EXHIBIT 4.1
================================================================================
SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
$75,000,000
AMONG
FLORSHEIM GROUP INC. AND EACH OF ITS
SUBSIDIARIES PARTY HERETO
AS BORROWERS,
EACH OF THE FINANCIAL INSTITUTIONS
INITIALLY A SIGNATORY HERETO,
TOGETHER WITH THOSE ASSIGNEES
PURSUANT TO SECTION 11.8 HEREOF,
AS LENDERS,
AND
BT COMMERCIAL CORPORATION,
AS AGENT
DATED AS OF MARCH 5, 2002
================================================================================
This Amended and Restated Credit Agreement is secured by, among
other things, a Deed of Trust and Security Agreement, dated as of
May 9, 1997 as amended through the date hereof, encumbering property
in the County ▇▇▇▇, Missouri, Securing Future Obligations and Future
Advances.
TABLE OF CONTENTS
ARTICLE
-------
ARTICLE 1 DEFINITIONS ................................................. 1
1.1 General Definitions ......................................... 1
1.2 Accounting Terms and Determinations ......................... 16
1.3 Other Terms; Headings ....................................... 17
ARTICLE 2 REVOLVING LOANS ............................................. 17
2.1 Revolving Credit Commitments ................................ 17
2.2 Borrowing of Revolving Loans ................................ 17
2.3 Notice of Request for Lender Advances ....................... 19
2.4 Periodic Settlement of Agent Advances; Interest and
Fees; Statements ............................................ 19
2.5 Sharing of Payments ......................................... 20
2.6 Defaulting Lenders .......................................... 20
2.7 Reliance on Notices; Appointment of Borrower Representative . 22
2.8 Revolving Credit as Renewal; Existing Revolving Loans ....... 22
ARTICLE 3 LETTERS OF CREDIT ........................................... 22
3.1 Issuance of Letters of Credit ............................... 22
3.2 Terms of Letters of Credit .................................. 22
3.3 Notice of Issuance .......................................... 23
3.4 Lenders' Participation ...................................... 23
3.5 Payments of Amounts Drawn Under Letters of Credit ........... 23
3.6 Payment by Lenders .......................................... 23
3.7 Obligations Absolute ........................................ 24
3.8 Agent's Execution of Applications and Other
Issuing Bank Documentation: Reliance on Credit
Agreement by Issuing Bank ................................... 24
3.9 Existing Letters of Credit .................................. 24
ARTICLE
-------
ARTICLE 4 COMPENSATION, REPAYMENT AND REDUCTION OF COMMITMENTS ........ 24
4.1 Interest on Revolving Loans ................................. 24
4.2 Unused Line Fee ............................................. 26
4.3 Letter of Credit Fees ....................................... 26
4.4 Interest and Letter of Credit Fees After Event of Default ... 26
4.5 Expenses .................................................... 27
4.6 Mandatory Payment; Reductions of Commitments ................ 27
4.7 Maintenance of Loan Account; Statements of Account .......... 28
4.8 Payment Procedures .......................................... 28
4.9 Collection of Accounts ...................................... 28
4.10 Distribution and Application of Collections
and Other Amounts ........................................... 29
4.11 Calculations ................................................ 29
4.12 Indemnification in Certain Events ........................... 29
ARTICLE 5 CONDITIONS PRECEDENT ........................................ 31
5.1 Conditions Precedent to the Credit Agreement ................ 31
5.2 Conditions Precedent to All Revolving Loans
and Letters of Credit ....................................... 32
ARTICLE 6 REPRESENTATIONS AND WARRANTIES .............................. 32
6.1 Organization and Qualification .............................. 33
6.2 Authority ................................................... 33
6.3 Enforceability .............................................. 33
6.4 No Conflict ................................................. 33
6.5 Consents and Filings ........................................ 33
6.6 Government Regulation ....................................... 33
6.7 [INTENTIONALLY DELETED] ..................................... 34
6.8 Rights in Collateral; Priority of Liens ..................... 34
6.9 Financial Data .............................................. 34
6.10 Locations of Offices, Records and Inventory ................. 34
6.11 Subsidiaries; Ownership of Stock ............................ 34
6.12 No Judgments or Litigation .................................. 35
ii
ARTICLE
-------
6.13 No Defaults ................................................. 35
6.14 Labor Matters ............................................... 35
6.15 Compliance with Law ......................................... 35
6.16 ERISA ....................................................... 35
6.17 Compliance with Environmental Laws .......................... 36
6.18 Intellectual Property ....................................... 36
6.19 Licenses and Permits ........................................ 36
6.20 Taxes and Tax Returns ....................................... 37
6.21 Material Contracts .......................................... 37
6.22 Accuracy and Completeness of Information .................... 38
ARTICLE 7 AFFIRMATIVE COVENANTS ....................................... 38
7.1 Financial Reporting ......................................... 38
7.2 Collateral Reporting ........................................ 39
7.3 Notification Requirements ................................... 39
7.4 Corporate Existence ......................................... 41
7.5 Books and Records; Inspections .............................. 41
7.6 Insurance ................................................... 41
7.7 Taxes ....................................................... 42
7.8 Compliance with Laws ........................................ 42
7.9 Use of Proceeds ............................................. 42
7.10 Fiscal Year ................................................. 43
7.11 Maintenance of Property ..................................... 43
7.12 ERISA Documents ............................................. 43
7.13 Environmental and Other Matters ............................. 43
7.14 [INTENTIONALLY DELETED] ..................................... 44
7.15 Further Assurances .......................................... 44
7.16 401(k) Trust Termination .................................... 44
7.17 Compliance with Order and Budget ............................ 44
ARTICLE 8 NEGATIVE COVENANTS .......................................... 44
8.1 Minimum Cash Receipts ....................................... 45
iii
ARTICLE
-------
8.2 Capital Expenditures ........................................ 45
8.3 Additional Indebtedness ..................................... 45
8.4 Liens ....................................................... 45
8.5 Contingent Obligations ...................................... 46
8.6 Sale of Assets .............................................. 47
8.7 Restricted Payments ......................................... 47
8.8 Investments ................................................. 47
8.9 Affiliate Transactions ...................................... 48
8.10 Restrictions on Foreign Subsidiary Trade Support ............ 48
8.11 Additional Bank Accounts .................................... 48
8.12 Additional Negative Pledges ................................. 48
8.13 Additional Subsidiaries ..................................... 48
ARTICLE 9 EVENTS OF DEFAULT AND REMEDIES .............................. 48
9.1 Events of Default ........................................... 48
9.2 Acceleration, Termination of Commitments and
Cash Collateralization ...................................... 50
9.3 Rescission of Acceleration .................................. 50
9.4 Remedies .................................................... 50
9.5 Right of Setoff ............................................. 51
9.6 License of Use of Software and Other Intellectual Property .. 51
9.7 Application of Proceeds; Surplus; Deficiencies .............. 51
ARTICLE 10 THE AGENT ................................................... 51
10.1 Appointment of Agent ........................................ 51
10.2 Nature of Duties of Agent ................................... 52
10.3 Lack of Reliance on Agent ................................... 52
10.4 Certain Rights of the Agent ................................. 53
10.5 Reliance by Agent ........................................... 53
10.6 Indemnification of Agent .................................... 53
10.7 The Agent in its Individual Capacity ........................ 53
10.8 Holders of Revolving Notes .................................. 54
iv
ARTICLE
-------
10.9 Successor Agent ............................................. 54
10.10 Collateral Matters .......................................... 54
10.11 Actions with Respect to Defaults ............................ 55
10.12 Delivery of Information ..................................... 56
ARTICLE 11 MISCELLANEOUS ............................................... 56
11.1 GOVERNING LAW ............................................... 56
11.2 SUBMISSION TO JURISDICTION .................................. 56
11.3 SERVICE OF PROCESS .......................................... 56
11.4 JURY TRIAL .................................................. 56
11.5 LIMITATION OF LIABILITY ..................................... 56
11.6 Delays ...................................................... 57
11.7 Notices ..................................................... 57
11.8 Assignments and Participations .............................. 57
11.9 Confidentiality ............................................. 58
11.10 Indemnification ............................................. 59
11.11 Amendments and Waivers ...................................... 59
11.12 Counterparts and Effectiveness .............................. 60
11.13 Severability ................................................ 60
11.14 Maximum Rate ................................................ 60
11.15 Entire Agreement; Successors and Assigns; Conflicts ......... 61
v
ANNEXES
-------
Annex I List of Lenders; Commitment Amounts;
and Applicable Lending Offices
Attachment A Interim Financing Order
SCHEDULES
---------
Schedule A Closing Document List
Schedule B Disclosure Schedules
Schedule B, Part. 3.9 Existing Letters of Credit
Schedule B, Part 6.1 States in which Qualified
Schedule B, Part 6.9 Contingent Obligations and Other Liabilities
Schedule B, Part 6.10 Principal Places of Business; Locations of Collateral
Schedule B, Part 6.11 Subsidiaries
Schedule B, Part 6.12 Pending Judgments, Litigation and other Claims
Schedule B, Part 6.14 Labor Contracts
Schedule B, Part 6.16 Plans
Schedule B, Part 6.17 Environmental Matters
Schedule B, Part 6.20 Tax Matters; Tax Sharing Agreements
Schedule B, Part 6.21 Material Contracts
Schedule B, Part 8.3 Existing Indebtedness
Schedule B, Part 8.4 Existing Liens
Schedule B, Part 8.8 Existing Investments
Schedule B, Part 8.11 Disbursement Accounts
EXHIBITS
--------
Exhibit A Form of Borrowing Base Certificate
Exhibit B Form of Notice of Borrowing
Exhibit C Form of Reaffirmation and Amendment to Patent Security Agreement
Exhibit D Form of Amended and Restated Revolving Note
Exhibit E Form of Reaffirmation and Amendment to Security Agreement
Exhibit F Form of Reaffirmation and Amendment to Trademark Security
Agreement
Exhibit G Form of Letter of Credit Request
THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT ("Credit Agreement") is
entered into as of March 5, 2002, among FLORSHEIM GROUP INC., Delaware
corporation ("Florsheim") and each of the Subsidiaries set forth on the
signature pages hereto (Florsheim and each such Subsidiary are sometimes
referred to individually as a "Borrower" and collectively as the "Borrowers";
each financial institution identified on Annex I, together with its successors
and assigns, hereinafter referred to individually as a "Lender" and collectively
as the "Lenders"); and BT COMMERCIAL CORPORATION, a Delaware corporation (in its
individual capacity, "BTCC"), acting in its capacity as agent for the Lenders
(in such capacity, together with its successors in such capacity, the "Agent").
R E C I T A L S
A. The Borrowers are parties to that certain Amended and Restated Credit
Agreement dated as of August 23, 1999, as amended (the "Prior Credit Agreement")
among Borrowers, the Lenders and Agent.
B. Each of the Borrowers is a Debtor and Debtor-in-Possession in jointly
administered Chapter 11 cases (Case Nos. 02 B 8209, 02 B 8212, 02 B 8210, 02 B
8213 and 02 B 8211) (the "Cases") in the United States Bankruptcy Court (the
"Court") for the Northern District of Illinois Eastern Division (the "Bankruptcy
Filing").
C. Concurrently with the Effective Date (as hereinafter defined), the
Court has entered its interim order in the form attached as Attachment 1 to this
Agreement, (such interim order, as modified from time to time, or as superceded
by a final order, the "Order").
D. In order to facilitate the post-petition financing to be provided under
the Order, Florsheim and each of the Borrowers have requested that Agent and the
Lenders agree to amend, renew and/or extend to them debtor-in-possession
financing on the terms set forth below.
E. Agent and Lenders are prepared to extend such credit as aforesaid by
amendment and renewal (but not novation) of the Prior Credit Agreement, but only
on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the covenants contained herein, the
Borrowers, the Lenders and Agent agree as follows:
ARTICLE 1
DEFINITIONS
1.1 GENERAL DEFINITIONS. Capitalized terms used and not otherwise defined
herein which are defined in the Order shall have the meaning given to such terms
in the Order.
ACCOUNT has the meaning set forth in the Security Agreement.
AFFILIATE of a Person means another Person who directly or indirectly
controls, is controlled by, is under common control with or is a director or
officer of, such Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to vote twenty percent (20%) or
more of the securities having ordinary voting power for the election of
directors or the direct or indirect power to direct the management and policies
of a business.
AGENT ADVANCES has the meaning set forth in Section 2.2.
APOLLO means Apollo Advisors, L.P. and Lion Advisors, L.P., both Delaware
limited partnerships.
APPLICABLE LENDING OFFICE means, with respect to each Lender, such
Lender's LIBOR Lending Office in the case of a LIBOR Rate Loan, and such
Lender's Domestic Lending Office in the case of a Prime Rate Loan.
ASSIGNMENT AND ASSUMPTION AGREEMENT has the meaning set forth in Section
11.8.
AUDITORS means a nationally recognized firm of independent public
accountants selected by Florsheim and satisfactory to the Agent in its sole
discretion; provided, that, for purposes of this Credit Agreement, any of the
current so-called "Big Five" firms of independent public accountants shall be
deemed to be satisfactory to the Agent.
BANKRUPTCY CODE means Title 11 of the U.S. Code (11 ▇.▇.▇.▇▇.▇▇. 101 et
seq.), as amended from time to time, and any successor statute, and the rules
promulgated thereunder.
BENEFIT PLAN means a "defined benefit plan" (as defined in Section 3(35)
of ERISA) (other than a Multiemployer Plan) for which any Borrower, any of its
Subsidiaries or any ERISA Affiliate has been an "employer" (as defined in
Section 3(5) of ERISA) within the past six years, other than the Florsheim
Retirement Plan.
BORROWER REPRESENTATIVE means Florsheim in its capacity as Borrower
Representative pursuant to the provisions of Section 2.7.
BORROWING means a borrowing of Revolving Loans by the Borrower
Representative on a pro rata basis from each of the Lenders on a given date
pursuant to Section 2.2.
BORROWING BASE means, at any time, the sum at such time of:
(a) Eighty-five percent (85%) of Eligible Accounts Receivable, plus
(b) the lesser of (i) $35,000,000 and (ii) sixty-five percent (65%)
of Eligible Inventory, plus
(c) the Fixed Asset and Intellectual Property Sublimit, plus
(d) the Tranche B Availability.
2
In addition, the Agent, in the exercise of its Permitted Discretion, may
(i) establish and increase or decrease reserves against Eligible Accounts
Receivable and Eligible Inventory, and (ii) impose additional restrictions (or
eliminate the same) to the standards of eligibility set forth in the definitions
of "Eligible Accounts Receivable" and "Eligible Inventory."
BORROWING BASE CERTIFICATE means the certificate of the Borrower
Representative concerning the Borrowing Base to be provided under Section 7.2,
substantially in the form of Exhibit A.
BT ACCOUNT has the meaning set forth in Section 4.11.
BUDGET means the Initial Approved Budget and any Supplemental Approved
Budget.
BUSINESS DAY means any day that is not a Saturday, a Sunday or a day on
which commercial banks in Chicago, Illinois are required or permitted by law to
be closed and, when used in connection with LIBOR Rate Loans, this definition
will also exclude any day on which commercial banks are not open for dealing in
United States dollar deposits in the London (U.K.) interbank market.
CAPITAL EXPENDITURES means, for any Person for any period, the sum of all
expenditures capitalized by such Person for financial statement purposes in
accordance with GAAP during such period (whether payable in cash or other
property or accrued as a liability), including the capitalized portion of
Capital Leases and that portion of Investments made by such Person allocable to
property, plant or equipment. Capital Expenditures shall exclude proceeds of a
casualty loss applied to the repair or replacement of the property affected by
the casualty loss. "Casualty loss", as used herein, means, for any Person, (i)
the loss, damage, or destruction of any asset or property owned or used by such
Person, (ii) the condemnation, confiscation, or other taking, in whole or in
part, of any such asset or property, or (iii) the diminishment of the use of any
such asset or property so as to render impracticable or unreasonable the use
thereof for its intended purpose.
CAPITAL LEASE shall mean any lease of property, real or personal, the
obligation of the lessee in respect of which is required in accordance with GAAP
to be capitalized on the balance sheet of the lessee.
CASH EQUIVALENTS shall mean, as to any Person, (i) direct obligations of
the United States or any agency thereof, or obligations guaranteed by the United
States or any agency thereof, (ii) commercial paper rated in the highest grade
by a nationally recognized credit rating agency, (iii) time deposits with,
including certificates of deposit issued by, the Agent or any office located in
the United States of any bank or trust company the senior debt securities of
which are rated in one of the two highest categories by a nationally recognized
credit rating agency, provided in each case that such securities or other
obligations described in subsections (i), (ii) and (iii) above mature within one
year from the date of acquisition thereof by a Borrower or a Subsidiary, (iv)
repurchase obligations with a term of not more than ten (10) days of underlying
securities of the type described in clause (i) entered into with any bank of the
type described in clause (iii), (v) investments in money market funds that are
registered under the Investment
3
Company Act of 1940, which have net assets of at least $100,000,000 and at least
eighty-five percent (85%) of whose assets consist of securities and other
obligations of the type described in clauses (i) through (iv) above, and (vi)
investments in any other money market mutual fund the underlying assets of which
are rated at least AAA or the equivalent by Standard & Poor's Corporation or at
least AAA or the equivalent thereof by ▇▇▇▇▇'▇ Investors Service, Inc.,
including, without limitation, any such mutual fund managed or advised by the
Agent or any Lender. All such Cash Equivalents must be denominated solely for
payment in U.S. Dollars.
CHANGE OF CONTROL means the occurrence of any of the following: (i) the
sale or other transfer of all or substantially all of the assets of Florsheim to
any person other than as contemplated by the Order, (ii) any transaction
(including a merger or consolidation) the result of which is that any "person"
or "group" (within the meaning of Section 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) becomes the "beneficial
owner" (within the meaning of Rule 13d-3 under the Exchange Act) of more than
thirty-five percent (35%) (calculated on a fully diluted basis) of the voting
power of all classes of voting stock of Florsheim and/or warrants or options to
acquire such voting stock and, at such time, such person or group is the
beneficial owner of a greater percentage of the voting power of the voting stock
of Florsheim than that which is then owned (calculated on a fully diluted basis)
by Apollo or any account managed by Apollo for so long as it exercises power of
disposition and voting with respect thereto (a "Controlled Account") or an
Affiliate of Apollo or of a Controlled Account, (iii) the adoption of a plan
relating to the liquidation or dissolution of Florsheim and (iv) the first day
on which a majority of the members of the Board of Directors of Florsheim cease
to be Continuing Directors (meaning the directors of Florsheim on the date
hereof and each other director, if such director's nomination for election to
the Board of Directors of Florsheim is recommended by a majority of the
Continuing Directors at the time of such nomination or election).
CLOSING DOCUMENT LIST has the meaning set forth in Section 5.1.
CODE has the meaning set forth in Section 1.3.
COLLATERAL means the Accounts, Inventory and all other real and personal
property of the Borrowers of every kind and description, identified in the
Collateral Documents and the Order as security for the Obligations.
COLLATERAL ACCESS AGREEMENT means an agreement in form and substance
reasonably satisfactory to the Agent pursuant to which a mortgagee or lessor of
real property on which Collateral is stored or otherwise located, or a
warehouseman, processor or other bailee of Inventory, acknowledges the Liens of
the Agent and, in the case of any such agreement with a mortgagee or lessor,
permits the Agent access to and use of such real property for a reasonable
amount of time following the occurrence and during the continuance of an Event
of Default to assemble, complete and sell any Collateral stored or otherwise
located thereon.
COLLATERAL DOCUMENTS means, collectively, the Security Agreement, the
Mortgage and all other contracts, instruments and other documents pursuant to
which Liens are now or hereafter granted to the Agent to secure any or all of
the Obligations under the Prior Credit
4
Agreement and hereunder, in each case as such collateral documents may be
modified, amended, extended, restated or supplemented from time to time,
including, without limitation, the Order.
COLLECTION ACCOUNT has the meaning set forth in Section 4.9.
COLLECTION BANKS has the meaning set forth in Section 4.9.
COLLECTIONS means all cash, funds, checks, notes, instruments and any
other form of remittance tendered by account debtors in payment of Accounts.
COMMITMENT of a Lender means its commitment to make Revolving Loans and to
participate in Letters of Credit, up to the amount set forth below its name on
Annex I, as reduced by the amount of the Pre-Petition Indebtedness owing to such
Lender, and as such amount may be further reduced from time to time in
accordance with the terms of this Credit Agreement.
CONSOLIDATED ENTITY means Florsheim and those of its Subsidiaries
consolidated with it for purposes of financial reporting.
CONTINGENT OBLIGATION means, with respect to any Person, any direct,
indirect, contingent or non-contingent guaranty or obligation of such Person for
the Indebtedness or performance obligations of another Person, except for
endorsements in the ordinary course of business.
CREDIT DOCUMENTS means, collectively, this Credit Agreement, the Revolving
Notes, the Letters of Credit, each of the Collateral Documents and all other
documents, agreements and instruments now or hereafter executed in connection
herewith or therewith, in each case as modified, amended, extended, restated or
supplemented from time to time.
CREDIT PARTIES means, collectively, the Borrowers and each other party to
any of the Credit Documents (other than the Lenders, the Agent or the Issuing
Bank).
DEFAULT means an event, condition or default which with the giving of
notice, the passage of time or both would be an Event of Default.
DEFAULTING LENDER has the meaning set forth in Section 2.6.
DEPOSITARY ACCOUNT AGREEMENTS has the meaning set forth in Section 4.9.
