THIRD AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
This THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is dated as
of April 7, 1997 and entered into by and among THE NORTH FACE, INC., a
Delaware corporation ("Borrower"), with its principal place of business at
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, the financial institutions
listed on the signature pages hereof, and ▇▇▇▇▇▇ FINANCIAL, INC., a Delaware
corporation (in its individual capacity, "▇▇▇▇▇▇") with offices at ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, for itself as a Lender and as agent
for any other Lender (in such capacity, "Agent"). All capitalized terms used
herein are defined in Section 1 of this Agreement.
WHEREAS, Borrower and ▇▇▇▇▇▇ entered into that certain Loan and
Security Agreement dated as of June 7, 1994 (as amended, supplemented or
otherwise modified, the "Original Loan Agreement");
WHEREAS, Borrower, Lenders and Agent entered into that certain Amended
and Restated Loan and Security Agreement dated as of March 1, 1995 (as
amended, the "Restated Loan Agreement");
WHEREAS, Borrower, Lenders and Agent entered into that certain Second
Amended and Restated Loan and Security Agreement dated as of June 21, 1996 (as
amended or modified prior to the date hereof, the "Existing Loan Agreement");
WHEREAS, Borrower, Agent and Lenders desire to amend and restate the
Existing Loan Agreement as provided herein to provide financing for Capital
Expenditures, Letters of Credit and working capital;
WHEREAS, upon the effectiveness of this Agreement as provided herein,
this Agreement shall amend and restate the Existing Loan Agreement in its
entirety, and the security interests and pledges granted to ▇▇▇▇▇▇, as the
lender under the Original Loan Agreement and the other "Loan Documents" (as
defined in the Original Loan Agreement), and granted and/or confirmed to Agent
under the Restated Loan Agreement or the Existing Loan Agreement and the other
"Loan Documents" (as defined in the Restated Loan Agreement or the Existing
Loan Agreement, as applicable) and the perfection thereof, shall remain in
full force;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Borrower, Lenders and Agent agree
as follows:
SECTION 1 DEFINITIONS
1.1 Certain Defined Terms. The following terms used in this Agreement
shall have the following meanings:
"Account(s)" means, as to the relevant Person, all "accounts" (as
defined in the UCC) now owned or hereafter created or acquired by such Person,
including all accounts receivable, contract rights and general intangibles
relating thereto, notes, drafts and other forms of obligations owed to or
owned by such Person arising or resulting from the sale of goods or the
rendering of services, all proceeds thereof, all guaranties and security
therefor, and all goods and rights represented thereby or arising therefrom
including the right of stoppage in transit, replevin and reclamation.
"Acquisition" means the acquisition by Borrower of substantially all of
the assets and certain liabilities of Old TNF pursuant to the Purchase
Agreement.
"Acquisition Documents" means the Purchase Agreement, the documents
listed on Schedule 1.1(A) to the Original Loan Agreement, and all other
agreements and instruments executed and delivered to transfer to Borrower all
of the Purchased Assets (as defined in the Purchase Agreement).
"Affiliate" means any Person (other than Agent or any Lender): (a)
directly or indirectly controlling, controlled by, or under common control
with, Borrower; (b) directly or indirectly owning or holding five percent (5%)
or more of any equity interest in Borrower; or (c) five percent (5%) or more
of whose voting stock or other equity interest is directly or indirectly owned
or held by Borrower; provided, however, that "Affiliate" shall not include a
Whitney Investor or any general or limited partner of a Whitney Investor or
any Person controlled by a Whitney Investor, other than Borrower and its
Subsidiaries. For purposes of this definition, "control" (including with
correlative meanings, the terms "controlling", "controlled by" and "under
common control with") means the possession directly or indirectly of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities or by contract or
otherwise.
"Agent" means ▇▇▇▇▇▇ in its capacity as agent for Lenders under the
Existing Agreement and this Agreement and the other Loan Documents and any
successor in such capacity appointed pursuant to subsection 9.2(G).
"Agent's Account" has the meaning assigned to that term in subsection
2.4(A).
"Agreement" means this Third Amended and Restated Loan and Security
Agreement, as it may be amended, supplemented or otherwise modified from time
to time.
"Asset Disposition" means the disposition, whether by sale, lease,
transfer, loss, damage, destruction, condemnation or otherwise, of any of the
following: (a) any of the
capital stock of any of Borrower's Subsidiaries, or (b) any or all of the
assets of Borrower or any of its Subsidiaries other than sales of Inventory in
the ordinary course of business.
"Assigned Agreements" means, collectively, the Acquisition Documents,
the Agreement dated as of February 18, 1994 among Old TNF, TNF Europe, Sophia
Limited and ▇▇▇▇-▇▇▇ Derclaye, and the Trademark License Agreement dated as of
August 1, 1992 between Old TNF and TNF Scotland.
"Blocked Account" has the meaning assigned to that term in subsection
5.6.
"Borrower" means the Delaware corporation known as TNF Holdings
Company, Inc. prior to consummation of the Acquisition and The North Face,
Inc. thereafter.
"Borrower Stock" means Common Stock and such Preferred Stock, if any,
as may be outstanding from time to time.
"Borrowing Limit" has the meaning assigned to that term in subsection
2.1(B).
"Budget" means the annual budget for Borrower and its Subsidiaries
prepared by the management of Borrower for the Board of Directors, including
consolidated and consolidating: (a) balance sheets; (b) statements of income;
(c) cash flow statements; and (d) statements of stockholder's equity, all
prepared on a division by division and Subsidiary by Subsidiary basis and
otherwise consistent with Borrower's historical financial statements, together
with appropriate supporting details and a statement of underlying assumptions.
"Business Day" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the States of Illinois,
Pennsylvania, New York, or California or is a day on which banking
institutions located in any such states are closed.
"Canadian Documents" means, collectively, the Distribution and License
Agreement dated as of January 1, 1995 between TNF Canada and Borrower, the
Security Agreement between TNF Canada and Borrower granting liens to Borrower
to secure all liabilities of TNF Canada to Borrower, all documents necessary
to perfect the Liens thereunder in favor of Borrower and the assignment of the
liens and Borrower's rights against TNF Canada to Agent for the benefit of
Lenders.
"CAPEX Loan" means the outstanding balance of all CAPEX Advances "CAPEX
Advances" means each advance made by Lenders under the CAPEX Loan Commitment
pursuant to subsection 2.1(A).
"CAPEX Loan Commitment" means (a) as to any Lender, the commitment of
such Lender to make CAPEX Advances as set forth on the signature page of this
Agreement opposite such Lender's signature or in the most recent Lender
Addition Agreement, if any, executed by such Lender and (b) as to all Lenders,
the aggregate commitment of all Lenders to make CAPEX Advances.
"CAPEX Note" or "CAPEX Notes" means each promissory note made by
Borrower in substantially the form of Exhibit B and issued pursuant to
subsection 2.1(D).
"Capital Expenditures" means all expenditures for (including deposits),
or contracts for expenditures with respect to, any fixed assets or
improvements, or for replacements, substitutions or additions thereto, which
have a useful life of more than one year, including the direct or indirect
acquisition of such assets by way of increased product or service charges,
offset items or otherwise.
"Capital Lease" means any lease of any property (whether real, personal
or mixed) that, in conformity with GAAP, should be accounted for as a capital
lease.
"Cash Equivalents" means: (a) marketable direct obligations issued or
unconditionally guarantied by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States,
in each case maturing within six (6) months from the date of acquisition
thereof; (b) commercial paper maturing no more than six (6) months from the
date issued and, at the time of acquisition, having a rating of at least A-1
from Standard & Poor's Ratings Group or at least P-1 from ▇▇▇▇▇'▇ Investors
Service, Inc.; and (c) certificates of deposit or bankers' acceptances
maturing within six (6) months from the date of issuance thereof issued by, or
overnight reverse repurchase agreements from, any commercial bank organized
under the laws of the United States of America or any state thereof or the
District of Columbia having combined capital and surplus of not less than
$250,000,000 and not subject to setoff rights in favor of such bank.
"Change in Control" means any Person or "group" (as defined under
Section 13d-3 and Regulation 13D of the Securities and Exchange Act) other
than the Investor Group becomes the beneficial owner, directly or indirectly,
of thirty percent or more of the issued and outstanding voting stock of
Borrower.
"Closing Date" means the date on which all conditions set forth in
Section 3.1 hereof are satisfied or waived by all Lenders, but not later than
April 30, 1997.
"Collateral" means, collectively, (a) all capital stock pledged to
Agent for the benefit of Lenders pursuant to the Pledge Agreement; (b) all
property of Borrower, now owned or hereafter acquired, in which a Lien is
granted to Agent for the benefit of Lenders pursuant to the Original Loan
Agreement, the Restated Loan Agreement, the Existing Loan Agreement, this
Agreement and any other Loan Document; (c) all property of Borrower or any of
its Subsidiaries, now owned or hereafter acquired, in which a Lien is granted
to Agent for the benefit of Lenders pursuant to any Loan Document, including
the property of TNF Canada in which Borrower has been granted a security
interest and assigned such security interest to Agent for the benefit of
Lenders; (d) any property or interest provided in addition to or in
substitution for any of the foregoing; and (e) all proceeds thereof.
"Commitment" or "Commitments" means the commitment or commitments of
Lenders to make Loans as set forth in subsections 2.l(A) and/or 2.1(B) and of
Agent to issue Lender Letters of Credit and purchase risk participations in
Underlying L/C's as set forth in subsection 2.1(E).
"Common Stock" means the Common Stock, par value $.0025 per share, of
Borrower, or any other capital stock of Borrower into which such stock is
reclassified or reconstituted.
"Compliance Certificate" means a certificate duly executed by the chief
executive officer or chief financial officer of Borrower appropriately
completed and in substantially the form of Exhibit A.
"Default" means a condition or event that, after notice or lapse of
time or both, would constitute an Event of Default if that condition or event
were not cured or removed within any applicable grace or cure period.
"Default Rate" has the meaning assigned to that term in subsection 2.2.
"Dilution Reserve" means a reserve against the Borrowing Limit for
doubtful Accounts as shown on Borrower's financial statements.
"Dollars" and "$" means the lawful money of the United States of
America.
"Domestic Accounts" means all accounts owing to Borrower or TNF Canada
from account debtors located in the United States or Canada but excluding the
Intercompany Inventory Account.
"Domestic Subsidiary" means any Subsidiary of Borrower or any of its
Subsidiaries organized in the United States or Canada or having any business
operations in the United States or Canada, including TNF Canada; provided that
if TNF Canada enters into a Permitted Canadian Financing, TNF Canada and its
Subsidiaries shall no longer be Domestic Subsidiaries.
"EBITDA" means, for any period, without duplication, the total of the
following for Borrower and its Domestic Subsidiaries on a consolidated basis,
each calculated for such period: (1) net income determined in accordance with
GAAP plus, to the extent included in the calculation of net income, (2) the
sum of (a) taxes paid or accrued; (b) Interest Expenses, net of interest
income, paid or accrued; (c) depreciation and amortization; and (d) other non-
cash charges (excluding accruals for cash expenses made in the ordinary course
of business), less (or plus, in the case of non-cash losses), to the extent
included in the calculation of net income, (3) the sum of (e) the income of
any Person (other than wholly-owned Domestic Subsidiaries of Borrower) in
which Borrower or any of its wholly-owned Domestic Subsidiaries has an
ownership interest unless such income is received by Borrower or such wholly-
owned Domestic Subsidiary in a cash distribution; (f) gains or losses from
sales or other dispositions of assets (other than Inventory in the normal
course of business); and (g) extraordinary or non-recurring gains or non-cash
losses, but not net of extraordinary or non-recurring "cash" losses.
"Employee Benefit Plan" means any employee benefit plan within the
meaning of Section 3(3) of ERISA which (a) is maintained for employees of any
Loan Party or any ERISA Affiliate or (b) has at any time within the preceding
six (6) years been maintained for the employees of any Loan Party or any
Seller or any current or former ERISA Affiliate.
"Environmental Laws" means any present or future federal, foreign,
state or local law, rule, regulation or order relating to pollution, waste
disposal, industrial hygiene or the protection of human health or safety,
plant life or animal life, natural resources or the environment.
"Equipment" means, as to the relevant Person, all "equipment" (as
defined in the UCC) now owned or hereafter acquired by such Person including,
without limitation, all machinery, motor vehicles, trucks, trailers, vessels,
aircraft and rolling stock and all parts thereof and all additions and
accessions thereto and replacements therefor.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute and all rules and
regulations promulgated thereunder.
"ERISA Affiliate", as applied to any Loan Party or any Seller, means
any Person who is a member of a group which is under common control with such
Person, who together with such Person is treated as a single employer within
the meaning of Section 414(b) and (c) of the IRC.
"Event of Default" means each of the events set forth in subsection 8.1.
"Existing Loan Agreement" has the meaning set forth in the recitals to
this Agreement.
"Federal Funds Effective Rate" means, for any day, the weighted average
of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published on the
immediately following Business Day by the Federal Reserve Bank of New York or,
if such rate is not published for any Business Day, the average of the
quotations for the day of the requested Loan received by Agent from three
Federal funds brokers of recognized standing selected by Agent.
"Fiscal Year" means each twelve month period ending on the last day of
December in each year.
"Fixed Charge Coverage" means, for any period, Operating Cash Flow
divided by Fixed Charges.
"Fixed Charges" means, for any period, without duplication, for
Borrower and its Domestic Subsidiaries on a consolidated basis, and each
calculated for such period, (a) Interest Expenses; plus (b) scheduled payments
of principal with respect to all Indebtedness; plus (c) any provision for (to
the extent it is greater than zero) income or franchise taxes included in the
determination of net income, excluding any provision for deferred taxes
included in net income; plus (d) payment of deferred taxes accrued in any
prior period.
"Funding Date" means the date of each funding of a Loan or issuance of
a Lender Letter of Credit or an Underlying L/C.
"GAAP" means generally accepted accounting principles in effect in the
United States of America and set forth in the opinions and pronouncements of
the Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board that are applicable to the circumstances as of the date of
determination.
"Goldwin" means Kabushiki Kaisha Goldwin, a Japanese corporation.
"Goldwin Stock Purchase Agreement" means that certain Stock Purchase
Agreement dated as of December 28, 1993 between Borrower and Goldwin, as
amended.
"Hazardous Material" means all or any of the following: (a) substances
that are defined or listed in, or otherwise classified pursuant to, any
applicable laws or regulations as "hazardous substances", "hazardous
materials", "hazardous wastes", "toxic substances" or any other formulation
intended to define, list or classify substances by reason of deleterious
properties such as ignitability, corrosivity, reactivity, carcinogenicity,
reproductive toxicity or "EP toxicity"; (b) oil, petroleum or petroleum
derived substances, natural gas, natural gas liquids or synthetic gas and
drilling fluids, produced waters and other wastes associated with the
exploration, development or production of crude oil, natural gas or geothermal
resources; (c) any flammable substances or explosives or any radioactive
materials; and (d) asbestos in any form or electrical equipment which contains
any oil or dielectric fluid containing levels of polychlorinated biphenyls in
excess of fifty parts per million.
"Indebtedness", as applied to any Person, means, without duplication:
(a) all indebtedness for borrowed money; (b) obligations under leases which in
accordance with GAAP constitute Capital Leases; (c) notes payable and drafts
accepted representing extensions of credit whether or not representing
obligations for borrowed money, including reimbursement obligations in respect
of letters of credit; (d) any obligation owed for all or any part of the
deferred purchase price of property or services if the purchase price is due
more than six months from the date the obligation is incurred or is evidenced
by a note or similar written instrument (but excluding any operating leases);
and (e) all indebtedness secured by any Lien on any property or asset owned or
held by that Person regardless of whether the indebtedness secured thereby
shall have been assumed by that Person or is nonrecourse to the credit of that
Person (but, only as to indebtedness which is non-recourse to the credit of
such Person, not in excess of the value of the asset so secured).
Notwithstanding the foregoing, for purposes of calculating the covenants
contained in Section 6, Indebtedness shall not include liabilities of Borrower
or any of its Subsidiaries under Permitted FX Contracts.
"Intangible Assets" means the amount of intangible assets (determined
in conformity with GAAP) of Borrower and its Subsidiaries, including, without
limitation, goodwill, trademarks, tradenames, licenses, organizational costs,
deferred amounts, covenants not to compete, unearned income and restricted
funds.
"Intellectual Property" means, with respect to the applicable Person,
all of such Person's present and future designs, patents, patent rights and
applications therefor, trademarks and registrations or applications therefor,
trade names, trade styles, logos, inventions, copyrights and all applications
and registrations therefor, software or computer programs, license rights,
trade secrets, methods, processes, know-how, drawings, specifications,
descriptions, and all memoranda, notes and records with respect to any
research and development, whether now owned or hereafter acquired by such
Person, all goodwill associated with any of the foregoing, and proceeds of all
of the foregoing, including, without limitation, proceeds of insurance
policies thereon.
"Intercompany Inventory Account" means the aggregate amounts
(denominated in Dollars) due to Borrower from TNF Canada for the purchase of
Inventory in accordance with the Canadian Documents.
"Interest Expenses" means, without duplication, for any period, the
following for Borrower and its Domestic Subsidiaries, each calculated for such
period: interest expenses deducted in the determination of net income
(excluding (i) the amortization of fees and costs with respect to the
transactions contemplated hereunder on the Original Closing Date which have
been capitalized as transaction costs; and (ii) interest paid in kind).
"Interest Period" means any interest period applicable to a Loan as
determined pursuant to subsection 2.2(B).
"Interest Rate Determination Date" means each date for calculating the
LIBOR Rate for purposes of determining the interest rate applicable to any
LIBOR Rate Loan pursuant to subsection 2.2 (A) . The Interest Rate
Determination Date shall be the second Business Day prior to the first day of
the related Interest Period for a LIBOR Rate Loan.
"Inventory" means, with respect to the applicable Person, all
"inventory" (as defined in the UCC) now owned or hereafter acquired by such
Person, wherever located including finished goods, raw materials, work in
process and other materials and supplies used or consumed in its business and
goods which are returned to or repossessed by such Person.
"Inventory Sublimit" means $40,000,000 in 1997 and $45,000,000
thereafter.
"Investor Group" means, collectively, the Whitney Investors, Marsden ▇.
▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇.
"IRC" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute and all rules and regulations promulgated
thereunder.
"Lender" or "Lenders" means each financial institution which is a party
to this Agreement, together with its successors and permitted assigns pursuant
to subsection 9.1.
"Lender Addition Agreement" means an agreement among Agent, a Lender
and such Lender's assignee substantially in the form attached hereto as
Exhibit E, delivered to Agent in connection with an assignment of a Lender's
interest hereunder in accordance with subsection 9.1.
"Lender Letter of Credit" has the meaning assigned to that term in
subsection 2.1(E), and shall include each Lender Letter of Credit issued under
the Existing Loan Agreement and outstanding on the Closing Date.
"Leverage Ratio" means as of any date of determination, the ratio of
(a) the sum of all long term Indebtedness of Borrower and its Domestic
Subsidiaries (including the current portion thereof but excluding any
Revolving Loan) outstanding plus the average daily balance of the Revolving
Loan during the applicable period to (b) EBITDA for such period.
"LIBOR Rate" means, for each Interest Period, a rate of interest equal
to:
(a) the rate of interest determined by Agent at
which deposits in Dollars for the relevant Interest Period are offered based
on information presented on the Reuters Screen LIBOR Page as of 11:00 A.M.
(London time) on the day which is two (2) Business Days prior to the first day
of such Interest Period; provided that if at least two such offered rates
appear on the Reuters Screen LIBOR Page in respect of such Interest Period,
the arithmetic mean of all such rates (as determined by Agent) will be the
rate used; provided further that if Reuters ceases to provide LIBOR
quotations, such rate shall be the average rate of interest determined by
Agent at which deposits in Dollars are offered for the relevant Interest
Period by Bankers Trust Company and Chase Manhattan Bank, N.A. (or their
respective successors) to prime banks in the London interbank market as of
11:00 A.M. (London time) on the applicable Interest Rate Determination Date,
divided by
(b) a number equal to 1.0 minus the aggregate (but
without duplication) of the rates (expressed as a decimal fraction) of
reserve requirements in effect on the day which is two (2) Business Days prior
to the beginning of such Interest Period (including, without limitation,
basic, supplemental, marginal and emergency reserves under any regulations of
the Board of Governors of the Federal Reserve System or other governmental
authority having jurisdiction with respect thereto, as now and from time to
time in effect) for Eurocurrency funding (currently referred to as
"Eurocurrency liabilities" in Regulation D of such Board) which are required
to be maintained by a member bank of the Federal Reserve System;
(such rate to be adjusted to the nearest one sixteenth of one percent (1/16 of
1%) or, if there is no nearest one sixteenth of one percent (1/16 of l%), to
the next higher one sixteenth of one percent (1/16 of 1%).
"LIBOR Rate Loans" means Loans bearing interest at rates determined by
reference to the LIBOR Rate as provided in subsection 2.2(A)(2).
"Lien" means any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind, whether voluntary or involuntary, (including any
conditional sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any security interest).
"Loan" or "Loans" means an advance or advances under the CAPEX Loan
Commitment or the Revolving Loan Commitment including all loans under the
Existing Loan Agreement outstanding on the Closing Date.
"Loan Documents" means this Agreement, the Original Loan Agreement, the
Existing Loan Agreement, the Notes, the Pledge Agreement, the Trademark and
Patent Agreements, the Canadian Documents, any Mortgages, and all other
instruments, documents and agreements executed by or on behalf of any Loan
Party and delivered concurrently herewith or at any time hereafter to or for
Agent or any Lender in connection with the Loans and other transactions
contemplated by this Agreement, all as amended, restated, supplemented or
modified from time to time.
"Loan Party" means, collectively, Borrower, Borrower's Subsidiaries,
and any other Person (other than Agent or any Lender or a Shareholder) which
is or becomes a party to any Loan Document.
"Loan Year" has the meaning assigned to that term in subsection 2.3(D).
"Management Stock Plans" means existing or future stock purchase,
savings, option, bonus, stock appreciation, incentive or similar plans
approved by Borrower's Board of Directors for the issuance of stock or options
for the benefit of Borrower's employees, officers, directors or consultants.
"Management Restricted Shares" means shares of Common Stock issued as
"restricted stock" pursuant to Borrower's 1994 Stock Incentive Plan.
"Management Stock Purchase Agreement" means the Stock Purchase and Non-
Competition Agreement dated as of the Original Closing Date among Borrower,
Marsden ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, as amended.
"Material Adverse Effect" means (a) a material adverse effect upon the
business, operations, properties, assets or condition (financial or otherwise)
of Borrower on an individual basis or on Borrower and its Subsidiaries, taken
as a whole or (b) the impairment in any material respect of the ability of any
Loan Party to perform its obligations under any Loan Document to which it is a
party or of Agent or any Lender to enforce or collect any of the Obligations.
"Maximum Revolving Loan Amount" has the meaning assigned to that term
in subsection 2.1(B).
"Mortgage" means any mortgage, deed of trust, leasehold mortgage,
leasehold deed of trust, collateral assignments of leases or other documents
under the laws of any applicable jurisdiction granting Liens on interests in
real property and delivered by any Loan Party to Agent, on behalf of Lenders,
with respect to Mortgaged Property, all in form and substance acceptable to
Agent.
"Mortgaged Property" has the meaning assigned to that term in
subsection 5.15(a).
"Note" or "Notes" means one or more of the CAPEX Notes or Revolving
Notes, or a combination thereof.
"Obligations" means all obligations, liabilities and indebtedness of
every nature of each Loan Party from time to time owed to Agent or any Lender
under the Loan Documents, including the principal amount of all debts, claims
and indebtedness, accrued and unpaid interest and all fees, costs and
expenses, whether primary, secondary, direct, contingent, fixed or otherwise,
heretofore, now and/or from time to time hereafter owing, due or payable.
"Odyssey Bank" means any of Chemical Bank, The First National Bank of
Boston, or The Hong Kong & Shanghai Banking Corporation Limited or each and
all of their Subsidiaries, successors and assigns.
"Old TNF" means the California corporation that was known as The North
Face prior to the Original Closing Date.
"Operating Cash Flow" means, for any period, (a) EBITDA; less (b)
Capital Expenditures (but excluding Capital Leases incurred during such period
and Capital Expenditures made with CAPEX Advances).
"Original Closing Date" means June 7, 1994.
"Original Loan Agreement" has the meaning set forth in the Recitals to
this Agreement.
"Permitted CAPEX Equipment" means Equipment purchased by Borrower after
the Closing Date the purchase price of which will be capitalized in accordance
with GAAP.
"Permitted Canadian Financing" means Indebtedness of TNF Canada to a
Person other than Borrower if (a) no guaranty or other credit support or Liens
are provided by Borrower; (b) the Intercompany Inventory Account and all other
Indebtedness and liabilities of TNF Canada to Borrower are repaid in full from
the initial proceeds; and thereafter (c) further sales of Inventory are made
by Borrower to TNF Canada only for cash in advance, COD, letter of credit or
credit (but at no time may the Intercompany Inventory Account exceed Fifty
Thousand Dollars ($50,000)); (d) no Lender Letters of Credit or Underlying L/C
may be issued for the benefit of TNF Canada; and (e) no Inventory of Borrower
shall be located in Canada.
"Permitted Encumbrances" means the following types of Liens: (a)
Liens (other than Liens relating to Environmental Laws or ERISA) for taxes,
assessments or other governmental charges not yet due and payable; (b)
statutory Liens of landlords, carriers, warehousemen, mechanics, materialmen
and other similar liens imposed by law, which are incurred in the ordinary
course of business for sums not more than thirty (30) days delinquent or which
are being contested in good faith if Borrower has notified Agent of the
assertion of such Liens and, if required by Agent, an adequate reserve against
the Borrowing Limit shall have been made therefor; (c) Liens (other than any
Lien imposed by ERISA) incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of social security, statutory obligations, surety and appeal
bonds, bids, leases, utilities, government contracts, trade contracts,
licenses of computer software or hardware, performance and return-of-money
bonds and other similar obligations (exclusive of obligations for the payment
of borrowed money); (d) easements, rights-of-way, restrictions, and other
similar charges or encumbrances not interfering in any material respect with
the ordinary conduct of the business of any Loan Party or any of its
Subsidiaries; (e) Liens for purchase money obligations or Capital Leases,
provided that (i) the purchase of the asset subject to any such Lien is
permitted under subsection 6.3, (ii) the Indebtedness secured by any such Lien
is permitted under subsection 7.1, and (iii) such Lien encumbers only the
asset so purchased; (f) Liens in favor of Agent on behalf of Lenders; (g)
judgment Liens which do not create an Event of Default; (h) Liens set forth on
Schedule 1.1(B); (i) Liens securing Indebtedness of TNF Scotland permitted to
be incurred under subsection 7.1(d); (j) Liens securing Indebtedness of TNF
Canada to Borrower which have been assigned to Agent for the benefit of
Lenders; and (k) Liens on assets of TNF Canada securing Permitted Canadian
Financing.
