargo to
indicate on its records for the Restricted Account that each Secured Party has a
security interest in the Restricted Account. Xxxxx Fargo agrees to do this.
Customer and each Secured Party would like to use the service of Xxxxx Fargo
described in this Agreement (the "SERVICE") to further the arrangements among
Secured Parties and Customer regarding the Account Funds.
2. ACCESS TO RESTRICTED ACCOUNT. Xxxxx Fargo agrees to comply with instructions
originated by Controlling Secured Party directing disposition of Account Funds
without further consent by Customer or other Secured Party. Customer agrees that
it will not be able to withdraw money from the Restricted Account, that it will
not have access to the Restricted Account or any Account Funds, and that
Controlling Secured Party will have exclusive access to the Account Funds and
the Restricted Account, except as specifically provided in this Agreement or as
specifically agreed by Controlling Secured Party in writing. As used herein, the
term (i) "CONTROLLING SECURED PARTY" shall mean (x) Senior Secured Party until
Senior Secured Party has given written notice to Xxxxx Fargo (with a copy of the
same to Junior Secured Party and Customer of the Discharge of Senior Lender
Claims (as defined in the Intercreditor Agreement, dated as of October 15, 2002
(as amended, supplemented, amended and restated or otherwise modified from time
to time, the "INTERCREDITOR AGREEMENT"), among, inter alia, Customer and Secured
Parties) and (y) thereafter, Junior Secured Party and (ii) "OTHER SECURED PARTY"
shall mean for so long as Controlling Secured Party is Senior Secured Party,
Junior Secured Party and (y) for so long as Controlling Secured Party is Junior
Secured Party, not refer to any person.
3. BALANCE REPORTS. Xxxxx Fargo agrees, at the telephone request of Secured
Party on any Business Day (a day on which Xxxxx Fargo is open to conduct its
regular banking business, other than a Saturday, Sunday or public holiday) to
make available to such Secured Party a report (the "BALANCE Report") showing the
opening available balance in the Restricted Account as of the beginning of that
Business Day, either on-line (over the internet) or by facsimile transmission,
at Bank's option. Customer expressly consents to this transmission of
information. Each Secured Party and Customer understand and agree that the
opening available balance in the Restricted Account at the beginning of any
Business Day will be determined after deducting from the Restricted Account the
face amount ("RETURNED ITEM AMOUNT") of all checks, automated clearing house
entries, and other items credited to the Restricted Account and then returned
unpaid on the immediately preceding Business Day for any reason ("RETURNED
ITEM"). Customer will be informed of the balances in the Restricted Account by
the means arranged between Xxxxx Fargo and Customer.
4. TRANSFERS TO CONTROLLING SECURED PARTY. Xxxxx Fargo agrees that, from and
after receipt of a Blockage Notice, on each Business Day it will transfer to the
Controlling Secured Party's account specified at the end of this Agreement with
the bank specified at the end of this Agreement (the "CONTROLLING SECURED PARTY
ACCOUNT") the full amount of the opening available balance in the Restricted
Account at the beginning of such Business Day, or such other partial amount
thereof if so directed in writing by Controlling Secured Party. Xxxxx Fargo will
use the Fedwire system to make such transfers unless for any reason the Fedwire
system is unavailable, in which case Xxxxx Fargo will determine the funds
transfer system to be used in making each funds transfer and the means by which
each transfer will be made. Except for changes to the Controlling Secured Party
Account or the frequency with which funds are transferred out of the Restricted
Account to the Controlling Secured Party Account, which changes each of Customer
and other Secured Party agrees may be made by the Controlling Secured Party
alone in any writing sent to Xxxxx Fargo, changes to the transfer instructions
in this Agreement can only be made by each Secured Party, Customer and Xxxxx
Fargo signing a new agreement or an amendment to this Agreement.
5. DELAYS IN MAKING FUNDS TRANSFERS. Each Secured Party and Customer understand
that a funds transfer may be delayed or not made if (a) the transfer would cause
Xxxxx Fargo to exceed any limitation on its intra-day net funds position
established in accordance with Federal Reserve or other regulatory guidelines or
to violate any other Federal Reserve or other regulatory risk control program,
or (b) the funds transfer would otherwise cause Xxxxx Fargo to violate any
applicable law or regulation. If a funds transfer cannot be made or will be
delayed, Xxxxx Fargo will attempt to notify Controlling Secured Party by
telephone.