DISBURSEMENT ACCOUNT means the operating account of Florsheim maintained
with the Disbursement Account Bank.
DISBURSEMENT ACCOUNT BANK means Bankers Trust Company/Deutsche Bank or any
other financial institution selected from time to time by the Agent and
reasonably acceptable to Florsheim.
5
DOMESTIC LENDING OFFICE means, with respect to any Lender, the office of
such Lender specified as its "Domestic Lending Office" on Annex I, as such annex
may be amended from time to time, which office shall in any event be located in
the United States.
EFFECTIVE DATE means the date on which all of the conditions precedent set
forth in Section 5.1 have been satisfied.
ELIGIBLE ACCOUNTS RECEIVABLE means Accounts of the Borrowers deemed by the
Agent in the exercise of its Permitted Discretion to be eligible for inclusion
in the calculation of the Borrowing Base. In determining the amount to be so
included, the face amount of such Accounts shall be reduced by the amount of all
returns, discounts, deductions, claims, credits, charges, or other allowances.
Unless otherwise approved in writing by the Agent, no Account shall be deemed to
be an Eligible Account Receivable if:
(a) it arises out of a sale made by a Borrower to an Affiliate
(other than an Affiliate of Apollo which would not otherwise be an
Affiliate of Borrower but for the relationship to Apollo); or
(b) it is unpaid more than ninety (90) days after the date of
invoice; or
(c) it is from the same account debtor or its Affiliate and fifty
percent (50%) or more of all Accounts from that account debtor (and its
Affiliates) are ineligible under (b) above; or
(d) when aggregated with all other Accounts of an account debtor,
the Account exceeds ten percent (10%) in face value of all Accounts of
such Borrower then outstanding, to the extent of such excess, unless
supported by an irrevocable letter of credit reasonably satisfactory to
the Agent (as to form, substance and issuer) and assigned to and directly
drawable by the Agent but excluding the Accounts owing to any Borrower by
Sears, ▇▇▇▇▇▇▇ and Company, ▇.▇. Penney Company, Inc., and Target
Corporation (d/b/a Mervyn's), which Accounts shall not be subject to the
limitation of this subsection (d); or
(e) the account debtor for the Account is a creditor of a Borrower,
has or has asserted a right of setoff against such Borrower, has disputed
its liability or made any claim with respect to the Account or any other
Account which has not been resolved, but in each of the foregoing cases,
solely to the extent of the amount of such actual or asserted right of
setoff, or the amount of such dispute or claim, as the case may be; or
(f) the account debtor is (or its assets are) the subject of an
Insolvency Event; or
(g) the Account is not payable in United States dollars or Canadian
dollars or the account debtor for the Account is located outside the
continental United States or Canada, unless the Account is supported by an
irrevocable letter of credit satisfactory to the Agent (as to form,
substance and issuer) and assigned to and directly drawable by the Agent;
or
6
(h) the sale to the account debtor is on a ▇▇▇▇-and-hold, guarantied
sale, sale-and-return, sale on approval or consignment basis or made
pursuant to any other written agreement providing for repurchase or
return; or
(i) the account debtor is the United States of America or any
department, agency or instrumentality thereof, unless the Borrower duly
assigns its rights to payment of such Account to the Agent pursuant to the
Assignment of Claims Act of 1940, as amended (31 ▇.▇.▇.▇▇.▇▇. 3727 et
seq.); or
(j) the goods giving rise to such Account have not been shipped and
delivered to and accepted by the account debtor, the services giving rise
to such Account have not been performed and accepted, or the Account
otherwise does not represent a final sale; or
(k) the Account does not comply with all Requirements of Law,
including, without limitation, the Federal Consumer Protection Act, the
Federal Truth-in-Lending Act and Regulation Z; or
(l) the Account is subject to any adverse security deposit, progress
payment or other similar advance made by or for the benefit of the
applicable account debtor; or
(m) the Account is not subject to a valid and perfected first
priority Lien in favor of the Agent or does not otherwise conform to the
representations and warranties contained in the Credit Documents.
ELIGIBLE INVENTORY means the aggregate amount of Inventory deemed by the
Agent in the exercise of its Permitted Discretion to be eligible for inclusion
in the calculation of the Borrowing Base. In determining the amount to be so
included, Inventory shall be valued at the lower of cost or market on a basis
consistent with the Borrowers' current and historical accounting practice.
Unless otherwise approved in writing by the Agent, no Inventory shall be deemed
Eligible Inventory if:
(a) it is not owned solely by a Borrower or a Borrower does not have
good, valid and marketable title thereto; or
(b) it is not located in the United States or Canada; or
(c) it is not located on property owned by a Borrower or by a third
party that has executed and delivered a Collateral Access Agreement and,
in the case of Inventory located on property owned by such a third party,
it is segregated or otherwise separately identifiable from goods of
others, if any, stored on such property, provided, however, that Inventory
located at any retail store operated by a Borrower and leased from a third
party owner shall not be deemed ineligible solely by reason of the failure
of such Borrower to deliver a Collateral Access Agreement to Agent; or
(d) it is not subject to a valid and perfected first priority Lien
in favor of the Agent (including Inventory located in Canada), except with
respect to Inventory stored at
7
sites described in clause (c) above, for Liens for unpaid rent or normal
and customary warehousing charges; or
(e) it consists of goods returned or rejected by any Borrower's
customers or goods in transit to third parties (other than to warehouse
sites covered by a Collateral Access Agreement); or
(f) it is not finished goods deemed suitable for retail sale, is
obsolete or slow moving, is not raw material consisting of leather in a
commercially saleable condition, or does not otherwise conform to the
representations and warranties contained in the Credit Documents.
ERISA means the Employee Retirement Income Security Act of 1974, 29
▇.▇.▇.▇▇.▇▇. 1000 et seq., amendments thereto, successor statutes, and
regulations or guidance promulgated thereunder.
ERISA AFFILIATE means any entity required to be aggregated with the
Borrower or any of its Subsidiaries under Sections 414 (b), (c), (m) or (o) of
the Internal Revenue Code.
EVENT OF DEFAULT has the meaning set forth in Article 9.
EXPENSES means all reasonable costs and expenses of the Agent incurred in
connection with the Credit Documents and the transactions contemplated therein,
including, without limitation, (i) the costs of conducting record searches,
examining collateral, opening bank accounts and lockboxes, depositing checks,
and receiving and transferring funds (including charges for checks for which
there are insufficient funds), (ii) the reasonable fees and expenses of legal
counsel and paralegals (excluding allocated costs of internal legal counsel and
paralegals), accountants, appraisers and other consultants, experts or advisors
retained by the Agent, (iii) expenses incurred in connection with the
assignments of or sales of participations in the Revolving Loans, (iv) the cost
of title insurance premiums, real estate survey costs, and fees and taxes in
connection with the filing of financing statements, and (v) the costs of
preparing and recording Collateral Documents, releases of Collateral, and
waivers, amendments, and terminations of any of the Credit Documents. Expenses
also means all reasonable costs and expenses (including the reasonable fees and
expenses of legal counsel and other professionals) paid or incurred by the Agent
and any Lender (i) during the continuance of an Event of Default (including,
without limitation, the cost of any property or casualty insurance obtained by
the Agent to insure the Collateral), (ii) during the continuance of the Cases,
(iii) in enforcing or defending its rights under or in respect of this Credit
Agreement, the other Credit Documents or any other document or instrument now or
hereafter executed and delivered in connection herewith, (iv) collecting the
Revolving Loans, (v) foreclosing or otherwise collecting upon the Collateral or
any part thereof and (vi) in obtaining any legal, accounting or other advice in
connection with any of the foregoing.
EXPIRATION DATE means August 31, 2002, or such earlier date in which this
Agreement and the Commitments are terminated pursuant to the terms hereof or of
the Order.
8
FEDERAL FUNDS RATE means, for any period, a fluctuating interest rate per
annum for each day during such period equal to the weighted average of the rates
on overnight federal funds transactions with members of the Federal Reserve
System arranged by Federal Funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day that
is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal Funds brokers of
recognized standing selected by the Agent.
FEDERAL RESERVE BOARD means the Board of Governors of the Federal Reserve
System or any Governmental Authority succeeding to its functions.
FEES means, collectively, the Unused Line Fee, the Letter of Credit Fees,
the Issuing Bank Fees, and the other fees and charges payable by the Borrowers
hereunder to the Agent for the benefit of the Lenders.
FINANCIAL STATEMENTS means the consolidated and consolidating balance
sheets, statements of operations, statements of cash flows and statements of
changes in shareholder's equity of the Consolidated Entity for the period
specified, prepared in accordance with GAAP and consistently with prior
practices.
FIXED ASSET AND INTELLECTUAL PROPERTY SUBLIMIT means an amount equal to
$24,700,000; provided, that the Fixed Asset and Intellectual Property Sublimit
shall be automatically and permanently reduced by an amount reasonably
determined by Agent to be allocable thereto from the Net Cash Proceeds of any
asset sales approved by the Bankruptcy Court in the Cases.
FLORSHEIM means Florsheim Group Inc., a Delaware corporation and its
successors.
FLORSHEIM RETIREMENT PLAN means the Florsheim Group Inc. Retirement Plan.
FOREIGN SUBSIDIARY means any Subsidiary of a Person not incorporated in
the United States.
GAAP means generally accepted accounting principles in the United States
as in effect from time to time.
GOVERNING DOCUMENTS means certificates or articles of incorporation,
by-laws and other similar organizational or governing documents.
GOVERNMENTAL AUTHORITY means any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
HIGHEST LAWFUL RATE means, at any given time during which any Obligations
shall be outstanding hereunder, the maximum nonusurious interest rate that at
any time or from time to time may be contracted for, taken, reserved, charged or
received on such Obligations, under the laws of the State of Illinois (or the
law of any other jurisdiction whose laws may be mandatorily
9
applicable notwithstanding other provisions of this Credit Agreement and the
other Credit Documents), or under applicable federal laws which may presently or
hereafter be in effect and which allow a higher maximum nonusurious interest
rate than under Illinois (or such other jurisdiction's) law, in any case after
taking into account, to the extent permitted by applicable law, any and all
relevant payments or charges under this Credit Agreement and any other Credit
Documents executed in connection herewith, and any available exemptions,
exceptions and exclusions.
INDEBTEDNESS of a Person means, without duplication, (a) indebtedness for
borrowed money or for the deferred purchase price of property or services (other
than trade liabilities incurred in the ordinary course of business and payable
in accordance with customary practices), whether on open account or evidenced by
a note, bond, debenture or similar instrument, (b) obligations under capital
leases, (c) reimbursement obligations for letters of credit, banker's
acceptances or other credit accommodations, (d) liabilities, as determined by
the Agent, under any Interest Rate Agreement, (e) Contingent Obligations and (f)
Indebtedness secured by any Lien on any property of that Person, even if that
Person has not assumed such Indebtedness.
INSOLVENCY EVENT means, with respect to any Person, the occurrence of any
of the following: (a) such Person shall be adjudicated insolvent or bankrupt, or
generally fail to pay, or admit in writing its inability to pay, its debts as
they become due, (b) the voluntary commencement of any proceeding or the filing
of any petition under any bankruptcy, insolvency or similar law, (c) the seeking
of dissolution or reorganization or the appointment of a receiver, trustee,
custodian or liquidator for it or a substantial portion of its property, assets
or business or to effect a plan or other arrangement with its creditors, (d) the
filing of any answer admitting the jurisdiction of the court and the material
allegations of an involuntary petition filed against it in any bankruptcy,
insolvency or similar proceeding, (e) such Person shall make a general
assignment for the benefit of its creditors, or shall consent to, or acquiesce
in the appointment of, a receiver, trustee, custodian or liquidator for a
substantial portion of its property, assets or business. Insolvency Event shall
also mean, with respect to any Person, the occurrence of any of the following:
an involuntary proceeding or involuntary petition shall be commenced or filed
against such Person under any bankruptcy, insolvency or similar law seeking the
dissolution or reorganization of it or the appointment of a receiver, trustee,
custodian or liquidator for it or of a substantial part of its property, assets
or business, or any writ, judgment, warrant of attachment, execution or similar
process shall be issued or levied against a substantial part of its property,
assets or business, and such proceedings or petitions shall not be dismissed, or
such writ, judgment, warrant of attachment, execution or similar process shall
not be released, vacated or fully bonded, within sixty (60) days after
commencement, filing, or levy, as the case may be, or any order for relief shall
be entered in any such proceeding.
INSURANCE PROCEEDS means the proceeds of any insurance or any judgements
or settlements made in lieu thereof resulting from a casualty with respect to
the Collateral or any part thereof.
INTEREST PERIOD means, for any LIBOR Rate Loan, the period commencing on
the date of such Borrowing and ending on the last day of the period selected by
the Borrower Representative pursuant to the provisions below. The duration of
each such Interest Period shall be one, two,
10
three or six months, in each case as the Borrower Representative may, in an
appropriate Notice of Borrowing, Notice of Continuation or Notice of Conversion,
select; provided, that the Borrower Representative may not select any Interest
Period that ends after the Expiration Date. Whenever the last day of any
Interest Period would otherwise occur on a day other than a Business Day, the
last day of such Interest Period shall be extended to occur on the next
succeeding Business Day; provided, that if such extension would cause the last
day of such Interest Period to occur in the next following calendar month, the
last day of such Interest Period shall occur on the next preceding Business Day.
INTEREST RATE AGREEMENT means any interest rate protection or hedge
agreement, including, without limitation, interest rate future, option, swap,
and cap agreements.
INTERNAL REVENUE CODE means the Internal Revenue Code of 1986, amendments
thereto, successor statutes, and regulations or guidance promulgated thereunder.
INVENTORY has the meaning set forth in the Security Agreement.
INVESTMENT means all expenditures made and all liabilities incurred
(contingently or otherwise) for or in connection with the acquisition of stock
or Indebtedness of, or for loans, advances, capital contributions or transfers
of property to, or acquisition of substantially all the assets of, a Person. In
determining the aggregate amount of Investments outstanding at any particular
time, (i) the amount of any Investment represented by a guaranty shall be taken
at not less than the principal amount of the obligations guaranteed and
outstanding; (ii) there shall be deducted in respect of each such Investment any
amount received as a return of capital (but only by repurchase, redemption,
retirement, repayment, liquidating dividend or liquidating distribution); (iii)
there shall not be deducted in respect of any Investment any amounts received as
earnings on such Investment, whether as dividends, interest or otherwise; and
(iv) there shall not be deducted from the aggregate amount of Investments any
decrease in the market value thereof.
JEFFERSON CITY REAL ESTATE means the real property consisting of land and
improvements and fixtures attached thereto located at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇.
ISSUING BANK means any Lender or other financial institution that is
acceptable to the Agent and the Borrowers which may at any time issue or be
requested to issue a Letter of Credit for the account of a Borrower.
ISSUING BANK FEES has the meaning set forth in Section 4.3(b).
LENDER ADVANCES has the meaning set forth in Section 2.2.
LETTER OF CREDIT FEE has the meaning set forth in Section 4.3(a).
LETTER OF CREDIT OBLIGATIONS means the sum of the aggregate undrawn face
amount of all Letters of Credit outstanding, plus the aggregate amount of all
drawings under Letters of Credit for which the Borrowers have not reimbursed the
Issuing Bank, plus the aggregate amount
11
of all payments made by Lenders to the Issuing Bank for their participations in
Letters of Credit, for which the Borrowers have not reimbursed the Lenders.
LETTER OF CREDIT REQUEST has the meaning set forth in Section 3.3.
LETTERS OF CREDIT means all letters of credit (commercial (trade) or
standby) issued for the account of a Borrower under Article 3 and all
amendments, renewals, extensions or replacements thereof.
LIBOR LENDING OFFICE means, with respect to any Lender, the office of such
Lender specified as its "LIBOR Lending Office" opposite its name on Annex I, as
such annex may be amended from time to time (or, if no such office is specified,
its Domestic Lending Office).
LIBOR RATE means, with respect to any Interest Period for each LIBOR Rate
Loan comprising part of the same Borrowing, an interest rate per annum equal to
the rate (rounded upward to the nearest whole multiple of one-sixteenth (1/16)
of one percent (1.00%) per annum, if such rate is not such a whole multiple of
one-sixteenth (1/16) of one percent (1.00%)) of the offered quotation, if any,
to first class banks in the London (U.K.) interbank market by Bankers Trust
Company for United States dollar deposits of amounts in immediately available
funds comparable to the principal amount of the LIBOR Rate Loan of BTCC for
which the LIBOR Rate is being determined with maturities comparable to the
Interest Period for which such LIBOR Rate will apply as of approximately 10:00
a.m. Chicago time two (2) Business Days prior to the commencement of such
Interest Period.
LIBOR RATE LOAN means a Revolving Loan that bears interest as provided in
Section 4.l(b) hereof.
LIBOR RATE MARGIN means three and one-half percent (3.5%) per annum for
each Interest Period for a LIBOR Rate Loan.
LIEN means any lien, claim, charge, pledge, security interest, assignment,
hypothecation, deed of trust, mortgage, financing lease, conditional sale,
retention of title, or other preferential arrangement having substantially the
same economic effect as any of the foregoing, whether voluntary or imposed by
law.
LINE OF CREDIT means the aggregate revolving line of credit extended
pursuant to this Credit Agreement by the Lenders to the Borrower for Revolving
Loans and Letters of Credit, in an amount up to $75,000,000, less the amount
outstanding from time to time equal to the Pre-Petition Indebtedness, as such
amount may be reduced from time to time pursuant to the respective terms and
provisions hereof.
LOAN ACCOUNT has the meaning set forth in Section 4.7.
LOCKBOXES has the meaning set forth in Section 4.9
LOCKBOX ACCOUNT has the meaning set forth in Section 4.9.
12
LOCKBOX AGREEMENTS has the meaning set forth in Section 4.9.
LOCKBOX BANKS has the meaning set forth in Section 4.9.
MAJORITY LENDERS means those Lenders holding in the aggregate more than
fifty percent (50%) of the total Commitments, or if the Commitments are
terminated, those Lenders owed more than fifty percent (50%) of the Revolving
Loans and Letter of Credit Obligations then outstanding.
MATERIAL ADVERSE EFFECT means a material adverse effect on (i) the
business, operations, results of operations, assets, liabilities or condition
(financial or otherwise) of Florsheim and the other Borrowers and their
consolidated Subsidiaries taken as a whole, (ii) the ability of the Borrowers
(taken as a whole) to perform their obligations under the Credit Documents to
which they are a party, or on the ability of the Agent or the Lenders to enforce
the Obligations or realize upon the Collateral, or (iii) the value of the
Collateral (taken as a whole), or the amount which the Agent or the Lenders
would be likely to receive (after giving consideration to delays in payment and
costs of enforcement) in the liquidation of such Collateral. For purposes
hereof, the Bankruptcy Filing itself shall not be deemed to have a Material
Adverse Effect on the Borrowers.
MATERIAL CONTRACT means any contract or other arrangement to which
Florsheim or any of its Subsidiaries is a party (other than the Credit
Documents) for which breach, nonperformance, cancellation or failure to renew
could reasonably be expected to have a Material Adverse Effect.
MOODY'S means ▇▇▇▇▇'▇ Investor Services, Inc., or any successor thereto.
MORTGAGE shall mean, with respect to real property owned by any Borrower,
each mortgage or deed of trust executed and delivered from time to time pursuant
to the terms hereof, and with respect to real property leased by each such
Borrower, each leasehold mortgage or leasehold deed of trust, if any, executed
and delivered from time to time pursuant to the terms hereof, as any of the same
may be amended, modified, supplemented, extended or renewed from time to time.
MULTIEMPLOYER PLAN means a "multiemployer plan" (as defined in Section
4001(a) (3) of ERISA) to which Florsheim, any of its Subsidiaries or any ERISA
Affiliate has contributed within the past three years or with respect to which
Florsheim or any of its Subsidiaries could reasonably be expected to incur any
liability.
NET CASH PROCEEDS shall mean, with respect to the sale or disposition of
any asset, the aggregate amount of cash received by a Borrower (including cash
payments received in respect of deferred payment pursuant to any note or
installment receivable or otherwise and state or federal income tax refunds
attributable to such sale or disposition, but in each case only as and when
received) in respect of such sale or disposition minus (i) all fees,
commissions, expenses and taxes incurred in connection with such sale or
disposition, (ii) the principal amount of Indebtedness of any Borrower which is
senior (in lien priority) to the Indebtedness hereunder and which by its terms
is required to be and is repaid, and (iii) any amount considered appropriate by
13
Florsheim, in good faith, to provide reserves for payment of indemnities or
liabilities that may be incurred in connection with such sale or disposition.
For purposes of this definition, if taxes or other expenses payable in
connection with the sale or disposition of any asset are not known as of the
date of such sale or disposition, then such fees, commissions, expenses or taxes
shall be estimated by Florsheim, in good faith, and such estimated amounts shall
be deducted therefrom.
NET REVERSION AMOUNT means the aggregate amount of cash and value of any
property received by Florsheim as a result of the final termination of the
existing Florsheim 401(k) Trust as contemplated by Section 7.16 minus the amount
of all federal, state and local income, alternative minimum, excise and other
taxes, if any, paid by Florsheim in connection with such termination.
NOTICE OF BORROWING means an irrevocable and binding notice delivered by
the Borrower Representative to the Agent either by telephone or by facsimile
transmission (and if by telephone, confirmed in writing), of the Borrower
Representative's request for a Borrowing, which notice shall be substantially in
the form of Exhibit B.