"Permitted FX Contracts" means (a) forward currency exchange contracts
of TNF Italy or TNF Europe and (b) forward currency exchange contracts of
Borrower or any other Subsidiary if (i) the settlement date for each such
contract is more than two (2) days after Borrower's or such Subsidiary's entry
into such contract; (ii) the Dollar value of all such contracts does not
exceed $15,000,000; and (iii) the tenor of each such contract does not exceed
eighteen (18) months from Borrower's or such Subsidiary's entry into such
contract.
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, joint stock
companies, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities, and governments and agencies and political subdivisions
thereof.
"Pledge Agreement" means the Amended and Restated Stock Pledge
Agreement executed and delivered by Borrower concurrently with the delivery of
the Restated Loan Agreement.
"Preferred Stock" means any capital stock of Borrower other than the
Common Stock.
"Prime Rate" means a variable rate of interest per annum equal to the
higher of (a) the rate of interest from time to time published by the Board of
Governors of the Federal Reserve System as the "Bank Prime Loan" rate in
Federal Reserve Statistical Release H.15(519) entitled "Selected Interest
Rates" or any successor publication of the Federal Reserve System reporting
the Bank Prime Loan rate or its equivalent, or (b) the Federal Funds Effective
Rate. The statistical release generally sets forth a Bank Prime Loan rate for
each Business Day. In the event the Board of Governors of the Federal Reserve
System ceases to publish a Bank Prime Loan rate or its equivalent, the term
"Prime Rate" shall mean a variable rate of interest per annum equal to the
highest of the "prime rate", "reference rate", "base rate", or other similar
rate announced from time to time by any of Bankers Trust Company or The Chase
Manhattan Bank, National Association or their successors (with the
understanding that any such rate may merely be a reference rate and may not
necessarily represent the lowest or best rate actually charged to any customer
by the any such bank).
"Prime Rate Loans" means Loans bearing interest at rates determined by
reference to the Prime Rate as provided in subsection 2.2(A)(2).
"Pro Forma" means the unaudited consolidated and consolidating balance
sheet of Borrower and its Subsidiaries as of the Original Closing Date annexed
as Schedule 1.1(C) to the Original Loan Agreement.
"Pro Rata Share" means (a) with respect to matters relating to a
particular Commitment of a Lender (including the making or repayment of Loans
pursuant to that Commitment), the percentage obtained by dividing (i) such
Commitment of that Lender by (ii) all such Commitments of all Lenders and
(b) with respect to all other matters, the percentage obtained by dividing
(i) the Total Loan Commitment of a Lender by (ii) the Total Loan Commitments
of all Lenders, in either case as such percentage may be adjusted by
assignments permitted pursuant to subsection 9.1.
"Purchase Agreement" means that certain Purchase and Sale Agreement
[Short Form] dated as of May 25, 1994 among Sellers and Borrower, as
purchaser, including all exhibits and schedules thereto.
"Requisite Lenders" means Lenders having (i) fifty-one percent (51%) or
more of the Total Loan Commitments or, (ii) if the CAPEX Loan Commitments have
been terminated, fifty-one percent (51%) or more of the sum of the Revolving
Loan Commitments and the aggregate outstanding principal amount of the CAPEX
Loans, if any, or (iii) if all Commitments have been terminated fifty-one
percent (51%) or more of the aggregate outstanding principal amount of the
Revolving Loan and the CAPEX Loan.
"Restated Loan Agreement" has the meaning set forth in the recitals to
this Agreement.
"Restricted Junior Payment" means: (a) any dividend or other
distribution, direct or indirect, on account of any shares of any class of
stock of Borrower or any of its Subsidiaries now or hereafter outstanding; (b)
any payment or prepayment of principal of, premium, if any, or interest on, or
any redemption, conversion, exchange, retirement, defeasance, sinking fund or
similar payment, purchase or other acquisition for value, direct or indirect,
of any shares of any class of stock of Borrower or any of its Subsidiaries now
or hereafter outstanding; (c) any payment made to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire
shares of any class of stock of Borrower or any of its Subsidiaries now or
hereafter outstanding; (d) any payment by Borrower or any of its Subsidiaries
of any management fees, director's fees, guarantee fees or similar fees to any
Affiliate, whether pursuant to a management agreement or otherwise, and (e)
fees, salaries or other compensation to any Shareholder or to the chief
executive officer and second most senior executive officer of Borrower.
"Revolving Loan" means all advances made by Lenders pursuant to
subsection 2.1(B) (including those revolving loans under the Existing Loan
Agreement which remain outstanding as Revolving Loans on the Closing Date) and
any amounts added to the principal balance of the Revolving Loan pursuant to
this Agreement.
"Revolving Loan Commitment" means (a) as to any Lender, the commitment
of such Lender to make Revolving Loans and to purchase risk participations in
Lender Letters of Credit and Underlying L/C's pursuant to subsection 2.1(D) as
set forth on the signature page of this Agreement opposite such Lender's
signature or in the most recent Lender Addition Agreement, if any, executed by
such Lender and (b) as to all Lenders, the aggregate commitment of all Lenders
to make Revolving Loans and to purchase risk participations in Lender Letters
of Credit and Underlying L/C's pursuant to subsection 2.1(E).
"Revolving Note" or "Revolving Notes" means each promissory note made
by Borrower in substantially the form of Exhibit D and issued pursuant to
subsection 2.1(D).
"Risk Participation Agreement" has the meaning assigned to that term in
subsection 2.1(E).
"Risk Participation Liability" means, as to each Lender Letter of
Credit and each Risk Participation Agreement, all reimbursement obligations of
Borrower or any of its Subsidiaries to the issuer of the Lender Letter of
Credit or the Underlying L/C including: (a) the amount available to be drawn
or which may become available to be drawn; (b) all amounts which have been
paid or made available by the issuing bank to the extent not reimbursed; and
(c) all unpaid interest, fees and expenses with respect thereto.
"Risk Participation Reserve" means, at any time, an amount equal to (a)
the aggregate amount of Risk Participation Liability with respect to all
Lender Letters of Credit, Underlying L/C's and all Risk Participation
Agreements outstanding at such time plus (b) to the extent not included in
clause (a), the aggregate amount theretofore paid by Agent or any Lender under
Lender Letters of Credit or Risk Participation Agreements for which Agent or
such Lender has not been reimbursed or which has not been debited to the Loan
Account pursuant to subsection 2.1(E)(2).
"Sellers" means, collectively, Odyssey Holding Inc. and Old TNF as
sellers under the Purchase Agreement.
"Shareholder" means each Person which owns shares of the capital stock
of Borrower, whether beneficially or of record.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which 50% or more of the total voting
power of shares of stock (or equivalent ownership or controlling interest)
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof.
"Tangible Net Worth" means an amount equal to (a) Borrower's and its
Domestic Subsidiaries' net worth; less (b) Borrower's and its Domestic
Subsidiaries' Intangible Assets; less (c) Borrower's and its Domestic
Subsidiaries' prepaid expenses; less (d) all obligations owed to Borrower or
any of its Domestic Subsidiaries by an Affiliate of Borrower or any of its
Subsidiaries; and less (e) all loans by Borrower or any of its Domestic
Subsidiaries to officers, stockholders or employees of Borrower or any of its
Subsidiaries.
"Term" has the meaning assigned to that term in subsection 2.5.
"Termination Date" means the date this Agreement is terminated as set
forth in subsection 2.5.
"TNF Canada" means The North Face (Canada), Inc., a corporation
organized under the laws of Canada, and a wholly-owned Subsidiary of Borrower.
"TNF Europe" means The North Face (Europe) Limited, a private limited
company incorporated in Scotland under the Companies Acts, formerly known as
The North Face (Scotland) Limited, and a wholly-owned Subsidiary of Borrower.
"TNF Italy" means The North Face (Italy) S.r.l., a limited liability
company formed under the laws of Italy and owned by TNF Europe and Borrower.
"Total Interest Coverage" means, for any period, Operating Cash Flow
divided by Interest Expenses.
"Total Loan Commitment" means the aggregate Commitments of any Lender
with respect to the Revolving Loan Commitment and the CAPEX Loan Commitment.
"Trademark and Patent Agreements" means, collectively, the agreement
entitled Amended and Restated Confirmation and Grant of Security Interest in
Trademarks and Trademark Applications and the agreement entitled Amended and
Restated Confirmation and Grant of Security Interest in Patents, executed and
delivered by Borrower concurrently with the Restated Loan Agreement.
"Transaction Documents" means collectively, the Loan Documents, the
Goldwin Stock Purchase Agreement, the Borrower Stock and the Acquisition
Documents and all other material documents and agreements executed and
delivered by Borrower on the Original Closing Date in connection with the
Acquisition, including the financing thereof.
"UCC" means the Uniform Commercial Code as in effect on the date hereof
in the State of Illinois, as amended from time to time, and any successor
statute, or as in effect in any jurisdiction in which Collateral is located
(provided, that with respect to the shares pledged under the Pledge Agreement,
UCC means the Uniform Commercial Code as in effect in the State of New York).
"Underlying L/C" means a letter of credit issued by a bank under a Risk
Participation Agreement.
"Whitney Investor" means each of ▇.▇. ▇▇▇▇▇▇▇ & Co., Whitney 1990
Equity Fund, L.P. and Whitney Subordinated Debt Fund, L.P., and any Affiliate
of any of them to which Borrower's Common Stock is transferred.
1.2 Accounting Terms. For purposes of this Agreement, all accounting terms
not otherwise defined herein shall have the meanings assigned to such terms in
conformity with GAAP. Financial statements and other information furnished to
Agent or any Lender pursuant to subsection 5.1 shall be prepared in accordance
with GAAP as in effect at the time of such preparation. In the event any
"Accounting Changes" (as defined below) shall occur and such changes affect
financial covenants, standards or terms in this Agreement, then Borrower and
Lenders agree to enter into negotiations in order to amend such provisions of
this Agreement so as to equitably reflect such Accounting Changes with the
desired result that the criteria for evaluating the financial condition of
Borrower and its Subsidiaries shall be the same after such Accounting Changes
as if such Accounting Changes had not been made, and until such time as such
an amendment shall have been executed and delivered by Borrower and Requisite
Lenders, (A) all financial covenants, standards and terms in this Agreement
shall be calculated and/or construed as if such Accounting Changes had not
been made, and (B) Borrower shall prepare footnotes to each Compliance
Certificate and the financial statements required to be delivered hereunder
that show the differences between the financial statements delivered (which
reflect such Accounting Changes) and the basis for calculating financial
covenant compliance (without reflecting such Accounting Changes). "Accounting
Changes" means: (a) changes in accounting principles required by GAAP and
implemented by Borrower and/or any of its Subsidiaries; (b) changes in
accounting principles recommended by the certified public accountants for
Borrower and/or any of its Subsidiaries (which certified public accountants
have been approved by Requisite Lenders); and (c) changes in carrying value of
Borrower's (or any of its Subsidiaries') assets, liabilities or equity
accounts resulting from (i) the application of purchase accounting principles
(A.P.B. 16 and/or 17 and EITF 88-16 and FASB 109) to the Acquisition or (ii)
as the result of any other adjustments that, in each case, were applicable to,
but not included in, the Pro Forma, except those adjustments described in
Schedule 1.2. All such adjustments resulting from expenditures made
subsequent to the Original Closing Date (including, but not limited to,
capitalization of costs and expenses or payment of pre-Closing Date
liabilities) shall be treated as expenses in the period the expenditures are
made and deducted as part of the calculation of EBITDA in such period.
1.3 Other Definitional Provisions. References to "Sections",
"subsections", "Exhibits" and "Schedules" shall be to Sections, subsections,
Exhibits and Schedules, respectively, of this Agreement unless otherwise
specifically provided. Any of the terms defined in subsection 1.1 may, unless
the context otherwise requires, be used in the singular or the plural
depending on the reference. In this Agreement, words importing any gender
include the other genders; the words "including," "includes" and "include"
shall be deemed to be followed by the words "without limitation"; references
to agreements and other contractual instruments shall be deemed to include
subsequent amendments, assignments, and other modifications thereto, but only
to the extent such amendments, assignments and other modifications are not
prohibited by the terms of this Agreement or any other Loan Document;
references to Persons include their respective permitted successors and
assigns or, in the case of governmental Persons, Persons succeeding to the
relevant functions of such Persons; and all references to statutes and related
regulations shall include any amendments of same and any successor statutes
and regulations.
SECTION 2 LOANS AND COLLATERAL
2.1 Loans
(A) CAPEX Line. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of Borrower
and the other Loan Parties set forth herein and in the other Loan Documents,
each Lender agrees, severally and not jointly, to lend to Borrower its Pro
Rata Share of each CAPEX Advance from time to time requested by Borrower prior
to March 31,1998, the aggregate amount of which shall not exceed $5,000,000;
provided that the principal amount of each CAPEX Advance shall not be less
than $100,000. Amounts borrowed under this subsection 2.1(A) and prepaid may
not be reborrowed. The principal of the CAPEX Loan shall be repaid in equal
quarterly installments based on five (5) year amortization of the outstanding
CAPEX Loan on March 31, 1998 commencing on April 1, 1998, but the outstanding
principal balance, together with all accrued and unpaid interest thereon,
shall be due and payable in full on the Termination Date.
(B) Revolving Loan. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of Borrower
herein set forth, each Lender agrees, severally but not jointly, to lend to
Borrower from time to time its Pro Rata Share of the Revolving Loan. The
Revolving Loan Commitment is Sixty Million Dollars ($60,000,000). Amounts
borrowed under this subsection 2.1(B) may be repaid and reborrowed at any time
prior to the earlier of (i) the termination of the Revolving Loan Commitment
pursuant to subsection 8.3 or (ii) the Termination Date. No Lender shall have
any obligation to make advances under this subsection 2.1(B) to the extent any
requested advance would cause the balance of the Revolving Loans then
outstanding to exceed the Maximum Revolving Loan Amount; provided that Lenders
may, in their sole discretion, with the approval of all Lenders elect from
time to time to make advances in excess of the Maximum Revolving Loan Amount
or the Revolving Loan Commitment. If advances in excess of the Maximum
Revolving Loan Amount are made pursuant to the approval of Lenders as set
forth in the proviso to the preceding sentence, then for purposes of
subsection 2.4(B)(1), the Maximum Revolving Loan Amount shall be deemed
increased by such amount but only for so long as Lenders allow such Loans to
be outstanding.
(1) "Maximum Revolving Loan Amount" means, as of any date
of determination, the lesser of (a) the Revolving Loan Commitment minus the
Risk Participation Reserve and (b) the Borrowing Limit minus the Risk
Participation Reserve.
(2) "Borrowing Limit" means, as of any date of
determination, an amount equal to the sum of (a) eighty-five percent (85%) of
Domestic Accounts of Borrower; plus (b) the lesser of (1) fifty percent (50%)
of Inventory of Borrower located in the United States and Canada (or 75% of
such Inventory of Borrower from April 1 to September 30 of each year) and (2)
the Inventory Sublimit; plus (c) forty-five percent (45%) of the aggregate
amount of Risk Participation Liability with respect to all outstanding Lender
Letters of Credit and Risk Participation Agreements used to purchase
Inventory; plus (d) eighty-five percent (85%) of Domestic Accounts of TNF
Canada; provided that the amounts available under this clause (d) shall not
exceed the unpaid amount of the Intercompany Inventory Account less reserves
for withholding taxes, if any, payable by TNF Canada with respect thereto and
shall only be available until TNF Canada enters into a Permitted Canadian
Financing; less (e) the Dilution Reserve; less (f) in each category, such
other reserves as Agent in its sole, reasonable discretion elects to establish
from time to time; plus (g) $5,000,000. For purposes of calculating the
Borrowing Limit, all Accounts and Inventory of TNF Canada shall be denominated
in Dollars, based on the most recently available conversion rate from Canadian
dollars.
(C) Borrowing Mechanics. (1) Prime Rate Loans made on any Funding
Date shall be in an aggregate minimum amount of Twenty-five Thousand Dollars
($25,000) and integral multiples of Twenty-five Thousand Dollars ($25,000) in
excess of such amount. LIBOR Rate Loans made on any Funding Date shall be in
an aggregate minimum amount of Five Hundred Thousand Dollars ($500,000) and
integral multiples of One Hundred Thousand Dollars ($100,000) in excess of
such amount.
(2) When Borrower desires to borrow under subsection 2.1 (A) or
(B) Borrower shall deliver to Agent a notice of borrowing no later than noon
(Chicago time) (i) on the proposed Funding Date in the case of a requested
Prime Rate Loan and (ii) at least two (2) Business Days in advance of the
proposed Funding Date in the case of a requested LIBOR Rate Loan ("Notice of
Borrowing"). The Notice of Borrowing shall specify: (1) the proposed Funding
Date (which shall be a Business Day); (2) the amount and type of Loans
requested; (3) in the case of a Revolving Loan, that the aggregate amount of
the Revolving Loan will not exceed the Maximum Revolving Loan Amount; (4)
whether such Loans shall consist of Prime Rate Loans or LIBOR Rate Loans; (5)
if such Loans, or any portion thereof are to be LIBOR Rate Loans, the amounts
thereof and the initial Interest Periods therefor; and (6) that no Default or
Event of Default has occurred and is continuing or would result from the
proposed advance. Borrower may not borrow any LIBOR Rate Loan if any Default
or Event of Default has occurred and is continuing.
In lieu of delivering a Notice of Borrowing, Borrower may give
Agent telephonic notice by the required time of the notice hereunder; provided
that such notice shall be promptly confirmed in writing by delivery of a
written Notice of Borrowing to Agent on that same day.
Neither Agent nor any Lender shall incur any liability to
Borrower for acting upon any telephonic notice that Agent believes in good
faith to have been given by a duly authorized officer or other person
authorized to borrow on behalf of Borrower or for otherwise acting in good
faith under this subsection 2.1(C). Neither Agent nor any Lender will make
any advance pursuant to any telephonic notice unless Agent has also received
the most recent financial statements required under subsection 5.1 by noon
(Chicago time). The making of an advance pursuant to telephonic notice shall
constitute a Loan under this Agreement. Each such advance made to Borrower
under the Revolving Loan shall be deposited by wire transfer in immediately
available funds in such account as Borrower may from time to time designate to
Agent in writing.
(3) Borrower shall give Agent at least three (3) Business Days
prior written notice of its desire to borrow any CAPEX Advance, which notice
shall be accompanied by a certificate of Borrower describing, in reasonable
detail, the Permitted CAPEX Equipment to be purchased with the proceeds
thereof. Each notice of borrowing hereunder shall specify the Funding Date
(which shall be a Business Day), whether such CAPEX shall consist of a Prime
Rate Loan or a LIBOR Rate Loan and the Interest Period, if any, applicable
thereto. Each such CAPEX Advance to Borrower shall be deposited in
immediately available funds in such account as Borrower may from time to time
designate to Agent in writing.
(4) Agent shall notify Lenders of Loans requested hereunder
in accordance with subsection 9.6.
(D) Notes. Borrower shall execute and deliver to each Lender (1) a
CAPEX Note to evidence its CAPEX Loan, such CAPEX Note to be in the principal
amount of the CAPEX Loan Commitment of such Lender and with other appropriate
insertions and (2) a Revolving Note to evidence its Revolving Loan, such
Revolving Note to be in the principal amount of the Revolving Loan Commitment
of such Lender and with other appropriate insertions. In the event of an
assignment under subsection 9.1, Borrower shall, upon surrendering of the
assigning Lender's Notes, issue new Notes to reflect the new commitments or
Loans of the assigning Lender and its assignee.
(E) Lender Letters of Credit and Risk Participation Agreements.
Subject to the terms and conditions of this Agreement and in reliance upon the
representations and warranties of Borrower herein set forth, the Revolving Loan
Commitments may, in addition to advances under the Revolving Loan, be utilized,
upon the request of Borrower, for (i) the issuance of documentary letters of
credit by Agent (each such letter of credit, a "Lender Letter of Credit") or
(ii) the issuance by Agent of risk participation agreements (each such
agreement, a "Risk Participation Agreement") to confirm payment to banks which
issue documentary letters of credit for the account of Borrower. Each Risk
Participation Agreement shall provide for automatic daily reporting of the
outstanding Underlying L/C's and any amounts drawn thereunder. All Lender
Letters of Credit and Lender Guaranties (as defined in the Existing Loan
Agreement) outstanding under the Existing Credit Agreement on the Closing Date
shall be deemed Lender Letters of Credit hereunder.
(1) Maximum Amount. The aggregate amount of Risk
Participation Liability with respect to all Lender Letters of Credit and Risk
Participation Agreements outstanding at any time shall not exceed Twenty-five
Million Dollars ($25,000,000), subject to, and reduced by, any reductions in
the Revolving Loan Commitment under subsection 2.4.
(2) Reimbursement. Borrower shall be irrevocably and
unconditionally obligated forthwith without presentment, demand, protest or
other formalities of any kind, to reimburse Agent, for the benefit of Agent
and Lenders, for any amounts paid by Agent or any Lender with respect to any
Lender Letter of Credit or any Risk Participation Agreement issued for the
account of Borrower, including all fees, costs and expenses paid by Agent or
any Lender to any bank that issues letters of credit. Borrower hereby
authorizes and directs Agent, at Agent's option, to debit Borrower's account
(by increasing the principal balance of the Revolving Loan) in the amount of
any payment made by Agent or any Lender with respect to any Lender Letter of
Credit or any Risk Participation Agreement. All amounts paid by Agent or any
Lender with respect to any Lender Letter of Credit or Risk Participation
Agreement that are not immediately repaid by Borrower with the proceeds of a
Revolving Loan or otherwise shall bear interest at the Default Rate applicable
to Revolving Loans. Each Lender agrees to fund its Pro Rata Share of any
Revolving Loan made pursuant to this subsection 2.1(E)(2). In the event that
Borrower shall fail to reimburse Agent on the date of any payment by Agent
under a Lender Letter of Credit or Risk Participation Agreement in an amount
equal to the amount of such payment, Agent shall promptly notify each Lender
of the unreimbursed amount of such payment, together with accrued interest
thereon, and each Lender agrees to purchase, and shall be deemed to have
purchased, a participation in such Lender Letter of Credit or Risk
Participation Agreement in an amount equal to its Pro Rata Share of the unpaid
amount of such Risk Participation Liability and each Lender agrees to pay to
Agent such Lender's Pro Rata Share of such Risk Participation Liability. The
obligation of each Lender to deliver to Agent an amount equal to its
respective participation pursuant to the foregoing sentence shall be absolute
and unconditional and such remittance shall be made notwithstanding the
occurrence or continuation of an Event of Default or Default or failure to
satisfy any condition set forth in Section 3. In the event any Lender fails to
make available to Agent the amount of such Lender's participation in such
Lender Letter of Credit or Risk Participation Agreement as provided in this
subsection 2.1(E)(2), Agent shall be entitled to recover such amount on demand
from such Lender, together with interest at the Prime Rate.
(3) Conditions of Issuance. In addition to all other terms
and conditions set forth in this Agreement, the issuance by Agent of any
Lender Letter of Credit or Risk Participation Agreement shall be subject to
the conditions precedent that the Lender Letter of Credit or Underlying L/C be
in such form, be for such amount, contain such terms and support such
transactions as are reasonably acceptable to Agent. Each Lender Letter of
Credit, Underlying L/C and Risk Participation Agreement shall be in form and
substance acceptable to Agent. The expiration date of each Lender Letter of
Credit or Underlying L/C shall be on a date which is at least thirty (30) days
before the Termination Date. Each Risk Participation Agreement shall provide
that all demands or claims for payment with respect to each Underlying L/C
must be presented by a date certain, which date will be at least thirty (30)
days before the Termination Date.
(4) Request for Letters of Credit. Borrower shall give
Agent at least two (2) Business Days prior notice specifying the date a Lender
Letter of Credit or Underlying L/C is to be issued, identifying the
beneficiary and describing the nature of the transactions proposed to be
supported thereby. The notice shall be accompanied by the form of the
requested Lender Letter of Credit or Underlying L/C.
(F) Other Letter of Credit and Guaranty Provisions
(1) Obligations Absolute. The obligation of Borrower to
reimburse Agent or any Lender for payments made under any Lender Letter of
Credit or Risk Participation Agreement shall be unconditional and irrevocable
and shall be paid strictly in accordance with the terms of this Agreement
under all circumstances including the following circumstances:
(a) any lack of validity or enforceability of any
Lender Letter of Credit or Risk Participation Agreement or Underlying L/C or
any other agreement;
(b) the existence of any claim, setoff, defense or
other right which Borrower, any of its Subsidiaries or Affiliates, Agent or
any Lender, on the one hand, may at any time have against any beneficiary or
transferee of any Lender Letter of Credit or any Underlying L/C (or any
Persons for whom any such transferee may be acting), Agent, any Lender or any
other Person, on the other hand, whether in connection with this Agreement,
the transactions contemplated herein or any unrelated transaction (including
any underlying transaction between Borrower or any of its Subsidiaries or
Affiliates and the beneficiary for which the Lender Letter of Credit or
Underlying L/C was procured);
(c) any draft, demand, certificate or any other
document presented under any Lender Letter of Credit or Underlying L/C proving
to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect;
(d) payment by Agent or any Lender under any Lender
Letter of Credit or Risk Participation Agreement against presentation of a
demand, draft or certificate or other document which does not comply with the
terms of such Lender Letter of Credit or Underlying L/C; provided that, in the
case of any payment by Agent or a Lender under any Lender Letter of Credit or
Underlying L/C, Agent or such Lender has not acted with gross negligence or
willful misconduct (as determined by a court of competent jurisdiction) in
determining that the demand for payment under such Lender Letter of Credit,
Underlying L/C or Risk Participation Agreement complies on its face with any
applicable requirements for a demand for payment under such Lender Letter of
Credit, Underlying L/C or Risk Participation Agreement;
(e) any other circumstance or happening whatsoever,
which is similar to any of the foregoing; or
(f) the fact that a Default or an Event of Default
shall have occurred and be continuing.