6. RELIANCE ON ACCOUNT NUMBER OF WIRE TRANSFER BENEFICIARY. If Controlling
Secured Party indicates a name and an identifying number for the bank of the
person or entity to receive funds transfers out of the Restricted Account,
Controlling Secured Party and Customer understand that Xxxxx Fargo will rely on
the number Controlling Secured Party indicates even if that number identifies a
bank different from the bank Controlling Secured Party named. If Controlling
Secured Party indicates a name and an account number for the person or entity to
receive funds transfers out of the Restricted Account, Controlling Secured Party
and Customer understand that the bank of that person or entity may rely on the
account number Controlling Secured Party indicates even if that account number
is not the account number for the person or entity who is to receive the
transfers.
7. REPORTING ERRORS IN TRANSFERS. If Controlling Secured Party or Customer
learns of any error in a funds transfer or any unauthorized funds transfer, then
the party learning of such error or unauthorized transfer (the "INFORMED PARTY")
must notify Xxxxx Fargo as soon as possible by telephone at (800) AT-XXXXX
(which is a recorded line), and provide written confirmation to Xxxxx Fargo of
such
2
telephonic notice within two Business Days at the address given for Xxxxx Fargo
on the signature page of this Agreement. In no case may such notice to Xxxxx
Fargo by an Informed Party be made more than fourteen (14) calendar days after
Xxxxx Fargo's first confirmation of a funds transfer to such Informed Party. If
a funds transfer is made in error and Xxxxx Fargo suffers a loss because
Controlling Secured Party or Customer breached its agreement to notify Xxxxx
Fargo of such error within this fourteen (14) calendar day period, then the
party or parties which breached this agreement shall be obligated to reimburse
Xxxxx Fargo for such loss promptly upon demand by Xxxxx Fargo; provided,
however, that in the event both Controlling Secured Party and Customer breach
this notification requirement, Controlling Secured Party shall not be obligated
to reimburse Xxxxx Fargo for such loss unless Customer fails to satisfy Xxxxx
Fargo's demand for such reimbursement within fifteen (15) calendar days after
such demand is made on Customer.
8. RETURNED ITEM AMOUNTS. Controlling Secured Party and Customer understand and
agree that the Returned Item Amount of each Returned Item will be paid by Xxxxx
Fargo debiting the Restricted Account, without notice to either Secured Party or
Customer, on the Business Day that each Returned Item is received. Customer
agrees to pay the Returned Item Amounts immediately on demand, without setoff or
counterclaim, to the extent there are not sufficient funds in the Restricted
Account to cover such Returned Item Amounts on the day they are to be debited to
the Restricted Account. Controlling Secured Party agrees to pay the Returned
Item Amounts within thirty (30) calendar days after demand, without setoff or
counterclaim, to the extent the Returned Item Amounts are not paid in full by
Customer within fifteen (15) calendar days after demand on Customer by Xxxxx
Fargo, and to the extent Controlling Secured Party received proceeds from the
corresponding Returned Item(s).
9. XXXXX FARGO FEES. Customer agrees to pay all Xxxxx Fargo's fees and charges
for the maintenance and administration of the Restricted Account and for the
cash management and other account services provided with respect to the
Restricted Account (collectively "XXXXX FARGO FEES"), including, but not limited
to, the fees for (a) the Balance Reports provided on the Restricted Account, (b)
the wire transfer services provided with respect to the Restricted Account, (c)
Returned Items, (d) funds advanced to cover overdrafts in the Restricted Account
(but without Xxxxx Fargo being in any way obligated to make any such advances),
and (e) duplicate bank statements on the Restricted Account. The Xxxxx Fargo
Fees will be paid by Xxxxx Fargo debiting the Restricted Account. All such
debits will be made on the Business Day that the Xxxxx Fargo Fees are due
without notice to either Secured Party or Customer. If there are not sufficient
funds in the Restricted Account to cover fully the Xxxxx Fargo Fees on the
Business Day they are debited from the Restricted Account such shortfall or the
amount of such Xxxxx Fargo Fees will be paid by Customer sending Xxxxx Fargo a
check in the amount of such shortfall or such Xxxxx Fargo Fees, without setoff
or counterclaim, within fifteen (15) calendar days after demand of Xxxxx Fargo.