OBLIGATIONS means the unpaid principal and interest hereunder (including
interest accruing on or after the occurrence of an Insolvency Event),
reimbursement obligations under Letters of Credit, Fees, Expenses and all other
obligations and liabilities of the Borrowers to the Agent, the Issuing Bank or
to the Lenders under this Credit Agreement, the Revolving Notes, or any other
Credit Document.
PATENT SECURITY AGREEMENT means, collectively, the Patent Security
Agreements executed by certain of the Borrowers in favor of the Agent in
connection with the Prior Credit Agreement, as reaffirmed and amended in the
form attached hereto as Exhibit C.
PERMITTED DISCRETION means the Agent's judgment exercised in good faith
and not in an irrational manner based upon its consideration of any factor which
the Agent believes in good faith could adversely affect the value of any
Collateral, including any Inventory or Accounts or the amount which the Agent
and the Lenders would be likely to receive (after giving consideration to delays
in payment and costs of enforcement) in the liquidation of such Collateral. In
exercising such judgment, the Agent may consider such factors which are already
included in or tested by the definition of Eligible Accounts Receivable or
Eligible Inventory, as well as any of the following: (i) changes in collection
history and dilution with respect to the Accounts, (ii) changes in levels of
backlog of firm purchase orders and demand for, and pricing of, Inventory, (iii)
changes in any concentration of risk with respect to Accounts and Inventory, and
(iv) any other factors that change the credit risk of lending to the Borrower on
the security of the Accounts and Inventory.
PERMITTED LIENS means the Liens referred to in clauses (a) through (l) of
Section 8.4.
PERSON means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
institution, entity, party or government (including any division, agency or
department thereof), and its successors, heirs and assigns.
14
PLAN means any Benefit Plan, Multiemployer Plan, or Retiree Health Plan,
or any employee benefit plan, fund, program or arrangement, whether oral or
written, maintained or contributed to by Florsheim or any of its Subsidiaries,
or with respect to which any of them could reasonably be expected to incur
liability.
PRIME LENDING RATE means the rate which Bankers Trust Company/Deutsche
Bank (New York office) publicly announces as its prime lending rate, from time
to time. The Prime Lending Rate is a reference rate and does not necessarily
represent the lowest or best rate actually charged to any customer. Bankers
Trust Company/Deutsche Bank and each of the Lenders may make commercial loans or
other loans at rates of interest at, above or below the Prime Lending Rate.
PRIME RATE LOAN means a Revolving Loan that bears interest as provided in
Section 4.1(a) hereof.
PROPORTIONATE SHARE of a Lender means a fraction, expressed as a
percentage, obtained by dividing its Commitment by the Line of Credit or, if the
Commitments are terminated, by dividing its then outstanding Revolving Loans and
Letter of Credit participations by the then outstanding aggregate Revolving
Loans and Letter of Credit Obligations.
PURCHASE MONEY LIENS has the meaning set forth in Section 8.3(e).
REGISTER has the meaning set forth in Section 11.8.
REGULATION D means Regulation D of the Federal Reserve Board, as in effect
from time to time.
REGULATION Z means Regulation Z of the Federal Reserve Board, as in effect
from time to time.
REPORTABLE EVENT means any of the events described in Section 4043 of
ERISA and the regulations thereunder for which the notice requirements have not
been waived.
REQUIREMENT OF LAW means, with respect to any Person, (a) the Governing
Documents of such Person, (b) any law, treaty, rule or regulation or
determination of an arbitrator, court or other Governmental Authority binding on
such Person, or (c) any franchise, license, lease, permit, certificate,
authorization, qualification, easement, right of way, right or approval binding
on a Person or any of its property.
RETIREE HEALTH PLAN means an "employee welfare benefit plan" within the
meaning of Section 3(1) of ERISA, and any other plan, program or arrangement,
whether oral or written, that provides medical benefits to persons after
termination of employment, other than as required by Section 601 of ERISA.
REVOLVING LOANS has the meaning set forth in Section 2.1.
15
REVOLVING NOTE means a promissory note of the Borrowers payable to the
order of any Lender, substantially in the form of Exhibit D.
S&P means Standard & Poor's Ratings Services, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., or any successor thereto.
SECURITY AGREEMENT means the Security Agreement executed by the Borrowers
in favor of the Agent in connection with the Prior Credit Agreement, as
reaffirmed and amended in the form attached hereto as Exhibit E.
SETTLEMENT DATE has the meaning set forth in Section 2.4(a).
SUBSIDIARY of a Person means a corporation or other entity in which that
Person directly or indirectly owns or controls the shares of stock or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or appoint other managers of such corporation or other
entity.
TERMINATION EVENT means (i) a Reportable Event with respect to any Benefit
Plan or Multiemployer Plan; (ii) the withdrawal of a Borrower, any of its
Subsidiaries or any ERISA Affiliate from a Benefit Plan during a plan year in
which it was a "substantial employer" (as defined in Section 4001(a) (2) of
ERISA); (iii) the providing of notice of intent to terminate a Benefit Plan in a
distress termination (as described in Section 4041(c) of ERISA); (iv) the
institution by the Pension Benefit Guaranty Corporation of proceedings to
terminate a Benefit Plan or Multiemployer Plan; (v) any event or condition (a)
which could reasonably be expected to constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Benefit Plan or Multiemployer Plan, or (b) that may result in termination of a
Multiemployer Plan pursuant to Section 4041A of ERISA; or (vi) the partial or
complete withdrawal, within the meaning of Sections 4203 and 4205 of ERISA, of a
Borrower, any of its Subsidiaries or any ERISA Affiliate from a Multiemployer
Plan. Any event which would otherwise be a Termination Event under this
definition which arises up as a result of the sale of the Jefferson City Real
Estate and which results in withdrawal liability of less than $250,000 shall not
be deemed a Termination Event hereunder.
TRANCHE B AVAILABILITY means an amount equal to $10,000,000.
TRADEMARK SECURITY AGREEMENT means, collectively, the Trademark Security
Agreement executed by certain of the Borrowers in favor of the Agent in
connection with the Prior Credit Agreement, as reaffirmed in the form attached
hereto as Exhibit F.
UNUSED LINE FEE has the meaning set forth in Section 4.2.
1.2 ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise defined or
specified herein, all accounting terms used in this Credit Agreement shall be
construed in accordance with GAAP, applied on a basis consistent in all material
respects with the Financial Statements referred to in Section 6.9. All
accounting determinations for purposes of determining compliance with the
financial covenants contained in Article 8 shall be made in accordance with GAAP
as in effect on the Effective Date and applied on a basis consistent in all
material respects with the audited Financial Statements as of and for the fiscal
year ended December 29, 2000. The Financial Statements required to be delivered
hereunder from and after the Effective Date, and all financial records, shall be
maintained in accordance with GAAP.
16
1.3 OTHER TERMS; HEADINGS. Terms used herein and not otherwise defined in
Article 1 that are defined in the Uniform Commercial Code in effect in the State
of Illinois (the "Code") from time to time shall have the meanings given in the
Code. Each of the words "hereof," "herein," and "hereunder" refer to this Credit
Agreement as a whole. An Event of Default shall "continue" or be "continuing"
until such Event of Default has been waived in accordance with Section 11.11
hereof. References to Articles, Sections, Annexes, Schedules, and Exhibits are
internal references to this Credit Agreement, and to its attachments, unless
otherwise specified. The headings and the Table of Contents are for convenience
only and shall not affect the meaning or construction of any provision of this
Credit Agreement.
ARTICLE 2
REVOLVING LOANS
2.1 REVOLVING CREDIT COMMITMENTS.
(a) Subject to the terms and conditions set forth in this Credit
Agreement, and in reliance on the representations and warranties of the
Borrowers set forth herein, on and after the Effective Date and to and
excluding the Expiration Date, each Lender severally agrees to make loans
and advances to the Borrower (each a "Revolving Loan") in an amount not to
exceed at any time its Proportionate Share of the lesser at such time of
the Line of Credit and the Borrowing Base minus, in each case, the then
outstanding Letter of Credit Obligations. (Only those Lenders which are
designated as Tranche B Lenders on Annex 1 hereto are obligated to make
loans and advances to the Borrowers against the Tranche B Availability.)
(b) Notwithstanding anything in this Agreement to the contrary, any
Revolving Loans made on or after the Effective Date to the Borrowers shall
be deemed DIP Indebtedness (as defined in the Order) and shall be subject
to the Order. All Revolving Loans made on or after the Effective Date
shall be Prime Rate Loans.
2.2 BORROWING OF REVOLVING LOANS. Revolving Loans shall be made available
to the Borrower Representative directly by the Lenders ("Lender Advances") or,
in the circumstances described in Section 2.2(b), from the Agent acting on
behalf of the Lenders ("Agent Advances").
(a) LENDER ADVANCES. Subject to the determination by the Agent and
the Lenders that the conditions for borrowing contained in Section 5.2 are
satisfied, upon receipt of a Notice of Borrowing from the Borrower
Representative received by the Agent before noon Chicago time on a
Business Day, Lender Advances of Revolving Loans shall be made to the
extent of each Lender's Proportionate Share of the requested Borrowing. So
long as the Borrowers continue to have Tranche B Availability hereunder,
such Lender Advances shall first be made against the Tranche B
Availability before any other Lender Advances are made.
17
(b) AGENT ADVANCES. The Agent is authorized by the Lenders, but is
not obligated, to make Agent Advances upon a receipt of any Notice of
Borrowing received by the Agent before 3:00 P.M. Chicago time on a
Business Day. Agent Advances shall be subject to periodic settlement with
the Lenders under Section 2.4. Agent Advances may be made only in the
following circumstances:
(i) NORMAL COURSE AGENT ADVANCES. For administrative
convenience, the Agent may, but is not obligated, to make Agent
Advances up to the amount available for borrowing under Section 2.1
in reliance upon the actual or deemed representations of the
Borrowers under Section 5.2 that the conditions for borrowing are
satisfied.
(ii) OTHER AGENT ADVANCES. (A) When the conditions for
borrowing under Section 5.2 cannot be fulfilled, and notwithstanding
the Borrowing Base limitation of Section 2.1, the Lenders authorize
the Agent, in its sole discretion, to make Revolving Loans ("Interim
Advances"), to the Borrowers during the period commencing on the
date the Agent first receives a Notice of Borrowing requesting an
Interim Advance until the earliest of (1) seventy (70) days after
such date, (2) the date the Borrower is again able to comply with
such Borrowing Base limitation and conditions precedent, or obtains
an amendment or waiver with respect thereto and (3) the date the
Majority Lenders instruct the Agent, or the Agent determines, to
cease making Interim Advances (in each case, the "Interim Advance
Period").
(B) The Agent shall not, in any event, make any Interim
Advances in excess of $5,000,000, and, in no event, if such Interim
Advance would result in outstanding Revolving Loans and Letters of
Credit exceeding the Line of Credit.
(C) All amounts received by the Agent during an Interim
Advance Period on account of the Obligations, whether in the form of
payments from the Borrower, collections on the Collateral or
otherwise, shall, so long as any Interim Advances made during such
Interim Advance Period are outstanding, be applied by the Agent,
first, to the repayment of such Interim Advances and, second, in
accordance with Section 4.10.
(c) DISBURSEMENT OF REVOLVING LOANS. The proceeds of Revolving Loans
shall be transmitted: (x) in the circumstances described in Section 3.5,
by the Agent directly to the Issuing Bank, and (y) in all other
circumstances, by the Agent or Lenders, as the case may be.
(d) NOTICES OF BORROWING. Notices of Borrowing may be given under
this Section by telephone or facsimile transmission, and, if by telephone,
promptly confirmed in writing. The Borrower Representative shall specify
in each Notice of Borrowing the intended use of such Borrowings and
whether the conditions for the requested Borrowing are satisfied. The
Borrower Representative may request one or more Borrowings of Revolving
Loans constituting Prime Rate Loans on the same Business Day, which shall
18
be in an aggregate amount of not less than $50,000. Once given, a Notice
of Borrowing is irrevocable by and binding on the Borrowers. The Borrower
Representative shall provide to the Agent a list, with specimen
signatures, of officers authorized to request Revolving Loans. The Agent
is entitled to rely upon such list until it is replaced by the Borrower
Representative.
2.3 NOTICE OF REQUEST FOR LENDER ADVANCES. Subject to the last sentence of
this Section, the Agent shall give each Lender prompt notice by telephone or
facsimile transmission of a Notice of Borrowing that is received pursuant to
Section 2.2(a) and is to be satisfied by Lender Advances. No later than 3:00
P.M. Chicago time on the date of receipt of such notice, each Lender shall make
available for the account of its Applicable Lending Office to the Agent at the
Agent's address for deposit into the Loan Disbursement Account, its
Proportionate Share of such Borrowing in immediately available funds. Unless the
Agent receives contrary written notice prior to any such Borrowing, it is
entitled to assume that each Lender will make available its Proportionate Share
of the Borrowing and in reliance upon that assumption, but without any
obligation to do so, may advance such Proportionate Share on behalf of the
Lender, without the necessity of giving daily notice to each Lender of the
receipt of a Notice of Borrowing.
2.4 PERIODIC SETTLEMENT OF AGENT ADVANCES; INTEREST AND FEES; STATEMENTS.
(a) THE SETTLEMENT DATE; ALLOCATION OF INTEREST AND FEES. The amount
of each Lender's Proportionate Share of Revolving Loans shall be computed
weekly (or more frequently in the Agent's discretion) and shall be
adjusted upward or downward based on all Loans (including Agent Advances)
and repayments received by the Agent as of 5:00 P.M. Chicago time on the
last Business Day of the period specified by the Agent (such date, the
"Settlement Date").
(b) SUMMARY STATEMENTS; SETTLEMENTS. The Agent shall deliver to the
Borrower Representative and each of the Lenders promptly after the
Settlement Date a summary statement of the account of outstanding Loans
(including Agent Advances) for the period, the amount of repayments
received for the period, and the amount allocated to each Lender of the
interest and Unused Line Fee for the period. After application of payments
under Section 4.10, as reflected on the summary statement: (i) the Agent
shall transfer to each Lender its allocated share of interest and Unused
Line Fee, and its Proportionate Share of repayments; and (ii) each Lender
shall transfer to the Agent, or the Agent shall transfer to each Lender,
such amounts as are necessary to insure that, after giving effect to all
such transfers, the amount of Loans made by each Lender shall be equal to
such Lender's Proportionate Share of the aggregate amount of Loans
outstanding as of such Settlement Date. If the summary statement requires
transfers to be made to the Agent by the Lenders and is received by the
Lenders prior to 12:00 noon Chicago time on a Business Day, such transfers
shall be made in immediately available funds no later than 3:00 P.M.
Chicago time that day; and, if received after 12:00 noon Chicago time,
then no later than 3:00 P.M. Chicago time on the next Business Day. The
obligation of each Lender to transfer such funds is irrevocable,
unconditional and without recourse to or warranty by the Agent.
19
(c) DISTRIBUTION OF INTEREST AND UNUSED LINE FEES. Interest on the
Revolving Loans (including Agent Advances) and the Unused Line Fee shall
be allocated by the Agent to each Lender (i) in the case of interest, in
accordance with the Revolving Loans actually advanced by and repaid to
such Lender and (ii) in the case of the Unused Line Fee, in accordance
with the Proportionate Share of such Lender. Interest shall accrue from
and including the date Revolving Loans are advanced and to but excluding
the date such Revolving Loans are either repaid by the Borrowers or, if
later, actually settled under this Section. Promptly after the end of each
month, the Agent shall distribute to each Lender its portion, allocated as
provided above, of the interest and Unused Line Fee which has accrued
during such month.
2.5 SHARING OF PAYMENTS. If any Lender shall obtain any payment (whether
made voluntarily or involuntarily, or through the exercise of any right of
set-off, or otherwise) on account of the Revolving Loans made by it or its
participation in the Letter of Credit Obligations in excess of its Proportionate
Share of payments on account of the Revolving Loans or Letter of Credit
Obligations obtained by all the Lenders, such Lender shall forthwith purchase
from the other Lenders such participations in the Revolving Loans made by them
or in their participation in Letters of Credit as shall be necessary to cause
such purchasing Lender to share the excess payment ratably with each of them;
provided, that if all or any portion of such excess payment is thereafter
recovered from such purchasing Lender, such purchase from each Lender shall be
rescinded and each such Lender shall repay to the purchasing Lender the purchase
price to the extent of such recovery, together with an amount equal to such
Lender's ratable share (according to the proportion of (i) the amount of such
Lender's required repayment to (ii) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect to the total amount so recovered. The Borrowers
agree that any Lender so purchasing a participation from another Lender pursuant
to this Section 2.5, to the fullest extent permitted by law, may exercise all of
its rights of payment (including the right of set-off) with respect to such
participation as fully as if such Lender were the direct creditor of the
Borrowers (or any of them) in the amount of such participation.
2.6 DEFAULTING LENDERS.
(a) A Lender who fails to pay the Agent its Proportionate Share of
any Revolving Loans (including Agent Advances) made available by the Agent
on such Lender's behalf, or who fails to pay any other amounts owing by it
to the Agent, is a "Defaulting Lender." The Agent is entitled to recover
from such Defaulting Lender all such amounts owing by such Defaulting
Lender on demand. If the Defaulting Lender does not pay such amounts on
the Agent's demand, the Agent shall promptly notify the Borrower
Representative and the Borrowers shall pay such amounts within five (5)
Business Days of its receipt of such notice. In addition, the Defaulting
Lender or the Borrowers shall pay to the Agent for its own account
interest on such amount for each day from the date it was made available
by the Agent to the Borrowers to the date it is recovered by the Agent at
a rate per annum equal to (x) the overnight Federal Funds Rate, if paid by
the Defaulting Lender, or (y) the then applicable rate of interest
calculated under Section 4.1, if paid by the Borrowers; plus, in each
case, the Expenses and losses, if any, incurred as a result of the
Defaulting Lender's failure to perform its obligations.
20
Nothing herein shall be deemed to relieve any Lender of its obligation to
fulfill its commitments hereunder or to prejudice any rights which the
Borrowers may have against any Lender as a result of any default by such
Lender hereunder, including, without limitation, the right of the
Borrowers to seek reimbursement from any Defaulting Lender for any amounts
paid by the Borrowers under clause (y) above on account of such Defaulting
Lender's default.
(b) The failure of any Lender to fund its Proportionate Share of a
Revolving Loan shall not relieve any other Lender of its obligation to
fund its Proportionate Share of a Revolving Loan. Conversely, no Lender
shall be responsible for the failure of another Lender to fund its
Proportionate Share of a Revolving Loan.
(c) The Agent shall not be obligated to transfer to a Defaulting
Lender any payments made by the Borrower to the Agent for the Defaulting
Lender's benefit; nor shall a Defaulting Lender be entitled to the sharing
of any payments hereunder. Amounts payable to a Defaulting Lender shall
instead be paid to or retained by the Agent. The Agent may hold and, in
its discretion, re-lend to the Borrowers the amount of all such payments
received by it for the account of such Lender. For purposes of voting or
consenting to matters with respect to the Credit Documents and determining
Proportionate Shares, such Defaulting Lender shall be deemed not to be a
"Lender" and such Lender's Commitment shall be deemed to be zero (-0-).
This Section shall remain effective with respect to such Lender until (x)
the Obligations under this Credit Agreement shall have been declared or
shall have become immediately due and payable or (y) the Majority Lenders,
the Agent and the Borrowers shall have waived such Lender's default in
writing. The operation of this Section shall not be construed to increase
or otherwise affect the Commitment of any Lender, or relieve or excuse the
performance by the Borrowers of their duties and obligations hereunder.
2.7 RELIANCE ON NOTICES; APPOINTMENT OF BORROWER REPRESENTATIVE. Agent
shall be entitled to rely upon, and shall be fully protected in relying upon,
any Notice of Borrowing or similar notice believed by Agent to be genuine. Agent
may assume that each person executing and delivering such notice was duly
authorized, unless the responsible individual acting thereon for Agent has
actual knowledge to the contrary or, in the case of Notice of Borrowing, unless
the notice is not executed by an officer designated by the Borrower
Representative under Section 2.2(d). Each Borrower hereby designates Florsheim
("Borrower Representative") as its representative and agent on its behalf for
the purpose of issuing a Notice of Borrowing, 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 Credit Documents and taking all
other actions (including in respect of compliance with covenants) on behalf of
any Borrower or Borrowers under the Credit Documents. Borrower Representative
hereby accepts such appointment. Agent and each Lender may regard any notice or
other communication pursuant to any Credit Document from the Borrower
Representative as a notice or communication from all Borrowers, and may give any
notice or communication required or permitted to be given to any Borrower or
Borrowers hereunder to Borrower Representative on behalf of such Borrower or
Borrowers. Each Borrower agrees that each notice, election, representation and
warranty, covenant, agreement and
21
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 if the same had been
made directly by such Borrower.
2.8 REVOLVING CREDIT AS RENEWAL; EXISTING REVOLVING LOANS.
(a) The Revolving Notes issues by the Borrowers hereunder shall
constitute renewal and replacement evidence of all present Indebtedness of
such parties outstanding under the Revolving Notes issued under the Prior
Credit Agreement. Revolving Loans shall be available, subject to the terms
hereof and to the Order, to fund working capital needs or other general
corporate purposes of the Applicable Borrower, as otherwise permitted
pursuant to the Budget.
(b) Each Revolving Loan outstanding pursuant to the Prior Credit
Agreement shall be deemed for all purposes of this Agreement to be a
Revolving Loan under this Agreement; provided, however, that such
Revolving Loans outstanding pursuant to the Prior Credit Agreement shall
not be deemed to be DIP Indebtedness for the purposes hereof and of the
Order.