(2) Nature of Agent's and Lenders' Duties. As between
Agent and or any Lender and Borrower, Borrower assumes all risks of the acts
and omissions of, or misuse of any Lender Letter of Credit, Underlying L/C or
Risk Participation Agreement by beneficiaries of any Lender Letter of Credit
or Underlying L/C. In furtherance and not in limitation of the foregoing,
neither Agent nor any Lender shall be responsible: (a) for the form,
validity, sufficiency, accuracy, genuineness or legal effect of any document
submitted by any party in connection with the application for and issuance of
any Lender Letter of Credit, Underlying L/C or Risk Participation Agreement,
even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (b) for the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any Lender Letter of Credit or Underlying L/C or the rights
or benefits thereunder or proceeds thereof, in whole or in part, which may
prove to be invalid or ineffective for any reason; (c) for failure of the
beneficiary of any Lender Letter of Credit or Underlying L/C to comply fully
with conditions required in order to demand payment under such Lender Letter
of Credit or Underlying L/C; provided that, in the case of any payment by
Agent or any Lender under any Lender Letter of Credit or Risk Participation
Agreement, or by any issuer of an Underlying L/C, Agent, or such Lender or
such issuer has not acted with gross negligence or willful misconduct (as
determined by a court of competent jurisdiction) in determining that the
demand for payment under such Lender Letter of Credit or Risk Participation
Agreement or Underlying L/C complies on its face with any applicable
requirements for a demand for payment thereunder; (d) for errors, omissions,
interruptions or delays in transmission or delivery of any messages, by mail,
cable, telegraph, telex or otherwise, whether or not they be in cipher; (e)
for errors in interpretation of technical terms; (f) for any loss or delay in
the transmission or otherwise of any document required in order to make a
payment under any Lender Letter of Credit, Underlying L/C or Risk
Participation Agreement or of the proceeds thereof; (g) for the credit of the
proceeds of any drawing under any Lender Letter of Credit, Underlying L/C or
demand under, a Risk Participation Agreement; and (h) for any consequences
arising from causes beyond the control of Agent or any Lender. None of the
above shall affect, impair, or prevent the vesting of any of Agent's or any
Lender's rights or powers hereunder.
(3) In furtherance and extension of and not in limitation
of, the specific provisions hereinabove set forth, any action taken or omitted
by Agent or any Lender under or in connection with any Lender Letter of Credit
or Risk Participation Agreement, if taken or omitted in good faith, shall not
put Agent or any Lender under any resulting liability to Borrower.
2.2 Interest.
(A) Rate of Interest. The Loans and all other Obligations shall
bear interest from the date such Loans are made or such other Obligations
become due to the date paid at a rate per annum determined by reference to the
Prime Rate or the LIBOR Rate. The applicable basis for determining the rate
of interest shall be selected by Borrower initially at the time a notice of
borrowing is given pursuant to subsection 2.1(C). The basis for determining
the interest rate with respect to any Loan may be changed from time to time
pursuant to subsection 2.2(E). If on any day a Loan is outstanding with
respect to which notice has not been delivered to Agent in accordance with the
terms of this Agreement specifying the basis for determining the rate of
interest, then for that day that Loan shall bear interest determined by
reference to the Prime Rate.
The Loans shall bear interest through maturity as follows:
(1) if a Prime Rate Loan, then at a per annum rate equal to
the Prime Rate minus one half of one percent (0.50%); and
(2) if a LIBOR Rate Loan, then at a per annum rate equal to
the LIBOR Rate plus one and one-quarter percent (1.25%).
Notwithstanding the foregoing, if, as of the end of any Fiscal Year,
the ratio of the daily average outstanding Obligations of Borrower and its
Domestic Subsidiaries to EBITDA for such Fiscal Year exceeds 2.5 to 1, all
Loans shall bear interest at a rate equal to one quarter of one percent
(0.25%) per annum plus the then-applicable rate, until the ratio of the daily
average outstanding Obligations of Borrower and its Domestic Subsidiaries to
EBITDA for any subsequent Fiscal Year is less than 2.5 to 1, at which time the
interest rate shall be reduced by one quarter of one percent (0.25%) per
annum, for subsequent Fiscal Years. If thereafter the ratio of the average
daily outstanding Obligations of Borrower and its Subsidiaries to EBITDA for
any subsequent Fiscal Year exceeds 2.5 to 1, the interest rate shall increase
as provided in the foregoing sentence. Any adjustment required hereby shall
be effective on the fifth Business Day following receipt by Agent and Lenders
of the audited financial statements delivered pursuant to subsection 5.1 (C)
hereof; provided that any change in the interest rate shall not become
effective for any outstanding LIBOR Rate Loans until the end of the applicable
Interest Period.
After the occurrence of an Event of Default and for so long as such
Event of Default continues, (i) the Loans and all other Obligations shall, at
the option of Agent or Requisite Lenders, bear interest at a rate per annum
equal to two percent (2.0%) plus the applicable interest rate (the "Default
Rate") and (ii) each LIBOR Rate Loan shall automatically convert to a Prime
Rate Loan at the end of any applicable Interest Period.
(B) Interest Periods. In connection with each LIBOR Rate Loan,
Borrower shall elect an interest period (each an "Interest Period") to be
applicable to such Loan, which Interest Period shall be either a one, two,
three or six month period; provided that
(1) the initial Interest Period for any Loan shall commence
on the Funding Date of such Loan;
(2) in the case of immediately successive Interest
Periods, each successive Interest Period shall commence on the day on which
the next preceding Interest Period expires;
(3) if an Interest Period would otherwise expire on a day
that is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided that if any Interest Period would otherwise
expire on a day that is not a Business Day but is a day of the month after
which no further Business Day occurs in such month, such Interest Period shall
expire on the next preceding Business Day;
(4) any Interest Period that begins on the last Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall, subject to part (5) below, end on the last Business Day of a calendar
month;
(5) no Interest Period shall extend beyond the Termination
Date;
(6) no Interest Period may extend beyond a date on which
Borrower is required to make a scheduled payment of principal of the Loans
unless the sum of (a) the aggregate principal amount of Loans that are Prime
Rate Loans or that have Interest Periods expiring on or before such date and
(b) the available, unused Revolving Loan Commitment or Borrowing Limit equals
or exceeds the principal amount required to be paid on the Loans on such date;
and
(7) there shall be no more than five (5) Interest Periods
relating to LIBOR Rate Loans outstanding at any time.
(C) Computation and Payment of Interest. Interest on the Loans and
all other Obligations shall be computed on the daily principal balance on the
basis of a 360-day year for the actual number of days elapsed in the period
during which it accrues. In computing interest on any Loan, the date of
funding of the Loan or the first day of an Interest Period applicable to such
Loan or, with respect to a Prime Rate Loan being converted from a LIBOR Rate
Loan, the date of conversion of such LIBOR Rate Loan to such Prime Rate Loan,
shall be included and the date of payment of such Loan or the expiration date
of an Interest Period applicable to such Loan, or with respect to a Prime Rate
Loan being converted to a LIBOR Rate Loan, the date of conversion of such
Prime Rate Loan to such LIBOR Rate Loan, shall be excluded; provided that if a
Loan is repaid on the same day on which it is made, one day's interest shall
be paid on that Loan. Interest on Prime Rate Loans and all other Obligations
other than LIBOR Rate Loans shall be payable to Agent, for the benefit of
Lenders, monthly in arrears on the first day of each month, on the date of any
prepayment of Loans and at maturity, whether by acceleration or otherwise.
Interest on LIBOR Rate Loans shall be payable to Agent, for the benefit of
Lenders, on the last day of the applicable Interest Period for such Loan, and
at maturity, whether by acceleration or otherwise. In addition, for each
LIBOR Rate Loan having an Interest Period longer than three (3) months,
interest accrued on such Loan shall also be payable on the last day of each
three (3) month interval during such Interest Period.
(D) Interest Laws. Notwithstanding any provision to the contrary
contained in this Agreement or any other Loan Document, Borrower shall not be
required to pay, and neither Agent nor any Lender shall be permitted to
collect, any amount of interest in excess of the maximum amount of interest
permitted by law ("Excess Interest"). If any Excess Interest is provided for
or determined by a court of competent jurisdiction to have been provided for
in this Agreement or in any other Loan Document, then in such event: (1) the
provisions of this subsection shall govern and control; (2) neither Borrower
nor any Loan Party shall be obligated to pay any Excess Interest; (3) any
Excess Interest that Agent or any Lender may have received hereunder shall be,
at such Lender's option, (a) applied as a credit against the outstanding
principal balance of the Obligations or accrued and unpaid interest (not to
exceed the maximum amount permitted by law), (b) refunded to the payor
thereof, or (c) any combination of the foregoing; (4) the interest rate(s)
provided for herein shall be automatically reduced to the maximum lawful rate
allowed from time to time under applicable law (the "Maximum Rate"), and this
Agreement and the other Loan Documents shall be deemed to have been and shall
be, reformed and modified to reflect such reduction; and (5) neither Borrower
nor any Loan Party shall have any action against Agent or any Lender for any
damages arising out of the payment or collection of any Excess Interest.
Notwithstanding the foregoing, if for any period of time interest on any
Obligations is calculated at the Maximum Rate rather than the applicable rate
under this Agreement, and thereafter such applicable rate becomes less than the
Maximum Rate, the rate of interest payable on such Obligations shall remain at
the Maximum Rate until each Lender shall have received the amount of interest
which such Lender would have received during such period on such Obligations
had the rate of interest not been limited to the Maximum Rate during such
period.
(E) Conversion or Continuation. Subject to the provisions of
subsection 2.10, Borrower shall have the option to (1) convert at any time all
or any part of outstanding Prime Rate Loans equal to Five Hundred Thousand
Dollars ($500,000) and integral multiples of Five Hundred Thousand Dollars
($500,000) in excess of that amount to LIBOR Rate Loans, or (2) upon the
expiration of any Interest Period applicable to a LIBOR Rate Loan, to continue
all or any portion of such Loan equal to Five Hundred Thousand Dollars
($500,000) and integral multiples of Five Hundred Thousand Dollars ($500,000)
in excess of that amount as a LIBOR Rate Loan and the succeeding Interest
Period(s) of such continued Loan shall commence on the last day of the
Interest Period of the Loan to be continued; or (3) at the end of any Interest
Period, convert all or any part of a LIBOR Rate Loan to a Prime Rate Loan;
provided that any LIBOR Rate Loan which continues as such meets the minimum
requirement of clause (2); and provided, further, that no outstanding Loan may
be continued as, or be converted into, a LIBOR Rate Loan when any Event of
Default or Default has occurred and is continuing.
Borrower shall deliver a Notice of Conversion/Continuation to Agent no
later than noon (Chicago time) at least two (2) Business Days in advance of the
proposed conversion/ continuation date ("Notice of Conversion/Continuation").
A Notice of Conversion/Continuation shall certify: (1) the proposed
conversion/continuation date (which shall be a Business Day); (2) the amount of
the Loan to be converted/continued; (3) the nature of the proposed
conversion/continuation; (4) in the case of a conversion to, or a continuation
of, a LIBOR Rate Loan, the requested Interest Period; and (5) that no Default
or Event of Default has occurred and is continuing or would result from the
proposed conversion/continuation.
In lieu of delivering the above-described Notice of
Conversion/Continuation, Borrower may give Agent telephonic notice by the
required time of any proposed conversion/continuation under this subsection 2.2
(E); provided that such notice shall be promptly confirmed in writing by
delivery of a Notice of Conversion/Continuation to Agent on or before the
proposed conversion/continuation date.
Neither Agent nor any Lender shall incur any liability to Borrower in
acting upon any telephonic notice referred to above that Agent believes in good
faith to have been given by a duly authorized officer or other person
authorized to act on behalf of Borrower or for otherwise acting in good faith
under this subsection 2.2(E) and upon conversion/continuation by Lenders in
accordance with this Agreement pursuant to any telephonic notice, Borrower
shall have effected such conversion or continuation, as the case may be,
hereunder.
2.3 Fees
(A) Agent's Fee. Borrower shall pay to Agent such fees as are
agreed upon by Borrower and Agent in a letter agreement of even date herewith.
(B) Unused Line Fee. Borrower shall pay to Agent, for the benefit
of Lenders, a fee in an amount equal to the Revolving Loan Commitment less the
sum of (i) the average daily balance of the Revolving Loan plus (ii) the
average daily face amount of the Risk Participation Reserve during the
preceding month multiplied by one-half percent (.5%) per annum, such fee to be
payable monthly in arrears on the first day of the first month following the
Closing Date and the first day of each month thereafter. The first payment
hereunder shall include the Unused Line Fee payable under the Existing Loan
Agreement for any partial month prior to the Closing Date.
(C) Letter of Credit and Guaranty Fees. Borrower shall pay to
Agent for the benefit of Lenders fees for each Lender Letter of Credit and
each Risk Participation Agreement for the period from and including the date
of issuance of same to and excluding the date of expiration or termination,
equal to the average daily face amount of Risk Participation Liability
multiplied by one and three- quarters percent (1.75%) per annum, such fees to
be calculated on the basis of a 360-day year for the actual number of days
elapsed and to be payable monthly in arrears on the first day of the first
month following the Closing Date and the first day of each month thereafter.
Borrower shall also reimburse Agent for any and all fees and expenses, if any,
paid by Agent to the issuer of the Underlying L/C.
(D) Closing Fee. On the Closing Date, Borrower shall pay to Agent
for the ratable benefit of Lenders a closing fee of Fifty Thousand Dollars
($50,000).
2.4 Payments and Prepayments
(A) Manner and Time of Payment. In its sole discretion, Agent may
charge interest and other amounts payable hereunder to the Revolving Loan, all
as set forth on Agent's books and records. Unless otherwise directed by
Agent, all payments to Lenders hereunder shall be made by delivery thereof to
Agent to the account specified below or, with respect to the Revolving Loan
only, by delivery to Agent of all proceeds of Accounts or other Collateral
deposited in the Blocked Accounts in accordance with subsection 5.6 hereof,
but subject to the terms of such subsection and the agreements governing the
Blocked Accounts. If Agent elects to ▇▇▇▇ Borrower for any amount due
hereunder, such amount shall be immediately due and payable with interest
thereon as provided herein. All payments made directly by Borrower of the
Obligations shall be made in Dollars without deduction, defense, setoff or
counterclaim and in same day funds and delivered to Agent by wire transfer to
Agent's account ("Agent's Account"), ABA No. ▇▇▇-▇▇▇▇-▇, Account No. 52-98695
at First National Bank of Chicago, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇, Reference: ▇▇▇▇▇▇ Business Credit for the benefit of The North Face or
at such other place as Agent may direct from time to time by notice to
Borrower. Proceeds remitted from the Blocked Accounts or otherwise wire
transferred to Agent's Account shall be credited to the Obligations on the
Business Day on which Agent receives immediately available funds in Agent's
Account if received prior to 3 p.m. (New York time).
(B) Mandatory Prepayments
(1) Overadvance. At any time that the principal balance of
the Revolving Loan exceeds the Maximum Revolving Loan Amount, Borrower shall
immediately repay the Revolving Loan to the extent necessary to reduce the
principal balance to an amount that is equal to or less than the Maximum
Revolving Loan Amount.
(2) Proceeds of Asset Dispositions and Securities Sales.
Immediately upon receipt by Borrower or any of its Subsidiaries of proceeds of
any Asset Disposition (in one or a series of related transactions), which
proceeds exceed Fifty Thousand Dollars ($50,000), net of taxes and other
customary closing costs payable in connection therewith and the amount applied
to repay Indebtedness secured by any Permitted Encumbrance (it being
understood that if the net proceeds exceed Fifty Thousand Dollars ($50,000),
the entire amount and not just the portion above Fifty Thousand Dollars
($50,000) shall be subject to this paragraph), or the proceeds from the
issuance of securities of Borrower or any of its Subsidiaries after the
Closing Date (net of reasonable underwriting fees and customary closing costs
payable in connection therewith), Borrower shall prepay the Obligations in an
amount equal to such proceeds. Notwithstanding the foregoing, if Borrower
reasonably expects the proceeds of any Asset Disposition to be reinvested
within 180 days to repair or replace any assets with like assets, Borrower
shall deliver the proceeds to Agent to be applied to the Revolving Loan, and
Borrower may, so long as no Default or Event of Default shall have occurred
and be continuing, borrow Revolving Loans for such repair or replacement. If
Borrower fails to reinvest such proceeds within 180 days, Borrower hereby
authorizes Lenders to make a Revolving Loan to repay the CAPEX Loan as
required hereby and/or if the CAPEX Loan has been repaid, the Revolving Loan
Commitment shall be permanently reduced as provided herein. All such
prepayments shall first be applied in payment of Scheduled Installments in the
inverse order of maturity (and the CAPEX Loan Commitment will be permanently
reduced in the amount of such prepayment) and, at any time after the CAPEX Loan
shall have been repaid in full, such payments shall be applied as a permanent
reduction of the Revolving Loan Commitment; provided, however, that prepayments
from proceeds of any issuance of Common Stock shall not permanently reduce the
Revolving Loan Commitment.
(C) Voluntary Prepayments and Repayments. Borrower may, at any
time and upon not less than three (3) Business Days prior notice to Agent,
prepay the CAPEX Loan in whole or in part, and upon like notice may terminate
the Revolving Loan Commitment, provided, however, the Revolving Loan
Commitment may not be terminated by Borrower until the CAPEX Loan and all
Revolving Loans are paid in full. Upon termination of the Revolving Loan
Commitment, Borrower shall cause Agent and each Lender to be released to the
satisfaction of Agent from all liability under any Lender Letters of Credit or
Risk Participation Agreements or, at Agent's option, Borrower will deposit
cash collateral with Agent in an amount equal to the Risk Participation
Liability with respect to each Lender Letter of Credit and each Risk
Participation Agreement that will remain outstanding after prepayment or
repayment or provide one or more letters of credit to Agent, from a bank and
on terms acceptable to Agent.
(D) Payments on Business Days. Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business Day, the
payment may be made on the next succeeding Business Day and such extension of
time shall be included in the computation of the amount of interest or fees due
hereunder.
2.5 Term of this Agreement. Subject to satisfaction of the conditions set
forth in subsection 3.1 hereof, this Agreement shall become effective on the
Closing Date and remain in effect until February 1, 2000 (the "Termination
Date"). The Commitments shall (unless earlier terminated) terminate on the
Termination Date. In addition, this Agreement may be terminated as set forth
in Section 8.3 hereof. Upon termination in accordance with Section 8.3 or on
the Termination Date, all Obligations shall be immediately due and payable
without notice or demand. Notwithstanding any termination, until all
Obligations have been fully paid and satisfied, Agent, on behalf of Lenders,
shall be entitled to retain security interests in and liens upon all
Collateral, and even after payment of all Obligations hereunder, the
obligation of Borrower and its Subsidiaries to indemnify Agent and Lenders in
accordance with the terms hereof or of any other Loan Document shall continue.
2.6 Statements; Application of Payments. Agent shall render a monthly
statement of account to Borrower within twenty (20) days after the end of each
month. Such statement of account shall constitute an account stated unless
Borrower makes written objection thereto in reasonable detail (including
appropriate calculations) within thirty (30) days from the date such statement
is mailed to Borrower. Borrower promises to pay all of its Obligations as
such amounts become due or are declared due pursuant to the terms of this
Agreement. After the occurrence and during the continuance of an Event of
Default, Borrower irrevocably waives the right to direct the application of
any and all payments at any time or times thereafter received by Agent or any
Lender from or on behalf of Borrower, and Borrower hereby irrevocably agrees
that Agent shall have the continuing exclusive right to apply and to reapply
any and all payments received at any time or times after the occurrence and
during the continuance of an Event of Default against the Obligations in such
manner as Agent may deem advisable notwithstanding any previous entry by Agent
upon any books and records.
2.7 Grant of Security Interest. To secure the payment and performance when
due of the Obligations, including all renewals, extensions, restructurings and
refinancings of any or all of the Obligations, Borrower hereby confirms the
grant to Agent, on behalf of Lenders, of the continuing first priority
security interest, lien and mortgage in the "Collateral" (as defined in the
Existing Loan Agreement) and grants to Agent, on behalf of Lenders, a
continuing first priority security interest, lien and mortgage in and to all
right, title and interest of Borrower in the following property of Borrower,
whether now owned or existing or hereafter acquired or arising and regardless
of where located (all being collectively included within the "Collateral"):
(A) Accounts; (B) Inventory; (C) general intangibles (as defined in the UCC),
including Borrower's rights and claims under the Assigned Agreements and the
Canadian Documents; (D) documents (as defined in the UCC) or other receipts
covering, evidencing or representing goods; (E) instruments (as defined in the
UCC); (F) chattel paper (as defined in the UCC); (G) Equipment; (H) Mortgaged
Property; (I) Intellectual Property, including without limitation that set
forth on Schedule 4.13 hereof; (J) all deposit accounts of Borrower maintained
with any bank or financial institution; (K) all cash and other monies and
property of Borrower in the possession or under the control of Agent or any
Lender or any participant; (L) all books, records, ledger cards, files,
correspondence, computer programs, tapes, disks and related data processing
software that at any time evidence or contain information relating to any of
the property described above or are otherwise necessary or helpful in the
collection thereof or realization thereon; (M) rights under this Agreement or
any other Loan Document and the proceeds of any Loans hereunder; and (N)
proceeds of all or any of the property described above, including, without
limitation, the proceeds of any insurance policies covering any of the above
described property. Borrower hereby confirms that the security interests
granted to ▇▇▇▇▇▇ under the Existing Loan Agreement shall continue in full
force and effect as if granted to Agent for the benefit of Lenders.
2.8 Capital Adequacy and Other Adjustments. In the event that Agent or any
Lender shall have determined that the adoption after the date hereof of any
law, treaty, governmental (or quasi-governmental) rule, regulation, guideline
or order regarding capital adequacy, reserve requirements or similar
requirements or compliance by Agent or such Lender or any corporation
controlling Agent or such Lender with any request or directive regarding
capital adequacy, reserve requirements or similar requirements (whether or not
having the force of law and whether or not failure to comply therewith would
be unlawful) from any central bank or governmental agency or body having
jurisdiction does or shall have the effect of increasing the amount of
capital, reserves or other funds required to be maintained by Agent or such
Lender or any corporation controlling Agent or such Lender with respect to the
Obligations and thereby reducing the rate of return on Agent's or such
Lender's or such corporation's capital as a consequence of its obligations
hereunder, then Borrower shall from time to time within fifteen (15) days
after notice and demand from Agent or such Lender (together with the
certificate referred to in the next sentence) pay to Agent or such Lender
additional amounts sufficient to compensate Agent or such Lender for such
reduction, so long as Agent or such Lender is then requiring such payments from
other borrowers, the demand does not seek payment for a period more than 90
days in arrears and the demand is made prior to payment in full of the
Obligations and termination of all Commitments. A certificate as to the
amount of such cost and showing the basis of the computation of such cost
submitted by Agent or such Lender to Borrower shall, absent manifest error, be
final, conclusive and binding for all purposes. If a Lender makes a demand
for compensation pursuant to this subsection 2.8, Borrower may obtain, at
Borrower's expense, a replacement lender who agrees to acquire Lender's
interest in the Loans and the Commitments on the terms set forth in this
Agreement and such Lender shall assign to such replacement lender its interest
in the Loans and the Commitments, provided that Borrower has paid all amounts
then due to such Lender (including any amounts due under this subsection 2.8).
2.9 Taxes.
(A) No Deductions. Any and all payments or reimbursements made
hereunder or under the Notes shall be made free and clear of and without
deduction for any and all taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto; excluding, however, the
following: taxes imposed on the net income of a Lender or Agent by the
jurisdiction under the laws of which such Lender or Agent is organized or doing
business or any political subdivision thereof and taxes imposed on its net
income by the jurisdiction of a Lender's or Agent's applicable lending office
or any political subdivision thereof. If Borrower shall be required by law to
deduct any such amounts from or in respect of any sum payable hereunder to
Agent or any Lender, then the sum payable hereunder shall be increased as may
be necessary so that, after making all required deductions, Agent or such
Lender receives an amount equal to the sum it would have received had no such
deductions been made. Each Lender which is organized under the laws of a
jurisdiction other than the United States or any state thereof shall deliver
to Agent and Borrower concurrently with its execution of this Agreement or any
Lender Addition Agreement duly executed copies of such Internal Revenue
Service forms as required to demonstrate that it is entitled to receive all
payments hereunder free from United States withholding taxes as of such date.
(B) Changes in Tax Laws. In the event that, subsequent to the
Closing Date, (1) any changes in any existing law, regulation, treaty or
directive or in the interpretation or application thereof, (2) any new law,
regulation, treaty or directive enacted or any interpretation or application
thereof, or (3) compliance by Agent or any Lender with any request or
directive (whether or not having the force of law) from any governmental
authority, agency or instrumentality:
(1) does or shall subject Agent or any Lender to any tax of
any kind whatsoever with respect to this Agreement, the other Loan Documents
or any Loans made or Risk Participation Agreements or Lender Letters of Credit
issued hereunder, or change the basis of taxation of payments to Agent or any
Lender of principal, fees, interest or any other amount payable hereunder
(except for net income taxes, or franchise taxes imposed in lieu of net income
taxes, imposed generally by federal, state or local taxing authorities with
respect to interest or commitment or other fees payable hereunder or changes
in the rate of tax on the overall net income of Agent or any Lender); or
(2) does or shall impose on Agent or any Lender any other
condition or increased cost in connection with the transactions contemplated
hereby or participations herein; and the result of any of the foregoing is to
increase the cost to Agent or any Lender of issuing or participating in any
Lender Letter of Credit or Risk Participation Agreement or making or continuing
any Loan hereunder, as the case may be, or to reduce any amount receivable
hereunder, then, in any such case, Borrower shall promptly pay to Agent or such
Lender, upon its demand, any additional amounts necessary to compensate Agent
or such Lender, on an after-tax basis, for such additional cost or reduced
amount receivable, as determined by Agent or such Lender with respect to this
Agreement or the other Loan Documents. If Agent or any Lender becomes
entitled to claim any additional amounts pursuant to this subsection, it shall
promptly notify Borrower of the event by reason of which Agent or such Lender
has become so entitled. A certificate as to any additional amounts payable
pursuant to the foregoing sentence submitted by Agent or any Lender to
Borrower shall, absent manifest error, be final, conclusive and binding for
all purposes.