Xxxxx Fargo may, in its discretion, change the Xxxxx Fargo Fees upon thirty (30)
calendar days prior written notice to Customer and each Secured Party.
10. ACCOUNT DOCUMENTATION. Each Secured Party and Customer agree that, except as
specifically provided in this Agreement, the Restricted Account will be subject
to, and Xxxxx Fargo's operation of the Restricted Account will be in accordance
with, the terms and provisions of Xxxxx Fargo's separate deposit account
agreement governing the Restricted Account ("ACCOUNT AGREEMENT"), a copy of
which Customer and each Secured Party acknowledge having received.
11. SUPPORT SERVICES FOR XXXXX FARGO. Customer and each Secured Party understand
that some bank affiliates of Xxxxx Fargo may provide support services in
connection with the services to be provided by Xxxxx Fargo under this Agreement.
Customer and each Secured Party agree to, and authorize, the performance of such
support services by such bank affiliates.
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12. BANK STATEMENTS. Xxxxx Fargo will, if such address is so indicated on the
signature page of this Agreement, send to each Secured Party by United States
mail, at the address indicated for such Secured Party after its signature to
this Agreement, duplicate copies of all bank statements on the Restricted
Account which are sent to Customer. Customer will have thirty (30) calendar days
after its receipt of a bank statement and each Secured Party will have thirty
(30) calendar days after its receipt of a bank statement to notify Xxxxx Fargo
of an error in such statement, unless within such thirty (30) calendar days
either Customer or such Secured Party learns that any such other party has
notified Xxxxx Fargo of such error. Xxxxx Fargo's liability for such errors is
limited as provided in Section 19 of this Agreement.
13. WAIVER OF SETOFF RIGHTS. Xxxxx Fargo hereby waives any right it may now or
hereafter have from time to time to apply any Account Funds against the payment
of any indebtedness from time to time owing to Xxxxx Fargo from Customer, except
for debits to the Restricted Account permitted under this Agreement for the
payment of Returned Item Amounts and Xxxxx Fargo Fees.
14. BANKRUPTCY NOTICE. If Xxxxx Fargo at any time receives notice of the
commencement of a bankruptcy case or other insolvency or liquidation proceeding
by or against Customer (a "BANKRUPTCY NOTICE"), Xxxxx Fargo will notify the
other parties to this Agreement, other than Customer. In such circumstances
Xxxxx Fargo agrees to continue to comply with its obligations under this
Agreement, except to the extent that any action required of Xxxxx Fargo under
this Agreement is prohibited under applicable bankruptcy laws or regulations or
is stayed pursuant to the automatic stay imposed under the United States
Bankruptcy Code or by order of any court or agency having jurisdiction over
Customer or the Restricted Account.
15. CLAIMS, LEGAL PROCESS AND NOTICES. If Xxxxx Fargo receives any claim,
notice, legal process or court order relating to the Account Funds or the
Restricted Account, Xxxxx Fargo will notify each Secured Party and Customer of
such receipt, unless Xxxxx Fargo knows that such Secured Party, with respect to
so notifying such Secured Party, or Customer, with respect to so notifying
Customer, is already aware of such claim, notice, legal process or court order.
Each Secured Party and Customer understand and agree that Xxxxx Fargo will
comply with any such legal process, legal notice or court order it receives if
Xxxxx Fargo determines in its sole discretion that such legal process, legal
notice or court order is legally binding on it. If any claim or notice received
by Xxxxx Fargo is not legally binding on it, as determined in its sole
discretion, Controlling Secured Party agrees to instruct Xxxxx Fargo promptly by
telephone, confirmed in writing, to comply or not comply with such claim or
notice and Xxxxx Fargo agrees to comply with such instructions if (a) such
instructions are given promptly after Controlling Secured Party is notified of
such claim or notice and (b) such instructions do not require Xxxxx Fargo to
violate any applicable law, regulation or court order. Each of Customer and
other Secured Party hereby irrevocably agrees that Xxxxx Fargo is to follow such
instructions of Controlling Secured Party with respect to any such non-binding
claim or notice even if such claim or notice is from Customer or other Secured
Party. If Xxxxx Fargo does not receive prompt instructions from Secured Party
regarding compliance or non-compliance with any such non-binding claim or
notice, Secured Party and Customer agree that Xxxxx Fargo will not comply with
such claim or notice.