ARTICLE 3
LETTERS OF CREDIT
3.1 ISSUANCE OF LETTERS OF CREDIT. Subject to the terms and conditions
hereof and in reliance on the representations and warranties of the Borrowers
set forth herein, the Agent shall cause the Issuing Bank to issue Letters of
Credit hereunder at the request of the Borrower Representative and for its
account, as more specifically described below. The Agent shall not be obligated
to cause the Issuing Bank to issue any Letter of Credit if:
(a) issuance of the requested Letter of Credit (i) would cause the
Letter of Credit Obligations then outstanding to exceed $6,000,000, or
(ii) would cause the sum of the Revolving Loans plus the Letter of Credit
Obligations then outstanding to exceed the lesser of (x) the Line of
Credit then in effect and (y) the Borrowing Base then in effect; or
(b) issuance of the Letter of Credit is enjoined, restrained or
prohibited by any Governmental Authority, Requirement of Law or any
request or directive of any Governmental Authority (whether or not having
the force of law) or would impose upon the Agent or the Issuing Bank any
material restriction, reserve, capital requirement, loss, cost or expense
(for which the Agent or the Issuing Bank is not otherwise compensated) not
in effect or known as of the Effective Date.
3.2 TERMS OF LETTERS OF CREDIT. The proposed terms and conditions, and
form of each Letter of Credit (and of any drafts thereunder) shall be subject to
approval by the Issuing Bank. All Letters of Credit shall be issued on a sight
basis. No Letter of Credit shall have an expiry date later than five (5)
Business Days prior to the Expiration Date; provided, however, that any Issuing
Bank may, but shall not be obligated to, issue Letters of Credit having terms
not
22
exceeding ninety (90) days beyond the Expiration Date, so long as such Letters
of Credit are collateralized by cash in an amount equal to 110% of the face
amount of all such Letters of Credit as of the date of issuance. No Letter of
Credit shall be issued in a currency other than U.S. Dollars.
3.3 NOTICE OF ISSUANCE. A request for issuance of a Letter of Credit in
the form of Exhibit G (a "Letter of Credit Request") must be given by the
Borrower Representative in writing (or by facsimile transmission) to the Agent
and the Issuing Bank no later than 1:00 P.M. Chicago time, at least four (4)
Business Days (or such shorter period as may be agreed to by the Issuing Bank)
in advance of the proposed date of issuance. Upon issuance of any standby Letter
of Credit or amendment thereto, the Issuing Bank shall notify the Borrower
Representative and the Agent, in writing, of such issuance or amendment, and
such notice must be accompanied by a copy of such issuance or amendment. Upon
receipt of such notice, the Agent shall notify each Lender, in writing of such
issuance or amendment, and if so requested by a Lender the Agent shall provide
such Lender with a copy of such issuance or amendment. With respect to
commercial Letters of Credit, Issuing Bank shall promptly after the issuance or
amendment to any such letter of credit notify the Borrower Representative and
the Agent, in writing of such issuance or amendment and such notice shall be
accompanied by a copy of such issuance or amendment. On the first Business Day
of each week, the Issuing Bank shall provide the Agent, by facsimile, with a
report detailing the daily aggregate commercial Letters of Credit outstanding
for the previous week.
3.4 LENDERS' PARTICIPATION. Immediately upon issuance or amendment of any
Letter of Credit, each Lender shall be deemed to have irrevocably and
unconditionally purchased and received from the Issuing Bank, without recourse
or warranty, an undivided interest and participation in all rights and
obligations under such Letter of Credit (other than fees and other amounts owing
to the Issuing Bank) in accordance with such Lender's Proportionate Share.
3.5 PAYMENTS OF AMOUNTS DRAWN UNDER LETTERS OF CREDIT. The Agent shall
notify the Borrower Representative of the receipt by the Agent of notice from
the Issuing Bank of a draft or other presentation for payment or drawing under a
Letter of Credit not later than 11:00 A.M. Chicago time on the Business Day
immediately prior to the date on which the Issuing Bank intends to honor such
drawing. Unless the procedures set forth in Section 9.2(c) shall be applicable,
the Borrower Representative shall be deemed to have concurrently given a Notice
of Borrowing to the Agent to make a Revolving Loan in the amount of and at the
time of such drawing, the proceeds of which shall be applied directly by the
Agent to reimburse the Issuing Bank for the amount of such drawing.
3.6 PAYMENT BY LENDERS. If a Revolving Loan is not made in an amount
sufficient to reimburse the Issuing Bank in full for the amount of any draw
under a Letter of Credit, the Agent shall promptly notify each Lender of the
unreimbursed amount of such drawing and of such Lender's respective
participation therein. Each Lender shall make available to the Agent, for the
account of the Issuing Bank, the amount of its participation in immediately
available funds not later than 1:00 P.M. Chicago time on the next Business Day
after such Lender receives notice from the Agent of the amount of such Lender's
participation in such unreimbursed amount. If any Lender fails to make available
to the Agent the amount of such Lender's
23
participation, the Issuing Bank shall be entitled to recover such amount on
demand from such Lender together with interest at the Federal Funds Rate for the
first three Business Days and thereafter at the Prime Lending Rate. For each
Letter of Credit, the Agent shall promptly distribute to each Lender which has
funded the amount of its participation its Proportionate Share of all payments
subsequently received by the Agent from the Borrower in reimbursement of honored
drawings.
3.7 OBLIGATIONS ABSOLUTE. The obligations of the Borrowers to reimburse
the Lenders under Section 3.6 shall be unconditional and irrevocable and shall
be paid strictly in accordance with the terms of this Credit Agreement under all
circumstances including, without limitation, upon the occurrence and during the
continuance of an Event of Default.
3.8 AGENT'S EXECUTION OF APPLICATIONS AND OTHER ISSUING BANK
DOCUMENTATION: RELIANCE ON CREDIT AGREEMENT BY ISSUING BANK. The Agent shall be
authorized to execute, deliver and perform on behalf of the Lenders such letter
of credit applications, shipping indemnities, letter of credit modifications and
consents and other undertakings for the benefit of the Issuing Bank as may be
reasonably necessary or appropriate in connection with the issuance or
modification of Letters of Credit requested by the Borrower hereunder. The
Lenders, the Agent and the Borrowers all expressly agree that the terms of this
Article 3 and various other provisions of this Credit Agreement identifying the
Issuing Bank are also intended to benefit the Issuing Bank and the Issuing Bank
shall be entitled to enforce the provisions hereof which are for its benefit.
3.9 EXISTING LETTERS OF CREDIT. Each of those Letters of Credit described
on Schedule B, Part 3.9 (each such letter of credit an "Existing Letter of
Credit") attached hereto issued pursuant to the Prior Credit Agreement shall be
deemed for all purposes of this Agreement to be a Letter of Credit. On the
Effective Date, the Agent shall be deemed automatically to have sold and
transferred, and each other Lender shall be deemed automatically, irrevocably
and unconditionally to have purchased and received from the issuing bank,
without recourse or warranty, an undivided interest and participation (on the
terms set forth herein) to the extent of such Lender's proportionate share, in
each Existing Letter of Credit and the applicable reimbursement obligations with
respect thereto and any security therefore or guarantee pertaining thereto;
provided, however, that the Existing Letters of Credit shall not be deemed to be
DIP Indebtedness for purposes of this Agreement and the Order.
ARTICLE 4
COMPENSATION, REPAYMENT
AND REDUCTION OF COMMITMENTS
4.1 INTEREST ON REVOLVING LOANS.
(a) Interest on the unpaid principal amount of Revolving Loans which
are Prime Rate Loans shall be payable monthly in arrears, on the first
Business Day of each month, at an interest rate per annum equal to the
Prime Lending Rate plus one and three-
24
quarters percent (1.75%) calculated on the net balances owing to the Agent
and the Lenders at the close of business each day during such month. The
rate hereunder shall change each day the Prime Lending Rate changes.
(b) Interest on Revolving Loans which are LIBOR Rate Loans shall be
payable on the last day of each Interest Period (provided, that in the
case of any LIBOR Rate Loan having an Interest Period of six (6) months,
such interest shall be payable on the ninetieth day occurring in such
Interest Period and on the last day of such Interest Period) with respect
to such LIBOR Rate Loans, at the date of conversion of such LIBOR Rate
Loans (or a portion thereof) to a Prime Rate Loan and at maturity of such
LIBOR Rate Loans at an interest rate per annum equal during the Interest
Period for such LIBOR Rate Loans to the LIBOR Rate for the Interest Period
in effect for such LIBOR Rate Loans plus the LIBOR Rate Margin. After
maturity of such LIBOR Rate Loans (whether by acceleration or otherwise),
interest shall be payable upon demand. The Agent upon determining the
LIBOR Rate for any Interest Period shall promptly notify the Borrower and
the Lenders by telephone (confirmed promptly in writing) or in writing
thereof. Each determination by the Agent of an interest rate hereunder
shall be conclusive and binding for all purposes, absent demonstrable
error.
(c) Notwithstanding the provisions of Sections 4.1(a) and (b), the
Borrower shall pay to each Lender, so long as and to the extent such
Lender shall be required under regulations of the Board of Governors of
the Federal Reserve System to maintain reserves with respect to
liabilities or assets consisting of or including Eurocurrency Liabilities,
additional interest on the unpaid principal amount of each Revolving Loan
comprised of LIBOR Rate Loans of such Lender, from the date of such LIBOR
Rate Loan until such principal amount is paid in full, at an interest rate
per annum equal at all times to the remainder obtained by subtracting (a)
the LIBOR Rate for the applicable Interest Period for such LIBOR Rate Loan
from (b) the rate obtained by dividing such LIBOR Rate by a percentage
equal to 1 minus the stated maximum rate (stated as a decimal) applicable
two (2) Business Days before the first day of such Interest Period of all
reserves, if any, required to be maintained against "Eurocurrency
liabilities" as specified in Regulation D (or against any other category
of liabilities which includes deposits by reference to which the interest
rate on LIBOR Rate Loans is determined or any category of extensions of
credit or other assets which includes loans by a non-United States office
of any Lender to United States residents) having a term equal to the
Interest Period applicable to such LIBOR Rate Loan. Such Lender shall as
soon as practicable provide notice to the Agent and the Borrower of any
such additional interest arising in connection with such LIBOR Rate Loan,
which notice shall be conclusive and binding, absent demonstrable error.
(d) Notwithstanding the provisions of Sections 4.1(a) and (b),
interest on Revolving Loans outstanding against the Tranche B Availability
shall be calculated at a rate per annum equal to eleven and one-half
percent (11.5%).
(e) Notwithstanding anything contained herein to the contrary,
Borrowers shall not be entitled to request, and the Lenders shall not be
obligated to make, any Libor
25
Rate Loans. Only those Revolving Loans outstanding under the Prior Credit
Agreement which are Libor Rate Loans, and for which the applicable
Interest Period has not yet expired as of the Effective Date shall be
subject to the terms and provisions with respect to Libor Rate Loans
contained herein. Upon the expiration of any Interest Period with respect
to any Libor Rate Loans outstanding under the Prior Credit Agreement, such
loans shall thereafter automatically convert to Prime Rate Loans.
4.2 UNUSED LINE FEE. The Borrowers shall pay to the Agent, for the ratable
benefit of the Lenders, a non-refundable fee (the "Unused Line Fee") equal to
three-eighths of one percent (.375%) per annum of the unused portion of the Line
of Credit. The Unused Line Fee shall accrue daily from the Effective Date until
the Expiration Date, and shall be due and payable monthly in arrears, on the
first Business Day of each month and on the Expiration Date. The aggregate
undrawn face amount of Letters of Credit shall constitute use of the Line of
Credit for purposes of calculating the Unused Line Fee.
4.2.1 CLOSING FEE. On the Effective Date, the Lenders shall be
entitled to a Closing Fee in the amount of $500,000, which shall be fully
earned, and $100,000 of which shall be due and owing, on the Effective Date, and
the balance of which shall be due and owing on the Expiration Date.
4.3 LETTER OF CREDIT FEES.
(a) The Agent, for the ratable benefit of the Lenders, shall be
entitled to charge to the account of the Borrowers, in arrears, on the
first Business Day of each month, a fee (the "Letter of Credit Fee"), in
an amount equal to (i) two and three-quarters percent (2.75%) per annum of
the daily undrawn amount of Letters of Credit (other than commercial
(trade) Letters of Credit) outstanding during the immediately preceding
month, and (ii) one and three-quarters percent (1.75%) per annum of the
daily undrawn amount of commercial (trade) Letters of Credit outstanding
during the immediately preceding month.
(b) The Agent shall also be entitled to charge to the account of the
Borrower, as and when incurred by the Agent or any Lender, the customary
charges, fees, costs and expenses charged to the Agent or any Lender for
the Borrower's account by any Issuing Bank (the "Issuing Bank Fees") in
connection with the issuance, transfer, drawing, amendment or negotiation
of any Letters of Credit by the Issuing Bank. Each determination by the
Agent of Letter of Credit Fees, Issuing Bank Fees and other fees, costs
and expenses charged under this Section shall be conclusive and binding
for all purposes, absent manifest error.
4.4 INTEREST AND LETTER OF CREDIT FEES AFTER EVENT OF DEFAULT. From the
date of occurrence of an Event of Default until the earlier of the date upon
which (i) all Obligations shall have been paid and satisfied in full or (ii)
such Event of Default shall have been waived, interest on the Revolving Loans
and Letter of Credit Fees on Letter of Credit Obligations shall each be payable
on demand as a rate per annum equal to, with respect to the Revolving Loans, the
rate in effect under Section 4.1, plus two percent (2%) (the "Default Rate"),
and with respect to the
26
Letter of Credit Obligations, the rate at which Letter of Credit Fees are
charged pursuant to the first sentence of Section 4.3(a), plus two percent (2%).
4.5 EXPENSES. The Borrowers shall reimburse the Expenses of the Agent, or
any Lender, as the case may be, promptly upon demand.
4.6 MANDATORY PAYMENT; REDUCTIONS OF COMMITMENTS.
(a) Except during the period described in Section 2.2(b)(ii), the
aggregate outstanding principal amount of Revolving Loans plus Letter of
Credit Obligations at any time in excess of the lesser at such time of (i)
the Borrowing Base and (ii) the Line of Credit, shall be immediately due
and payable without the necessity of any demand.
(b) On the Expiration Date, the Commitment of each Lender shall
automatically reduce to zero (-0-) and may not be reinstated.
(c) The Borrowers may reduce or terminate the Line of Credit at any
time and from time to time in whole or in part; provided, that each such
reduction must be in an amount not less than $500,000 (and in increments
of $500,000 in excess thereof). Once reduced, no portion of the Line of
Credit may be reinstated.
(d) If any Borrower shall make any sale or distribution of any
assets pursuant to Section 8.6(ii) hereof, the Borrowers shall prepay the
outstanding balance of the Revolving Loans at the time of such sale or
disposition from the proceeds thereof in an amount equal to the lesser of
(i) the Revolving Loans then outstanding or (ii) the Net Cash Proceeds
received in connection with such sale or disposition, except that, with
respect to any prepayment required as a result of the receipt by the
Borrowers of Net Cash Proceeds from the sale or other transfer of
Inventory under the Agency Agreement described in Section 5.1(g) hereof,
the amount thereof shall be limited to that portion of the Net Cash
Proceeds equal the Revolving Loans outstanding against such Inventory. Any
prepayments required to be made under this subsection (d) shall constitute
a permanent reduction of the Line of Credit.
(e) If Florsheim shall receive any payments on the intercompany
indebtedness owing to it from Florsheim Australia Limited, Florsheim shall
prepay the outstanding balance of the Revolving Loans at the time of the
receipt of such payment in an amount equal to the lesser of (i) the
Revolving Loans then outstanding, or (ii) the amount of any payment
received with respect to such intercompany indebtedness. Any prepayments
required to be made under this subsection (e) shall not constitute a
permanent reduction of the Line of Credit.
(f) On or before the Business Day immediately following their
receipt of amounts representing a reversion or distribution in connection
with the termination of the Florsheim 401(k) Trust as contemplated by
Section 7.16, the Borrowers shall prepay the Revolving Loans in an amount
equal to the Net Reversion Amount. Any such prepayment shall be a
permanent reduction of the Line of Credit.
27
4.7 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF ACCOUNT. The Agent shall
maintain an account on its books in the name of Florsheim (the "Loan Account")
in which the Borrowers will be charged with all loans and advances made by the
Lenders to the Borrowers or for the account of the Borrowers, including the
Revolving Loans, and all Letter of Credit Obligations, the Fees, the Expenses
and any other Obligations, as and when such payments become due. The Loan
Account will be credited with all payments received by the Agent from the
Borrowers or for the account of the Borrowers, including all amounts received in
the BT Account from the Lockbox and Collection Banks. After the end of each
month, the Agent shall send the Borrower Representative a monthly statement
accounting for the charges, loans, advances and other transactions occurring
among and between the Agent, the Lenders and the Borrowers during that month,
provided, that the failure of the Agent to send such statement to the Borrower
Representative shall not relieve the Borrowers of any Obligations. Absent
manifest error, each monthly statement shall be an account stated and shall be
final, conclusive and binding on the Borrowers, unless Agent receives a written
statement of the Borrowers' exceptions thereto within sixty (60) days after any
such monthly statement is mailed.
4.8 PAYMENT PROCEDURES. Payments of principal, interest, Fees and Expenses
shall be made not later than 2:00 P.M. Chicago time on the day when due, in
immediately available dollars, to the offices of the Agent, at the address set
forth in Section 11.7, or as the Agent may otherwise direct the Borrowers. The
Borrowers hereby authorize the Agent to charge the Loan Account with the amount
of all payments to be made hereunder and under the other Credit Documents,
including all Fees and Expenses, as and when such payments become due. The
obligation of the Borrowers to the Lenders with respect to such payments shall
be discharged by making such payments to the Agent pursuant to this Section or
by the charging of the Loan Account by the Agent.
4.9 COLLECTION OF ACCOUNTS. Until instructed otherwise by the Agent, the
Borrowers shall be entitled to receive Collections directly from retail
customers and deposit such Collections in local depository banks in accordance
with its historical practices. The Borrowers, the Agent and financial
institutions selected by Florsheim and acceptable to the Agent (the "Collection
Banks") have previously entered into agreements with respect to such accounts
acceptable to Agent in connection with the Prior Credit Agreement (and shall
enter into such additional agreements as Agent shall reasonably request with
respect thereto) (the "Depositary Account Agreements"), which among other things
shall provide for the opening of an account for the deposit of Collections (a
"Collection Account") at a Collection Bank. All Collections and other amounts
received by the Borrowers from any retail customer, in addition to all other
cash received from any other Collateral, shall upon receipt be deposited
directly into a Collection Account, or into a local depository bank which shall
be instructed to make daily transfers of all collected amounts to a Collection
Account. Termination of such arrangements shall also be subject to approval by
the Agent. Upon the terms and subject to the conditions set forth in the
Depositary Account Agreements, all available amounts held in each Collection
Account shall be wired each Business Day into an account (the "BT Account")
maintained by the Agent at Bankers Trust Company/Deutsche Bank. Amounts received
in the BT Account from the Collection Banks shall be credited to the Loan
Account and distributed and applied as set forth in Section 4.10.
28
The Borrowers shall at all times maintain lockboxes ("Lockboxes") and
shall instruct all wholesale account debtors on the Accounts of the Borrowers to
remit all Collections therefrom to the Lockboxes. The Borrowers, the Agent and
financial institutions selected by Florsheim and acceptable to the Agent (the
"Lockbox Banks") have previously entered into agreements with respect to such
Lockboxes acceptable to Agent in connection with the Prior Credit Agreement (and
shall enter into such additional agreements as Agent shall reasonably request
with respect thereto) (the "Lockbox Agreements"), which among other things shall
provide for the opening of an account for the deposit of all such Collections (a
"Lockbox Account") at a Lockbox Bank. All such Collections and other amounts
received by the Borrowers from any wholesale account debtor, in addition to all
other cash received from any other source shall upon receipt be deposited into a
Lockbox Account. Termination of such arrangements shall also be subject to
approval by the Agent. Upon the terms and subject to the conditions set forth in
the Lockbox Agreements, all available amounts held in each Lockbox Account shall
be wired each Business Day into the BT Account. Amounts received in the BT
Account from the Lockbox Banks shall be credited to the Loan Account and
distributed and applied as set forth in Section 4.10.
4.10 DISTRIBUTION AND APPLICATION OF COLLECTIONS AND OTHER AMOUNTS.
Subject to the provisions of the Order, including, without limitation, Paragraph
15 thereof, all Collections received by the Agent, and all other amounts
received by the Borrowers from any account debtor, or from the proceeds of any
Collateral and delivered to the Agent, shall be credited to the Loan Account,
unless an Event of Default has occurred and is continuing, in which case such
Collections and other amounts shall be distributed and applied in the following
order: first, to the payment of any Fees, Expenses or other Obligations due and
payable to the Agent under any of the Credit Documents, including Agent Advances
and any other amounts advanced by the Agent on behalf of the Lenders; second, to
the payment of any Fees, Expenses or other Obligations due and payable to the
Issuing Bank under any of the Credit Documents; third, to the ratable payment of
any Fees, Expenses or other Obligations due and payable to the Lenders under any
of the Credit Documents other than those Obligations specifically referred to in
this Section; fourth, to the ratable payment of interest due on the Revolving
Loans; and, fifth, to the ratable payment of principal due on the Revolving
Loans. Notwithstanding the foregoing, any distributions for the ratable payment
of interest and principal on the Revolving Loans shall be made by the Agent as
if no Tranche B Availability Revolving Loans were outstanding, to the effect
that all interest and principal on all other outstanding loans shall be paid
prior to the payment of interest and principal on any Revolving Loans
outstanding against Tranche B Availability.