2.10 Special Provisions Governing LIBOR Rate Loans.
Notwithstanding any other provision of this Agreement, the following
provisions shall govern with respect to LIBOR Rate Loans as to the matters
covered:
(A) Determination of Interest Rate. As soon as practicable after
noon (New York time) on each Interest Rate Determination Date, Agent shall
determine (which determination shall, absent manifest error, be final,
conclusive and binding upon all parties) the interest rate that shall apply to
the LIBOR Rate Loans for which an interest rate is then being determined for
the applicable Interest Period and shall promptly give notice thereof (in
writing or by telephone confirmed in writing) to Borrower and Lenders.
(B) Substituted Rate of Borrowing. If on any Interest Rate
Determination Date Agent shall have determined (which determination shall be
final and conclusive and binding upon all parties) that:
(1) by reason of any changes arising after the date of this
Agreement affecting the LIBOR market or affecting the position of Agent or any
Lender in such market, adequate and fair means do not exist for ascertaining
the applicable interest rate by reference to the LIBOR Rate with respect to
the LIBOR Rate Loans as to which an interest rate determination is then being
made; or
(2) by reason of (a) any change after the date hereof in
any applicable law or governmental rule, regulation or order (or any
interpretation thereof and including the introduction of any new law or
governmental rule, regulation or order) or (b) any change in circumstances
affecting Agent or any Lender or the LIBOR market or the position of Agent or
any Lender in such market (such as for example, but not limited to, official
reserve requirements required by Regulation D to the extent not given effect
in the LIBOR Rate), the LIBOR Rate shall not represent the effective pricing
to Lenders for Dollar deposits of comparable amounts for the relevant period;
then, and in any such event, Agent shall promptly (and in any event as soon as
possible after being notified of a borrowing, conversion or continuation) give
notice (by telephone confirmed in writing) to Borrower and Lenders of such
determination. Thereafter, Borrower shall pay to Agent for the benefit of
Lenders, upon written demand therefor, such additional amounts (in the form of
an increased rate of, or a different method of calculating, interest or
otherwise as Agent in its sole discretion shall determine) as shall be
required to cause Lenders to receive interest with respect to LIBOR Rate Loans
for the Interest Period following that Interest Rate Determination Date at a
rate per annum equal to the applicable LIBOR Rate Margin in excess of the
effective pricing to Lenders for Dollar deposits to make or maintain LIBOR
Rate Loans. A certificate as to additional amounts owed showing in reasonable
detail the basis for the calculation thereof, submitted in good faith to
Borrower by Agent shall, absent manifest error, be final and conclusive and
binding upon all of the parties hereto.
(C) Required Termination and Prepayment. If on any date any Lender
shall have reasonably determined (which determination shall be final and
conclusive and binding upon all parties) that the making or continuation of its
LIBOR Rate Loans has become unlawful or impossible by compliance by any Lender
in good faith with any law, governmental rule, regulation or order (whether or
not having the force of law and whether or not failure to comply therewith
would be unlawful), then, and in any such event, that Lender shall promptly
give notice (by telephone confirmed in writing) to Agent and Borrower of that
determination. Subject to prior withdrawal of a notice of borrowing or a
Notice of Conversion/Continuation or prepayment of the LIBOR Rate Loans as
contemplated by the following subsection 2.10(D), the obligation of Lenders to
make or maintain any LIBOR Rate Loans during any such period shall be
terminated at the earlier of the termination of the Interest Period then in
effect or when required by law and Borrower shall no later than the
termination of the Interest Period in effect at the time any such
determination pursuant to this subsection 2.10 (C) is made or, earlier, when
required by law, repay or prepay the LIBOR Rate Loans, together with all
interest accrued thereon.
(D) Options of Borrower. In lieu of paying Lenders such additional
moneys as are required by subsection 2.10(B) or the prepayment required by
subsection 2.10(C), Borrower may exercise any one of the following options:
(1) If the determination by Agent or any Lender relates only
to LIBOR Rate Loans then being requested by Borrower pursuant to a notice of
borrowing or a Notice of Conversion/Continuation, Borrower may by giving notice
(by telephone confirmed in writing) to Agent no later than the date immediately
prior to the date on which such LIBOR Rate Loans are to be made, withdraw that
notice and the LIBOR Rate Loans then being requested shall be made by Lenders
as Prime Rate Loans; or
(2) Upon written notice to Agent, Borrower may terminate the
obligations of Lenders to make or maintain Loans as, and to convert Loans into,
LIBOR Rate Loans and in such event, Borrower shall, prior to the time any
payment pursuant to subsection 2.10(C) is required to be made or, if the
provisions of subsection 2.10(B) are applicable, at the end of the then
current Interest Period, convert all of the LIBOR Rate Loans into Prime Rate
Loans in the manner contemplated by subsection 2.2(E) but without satisfying
the advance notice requirements therein; or
(3) Borrower may give notice (by telephone confirmed in
writing) to Agent and require Lenders to make the LIBOR Rate Loan then being
requested as a Prime Rate Loan or to continue to maintain any outstanding
Prime Rate Loan then the subject of a Notice of Conversion/Continuation as a
Prime Rate Loan or to convert any LIBOR Rate Loans then outstanding that are
so affected into Prime Rate Loans at the end of the then current Interest
Period (or at such earlier time as prepayment is otherwise required to be made
pursuant to subsection 2.10(C)) in the manner contemplated by subsection 2.2
(E) but without satisfying the advance notice requirements therein, that
notice to pertain only to those Loans and to have no effect on the obligations
of Lenders to make or maintain LIBOR Rate Loans or to convert Prime Rate Loans
into LIBOR Rate Loans.
(E) Compensation. Borrower shall compensate each Lender, upon
written request by such Lender (which request shall set forth in reasonable
detail the basis for requesting such amounts and which shall, absent manifest
error, be conclusive and binding upon all parties hereto), for all reasonable
losses, expenses and liabilities (including, without limitation, any loss
(including interest paid) sustained by such Lender in connection with the
re-employment of such funds), such Lender may sustain: (1) if for any reason
(other than a default by such Lender) a borrowing of any LIBOR Rate Loan does
not occur on a date specified therefor in a notice of borrowing, a Notice of
Conversion/Continuation or a telephonic request for borrowing or
conversion/continuation or a successive Interest Period does not commence after
notice therefor is given pursuant to subsection 2.2(E); (2) if any prepayment
of any of its LIBOR Rate Loans occurs on a date that is not the last day of an
Interest Period applicable to that Loan; (3) if any prepayment of any of its
LIBOR Rate Loans is not made on any date specified in a notice of prepayment
given by Borrower; or (4) as a consequence of any other default by Borrower to
repay its LIBOR Rate Loans when required by the terms of this Agreement;
provided that during the period while any such amounts have not been paid,
Agent shall reserve an equal amount from amounts otherwise available to be
borrowed under the Revolving Loan.
(F) Booking of LIBOR Rate Loans. Any Lender may make, carry or
transfer LIBOR Rate Loans at, to, or for the account of, any of its branch
offices or the office of an Affiliate of such Lender.
(G) Assumptions Concerning Funding of LIBOR Rate Loans.
Calculation of all amounts payable to Lenders under this subsection 2.10 shall
be made as though each Lender had actually funded its relevant LIBOR Rate Loan
through the purchase of a LIBOR deposit bearing interest at the LIBOR Rate in
an amount equal to the amount of that LIBOR Rate Loan and having a maturity
comparable to the relevant Interest Period and through the transfer of such
LIBOR deposit from an offshore office to a domestic office in the United
States of America; provided, however, that any Lender may fund each of its
LIBOR Rate Loans in any manner it sees fit and the foregoing assumption shall
be utilized only for the calculation of amounts payable under this subsection
2.10.
SECTION 3 CONDITIONS TO EFFECTIVENESS; CONDITIONS TO LOANS
3.1 Conditions to Effectiveness of this Agreement and to Loans on the
Closing Date. The effectiveness of this Agreement and obligations of Agent
and each Lender to make Loans or to issue Lender Letters of Credit or
participate in any Risk Participation Agreement on the Closing Date are
subject to the prior or concurrent satisfaction of all of the conditions set
forth below.
(A) Closing Deliveries. Agent shall have received, in form and
substance acceptable to Agent all documents, instruments and information
identified on Schedule 3.1(A), and all other agreements, notes, certificates,
legal opinions, orders, authorizations, financing statements, mortgages and
other documents which Agent or any Lender may in good faith request and each
and all of the foregoing must be in form and substance acceptable to Agent.
(B) Security Interests. Agent shall have received satisfactory
evidence that all security interests and liens granted to ▇▇▇▇▇▇ or Agent
pursuant to the Existing Loan Agreement, this Agreement or the other Loan
Documents have been duly perfected and constitute first priority liens on the
Collateral, subject only to Permitted Encumbrances. Agent shall have received
all UCC termination statements and other releases of Liens, duly executed by
the applicable secured parties, releasing any and all Liens against the
Collateral, except Permitted Encumbrances.
(C) Repayment of Loans. The "Term Loan" under the Existing Loan
Agreement shall be repaid in full on the Closing Date.
(D) Fees and Costs. Borrower shall have paid the fees payable on
the Closing Date referred to in subsections 2.3(A) and (D) and all fees and
costs of Agent's counsel.
(E) Corporate Authorization and Opinions. Agent shall have
received evidence satisfactory to it that all necessary actions of Borrower to
authorize the execution, delivery and performance of this Agreement and the
other Loan Documents have been duly taken, and shall have received the opinion
of Crosby, Heafey, ▇▇▇▇▇ & May, in form and substance acceptable to Agent and
its counsel.
(F) Availability. After giving effect to any Loans made on the
Closing Date and the payment of all fees and expenses, the Maximum Revolving
Loan Amount shall exceed the outstanding principal balance of the Revolving
Loans plus the Risk Participation Reserve by at least Five Million Dollars
($5,000,000).
(G) Budgets. Lenders shall have received and approved Borrower's
1997 and 1998 Budgets, which shall be monthly for 1997 and annual for 1998,
and determined that Borrower will be able to achieve such Budgets.
3.2 Conditions to all Loans and Lender Letters of Credit. The obligations
of each Lender to make Loans or of Agent to issue Lender Letters of Credit or
to execute and deliver any Risk Participation Agreement on any Funding Date
(including the Closing Date) are subject to satisfaction of all of the
conditions set forth below.
(A) Loan Documents. Agent shall have received, in form and
substance satisfactory to Lender, all agreements, mortgages, financing
statements and other documents as required to perfect or continue the
perfection of Agent's first priority security interests in the Collateral for
the benefit of Lenders.
(B) Consents. All consents, approvals or authorizations of any
Person required for the execution, delivery or performance of the Loan
Documents shall have been obtained and remain in full force and effect.
(C) Representations and Warranties. The representations and
warranties contained herein and in the Loan Documents shall be true, correct
and complete in all material respects on and as of that Funding Date to the
same extent as though made on and as of that date, except for any
representation or warranty limited by its terms to a specific date and taking
into account any amendments to the Schedules or Exhibits as a result of any
disclosures made by Borrower to Lenders after the Closing Date and approved by
Agent.
(D) No Default. No event shall have occurred and be continuing or
would result from the consummation of the requested borrowing or notice
requesting issuance of a Lender Letter of Credit or Underlying L/C that would
constitute a Default or an Event of Default.
(E) Performance of Agreements. Each Loan Party shall have
performed in all material respects all agreements and satisfied all conditions
which any Loan Document or (if failure to perform would have a Material
Adverse Effect or permit other parties to exercise remedies against a Loan
Party) any other Transaction Document provides shall be performed by it on or
before that Funding Date.
(F) No Prohibition. No provision of any law or regulation, and no
order, judgment or decree of any court, arbitrator or governmental authority,
shall purport to enjoin or restrain Agent or any Lender from making any Loans
or issuing or participating in any Lender Letters of Credit or Underlying
L/C's or impair any security interest in the Collateral.
(G) Margin Regulations. The making of the Loans requested on such
Funding Date shall not violate Regulation G, Regulation T, Regulation U or
Regulation X of the Board of Governors of the Federal Reserve System.
(H) No Litigation. There shall not be pending or, to the knowledge
of Borrower, threatened, any action, charge, claim, demand, suit, proceeding,
petition, governmental investigation or arbitration against or affecting any
Loan Party or any of its Subsidiaries or any property of any Loan Party or any
of its Subsidiaries that has not been disclosed by Borrower in writing, and
that, in the opinion of Agent, would reasonably be expected to have a Material
Adverse Effect and there shall have occurred no development in any such
action, charge, claim, demand, suit, proceeding, petition, governmental
investigation or arbitration that, in the opinion of Agent, would reasonably
be expected to have a Material Adverse Effect.
(I) No Material Adverse Change. No event shall have occurred since
the Original Closing Date which has resulted in any material adverse change in
the business, properties, assets or condition (financial or otherwise) of
Borrower individually or Borrower and its Subsidiaries taken as a whole.
SECTION 4 BORROWER'S REPRESENTATIONS AND WARRANTIES
In order to induce Agent and each Lender to enter into this
Agreement, to make Loans and to issue or participate in Lender Letters of
Credit and Risk Participation Agreements, Borrower represents and warrants to
Agent and each Lender that the following statements are and will be true,
correct and complete:
4.1 Organization, Powers, Capitalization.
(A) Organization and Powers. Each of the Loan Parties is a
corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation and qualified to do business in all
jurisdictions where such qualification is required. Each of the Loan Parties
has (and had at all relevant times) all requisite corporate power and
authority to own and operate its properties, to carry on its business as now
conducted and proposed to be conducted and to enter into each Loan Document
and other Transaction Document to which such Loan Party is a signatory.
(B) Capitalization. The authorized capital stock of each of the
Loan Parties is as set forth on Schedule 4.1(B). All issued and outstanding
shares of capital stock of each of the Loan Parties are duly authorized and
validly issued, fully paid, and nonassessable. The capital stock of each of
Borrower's Subsidiaries is free and clear of all Liens other than those in
favor of Agent for the benefit of Lenders. All shares of the capital stock of
the Loan Parties were issued in compliance with all applicable state and
federal (domestic or foreign) laws concerning the issuance of securities. As
of the Closing Date, the Investor Group owns the capital stock of Borrower in
the amounts set forth on Schedule 4.1(B). All of the capital stock of TNF
Europe is owned by Borrower (except one director's qualifying share), all of
the capital stock of TNF Canada is owned by Borrower, and all of the capital
stock of TNF Italy (except director's qualifying shares) is owned by TNF
Europe and Borrower. There are no preemptive or other outstanding rights,
options, warrants, conversion rights or similar agreements or understandings
for the purchase or acquisition (i) from any Loan Party or any other Person of
any securities of any of Borrower's Subsidiaries or (ii) from any Loan Party
or member of the Investor Group of any securities of Borrower that would
constitute a Change of Control.
4.2 Authorization of Borrowing and Acquisition, No Conflict. Borrower has
(and had at all relevant times) the corporate power and authority to incur the
Obligations and to grant security interests in the Collateral. The execution,
delivery and performance of the Loan Documents and the other Transaction
Documents by each Loan Party signatory thereto has been duly authorized by all
necessary corporate and shareholder action. The execution, delivery and
performance by each Loan Party of each Loan Document and other Transaction
Document to which it is a party and the consummation of the transactions
contemplated by this Agreement and the Transaction Documents do not and will
not be in contravention of any applicable law, the corporate charter or bylaws
of any Loan Party or any material agreement or order by which any Loan Party
or any of its property is bound. No consents, authorizations or permits are
required to be obtained by Borrower or any of its Subsidiaries for the
execution, delivery or performance of any Loan Document, except those which
have been obtained and delivered to Agent. This Agreement is, and the other
Transaction Documents, including the Notes, are the legally valid and binding
obligations of the applicable Loan Parties, respectively, enforceable against
the Loan Parties in accordance with the respective terms of the respective
Transaction Documents.
4.3 Financial Condition. The financial statements of Borrower and its
Subsidiaries as of November 30, 1993 and for each period thereafter which have
been, and all financial statements concerning Borrower and its Subsidiaries
which have been furnished pursuant to the Existing Loan Agreement or will
hereafter be furnished by Borrower and its Subsidiaries to Agent or any Lender
pursuant to this Agreement have been or will be prepared in accordance with
GAAP consistently applied throughout the periods involved (except as disclosed
therein) and do or will present fairly in all material respects the financial
condition of the Persons covered thereby as at the dates thereof and the
results of their operations for the periods then ended. The Budgets delivered
and to be delivered have been and will be prepared by Borrower in light of the
past operations of the business of Borrower and its Subsidiaries.
4.4 Indebtedness and Liabilities. As of the Closing Date, except as set
forth on Schedule 7.1(C), neither Borrower nor any of its Subsidiaries has (a)
any Indebtedness except Indebtedness under the Existing Loan Agreement or as
accrued in the financial statements dated as of December 31, 1996 or February
28, 1997; or (b) any liabilities other than as stated in financial statements
dated as of December 31, 1996 or February 28, 1997 or operating lease
liabilities and trade credit to Persons incurred in the ordinary course of
business following the date of the such financial statements.
4.5 Account Warranties. Borrower represents, warrants and covenants as to
each Account of Borrower or TNF Canada or any of Borrower's Subsidiaries which
is a party to a Loan Document that, at the time of its creation, the Account
is a valid, bona fide account, representing an indebtedness incurred by the
named account debtor for goods actually sold and delivered or for services
completely rendered; there are no setoffs, or counterclaims, genuine or
otherwise, against the Account; the Account does not represent a sale to an
Affiliate (other than Goldwin or TNF Canada) or a consignment, sale subject to
return or a ▇▇▇▇ and hold transaction; no agreement exists permitting any
deduction or discount (other than the discount stated on the invoice);
Borrower or the applicable Subsidiary is the lawful owner of the Account and
Borrower or such Subsidiary has the right to assign the same to Agent, for the
benefit of Lenders; each Account is free of all security interests, liens and
encumbrances other than those in favor of Agent, for the benefit of Lenders
and, as to Accounts of TNF Canada Liens in favor of Borrower which have been
assigned to Agent, for the benefit of Lenders; and the Account is due and
payable in accordance with its terms.
4.6 Names. Borrower does not conduct business, nor has it at any time
during the past five years conducted business, under any name, trade name or
fictitious business name other than those names set forth on Schedule 4.6.
4.7 Locations; FEIN. Schedule 4.7 sets forth the locations of Borrower's
and each Subsidiary's principal places of business, the locations of their
books and records, the locations of all other offices of Borrower and its
Subsidiaries and all Collateral locations, and such locations are Borrower's
and its Subsidiaries sole locations for their respective businesses and the
Collateral. Borrower's federal employer identification number is ▇▇-▇▇▇-▇▇▇▇.
4.8 Title to Properties; Liens. Borrower and each of its Subsidiaries has
good, sufficient and legal title, subject to Permitted Encumbrances, to all its
respective material properties and assets. Except for Permitted Encumbrances,
all such properties and assets are free and clear of Liens. To the best
knowledge of Borrower after due inquiry, there are no actual, threatened or
alleged defaults with respect to any leases of real property under which
Borrower or any of its Subsidiaries is lessee or lessor which would have a
Material Adverse Effect.
4.9 Litigation; Adverse Facts. Except as set forth on Schedule 4.9, there
are no judgments outstanding against any Loan Party or Old TNF or affecting
any property of any Loan Party or Old TNF nor is there any action, charge,
claim, demand, suit, proceeding, petition, governmental investigation or
arbitration now pending or, to the best knowledge of Borrower after due
inquiry, threatened against or affecting any Loan Party or Old TNF or any
property of any Loan Party or Old TNF which could reasonably be expected to
result in any Material Adverse Effect. No Loan Party has received any opinion
or memorandum or legal advice from legal counsel to the effect that such Loan
Party is exposed to any liability which could reasonably be expected to result
in any Material Adverse Effect.
4.10 Payment of Taxes. Except as set forth on Schedule 4.10 or permitted
pursuant to Section 5.9, all tax returns and reports of Borrower and each of
its Subsidiaries required to be filed by any of them have been timely filed,
and all taxes, assessments, fees and other governmental charges upon such
Persons and upon their respective properties, assets, income and franchises
which are shown on such returns as due and payable have been paid when due and
payable. None of the income tax returns of Borrower or any of its
Subsidiaries are under audit. No tax liens have been filed against any assets
of Borrower or its Subsidiaries and not discharged and no claims are being
asserted with respect to any taxes against Borrower or its Subsidiaries. The
charges, accruals and reserves on the books of Borrower and each of its
Subsidiaries in respect of any taxes or other governmental charges are in
accordance with GAAP.
4.11 Performance of Agreements. None of the Loan Parties, and none of their
respective Subsidiaries is in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
contractual obligation of any such Person, and no condition exists that, with
the giving of notice or the lapse of time or both, would constitute such a
default, except as set forth in Schedule 4.11 and for such defaults which
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
4.12 Employee Benefit Plans. Borrower, each Subsidiary of Borrower and each
ERISA Affiliate is in compliance in all material respects with all applicable
provisions of ERISA, the IRC and all other applicable laws and the regulations
and interpretations thereof with respect to all Employee Benefit Plans and, as
to TNF Europe and TNF Canada, with all applicable laws relating to any
employee benefit or retirement plans. No liability has been incurred by
Borrower, any Subsidiary of Borrower, Old TNF or any ERISA Affiliate which
remains unsatisfied for any funding obligation, taxes or penalties with
respect to any Employee Benefit Plan or any similar plan of TNF Europe and TNF
Canada, except the liability of TNF Europe for underfunding of its pension
plan as disclosed prior to the Original Closing Date, for which Borrower has
no liability. Neither Borrower, any Subsidiary of Borrower, or any ERISA
Affiliate has any withdrawal liability under any multi-employer plan.
4.13 Intellectual Property. Borrower and each of its Subsidiaries owns, is
licensed to use or otherwise has the right to use, all Intellectual Property
used in or necessary for the conduct of its business as currently conducted
and as conducted by Old TNF and its Subsidiaries prior to the Original Closing
Date and all such Intellectual Property is identified on Schedule 4.13.
4.14 Broker's Fees. No broker's or finder's fee or commission will be
payable with respect to the issuance and sale of the Notes or any of the other
transactions contemplated hereby.
4.15 Environmental Compliance. Each Loan Party and Old TNF has been and is
currently in compliance in all material respects with all applicable
Environmental Laws, including obtaining and maintaining in effect all permits,
licenses or other authorizations required by applicable Environmental Laws.
There are no claims, liabilities, investigations, litigation, administrative
proceedings, whether pending or threatened, or judgments or orders relating to
any Hazardous Materials asserted or (to the best knowledge of Borrower)
threatened against any Loan Party or Old TNF or relating to any real property
currently or formerly owned, leased or operated by any Loan Party or Old TNF
which could have a Material Adverse Effect.
4.16 Solvency. As of and from and after the date of this Agreement,
Borrower and each of its Subsidiaries: (a) owns and will own assets the fair
saleable value of which are (i) greater than the total amount of its
liabilities (including contingent liabilities); (ii) greater than the amount
that will be required to pay its probable liabilities as they mature; (b) has
capital that is not unreasonably small in relation to its business as
presently conducted or any contemplated or undertaken transaction; and (c)
does not intend to incur and does not believe that it will incur debts beyond
its ability to pay such debts as they become due.
4.17 Disclosure. No representation or warranty of Borrower, any of its
Subsidiaries or any other Loan Party contained in this Agreement, the Existing
Loan Agreement, the Purchase Agreement, or any other Transaction Document, the
financial statements described in subsection 4.3 or delivered by Borrower under
this Agreement, the other Loan Documents, or any other document, certificate or
written statement in final form furnished to Agent or any Lender by or on
behalf of any such Person for use in connection with the Loan Documents
contains any untrue statement of a material fact or omitted, omits or will
omit (in each case at the time made) to state a material fact necessary in
order to make the statements contained herein or therein not misleading in
light of the circumstances in which the same were made. The Budgets and pro
forma financial information contained in such materials are based upon good
faith estimates and assumptions believed by such Persons to be reasonable at
the time made, it being recognized by Agent and Lenders that such projections
as to future events are not to be viewed as facts and that actual results
during the period or periods covered by any such projections may differ from
the projected results. There is no material fact known to Borrower that has
had or could reasonably be expected to have a Material Adverse Effect and that
has not been disclosed herein or in such other documents, certificates and
statements furnished to Agent and Lenders for use in connection with the
transactions contemplated hereby.
4.18 Insurance. Borrower and each of its Subsidiaries maintains insurance
policies for business interruptions and public liability and property and
casualty damage for its business and properties as required by subsection 5.10,
no notice of cancellation has been received with respect to such policies and
Borrower and each of its Subsidiaries is in compliance with all conditions
contained in such policies. Agent, for the benefit of Lenders has been named
as an additional insured and loss payee, respectively, on all such insurance
policies.
4.19 Compliance with Laws. Neither Borrower nor any of its Subsidiaries is
in violation of any law, ordinance, rule, regulation, order, policy, guideline
or other requirement of any domestic or foreign government or any
instrumentality or agency thereof, having jurisdiction over the conduct of its
business or the ownership of its properties, including, without limitation,
any violation relating to any use, release, storage, transport or disposal of
any Hazardous Material, which violation would subject Borrower or any such
Subsidiary, or any of their respective officers to criminal liability or have
a Material Adverse Effect and no such violation has been alleged.
4.20 Bank Accounts. Schedule 4.20 sets forth the account numbers and
locations of all bank accounts of Borrower and its Subsidiaries as of the
Closing Date.