16. INDEMNIFICATION FOR FOLLOWING INSTRUCTIONS. Each Secured Party and Customer
each agree that, notwithstanding any other provision of this Agreement, Xxxxx
Fargo will not be liable to either Secured Party or Customer for any losses,
liabilities, damages, claims (including, but not limited to, third party
claims), demands, obligations, actions, suits, judgments, penalties, costs or
expenses, including, but not limited to, attorneys' fees, (collectively, "LOSSES
AND LIABILITIES") suffered or incurred by such Secured Party or Customer as a
result of or in connection with, (a) Xxxxx Fargo complying with any binding
legal process, legal notice or court order referred to in Section 15 of this
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Agreement, (b) Xxxxx Fargo following any instruction of Controlling Secured
Party to comply or not comply with any non-binding claim or notice referred to
in Section 15, (c) if no such instruction from Controlling Secured Party is
promptly received, Xxxxx Fargo not complying with any such non-binding claim or
notice, (d) Xxxxx Fargo following any other instruction or request of
Controlling Secured Party, or (e) Xxxxx Fargo complying with its obligations
under this Agreement. Further, Customer will indemnify Xxxxx Fargo against any
Losses and Liabilities Xxxxx Fargo may suffer or incur as a result of or in
connection with any of the circumstances referred to in subsections (a) through
(e) in the preceding sentence.
17. NO REPRESENTATIONS OR WARRANTIES OF XXXXX FARGO. Xxxxx Fargo agrees to
perform its obligations under this Agreement in a manner consistent with the
quality provided when Xxxxx Fargo performs similar services for its own account.
However, Xxxxx Fargo cannot be responsible for the errors, acts or omissions of
others, such as communications carriers, correspondents or clearinghouses
through which Xxxxx Fargo may perform its obligations under this Agreement or
receive or transmit information in performing its obligations under this
Agreement. Each Secured Party and the Customer also understand that Xxxxx Fargo
cannot be responsible for any loss, liability or delay caused by wars, failures
in communications networks, labor disputes, legal constraints, fires, power
surges or failures, earthquakes, civil disturbances or other events beyond Xxxxx
Fargo's control. XXXXX FARGO MAKES NO EXPRESS OR IMPLIED REPRESENTATIONS OR
WARRANTIES WITH RESPECT TO THE SERVICE IT IS TO PERFORM UNDER THIS AGREEMENT
OTHER THAN THOSE EXPRESSLY SPECIFIED IN THIS AGREEMENT.
18. LIMITATION OF LIABILITY. In the event that either Secured Party, the
Customer or Xxxxx Fargo suffers or incurs any Losses and Liabilities as a result
of, or in connection with, its or any other party's performance or failure to
perform its obligations under this Agreement, the affected parties shall
negotiate in good faith in an effort to reach a mutually satisfactory allocation
of such Losses and Liabilities, it being understood that Xxxxx Fargo will not be
responsible for any Losses and Liabilities due to any cause other than its own
negligence, willful misconduct or breach of this Agreement, in which case its
liability to each Secured Party and Customer shall, unless otherwise provided by
any law which cannot be varied by contract, be limited to direct money damages
in an amount not to exceed ten (10) times all the Xxxxx Fargo Fees charged or
incurred during the calendar month immediately preceding the calendar month in
which such Losses and Liabilities occurred (or, if no Xxxxx Fargo Fees were
charged or incurred in the preceding month, the Xxxxx Fargo Fees charged or
incurred in the month in which the Losses and Liabilities occurred). Customer
will indemnify Xxxxx Fargo against all Losses and Liabilities suffered or
incurred by Xxxxx Fargo as a result of third party claims; provided, however,
that to the extent such Losses and Liabilities are directly caused by Xxxxx
Fargo's negligence or breach of this Agreement such indemnity will only apply to
those Losses and Liabilities which exceed the liability limitation specified in
the preceding sentence. The limitation of Xxxxx Fargo's liability and the
indemnification by Customer set out above will not be applicable to the extent
any Losses and Liabilities of any party to this Agreement are directly caused by
Xxxxx Fargo's gross negligence or willful misconduct. IN NO EVENT XXXX XXXXX
FARGO BE LIABLE FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL, INDIRECT OR PUNITIVE
DAMAGES, WHETHER ANY CLAIM IS BASED ON CONTRACT OR TORT, WHETHER THE LIKELIHOOD
OF SUCH DAMAGES WAS KNOWN TO XXXXX FARGO AND REGARDLESS OF THE FORM OF THE CLAIM
OR ACTION, INCLUDING, BUT NOT LIMITED TO, ANY CLAIM OR ACTION ALLEGING GROSS
NEGLIGENCE, WILLFUL MISCONDUCT, FAILURE TO EXERCISE REASONABLE CARE OR FAILURE
TO ACT IN GOOD FAITH. Any action against Xxxxx Fargo by Customer or either
Secured Party under or related to this Agreement must be brought within twelve
months after the cause of action accrues.