4.11 CALCULATIONS. All calculations of (i) interest hereunder and (ii)
Fees, including, without limitation, Unused Line Fees and Letter of Credit Fees,
shall be made by the Agent, on the basis of a year of 360 days, or, if such
computation would cause the interest and fees chargeable hereunder to exceed the
Highest Lawful Rate, 365/366 days, in each case for the actual number of days
elapsed (including the first day but excluding the last day) occurring in the
period for which such interest or Fees are payable. Each determination by the
Agent of an interest rate, Fee or other payment hereunder shall be conclusive
and binding for all purposes, absent manifest error.
29
4.12 INDEMNIFICATION IN CERTAIN EVENTS.
(a) INCREASED COSTS. If after the Effective Date, either (i) any
change in or in the interpretation of any law or regulation is introduced,
including, without limitation, with respect to reserve requirements
applicable to the Agent, to any of the Lenders, Bankers Trust
Company/Deutsche Bank or any other banking or financial institution from
whom any of the Lenders borrows funds or obtains credit (a "Funding
Bank"), or (ii) the Agent, a Funding Bank or any of the Lenders complies
with any future guideline or request from any central bank or other
Governmental Authority proposed or promulgated after the date of the
Agreement or (iii) the Agent, a Funding Bank or any of the Lenders
determines that the adoption of any applicable law, rule or regulation
regarding capital adequacy or any change therein, or any change in the
interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof announced after the date of this Credit Agreement
has or would have the effect described below, or the Agent, a Funding Bank
or any of the Lenders complies with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency announced after the date of
this Credit Agreement and in the case of any event set forth in this
clause (iii), such adoption, change or compliance has or would have the
direct or indirect effect of reducing the rate of return on any of such
Person's capital as a consequence of its obligations hereunder to a level
below that which such Person could have achieved but for such adoption,
change or compliance (taking into consideration such Person's policies
with respect to capital adequacy) by an amount deemed by such Person to be
material, and any of the foregoing events described in clauses (i), (ii)
or (iii) increases the cost to the Agent, or any of the Lenders of (A)
funding or maintaining its Commitments or (B) issuing, causing the
issuance of making or maintaining any Letter of Credit or of purchasing or
maintaining any participation therein, or reduces the amount receivable in
respect thereof by the Agent or any Lender, then the Borrowers shall upon
demand by the Agent at any time within thirty (30) days after the date on
which an officer of the Agent, such Funding Bank or such Lender, as the
case may be, responsible for overseeing this Credit Agreement knows or has
reason to know of its right to additional compensation under this Section
4.12(a), pay to the Agent, for the account of such Lender or, as
applicable, the Agent or a Funding Bank, additional amounts sufficient to
reimburse the Agent, such Funding Bank and such Lender against such
increase in cost or reduction in amount receivable; provided, however,
that if the Agent or any such Lender or Funding Bank, as the case may be,
fails to deliver such demand within such thirty 30 day period, such entity
shall only be entitled to additional compensation for any such costs
incurred from and after the date that is thirty (30) days prior to the
date the Borrower Representative receives such demand; and provided
further, however, that before making any such demand, the Agent and each
Lender agree to use reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions) to designate a different
Applicable Lending Office if the making of such a designation would avoid
the need for, or reduce the amount of, such increased cost and would not,
in the reasonable judgment of such Lender, be otherwise disadvantageous to
such Lender. A certificate as to the amount of such increased cost, and
setting forth in reasonable detail the calculation thereof, shall be
submitted to the
30
Borrower Representative by the Agent, or the applicable Lender or Funding
Bank, and shall be conclusive absent demonstrable error.
Each Lender will promptly notify the Borrower Representative and the Agent, and
the Agent will promptly notify the Borrower Representative, of any event of
which it has knowledge that would entitle such entity to additional compensation
under this Section 4.12. Neither the Agent nor any Lender shall request any
additional compensation under this Section 4.12 unless it is generally making
similar requests of other borrowers similarly situated, and the Agent and each
Lender agrees to use a reasonable basis for calculating amounts allocable to its
commitment to lend or its Revolving Loans and Letter of Credit obligations
hereunder.
ARTICLE 5
CONDITIONS PRECEDENT
5.1 CONDITIONS PRECEDENT TO THE CREDIT AGREEMENT. This Credit Agreement is
subject to the satisfaction or waiver of the following conditions precedent:
(a) CLOSING DOCUMENT LIST. The Agent and the Lenders shall have
received each of the agreements, opinions, reports, approvals, consents,
certificates and other documents set forth on the closing document list
attached hereto as Schedule A (the "Closing Document List").
(b) MATERIAL ADVERSE CHANGE. (i) No event shall have occurred which
has had or could reasonably be expected to have a Material Adverse Effect;
or (ii) there shall not have occurred a substantial impairment of the
financial markets generally that is reasonably likely to materially and
adversely affect the transactions contemplated hereby, in each case as
determined solely by the Agent in its reasonable discretion.
(c) FEES AND EXPENSES. All Fees and Expenses payable by the Borrower
hereunder on or before the Effective Date shall have been paid in full.
(d) BUDGET. Florsheim shall have delivered to the Agent the Approved
Budget, certified by the Chief Financial Officer, Chief Accounting Officer
or Treasurer of Florsheim, which includes the Borrowers' projections of
the anticipated cash receipts to be received during the period subject to
the Budget.
(e) ORDER. The applicable Order shall have been entered and become
effective.
(f) PURCHASE AGREEMENT. Florsheim and the Borrowers shall have
entered into an Asset Purchase Agreement with WEYCO Group, Inc. (the
"Purchase Agreement") substantially on the terms and conditions previously
disclosed to Agent and Lenders, and otherwise acceptable to Agent and
Lenders in their sole discretion.
31
(g) AGENCY AGREEMENT. Florsheim shall have entered into an Agency
Agreement with Great American Group substantially on the terms and
conditions previously disclosed to Agent and Lenders, and otherwise
acceptable to Agent and Lenders in their sole discretion.
5.2 CONDITIONS PRECEDENT TO ALL REVOLVING LOANS AND LETTERS OF CREDIT. The
obligation of each Lender to fund its Proportionate Share of any requested
Revolving Loan or of the Issuing Bank to issue any requested Letter of Credit is
subject to the satisfaction of the conditions precedent set forth below. Each
Notice of Borrowing, each Letter of Credit Request, and each issuance by
Florsheim of a check drawn against, or request for transfer from, the
Disbursement Account shall constitute a representation and warranty by the
Borrowers that such conditions are satisfied.
(a) All representations and warranties contained in this Credit
Agreement and the other Credit Documents are true and correct in all
material respects on and as of the date of such Notice of Borrowing,
Letter of Credit Request or issuance of a check drawn against or request
for transfer from the Disbursement Account, as if then made, other than
representations and warranties that relate solely to a date other than the
date of such Notice of Borrowing, Letter of Credit Request or issuance of
a check drawn against or request for transfer from the Disbursement
Account; and
(b) No Default or Event of Default shall have occurred and be
continuing or could reasonably be expected to result from the making of
the requested Revolving Loan or the issuance of the requested Letter of
Credit, which has not been waived.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Lenders to enter into this Credit Agreement
and to induce the Lenders to make the Revolving Loans and other financial
accommodations described herein, the Borrowers hereby represent and warrant to
the Agent and the Lenders that the representations and warranties contained in
this Article 6 are true and correct in all material respects. Such
representations and warranties, and all other representations and warranties
made by the Borrowers in any other Credit Documents, shall survive the execution
and delivery of this Credit Agreement and such other Credit Documents. All
references in this Article 6 to "Subsidiaries" shall not include any Foreign
Subsidiaries of any of the Borrowers. Notwithstanding the foregoing, from and
after the Effective Date of this Agreement, the representations and warranties
of the Borrowers set forth herein are subject to those matters disclosed by the
Borrowers to Agent and the Lenders in various communications in connection with
the Bankruptcy Filing, and Section 6.13 hereof shall not apply to the Borrowers,
or any obligation incurred by any of them, prior to the Bankruptcy Filing, and
said Section shall be subject to applicable bankruptcy law, the Order, and any
further orders entered by the Court.
32
6.1 ORGANIZATION AND QUALIFICATION. Each of the Borrowers and each of
their respective Subsidiaries (i) are corporations duly organized, validly
existing and in good standing under the laws of the respective states of their
incorporation, (ii) have the power and authority to own their respective
properties and assets and to transact their respective businesses in which they
presently are, or propose to be, engaged and (iii) are duly qualified and are
authorized to do business and are in good standing in every jurisdictions in
which the failure to be so authorized, qualified, or in good standing could
reasonably be expected to have a Material Adverse Effect. As of the date of this
Credit Agreement, Schedule B, Part 6.1 lists all jurisdictions in which the
Borrowers and each of their respective Subsidiaries are qualified to do business
as foreign corporations.
6.2 AUTHORITY. Each of the Borrowers and each of their respective
Subsidiaries have the requisite corporate power and authority to execute,
deliver and perform the respective Credit Documents to which they are parties.
All corporate action necessary for the execution, delivery and performance of
any of the Credit Documents by the Borrowers and each of their Subsidiaries has
been taken.
6.3 ENFORCEABILITY. This Credit Agreement and each of the other Credit
Documents are the legal, valid and binding obligations of the Borrowers and each
of their Subsidiaries which are parties thereto, enforceable in accordance with
their respective terms, except as such enforceability may be limited by (i)
bankruptcy, insolvency or similar laws affecting creditors' rights generally,
and (ii) general principles of equity.
6.4 NO CONFLICT. The execution, delivery and performance of each Credit
Document by the Borrowers and each of their Subsidiaries which are parties
thereto are not in contravention of (i) the Governing Documents of such Persons,
or (ii) any Requirement of Law, or (iii) any indenture, contract, agreement or
instrument or other commitment to which any or all of such Persons are parties
or by which any of such Persons or any of its properties are bound, except for
any such contravention which could not reasonably be expected to have a Material
Adverse Effect, and will not, except as contemplated herein, result in the
imposition of any material Liens upon any of the properties of any of such
Persons.
6.5 CONSENTS AND FILINGS. No consent, authorization, permit or filing is
required in connection with the execution, delivery and performance of this
Credit Agreement or any Credit Document by the Borrowers and each of their
Subsidiaries which are parties thereto, or in connection with the continuing
operations of such Persons, the lack of which could reasonably be expected to
have a Material Adverse Effect, except (i) those that have been obtained or made
(including, without limitation, the approval of the Court under the Order) and
(ii) filings necessary to create, perfect or retain the perfection of Liens
against the Collateral.
6.6 GOVERNMENT REGULATION. None of the Borrowers nor any of their
respective Subsidiaries are subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act,
the Investment Company Act of 1940, or any other similar Requirement of Law that
limits the respective abilities of such Persons to incur indebtedness or
consummate the transactions contemplated in this Credit Agreement and the other
Credit Documents.
33
6.7 [INTENTIONALLY DELETED]
6.8 RIGHTS IN COLLATERAL; PRIORITY OF LIENS. All property constituting
Collateral is owned or leased by the applicable Borrower, free and clear of any
and all Liens in favor of third parties, other than Permitted Liens. The
security interests granted pursuant to the Credit Documents constitute valid and
enforceable first, prior (subject to Permitted Liens) and perfected Liens on the
Collateral, to the extent such Liens can be perfected by the filing of such
documents, or are otherwise deemed perfected by the terms of the Order and
applicable bankruptcy law.
6.9 FINANCIAL DATA. Florsheim has provided to the Agent complete and
accurate copies of annual audited Financial Statements for the Consolidated
Entity for the fiscal year ended December 29, 2000 and unaudited Financial
Statements for the eleven-month fiscal period ended November 30, 2001. Such
Financial Statements have been prepared in accordance with GAAP (as applicable
to annual and interim statements respectively) consistently applied and fairly
present the respective consolidated financial positions, results of operations
and cash flows of the Consolidated Entity for each of the periods covered
(subject, in the case of unaudited Financial Statements, to normal year-end
adjustments) as of the date of such Financial Statement. As of the date of this
Credit Agreement, the Consolidated Entity has no Contingent Obligation, or
liability for taxes or long-term leases, which is not reflected in all material
respects in such Financial Statements or the footnotes thereto, or is not
otherwise disclosed on Schedule B, Part 6.9.
6.10 LOCATIONS OF OFFICES, RECORDS AND INVENTORY. The address of the
principal place of business and chief executive office of each of the Borrowers
is set forth on Schedule B, Part 6.10, as the same may be amended after the
Effective Date in accordance with Section 11.11. The books and records of each
Borrower, and all its chattel paper, if any, and records of Accounts, are
maintained exclusively at the location identified on Schedule B, Part 6.10.
There is no jurisdiction in which any Borrower has any Collateral (except for
vehicles and Inventory in transit) other than those jurisdictions identified on
Schedule B, Part 6.10, as the same may be amended after the Effective Date in
accordance with Section 11.11. A complete list of the legal name and address of
each warehouse at which Inventory of any Borrower is stored as of the date of
this Credit Agreement is set forth on Schedule B, Part 6.10, as the same may be
amended after the Effective Date in accordance with Section 11.11. None of the
receipts received and to be received by any Borrower from any warehouseman state
that the Inventory covered thereby is to be delivered to bearer or to the order
of a named Person or to a named Person and such named Person's assigns, in each
case other than any Borrower.
6.11 SUBSIDIARIES; OWNERSHIP OF STOCK. As of the Effective Date, except as
otherwise expressly disclosed on Schedule B, (i) the only direct or indirect
Subsidiaries of Florsheim are those listed on Schedule B, Part 6.11, (ii)
Florsheim is the record and beneficial owner of all of the respective shares of
capital stock of each of its Subsidiaries listed on Schedule B, Part 6.11 (other
than directors' qualifying shares, if any, for Subsidiaries that are not
Borrowers), (iii) there are no proxies, irrevocable or otherwise, with respect
to such shares, and no equity securities of any of such Subsidiaries are or may
become required to be issued by reason of any options, warrants, scrip, rights
to subscribe to, calls or commitments of any
34
character whatsoever relating to, or securities or rights convertible into or
exchangeable for, shares of any capital stock of any such Subsidiary, and (iv)
there are no contracts, commitments, understandings or arrangements by which any
such Subsidiary is or may become bound to issue additional shares of its capital
stock or securities convertible into or exchangeable for such shares. All of
such shares so owned by Florsheim are owned by Florsheim free and clear of any
Liens, other than Liens in favor of the Agent created pursuant to the Credit
Documents.
6.12 NO JUDGMENTS OR LITIGATION. Except as set forth on Schedule B, Part
6.12, no judgments, orders, writs or decrees are outstanding against any
Borrower or any of its Subsidiaries, nor is there now pending or, to the best of
any Borrower's knowledge after diligent inquiry, threatened, any litigation,
contested claim, investigation, arbitration, or governmental proceeding by or
against such Borrower or any of its Subsidiaries, which, in either case, could
reasonably be expected to have a Material Adverse Effect.
6.13 NO DEFAULTS. None of the Borrowers nor any of their respective
Subsidiaries is in default under any term of any indenture, contract, lease,
agreement, instrument or commitment to which any of them is a party or by which
any of them is bound, which default, individually or in the aggregate with any
other defaults, could reasonably be expected to have a Material Adverse Effect.
No Borrower knows of any dispute regarding any such indenture, contract, lease,
agreement, instrument or other commitment which dispute, individually or when
aggregated with other disputes, could reasonably be expected to have a Material
Adverse Effect.
6.14 LABOR MATTERS. Schedule B, Part 6.14 accurately sets forth all labor
contracts to which any Borrower or any of its Subsidiaries is a party as of the
Effective Date (including their dates of expiration). There are no existing or,
to the knowledge of any Borrower, threatened strikes, lockouts or other disputes
relating to any collective bargaining or similar agreement to which the
Borrowers or any of its Subsidiaries is a party, which individually, or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
6.15 COMPLIANCE WITH LAW. None of the Borrowers nor any of their
respective Subsidiaries has violated or failed to comply with any Requirements
of Law, including without limitation ERISA and environmental laws, except for
any such violations or failures which individually or in the aggregate could not
reasonably be expected to have a Material Adverse Effect.
6.16 ERISA. Schedule B, Part 6.16 accurately sets forth each Plan
maintained or contributed to by any Borrower, any Subsidiary or any ERISA
Affiliate as of the Effective Date. Except for violations or failures which
individually or in the aggregate could not reasonably be expected to have a
Material Adverse Effect, each Plan has been and is maintained and funded in all
material respects in accordance with its terms and in compliance with all
applicable provisions of ERISA and the Code, each Borrower, each Subsidiary of a
Borrower and each ERISA Affiliate has fulfilled in all material respects all
contribution obligations for each Plan to the extent required (including
obligations related to the minimum funding standards of ERISA and the Internal
Revenue Code). No Termination Event has occurred nor has any other event
occurred that may result in a Termination Event. None of the Borrowers, any of
their respective Subsidiaries, or any ERISA Affiliate, or any fiduciary of any
Plan is subject to any direct or
35
indirect liability with respect to any Plan under any Requirement of Law or
agreement, except for any such liabilities which individually or in the
aggregate could not reasonably be expected to have a Material Adverse Effect.
None of the Borrowers, any of their respective Subsidiaries or any ERISA
Affiliate, is required to provide security to any Plan under Section 401(a)(29)
of the Internal Revenue Code.
6.17 COMPLIANCE WITH ENVIRONMENTAL LAWS. Except as disclosed on Schedule
B, Part 6.17, and excluding any such matters which could not reasonably be
expected to have a Material Adverse Effect, (i) the operations of the Borrowers
and each of their respective Subsidiaries comply with all applicable federal,
state and local environmental, health and safety statutes, regulations,
directions, ordinances, criteria and guidelines; (ii) no Borrower has received
notice that any of the operations of such Borrower or any of its Subsidiaries is
the subject of any judicial or administrative proceeding alleging the violation
of any federal, state or local environmental, health or safety statute,
regulation, direction, ordinance, criteria or guideline; (iii) none of the
operations of the Borrowers or any of their respective Subsidiaries is the
subject of any federal or state investigation evaluating whether the Borrowers
or any of their respective Subsidiaries disposed of any hazardous or toxic
waste, substance or constituent or other substance at any site that may require
remedial action, or any federal or state investigation evaluating whether any
remedial action is needed to respond to a release of any hazardous or toxic
waste, substance or constituent or other substance into the environment; (iv)
none of the Borrowers nor any of their respective Subsidiaries has filed any
notice under any federal or state law indicating past or present treatment,
storage or disposal of a hazardous waste, substance or constituent or reporting
a spill or release of a hazardous or toxic waste, substance or constituent or
other substance into the environment; and (v) none of the Borrowers nor any of
their respective Subsidiaries has any contingent liability of which any Borrower
has knowledge, or reasonably should have knowledge, in connection with any
release or potential release of any hazardous or toxic waste, substance or
constituent or other substance into the environment, nor has any Borrower or any
of its Subsidiaries received any notice, letter or other indication of potential
liability arising from the disposal of any hazardous or toxic waste, substance
or constituent or other substance into the environment.
6.18 INTELLECTUAL PROPERTY. Florsheim possesses such assets, licenses,
patents, patent applications, copyrights, service marks, trademarks and trade
names as are necessary to continue to conduct its respective present business
activities of the Borrowers (including Florsheim) and their respective
Subsidiaries.
6.19 LICENSES AND PERMITS. The Borrowers and each of their respective
Subsidiaries have obtained and hold in full force and effect all franchises,
licenses, leases, permits, certificates, authorizations, qualifications,
easements, rights of way and other rights and approvals which are necessary for
the operation of their respective business as presently conducted, except where
the failure to obtain or hold in effect any of the foregoing, either
individually, or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
36
6.20 TAXES AND TAX RETURNS.
(a) Except as set forth on Schedule B, Part 6.20, the Borrowers and
their respective Subsidiaries have timely filed, inclusive of any
permitted extension, all United States federal income tax returns and all
other material tax returns they are required to file. The information
filed is complete and accurate in all material respects. All material
deductions taken in such income tax returns are appropriate and in
accordance with applicable laws and regulations, except deductions that
may have been disallowed but are being challenged in good faith and for
which adequate reserves have been made in accordance with GAAP).
(b) All taxes which have been assessed, other assessments, fees and
other governmental charges for periods beginning prior to the date hereof,
have been timely paid (except where the same are being challenged in good
faith and for which adequate reserves have been made in accordance with
GAAP) and neither the Borrowers nor any of their respective Subsidiaries
have any liability for taxes in excess of the amounts so paid or reserves
so established.