4.21 Subsidiaries. Borrower has no Subsidiaries other than TNF Canada, TNF
Europe, TNF Italy and a dormant Subsidiary of TNF Europe, Black & ▇▇▇▇▇▇▇▇▇
(Exports) Limited, which conducts no business and has no assets or liabilities
other than a guaranty of the indebtedness and/or obligations of TNF Europe.
4.22 Use of Proceeds and Margin Security. Borrower shall use the proceeds
of all Loans for proper business purposes (as described in this Agreement)
consistent with all applicable laws, statutes, rules and regulations. No
portion of the proceeds of any Loan shall be used by Borrower or any of its
Subsidiaries in any manner that might cause the borrowing or the application
of such proceeds to violate Regulation G, Regulation U, Regulation T or
Regulation X or any other regulation of the Board of Governors of the Federal
Reserve System or to violate the Exchange Act.
4.23 Employee Matters. Except as set forth on Schedule 4.23, (a) no Loan
Party nor any of such Loan Party's employees is subject to any collective
bargaining agreement, (b) no petition for certification or union election is
pending with respect to the employees of any Loan Party and no union or
collective bargaining unit has sought such certification or recognition with
respect to the employees of any Loan Party within the past three (3) years and
(c) there are no strikes, slowdowns, work stoppages or controversies pending
or, to the best knowledge of Borrower after due inquiry, threatened between
any Loan Party and its respective employees, other than employee grievances
arising in the ordinary course of business which could not reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect. Except as set forth on Schedule 4.23, neither Borrower nor any of its
Subsidiaries is subject to an employment contract or any liability for
severance pay.
4.24 Governmental Regulation. None of the Loan Parties is, or after giving
effect to any Loan will be, subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act or the Investment Company
Act of 1940 or to any federal or state statute or regulation limiting its
ability to incur Indebtedness for borrowed money.
4.25 Purchase Agreement; Transaction Documents; Existing Loan Agreement.
Borrower represents and warrants that each of the representations and
warranties of Sellers and Borrower in the Purchase Agreement and each
representation and warranty of Borrower in any other Transaction Document, all
of which are incorporated herein by this reference, were true and correct in
all material respects as of the Original Closing Date and each representation
and warranty of Borrower in the Existing Loan Agreement, all of which are
incorporated herein by reference, were true and correct when made under the
Existing Loan Agreement. Notwithstanding anything in the Purchase Agreement
or any Transaction Document or the Existing Loan Agreement to the contrary,
all such representations and warranties incorporated herein shall, solely for
purposes of this Agreement, survive the execution and delivery of the Purchase
Agreement or any Transaction Document and the consummation of the Acquisition,
the execution and delivery of this Agreement and the making of the Loans.
4.26 TNF Canada. TNF Canada has the corporate power and authority to
purchase Inventory from Borrower and to grant security interests in its assets
to secure the unpaid obligations owed to Borrower. The Canadian Documents
executed and delivered by TNF Canada have been duly authorized, executed and
delivered by TNF Canada, and neither the execution and delivery of such
Canadian Documents, nor TNF Canada's performance thereof, contravenes or
violates its governing documents, any applicable law or any agreement or order
to which TNF Canada is a party.
4.27 Inventory Warranties. Borrower represents, warrants and covenants as
to the Inventory of Borrower, TNF Canada and any of Borrower's Subsidiaries
that is party to any Loan Document that the Inventory is owned by Borrower or
such Subsidiary, free and clear of all Liens, and is not obsolete or
unmarketable in the ordinary course of business, and was not produced in
violation of the Fair Labor Standards Act.
SECTION 5 AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, so long as any of the
Commitments hereunder shall be in effect and until payment in full of all
Obligations and termination of all Lender Letters of Credit and Underlying
L/C's, unless Requisite Lenders or Agent at the direction of Requisite Lenders
shall otherwise give prior written consent, Borrower shall perform, and shall
cause each of its Subsidiaries to perform, all covenants in this Section 5
applicable to such Person.
5.1 Financial Statements and Other Reports. Borrower will maintain, and
cause each of its Subsidiaries to maintain, a system of accounting established
and administered in accordance with sound business practices to permit
preparation of financial statements in conformity with GAAP. Borrower will
deliver to Agent and each Lender the financial statements and other reports
described below (unless specified to be delivered solely to Agent).
(A) Monthly Financials. As soon as available and in any event
within thirty (30) days after the end of each month, Borrower will deliver (1)
the consolidated and consolidating balance sheet of Borrower and its
Subsidiaries as at the end of such month and the related consolidated and
consolidating statements of income, stockholders' equity and cash flow for
such month and for the period from the beginning of the then current Fiscal
Year to the end of such month, (2) the consolidated and consolidating balance
sheet and the related consolidated and consolidating statements of income,
stockholders' equity and cash flow for the same period of the prior year and
(3) a schedule of the outstanding Indebtedness for borrowed money of Borrower
and its Subsidiaries describing in reasonable detail each such debt issue or
loan outstanding and the principal amount and amount of accrued and unpaid
interest with respect to each such debt issue or loan.
(B) Quarterly Financials. As soon as available and in any event
within forty-five (45) days after the end of each quarter of a Fiscal Year,
Borrower will deliver the consolidated and consolidating balance sheet of
Borrower and its Subsidiaries as at the end of such period and the related
consolidated and consolidating statements of income, stockholders' equity and
cash flow for such quarter of a Fiscal Year and for the period from the
beginning of the then current Fiscal Year to the end of such quarter of a
Fiscal Year. Borrower will also deliver the consolidated and consolidating
balance sheet, and the related consolidated and consolidating statements of
income, stockholders' equity and cash flow for the same periods in the prior
Fiscal Year.
(C) Year-End Financials. As soon as available and in any event
within ninety (90) days after the end of each Fiscal Year, Borrower will
deliver: (1) the consolidated balance sheet of Borrower and its Subsidiaries
as at the end of such year and the related consolidated statements of income,
stockholders' equity and cash flow for such Fiscal Year; (2) for the Fiscal
Year ending December 31, 1994, the consolidated balance sheet, and the related
consolidated statements of income, stockholders' equity and cash flow for Old
TNF for the prior Fiscal Year; (3) a schedule of the outstanding Indebtedness
of Borrower and its Subsidiaries describing in reasonable detail each such
debt issue or loan outstanding and the principal amount and amount of accrued
and unpaid interest with respect to each such debt issue or loan; and (4) a
report with respect to the financial statements of Borrower and its
Subsidiaries from a firm of independent certified public accountants selected
by Borrower and acceptable to Agent, which report shall be unqualified as to
going concern and scope of audit and shall state that (a) such consolidated
financial statements present fairly the consolidated financial position of
Borrower and its Subsidiaries as at the dates indicated and the results of
their operations and cash flow for the periods indicated in conformity with
GAAP applied on a basis consistent with prior years and (b) that the
examination by such accountants in connection with such consolidated financial
statements has been made in accordance with generally accepted auditing
standards; and (5) copies of the consolidating financial statements of
Borrower and its Subsidiaries, including (a) consolidating balance sheets of
Borrower and its Subsidiaries as at the end of such Fiscal Year showing
intercompany eliminations and (b) related consolidating statements of earnings
of Borrower and its Subsidiaries showing intercompany eliminations and (c)
consolidating cash flows of Borrower and its Subsidiaries.
(D) Accountants' Certification and Reports. Together with each
delivery of consolidated financial statements of Borrower and its Subsidiaries
pursuant to subsection 5.1(C), Borrower will deliver a written statement by
its independent certified public accountants (a) stating that the examination
has included a review of the terms of this Agreement as same relate to
accounting matters and (b) stating whether, in connection with the
examination, any condition or event that constitutes a Default or an Event of
Default has come to their attention and, if such a condition or event has come
to their attention, specifying the nature and period of existence thereof.
Promptly upon receipt thereof, Borrower will deliver copies of all significant
reports submitted to Borrower by independent public accountants in connection
with each annual, interim or special audit of the financial statements of
Borrower made by such accountants, including the comment letter submitted by
such accountants to management in connection with their annual audit.
(E) Compliance Certificate. Together with the delivery of each set
of financial statements referenced in subparts (B) and (C) of this subsection
5.1, Borrower will deliver a Compliance Certificate.
(F) Borrowing Limit Calculation. Concurrently with the delivery
of the financial statements pursuant subsection 5.1(A), Borrower shall deliver
to Agent a calculation of the Borrowing Limit in reasonable detail.
(G) [intentionally omitted]]
(H) Management Report. Together with each delivery of financial
statements of Borrower and its Subsidiaries pursuant to subdivisions (B) and
(C) of this subsection 5.1, Borrower will deliver a management report: (1)
describing the operations and financial condition of Borrower and its
Subsidiaries for the quarter then ended and the portion of the current Fiscal
Year then elapsed; (2) setting forth in comparative form the corresponding
figures for the corresponding periods of the previous Fiscal Year (or, as
applicable, for the Fiscal Year of Old TNF) and the corresponding figures from
the most recent Budget for the current Fiscal Year delivered to Agent and
Lenders pursuant to 5.1(P); and (3) discussing the reasons for any significant
variations. The information above shall be presented in reasonable detail and
shall be certified by the chief financial officer of Borrower to the effect
that such information fairly presents the results of operations and financial
condition of Borrower and its Subsidiaries as at the dates and for the periods
indicated.
(I) Appraisals. From time to time after the occurrence of an Event
of Default, upon the request of Agent, Borrower will obtain and deliver to
Agent, at Borrower's expense, appraisal reports in form and substance and from
appraisers acceptable to Agent, stating the then current fair market and
orderly liquidation values of all or any portion of the Collateral.
(J) Government Notices. Borrower will deliver to Agent promptly
after receipt by Borrower or any of its Subsidiaries copies of all notices,
requests, subpoenas, inquiries or other writings received from any
governmental agency concerning any Employee Benefit Plan, the violation or
alleged violation of any Environmental Laws, the storage, use or disposal of
any Hazardous Material, the violation or alleged violation of the Fair Labor
Standards Act or Borrower's or any Subsidiary's payment or nonpayment of any
taxes, including any tax audit.
(K) Events of Default, etc. Promptly upon any officer of Borrower
or of any of its Subsidiaries obtaining knowledge of any of the following
events or conditions, Borrower shall deliver a certificate of Borrower's chief
executive officer specifying the nature and period of existence of such
condition or event and what action Borrower and/or its Subsidiary has taken,
is taking and proposes to take with respect thereto: (1) any condition or
event that constitutes an Event of Default or Default; (2) any notice of
default that any Person has given to Borrower or any of its Subsidiaries or
any other action taken with respect to a claimed default; or (3) any Material
Adverse Effect.
(L) Trade Names. Borrower and its Subsidiaries will give Agent at
least thirty (30) days advance written notice of any change of name or of any
new trade name or fictitious business name. Borrower's and each of its
Subsidiaries' use of any trade name or fictitious business name will be in
compliance with all laws regarding the use of such names.
(M) Locations. Borrower will give Agent at least thirty (30) days
advance written notice of any change in the principal place of business of
Borrower or of any of its Subsidiaries which is a party to any Loan Document or
any change in the location of the books and records or any of the Collateral or
of any new location for the books and records or any of the Collateral.
(N) Bank Accounts. Borrower will give Agent written notice after
Borrower or any of its Subsidiaries which is a party to any Loan Document opens
any new bank account no later than fifteen (15) days after opening such account.
(O) Litigation. Promptly upon any officer of Borrower or of any of
its Subsidiaries obtaining knowledge of (1) the institution of any action,
suit, proceeding, governmental investigation or arbitration against or
affecting any Loan Party or any property of any Loan Party not previously
disclosed by Borrower to Agent (other than any such action, suit, proceeding,
investigation or arbitration which seeks only money damages in an amount not
in excess of $100,000) or (2) any material development in any action, suit,
proceeding, governmental investigation or arbitration at any time pending
against or affecting any Loan Party or any property of any Loan Party which is
reasonably likely to have a Material Adverse Effect, Borrower will promptly
give notice thereof to Agent and provide such other information as may be
reasonably available to them to enable Agent and its counsel to evaluate such
matter.
(P) Budgets. As soon as available and in any event no later than
the end of each Fiscal Year of Borrower, Borrower will deliver a consolidated
and consolidating Budget of Borrower and its Subsidiaries for the forthcoming
three Fiscal Years, year by year, and for the forthcoming Fiscal Year, month
by month.
(Q) [intentionally omitted]
(R) Other Information. With reasonable promptness, Borrower will
deliver such other information and data with respect to any Loan Party, any
Subsidiary of any Loan Party or any of the Collateral as Agent or any Lender
may reasonably request from time to time.
5.2 Access to Accountants. Borrower authorizes Agent to discuss the
financial condition and financial statements of Borrower and its Subsidiaries
with Borrower's or any of its Subsidiaries' independent public accountants
upon reasonable notice to Borrower of its intention to do so and authorizes
such accountants to respond to all of Agent's inquiries.
5.3 Inspection. Borrower shall permit Agent and any Lender and any
authorized representatives designated by Agent or any Lender to visit and
inspect any of the properties of Borrower or any of its Subsidiaries,
including its and their financial and accounting records, and to make copies
and take extracts therefrom, and to discuss its and their affairs, finances
and business with its and their employees and independent public accountants,
at such reasonable times during normal business hours and as often as may be
reasonably requested; provided Lenders shall coordinate such visits through
Agent and, except as provided in this subsection 5.3 or subsection 10.1, at
Lenders' expense; and, provided further, that so long as no Event of Default
has occurred, such inspections shall be limited to once in each Fiscal Year
without Borrower's consent. Borrower agrees to pay to Agent audit fees equal
to Five Hundred Dollars ($500.00) per auditor per day or any portion thereof,
excluding all full days spent by Agent traveling to or from Borrower's
locations (but not to exceed Five Thousand Dollars ($5,000) in any Fiscal Year
for all Lenders and Agent so long as no Event of Default has occurred), plus
out of pocket expenses.
5.4 Collateral Records. Borrower shall keep and shall cause each of its
Subsidiaries to keep full and accurate books and records relating to the
Collateral and shall ▇▇▇▇ such books and records to indicate Agent's security
interests in the Collateral for the benefit of Lenders.
5.5 Account Covenants; Verification. Borrower shall, at its own expense:
(a) cause all invoices evidencing Accounts of Borrower and all copies thereof
to bear a notice that such invoices are payable in the name of Borrower to the
Blocked Accounts established in accordance with subsection 5.6 and (b) use its
best efforts to assure prompt payment of all amounts due or to become due
under such Accounts. No discounts, credits or allowances will be issued,
granted or allowed by Borrower or any Subsidiary to customers and no returns
will be accepted without Agent's prior written consent except in the ordinary
course of business; provided, that until Agent notifies Borrower to the
contrary after the occurrence and during the continuance of an Event of
Default, Borrower may presume consent. Borrower will promptly notify Agent in
the event that a customer alleges any dispute or claim with respect to an
Account of Borrower and each of its Subsidiaries in excess of $50,000 or of
any other circumstances known to Borrower that may impair the validity or
collectibility of such an Account. Agent shall have the right, at any time or
times hereafter, to verify the validity, amount or any other matter relating
to an Account, by mail, telephone or in person. After the occurrence of a
Default or an Event of Default, Borrower shall not, and shall not permit any
Subsidiary to, without the prior consent of Agent, adjust, settle or
compromise the amount or payment of any Account, or release wholly or partly
any customer or obligor thereof, or allow any credit or discount thereon.
5.6 Collection of Accounts and Payments. Borrower shall establish such
lockboxes and depository accounts (collectively, "Blocked Accounts") with such
banks as are reasonably acceptable to Agent to which all account debtors shall
directly remit all payments on Accounts of Borrower and in which Borrower will
immediately deposit all cash payments made for Inventory or other cash payments
constituting proceeds of Collateral in the identical form in which such payment
was made, whether by cash or check. Unless a facility for a Permitted Canadian
Financing has been executed, Borrower shall cause TNF Canada to establish a
lockbox for payment of its Accounts, and all funds shall be transferred to a
Blocked Account. Prior to the occurrence of a Default or an Event of Default,
Agent shall instruct the banks to release all funds in the Blocked Accounts to
Borrower. After the occurrence of a Default or an Event of Default which has
not been cured, Agent may deliver a notice that all funds in the Blocked
Accounts shall be transferred to Agent and, in such event, Borrower hereby
agrees that all payments received by Agent, whether by cash, check, wire
transfer or any other instrument, made to such Blocked Accounts or otherwise
received by Agent and whether on the Accounts or as proceeds of other
Collateral or otherwise will be the sole and exclusive property of Agent for
the benefit of Lenders. Borrower, and any of its Affiliates, employees,
agents or other Persons acting for or in concert with Borrower, shall, acting
as trustee for Agent, receive, as the sole and exclusive property of Agent,
any monies, checks, notes, drafts or any other payments relating to and/or
proceeds of Accounts or other Collateral which come into the possession or
under the control of Borrower or any of Borrower's Affiliates, employees,
agents or other Persons acting for or in concert with Borrower, and
immediately upon receipt thereof, Borrower or such Persons shall remit the
same or cause the same to be remitted, in kind, to the Blocked Accounts,
Agent's Account or to Agent at its address set forth in subsection 9.6 below.
5.7 Endorsement. Borrower hereby constitutes and appoints, and shall cause
each of its Subsidiaries which is a party to any Loan Document to constitute
and appoint, Agent and all Persons designated by Agent for that purpose as
Borrower's true and lawful attorney-in-fact, with power to endorse Borrower's
name to any of the items of payment described in subsection 5.6 above and all
proceeds of Collateral that come into Agent's or any Lender's possession or
under Agent's or any Lender's control. Both the appointment of Agent as
Borrower's or its Subsidiary's attorney and Agent's rights and powers are
coupled with an interest and are irrevocable until payment in full and
complete performance of all of the Obligations.
5.8 Corporate Existence. Borrower will, and will cause each of its
Subsidiaries to, at all times preserve and keep in full force and effect its
corporate existence and all rights and franchises material to its business.
Borrower will promptly notify Agent of any change in its or any of its
Subsidiaries' corporate structures.
5.9 Payment of Taxes. Borrower will, and will cause each of its
Subsidiaries to, pay all taxes, assessments and other governmental charges
imposed upon it or any of its properties or assets or with respect to any of
its franchises, business, income or property before any penalty accrues
thereon; provided that no such tax need be paid if Borrower or such Subsidiary
is contesting same in good faith by appropriate proceedings promptly
instituted and diligently conducted and if Borrower or such Subsidiary has
established appropriate reserves as shall be required in conformity with GAAP.
5.10 Maintenance of Properties; Insurance. Borrower will maintain or cause
to be maintained in good repair, working order and condition all material
properties used in the business of Borrower and its Subsidiaries and will make
or cause to be made all appropriate repairs, renewals and replacements
thereof. Borrower will maintain or cause to be maintained, with financially
sound and reputable insurers, business interruption insurance (with no
exclusion for earthquakes), public liability and property damage and casualty
insurance with respect to its business and properties and the business and
properties of its Subsidiaries against loss or damage of the kinds customarily
carried or maintained by corporations of established reputation engaged in
similar businesses and in amounts acceptable to Agent. Borrower shall cause
Agent, for the benefit of Lenders, to be named as loss payee on all insurance
policies relating to any Collateral and as additional insured under all
liability policies, in each case pursuant to appropriate endorsements in form
and substance acceptable to Agent. Borrower shall apply any proceeds received
from any policies of insurance relating to any Collateral to the Obligations
as set forth in subsection 2.4(B).
5.11 Compliance with Laws. Borrower will, and will cause each of its
Subsidiaries to, comply with the requirements of all applicable laws, rules,
regulations and orders of any governmental authority as now in effect and which
may be imposed in the future in all jurisdictions in which Borrower or any of
its Subsidiaries is now doing business or may hereafter be doing business,
other than those laws the noncompliance with which would not have a Material
Adverse Effect.
5.12 Further Assurances. Borrower shall, and shall cause each of its
Subsidiaries to, from time to time, execute such guaranties, financing or
continuation statements, documents, security agreements, reports and other
documents or deliver to Agent such instruments, certificates of title or other
documents as Agent at any time may reasonably request to evidence, perfect or
otherwise implement the guaranties and security for repayment of the
Obligations provided for in the Loan Documents. At Agent's request, Borrower
shall cause any of its Subsidiaries promptly to guaranty the Obligations and
to grant to Agent, for the benefit of Lenders, security interests in the real,
personal and mixed property of such Subsidiary to secure the Obligations;
provided that, so long as Borrower does not loan or advance funds (by capital
contribution or otherwise) to TNF Europe or TNF Italy except as expressly
permitted hereby, neither TNF Europe nor TNF Italy shall be required to
guaranty the Obligations or grant Liens to Lender on its assets, and so long
as Borrower and TNF Canada are in compliance with this Agreement with respect
to Indebtedness of TNF Canada and investments by Borrower in TNF Canada, and
the Liens granted to Borrower by TNF Canada have been perfected and assigned
to Agent, TNF Canada shall not be required to guaranty the Obligations.
5.13 Collateral Locations. Borrower will keep its Collateral at the
locations specified as Borrower's locations on Schedule 4.7. With respect to
any new location (which as to Borrower in any event shall be within the
continental United States or Canada), Borrower will execute such documents and
take such actions as Agent deems necessary to perfect and protect the security
interests of Agent in the Collateral, for the benefit of Lenders including
obtaining agreements from any landlord in form and substance acceptable to
Agent. Borrower will segregate its Collateral from any Inventory of TNF
Canada, and undertake such procedures as may be requested by Agent to identify
all such Collateral. If TNF Canada enters into a Permitted Canadian
Financing, Borrower shall no longer keep any Collateral in Canada.
5.14 Bailees. If any Collateral is at any time in the possession or control
of any warehouseman, bailee or any of Borrower's or any Subsidiary's agents or
processors, Borrower shall, upon the request of Agent, notify, or cause its
Subsidiary to notify, such warehouseman, bailee, agent or processor of the
security interests in favor of Agent, for the benefit of Lenders, created
hereby and shall instruct such Person to hold all such Collateral for Agent's
account subject to Agent's instructions.
5.15 Mortgages; Title Insurance; Surveys.
(A) Mortgaged Property. Agent may from time to time designate real
property or leasehold interests of any Loan Party or any Subsidiary of any Loan
Party after the date hereof as "Mortgaged Property", in which case Borrower
shall as promptly as possible (and in any event within sixty (60) days after
such designation) deliver to Agent, for the benefit of Lenders, a fully
executed Mortgage, in form and substance acceptable to Agent, together with
title insurance policies and surveys as required by this subsection 5.15.
Borrower agrees that, following the taking of the actions with respect to any
Mortgaged Property required by the immediately preceding sentence, Agent, for
the benefit of Lenders, shall have a valid and enforceable mortgage on the
respective Mortgaged Property, free and clear of all defects and encumbrances
except for Permitted Encumbrances. Notwithstanding the foregoing, Agent shall
not require a leasehold mortgage or deed of trust to the extent that it is
prohibited by the applicable lease, nor any Mortgage on the real property
owned by TNF Europe so long as TNF Europe is not required to guaranty the
Obligations.
(B) Title Insurance. Within thirty (30) days following delivery of
any Mortgage with respect to Mortgaged Property, Borrower shall deliver or
cause to be delivered to Agent, for the benefit of Lenders, ALTA lender's
title insurance policies issued by title insurers reasonably satisfactory to
Agent (the "Mortgage Policies") in form and substance and in amounts
reasonably acceptable to Agent assuring Agent that the Mortgages are valid and
enforceable first priority mortgage liens on the respective Mortgaged
Property, free and clear of all defects and encumbrances except Permitted
Encumbrances. The Mortgage Policies shall be in form and substance reasonably
acceptable to Agent and shall include an endorsement insuring against the
effect of future advances under this Agreement, for mechanics' liens and for
any other matter that Agent may reasonably request, and shall provide for
affirmative insurance and such reinsurance as Agent may reasonably request.
In the case of each leasehold constituting Mortgaged Property, Agent shall
have received such estoppel letters, consents and waivers from the landlords
and non-disturbance agreements from any holders of mortgages or deeds of trust
on such real estate as may have been requested by Agent, which letters shall
be in form and substance satisfactory to Agent.
(C) Surveys. Within thirty (30) days following delivery of any
Mortgage with respect to Additional Mortgaged Property, Borrower shall deliver
or cause to be delivered to Agent current surveys, certified by a licensed
surveyor, for all real property that is the subject of the Mortgage Policies.
All such surveys shall be sufficient to allow the issuer of the mortgage
policy to issue an ALTA lender's policy.
5.16 Canadian Accounts. Borrower will cause TNF Canada to apply proceeds of
the collections of its Accounts and any Permitted Canadian Financing to the
payment of the Intercompany Inventory Account and other Indebtedness owed to
Borrower. Unless a credit facility to provide a Permitted Canadian Financing
is in effect, TNF Canada shall not maintain more than Seventy-Five Thousand
Dollars ($75,000) in cash or cash equivalents.
5.17 Dividends. Borrower will not pay any cash dividends on any Borrower
Stock.
SECTION 6 FINANCIAL COVENANTS
Borrower covenants and agrees that so long as any of the
Commitments remain in effect and until payment in full of all Obligations and
termination of all Lender Letters of Credit and Risk Participation Agreements,
unless Borrower has received the prior written consent of Requisite Lenders or
of Agent at the direction of Requisite Lenders, Borrower shall comply with and
shall cause each of its Subsidiaries to comply with all covenants in this
Section 6 applicable to such Person.
6.1 Tangible Net Worth. As of the end of each Fiscal Quarter Tangible Net
Worth shall be at least $50,000,000 in 1997, and in each Fiscal Year thereafter
shall be increased by an amount equal to seventy-five percent (75%) of
Borrower's net income (determined in accordance with GAAP) (but not decreased
by the amount of any loss) for Fiscal Year 1997 and each Fiscal Year ended
thereafter.
6.2 Minimum EBITDA. Minimum EBITDA at the end of each fiscal quarter set
forth below for the rolling four (4) quarter period ending on the last day of
each fiscal quarter set forth below shall not be less than the amount set
forth below opposite such date.