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19. TERMINATION. This Agreement and the Service may be terminated by Controlling
Secured Party or Xxxxx Fargo at any time by either of them giving thirty (30)
calendar days prior written notice of such termination to the other parties to
this Agreement at their contact addresses specified after their signatures to
this Agreement; provided, however, that this Agreement and the Service may be
terminated (a) immediately upon written notice from Xxxxx Fargo to Customer and
each Secured Party should Controlling Secured Party fail to make any payment
when due to Xxxxx Fargo from Controlling Secured Party under the terms of this
Agreement, and (b) ten (10) calendar days after each Secured Party and Customer
receive written notice of such termination from Xxxxx Fargo if Customer fails to
pay any Xxxxx Fargo Fees as provided in this Agreement; provided, further,
however, that such termination will not occur if either Secured Party pays,
within such ten (10) calendar days (but without either Secured Party being
obligated to make such payment) all such unpaid fees up to the date the notice
of termination was sent. Each Secured Party and Customer agree that the
Restricted Account may be closed as provided in the Account Agreement.
Customer's and each Secured Party's obligations, as provided in this Agreement,
to report errors in funds transfers and bank statements and to pay the Xxxxx
Fargo Fees, as well as the indemnifications made, and the limitations on the
liability of Well Fargo accepted, by Customer and such Secured Party under this
Agreement will continue after the termination of this Agreement and/or the
closure of the Restricted Account with respect to all the circumstances to which
they are applicable existing or occurring before such termination or closure,
and any liability of any party to this Agreement, as determined under the
provisions of this Agreement, with respect to acts or omissions of such party
prior to such termination or closure will also survive such termination or
closure; provided, however, that Customer's obligations of indemnity and
reimbursement hereunder will end forty-five (45) calendar days after such
termination and/or closure, except with respect to written claims made to such
Secured Party prior to expiration of such forty-five (45) day period. Upon any
termination of this Agreement and the Service or closure of the Restricted
Account all collected balances in the Restricted Account on the date of such
termination or closure will be transferred to Controlling Secured Party as
requested by Controlling Secured Party in writing to Xxxxx Fargo without further
consent by Customer or other Secured Party.
20. MODIFICATIONS, AMENDMENTS, AND WAIVERS. This Agreement may not be modified
or amended, or any provision thereof waived, except in a writing signed by all
the parties to this Agreement; provided, however, that the Xxxxx Fargo Fees may
be changed after thirty (30) calendar days prior written notice to Customer and
each Secured Party.
21. NOTICES. All notices from one party to another shall be in writing, or be
made by a telecommunications device capable of creating a written record, shall
be delivered to Customer, each/either Secured Party and/or Xxxxx Fargo at their
respective contact addresses specified after their respective signatures to this
Agreement, or any other address of any party notified to each of the other
parties in writing, and shall be effective upon receipt. Any notice sent by one
party to this Agreement to another party shall also be sent to each other party
to this Agreement, except to the extent specifically contemplated in the first
sentence of Section 14 of this Agreement. Xxxxx Fargo is authorized by Customer
and each Secured Party to act on any instructions or notices received by Xxxxx
Fargo if (a) such instructions or notices purport to be made in the name of such
Secured Party, (b) Xxxxx Fargo reasonably believes that they are so made, and
(c) they do not conflict with the terms of this Agreement as such terms may be
amended from time to time, unless such conflicting instructions or notices are
supported by a court order.