(c) Except as set forth in Schedule B, Part 6.20, no material
deficiencies for taxes have been claimed, proposed or assessed by any
taxing or other Governmental Authority against any Borrower or any of
their respective Subsidiaries and no material tax liens have been filed
other than Liens permitted under Section 8.4(i) of this Credit Agreement
of which the Agent has been notified in writing, and which are being
contested in good faith by appropriate proceedings, and appropriate
reserves therefor have been established and maintained as reflected on the
audited financial statements for Florsheim's fiscal year ended December
29, 2000 in accordance with GAAP, and to the extent such reserves are
maintained for period after November 30, 2001, consistent with the
Borrowers' past practice, and to the extent such Liens have been bonded in
a manner reasonably satisfactory to the Agent. As of the date of this
Credit Agreement and except as set forth in Schedule B, Part 6.20, there
are no pending or threatened audits, investigations or claims for or
relating to any liability for taxes and there are no matters under
discussion with any Governmental Authority which could reasonably be
expected to result in a material additional liability for taxes. As of the
date of this Credit Agreement, either the federal income tax returns of
the Borrowers have been audited by the Internal Revenue Service and such
audits have been closed, or the period during which any assessments may be
made by the Internal Revenue Service has expired without waiver or
extension for all years up to and including the fiscal year of the
Consolidated Entity ended December, 1997. As of the date of this Credit
Agreement, except as set forth in Schedule B, Part 6.20, no extension of a
statute of limitations relating to taxes, assessments, fees or other
governmental charges is in effect with respect to the Borrowers or any of
their respective Subsidiaries.
(d) Except as set forth on Schedule B, Part 6.20, none of the
Borrowers nor any of their respective Subsidiaries has any obligation
under any written tax sharing agreement or agreement regarding payments in
lieu of taxes.
6.21 MATERIAL CONTRACTS. Schedule B, Part 6.21, contains a true, correct
and complete list of all the Material Contracts currently in effect on the
Effective Date. As of the date of this
37
Credit Agreement and except as described on Schedule B, Part 6.21, none of the
Material Contracts contains any burdensome restrictions on the Borrower or any
of its Subsidiaries or any of their respective properties which could reasonably
be expected to have a Material Adverse Effect, all of the Material Contracts are
in full force and effect and no defaults currently exist thereunder.
6.22 ACCURACY AND COMPLETENESS OF INFORMATION. All factual information
furnished by or on behalf of the Borrowers or any of their respective
Subsidiaries in writing to the Agent, any Lender, or the Auditors for purposes
of or in connection with this Credit Agreement or any Credit Documents or any
transaction contemplated hereby or thereby is or will be true and accurate in
all material respects on the date as of which such information is dated or
certified and not incomplete by omitting to state any material fact necessary to
make such information not misleading at such time.
ARTICLE 7
AFFIRMATIVE COVENANTS
All references in this Article 7, except for Section 7.1, to
"Subsidiaries" shall not include any Foreign Subsidiaries of any Borrower.
Notwithstanding anything contained herein to the contrary, from and after the
Effective Date, the application of this Article 7 to the Borrowers shall in all
respects be subject to applicable bankruptcy law, the Order, and any further
orders entered by the Court. The failure by any of the Borrowers to comply with
any of the provisions of this Article 7 which are not applicable as a result of
the Bankruptcy Filing or which are stayed as a result thereof, shall not
constitute a Default or Event of Default hereunder. Until termination of this
Credit Agreement and payment and satisfaction of all Obligations due hereunder
(other than Letter of Credit Obligations with respect to Letters of Credit
expiring after the Expiration Date which have been cash collateralized pursuant
to the terms hereof):
7.1 FINANCIAL REPORTING. The Borrower shall timely deliver to each Lender
the following information:
(a) ANNUAL FINANCIAL STATEMENTS. As soon as available, but not later
than ninety (90) days after each fiscal year end: (i) the annual audited
consolidated, and if requested by Agent, unaudited consolidating,
Financial Statements of the Consolidated Entity; (ii) a comparison in
reasonable detail to the prior year annual audited and unaudited Financial
Statements; and (iii) the Auditors' opinion stating that such Financial
Statements present fairly in all material respects the financial position
of the Consolidated Entity and the results of its operations and cash
flows for such fiscal year in conformity with GAAP and otherwise reported
in a manner acceptable to the Securities Exchange Commission, accompanied
by a statement indicating whether the Auditors have obtained knowledge of
the existence of any Default or Event of Default during the course of
their audit.
38
(b) MONTHLY FINANCIAL STATEMENTS. As soon as available, but not
later than thirty (30) days after the end of each fiscal month: (i) a
balance sheet for the Consolidated Entity as at the end of such month and
for the fiscal year to date and statements of operations and cash flows
for such month and for the fiscal year to date; and (ii) a certification
by the chief financial officer, chief accounting officer or treasurer of
Florsheim that such balance sheet, statement of operations and statement
of cash flows have been prepared in accordance with GAAP for interim
financial statements.
7.2 COLLATERAL REPORTING. The Borrowers shall timely deliver to the Agent
the following certificates and reports:
(a) WEEKLY AND MONTHLY BORROWING BASE CERTIFICATES. Weekly, before
12:00 noon on the third Business Day of each week (except the last week of
each month), monthly, within five (5) Business Days after the last
Business Day of each month, and at any other time requested by the Agent,
a Borrowing Base Certificate, which shall be: (i) substantially in the
form of Exhibit A, detailing the Eligible Accounts Receivable as of each
Saturday of the immediately preceding week and, until otherwise directed
by the Agent, Eligible Inventory as of the last Business Day of the
immediately preceding month (if a weekly Borrowing Base Certificate), or
as of the last Business Day of the immediately preceding month (if a
monthly Borrowing Base Certificate), or as of such other date as the Agent
may request; and (ii) prepared by or under the supervision of the chief
financial officer, chief accounting officer or treasurer of Florsheim and
certified by such officer subject only to adjustment upon completion of
the normal annual audit of physical inventory. Each Borrowing Base
Certificate shall have attached to it such additional schedules and other
information as the Agent may reasonably request, including, without
limitation, an aging of Accounts.
(b) BUDGET COMPLIANCE. Weekly, before 12:00 noon on the third
Business Day of each week, a report setting forth the actual and budgeted
revenues, cash receipts and disbursements (broken down by category and
identifying any and all affiliate-related transactions) for the 7 day
period ending on the immediately preceding Saturday and for the period
from the first week of such Budget period through the immediately
preceding Saturday, together with any other report which Borrowers are
required to deliver to the Agent pursuant to the terms of the Order,
prepared by or under the supervision of the chief financial officer, chief
accounting officer or treasurer of Florsheim and certified by such
officer.
(c) FURTHER ASSURANCES. When requested by the Agent, any further
information regarding the Collateral, business affairs and financial
condition of the Borrowers or any of their respective Subsidiaries.
7.3 NOTIFICATION REQUIREMENTS. The Borrowers shall timely give to the
Agent and each of the Lenders the following notices:
(a) NOTICE OF DEFAULTS. Promptly, and in any event within three (3)
Business Days after becoming aware of the occurrence of a Default or Event
of Default, a
39
certificate of the chief financial officer , chief accounting officer or
treasurer of the effected Borrower specifying the nature thereof and the
proposed response of such Borrower thereto, each in reasonable detail.
(b) PROCEEDINGS OR ADVERSE CHANGES. Promptly, and in any event
within five (5) Business Days after such Borrower becomes aware of (i) any
proceeding being instituted or threatened to be instituted by or against
such Borrower or any of its Subsidiaries in any federal, state, local or
foreign court or before any commission or other regulatory body (federal,
state, local or foreign) in which (x) the amount in controversy exceeds
$3,000,000 and is not covered by insurance, or (y) injunctive or similar
relief is sought, (ii) any order, judgment or decree in excess of
$1,000,000 being entered against such Borrower or any of its Subsidiaries
or any of their respective properties or assets or (iii) any actual or
prospective change, development or event which has had or could reasonably
be expected to have a Material Adverse Effect, a written statement
describing such proceeding, order, judgment, decree, change, development
or event and any action being taken with respect thereto by such Borrower
or any such Subsidiary.
(c) ERISA NOTICES. (i) Promptly, and in any event within ten (10)
Business Days after any Borrower, any of its Subsidiaries or any ERISA
Affiliate knows or has reason to know that a Termination Event has
occurred, a written statement of the chief financial officer, chief
accounting officer, treasurer, secretary or assistant secretary of such
Borrower describing such Termination Event and any action that is being
taken with respect thereto by such Borrower, any such Subsidiary or ERISA
Affiliate, and any action taken or threatened by the Internal Revenue
Service, Department of Labor or Pension Benefit Guaranty Corporation (the
"PBGC"). Each Borrower, each such Subsidiary and each such ERISA Affiliate
shall be deemed to know all facts known by the administrator of any
Benefit Plan of which it is the plan sponsor; (ii) promptly, and in any
event within three (3) Business Days after the filing thereof with the
Internal Revenue Service, a copy of each funding waiver request filed with
respect to any Benefit Plan and all communications received by any
Borrower, any of its Subsidiaries or any ERISA Affiliate with respect to
such request; and (iii) promptly, and in any event within three (3)
Business Days after receipt by such Borrower, any of its Subsidiaries or
any ERISA Affiliate, of the PBGC's intention to terminate a Benefit Plan
or to have a trustee appointed to administer a Benefit Plan, copies of
each such notice.
(d) ENVIRONMENTAL AND HEALTH AND SAFETY NOTICES. Promptly, and in
any event within ten (10) Business Days after receipt by any Borrower or
any of its Subsidiaries of any notice, complaint or order alleging any
actual or prospective violation of any environmental, health or safety
Requirement of Law or alleging responsibility for costs of a cleanup,
which violation or responsibility could reasonably be expected to have a
Material Adverse Effect, together with a copy of such notice, complaint,
or order and a written statement describing any action being taken with
respect thereto by such Borrower or any of its Subsidiaries.
(e) MATERIAL CONTRACTS. Promptly, and in any event within ten (10)
Business Days after any Material Contract of any Borrower or any of its
Subsidiaries is terminated
40
or amended or any new Material Contract is entered into, a written
statement describing such event, with copies of amendments or new
contracts, and an explanation of any actions being taken with respect
thereto.
(f) COLLATERAL MATTERS.
(i) At least thirty (30) Business Days' prior written notice
to the Agent of any change in the location of any Collateral having
a value in excess of $100,000 or in the location of the chief
executive office or place of business of any Borrower or any of its
Subsidiaries from the locations specified in Schedule B, Part 6.10.
At least twenty (20) Business Days prior to any such change, such
Borrower shall cause to be executed and delivered to the Agent any
financing statements, Collateral Access Agreements or other
documents reasonably required by the Agent, all in form and
substance reasonably satisfactory to the Agent.
(ii) Within ten (10) Business Days prior to the occurrence
thereof, notice of the sale of any assets permitted pursuant to
Section 8.6 hereof where the proceeds from such sale are in excess
of $100,000, and notice of the sale by any Foreign Subsidiary of all
or substantially all of its assets (including any transaction which
has the effect of vesting title to such assets in another Person
other than a Borrower), together with such additional information
with respect to any such transaction as the Agent shall reasonably
request.
7.4 CORPORATE EXISTENCE. Each Borrower shall, and shall cause each of its
Subsidiaries to, (i) maintain in full force and effect all material licenses,
bonds, franchises, leases, trademarks and qualifications to do business, and all
material patents, contracts and other rights necessary or advisable for the
profitable conduct of their businesses, (ii) continue in, and limit their
operations to, the same general lines of business as presently conducted by them
and reasonable extensions thereof, (iii) in the case of Florsheim, maintain all
material terms and provisions of its corporate charter and bylaws in the form in
effect on the Effective Date, and (iv) maintain its corporate existence and not
consolidate or merge with or into any other Person.
7.5 BOOKS AND RECORDS; INSPECTIONS. Each Borrower agrees to maintain, and
to cause each of its Subsidiaries to maintain, books and records pertaining to
the Collateral in such detail, form and scope as is consistent with good
business practice. Each Borrower agrees that the Agent or its agents may enter
upon the premises of such Borrower or any of its Subsidiaries at any time and
from time to time, during normal business hours and upon reasonable prior notice
under the circumstances, and at any time at all upon the occurrence and during
the continuance of an Event of Default, for the purposes of (i) inspecting and
verifying the Collateral, (ii) inspecting and/or copying (at the expense of the
Borrowers) any and all records pertaining thereto, and (iii) discussing the
affairs, finances and business of such Borrower with any officers, employees and
directors of such Borrower or with the Auditors.
7.6 INSURANCE. Florsheim agrees to maintain, for itself and each of its
Subsidiaries, public liability insurance, third party property damage insurance
and replacement value
41
insurance on the Collateral under such policies of insurance, with such
insurance companies, in such amounts and covering such risks as are at all times
satisfactory to the Agent in its commercially reasonable judgment. Such
insurance may include levels of self-insurance comparable to those in place on
the Effective Date or otherwise satisfactory to the Agent, in its commercially
reasonable judgement. All policies covering the Collateral are to name the Agent
as an additional insured and/or the loss payee in case of loss, and are to
contain such other provisions as the Agent may reasonably require to fully
protect the Agent's interest in the Collateral and to any payments to be made
under such policies.
Unless the Borrower provides the Agent with satisfactory evidence of the
insurance coverage required hereby, the Agent may purchase insurance at the
Borrowers' expense to protect the Agent's interest in the Collateral. This
insurance may, but need not, protect the interests of the Borrowers. The
coverage that the Agent purchases may not pay any claim that the Borrowers make
or any claim that is made against the Borrowers in connection with the
Collateral. The Borrowers may later cancel any insurance purchased by the Agent,
but only after providing the Agent with satisfactory evidence that the Borrowers
have obtained insurance as required hereby. If the Agent purchases insurance for
the Collateral, the Borrowers will be responsible for the costs of that
insurance, including interest thereon at the Default Rate and any other charges
which the Agent may impose in connection with the placement of the insurance
until the effective date of the cancellation or expiration of the insurance. The
costs of the insurance may be added to the Obligations, shall constitute
Expenses, shall bear interest at the Default Rate, and shall be payable upon
demand. The costs of the insurance may be more than the cost of insurance the
Borrowers may be able to obtain on their own.
7.7 TAXES. Each Borrower agrees to pay, when due, and to cause each of its
Subsidiaries to pay when due, all taxes lawfully levied or assessed against such
Borrower, any of its Subsidiaries or any of the Collateral before any penalty or
interest accrues thereon; provided, that, unless such taxes have become a
federal tax or ERISA Lien on any of the assets of such Borrower or any of its
Subsidiaries, no such tax need be paid if the same is being contested, in good
faith, by appropriate proceedings promptly instituted and diligently conducted
and if an adequate reserve or other appropriate provision shall have been made
therefor as required in order to be in conformity with GAAP.
7.8 COMPLIANCE WITH LAWS. Each Borrower agrees to comply, and to cause
each of its Subsidiaries to comply, with all Requirements of Law applicable to
the Collateral or any part thereof, or to the operation of its business or its
assets generally, except where the failure to comply could not reasonable be
expected to have a Material Adverse Effect, unless such Borrower contests any
such Requirements of Law in a reasonable manner and in good faith.
7.9 USE OF PROCEEDS. Proceeds of the Revolving Loan shall be used by the
Borrowers to pay the costs and expenses of the transactions contemplated by this
Credit Agreement which are due and payable on the Effective Date, including
without limitation the Fees and Expenses due on the Effective Date pursuant to
Section 5.1(c) hereof and for ongoing working capital requirements and other
general corporate purposes consistent with the Order and Budget. The Borrowers
shall not use any portion of the proceeds of any Revolving Loans for the purpose
of purchasing or carrying any "margin stock" (as defined in Regulation U) in any
manner which
42
violates the provisions of Regulation U or X or of the terms and conditions of
this Credit Agreement or any other Credit Document.
7.10 FISCAL YEAR. Florsheim agrees to maintain, and to cause each of its
Subsidiaries to maintain, its fiscal year as a year ending on the Saturday
closest to or falling on December 31.
7.11 MAINTENANCE OF PROPERTY. Each Borrower agrees to keep, and to cause
each of its Subsidiaries to keep, all material property useful and necessary to
their respective businesses in good working order and condition (ordinary wear
and tear excepted) in accordance with their past operating practices and not to
commit or suffer any waste with respect to any of their material properties.
7.12 ERISA DOCUMENTS. Each Borrower will cause to be delivered to the
Agent, upon the Agent's reasonable request, each of the following: (i) a copy of
each Plan (or, where any such plan is not in writing, a description thereof)
(and if applicable, related trust agreements or other funding instruments) and
all amendments thereto, all written interpretations thereof and written
descriptions thereof that have been distributed to employees or former employees
of such Borrower or any of its Subsidiaries within the last year; (ii) the most
recent determination letter issued by the Internal Revenue Service with respect
to each Benefit Plan; (iii) for the three (3) most recent plan years, Annual
Reports on Form 5500 Series required to be filed with any governmental agency
for each Benefit Plan; (iv) all actuarial reports prepared for the last three
(3) plan years for each Benefit Plan; (v) a listing of all Multiemployer Plans,
with the aggregate amount of the most recent annual contributions required to be
made by such Borrower or any ERISA Affiliate to each such plan and copies of the
collective bargaining agreements requiring such contributions by such Borrower
or any ERISA Affiliate to any Multiemployer Plans; and (vi) any information that
has been provided to such Borrower or any ERISA Affiliate regarding withdrawal
liability under any Multiemployer Plan.
7.13 ENVIRONMENTAL AND OTHER MATTERS.
(a) Each Borrower and each of its Subsidiaries will conduct their
businesses so as to comply in all material respects with all
environmental, land use, occupational, safety or health laws, regulations,
directions, ordinances, criteria and guidelines in all jurisdictions in
which any of them is or may at any time be doing business, except to the
extent that (i) any such failure to comply could not reasonably be
expected to have a Material Adverse Effect, or (ii) such Borrower or such
Subsidiary is contesting, in good faith by appropriate legal proceedings,
any such law, regulation, direction, ordinance, criteria, guideline, or
interpretation thereof or application thereof; provided, that each
Borrower and each of its Subsidiaries shall comply with the order of any
court or other Governmental Authority relating to such laws unless such
Borrower or such Subsidiary shall currently be prosecuting an appeal or
proceedings for review and shall have secured a stay of enforcement or
execution or other arrangement postponing enforcement or execution pending
such appeal or proceedings for review.
(b) If the Agent reasonably believes, or the Majority Lenders
reasonably believe, that the facts or circumstances evidence or suggest
that any Borrower or any of
43
its Subsidiaries is in material non-compliance with any environmental law
and that such non-compliance could reasonably be expected to have a
Material Adverse Effect, then at the written request of the Agent or the
Majority Lenders, which request shall specify in reasonable detail the
basis therefor, at any time and from time to time, such Borrower will
provide at its sole cost and expense an environmental site assessment
report concerning the site owned, operated or leased by such Borrower or
such Subsidiary in respect of which such material non-compliance is
believed to have occurred and be continuing, such report to be prepared by
an environmental consulting firm approved by the Agent and the Majority
Lenders, indicating the presence, release or absence of hazardous
materials on or from such site and the potential cost of any removal,
remedial or corrective action in connection with any such hazardous
materials on such site.
7.14 [INTENTIONALLY DELETED].
7.15 FURTHER ASSURANCES. Each Borrower shall take, and shall cause each of
its Subsidiaries to take, all such further actions and execute all such further
documents and instruments as the Agent may at any time reasonably determine in
the exercise of its sole discretion to be necessary or desirable to further
carry out and consummate the transactions contemplated by the Credit Documents,
to cause the execution, delivery and performance of the Credit Documents to be
duly authorized and to perfect or protect the Liens (and the priority status
thereof) of the Agent on the Collateral.
7.16 401(K) TRUST TERMINATION. Provided that WEYCO Group, Inc. has not
assumed the Florsheim 401(k) Trust, and except as otherwise required by law,
including, without limitation, the Internal Revenue Code of 1986, as amended,
upon termination of the Florsheim 401(k) Trust, Florsheim will take all steps
necessary to cause any amount constituting excess assets (net of any applicable
taxes, including, without limitation, income taxes, alternative minimum taxes
and/or excise taxes) to be distributed to Florsheim and paid to the Agent as
provided in Section 4.6(f).
7.17 COMPLIANCE WITH ORDER AND BUDGET. Borrowers shall comply in all
respects with the terms and conditions of the Order and the Budget.
ARTICLE 8
NEGATIVE COVENANTS
All references in this Article 8 to "Subsidiaries" shall not include any
Foreign Subsidiaries. Until termination of this Credit Agreement and payment and
satisfaction of all Obligations due hereunder (other than Letter of Credit
Obligations with respect to Letters of Credit expiring after the Execution Date
which have been cash collateralized pursuant to the terms hereof), the Borrowers
shall comply with, and, where required, shall cause each of its Subsidiaries to
comply with, the following covenants:
44
8.1 MINIMUM CASH RECEIPTS. The Consolidated Entity shall not permit actual
cash receipts to be less than the percentage set forth below of the forecasted
cash receipts for each such measurement period on a rolling average basis:
Minimum Percentage Measurement Period
------------------ ------------------
75% of forecast During the first two weeks of operation
80% of forecast During the first three weeks of operation
90% of forecast During the first four weeks of operation, and
each four week period thereafter
In calculating compliance with this provision, no effect shall be given to the
receipt or non-receipt of certain licensing fees to be payable by WEYCO Group
Inc. pursuant to the Purchase Agreement.
8.2 CAPITAL EXPENDITURES. The Consolidated Entity shall not make payments
for Capital Expenditures except to the extent authorized in the Budget.
8.3 ADDITIONAL INDEBTEDNESS. None of the Borrowers nor any of their
respective Subsidiaries shall directly or indirectly incur, create, assume or
suffer to exist any Indebtedness other than:
(a) Indebtedness under the Credit Documents;
(b) Indebtedness in the ordinary course of business under Interest
Rate Agreements in form and substance reasonably satisfactory to the
Agent;
(c) Indebtedness of any Borrower to any other Borrower; provided
that if and to the extent any of such Indebtedness is evidenced by a
promissory note or other instrument, such note or other instrument shall
be endorsed to and delivered to the Agent as additional Collateral
securing the Obligations;
(d) Indebtedness described on Schedule B, Part 8.3; and
(e) Indebtedness consisting of unsecured guarantees of the
Indebtedness of Foreign Subsidiaries.