Fiscal Quarter Amount
3/31/97 $11,000,000
6/30/97 $11,000,000
9/30/97 $12,000,000
12/31/97 $13,000,000
3/31/98 $13,000,000
6/30/98 $13,000,000
9/30/98 $14,000,000
12/31/98 and thereafter $15,000,000
6.3 Capital Expenditure Limits. The aggregate amount of all Capital
Expenditures of Borrower and its Domestic Subsidiaries (excluding (i)
trade-ins, and (ii) Capital Expenditures in respect of replacement assets to
the extent funded with casualty insurance proceeds), will not exceed Fifteen
Million Dollars ($15,000,000) in any Fiscal Year. In the event that Borrower
or any of its Domestic Subsidiaries enters into a Capital Lease or other
contract with respect to fixed assets, for purposes of calculating Capital
Expenditures under this subsection only, the amount of the Capital Lease
initially capitalized on Borrower's balance sheet prepared in accordance with
GAAP shall be considered expended in full on the date that Borrower or any of
its Domestic Subsidiaries enters into such contract or Capital Lease.
6.4 Fixed Charge Coverage. Fixed Charge Coverage at the end of each fiscal
quarter for the rolling four (4) quarter period ending on the last day of each
fiscal quarter shall not be less than 1.2.
6.5 Total Interest Coverage. Total Interest Coverage at the end of each
fiscal quarter for the rolling four (4) quarter period ending on the last day
of each fiscal quarter shall not be less than 1.75.
6.6 Leverage Ratio. The Leverage Ratio at the end of each fiscal quarter
for the rolling four (4) quarter period ending on the last day of each fiscal
quarter shall not exceed 4.0 for the fiscal quarters ending March 31, and June
30, 1997, 3.5 for the fiscal quarter ending September 30, 1997 and for any
fiscal quarter ending thereafter.
6.7 Adjustment of Financial Covenants. If TNF Canada enters into a
Permitted Canadian Financing, Borrower, Agent and Lenders agree to negotiate
in good faith in order to amend the foregoing covenants and the related
definitions to exclude TNF Canada and provide criteria for evaluating
Borrower's performance and financial condition which shall be the same after
such exclusion.
SECTION 7 NEGATIVE COVENANTS
Borrower covenants and agrees that so long as any of the
Commitments remain in effect and until payment in full of all Obligations and
termination of all Lender Letters of Credit and Risk Participation Agreements,
unless Borrower has received the prior written consent of Requisite Lenders or
of Agent at the direction of Requisite Lender, Borrower shall comply, and
shall cause each of its Subsidiaries to comply, with all covenants in this
Section 7 applicable to such Person.
7.1 Indebtedness and Liabilities. Borrower will not, and will not permit
any of its Subsidiaries to, directly or indirectly create, incur, assume,
guaranty, or otherwise become or remain directly or indirectly liable, on a
fixed or contingent basis, with respect to any Indebtedness except: (a) the
Obligations; (b) Indebtedness not to exceed One Hundred Thousand Dollars
($100,000) in the aggregate at any time outstanding secured by purchase money
Liens; (c) Indebtedness with respect to Capital Leases permitted under
subsection 6.3 hereof; (d) Indebtedness existing on the Closing Date not
otherwise permitted hereunder and identified on Schedule 7.1(C) and
refinancings thereof in amounts not in excess of that set forth on such
Schedule 7.1(C); provided, that in no event may any refinancing of the
Indebtedness of TNF Europe or TNF Italy require any guaranty of payment or
other credit support by Borrower; (e) until TNF Canada enters into a Permitted
Canadian Financing, the Intercompany Inventory Account and other intercompany
Indebtedness of TNF Canada to Borrower in an amount not to exceed the
investment permitted under subsection 7.4(e) and if a credit facility for a
Permitted Canadian Financing is in effect, the Intercompany Inventory Account
in an amount not to exceed Fifty Thousand Dollars ($50,000); (f) a Permitted
Canadian Financing; and (g) Permitted FX Contracts. Except for Indebtedness
described in the preceding sentence, Borrower will not, and will not permit
any of its Subsidiaries to, incur any indebtedness or liabilities except for
trade payables, operating leases and other liabilities not constituting
Indebtedness in the ordinary course of business not delinquent or with respect
to which Borrower or any of its Subsidiaries is contesting in good faith the
amount or validity thereof by appropriate proceedings and then only to the
extent that Borrower or any of its Subsidiaries has established adequate
reserves therefor, if appropriate under GAAP.
7.2 Guaranties. Except for guaranties issued to Agent for the benefit of
Lenders or endorsements of instruments or items of payment for collection in
the ordinary course of business or customary indemnities to corporate agents,
officers and directors (but subject to sub-section 7.5), Borrower shall not,
and shall not permit any of its Subsidiaries to, guaranty, endorse, or
otherwise in any way become or be responsible for any obligations of any other
Person, whether directly or indirectly by agreement to purchase the
indebtedness of any other Person or through the purchase of goods, supplies or
services, or maintenance of working capital or other balance sheet covenants
or conditions, or by way of stock purchase, capital contribution, advance or
loan for the purpose of paying or discharging any indebtedness or obligation
of such other Person or otherwise. The foregoing shall not prohibit
Subsidiaries from guarantying the Obligations, nor Borrower from guarantying
the obligations of TNF Canada under its lease; provided that the terms of such
lease and guaranty are acceptable to Lender.
7.3 Transfers, Liens and Related Matters.
(A) Transfers. Borrower shall not, and shall not permit any of its
Subsidiaries to, sell, assign (by operation of law or otherwise) or otherwise
dispose of, or grant any option with respect to any of the Collateral or the
assets of such Person, except that Borrower and its Subsidiaries may (i) sell
Inventory in the ordinary course of business; (ii) with the prior written
consent of Lender not to be unreasonably withheld or delayed, license
trademarks and tradenames in the ordinary course of business consistent with
past practices of Old TNF prior to the Original Closing Date; (iii) terminate
the leases described on Schedule 7.3(B); and (iv) make voluntary Asset
Dispositions if all of the following conditions are met: (1) the market value
of assets sold or otherwise disposed of in any single transaction or series of
related transactions does not exceed Twenty-five Thousand Dollar ($25,000) and
the aggregate market value of assets sold or otherwise disposed of in any
Fiscal Year does not exceed Seventy- five Thousand Dollars ($75,000); (2) the
consideration received is at least equal to the fair market value of such
assets; (3) the sole consideration received is cash; (4) the net proceeds of
such Asset Disposition are applied as required by subsection 2.4(B); (5) after
giving effect to the sale or other disposition of the assets included within
the Asset Disposition and the repayment of the Obligations with the proceeds
thereof, Borrower is in compliance on a pro forma basis with the covenants set
forth in Section 6 recomputed for the most recently ended month for which
information is available and is in compliance with all other terms and
conditions contained in this Agreement; and (6) no Default or Event of Default
shall result from such sale or other disposition.
(B) Liens. Except for Permitted Encumbrances, Borrower will not,
and will not permit any of its Subsidiaries to, directly or indirectly create,
incur, assume or permit to exist any Lien on or with respect to any of the
Collateral or the assets of such Person or any proceeds, income or profits
therefrom.
(C) No Negative Pledges. Neither Borrower nor any Subsidiary of
Borrower shall enter into or assume any agreement (other than the Loan
Documents) prohibiting the creation or assumption of any Lien upon its
properties or assets, whether now owned or hereafter acquired, other than any
such agreement entered into by TNF Europe prior to the Original Closing Date
or in connection with a refinancing of Indebtedness of TNF Europe permitted by
subsection 7.1(d) and any prohibition on Liens upon assets of TNF Canada in
any Permitted Canadian Financing.
(D) No Restrictions on Subsidiary Distributions to Borrower.
Except as provided herein and for any agreement entered into by TNF Europe
prior to the Original Closing Date, Borrower will not and will not permit any
of its Subsidiaries directly or indirectly to create or otherwise cause or
suffer to exist or become effective any consensual encumbrance or restriction
of any kind on the ability of any such Subsidiary to: (1) pay dividends or
make any other distribution on any of such Subsidiary's capital stock owned by
Borrower or any Subsidiary of Borrower; or (2) subject to subordination
provisions, pay any indebtedness owed to Borrower or any other Subsidiary; (3)
make loans or advances to Borrower or any other Subsidiary; or (4) transfer
any of its property or assets to Borrower or any other Subsidiary.
7.4 Investments and Loans. Borrower shall not, and shall not permit any of
its Domestic Subsidiaries to, make or permit to exist investments in or loans
to any other Person, except: (a) Cash Equivalents; (b) loans and advances to
employees for moving, entertainment, travel and other similar expenses in the
ordinary course of business in an aggregate outstanding amount not in excess
of Two Hundred Thousand Dollars ($200,000) at any time; (c) the investment of
Borrower in the stock of TNF Europe and of TNF Europe in the stock of Black &
▇▇▇▇▇▇▇▇▇ (Exports) Limited, in each case existing on the Original Closing
Date (but excluding in each case any additional investments, by capital
contribution or otherwise, or loans); (d) in addition to investments permitted
under clause (c) the investment of Borrower in TNF Europe or TNF Italy not to
exceed $3,000,000 (excluding retained earnings); and (e) the investment (by
loan, advance, capital contribution or otherwise) of Borrower in TNF Canada in
an amount not in excess of Five Hundred Thousand Dollars ($500,000) in the
aggregate plus liabilities of TNF Canada for Inventory sold by Borrower in
accordance with the Canadian Documents; provided that the Intercompany
Inventory Account and all Indebtedness or liabilities of TNF Canada to
Borrower shall be repaid with the initial proceeds of any Permitted Canadian
Financing and no further sales of Inventory shall be made by Borrower to TNF
Canada except as permitted under the definition of Permitted Canadian
Financing. Prior to TNF Canada's entering into an agreement for a Permitted
Canadian Financing, Borrower shall not amend the provisions of the Canadian
Documents relating to the price of Inventory sold by Borrower to TNF Canada,
or the Liens granted to Borrower and assigned to Agent.
7.5 Restricted Junior Payments. Borrower will not, and will not permit any
of its Subsidiaries to, directly or indirectly declare, order, pay, make or
set apart any sum for any Restricted Junior Payment, except that: (a)
Subsidiaries of Borrower may make Restricted Junior Payments to Borrower with
respect to their common stock; and (b) so long as no Default or Event of
Default shall have occurred and be continuing or shall result from the
Restricted Junior Payment and Borrower is in compliance on a pro forma basis
with the covenants set forth in Section 6, Borrower may (i) repurchase Common
Stock or options or Management Restricted Stock held by an employee of
Borrower upon termination of employment of such employee in an aggregate
amount in each Fiscal Year not to exceed Five Hundred Thousand Dollars
($500,000); and (ii) pay director's fees in an amount not in excess of Three
Hundred Thousand Dollars ($300,000.00) per year; and (c) Borrower may pay base
compensation to Borrower's two top executive officers in an amount not in
excess, in the aggregate, of One Million Dollars ($1,000,000.00) in each
Fiscal Year and such incentive compensation as may be approved by the
Compensation Committee of Borrower's Board of Directors plus an amount not in
excess of Five Hundred Thousand ($500,000) in the aggregate for legal fees and
expenses of such officers in connection with proceedings for which the Board of
Directors has approved Borrower's indemnification.
7.6 Restriction on Fundamental Changes. Neither Borrower nor any of its
Subsidiaries will: (a) enter into any transaction of merger or consolidation;
(b) liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution); (c) convey, sell, lease, sublease, transfer or otherwise dispose
of, in one transaction or a series of transactions, all or any substantial
part of its business or assets, or the capital stock of any of its
Subsidiaries, whether now owned or hereafter acquired; or (d) acquire by
purchase or otherwise all or any substantial part of the business or assets
of, or stock or other evidence of beneficial ownership of, any Person.
7.7 Preferred Stock. Borrower will not issue any Preferred Stock which
requires the cash payment of dividends or any mandatory redemption thereof.
7.8 Transactions with Affiliates. Borrower will not, and will not permit
any Loan Party to, directly or indirectly, enter into or permit to exist any
transaction (including the purchase, sale or exchange of property or the
rendering of any service) with any Affiliate or with any officer, director or
employee of any Loan Party, except for (a) transactions in the ordinary course
of, and pursuant to the reasonable requirements of, Borrower's or a
Subsidiary's business and upon fair and reasonable terms which are fully
disclosed to Agent and Lenders and which are no less favorable to Borrower or
such Subsidiary than it would obtain in a comparable arm's length transaction
with an unaffiliated Person; (b) the transactions set forth in the Goldwin
Stock Purchase Agreement; and (c) the issuance of grants or awards under the
Management Stock Plans and purchases of securities to the extent permitted by
subsection 7.5. The foregoing shall not prohibit the transactions
contemplated by the Transaction Documents or Borrower's performance of the
terms thereof so long as Borrower fully complies with all restrictions
contained in any other covenant in this Agreement.
7.9 Environmental Liabilities. Borrower will not, and will not permit any
Loan Party to: (a) violate in any material respect any applicable
Environmental Law; (b) dispose of any Hazardous Materials (except in
accordance with applicable law) into or onto or from, any real property owned,
leased or operated by any Loan Party; or (c) permit any Lien imposed pursuant
to any Environmental Law to be imposed or to remain on any real property
owned, leased or operated by any Loan Party.
7.10 Conduct of Business. Borrower will not, and will not permit any of its
Subsidiaries to, engage in any business other than businesses of the type
engaged in by Borrower as of the date hereof.
7.11 Compliance with ERISA. Borrower will not, and will not permit any of
its Subsidiaries to establish any new Employee Benefit Plan or amend any
existing Employee Benefit Plan if the liability or increased liability
resulting from such establishment or amendment is material. Neither Borrower
nor any Subsidiary shall fail to establish, maintain and operate each Employee
Benefit Plan in compliance in all material respects with the provisions of
ERISA, the IRC and all other applicable laws and the regulations and
interpretations thereof.
7.12 Tax Consolidations. Borrower will not, and will not permit any of its
Subsidiaries to, file or consent to the filing of any consolidated income tax
return with any Person other than Borrower or any of its Subsidiaries.
7.13 Subsidiaries. Borrower will not, and will not permit any of its
Subsidiaries to, establish, create or acquire any new Subsidiaries after the
Closing Date without Lender's prior written consent. TNF Canada and TNF Europe
will remain wholly-owned Subsidiaries of Borrower, and TNF Italy will remain
wholly-owned by TNF Europe and Borrower.
7.14 Fiscal Year. Neither Borrower nor any Subsidiary of Borrower shall
change its Fiscal Year.
7.15 Press Release; Public Offering Materials. Borrower will not, and will
not permit any Loan Party to, disclose the name of Agent or any Lender in any
press release or in any prospectus, proxy statement or other materials filed
with any governmental entity relating to a public offering of the capital
stock of any Loan Party without prior notice to Agent and Lenders and the
approval of Agent and such Lender the terms of the disclosure concerning it,
which approval will not be unreasonably withheld. Notwithstanding the
foregoing, this Agreement may be filed with the Securities and Exchange
Commission to the extent required by law.
SECTION 8 DEFAULT, RIGHTS AND REMEDIES
8.1 Event of Default. "Event of Default" shall mean the occurrence or
existence of any one or more of the following:
(A) Payment. Failure to make payment of the principal of any of
the Obligations when due (in installments, by mandatory prepayment,
acceleration or otherwise) or failure to pay interest or any other amount due
to Lender under the Loan Documents when due and such default is not remedied
within five (5) days after such interest or other amount becomes due; or
(B) Default in Other Agreements. (1) Default of Borrower or any of
its Subsidiaries in payment when due of any principal or interest on any
Indebtedness or (2) breach or default of Borrower or any of its Subsidiaries
with respect to any Indebtedness, if such failure to pay, breach or default
entitles the holder to cause such Indebtedness having an individual principal
amount in excess of $250,000 or having an aggregate principal amount in excess
of $500,000 to become or be declared due prior to its stated maturity; or
(C) Breach of Certain Provisions. Failure of Borrower to perform
or comply with any term or condition contained in subsections 5.1, 5.3, 5.5,
5.6, 5.8 or contained in Section 6 or Section 7; or
(D) Breach of Warranty. Any representation, warranty,
certification or other statement made by any Loan Party in any Loan Document
or in any statement or certificate at any time given by such Person in writing
pursuant or in connection with any Loan Document is false in any material
respect on the date made; or
(E) Other Defaults Under Loan Documents. Borrower or any other
Loan Party defaults in the performance of or compliance with any term
contained in this Agreement or the other Loan Documents and such default is
not remedied or waived within ten (10) days after receipt by Borrower of
notice from Agent or Requisite Lenders of such default (other than occurrences
described in other provisions of this subsection 8.1 for which a different
grace or cure period is specified or which constitute immediate Events of
Default); or
(F) Change in Control. Any Change in Control occurs; or
(G) Involuntary Bankruptcy; Appointment of Receiver, etc. (1) A
court enters a decree or order for relief with respect to Borrower or any of
its Subsidiaries in an involuntary case under the Bankruptcy Code or any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, which decree or order is not stayed or other similar relief is not
granted under any applicable federal or state law; or (2) the continuance of
any of the following events for forty-five (45) days unless dismissed, bonded
or discharged: (a) an involuntary case is commenced against Borrower or any of
its Subsidiaries, under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect; or (b) a decree or order of a court for the
appointment of a receiver, liquidator, sequestrator, trustee, custodian or
other officer having similar powers over Borrower or any of its Subsidiaries,
or over all or a substantial part of their respective property, is entered; or
(c) an interim receiver, trustee or other custodian is appointed without the
consent of Borrower or any of its Subsidiaries, for all or a substantial part
of the property of Borrower or any such Subsidiary; or
(H) Voluntary Bankruptcy; Appointment of Receiver, etc. (1) An
order for relief is entered with respect to Borrower or any of its
Subsidiaries or Borrower or any of its Subsidiaries commences a voluntary case
under the Bankruptcy Code or any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or consents to the entry of an order
for relief in an involuntary case or to the conversion of an involuntary case
to a voluntary case under any such law or consents to the appointment of or
taking possession by a receiver, trustee or other custodian for all or a
substantial part of its property; or (2) Borrower or any of its Subsidiaries
makes any assignment for the benefit of creditors; or (3) the board of
directors of Borrower or any of its Subsidiaries adopts any resolution or
otherwise authorizes action to approve any of the actions referred to in this
subsection 8.1(H); or
(I) Liens. Any lien, levy or assessment is filed or recorded with
respect to or otherwise imposed upon all or any part of the Collateral or the
assets of Borrower or any of its Subsidiaries by the United States or any
department or instrumentality thereof or by any state, county, municipality or
other governmental agency, domestic or foreign (other than Permitted
Encumbrances) and such lien, levy or assessment is not stayed, vacated, paid or
discharged within ten (10) days; or
(J) Judgment and Attachments. Any money judgment, writ or warrant
of attachment, or similar process involving (1) an amount in any individual
case in excess of $250,000 or (2) an amount in the aggregate at any time in
excess of $500,000 (in either case not adequately covered by insurance,
subject to the deductibles approved by Agent, as to which the insurance
company has acknowledged coverage) is entered or filed against Borrower or any
of its Subsidiaries or any of their respective assets or any Collateral and
remains undischarged, unvacated, unbonded or unstayed for a period of
forty-five (45) days or in any event later than five (5) days prior to the
date of any proposed sale thereunder; or
(K) Dissolution. Any order, judgment or decree is entered against
Borrower or any of its Subsidiaries decreeing the dissolution or split up of
Borrower or that Subsidiary and such order remains undischarged or unstayed for
a period in excess of twenty (20) days; or
(L) Injunction. Borrower or any of its Subsidiaries is enjoined,
restrained or in any way prevented by the order of any court or any
administrative or regulatory agency from conducting all or any material part of
its business and such order continues for more than thirty (30) days; or
(M) Invalidity of Loan Documents. Any of the Loan Documents for
any reason, other than a partial or full release in accordance with the terms
thereof, ceases to be in full force and effect or is declared to be null and
void, or any Loan Party or Shareholder denies that it has any further liability
under any Loan Documents to which it is party, or gives notice to such effect;
or
(N) Failure of Security. Agent, on behalf of Lenders, does not
have or ceases to have a valid and perfected first priority security interest
in the Collateral (subject to Permitted Encumbrances), in each case, for any
reason other than the failure of Agent or any Lender to take any action within
its control; or
(O) Damage, Strike, Casualty. Any material damage to, or loss,
theft or destruction of, any Collateral, whether or not insured, or any
strike, lockout, labor dispute, embargo, condemnation, act of God or public
enemy, or other casualty which causes, for more than fifteen (15) consecutive
days beyond the coverage period of any applicable business interruption
insurance as to which Borrower has received payments, the cessation or
substantial curtailment of revenue producing activities at any facility of
Borrower or any of its Subsidiaries if any such event or circumstance could
reasonably be expected to have a Material Adverse Effect; or
(P) Licenses and Permits. The loss, suspension or revocation of,
or failure to renew, any license or permit now held or hereafter acquired by
Borrower or any of its Subsidiaries, if such loss, suspension, revocation or
failure to renew could have a Material Adverse Effect.
8.2 Suspension of Commitments. Upon the occurrence of any Default or Event
of Default, notwithstanding any grace period or right to cure, Agent may, and
upon the demand of Requisite Lenders shall, without notice or demand,
immediately cease making additional Loans and the Commitments shall be
suspended; provided that, in the case of a Default, if the subject condition
or event is waived, cured or removed by Requisite Lenders within any
applicable grace or cure period, the Commitments shall be reinstated.
8.3 Acceleration. Upon the occurrence of any Event of Default described in
the foregoing subsections 8.1(G) or 8.1(H), all Obligations shall
automatically and immediately be immediately due and payable, without
presentment, demand, protest or other requirements of any kind, all of which
are hereby expressly waived by Borrower, and the Commitments shall thereupon
terminate. Upon the occurrence and during the continuance of any other Event
of Default, Agent may, and upon demand by Requisite Lenders shall, by written
notice to Borrower, (a) declare all or any portion of the Obligations to be,
and the same shall forthwith become, immediately due and payable and the
Commitments shall thereupon terminate and (b) demand that Borrower immediately
deposit with Agent an amount equal to the Risk Participation Liability to
enable Lender to make payments under the Lender Letters of Credit and Risk
Participation Agreements when required and such amount shall become
immediately due and payable.
8.4 Remedies. If any Event of Default shall have occurred and be
continuing, Agent may, and upon demand of Requisite Lenders shall, exercise in
respect of the Collateral, in addition to all other rights and remedies
provided for herein or in any other Loan Documents or otherwise available to
Agent or Lenders, all the rights and remedies of a secured party on default
under the UCC (whether or not the UCC applies to the affected Collateral) and
may also (a) notify any or all obligors on the Accounts to make all payments
directly to Agent; (b) require Borrower and any other Loan Party to, and
Borrower hereby agrees that it will, at its expense and upon request of Agent
forthwith, assemble all or part of the Collateral as directed by Agent and
make it available to Agent at a place to be designated by Agent which is
reasonably convenient to both parties; (c) withdraw all cash in the Blocked
Accounts and apply such monies in payment of the Obligations in the manner
provided in subsection 8.7; (d) without notice or demand or legal process,
enter upon any premises of Borrower and any other Loan Party and take
possession of the Collateral; and (e) without notice except as specified
below, sell the Collateral or any part thereof in one or more parcels at
public or private sale, at any of the Lender's offices or elsewhere, at such
time or times, for cash, on credit or for future delivery, and at such price or
prices and upon such other terms as Agent may deem commercially reasonable.
Borrower agrees that, to the extent notice of sale shall be required by law, at
least ten (10) days notice to Borrower of the time and place of any public
sale or the time after which any private sale is to be made shall constitute
reasonable notification. At any sale of the Collateral, if permitted by law,
Agent or any Lender may bid (which bid may be, in whole or in part, in the form
of cancellation of indebtedness) for the purchase of the Collateral or any
portion thereof for the account of Agent or such Lender. Agent and Lenders
shall not be obligated to make any sale of Collateral regardless of notice of
sale having been given. Borrower shall remain liable for any deficiency.
Agent may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so adjourned. Agent
shall not be required to proceed against any Collateral but may proceed
against Borrower directly. To the extent permitted by law, Borrower hereby
specifically waives all rights of redemption, stay or appraisal which it has
or may have under any law now existing or hereafter enacted.
8.5 Appointment of Attorney-in-Fact. Borrower hereby constitutes and
appoints Agent as Borrower's attorney-in-fact with full authority in the place
and stead of Borrower and in the name of Borrower, Agent or otherwise, from
time to time in Agent's discretion to take any action and to execute any
instrument that Agent may deem necessary or advisable to accomplish the
purposes of this Agreement, including: (a) to ask, demand, collect, ▇▇▇ for,
recover, compound, receive and give acquittance and receipts for moneys due
and to become due under or in respect of any of the Collateral; (b) to adjust,
settle or compromise the amount or payment of any Account, or release wholly
or partly any customer or obligor thereunder or allow any credit or discount
thereon; (c) to receive, endorse, and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (a) above; (d) to file
any claims or take any action or institute any proceedings that Agent may deem
necessary or desirable for the collection of any of the Collateral or
otherwise to enforce the rights of Agent and Lenders with respect to any of
the Collateral; and (e) to sign and endorse any invoices, freight or express
bills, bills of lading, storage or warehouse receipts, assignments,
verifications and notices in connection with Accounts and other documents
relating to the Collateral. The appointment of Agent as Borrower's attorney
and Agent's rights and powers are coupled with an interest and are irrevocable
until payment in full and complete performance of all of the Obligations.
8.6 Limitation on Duty of Agent and Lenders with Respect to Collateral.
Beyond the safe custody thereof, neither Agent nor any Lender shall have any
duty with respect to any Collateral in its possession or control (or in the
possession or control of any agent or bailee of Agent ) or with respect to any
income thereon or the preservation of rights against prior parties or any
other rights pertaining thereto. Agent and each Lender shall be deemed to
have exercised reasonable care in the custody and preservation of the
Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which it accords its own property. Neither Agent
nor any Lender shall be liable or responsible for any loss or damage to any of
the Collateral, or for any diminution in the value thereof, by reason of the
act or omission of any warehouseman, carrier, forwarding agency, consignee or
other agent or bailee selected by Agent or any Lender in good faith.