22. SUCCESSORS AND ASSIGNS. Neither Customer nor either Secured Party may assign
or transfer its rights or obligations under this Agreement to any person or
entity without the prior written consent of Xxxxx Fargo, which consent will not
be unreasonably withheld. Xxxxx Fargo may not assign its rights or obligations
under this Agreement to any person or entity without the prior written consent
of
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each Secured Party, which consent will not be unreasonably withheld; provided,
however, that no such consent will be required if the assignee is a bank
affiliate of Xxxxx Fargo, that affirms its obligations hereunder in writing to
each Secured Party and Customer.
23. GOVERNING LAW. Customer and each Secured Party understand that Xxxxx Fargo's
provision of the Service under this Agreement is subject to federal laws and
regulations. To the extent that such federal laws and regulations are not
applicable, the rights and obligations of all the parties to this Agreement
under this Agreement shall be governed by and be construed in accordance with
the laws of the state in which the office of Xxxxx Fargo that maintains the
Restricted Account is located, without regard to conflicts of law principles.
24. SEVERABILITY. To the extent that this Agreement or the Service to be
provided under this Agreement are inconsistent with, or prohibited or
unenforceable under, any applicable law or regulation, they will be deemed
ineffective only to the extent of such prohibition or unenforceability and be
deemed modified and applied in a manner consistent with such law or regulation.
Any provision of this Agreement which is deemed unenforceable or invalid in any
jurisdiction shall not effect the enforceability or validity of the remaining
provisions of this Agreement or the same provision in any other jurisdiction.
25. USURY. It is never the intention of Xxxxx Fargo to violate any applicable
usury or interest rate laws. Xxxxx Fargo does not agree to, or intend to
contract for, charge, collect, take, reserve or receive (collectively, "charge
or collect") any amount in the nature of interest or in the nature of a fee,
penalty or other charge which would in any way or event cause Xxxxx Fargo to
charge or collect more than the maximum Xxxxx Fargo would be permitted to charge
or collect by any applicable federal or state law. Any such excess interest or
unauthorized fee shall, notwithstanding anything stated to the contrary in this
Agreement, be applied first to reduce the amount owed, if any, and then any
excess amounts will be refunded.
26. COUNTERPARTS. This Agreement may be executed in any number of counterparts,
each of which shall be an original with the same effect as if the signatures
thereto and hereto were upon the same instrument.
27. ENTIRE AGREEMENT. This Agreement, together with the Account Agreement,
contains the entire and only agreement among all the parties to this Agreement
and between Xxxxx Fargo and Customer and Xxxxx Fargo and each Secured Party with
respect to (a) the Service, (b) the interest of such Secured Party and the
Lenders in the Account Funds and the Restricted Account, and (c) Xxxxx Fargo's
obligations to such Secured Party and the Lenders in connection with the Account
Funds and the Restricted Account.
This Agreement has been signed by the duly authorized officers or
representatives of Customer, each Secured Party and Xxxxx Fargo on the date
specified below.
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DATE: OCTOBER __, 2002
RESTRICTED ACCOUNT NUMBER:
-----------------------------
SENIOR SECURED PARTY ACCOUNT NUMBER:
-----------------------------
BANK OF SENIOR SECURED PARTY ACCOUNT:
-----------------------------
JUNIOR SECURED PARTY ACCOUNT NUMBER:
-----------------------------
BANK OF JUNIOR SECURED PARTY ACCOUNT:
-----------------------------
X EACH SECURED PARTY IS TO BE SENT DUPLICATE BANK STATEMENTS
-------
XXXXX FARGO BANK, NATIONAL ASSOCIATION
By:
--------------------------------------
Name:
-------------------------------
Title:
------------------------------
ADDRESS FOR ALL NOTICES:
------------------------------------------
------------------------------------------
[RELEVANT GOLFSMITH CREDIT PARTY]
as Customer
By:
--------------------------------------
Name:
-------------------------------
Title:
------------------------------
ADDRESS FOR ALL NOTICES:
------------------------------------------
------------------------------------------
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GENERAL ELECTRIC CAPITAL CORPORATION,
as Senior Secured Party
By:
--------------------------------------
Name:
-------------------------------
Title:
------------------------------
ADDRESS FOR ALL NOTICES:
------------------------------------------
------------------------------------------
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Junior Secured Party
By:
--------------------------------------
Name:
-------------------------------
Title:
------------------------------
ADDRESS FOR ALL NOTICES:
------------------------------------------
------------------------------------------
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