8.4 LIENS. None of the Borrowers nor any of their respective Subsidiaries
shall directly or indirectly create, incur, assume, or suffer to exist any Lien
on any of its property now owned or hereafter acquired except:
(a) Liens granted to the Lenders under the Credit Documents;
(b) Liens listed on Schedule B, Part 8.4;
45
(c) Liens of warehousemen, mechanics, materialmen, workers,
repairmen, common carriers, or landlords, liens for taxes, assessments or
other governmental charges, and other similar Liens arising by operation
of law for amounts that are not yet due and payable or that are being
diligently contested in good faith by the effected Borrower, so long as
the Agent has been notified thereof and adequate reserves are maintained
by such Borrower for their payment;
(d) Attachment or judgment Liens so long as such Liens are (i)
bonded to the reasonable satisfaction of the Agent or (ii) covered by
insurance to the reasonable satisfaction of the Agent;
(e) Deposits or pledges made in the ordinary course of Borrowers'
businesses to secure obligations under workmen's compensation, social
security or similar laws, under unemployment insurance, or to secure
public or statutory obligations;
(f) Easements, rights-of-way, restrictions and other similar
encumbrances on title to, or restrictions on the use of, real property,
which, in the aggregate, in the opinion of the Agent, are not material in
amount and which do not materially detract from the value of the property
subject thereto or materially interfere with the ordinary conduct of the
business of the effected Borrower or any of its Subsidiaries;
(g) Liens for taxes, assessments, governmental charges or levies not
yet due or which are being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto are maintained on
the books of Florsheim or the appropriate Subsidiary, as the case may be,
in accordance with GAAP;
(h) Liens affecting assets existing at the time such assets are
acquired provided that such Liens are not created in contemplation of such
acquisition;
(i) Liens affecting the assets of any Borrower's Subsidiaries at the
time such Subsidiaries are acquired provided such Liens are not created in
contemplation of such acquisition;
(j) Liens granted pursuant to the Agency Agreement to be entered
into with Great American Group; and
(k) Extensions and renewals of any of the foregoing so long as the
aggregate amount of extended or renewed Liens are not increased and are on
terms and conditions no more restrictive than the terms and conditions of
the Liens extended or renewed.
8.5 CONTINGENT OBLIGATIONS. None of the Borrowers nor any of their
respective Subsidiaries shall directly or indirectly incur, assume, or suffer to
exist any Contingent Obligation, excluding indemnities given in connection with
the sale of Inventory or other asset dispositions permitted hereunder and
Contingent Obligations for Indebtedness permitted to be incurred under Section
8.3.
46
8.6 SALE OF ASSETS. The Borrowers shall not, and shall not permit any of
their respective Subsidiaries to, directly or indirectly, sell, lease, assign,
transfer or otherwise dispose of any assets other than (i) Inventory in the
ordinary course of business; and (ii) such other sale, lease, assignment,
transfer or other disposition of any such assets to which the Agent and the
Lenders have consented and which are contemplated by the terms of the Order.
8.7 RESTRICTED PAYMENTS. Florsheim shall not, directly or indirectly, (i)
declare or pay any dividend or make any distribution on its capital stock or to
the holders of its capital stock, (ii) redeem, repurchase or otherwise acquire
or retire for value, or permit any Subsidiary to, directly or indirectly,
redeem, purchase or otherwise acquire or retire for value, any such capital
stock, or (iii) redeem, repurchase, defease or otherwise acquire or retire for
value, or permit any Subsidiary to, directly or indirectly, redeem, repurchase,
defease or otherwise acquire or retire for value, prior to any scheduled or
mandatory maturity, scheduled or mandatory repayment or scheduled sinking fund
payment (after giving effect to the exercise of any and all unconditional (other
than as to the giving of notice) options to extend the maturity), Indebtedness
of Florsheim or any other Borrower or any of their respective Subsidiaries.
8.8 INVESTMENTS. The Borrowers shall not, and shall not permit any of
their respective Subsidiaries to, directly or indirectly, make any Investment in
any Person, whether in cash, securities, or other property of any kind
including, without limitation, any Subsidiary or Affiliate, other than:
(a) Loans, investments and advances between the Borrowers and
Subsidiaries or between the Borrowers and Foreign Subsidiaries in
existence as of the date hereof and described on Schedule B, Part 8.8, or
as permitted pursuant to Section 8.3(c);
(b) Cash Equivalents;
(c) Deposits with financial institutions, disclosed in Schedule B,
Part 8.8, and which are insured by the Federal Deposit Insurance
Corporation ("FDIC") or a similar federal insurance program; provided,
that the Borrower may, in the ordinary course of its business, maintain in
its disbursement accounts from time to time amounts in excess of then
applicable FDIC or other program insurance limits;
(d) Investments consisting of securities distributed pursuant to any
plan of reorganization;
(e) Other Investments outstanding on the date hereof as disclosed in
Schedule B, Part 8.8;
(f) An advance in an amount not to exceed $100,000 to Florsheim
Australia Limited ("Australia") to fund certain transaction costs
associated with the contemplated sale of the assets of Australia; and
(g) Such other Investments as the Agent may approve in writing in
the exercise of its sole discretion.
47
8.9 AFFILIATE TRANSACTIONS. The Borrower shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly, enter into any transaction
with (including, without limitation, the purchase, sale or exchange of property
or the rendering of any service to) any Subsidiary or Affiliate of the Borrower,
except to the extent contemplated by the Budget upon fair and reasonable terms
no less favorable to the Borrower or such Subsidiary than could be obtained in a
comparable arm's-length transaction with an unaffiliated Person.
8.10 RESTRICTIONS ON FOREIGN SUBSIDIARY TRADE SUPPORT. None of the
Borrowers will permit to exist any open account sales or transfers by any such
Borrowers of goods of any kind to any Foreign Subsidiary.
8.11 ADDITIONAL BANK ACCOUNTS. The Borrowers shall not, and shall not
permit any of their respective Subsidiaries to, directly or indirectly, open,
maintain or otherwise have any checking, savings or other accounts at any bank
or other financial institution, or any other account where money is or may be
deposited or maintained with any Person, other than the Disbursement Account and
the accounts set forth on Schedule B, Part 8.11.
8.12 ADDITIONAL NEGATIVE PLEDGES. The Borrowers shall not, and shall not
permit any of their respective Subsidiaries to, directly or indirectly, create
or otherwise cause or suffer to exist or become effective, or permit any of its
Subsidiaries to create or otherwise cause or suffer to exist or become
effective, directly or indirectly, (i) any prohibition or restriction (including
any agreement to provide equal and ratable security to any other Person in the
event a Lien is granted to or for the benefit of the Agent and the Lenders) on
the creation or existence of any Lien upon the assets of the Borrower or its
Subsidiaries, other than Permitted Liens; or (ii) any contractual obligation
which may restrict or inhibit the Agent's rights or ability to sell or otherwise
dispose of the Collateral or any part thereof after the occurrence of an Event
of Default.
8.13 ADDITIONAL SUBSIDIARIES. The Borrowers shall not, and shall not
permit any of their respective Subsidiaries to, directly or indirectly, form or
acquire any new Subsidiaries.
ARTICLE 9
EVENTS OF DEFAULT AND REMEDIES
9.1 EVENTS OF DEFAULT. The occurrence of any of the following events shall
constitute an event of default (each an "Event of Default") hereunder:
(a) FAILURE TO PAY. The Borrowers shall fail to pay principal when
the same shall become payable, and shall fail to pay any other Obligation
when the same shall become payable, and such failure shall continue for
three (3) Business Days.
(b) BREACH OF CERTAIN COVENANTS. Any Borrower shall fail to comply
with any covenant contained in Sections 7.1, 7.2, 7.4, 7.5, 7.6, 7.9, 7.17
or Article 8 hereof.
48
(c) BREACH OF REPRESENTATION OR WARRANTY. Any representation or
warranty made or deemed to be made by any Borrower in this Credit
Agreement or in any other Credit Document (and in any statement or
certificate given under this Credit Agreement or any other Credit
Document), shall be false or misleading in any material respect when made
or deemed to be made.
(d) BREACH OF OTHER COVENANTS. Any Borrower shall fail to comply
with any covenant contained in this Credit Agreement or any other Credit
Document, other than as set forth in Section 9.1(b), and such failure
shall continue for five (5) days after its occurrence.
(e) DISSOLUTION. Any material Borrower shall dissolve, wind up or
otherwise cease its business except as the result of any merger with, or
transfer of assets to, any other Borrower.
(f) INSOLVENCY EVENT. Any Credit Party shall become the subject of
an Insolvency Event.
(g) CHANGE OF CONTROL. A Change of Control shall occur.
(h) CROSS DEFAULT. A default or event of default shall occur (and
continue beyond any applicable grace period) under any note, agreement or
instrument evidencing any other Indebtedness of a Borrower or any
Subsidiary of a Borrower, which default or event of default permits the
acceleration of its maturity, provided, that the aggregate principal
amount of all such Indebtedness for which the default or event of default
has occurred exceeds $250,000.
(i) FAILURE OF ENFORCEABILITY OF CREDIT DOCUMENTS; SECURITY. Any
material covenant, agreement or obligation of any Credit Party contained
in or evidenced by any of the Credit Documents shall cease to be
enforceable, or shall be determined to be unenforceable, in accordance
with its terms; any Credit Party shall deny or disaffirm its obligations
under any of the Credit Documents or any Liens granted in connection
therewith or institute any adversary proceeding in any of the cases
against Agent or any of the Lenders; or, any Liens granted in any of the
Collateral with a value in excess of $250,000 shall be determined to be
void, voidable, invalid or unperfected, are subordinated or not given the
priority contemplated by this Credit Agreement.
(j) WEYCO TERMINATION. WEYCO shall terminate, withdraw or materially
amend the terms and conditions of, the Purchase Agreement, and there shall
not be a replacement purchaser which has committed to purchase the assets
subject to the Purchase Agreement and in accordance with and pursuant to
the Procedures Motion.
(k) BANKRUPTCY ORDER. There shall occur a default or event of
default under, or any non-compliance with, or termination of, the Order.
Notwithstanding the foregoing, unless and until such time that the Bankruptcy
Filing in respect of any Borrower is converted to a Chapter 7 proceeding, the
Bankruptcy Filing is dismissed or a
49
trustee, receiver, examiner with expanded powers or other custodian is
appointed, (A) except for purposes of the references to Events of Default in
Section 13 hereof and for the termination of any pre-petition commitments under
the Prior Credit Agreement, the Bankruptcy Filing shall not constitute an Event
of Default under Section 9.1(f); and (B) Section 9.1(h) of the Agreement shall
not apply to the Borrowers or any obligations incurred by them prior to the
Bankruptcy Filing and said Section shall be subject to applicable bankruptcy
law, the Order and any further orders entered by the Court.
9.2 ACCELERATION, TERMINATION OF COMMITMENTS AND CASH COLLATERALIZATION.
Upon the occurrence and during the continuance of any Event of Default, and
subject to applicable bankruptcy law and the terms of the Order, without
prejudice to the rights of the Agent or any Lender to enforce its claims against
the Borrowers:
(a) ACCELERATION. Upon the written request of the Majority Lenders,
and by delivery of written notice to the Borrower Representative from the
Agent, all Obligations shall be immediately due and payable (except with
respect to any Event of Default set forth in Section 9.1(f), in which case
all Obligations shall automatically become immediately due and payable
without the necessity of any request of the Majority Lenders or notice or
other demand to the Borrower Representative) without presentment, demand,
protest or any other action or obligation of the Agent or any Lender.
(b) TERMINATION OF COMMITMENTS. Upon the written request of the
Majority Lenders, and by delivery of written notice to the Borrower
Representative from the Agent, the Commitments shall be immediately
terminated and, at all times thereafter, all Revolving Loans made by any
Lender pursuant to this Credit Agreement shall be at such Lender's sole
discretion, unless such Event of Default is waived in accordance with
Section 11.11, in which case the Commitments shall be automatically
reinstated.
(c) CASH COLLATERALIZATION. On demand of the Agent or the Majority
Lenders, the Borrowers shall immediately deposit with the Agent for each
Letter of Credit then outstanding, cash or Cash Equivalents in an amount
equal to 110% of the greatest amount drawable thereunder. Such deposit
shall be held by the Agent and used to reimburse the Issuing Bank for the
amount of each drawing made under such Letters of Credit, as and when each
such drawing is made.
9.3 RESCISSION OF ACCELERATION. After acceleration of the maturity of the
Obligations, if the Borrowers pay all accrued interest and all principal due
(other than by reason of the acceleration) and all Defaults and Events of
Default are waived in accordance with Section 11.11, the Majority Lenders may
elect in their sole discretion, to rescind the acceleration and return to the
Borrowers any cash collateral deposited with the Agent pursuant to Section
9.2(c). (This Section is intended only to bind all of the Lenders to a decision
of the Majority Lenders and not to confer any right on the Borrowers, even if
the described conditions for the Majority Lenders' election may be met.)
9.4 REMEDIES. Upon the occurrence and during the continuance of an Event
of Default, upon the written request and at the direction of the Majority
Lenders, the Agent may
50
exercise any rights and remedies available to it under applicable law (including
under the Code) and under the Collateral Documents. The foregoing rights and
remedies are not intended to be exhaustive and the full or partial exercise of
any right or remedy shall not preclude the full or partial exercise of any other
right or remedy available under this Credit Agreement, any other Credit
Document, at equity or at law.
9.5 RIGHT OF SETOFF. In addition to and not in limitation of all rights of
offset that any Lender may have under applicable law, upon the occurrence and
during the continuance of any Event of Default, and whether or not any Lender
has made any demand or the Obligations of any Credit Party have matured, each
Lender shall have the right to appropriate and apply to the payment of the
Obligations of such Credit Party all deposits and other obligations then or
thereafter owing by such Lender to such Credit Party. Each Lender exercising
such rights shall notify the Agent thereof and any amount received as a result
of the exercise of such rights shall be shared by the Lenders in accordance with
Section 2.5.
9.6 LICENSE OF USE OF SOFTWARE AND OTHER INTELLECTUAL PROPERTY. Unless
expressly prohibited by the licenser thereof, if any, the Agent is hereby
granted a license, effective upon any acceleration of the Obligations pursuant
to this Article 9, to use all computer software programs, data bases, processes
and materials used by the Borrowers in connection with their businesses or in
connection with the Collateral. The Agent agrees not to use any such license
prior to the occurrence of an Event of Default without giving the Borrowers
prior notice.
9.7 APPLICATION OF PROCEEDS; SURPLUS; DEFICIENCIES. The net cash proceeds
resulting from the Agent's exercise of any of the foregoing rights against any
Collateral (after deducting all of the Agent's Expenses related thereto) shall
be applied by the Agent to the payment of the Obligations, whether due or to
become due, in the order set forth in Section 4.12. The Borrowers shall remain
liable to the Agent and the Lenders for any deficiencies, and the Agent and the
Lenders in turn agree to remit to the Borrowers or their successors or assigns,
any surplus resulting therefrom.
ARTICLE 10
THE AGENT
10.1 APPOINTMENT OF AGENT.
(a) Each Lender hereby designates BTCC as Agent to act as herein
specified. Each Lender hereby irrevocably authorizes, and each holder of
any Revolving Note, by the acceptance of such Revolving Note, shall be
deemed irrevocably to authorize the Agent to take such action on its
behalf under the provisions of this Credit Agreement and the other Credit
Documents and any other instruments and agreements referred to herein and
therein and to exercise such powers and to perform such duties hereunder
and thereunder as are specifically delegated to or required of the Agent
by the terms hereof and thereof and such other powers as are reasonably
incidental thereto. The Agent shall hold all Collateral and all payments
of principal, interest, Fees, (other than Fees that are
51
exclusively for the account of the Agent), charges and Expenses received
pursuant to this Credit Agreement or any other Credit Document for the
ratable benefit of the Lenders. The Agent may perform any of its duties
hereunder by or through its agents or employees.
(b) Other than the Borrowers' rights under Section 10.9, the
provisions of this Article 10 are for the benefit of the Agent and the
Lenders only and none of the Credit Parties or any other Persons shall
have any rights as a third party beneficiary of any of the provisions
hereof. In performing its functions and duties under this Credit Agreement
and the other Credit Documents, the Agent shall act only for the Lenders
and does not assume and shall not be deemed to have assumed any obligation
toward or relationship of agency or trust with or for any Credit Party.
10.2 NATURE OF DUTIES OF AGENT. The Agent has no duties or
responsibilities except those expressly set forth in the Credit Documents.
Neither the Agent nor any of its officers, directors, employees or agents shall
be liable for any action taken or omitted hereunder or in connection herewith,
unless caused by its or their gross negligence or willful misconduct. The duties
of the Agent shall be mechanical and administrative in nature; the Agent shall
not have by reason of this Credit Agreement or any of the other Credit Documents
a fiduciary relationship in respect of any Lender or any participant of any
Lender; and nothing in this Credit Agreement or any other Credit Document,
expressed or implied, is intended to or shall be so construed as to impose upon
the Agent any obligations in respect of this Credit Agreement or any other
Credit Document, except as expressly set forth herein or therein.
10.3 LACK OF RELIANCE ON AGENT.
(a) Independently and without reliance upon the Agent, each Lender,
to the extent it deems appropriate, has made and shall continue to make
(i) its own independent investigation of the financial or other condition
and affairs of each Credit Party in connection with the taking or not
taking of any action in connection herewith and (ii) its own appraisal of
the creditworthiness of each Credit Party, and, except as expressly
provided in this Credit Agreement, the 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, whether
coming into its possession before the making of the Revolving Loans or at
any time or times thereafter.
(b) The Agent shall not be responsible to any Lender for any
recitals, statements, information, representations or warranties herein or
in any document, certificate or other writing delivered in connection
herewith or for the execution, effectiveness, genuineness, validity,
enforceability, collectibility, priority or sufficiency of this Credit
Agreement or any of the other Credit Documents or the financial or other
condition of any Credit Party. The Agent shall not be required to make any
inquiry concerning either the performance or observance of any other
terms, provisions or conditions of this Credit Agreement or any of the
other Credit Documents, or the financial condition of any Credit Party, or
the existence or possible existence of any
52
Default or Event of Default, unless specifically requested to do so in
writing by any Lender.
10.4 CERTAIN RIGHTS OF THE AGENT. The Agent shall have the right to
request instructions from the Majority Lenders by notice to each of the Lenders.
If the Agent shall request instructions from the Majority Lenders with respect
to any act or action (including the failure to act) in connection with this
Credit Agreement, the Agent shall be entitled to refrain from such act or taking
such action unless and until the Agent shall have received instructions from the
Majority Lenders, and the Agent shall not incur liability to any Person by
reason of so refraining. Without limiting the foregoing, no Lender shall have
any right of action whatsoever against the Agent as a result of the Agent acting
or refraining from acting hereunder in accordance with the instructions of the
Majority Lenders. The Agent may give any notice required under Article 9 hereof
without the consent of any of the Lenders unless otherwise directed by the
Majority Lenders in writing and will, at the direction of the Majority Lenders,
give any such notice required under Article 9.
10.5 RELIANCE BY AGENT. The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram,
radiogram, order or other documentary, teletransmission or telephone message
believed by it to be genuine and correct and to have been signed, sent or made
by the proper person. The Agent may consult with legal counsel (including
counsel for the Borrowers with respect to matters concerning the Borrowers),
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken by it in good faith in
accordance with the advice of such counsel, accountants or experts.
10.6 INDEMNIFICATION OF AGENT. To the extent the Agent is not reimbursed
and indemnified by the Borrowers, each Lender will reimburse and indemnify the
Agent, in proportion to its respective Commitment, for and against all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including counsel fees and disbursements) or disbursements of
any kind or nature whatsoever which may be imposed on, incurred by or asserted
against the Agent in performing its duties hereunder, in any way relating to or
arising out of this Credit Agreement; provided, that no Lender shall be liable
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the
Agent's gross negligence or willful misconduct.
10.7 THE AGENT IN ITS INDIVIDUAL CAPACITY. With respect to its obligation
to lend under this Credit Agreement, the Revolving Loans made by it and the
Revolving Notes issued to it and its participation in Letters of Credit issued
hereunder, the Agent shall have the same rights and powers hereunder as any
other Lender or holder of a Revolving Note or participation interests and may
exercise the same as though it was not performing the duties specified herein;
and the terms "Lenders," "Majority Lenders," "holders of Revolving Notes," or
any similar terms shall, unless the context clearly otherwise indicates, include
the Agent in its individual capacity. The Agent may accept deposits from, lend
money to, acquire equity interests in, and generally engage in any kind of
banking, trust, financial advisory or other business with the Borrowers or any
Affiliate of any Borrower as if it were not performing the duties specified
herein, and may
53
accept fees and other consideration from the Borrower for services in connection
with this Credit Agreement and otherwise without having to account for the same
to the Lenders.
10.8 HOLDERS OF REVOLVING NOTES. The Agent may deem and treat the payee of
any Revolving Note as the owner thereof for all purposes hereof unless and until
a written notice of the assignment or transfer thereof shall have been filed
with the Agent. Any request, authority or consent of any Person who, at the time
of making such request or giving such authority or consent, is the holder of any
Revolving Note, shall be conclusive and binding on any subsequent holder,
transferee or assignee of such Revolving Note or of any Revolving Note or Notes
issued in exchange therefor.