8.7 Application of Proceeds. Upon the occurrence and during the
continuance of an Event of Default, the proceeds of any sale of, or other
realization upon, all or any part of the Collateral shall be applied: first,
to all fees, costs and expenses incurred by Agent or any Lender with respect
to this Agreement, the other Loan Documents or the Collateral; second, to all
fees due and owing to Agent and Lenders; third, to accrued and unpaid interest
on the Obligations; fourth, to the principal amounts of the Obligations
outstanding in such order as Agent may determine in its sole discretion; and
fifth, to any other indebtedness or obligations of Borrower owing to Agent or
any Lender.
8.8 Waivers, Non-Exclusive Remedies. No failure on the part of Agent or
any Lender to exercise, and no delay in exercising and no course of dealing
with respect to, any right under this Agreement or any other Loan Document
shall operate as a waiver thereof; nor shall any single or partial exercise by
Agent or any Lender of any right under this Agreement or any other Loan
Document preclude any other or further exercise thereof or the exercise of any
other right. The rights in this Agreement and the other Loan Documents are
cumulative and are not exclusive of any other remedies provided by law.
SECTION 9 ASSIGNMENTS; AGENCY PROVISIONS
9.1 Assignments and Participations. Each Lender may assign its rights and
delegate its obligations under this Agreement to another Person; provided that
such assignment shall be of a constant and not a varying percentage of its
Commitments and shall be of the same percentage of the Revolving Loan
Commitment and CAPEX Loan Commitment (or outstanding CAPEX Loan); provided
that (a) unless such assignment is to a Lender or an Affiliate of a Lender,
the assigning Lender shall first obtain the written consent of Agent, which
consent is not to be unreasonably withheld; (b) the amount of Commitments and
Loans of the assigning Lender being assigned shall in no event be less than
the lesser of (i) Five Million Dollars ($5,000,000) or (ii) the entire amount
of the Commitments and Loans of such assigning Lender, (c) the Lender and its
assignee shall have executed and delivered to Agent a Lender Addition
Agreement and paid to Agent a processing fee of Two Thousand Five Hundred
Dollars ($2,500); (d) as a condition to the effectiveness of such assignment,
Borrower shall have complied with its obligations under the last sentence of
subsection 2.1(F); and (e) no assignment may be made to any Odyssey Bank.
In the case of an assignment authorized under this subsection 9.1, the
assignee shall have, to the extent of such assignment, the same rights,
benefits and obligations as it would if it were a Lender hereunder. The
assigning Lender shall be relieved of its obligations hereunder with respect
to its Commitment or such assigned portion thereof. Borrower hereby
acknowledges and agrees that any assignment will give rise to a direct
obligation of Borrower to the assignee and that the assignee shall be
considered to be a "Lender". Each Lender may sell participations in all or
any part of any Loans made by it to another Person; provided that no
participation may be sold to any Odyssey Bank; and provided, further that any
such participation shall be in a minimum amount of Five Million Dollars
($5,000,000) and provided, further, that all amounts payable by Borrower
hereunder shall be determined as if that Lender had not sold such participation
and the holder of any such participation shall not be entitled to require such
Lender to take or omit to take any action hereunder except action directly
affecting (a) any reduction in the principal amount, interest rate or fees
payable with respect to any Loan in which such holder participates; (b) any
extension of the Term or the date fixed for any payment of interest or fees
payable with respect to any Loan in which such holder participates; and (c) any
release of substantially all of the Collateral (other than in accordance with
the terms of this Agreement or the Loan Documents). Borrower hereby
acknowledges and agrees that any participation will give rise to a direct
obligation of Borrower to the participant, and the participant shall for
purposes of subsections 2.8, 2.9, 2.10, 9.4 and 10.2 be considered to be a
"Lender".
Except as otherwise provided in this subsection 9.1, no Lender shall,
as between Borrower and that Lender, be relieved of any of its obligations
hereunder as a result of any sale, assignment, transfer or negotiation of, or
granting of participation in, all or any part of the Loans or other
obligations owed to such Lender. Each Lender may furnish any information
concerning Borrower and its Subsidiaries in the possession of that Lender from
time to time to an assignee or participant which is an institutional lender
(including prospective assignees and participants) and may furnish such
information to other Persons upon taking reasonable steps to assure the
confidentiality thereof.
Agent shall provide Borrower with written notice of the name and
address of any new Lender after the date hereof.
9.2 Agent.
(A) Appointment. Each Lender hereby designates and appoints ▇▇▇▇▇▇
as its Agent under this Agreement and the Loan Documents, and each Lender
hereby irrevocably authorizes Agent to take such action or to refrain from
taking such action on its behalf under the provisions of this Agreement and
the Loan Documents and to exercise such powers as are set forth herein or
therein, together with such other powers as are reasonably incidental thereto.
Agent is authorized and empowered to amend, modify, or waive any provisions
of this Agreement or the other Loan Documents on behalf of Lenders subject to
the requirement that certain of Lenders' consent be obtained in certain
instances as provided in subsection 9.3 or otherwise specifically required
under this Agreement. Agent agrees to act as such on the express conditions
contained in this subsection 9.2. The provisions of this subsection 9.2 are
solely for the benefit of Agent and Lenders and neither Borrower nor any Loan
Party shall have any rights as a third party beneficiary of any of the
provisions hereof. In performing its functions and duties under this
Agreement, Agent does not assume and shall not be deemed to have assumed any
obligation toward or relationship of agency or trust with or for Borrower or
any Loan Party. Agent may perform any of its duties hereunder, or under the
Loan Documents, by or through its agents or employees.
(B) Nature of Duties. Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement or in the
Loan Documents. The duties of Agent shall be mechanical and administrative in
nature. Agent shall not have by reason of this Agreement a fiduciary
relationship in respect of any Lender. Nothing in this Agreement or any of
the Loan Documents, express or implied, is intended to or shall be construed
to impose upon Agent any obligations in respect of this Agreement or any of
the Loan Documents except as expressly set forth herein or therein. Each
Lender shall make its own independent investigation of the financial condition
and affairs of Borrower and its Subsidiaries in connection with the extension
of credit hereunder and shall make its own appraisal of the credit worthiness
of Borrower, and Agent shall have no duty or responsibility, either initially
or on a continuing basis, to provide any Lender with any credit or other
information with respect thereto (other than financial information received by
it in accordance herewith), whether coming into its possession before the
Closing Date hereunder or at any time or times thereafter. If Agent seeks the
consent or approval of any Lenders to the taking or refraining from taking any
action hereunder, then Agent shall send notice thereof to each Lender. Agent
shall promptly notify each Lender any time that the Requisite Lenders have
instructed Agent to act or refrain from acting pursuant hereto.
(C) Rights, Exculpation, Etc. Neither Agent nor any of its
officers, directors, employees or agents shall be liable to any Lender for any
action taken or omitted by them hereunder or under any of the Loan Documents,
or in connection herewith or therewith, except that Agent shall be liable with
respect to its own gross negligence or willful misconduct. Agent shall not be
liable for any apportionment or distribution of payments made by it in good
faith and if any such apportionment or distribution is subsequently determined
to have been made in error, the sole recourse of any Lender to whom payment
was due but not made shall be to recover from other Lenders any payment in
excess of the amount to which they are determined to be entitled (and such
other Lenders hereby agree to return to such Lender any such erroneous
payments received by them). In performing its functions and duties hereunder,
Agent shall exercise the same care which it would in dealing with loans for
its own account, but Agent shall not be responsible to any Lender for any
recitals, statements, representations or warranties herein or for the
execution, effectiveness, genuineness, validity, enforceability,
collectibility, or sufficiency of this Agreement or any of the Loan Documents
or the transactions contemplated thereby, or for the financial condition of
any Loan Party. Agent shall not be required to make any inquiry concerning
either the performance or observance of any of the terms, provisions or
conditions of this Agreement or any of the Loan Documents or the financial
condition of any Loan Party, or the existence or possible existence of any
Default or Event of Default. Agent may at any time request instructions from
Lenders with respect to any actions or approvals which by the terms of this
Agreement or of any of the Loan Documents Agent is permitted or required to
take or to grant, and if such instructions are promptly requested, Agent shall
be absolutely entitled to refrain from taking any action or to withhold any
approval and shall not be under any liability whatsoever to any Person for
refraining from any action or withholding any approval under any of the Loan
Documents until it shall have received such instructions from Requisite
Lenders or all of the Lenders, as applicable. In no event shall Agent be
required to take any action or to refrain from taking any action which, in
Agent's opinion, would expose Agent to any liability. Without limiting the
foregoing, no Lender shall have any right of action whatsoever against Agent
as a result of Agent acting or refraining from acting under this Agreement or
any of the other Loan Documents in accordance with the instructions of
Requisite Lenders.
(D) Reliance. Agent shall be entitled to rely upon any written
notices, statements, certificates, orders or other documents or any telephone
message or other communication (including any writing, telex, telecopy or
telegram) believed by it in good faith to be genuine and correct and to have
been signed, sent or made by the proper Person, and with respect to all
matters pertaining to this Agreement or any of the Loan Documents and its
duties hereunder or thereunder, upon advice of counsel selected by it. Agent
shall be entitled to rely upon the advice of legal counsel, independent
accountants, and other experts selected by Agent in its sole discretion.
(E) Indemnification. Lenders will reimburse and indemnify Agent
for and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, advances or
disbursements of any kind or nature whatsoever which may be imposed on,
incurred by, or asserted against Agent in any way relating to or arising out
of this Agreement or any of the Loan Documents or any action taken or omitted
by Agent under this Agreement for any of the Loan Documents, in proportion to
each Lender's Pro Rata Share; provided, however, that no Lender shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, advances or
disbursements resulting from Agent's gross negligence or willful misconduct.
The obligations of Lenders under this subsection 9.2(E) shall survive the
payment in full of the Obligations and the termination of this Agreement.
(F) ▇▇▇▇▇▇ Individually. With respect to its Commitments and the
Loans made by it, and the Notes issued to it, ▇▇▇▇▇▇ shall have and may
exercise the same rights and powers hereunder and is subject to the same
obligations and liabilities as and to the extent set forth herein for any
other Lender. The terms "Lenders" or "Requisite Lenders" or any similar terms
shall, unless the context clearly otherwise indicates, include ▇▇▇▇▇▇ in its
individual capacity as a Lender or one of the Requisite Lenders. ▇▇▇▇▇▇ may
lend money to, and generally engage in any kind of banking, trust or other
business with any Loan Party as if it were not acting as Agent pursuant hereto.
(G) Successor Agent.
(1) Resignation. Agent may resign from the performance of
all its functions and duties hereunder at any time by giving at least thirty
(30) Business Days' prior written notice to Borrower and Lenders. Such
resignation shall take effect upon the acceptance by a successor Agent of its
appointment pursuant to clause (2) below or as otherwise provided below.
(2) Appointment of Successor. Upon any such notice of
resignation pursuant to clause (G) (1) above, Requisite Lenders shall appoint
a successor Agent. If a successor Agent shall not have been so appointed
within said thirty (30) Business Day period, the retiring Agent, shall then
appoint a successor Agent who shall serve as Agent until such time, if any, as
Requisite Lenders, appoint a successor Agent as provided above.
(3) Successor Agent. Upon the acceptance of any
appointment as Agent under the Loan Documents by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under the Loan
Documents. Even after any retiring Agent's resignation as Agent under the
Loan Documents, the provisions of this subsection 9.2 shall continue to inure
to its benefit as to any actions taken or omitted to be taken by it while it
was Agent under the Loan Documents.
(H) Collateral Matters.
(1) Release of Collateral. (a) Lenders hereby irrevocably
authorize Agent, at its option and in its discretion, to release any Lien
granted to or held by Agent upon any property covered by this Agreement or the
Loan Documents (i) upon termination of the Commitments and payment and
satisfaction of all Obligations; (ii) constituting property being sold or
disposed of if Borrower certifies to Agent that the sale or disposition is
made in compliance with the provisions of this Agreement (and Agent may rely
in good faith conclusively on any such certificate, without further inquiry);
(iii) constituting property leased to Borrower under a lease which has expired
or been terminated in a transaction permitted under this Agreement or is about
to expire and which has not been, and is not intended by Borrower to be,
renewed or extended; or (iv) on assets of TNF Canada if required in connection
with a Permitted Canadian Financing (and Agent may rely in good faith
conclusively on a certificate of Borrower that the conditions to such
Permitted Canadian Financing have been met).
(b) In any year, without requiring the consent of any
Lender, Agent may release or compromise any Collateral and the proceeds
thereof having a value not greater than ten percent (10%) of the total book
value of all Collateral, and, with the prior consent of Requisite Lenders, may
release or compromise any Collateral and the proceeds thereof having a value
not greater than twenty-five percent (25%) of the book value of all
Collateral. With the consent of Lenders owning a total of at least
eighty-five percent (85%) of the Commitments of all Lenders, Agent may release
or compromise any Collateral or proceeds thereof in excess of that otherwise
permitted hereunder. Lenders hereby irrevocably authorize Agent to release or
compromise Collateral or proceeds as permitted under this subsection
9.2(H)(1)(b).
(c) Notwithstanding anything to the contrary contained
herein, Agent may, at its sole discretion, release or compromise Collateral and
the proceeds thereof to the extent permitted by subsection 9.2(H)(1)(a).
(d) Lenders hereby authorize and direct Agent to
execute the Amendment Agreement and Confirmation of Liens in the form attached
hereto as Exhibit E.
(2) Confirmation of Authority; Execution of Releases.
Without in any manner limiting Agent's authority to act without any specific
or further authorization of Lenders or with the consent by Requisite Lenders
or with the consent of less than all Lenders (as set forth in subsection
9.2(H)(1)), each Lender agrees to confirm in writing, upon request by
Borrower, the authority to release any property covered by this Agreement or
the Loan Documents conferred upon Agent under subsections 9.2(H)(1)(a) and
(b). So long as no Event of Default is then continuing, upon receipt by
Agent of confirmation from the Requisite Lenders or from the requisite
percentage of Lenders specifically required by subsection 9.2(H)(1)(b), as the
case may be, of its authority to release any particular item or types of
property covered by this Agreement or the Loan Documents, and upon at least
five (5) Business Days prior written request by Borrower, Agent shall (and is
hereby irrevocably authorized by Lenders to) execute such documents as may be
necessary to evidence the release of the Liens granted to Agent for the
benefit of Lenders herein or pursuant hereto upon such collateral; provided,
however, that (i) Agent shall not be required to execute any such document on
terms which, in Agent's opinion, would expose Agent to liability or create any
obligation or entail any consequence other than the release of such Liens
without recourse or warranty, and (ii) such release shall not in manner
discharge, affect or impair the Obligations or any Liens upon (or obligations
of any Loan Party, in respect of), all interests retained by any Loan Party,
including (without limitation) the proceeds of any sale, all of which shall
continue to constitute part of the property covered by this Agreement or the
Loan Documents.
(3) Absence of Duty. Agent shall have no obligation whatsoever to
any Lender or any other Person to assure that the property covered by this
Agreement or the Loan Documents exists or is owned by Borrower or is cared
for, protected or insured or has been encumbered or that the Liens granted to
Agent, on behalf of Lenders, herein or pursuant hereto have been properly or
sufficiently or lawfully created, perfected, protected or enforced or are
entitled to any particular priority, or to exercise at all or in any
particular manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to Agent in this subsection 9.2(H) or in any of the Loan Documents,
it being understood and agreed that in respect of the property covered by this
Agreement or the Loan Documents or any act, omission or event related thereto,
Agent may act in any manner it may deem appropriate, in its discretion, given
Agent's own interest in property covered by this Agreement or the Loan
Documents as one of the Lenders and that Agent shall have no duty or liability
whatsoever to any of the other Lenders; provided, that Agent shall exercise
the same care which it would in dealing with loans for its own account.
(I) Agency for Perfection. Agent and each Lender hereby appoints
each other Lender as agent for the purpose of perfecting Lenders' security
interest in assets which, in accordance with Article 9 of the Uniform
Commercial Code in any applicable jurisdiction, can be perfected only by
possession. Should any Lender (other than Agent) obtain possession of any
such Collateral, such Lender shall notify Agent thereof, and, promptly upon
Agent's request therefor, shall deliver such Collateral to Agent or in
accordance with Agent's instructions. Each Lender agrees that it will not
have any right individually to enforce or seek to enforce this Agreement or
any Loan Document or to realize upon any collateral security for the Loans, it
being understood and agreed that such rights and remedies may be exercised
only by Agent.
9.3 Amendments, Consents and Waivers for Certain Actions.
(A) Except as otherwise provided in this subsection 9.3 or in
subsections 9.2 and 10.3 and except as to matters set forth in other
subsections hereof as requiring only Agent's consent, the consent of Requisite
Lenders shall be required to amend, modify, terminate, or waive any provision
of this Agreement, including, but not limited to, any amendment, modification,
termination, or waiver with regard to Sections 5, 6 and 7.
(B) In the event Agent requests the consent of a Lender and does
not receive a written denial thereof within five (5) Business Days after such
Lender's receipt of such request, then such Lender will be deemed to have given
such consent.
(C) In the event Agent requests the consent of a Lender and such
consent is denied, then ▇▇▇▇▇▇ or the Lender which assigned its interest in
the Loans to such Lender (the "Assigning Lender") may, at its option, require
such Lender to reassign its interest in the Loans to ▇▇▇▇▇▇ or the Assigning
Lender, as applicable, for a price equal to the then outstanding principal
amount thereof plus accrued and unpaid interest and fees due such Lender,
which interest and fees will be paid when collected from Borrower. In the
event that ▇▇▇▇▇▇ or the Assigning Lender elects to require any Lender to
reassign its interest to ▇▇▇▇▇▇ or the Assigning Lender, ▇▇▇▇▇▇ or the
Assigning Lender, as applicable, will so notify such Lender in writing within
forty-five (45) days following such Lender's denial, and such Lender will
reassign its interest to ▇▇▇▇▇▇ or the Assigning Lender, as applicable, no
later than five (5) days following receipt of such notice.
(D) In the event Agent waives (1) any Default arising under
subsection 8.1(E) as a result of the breach of any of the provisions of
Section 5 of this Agreement (other than any such breach which constitutes an
Event of Default) or (2) any Default constituting a condition to the funding
of any Revolving Loan or issuance of any Lender Letter of Credit or execution
of a Risk Participation Agreement, such waiver shall expire on the date upon
which the Default which was the subject of such waiver matures into an Event
of Default pursuant to the terms of this Agreement.
9.4 Set Off and Sharing of Payments. In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such
rights, upon the occurrence and during the continuance of any Event of Default,
each Lender is hereby authorized by Borrower at any time or from time to time,
with reasonably prompt subsequent notice to Borrower or to any other Person
(any prior or contemporaneous notice being hereby expressly waived) to set off
and to appropriate and to apply any and all (A) balances held by such Lender
or such holder at any of its offices for the account of Borrower or any of its
Subsidiaries (regardless of whether such balances are then due to Borrower or
its Subsidiaries), and (B) other property at any time held or owing by such
Lender or such holder to or for the credit or for the account of Borrower or
any of its Subsidiaries, against and on account of any of the Obligations
which are not paid when due; except that no Lender or any such holder shall
exercise any such right without the prior written consent of Agent. Any
Lender having a right to set off shall, to the extent the amount of any such
set off exceeds its Pro Rata Share of the Obligations, purchase for cash (and
the other Lenders or holders shall sell) participations in each such other
Lender's or holder's Pro Rata Share of the Obligations as would be necessary
to cause such Lender to share such excess with each other Lender or holder in
accordance with their respective Pro Rata Shares. Borrower agrees, to the
fullest extent permitted by law, that (a) any Lender or holder may exercise
its right to set off with respect to amounts in excess of its Pro Rata Share
of the Obligations and may sell participations in such excess to other Lenders
and holders, and (b) any Lender or holder so purchasing a participation in the
Loans made or other obligations held by other Lenders or holders may exercise
all rights of set-off, bankers' lien, counterclaim or similar rights with
respect to such participation as fully as if such Lender or holder were a
direct holder of Loans and other Obligations in the amount of such
participation.
9.5 Disbursement of Funds. Agent may, on behalf of Lenders, disburse
funds to Borrower for Loans requested. Each Lender shall reimburse Agent on
demand for all funds disbursed on its behalf by Agent, or if Agent so
requests, each Lender will remit to Agent its Pro Rata Share of any Loan
before Agent disburses same to Borrower. If any Lender fails to pay the
amount of its Pro Rata Share forthwith upon Agent's demand, Agent shall
promptly notify Borrower, and Borrower shall immediately repay, such amount to
Agent. Any repayment required pursuant to this subsection 9.5 shall be
without premium or penalty. Nothing in this subsection 9.5 or elsewhere in
this Agreement or the other Loan Documents, including without limitation the
provisions of subsection 9.6, shall be deemed to require Agent to advance
funds on behalf of any Lender or to relieve any Lender from its obligation to
fulfill its Commitments hereunder or to prejudice any rights that Agent or
Borrower may have against any Lender as a result of any default by such Lender
hereunder.
9.6 Disbursements of Advances, Payments and Information.
(A) Revolving Loan Advances and Payments; Fee Payments.
(1) The Revolving Loan balance may fluctuate from day to
day through Agent's disbursement of funds to, and receipt of funds from,
Borrower. In order to minimize the frequency of transfers of funds between
Agent and each Lender notwithstanding terms to the contrary set forth in
Section 2, Revolving Loan advances and payments will be settled according to
the procedures described in subsection 9.6(A)(2) and 9.6(A)(3) of this
Agreement. Payments of principal interest and fees in respect of the CAPEX
Loan will be settled on the Business Day received in accordance with the
provisions of Section 2. Notwithstanding these procedures, each Lender's
obligation to fund its portion of any advances made by Agent to Borrower will
commence on the date such advances are made by Agent. Such payments will be
made by such Lender without set-off, counterclaim or reduction of any kind.
(2) Once each week, or more frequently (including daily) ,
if Agent so elects, Agent will advise each Lender by telephone, telex, or
telecopy of the amount of each such Lender's Pro Rata Share of the Revolving
Loan balance. In the event that payments are necessary to adjust the amount
of such Lender's Pro Rata Share of the Revolving Loan balance to such Lender's
Pro Rata Share of the Revolving Loan, the party from which such payment is due
will pay the other, in same day funds, by wire transfer to the other's account
not later than 3:00 p.m. (New York time) on such date. Notwithstanding the
foregoing, if Agent so elects, Agent may require that each Lender make its Pro
Rata Share of any requested Loan available to Agent for disbursement on or
prior to the Funding Date applicable to such Loan. If Agent elects to require
that such funds be made available, Agent shall promptly advise each Lender by
telephone, telex or telecopy of the amount of such Lender's Pro Rata Share of
such requested Loan. Each Lender shall pay Agent such Lender's Pro Rata Share
of such requested Loan in same day funds, by wire transfer to Agent's account
not later than 3:00 p.m. (New York) time on such Funding Date.
(3) For purposes of this subsection 9.6(A)(3), the following
terms and conditions will have the meanings indicated:
(a) "Daily Loan Balance" means an amount calculated as
of the end of each calendar day by subtracting (i) the cumulative principal
amount paid by Agent to a Lender on a Loan from the Closing Date through and
including such calendar day, from (ii) the cumulative principal amount on a
Loan advanced by such Lender to Agent on that Loan from the Closing Date
through and including such calendar day.
(b) "Daily Interest Rate" means an amount calculated
by dividing the interest rate payable to a Lender on a Loan (as set forth in
subsection 2.2) as of each calendar day by three hundred sixty (360).
(c) "Daily Interest Amount" means an amount calculated
by multiplying the Daily Loan Balance of a Loan by the associated Daily
Interest Rate on that Loan.
(d) "Interest Ratio" means a number calculated by
dividing the total amount of the interest on a Loan received by Agent with
respect to the immediately preceding month by the total amount of interest on
that Loan due from Borrower during the immediately preceding month.
On the first Business Day of each month ("Interest Settlement Date"), Agent
will advise each Lender by telephone, telex, or telecopy of the amount of such
Lender's share of interest and fees payable with respect to the Obligations
outstanding during the immediately preceding month. Provided that such Lender
has made all payments required to be made by it under this Agreement, Agent
will pay to such Lender, by wire transfer to such Lender's account (as
specified by such Lender on the signature page of this Agreement or the
applicable Lender Addition Agreement as amended by such Lender from time to
time after the date hereof pursuant to the notice provisions contained herein
or in the applicable Lender Addition Agreement) not later than 3:00 p.m. (New
York time) on the next Business Day following the Interest Settlement Date,
such Lender's share of such interest and fees. Such Lender's share of
interest on each Loan will be calculated for that Loan by adding together the
Daily Interest Amounts for each calendar day of the prior month for that Loan
and multiplying the total thereof by the Interest Ratio for that Loan. Such
Lender's share of the total Unused Line Fee payable in respect thereto and
received by Agent shall be equal to the product of (i) (A) the Commitments of
the Lenders minus the average daily balance of Risk Participation Reserve
during the preceding month, multiplied by such Lender's Pro Rata Share of the
Commitments, minus (B) the average daily balance of such Lender's advances
under the Revolving Loan during the preceding month, multiplied by (ii)
one-half of one percent (.50%) per annum. Such Lender's share of any Lender
Letter of Credit and Risk Participation Agreement fees shall be equal to such
fees received by Agent multiplied by such Lender's Pro Rata Share of the
Commitments.
(B) Availability of Lender's Pro Rata Share.
(1) Unless Agent has been notified by a Lender prior to a
Funding Date of such Lender's intention not to fund its Pro Rata Share of the
Loan amount requested by Borrower, Agent may assume that such Lender will make
such amount available to Agent on the Business Day following the next
Settlement Date. If such amount is not, in fact, made available to Agent by
such Lender when due, Agent will be entitled to recover such amount on demand
from such Lender without set-off, counterclaim or deduction of any kind.
(2) Nothing contained in this subsection 9.6(B) will be
deemed to relieve a Lender of its obligation to fulfill its Commitments or to
prejudice any rights Agent or Borrower may have against such Lender as a
result of any default by such Lender under this Agreement.