10.9 SUCCESSOR AGENT.
(a) The Agent may, upon five (5) Business Days' notice to the
Lenders and the Borrower Representative, resign at any time (effective
upon the appointment of a successor Agent pursuant to the provisions of
this Section 10.9) by giving written notice thereof to the Lenders and the
Borrower. Upon any such resignation, the Majority Lenders shall have the
right, upon five (5) days' notice and approval by Florsheim (which
approval shall not be unreasonably withheld or delayed), to appoint a
successor Agent. If no successor Agent shall have been so appointed by the
Majority Lenders and accepted such appointment, within thirty (30) days
after the retiring Agent's giving of notice of resignation, then, upon
five (5) days' notice and approval by Florsheim (which approval shall not
be unreasonably withheld or delayed), the retiring Agent may, on behalf of
the Lenders, appoint a successor Agent, which shall be a bank or a trust
company or other financial institution which maintains an office in the
United States, or a commercial bank organized under the laws of the United
States of America or of any State thereof, or any Affiliate of such bank
or trust company or other financial institution which is engaged in the
banking business, having a combined capital and surplus of at least
$500,000,000.
(b) Upon the acceptance of any appointment as Agent hereunder 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 this Credit Agreement and the other Credit
Documents. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Article 10 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under or in
connection with this Credit Agreement.
10.10 COLLATERAL MATTERS.
(a) Each Lender authorizes and directs the Agent to enter into the
Collateral Documents for the benefit of the Lenders. Each Lender hereby
agrees, and each holder of any Revolving Note by the acceptance thereof
will be deemed to agree, that, except as otherwise set forth herein, any
action taken by the Majority Lenders in accordance with the provisions of
this Credit Agreement or any of the Credit Documents, and the exercise by
the Majority Lenders of the powers set forth herein or therein, together
with such other
54
powers as are reasonably incidental thereto, shall be authorized and
binding upon all of the Lenders. The Agent is hereby authorized on behalf
of all of the Lenders, without the necessity of any notice to or further
consent from any Lender, from time to time prior to an Event of Default,
to take any action with respect to any Collateral or Collateral Documents
which may be necessary to perfect and maintain the perfection of the Liens
upon the Collateral granted pursuant to the Collateral Documents.
(b) The Lenders hereby authorize the Agent, at its option and in its
discretion, to release any Lien granted to or held by the Agent upon any
Collateral (i) upon termination of the Commitments and payment and
satisfaction of all of the Obligations at any time arising under or in
respect of this Credit Agreement or the Credit Documents or the
transactions contemplated hereby or thereby or (ii) if approved,
authorized or ratified in writing by the Majority Lenders, unless such
release is required to be approved by all of the Lenders pursuant to
Section 11.11. Upon request by the Agent at any time, the Lenders will
confirm in writing the Agent's authority to release particular types or
items of Collateral pursuant to this Section 10.10.
(c) The Lenders hereby agree that the Lien granted to the Agent and
the Lenders in any property sold or disposed of in accordance with the
provisions of Section 8.6 hereof shall, if no Default or Event of Default
shall then exist, be automatically released (although a signed release of
the Agent may be requested in any transaction permitted pursuant to
Section 8.6); provided however that Agent's Lien shall attach to and
continue in the proceeds and products of such property arising from any
such sale or disposition and; provided, further, that the proceeds from
any such sale or disposition by the Borrowers shall be paid to the Agent
for application to the then outstanding Loans.
(d) The Agent shall have no obligation whatsoever to the Lenders or
to any other Person to assure that the Collateral exists or is owned by a
Borrower or is cared for, protected or insured or that the Liens granted
to the Agent in or pursuant to any of the Collateral Documents have been
properly or sufficiently or lawfully created, perfected, protected or
enforced or are entitled to any particular priority, or to exercise or to
continue exercising at all or in any manner or under any duty of care,
disclosure or fidelity any of the rights, authorities and powers granted
or available to the Agent in this Section 10.10 or in any of the
Collateral Documents, it being understood and agreed that in respect of
the Collateral, or any act, omission or event related thereto, the Agent
may act in any manner it may deem appropriate, in its sole discretion,
given the Agent's own interest in the Collateral as one of the Lenders and
that the Agent shall have no duty or liability whatsoever to the Lenders,
except for its gross negligence or willful misconduct. The Agent agrees to
conduct or cause to be conducted at least one audit of the Collateral
during each year that this Credit Agreement shall remain in effect.
10.11 ACTIONS WITH RESPECT TO DEFAULTS. In addition to the Agent's right
to take actions on its own accord as permitted under this Credit Agreement, the
Agent shall take such action with respect to a Default or Event of Default as
shall be directed by the Majority Lenders; provided, that until the Agent shall
have received such directions, the Agent may (but shall not
55
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 and in
the best interests of the Lenders.
10.12 DELIVERY OF INFORMATION. The Agent shall not be required to deliver
to any Lender originals or copies of any documents, instruments, notices,
communications or other information received by the Agent from the Borrowers,
any Subsidiary of a Borrower, the Majority Lenders, any Lender or any other
Person under or in connection with this Credit Agreement or any other Credit
Document except (i) as specifically provided in this Credit Agreement or any
other Credit Document and (ii) as specifically requested from time to time in
writing by any Lender with respect to a specific document, instrument, notice or
other written communication received by and in the possession of the Agent at
the time of receipt of such request and then only in accordance with such
specific request.
ARTICLE 11
MISCELLANEOUS
11.1 GOVERNING LAW. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS
CREDIT AGREEMENT AND THE REVOLVING NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS AND DECISIONS OF THE STATE OF ILLINOIS,
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
11.2 SUBMISSION TO JURISDICTION. ALL DISPUTES AMONG THE BORROWERS AND THE
LENDERS (OR THE AGENT ACTING ON THEIR BEHALF), WHETHER SOUNDING IN CONTRACT,
TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED BY THE FEDERAL BANKRUPTCY COURT
HAVING JURISDICTION OVER THE CASES LOCATED IN CHICAGO, ILLINOIS, AND THE COURTS
TO WHICH AN APPEAL THEREFROM MAY BE TAKEN.
11.3 SERVICE OF PROCESS. THE BORROWERS HEREBY IRREVOCABLY AGREE THAT
SERVICE OF PROCESS IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS CREDIT
AGREEMENT OR ANY OTHER CREDIT DOCUMENT MAY BE AFFECTED BY MAILING A COPY THEREOF
BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE BORROWER REPRESENTATIVE
AT ITS ADDRESS SET FORTH IN SECTION 11.7.
11.4 JURY TRIAL. THE BORROWERS, THE AGENT AND THE LENDERS EACH HEREBY
WAIVE ANY RIGHT TO A TRIAL BY JURY. INSTEAD, ANY DISPUTES WILL BE RESOLVED IN A
BENCH TRIAL.
11.5 LIMITATION OF LIABILITY. NEITHER THE AGENT NOR ANY LENDER SHALL HAVE
ANY LIABILITY TO THE BORROWERS (WHETHER SOUNDING IN TORT, CONTRACT, OR
OTHERWISE) FOR LOSSES SUFFERED BY THE BORROWERS IN CONNECTION WITH, ARISING OUT
OF, OR IN ANY WAY RELATED
56
TO THE TRANSACTIONS OR RELATIONSHIPS CONTEMPLATED BY THIS CREDIT AGREEMENT, OR
ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS
DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OR COURT ORDER BINDING ON THE
AGENT OR ANY SUCH LENDER, THAT THE LOSSES WERE THE RESULT OF ACTS OR OMISSIONS
CONSTITUTING GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
11.6 DELAYS. No delay or omission of the Agent or the Lenders to exercise
any right or remedy hereunder shall impair any such right or operate as a waiver
thereof.
11.7 NOTICES. Except as otherwise provided herein, all notices and
correspondences hereunder shall be in writing and sent by certified or
registered mail, return receipt requested, or by overnight delivery service,
with all charges prepaid, if to the Agent or any of the Lenders, then to BT
Commercial Corporation, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: Credit Department, and if to the Borrower, then to c/o The Borrower
Representative at Florsheim Group Inc., at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Executive Vice President and Chief
Financial Officer, or by facsimile transmission, promptly confirmed in writing
sent by first class mail, if to the Agent, or any of the Lenders, at (312)
993-8096 and if to the Borrower at (▇▇▇) ▇▇▇-▇▇▇▇. All such notices and
correspondence shall be deemed given (i) if sent by certified or registered
mail, three Business Days after being postmarked, (ii) if sent by overnight
delivery service, when received at the above stated addresses or when delivery
is refused and (iii) if sent by telex or facsimile transmission, when receipt of
such transmission is acknowledged.
11.8 ASSIGNMENTS AND PARTICIPATIONS.
(a) BORROWER ASSIGNMENT. The Borrower shall have no right to assign
this Credit Agreement, or any rights or obligations hereunder, without the
prior written consent of the Agent and the Lenders.
(b) LENDER ASSIGNMENTS. Each Lender may assign to one or more banks
or other financial institutions all or a portion of its rights and
obligations under this Credit Agreement, the Revolving Notes and the other
Credit Documents, with the consent of the Agent; and upon execution and
delivery to the Agent, for its acceptance and recording in the Register,
of an agreement in substantially the form of Exhibit K (an "Assignment and
Assumption Agreement"), together with surrender of any Revolving Note or
Revolving Notes subject to such assignment and a processing and
recordation fee of $3,500. No such assignment shall be for less than
$10,000,000 of the Commitments unless it is to another Lender or is an
assignment of all of such Lender's rights and obligations under this
Credit Agreement. (This Section does not apply to branches and Affiliates
of a Lender, it being understood that a Lender may make, carry or transfer
Revolving Loans at or for the account of any of its branch offices or
Affiliates without consent of the Borrowers, the Agent or any other
Lender).
(c) AGENT'S REGISTER. The Agent shall maintain a register of the
names and addresses of the Lenders, their Commitments, and the principal
amount of their
57
Revolving Loans (the "Register") at the address specified for the Agent in
Section 11.7. The Agent shall also maintain a copy of each Assignment and
Assumption Agreement delivered to and accepted by it and modify the
Register to give effect to each Assignment and Assumption Agreement. Upon
its receipt of each Assignment and Assumption Agreement and surrender of
the affected Revolving Note or Revolving Notes, the Agent will give prompt
notice thereof to the Borrower Representative and deliver to the Borrower
Representative a copy of the Assignment and Assumption Agreement and the
surrendered Revolving Note or Revolving Notes. Within five (5) Business
Days after its receipt of such notice, the Borrower shall execute and
deliver to the Agent a substitute Revolving Note or Revolving Notes to the
order of the assignee in the amount of the Commitment or Commitments
assumed by it and to the assignor in the amount of the Commitment or
Commitments retained by it, if any. Such substitute Revolving Note or
Revolving Notes shall re-evidence the Indebtedness outstanding under the
surrendered Revolving Note or Revolving Notes and shall be dated as of the
Effective Date. The Agent shall be entitled to rely upon the Register
exclusively for purposes of identifying the Lenders hereunder. The
Register shall be available for inspection by the Borrower Representative
and the Lenders (or any of them) at any reasonable time and from time to
time upon reasonable notice to the Agent.
(d) LENDER PARTICIPATIONS. Each Lender may sell participations
(without the consent of the Agent, the Borrowers or any other Lender) to
one or more parties in or to all or a portion of its rights and
obligations under this Credit Agreement, the Revolving Notes and the other
Credit Documents. Notwithstanding a Lender's sale of a participation
interest, its obligations hereunder shall remain unchanged. The Borrowers,
the Agent, and the other Lenders shall continue to deal solely and
directly with such Lender. No participant shall have rights to approve any
amendment or waiver of this Credit Agreement or any of the other Credit
Documents except to the extent such amendment or waiver would (i) increase
the participant's obligation in respect of the Commitment of the Lender
from whom the participant purchased its participation interest; (ii)
reduce the principal of, or stated rate or amount of interest on, the
Revolving Loans subject to such participation, (iii) postpone any maturity
date fixed for final payment of principal of the Revolving Loans subject
to the participation interest, and (iv) release any guarantor of the
Obligations or all or a substantial portion of the Collateral, other than
when otherwise permitted hereunder.
11.9 CONFIDENTIALITY. Each Lender agrees that it will use its best efforts
not to disclose without the prior consent of the Borrowers any information with
respect to the Borrower or any of their respective Subsidiaries which is
furnished pursuant to this Credit Agreement and which is designated by the
Borrower to the Lenders in writing as confidential, provided, that, each Lender
may disclose any such information (a) to its employees, auditors, or counsel, or
to another Lender if the disclosing Lender or such disclosing Lender's holding
or parent company in its sole discretion determines that any such party should
have access to such information, (b) as has become generally available to the
public, (c) as may be required or appropriate in any report, statement or
testimony submitted to any Governmental Authority having or claiming to have
jurisdiction over such Lender, (d) as may be required or appropriate in response
to any summons or subpoena or in connection with any litigation, (e) in order to
comply with any
58
Requirement of Law, and (f) to any such prospective or actual transferee or
participant in connection with any contemplated transfer or participation of any
of the Revolving Notes or Commitments or any interest therein by such Lender.
11.10 INDEMNIFICATION. The Borrowers hereby jointly and severally
indemnify and agree to defend and hold harmless the Agent and each of the
Lenders and their respective directors, officers, agents, employees and counsel
from and against any and all losses, claims, damages, liabilities, deficiencies,
judgments or expenses incurred by any of them (except to the extent that it is
finally judicially determined to have resulted from their own gross negligence
or willful misconduct) arising out of or by reason of (a) any litigations,
investigations, claims or proceedings which arise out of or are in any way
related to (i) this Credit Agreement or the transactions contemplated hereby,
(ii) the issuance of the Letters of Credit, (iii) the failure of the Issuing
Bank to honor a drawing under any Letter of Credit, as a result of any act or
omission, whether rightful or wrongful, of any present or future de jure or de
facto government or Governmental Authority, (iv) any actual or proposed use by a
Borrower of the proceeds of the Revolving Loans or (v) the Agent's or the
Lenders' entering into this Credit Agreement, the other Credit Documents or any
other agreements and documents relating hereto, including, without limitation,
amounts paid in settlement, court costs and the fees and disbursements of
counsel incurred in connection with any such litigation, investigation, claim or
proceeding or any advice rendered in connection with any of the foregoing and
(b) any remedial or other action taken by a Borrower or any of the Lenders in
connection with compliance by such Borrower or any of its Subsidiaries, or any
of their respective properties, with any federal, state or local environmental
laws, acts, rules, regulations, orders, directions, ordinances, criteria or
guidelines.
11.11 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Credit Agreement, any part of Schedule B, or any other Credit Document
shall be effective unless in writing and signed by the Majority Lenders (or by
the Agent on their behalf), except that:
(a) the consent of all the Lenders is required to (i) increase the
Commitments, (ii) reduce the principal of, or interest on, the Revolving
Notes, any Letter of Credit reimbursement obligations or any Fees
hereunder (other than Fees that are exclusively for the account of the
Agent), (iii) postpone any date fixed for any payment in respect of
principal of, or interest on, the Revolving Notes, any Letter of Credit
reimbursement obligations or any Fees hereunder, (iv) change the
percentage of the Commitments, or any minimum requirement necessary for
the Lenders or the Majority Lenders to take any action hereunder, (v)
amend or waive this Section 11.11(a), or change the definition of Majority
Lenders or (vi) except as otherwise expressly provided in this Credit
Agreement, and other than in connection with the financing, refinancing,
sale or other disposition of any asset of the Borrower permitted under
this Credit Agreement, release any Liens in favor of the Lenders on any of
the Collateral; and
(b) Notwithstanding the provisions of the foregoing subsection (a)
the consent of the Majority Lenders, plus all of the Lenders which are
making loans or advances against the Tranche B Availability (the "Tranche
B
59
Lenders") shall be required to change the definition of Tranche B
Availability, and only the consent of all of the Tranche B Lenders shall
be required and with respect to all other matters relating to such loans
or advances including, without limitation, any changes with respect to the
rate of interest thereon; and
(c) the consent of the Agent shall be required for any amendment,
waiver or consent affecting the rights or duties of the Agent under any
Credit Document, in addition to the consent of the Lenders otherwise
required by this Section.
The consent of the Borrowers shall not be required for any amendment,
modification or waiver of the provisions of Article 10 (other than Section 10.9
and Section 10.10(c)). The Borrowers and the Lenders each hereby authorize the
Agent to modify this Credit Agreement by unilaterally amending or supplementing
Annex I to reflect assignments of the Commitments. Notwithstanding the
foregoing, the Borrowers may unilaterally amend Schedule B, Parts 6.1, 6.10, and
6.14, without the consent of the Majority Lenders.
11.12 COUNTERPARTS AND EFFECTIVENESS. This Credit Agreement and any waiver
or amendment hereto may be executed in any number of counterparts and by the
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument. This Credit Agreement shall become
effective on the Effective Date when all of the parties hereto shall have signed
a copy hereof (whether the same or different copies) and shall have delivered
the same to the Agent pursuant to Section 11.7 or, in the case of the Lenders,
shall have given to the Agent written, telecopied or telex notice (actually
received) at such office that the same has been signed and mailed to it.
11.13 SEVERABILITY. In case any provision in or obligation under this
Credit Agreement or the Revolving Notes or the other Credit Documents shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
11.14 MAXIMUM RATE. Notwithstanding anything to the contrary contained
elsewhere in this Credit Agreement or in any other Credit Document, the
Borrowers, the Agent and the Lenders hereby agree that all agreements among them
under this Credit Agreement and the other Credit Documents, whether now existing
or hereafter arising and whether written or oral, are expressly limited so that
in no contingency or event whatsoever shall the amount paid, or agreed to be
paid, to the Agent or any Lender for the use, forbearance, or detention of the
money loaned to the Borrowers and evidenced hereby or thereby or for the
performance or payment of any covenant or obligation contained herein or
therein, exceed the Highest Lawful Rate. If due to any circumstance whatsoever,
fulfillment of any provisions of this Credit Agreement or any of the other
Credit Documents at the time performance of such provision shall be due shall
exceed the Highest Lawful Rate, then, automatically, the obligation to be
fulfilled shall be modified or reduced to the extent necessary to limit such
interest to the Highest Lawful Rate, and if from any such circumstance any
Lender should ever receive anything of value deemed interest by applicable law
which would exceed the Highest Lawful Rate, such excessive interest shall be
applied to the reduction of the principal amount then outstanding hereunder or
on account of any
60
other then outstanding Obligations and not to the payment of interest, or if
such excessive interest exceeds the principal unpaid balance then outstanding
hereunder and such other then outstanding Obligations, such excess shall be
refunded to the Borrowers. All sums paid or agreed to be paid to the Agent or
any Lender for the use, forbearance, or detention of the Obligations and other
Indebtedness of the Borrower to the Agent or any Lender, to the extent permitted
by applicable law, shall be amortized, prorated, allocated and spread throughout
the full term of such Indebtedness, until payment in full thereof, so that the
actual rate of interest on account of all such Indebtedness does not exceed the
Highest Lawful Rate throughout the entire term of such Indebtedness. The terms
and provisions of this Section shall control over every other provision of this
Credit Agreement, the other Credit Documents, and all agreements among the
Borrowers, the Agent and the Lenders.
11.15 ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS; CONFLICTS. This Credit
Agreement and the other Credit Documents constitute the entire agreement among
the Borrowers, the Agent and the Lenders, supersede any prior agreements among
them, and shall bind and benefit each of such Persons and their respective
successors and permitted assigns. This Agreement constitutes an amendment and
restatement of the Prior Credit Agreement, which Prior Credit Agreement is fully
superceded and amended and restated in its entirety hereby; provided, however,
that the Indebtedness governed by the Prior Credit Agreement shall remain
outstanding and in full force and effect and provided further that this
Agreement does not constitute a novation of such Indebtedness. In the event of
any conflict between the terms of this Agreement and the other Loan Documents,
on the one hand, and the Order on the other hand, the Order shall govern, it
being acknowledged and agreed by the parties hereto that this Agreement and the
other Loan Documents shall be subject in all respects to the Order. Agent and
the Lenders, by their execution and delivery of this Agreement, have approved
the Order in the form attached hereto. Any amendments to or modifications of the
Order (other than amendments or modifications ordered by the Court over the
objection of the Lenders) shall be subject to the prior written approval of the
Majority Lenders.
[SIGNATURE PAGE FOLLOWS]
61
IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement
to be executed and delivered in Chicago, Illinois by their proper and duly
authorized officers as of the date first set forth above.
BORROWER:
FLORSHEIM GROUP INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
Title: Executive Vice President,
Chief Financial Officer
THE FLORSHEIM SHOE STORE
COMPANY - NORTHEAST
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
Title: Executive Vice President,
Chief Financial Officer
THE FLORSHEIM SHOE STORE
COMPANY - WEST
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
Title: Executive Vice President,
Chief Financial Officer
FLORSHEIM OCCUPATIONAL
FOOTWEAR, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
Title: Executive Vice President,
Chief Financial Officer
▇.▇. ▇'▇▇▇▇▇ SHOE CO.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
Title: Executive Vice President,
Chief Financial Officer
AGENT:
BT COMMERCIAL CORPORATION, as Agent
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
-----------------------------
Title: Vice President
----------------------------
LENDERS:
BANKERS TRUST COMPANY
62
LASALLE BANK NATIONAL
ASSOCIATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------
Title: Senior Vice President
----------------------------
DIME FINANCIAL CORP.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Title: Vice President
----------------------------
63