(3) Without limiting the generality of the foregoing, each
Lender shall be obligated to fund its Pro Rata Share of any Revolving Loan
made after any acceleration of the Obligations with respect to any draw on a
Lender Letter of Credit or Underlying L/C.
(C) Return of Payments.
(1) If Agent pays an amount to a Lender under this
Agreement in the belief or expectation that a related payment has been or will
be received by Agent from Borrower and such related payment is not received by
Agent, then Agent will be entitled to recover such amount from such Lender
without set-off, counterclaim or deduction of any kind.
(2) If Agent determines at any time that any amount
received by Agent under this Agreement must be returned to Borrower or paid to
any other Person pursuant to any solvency law or otherwise, then,
notwithstanding any other term or condition of this Agreement, Agent will not
be required to distribute any portion thereof to any Lender. In addition,
each Lender will repay to Agent on demand any portion of such amount that
Agent has distributed to such Lender, together with interest at such rate, if
any, as Agent is required to pay to Borrower or such other Person, without
set-off, counterclaim or deduction of any kind.
(D) Dissemination of Information. Agent will use its best efforts
to provide Lenders with any information received by Agent from Borrower which
is required to be provided to a Lender hereunder; provided, however, that
Agent shall not be liable to Lenders for any failure to do so, except to the
extent that such failure is attributable to Agent's gross negligence or
willful misconduct.
SECTION 10 MISCELLANEOUS
10.1 Expenses and Attorneys' Fees. Whether or not the transactions
contemplated hereby shall be consummated, Borrower agrees to promptly pay all
fees, costs and expenses incurred by Agent and, to the extent specified below,
Lenders in connection with any matters contemplated by or arising out of this
Agreement or any other Loan Document including the following, and all such
fees, costs and expenses shall be part of the Obligations, payable on demand
and secured by the Collateral: (a) fees, costs and expenses of Agent
(including attorneys' fees, allocated costs of internal counsel and fees of
environmental consultants, accountants and other professionals retained by
Agent) incurred in connection with the examination, review, due diligence
investigation, documentation and closing of the financing arrangements
evidenced by the Loan Documents; (b) fees, costs and expenses of Agent
(including attorneys' fees, allocated costs of internal counsel and fees of
environmental consultants, accountants and other professionals retained by
Agent) incurred in connection with the review, negotiation, preparation,
documentation, execution and administration of the Loan Documents, the Loans,
and after the occurrence and during the continuance of an Event of Default,
the fees, costs and expenses of Agent and Lenders (including attorney's fees
and allocated costs of internal counsel) in connection with any amendments,
waivers, consents, forbearance and other modifications relating thereto or any
subordination or intercreditor agreements; (c) fees, costs and expenses
incurred in creating, perfecting and maintaining perfection of Liens in favor
of Agent for the benefit of Lenders; (d) fees, costs and expenses incurred in
connection with forwarding to Borrower the proceeds of Loans including Agent's
standard wire transfer fee; (e) fees, costs, expenses and bank charges,
including bank charges for returned checks, incurred by Agent in establishing,
maintaining and handling lock box accounts, Blocked Accounts or other accounts
for collection of the Collateral; (f) fees, costs, and expenses of Agent and
Lenders (including attorneys' fees and allocated costs of internal counsel)
and costs of settlement incurred in collecting upon or enforcing rights
against the Collateral or incurred in any action to enforce this Agreement or
other Loan Document or to collect any payments due from Borrower or any other
Loan Party under this Agreement or any other Loan Document or incurred in
connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement, whether in the nature of a "workout" or in
connection with any insolvency or bankruptcy proceedings or otherwise.
10.2 Indemnity. In addition to the payment of expenses pursuant to
subsection 10.1, whether or not the transactions contemplated hereby shall be
consummated, Borrower agrees to indemnify, pay and hold Agent and each Lender
and any holder of the Notes or other assignee under section 9.1, and the
officers, directors, employees, agents, affiliates and attorneys of Agent and
each Lender and such holders or assignees (collectively called the
"Indemnitees") harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, costs, expenses
and disbursements of any kind or nature whatsoever (including the fees and
disbursements of counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not such Indemnitee shall be designated a party thereto) that may
be imposed on, incurred by, or asserted against that Indemnitee, in any manner
relating to or arising out of this Agreement or any other Loan Document, the
consummation of the transactions contemplated by this Agreement, the
statements contained in the commitment letters, if any, delivered by Agent or
any Lender, Agent or any Lender's agreement to make the Loans hereunder, the
use or intended use of the proceeds of any of the Loans or the exercise of any
right or remedy hereunder or under any other Loan Document (the "Indemnified
Liabilities"); provided that Borrower shall have no obligation to an
Indemnitee hereunder with respect to Indemnified Liabilities arising from the
gross negligence or willful misconduct of that Indemnitee as determined by a
court of competent jurisdiction.
10.3 Amendments and Waivers. Except as otherwise provided herein or in
Section 9, no amendment, modification, termination or waiver of any provision
of this Agreement, the Note(s) or any other Loan Document, or consent to any
departure by any Loan Party therefrom, shall in any event be effective unless
the same shall be in writing and signed by Requisite Lenders or Agent, as
applicable; provided, no amendment, modification, termination or waiver shall,
unless in writing and signed by all Lenders, do any of the following: (a)
increase the Commitment of any Lender; (b) reduce the principal of, rate of
interest on or fees payable with respect to any Loan; (c) extend the scheduled
maturity date of the principal amount of the Loans; (d) change the percentage
of the Commitments or of the aggregate unpaid principal amount of the Loans,
or the percentage of Lenders which shall be required for Lenders or any of
them to take any action hereunder; (e) release Collateral (except to the
extent permitted under subsection 9.2(H) and except if the sale or disposition
of such Collateral is permitted under any other provision of this Agreement or
any other Loan Document); (f) amend or waive this subsection 10.3 or the
definitions of the terms used in this subsection 10.3 insofar as the
definitions affect the substance of this subsection 10.3; (g) any increase in
the advance rates contained in the definition of "Borrowing Limit" or in
subsection 2.1(C); and (h) consent to the assignment or other transfer by any
Loan Party of any of its rights and obligations under any Loan Document; and
provided, further, that no amendment, modification, termination or waiver
affecting the rights or duties of Agent under any Loan Document shall in any
event be effective unless in writing and signed by Agent, in addition to
Lenders required hereinabove to take such action. Each amendment,
modification, termination or waiver shall be effective only in the specific
instance and for the specific purpose for which it was given. No amendment,
modification, termination or waiver shall be required for Agent to take
additional Collateral pursuant to any Loan Document. No amendment,
modification, termination or waiver of any provision of any Note shall be
effective without the written concurrence of the holder of that Note. No
notice to or demand on Borrower or any other Loan Party in any case shall
entitle Borrower or any other Loan Party to any other or further notice or
demand in similar or other circumstances. Any amendment, modification,
termination, waiver or consent effected in accordance with this subsection
10.3 shall be binding upon each holder of the Note[s] at the time outstanding,
each future holder of the Note[s], and, if signed by a Loan Party, on such
Loan Party.
10.4 Notices. Unless otherwise specifically provided herein, all notices
shall be in writing addressed to the respective party as set forth below and
may be personally served, telecopied or sent by overnight courier service or
United States mail and shall be deemed to have been given: (a) if delivered in
person, when delivered; (b) if delivered by telecopy, on the date of
transmission if transmitted on a Business Day before 4:00 p.m. (New York time)
or, if not, on the next succeeding Business Day; (c) if delivered by overnight
courier, two (2) days after delivery to such courier properly addressed; or
(d) if by U.S. Mail, four Business Days after depositing in the United States
mail, with postage prepaid and properly addressed.
If to Borrower: THE NORTH FACE, INC.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Crosby, Heafey, ▇▇▇▇▇ & May
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Agent: ▇▇▇▇▇▇ FINANCIAL, INC.
or ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ Business Credit
Portfolio Manager
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ FINANCIAL, INC.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ Business Credit
Legal Department
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to any Lender: its address indicated on the
signature page hereto, in a Lender
Addition Agreement or in a notice to
Agent and Borrower
or to such other address as the party addressed shall have previously
designated by written notice to the serving party, given in accordance with
this subsection 10.4.
10.5 Survival of Warranties and Certain Agreements. All agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement and the making of the Loans hereunder.
Notwithstanding anything in this Agreement or implied by law to the contrary,
the agreements of Borrower set forth in subsections 10.1 and 10.2 and the
indemnities set forth in the Existing Loan Agreement shall survive the payment
of the Loans and the termination of this Agreement.
10.6 Indulgence Not Waiver. No failure or delay on the part of Agent, any
Lender or any holder of a Notes in the exercise of any power, right or
privilege hereunder or under a Note shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other right,
power or privilege. 10.7 Marshaling; Payments Set Aside. Neither Agent
nor any Lender shall be under any obligation to marshal any assets in favor of
any Loan Party or any Shareholder or any other party or against or in payment
of any or all of the Obligations. To the extent that any Loan Party or any
Shareholder makes a payment or payments to Agent or any Lender or Agent and/or
any Lender enforces its security interests or exercise its rights of setoff,
and such payment or payments or the proceeds of such enforcement or setoff or
any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver or
any other party under any bankruptcy law, state or federal law, common law or
equitable cause, then to the extent of such recovery, the Obligations or part
thereof originally intended to be satisfied, and all Liens, rights and
remedies therefor, shall be revived and continued in full force and effect as
if such payment had not been made or such enforcement or setoff had not
occurred.
10.8 Entire Agreement. This Agreement, the Notes, and the other Loan
Documents referred to herein embody the final, entire agreement among the
parties hereto and supersede any and all prior commitments, agreements,
representations, and understandings, whether written or oral, relating to the
subject matter hereof and may not be contradicted or varied by evidence of
prior, contemporaneous, or subsequent oral agreements or discussions of the
parties hereto or their agents or attorneys. There are no oral agreements
among the parties hereto.
10.9 Independence of Covenants. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or be otherwise within the limitations of, another covenant shall not
avoid the occurrence of a Default or an Event of Default if such action is
taken or condition exists.
10.10 Severability. The invalidity, illegality or unenforceability in any
jurisdiction of any provision in or obligation under this Agreement or the
other Loan Documents shall not affect or impair the validity, legality or
enforceability of the remaining provisions or obligations under this Agreement,
or the other Loan Documents or of such provision or obligation in any other
jurisdiction.
10.11 Lenders' Obligations Several; Independent Nature of Lenders' Rights.
The obligation of each Lender hereunder is several and not joint and no Lender
shall be responsible for the obligation or commitment of any other Lender
hereunder. In the event that any Lender at any time should fail to make a
Loan as herein provided, the Lenders, or any of them, at their sole option,
may make the Loan that was to have been made by the Lender so failing to make
such Loan. Nothing contained in any Loan Document and no action taken by
Agent or any Lender pursuant hereto or thereto shall be deemed to constitute
Lenders to be a partnership, an association, a joint venture or any other kind
of entity. The amounts payable at any time hereunder to each Lender shall be
a separate and independent debt, and, subject to the terms of any Lender
Addition Agreement, each Lender shall be entitled to protect and enforce its
rights arising out of this Agreement and it shall not be necessary for any
other Lender to be joined as an additional party in any proceeding for such
purpose.
10.12 Headings. Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive
effect.
10.13 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
ILLINOIS, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
10.14 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns except that Borrower may not assign its rights or obligations
hereunder without the written consent of Lenders.
10.15 No Fiduciary Relationship; Limitation of Liabilities.
(A) No provision in this Agreement or in any other Loan Document
and no course of dealing between the parties shall be deemed to create any
fiduciary duty by Agent or any Lender to Borrower.
(B) Neither Agent nor any Lender, nor any affiliate, officer,
director, employee, attorney, or agent of Agent or any Lender shall have any
liability with respect to, and Borrower hereby waives, releases, and agrees
not to ▇▇▇ any of them upon, any claim for any special, indirect, incidental,
or consequential damages suffered or incurred by Borrower in connection with,
arising out of, or in any way related to, this Agreement or any other Loan
Document, or any of the transactions contemplated by this Agreement or any
other Loan Document. Borrower hereby waives, releases, and agrees not to ▇▇▇
Agent or any Lender or any of its affiliates, officers, directors, employees,
attorneys, or agents for punitive damages in respect of any claim in
connection with, arising out of, or in any way related to, this Agreement or
any other Loan Document, or any of the transactions contemplated by this
Agreement or any of the transactions contemplated hereby.
10.16 CONSENT TO JURISDICTION. BORROWER HEREBY CONSENTS TO THE JURISDICTION
OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF ▇▇▇▇, STATE OF
ILLINOIS AND IRREVOCABLY AGREES THAT, SUBJECT TO AGENT'S ELECTION, ALL ACTIONS
OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES OR ANY
OTHER LOAN DOCUMENT SHALL BE LITIGATED IN SUCH COURTS. BORROWER ACCEPTS FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY,
THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE
OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT, THE NOTES, ANY OTHER LOAN
DOCUMENT OR THE OBLIGATIONS.
10.17 WAIVER OF JURY TRIAL. BORROWER, AGENT AND EACH LENDER HEREBY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS AGREEMENT, THE NOTES OR ANY OTHER LOAN DOCUMENT.
BORROWER, AGENT AND EACH LENDER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL
INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED
ON THE WAIVER IN ENTERING INTO THIS AGREEMENT, THE NOTES AND THE OTHER LOAN
DOCUMENTS AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED
FUTURE DEALINGS. BORROWER, AGENT AND EACH LENDER FURTHER WARRANT AND
REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT
EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL.
10.18 Construction. Borrower, Agent and each Lender each acknowledge that it
has had the benefit of legal counsel of its own choice and has been afforded
an opportunity to review this Agreement and the other Loan Documents with its
own legal counsel and that this Agreement and the other Loan Documents shall
be construed without regard to which party may be deemed to have drafted the
same or any provision thereof.
10.19 Counterparts; Effectiveness. This Agreement and any amendments,
waivers, consents, or supplements may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all of
which counterparts together shall constitute but one and the same instrument.
This Agreement shall become effective upon the execution of a counterpart
hereof by each of the parties hereto, and acceptance of the Borrower's
counterpart by Agent at its office in Chicago and satisfaction or waiver of
the conditions set forth in subsection 3.1. At the time of the effectiveness
of this Agreement, this Agreement shall amend and restate and thereby
supersede the Existing Loan Agreement. From and after the date on which this
Agreement becomes effective, all references in the other Loan Documents shall
be deemed references to this Agreement, as it may be amended, supplemented or
otherwise modified from time to time.
10.20 No Duty. All attorneys, accountants, appraisers, and other
professional Persons and consultants respectively retained by Agent, any
Lender, Borrower and Borrower's Affiliates shall have the right to act
exclusively in the interest of the party retaining then and shall have no duty
of disclosure, duty of loyalty, duty of care, or other duty or obligation of
any type or nature whatsoever to any other party; provided that this Section
10.20 shall not be deemed to reduce the legal or contractual duty of any
Person providing reports, opinions, financial statements, audit reports or
other documents to any Person.
[remainder of page intentionally blank]
Witness the due execution of this Third Amended and Restated
Loan and Security Agreement by the respective duly authorized officers of the
undersigned as of the date first written above.
THE NORTH FACE, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: Chief Financial Officer
[Signature pages continue]
▇▇▇▇▇▇ FINANCIAL, INC.,
as a Lender and as Agent
Revolving Loan
Commitment: $27,691,000 By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
CAPEX Loan Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Commitment:$2,309,000 Its: Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
Revolving Loan
Commitment: $18,462,000 By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
CAPEX Loan Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Commitment:$1,538,000 Its: Vice President
Address for Notices:
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇ ▇▇.
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
IBJ ▇▇▇▇▇▇▇▇ BANK & TRUST CO.
Revolving Loan
Commitment: $13,847,000 By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
CAPEX Loan Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Commitment:$1,153,000 Its: Vice President
Address for Notices:
IBJ ▇▇▇▇▇▇▇▇ BANK & TRUST COMP.
▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
THIRD AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
DATED as of April 7, 1997
between
THE NORTH FACE, INC.
as Borrower,
CERTAIN FINANCIAL INSTITUTIONS
and
▇▇▇▇▇▇ FINANCIAL, INC.,
as Agent and as a Lender
TABLE OF CONTENTS
Page
SECTION 1 DEFINITIONS 2
1.1 Certain Defined Terms 2
1.2 Accounting Terms 17
1.3 Other Definitional Provisions 17
SECTION 2 LOANS AND COLLATERAL 18
2.1 Loans 18
(A) CAPEX Loan 18
(B) Revolving Loan 18
(C) Borrowing Mechanics 19
(D) Notes 20
(E) Lender Letters of Credit & Risk Participation
Agreements 20
(1) Maximum Amount 21
(2) Reimbursement 21
(3) Conditions of Issuance 21
(4) Request for Letters of Credit 22
(F) Other Letter of Credit and Guaranty Prov 22
(1) Obligations Absolute 22
(2) Nature of Agent's & Lenders' Duties 23
2.2 Interest 24
(A) Rate of Interest 24
(B) Interest Periods 25
(C) Computation and Payment of Interest 25
(D) Interest Laws 26
(E) Conversion or Continuation 26
2.3 Fees 27
(A) Agent's Fee 27
(B) Unused Line Fee 27
(C) Letter of Credit and Guaranty Fees 27
(D) Closing Fee 28
2.4 Payments and Prepayments 28
(A) Manner and Time of Payment 28
(B) Mandatory Prepayments 28
(1) Overadvance 28
(2) Proceeds of Asset Dispositions and
Securities Sales 28
(C) Voluntary Prepayments and Repayments 29
(D) Payments on Business Days 29
2.5 Term of this Agreement 29
2.6 Statements; Application of Payments 30
2.7 Grant of Security Interest 30
2.8 Capital Adequacy and Other Adjustments 31
2.9 Taxes 31
(A) No Deductions 31
(B) Changes in Tax Laws 32
2.10 Special Provisions Governing LIBOR Rate Loans 32
(A) Determination of Interest Rate 32
(B) Substituted Rate of Borrowing 33
(C) Required Termination and Prepayment 33
(D) Options of Borrower 34
(E) Compensation 34
(F) Booking of LIBOR Rate Loans 35
(G) Assumptions Concerning Funding of LIBOR Rate
Loans 35
SECTION 3 CONDITIONS TO EFFECTIVENESS; CONDITIONS TO LOANS 35
3.1 Conditions to Effectiveness of this Agreement and to
Loans on the Closing Date 35
(A) Closing Deliveries 35
(B) Security Interests 35
(C) Repayment of Loans. 36
(D) Fees and Costs 36
(E) Corporate Authorization and Opinions 36
(F) Availability 36
(G) Budget 36
3.2 Conditions to all Loans& Lender Letters of Credit 36
(A) Loan Documents 36
(B) Consents 36
(C) Representations and Warranties 36
(D) No Default 37
(E) Performance of Agreements 37
(F) No Prohibition 37
(G) Margin Regulations 37
(H) No Litigation 37
(I) No Material Adverse Change 37
SECTION 4 BORROWER'S REPRESENTATIONS AND WARRANTIES 37
4.1 Organization, Powers, Capitalization 38
(A) Organization and Powers 38
(B) Capitalization 38
4.2 Authorization of Borrowing and Acquisition, No
Conflict 38
4.3 Financial Condition 39
4.4 Indebtedness and Liabilities 39
4.5 Account Warranties 39
39
4.6 Names 39
4.7 Locations; FEIN 39
4.8 Title to Properties; Liens 40
4.9 Litigation; Adverse Facts 40
4.10 Payment of Taxes 40
4.11 Performance of Agreements 40
4.12 Employee Benefit Plans 40
4.13 Intellectual Property 41
4.14 Broker's Fees 41
4.15 Environmental Compliance 41
4.16 Solvency 41
4.17 Disclosure 41
4.18 Insurance 42
4.19 Compliance with Laws 42
4.20 Bank Accounts 42
4.21 Subsidiaries 42
4.22 Use of Proceeds and Margin Security 42
4.23 Employee Matters 42
4.24 Governmental Regulation 43
4.25 Purchase Agreement; Transaction Documents; Existing
Loan Agreement 43
4.26 TNF Canada 43
SECTION 5 AFFIRMATIVE COVENANTS 43
5.1 Financial Statements and Other Reports 44
(A) Monthly Financials 44
(B) Quarterly Financials 44
(C) Year-End Financials 44
(D) Accountants' Certification and Reports 45
(E) Compliance Certificate 45
(F) 45
(G) 45
(H) Management Report 45
(I) Appraisals 46
(J) Government Notices 46
(K) Events of Default, etc. 46
(L) Trade Names 46
(M) Locations 46
(N) Bank Accounts 46
(O) Litigation 46
(P) Budgets 47
(Q) 47
(R) Other Information 47
5.2 Access to Accountants 47
5.3 Inspection 47
5.4 Collateral Records 47
5.5 Account Covenants; Verification 47
5.6 Collection of Accounts and Payments 48
5.7 Endorsement 48
5.8 Corporate Existence 49
5.9 Payment of Taxes 49
5.10 Maintenance of Properties; Insurance 49
5.11 Compliance with Laws 49
5.12 Further Assurances 49
5.13 Collateral Locations 50
5.14 Bailees 50
5.15 Mortgages; Title Insurance; Surveys 50
(A) Mortgaged Property 50
(B) Title Insurance 51
(C) Surveys 51
5.16 Canadian Accounts 51
5.17 Dividends 51
SECTION 6 FINANCIAL COVENANTS 51
6.1 Tangible Net Worth 51
6.2 Minimum EBITDA 52
6.3 Capital Expenditure Limits 52
6.4 Fixed Charge Coverage 52
6.5 Total Interest Coverage 52
6.6 Leverage Ratio 52
6.7 Adjustment of Financial Covenants 52
SECTION 7 NEGATIVE COVENANTS 53
7.1 Indebtedness and Liabilities 53
7.2 Guaranties 53
7.3 Transfers, Liens and Related Matters 54
(A) Transfers 54
(B) Liens 54
(C) No Negative Pledges 54
(D) No Restrictions on Subsidiary Distributions to
Borrower 54
7.4 Investments and Loans 55
7.5 Restricted Junior Payments 55
7.6 Restriction on Fundamental Changes 56
7.7 Preferred Stock 56
7.8 Transactions with Affiliates 56
7.9 Environmental Liabilities 56
7.10 Conduct of Business 56
7.11 Compliance with ERISA 56
7.12 Tax Consolidations 57
7.13 Subsidiaries 57
7.14 Fiscal Year 57
7.15 Press Release; Public Offering Materials 57
SECTION 8 DEFAULT, RIGHTS AND REMEDIES 57
8.1 Event of Default 57
(A) Payment 57
(B) Default in Other Agreements 57
(C) Breach of Certain Provisions 57
(D) Breach of Warranty 58
(E) Other Defaults Under Loan Documents 58
(F) Change in Control 58
(G) Involuntary Bankruptcy; Appointment of
Receiver, etc. 58
(H) Voluntary Bankruptcy; Appointment of Receiver,
etc. 58
(I) Liens 58
(J) Judgment and Attachments 59
(K) Dissolution 59
(L) Injunction 59
(M) Invalidity of Loan Documents 59
(N) Failure of Security 59
(O) Damage, Strike, Casualty 59
(P) Licenses and Permits 59
8.2 Suspension of Commitments 60
8.3 Acceleration 60
8.4 Remedies 60
8.5 Appointment of Attorney-in-Fact 61
8.6 Limitation on Duty of Agent and Lenders with Respect
to Collateral 61
8.7 Application of Proceeds 61
8.8 Waivers, Non-Exclusive Remedies 62
SECTION 9 ASSIGNMENTS; AGENCY PROVISIONS 62
9.1 Assignments and Participations 62
9.2 Agent 63
(A) Appointment 63
(B) Nature of Duties 63
(C) Rights, Exculpation, Etc 64
(D) Reliance 64
(E) Indemnification 65
(F) ▇▇▇▇▇▇ Individually 65
(G) Successor Agent 65
(1) Resignation 65
(2) Appointment of Successor 65
(3) Successor Agent 65
(H) Collateral Matters 66
(1) Release of Collateral 66
(2) Confirmation of Authority; Execution
of Releases 66
(3) Absence of Duty 67
(I) Agency for Perfection 67
9.3 Amendments, Consents & Waivers for Certain Actions 67
9.4 Set Off and Sharing of Payments 68
9.5 Disbursement of Funds 69
9.6 Disbursements of Advances, Payments and Information 69
(A) Revolving Loan Advances and Payments; Fee
Payments 69
(B) Availability of Lender's Pro Rata Share 71
(C) Return of Payments 71
(D) Dissemination of Information 71
SECTION 10 MISCELLANEOUS 72
10.1 Expenses and Attorneys' Fees 72
10.2 Indemnity 72
10.3 Amendments and Waivers 73
10.4 Notices 74
10.5 Survival of Warranties and Certain Agreements 75
10.6 Indulgence Not Waiver 75
10.7 Marshaling; Payments Set Aside 75
10.8 Entire Agreement 75
10.9 Independence of Covenants 75
10.10 Severability 75
10.11 Lenders' Obligations Several; Independent Nature of
Lenders' Rights 76
10.12 Headings 76
10.13 APPLICABLE LAW 76
10.14 Successors and Assigns 76
10.15 No Fiduciary Relationship; Limitation of Liab. 76
10.16 CONSENT TO JURISDICTION 77
10.17 WAIVER OF JURY TRIAL 77
10.18 Construction 77
10.19 Counterparts; Effectiveness 77
10.20 No Duty 78
EXHIBITS
Exhibit A Compliance Certificate
Exhibit B CAPEX Note
Exhibit C Lender Addition Agreement
Exhibit D Revolving Note
Exhibit E Confirmation of Liens
SCHEDULES
Schedule 1.1(B) Liens
Schedule 1.2 Accounting Adjustments
Schedule 3.1(A) Closing Deliveries
Schedule 4.1(B) Capitalization
Schedule 4.6 Names
Schedule 4.7 Locations; FEIN
Schedule 4.9 Litigation; Adverse Facts
Schedule 4.10 Taxes
Schedule 4.11 Performance of Agreements
Schedule 4.13 Intellectual Property
Schedule 4.20 Bank Accounts
Schedule 4.23 Employee Matters
Schedule 7.1(C) Indebtedness and Liabilities